EXHIBIT 5
CHANGE OF CONTROL AGREEMENT
This AGREEMENT is made as of January 5, 1998, by and between ENVIRONMENT
ONE CORPORATION, with offices located in Niskayuna, New York ("Corporation"),
and XXXXXXX X. XXXXX, an individual employed by the Corporation ("Employee").
WITNESSETH:
WHEREAS, the Corporation's Board of Directors (the "Board") has authorized
the Corporation to enter into severance agreements with certain key employees of
the Corporation to encourage the continued dedication of the employee to the
Corporation and to promote the stability of Corporation management by providing
certain protections for the employee in the event a change of control of the
Corporation occurs; and
WHEREAS, should the Corporation receive any proposal from a third person
concerning any possible business combination with, or acquisition of equity
securities of, the Corporation, the Board believes it imperative that the
Corporation be able to rely upon the Employee to continue in his position, and
that the Corporation be able to receive and rely upon his advice, if it requests
it, as to the best interests of the Corporation and its shareholders without
concern that the Employee might be distracted by the personal uncertainties and
risks created by such a proposal; and
WHEREAS, should the Corporation receive any such proposals, in addition to
the Employee's regular duties, he may be called upon to assist in the assessment
of such proposals, to advise management and the Board as to whether such
proposals would be in the best interests of the Corporation and its
shareholders, and to take such other actions as the Board might determine to be
appropriate; and
WHEREAS, the Board also desires to encourage the continued dedication of
the Employee to the Corporation and to promote the stability of the
Corporation's management by providing certain protections for the Employee in
the event that a change of control occurs with respect to the Corporation;
NOW, THEREFORE, to assure the Corporation will have the continued
dedication of the Employee and the availability of his advice and counsel
notwithstanding the possibility, threat or occurrence of a bid to take over
control of the Corporation, and to induce the Employee to remain in the employ
of the Corporation, and for other good and valuable consideration, the
Corporation and the Employee agree as follows:
1. SERVICES DURING CERTAIN EVENTS. In the event a "person" or "group"
(as such quoted terms are defined in Section 4(a)(ii) below) begins a tender or
exchange offer, circulates a proxy to shareholders, or takes other steps seeking
to effect a Change of Control (as defined in Section 4(a) below), the Employee
agrees that he will not voluntarily leave the employ of the Corporation and will
render the services contemplated in the recitals to this Agreement consistent
with his then current employment terms until the such person or group has
abandoned or terminated efforts to effect a Change of Control or until three (3)
months after a Change of Control has occurred, provided no adverse changes occur
in the Employee's authority, duties, or compensation.
2. CHANGE OF CONTROL PAYMENT.
(a) In the event a Change of Control (defined in Section 4(a) below)
occurs during the Employee's employment with the Corporation, the Corporation
shall be obligated, subject to the limitation contained in Section 2(b) below,
to pay the Employee, as compensation for services rendered to the Corporation,
an amount equal to: (i) the amount of the Employee's annual base salary in
effect on the date the Change of Control occurs, and (ii) an amount equal to the
sum of (A) the bonus payable to the Employee for the year during which the
Change of Control occurs, prorated through the date the Change of Control
occurs, plus (B) the average annual bonus paid to the Employee for the two
complete fiscal years that precede the fiscal year during which the Change of
Control occurs. In addition, the Corporation shall waive for 12 months
following the Employee's termination of employment (whenever such termination
shall occur) any required premium payment due from the Employee to allow the
Employee to continue the Employee's coverage under the Corporation's group
health plan pursuant to Public Law 99-272, Title X (i.e., "COBRA"). The
Employee shall not be entitled to the foregoing change of control benefits if
the Employee is terminated for Cause (as defined in Section 4(b)) prior to the
Change of Control. Amounts payable by the Corporation pursuant to this Section
2(a) shall be paid to the Employee in substantially equal installments (subject
to any applicable payroll or other taxes required to be withheld), over a one
year period, without interest, with the first such payment made not later than
30 days after the date the Change of Control occurs and with succeeding
installments paid in accordance with the Corporation's regular payroll cycles
for executive employees. In the event the Employee dies prior to the payment of
all amounts due pursuant to this Section 2(a), remaining unpaid installments
shall be paid to his estate. Notwithstanding the foregoing, at the sole
election of the Corporation, the entire amount payable to the Employee pursuant
to this Section 2(a) may be paid in a lump sum, not later than the 30th day
following the date the Change of Control occurs.
(b) Notwithstanding anything in this Agreement to the contrary, in
the event that the amount payable to the Employee pursuant to Section 2(a)
above, when added to all other amounts paid or to be paid to, and the value of
all property received or to be received by the Employee in anticipation of or
following a Change of Control, whether paid or received pursuant to this
Agreement or otherwise (such other amounts and property being referred to herein
as "Other Change of Control Payments"), would constitute an excess parachute
payment within the meaning of Section 280G of the Internal Revenue Code of 1986,
as
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amended (or any successor or renumbered section), then the amount payable
pursuant to Section 2(a) of this Agreement shall be reduced to the maximum
amount which, when added to such Other Change of Control Payments, does not
constitute an excess parachute payment.
3. OTHER EMPLOYMENT. The Employee shall not be obligated to seek other
employment in mitigation of the amounts payable or arrangements made under any
provision of this Agreement, nor shall any payments under this Agreement be
reduced on account of any compensation, benefits or service credits for benefits
from any employment that the Employee may obtain following his termination of
employment with the Corporation.
4. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the following respective meanings:
(a) A "CHANGE OF CONTROL" shall be deemed to have taken place if
either:
(i) as the result of, or in connection with, any tender
or exchange offer, consolidation, merger or other business
combination, sale of assets or contested election or any
combination of the foregoing transactions (a "transaction"), the
persons who were directors of the Corporation before the
Transaction shall cease for any reason to constitute a majority
of the Board of Directors of the Corporation or any successor to
the Corporation; or
(ii) any "person" (as that term is used Section 13(d) and
14(d)(2) of the Securities and Exchange Act of 1934 (the
"Exchange Act") as in effect on the date hereof), including a
"group" as defined in Section 13(d)(3) of the Exchange Act,
becomes the beneficial owner, directly or indirectly, of shares
of the Corporation having more than 20% of the total number of
votes that may be cast for the election of directors of the
Corporation; or
(iii) the Corporation is merged or consolidated with
another corporation and as a result of the merger or
consolidation less than 20% of the outstanding voting securities
of the surviving or resulting corporation shall then be owned in
the aggregate by the former stockholders of the Corporation,
other than affiliates within the meaning of the Exchange Act or
any party to the merger or consolidation; or
(iv) a tender offer or exchange offer is made and
consummated for the ownership of securities of the Corporation
representing more than 20% of the combined voting power of the
Corporation's then outstanding voting securities; or
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(v) the Corporation transfers substantially all of its
assets to another corporation which is not a direct or indirect
wholly-owned subsidiary of the Corporation.
(b) "CAUSE" shall mean (i) conduct involving fraud, misappropriation
or intentional material damage to the property or business of the Corporation,
or commission of a felony, (ii) failure or breach to perform Employee's
designated duties consistent with his position with the Corporation after
receiving written notice from the Corporation specifying the nature of the
alleged failure or breach and failing to correct the failure or breach within 15
days of such notice, or (iii) Employee's intentional violation of the
Corporation's written policies, Employee's fiduciary duties, or any law or
regulation which results in material damage or cost to the Corporation.
5. TRADE SECRETS. It is recognized that the Corporation has acquired and
developed and will continue to acquire and develop techniques, plans, processes,
computer programs, and lists of customers and their particular requirements
which may pertain to Corporation related services and equipment, and related
trade secrets, know-how, research and development, which are proprietary and
confidential in nature and are and will continue to be of unique value to the
Corporation and its business (all hereinafter referred to as "Confidential
Information"). All Confidential Information known or in the possession of the
Employee shall be kept and maintained by him as confidential and proprietary to
the Corporation. The Employee shall not disclose any Confidential Information
at any time directly or indirectly, in any manner to any person or firm, except
to other employees of the Corporation on a "need to know" basis. Upon
termination of his employment for any reason, the Employee shall without demand
therefore deliver to the Corporation all Confidential Information in his
possession. The obligations of this Section shall survive the termination of
this Agreement indefinitely.
6. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the Employee and his estate, and the Corporation and any successors
of the Corporation, but neither this Agreement nor any rights arising hereunder
may be assigned or pledged by the Employee.
7. MISCELLANEOUS. This Agreement represents the entire agreement between
the parties with respect to the subject matter of this Agreement and
specifically supersedes any and all oral or written agreements on its subject
matter previously agreed to by the parties.
8. SEVERABILITY. Any provision in this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
or affecting the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not be invalidated or rendered
unenforceable such provision in any other jurisdiction.
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9. CONTROLLING LAW. This Agreement shall in all respects be governed by,
and construed in accordance with, the laws of the State of New York.
10. TERM OF AGREEMENT.
(a) INITIAL TERM AND RENEWAL. The initial term of this Agreement
shall commence as of January 5, 1998, and shall continue through December 31,
1998, unless earlier terminated as provided herein. Thereafter, this Agreement
shall be renewed for additional one year periods, unless either party gives
written notice of non-renewal of this Agreement to the other party at least
thirty (30) days prior to the expiration of the initial term or any renewal
term; provided, however, that in no case shall this Agreement terminate:
(i) within 12 months after the occurrence of a Change of Control, or (ii) during
any period of time when the Corporation has knowledge that any person or group
(such terms are defined in Section 4(a)(ii) above) has taken steps reasonably
calculated to effect a Change of Control until, in the opinion of the Board,
such person or group has abandoned or terminated his or its efforts to effect a
Change of Control. Any determination by the Board that such person or group has
abandoned or terminated his or its efforts to effect a Change of Control shall
be conclusive and binding as the Employee.
(b) EMPLOYMENT "AT WILL". Notwithstanding any provisions of this
Agreement, this Agreement shall not confer upon the Employee the right to be
retained in the service of the Corporation nor limit the right of the
Corporation to discharge or otherwise deal with the Employee. Accordingly, the
Employee or the Corporation may terminate the Employee's employment with the
Corporation at any time with or without cause, subject to the provisions of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
specified in the first paragraph of this Agreement.
ENVIRONMENT ONE CORPORATION
By:
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Xxxx X. Xxxxx, Chair
Human Resource Committee
EMPLOYEE:
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Xxxxxxx X. Xxxxx
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