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EXHIBIT 10.15
MANAGEMENT AGREEMENT
AGREEMENT entered into as of June 5, 1998 by and between FSI
International, Inc., a Minnesota corporation (the "Company"), and Xxxx X.
Xxxxxxxx (the "Employee").
WITNESSETH:
WHEREAS, the Employee is a key member of the management of the Company
or a Subsidiary and has devoted and/or is expected to devote substantial skill
and effort to the affairs of the Company or a Subsidiary, and the Board of
Directors of the Company desires to recognize the significant personal
contribution that the Employee has made and/or is expected to make to further
the best interests of the Company and its shareholders; and
WHEREAS, it is desirable and in the best interests of the Company and
its shareholders to obtain or maintain the benefits of the Employee's services
and attention to the affairs of the Company or a Subsidiary; and
WHEREAS, it is desirable and in the best interests of the Company and
its shareholders to provide inducement for the Employee (a) to remain in the
service of the Company or a Subsidiary in the event of any proposed or
anticipated change in control of the Company and (b) to remain in the service of
the Company or a Subsidiary in order to facilitate an orderly transition in the
event of a change in control of the Company; and
WHEREAS, it is desirable and in the best interests of the Company and
its shareholders that the Employee be in a position to make judgments and advise
the Company or a Subsidiary with respect to proposed changes in control of the
Company without regard to the possibility that Employee's employment may be
terminated without compensation in the event of certain changes in control of
the Company; and
WHEREAS, the Employee desires to be protected in the event of certain
changes in control of the Company; and
WHEREAS, for the reasons set forth above, the Company and the Employee
desire to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, the Company and the Employee agree as
follows:
1. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
A. "Accounting Firm" shall have the meaning set forth in Paragraph
4(B).
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B. "Base Annual Salary" shall mean the highest annual rate of the
Employee's base salary with whichever of the Company and one or
more of its Subsidiaries that shall have employed the Employee in
effect at any time during the period commencing as of twelve months
prior to the First Event and ending on the date of termination of
the Employee's employment with the Company and its Subsidiaries
(without reduction for any salary reduction or other deferral
contribution to any employee benefit plan sponsored by the Company
or any Subsidiary).
C. "Board" shall mean the Board of Directors of the Company
D. "Cause" shall mean and be limited to, (i) willful and gross neglect
of duties by the Employee or (ii) an act or acts committed by the
Employee constituting a felony under United States federal or
applicable state law and substantially detrimental to the Company
or any Subsidiary or the reputation of the Company or any
Subsidiary, following a determination to that effect by a
resolution duly adopted by the affirmative vote of not less than
two-thirds of the entire membership of the Board at a meeting
thereof called and held for such purpose (after reasonable notice
is provided to the Employee and the Employee is given an
opportunity to be heard before the Board) finding that in the good
faith opinion of the Board the Employee is guilty of the conduct
described above in (i) or (ii).
E. "Code" shall mean the Internal Revenue Code of 1986, as amended,
and any successor statute thereto.
F. "Commencement Date" shall mean the earliest to occur of an Event
described in clause (J)(i), (ii) or (iii) of this Paragraph 1.
G. "Company" shall mean the Company as defined in the first sentence
of this Agreement and any successor to its business and/or assets
which is required to execute and deliver the agreement provided for
in Paragraph 6(B) or which otherwise becomes bound by operation of
law to all the terms and provisions of this Agreement.
H. "Constructive Involuntary Termination" shall mean a termination of
employment with the Company and its Subsidiaries by the Employee at
any time from the date of the First Event until the end of the
Transition Period, if after the First Event and at or prior to the
time of such termination:
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(i) the Employee is assigned duties materially inconsistent with
the Employee's authorities, duties, responsibilities and
status (including office, title and reporting requirements)
as an employee of the Company, there is a reduction or
alteration in the nature or status of the Employee's title,
authorities, duties, assignments or responsibilities as
compared with the Employee's title, authorities, duties,
assignments and responsibilities immediately prior to the
First Event, other than a termination for Cause or on account
of Disability;
(ii) the Company or any Subsidiary shall have failed to continue
in effect the Employee's base salary at an equivalent or
greater level, as compared to immediately prior to the First
Event other than a termination for Cause or on account of
Disability or shall have failed to pay the Employee any
amounts due thereunder;
(iii) there is a material reduction in the Employee's level of
participation in any of the Company's short- and/or long-term
incentive compensation plans, or employee benefit or
retirement plans, policies, practices, arrangements,
perquisites or fringe benefits in which the Employee
participates from the levels in place immediately prior to
the First Event, other than a Termination for Cause on
account of Disability; provided, however, that reductions in
the levels of participation in any such plans, policies,
practices, arrangements, perquisites or fringe benefits shall
not be deemed to be a Constructive Involuntary Termination if
the Employee's reduced level of participation in each such
program remains substantially consistent with the average
level of participation of other executives who have positions
commensurate with the Employee's position;
(iv) the Company shall have failed to obtain assumption of this
Agreement by any successor as contemplated by Paragraph 6(B)
hereof;
(v) The Company or any Subsidiary shall fail to reimburse the
Employee for reasonable business expenses and such failure
shall have continued for at least seven days after notice in
accordance with Paragraph 8 hereof of such failure is given
by the Employee to the Company or the Subsidiary, as the case
may be;
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(vi) the Company or any Subsidiary shall require the Employee
to relocate to any place other than a location within
twenty-five miles of the location at which the Employee
performed substantially all of his duties immediately
prior to the First Event or, if the Employee performed
such duties at the Company's or a Subsidiary's principal
executive offices, the Company or such Subsidiary shall
relocate its principal executive offices to any location
other than a location within twenty-five miles of the
location of the principal executive offices of the
Company or the Subsidiary, as the case may be,
immediately prior to the First Event; or
(vii) the Company or a Subsidiary shall require that the
Employee travel on Company business to a substantially
greater extent than required immediately prior to the
First Event.
I. "Disability" shall mean the Employee's absence from his duties
with the Company and its Subsidiaries on a full time basis for
180 consecutive business days, as a result of the Employee's
incapacity due to physical or mental illness, unless within 30
days after written notice pursuant to Paragraph 8 is given
following such absence, the Employee shall have returned to the
full time performance of his duties.
J. "Event" shall mean the occurrence of any one or more of the
following:
(i) less than a majority of the Board shall consist of members of
the Incumbent Board;
(ii) 30% or more of the then Outstanding Company Common Stock or the
combined voting power of the then Outstanding Company Voting
Securities of the Company is acquired or beneficially owned (as
defined in Exchange Act Rule 13d-3) by any person or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act), provided, however, that the following
acquisitions and beneficial ownership shall not constitute
Events pursuant to this clause (ii):
(a) any acquisition or beneficial ownership by the
Company or a Subsidiary of the Company,
(b) any acquisition or beneficial ownership by any employee
benefit plan (or related trust) sponsored or maintained
by the Company or one or more of its Subsidiaries,
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(c) any acquisition or beneficial ownership by the
Employee or any group that includes the Employee, or
(d) any acquisition or beneficial ownership by any
corporation (including without limitation an acquisition
of the nature described in clause (J)(iii) of this
Paragraph 1) with respect to which, immediately
following such acquisition, more than 70% of,
respectively, the then outstanding shares of common
stock of such corporation and the combined voting power
of the then outstanding voting securities of such
corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the persons
who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and the Outstanding
Company Voting Securities immediately prior to such
acquisition in substantially the same proportions as
their ownership, immediately prior to such acquisition,
of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may
be;
(iii) The shareholders of the Company approve a definitive agreement
or plan to
(a) merge, consolidate or reorganize the Company (other than
(1) a merger or consolidation with a Subsidiary of the
Company or (2) a merger, consolidation or reorganization
in which all or substantially all of the persons who
were the beneficial owners, respectively, of the
Outstanding Company Common Stock and the Outstanding
Voting Company Securities immediately prior to such
merger, consolidation or reorganization beneficially
own, directly or indirectly, immediately after the
merger, consolidation or reorganization, more than 70%
of, respectively, the then outstanding shares of common
stock and the combined voting power of the then
outstanding voting securities of such corporation
entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from
the merger, consolidation or reorganization or its
parent corporation, in substantially the same
proportions as their ownership immediately prior to such
merger, consolidation or reorganization of the
Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be);
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(b) exchange, pursuant to a statutory exchange, Outstanding
Company Common Stock or Outstanding Company Voting
Securities held by shareholders of the Company
immediately prior to the exchange for cash, securities
or other property, unless all or substantially all of
the persons who were the beneficial owners,
respectively, of the Outstanding Company Common Stock
and the Outstanding Company Voting Securities
immediately prior to such statutory exchange
beneficially own, directly or indirectly, immediately
after the statutory exchange, more than 70% of,
respectively, the then outstanding shares of common
stock and the combined voting power of the then
outstanding voting securities of the parent corporation
of the Company entitled to vote generally in the
election of directors, in substantially the same
proportions as their ownership, immediately prior to the
statutory exchange, of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities, as
the case may be; or
(c) (x) completely liquidate or dissolve the Company or (y)
sell or otherwise dispose of all or substantially all of
the assets of the Company (in one or a series of
transactions), other than to a corporation with respect
to which, immediately following such sale or other
disposition, more than 70% of, respectively, the then
outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote
generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the persons who were the beneficial
owners, respectively, of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportions as their ownership,
immediately prior to such sale or other disposition, of
the Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be.
unless at least 30% of the common stock (or the combined voting power
of the voting securities entitled to vote generally in the election of
directors or voting equity interests) of the surviving corporation or
its parent corporation or of any corporation (or other entity)
acquiring all or substantially all of the assets of the Company (in the
case of a merger, consolidation, reorganization or disposition of
assets) or the Company or its parent corporation (in the case of a
statutory exchange) is, immediately following the merger,
consolidation, reorganization,
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statutory exchange or disposition of assets, beneficially owned,
directly or indirectly, by the Employee or a group of individuals
and/or entities, including the Employee, acting in concert, or
(iv) (a) the Company enters into a letter of intent, an agreement
in principle or a definitive agreement relating to an
Event described in clause (i), (ii) or (iii) above which
ultimately results in such an Event described in clause
(i), (ii) or (iii) hereof,
(b) a tender or exchange offer or proxy contest is commenced
which ultimately results in an Event described in clause
(i), (ii) or (iii) hereof, or
(c) there shall be an involuntary termination of the
employment with the Company and its Subsidiaries of the
Employee or any of the events which constitute a
Constructive Involuntary Termination of employment of
the Employee has occurred, and the Employee reasonably
demonstrates that such event (x) was requested by a
party other than the Board that has previously taken
other steps reasonably calculated to result in an Event
described in clause (i), (ii) or (iii) above and which
ultimately results in an Event described in clause (i),
(ii) or (iii) hereof or (y) otherwise arose in
connection with or in anticipation of an Event described
in clause (i), (ii) or (iii) above that ultimately
occurs.
K. "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
L. "First Event" shall mean the first Event to occur.
M. "Excise Tax" shall have the meaning set forth in Paragraph 4.
N. "Gross-up Payment" shall have the meaning set forth in
Paragraph 4 and "Payment," as used in Paragraph 4, shall have
the meaning set forth in Paragraph 4.
O. "Incumbent Board" shall mean individuals who were either
members of the Board as of the date of this Agreement or whose
election or nomination for election by the Company's
shareholders was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or
threatened election contest which
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was (or, if threatened, would have been) subject to Rule 14a-11
of the Exchange Act.
P. "Outstanding Company Common Stock" shall mean the then
outstanding shares of common stock of the Company.
Q. "Outstanding Company Voting Securities" shall mean the then
outstanding securities of the Company entitled to vote
generally in the election of the Board.
R. "person" shall mean an individual, partnership, corporation,
limited liability company, estate, trust or other entity.
S. "Subsidiary" shall mean a corporation, a majority of the
outstanding voting power of the outstanding securities entitled
to vote generally in an election of directors of such
corporation is beneficially owned directly or indirectly by the
Company.
T. "Term" shall have the meaning set forth in Paragraph 14 hereof.
U. "Transition Period" shall mean the two-year period commencing
on the Commencement Date and ending on the second anniversary
of the Commencement Date.
V. "Underpayment" shall have the meaning set forth in Paragraph 4.
2. Employment. The Employee shall remain in the employ of the
Company or a Subsidiary for the Term of this Agreement, and during the Term the
Employee shall have such title, duties, responsibilities, assignments and
authority, and receive such remuneration and fringe benefits, as the Board or
its committees or the board of directors or a committee of the Subsidiary shall
from time to time provide for the Employee; provided, however, that either the
Employee or the Company or a Subsidiary may terminate the employment of the
Employee at any time prior to the expiration of the Term, with or without Cause
and for any reason whatever, subject to the right of the Employee to receive any
payment and other benefits that may be due pursuant to the terms and conditions
of Paragraph 3 of this Agreement (subject to Paragraph 5 of this Agreement) or,
except as provided in Paragraph 3(B), the terms of any other written employment
agreement relating to the employment of Employee by the Company or any
Subsidiary.
3. Rights to Payments Following An Event. If any Event shall occur
during the Term of this Agreement, then the Employee shall be entitled to
receive from the Company cash payments and other benefits on the following basis
(unless the Employee's employment by the
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Company and its Subsidiaries is terminated voluntarily or involuntarily prior to
the First Event, in which case the Employee shall be entitled to no payment or
benefits under this Paragraph 3):
(A) If at the time of, or at any time after, the occurrence of the
First Event and prior to the end of the Transition Period, the
employment of the Employee with the Company and its Subsidiaries
is voluntarily or involuntarily terminated for any reason (unless
such termination is a voluntary termination by the Employee other
than a Constructive Involuntary Termination, is on account of the
death or Disability of the Employee, or is a termination by the
Company or a Subsidiary for Cause), the Employee (or the
Employee's legal representative, as the case may be) shall be
entitled to receive from the Company,
(i) (a) in the event of an involuntary termination, at least 30
days prior written notice of termination and compensation
at the Employee's regular rate of compensation for the
30-day period following receipt of notice of termination of
employment without regard to whether Employee is required
to perform services during such period and (b) a lump sum
cash payment in an amount equal to (x) two times the Base
Annual Salary, plus (y) in lieu of any incentive cash bonus
for any fiscal year or fiscal period of the Company or any
Subsidiary that shall not have ended prior to the
termination of employment of the Employee or has not
commenced as of the date of termination of employment of
the Employee, a lump sum cash payment in an amount equal to
80% of Base Annual Salary;
(ii) in lieu of any further right to participate in any health,
dental, disability or life insurance plan or program in
which the Employee would otherwise be entitled to
participate (except, (a) to the extent required by law or
(b) with respect to life insurance coverage, for any
coverage pursuant to a split dollar insurance agreement
between the Employee and the Company, which split dollar
insurance agreement contains separate provisions applicable
upon termination of employment), a lump sum cash payment of
$18,000;
(iii) in lieu of any other perquisites, including without
limitation fees for professional outplacement services,
secretarial support, office space or car leases, a lump sum
cash payment of $35,000; and
(iv) in lieu of any retirement contributions by the Company or
any Subsidiary under the FSI Pension Plan for the year in
which such termination occurs and for any future years, a
lump sum cash
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payment equal to 8% of the Employee's Base Annual Salary
unless such amount exceeds the cap on Certified Earnings
(as defined in the FSI Pension Plan) contained in the FSI
Pension Plan, in which case the cap amount will be used.
(B) The payments provided for in this Paragraph 3 shall be in
addition to any salary or other remuneration otherwise payable to
the Employee on account of employment by the Company or one or
more of its Subsidiaries (including any amounts received prior to
such termination of employment for personal services rendered
after the occurrence of the First Event) but shall be reduced by
any severance pay which the Employee receives from the Company or
its Subsidiaries under any other policy or agreement of the
Company or its Subsidiaries in the event of involuntary
termination of the Employee's employment.
(C) The Company also shall reimburse the Employee for all previously
unreimbursed reasonable business expenses incurred by the
Employee on or prior to such termination. In addition, the
Company shall promptly pay to the Employee, as incurred, all
reasonable legal fees and expenses incurred by the Employee as a
result of such termination, including, but not limited to, all
such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement; provided,
however, that the Company may recover such legal fees and
expenses of the Employee if it is finally judicially determined
in such proceeding that the Employee pursued such claim or claims
in bad faith (but in no event shall the Employee be responsible
for any legal fees and expenses of the Company).
(D) 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 set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company or any
Subsidiary may have against the Employee or others.
(E) The Employee shall not be required to mitigate the amount of any
payment or other benefit provided for in Paragraph 3 by seeking
other employment or otherwise, nor shall the amount of any
payment or other benefit provided for in Paragraph 3 be reduced
by any compensation earned by the Employee as the result of
employment by another employer after termination, or otherwise.
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(F) The obligations of the Company under this Paragraph 3 shall survive
the termination of this Agreement and shall be paid in full within
ten business days after the Employee's termination of employment
with the Company and its Subsidiaries.
4. Certain Additional Payment by the Company.
(A) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that Paragraph 5 does not apply and
that any payment or distribution by the Company or any Subsidiary
to or for the benefit of the Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement, any stock option, restricted stock agreement or
otherwise, but determined without regard to any additional payments
required under this Paragraph 4) (a "Payment") would be subject to
the excise tax imposed by Section 4999 of the Code or any interest
or penalties are incurred by the Employee 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 Employee shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment
by the Employee of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Employee retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payment.
(B) Subject to the provisions of Paragraph 4(C), all determinations
required to be made under this Paragraph 4, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by KPMG Peat Marwick LLP ("KPMG") or
such other nationally recognized certified public accounting firm
as may be designated by the Employee and reasonably acceptable to
the Company if KPMG is unable to render such services (the
"Accounting Firm"), which Accounting Firm shall provide detailed
supporting calculations both to the Company and the Employee within
15 business days of the receipt by the Accounting Firm of notice
from the Employee that there has been a Payment, or such earlier
time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the person
effecting the Event, the Employee shall appoint another nationally
recognized accounting firm reasonably acceptable to the Company to
make the determinations required hereunder (which accounting firm
shall then be referred to as the
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Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment,
as determined pursuant to this Paragraph 4, shall be paid by the
Company to the Employee within ten business days of the receipt of
the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Employee, it shall
furnish the Employee with a written opinion that failure to report
the Excise Tax on the Employee's applicable federal income tax
return would not result in the imposition of the negligence or
similar penalty. Any determination by the Accounting Firm shall be
binding upon the Company and the Employee. As result of the
uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder,
it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Paragraph 4(C)
and the Employee thereafter is required to make a payment of an
Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment together
with all penalties and interest related thereto shall be promptly
paid by the Company to or for the benefit of the Employee.
(C) The Employee shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than ten
business days after the Employee is informed in writing of such
claim (provided that any delay in so informing the Company within
such ten business day period shall not affect the obligations of
the Company under this Paragraph 4 except to the extent that such
delay materially and adversely affects the Company) and shall
apprise the Company of the nature of such claim and the date on
which such claim is required to be paid. The Employee shall not pay
such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Employee
in writing prior to the expiration of such period that it desires
to contest such claim, the Employee shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to
time,
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including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected
by the Company,
(iii) cooperate with the Company in good faith in order to
effectively contest such claim, and
(iv) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and
hold the Employee harmless, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of
costs and expenses including reasonable attorneys' fees. Without
limitation on the foregoing provisions of this Paragraph 4(C), the
Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with
the taxing authority in respect of such claim and may, at its sole
option, either direct the Employee to pay the tax claimed and xxx
for a refund or contest the claim in any permissible manner, and
the Employee agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company
shall determine; provided, however, that if the Company directs the
Employee to pay such claim and xxx for a refund, the Company shall
advance the amount of such payment to the Employee, on an
interest-free basis, and shall indemnify and hold the Employee
harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the
taxable year of the Employee with respect to which such contested
amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
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(D) If, after the receipt by the Employee of an amount advanced by the
Company pursuant to Paragraph 4(C), the Employee becomes entitled
to receive any refund with respect to such claim, the Employee
shall (subject to the Company's complying with the requirements of
Paragraph 4(C)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Employee of
an amount advanced by the Company pursuant to Paragraph 4(C), a
determination is made that the Employee shall not be entitled to
any refund with respect to such claim and the Company does not
notify the Employee in writing of its intent to contest such denial
of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to
be paid.
5. Possible Payment Reduction. Notwithstanding any provision to the
contrary contained herein except the last sentence of this Paragraph 5, if the
lump sum cash payments due and the other benefits to which the Employee shall
become entitled under Paragraph 3 hereof, either alone or together with other
payments in the nature of compensation to the Employee which are contingent on a
change in the ownership or effective control of the Company or in the ownership
of a substantial portion of the assets of the Company or otherwise, would equal
or exceed, by less than $25,000, three times the Employee's "base amount" as
defined in Section 280G of the Code or any successor provision thereto, then in
such case such lump sum payment and/or such other benefits and payments shall be
reduced to the largest aggregate amount as will result in no portion thereof
being subject to the excise tax imposed under Section 4999 of the Code (or any
successor provision thereto) or being non-deductible to the Company for federal
income tax purposes pursuant to Section 280G of the Code (or any successor
provision thereto). The Employee in good faith shall determine the amount of any
reduction to be made pursuant to this Paragraph 5 and shall select from among
the foregoing benefits and payments those which shall be reduced. No
modification of, or successor provision to, Section 280G or Section 4999
subsequent to the date of this Agreement shall, however, reduce the benefits to
which the Employee would be entitled under this Agreement in the absence of this
Section 5 to a greater extent than they would have been reduced if Section 280G
and Section 4999 had not been modified or superseded subsequent to the date of
this Agreement, notwithstanding anything to the contrary provided in the first
sentence of this Paragraph 5.
6. Successors and Assigns.
(A) This Agreement shall be binding upon and inure to the benefit of
the successors, legal representatives and assigns of the parties
hereto; provided, however, that the Employee shall not have any right
to assign, pledge or otherwise dispose of or
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transfer any interest in this Agreement or any payments
hereunder, whether directly or indirectly or in whole or in part,
without the written consent of the Company.
(B) The Company will require any successor (whether direct or indirect,
by purchase of a majority of the Outstanding Company Voting
Securities or all or substantially all of the assets of the
Company, or by merger, consolidation, reorganization or otherwise),
by agreement in form and substance satisfactory to the Employee, to
assume expressly 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 had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any
such succession (other than in the case of a merger or
consolidation) shall be a breach of this Agreement and shall
entitle the Employee to compensation from the Company in the same
amount and on the same terms as the Employee would be entitled
hereunder if the Employee terminated his employment on account of a
Constructive Involuntary Termination, except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the date of termination.
7. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Minnesota without regard to conflict
of laws principles.
8. Notices. All notices, requests and demands given to or made
pursuant hereto shall be in writing and shall be delivered or mailed to any such
party at its address which:
(A) In the case of the Company shall be:
FSI International, Inc.
000 Xxxx Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
(B) In the case of the Employee shall be:
Xxxx X. Xxxxxxxx
FSI International, Inc.
000 Xxxx Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxx 00000
Either party may, by notice hereunder, designate a changed address. Any notice,
if mailed properly addressed, postage prepaid, registered or certified mail,
shall be deemed to have been given on the registered date or that date stamped
on the certified mail receipt.
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9. Severability; Severance. In the event that any portion of this
Agreement is held to be invalid or unenforceable for any reason, it is hereby
agreed that such invalidity or unenforceability shall not affect the other
portions of this Agreement and that the remaining covenants, terms and
conditions or portions hereof shall remain in full force and effect, and any
court of competent jurisdiction may so modify the objectionable provision as to
make it valid, reasonable and enforceable.
10. Employment Tax Withholding. The Company may withhold from any
compensation or benefits payable under this Agreement all federal, state, city
or other income and employment taxes that are required to be withheld pursuant
to any law or governmental regulation or ruling.
11. Non-Disposition of Payments. Employee may not encumber or
dispose of any payment under this Agreement, which payments and the rights to
such payments are expressly declared nonassignable or nontransferable, except as
otherwise specifically provided in this Agreement.
12. Titles. The titles and headings preceding the text of the
Paragraphs of this Agreement have been inserted solely for convenience of
reference and do not constitute a part of this Agreement or affect its meaning,
interpretation or effect.
13. Waiver. No provision hereof may be altered, amended, modified
or waived in any way whatsoever, except by written agreement executed by both
the Company and the Employee. The failure of either party to insist in any one
or more instances upon performance of any terms or conditions of this Agreement
will not be construed as a waiver of future performance of any such term,
covenant, or condition and the obligations of either party with respect to such
term, covenant or condition will continue in full force and effect.
14. Term. This Agreement shall commence on the date of this
Agreement and shall terminate, and the Term of this Agreement shall end, on the
later of (A) December 31, 2000, provided that such period shall be automatically
extended for one year and from year to year thereafter until notice of
termination is given by the Employer or the Employee to the other party hereto
at least 90 days prior to December 31, 2000 or the one-year extension period
then in effect, as the case may be, or (B) if the Commencement Date occurs on or
prior to December 31, 2000 (or prior to the end of the extension year then in
effect as provided for in clause (A) hereof), the second anniversary of the
Commencement Date.
15. Termination of Employment with the Company and its
Subsidiaries. References in this Agreement to "termination of employment with
the Company and its Subsidiaries" or words of similar import mean that the
employment of the Employee with whichever of the Company and one or more of the
Subsidiaries that shall have employed the Employee immediately prior to the
termination shall have been terminated.
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16. Superseded Agreement. This Agreement supersedes in all
respects the Management Agreement between the Employee and the Company dated as
March 28, 1994, (the "Superseded Change in Control Agreement"), which Superseded
Change in Control Agreement is hereby terminated and shall be of no further
force.
17. Indemnification. All rights to indemnification, expense
advancement and exculpation existing in favor of the Employee at the time of the
occurrence of the First Event as provided in the Articles of Incorporation or
Bylaws of the Company or any Subsidiaries or by law shall continue until the end
of the Transition Period.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
FSI International, Inc.
By /s/ Benno Sand
_______________________________
/s/ X.X. Xxxxxxxx Its CAO
_________________________ _______________________________
Xxxx X. Xxxxxxxx
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