Exhibit 10.14
SEVERANCE AGREEMENT
AGREEMENT dated as of the 14th day of March, 1999 between
Insituform Technologies, Inc., a Delaware corporation (the
"Company"), and Xxxxxx X. Xxxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has determined
that it is in the best interests of the Company and its
stockholders to assure that the Company shall have the continued
dedication of the Executive, and, accordingly, to extend to the
Executive the arrangements hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereby agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following capitalized terms
shall have the meanings set forth below:
(a) The term "1997 Agreement" shall mean the Severance
Agreement dated June 19, 1997 between the Executive and the
Company.
(b) The term "Change in Control" shall mean:
(i) the acquisition by any "person" or "group" (as
defined pursuant to Section 13(d) under the Securities
Exchange Act of 1934) of "beneficial ownership" (as
defined in Rule 13d-3 under said Act) of in excess of 50%
of the combined voting power of the outstanding Voting
Securities of the Company; and/or
(ii) the replacement of 50% or more of the members
of the Company's Board of Directors (excluding, for
purposes of such calculation, the Chairman of the Board)
over a one year period from the directors who constituted
such Board at the beginning of such period, where such
replacement shall not have been approved by a vote
including at least a majority of the directors who were
members of the Board at the beginning of such one-year
period or whose election as members of the Board was
previously so approved; and/or
(iii) consummation of a merger, statutory share
exchange or consolidation involving the Company or sale
or other disposition of all or substantially all of the
assets of the Company, unless following such transaction:
(x) all or substantially all of the individuals and
entities who were the "beneficial owners" (as hereinabove
defined), respectively, of the outstanding Voting
Securities immediately prior to such transaction
"beneficially owned", directly or indirectly, more than
50% of the combined voting power of the then outstanding
Voting Securities of the corporation resulting from such
transaction in substantially the same proportion as their
ownership immediately prior to such transaction of the
outstanding Voting Securities of the Company, (y) no
"person" or "group" (as hereinabove defined)
"beneficially owns", directly or indirectly, 20% or more
of the combined voting power of the then outstanding
Voting Securities of such corporation except to the
extent that such ownership existed prior to such
transaction and (z) at least a majority of the members of
the board of directors resulting from such transaction
were members of the Company's Board of Directors
immediately prior to such transaction or were nominated
by at least a majority of the members of the Company's
Board of Directors at the time of the execution of the
initial agreement for such transaction, or by the action
of the Company's Board of Directors providing for such
transaction; and/or
(iv) approval by the stockholder of the Company of
a complete liquidation or dissolution of the Company.
(c) The term "Excise Tax" shall have the meaning set
forth under Paragraph A of Article III hereof.
(d) The term "good reason" shall mean (1) the assignment
to the Executive by the Company of duties inconsistent with
the position of Vice President and General Counsel of the
Company (including status, offices, titles and reporting
requirements), or any authority, duties or responsibilities
not at least commensurate in all material respects with the
most significant of those exercised or assigned to the
Executive during the 120-day period prior to the date hereof;
or (2) any other action by the Company which results in a
diminution in such position, authority, duties or
responsibilities (excluding any isolated, insubstantial and
inadvertent action by the Company not taken in bad faith and
which is remedied by the Company promptly after receipt of
notice thereof from the Executive); or (3) the Company's
requiring the Executive to be based at any office or location
other than in metropolitan St. Louis or to travel on Company
business during an extended period to a substantially greater
extent than required during the Executive's employment with
the Company and its Affiliates prior to the date hereof; or
(4) subject to reasonable assessment by the Company of the
performance of the Executive, adjustments in the base salary
of the Executive or determination of achievement of bonus
entitlement or calculation of stock option grants, in each
case not at least substantially commensurate with the
treatment by the Company with respect to other peer executives
of the Company and its Affiliates (hereinafter referred to as
the "Peer Group").
(e) The term "Gross-Up Payment shall have the meaning
set forth under Paragraph A of Article III hereof.
(f) The term "Other Plans" shall have the meaning set
forth in paragraph B of Article II hereof.
(g) The term "Payments" shall mean any payment or
distribution by the Company to or for the benefit of the
Executive pursuant to the terms of this Agreement (but
determined without regard to any additional payments required
under Article III hereof).
(h) The term "Peer Group" shall have the meaning set
forth in Paragraph (d) of this Article I.
(i) The term "Severance Amount" shall mean the lump-sum
cash payment set forth under Paragraph (b)(i) of Article II of
the 1997 Agreement, it being understood and agreed, however,
that, for purposes of the calculation of "Annual Base Salary"
and "Annual Bonus" thereunder, the "Date of Termination"
thereunder shall be deemed to be November 6, 1998 and the
reference under said Paragraph (b)(i) to the "current fiscal
year" shall be deemed to refer to "1998".
(j) The term "Supplemental Letters" shall mean the
notice dated October 9, 1998 delivered by the Executive to the
Company under the 1997 Agreement, and the letter agreements
dated, respectively, November 6 and December 18, 1998 between
the Executive and the Company supplementing the 1997
Agreement.
(k) The term "Voting Securities" shall mean the voting
securities of the subject referenced entitled to vote
generally in the election of directors.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned and ascribed to them in the 1997
Agreement.
ARTICLE II
SEVERANCE BENEFITS
A. The Executive shall be entitled to payment by or on behalf
of the Company of the Severance Amount in the following
circumstances:
(i) with 30 days after (x) termination by the Company of
the Executive's employment for any reason, or (y) the
Executive's death, or (z) the Executive's disability (defined
as his inability to report for work for a period of four
months or longer);
(ii) within six months after termination by the Executive
of his employment for "good reason";
(iii) within 30 days after termination by the Executive
of his employment during the 30-day period immediately
following the first anniversary of any Change in Control; or
(iv) in the event of termination by the Executive of his
employment other than for "good reason" or pursuant to clause
(iii) immediately preceding, at the later of (x) December 31,
2002 or (y) on or prior to any June 30 or December 31
following no less than six months' prior written notice by the
Executive to the Company that such payment is due;
it being acknowledged and agreed that the Executive's entitlement
to the Severance Amount arising from any termination of employment
as aforesaid shall survive any disability (or death), or any other
event subsequent to termination.
B. For three years after the termination of the Executive's
employment for any reason, or such longer period as may be provided
by the terms of the appropriate plan, program, practice or policy,
the Company shall continue benefits to the Executive and/or the
Executive's family at least equal to all those which would have
been provided to them under the Welfare Benefit Plans and the car
allowance and other plans, programs or arrangements applicable to
Company employees generally or to the Peer Group specifically (such
car allowance and other plans, programs and arrangements herein
referred to, collectively, as "Other Plans") in effect at November
6, 1998, as if the Executive's employment had not been terminated
or, if more favorable to the Executive, the benefits available
under the Welfare Benefit Plans, Other Plans or new plans, programs
or arrangements, as in effect generally at any time thereafter with
respect to other employees of the Company generally or the Peer
Group specifically and their families, provided, however, that if
and to the extent the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare
benefits under another employer provided plan, the medical and
other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of
eligibility; provided, further, that if and to the extent the
Executive is eligible to receive medical or other welfare benefits
under any retirement plan provided by Monsanto Company, or any
successor thereto, the medical and other welfare benefits described
herein shall be secondary to those provided under such other plan
during such applicable period of eligibility (subject to
reimbursement by the Company to the Executive of his premium under
such other plan). For purposes of determining eligibility (but not
the time of commencement of benefits) of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies,
the Executive shall be considered to have remained employed until
three years after the termination of his employment and to have
retired on the last day of such period.
C. In the event the Executive's employment shall terminate
for any reason, to the extent not theretofore paid or provided the
Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the
Executive is eligible to receive under any plan, program, policy or
practice or contract or agreement of the Company and its affiliated
companies.
ARTICLE III
CERTAIN ADDITIONAL PAYMENTS
A. Except as set forth below, in the event it shall be
determined that any Payments would be subject to any excise tax
imposed by Section 4999 of the Code, and any interest or penalties
incurred by you with respect to such excise tax (herein referred
to, collectively, as the "Excise Tax"), then you shall be entitled
to receive an additional payment (herein referred to as a "Gross-Up
Payment") in an amount such that after payment by you of all 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, you retain an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Paragraph A, if it
shall be determined that you are entitled to a Gross-Up Payment,
but that the Payments do not exceed 110% of the greatest amount
that could be paid to you such that the receipt of Payments would
not give rise to any Excise Tax, then no Gross-Up Payment shall be
made to you and the Payments, in the aggregate, shall be reduced to
such greatest amount.
B. All determinations required to be made under this Article
III shall be made by the Company's independent auditors, who shall
provide detailed supporting calculations both to the Company and
you within 15 business days of the receipt of notice from you that
there has been a Payment, or such earlier time as is requested by
the Company. All fees and expenses of the accounting firm acting
hereunder shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Article III, shall be paid
by the Company to you within five days of the receipt of the
accounting firm's determination.
C. The Executive shall promptly 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. If the Company notifies the Executive in writing
prior to the expiration of 30 days after receipt of such notice
that it desires to contest such claim, the Executive shall: (A)
give the Company any information reasonably requested by the
Company relating to such claim, and (B) take such action in
connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company, 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. Without limitation on the foregoing
provisions of this Article III, the Company shall control all
proceedings taken in connection with such contest.
ARTICLE IV
NOTICE OF TERMINATION
Any termination by the Executive of his employment for other
than "good reason" shall be subject to no less than six months'
prior written notice of termination delivered by the Executive to
the Company.
ARTICLE V
MISCELLANEOUS
A. All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
000 Xxxxx Xxxxx Xxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
If to the Company:
702 Spirit 00 Xxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: President
With a copy to:
Krugman & Kailes LLP
Park 00 Xxxx - Xxxxx Xxx
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxx, Esq.
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
B. This Agreement shall contain the entire agreement of the
parties with respect to the transactions contemplated hereby.
Without limiting the generality of the foregoing (and except to the
extent certain provisions of the 1997 Agreement are referenced
hereunder), the terms hereof supersede in all respects: (i) the
letter agreement dated February 23, 1996 between the parties
hereto, (ii) the 1997 Agreement, and (iii) the Supplemental
Letters, which are hereby terminated and shall have no further
force or effect.
C. (i) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the benefit
of and be enforceable by the Executive's legal representatives.
(ii) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(iii) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or other-
wise) to all or substantially all of the business and/or assets of
the Company 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. As
used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
D. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no
force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties
hereto or their respective successors and legal representatives.
E. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
F. The Company may withhold from any amounts payable under
this Agreement such federal, state, local or foreign taxes as shall
be required to be withheld pursuant to any applicable law or
regulation.
G. The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement the failure
to assert any right the Executive or the Company may have
hereunder, including, without limitation, the right of the
Executive to terminate employment for "good reason", shall not be
deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
H. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board
of Directors, the Company has caused these presents to be executed
in its name on its behalf, all as of the day and year first above
written.
Executive:
s/Xxxxxx X. Xxxxxx
----------------------------------
Xxxxxx X. Xxxxxx
Insituform Technologies, Inc.
By s/Xxxxxxx X. Xxxxxx
--------------------------------
President
HAND DELIVERY
October 9, 1998
Insituform Technologies, Inc.
702 Spirit 00 Xxxx xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Chairman,
President & CEO
Gentlemen:
Reference is hereby made to the Severance Agreement dated June 19,
1997 (the "Agreement") between Insituform Technologies, Inc. (the
"Company") and the undersigned. Capitalized terms utilized herein
and not otherwise defined herein shall have the respective meanings
ascribed to them in the Agreement.
This letter shall constitute a Notice of Termination pursuant to
the Agreement, notifying the Company of the termination by the
undersigned of his employment with the Company and its Affiliates
for Good Reason. In accordance with the Agreement, the undersigned
hereby advises the Company as follows:
(a) Paragraph (p) of Article I of the Agreement provides that a
"termination by the Executive for any reason during the 30-
day period immediately following the first anniversary of the
Effective Date ... shall be deemed to be a termination for
Good Reason for all purposes of this Agreement."
(b) The Effective Date occurred on October 8, 1997, as a result of
a Change of Control described in paragraph (g)(i) of Article
I of the Agreement, upon the election the Board of at least
two members other than pursuant to the circumstances described
under clauses (x) or (y) of said paragraph and, in particular,
pursuant to the circumstances described in the Company's proxy
statement dated August 25, 1997. Accordingly, the termination
to which this Notice of Termination relates shall be deemed a
termination for Good Reason.
(c) The Date of Termination shall be November 6, 1998 (which is
not later than 30 days after the first anniversary of the
Effective Date).
This Notice of Termination may be withdrawn by the undersigned in
the event that the Company and the undersigned reach a mutually
satisfactory new agreement on or before November 6, 1998, in which
event this letter and Notice of termination hereunder shall have no
further effect.
Please acknowledge your receipt of this letter and the Notice of
Termination herein by countersigning the enclosed copy of this
letter in the space provided below and returning the copy to the
undersigned.
Your acknowledgement also constitutes confirmation that the address
of the Company for purposes of notices and other communications as
set out in paragraph (a) of Article IV of the Agreement is amended
to read as set out at the head of this letter.
Very truly yours,
s/Xxxxxx X. Xxxxxx
----------------------------
Xxxxxx X. Xxxxxx
RECEIPT ACKNOWLEDGED
INSITUFORM TECHNOLOGIES, INC.
By: s/Xxxxxxx X. Xxxxxx
-------------------------
November 6, 1998
Xx. Xxxxxx X. Xxxxxx
000 Xxxxx Xxxxx Xxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Dear Xx. Xxxxxx:
Reference is hereby made to: (i) the Severance Agreement dated June
19, 1997 (the "Agreement") between you and Insituform Technologies,
Inc. (the "Company"); and (ii) the Notice of Termination dated
October 9, 1998 delivered by you to the Company thereunder.
In connection with the foregoing, the Company and you hereby agree
as follows (capitalized terms used herein and not otherwise defined
herein, to have the same meanings ascribed to them in the
Agreement):
(a) The Company hereby acknowledges that the foregoing
Notice of Termination has been timely delivered and that, as
modified pursuant to this letter, shall for all purposes of
the Agreement be deemed to evidence termination for Good
Reason, as defined in the final sentence of Paragraph (p) of
Article I of the Agreement.
(b) Notwithstanding anything to the contrary contained in
the Agreement (including without limitation, the provisions of
clause (iii) of Paragraph (s) of Article I of the Agreement),
and without prejudice to any of your rights under the
Agreement arising from delivery of the aforesaid Notice of
Termination, the Date of Termination referenced in the
aforesaid Notice of Termination (the "Original Date of
Termination") shall, for all purposes of the Agreement (except
as set forth in the immediately succeeding paragraph), be
postponed to December 14, 1998 (the postponed date as
aforesaid to be the "Postponed Date of Termination").
Xx. Xxxxxx X. Xxxxxx November 6, 1998
Page 2 of 2
(c) Without limiting the generality of paragraph (b)
immediately preceding, you and the Company acknowledge and
agree that the lump-sum cash payment required under Paragraph
(b)(i) of Article II of the Agreement shall be made within 30
days of the Postponed Date of Termination, but not earlier
than January 2, 1999, and the continuation of benefits
required under Paragraph (b)(ii) of said Article II shall
extend through the period of three years after the Postponed
Date of Termination; it being understood and agreed, however,
that, for purposes of the calculation of Annual Base Salary
and Annual Bonus under the Agreement, the Date of Termination
shall be deemed to be the Original Date of Termination, and
reference under said Paragraph (b)(i) to the "current fiscal
year" shall be deemed to refer to the "fiscal year of the Date
of Termination" (with such last date deemed to be the Original
Date of Termination).
(d) Notwithstanding anything in this letter to the
contrary (including, without limitation, paragraph (c)
immediately preceding), you and the Company acknowledge and
agree that you have the right to accelerate the Postponed Date
of Termination (the "Accelerated Postpone Date of
Termination") in the event of the occurrence of any change (or
approval of a change) in the governance of the Company
occurring at any time after the date of this letter or change
(or approval of change) in the equity ownership of the Company
held by affiliates of the Company; such Accelerated Postponed
Date of Termination to be effective immediately upon hand
delivery to the Company of your written notice of Accelerated
Postponed Date of Termination or effective the date of
postmark of such written notice if mailed through the United
States Postal Service.
The Company and you hereby acknowledge and agree that your
entitlement to the benefits of the Agreement arising from
termination by you for Good Reason as aforesaid during the
Protected Period shall survive any Disability (or death), or any
other event, subsequent to the date hereof.
Except as stated herein, all provisions of the Agreement shall
remain in full force and effect, without modification and without
adverse effect on any rights, benefits or privileges conferred on
you pursuant to the Agreement.
If the foregoing accurately reflects our agreement, kindly
acknowledge your acceptance hereof by countersigning the enclosed
copy of this letter in the space below provided and returning such
signed copy to the undersigned.
Your acknowledgement also constitutes confirmation that your
address for purposes of notices and other communications as set out
in paragraph (a) of Article IV of the Agreement is amended to read
as set out at the head of this letter.
Very truly yours,
INSITUFORM TECHNOLOGIES, INC.
By s/Xxxxxxx X. Xxxxxx
----------------------------
ACCEPTED AND AGREED:
s/Xxxxxx X. Xxxxxx
--------------------------
Xxxxxx X. Xxxxxx
as of December 18, 1998
Xx. Xxxxxx X. Xxxxxx
000 Xxxxx Xxxxx Xxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Dear Xx. Xxxxxx:
Reference is hereby made to: (i) the Severance Agreement dated
June 19, 1997 (the "Agreement") between you and Insituform
Technologies, Inc. (the "Company"); (ii) the Notice of Termination
dated October 9, 1998 delivered by you to the Company thereunder;
and (iii) the letter agreement dated November 6, 1998 (the
"Moratorium Letter") between you and the Company.
This letter shall evidence that the Company and you hereby
agree that the reference in the Moratorium Letter to "December 14,
1998" shall be modified to refer to "March 14, 1999"; and that the
Moratorium Letter, as so amended, shall remain in full force and
effect.
If the foregoing accurately reflects our agreement, kindly so
indicate by countersigning the enclosed copy of this letter in the
space below provided and returning such signed copy to the
undersigned.
Very truly yours,
INSITUFORM TECHNOLOGIES, INC.
By s/Xxxxxxx X. Xxxxxx
------------------------------
ACCEPTED AND AGREED:
s/Xxxxxx X. Xxxxxx
-----------------------------
Xxxxxx X. Xxxxxx
