CHANGE OF CONTROL EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of the 16th day of August, 1996, by Xxxxxx Inc., a
Delaware corporation (the "Company"), and _________________ ("Executive").
R E C I T A L S
The Executive is an officer of the Company and is employed by Xxxxxx Wire &
Cable Company ("BWC"), a wholly-owned subsidiary of the Company, in a key
executive capacity. The Executive's services are valuable to the Company.
The Executive possesses intimate knowledge of the business and affairs of
the Company and has acquired certain confidential information with respect
to the Company.
The Company desires to insure that it will continue to have the benefit of
the Executive's services and to protect its confidential information and
goodwill. The Company recognizes that circumstances may arise in which a
change in control of the Company occurs, through acquisition or otherwise,
causing uncertainty about the Executive's future employment with the
Company without regard to the Executive's competence or past contributions.
Such uncertainty may result in the loss of valuable services of the
Executive to the detriment of the Company and its stockholders.
The Company and the Executive desire that any proposal for a change in
control or acquisition of the Company will be considered by the Executive
objectively and with reference only to the best interests of the Company
and its stockholders. The Executive will be in a better position to
consider the Company's best interests if the Executive is afforded
reasonable security, as provided in this Agreement, against altered
conditions of employment which could result from any such change in control
or acquisition.
NOW, the Company and the Executive (collectively the "Parties" or
individually a "Party"), agree as follows:
1. Certain Definitions.
1.1 Act. The term "Act" means the Securities Exchange Act of
1934, as amended.
1.2 A f filiate and Associate. The terms "Affiliate" and
"Associate" shall have the meanings given them in Rule 12b-2 of the General
Rules and Regulations of the Act.
1.3 Beneficial Owner. A Person shall be deemed to be the
"Beneficial Owner" of any securities:
(i) that such Person or any other Person's Affiliates or
Associates has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own,
(A) securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase, or
(B) securities issuable upon exercise of Rights issued
pursuant to the terms of the Rights Agreement between the Company and First
Chicago Trust Company of New York (the "Rights Agreement"), dated at July
6, 1995, as amended from time to time (or any successor to such Rights
Agreement), at any time before the issuance of such securities;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Act), including pursuant to any
agreement, arrangement or understanding; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, any
security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if the agreement,
arrangement or understanding:
(A) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and
regulations under the Act and
(B) is not also then reportable on a Schedule 13D
under the Act (or any comparable or successor report); or
(iii) that are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in Subsection 1.3 (ii) above) or
disposing of any voting securities of the Company; provided, however, that
nothing in this paragraph (iii) shall cause a Person engaged in the
business as an underwriter of securities to be deemed the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
Person's participation in good faith in a firm commitment underwriting
until the expiration of forty days (40) after the date of such acquisition.
1.4 Cause. "Cause" for termination by the Company of the
Executive's employment with the Company, BWC or any of their Affiliates
after a Change of Control of the Company shall, for purposes of this
Agreement, be limited to:
(i) the engaging by the Executive in intentional conduct
taken in bad faith which has caused demonstrable and serious financial
injury to the Company, as evidenced by a determination in a binding and
final judgment, order or decree of a court or administrative agency of
competent jurisdiction, in effect after exhaustion or lapse of all rights
of appeal, in an action, suit or proceeding, whether civil, criminal,
administrative or investigative;
-2-
(ii) conviction of a felony (as evidenced by a binding and
final judgment, order or decree of a court of competent jurisdiction, in
effect after exhaustion of all rights of appeal) which substantially
impairs the Executive's ability to perform his duties or responsibilities;
and
(iii) continuing willful and unreasonable refusal by the
Executive to perform the Executive's duties or responsibilities (unless
significantly changed without the Executive's consent).
1.5 Change in Control of the Company. A "Change in Control of
the Company" shall be deemed to have occurred if:
(i) any Person (other than any employee benefit plan of the
Company or any subsidiary of the Company, any entity holding securities of
the Company for or pursuant to the terms of any such plan or any trustee,
administrator or fiduciary of such a plan) is or becomes the Beneficial
Owner of securities of the Company representing at least 30% of the
combined voting power of the Company's then outstanding securities (other
than acquisitions directly from the Company);
(ii) a Section 11(a)(ii) Event shall have occurred under the
Rights Agreement (or a similar event shall have occurred under any
successor to such Rights Agreement) at any time any Rights are issued and
outstanding thereunder;
(iii) one-third or more of the members of the Board are
not Continuing Directors; or
(iv) there shall be consummated any merger of the Company in
which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Common Stock would be converted
into cash, securities or other property, other than a merger of the Company
in which the holders of the Company's Common Stock immediately prior to the
merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger.
1.6 Code. The term "Code" means the Internal Revenue Code of
1986, as amended.
1.7 Continuing Director. The term "Continuing Director" means
(i) any member of the Board of Directors of the Company (the "Board") who
was a member of such Board on August 15, 1996, (ii) any successor of a
Continuing Director who is recommended to succeed a Continuing Director by
a majority of the Continuing Directors then on the Board, and (iii) any
appointee who is recommended by a majority of the Continuing Directors then
on the Board.
1.8 Covered Termination. The term "Covered Termination" means
any termination of the Executive's employment where the Termination Date is
any date prior to the end of the Employment Period.
-3-
1.9 Employment Period. The term "Employment Period" means a
period beginning on the date of a Change in Control of the Company (as
defined in Section 1.5 above), and ending at 11:59 p.m. St. Louis Time on
the earlier of the third anniversary of such date or the Executive's Normal
Retirement Date.
1.10 Good Reason. The Executive shall have a "Good Reason" for
termination of employment after a Change in Control of the Company in the
event of:
(i) any breach of this Agreement by the Company, including
specifically any breach by the Company of its agreements contained in
S e c t ions 4 (Duties), 5 (Compensation) or 6 (Annual Compensation
Adjustments) hereof;
(ii) the removal of the Executive from, or any failure to
reelect or reappoint the Executive to, any of the positions held with the
Company, BWC or any of their affiliates on the date of the Change in
Control of the Company or any other positions with the Company, BWC or any
of their affiliates, to which the Executive shall thereafter be elected,
appointed or assigned, except when such removal or failure to reelect or
reappoint relates to the termination by the Company of the Executive's
employment for Cause or by reason of disability pursuant to Section 12;
(iii) a good faith determination by the Executive that
there has been a significant adverse change, without the Executive's
written consent, in the Executive's working conditions or status with the
Company, BWC or any of their affiliates from such working conditions or
status in effect immediately prior to the Change in Control of the Company,
including but not limited to;
(A) a significant change in the nature or scope of the
Executive's authority, powers, functions, duties or responsibilities, or
(B) a significant reduction in the level of support
services, staff, secretarial and other assistance, office space and
accoutrements; or
(iv) failure by the Company to obtain the Agreement referred
to in Section 17.1 (Successors) below; or
(v) a n y voluntary termination of employment by the
Executive where the Notice of Termination is delivered within 30 days of
the first anniversary of the Effective Date (Window Period).
1.11 Normal Retirement Date. The term "Normal Retirement Date"
means the date Executive attains the age of 70.
1.12 Person. The term "Person" shall mean any individual, firm,
partnership, corporation or other entity, including any successor (by
merger or otherwise) of such entity, or a group of any of the foregoing
acting in concert.
1.13 Termination Date. For purposes of this Agreement, except as
otherwise provided in Section 10.2 (Death) and Section 17.1 (Successors),
the term "Termination Date" means:
-4-
(i) if the Executive's employment is terminated by the
Executive's death, the date of death;
(ii) if the Executive's employment is terminated by reason
of voluntary early retirement, as agreed in writing by the Company and the
Executive, the date of such early retirement which is set forth in such
written agreement;
(iii) if the Executive's employment is terminated for
purposes of this Agreement by reason of disability pursuant to Section 12,
the earlier of thirty days after the Notice of Termination is given or one
day prior to the end of the Employment Period;
(iv) if the Executive's employment is terminated by the
Executive voluntarily (other than for Good Reason), the date the Notice of
Termination is given; and
(v) if the Executive's employment is terminated by the
Company (whether or not for Cause), or by the Executive for Good Reason,
the earlier of thirty days after the Notice of Termination is given or one
day prior to the end of the Employment Period. Notwithstanding the
foregoing;
(A) If termination is for Cause pursuant to Section
1.4(iii) of this Agreement and if the Executive has cured the conduct
constituting such Cause as described by the Company in its Notice of
Termination within such thirty day or shorter period, then the Executive's
employment under this Agreement shall continue as if the Company had not
delivered its Notice of Termination.
(B) If the Company shall give a Notice of Termination
for Cause or by reason of disability and the Executive in good faith
notifies the Company that a dispute exists concerning the termination
within the applicable period following receipt of notice, then the
Executive may elect to continue his employment (or, if the Executive ceased
performing his duties under this Agreement at the request of the Company at
the time of delivery of Notice of Termination, resume and continue
employment) during such dispute and the Termination Date shall be
determined under this paragraph. If the Executive so elects and it is
thereafter determined that Cause or disability (as the case may be ) did
exist, the Termination Date shall be the earliest of (1) the date on which
the dispute is finally determined, either (x) by mutual written agreement
of the parties or (y) in accordance with Section 22 (Governing Law;
Resolution of Disputes), (2) the date of the Executive's death, or (3) one
day prior to the end of the Employment Period. If the Executive so elects
and it is subsequently determined that Cause or disability (as the case may
be ) did not exist, then the employment of the Executive under this
Agreement shall continue after such determination as if the Company had not
delivered its Notice of Termination and there shall be no Termination Date
arising out of such Notice. In either case, this Agreement continues,
until the Termination Date, if any, as if the Company had not delivered the
Notice of Termination except that, if it is finally determined that the
Company properly terminated the Executive for the reason asserted in the
Notice of Termination, the Executive shall in no case be entitled to a
Termination Payment (as defined below) arising out of events occurring
after the Company delivered its Notice of Termination.
-5-
(C) If the Executive shall in good faith give a Notice
of Termination for Good Reason and the Company notifies the Executive that
a dispute exists concerning the termination within the applicable period
following receipt of notice, then the Executive may elect to continue his
employment during such dispute and the Termination Date shall be determined
under this paragraph. If the Executive so elects and it is subsequently
determined that Good Reason did exist, the Termination Date shall be the
earliest of (1) the date on which the dispute is finally determined, either
(x) by mutual written agreement of the parties or (y) in accordance with
Section 22 (Governing Law; Resolution of Disputes), (2) the date of the
Executive's death or (3) one day prior to the end of the Employment Period.
If the Executive so elects and it is subsequently determined that Good
Reason did not exist, then the employment of the Executive under this
Agreement shall continue after such determination as if the Executive had
not delivered the Notice of Termination asserting Good Reason and there
shall be no Termination Date arising out of such Notice. In either case,
this Agreement continues, until the Termination Date, if any, as if the
Company had not delivered the Notice of Termination except that, if it is
finally determined that Good Reason did exist, the Executive shall in no
case be denied the benefits described in Sections 8 and 9 (including a
Termination Payment) based on events occurring after the Executive
delivered his Notice of Termination.
(D) If an opinion is required to be delivered pursuant
to Section 9.2(ii) hereof and such opinion shall not have been delivered,
the Termination Date shall be the earlier of the date on which such opinion
is delivered or one day prior to the end of the Employment Period.
(E) Except as provided in Paragraphs (B) and (C)
above, if the party receiving the Notice of Termination notifies the other
Party that a dispute exists concerning the termination within the
appropriate period following receipt of notice and it is finally determined
that the reason asserted in such Notice of Termination did not exist, then
(1) if such Notice was delivered by the Executive, the Executive will be
deemed to have voluntarily terminated his employment and the Termination
Date shall be the earlier of the date thirty days after the Notice of
Termination is given or one day prior to the end of the Employment Period
and (2) if delivered by the Company, the Company will be deemed to have
terminated the Executive other than by reason of death, disability or
Cause.
2. Termination Prior to Change in Control. The Company and the
Executive shall each retain the right to terminate the employment of the
Executive at any time prior to a Change in Control of the Company. If the
Executive's employment is terminated prior to a Change in Control of the
Company, this Agreement shall be terminated and all rights and obligations
of the parties under it shall cease.
3. Employment Period. If a Change in Control of the Company occurs
when the Executive is employed by BWC, BWC will continue subsequently to
employ the Executive during the Employment Period, and the Executive will
remain in the employ of BWC, in accordance with and subject to the
provisions of this Agreement.
-6-
4. Duties. During the Employment Period, the Executive shall, in
the same capacities and positions held by the Executive at the time of the
Change in Control of the Company or in such other capacities and positions
as may be agreed to by the Company and the Executive in writing, devote the
Executive's best efforts and all of the Executive's business time,
attention and skill to the business and affairs of the Company, as such
business and affairs now exist and as they may subsequently be conducted.
The services that are to be performed by the Executive under this Agreement
are to be rendered in the same metropolitan area in which the Executive was
employed at the time of such Change in Control of the Company, or in such
other place or places as shall be agreed upon in writing by the Executive
and the Company from time to time. Without the Executive's consent, the
Executive shall not be required to be absent from such metropolitan area
more than 45 days in any fiscal year of the Company.
5. Compensation. During the Employment Period, the Executive shall
be compensated as follows:
5.1 The Executive shall receive, at reasonable intervals (but
not less often than monthly) and in accordance with such standard policies
as may be in effect immediately prior to the Change in Control of the
Company, an annual base salary in cash equivalent of not less than the
Executive's annual base salary as in effect immediately prior to the Change
in Control of the Company (which base salary shall, unless otherwise agreed
in writing by the Executive, include the current receipt by the Executive
of any amounts that, prior to the Change in Control of the Company, the
Executive had elected to defer, whether such compensation is deferred under
Section 401(k) of the Code or otherwise), subject to adjustment as provided
below.
5.2 The Executive shall receive fringe benefits at least equal
in value to those provided for the Executive immediately prior to the
Change in Control of the Company, and shall be reimbursed, at such
intervals and in accordance with such standard policies as may be in effect
immediately prior to the Change in Control of the Company, for any monies
advanced in connection with the Executive's employment for reasonable and
necessary expenses incurred by the Executive on behalf of the Company, BWC
or their affiliates, including travel expenses.
5.3 The Executive shall be included, to the extent eligible
thereunder (which eligibility shall not be conditioned on the Executive's
salary grade or on any other requirement that excludes persons of
comparable status to the Executive unless such exclusion was in effect for
such plan or an equivalent plan immediately prior to the Change in Control
of the Company), in any plan providing benefits for the Company's salaried
employees in general of the Company, BWC or their Affiliates, including but
not limited to the Management Incentive Plan, the Long-Term Incentive Plan,
group life insurance, hospitalization, medical, dental, savings, profit
sharing and stock bonus plans. However, in no event shall the aggregate
level of benefits under such plans in which the Executive is included be
less than the aggregate level of benefits under plans of the Company, BWC
or their Affiliates of the type referred to in this Section 5.3 in which
the Executive was participating immediately prior to the Change in Control
of the Company.
-7-
5.4 The Executive shall annually be entitled to not less than
the amount of paid vacation and not fewer than the number of paid holidays
to which the Executive was entitled annually immediately prior to the
Change in Control of the Company or such greater amount of paid vacation
and number of paid holidays as may be made available annually to other
executives of the Company, BWC or their Affiliates of comparable status and
position to the Executive.
5.5 The Executive shall be included in all plans providing
additional benefits to executives of the Company, BWC or their Affiliates
of comparable status and position to the Executive, including deferred
compensation, split-dollar life insurance, supplemental retirement, stock
option, stock appreciation, stock bonus and similar or comparable plans.
However, in no event shall the aggregate level of benefits under such plans
be less than the aggregate level of benefits under plans of the Company,
BWC or their Affiliates of the type referred to in this Section 5.5 in
which the Executive was participating immediately prior to the Change in
Control of the Company. Moreover, the obligation of the Company, BWC or
t h e ir Affiliates to include the Executive in bonus or incentive
compensation plans shall be determined by Subsection 5.6.
5.6 To assure that the Executive will have an opportunity to
earn incentive compensation after a Change in Control of the Company, the
Executive shall be included in a bonus plan of the Company, BWC or their
Affiliates that shall satisfy the standards described below (such plan, the
"Bonus Plan"). Bonuses under the Bonus Plan shall be payable with respect
to achieving such financial or other goals reasonably related to the
business of the Company as the Company shall establish (the "Goals"), all
of which Goals shall be attainable, prior to the end of the Employment
Period, with approximately the same degree of probability as the goals
under the bonus plan of the Company, BWC or their Affiliates as in effect
immediately prior to the Change in Control of the Company (the "Company
Bonus Plan") and in view of the Company's existing and projected financial
and business circumstances applicable at the time. The amount of the bonus
(the "Bonus Amount") that the Executive will be eligible to earn under the
Bonus Plan shall be no less than the amount of the Executive's maximum
award provided in such Company Bonus Plan (such bonus amount is referred to
as the "Targeted Bonus"). If the Goals are not achieved such that the
entire Targeted Bonus is not payable, the Bonus Plan shall provide for a
payment of a Bonus Amount equal to a portion of the Targeted Bonus
reasonably related to that portion of the Goals that were achieved.
Payment of the Bonus Amount shall not be affected by any circumstance
occurring subsequent to the end of the Employment Period, including
termination of the Executive's employment.
6. Annual Compensation Adjustments. During the Employment Period,
the Board of Directors of the Company (or an appropriate committee or
officer thereof) will consider and review, at least annually, the
contributions of the Executive to the Company, BWC or their Affiliates and
in accordance with the practice of the Company, BWC or their Affiliates
prior to the Change in Control of the Company, due consideration shall be
given to the upward adjustment of the Executive's base compensation rate,
at least annually, (i) commensurate with increases generally given to other
executives of the Company, BWC or their Affiliates of comparable status and
position to the Executive, and (ii) as the scope of the operations of the
Company, BWC or their Affiliates or the Executive's duties expand.
-8-
7. Termination For Cause or Without Good Reason. If there is a
Covered Termination for Cause or if the Executive voluntarily terminates
his employment other than for Good Reason (any such terminations to be
subject to the procedures set forth in Section 13), then the Executive
shall be entitled to receive only Accrued Benefits pursuant to Section 9.1.
8. Termination Giving Rise to a Termination Payment.
8.1 If there is a Covered Termination by the Executive for Good
Reason, or by the Company other than by reason of (i) death, (ii)
disability pursuant to Section 12, or (iii) Cause (any such terminations to
be subject to the procedures set forth in Section 13), then the Executive
shall be entitled to receive, and the Company shall promptly pay, Accrued
Benefits pursuant to Section 9.1 and, in lieu of further base salary for
p e riods following the Termination Date, as liquidated damages and
additional severance pay the Termination Payment pursuant to Section 9.2.
8.2 If there is Covered Termination and the Executive is
entitled to Accrued Benefits and the Termination Payment, then the
Executive shall be entitled to the following additional benefits:
(i) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a level of
service commensurate with the Executive's status with the Company, BWC or
their Affiliates immediately prior to the Change in Control of the Company
(or, if higher, immediately prior to the termination of the Executive's
employment), provided by a nationally recognized executive placement firm
selected by the Company.
(ii) For two years after the date of Termination, the
Executive shall continue to be covered, at the expense of the Company, by
the same or equivalent life insurance, hospitalization, medical and dental
coverage as was required under this Agreement with respect to the Executive
immediately prior to the date the Notice of Termination is given.
9. Payments Upon Termination.
9.1 Accrued Benefits. The Executive's "Accrued Benefits" shall
include the following amounts, payable as described in this Agreement:
(i) all base salary for the time period ending with the
Termination Date;
(ii) reimbursement for any monies advanced in connection
with the Executive's employment for reasonable and necessary expenses
incurred by the Executive on behalf of the Company, BWC or their Affiliates
for the time period ending with the Termination Date;
(iii) any other cash earned through the Termination Date
and deferred at the election of the Executive or pursuant to any deferred
compensation plan then in effect;
(iv) a l ump sum payment of the bonus or incentive
compensation otherwise payable to the Executive with respect to the year in
which termination occurs under all bonus or incentive compensation plans in
which the Executive is a participant; and
-9-
(v) all other payments and benefits to which the Executive
(or in the event of the Executive's death, the Executive's surviving spouse
or other beneficiary) may be entitled as compensatory fringe benefits or
under the terms of any benefit plan of the Company, BWC or their
Affiliates, and severance payments under the Company's severance policies
and practices as in effect immediately prior to the Change in Control of
the Company. Payment of Accrued Benefits shall be made promptly in
a c cordance with the Company's prevailing practice with respect to
Subsections (i) and (ii) or, with respect to Subsections (iii), (iv) and
(v), pursuant to the terms of the benefit plan or practice establishing
such benefits.
9.2 Termination Payment.
(i) Subject to the limits set forth in Subsection 9.2(ii),
the Termination Payment shall be an amount equal to (A) the Executive's
annual base salary, as in effect immediately prior to the Change in Control
of the Company, as adjusted upward, from time to time, pursuant to Section
6, plus (B) the amount of the highest annual bonus award (determined on an
annualized basis for any bonus award paid for a period of less than one
year) paid to the Executive with respect to the two complete fiscal years
preceding the Termination Date (the aggregate amount set forth in (A) and
(B) hereof shall be referred to as "Annual Cash Compensation"), times (C) a
factor of 2.99. The Termination Payment shall be paid to the Executive in
cash equivalent ten business days after the Termination Date. Such lump
sum payment shall not be reduced by any present value or similar factor,
and the Executive shall not be required to mitigate the amount of the
Termination Payment by securing other employment or otherwise, nor will
such Termination Payment be reduced by reason of the Executive's securing
other employment or for any other reason. The Termination Payment shall be
in addition to any other severance payments to which the Executive is
entitled under the Company's severance policies and practices as in effect
immediately prior to the Change in Control of the Company.
(ii) Notwithstanding any contrary provision, if any portion
of the Termination Payment would constitute an "excess parachute payment,"
then the Termination Payment shall be reduced such that the value of the
Termination Payment the Executive will receive shall be One Dollar ($1)
less than the maximum amount which the Executive may receive without
becoming subject to the tax imposed by Section 4999 of the Code (or any
successor provision) or which the Company may pay without loss of deduction
under Section 280G(a) of the Code (or any successor provision). The terms
"excess parachute payment" and "parachute payments" shall have the meanings
assigned to them in Section 280G of the Code (or any successor provision),
and such "parachute payments" shall be valued as provided therein. Present
value for purposes of this Agreement shall be calculated in accordance with
Section 1274(b)(2) of the Code (or any successor provision). If the
provisions of Sections 280G and 4999 of the Code (or any successor
provisions) are repealed without succession, then this Section 9.2(ii)
shall be of no further force or effect.
-10-
(iii) (A) If, notwithstanding the provisions of Subsection
(ii) of this Section 9.2, but subject to paragraph (B)below, it is
ultimately determined by a court or pursuant to a final determination by
the Internal Revenue Service that any portion of Total Payments (as defined
below) is subject to the tax (the "Excise Tax") imposed by Section 4999 of
the Code (or any successor provision), the Company shall pay to the
Executive an additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive after deduction of any Excise Tax and any
interest charges or penalties in respect of the imposition of such Excise
Tax (but not any federal, state or local income tax) on the Total Payments,
and any federal, state and local income tax and Excise Tax upon the payment
provided for by this Subsection (iii), shall be equal to the Total
Payments. As used in this Section 9.2(iii), the term Total Payments" means
the Termination Payment and any other payment payable to the Executive
under this Agreement or under any other agreement or plan of the Company or
any affiliate of the Company. For purposes of determining the amount of
the Gross-Up Payment, the Executive shall be deemed to pay federal income
taxes 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 rates of taxation in the state
and locality of the Executive's domicile for income tax purposes on the
date the Gross-Up Payment is made, net of the maximum reduction in federal
income taxes which could be obtained from reduction of such state and local
taxes.
(B) If legislation is enacted that would require the
Company's stockholders to approve this Agreement, prior to a Change in
Control of the Company, due solely to the provision contained in paragraph
(A) of this Subsection 9.2(iii), then;
(1) from and after such time as stockholder approval would
be required, until stockholder approval is obtained as required by such
legislation, paragraph (A) shall be of no force and effect;
(2) the Company and the Executive shall use their best
efforts to consider and agree in writing upon an amendment to this
Subsection 9.2(iii) such that, as amended, this Subsection would provide
the Executive with the benefits intended to be afforded to the Executive by
paragraph (A) without requiring stockholder approval; and
(3) at the reasonable request of the Executive, the Company
shall seek stockholder approval of this Agreement at the next annual
meeting of stockholders of the Company.
-11-
10. Death.
10.1 Except as provided in Section 10.2, in the event of a
Covered Termination due to the Executive's death, the Executive's estate,
heirs and beneficiaries shall receive all the Executive's Accrued Benefits
through the Termination Date.
10.2 I n the event the Executive dies after a Notice of
Termination is given (i) by the Company or (ii) by the Executive for Good
Reason, the Executive's estate, heirs and beneficiaries shall be entitled
to the benefits described in Section 10.1 hereof and, subject to the
provisions of this Agreement, to such Termination Payment as the Executive
would have been entitled to had the Executive lived. For purposes of this
Subsection 10.2, the Termination Date shall be the earlier of thirty days
following the giving of the Notice of Termination, subject to extension
pursuant to Section 1.14, or one day prior to the end of the Employment
Period.
11. Retirement. If, during the Employment Period, the Executive
and the Company shall execute an agreement providing for the early
retirement of the Executive from the Company, or the Executive shall
otherwise give notice that he is voluntarily choosing to retire early from
the Company, the Executive shall receive Accrued Benefits through the
Termination Date. However, if the Executive's employment is terminated by
the Executive for Good Reason or by the Company other than by reason of
death, disability or Cause and the Executive also, in connection with such
termination, elects voluntary early retirement, the Executive shall also be
entitled to receive a Termination Payment pursuant to Section 8.1 hereof.
12. Termination for Disability. If, during the Employment Period,
as a result of the Executive's disability due to physical or mental illness
or injury (regardless of whether such illness or injury is job-related),
the Executive shall have been absent from the Executive's duties under this
Agreement on a full-time basis for a period of six consecutive months and,
within thirty days after the Company notifies the Executive in writing that
it intends to terminate the Executive's employment (which notice shall not
constitute the Notice of Termination contemplated below), the Executive
shall not have returned to the performance of the Executive's duties under
this Agreement on a full-time basis, the Company may terminate the
Executive's employment for purposes of this Agreement pursuant to a Notice
of Termination given in accordance with Section 13. If the Executive's
employment is terminated on account of the Executive's disability in
accordance with this Section, the Executive shall receive Accrued Benefits
in accordance with Section 9.1 hereof and shall remain eligible for all
benefits provided by any long term disability programs of the Company, BWC
or its Affiliates in effect at the time of such termination.
13. Termination Notice and Procedure. Any Covered Termination by the
Company or the Executive shall be communicated by written Notice of
Termination to the Executive, if such Notice is given by the Company, and
to the Company, if such Notice is given by the Executive, all in accordance
with the following procedures and those set forth in Section 23:
13.1 If such termination is for disability, Cause or Good Reason,
the Notice of Termination shall indicate in reasonable detail the facts and
circumstances alleged to provide a basis for such termination.
-12-
13.2 Any Notice of Termination by the Company shall have been
approved, prior to the giving thereof to the Executive, by a resolution
duly adopted by a majority of the directors of the Company (or any
successor corporation) then in office.
13.3 If the Notice is given by the Executive for Good Reason, the
Executive may cease performing his duties under this Agreement on or after
the date fifteen days after the delivery of Notice of Termination and shall
in any event cease employment on the Termination Date. If the Notice is
given by the Company, then the Executive may cease performing his duties
under this Agreement on the date of receipt of the Notice of Termination,
subject to the Executive's rights under this Agreement.
13.4 The Executive shall have thirty days, or such longer period
as the Company may determine to be appropriate, to cure any conduct or act,
if curable, alleged to provide grounds for termination of the Executive's
employment for Cause under this Agreement pursuant to Subsection 1.4(iii).
13.5 The recipient of any Notice of Termination shall personally
deliver or mail in accordance with Section 23 written notice of any dispute
relating to such Notice of Termination to the party giving such Notice
within fifteen days after receipt thereof. However, if the Executive's
conduct or act alleged to provide grounds for termination by the Company
for Cause is curable, then such period shall be thirty days. After the
expiration of such period, the contents of the Notice of Termination shall
become final and not subject to dispute.
14. Further Obligations of the Executive. The Executive agrees
that, in the event of any Covered Termination where the Executive is
entitled to and receives Accrued Benefits and the Termination Payment, the
Executive shall not, for a period of one year after the Termination Date,
without the prior written approval of the Company's Board of Directors,
participate in the management of, be employed by or own any business
enterprise at a location within the United States that engages in
substantial competition with the Company or its subsidiaries, where such
enterprise's revenues from any competitive activities amount to 40% or more
of such enterprise's net revenues and sales for its most recently completed
fiscal year. However, nothing in this Section 14 shall prohibit the
Executive from owning stock or other securities of a competitor amounting
to less than five percent of the outstanding capital stock of such
competitor. The Executive also shall perform his obligations under the
"Secrecy Agreement" and the "Invention Assignment and Confidentiality
Agreement" entered into by the Company and the Executive.
-13-
15. Expenses and Interest. If, after a Change in Control of the
Company, (i) a dispute arises with respect to the enforcement of the
Executive's rights under this Agreement or (ii) any legal or arbitration
proceeding shall be brought to enforce or interpret any provision contained
in this Agreement or to recover damages for breach, in either case so long
as the Executive is not acting in bad faith, the Executive shall recover
from the Company any reasonable attorneys' fees and necessary costs and
disbursements incurred as a result of such dispute, legal or arbitration
proceeding ("Expenses"), and prejudgment interest on any money judgment or
arbitration award obtained by the Executive calculated at the rate of
interest announced by Xxxxxxx'x Bank, St. Louis, Missouri from time to time
as its prime or base lending rate from the date that payments to him should
have been made under this Agreement. Within ten days after the Executive's
written request, the Company shall pay to the Executive, or such other
person or entity as the Executive may designate in writing to the Company,
the Executive's reasonable Expenses in advance of the final disposition or
conclusion of any such dispute, legal or arbitration proceeding.
16. Payment Obligations Absolute. The Company's obligation during and
after the Employment Period to pay the Executive the amounts and to make
the benefit and other arrangements provided in this Agreement shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any setoff, counterclaim, recoupment,
defense or other right which the Company may have against him or anyone
else. Except as provided in Section 15 of this Agreement, all amounts
payable by the Company hereunder shall be paid without notice or demand.
Each payment made under this Agreement by the Company shall be final, and
the Company will not seek to recover any part of such payment from the
Executive, or from whoever may be entitled to such payment, for any reason.
17. Successors.
17.1 I f the Company sells, assigns or transfers all or
substantially all of its business and assets to any Person or if the
Company merges into or consolidates or otherwise combines (where the
Company does not survive such combination) with any Person (any such event,
a "Sale of Business"), then the Company shall assign all of its right,
title and interest in this Agreement as of the date of such event to such
Person, and the Company shall cause such Person, by written agreement in
form and substance reasonably satisfactory to the Executive, to expressly
assume and agree to perform from and after the date of such assignment all
of the terms, conditions and provisions imposed by this Agreement upon the
Company. Failure of the Company to obtain such agreement prior to the
effective date of such Sale of Business shall be a breach of this Agreement
constituting "Good Reason" for termination hereunder, except that for
purposes of implementing the foregoing the date upon which such Sale of
Business becomes effective shall be deemed the Termination Date. In case
of such assignment by the Company and of assumption and agreement by such
Person, as used in this Agreement, "Company" shall subsequently mean such
Person which executes and delivers the agreement provided for in this
Section 17 or that otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law, and this Agreement shall inure to
the benefit of, and be enforceable by, such Person. The Executive shall,
in his discretion, be entitled to proceed against any of such Persons, any
-14-
Person which theretofore was such a successor to the Company and the
Company (as so defined) in any action to enforce any rights of the
Executive under this Agreement. Except as provided in this Subsection,
this Agreement shall not be assignable by the Company. This Agreement
shall not be terminated by the voluntary or involuntary dissolution of the
Company.
17.2 This Agreement and all rights of the Executive shall inure
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. All
amounts payable to the Executive under Sections 7, 8, 9, 10, 11, 12 and 15
if the Executive had lived shall be paid, in the event of the Executive's
death, to the Executive's estate, heirs and representatives. However, the
foregoing shall not be construed to modify any terms of any benefit plan of
the Company, as such terms are in effect on the date of the Change in
Control of the Company, that expressly govern benefits under such plan in
the event of the Executive's death.
18. Severability. The provisions of this Agreement shall be regarded
as divisible, and if any provision or any part is declared invalid or
unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts and the
applicability thereof shall not be so affected.
19. Amendment. This Agreement may not be amended or modified at
any time except by written instrument executed by the Company and the
Executive.
20. Withholding. The Company shall be entitled to withhold from
amounts to be paid to the Executive under this Agreement any federal, state
or local withholding or other taxes or charges which it is from time to
time required to withhold. However, the amount so withheld shall not
exceed the minimum amount required to be withheld by law. The Company
shall be entitled to rely on an opinion of nationally recognized tax
counsel if any question as to the amount or requirement of any such
withholding shall arise.
21. Certain Rules of Construction. No Party shall be considered
as being responsible for the drafting of this Agreement for the purpose of
applying any rule construing ambiguities against the drafter or otherwise.
No draft of this Agreement shall be taken into account in construing this
Agreement. Any provision of this Agreement which requires an agreement in
writing shall be deemed to require that the writing in question be signed
by the Executive and an authorized representative of the Company.
-15-
22. Governing Law; Resolution of Disputes. This Agreement and the
rights and obligations under it shall be governed by and construed in
accordance with the laws of the State of Delaware. Any dispute arising out
of this Agreement shall, at the Executive's election, be determined by
arbitration under the rules of the American Arbitration Association then in
effect (in which case both parties shall be bound by the arbitration award)
or by litigation. Whether the dispute is to be settled by arbitration or
litigation, the venue for the arbitration or litigation shall be St. Louis,
Missouri or, at the Executive's election, if the Executive is no longer
residing or working in the St. Louis, Missouri metropolitan area, in the
judicial district encompassing the city in which the Executive resides.
However, if the Executive is not then residing in the United States, the
election of the Executive with respect to such venue shall be either St.
Louis, Missouri or in the judicial district encompassing that city of the
United States among the thirty cities having the largest population (as
determined by the most recent United States Census data available at the
Termination Date) that is closest to the Executive's residence. The
Parties consent to personal jurisdiction in each trial court in the
selected venue having subject matter jurisdiction regardless of their
residence or situs, and each party irrevocably consents to service of
process in the manner provided in Section 23.
23. Notice. Notices given pursuant to this Agreement shall be in
writing and, except as otherwise provided by Section 13.4, shall be deemed
given when actually received by the Executive or actually received by the
Company's Secretary or any officer of the Company other than the Executive.
If mailed, such notices shall be mailed by United States registered or
certified mail, return receipt requested, addressee only, postage prepaid,
if to the Company, to Xxxxxx Inc., Attention: Secretary (or President, if
the Executive is then Secretary), 0000 Xxxxxxx Xxxx., Xxxxx 000, Xx. Xxxxx,
Xxxxxxxx 00000, or if to the Executive, at the address set forth below the
Executive's signature to this Agreement, or to such other address as the
Party to be notified shall have given to the other Party in writing.
24. No Waiver. No waiver by either Party at any time of any
breach by the other Party of, or compliance with, any condition or
provision of this Agreement to be performed by the other Party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same time or any prior or subsequent time.
25. Headings. The headings are for reference only and shall not
affect the meaning or interpretation of any provision of this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first written above.
XXXXXX INC.
By:_____________________________________
Attest:__________________________________
OFFICER
By:______________________________________
-16-
