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EXHIBIT 10.39
FORM OF
STATE OF NORTH CAROLINA EXECUTIVE SEVERANCE
COUNTY OF MECKLENBURG AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT (this "Agreement") is made this the
______ day of December, 1997, by and between GS Industries, Inc., a Delaware
corporation (the "Company"), and __________________ ("Executive").
WHEREAS, the Company and its Board of Directors have determined that
its best interests and those of its shareholders will be served by reinforcing
and encouraging the continued dedication of key executives to their assigned
duties without distractions arising from a potential change in control of the
Company; and
WHEREAS, this Agreement is intended to remove such distraction and to
reinforce the continued attention and dedication of senior management to their
assigned duties.
NOW, THEREFORE, as provided herein, the parties hereby agree as
follows:
I. ELIGIBILITY FOR BENEFITS
Section 1.1. Qualifying Termination. The Company shall not be required
to provide any benefits to the Executive pursuant to this Agreement unless a
Qualifying Termination occurs before this Agreement expires in accordance with
Section 5.2 hereof. For purposes of this Agreement, a Qualifying Termination
shall occur only if
(a) a Change in Control occurs after January 1, 1998, and
(b) within two years after the Change in Control,
(i) the Company terminates the Executive's employment
other than for Cause; or
(ii) the Executive terminates his employment with the
Company for Good Reason;
provided, that a Qualifying Termination shall not occur if the Executive's
employment with the Company terminates by reason of the Executive's Disability,
death, or voluntary retirement.
Section 1.2. Change in Control. A Change in Control shall be deemed to
occur when and only when any individuals, firms, corporations or other entities
other than a Major Stockholder on the date of this Agreement, acting in concert
("Person"), together with all Affiliates and Associates of such Person, acquire
(including by purchase, exchange, merger or other business combination, or any
combination of the foregoing) beneficial ownership of securities of the Company
representing 50 percent or more of the combined voting power of the
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Company's then outstanding voting securities; provided, that no Change of
Control will be deemed to have occurred if such acquisition is in connection
with a sale by the Company or an Affiliate of its equity securities pursuant to
an effective registration statement under the Securities Act of 1933, as
amended.
For purposes of this Section 1.2, the terms "Affiliates" and "Associates" shall
have the meanings set forth in Rule 12b-2 of the General Rules and Regulations
promulgated under the Securities Exchange Act of 1934 (the Exchange Act"); the
terms "beneficial ownership" and "beneficially owned" shall have the meaning set
forth in section 13(d) of the Exchange Act, as amended, and in Rule 13d-3
promulgated thereunder, the term "Major Stockholder" shall mean the current
stockholders of the Company that are listed on Schedule 1 hereto.
Section 1.3. Termination for Cause. The Company shall have Cause to
terminate the Executive's employment with the Company for purposes of Section
l.1 hereof only if the Executive (a) engages in unlawful acts intended to result
in the substantial personal enrichment of the Executive at the Company's
expense, (b) is convicted of a crime involving moral turpitude, or (c) after
specific written notice from the Board of Directors or Chief Executive Officer
of the Company setting forth the particular duty or obligation required of the
Executive, and after a reasonable time to cure, the Executive's continued,
material failure to perform a duty or obligation reasonably required of the
Executive; provided, that such duty or obligation does not represent a material
diminution of Executive's responsibilities as they existed prior to the Change
of Control.
Section 1.4. Termination for Good Reason. The Executive shall have a
Good Reason for terminating employment with the Company only if one or more of
the following occurs in anticipation of, or after, a Change in Control:
(a) a change in the Executive's position or responsibilities with
the Company that represents a material diminution from, and is
not substantially equivalent to, the Executive's position or
responsibilities in effect immediately before the Change in
Control;
(b) transfer of the Executive to a location in excess of
twenty-five miles from Charlotte, North Carolina, without
fully compensating the Executive for all expenses related to
relocating the Executive and his family to the new location;
(c) layoff or involuntary termination of the Executive's
employment, except in connection with the termination of the
Executive's employment for Cause or as a result of the
Executive's Disability, death or voluntary retirement;
(d) a material reduction by the Company in the Executive's base
salary as in effect at the time of the Change in Control;
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(e) the failure by the Company to continue in effect any Plan in
which the Executive is participating at the time of the Change
in Control (or plans or arrangements providing the Executive
with substantially equivalent benefits) other than as a result
of the normal expiration of any such Plan in accordance with
its terms as in effect at the time of the Change in Control;
(f) any action or inaction by the Company that would adversely
affect the Executive's continued participation in any Plan on
at least as favorable a basis as was the case at the time of
the Change in Control, or that would materially reduce the
Executive's benefits in the future under the Plan or deprive
him of any material benefits that he enjoyed at the time of
the Change in Control, except to the extent that such action
or inaction by the Company is required by the terms of the
Plan as in effect immediately before the Change in Control, or
is necessary to comply with applicable law or to preserve the
qualification of the Plan under the Internal Revenue Code;
(g) the Company's failure to obtain the express assumption of this
Agreement by any successor to the Company as provided by
Section 5.4 hereof; or
(h) any material violation by the Company of any agreement
(including this Agreement) between it and the Executive.
Notwithstanding the foregoing, no action by the Company shall give rise to a
Good Reason if it results from the Executive's termination for Cause, death or
voluntary retirement, and no action by the Company specified in paragraphs (a)
through (i) above shall give rise to a Good Reason if it results from the
Executive's Disability. A Good Reason shall not be deemed to be waived solely by
reason of the Executive's continued employment as long as the termination of the
Executive's employment occurs within the time prescribed by Section 1.1(b)
hereof. For purposes of this Section 1.4, "Plan" means any compensation plan,
such as an incentive or stock option plan or incentive bonus plan, or any
employee benefit plan, such as a thrift, pension, profit-sharing, stock bonus,
long-term performance award, medical, disability, accident, or life insurance
plan, or any other plan, program or policy of the Company that is intended to
benefit employees.
Section 1.5 Disability. For purposes of this Agreement, "Disability"
shall mean illness or injury that prevents the Executive from performing the
essential functions of his duties (as they existed immediately before the
illness or injury) on a full-time basis, with or without reasonable
accommodations, for six consecutive months.
Section 1.6. Notice. If a Change in Control occurs, the Company shall
notify the Executive of the occurrence of the Change in Control within two weeks
after the Change in Control.
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II. BENEFITS AFTER A QUALIFYING TERMINATION
Section 2.1 Basic Severance Payment. If the Executive incurs a
Qualifying Termination following a Change in Control that occurs on or before
termination of this Agreement as provided in Section 5.2 hereof, the Company
shall pay within 30 days after the date of the Qualifying Termination to the
Executive a single lump sum cash amount equal to (i) two (2) times the greater
of his annual base salary in effect immediately preceding termination or
immediately preceding the Change of Control and (ii) an amount equivalent to an
incentive bonus for the two years following termination which assumes the
Company achieves the results outlined in its Annual Business Plan and based on
either the terms of the incentive plan immediately preceding the Change of
Control or immediately preceding termination, whichever gives the greater
result.
Section 2.2 Benefits and Perquisites. If the Executive incurs a
Qualifying Termination following a Change in Control that occurs on or before
termination of this Agreement as provided in Section 5.2 hereof, the Company
shall provide the Executive, at the Company's expense, for a two year period
beginning on the date of the Qualifying Termination, all benefits and
perquisites that the Executive received immediately preceding the termination or
Change in Control, whichever is higher, including, but not limited to the same
(or equivalent if such insured plans do not allow participation by former
employees) medical, accident, disability, life and any other insurance coverage
as was provided to him by the Company immediately before the Change in Control
(or, if greater, as in effect immediately before the Qualifying Termination
occurs), except that continued benefit accrual or participation under any
Company Qualified Benefit Plans, intended to qualify under Internal Revenue Code
Sections 401 and 501, shall not continue post-termination, to the extent that
such accrual or participation is not permitted under the terms of those
Qualified Benefit Plans.
Section 2.3. Nonduplication. Nothing in this Agreement shall require
the Company to make any payment or to provide any benefit or service credit that
the Company is otherwise required to provide under any other contract,
agreement, policy, plan, or arrangement.
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III. EFFECT ON SEVERANCE POLICY
Section 3.1. Effect on Severance Policy. If the Executive becomes
entitled to receive benefits hereunder, the Executive shall not be entitled to
any benefits under any other Company severance policy.
IV. TAX MATTERS
Section 4.1. Withholding. The Company may withhold from any amount
payable to the Executive hereunder all federal, state or other taxes that the
Company may reasonably determine are required to be withheld pursuant to any
applicable law or regulation.
Section 4.2. Certain Additional Payments by the Company. Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the benefit
of the Executive that is considered paid or payable or distributed or
distributable in connection with a Change in Control (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (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, being collectively the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes on
the Gross-up Payment (including, without limitation, any income taxes and Excise
Tax imposed upon the Gross-Up Payment and any interest or penalties imposed with
respect to such taxes), the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments (as determined without regard
to the Gross-Up Payment). All determinations required to be made under this
Section 4.2, including whether a Gross-Up Payment is required and the amount of
such Gross-Up Payment, shall be made by a nationally recognized independent
accounting firm selected by the Company (the "Accounting Firm") which shall
provide detailed supporting calculations to the Company and the Executive within
30 business days following the date of the Qualifying Termination, if
applicable, or such earlier time as the Company may request. All fees and
expenses of the Accounting Firm shall be borne by the Company. The Gross-Up
Payment, if any, as determined pursuant to this Section 4.2, shall be paid to
the Executive within ten days following receipt by the Company of the Accounting
Firm's determination. The Accounting Firm shall either make the determination
that a Payment is subject to the Excise Tax or it shall furnish the Executive
with an opinion that failure to report the Excise Tax on the Executive's
applicable Federal income tax return would not result in the imposition of a
negligence or similar penalty, and, in the latter case (subject to the last
sentence of this paragraph), no Gross-Up Payment shall be required. Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code, it is possible that Gross-Up Payments which will not have been made by
the Company should have been made (an "Underpayment") or that Gross-Up Payments
which have been made by the Company should not have been made (an
"Overpayment"), consistent with the calculations required to be made
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hereunder. The Accounting firm shall determine the amount of any Underpayment or
Overpayment that has occurred and (i) an amount equal to any such Underpayment
shall be promptly paid by the Company to or for the benefit of the Executive and
(ii) any amount refunded to the Executive as a result of such Overpayment shall
be promptly paid by the Executive to the Company in an amount which will result
in the Executive being made whole on an after-tax basis.
V. GENERAL PROVISIONS
Section 5.1. Nature of Payments. All payments to the Executive under
this Agreement shall be considered either payments in consideration of his
continued service to the Company or severance payments in consideration of his
past services thereto.
Section 5.2. Term of Agreement. This Agreement shall become effective
on the Commencement Date of the Employment Agreement between the Company and
Executive of even date herewith and shall continue in effect until the earliest
of (a) October 1, 2000, if no Change in Control has occurred before that date;
provided, however, that commencing on October 2, 2000 and each October 2
thereafter, the term of this Agreement shall automatically be extended for an
additional year unless, not later than June 30 of the same year, the Company
shall have given notice that it does not wish to extend this Agreement; (b) the
termination of the Executive's employment with the Company for any reason prior
to a Change in Control; (c) the Company's termination of the Executive's
employment for Cause, or the Executive's resignation for other than Good Reason,
following a Change in Control and the Company's and the Executive's fulfillment
of all of their obligations hereunder; and (d) the expiration following a Change
in Control of two years and the fulfillment by the Company and the Executive of
all of their obligations hereunder. Furthermore, nothing in this Article V shall
cause this Agreement to terminate before both the Company and the Executive have
fulfilled all of their obligations hereunder.
Section 5.3. Governing Law. Except as otherwise expressly provided
herein, this Agreement and the rights and obligations hereunder shall be
construed and enforced in accordance with the laws of the State of North
Carolina.
Section 5.4. Successor to the Company. This Agreement shall inure to
the benefit of and shall be binding upon and enforceable by the Company and any
successor thereto, including, without limitation, any corporation or
corporations acquiring directly or indirectly all or substantially all of the
business or assets of the Company, whether by merger, consolidation, sale or
otherwise, but shall not otherwise be assignable by the Company. As used in this
Agreement, "Company" shall mean the Company as heretofore defined and any
successor to all or substantially all of its business or assets that executes
and delivers the agreement provided for in this Section 5.4 or that becomes
bound by this Agreement either pursuant to this Agreement or by operation of
law.
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Section 5.5. Successor to the Executive. This Agreement shall inure to
the benefit of and shall be binding upon and enforceable by the Executive and
his personal and legal representatives, executors, administrators, heirs,
distributees, legatees and, subject to the Section 5.7 hereof, his designees
("Successors"). If the Executive should die while amounts are or may be payable
to him under this Agreement, references hereunder to the "Executive" shall,
where appropriate, be deemed to refer to his Successors; provided that nothing
in this Section 5.5 shall supersede the terms of any plan or arrangement (other
than this Agreement) that is affected by this Agreement.
Section 5.6. Nonalienability. No right of or amount payable to the
Executive under this Agreement shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, hypothecation, encumbrance,
charge, execution, attachment, levy or similar process or to setoff against any
obligations or to assignment by operation of law. Any attempt, voluntary or
involuntary, to effect any action specified in the immediately preceding
sentence shall be void. However, this Section 5.6 shall not prohibit the
Executive from designating one or more persons, on a form satisfactory to the
Company, to receive amounts payable to him under this Agreement in the event
that he should die before receiving them.
Section 5.7. Notices. All notices provided for in this Agreement shall
be in writing. Notices to the Company shall be deemed given when personally
delivered or sent by certified or registered mail or overnight delivery service
to GS Industries, Inc., 0000 Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000, Attention: Chief Executive Officer. Notices to the Executive
shall be deemed given when personally delivered or sent by certified or
registered mail or overnight delivery service to the last address for the
Executive shown on the records of the Company. Either the Company or the
Executive may, by notice to the other, designate an address other than the
foregoing for the receipt of subsequent notices.
Section 5.8. Amendment. No amendment to this Agreement shall be
effective unless in writing and signed by both the Company and the Executive.
Section 5.9. Waivers. No waiver of any provision of this Agreement
shall be valid unless approved in writing by the party giving such waiver. No
waiver of a breach under any provision of this Agreement shall be deemed to be a
waiver of such provision or any other provision of this Agreement or any
subsequent breach. No failure on the part of either the Company or the Executive
to exercise, and no delay in exercising, any right or remedy conferred by law or
this Agreement shall operate as waiver of such right or remedy, and no exercise
or waiver, in whole or in part, or any right or remedy conferred by law or
herein shall operate as a waiver of any other right or remedy.
Section 5.10. Severability. If any provision of this Agreement shall be
held invalid or unenforceable in whole or in part, such invalidity or
unenforceability shall not affect any other provision of this Agreement or part
thereof, each of which shall remain in full force and effect.
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Section 5.11. Captions. The captions to the respective articles and
sections of this Agreement are intended for convenience of reference only and
have no substantive significance.
Section 5.12. Counterparts. This Agreement may be executed in a number
of counterparts, each of which shall be deemed to be an original but all of
which together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
GS INDUSTRIES, INC.
By
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