AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT
Exhibit
10.78
AMENDED
AND RESTATED CHANGE OF CONTROL AGREEMENT
THIS
AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT is dated as of October 1,
2005
by and between THE FEMALE HEALTH COMPANY, a Wisconsin corporation (the
"Company"), and X.X. XXXXXXX (the "Executive").
RECITALS
A. The
Company and Executive have previously entered into a Change of Control Agreement
governing the terms of Executive's employment relationship with the Company
in
the event of the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. Executive and the Company desire to amend and
restate such Change of Control Agreement in accordance with the terms and
conditions hereof.
B. The
Board
of Directors of the Company (the "Board") has determined that it is in the
best
interests of the Company and its shareholders to assure that the Company will
have the continued dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control of the Company.
C. The
Board
believes it is imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created by a pending
or threatened Change of Control and to encourage the Executive's full attention
and dedication to the Company currently and in the event of any threatened
or
pending Change of Control, and to provide the Executive with compensation and
benefit arrangements upon a Change of Control which ensure that the compensation
and benefit expectations of the Executive will be satisfied and which are
competitive with those of other corporations.
D. In
order
to accomplish the objectives of the Board summarized in these recitals, the
Board has caused the Company to enter into this Agreement.
AGREEMENTS
In
consideration of the recitals and the mutual covenants and agreements set forth
in this Agreement and for other good and valuable consideration, the receipt
and
sufficiency of which are acknowledged, the parties agree as
follows:
1. Definitions.
For the
sole and exclusive purposes of this Agreement, the following terms have the
following meanings:
(a) Effective
Date.
The
"Effective Date" means the first date during the Change of Control Period on
which a Change of Control occurs. Notwithstanding anything in this Agreement
to
the contrary, if a Change of Control occurs and Executive's employment with
the
Company (or, if applicable, its subsidiary) or this Agreement was terminated
prior to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment or of this
Agreement (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (ii) otherwise arose
in connection with or anticipation of a Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately prior
to
the date of such termination of employment or purported termination of this
Agreement.
(b) Change
of Control Period.
The
"Change of Control Period" means the period commencing on the date of a Change
of Control and ending on the third anniversary thereafter.
(c) Change
of Control.
"Change
of Control" means any of the following:
(i) The
acquisition by any individual, entity or group (within the meaning of
section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either [a] the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or [b] the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally
in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a Change
of Control: [i] any acquisition directly from the Company, [ii] any
acquisition by the Company, [iii] any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or [iv] any acquisition by any
corporation pursuant to a transaction which complies with clauses [a], [b]
and [c] of subsection (iii) of this section 1.
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(ii) Individuals
who, as of the date hereof, constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising
the
Incumbent Board (or by the Nominating and Corporate Governance Committee of
the
Board) shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of
a
Person other than the Board.
(iii) Approval
by the shareholders of the Company of a reorganization, merger or consolidation
(a "Business Combination"), in each case, unless, following such Business
Combination, [a] all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 60%
of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
(or other entity) resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the Company
through one or more subsidiaries) in substantially the same proportions as
their
ownership, immediately prior to such Business Combination, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case
may
be, [b] no Person (excluding any employee benefit plan (or related trust)
of the Company or such corporation (or other entity) resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more
of,
respectively, the then outstanding shares of common stock of the corporation
(or
other entity) resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except
to
the extent that such ownership existed prior to the Business Combination and
[c] at least a majority of the members of the board of directors of the
corporation (or other governing body) resulting from such Business Combination
were members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination.
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(iv) Approval
by the shareholders of the Company of [a] a complete liquidation or
dissolution of the Company or [b] the sale or other disposition of all or
substantially all of the assets of the Company, other than to a corporation
(or
other entity), with respect to which following such sale or other disposition,
[i] more than 60% of, respectively, the then outstanding shares of common
stock of such corporation (or other equity interests) and the combined voting
power of the then outstanding voting securities of such corporation entitled
to
vote generally in the election of directors (or other governing body) is then
beneficially owned, directly or indirectly, by all or substantially all of
the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and outstanding Company Voting Securities
immediately prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, [ii] less than 20% of, respectively,
the then outstanding shares of common stock of such corporation (or other
entity) and the combined voting power of the then outstanding voting securities
of such corporation (or other entity) entitled to vote generally in the election
of directors (or other governing body)is then beneficially owned, directly
or
indirectly, by any Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation), except to the extent that such
Person owned substantially the same percent of the Outstanding Company Common
Stock or Outstanding Company Voting Securities prior to the sale or disposition,
and [iii] at least a majority of the members of the board of directors of
such corporation (or other governing body) were members of the Incumbent Board
at the time of the execution of the initial agreement, or of the action of
the
Board, providing for such sale or other disposition of assets of the Company
or
were elected, appointed or nominated by the Board.
(d) Disability.
"Disability" means the absence of the Executive from the Executive's duties
with
the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined
to be
total and permanent by a physician selected by the Company or its insurers
and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably).
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(e) Cause.
"Cause"
means:
(i) the
willful and continued failure of the Executive to perform substantially the
Executive's duties with the Company or its affiliates (other than any such
failure resulting from incapacity due to physical or mental illness), after
a
written demand for substantial performance is delivered to the Executive by
the
Board which specifically identifies the manner in which the Board believes
that
the Executive has not substantially performed the Executive's duties and after
the Executive is given a reasonable period of time to rectify or eliminate
such
failure, or
(ii) the
willful engaging by the Executive in illegal conduct or gross misconduct which
is materially and demonstrably injurious to the Company.
Notwithstanding
anything herein to the contrary, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution
duly
adopted by the Board or upon the instructions of a more senior officer of the
Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of employment
of the Executive shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters of the entire membership
of the Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding
that,
in the good faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(f) Good
Reason.
"Good
Reason" means:
(i) the
assignment to the Executive of any duties inconsistent in any respect with
the
Executive's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by
section 3(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action
not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
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(ii) any
failure by the Company to comply with any of the provisions of section 3(b)
of this Agreement, other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the
Company's requiring the Executive to be based at any office or location other
than as provided in section 3(a)(i)(b) hereof or the Company's requiring
the Executive to travel on Company business to a substantially greater extent
than required immediately prior to the Effective Date;
(iv) any
purported termination by the Company of the Executive's employment otherwise
than as expressly permitted by this Agreement; or
(v) any
failure by the Company to comply with and satisfy section 10(c) of this
Agreement.
(g) Date
of Termination.
"Date
of Termination" means (i) if the Executive's employment is terminated by
the Company for Cause, or by the Executive for Good Reason, the date of receipt
of the Notice of Termination (as defined in section 4(d)) or any later date
specified therein, as the case may be, (ii) if the Executive's employment
is terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the Executive of
such termination, and (iii) if the Executive's employment is terminated by
reason of death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date (as defined in
section 4(a)), as the case may be.
2. Employment
Period.
The
Company agrees to continue the Executive in its employ (or, if applicable,
in
the employ of its subsidiary or subsidiaries), and the Executive agrees to
remain in the employ of the Company (or, if applicable, in the employ of its
subsidiary or subsidiaries) subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date and ending on the
third anniversary of such date (the "Employment Period"). Notwithstanding the
foregoing, if the Incumbent Board approves the Change of Control transaction
before it is consummated and one or more of the nonemployee directors adopt(s)
a
resolution providing that this Agreement shall not become operative in
connection with such Change of Control, this Agreement shall not become
operative in connection with that Change of Control.
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3. Terms
of Employment.
(a) Position
and Duties.
(i) During
the Employment Period, [a] the Executive's position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
those held, exercised or assigned at any time during the 120-day period
immediately preceding the Effective Date and [b] the Executive's services
shall be performed at the location where the Executive was employed immediately
preceding the Effective Date or any office or location less than 35 miles
from such location.
(ii) During
the Employment Period, and excluding any periods of vacation and sick leave
to
which the Executive is entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the business and affairs
of
the Company (or, if applicable, its subsidiary or subsidiaries) and, to the
extent necessary to discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable efforts to perform faithfully
and
efficiently such responsibilities. During the Employment Period it shall not
be
a violation of this Agreement for the Executive to [a] serve on corporate,
civic or charitable boards or committees, [b] deliver lectures, fulfill
speaking engagements or teach at educational institutions and/or [c] manage
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as an employee of
the
Company (or, if applicable, its subsidiaries) in accordance with this Agreement.
It is expressly understood and agreed that to the extent that any such
activities have been conducted by the Executive prior to the Effective Date,
the
continued conduct of such activities (or the conduct of activities similar
in
nature and scope thereto) subsequent to the Effective Date shall not thereafter
be deemed to interfere with the performance of the Executive's responsibilities
to the Company (or, if applicable, its subsidiaries).
(b) Compensation.
(i) Base
Salary.
During
the Employment Period, the Executive shall receive an annual base salary
("Annual Base Salary"), at least equal to twelve times the highest monthly
base
salary paid or payable, including any base salary which has been earned but
deferred, to the Executive by the Company and its affiliated companies in
respect of the 12-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual Base Salary
shall be reviewed no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and
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thereafter
at least annually and shall be first increased no more than 12 months after
the last salary increase awarded to the Executive prior to the Effective Date
and thereafter at least annually by the higher of [a] the average increase
(excluding promotional increases) in base salary awarded to the Executive for
each of the three full fiscal years (annualized in the case of any fiscal year
consisting of less than twelve full months or during which the Executive was
employed for less than twelve months) prior to the Effective Date, and
[b] the percentage increase (excluding promotional increases) in base
salary generally awarded to peer executives of the Company and its affiliated
companies for the year of determination. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the Executive under
this Agreement. Annual Base Salary shall not be reduced after any such increase
and the term Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as so increased. As used in this Agreement, the term
"affiliated companies" shall include any company controlled by, controlling
or
under common control with the Company.
(ii) Annual
Bonus.
In
addition to Annual Base Salary, the Executive shall be awarded, for each fiscal
year ending during the Employment Period, an annual bonus (the "Annual Bonus")
in cash at least equal to the higher of [a] the average of the three
highest bonuses paid or payable, including any bonus or portion thereof which
has been earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the five fiscal years (or such shorter period during
which the Executive has been employed by the Company) immediately preceding
the
fiscal year in which the Effective Date occurs (annualized for any fiscal year
during such period consisting of less than twelve full months or with respect
to
which the Executive has been employed by the Company for less than twelve full
months) and [b] the bonus paid or payable (annualized as described above),
including any bonus or portion thereof which has been earned but deferred,
to
the Executive by the Company and its affiliated companies in respect of the
most
recently completed fiscal year prior to the Effective Date (such higher amount
being referred to as the "Recent Annual Bonus"). Each such Annual Bonus shall
be
paid no later than two and one-half months following the end of the fiscal
year
for which the Annual Bonus is awarded, unless the Executive shall elect to
defer
the receipt of such Annual Bonus.
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(iii) Incentive,
Savings and Retirement Plans.
During
the Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for
the
Executive under such plans, practices, policies and programs as in effect at
any
time during the 120-day period immediately preceding the Effective Date or
if
more favorable to the Executive, those provided generally at any time after
the
Effective Date to other peer executives of the Company and its affiliated
companies.
(iv) Welfare
Benefit Plans.
During
the Employment Period, the Executive and/or the Executive's family, as the
case
may be, shall be eligible for participation in and shall receive all benefits
under welfare benefit plans, practices, policies and programs provided by the
Company and its affiliated companies (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group
life,
accidental death and travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with benefits which are less favorable, in the aggregate,
than the most favorable of such plans, practices, policies and programs in
effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer executives
of the Company and its affiliated companies.
(v) Expenses.
During
the Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in
accordance with the most favorable policies, practices and procedures of the
Company and the affiliated companies in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
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(vi) Fringe
Benefits.
During
the Employment Period, the Executive shall be entitled to fringe benefits,
including, without limitation, tax and financial planning services, payment
of
club dues, and, if applicable, use of automobile and payment of related
expenses, in accordance with the most favorable plans, practices, programs
and
policies of the Company and its affiliated companies in effect for the Executive
at any time during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vii) Office
and Support Staff.
During
the Employment Period, the Executive shall be entitled to an office or offices
of a size and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the Company and its affiliated companies
at any time during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.
(viii) Vacation.
During
the Employment Period, the Executive shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs and practices
of
the Company and its affiliated companies as in effect for the Executive at
any
time during the 120-day period immediately preceding the Effective Date or,
if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
4. Termination
of Employment.
(a) Death
or Disability.
The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. If the Company determines in good faith that
a
Disability of the Executive has occurred during the Employment Period, it may
give to the Executive written notice in accordance with section 11(b) of
this Agreement of its intention to terminate the Executive's employment. In
such
event, the Executive's employment with the Company shall terminate effective
on
the 30th day after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties.
(b) Cause.
The
Company may terminate the Executive's employment during the Employment Period
for Cause.
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(c) Good
Reason.
The
Executive's employment may be terminated by the Executive for Good Reason.
For
purposes of this section 4(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive. Anything in this Agreement
to
the contrary notwithstanding, a termination by the Executive for any reason
during the 180-day period immediately following the Effective Date shall be
deemed to be a termination for Good Reason for all purposes of this
Agreement.
(d) Notice
of Termination.
Any
termination by the Company for Cause, or by the Executive for Good Reason,
shall
be communicated by Notice of Termination to the other party hereto given in
accordance with section 11(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which
(i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of
such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance
which
contributes to a showing of Good Reason or Cause shall not waive any right
of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
5. Obligations
of the Company upon Termination.
(a) Good
Reason; Other Than for Cause, Death or Disability.
If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause, death or Disability or the Executive shall
terminate the Executive's employment for Good Reason:
(i) The
Company shall pay to the Executive in a lump sum in cash within 30 days
after the Date of Termination the aggregate of the following
amounts:
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[a] the
sum
of [i] the Executive's Annual Base Salary through the Date of Termination
to the extent not theretofore paid, [ii] the product of (x) the higher of
[A] the Recent Annual Bonus and [B] the Annual Bonus paid or payable,
including any bonus or portion thereof which has been earned but deferred (and
annualized for any fiscal year consisting of less than 12 full months or during
which the Executive was employed for less than 12 full months), for the most
recently completed fiscal year during the Employment Period, if any (such higher
amount being referred to as the "Highest Annual Bonus") and (y) a fraction,
the
numerator of which is the number of days in the current fiscal year through
the
Date of Termination, and the denominator of which is 365 and [iii] any
compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued vacation pay, in each case to
the
extent not theretofore paid (the sum of the amounts described in
clauses [i], [ii] and [iii] shall be hereinafter referred to as the
"Accrued Obligations"); and
[b] The
amount equal to the product of [i] three and [ii] the sum of (x) the
Executive's Annual Base Salary and (y) the Highest Annual Bonus.
(ii) For
three
years after the Executive's Date of Termination, 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 those which would have been provided to them in accordance
with the plans, programs, practices and policies described in
sections 3(b)(iii) and (iv) (the "Benefit Plans") of this Agreement had the
Executive's employment not been terminated, in accordance with the most
favorable plans, practices, programs or policies of the Company and its
affiliated companies applicable generally to other peer executives and their
families during the 120-day period immediately preceding the Effective Date
or,
if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies and their families, provided, however, that if the
Executive becomes re-employed 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.
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 Date of Termination and to have
retired on the last day of such period. Notwithstanding anything herein to
the
contrary, the Company shall have no obligation to continue benefits to the
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Executive
under this section 5(a)(ii) to the extent any such continuation of benefits
[a] is contrary to the terms of the applicable Benefit Plan at the time of
the
Effective Date of the Change of Control, [b] would cause a Benefit Plan or
the
applicable benefit to lose any tax favored treatment or tax qualification,
or
[c] would cause a Benefit Plan to violate any requirement of the Employee
Retirement Income Security Act of 1974, as amended, or any tax qualification
or
tax favorable treatment provision of the Code (defined below) that is intended
to apply to the Benefit Plan. To the extent the Company is not able to continue
the benefits to the Executive under this section 5(a)(ii) because of application
of the foregoing sentence, then the Company shall make a lump-sum payment
(within 30 days after the Executive's Date of Termination) to the Executive
equal to the present value of the health, welfare and retirement benefits unable
to be provided hereunder, which is designed to compensate the Executive for
lost
health, welfare and retirement benefits.
(iii) The
Company shall, at its sole expense and as requested, provide the Executive
with
outplacement services the scope and provider of which shall be selected by
the
Executive in the Executive's sole discretion.
(iv) 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
(such other amounts and benefits shall be hereinafter referred to as the "Other
Benefits").
(b) Death.
If the
Executive's employment is terminated by reason of the Executive's death during
the Employment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other
than for payment of Accrued Obligations and the timely payment or provision
of
Other Benefits. Accrued Obligations shall be paid to the Executive's estate
or
beneficiary, as applicable, in a lump sum in cash within 30 days of the
Date of Termination. With respect to the provision of Other Benefits, the term
Other Benefits as utilized in this section 5(b) shall include, without
limitation, and the Executive's estate and/or beneficiaries shall be entitled
to
receive, benefits at least equal to the most favorable benefits provided by
the
Company and affiliated companies to the estates and beneficiaries of peer
executives of the Company and such affiliated companies under such plans,
programs, practices and policies relating to death benefits, if any, as in
effect with respect to other peer executives and their beneficiaries at any
time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive's estate and/or the Executive's beneficiaries, as
in
effect on the date of the Executive's death with respect to other peer
executives of the Company and its affiliated companies and their
beneficiaries.
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(c) Disability.
If the
Executive's employment is terminated by reason of the Executive's Disability
during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations
and
the timely payment or provision of Other Benefits. Accrued Obligations shall
be
paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this section 5(c) shall include, and the Executive
shall be entitled after the Disability Effective Date to receive, disability
and
other benefits at least equal to the most favorable of those generally provided
by the Company and its affiliated companies to disabled executives and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to other
peer executives and their families at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect at any time thereafter generally
with respect to other peer executives of the Company and its affiliated
companies and their families.
(d) Cause;
Other than for Good Reason.
If the
Executive's employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive (i) the
Executive's Annual Base Salary through the Date of Termination, (ii) the
amount of any compensation previously deferred by the Executive, and
(iii) Other Benefits, in each case to the extent theretofore unpaid. If the
Executive voluntarily terminates employment during the Employment Period,
excluding a termination for Good Reason, this Agreement shall terminate without
further obligations to the Executive, other than for Accrued Obligations and
the
timely payment or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination.
(e) Compliance
with Code section 409A.
To the
extent any amount payable under this Agreement is considered "nonqualified
deferred compensation" under Code section 409A, the Company shall not
accelerate the time or schedule of any payment to be made hereunder and such
payments may only be made if the Executive has previously "separated from
service" with the Company as defined under Code section 409A.
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6. Nonexclusivity
of Rights.
Nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which the Executive may qualify,
nor
shall anything herein limit or otherwise affect such rights as the Executive
may
have under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated companies at
or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
7. Full
Settlement.
The
Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action
which
the Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by
way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced whether
or
not the Executive obtains other employment. The Company agrees to pay as
incurred, to the full extent permitted by law, all legal fees and expenses
which
the Executive reasonably incurs as a result of any contest (regardless of the
outcome thereof) by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus
in
each case interest on any delayed payment at the applicable federal rate
provided for in section 7872(f)(2)(A) of the Internal Revenue Code of 1986,
as amended (the "Code").
8. Certain
Additional Payments by the Company.
(a) Anything
in this Agreement to the contrary notwithstanding, if it is determined that
any
payment or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this section 8) (a "Payment") would be subject to
the excise tax imposed by section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest
or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
15
(b) Subject
to the provisions of section 8(c), all determinations required to be made
under this section 8, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by such certified
public accounting firm as may be designated by the Executive (the "Accounting
Firm") which shall provide detailed supporting calculations both to the Company
and the Executive within 15 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested
by
the Company. If the Accounting Firm is serving as accountant or auditor for
the
individual, entity or group effecting the Change of Control, the Executive
shall
appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant
to
this section 8, shall be paid by the Company to the Executive within five
days of the receipt of the Accounting Firm's determination. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall furnish
the Executive with a written opinion that failure to report the Excise Tax
on
the Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. If the Company exhausts its remedies pursuant
to
section 8(c) and the Executive thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly
paid
by the Company to or for the benefit of the Executive.
(c) The
Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company
of
the Gross-Up Payment. Such notification shall be given as soon as practicable
but no later than ten business days after the Executive is informed in writing
of such claim and shall apprise the Company of the nature of such claim and
the
date on which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the 30-day period following the date
on
which it gives such notice to the Company (or such shorter period ending on
the
date that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
16
(i) give
the
Company any information reasonably requested by the Company relating to such
claim,
(ii) take
such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably
selected by the Company,
(iii) cooperate
with the Company in good faith in order effectively to contest such claim,
and
(iv) permit
the Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of
costs
and expenses. Without limitation on the foregoing provisions of this
section 8(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and xxx for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest
to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and
hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income
tax
(including interest or penalties with respect thereto) imposed with respect
to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited
to
issues with respect to whether a Gross-Up Payment would be payable hereunder
and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
17
(d) If,
after
the receipt by the Executive of an amount advanced by the Company pursuant
to
section 8(c), the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the Company's complying
with the requirements of section 8(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon
after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to section 8(c), a determination is made
that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent
to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required
to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
9. Confidential
Information.
The
Executive shall hold in a fiduciary capacity for the benefit of the Company
all
secret or confidential information, knowledge or data relating to the Company
or
any of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by the
Company or any of its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or representatives of
the
Executive in violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, for a period of three
years following the Executive's termination of employment, without the prior
written consent of the Company or as may otherwise be required by law or legal
process, communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no event shall
an
asserted violation of the provisions of this section 9 constitute a basis
for deferring or withholding any amounts otherwise payable to the Executive
under this Agreement.
10. Successors.
(a) 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.
(b) This
Agreement shall inure to the benefit of and be binding upon the Company and
its
successors and assigns.
18
(c) The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) 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.
11. Miscellaneous.
(a) This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Wisconsin, 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.
(b) 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, to the Executive's address appearing on the records of the
Company.
If
to the
Company:
The
Female Health Company
Xxxxx
0000
000
Xxxxx
Xxxxx Xxxxxx
Xxxxxxx,
XX 00000
Attn:
Chief Executive Officer
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.
(c) The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.
19
(d) 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.
(e) The
Executive's or the Company's failure to insist upon strict compliance with
any
provision hereof or any other provision of this Agreement or 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 pursuant to section 4(c) of this Agreement, shall not be deemed to
be a waiver of such provision or right or any other provision or right of this
Agreement.
(f) The
Executive and the Company acknowledge that, except as may otherwise be provided
under any other written agreement between the Executive and the Company, the
employment of the Executive by the Company is "at will" and, prior to the
Effective Date, the Executive's employment and this Agreement may be terminated
by either the Executive or the Company at any time prior to the Effective Date,
in which case the Executive shall have no further rights under this Agreement.
From and after the Effective Date this Agreement shall supersede any other
agreement between the parties with respect to the subject matter
hereof.
Dated
as
of the date first above written.
EXECUTIVE:
/s/
X.X.
Xxxxxxx
X.X.
Xxxxxxx
THE
FEMALE HEALTH COMPANY
BY
/s/ Xxxx Xxx
Xxxxxx
Xxxx
Xxx Xxxxxx, President and
Chief
Operating Officer
20
