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EXHIBIT 10.8
TERMINATION PROTECTION AGREEMENT
AGREEMENT as of (the "Effective Date") by and between
Xxxxx & Co., Inc., a New York corporation (together with its subsidiaries and
affiliates and, after a Change of Control Event (as defined herein), any
successor or successors thereto, the "Corporation"), and (the
"Executive").
WHEREAS, Executive is a skilled and dedicated employee who has important
management responsibilities and talents which benefit the Corporation; and
WHEREAS, the Corporation believes that its interests will be served if
Executive has fair and reasonable protection from the risks of a change in
ownership or control of the Corporation;
NOW, THEREFORE, the parties hereby agree as follows:
1. DEFINED TERMS.
Unless otherwise indicated, capitalized terms used in this Agreement which
are defined in Schedule A shall have the meanings set forth in Schedule A.
2. TERM.
This Agreement shall be effective as of the Effective Date and shall remain
in effect thereafter. The Corporation may terminate this Agreement by giving
Executive at least two years advance written notice of termination of the
Agreement. Notwithstanding the foregoing, this Agreement shall, if in effect on
the date of a Change of Control Event, remain in effect for at least two years
and six months following such Change of Control Event, and such additional time
as may be necessary to give effect to the terms of the Agreement.
3. SEVERANCE AND OTHER BENEFITS.
If Executive's employment with the Corporation is terminated by the
Corporation at any time within the two years and six months following a Change
of Control Event without Cause, or by Executive for Good Reason (the effective
date of either such termination hereafter referred to as the "Termination
Date"), Executive shall be entitled to the benefits provided hereafter in this
Section 3 and as set forth in this Agreement. If Executive's employment with the
Corporation is terminated prior to a Change of Control Event at the request of
any individual or entity acquiring ownership and control of the Corporation,
this Agreement shall become effective upon the subsequent occurrence of a Change
of Control Event involving such acquiror, Executive's Termination Date shall be
deemed to have occurred immediately following the Change of Control Event, and
therefore Executive shall be entitled to the benefits provided hereafter in this
Section 3 and as set forth in this Agreement.
(a) Severance Benefits. Within ten (10) days after the Termination Date,
the Corporation shall pay Executive a lump sum amount, in cash, equal to the sum
of:
(1) two (2) times the sum of:
(A) Executive's Base Salary, and
(B) Executive's Target Bonus; and
(2) Executive's Target Bonus multiplied by a fraction, the numerator of
which shall equal the number of days Executive was employed by the
Corporation in the Fiscal Year in which the Termination Date occurs and
the denominator of which shall equal 365.
(b) Payment of Accrued But Unpaid Amounts. Within ten (10) days after the
Termination Date, the Corporation shall pay Executive (1) any unpaid portion of
Executive's bonus accrued with respect to the Fiscal Year ended prior to the
Termination Date; and (2) all compensation previously deferred by Executive but
not yet paid.
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(c) Continued Welfare Benefits. Until the date which is two years after
the Termination Date or, if earlier, the date on which Executive commences
full-time employment after the Termination Date, the Corporation shall, at its
expense, provide Executive with medical and dental benefits, life insurance,
disability and accidental death and dismemberment benefits at the highest level
provided to Executive during the period beginning immediately prior to the
Change of Control Event and ending on the Termination Date; provided, however,
that if Executive becomes employed by a new employer which maintains a medical
plan (or its equivalent) that either (i) does not cover Executive with respect
to a pre-existing condition which was covered under the Corporation's medical
plan, or (ii) does not cover Executive for a designated waiting period,
Executive's coverage under the Corporation's medical plan shall continue (but
shall be limited in the event of noncoverage due to a preexisting condition, to
the preexisting condition itself) until the earlier of the end of the applicable
period of noncoverage under the new employer's plan or the date which is two
years after the Termination Date.
(d) Outplacement Counseling. The Corporation shall reimburse Executive for
professional outplacement counseling services by qualified consultants selected
by Executive that are incurred through the period ending two years after the
Termination Date; provided, however, that the maximum aggregate amount for which
an Executive shall be reimbursed under this subsection 3(d) shall be 20% of the
sum of (i) the Executive's Base Salary and (ii) the Executive's Target Bonus.
(e) Effect on Existing Plans. All provisions relating to a Change of
Control Event applicable to Executive and contained in any plan, program,
agreement or arrangement maintained on the Effective Date (or thereafter) by the
Corporation, including, but not limited to, any stock option, restricted stock
or retirement plan, shall remain in effect through the date of the Change of
Control Event, and for such period thereafter as is necessary to carry out such
provisions and provide the benefits payable thereunder, and may not be altered
in a manner which adversely affects Executive without Executive's express prior
written approval.
4. ACCELERATION OF EQUITY RIGHTS.
Effective as of the date of a Change of Control Event, the Corporation
shall cause Executive's outstanding stock options which are not immediately
exercisable to vest and become immediately exercisable and the restrictions on
any equity and equity rights held by Executive which are scheduled to lapse
solely through the passage of time to lapse.
5. EXCESS PARACHUTE PAYMENT.
(a) Notwithstanding anything in this Agreement to the contrary, if any
amount or distribution by the Company to or for the benefit of Executive
(whether or not paid or distributed pursuant to the terms of this Agreement or
otherwise) (a "Payment") would subject Executive to an excise tax under Section
4999 of the Code (such excise tax, together with any interest and penalties
thereon, hereinafter referred to as the "Excise Tax") on "excess parachute
payments", as defined in Section 280G of the Code, the amounts payable under
Section 3 shall be reduced by the smallest amount necessary to avoid the
imposition of the Excise Tax.
(b) The determination of whether and when an Excise Tax is payable, the
amount of such Excise Tax, the amount, if any that a Payment must be reduced,
and the assumptions to be utilized in arriving at such determination shall be
made by Ernst & Young or such other nationally recognized certified public
accounting firm as may be designated by Executive (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Corporation and
Executive within fifteen (15) business days of the receipt of notice from
Executive that there has been a Payment, or such earlier time as is requested by
the Corporation. In the event that the Accounting Firm is serving as accountant
or auditor for an individual, entity or group effecting the change in ownership
or effective control (within the meaning of Section 280G of the Code), Executive
shall appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Corporation. If the Accounting Firm determines
that no Excise Tax is payable by Executive, it shall so indicate to Executive in
writing. Any determination by the Accounting Firm shall be binding upon the
Corporation and Executive.
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6. MITIGATION.
Executive shall not be required to mitigate damages or the amount of any
payment provided for under this Agreement by seeking other employment or
otherwise, and compensation earned from such employment or otherwise shall not
reduce the amounts payable under this Agreement. No amounts payable under this
Agreement shall be subject to reduction or offset in respect of any claims which
the Corporation (or any other person or entity) may have against Executive.
7. INDEMNIFICATION; DIRECTORS' AND OFFICERS' LIABILITY INSURANCE.
Executive shall, after the Termination Date, retain all rights to
indemnification under applicable law or under the Corporation's Certificate of
Incorporation or By-Laws, as they may be amended or restated from time to time.
In addition, the Corporation shall maintain Directors' and Officers' liability
insurance on behalf of Executive, at the level in effect immediately prior to
the Termination Date, for two years following the Termination Date, and
throughout the period of any applicable statute of limitations.
8. TERMINATION FOR CAUSE.
Nothing in this Agreement shall be construed to prevent the Corporation
from terminating Executive's employment for Cause. If Executive is terminated
for Cause, the Corporation shall have no obligation to make any payments under
this Agreement, except for payments that may otherwise be payable under then
existing employee benefit plans, programs and arrangements of the Corporation.
9. DISPUTES.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in New York, New York or,
at the option of Executive, in the county and state where Executive then
resides, in accordance with the Rules of the American Arbitration Association
then in effect, except that if Executive institutes an action relating to this
Agreement, Executive may, at Executive's option, bring that action in a court of
competent jurisdiction. Judgment may be entered on an arbitrator's award
relating to this Agreement in any court having jurisdiction.
10. COSTS OF PROCEEDINGS.
The Corporation shall pay all costs and expenses, including attorneys' fees
and disbursements, at least monthly, of Executive in connection with any legal
proceeding (including arbitration) instituted by the Executive for breach of any
provision of this Agreement by the Corporation in which the Executive is the
prevailing party. If Executive does not prevail on such claim for breach,
Executive shall pay all costs and expenses, including attorney's fees and
disbursements, of Executive, including repayment to the Corporation of any
amounts paid to or on behalf of Executive pursuant to the preceding sentence.
The Corporation shall pay pre-judgment interest on any money judgment obtained
by Executive as a result of such a proceeding, calculated at the prime rate of
Chemical Bank, N.A. as in effect from time to time, from the date that payment
should have been made to Executive under this Agreement.
11. NOTICE.
Any notice required or permitted to be given by this Agreement shall be
effective only if in writing, delivered personally against receipt therefor or
mailed by certified or registered mail, return receipt requested, to the parties
at the address herein after set forth, or at such other places that either party
may designate by notice to the other.
Notice to the Corporation shall be addressed to:
Xxxxx & Co., Inc.
000 Xxxxxx Xxxxxx Xxx Xxxx, XX 00000
Attn: President
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Notice to Executive shall be addressed to him or her at the Corporation,
with a copy to his or her home address at:
A copy of any notice to Executive shall also be sent to:
Xxxxxxx X. Xxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000.
Notices shall be deemed effectively given five (5) days after deposited in
a post box under the exclusive control of the United States Postal Service.
12. ASSIGNMENT.
Except as otherwise provided herein, this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the Corporation and Executive and
their respective heirs, legal representatives, successors and assigns. If the
Corporation shall be merged into or consolidated with another entity, the
provisions of this Agreement shall be binding upon and inure to the benefit of
the entity surviving such merger or resulting from such consolidation. The
Corporation will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
or assets of the Corporation by agreement in form and substance satisfactory to
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
it if no such succession had taken place. The provisions of this Section 12
shall continue to apply to each subsequent employer of Executive hereunder in
the event of any subsequent merger, consolidation or transfer of assets of such
subsequent employer.
13. WITHHOLDING.
Notwithstanding the provisions of Section 6 hereof, the Corporation may, to
the extent required by law, withhold applicable federal, state and local income
and other taxes from any payments due to Executive hereunder.
14. APPLICABLE LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
therein.
15. ENTIRE AGREEMENT; AMENDMENT.
This Agreement constitutes the entire agreement between the parties and,
except as expressly provided herein, supersedes all other prior agreements
concerning the effect of a Change of Control Event on the relationship between
the Corporation and Executive. This Agreement may be changed only by a written
agreement executed by the Corporation and Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day of .
XXXXX & CO., INC.
By
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Executive
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SCHEDULE A
CERTAIN DEFINITIONS
As used in this Agreement, and unless the context requires a different
meaning, the following terms, when capitalized, have the meaning indicated:
"Base Salary" means Executive's annual rate of base salary in effect on the
date of the Change of Control Event or the Termination Date, whichever is
higher.
"Cause" means either of the following:
(a) Executive's willful malfeasance or nonfeasance having a material
adverse effect on the Corporation;
(b) Executive's conviction of a felony;
provided, that any action or refusal by Executive shall not constitute "Cause"
if, in good faith, Executive believed such action or refusal to be in, or not
opposed to, the best interests of the Corporation or if Executive shall be
entitled, under applicable law or under an Corporation's Certificate of
Incorporation or By-Laws, as they may be amended or restated from time to time,
to be indemnified with respect to such action or refusal.
"Change of Control Event" means any of the following:
(a) a change is proposed by the stockholders of the Corporation as to
the number of members, or incumbent membership of the Corporation's Board
of Directors such that the incumbent members of said Board of Directors
immediately prior to such change would not longer constitute at least a
majority of the Board of Directors after such change, and such proposal is
enacted; or the Board of Directors as constituted immediately prior to any
action by the Corporation's stockholders with respect to such proposal
determines that such proposal, if enacted, would constitute a change in
control of the Corporation, and such proposal is enacted;
(b) any determination is made by the Board of Directors of the
Corporation that there has been a change in the control of the Corporation
because a person (as such term us used in Section 13(d) of the Securities
Exchange Act of 0000, (xxx "Xxxxxxxx Xxx")), together with such person's
affiliates (as such term is defined in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act), has become, at any date after the date
of this Agreement, and is not on the date hereof, the beneficial owner (as
such term is defined in Rule 13d-3 of the General Rules and Regulations
under the Exchange Act), directly or indirectly of 10% or more of the
voting power of the Corporation's then outstanding securities;
(c) any person (other than (i) any employee stock ownership trust or
similar entity created by the Corporation for the benefit of its employees,
(ii) an underwriter participating in a public offering of stock of the
Corporation or (iii) an entity owned by the Corporation's stockholders in
substantially the same proportions as their ownership of stock of the
Corporation prior to an acquisition of stock of the Corporation by such
entity in connection with a reorganization), together with its affiliates,
has become, at any date after the Effective Date, and is not on the date
hereof, the beneficial owner, directly or indirectly, of 33% or more of the
voting power of the Corporation's then outstanding securities entitled
generally to vote for the election of the Corporation's directors; or
(d) the approval by the stockholders of the Corporation of (i) the
sale of all or substantially all the assets of the Corporation, (ii) a
liquidation of the Corporation or (iii) the merger or consolidation of the
Corporation with any other corporation, unless the incumbent members of the
Board of Directors of the corporation as constituted immediately prior to
such merger or consolidation shall constitute at least a majority of the
directors of the surviving parent (as such term is defined in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act) of such
corporation.
Any determination of the occurrence of any Change of Control Event made in good
faith by the Board of Directors of the Corporation, on the basis of information
available at the time to it, shall be conclusive and binding for all purposes of
this Agreement.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Corporation" means Xxxxx & Co., Inc. and its subsidiaries and affiliates
and, after a Change of Control Event, any successor or successors thereto.
"Fiscal Year" means November 1st to October 31st.
"Good Reason" means any of the following actions, without Executive's
express prior written approval, other than due to Executive's Permanent
Disability or death:
(a) any substantial diminution without the consent of Executive, in
Executive's titles, duties, responsibilities, status or reporting
relationship from the positions, duties, responsibilities, status or
reporting relationship existing immediately prior to a Change of Control
Event;
(b) the removal of Executive from, or any failure to re-elect
Executive to, any of the positions Executive holds immediately prior to a
Change of Control Event;
(c) the failure of the Corporation to pay Executive's Base Salary when
due;
(d) any reduction of Executive's Base Salary or reduction of
Executive's Target Bonus;
(e) a material reduction in Executive's employee or fringe benefits;
(f) the change of Executive's principal place of employment to a
location outside of the New York metropolitan area; or
(g) any material breach by the Corporation of any provision of this
Agreement.
"Permanent Disability" means Executive's inability, by reason of any
physical or mental impairment, to substantially perform the significant aspects
of his regular duties which inability is reasonably contemplated to continue for
at least one (1) year from its incurrence.
"Target Bonus" means the annual bonus payable to Executive for the
Corporation's Fiscal Year in which a Change of Control Event occurs, calculated
on the assumption that Executive and those subsidiaries, divisions or business
units within the Corporation on whose performance Executive's bonus depends
achieve the applicable target performance goals established under the applicable
bonus plan with respect to that year. If no target performance goals for the
year in which the Change of Control Event occurs have been set prior to the
Change of Control Event, the Target Bonus shall be determined by substituting,
in the previous sentence, the prior year for the year in which a Change of
Control Event occurs.
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