EXHIBIT 10.13A
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT ("First Amendment") is
made this first day of October, 2001 (the "Effective Date"), by and between
Sheffield Pharmaceuticals, Inc. (the "Corporation") and Xxxxx X. Xxxxxxxx (the
"Executive").
WHEREAS, the Compensation Committee of the Board of Directors has
determined that a possibility of a Change in Control of the Corporation exists
and appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of certain management to their assigned duties.
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, intending to be legally bound, the Corporation and Executive
hereby agree, effective as of the Effective Date, as follows:
22. Paragraph 3 of the Employment Agreement by and between the Corporation and
Executive dated April 25, 1997 (the "Employment Agreement") is hereby
amended by deleting the fourth sentence in its entirety and adding to the
third sentence the following:
"; provided that, no such notice by the Corporation shall be
effective and the term of this Agreement shall be extended for an
additional year if a Potential Change in Control shall have occurred
or occurs at any time prior to the date of such notice or within the
twelve month period beginning on the date of such notice. Further,
if a Change in Control shall have occurred at any time during the
term of this Agreement, then notwithstanding any provision hereof to
the contrary, the term shall continue in effect for: (i) the
remainder of the month in which the Change in Control occurred, and
(ii) a term of twenty-four months beyond the month in which such
Change in Control occurred; provided that, if any obligations of the
Corporation hereunder shall not have been fully and finally
discharged at the end of such twenty-four month period, the term
shall continue until such obligations shall have been finally
discharged in full. The period commencing on the earlier of a
Potential Change in Control (if applicable) or Change in Control and
ending with the conclusion of such twenty-four month period shall be
referred to hereinafter as the "Protection Period."
23. Paragraph 12(c) of the Employment Agreement is hereby deleted in its
entirety.
24. Paragraph 14 of the Employment Agreement is hereby amended by deleting
Paragraph 14 in its entirety and replacing it with the following:
"14. Termination for Cause. The Corporation may at any
time upon written notice to Executive terminate Executive's employment for
Cause. For purposes of this Agreement, the following shall constitute Cause: (a)
the Executive's gross misconduct which is materially and demonstrably injurious
to the Corporation; (b) the Executive's willful and continued failure to perform
substantially his duties with the Corporation (other than a failure resulting
from the Executive's incapacity due to bodily injury or physical or mental
illness) after a 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 his duties and
provides for a reasonable period of time within which the Executive may take
corrective measures; or (c) the Executive's conviction (including a plea of nolo
contendere) of willfully engaging in illegal conduct constituting a felony or a
gross misdemeanor involving an intentional act of fraud, misrepresentation,
theft, embezzlement or dishonesty under federal or state law (or comparable
illegal conduct under the laws of any foreign jurisdiction) which is materially
and demonstrably injurious to the Corporation or which impairs the Executive's
ability to perform substantially his duties with the Corporation. An act or
failure to act will be considered "gross" or "willful" for this purpose only if
done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that it was in, or not opposed to, the best interests of the
Corporation. Any act, or failure to act, based upon authority given pursuant to
a resolution duly adopted by the Board or governing body of the Corporation (or
a committee thereof) or based upon the advice of counsel for the Corporation
will be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Corporation.
Executive's attention to matters not directly related to the business of the
Corporation will not provide a basis for termination for Cause so long as the
Board did not expressly disapprove in writing of his engagement in such
activities either before or within a reasonable period of time after the Board
knew or could reasonably have known that the Executive engaged in those
activities. Notwithstanding the
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foregoing, the Executive may not be terminated for Cause unless and until there
has been delivered to Executive a copy of a resolution duly adopted by the
affirmative vote of not less than two-thirds of the entire membership of the
Board (excluding such Executive) at a meeting of the Board called and held for
such purpose (after reasonable notice to such Executive and an opportunity for
such Executive, together with his counsel, to be heard before the Board),
finding that in the good faith opinion of the Board such Executive engaged in
the conduct set forth in paragraphs (a), (b) or (c) above and specifying the
particulars thereof in detail."
25. Paragraph 21 of the Employment Agreement is hereby amended by adding to the
end of the first sentence the following:
"and the Corporation hereby irrevocably consents to the jurisdiction
of the federal and state courts sitting in the State of Missouri for
purposes of enforcing this Agreement."
26. Paragraph 26 of the Employment Agreement is hereby amended by deleting
Paragraph 26 in its entirety and replacing it with the following:
"26. Disputes. (a) If the Executive so elects, any
dispute, controversy or claim arising under or in connection with this Agreement
will be settled exclusively by binding arbitration in St. Louis, Missouri in
accordance with the Employee Benefit Plan Claims Arbitration Rules of the
American Arbitration Association, incorporated by referenced herein. Judgment
may be entered on the arbitrator's award in any court having jurisdiction;
provided that, the Executive may seek specific performance of his right to
receive benefits until the Termination Date during the pendency of any dispute
or controversy arising under or in connection with this Agreement.
(b) If the Executive does not elect arbitration to
resolve a dispute, claim or controversy, he may pursue all other available legal
remedies.
(c) Any review by an arbitrator or a court of competent
jurisdiction of a decision made by the Board at any time after a Change in
Control shall be de novo, and any such Board determination shall not be entitled
to deference.
(d) The Corporation will not assert in any dispute or
controversy with the Executive arising under or in connection with this
Agreement the Executive's failure to exhaust administrative remedies.
(e) In the event of any dispute, claim or controversy
arising out of or in connection with this Agreement, if the Executive prevails
on any of the material issues involved in any such dispute, claim or
controversy, the Corporation shall pay to the Executive immediately upon demand
all reasonable expenses (including without limitation attorneys' fees) incurred
by the Executive in connection therewith.
(f) If the Corporation refuses or otherwise fails to
make a payment when due under this Agreement and it is ultimately determined
that the Executive is entitled to such payment, such payment shall be increased
to reflect an interest factor, compounded annually, equal to the prime rate in
effect as of the date the payment was first due plus five points. For this
purpose, the prime rate shall be based on the rate identified by Chase Manhattan
Bank as its prime rate in New York City."
27. The Employment Agreement is further amended by adding the following as new
Paragraphs 27 through 32:
"27. Definitions. For purposes of this Agreement, the
capitalized terms set forth herein and not otherwise defined shall have the
meanings set forth in Appendix A attached hereto which shall have the same force
and effect as if included as a Paragraph in this Amendment and shall apply when
interpreting the terms of this Agreement.
28. Termination Employment in Connection with a Change
in Control.
(a) Eligibility. If the Executive's employment is
terminated during the Protection Period either: (i) by the Corporation without
Cause, or (ii) by the Executive for Good Reason, the Corporation will provide
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the Executive with the payments and benefits set forth in Paragraph 29 below
(collectively, the "Enhanced Severance Benefits"), accelerated vesting and
exercisability of stock based compensation under Paragraph 30 and a Gross-Up
Payment for "Excise Tax" (as defined in Paragraph 31) under Paragraph 31. If the
Executive terminates employment with the Corporation under any other
circumstances, he shall not be entitled to Enhanced Severance Benefits under
Paragraph 29, but may be entitled to (c) benefits under Paragraph 12 hereunder,
and (d) accelerated vesting and exercisability of stock based compensation under
Paragraph 30 and a Gross-Up Payment for Excise Tax under Paragraph 31 by
remaining employed with the Corporation as of a Change in Control. In no event
shall Executive be entitled to Enhanced Severance Benefits under Paragraph 29
and to benefits under Paragraph 12.
(b) Process for Termination of Employment. During
the Protection Period, any termination of the Executive's employment by the
Executive for Good Reason or by the Corporation for Cause shall be communicated
by written Notice of Termination from the party terminating employment hereunder
to the other party hereto in accordance with Paragraph 18. A "Notice of
Termination" shall mean, for purposes of this Agreement, a written notice given
in good faith and with a reasonable belief that Good Reason or Cause, as the
case may be, has occurred, which shall indicate the specific termination
provision in this Agreement relied upon and shall set 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. Any Notice of
Termination must specify a Termination Date and any Notice of Termination for
Cause shall include a copy of the relevant resolution of the Board action taken
in accordance with the terms of this Agreement to terminate the Executive's
employment for Cause.
(c) Compensation and Benefits before Termination
Date. During the period beginning on the date the Executive or the Corporation,
as the case may be, receives Notice of Termination and ending on the Termination
Date, the Corporation will continue to pay the Executive his Base Pay and cause
his continued participation in all Benefit Plans in accordance with the terms of
such Benefit Plans.
(d) Rights Under Other Plans, Policies, Practices
and Agreements. Other than to the extent expressly provided herein, this
Agreement does not supersede any other plans, policies, and/or practices of the
Corporation. To the extent that any provision of any Benefit Plan limits,
qualifies or is inconsistent with any of the benefits provided under this
Agreement, then, for purposes of this Agreement, while such other Benefit Plans
remains in force, the provisions of this Agreement will control and such
provision of such other Benefit Plan will be deemed to have been superseded and
to be of no force or effect, as if such other agreement had been formally
amended to the extent necessary to accomplish such purpose. Nothing in this
Agreement prevents or limits the Executive's continuing or future participation
in any Benefit Plan provided by the Corporation and nothing in this Agreement
limits or otherwise affects the rights the Executive may have under any Benefit
Plans with the Corporation. Amounts that are vested benefits or which the
Executive is otherwise entitled to receive under any Benefit Plan with the
Corporation at or subsequent to the Termination Date will be payable in
accordance with such Benefit Plan.
29. Enhanced Severance Benefits.
(a) Cash Payment. The Executive will be entitled to a cash payment
equal to two (2) times Base Pay (disregarding any change in Base Pay that
constitutes Good Reason). The benefit provided under this Paragraph 29(a) will
be distributed in a single lump sum within ten business days after the
Termination Date or, if later, within ten business days following the effective
date of the Change in Control.
(b) Continuation of Certain Welfare Benefits.
(i) During the period described in Paragraph 29(b)(ii) below,
the Corporation will maintain, or continue to reimburse or pay on behalf of the
Executive, as the case may be, medical, dental and life insurance plans which by
their terms cover the Executive and his family members and dependents under the
same terms and at the same cost to the Executive and his family members and
dependents as similarly situated executives who continue to be employed by the
Corporation (without regard to any reduction in such benefits that constitutes
Good Reason). The continuation period under applicable federal and state
continuation laws will begin to run from the date on which coverage under this
Paragraph ends.
(ii) For purposes of Paragraph 29(b)(i) above, the continuation
period with respect to any particular plan is the period beginning on the
Termination Date and ending on the earlier of: (x) the last day
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of the twelfth month that begins after the Termination Date, (y) the date after
Termination Date on which the Executive first becomes eligible to participate in
the plan of another employer providing comparable benefits to the Executive and
his eligible family members and dependents which plan does not contain any
exclusion or limitation with respect to any pre-existing condition of the
Executive or any eligible family member or dependent who would otherwise be
covered under the Corporation's plan but for this clause (y), or (z) the date of
the Executive's death.
(iii) To the extent the Executive incurs a liability for Taxes
in connection with a benefit provided pursuant to Paragraph 29(b) which he would
not have incurred had he been an active employee of the Corporation
participating in one of the Corporation's Benefit Plans, the Corporation shall
make a Gross-Up Payment for any such Taxes to the Executive. For purposes of
applying the foregoing, the Executive's tax rate will be deemed to be the
highest statutory marginal state and federal tax rate (on a combined basis) then
in effect. The payment pursuant to this subparagraph will be made within ten
days after the Executive's remittal of a written request therefor, accompanied
by a statement indicating the basis for and amount of the liability.
(c) Extended Exercise Period for Stock Options. Any stock options
issued by the Corporation and held by the Executive shall remain exercisable
until thirty-six months following the Termination Date, but in no event beyond
the stock option's maximum exercise period (without regard to any provisions
that shortens the exercise period in connection with termination of employment
or otherwise).
30. Accelerated Vesting and Exercisability. If a Change in Control
occurs while the Executive is employed by the Corporation or after the Executive
has terminated employment with the Corporation under circumstances entitling him
to Enhanced Severance Benefits, (a) all stock options previously granted to the
Executive by the Corporation shall become fully vested and exercisable as of the
date of the Change in Control, whether or not otherwise exercisable and vested
as of that date, and (b) shares of restricted Corporation stock previously
awarded to the Executive shall become fully vested.
31. Excise Tax Equalization. The Corporation will cause its independent
auditors promptly to review, at the Corporation's sole expense, the
applicability of Paragraph 4999 of the Code to any payment or distribution of
any type by the Corporation or its Affiliates to or for the benefit of the
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement, any Benefit Plan or otherwise (the "Total
Payments"). The Corporation shall engage the auditor so that its review is
completed no later than the Change in Control. If the auditor determines that
the Total Payments result in an excise tax imposed by Paragraph 4999 of the Code
or any comparable state or local law, or any interest or penalties with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are collectively referred to as the "Excise Tax") and if the
Executive is entitled to Enhanced Severance Benefits or accelerated vesting or
exercisability of equity compensation under Paragraph 30, or both, the
Corporation shall make a Gross-Up Payment for any Excise Taxes to the Executive
within ten business days after the Termination Date, but in no event later than
the due date for the payments of any excise tax. For purposes of the foregoing
determination, the Executive's tax rate will be deemed to be the highest
statutory marginal state and federal tax rate (on a combined basis) then in
effect. If any tax authority determines that a greater Excise Tax should be
imposed upon the Total Payments than is determined by the Corporation's
independent auditors pursuant to this Paragraph 31, the Executive is entitled to
receive from the Corporation the full Gross-Up Payment calculated on the basis
of the amount of Excise Tax determined to be payable by such tax authority
within ten business days after he notifies the Corporation of such
determination.
32. Miscellaneous.
(a) Successors and Assigns.
(i) The Corporation will require any Successor to expressly
assume and agree to perform the obligations of this Agreement in the same manner
and to the same extent that the Corporation would be required to perform if no
such succession had taken place except as specifically required to the contrary
hereunder. Failure of the Corporation to obtain such assumption and agreement at
least three business days prior to the time a Person becomes a Successor (or
where the Corporation does not have at least three business days' advance notice
that a Person may become a Successor, within one business day after having
notice that such Person may become or has become a Successor) will constitute
Good Reason for termination of the Executive's employment. The date on which any
such succession becomes effective will be deemed the Termination Date and Notice
of Termination will be deemed to have been timely given by the Executive. A
Successor has no rights, authority or power with respect to this Agreement prior
to a Change in Control.
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(ii) This Agreement is for the benefit of, and is enforceable
by, the Executive, his personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees; provided
that, the Executive may not otherwise assign any of his rights or delegate any
of his obligations under this Agreement. If the Executive dies after becoming
entitled to, but before receiving, any amounts payable under this Agreement, all
such amounts, unless otherwise specifically provided to the contrary in this
Agreement, will be paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee or other designee or, if there be no such designee,
to the Executive's estate.
(b) No Mitigation or Set-Off. The Executive will not be required to
mitigate the amount of any benefits the Corporation becomes obligated to provide
in connection with this Agreement by seeking other employment or otherwise. The
Corporation has no right to set-off benefits owed under this Agreement against
amounts owed or claimed to be owed by the Executive to the Corporation under
this Agreement or otherwise.
(c) Taxes. All benefits to be provided to the Executive in
connection with the this Agreement will be subject to required withholding of
federal, state and local income, excise and employment-related taxes.
(d) Survival. The respective obligations of, and benefits afforded
to, the Corporation and the Executive which, by their express terms or clear
meaning, survive termination of the Executive's employment with the Corporation
or termination of this Agreement, as the case may be, will remain in full force
and effect according to their terms notwithstanding the termination of the
Executive's employment with the Corporation or termination of this Agreement, as
the case may be.
(e) Benefits as Eligible Compensation under Other Benefit Plans.
Unless otherwise expressly provided therein, benefits paid or payable under this
Agreement will not be deemed to be salary or compensation for purposes of
determining the benefits to which the Executive may be entitled under any other
Benefit Plan sponsored, maintained or contributed to by the Corporation."
28. Except as amended as set forth in this First Amendment, the Employment
Agreement shall remain in full force and effect in accordance with its
terms.
IN WITNESS WHEREOF, this First Amendment has been executed by the
Corporation, by its duly authorized representative, and by Executive, as of the
Effective Date.
EXECUTIVE CORPORATION
/s/ Xxxxx X. Xxxxxxxx /s/ Xxxxxx X. Xxxxxxxxxx
------------------------------ -----------------------------
By: Xxxxxx X. Xxxxxxxxxx
Title: Chairman
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APPENDIX A
DEFINITIONS
Whenever the following capitalized terms are used in the Agreement, they shall
have the meaning specified below.
Affiliate
"Affiliate" shall mean: (a) any corporation at least a majority of
whose outstanding securities ordinarily having the right to vote at elections of
directors is owned directly or indirectly by the Corporation; or (b) any other
form of business entity in which the Corporation, by virtue of a direct or
indirect ownership interest, has the right to elect a majority of the members of
such entity's governing body.
Base Pay
"Base Pay" shall mean the Executive's base salary at the highest
annual rate in effect immediately prior to the Change in Control or at the time
Notice of Termination is given, whichever is greater, disregarding any decrease
which constitutes Good Reason for the Executive's termination of employment.
Base Pay includes only regular cash salary and wages and is determined before
any reduction for deferrals pursuant to any nonqualified deferred compensation
plan or arrangement, qualified cash or deferred arrangement or cafeteria plan.
Beneficial Owner
"Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
Benefit Plan
"Benefit Plan" is (a) employee benefit plan as defined in Paragraph
3(3) of ERISA, (b) a cafeteria plan described in Paragraph 125 of the Code, (c)
a plan, policy or practice providing for paid vacation, other paid time off or
short- or long-term profit sharing, bonus or incentive payments, or (d) stock
option, stock purchase, restricted stock, phantom stock, stock appreciation
right or other equity-based compensation plan that is sponsored, maintained or
contributed to by the Corporation or its Affiliates for the benefit of employees
(and/or their families and dependents) generally or the Executive (and/or the
Executive's family and dependents) in particular.
Board
"Board" is the board of directors of the Corporation duly qualified
and acting at the time in question. On and after the date of a Change in
Control, any duty of the Board in connection with this Agreement is
non-delegable and any attempt by the Board to delegate any such duty is
ineffective.
Change in Control
A "Change in Control" shall mean the first of the following events
to occur:
(a) Any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing at least thirty
percent or, in the case of Elan Corporation and its Affiliates in the aggregate
(collectively, the "Elan Group"), at least fifty percent, of the combined voting
power of the Corporation's then outstanding securities;
(b) During any twenty-four month consecutive period beginning on or
after October 1, 2001, individuals who at the beginning of such period
constituted a majority of the Board of Directors cease for any reason during any
day during any such period to constitute a majority thereof; provided, however,
that any director who is not in office at the beginning of such twenty-four
month period, but whose election by the Board or whose nomination for election
by the Company's shareholders was to fill a vacancy caused by death or
retirement and was
6
approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved shall be deemed
to have been in office at the beginning of such period for purposes of this
definition;
(c) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other Corporation or agreement of
exchange involving the Corporation ("Merger"), other than (1) a Merger which
would result in the voting securities of the Corporation outstanding as of
October 1, 2001 continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than fifty
percent of the combined voting power of the voting securities of the Corporation
or such surviving entity outstanding immediately after the Merger, or (2) a
Merger effected to implement a recapitalization of the Corporation (or similar
transaction) in which no Person acquires thirty percent or more, or in the case
of Elan Group in the aggregate, fifty percent or more, of the combined voting
power of the Corporation's then outstanding securities; or
(d) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) or
disposition by the Corporation of all or substantially all of the Corporation's
assets.
Code
"Code" shall mean the Internal Revenue Code of 1986, as amended. Any
reference to a specific provision of the Code includes a reference to such
provision as it may be amended from time to time and to any successor provision.
Effective Date
"Effective Date" shall mean the Effective Date of the First
Amendment.
ERISA
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended. Any reference to a specific provision of ERISA includes a
reference to such provision as it may be amended from time to time and to any
successor provision.
Exchange Act
The "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended. Any reference to a specific provision of the Exchange Act or to any
rule or regulation thereunder includes a reference to such provision as it may
be amended from time to time and to any successor provision.
Good Reason
"Good Reason" shall mean the occurrence of one or more of the
following events (regardless of whether any other reason, other than Cause, for
such termination exists or has occurred, including without limitation other
employment):
(a) failure to elect or reelect or otherwise maintain the Executive
in the offices or positions that the Executive held immediately prior to the
Change in Control;
(b) a change in the nature or scope of the authorities, powers,
functions, duties or responsibilities attached to the position with the
Corporation that the Executive held immediately prior to the Change in Control,
as reasonably determined by the Executive;
(c) a reduction by the Corporation in the Executive's Base Pay or an
adverse change in the form or timing of the payment thereof, as in effect
immediately prior to the Potential Change in Control or as thereafter increased;
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(d) the failure by the Corporation to cover the Executive under
Benefit Plans that, in the aggregate, provide substantially similar benefits to
the Executive and/or his family and dependents at a substantially similar total
cost to the Executive (e.g., premiums, deductibles, co-pays, out of pocket
maximums, required contributions, Taxes and the like) relative to the highest
benefits and lowest total costs under the Benefit Plans in which the Executive
(and/or his family or dependents) is participating at any time during the period
between the Potential Change in Control and the Change in Control;
(e) the Corporation's requiring the Executive to be based more than
fifty miles from where his office is located immediately prior to the Change in
Control, except for required travel on the Corporation's business, and then only
to the extent substantially consistent with the business travel obligations
which the Executive undertook on behalf of the Corporation during the ninety day
period ending on the date of the Potential Change in Control (without regard to
travel related to or in anticipation of the Change in Control);
(f) the failure of the Corporation to obtain from any Successor the
assent to this Agreement as required under Paragraph 32(a)(i);
(g) any purported termination by the Corporation of the Executive's
employment which is not properly effected pursuant to a Notice of Termination
and pursuant to any other requirements of this Agreement and, for purposes of
this Agreement, no such purported termination will be effective; or
(h) any refusal by the Corporation to continue to allow the
Executive to attend to matters or engage in activities not directly related to
the business of the Corporation which, at any time prior to the Potential Change
in Control, the Executive was not expressly prohibited by the Corporation from
attending to or engaging in.
The Executive's continued employment does not constitute consent to, or waiver
of any rights arising in connection with, any circumstance constituting Good
Reason. Notwithstanding the foregoing, the occurrence of an event that would
otherwise constitute Good Reason hereunder shall cease to be an event
constituting Good Reason if the Executive does not provide a Notice of
Termination to the Corporation within one hundred eighty days of the date that
the Executive first becomes aware of the occurrence of such event. Termination
by the Executive of his employment for Good Reason as defined hereunder will
constitute Good Reason for all purposes of this Agreement, even if the Executive
may also thereby be deemed to have "retired" under any applicable retirement
programs of the Corporation.
Gross-Up Payment
"Gross-Up Payment" shall mean an amount payable to the Executive
such that, after the payment of all Taxes attributable to any item of
compensation subject to gross-up under this Agreement by the Corporation, there
remains a balance sufficient to pay the Taxes being reimbursed.
Person
A "Person" shall mean any individual, corporation, partnership,
group, association or other "person," as such term is used in Paragraph 14(d) of
the Exchange Act, other than the Corporation, any Affiliate or any benefit plan
sponsored by the Corporation or an Affiliate.
Potential Change in Control
A "Potential Change in Control" shall be the first of the following
events to occur:
(a) the Corporation enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;
(b) any Person (including the Corporation) publicly announces an
intention to take or to consider taking actions which, if consummated, would
constitute a Change in Control; or
(c) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing fifteen percent or
more of the combined voting power of the Corporation's then outstanding
8
securities, increases its beneficial ownership of such securities by one
percentage point or more over the percentage so owned by such Person on the
Effective Date, other than an increase in ownership percentage due to the
payment of dividends by the issuance of additional securities of the
Corporation; or
(d) the Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has occurred.
The Board shall not be precluded from adopting a resolution to the effect that,
for purposes of this Agreement, it is the good faith opinion of the Board that a
Potential Change in Control has been abandoned and that a Potential Change in
Control no longer exists.
An event shall not be a Potential Change in Control for purposes of this
Agreement if a Change in Control does not occur within twelve months of such
event.
Successor
A "Successor" shall mean any Person that succeeds to, or has the
practical ability to control (either immediately or solely with the passage of
time), the Corporation's business directly, by merger, consolidation or other
form of business combination, or indirectly, by purchase of the Corporation's
outstanding securities ordinarily having the right to vote at the election of
directors, all or substantially all of its assets or otherwise.
Taxes
"Taxes" shall mean the incremental federal, state and local income,
excise and other taxes (including Excise Taxes), penalties and interest payable
by the Executive with respect to any applicable item of income.
Termination Date
"Termination Date" shall mean: (1) in the case of an employment
termination by the Corporation for Cause or by the Executive for Good Reason,
the date specified as the Executive's last day of employment in the Notice of
Termination, which shall not be less than ten business days after the date such
Notice of Termination is deemed given in accordance with Paragraph 18, or (2) in
any other case, the last day worked by the Executive as reflected on the
Corporation's payroll records. Notwithstanding the foregoing, if the Corporation
terminates the Executive's employment for Cause and the Executive has not
previously expressly agreed in writing to the termination, then within the
thirty day period after the Executive's receipt of the Notice of Termination,
the Executive may notify the Corporation that a dispute exists concerning the
termination, in which event the Termination Date will be the date set either by
mutual written agreement of the parties or by the arbitrators or a court under
the dispute resolution provisions in Paragraph 26. During the pendency of any
such dispute, the Executive will continue to make himself available to provide
services to the Corporation and the Corporation will continue to pay the
Executive his full compensation and benefits in effect immediately prior to the
date on which the Notice of Termination is given (without regard to any changes
to such compensation or benefits which constitute Good Reason) and until the
dispute is resolved in accordance with Paragraph 26. The Executive will be
entitled to retain the full amount of any such compensation and benefits without
regard to the resolution of the dispute unless the arbitrators or judge
decide(s) that the Executive's claim of a dispute was frivolous or advanced by
the Executive in bad faith.
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