1
EXHIBIT 10.2
DT INDUSTRIES, INC.
--------------------------------------------------------------------------------
TERMINATION AND CHANGE OF CONTROL AGREEMENT FOR ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
2
Table of Contents
Page
----
1. Term and Application.....................................................................................1
2. Office and Duties during Extended Employment Period......................................................2
3. Salary and Annual Incentive Compensation during Extended Employment Period...............................2
4. Long-Term Compensation, Benefits and Expense Reimbursement during the Extended
Employment Period........................................................................................2
5. Termination of Employment................................................................................4
6. Termination Due to Normal Retirement, Death, or Disability...............................................5
7. Termination of Employment For Reasons Other Than Normal Retirement, Death or
Disability...............................................................................................6
8. Termination by the Company Without Cause and Termination by Executive for Good Reason
During the Extended Employment Period...................................................................10
9. Definitions Relating to Termination Events..............................................................12
10. Excise Tax Gross-Up ....................................................................................16
11. Release of Employment Claims............................................................................19
12. Governing Law; Disputes; Arbitration....................................................................19
13. Miscellaneous...........................................................................................20
14. Indemnification.........................................................................................23
15. Income Tax Treatment....................................................................................23
i
3
TERMINATION AND CHANGE OF CONTROL AGREEMENT
THIS TERMINATION AND CHANGE OF CONTROL AGREEMENT ("Termination
Agreement") by and between DT INDUSTRIES, INC., a Delaware corporation (the
"Company"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Executive") is and shall become effective
as of November 6, 2000 (the "Effective Date").
W I T N E S S E T H
The Board of Directors of the Company (the "Board") has determined that
it is in the best interests of the Company and its stockholders to assure that
the Company will have the continued dedication of the Executive, notwithstanding
the possibility, threat or occurrence of a Change of Control (as defined below)
of the Company. The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other corporations.
Furthermore, the Company and Executive are simultaneously entering into an
Employment Agreement (the "Employment Agreement") to set forth the terms upon
which Executive shall be employed by the Company and desire to provide Executive
with certain compensation and benefits upon the termination of his employment
thereunder. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Termination Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Term and Application. The term of this Termination Agreement (the
"Term") shall commence on the Effective Date and shall terminate, except to the
extent that any obligation of the Company under this Termination Agreement
remains unpaid as of such time, on the date three years from the Effective Date
(subject to earlier termination in accordance with Section 5 below); provided,
however, that on or after the Extension Date (as defined below), the Term shall
be the Extended Employment Period (as defined below). As long as the Extension
Date has not occurred, commencing on the date three years after the Effective
Date and each anniversary date of the Effective Date thereafter, the Term shall
automatically be extended for one additional year to match the term of the
Employment Agreement unless the Company or Executive shall have given proper
written notice to the other in accordance with the Employment Agreement of its
intention not to extend the Employment Agreement. If there is a conflict between
the Employment Agreement and this Termination Agreement, this Termination
Agreement shall supersede the Employment Agreement; provided the Executive shall
receive the more valuable payment, right or benefit under the Employment
Agreement and this Termination Agreement. In no event shall any payment, right
or benefit under the Employment Agreement be reduced, eliminated or otherwise
adversely affected by this Termination Agreement. In no event shall Executive
receive any payment, right or benefit under both this Termination Agreement and
the Employment Agreement with respect to the same Date of Termination (as
defined below).
4
2. Office and Duties during Extended Employment Period.
(a) Generally. During the Extended Employment Period, the
Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities with the Company shall be
at least commensurate in all material respects with the most significant of
those held by, exercised by and assigned to Executive at any time during the
120-day period immediately preceding the Extension Date.
(b) Place of Employment. During the Extended Employment
Period, the Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Extension Date or any office or
location less than thirty-five (35) miles from such location.
3. Salary and Annual Incentive Compensation during Extended Employment
Period.
(a) Base Salary. During the Extended Employment Period, the
Executive shall receive an annual base salary, which shall be paid at a monthly
rate, at least equal to twelve (12) times the highest monthly base salary paid
or payable, including any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of the 12-month
period immediately preceding the month in which the Extension Date occurs
("Annual Base Salary"). During the Extended Employment Period, the Annual Base
Salary shall be reviewed no more than twelve (12) months after the last salary
increase awarded to the Executive prior to the Extension Date and thereafter at
least annually. Any increase in Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Termination Agreement.
Annual Base Salary shall not be reduced after any such increase and the term
Annual Base Salary as utilized in this Termination Agreement shall refer to
Annual Base Salary as so increased. As used in this Termination Agreement, the
term "affiliated companies" shall include any company controlled by, controlling
or under common control with the Company.
(b) Annual Incentive Compensation. In addition to Annual Base
Salary, the Executive shall be awarded, for each fiscal year ending during the
Extended Employment Period, an annual bonus (the "Annual Bonus") in cash at
least equal to the highest average of the Executive's annual incentive
compensation for any two (2) full fiscal years in the most recent five (5) full
fiscal years or, if Executive has received annual incentive compensation for
only one fiscal year prior to the Extension Date, at least equal to the annual
incentive compensation for such fiscal year (annualized in the event that the
Executive was not employed by the Company for the whole of any such fiscal year
or the fiscal year consisted of less than twelve (12) months) (the "Recent
Annual Bonus"). Each such Annual Bonus shall be paid no later than the end of
the third month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive shall elect to defer the receipt
of such Annual Bonus.
4. Long-Term Compensation, Benefits and Expense Reimbursement during
the Extended Employment Period.
(a) Executive Compensation Plans. During the Extended
Employment Period, the compensation plans, practices, policies and programs of
the Company, in the aggregate, including, without limitation, any of the
Company's long-term incentive plans, other stock incentive plans, performance
share plans, deferred compensation plans, management
2
5
incentive plans and supplemental retirement plans, shall provide Executive with
benefits, options to acquire Company stock and compensation and incentive award
opportunities substantially no less favorable than those provided by the Company
under such plans and programs to senior executives in similar capacities. During
the Extended Employment Period, in no event shall such plans, practices,
policies and programs provide the Executive with incentive opportunities
(measured with respect to both regular and special incentive opportunities, to
the extent, if any, that such distinction is applicable), in each case, less
favorable, in the aggregate, than the most favorable of those provided by the
Company and its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during the 120-day
period immediately preceding the Extension Date or if more favorable to the
Executive, those provided generally at any time after the Extension Date to
other peer executives of the Company and its affiliated companies.
(b) Employee and Executive Benefit Plans. During the Extended
Employment Period, benefit plans, practices, policies and programs of the
Company, in the aggregate, including, without limitation, plans providing health
and medical insurance, life insurance, disability insurance and accidental death
or dismemberment insurance, pension or other retirement plans, 401(k) or other
savings plans, time-off programs, profit-sharing plans, stock purchase plans and
stock ownership plans, shall provide Executive with benefits substantially no
less favorable than those provided by the Company to senior executives in
similar capacities. During the Extended Employment Period, in no event shall
such plans, practices, policies and programs provide the Executive with benefits
which are less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Extension Date or, if more
favorable to the Executive, those provided generally at any time after the
Extension Date to other peer executives of the Company and its affiliated
companies.
(c) Country Club Membership. During the Extended Employment
Period, the Company shall pay the annual dues and assessments for Executive's
membership in one country club located in the same geographic area as
Executive's place of employment of which Executive is a member as of the
Extension Date.
(d) Vacation. During each year of the Extended Employment
Period, Executive shall receive an amount of paid vacation at least equal to the
amount of such vacation received by Executive during the year in which the
Extension Date occurs.
(e) Special Benefits. During the Extended Employment Period,
Executive shall continue to receive the following benefits:
(i) a monthly automobile allowance in an amount equal
to the amount in effect as of the Extension Date
and reimbursement of related insurance coverage
and reasonable fuel and maintenance costs; and
(ii) payment of reasonable expenses incurred by
Executive in connection with the preparation of
Executive's annual federal and state personal
income tax returns.
(f) Reimbursement of Expenses. The Company will promptly
reimburse Executive for all reasonable business expenses and disbursements
incurred by Executive in the
3
6
performance of Executive's duties during the Extended Employment Period in
accordance with the Company's reimbursement policies as in effect from time to
time.
5. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Term. If the
Company determines in good faith that the Disability (as defined below) of the
Executive has occurred during the Term, it may give to the Executive written
notice in accordance with Section 13(d) of this Termination Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's Date of Termination is effective on the 30th day after receipt of
such notice by the Executive (the "Disability Effective Date"), provided that,
within the thirty (30) days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties and presented to the
Company a written certificate of Executive's good health as contemplated by
Section 9(c) hereof.
(b) Notice of Termination. Any termination by the Company for
Cause (as defined below), or by the Executive for Good Reason (as defined
below), shall be communicated by Notice of Termination (as defined below) to the
other party hereto given in accordance with Section 13(d) of this Termination
Agreement. For purposes of this Termination Agreement, a "Notice of Termination"
means a written notice which (i) indicates the specific termination provision in
this Termination Agreement relied upon, (ii) to the extent applicable, sets
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 and (iii) if the Date of Termination is other than the date of receipt
of such notice, specifies the Date of Termination (which date shall be not more
than thirty (30) days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder.
(c) Date of Termination. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein (which date shall be not more than thirty (30)
days after the giving of such notice), as the case may be, (ii) if the
Executive's employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such Date of Termination, and (iii) if the Executive's
employment is terminated by reason of death or Disability, or due to his
voluntary decision to retire on or after his Normal Retirement Date other than
for Good Reason, the Date of Termination shall be the date of death of the
Executive, the Disability Effective Date, or the date the Executive notifies the
Company that the Executive's employment will terminate, as the case may be.
Notwithstanding the foregoing, solely the transfer of an Executive to employment
with an affiliated company shall not constitute a termination of employment with
the Company.
4
7
6. Termination Due to Normal Retirement, Death, or Disability
Upon an Executive's Date of Termination due to his voluntary
decision to retire on or after his Normal Retirement Date (other than for Good
Reason), death or Disability, the Term and the term of the Employment Agreement
will immediately terminate and all obligations of the Company and Executive
under Sections 1 through 4 of this Termination Agreement and Sections 1 through
5 of the Employment Agreement will immediately cease; provided, however, that
subject to the provisions of Section 13(c), the Company will pay Executive (or,
in the case of Executive's death, his beneficiaries or estate), and Executive
(or, in the case of Executive's death, his beneficiaries or estate) will be
entitled to receive, the following:
(a) The unpaid portion of Annual Base Salary at the rate
payable, in accordance with Section 4(a) of the Employment Agreement or Section
3(a) hereof, as the case may be, at the Date of Termination, pro rated through
such Date of Termination, will be paid;
(b) All vested, nonforfeitable amounts owing and accrued at
the Date of Termination under any compensation and benefit plans, programs, and
arrangements in which Executive theretofore participated will be paid under the
terms and conditions of the plans, programs, and arrangements (and agreements
and documents thereunder) pursuant to which such compensation and benefits were
granted, including any supplemental retirement plan in which the Executive may
have participated;
(c) In lieu of any annual incentive compensation under Section
4(b) of the Employment Agreement or Section 3(b) hereof, as the case may be, for
the year in which Executive's employment terminated (unless otherwise payable
under Section 6(b) above), Executive will be paid an amount equal to the average
annual incentive compensation paid to Executive in the three fiscal years
immediately preceding the year of termination (or, if Executive was not eligible
to receive or did not receive such incentive compensation for any fiscal year in
such three fiscal year period, the Executive's target annual incentive
compensation for such fiscal year(s) shall be used to calculate average annual
incentive compensation) multiplied by a fraction the numerator of which is the
number of days Executive was employed in the fiscal year of termination and the
denominator of which is the total number of days in the fiscal year of
termination;
(d) Stock options then held by Executive will be exercisable
and restricted stock and performance shares then held by Executive will be
vested to the extent and for such periods indicated in, and otherwise be
governed by, the plans and programs and the agreements and other documents
thereunder pursuant to which such stock options, restricted stock or performance
shares were granted;
(e) If Executive's Date of Termination is due to Disability,
for the period extending from such Date of Termination until Executive reaches
age 65, Executive shall continue to participate in all employee benefit plans,
programs, and arrangements providing health, medical, and life insurance in
which Executive was participating immediately prior to the Date of Termination,
the terms of which allow Executive's continued participation, as if Executive
had continued in employment with the Company during such period or, if such
plans, programs, or arrangements do not allow Executive's continued
participation, a cash payment equivalent on an after-tax basis to the value of
the additional benefits Executive would have
5
8
received under such employee benefit plans, programs, and arrangements in which
Executive was participating immediately prior to the Date of Termination, as if
Executive had received credit under such plans, programs, and arrangements for
service and age with the Company during such period following Executive's Date
of Termination, with such benefits payable by the Company at the same times and
in the same manner as such benefits would have been received by Executive under
such plans (it being understood that the value of any insurance-provided
benefits will be based on the premium cost to Executive, which shall not exceed
the highest risk premium charged by a carrier having an investment grade or
better credit rating); and
(f) Reimbursement of reasonable business expenses and
disbursements incurred by Executive prior to such termination of employment, as
authorized under Section 5(h) of the Employment Agreement or Section 4(f)
hereof, as the case may be.
Except as provided in this Section 6, the amounts payable pursuant to this
Section 6 are immediately payable and will be paid as promptly as practicable
after Executive's Date of Termination and in no event more than 30 days after
the Date of Termination; provided, however, to the extent that the Company would
not be entitled to deduct any such payments under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), such payments shall be made at
the earliest time that the payments would be deductible by the Company without
limitation under Section 162(m) (unless this provision is waived by the
Company). Any deferred payments shall be credited with the interest at a rate
applied to prevent the imputation of taxable income under the Code.
7. Termination of Employment For Reasons Other Than Normal Retirement,
Death or Disability.
(a) Termination by the Company for Cause and Termination by
Executive. Upon an Executive's Date of Termination by the Company for Cause, or
voluntarily by Executive for reasons other than Good Reason, and other than
because of the attainment of the Normal Retirement Date, death or Disability,
the Term and the term of the Employment Agreement will immediately terminate,
and all obligations of the Company under Sections 1 through 4 of this
Termination Agreement and Sections 1 through 5 of the Employment Agreement will
immediately cease; provided, however, that subject to the provisions of Section
13(c), the Company shall pay Executive (or, in the case of Executive's death,
his beneficiaries or estate), and Executive (or, in the case of Executive's
death, his beneficiaries or estate) shall be entitled to receive, the following:
(i) The unpaid portion of Annual Base Salary at the
rate payable, in accordance with Section 4(a) of
the Employment Agreement or Section 3(a) hereof,
as the case may be, at the Date of Termination,
pro rated through such Date of Termination, will
be paid;
(ii) All vested, nonforfeitable amounts owing and
accrued at the Date of Termination under any
compensation and benefit plans, programs, and
arrangements in which Executive theretofore
participated will be paid under the terms and
conditions of the plans, programs, and
arrangements (and agreements and documents
thereunder) pursuant to which such compensation
and
6
9
benefits were granted, including any supplemental
retirement plan in which the Executive may have
participated; and
(iii) Reimbursement of reasonable business expenses and
disbursements incurred by Executive prior to such
termination of employment, as authorized under
Section 5(h) of the Employment Agreement or
Section 4(f) hereof, as the case may be.
Except as provided in this Section 7(a), amounts payable pursuant to this
Section 7(a) are immediately payable and will be paid as promptly as practicable
after the Executive's Date of Termination and in no event more than 30 days
after the Date of Termination; provided, however, to the extent that the Company
would not be entitled to deduct any such payments under Section 162(m) of the
Code, such payments shall be made at the earliest time that the payments would
be deductible by the Company without limitation under Section 162(m) (unless
this provision is waived by the Company). Any deferred payment shall be credited
with the interest at a rate applied to prevent the imputation of taxable income
under the Code.
(b) Termination by the Company Without Cause. Upon an
Executive's Date of Termination prior to the Extension Date by the Company
without Cause, the Term and the term of the Employment Agreement will
immediately terminate and all obligations of the Company and Executive under
Sections 1 through 4 of this Termination Agreement and Sections 1 through 5 of
the Employment Agreement will immediately cease; provided, however, that subject
to the provisions of Section 13(c), the Company shall pay to the Executive (or,
in the event of Executive's death, his beneficiaries or estate) and Executive
(or, in the event of Executive's death, his beneficiaries or estate) shall be
entitled to receive, the following:
(i) The unpaid portion of Annual Base Salary at the
rate payable, in accordance with Section 4(a) of
the Employment Agreement, at the Date of
Termination, pro rated through such Date of
Termination, will be paid;
(ii) An amount equal to two times the sum of (A)
Executive's then current Annual Base Salary
pursuant to Section 4(a) of the Employment
Agreement and (B) sixty percent (60%) of
Executive's targeted Annual Bonus payable for the
Company's fiscal year in which the Date of
Termination occurs, payable in equal monthly
payments during a twenty-four (24) consecutive
month period following the Date of Termination;
provided, however, notwithstanding anything to the
contrary in the Termination Agreement or in the
Employment Agreement, none of such amounts shall
qualify Executive for any incremental benefit
under any plan or program in which he has
participated or continues to participate;
(iii) In lieu of any annual incentive compensation under
Section 4(b) of the Employment Agreement for the
year in which Executive's employment terminated
(unless otherwise payable under Section 7(b)(v)
below), Executive will be paid an amount equal to
60 percent (60%) of Executive's then current
Annual Base Salary pursuant to Section 4(a) of the
Employment Agreement multiplied
7
10
by a fraction the numerator of which is the number
of days Executive was employed in the fiscal year
of termination and the denominator of which is the
total number of days in the year of termination;
(iv) stock options then held by Executive will be
exercisable and restricted stock and performance
shares then held by Executive will be vested to
the extent and for such periods indicated in, and
otherwise be governed by, the plans and programs
and the agreements and other documents thereunder
pursuant to which such stock options, restricted
stock or performance shares were granted;
(v) all vested, nonforfeitable amounts owing and
accrued at the Date of Termination under any
compensation and benefit plans, programs, and
arrangements in which Executive theretofore
participated will be paid under the terms and
conditions of the plans, programs, and
arrangements (and agreements and documents
thereunder) pursuant to which such compensation
and benefits were granted, including any
supplemental retirement plan in which the
Executive may have participated;
(vi) For two (2) years after the Executive's Date of
Termination, or such longer period as may be
provided by the terms of the appropriate plan,
program, practice or policy, the Company shall
continue welfare plan benefits to the Executive
and/or the Executive's family at least equal to
those which would have been provided to them in
accordance with the plans, programs, practices and
policies described in Section 5(b) of the
Employment Agreement if the Executive's employment
had not been terminated or, if more favorable to
the Executive, as in effect generally at any time
thereafter with respect to other peer executives
of the Company and its affiliated companies and
their families; provided, however, that if the
Executive is employed with another employer and is
eligible to receive medical or other welfare
benefits under another employer-provided plan, the
medical and other welfare benefits described
herein shall be secondary to those provided under
such other plan during such applicable period of
eligibility. For two (2) years after the
Executive's Date of Termination, or such longer
period as may be provided by the terms of the
plan, the Company shall continue tax-qualified
defined contribution plan accruals for the
Executive, including participation and crediting
of service, contributions and compensation at
least equal to what the Executive would have
accrued in accordance with such plans of the
Company or affiliated companies if the Executive's
employment had not been terminated or, if more
favorable to the Executive, as in effect generally
at any time thereafter with respect to other peer
executives of the Company and its affiliated
companies. If such welfare benefit or
tax-qualified defined contribution plans,
8
11
programs, or arrangements do not allow Executive's
continued participation, a cash payment equivalent
on an after-tax basis to the value of the
additional benefits Executive would have received
under such employee benefit plans, programs, and
arrangements in which Executive was participating
immediately prior to the Date of Termination, as
if Executive had received credit under such plans,
programs, and arrangements for service,
compensation and age with the Company during such
period following Executive's Date of Termination,
with such benefits payable by the Company at the
same times and in the same manner as such benefits
would have been received by Executive under such
plans (it being understood that the value of any
insurance-provided benefits will be based on the
premium cost to Executive, which shall not exceed
the highest risk premium charged by a carrier
having an investment grade or better credit
rating);
(vii) The Company shall reimburse the Executive the
actual brokerage commissions paid by Executive in
connection with the sale of Executive's principal
residence, if the Executive lists (and continues
to list) the Executive's principal residence for
sale commencing not later than the second year
anniversary of the Date of Termination, and the
Executive shall have the right to cause the
Company to purchase Executive's principal
residence at any time after the sixth month
anniversary and prior to the second year
anniversary of the Date of Termination for its
appraised value; provided, the appraised value
shall be the average of the values of the
Executive's principal residence (net of any
indebtedness assumed by the Company) determined
within ten (10) days of the date the residence is
listed for sale by three real estate appraisers,
one chosen by each of the Executive and the
Company and the third appraiser chosen by the
other two appraisers; and
(viii) Reimbursement of reasonable business expenses and
disbursements incurred by Executive prior to such
termination of employment, as authorized under
Section 5(h) of the Employment Agreement.
Except as provided in this Section 7(b), the amounts payable pursuant to this
Section 7(b) are immediately payable and will be paid as promptly as practicable
after Executive's Date of Termination and in no event more than 30 days after
the Date of Termination; provided, however, to the extent that the Company would
not be entitled to deduct any such payments under Section 162(m) of the Code,
such payments shall be made at the earliest time that the payments would be
deductible by the Company without limitation under Section 162(m) (unless this
provision is waived by the Company). Any deferred payment shall be credited with
the interest at a rate applied to prevent the imputation of taxable income under
the Code.
9
12
8. Termination by the Company Without Cause and Termination by
Executive for Good Reason During the Extended Employment Period.
Upon an Executive's Date of Termination during the Extended
Employment Period by the Company without Cause or voluntarily by the Executive
for Good Reason, the Term and the term of the Employment Agreement will
immediately terminate and all obligations of the Company and Executive under
Sections 1 through 4 of this Termination Agreement and Sections 1 through 5 of
the Employment Agreement will immediately cease; provided, however, that subject
to the provisions of Section 13(c), the Company shall pay Executive (or, in the
event of Executive's death, his beneficiaries or estate), and Executive (or, in
the event of Executive's death, his beneficiaries or estate) shall be entitled
to receive, the following:
(a) the Company shall pay to the Executive in a lump sum in
cash on the Date of Termination the aggregate of the following amounts:
(i) the sum of (1) the unpaid portion of Annual Base
Salary at the rate payable, in accordance with
Section 3(a) hereof, at the Date of Termination,
prorated through such Date of Termination, and (2)
the product of (x) the higher of (A) the Recent
Annual Bonus and (B) the Executive's Annual Bonus
payable for the Company's fiscal year in which the
Date of Termination occurs, assuming Executive and
Company satisfy all conditions to Executive's
receiving the full Annual Bonus at target (and
annualized for any fiscal year consisting of less
than twelve (12) full months or during which the
Executive was employed for less than twelve (12)
full months) (such higher amount being referred to
as the "Highest Annual Bonus") and (y) a fraction,
the numerator of which is the number of days in
the current fiscal year through the Date of
Termination, and the denominator of which is the
total number of days in such fiscal year;
(ii) the amount equal to three times the sum of (A) the
then current Annual Base Salary pursuant to
Section 3(a) hereof and (B) the Executive's
Highest Annual Bonus. (Payment of any amount under
Section 8(a)(i) shall not constitute a payment or
discharge of the Company's obligation under this
Section 8(a)(ii) and vice versa);
(iii) in lieu of any payment in respect of long term
incentive awards granted prior to the Extension
Date or in accordance with Section 4(a) hereof,
for any performance period not completed at the
Executive's Date of Termination, an amount equal
to the cash amount payable plus the value of any
shares, dividends or other property (valued at the
Date of Termination) payable upon the achievement
of the then existing performance in respect of
each tranche of such awards as if the Date of
Termination were the end of the performance
period, but in no event less than one hundred
percent (100%) of target, multiplied by (A) with
respect to any tranche as of the Date of
Termination for which at least fifty percent (50%)
of the performance period has elapsed, one
10
13
hundred percent (100%), and (B) with respect to
any tranche as of the Date of Termination for
which less than fifty percent (50%) of the
performance period has elapsed, a fraction, the
numerator of which is the number of days that have
elapsed in the relevant performance period and the
denominator of which is the total number of days
in the relevant performance period; and
(iv) to the extent not covered in (i), (ii) or (iii)
above, all vested, nonforfeitable amounts owing or
accrued at the Date of Termination under any other
compensation and benefit plans, programs, and
arrangements in which Executive theretofore
participated, including any supplemental
retirement plan in which the Executive may have
participated, including any additional accruals
provided under such plan due to the Change of
Control, will be paid under the terms and
conditions of the plans, programs, and
arrangements (and agreements and documents
thereunder) pursuant to which such compensation
and benefits were granted.
(b) Stock options then held by Executive will be exercisable
and restricted stock and performance shares then held by the Executive will be
vested to the extent and for such periods indicated in, and otherwise be
governed by, the plans and programs (and the agreements and other documents
thereunder) pursuant to which such stock options, restricted stock or
performances shares were granted;
(c) For three (3) years after the Executive's Date of
Termination, or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company shall continue
welfare plan benefits to the Executive and/or the Executive's family at least
equal to those which would have been provided to them in accordance with the
plans, programs, practices and policies described in Section 4(b) of this
Termination Agreement if the Executive's employment had not been terminated or,
if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies and their families; provided, however, that if the
Executive is employed with another employer and is eligible to receive medical
or other welfare benefits under another employer-provided plan, the medical and
other welfare benefits described herein shall be secondary to those provided
under such other plan during such applicable period of eligibility. For three
(3) years after the Executive's Date of Termination, or such longer period as
may be provided by the terms of the plan, the Company shall continue
tax-qualified defined contribution plan accruals for the Executive, including
participation and crediting of service, contributions and compensation at least
equal to what the Executive would have accrued in accordance with such plans of
the Company or affiliated companies if the Executive's employment had not been
terminated or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company and its
affiliated companies. If such welfare benefit or tax-qualified defined
contribution plans, programs, or arrangements do not allow Executive's continued
participation, a cash payment equivalent on an after-tax basis to the value of
the additional benefits Executive would have received under such employee
benefit plans, programs, and arrangements in which Executive was participating
immediately prior to the Date of Termination, as if Executive had received
credit under such plans, programs, and arrangements for service, compensation
and age with the Company during such period following Executive's Date of
Termination, with such benefits
11
14
payable by the Company at the same times and in the same manner as such benefits
would have been received by Executive under such plans (it being understood that
the value of any insurance-provided benefits will be based on the premium cost
to Executive, which shall not exceed the highest risk premium charged by a
carrier having an investment grade or better credit rating);
(d) Outplacement services the scope and provider of which
shall be selected by the Executive in his sole discretion, provided by the
Company at its sole expense as incurred;
(e) The Company shall reimburse the Executive the actual
brokerage commissions paid by Executive in connection with the sale of
Executive's principal residence, if the Executive lists (and continues to list)
the Executive's principal residence for sale commencing not later than the
second year anniversary of the Date of Termination, and the Executive shall have
the right to cause the Company to purchase Executive's principal residence at
any time prior to the second year anniversary of the Date of Termination for its
appraised value; provided, the appraised value shall be the average of the
values of the Executive's principal residence (net of any indebtedness assumed
by the Company) determined within ten (10) days of the date the residence is
listed for sale by three real estate appraisers, one chosen by each of the
Executive and the Company and the third appraiser chosen by the other two
appraisers; and
(f) Reimbursement of reasonable business expenses and
disbursements incurred by Executive prior to such termination of employment, as
authorized under Section 4(f) hereof.
9. Definitions Relating to Termination Events.
(a) "Cause." For purposes of this Termination Agreement,
"Cause" shall mean Executive's gross misconduct (as defined herein). For
purposes of this definition, "gross misconduct" shall mean (A) a felony
conviction in a court of law under applicable federal or state laws which
results in material damage to the Company or any of its affiliated companies or
materially impairs the value of Executive's services to the Company, or (B)
willfully engaging in one or more acts, or willfully omitting to act in
accordance with duties hereunder, which is demonstrably and materially damaging
to the Company or any of its affiliated companies, including acts and omissions
that constitute gross negligence in the performance of Executive's duties under
the Employment Agreement or this Termination Agreement or a material breach of
Section 7 of the Employment Agreement. Notwithstanding the foregoing, Executive
may not be terminated for Cause unless and until there shall have been delivered
to him a copy of a resolution duly adopted by a majority affirmative vote of the
membership of the Board of Directors of the Company (the "Board") (excluding
Executive, if he is then a member) at a meeting of the Board called and held for
such purpose (after giving Executive reasonable notice specifying the nature of
the grounds for such termination and not less than 30 days to correct the acts
or omissions complained of, if correctable, and affording Executive the
opportunity, together with his counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, Executive was guilty of conduct
which constitutes Cause as set forth in this Section 9(a).
(b) "Change of Control." For the purpose of this Termination
Agreement, a "Change of Control" shall mean:
12
15
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of
twenty-five percent (25%) or more of either (A)
the then-outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock")
or (B) the combined voting power of the
then-outstanding voting securities of the Company
entitled to vote generally in the election of
directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes
of this subsection (i), the following acquisitions
shall not constitute a Change of Control: (A) any
acquisition directly from the Company, (B) any
acquisition by the Company, (C) any acquisition by
any employee benefit plan (or related trust)
sponsored or maintained by the Company or any
corporation controlled by the Company, (D) any
acquisition by a lender to the Company pursuant to
a debt restructuring of the Company, or (E) any
acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B)
and (C) of subsection (iii) of this Section 9(b);
(ii) Individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the
Board; provided, however, that any individual
becoming a director subsequent to the date hereof
whose election, or nomination for election by the
Company's stockholders, was approved by a vote of
at least a majority of the directors then
comprising the Incumbent Board shall be considered
as though such individual were a member of the
Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of
office occurs as a result of an actual or
threatened election contest with respect to the
election or removal of directors or other actual
or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board
(for purposes of this Section, any good faith
determination made by the then Incumbent Board of
whether an election contest or other solicitation
of proxies or consents has been threatened or
occurred shall be conclusive);
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all
or substantially all of the assets of the Company
(a "Business Combination"), unless, following such
Business Combination, (A) all or substantially all
of the individuals and entities who were the
beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to
such Business Combination beneficially own,
directly or indirectly, more than fifty percent
(50%) of, respectively, the then-outstanding
shares of common stock and the combined voting
power of the then outstanding voting securities
entitled to vote generally in the election of
13
16
directors, as the case may be, of the corporation
resulting from such Business Combination
(including, without limitation, a corporation
which as a result of such transaction owns the
Company or all or substantially all of the
Company's assets either directly or through one or
more subsidiaries) in substantially the same
proportions as their ownership, immediately prior
to such Business Combination, of the Outstanding
Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (B) no
person (excluding any corporation resulting from
such Business Combination or any employee benefit
plan (or related trust) of the Company or such
corporation resulting from such Business
Combination) beneficially owns, directly or
indirectly, twenty-five percent (25%) or more of,
respectively, the then outstanding shares of
common stock of the corporation resulting from
such Business Combination, or the combined voting
power of the then outstanding voting securities of
such corporation except to the extent that such
ownership existed prior to the Business
Combination and (C) at least a majority of the
members of the board of directors of the
corporation resulting from such Business
Combination were members of the Incumbent Board at
the time of the execution of the initial
agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) Approval by the stockholders of the Company of a
complete liquidation or dissolution of the
Company.
(c) "Disability" means the failure of Executive to render and
perform the services required of him under this Termination Agreement, for a
total of 180 days or more during any consecutive 12 month period, because of any
physical or mental incapacity or disability as determined by a physician or
physicians selected by the Company and reasonably acceptable to Executive,
unless, within 30 days after Executive has received written notice from the
Company of a proposed Date of Termination due to such absence, Executive shall
have returned to the full performance of his duties hereunder and shall have
presented to the Company a written certificate of Executive's good health
prepared by a physician selected by Company and reasonably acceptable to
Executive.
(d) "Extended Employment Period" shall mean the period
commencing on the Extension Date and ending on the third anniversary of such
date.
(e) "Extension Date" shall mean the first date during the Term
on which a Change of Control occurs. Anything in this Termination Agreement or
the Employment Agreement to the contrary notwithstanding, if a Change of Control
occurs and if the Executive's employment with the Company is terminated prior to
the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to effect a
Change of Control or (ii) otherwise arose in connection with or anticipation of
a Change of Control, then for all purposes of the Employment Agreement the
"Extension Date" shall mean the date immediately prior to the date of such
termination of employment.
14
17
(f) "Good Reason." For purposes of this Termination Agreement, "Good
Reason" shall mean, during the Extended Employment Period, without Executive's
prior written consent:
(i) the assignment to the Executive of any duties
inconsistent in any material respect with the
Executive's position (including status, offices,
titles and reporting requirements), authority,
duties or responsibilities as contemplated by
Section 3(a) of the Employment Agreement or
Section 2(a) of this Termination Agreement, or any
other action by the Company which results in a
material diminution in such position, authority,
duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is
remedied by the Company promptly after receipt of
notice thereof given by the Executive or any such
assignment or action as requested or consented by
Executive;
(ii) any failure by the Company to comply with, or
breach by the Company of any of the material
provisions of this Termination Agreement or the
Employment Agreement, other than an isolated,
insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by
the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than as provided
in Section 2(b) hereof or the Company's requiring
the Executive to travel on Company business to a
substantially greater extent than required
immediately prior to the Extension Date; or
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly
permitted by this Termination Agreement.
For purposes of this Section, any good faith determination of "Good Reason" made
by the Executive shall be conclusive.
(g) "Normal Retirement Date." For purposes of this Termination
Agreement, an Executive's Normal Retirement Date is his attainment of age
sixty-five (65).
15
18
10. Excise Tax Gross-Up.
If Executive becomes entitled to one or more payments (with a
"payment" including, without limitation, the vesting of an option or other
non-cash benefit or property), whether pursuant to the terms of this Termination
Agreement or any other plan, arrangement, or agreement with the Company or any
affiliated company (the "Total Payments"), which are or become subject to the
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code") (or any similar tax that may hereafter be imposed) (the "Excise
Tax"), the Company shall pay to Executive at the time specified below an
additional amount (the "Gross-up Payment") (which shall include, without
limitation, reimbursement for any penalties and interest that may accrue in
respect of such Excise Tax) such that the net amount retained by Executive,
after reduction for any Excise Tax (including any penalties or interest thereon)
on the Total Payments and any federal, state and local income or employment tax
and Excise Tax on the Gross-up Payment provided for by this Section 10, but
before reduction for any federal, state, or local income or employment tax on
the Total Payments, shall be equal to the sum of (a) the Total Payments, and (b)
an amount equal to the product of any deductions disallowed for federal, state,
or local income tax purposes because of the inclusion of the Gross-up Payment in
Executive's adjusted gross income multiplied by the highest applicable marginal
rate of federal, state, or local income taxation, respectively, for the calendar
year in which the Gross-up Payment is to be made.
For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise Tax:
(a) The Total Payments shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of
the Code, and all "excess parachute payments" within the
meaning of Section 280G(b)(1) of the Code shall be
treated as subject to the Excise Tax, unless, and except
to the extent that, in the written opinion of
independent legal counsel, compensation consultants or
auditors of nationally recognized standing ("Independent
Advisors") selected by the Company and reasonably
acceptable to Executive, the Total Payments (in whole or
in part) do not constitute parachute payments, or such
excess parachute payments (in whole or in part)
represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the
Code in excess of the base amount within the meaning of
Section 280G(b)(3) of the Code or are otherwise not
subject to the Excise Tax;
(b) The amount of the Total Payments which shall be treated
as subject to the Excise Tax shall be equal to the
lesser of (i) the total amount of the Total Payments or
(ii) the total amount of excess parachute payments
within the meaning of Section 280G(b)(1) of the Code
(after applying clause (a) above); and
16
19
(c) The value of any non-cash benefits or any deferred
payment or benefit shall be determined by the
Independent Advisors in accordance with the principles
of Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-up
Payment, Executive shall be deemed (A) to pay federal income taxes at the
highest marginal rate of federal income taxation for the calendar year in which
the Gross-up Payment is to be made; (B) to pay any applicable state and local
income taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of Executive's adjusted gross income); and (C)
to have otherwise allowable deductions for federal, state, and local income tax
purposes at least equal to those disallowed because of the inclusion of the
Gross-up Payment in Executive's adjusted gross income. In the event that the
Excise Tax is subsequently determined to be less than the amount taken into
account hereunder at the time the Gross-up Payment is made, Executive shall
repay to the Company at the time that the amount of such reduction in Excise Tax
is finally determined (but, if previously paid to the taxing authorities, not
prior to the time the amount of such reduction is refunded to Executive or
otherwise realized as a benefit by Executive) the portion of the Gross-up
Payment that would not have been paid if such Excise Tax had been applied in
initially calculating the Gross-up Payment, plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is determined to exceed the amount taken into account
hereunder at the time the Gross-up Payment is made (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-up Payment), the Company shall make an additional Gross-up Payment and
shall indemnify and hold Executive harmless in respect of such excess (plus any
interest and penalties payable with respect to such excess) at the time that the
amount of such excess is finally determined.
The Gross-up Payment provided for above shall be paid on the
30th day (or such earlier date as the Excise Tax becomes due and payable to the
taxing authorities) after it has been determined that the Total Payments (or any
portion thereof) are subject to the Excise Tax; provided, however, that if the
amount of such Gross-up Payment or portion thereof cannot be finally determined
on or before such day, the Company shall pay to Executive on such day an
estimate, as determined by the Independent Advisors, of the minimum amount of
such payments and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code), as soon as
the amount thereof can be determined. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to Executive, payable on the
fifth day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code). If more than one Gross-up
Payment is made, the amount of each Gross-up Payment shall be computed so as not
to duplicate any prior Gross-up Payment.
The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid.
17
20
The Executive shall not pay such claim prior to the expiration of the 30-day
period following the date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request
in writing from time to time, including, without
limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income or employment tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 10, the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and ▇▇▇ for a
refund or to contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and ▇▇▇ for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free basis
and shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income or employment tax (including income or employment or
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority. If,
after the receipt by the Executive of an amount advanced by the Company pursuant
to this Section 10, the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the Company's complying
with the requirements of this Section 10) promptly pay to the Company the amount
of such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the
18
21
Executive of an amount advanced by the Company pursuant to this Section 10, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
11. Release of Employment Claims.
(a) Release of Employment Claims. Executive agrees, as a
condition to receipt of the termination payments and benefits provided
hereunder, that he will execute a release agreement, in a form satisfactory to
the Company, releasing any and all claims arising out of Executive's employment
(other than claims made pursuant to any indemnities provided under the articles
or by-laws of the Company, under any directors or officers liability insurance
policies maintained by the Company or enforcement of this Termination
Agreement).
(b) Survival. Notwithstanding any provision of this
Termination Agreement to the contrary, the provisions of this Section 11 shall
survive the termination or expiration of this Termination Agreement.
12. Governing Law; Disputes; Arbitration.
(a) Governing Law. This Termination Agreement is governed by
and is to be construed, administered, and enforced in accordance with the laws
of the state in which the Company's corporate offices are then located (e.g.,
Missouri as of the date hereof) without regard to that state's conflicts of law
principles, except insofar as Delaware General Corporation Laws and federal laws
and regulations may be applicable. If under the governing law, any portion of
this Termination Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation, ordinance, or other principle of law, such
portion shall be deemed to be modified or altered to the extent necessary to
conform thereto or, if that is not possible, to be omitted from this Termination
Agreement. The invalidity of any such portion shall not affect the force,
effect, and validity of the remaining portion hereof.
(b) Reimbursement of Expenses in Enforcing Rights and Funding
of Obligations. On and after the Extension Date, all reasonable costs and
expenses (including reasonable fees and disbursements of counsel) incurred by
Executive in seeking to enforce rights pursuant to this Termination Agreement
shall be paid on behalf of or reimbursed to Executive promptly by the Company,
whether or not Executive is successful in asserting such rights; provided,
however, that no reimbursement shall be made of such expenses relating to any
unsuccessful assertion of rights if and to the extent that Executive's assertion
of such rights was in bad faith or frivolous, as determined by independent
counsel mutually acceptable to Executive and the Company. Immediately prior to
the Extension Date but not less than five (5) days prior thereto, the Company
agrees to maintain a minimum amount in a rabbi trust (or to provide to the
trustee of such rabbi trust an irrevocable letter of credit in an amount equal
to such minimum amount (and callable at will by such trustee)) sufficient to
fund any such enforcement action and the aggregate present value of all
liabilities potentially owed to the Executive under this Termination Agreement
as if he or she had incurred a termination of employment by the Company other
than for Cause.
19
22
(c) Arbitration. Any dispute or controversy arising under or
in connection with this Termination Agreement shall be settled exclusively by
arbitration in the city in which the Company's corporate offices are then
located (e.g., Springfield, Missouri as of the date hereof) by a panel of three
arbitrators in accordance with the rules of the American Arbitration Association
in effect at the time of submission to arbitration. Judgment may be entered on
the arbitrators' award in any court having jurisdiction. For purposes of
entering any judgment upon an award rendered by the arbitrators, the Company and
Executive hereby consent to the jurisdiction of any or all of the following
courts: (i) the United States District Court for the judicial district in which
the Company's corporate offices are then located (e.g., Western District of
Missouri as of the date hereof) (ii) any of the courts of the state in which the
Company's corporate offices are then located (e.g., Missouri as of the date
hereof), or (iii) any other court having jurisdiction. The Company and Executive
further agree that any service of process or notice requirements in any such
proceeding shall be satisfied if the rules of such court relating thereto have
been substantially satisfied. The Company and Executive hereby waive, to the
fullest extent permitted by applicable law, any objection which they may now or
hereafter have to such jurisdiction and any defense of inconvenient forum. The
Company and Executive hereby agree that a judgment upon an award rendered by the
arbitrators may be enforced in other jurisdictions by suit on the judgment or in
any other manner provided by law. Subject to Section 12(b), the Company shall
bear all costs and expenses arising in connection with any arbitration
proceeding pursuant to this Section 12(c). Notwithstanding any provision in this
Section 12, Executive shall be entitled to seek specific performance of
Executive's right to be paid during the pendency of any dispute or controversy
arising under or in connection with this Termination Agreement.
(d) Interest on Unpaid Amounts. Any amounts that have become
payable pursuant to the terms of this Termination Agreement or any decision by
arbitrators or judgment by a court of law pursuant to this Section 12 but which
are not timely paid shall bear interest at the prime rate in effect at the time
such payment first becomes payable, as quoted in The Wall Street Journal
(Midwest edition).
13. Miscellaneous.
(a) Integration. This Termination Agreement cancels and
supersedes any and all prior agreements and understandings between the parties
hereto with respect to the employment of Executive by the Company and its
affiliated companies, except for the Employment Agreement and the Restricted
Stock Agreement (as defined in the Employment Agreement). This Termination
Agreement, the Employment Agreement and the Restricted Stock Agreement together
constitute the entire agreement among the parties with respect to the matters
herein provided, and no modification or waiver of any provision hereof shall be
effective unless in writing and signed by the parties hereto. Executive shall
not be entitled to any payment, right or benefit under this Termination
Agreement which duplicates a payment, right or benefit received or receivable by
Executive under such prior agreements and understandings with the Company or
under any benefit or compensation plan of the Company.
(b) Non-Transferability. Neither this Termination Agreement
nor the rights or obligations hereunder of the parties hereto shall be
transferable or assignable by Executive, except in accordance with the laws of
descent and distribution or as specified in Section 13(c). The Company may
assign this Termination Agreement and the Company's rights and obligations
hereunder, and shall assign this Termination Agreement, to any Successor (as
20
23
hereinafter defined) which, by operation of law or otherwise, continues to carry
on substantially the business of the Company prior to the event of succession,
and the Company shall, as a condition of the succession, require such Successor
to agree to assume the Company's obligations and be bound by this Termination
Agreement. For purposes of this Termination Agreement, "Successor" shall mean
any person that succeeds to, or has the practical ability to control (either
immediately or with the passage of time), the Company's business directly, by
merger or consolidation, or indirectly, by purchase of the Company's voting
securities or all or substantially all of its assets, or otherwise.
(c) Beneficiaries. Executive shall be entitled to designate
(and change, to the extent permitted under applicable law) a beneficiary or
beneficiaries to receive any compensation or benefits payable hereunder
following Executive's death.
(d) Notices. Whenever under this Termination Agreement it
becomes necessary to give notice, such notice shall be in writing, signed by the
parties giving or making the same, and shall be deemed to have been duly given
(i) upon actual receipt (or refusal of receipt) if delivered personally; (ii)
three business days following deposit, if sent by certified or registered mail,
return receipt requested, postage prepaid; (iii) one business day following
deposit with a documented overnight delivery service or (iv) upon transmission,
if sent by facsimile (with confirmation receipt and followed by a copy sent by
regular mail), in each case to the appropriate address or number as set forth
below or at such other address or facsimile number as may be designated by such
party by like notice:
If to the Company:
DT Industries, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chairman of the Board and General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: 312/▇▇▇-▇▇▇▇
Facsimile: 312/902-1061
21
24
If to Executive:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
DT Industries, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(e) Reformation. The invalidity of any portion of this
Termination Agreement shall not be deemed to render the remainder of this
Termination Agreement invalid.
(f) Headings. The headings of this Termination Agreement are
for convenience of reference only and do not constitute a part hereof.
(g) No General Waivers. The failure of any party at any time
to require performance by any other party of any provision hereof or to resort
to any remedy provided herein or at law or in equity shall in no way affect the
right of such party to require such performance or to resort to such remedy at
any time thereafter, nor shall the waiver by any party of a breach of any of the
provisions hereof be deemed to be a waiver of any subsequent breach of such
provisions. No such waiver shall be effective unless in writing and signed by
the party against whom such waiver is sought to be enforced.
(h) No Obligation To Mitigate. Executive shall not be required
to seek other employment or otherwise to mitigate Executive's damages on or
after Executive's Date of Termination, nor shall the amount of any payment
hereunder be reduced by any compensation earned by the Executive as a result of
employment by another employer; provided, however, that, to the extent Executive
receives from a subsequent employer health or other insurance benefits that are
substantially similar to the benefits referred to in this Termination Agreement,
any such benefits to be provided by the Company to Executive following the Term
shall be correspondingly reduced.
(i) Offsets; Withholding. The amounts required to be paid by
the Company to Executive pursuant to this Termination Agreement shall not be
subject to offset, counterclaim, recoupment, defense or other claim, right or
action which the Company may have against Executive or others, other than with
respect to any amounts that are owed to the Company by Executive due to his
receipt of Company funds as a result of his fraudulent activity. The foregoing
and other provisions of this Termination Agreement notwithstanding, all payments
to be made to Executive under this Termination Agreement will be subject to
required withholding taxes other normal payroll deductions and any other
deductions required by law.
(j) Successors and Assigns. This Termination Agreement shall
be binding upon and shall inure to the benefit of Executive, his heirs,
executors, administrators and beneficiaries, and shall be binding upon and inure
to the benefit of the Company and its successors and assigns.
22
25
14. Indemnification.
All rights to indemnification by the Company now existing in
favor of Executive as provided in the Company's Certificate of Incorporation or
Bylaws or pursuant to other agreements in effect on or immediately prior to the
Extension Date shall continue in full force and effect from the Extension Date
(including all periods after the expiration of the Term), and the Company shall
also advance expenses for which indemnification may be ultimately claimed as
such expenses are incurred to the fullest extent permitted under applicable law,
subject to any requirement that Executive provide an undertaking to repay such
advances if it is ultimately determined that Executive is not entitled to
indemnification; provided, however, that any determination required to be made
with respect to whether Executive's conduct complies with the standards required
to be met as a condition of indemnification or advancement of expenses under
applicable law and the Company's Certificate of Incorporation, Bylaws, or other
agreement shall be made by independent counsel mutually acceptable to Executive
and the Company (except to the extent otherwise required by law). After the date
hereof, the Company shall not amend its Certificate of Incorporation or Bylaws
or any agreement in any manner which adversely affects the rights of Executive
to indemnification thereunder. Any provision contained herein notwithstanding,
this Termination Agreement shall not limit or reduce any rights of Executive to
indemnification pursuant to applicable law. In addition, the Company will
maintain directors' and officers' liability insurance in effect and covering
acts and omissions of Executive, during the Term and for a period of six years
thereafter, on terms substantially no less favorable as those in effect on the
Extension Date.
15. Income Tax Treatment.
Executive and the Company acknowledge that it is the intention
of the Company to deduct all amounts paid by the Company to Executive pursuant
to this Termination Agreement as ordinary and necessary business expenses for
income tax purposes. Executive agrees and represents that he will treat all such
amounts as ordinary income for income tax purposes, and should he report such
amounts as other than ordinary income for income tax purposes, he will indemnify
and hold the Company harmless from and against any and all taxes, penalties,
interest, costs and expenses, including reasonable attorneys' and accounting
fees and costs, which are incurred by Company directly or indirectly as a result
thereof.
23
26
IN WITNESS WHEREOF, Executive has hereunto set his hand and
the Company has caused this instrument to be duly executed as of the day and
year first above written.
DT INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Title Chairman of the Board
--------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------