CHANGE-IN-CONTROL AGREEMENT
AGREEMENT, made and entered into as of the 13th day of May, 1997 by and
between General Cable Corporation, a Delaware corporation (the "Company"), and
Xxxxxxx Xxxxxxxxxx (the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive is a key employee of the Company or one of its
subsidiaries; and
WHEREAS, it is proposed that the Company become a publicly-traded company
by means of a public offering (the "Public Offering") and the Company's Board of
Directors has determined that, in light of the uncertainties affecting the
industry in which the Company operates, it would be in the best interests of the
Company and its future public shareholders to induce key employees, including
the Executive, to remain with the Company after it becomes a public company and
to reinforce and encourage their continued attention and dedication to the
Company; and
WHEREAS, the Company and the Executive have entered into an Employment
Agreement as of the date hereof to become effective as of the Effective Date, as
hereinafter defined (such agreement, as amended from time to time, being
hereinafter referred to as the "Employment Agreement"); and
WHEREAS, the Company desires to enter into this agreement ("Agreement")
with the Executive providing for, among other things, (i) the acceleration of
vesting of the Executive's restricted stock and stock options upon the
occurrence of a Change-in-Control (as hereinafter defined) and (ii) a severance
payment to the Executive and the continuation of the Executive's welfare
benefits if the Executive's employment is terminated in connection with a
Change-in-Control, subject to the terms and conditions specified herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Executive agree as follows:
1. TERM
(a) This Agreement shall become effective upon the consummation of the
Public Offering (the "Effective Date") and shall terminate and be of no further
force or effect upon the expiration of the Employment Agreement (the "Term");
provided, however, that, if a Change-in-Control shall have occurred during the
Term or within six months after Executive's employment terminates, as described
in Paragraph 2(a) hereof, the Term shall expire on the last day of the
twenty-fourth (24th) month following the month in which the Change-in-Control
occurs.
(b) If the consummation of the Public Offering does not occur on or before
October 31, 1997, this Agreement shall terminate and be of no further force or
effect.
2. TERMINATION OF EXECUTIVE'S EMPLOYMENT PRIOR TO OR FOLLOWING A
CHANGE-IN-CONTROL
(a) If the Executive's employment is terminated by the Company or any of
its subsidiaries or by the Company's successor without Cause (as hereinafter
defined), or the Executive terminates his employment with the Company or any of
its subsidiaries or with the Company's successor for Good Reason (as hereinafter
defined), and such termination occurs within six months preceding, or within two
years following, a Change-in-Control, the Executive shall be entitled to receive
a Change-in-Control Payment (as hereinafter defined).
(b) Notwithstanding the foregoing, the Executive shall not be entitled to
receive the Change-in-Control Payment if any of the Circumstances of
Ineligibility (as hereinafter defined) apply to the Executive.
(c) "CHANGE-IN-CONTROL PAYMENT" means the product of (i) three times (ii)
the sum of (x) the Executive's annual base salary at the time of the termination
of the Executive's employment (or, in the case of a termination of employment
for Good Reason based on a reduction of the Executive's annual base salary, the
annual base salary in effect immediately prior to such reduction) plus (y) the
Executive's target annual incentive bonus in effect for the year in which the
Executive's employment is terminated or the year in which the Change-in-Control
occurs, whichever target bonus is greater.
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(d) "CHANGE-IN-CONTROL" means that any of the following has occurred:
(i) any person or other entity (other than any of the Company's
subsidiaries or any employee benefit plan sponsored by the
Company or any of its subsidiaries) including any person as
defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), becomes the beneficial
owner, as defined in Rule 13d-3 under the Exchange Act, directly
or indirectly, of more than fifty percent (50%) of the total com-
bined voting power of all classes of capital stock of the Company
normally entitled to vote for the election of directors of the
Company (the "Voting Stock"),
(ii) the stockholders of the Company approve the sale of all or
substantially all of the property or assets of the Company and
such sale occurs;
(iii) the stockholders of the Company approve a consolidation or
merger of the Company with another corporation (other than with
any of the Company's subsidiaries), the consummation of which
would result in the shareholders of the Company immediately
before the occurrence of the consolidation or merger owning, in
the aggregate, less than 60% of the Voting Stock of the surviving
entity, and such consolidation or merger occurs; or
(iv) a change in the Company's Board of Directors occurs with the
result that the members of the Board on the Effective Date (the
"Incumbent Directors") no longer constitute a majority of such
Board of Directors, provided that any person becoming a director
(other than a director whose initial assumption of office is in
connection with an actual or threatened election contest or the
settlement thereof, including but not limited to a consent
solicitation, relating to the election of directors of the
Company) whose election or nomination for election was
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supported by two-thirds (2/3) of the then Incumbent Directors
shall be considered an Incumbent Director for purposes hereof.
Notwithstanding anything contained herein to the contrary, a Change-in-Control
shall not include the Public Offering.
(e) "CAUSE" shall have the meaning set forth in the Employment Agreement
and shall be subject to the procedures set forth therein.
(f) "GOOD REASON" means the occurrence of any of the following without the
prior written consent of the Executive:
(i) removal from any of the positions held by the Executive with
respect to the Company or any of its significant subsidiaries (as
defined in Regulation S-X under the Securities Exchange Act of
1934) on the 181st day prior to the Change-in-Control or any
senior position that the Executive subsequently achieves;
(ii) the assignment of duties or responsibilities materially
inconsistent with those customarily associated with the position
held by the Executive on the 181st day prior to the
Change-in-Control or any senior position that the Executive
subsequently achieves (alternatively, the "Measuring Position"),
or any other action by the Company or a successor that results in
a diminution of the Executive's position, authority, duties or
responsibilities compared to the Measuring Position, other than
an isolated action that is not taken in bad faith and is remedied
by the Company or a successor promptly after receipt of written
notice thereof from the Executive;
(iii) a reduction in the Executive's annual base salary or Executive's
annual bonus opportunity set forth in the Employment Agreement
from that in effect on the 181st day prior to the
Change-in-Control (or any greater salary or bonus that the
Executive is
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subsequently entitled to) or a material reduction in any other
material benefit provided the Executive by the Company;
(iv) notice by the Company not to extend the Employment Agreement;
(v) the relocation of the Executive's principal place of employment
to a location more than fifty (50) miles from the Executive's
principal place of employment (unless such relocation does not
increase the Executive's commute by more than twenty (20) miles)
on the 181st day prior to the Change-in-Control, except for
required travel on the Company's business to an extent
substantially consistent with the Executive's business travel
obligations as of such day; or
(vi) the failure by the Company to obtain an agreement from any
successor to assume and agree to perform this Agreement.
(g) "CIRCUMSTANCES OF INELIGIBILITY" mean any one or more of the following
circumstances:
(i) Death, Disability or Voluntary Termination. If the Executive is
terminated due to death or Disability (as defined in the
Employment Agreement) or if the Executive elects to voluntarily
terminate his employment, including a termination due to
retirement, with the Company or a successor, the Executive shall
not be eligible to receive the Change-in-Control Payment;
provided, however, that termination of employment by the
Executive for Good Reason shall not constitute a Circumstance of
Ineligibility.
(ii) Termination for Cause. If the Executive's employment with the
Company or a successor is terminated for Cause at any time
preceding or following a Change-in-Control, the Executive shall
not be eligible to receive the Change-in-Control Payment.
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3. TIME OF PAYMENT OF CHANGE-IN-CONTROL PAYMENT
The Change-in-Control Payment (if any) shall be paid to the Executive in
cash in a lump sum within 10 business days following the later of (i) the date
of the termination of the Executive's employment with the Company or the
successor or (ii) the date of the Change-in-Control.
4. VESTING OF RESTRICTED STOCK AND STOCK OPTIONS
Upon the occurrence of a Change-in-Control, (i) any and all restricted
stock held by the Executive as of such date shall become immediately vested and
fully transferable and (ii) any and all unexercisable stock options held by the
Executive as of such date shall become fully vested and immediately exercisable
and shall remain exercisable until their expiration in accordance with the terms
of the applicable plan.
5. CONTINUATION OF EXECUTIVE WELFARE BENEFITS
Notwithstanding anything contained herein to the contrary, if the Executive
is entitled to receive the Change-in-Control Payment, the Company or any of its
subsidiaries or successor shall continue his participation, as if he were still
an employee, in the medical, dental, hospitalization and life insurance plans,
programs and/or arrangements of the Company or any of its subsidiaries in which
he was participating on the date of the termination of his employment (or on the
181st day prior to the Change-in-Control, if more favorable to the Executive) on
the same terms and conditions as other executives under such plans, programs
and/or arrangements until the earlier of (i) the end of the 36-month period
following the date of the termination of his employment or (ii) the date, or
dates, he receives equivalent coverage and benefits under the plans, programs
and/or arrangements of a subsequent employer (such coverage and benefits to be
determined on a coverage-by-coverage or benefit-by-benefit basis).
6. LIMITATION ON PAYMENTS; GROSS-UP PAYMENT
(a) If any of the payments or benefits received or to be received by the
Executive in connection with a Change in Control or the Executive's termination
of employment (whether such payments or benefits are provided pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with the
Company, any person whose
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actions result in a Change in Control or any person affiliated with the Company
or such person) (such payments or benefits, excluding the Gross-Up Payment,
being hereinafter referred to as the "Total Payments") will be subject to the
excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), the Company shall pay to the Executive,
as soon as practicable following the Change in Control (but in any event not
later than the later of (1) thirty (30) days following Executive's termination
of employment or (2) thirty (30) days following the Change in Control), an
additional amount (the "Gross-Up Payment") such that the net amount retained by
the Executive, after deduction of any Excise Tax on the Total Payments and any
federal, state and local income and employment taxes and Excise Tax upon the
Gross-Up Payment, shall be equal to the Total Payments; provided, however, that
the Executive shall not be entitled to the Gross-Up Payment if any amount of
compensation (otherwise includible in income for any year commencing with 1997)
has been deferred by the Executive and is not included in Executive's gross
income in the calendar year in which it would have been includible for federal
income tax purposes as determined by Tax Counsel (as hereinafter defined);
provided, further, however, in the event that the Executive has so deferred
compensation and it is determined that such Excise Tax would cause the net
after-tax Total Payments to be paid to or on behalf of Executive to be less than
what he would have netted, after federal, state and local income taxes, had the
present value of his Total Payments equalled $1 less than three times his base
amount, as defined under Section 280G(b)(3)(A) of the Code, then the payments
under Paragraph 5 hereof shall be reduced and thereafter, if necessary, the
Change in Control Payment shall be reduced (but not below the minimum possible
amount), so that no portion of the Total Payments is subject to the Excise Tax.
For purposes of the preceding sentence, the failure of the Executive to exercise
a stock option shall not be construed to be a deferral of compensation.
(b) For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) all of the
Total Payments shall be treated as "parachute payments" (within the meaning of
Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel ("Tax
Counsel") selected by the Company and reasonably acceptable to the Executive,
such payments or benefits (in whole or in part) do not constitute parachute
payments, including by reason of Section 280G(b)(4)(A) of
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the Code, (ii) all "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code shall be treated as subject to the Excise Tax unless, in
the opinion of Tax Counsel, such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered (within the
meaning of Section 280G(b)(4)(B) of the Code) in excess of the "base amount" (as
defined in Section 280G(b)(3) of the Code) allocable to such payment, or are
otherwise not subject to the Excise Tax, and (iii) the value of any noncash
benefits or any deferred payment or benefit shall be determined by Tax Counsel
in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, the Executive
shall be deemed to pay federal income tax at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Executive's residence in the calendar
year in which the Gross-Up Payment is to be made, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state and
local taxes.
(c) In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder in calculating the Gross-Up Payment (including by
reason of any payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Company shall make an additional Gross-Up
Payment in respect of such excess (plus any interest, penalties or additions
payable by the Executive with respect to such excess) within five (5) business
days following the time that the amount of such excess is finally determined. In
the event that the Excise Tax is determined to be less than the amount taken
into account hereunder in calculating the Gross-Up Payment, the Executive shall
repay to the Company within five (5) business days following the time that such
difference is finally determined the portion of the Gross-Up Payment
attributable to such reduction (plus the portion of the Gross-Up Payment
attributable to such Excise Tax and federal, state and local income tax imposed
on the Gross-Up Payment being repaid by the Executive if such repayment results
in a reduction in such Excise Tax or a federal, state and local income tax
deduction) plus any interest received by the Executive on the amount of such
repayment. The Executive and the Company shall each reasonably cooperate with
the other in connection with any
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administrative or judicial proceedings concerning the existence or amount of
liability for any Excise Tax with respect to the Total Payments.
7. MISCELLANEOUS
(a) No Employment Agreement. This Agreement does not constitute a contract
of employment or impose on the Company any obligation to retain the Executive as
an employee.
(b) Deductions and Withholding. The Executive agrees that the Company shall
withhold from any and all compensation required to be paid to the Executive
pursuant to this Agreement all federal, state, local and/or other taxes which
the Company determines are required to be withheld in accordance with applicable
statutes and/or regulations from time to time in effect.
(c) Waiver and Release. The Executive acknowledges that (i) the
Change-in-Control Payment is in excess of the amounts that the Executive would
otherwise be entitled to receive under any employment or severance agreement,
plan, program or arrangement of the Company or between the Company and the
Executive and (ii) the Company has no obligation to enter into this Agreement.
In consideration of the Company assuming these additional obligations and
entering into this Agreement, the Executive agrees to execute a customary
release of all claims related to the Executive's employment or termination
thereof, in substantially the same form as annexed hereto other than any
modifications which may be required to effectuate such release based upon any
changes in law.
(d) Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration conducted in
Cincinnati, Ohio under the Commercial Arbitration Rules then prevailing of the
American Arbitration Association and such submission shall request the American
Arbitration Association to: (i) appoint an arbitrator experienced and
knowledgeable concerning the matter then in dispute; (ii) require the testimony
to be transcribed; (iii) require the award to be accompanied by findings of fact
and a statement of reasons for the decision; and (iv) request the matter to be
handled by and in accordance with the expedited procedures provided for in the
Commercial Arbitration Rules. The determination of the arbitrators, which shall
be based upon a de novo
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interpretation of this Agreement, shall be final and binding and judgment may be
entered on the arbitrators' award in any court having jurisdiction. All costs of
the American Arbitration Association and the arbitrator shall be borne by the
Company, unless the position advanced by the Executive is determined by the
arbitrator to be frivolous in nature.
(e) Legal Fees. The Company or the successor shall pay to the Executive all
reasonable legal fees and expenses incurred by the Executive in disputing in
good faith any issues hereunder relating to the termination of the Executive's
employment, in seeking in good faith to obtain or enforce any benefit or right
provided by this Agreement or in connection with any tax audit or proceeding to
the extent attributable to the application of Section 4999 of the Code to any
payment or benefit provided hereunder. Such payments shall be made within 30
days after delivery of the Executive's written request for payment accompanied
with such evidence of fees and expenses incurred as the Company reasonably may
require. The Company or the successor shall pay to the Executive interest at the
prime lending rate as announced from time to time by The Chase Manhattan Bank on
all or any part of the Change-in-Control Payment that is not paid when due. The
prime rate for each calendar quarter shall be the prime rate in effect on the
first day of the calendar quarter.
(f) No Duty to Mitigate/Set-off. The Company agrees that if the Executive's
employment with the Company or a successor is terminated during the Term, the
Executive shall not be required to seek other employment. Further, the amount of
any payment or benefit hereunder shall not be reduced by any compensation earned
by the Executive or any benefit provided to the Executive as the result of
employment by another employer or otherwise, except as provided in Paragraph 5
or 7(g) hereof. The Company's obligations to make any payment or provide any
benefit hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company or a successor corporation may have against the Executive.
(g) Offset. The Change-in-Control Payment shall be reduced by any severance
payment made by the Company or any subsidiary of the Company to the Executive
pursuant to (i) any severance plan, program, policy or arrangement of the
Company or any subsidiary of the Company, (ii) the Employment Agreement or any
other employment agreement
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between the Company or any subsidiary of the Company and the Executive, and
(iii) any federal, state or local statute, rule, regulation or ordinance.
(h) Entire Agreement. This Agreement embodies the entire agreement of the
parties with respect to any payment due the Executive in the event of a
Change-in-Control and supersedes any other prior oral or written agreements
between the Executive and the Company with respect thereto, except that nothing
herein shall be construed to adversely affect the Executive's right to receive
any non-duplicative payment or benefit to which he is entitled under the
Employment Agreement or any other employment agreement between the Company or
any subsidiary of the Company and the Executive in connection with his
termination of employment. No party may amend, modify or terminate this
Agreement without the express written consent of the other party.
(i) Binding Agreement. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devises and legatees.
(j) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Kentucky without reference to
principles of conflict of laws.
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(k) Counterparts. This Agreement may be executed and delivered in separate
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first written above.
GENERAL CABLE CORPORATION
By: ___________________________
Xxxxxx X. Xxxxxx
Executive Vice President,
General Counsel and
Secretary
ACCEPTED AND AGREED TO
as of the date first written above
By: _________________________________
Xxxxxxx Xxxxxxxxxx
Address: 000 Xxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxx 00000
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