CHANGE IN CONTROL AGREEMENT
EXHIBIT 10.32
This Change in Control Agreement (this “Agreement”),
effective as of December 30, 2008, is made between ABM
Industries Incorporated, a Delaware corporation (the
“Company”), and the individual executing this
Agreement as the Executive on the signature page (the
“Executive”).
RECITALS
A. The Executive is a senior executive of the Company and
has made and is expected to continue to make major contributions
to the short- and long-term profitability, growth and financial
strength of the Company;
B. The Company recognizes that the possibility of a Change
in Control exists and that such possibility, and the uncertainty
it may create among management, may result in the distraction or
departure of management personnel, to the detriment of the
Company and its stockholders, including a reduction of the value
received by stockholders in a Change in Control transaction;
C. The Executive and the Company are party to a Severance
Agreement dated August 1, 2008 (the “Prior
Agreement”);
D. The parties desire to amend and restate the Prior
Agreement to reflect changes required to comply with
Section 409A and Section 162(m) of the Code and to
revise the definition of “Cause” set forth in the
Prior Agreement;
E. The Company desires to assure itself of both present and
future continuity of management and to establish fixed severance
benefits for certain of its senior executives, including the
Executive, applicable in the event of a Change in
Control; and
F. The Company desires to provide additional inducement for
the Executive to continue to remain in the employ of the
Company. Accordingly, the Company and the Executive agree as
follows:
1. Certain Defined Terms. In
addition to terms defined elsewhere herein, the following terms
have the following meanings when used in this Agreement with
initial capital letters:
(a) “After-Tax Amount” means the amount to be
received by an Executive determined on an after-tax basis taking
into account the excise tax imposed pursuant to
Section 4999 of the Code, or any successor provision
thereto, any tax imposed by any comparable provision of state
law and any applicable federal, state and local income and
employment taxes.
(b) “Base Pay” means the Executive’s annual
base salary rate as in effect at the time a determination is
required to be made under Section 4.
(c) “Board” means the Board of Directors of the
Company; any action of the Board herein contemplated will be
valid if adopted by a majority of the total number of directors
then in office or a majority of the Incumbent Directors and, for
purposes of interpreting, amending or waiving any portion of
this Agreement, may be adopted by a majority of the Incumbent
Directors by written action, whether or not unanimous, or may be
delegated by specific action of the Board of Directors after the
date hereof to any directorate committee comprised solely of
Incumbent Directors who are also Independent Directors.
(d) “Cause” shall mean, with respect to the
Executive: (i) the willful and continued failure to
substantially perform the Executive’s duties and
responsibilities for reasons other than death or disability,
after a written demand for substantial performance is delivered
to him/her by the Company which specifically identifies the
manner in which the Company believes that the Executive has not
substantially performed the Executive’s duties;
(ii) the Executive’s conviction (or entry of a plea
bargain admitting criminal guilt) of any felony or a misdemeanor
involving moral turpitude; (iii) intentional breach by the
Executive of
his/her
fiduciary obligations to the Company or any securities laws
applicable to the Company; or (iv) intentional wrongful
engagement by the Executive in any Competitive Activity; and,
for purposes of this subsection (iv), any such act shall have
been demonstrably and materially harmful to the Company. For
purposes of this Agreement, no act or failure
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to act on the part of the Executive will be deemed
“intentional” if it was due primarily to an error in
judgment or negligence, but will be deemed
“intentional” only if done or omitted to be done by
the Executive not in good faith and without reasonable belief
that the Executive’s action or omission was in the best
interest of the Company.
(e) “Change in Control” means that during the
Term any of the following events occurs, provided that the
occurrence of such event constitutes a “change in effective
ownership or control” of the Company, as defined in
Section 409A:
(i) any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
“Person”) (A) is or becomes the beneficial owner
(within the meaning of
Rule 13d-3
promulgated under the Exchange Act) of more than 35% of the
combined voting power of the then-outstanding Voting Stock of
the Company or succeeds in having nominees as directors elected
in an “election contest” within the meaning of
Rule 14a-12(c)
under the Exchange Act and (B) within 18 months after
either such event, individuals who were members of the Board of
Directors of the Company immediately prior to either such event
cease to constitute a majority of the members of the Board of
Directors of the Company; or
(ii) a majority of the Board ceases to be comprised of
Incumbent Directors; or
(iii) the consummation of a reorganization, merger,
consolidation, plan of liquidation or dissolution,
recapitalization or sale or other disposition of all or
substantially all of the assets of the Company or the
acquisition of the stock or assets of another corporation, or
other transaction (each, a “Business Transaction”),
unless, in any such case, (A) no Person (other than the
Company, any entity resulting from such Business Transaction or
any employee benefit plan (or related trust) sponsored or
maintained by the Company, any Subsidiary or such entity
resulting from such Business Transaction) beneficially owns,
directly or indirectly, 35% or more of the combined voting power
of the then-outstanding shares of Voting Stock of the entity
resulting from such Business Transaction or, if it is such
entity, the Company and (B) at least one-half of the
members of the Board of Directors of the entity resulting from
such Business Transaction were Incumbent Directors at the time
of the execution of the initial agreement providing for such
Business Transaction.
(f) “Code” means the Internal Revenue Code of
1986, as amended.
(g) “Competitive Activity” means the
Executive’s participation, without the written consent
signed by an officer of the Company and authorized by the Board,
in the management of any business enterprise if (i) such
enterprise engages in substantial and direct competition with
the Company and such enterprise’s sales of any product or
service competitive with any product or service of the Company
amounted to 10% of such enterprise’s net sales for its most
recently completed fiscal year and if the Company’s net
sales of said product or service amounted to 10% of the
Company’s net sales for its most recently completed fiscal
year or (ii) the primary business done or intended to be
done by such enterprise is in direct competition with the
business of providing facility services in any geographic market
in which the Company operates. “Competitive Activity”
will not include the mere ownership of securities in any such
enterprise and the exercise of rights appurtenant thereto, if
such ownership is less than 5% of the outstanding voting
securities or units of such enterprise.
(h) “Employee Benefits” means the benefits and
service credit for benefits as provided under any and all
employee retirement income and welfare benefit policies, plans,
programs or arrangements in which the Executive is entitled to
participate, including without limitation any stock option,
performance share, performance unit, stock purchase, stock
appreciation, savings, pension, supplemental executive
retirement, or other retirement income or welfare benefit,
deferred compensation, incentive compensation, group or other
life, health, medical/hospital or other insurance (whether
funded by actual insurance or self-insured by the Company or a
Subsidiary), disability, salary continuation, expense
reimbursement and other employee benefit policies, plans,
programs or arrangements that may now exist or any equivalent
successor policies, plans, programs or arrangements that may be
adopted hereafter by the Company or a Subsidiary, providing
benefits
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and service credit for benefits at least as great in the
aggregate as are payable thereunder immediately prior to a
Change in Control.
(i) “ERISA” means the Employee Retirement Income
Security Act of 1976, as amended.
(j) “Excess Parachute Payment” means a payment
that creates an obligation for Executive to pay excise taxes
under Section 280G of the Code or any successor provision
thereto.
(k) “Exchange Act” means the Securities Exchange
Act of 1934, as amended.
(l) “Good Reason” means the occurrence of one or
more of the following events:
(i) Failure to elect or reelect or otherwise to maintain
the Executive in the office or the position he had with the
Company immediately prior to a Change in Control, or a
substantially equivalent or better office or position than that
which he had with the Company immediately prior to the Change in
Control, in either such case with the Company, any legal
successor to the Company or, if the Company merges with or into
another entity with substantial operations, with respect to the
business of the Company and its Subsidiaries substantially as
conducted immediately prior to the Change in Control;
(ii) Failure of the Company to remedy any of the following
within 30 calendar days after receipt by the Company of written
notice thereof from the Executive: (A) a significant
adverse change in the nature or scope of the authorities, powers
or functions attached to the position with the Company which the
Executive held immediately prior to the Change in Control,
(B) a material reduction in the Executive’s Base Pay,
(C) a material reduction in the Executive’s Incentive
Pay Opportunity or Incentive Pay Target, or (D) the
termination or denial of the Executive’s rights to material
Employee Benefits or a material reduction in the scope or value
thereof, unless such termination or reduction referred to in
clauses (B), (C) or (D) applies on a substantially
similar basis to all executives of the Company and its parent
entities or such right is replaced with a right with a
substantially similar scope or value;
(iii) The liquidation, dissolution, merger, consolidation
or reorganization of the Company or the transfer of all or
substantially all of its business
and/or
assets, unless the successor or successors (by liquidation,
merger, consolidation, reorganization, transfer or otherwise) to
which all or substantially all of its business
and/or
assets have been transferred (by operation of law or otherwise)
assumed all duties and obligations of the Company under this
Agreement pursuant to Section 11(a);
(iv) If the Executive’s principal residence at the
time in question is within 35 miles of the Company’s
headquarters or the headquarters of the Subsidiary that is
Executive’s employer, the Company requires the Executive to
have Executive’s principal location of work changed to any
location that is in excess of 50 miles from such residence
without Executive’s prior written consent; or
(v) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement or any Other
Employment Agreement (as defined in Section 6) by the
Company or any successor thereto which is not remedied by the
Company within 10 calendar days after receipt by the Company of
written notice from the Executive of such breach.
A termination of employment by the Executive for one of the
reasons set forth in clauses (i) - (v), above, will
not constitute “Good Reason” unless, within the
60-day
period immediately following the occurrence of such Good Reason
event, the Executive has given written notice to the Company
specifying in reasonable detail the event or events relied upon
for such termination and the Company has not remedied such event
or events within 30 days of the receipt of such notice. The
Company and the Executive may mutually waive in writing any of
the foregoing provisions with respect to an event or events that
otherwise would constitute Good Reason.
(m) “Incumbent Directors” means the individuals
who, as of the date hereof, are Directors of the Company and any
individual becoming a Director subsequent to the date hereof
whose election, nomination for election by the Company’s
shareholders or appointment was approved by a vote of at least
two-thirds of the then Incumbent Directors (either by a specific
vote or by approval of the proxy statement of the Company in
which such person is named as a nominee for director, without
objection to such nomination); provided,
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however, that an individual shall not be an Incumbent Director
if such individual’s election or appointment to the Board
occurs as a result of an actual or threatened election contest
(as described in
Rule 14a-12(c)
of the Exchange Act) 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.
(n) “Incentive Pay” means compensation in
addition to Base Pay determined by reference to one or more
performance measures, whether payable in cash, securities or
otherwise.
(o) “Incentive Pay Opportunity” means the maximum
amount of Incentive Pay that the Executive would receive
pursuant to any Incentive Pay Plan in existence immediately
prior to a Change in Control (disregarding the effects of the
Change in Control, including without limitation increased
depreciation or amortization, financing expense and transaction
costs), assuming satisfaction of all thresholds or other
conditions thereto established (i) prior to the Change in
Control or (ii) after the Change in Control either
(A) with the Executive’s specific prior written
approval or (B) by action of a committee of the Board
comprised solely of Independent Directors.
(p) “Incentive Pay Plan” means any plan, program,
agreement or arrangement (excluding employee stock options,
restricted stock or other rights the value of which is
determined solely by reference to the value of the
Company’s common stock).
(q) “Incentive Pay Target” means the amount or
value of Incentive Pay the Executive would have received
assuming that the Incentive Pay Plans in effect immediately
prior to the Change in Control continue unchanged and are
satisfied at the target level and, if applicable, any conditions
to entitlement to payment at the target level thereunder that
are not measured by the Company’s results of operation are
satisfied at the target level.
(r) “Independent Directors” means directors who
qualify as “independent” directors under
then-applicable New York Stock Exchange rules applicable to
compensation committees (whether or not the Company’s
securities continue to be listed for trading thereon).
(s) “Other Agreement” means an agreement,
contract or understanding (including any option or equity plan
or agreement) other than this Agreement, heretofore or hereafter
entered into by the Executive with the Company or any Subsidiary.
(t) “Retirement Plans” means the benefit plans of
the Company that are intended to be qualified under
Section 401(a) of the Code and any supplemental executive
retirement benefit plan or any other plan that is a successor
thereto as such Retirement Plans were in effect immediately
prior to the Change in Control and if the Executive was a
participant in such Retirement Plan immediately prior to the
Change in Control.
(u) Section 162(m) means Section 162(m) of the
Code, and the regulations and guidance promulgated thereunder,
or any successor statute.
(v) Section 409A means Section 409A of the Code,
and the regulations and guidance promulgated thereunder, or any
successor statute.
(w) “Severance Period” means the period of time
commencing on the date of the first occurrence of a Change in
Control and continuing until the earlier of (i) the second
anniversary of the occurrence of the Change in Control and
(ii) the Executive’s death.
(x) “Subsidiary” means an entity in which the
Company directly or indirectly beneficially owns 50% or more of
the outstanding Voting Stock.
(y) “Term” means the period commencing as of the
date hereof and expiring on the close of business on
December 31, 2008; provided, however, that
(i) commencing on January 1, 2009 and each January 1
thereafter, the term of this Agreement will automatically be
extended for an additional year unless, not later than September
30 of the immediately preceding year, the Company or the
Executive shall have given notice that it or the Executive, as
the case may be, does not wish to have the Term extended;
(ii) if a Change in Control occurs during the Term, the
Term will expire on the last day of the Severance Period; and
(iii) subject to Section 3(c), if, prior to a Change
in Control, the Executive ceases for any reason to be a
full-time
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employee of the Company, thereupon without further action the
Term shall be deemed to have expired and this Agreement will
immediately terminate and be of no further effect.
(z) “Termination Date” means the date on which
the Executive’s employment is terminated (the effective
date of which will be the date of termination, or such other
date that may be specified by the Executive if the termination
is pursuant to Section 3(b)).
(aa) “Voting Stock” means securities entitled to
vote generally in the election of directors.
(bb) “Welfare Benefits” means Employee Benefits
that are provided under any “welfare plan” (within the
meaning of Section 3(1) of ERISA) of the Company, and
fringe benefits and other perquisites of employment, such as car
allowances, club dues, financial planning and product discounts.
2. Operation of
Agreement. This Agreement will be effective
and binding immediately upon its execution, but, anything in
this Agreement to the contrary notwithstanding, except as
provided in Section 3(c), this Agreement will not be
operative unless and until a Change in Control occurs. Upon the
occurrence of a Change in Control at any time during the Term,
without further action, this Agreement will become immediately
operative.
3. Termination Following a Change in
Control. (a) In the event of the
occurrence of a Change in Control, the Executive’s
employment may be terminated by the Company during the Severance
Period and the Executive will be entitled to the benefits
provided by Section 4 unless such termination is the result
of the occurrence of one or more of the following events:
(i) The Executive’s death;
(ii) if the Executive becomes permanently disabled within
the meaning of, and begins actually to receive disability
benefits pursuant to, the long-term disability plan in effect
for, or applicable to, the Executive immediately prior to the
Change in Control; or
(iii) Cause.
If, during the Severance Period, the Executive’s employment
is terminated by the Company other than pursuant to
Section 3(a)(i), 3(a)(ii) or 3(a)(iii), the Executive will
be entitled to the benefits provided by Section 4, provided
that such termination constitutes a “separation from
service” as defined in Section 409A.
(b) In the event of the occurrence of a Change in Control,
the Executive may terminate employment with the Company during
the Severance Period for Good Reason with the right to severance
compensation as provided in Section 4 regardless of whether
any other reason, other than Cause, for such termination exists
or has occurred, including without limitation other employment.
(c) Nothing in this Agreement will (i) be construed as
creating an express or implied contract of employment, changing
the status of Executive as an employee at will, giving Executive
any right to be retained in the employ of the Company, or giving
Executive the right to any particular level of compensation or
benefits or (ii) interfere in any way with the right of the
Company to terminate the employment of the Executive at any time
with or without Cause, subject in either case to the obligations
of the Company under this Agreement.
4. Severance
Compensation. (a) If, following the
occurrence of a Change in Control, the Company terminates the
Executive’s employment during the Severance Period other
than pursuant to Section 3(a)(i), 3(a)(ii) or 3(a)(iii), or
if the Executive terminates Executive’s employment pursuant
to Section 3(b) (any such termination, a “Triggering
Termination”), provided that such Triggering Termination
constitutes a “separation from service” as defined in
Section 409A, the Company will pay to the Executive the
amounts described in Annex A within five business days
after the Termination Date (subject to the provisions of
Section 4(d) of this Agreement) and will continue to
provide to the Executive the benefits described in Annex A
for the periods described therein.
(b) Without limiting the rights of the Executive at law or
in equity, if the Company fails to make any payment or provide
any benefit required to be made or provided hereunder on a
timely basis, the Company will pay interest on the amount or
value thereof at an annualized rate of interest equal to the
“prime rate” as set forth from time to time during the
relevant period in The Wall Street Journal “Money
Rates” column, plus 200 basis points,
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compounded monthly, or, if less, the maximum rate legally
allowed. Such interest will be payable as it accrues on demand.
Any change in such prime rate will be effective on and as of the
date of such change.
(c) Unless otherwise expressly provided by the applicable
plan, program or agreement, after the occurrence of a Change in
Control, the Company will pay in cash to the Executive a lump
sum amount equal to the sum of (i) any unpaid Incentive Pay
that has been earned, accrued, allocated or awarded to the
Executive for any performance period that by its terms as in
effect prior to a Triggering Termination has been completed (any
such period, a “Completed Performance Period”)
(regardless of whether payment of such compensation would
otherwise be contingent on the continuing performance of
services by the Executive) and (ii) the Pro Rata Portion of
the Incentive Pay Target in effect for any subsequent
performance period. For this purpose, “Pro Rata
Portion” means (x) the number of days from and
including the first day immediately following the last day of
the immediately preceding Completed Performance Period to and
including the Termination Date, divided by (y) the total
number of days in such subsequent performance period. Such
payments will be made at the earlier of (x) the date
prescribed for payment pursuant to the applicable plan, program
or agreement and (y) within five business days after the
Termination Date, and will be payable and calculated
disregarding any otherwise applicable vesting requirements.
(d) To the extent required in order to avoid accelerated
taxation
and/or tax
penalties under Section 409A, amounts that would otherwise
be payable and benefits that would otherwise be provided
pursuant to this Agreement during the six-month period
immediately following the Executive’s termination of
employment shall instead be paid on the first business day after
the date that is six months following the Executive’s
termination of employment (or upon the Executive’s death,
if earlier). In addition, for purposes of this Agreement, each
amount to be paid or benefit to be provided shall be construed
as a separate identified payment for purposes of
Section 409A, and any payments described in Annex A
that are due within the “short term deferral period”
as defined in Section 409A shall not be treated as deferred
compensation unless applicable law requires otherwise.
5. Limitations on Payments and
Benefits. Notwithstanding any provision of
this Agreement or any Other Agreement to the contrary, if any
amount or benefit to be paid or provided under this Agreement or
any Other Agreement would be an Excess Parachute Payment
(including after taking into account the value, to the maximum
extent permitted by Section 280G of the Code, of the
covenants in Section 8 hereof), but for the application of
this sentence, then the payments and benefits to be paid or
provided under this Agreement and any Other Agreement will be
reduced to the minimum extent necessary (but in no event to less
than zero) so that no portion of any such payment or benefit, as
so reduced, constitutes an Excess Parachute Payment; provided,
however, that the foregoing reduction will not be made if such
reduction would result in Executive receiving an After-Tax
Amount less than 90% of the After-Tax Amount of the severance
payments he or she would have received under Section 4 or
under any Other Agreement without regard to this clause. Whether
requested by the Executive or the Company, the determination of
whether any reduction in such payments or benefits to be
provided under this Agreement or otherwise is required pursuant
to the preceding sentence, and the value to be assigned to the
Executive’s covenants in Section 8 hereof for purposes
of determining the amount, if any, of the Excess Parachute
Payment will be made at the expense of the Company by the
Company’s independent accountants or benefits consultant.
The fact that the Executive’s right to payments or benefits
may be reduced by reason of the limitations contained in this
Section 5 will not of itself limit or otherwise affect any
other rights of the Executive pursuant to this Agreement or any
Other Agreement. In the event that any payment or benefit
intended to be provided is required to be reduced pursuant to
this Section 5, the Executive will be entitled to designate
the payments
and/or
benefits to be so reduced in order to give effect to this
Section 5, provided, however, that payments that do not
constitute deferred compensation within the meaning of
Section 409A shall be reduced first. The Company will
provide the Executive with all information reasonably requested
by the Executive to permit the Executive to make such
designation. In the event that the Executive fails to make such
designation within 10 business days after receiving notice from
the Company of a reduction under this Section 5, the
Company may effect such reduction in any manner it deems
appropriate.
6. No Mitigation Obligation; Other
Agreements. (a) The Company hereby
acknowledges that it will be difficult and may be impossible for
the Executive to find reasonably comparable employment following
the Termination Date. Accordingly, the payment of the severance
compensation by the Company to the Executive in accordance with
the terms of this Agreement is hereby acknowledged by the
Company to be reasonable, and the
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Executive will not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other
employment or otherwise, nor will any profits, income, earnings
or other benefits from any source whatsoever create any
mitigation, offset, reduction or any other obligation on the
part of the Executive hereunder or otherwise, except as
expressly provided in Paragraph 2(E) of Annex A.
(b) A termination of employment pursuant to
Section 3(a), 3(b) or 3(c) will not affect any rights that
the Executive may have pursuant to any agreement, policy, plan,
program or arrangement of the Company or Subsidiary providing
Employee Benefits, which rights will be governed by the terms
thereof. To the extent that the Executive receives payments by
reason of his or her termination of employment pursuant to any
other employment or severance agreement or employee plan
(collectively, “Other Employment Agreements”), the
amounts otherwise receivable under Section 4 will be
reduced by the amounts actually paid pursuant to the Other
Employment Agreements, but not below zero, to avoid duplication
of payments so that the total amount payable or value of
benefits receivable hereunder and under the Other Employment
Agreements is not less than the amounts so payable or value so
receivable had such benefits been paid in full hereunder.
7. Legal Fees and
Expenses. It is the intent of the Company
that the Executive not be required to incur legal fees and the
related expenses associated with the interpretation, enforcement
or defense of Executive’s rights in connection with any
dispute arising under this Agreement because the cost and
expense thereof would substantially detract from the benefits
intended to be extended to the Executive hereunder. Accordingly,
if it should appear to the Executive that the Company has failed
to comply with any of its obligations under this Agreement or in
the event that the Company or any other person takes or
threatens to take any action to declare this Agreement void or
unenforceable, or institutes any proceeding designed to deny, or
to recover from, the Executive the benefits provided or intended
to be provided to the Executive hereunder, the Company
irrevocably authorizes the Executive from time to time to retain
counsel of Executive’s choice, at the expense of the
Company as hereafter provided, to advise and represent the
Executive in connection with any such dispute or proceeding.
Without respect to whether the Executive prevails, in whole or
in part, in connection with any of the foregoing, the Company
will pay and be solely financially responsible for any and all
reasonable attorneys’ and related fees and expenses
incurred by the Executive in connection with any of the
foregoing; provided that, in regard to such matters, the
Executive has not acted in bad faith or with no colorable claim
of success. The Executive shall promptly submit a written
request for reimbursement of such expenses, but in no event
later than ninety days following the date on which such expenses
were incurred, accompanied by such evidence of fees and expenses
incurred as the Company may reasonably require, and such
reimbursements will be made within thirty business days after
delivery of the Executive’s written requests for payment.
8. Competitive Activity; Confidentiality;
Nonsolicitation. (a) For the period
following the Termination Date specified in Paragraph
(3) of Annex A (the “Non-Competition
Period”), subject to the Executive’s receipt of
benefits under Section 4, the Executive will not, without
the prior written consent of the Company, which consent will not
be unreasonably withheld, engage in any Competitive Activity.
(b) During the Term, the Company agrees that it will
disclose to Executive its confidential or proprietary
information (as defined in this Section 8(b)) to the extent
necessary for Executive to carry out Executive’s
obligations to the Company. The Executive hereby covenants and
agrees that Executive will not, without the prior written
consent of the Company, during the Term and two years thereafter
disclose to any person not employed by the Company, or use in
connection with engaging in competition with the Company, any
confidential or proprietary information of the Company. For
purposes of this Agreement, the term “confidential or
proprietary information” will include all information of
any nature and in any form that is owned by the Company and that
is not publicly available (other than by Executive’s breach
of this Section 8(b)) or generally known to persons engaged
in businesses similar or related to those of the Company.
Confidential or proprietary information will include, without
limitation, the Company’s financial matters, customers,
employees, industry contracts, strategic business plans, product
development (or other proprietary product data), marketing
plans, and all other secrets and all other information of a
confidential or proprietary nature. For purposes of the
preceding two sentences, the term “Company” will also
include any Subsidiary (collectively, the “Restricted
Group”). The obligations imposed by this Section 8(b)
will not apply (i) during the Term, in the course of the
business of and for the benefit of the Company, (ii) if
such confidential or proprietary information has become, through
no fault of the Executive, generally known to the public or
(iii) if the Executive is required by law to make
disclosure (after giving the Company notice and an opportunity
to contest such requirement).
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(c) The Executive hereby covenants and agrees that for a
period ending one year after the Termination Date Executive will
not, without the prior written consent of the Company, which
consent will not unreasonably be withheld as to Executive’s
personal assistant, on behalf of Executive or on behalf of any
person, firm or company, directly or indirectly, attempt to
influence, persuade or induce, or assist any other person in so
persuading or inducing, any employee of the Restricted Group to
give up, or to not commence, employment or a business
relationship with the Restricted Group.
(d) Executive and the Company agree that the covenants
contained in this Section 8 are reasonable under the
circumstances and subject to the provisions of Section 14
of this Agreement. Executive acknowledges and agrees that the
remedy at law available to the Company for breach of any of
Executive’s obligations under this Section 8 would be
inadequate and that damages flowing from such a breach may not
readily be susceptible to being measured in monetary terms.
Accordingly, Executive acknowledges, consents and agrees that,
in addition to any other rights or remedies that the Company may
have at law, in equity or under this Agreement, upon adequate
proof of Executive’s violation of any such provision of
this Agreement, the Company will be entitled to immediate
injunctive relief and may obtain a temporary order restraining
any threatened or further breach, without the necessity of proof
of actual damage.
9. Employment
Rights. Nothing expressed or implied in this
Agreement will create any right or duty on the part of the
Company or the Executive to have the Executive remain in the
employment of the Company or any Subsidiary prior to or
following any Change in Control.
10. Withholding of
Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or
other taxes as the Company is required to withhold pursuant to
any applicable law, regulation or ruling.
11. Successors and Binding
Agreement. (a) The Company will require
any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or
substantially all of the business or assets of the Company, by
agreement in form and substance reasonably satisfactory to the
Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent the Company
would be required to perform if no such succession had taken
place. This Agreement will be binding upon and inure to the
benefit of the Company and any successor to the Company,
including without limitation any persons acquiring directly or
indirectly all or substantially all of the business or assets of
the Company whether by purchase, merger, consolidation,
reorganization or otherwise (and such successor will thereafter
be deemed the “Company” for the purposes of this
Agreement), but will not otherwise be assignable, transferable
or delegable by the Company.
(b) This Agreement will inure to the benefit of and be
enforceable by the Executive’s personal or legal
representatives, executors, administrators, successors, heirs,
distributees and legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto will, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Sections 11(a)
and 11(b). Without limiting the generality or effect of the
foregoing, the Executive’s right to receive payments
hereunder will not be assignable, transferable or delegable,
whether by pledge, creation of a security interest, or
otherwise, other than by a transfer by Executive’s will or
by the laws of descent and distribution and, in the event of any
attempted assignment or transfer contrary to this
Section 11(c), the Company will have no liability to pay
any amount so attempted to be assigned, transferred or delegated.
12. Notices. For all
purposes of this Agreement, all communications, including
without limitation notices, consents, requests or approvals,
required or permitted to be given hereunder will be in writing
and will be deemed to have been duly given when hand delivered
or dispatched by electronic facsimile transmission (with receipt
thereof orally confirmed), or five business days after having
been mailed by United States registered or certified mail,
return receipt requested, postage prepaid, or three business
days after having been sent by a nationally recognized overnight
courier service such as FedEx or UPS, addressed to the Company
(to the attention of the Secretary of the Company) at its
principal executive office and to the Executive at
Executive’s principal residence, or to such other address
as any party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address
will be effective only upon receipt.
9
13. Governing Law. The
validity, interpretation, construction and performance of this
Agreement will be governed by and construed in accordance with
the substantive laws of the State of Delaware and federal law,
without giving effect to the principles of conflict of laws of
such State, except as expressly provided herein. In the event
the Company exercises its discretion under Section 8(d) to
bring an action to enforce the covenants contained in
Section 8 in a court of competent jurisdiction where the
Executive has breached or threatened to breach such covenants,
and in no other event, the parties agree that the court may
apply the law of the jurisdiction in which such action is
pending in order to enforce the covenants to the fullest extent
permissible.
14. Validity. If any
provision of this Agreement or the application of any provision
hereof to any person or circumstance is held invalid,
unenforceable or otherwise illegal, including without limitation
Section 8 hereof, the remainder of this Agreement and the
application of such provision to any other person or
circumstance will not be affected, and the provision so held to
be invalid, unenforceable or otherwise illegal will be reformed
to the extent (and only to the extent) necessary to make it
enforceable, valid or legal. If any covenant in Section 8
should be deemed invalid, illegal or unenforceable because its
time, geographical area, or restricted activity, is considered
excessive, such covenant will be modified to the minimum extent
necessary to render the modified covenant valid, legal and
enforceable.
15. Miscellaneous. No
provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company. No
waiver by either party hereto at any time of any breach by the
other party hereto or compliance with any condition or provision
of this Agreement to be performed by such other party will be
deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, expressed or
implied with respect to the subject matter hereof have been made
by either party that are not set forth expressly in this
Agreement. The headings used in this Agreement are intended for
convenience or reference only and will not in any manner
amplify, limit, modify or otherwise be used in the construction
or interpretation of any provision of this Agreement. References
to Sections are to Sections of this Agreement. References to
Paragraphs are to Paragraphs of an Annex to this Agreement. Any
reference in this Agreement to a provision of a statute, rule or
regulation will also include any successor provision thereto.
16. Survival. Notwithstanding
any provision of this Agreement to the contrary, the
parties’ respective rights and obligations under
Sections 3(c), 4, 5, 7, 8, 9, 10, 11(b), 16 and 18 will
survive any termination or expiration of this Agreement or the
termination of the Executive’s employment following a
Change in Control for any reason whatsoever.
17. Beneficiaries. The
Executive will be entitled to select (and change, to the extent
permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable
hereunder following the Executive’s death, and may change
such election, in either case by giving the Company written
notice thereof in accordance with Section 12. In the event
of the Executive’s death or a judicial determination of the
Executive’s incompetence, reference in this Agreement to
the “Executive” will be deemed, where appropriate, to
the Executive’s beneficiary, estate or other legal
representative.
18. Counterparts. This
Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original but all of which together
will constitute one and the same agreement.
19. Section 409A. To
the extent applicable, it is intended that this Agreement comply
with the provisions of Section 409A. This Agreement will be
administered in a manner consistent with this intent, and any
provision that would cause the Agreement to fail to satisfy
Section 409A will have no force and effect until amended to
comply with Section 409A (which amendment may be
retroactive to the extent permitted by Section 409A and may
be made by the Company without the consent of the Executive).
Prior to any Change in Control, the Company and the Executive
will agree to any amendment of this Agreement approved by the
Board based on the advice of Skadden, Arps, Slate,
Xxxxxxx & Xxxx, LLP or any other nationally recognized
law firm designated by the Board that such amendment, if
implemented, is or is reasonably likely to reduce any adverse
effect on the Company or the Executive of any rule, regulation
or IRS interpretation of Section 409A and that such firm is
recommending similar changes or provisions to its other clients
that have
change-in-control,
severance or employment agreements or plans.
10
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the date first above written.
ABM INDUSTRIES INCORPORATED
| By: |
/s/ Xxxx
Xxxxx
|
| Title: | Senior Vice President-Human |
Resources
| Signature: |
/s/ Xxxxx
X. XxXxxxxxx
|
Date:
December 30, 2008
11
Annex A
SEVERANCE
COMPENSATION, ETC.
(1) A lump sum payment in an amount equal to two times the
sum of (A) Base Pay (at the rate in effect for the year in
which the Termination Date occurs), plus (B) Incentive Pay
Target (or, if the Incentive Pay Target shall not have been
established or shall be reduced after a Change in Control, the
highest aggregate Incentive Pay Target as in effect for any of
the three fiscal years immediately preceding the year in which
the Change in Control occurred).
(2) (A) For any Welfare Benefits that the Executive
was receiving or entitled to receive immediately prior to the
Termination Date (or, if greater, immediately prior to the
reduction, termination or denial described in
Section 1(1)(ii)) that are considered to be
“reimbursement arrangements” covered under
Section 1.409A-1(b)(9)(iv)(A)
of the Code:
(i) for a period of 18 months following the
Termination Date (the “Continuation Period”), the
Company will arrange to provide the Executive with Welfare
Benefits substantially similar to those that the Executive was
receiving or entitled to receive immediately prior to the
Termination Date (or, if greater, immediately prior to the
reduction, termination, or denial described in Section 1(I)(ii))
except that the level of any such Welfare Benefits to be
provided to the Executive may be reduced in the event of a
corresponding reduction generally applicable to all similarly
situated recipients of or participants in such Welfare Benefits.
If and to the extent that any benefit described in this
Paragraph 2 is not or cannot be paid or provided under any
policy, plan, program or arrangement of the Company or any
Subsidiary, as the case may be, then the Company will itself pay
or provide for the payment to the Executive, Executive’s
dependents and beneficiaries, of such Welfare Benefits along
with, in the case of any benefit described in this
Paragraph 2 that is subject to tax because it is not or
cannot be paid or provided under any such policy, plan, program
or arrangement of the Company or any Subsidiary, an additional
amount such that after payment by the Executive, or
Executive’s dependents or beneficiaries, as the case may
be, of all taxes so imposed, the recipient retains an amount
equal to such taxes. Such tax payment will be made to the
Executive by the Company no later than
December 31st of the year in which the Executive
remits such tax payments to the appropriate taxing authorities.
(ii) the Company will pay to the Executive, in a lump sum
within the time period described in Section 4(a), an amount
equal to the difference between (1) the present value of
the continuation of such benefits for 18 months and
(2) the present value of the benefits the Executive will
receive under Paragraph 2(A)(i).
(B) Notwithstanding the foregoing, or any other provision
of the Agreement, for purposes of determining the period of
continuation coverage to which the Executive or any of
Executive’s dependents is entitled pursuant to
Section 4980B of the Code under the Company’s medical,
dental and other group health plans, or successor plans, the
Executive’s “qualifying event” will be the
termination of the Continuation Period and the Executive will be
considered to have remained actively employed on a full-time
basis through that date, provided, however, that (1) with
respect to health benefits the continuation period will in all
events terminate on the
18-month
anniversary of the termination date as so determined and
(2) the Company will pay, or reimburse the Executive for,
all COBRA continuation costs during such period.
(C) For purposes of the immediately preceding sentence and
for purposes of calculating service or age to determine the
Executive’s eligibility for welfare benefits, including
benefits under any retiree medical benefits or life insurance
plan or policy, the Executive will be considered to have
remained actively employed on a full-time basis through the
termination of the Continuation Period.
(D) For any Welfare Benefits that the Executive was
receiving or entitled to receive immediately prior to the
Termination Date (or, if greater, immediately prior to the
reduction, termination, or denial described in
Section 1(1)(5)) that are not considered to be
“reimbursement arrangements” covered under
Section 1.409A-1(b)(9)(iv)(A)
of the Code, the Company shall pay to the Executive, within the
time period described in Section 4(a), in a lump sum, an
amount equal to the present value of the continuation of such
benefits for 18 months following the Termination Date.
(E) Welfare Benefits otherwise receivable by the Executive
pursuant to this Paragraph 2 will be reduced to the extent
comparable Welfare Benefits are actually received by the
Executive from another employer during the Continuation Period
following the Executive’s Termination Date, and any such
Welfare Benefits actually received by the Executive will be
reported by the Executive to the Company.
(3) The Non-Competition Period contemplated by
Section 8(a) will be 12 months from the Termination
Date.
A-1
