FIRST AMENDED AND RESTATED TERMINATION PROTECTION AGREEMENT FOR CORPORATE EXECUTIVES
Exhibit
10.60
FIRST AMENDED AND
RESTATED
FOR CORPORATE
EXECUTIVES
THIS
FIRST AMENDED AND RESTATED AGREEMENT (the “Agreement”) effective as of the
31st
day of December, 2008 (the “Effective Date”), by and between the "Company" (as
hereinafter defined) and Xxxxx X. Xxxxx (the "Executive").
WHEREAS,
the Board of Directors of the Company (the "Board") recognizes that the
possibility of a "Change in Control" (as hereinafter defined) exists and that
the threat or the occurrence of a Change in Control can result in significant
distractions of its key management personnel because of the uncertainties
inherent in such a situation;
WHEREAS,
the Board has determined that it is essential and in the best interest of the
Company and its stockholders to retain the services of the Executive in the
event of a threat or occurrence of a Change in Control and to ensure his
continued dedication and efforts in such event without undue concern for his
personal financial and employment security; and
WHEREAS,
in order to induce the Executive to remain in the employ of the Company and the
Employer, particularly in the event of a threat or the occurrence of a Change in
Control, the Company has previously entered into an agreement with the
Executive, dated as of November 13, 2006, to provide the Executive with certain
benefits in the event his employment is terminated as a result of, or in
connection with, a Change in Control and to provide the Executive with the
"Gross-Up Payment" (as hereinafter defined) and certain other benefits whether
or not the Executive's employment is terminated (the “Prior
Agreement”);
WHEREAS,
the Company and the Executive now find it desirable and necessary to enter into
this Agreement, which amends and restates the provisions of the Prior Agreement
in order to satisfy the requirements of Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”) (unless otherwise indicated, all “section”
or “Code” references are to the Code and the Treasury Regulations related
thereto, as may be amended from time to time, promulgated under the authority of
the applicable Code section and, in each case, any successor provisions
thereto).
NOW,
THEREFORE, in consideration of the respective agreements of the parties
contained herein, it is agreed as follows:
1. Term of
Agreement. This Agreement shall commence as of the Effective
Date and shall continue in effect until May 18, 2009; provided, however, that
commencing on May 18, 2009 and on each May 18 thereafter, the term of this
Agreement shall be automatically extended for one (1) year unless either the
Company or the Executive shall have given written notice to the other at least
ninety (90) days prior thereto that the term of this Agreement shall not be so
extended; and provided, further, however, that
notwithstanding any such notice by the Company not to extend, the term of this
Agreement shall not expire prior to the expiration of twenty-four (24) months
after the occurrence of a Change in Control.
2. Definitions.
2.1. Accrued
Compensation. For purposes of this Agreement, "Accrued
Compensation" shall
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mean an
amount which shall include all amounts earned or accrued through the
"Termination Date" (as hereinafter defined) but not paid as of the Termination
Date including (i) base salary, and (ii) reimbursement for reasonable and
necessary expenses incurred by the Executive on behalf of the Company during the
period ending on the Termination Date, (iii) vacation pay, if required by
applicable law, and (iv) bonuses and incentive compensation (other than the "Pro
Rata Bonus" (as hereinafter defined)).
2.2. Base
Amount. For purposes of this Agreement, "Base Amount" shall
mean the greater of the Executive's annual base salary (a) at the rate in effect
on the Termination Date or (b) at the highest rate in effect at any time during
the ninety (90) day period prior to the Change in Control, and shall include all
amounts of his base salary that are deferred under the qualified and
non-qualified employee benefit plans of the Company.
2.3. Bonus
Amount. For purposes of this Agreement, "Bonus Amount" shall
mean the highest annual bonus paid or payable to the Executive for any fiscal
year in respect of the three (3) full fiscal years ended prior to the Change in
Control.
2.4. Cause. For
purposes of this Agreement, a termination of employment is for "Cause" if the
Executive has been convicted of a felony or the termination is evidenced by a
resolution adopted in good faith by two-thirds of the Board that the Executive
(a) intentionally and continually failed substantially to perform his reasonably
assigned duties with the Company (other than a failure resulting from the
Executive's incapacity due to physical or mental illness or from the
Executive's assignment of duties that would constitute "Good Reason" as
hereinafter defined) which failure continued for a period of at least thirty
(30) days after a written notice of demand for substantial performance has been
delivered to the Executive specifying the manner in which the Executive has
failed substantially to perform, or (b) intentionally engaged in conduct which
is demonstrably and materially injurious to the Company, monetarily or
otherwise; provided, however, that no
termination of the Executive's employment shall be for Cause as set forth in
clause (b) above until (x) there shall have been delivered to the Executive a
copy of a written notice setting forth that the Executive was guilty of the
conduct set forth in clause (b) and specifying the particulars thereof in
detail, and (y) the Executive shall have been provided an opportunity to be
heard in person by the Board (with the assistance of the Executive's counsel if
the Executive so desires). No act, nor failure to act, on the
Executive's part, shall be considered "intentional" unless the Executive has
acted, or failed to act, with a lack of good faith and with a lack of reasonable
belief that the Executive's action or failure to act was in the best interest of
the Company.
2.5. Change in
Control. For purposes of this Agreement, a "Change in Control"
shall mean any of the following events:
(a) An
acquisition (other than directly from the Company) of any voting securities of
the Company (the “Voting Securities”) by any “Person” (as the term person is
used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the “1934 Act”)) immediately after which such Person has
“Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the
0000 Xxx) of fifteen percent (15%) or more of the combined voting power of the
Company’s then outstanding Voting Securities; provided, however, in determining
whether a Change in Control has occurred, Voting Securities which are acquired
in a Non-Control Acquisition (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control.
A
“Non-Control Acquisition” shall mean an acquisition by (i) an employee benefit
plan (or a trust forming a part thereof) maintained by (A) the Company or (B)
any corporation or other Person of
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which
a majority of its voting power or its voting equity securities or equity
interest is owned, directly or indirectly, by the Company (for purposes of this
definition, a “Subsidiary”), (ii) the Company or its Subsidiaries, or (iii) any
Person in connection with a Non-Control Transaction (as hereinafter
defined);
(b) The
individuals who, as of the Effective Date, are members of the Board (the
“Incumbent Board”), cease for any reason to constitute at least two-thirds of
the Board; provided, however, that if the election, or nomination for election
by the Company’s stockholders, of any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new director shall, for purposes
of this Plan, be considered as a member of the Incumbent Board; provided
further, however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened “Election Contest” (as described in Rule 14a-11
promulgated under the 0000 Xxx) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board (a “Proxy
Contest”) including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(c) The
consummation of:
(i) A
merger, consolidation, reorganization or other business combination with or into
the Company or in which securities of the Company are issued,
unless
(A) the
stockholders of the Company, immediately before such merger, consolidation,
reorganization or other business combination, own directly or indirectly
immediately following such merger, consolidation, reorganization or other
business combination, at least sixty percent (60%) of the combined voting power
of the outstanding voting securities of the corporation resulting from such
merger or consolidation, reorganization or other business combination (the
“Surviving Corporation”) in substantially the same proportion as their ownership
of the Voting Securities immediately before such merger, consolidation,
reorganization or other business combination,
(B) the individuals who were members
of the Incumbent Board immediately prior to the execution of the agreement
providing for such merger, consolidation, reorganization or other business
combination constitute at least two-thirds of the members of the board of
directors of the Surviving Corporation, or a corporation beneficially directly
or indirectly owning a majority of the combined voting power of the outstanding
voting securities of the Surviving Corporation, or
(C) no Person other than (i) the
Company, (ii) any Subsidiary, (iii) any employee benefit plan (or any trust
forming a part thereof) that, immediately prior to such merger, consolidation,
reorganization or other business combination was maintained by the Company, the
Surviving Corporation, or any Subsidiary, or (iv) any Person who, immediately
prior to such merger, consolidation, reorganization or other business
combination had Beneficial Ownership of fifteen percent (15%) or more of the
then outstanding Voting Securities, has Beneficial Ownership of fifteen percent
(15%) or more of the combined voting power of the Surviving Corporation’s then
outstanding voting securities, and
A
transaction described in clauses (A) through (C) shall herein be referred to as
a “Non-Control Transaction.”
(ii) A
complete liquidation or dissolution of the Company; or
(iii) The
sale or other disposition of all or substantially all of the assets of the
Company to any Person (other than (i) any such sale or disposition that results
in at least fifty percent
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(50%)
of the Company’s assets being owned by one or more subsidiaries or (ii) a
distribution to the Company’s stockholders of the stock of a subsidiary or any
other assets).
Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur solely because
any
Person
(the “Subject Person”) acquired Beneficial Ownership of more than the permitted
amount of the then outstanding Voting Securities (X) as a result of the
acquisition of Voting Securities by the Company which, by reducing the number of
Voting Securities outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person, provided that if a Change in Control
would occur (but for the operation of this subsection (X)) as a result of the
acquisition of Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur, or (Y) and such Subject Person (1) within
fourteen (14) Business Days (or such greater period of time as may be determined
by action of the Board) after such Subject Person would otherwise have caused a
Change in Control (but for the operation of this clause (Y)), such Subject
Person notifies the Board that such Subject Person did so inadvertently, and (2)
within seven (7) Business Days after such notification (or such greater period
of time as may be determined by action of the Board), such Subject Person
divests itself of a sufficient number of Voting Securities so that such Subject
Person is no longer the Beneficial Owner of more than the permitted amount of
the outstanding Voting Securities.”
(d) Notwithstanding
anything contained in this Agreement to the contrary, if the Executive's
employment is terminated during the term of this Agreement but within one (1)
year prior to a Change in Control and the Executive reasonably demonstrates that
such termination (i) was at the request of a third party who has indicated an
intention or taken steps reasonably calculated to effect a Change in Control and
who effectuates a Change in Control (a "Third Party") or (ii) otherwise occurred
in connection with, or in anticipation of, a Change in Control which actually
occurs, then for all purposes of this Agreement, the date of a Change in Control
with respect to the Executive shall mean the date immediately prior
to the date of such termination of the Executive's employment (such a
termination, an “Anticipatory Termination”).
2.6 Company. For purposes
of this Agreement, the “Company” shall mean RadioShack Corporation and shall
include its “Successors and Assigns” (as hereafter defined).”
2.7. Disability. For
purposes of this Agreement, "Disability" shall mean a physical or mental
infirmity which impairs the Executive's ability to substantially perform his
duties with the Company for a period of one hundred eighty (180) consecutive
days and the Executive has not returned to his full time employment prior to the
Termination Date as stated in the "Notice of Termination" (as hereinafter
defined).
2.8. (a) Good
Reason. For purposes of this Agreement, "Good Reason" shall
mean the occurrence after a Change in Control of any of the events or conditions
described in Subsections (i) through (ix) hereof:
(i) a
change in the Executive's status, title, position or responsibilities (including
reporting responsibilities) which, in the Executive's reasonable judgment,
represents an adverse change in his status, title, position or responsibilities
as in effect at any time within ninety (90) days preceding the date of the
Change in Control or at any time thereafter; the assignment to the Executive of
any duties or responsibilities which, in the Executive's reasonable judgment,
are inconsistent with such status, title, position or responsibilities as in
effect at any time within ninety (90)
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days
preceding the date of the Change in Control or at any time thereafter; or any
removal of the Executive from or failure to reappoint or reelect him to any of
his offices or positions, except in connection with the termination of the
Executive's employment for Cause, or as a result of his death, or by the
Executive other than for Good Reason;
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(ii)
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a
reduction in the rate of the Executive's base salary below the Base Amount
or any failure to pay the Executive any compensation or benefits to which
he is entitled within fifteen (15) days of the date notice of such failure
to pay is given to the Company and, in the case of any annual bonus,
within forty-five (45) days following the end of the fiscal year pursuant
to which such bonus relates;
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(iii) a
change in the accounting policies or practices as in effect during the ninety
(90) days preceding the Change in Control or at any time thereafter which, in
the Executive's reasonable judgment, results in a reduction in his earning
potential;
(iv) the
Company's requiring the Executive to be based at any place outside a 20-mile
radius from his place of employment on the day prior to the Change in Control,
except for reasonably required travel on the Company's business which is not
materially greater than such travel requirements prior to the Change in
Control;
(v) the
failure by the Company to (A) continue in effect (without reduction in benefit
levels, reward opportunities and/or bonus potential for comparable performance)
any material compensation or benefit plan in which the Executive was
participating at any time within ninety (90) days preceding the Change in
Control or at any time thereafter including, but not limited to, the plans
listed on Appendix A, unless such plan is replaced with a plan that provides
substantially equivalent compensation or benefits to the Executive, or (B)
provide the Executive with compensation and benefits, in the aggregate at least
equal (in terms of benefit levels and/or reward opportunities) to those provided
for under each other employee benefit plan, program and practice in which the
Executive was participating at any time within ninety (90) days preceding the
Change in Control or at any time thereafter;
(vi) the
insolvency or the filing (by any party, including the Company) of a petition for
bankruptcy, of the Company, which petition is not dismissed within sixty (60)
days;
(vii) any
material breach by the Company of any provision hereof;
(viii) any
purported termination of the Executive's employment for Cause by the Company
which does not comply with the terms of Section 2.4 hereof; and
(ix) the
failure of the Company to obtain an agreement, satisfactory to the Executive,
from any Successor or Assign of the Company, to assume and agree to perform this
Agreement, as contemplated in Section 6 hereof.
(b) Any
event or condition described in this Section 2.8(a)(i) through (ix) which occurs
during the term of this Agreement but within one (1) year prior to a Change in
Control and which the Executive reasonably demonstrates (i) was at the request
of a Third Party or (ii) otherwise arose in connection with, or in anticipation
of, a Change in Control which actually occurs, shall constitute Good Reason for
purposes of this Agreement notwithstanding that it occurred prior to the Change
in Control.
2.9. Notice of
Termination. For purposes of this Agreement, following a
Change in
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Control,
"Notice of Termination" shall mean a written notice of termination from the
Company of the Executive's employment which indicates the specific termination
provision in this Agreement relied upon and which sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
2.10. Pro Rata
Bonus. For purposes of this Agreement, "Pro Rata Bonus" shall
mean an amount equal to the Bonus Amount multiplied by a fraction the numerator
of which is the number of days in the fiscal year through the Termination Date
and the denominator of which is 365.
2.11. Successors and
Assigns. For purposes of this Agreement, "Successors and
Assigns" shall mean a corporation or other entity acquiring all or substantially
all the assets and business of the Company (including this Agreement) whether by
operation of law or otherwise.
2.12. Termination
Date. For purposes of this Agreement, "Termination Date" shall
mean in the case of the Executive's death, his date of death, in the case of
Good Reason, the last day of his employment, and in all other cases, the date
specified in the Notice of Termination; provided, however, that if the
Executive's employment is terminated by the Company for Cause or due to
Disability, the date specified in the Notice of Termination shall be at least 30
days from the date the Notice of Termination is given to the
Executive, provided that in the case of Disability the Executive shall not have
returned to the full-time performance of his duties during such period of at
least 30 days. The Company shall take all steps necessary (including
with respect to any post-termination services by the Executive) to ensure that
any termination described in this Agreement constitutes a “separation from
service,” within the meaning of Code section 409A (a “Separation from Service”),
and notwithstanding anything contained herein to the contrary, the date on which
such Separation from Service occurs shall be the “Termination
Date”.
3. Termination of
Employment.
3.1. If,
during the term of this Agreement, the Executive's employment with the Company
shall be terminated within twenty-four (24) months following a Change in
Control, the Executive shall be entitled to the following compensation and
benefits:
(a) If
the Executive's employment with the Company shall be terminated (1) by reason of
the Executive's death, (2) by the Company for Cause or Disability, or (3) by the
Executive other than for Good Reason and other than during the 60-day period
commencing on the first anniversary of the date of the occurrence of a Change in
Control (the "Window Period"), the Company shall pay to the Executive the
Accrued Compensation and, if such termination is other than by the Company for
Cause, a Pro Rata Bonus.
(b) Except
as provided in Section 3.1(e) hereof, if the Executive's employment with the
Company shall be terminated for any reason other than as specified in Section
3.1(a) or during the Window Period, the Executive shall be entitled to the
following:
(i)
the Company shall pay the Executive all Accrued Compensation and a Pro-Rata
Bonus;
(ii) the
Company shall pay the Executive as termination pay and in lieu of any further
compensation for periods subsequent to the Termination Date, in a single payment
an amount (the "Termination Amount") in cash equal to two times the sum of (A)
the Base Amount and (B) the Bonus Amount;
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(iii) for twenty-four
(24) months from the Termination Date (the "Continuation Period"), the Company
shall at its expense continue on behalf of the Executive and his dependents and
beneficiaries the fringe benefits, (excluding those benefit plans numbered 1
through 5 inclusive on Appendix A but including an automobile or automobile
allowance and the related expenses of public liability insurance, collision
coverage, repairs and maintenance) and the life insurance, disability, medical,
dental and hospitalization benefits provided (x) to the Executive at any time
during the 90-day period prior to the Change in Control or at any time
thereafter or (y) to other similarly situated executives who continue in the
employ of the Company during the Continuation Period; provided, however, that with
respect to any Executive who was entitled to the use of an automobile provided
by the Company within the ninety (90) day period prior to a Change in Control or
at any time thereafter, the Executive shall be paid a cash payment equal to the
value of the Company provided automobile to the Executive for the Continuation
Period. The coverage and benefits (including deductibles and
contributions by the Executive, if any) provided in this Section 3.1(b)(iii)
during the Continuation Period shall be no less favorable to the Executive and
his dependents and beneficiaries, than the most favorable of such coverages and
benefits during any of the periods referred to in clauses (x) and (y)
above. The Company's obligation hereunder with respect to the
foregoing benefits (except for the automobile or automobile allowance and the
related expenses of public liability insurance, collision coverage, repairs and
maintenance) shall be limited to the extent that the Executive obtains any such
benefits pursuant to a subsequent employer's benefit plans, in which case the
Company may reduce the coverage of any benefits it is required to provide the
Executive hereunder as long as the aggregate coverages and benefits of the
combined benefit plans is no less favorable to the Executive than the coverages
and benefits required to be provided hereunder. This Subsection (iii)
shall not be interpreted so as to limit any benefits to which the Executive, his
dependents or beneficiaries may be entitled under any of the Company's employee
benefit plans, programs or practices following the Executive's termination of
employment, including without limitation, retiree medical and life insurance
benefits. To the extent any continuation of benefits contemplated by
the foregoing is not exempt from Code section 409A, (A) the provision of such
continuation of benefits during a given taxable year of the Executive shall not
affect the amount of benefits that the Company is obligated to provide in
another taxable year, (B) the Executive’s right to have the Company provide such
benefits may not be liquidated or exchanged for any other benefit, (C) if
applicable, any reimbursement shall be made no later than the Executive’s
taxable year following the taxable year in which the expense was incurred, and
the continuation of benefits shall otherwise comply with the requirements of
Code section 409A;
(iv) the
Company shall pay in a single payment an amount equal to eighty percent (80%) of
the maximum amount the Executive could have contributed under the RadioShack
401(k) Plan, RadioShack Investment Plan and RadioShack Employee
Supplemental Stock Plan as in effect on the date immediately prior to the Change
in Control during the Continuation Period had the Executive continued in the
employment with the Company during the Continuation Period at the greater of his
annualized gross salary and wages as in effect immediately prior to the Change
in Control or at any time thereafter; and
(v) (A)
the restrictions on any outstanding incentive awards (including restricted stock
and granted performance shares or units) granted to the Executive including, but
not limited to, awards granted under the Company's 1985 Stock Option Plan, 1993
Incentive Stock Plan, 1997 Incentive Stock Plan, 1999 Incentive Stock Plan, 2001
Incentive Stock Plan or under any other incentive plan or arrangement
shall lapse and such incentive award shall become 100% vested, all stock options
and stock appreciation rights granted to the Executive shall become immediately
exercisable and shall become 100% vested, and all performance units granted to
the Executive shall become 100% vested and (B) the Executive shall have the
right to require the Company to purchase,
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for
cash, any shares of unrestricted stock or shares purchased upon exercise of any
options, at a price equal to the fair market value of such shares on the date of
purchase by the Company.
(c) The
amounts provided for in Sections 3.1(a) and 3.1(b)(i), (ii), (iii) (only as to
the automobile allowance and the related expenses of public liability insurance,
collision coverage, repairs and maintenance) and (iv) shall be paid in a single
lump sum cash payment within five (5) days after the Executive's Termination
Date (or earlier, if required by applicable law).
(d) The
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise and no such
payment shall be offset or reduced by the amount of any compensation or benefits
provided to the Executive in any subsequent employment except as provided in
Section 3.1(b)(iii).
(e) Anything
in this Agreement to the contrary notwithstanding, in the event that as of the
Termination Date the Executive is a “specified employee,” within the meaning of
Code section 409A (as determined in accordance with the methodology established
by the Company as in effect as of the Termination Date) (a “Specified
Employee”), (X) the payment of amounts of the Accrued Compensation contemplated
under Section 3.1(a) that constitute nonqualified deferred compensation subject
to Code section 409A and the Pro-Rata Bonus, (Y) the payments contemplated under
Sections 3.1(b)(i), (ii), (iii) (to the extent those payments are not exempt
from Code section 409A) and (iv) and (Z) any shares deliverable under Section
3.1(b)(v), that are subject to any equity awards that are subject to Code
section 409A (the payment and benefits described in (X), (Y) and (Z), the “409A
Deferred Compensation Amounts”), in each of the foregoing cases that would
otherwise be payable, provided or delivered, as applicable, during the six-month
period shall instead be paid, provided or delivered, as applicable on the first
business day of the seventh month following the Executive’s Termination Date,
or, if earlier, the Executive’s death, to the extent such delayed payment is
required in order to avoid a prohibited distribution under Code section
409A(a)(2) (the “Delayed Payment Date). On the Delayed
Payment Date, all payments and benefits, and, if applicable, delivery of shares,
deferred pursuant to this Section 3(e) shall be paid, provided, or delivered, as
applicable, in a lump sum to the Executive, and any remaining payments, benefits
or delivery of shares due under the Agreement shall be paid, provided or
delivered in accordance with the normal payment and distribution dates specified
in this Agreement.
(f) Anything
in this Agreement to the contrary notwithstanding, in the event of an
Anticipatory Termination, any 409A Deferred Compensation Amounts shall be paid
as follows: (i) if the Change in Control is a “change in control event,” within
the meaning of Code section 409A, (A) except as provided in clause (i)(B), on
the date of such Change in Control, or (B) if the Executive is a Specified
Employee, and the Delayed Payment Date is later than the date of such Change in
Control, on the Delayed Payment Date, and (ii) if the Change in Control is not a
“change in control event,” within the meaning of Code section 409A, on the first
anniversary of the date of such Anticipatory Termination to the extent payment
on such date would not violate Code section 409A. In the event of an
Anticipatory Termination, any payments or benefits required to be paid or
provided under this Agreement that are not deferred compensation subject to Code
section 409A shall be paid or shall commence being provided on the date of the
Change in Control.
3.2. (a) The
termination pay and termination benefits provided for in this Section 3 shall be
in lieu of any other severance or termination pay to which the Executive may be
entitled under any Company severance or termination plan, program, policy or
practice.
(b) The
Executive's entitlement to any other compensation or benefits (other than
the
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Pro
Rata Bonus and other than the termination pay and termination benefits as
provided under this Section 3) shall be determined in accordance with the
Company's employee benefit plans (including, the plans listed on Appendix A) and
other applicable programs, policies and practices then in effect.
4. Notice of
Termination. Following a Change in Control, any purported
termination of the Executive's employment by the Company and/or the Employer
shall be communicated by Notice of Termination to the Executive. For
purposes of this Agreement, no such purported termination shall be effective
without such Notice of Termination.
5. Excise Tax
Payments.
(a) In
the event that any payment or benefit (within the meaning of Code section
280G(b)(2)), to the Executive or for his benefit paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise in
connection with, or arising out of, his employment with the Company or a change
in ownership or effective control of the Company or of a substantial
portion of its assets (a "Payment" or "Payments"), would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive will be entitled to receive
an additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties,
other than interest and penalties imposed by reason of the Executive's failure
to file timely a tax return or pay taxes shown due on his return, imposed with
respect to such taxes and the Excise Tax), including any Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) An
initial determination as to whether a Gross-Up Payment is required pursuant to
this Agreement and the amount of such Gross-Up Payment shall be made at the
Company's expense by an accounting firm selected by the Company and reasonably
acceptable to the Executive which is designated as one of the five largest
accounting firms in the United States (the "Accounting Firm"). The
Accounting Firm shall provide its determination (the "Determination"), together
with detailed supporting calculations and documentation to the Company and the
Executive within five days of the Termination Date if applicable, or such other
time as requested by the Company or by the Executive (provided the Executive
reasonably believes that any of the Payments may be subject to the Excise Tax)
and if the Accounting Firm determines that no Excise Tax is payable by the
Executive with respect to a Payment or Payments, it shall furnish the Executive
with an opinion reasonably acceptable to the Executive that no Excise Tax will
be imposed with respect to any such Payment or Payments. Within ten
days of the delivery of the Determination to the Executive, the Executive shall
have the right to dispute the Determination (the "Dispute"). The
Gross-Up Payment, if any, as determined pursuant to this Paragraph 5(b) shall be
paid by the Company to the Executive within five days of the receipt of the
Accounting Firm's determination. The existence of the Dispute shall
not in any way affect the Executive's right to receive the Gross-Up Payment in
accordance with the Determination. If there is no Dispute, the
Determination shall be binding, final and conclusive upon the Company and the
Executive subject to the application of Paragraph 5(c) below.
(c) As
a result of the uncertainty in the application of Sections 4999 and 280G of the
Code, it is possible that a Gross-Up Payment (or a portion thereof) will be paid
which should not have been paid (an "Excess Payment") or a Gross-Up Payment (or
a portion thereof) which should have been paid will not have been paid (an
"Underpayment"). An Underpayment shall be deemed to have occurred (i)
upon notice (formal or informal) to the Executive from any governmental taxing
authority that the Executive's tax liability (whether in respect of the
Executive's current taxable year or in respect
9
of any
prior taxable year) may be increased by reason of the imposition of the Excise
Tax on a Payment or Payments with respect to which the Company has failed to
make a sufficient Gross-Up Payment, (ii) upon a determination by a court, (iii)
by reason of determination by the Company (which shall include the position
taken by the Company, together with its consolidated group, on its federal
income tax return) or (iv) upon the resolution of the Dispute to the Executive's
satisfaction. If an Underpayment
occurs,
the Executive shall promptly notify the Company and the Company shall promptly,
but in any event, at least five days prior to the date on which the applicable
government taxing authority has requested payment, pay to the Executive an
additional Gross-Up Payment equal to the amount of the Underpayment plus any
interest and penalties (other than interest and penalties imposed by reason of
the Executive's failure to file timely a tax return or pay taxes shown due on
the Executive's return) imposed on the Underpayment. An Excess
Payment shall be deemed to have occurred upon a "Final Determination" (as
hereinafter defined) that the Excise Tax shall not be imposed upon a Payment or
Payments (or portion thereof) with respect to which the Executive had previously
received a Gross-Up Payment. A "Final Determination" shall be deemed
to have occurred when the Executive has received from the applicable government
taxing authority a refund of taxes or other reduction in the Executive's tax
liability by reason of the Excise Payment and upon either (x) the date a
determination is made by, or an agreement is entered into with, the applicable
governmental taxing authority which finally and conclusively binds the Executive
and such taxing authority, or in the event that a claim is brought before a
court of competent jurisdiction, the date upon which a final determination has
been made by such court and either all appeals have been taken and finally
resolved or the time for all appeals has expired or (y) the statute of
limitations with respect to the Executive's applicable tax return has
expired. If an Excess Payment is determined to have been made, the
amount of the Excess Payment shall be treated as a loan by the Company to the
Executive and the Executive shall pay to the Company on demand (but not less
than 10 days after the determination of such Excess Payment and written notice
has been delivered to the Executive) the amount of the Excess Payment plus
interest at an annual rate equal to the Applicable Federal Rate provided for in
Section 1274(d) of the Code from the date the Gross-Up Payment (to which the
Excess Payment relates) was paid to the Executive until the date of repayment to
the Company.
(d) Notwithstanding
anything contained in this Agreement to the contrary, in the event that,
according to the Determination, an Excise Tax will be imposed on any Payment or
Payments, the Company shall pay to the applicable government taxing authorities
as Excise Tax withholding, the amount of the Excise Tax that the Company has
actually withheld from the Payment or Payments.
(e) Any
Gross-Up Payment shall in all events be paid no later than the end of the
Executive’s taxable year next following the Executive’s taxable year in which
the Excise Tax (and any income or other related taxes or interest or penalties
thereon) on a Payment are remitted to the Internal Revenue Service or any other
applicable taxing authority.
6. Successors; Binding
Agreement.
(a) This
Agreement shall be binding upon and shall inure to the benefit of the Company,
its Successors and Assigns and the Company shall require any Successor or Assign
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession or assignment had taken place.
(b) Neither
this Agreement nor any right or interest hereunder shall be assignable or
transferable by the Executive, his beneficiaries or legal representatives,
except by will or by the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal personal representative.
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7. Fees and
Expenses. The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) incurred by the
Executive as they become due as a result of (a) the Executive's termination of
employment (including all such fees and expenses, if any, incurred in contesting
or disputing any such termination of employment), (b) the Executive seeking to
obtain or enforce any right or benefit provided by this Agreement (including,
but not limited to, any such fees and expenses incurred in connection with (i)
the Dispute and (ii) the Gross-Up Payment whether as
a
result of any applicable government taxing authority proceeding, audit or
otherwise) or by any other plan or arrangement maintained by the Company under
which the Executive is or may be entitled to receive benefits, and (c) the
Executive's hearing before the Board as contemplated in Section 2.4 of this
Agreement; provided, however, that the
circumstances set forth in clauses (a) and (b) (other than as a result of the
Executive's termination of employment under circumstances described in Section
2.5(d)) occurred on or after a Change in Control; provided further, however,
that in order to comply with Code section 409A, in no event shall the payments
by the Company under this Section 7 be made later than the last day of the
Executive’s tax year following the taxable year in which the fees and expenses
were incurred. The amount of expenses and fees eligible for
reimbursement under this provision in any calendar year shall not affect the
amount of expenses eligible for reimbursement in any other calendar year, and
the Executive’ right to reimbursement shall not be subject to liquidation or
exchange for any other benefit. In all events, reimbursement shall be
made in accordance with Code section 409A.
8. Notice. For
the purposes of this Agreement, notices and all other communications provided
for in the Agreement (including the Notice of Termination) shall be in writing
and shall be deemed to have been duly given when personally delivered or sent by
a nationally recognized overnight delivery service or by certified mail, return
receipt requested, postage prepaid, addressed to the respective addresses last
given by each party to the other, provided that all notices to the Company shall
be directed to the attention of the Board with a copy to the Secretary of the
Company. All notices and communications shall be deemed to have been
received on the date of delivery thereof or on the third business day after the
sending thereof, except that notice of change of address shall be effective only
upon receipt.
9. Non-exclusivity of
Rights. Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any benefit, bonus, incentive
or other plan or program provided by the Company (except for any severance or
termination policies, plans, programs or practices) and for which the Executive
may qualify, nor shall anything herein limit or reduce such rights as the
Executive may have under any other agreements with the Company (except for any
severance or termination agreement). Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan
or program of the Company shall be payable in accordance with such plan or
program, except as explicitly modified by this Agreement.
10. Settlement of
Claims. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which the Company may
have against the Executive or others.
11. Miscellaneous. No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by the
Executive and the Company. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or
11
subsequent
time. No agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.
It is
intended that this Agreement and the Company’s exercise of authority or
discretion hereunder shall comply with the provisions of Code section 409A and
the Treasury Regulations relating thereto so as not to subject Executive to the
payment of interest and tax penalty which may be imposed under Code section
409A. In furtherance of this interest, to the extent that any
regulations or other guidance issued under Code section 409A after the effective
date of this Agreement would result in
Executive
being subject to payment of interest and tax penalty under Code section 409A,
the Company may amend the Agreement, with the Executive’s consent, including
with respect to the timing of payment of benefits, in order to avoid the
application of or to comply with the requirements of Code section 409A;
provided, however, that the Company makes no representation that compensation or
benefits payable under this Agreement shall be exempt from or comply with Code
section 409A and makes no representation to preclude Code section 409A from
applying to the compensation or benefits payable under the
Agreement.
12. Governing
Law. THE VALIDITY, INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF; PROVIDED, HOWEVER, THAT IN ANY
ACTION INVOLVING THE EXECUTIVE AND THE COMPANY WITH RESPECT TO ANY CLAIM OR
ASSERTION THAT THE EXECUTIVE'S EMPLOYMENT WAS PROPERLY TERMINATED FOR CAUSE, THE
COMPANY HAS THE BURDEN OF PROVING THAT THE EXECUTIVE'S EMPLOYMENT WAS PROPERLY
TERMINATED FOR CAUSE.
13. Forum. Any
suit brought by the Executive under this Agreement may be brought in the
appropriate state or federal court for Tarrant County, Texas, or for the county
wherein the Executive maintains his residence. Any suit brought by
the Company under this Agreement may only be brought in the county wherein the
Executive maintains his residence unless the Executive consents to suit
elsewhere.
14. Severability. The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
15. Entire
Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof, including, without limitation, the
Prior Agreement.
12
IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer and the Executive has executed this Agreement effective
as of the day and year first above written.
|
|
RADIOSHACK
CORPORATION
|
ATTEST: By: __________________________________
Xxxxxx X. Day
Title:
_________________________________
Chairman and Chief Executive
Officer
_____________________________
Corporate
Secretary
__________________________________
Executive
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APPENDIX
A
COMPENSATION AND BENEFIT
PLANS
1. RadioShack
401(k) Plan
|
2.
|
RadioShack
Corporation 1997, 1999 and 2001 Incentive Stock
Plans
|
|
3.
|
RadioShack
Corporation 2007 Restricted Stock
Plan
|
|
4.
|
RadioShack
Corporation Officer’s Supplemental Executive Retirement
Plan
|
|
5.
|
RadioShack
Corporation Officers’ Severance
Program
|
14
