EXHIBIT 3
SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of the 23rd day of February 1998 by
and between Global Industrial Technologies, Inc. a Delaware corporation (the
"Company"), and Xxxxxx X. Xxxxxx ("Executive").
W I T N E S S E T H
WHEREAS, the Company considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Company and its stockholders; and
WHEREAS, the Company recognizes that, as is the case with many
publicly held corporations, the possibility of a change in control may arise and
that such possibility may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders; and
WHEREAS, the Board (as defined in Section 1) has determined that it is
in the best interests of the Company and its stockholders to secure Executive's
continued services and to ensure Executive's continued dedication to his duties
in the event of any threat or occurrence of a Change in Control (as defined in
Section 1) of the Company; and
WHEREAS, the Board has authorized the Company to enter into this
Agreement.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements herein contained, the Company and Executive
hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms
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shall have the respective meanings set forth below:
(a) "Average Bonus Fraction" means a fraction, where the numerator is
the aggregate bonus compensation Executive has received during the lesser
of (i) the two (2) year period immediately preceding the year in which the
Date of Termination occurs or (ii) Executive's period of employment
immediately preceding the year in which the Date of Termination occurs and
the denominator is the aggregate amount of base salary that Executive has
received during the relevant period in clause (i) or (ii) above, as the
case may be.
(b) "Board" means the Board of Directors of the Company.
(c) "Bonus Amount" means the product of (i) Executive's current annual
rate of base salary on the Date of Termination (or, if greater, the base
salary in effect on the date of a Change in Control) and (ii) the Average
Bonus Fraction.
(d) "Cause" means (i) the willful and continued failure of Executive
to perform substantially his duties with the Company (other than any such
failure resulting from Executive's incapacity due to physical or mental
illness or any such failure subsequent to Executive being delivered a
Notice of Termination without Cause by the Company (or delivering a Notice
of Termination for Good Reason to the Company) after a written demand for
substantial performance is delivered to Executive by the Board which
specifically identifies the manner in which the Board believes that
Executive has not substantially performed Executive's duties, or (ii) the
willful engaging by Executive in illegal conduct or gross misconduct which
is demonstrably and materially injurious to the Company or its affiliates.
For purpose of this paragraph (d), no act or failure to act by Executive
shall be considered "willful" unless done or omitted to be done by
Executive in bad faith and without reasonable belief that Executive's
action or omission was in the best interests of the Company or its
affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board, based upon the advice
of counsel for the Company or upon the instructions of the Company's chief
executive officer or another senior officer of the Company shall be
conclusively presumed to be done, or omitted to be done, by Executive in
good faith and in the best interests of the Company. Cause shall not exist
unless and until the Company has delivered to Executive a copy of a
resolution duly adopted by three-quarters (3/4) of the entire Board
(excluding Executive if Executive is a Board member) at a meeting of the
Board (after reasonable notice to Executive and an opportunity for
Executive, together with counsel, to be heard before the Board at such
meeting), finding that in the good faith opinion of the Board an event set
forth in clauses (1) or (2) has occurred and specifying the particulars
thereof in detail. The Company must notify Executive of any event
constituting Cause within ninety (90) days following the Company's
knowledge of its existence or such event shall not constitute Cause under
this Agreement.
(e) "Change in Control" means the occurrence of any one of the
following events:
(i) individuals who, on February 23, 1998, constitute the Board
(the "Incumbent Directors") cease for any reason to constitute at
least a majority of the Board, provided that any person becoming
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a director subsequent to February 23, 1998, whose election or
nomination for election was approved by a vote of at least two-thirds
of the Incumbent Directors then on the Board (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 written
objection to such nomination) shall be an Incumbent Director;
provided, however, that no individual initially elected or nominated
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as a director of the Company as a result of an actual or threatened
election contest with respect to directors or as a result of any other
actual or threatened solicitation of proxies or consents by or on
behalf of any person other than the Board shall be deemed to be an
Incumbent Director;
(ii) any "person" (as such term is defined in Section 3(a)(9) of
the Securities Exchange Act of 1934 (the "Exchange Act") and as used
in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30%
or more of the combined voting power of the Company's then outstanding
securities eligible to vote for the election of the Board (the
"Company Voting Securities"); provided, however, that the event
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described in this paragraph (ii) shall not be deemed to be a Change in
Control by virtue of any of the following acquisitions: (A) by the
Company or any Subsidiary, (B) by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
Subsidiary, (C) by any underwriter temporarily holding securities
pursuant to an offering of such securities, (D) pursuant to a Non-
Qualifying Transaction (as defined in paragraph (iii)), or (E)
pursuant to any acquisition by Executive or any group of persons
including Executive (or any entity controlled by Executive or any
group of persons including Executive);
(iii) the consummation of a merger, consolidation, statutory
share exchange or similar form of corporate transaction involving the
Company or any of its Subsidiaries that requires the approval of the
Company's stockholders, whether for such transaction or the issuance
of securities in the transaction (a "Business Combination"), unless
immediately following such Business Combination: (A) 60% or more of
the total voting power of (x) the corporation resulting from such
Business Combination (the "Surviving Corporation"), or (y) if
applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of 100% of the voting securities
eligible to
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elect directors of the Surviving Corporation (the "Parent
Corporation"), is represented by Company Voting Securities that were
outstanding immediately prior to such Business Combination (or, if
applicable, is represented by shares into which such Company Voting
Securities were converted pursuant to such Business Combination), and
such voting power among the holders thereof is in substantially the
same proportion as the voting power of such Company Voting Securities
among the holders thereof immediately prior to the Business
Combination, (B) no person (other than any employee benefit plan (or
related trust) sponsored or maintained by the Surviving Corporation or
the Parent Corporation), is or becomes the beneficial owner, directly
or indirectly, of 30% or more of the total voting power of the
outstanding voting securities eligible to elect directors of the
Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) and (C) at least a majority of the members of
the board of directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) following the
consummation of the Business Combination were Incumbent Directors at
the time of the Board's approval of the execution of the initial
agreement providing for such Business Combination (any Business
Combination which satisfies all of the criteria specified in (A), (B)
and (C) above shall be deemed to be a "Non-Qualifying Transaction");
or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or a sale of all or
substantially all of the Company's assets.
Notwithstanding the foregoing, a Change in Control of the Company
shall not be deemed to occur solely because any person acquires beneficial
ownership of more than 30% of the Company Voting Securities as a result of the
acquisition of Company Voting Securities by the Company which reduces the number
of Company Voting Securities outstanding; provided, that, if after such
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acquisition by the Company such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control of the Company shall then occur.
(f) "Date of Termination" means (1) the effective date on which
Executive's employment by the Company terminates as specified in a prior
written notice by the Company or Executive, as the case may be, to the
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other, delivered pursuant to Section 13 or (ii) if Executive's employment
by the Company terminates by reason of death, the date of death of
Executive.
(g) "Disability" means termination of Executive's employment by the
Company due to Executive's absence from Executive's duties with the Company
on a full-time basis for at least one hundred eighty (180) consecutive days
as a result of Executive's incapacity due to physical or mental illness.
(h) "Good Reason" means, without Executive's express written consent,
the occurrence of any of the following events after a Change in Control:
(i) (A) any change in the duties or responsibilities of Executive
that is inconsistent in any material and adverse respect with
Executive's position(s), duties, responsibilities or status with the
Company immediately prior to such Change in Control (including any
material and adverse diminution of such duties or responsibilities);
provided, however, that Good Reason shall not be deemed to occur upon
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a change in duties or responsibilities that is solely and directly a
result of the Company no longer being a publicly traded entity (other
than such change which would have a material and adverse effect on
Executive's duties or responsibilities) and does not involve any other
event set forth in this paragraph (h) or (B) a material and adverse
change in Executive's titles or offices (including, if applicable,
membership on the Board) with the Company as in effect immediately
prior to such Change in Control;
(ii) a reduction by the Company in Executive's rate of annual
base salary or annual target bonus opportunity (including any material
and adverse change in the formula for such annual bonus target) as in
effect immediately prior to such Change in Control or as the same may
be increased from time to time thereafter;
(iii) any requirement of the Company that Executive (A) be based
anywhere more than thirty (30) miles from the office where Executive
is located at the time of the Change in Control or (B) travel on
Company business to an extent substantially greater than the travel
obligations of Executive immediately prior to such Change in Control;
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(iv) the failure of the Company to (A) continue in effect any
material employee benefit plan, compensation plan, welfare benefit
plan or fringe benefit plan in which Executive is participating
immediately prior to such Change in Control or the taking of any
action by the Company which would adversely affect Executive's
participation in or reduce Executive's benefits under any such plan,
unless Executive is permitted to participate in other plans providing
Executive with substantially equivalent benefits, or (B) provide
Executive with paid vacation in accordance with the most favorable
vacation policies of the Company as in effect for Executive
immediately prior to such Change in Control, including for purposes of
both (A) and (B), the crediting of all service for which Executive had
been credited under such plans and policies prior to the Change in
Control;
(v) any refusal by the Company to continue to permit Executive to
engage in activities not directly related to the business of the
Company which Executive was permitted to engage in prior to the Change
in Control;
(vi) any purported termination of Executive's employment which
is not effectuated pursuant to Section 11 (b) (and which will not
constitute a termination hereunder); or
(vii) the failure of the Company to obtain the assumption (and,
if applicable, guarantee) agreement from any successor (and Parent
Corporation) as contemplated in Section 10(b).
An isolated, insubstantial and inadvertent action taken in good faith
and which is remedied by the Company within ten (10) days after receipt of
notice thereof given by Executive shall not constitute Good Reason. Executive's
right to terminate employment for Good Reason shall not be affected by
Executive's incapacities due to mental or physical illness and Executive's
continued employment shall not constitute consent to, or a waiver of rights with
respect to, any event or condition constituting Good Reason; provided, however,
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that Executive must provide notice of termination of employment within ninety
(90) days following Executive's knowledge of an event constituting Good Reason
or such event shall not constitute Good Reason under this Agreement.
(i) "Qualifying Termination" means a termination of Executive's
employment (i) by the Company other than for Cause or (ii) by Executive for
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Good Reason. Termination of Executive's employment on account of death,
Disability or Retirement shall not be treated as a Qualifying Termination.
(j) "Retirement" means Executive's mandatory retirement (not including
any mandatory early retirement) in accordance with the Company's retirement
policy generally applicable to its salaried employees, as in effect
immediately prior to the Change in Control, or in accordance with any
retirement arrangement established with respect to Executive with
Executive's written consent.
(k) "Subsidiary" means any corporation or other entity in which the
Company has a direct or indirect ownership interest of 50% or more of the
total combined voting power of the then outstanding securities or interests
of such corporation or other entity entitled to vote generally in the
election of directors or in which the Company has the right to receive 50%
or more of the distribution of profits or 50% of the assets or liquidation
or dissolution.
(l) "Termination Period" means the period of time beginning with a
Change in Control and ending three (3) years following such Change in
Control. Notwithstanding anything in this Agreement to the contrary, if
(i) Executive's employment is terminated prior to a Change in Control for
reasons that would have constituted a Qualifying Termination if they had
occurred following a Change in Control; (ii) Executive reasonably
demonstrates that such termination (or Good Reason event) was at the
request of a third party who had indicated an intention or taken steps
reasonably calculated to effect a Change in Control; and (iii) a Change in
Control involving such third party (or a party competing with such third
party to effectuate a Change in Control) does occur, then for purposes of
this Agreement, the date immediately prior to the date of such termination
of employment or event constituting Good Reason shall be treated as a
Change in Control. For purposes of determining the timing of payments and
benefits to Executive under Section 4, the date of the actual Change in
Control shall be treated as Executive's Date of Termination under Section
1(f).
2. Obligation of Executive. In the event of a tender or exchange
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offer, proxy contest, or the execution of any agreement which, if consummated,
would constitute a Change in Control, Executive agrees not to voluntarily leave
the employ of the Company, other than as a result of Disability, Retirement or
an event which would constitute Good Reason if a Change in Control had occurred,
until the Change in Control occurs or, if earlier, such tender or exchange
offer, proxy contest, or agreement is terminated or abandoned.
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3. Term of Agreement. This Agreement shall be effective on the date
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hereof and shall continue in effect until the first anniversary thereof;
provided, however, that the term of this Agreement shall automatically be
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extended commencing on the first anniversary hereof for successive additional
one (1) year periods unless either party gives written notice not to extend the
term not less than ninety (90) days prior to the then next upcoming expiration
date; provided, further, that notwithstanding the delivery of any such notice,
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this Agreement shall continue in effect for a period of three (3) years after a
Change in Control, if such Change in Control shall have occurred during the term
of this Agreement. Notwithstanding anything in this Section to the contrary,
this Agreement shall terminate if Executive or the Company terminates
Executive's employment prior to a Change in Control except as provided in
Section 1(l).
4. Payments Upon Termination of Employment.
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(a) Qualifying Termination. If during the Termination Period the
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employment of Executive shall terminate pursuant to a Qualifying Termination,
then the Company shall provide to Executive:
(i) within ten (10) business days following the Date of Termination a
lump-sum cash amount equal to the sum of (A) Executive's base salary
through the Date of Termination and any bonus amounts which have become
payable, to the extent not theretofore paid or deferred, (B) a pro rata
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portion of Executive's annual bonus for the fiscal year in which
Executive's Date of Termination occurs in an amount at least equal to (1)
Executive's Bonus Amount, multiplied by (2) a fraction, the numerator of
which is the number of days in the fiscal year in which the Date of
Termination occurs through the Date of Termination and the denominator of
which is three hundred sixty-five (365), and reduced by (3) any amounts
paid from the Company's annual incentive plan for the fiscal year in which
Executive's Date of Termination occurs and (C) any accrued vacation pay, in
each case to the extent not theretofore paid; plus
(ii) within ten (10) business days following the Date of Termination,
a lump-sum cash amount equal to (A) two and one-half (2.5) times
Executive's highest annual rate of base salary during the 12-month period
immediately prior to Executive's Date of Termination, plus (B) two and one-
half (2.5) times Executive's Bonus Amount.
(b) If during the Termination Period the employment of Executive shall
terminate pursuant to a Qualifying Termination, the Company shall continue to
provide, for a period of two (2) years and six (6) months following Executive's
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Date of Termination, Executive (and Executive's dependents, if applicable) with
the same level of medical, dental, accident, disability and life insurance
benefits upon substantially the same terms and conditions (including
contributions required by Executive for such benefits) as existed immediately
prior to Executive's Date of Termination (or, if more favorable to Executive, as
such benefits and terms and conditions existed immediately prior to the Change
in Control); provided, that, if Executive cannot continue to participate in the
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Company plans providing such benefits, the Company shall otherwise provide such
benefits on the same after-tax basis as if continued participation had been
permitted (the Continued Benefits), provided, further, that such Continued
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Benefits shall terminate on the date Executive receives substantially equivalent
coverage and benefits, without waiting periods or pre-existing condition
limitations, at the same or lower costs to Executive, taking into consideration
deductibles, premiums, and copayment requirements, under plans and programs of a
subsequent employer (such coverage, benefits and cost to be determined on a
coverage-by-coverage or benefit-by-benefit basis).
In addition, the Company shall pay to Executive, within ten (10)
business days following his Date of Termination, a lump sum payment in an amount
equal to the sum of (A) and (B), where (A) is the excess, if any, of (i) the
present value of the benefits to which Executive would be entitled under
Company's pension and retirement plans (whether or not intended to be qualified
under Section 401(a) of the Internal Revenue Code of 1986, as amended (the Code)
if Executive had continued in the employ of the Company for an additional two
(2) years and six (6) months following his Date of Termination earning during
such two year and six month period the rate of base salary and Bonus Amount in
effect as of his Date of Termination, over (ii) the present value of the benefit
to which Executive is actually entitled under such pension and retirement plans
as of his Date of Termination and (B) is the present value of the Company
contributions that would have been made under all Company savings programs
(whether or not intended to be qualified under Section 401 (a) of the Code) if
Executive had continued in the employ of the Company for an additional two (2)
years and six (6) months following his Date of Termination earning during such
two year and six month period the rate of base salary and Bonus Amount in effect
as of his Date of Termination, assuming that the Company would have made the
maximum contributions permitted under such savings programs, and assuming, for
purposes of determining the amount of any Company matching contributions, that
Executive would have contributed the amount necessary to receive the maximum
matching contributions available under such savings programs.
For purposes of the preceding sentence, present value shall be
determined as of the Date of Termination and shall be calculated based upon a
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discount rate equal to the applicable Federal rate as provided in Section
1274(b)(2)(B) of the Code and without reduction for mortality.
(c) If during the Termination Period the employment of Executive shall
terminate other than by reason of a Qualifying Termination, then the Company
shall pay to Executive within thirty (30) days following the Date of
Termination, a lump-sum cash amount equal to the sum of (i) Executive's base
salary through the Date of Termination and any bonus amounts which have become
payable, to the extent not theretofore paid or deferred, and (ii) any accrued
vacation pay, in each case to the extent not theretofore paid.
5. Certain Additional Payments by the Company.
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(a) Notwithstanding anything in this Agreement to the contrary, in the
event it shall be determined that any payment, award, benefit or distribution
(or any acceleration of any payment, award, benefit or distribution) by the
Company (or any of its affiliated entities) or any entity which effectuates a
Change in Control (or any of its affiliated entities) to or for the benefit of
Executive (whether pursuant to the terms of this Agreement or otherwise) (the
"Payments") would be subject to the excise tax (the "Excise Tax") under Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"), then the
amounts payable to Executive under this Agreement shall be the greater of (i)
the Payment, if the result of subtracting the Excise Tax from the Payment is
more than the Safe Harbor Cap and (ii) the Payment, reduced to the maximum
amount as will result in no portion of the Payments being subject to the Excise
Tax (the "Safe Harbor Cap"), reducing first the payments under Section 4(a)(ii),
unless an alternative method of reduction is elected by Executive. For purposes
of reducing the Payments to the Safe Harbor Cap, only amounts payable to
Executive under this Agreement (and no other Payments) shall be reduced, unless
consented to by Executive.
(b) All determinations required to be made under this Sections 4 and 5
shall be made by the nationally recognized public accounting firm that is
retained by the Company (the "Accounting Firm"). In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change in Control, Executive may appoint another
nationally recognized public accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). If payments are reduced to the Safe Harbor Cap, the Accounting
Firm shall provide a reasonable opinion to Executive that he is not required to
report any Excise Tax on his federal income tax return. All fees, costs and
expenses (including, but not limited to, the costs of retaining experts) of the
Accounting Firm shall be borne by the Company.
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The determination by the Accounting Firm shall be binding upon the Company and
Executive (except as provided in paragraph (c) below).
(c) If payments are reduced to the Safe Harbor Cap as provided in
Section 5(a)(ii) and if it is established pursuant to a final determination of a
court or an Internal Revenue Service (the "IRS") proceeding which has been
finally and conclusively resolved, that Payments have been made to, or provided
for the benefit of, Executive by the Company, which are in excess of the
limitations provided in this Section 5(a)(ii) (hereinafter referred to as an
"Excess Payment"), such Excess Payment shall be deemed for all purposes to be a
loan to Executive made on the date Executive received the Excess Payment and
Executive shall repay the Excess Payment to the Company on demand, together with
interest on the Excess Payment at the applicable federal rate (as defined in
Section 1274(d) of the Code) from the date of Executive's receipt of such Excess
Payment until the date of such repayment. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the determination, it is
possible that Payments which will not have been made by the Company should have
been made (an "Underpayment"), consistent with the calculations required to be
made under this Section 5. In the event that it is determined (1) by the
Accounting Firm, the Company (which shall include the position taken by the
Company, or together with its consolidated group, on its federal income tax
return) or the IRS or (2) pursuant to a determination by a court, that an
Underpayment has occurred, the Company shall pay an amount equal to such
Underpayment to Executive within ten (10) days of such determination together
with interest on such amount at the applicable federal rate from the date such
amount would have been paid to Executive until the date of payment.
6. Confidential Information and Non-Solicitation.
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(a) Executive agrees to keep secret and retain in the strictest
confidence all Confidential Information which relates to the Company, its
Subsidiaries and affiliates. Confidential Information (a) means information (i)
that is learned by Executive from the Company or any of its Subsidiaries or
affiliates before or after the date of this Agreement (other than Confidential
Information that was known by Executive on a nonconfidential basis prior to the
disclosure thereof), (ii) that is commercially valuable to the Company and (iii)
that is not published or of public record or otherwise generally known (other
than through failure of Executive to fully perform his obligations hereunder)
and (b) includes, without limitation, customer lists, client lists, trade
secrets, pricing policies and other business affairs of the Company, its
Subsidiaries and affiliates. Executive agrees not to disclose any such
Confidential Information to anyone outside the Company or any of its
subsidiaries or affiliates, whether during or after his period of services
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with the Company, except (x) as such disclosure may be required or appropriate
in connection with his service or (y) when required to do so by a court of law,
by any governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) with apparent jurisdiction to order him to divulge, disclose or make
accessible such information. Executive agrees to give the Company advance
written notice of any disclosure pursuant to clause (y) of the preceding
sentence and to cooperate with any efforts by the Company to limit the extent of
such disclosure. Upon request by the Company, Executive agrees to deliver
promptly to the Company upon termination of his services from the Company, or at
any reasonable time thereafter as the Company may request, all Company,
subsidiary or affiliate memoranda, notes, records, reports, manuals, drawings,
designs, computer files in any media and other documents (and all copies
thereof) relating to the Company's or any Subsidiary's or affiliate's business
and all property of the Company or any Subsidiary or affiliate associated
therewith, which he may then possess or have under his direct control.
(b) Executive hereby covenants and agrees that, at all times during
the term of this Agreement and for a one year period following his Date of
Termination for any reason, Executive shall not employ or seek to employ any
person employed at that time by the Company or any of its Subsidiaries or its
affiliates who is engaged in or concerned with or interested in a business which
conducts the same or similar business in any way or degree in competition with
the Company, or otherwise encourage or entice such person or entity to leave
such employment.
7. Withholding Taxes. The Company may withhold from all payments
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due to Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.
8. Reimbursement.of Expenses. If any contest or dispute shall arise
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under this Agreement involving termination of Executive's employment with the
Company or involving the failure or refusal of the Company to perform fully in
accordance with the terms hereof, the Company shall reimburse Executive, on a
current basis, for all reasonable legal fees and expenses, if any, incurred by
Executive in connection with such contest or dispute (regardless of the result
thereof), together with interest in an amount equal to the prime rate of Bank of
America from time to time in effect, but in no event higher than the maximum
legal rate permissible under applicable law, such interest to accrue from the
date the Company receives Executive's statement for such fees and expenses
through the date of payment thereof, regardless of whether or not Executive's
claim is upheld
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by a court of competent jurisdiction; provided, however, Executive shall be
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required to repay any such amounts to the Company to the extent that a court
issues a final and non-appealable order setting forth the determination that the
position taken by Executive was frivolous or advanced by Executive in bad faith.
9. Scope of Agreement. Nothing in this Agreement shall be deemed to
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entitle Executive to continued employment with the Company or its Subsidiaries,
and if Executive's employment with the Company shall terminate prior to a Change
in Control, Executive shall have no further rights under this Agreement (except
as otherwise provided hereunder); provided, however, that any termination of
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Executive's employment during the Termination Period shall be subject to all of
the provisions of this Agreement.
10. Successors; Binding Agreement.
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(a) This Agreement shall not be terminated by any Business
Combination. In the event of any Business Combination, the provisions of this
Agreement shall be binding upon the Surviving Corporation, and such Surviving
Corporation shall be treated as the Company hereunder.
(b) The Company agrees that in connection with any Business
Combination, it will cause any successor entity to the Company unconditionally
to assume (and for any Parent Corporation in such Business Combination to
guarantee), by written instrument delivered to Executive (or his beneficiary or
estate), all of the obligations of the Company hereunder. Failure of the
Company to obtain such assumption and guarantee prior to the effectiveness of
any such Business Combination that constitutes a Change in Control, shall be a
breach of this Agreement and shall constitute Good Reason hereunder and shall
entitle Executive to compensation and other benefits from the Company in the
same amount and on the same terms as Executive would be entitled hereunder if
Executive's employment were terminated following a Change in Control by reason
of a Qualifying Termination. For purposes of implementing the foregoing, the
date on which any such Business Combination becomes effective shall be deemed
the date Good Reason occurs, and shall be the Date of Termination if requested
by Executive.
(c) This Agreement shall inure to the benefit of and be enforceable
by Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive shall die
while any amounts would be payable to Executive hereunder had Executive
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to such person or persons
appointed
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in writing by Executive to receive such amounts or, if no person is so
appointed, to Executive's estate.
11. Notice. (a) For purposes of this Agreement, all notices and
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other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered or five (5) days after
deposit in the United States mail, certified and return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
Xxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
If to the Company:
Global Industrial Technologies, Inc.
0000 Xxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
(b) A written notice of Executive's Date of Termination by the Company
or Executive, as the case may be, to the other, shall (i) indicate the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's employment under the provision
so indicated and (iii) specify the termination date (which date shall be not
less than fifteen (15) (thirty (30), if termination is by the Company for
Disability) nor more than sixty (60) days after the giving of such notice). The
failure by Executive or the Company to set forth in such notice any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of Executive or the Company hereunder or preclude Executive or
the Company from asserting such fact or circumstance in enforcing Executive's or
the Company's rights hereunder.
12. Full Settlement. The Company's obligation to make any payments
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provided for in this Agreement and otherwise to perform its obligations
hereunder shall be in lieu and in full settlement of all other severance
payments to
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Executive under any other severance or employment agreement between Executive
and the Company, and any severance plan of the Company. The Company's
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against Executive or others. In no event shall Executive be obligated to seek
other employment or take other action by way of mitigation of the amounts
payable to Executive under any of the provisions of this Agreement and, except
as provided in Section 4(b), such amounts shall not be reduced whether or not
Executive obtains other employment.
13. Employment with Subsidiaries. Employment with the Company for
----------------------------
purposes of this Agreement shall include employment with any Subsidiary.
14. Survival. The respective obligations and benefits afforded to
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the Company and Executive as provided in Sections 4 (to the extent that payments
or benefits are owed as a result of a termination of employment that occurs
during the term of this Agreement), 5 (to the extent that Payments are made to
Executive as a result of a Change in Control that occurs during the term of this
Agreement), 6, 7, 8, 1 0(c) and 12 shall survive the termination of this
Agreement.
15. GOVERNING LAW; VALIDITY THE INTERPRETATION CONSTRUCTION AND
-----------------------
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE
PRINCIPLE OF CONFLICTS OF LAWS. THE INVALIDITY OR UNENFORCEABILITY OF ANY
PROVISION OF THIS AGREEMENT SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF
ANY OTHER PROVISION OF THIS AGREEMENT, WHICH OTHER PROVISIONS SHALL REMAIN IN
FULL FORCE AND EFFECT.
16. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
17. Miscellaneous. No provision of this Agreement may be modified or
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waived unless such modification or waiver is agreed to in writing and signed by
Executive and by a duly authorized officer of the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Failure by Executive
or the Company to insist upon strict compliance with any provision of this
Agreement
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or to assert any right Executive or the Company may have hereunder, including
without limitation, the right of Executive to terminate employment for Good
Reason, shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement. Except as otherwise specifically
provided herein, the rights of, and benefits payable to, Executive, his estate
or his beneficiaries pursuant to this Agreement are in addition to any rights
of, or benefits payable to, Executive, his estate or his beneficiaries under any
other employee benefit plan or compensation program of the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer of the Company and Executive has executed
this Agreement as of the day and year first above written.
Global Industrial Technologies, Inc.
By: /s/ X.X. Xxxxxxx
---------------------------
X.X. Xxxxxxx
Title: Chairman and
Chief Executive Officer
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Xxxxxx X. Xxxxxx
Title: Vice President - Communications
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