EXHIBIT 10r
EMPLOYMENT AGREEMENT
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THIS AGREEMENT, made and entered into as of January 1,
1997 by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "Executive") and Zenith
Electronics Corporation (the "Company");
WITNESSETH THAT:
WHEREAS, the parties desire to enter into this Agreement
pertaining to the employment of the Executive by the Company;
NOW, THEREFORE, in consideration of the mutual covenants
and agreements set forth below, it is hereby covenanted and agreed by the
Executive and the Company as follows:
1. Performance of Services. The Executive's employment with
the Company shall be subject to the following:
(a) Subject to the terms of this Agreement, the Company hereby
agrees to employ the Executive as its President and Chief
Executive Officer during the Agreement Term (as defined below),
and the Executive hereby agrees to remain in the employ of the
Company during the Agreement Term. During the Agreement
Term, while he is employed by the Company, the Executive shall
be a member of the Board of Directors of the Company (the
"Board").
(b) During the Agreement Term, while the Executive is employed by
the Company, the Executive shall devote his full time, energies
and talents to serving as its President and Chief Executive
Officer.
(c) The Executive agrees that he shall perform his duties faithfully
and efficiently subject to the directions of the Board. The
Executive's duties may include providing services for both the
Company and the Subsidiaries (as defined below), as determined
by the Board; provided, that the Executive shall not, without his
consent, be assigned tasks that would be inconsistent with those
of President and Chief Executive Officer. The Executive will
have such authority, power, responsibilities and duties as are
inherent to his positions and necessary to carry out his
responsibilities and the duties required of him hereunder.
(d) Notwithstanding the foregoing provisions of this paragraph 1,
during the Agreement Term, the Executive may devote reasonable
time to activities other than those required under this Agreement,
including the supervision of his personal investments, and
activities involving professional, charitable, educational, religious
and similar types of organizations, speaking engagements,
membership on the boards of directors of other organizations, and
similar type activities, to the extent that such other activities do
not, in the judgement of the Board, materially inhibit or prohibit
the performance of the Executive's duties under this Agreement,
or conflict in any material way with the business of the Company
or any Subsidiary.
(e) Subject to the provisions of this Agreement, the Executive shall
not be required to perform services under this Agreement during
any period that he is Disabled. The Executive shall be considered
"Disabled" during any period in which he has a physical or mental
disability which renders him incapable, after reasonable
accommodation, of performing his duties under this Agreement.
In the event of a dispute as to whether the Executive is Disabled,
the Company may refer the same to a mutually acceptable
licensed practicing physician, and the Executive agrees to submit
to such tests and examinations as such physician shall deem
appropriate.
(f) The "Agreement Term" shall be the period beginning on January
1, 1997 (the "Effective Date") and ending on December 29, 1998.
(g) For purposes of this Agreement, the term "Subsidiary" shall mean
any corporation, partnership, joint venture or other entity during
any period in which at least a fifty percent interest in such entity
is owned, directly or indirectly, by the Company (or a successor
to the Company).
2. Compensation. Subject to the terms of this Agreement, during
the Agreement Term, while the Executive is employed by the Company,
the Company shall compensate him for his services as follows:
(a) The Executive shall receive, in substantially equal monthly or
more frequent installments, in accordance with the Company's
regular payroll practices, an annual base salary of $750,000 (the
"Salary").
(b) For Company performance based on the performance period
beginning on the Effective Date and ending December 31, 1997
(the "1997 Performance Period") and for the performance period
beginning on the January 1, 1998 and ending December 31, 1998
(the "1998 Performance Period"), the Executive shall participate
in a bonus program. The bonus program shall provide, for each
performance period, a maximum bonus amount of 120% of the
Executive's annual Salary, and a minimum bonus amount for each
performance period of not less than 60% of the Executive's
annual Salary, with the minimum payable only if the target goals
for the performance period are achieved. The performance goals
for each performance period shall be established by the
Organization and Compensation Committee of the Board after
consultation with the Executive. The performance goals for the
1997 Performance Period shall be established not later than
March 31, 1997. The value for each bonus award will be
distributed in cash. For the 1997 Performance Period, the bonus
shall be distributed not later than February 28, 1998, and for the
1998 Performance Period, the bonus shall be distributed not later
than February 28, 1999. Notwithstanding the foregoing
provisions of this paragraph (b), for the 1997 Performance
Period, the Executive shall be entitled to a bonus of not less than
$450,000.
(c) As provided in Exhibit 1, which is attached to and forms a part of
this Agreement, the Executive shall be entitled to receive a cash
payment based on the value of 150,000 shares of common stock
of the Company ("Company Stock").
(d) As provided in Exhibit 2, which is attached to and forms a part of
this Agreement, the Executive shall be entitled to receive the
award of options to purchase 150,000 shares of Company Stock.
(e) The Executive shall be provided with the welfare benefits and
other fringe benefits to the same extent and on the same terms as
those benefits are provided by the Company from time to time to
the Company's other senior management employees, except that
the Salary, and the bonus, stock-based awards, and other
incentive compensation benefits for the Executive shall be
determined under the provisions of this agreement rather than the
policies applicable to other employees.
(f) If the Executive's Date of Termination is December 29, 1998, and
he is precluded from receiving an allocation under the Zenith
Salaried Profit Sharing Retirement Plan and/or the Zenith
Electronics Corporation Supplemental Salaried Profit Sharing
Retirement Plan for the year ending December 31, 1998 by reason
of his not being employed by the Company on that date, the
Company shall make a cash payment to the Executive equal to the
amount which would have been allocated to his accounts under
those plans, based on his actual compensation from the Company
for 1998, but determined as though he had been employed through
December 31, 1998. Such payment shall be made not later than
January 20, 1999.
(g) The Executive shall be provided, at the Company's expense,
transportation between his home and the office, and the Executive
is authorized to incur reasonable expenses for entertainment,
traveling, meals, lodging and similar items in promoting the
Company's business. The Company will reimburse the Executive
for all reasonable expenses so incurred, and for reasonable legal
fees incurred in connection with the negotiation of this Agreement.
(h) The Executive shall be entitled to coverage under the
indemnification agreement dated April 24, 1990 between the
Executive and the Company (the "Indemnification Agreement"),
and coverage under such agreement shall continue during the
period in which the Executive is employed, and for five years
after the Date of Termination, or such period longer than five
years as is consistent with the Company policy applicable to other
senior executives of the Company.
3. Termination. The Executive's employment with the Company
during the Agreement Term may be terminated by the Company or the
Executive without any breach of this Agreement only under the
circumstances described in paragraphs 3(a) through 3(f):
(a) Death. The Executive's employment hereunder will terminate
upon his death.
(b) Disability. The Company may terminate the Executive's
employment during any period in which he is Permanently
Disabled. The Executive shall be considered "Permanently
Disabled" during any period in which (i) he has a physical or
mental disability which renders him incapable, after reasonable
accommodation, of performing his duties under this Agreement;
and (ii) such disability is determined by the Board to be of a long-
term nature. In the event of a dispute as to whether the Executive
is Permanently Disabled, the Company may refer the same to a
mutually acceptable licensed practicing physician, and the
Executive agrees to submit to such tests and examination as such
physician shall deem appropriate.
(c) Cause. The Company may terminate the Executive's employment
hereunder at any time for Cause. For purposes of this Agreement,
the term "Cause" shall mean:
(i) the willful and continued failure by the Executive to
substantially perform his duties with the Company (other than any
such failure resulting from the Executive's being Disabled) within
a reasonable period of time after a written demand for substantial
performance is delivered to the Executive by the Board, which
demand specifically identifies the manner in which the Board
believes that the Executive has not substantially performed his
duties;
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company,
monetarily or otherwise; or
(iii) the engaging by the Executive in egregious misconduct
involving serious moral turpitude to the extent that, in the
reasonable judgment of the Company's Board, the Executive's
credibility and reputation no longer conform to the standard of the
Company's executives.
For purposes of this Agreement, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted
to be done, by the Executive not in good faith and without
reasonable belief that the Executive's action or omission was not
contrary to the best interest of the Company.
(d) Constructive Discharge. If (i) the Company commits a material
breach of the Agreement; (ii) the Executive provides written
notice to the Company of the occurrence of such material breach,
which specifically identifies the manner in which the Executive
believes that the breach has occurred; (iii) the Company fails to
correct such breach within a reasonable time (not to exceed 10
business days) after such notice is given; and (iv) the Executive
resigns within the 60-calendar-day period following the
Executive's discovery of such breach, then, for purposes of this
paragraph 3(d), the Executive shall be considered to have been
dismissed by the Company for reasons other than Cause. For
purposes of this paragraph (d), a "material breach" of the
Agreement shall include (without limitation), in the absence of the
Executive's express written consent, the occurrence of either of
the following circumstances:
(i) The assignment to the Executive of any duties materially
inconsistent with the Executive's position as President and Chief
Executive Officer, or the removal from the Executive of the
authority for any material responsibilities normally attendant to
the office of the President and Chief Executive Officer.
(ii) The failure of the Executive to be elected as a member of the
Board.
(e) Termination by Executive. The Executive may terminate his
employment hereunder at any time for any reason by giving the
Company prior written Notice of Termination (as defined in
paragraph 3(g)), which Notice of Termination shall be effective
not less than 30 calendar days after it is given to the Company,
provided that nothing in this Agreement shall require the
Executive to specify a reason for any such termination. However,
to the extent that the procedures specified in paragraph 3(d) are
required, the procedures of this paragraph 3(e) may not be used in
lieu of the procedures required under paragraph 3(d).
(f) Termination by Company. The Company may terminate the
Executive's employment hereunder at any time for any reason, by
giving the Executive prior written Notice of Termination, which
Notice of Termination shall be effective immediately, or such
later time as is specified in such notice. The Company shall not
be required to specify a reason for the termination under this
paragraph 3(f), provided that termination of the Executive's
employment by the Company shall be deemed to have occurred
under this paragraph 3(f) only if it is not for reasons described in
paragraph 3(b), 3(c), 3(d) or 3(e).
(g) Notice of Termination. Any termination of the Executive's
employment by the Company or the Executive (other than a
termination pursuant to paragraph 3(a)) must be communicated
by a written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" means a
dated notice which indicates the specific termination provision in
this Agreement relied on and which sets forth in reasonable detail
the facts and circumstances, if any, claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated.
(h) Date of Termination. "Date of Termination" means the last day
the Executive is employed by the Company, provided that the
Executive's employment is terminated in accordance with the
foregoing provisions of this paragraph 3.
4. Rights Upon Termination. The Executive's right to payment
and benefits under this Agreement for periods after his Date of
Termination shall be determined in accordance with the following
provisions of this paragraph 4:
(a) General. If the Executive's Date of Termination occurs during the
Agreement Term for any reason, the Company shall pay to the
Executive:
(i) The Executive's Salary for the period ending on the Date of
Termination.
(ii) Payment for unused vacation days, as determined in
accordance with Company policy as in effect from time to time,
which amounts shall be paid in accordance with the Company's
regular payroll practices.
(iii) Payment of any unpaid bonus amount for the 1997
Performance Period in accordance with actual performance for
the period (subject to the minimum for the period set forth above),
but only if the Date of Termination has occurred on or after
December 31, 1997. Amounts paid under this paragraph (iii)
shall be paid to the Executive at the time such bonus amounts
would otherwise have been paid to the Executive if he had
remained in the employ of the Company through the end of the
Agreement Term.
(iv) Any other payments or benefits due to be provided to the
Executive pursuant to any employee compensation or benefit
plans or arrangements (as the terms of those compensation or
benefit plans or arrangements may be modified by paragraph 2 of
this Agreement), to the extent such payments and benefits are
earned as of the Date of Termination. Except as may otherwise
be expressly provided to the contrary in this Agreement, nothing
in this Agreement shall be construed as requiring the Executive to
be treated as employed by the Company for purposes of any
employee benefit plan or arrangement following the date of the
Executive's Date of Termination.
(b) Resignation and Termination for Cause. If the Executive's Date
of Termination occurs during the Agreement Term under
circumstances described in paragraph 3(c) (relating to the
Executive's termination for Cause) or paragraph 3(e) (relating to
the Executive's resignation), then, in addition to the amounts
payable in accordance with paragraph 4(a):
(i) All unexercised stock options granted to the Executive prior to
the Date of Termination and which are exercisable immediately
prior to the Date of Termination shall continue to be exercisable
by the Executive for a period of 90 days after the Date of
Termination.
(ii) The Executive shall receive a cash payment from the
Company equal to the Fair Market Value of the vested Share
Units credited to his Stock Account as of the Date of
Termination.
(c) Death. If the Executive's Date of Termination occurs during the
Agreement Term because of the Executive's death, then, in
addition to the amounts payable in accordance with paragraph
4(a):
(i) The Executive's estate shall receive from the Company, for the
period continuing through the end of the Agreement Term, the
Salary amount described in paragraph 2(a), as in effect on his
Date of Termination, in monthly or more frequent installments in
accordance with the Company's regular payroll practices.
(ii) The Executive's estate shall receive from the Company a
payment (or payments) in lieu of bonus (or bonuses). If the Date
of Termination occurs during the 1997 Performance Period, the
Executive's estate shall be entitled to a payment based on actual
performance for that performance period (provided that such
amount shall be not less than $450,000), and the Executive's
estate shall be entitled to a payment for the 1998 Performance
Period in an amount determined by the Board, provided that such
amount shall be not less than $450,000. If the Date of
Termination occurs during the 1998 Performance Period, the
Executive's estate shall be entitled to a payment based on actual
performance for that performance period. Amounts payable
under this paragraph (ii) shall be paid at the time such bonus
amounts would otherwise have been paid to the Executive if he
had remained in the employ of the Company through the end of
the Agreement Term.
(iii) All unexercised stock options granted to the Executive prior
to the Executive's death (regardless of whether they are
exercisable prior to the Date of Termination) shall be exercisable
by the Executive's estate, heirs and assigns for a period expiring
on the third anniversary of the Date of Termination.
(iv) The Executive's estate shall receive a cash payment from the
Company equal to the Fair Market Value of the Share Units
credited to his Stock Account as of the Date of Termination
(regardless of whether such Share Units are vested prior to the
Date of Termination).
By writing filed with the Company in accordance with the
procedures established by it, the Executive may designate one or
more beneficiaries to receive the benefits which would otherwise
be provided to the Executive's estate under this paragraph (c).
(d) Disability. If the Executive's Date of Termination occurs during
the Agreement Term under circumstances described in paragraph
3(b) (relating to the Executive's being Disabled), then, in addition
to the amounts payable in accordance with paragraph 4(a):
(i) The Executive shall receive from the Company for the period
continuing through the end of the Agreement Term (regardless of
whether the Executive continues to be Disabled through the end of
the Agreement Term), the Salary amount described in paragraph
2(a), as in effect on his Date of Termination, in monthly or more
frequent installments in accordance with the Company's regular
payroll practices.
(ii) The Executive shall receive from the Company a payment (or
payments) in lieu of the bonus (or bonuses). If the Date of
Termination occurs during the 1997 Performance Period, the
Executive shall be entitled to a payment based on actual
performance for that performance period (provided that such
amount shall be not less than $450,000), and the Executive shall
be entitled to a payment for the 1998 Performance Period in an
amount determined by the Board, provided that such amount shall
be not less than $450,000. If the Date of Termination occurs
during the 1998 Performance Period, the Executive shall be
entitled to a payment based on actual performance for that
performance period. Amounts payable under this paragraph (ii)
shall be paid at the time such bonus amounts would otherwise
have been paid to the Executive if he had remained in the employ
of the Company through the end of the Agreement Term.
(iii) All unexercised stock options granted to the Executive prior
to the Date of Termination (regardless of whether they are
exercisable prior to the Date of Termination) shall be exercisable
by the Executive for a period expiring on the third anniversary of
the Date of Termination.
(iv) The Executive shall receive a cash payment from the
Company equal to the Fair Market Value of the Share Units
credited to his Stock Account as of the Date of Termination
(regardless of whether such Share Units are vested prior to the
Date of Termination).
(v) If the Executive continues to be Disabled through the end of
the Agreement Term, then, for the period after the end of the
Agreement Term, the Executive shall be entitled to receive
disability income replacement coverage to the extent provided
under the disability policy applicable to other senior management
employees of the Company. During any period while the
Executive is Disabled, and is otherwise entitled to receive Salary
(or Salary replacement) payments under this Agreement, any
Salary payments otherwise due to the Executive shall be reduced
by the amount of any benefits paid for the same period of time
under such disability income replacement coverage.
(e) Discharge without Cause. If the Executive's Date of Termination
occurs during the Agreement Term under circumstances described
in paragraph 3(d) (relating to constructive discharge) or
paragraph 3(f) (relating to termination by the Company without
Cause), then, in addition to the amounts payable in accordance
with paragraph 4(a):
(i) The Executive shall receive from the Company, for the period
continuing through the end of the Agreement Term, the Salary
amount described in paragraph 2(a), as in effect on his Date of
Termination, in monthly or more frequent installments in
accordance with the Company's regular payroll practices.
(ii) The Executive shall receive from the Company a payment (or
payments) in lieu of the bonus (or bonuses), which payment shall
be based on actual performance for the performance period (but
shall not be less than the rate of $450,000 for each of the
performance periods). However, if the Executive is entitled to
payment for the 1997 Performance Period in accordance with
paragraph 4(a)(iii) because the Date of Termination occurs on or
after December 31, 1997, no payment shall be made for the 1997
Performance Period under this paragraph (ii). Amounts payable
under this paragraph (ii) shall be paid at the time the bonus
amounts would otherwise have been paid to the Executive if he
had remained in the employ of the Company through the end of
the Agreement Term.
(iii) All unexercised stock options granted to the Executive prior
to the Date of Termination (regardless of whether they are
exercisable prior to the Date of Termination) shall be exercisable
by the Executive for a period expiring on the third anniversary of
the Date of Termination.
(iv) The Executive shall receive a cash payment from the
Company equal to the Fair Market Value of the Share Units
credited to his Stock Account as of the Date of Termination
(regardless of whether such Share Units are vested prior to the
Date of Termination).
(f) Other Severance Benefits. Except as may be otherwise
specifically provided by an amendment of this paragraph (f)
adopted in accordance with paragraph 10, payments under this
paragraph 4 shall be in lieu of any benefits that may be otherwise
payable to or on behalf of the Executive pursuant to the terms of
any severance pay arrangement of the Company or any
Subsidiary or any other, similar arrangement of the Company or
any Subsidiary providing benefits upon involuntary termination of
employment.
5. Duties on Termination. Subject to the terms and conditions of
this Agreement, during the period beginning on the date of delivery of a
Notice of Termination, and ending on the Date of Termination, the
Executive shall continue to perform his duties as set forth in this
Agreement, and shall also perform such services for the Company as are
necessary and appropriate for a smooth transition to the Executive's
successor. Notwithstanding the foregoing provisions of this paragraph 5,
the Company may suspend the Executive from performing his duties
under this Agreement following the delivery of a Notice of Termination
providing for the Executive's resignation, or delivery by the Company of a
Notice of Termination providing for the Executive's termination of
employment for any reason; provided, however, that during the period of
suspension (which shall end on the Date of Termination), the Executive
shall continue to be treated as employed by the Company for other
purposes, and his rights to compensation or benefits shall not be reduced
by reason of the suspension.
6. Mitigation and Set-Off. The Executive shall not be required to
mitigate the amount of any payment or benefit provided for in this
Agreement by seeking other employment or otherwise. The Company
shall not be entitled to set off against the amounts payable to the
Executive under this Agreement any amounts owed to the Company by the
Executive, any amounts earned by the Executive in other employment
after termination of his employment with the Company, or any amounts
which might have been earned by the Executive in other employment had
he sought such other employment.
7. Noncompetition and Confidentiality. Except as otherwise
provided in this Agreement, the Executive shall be subject to such
restrictions on competition, interference with the business of the
Company and its Subsidiaries, and on the use, disclosure and retention of
trade secrets and confidential information as are applicable to other senior
management employees of the Company.
8. Assistance with Claims. The Executive agrees that, for the
period beginning the Effective Date, and continuing for a reasonable
period after the Executive's termination of employment with the Company,
the Executive will assist the Company in defense of any claims that may
be made against the Company, and will assist the Company in the
prosecution of any claims that may be made by the Company, to the
extent that such claims may relate to services performed by the Executive
for the Company. The Executive agrees to promptly inform the Company
if he becomes aware of any lawsuits involving such claims that may be
filed against the Company. The Company agrees to reimburse the
Executive for all of the Executive's reasonable out-of-pocket expenses
associated with such assistance, including travel expenses. For periods
after the Executive's employment with the Company terminates, the
Company agrees to provide reasonable compensation to the Executive for
such assistance. The Executive also agrees to promptly inform the
Company if he is asked to assist in any investigation of the Company (or
its actions) that may relate to services performed by the Executive for the
Company, regardless of whether a lawsuit has then been filed against the
Company with respect to such investigation.
9. Nonalienation. The interests of the Executive under this
Agreement are not subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors of the Executive or the Executive's beneficiary.
10. Amendment. This Agreement may be amended or cancelled
only by mutual agreement of the parties in writing without the consent of
any other person. So long as the Executive lives, no person, other than the
parties hereto, shall have any rights under or interest in this Agreement or
the subject matter hereof.
11. Applicable Law. The provisions of this Agreement shall be
construed in accordance with the laws of the State of Illinois, without
regard to the conflict of law provisions of any state. All disputes shall be
litigated in Chicago, Illinois.
12. Severability. The invalidity or unenforceability of any
provision of this Agreement will not affect the validity or enforceability of
any other provision of this Agreement, and this Agreement will be
construed as if such invalid or unenforceable provision were omitted (but
only to the extent that such provision cannot be appropriately reformed or
modified).
13. Waiver of Breach. No waiver by any party hereto of a
breach of any provision of this Agreement by any other party, or of
compliance with any condition or provision of this Agreement to be
performed by such other party, will operate or be construed as a waiver of
any subsequent breach by such other party or any similar or dissimilar
provisions and conditions at the same or any prior or subsequent time.
The failure of any party hereto to take any action by reason of such
breach will not deprive such party of the right to take action at any time
while such breach continues.
14. Successors. This Agreement shall be binding upon, and inure
to the benefit of, the Company and its successors and assigns and upon
any person acquiring, whether by merger, consolidation, purchase of
assets or otherwise, all or substantially all of the Company's assets and
business.
15. Notices. Notices and all other communications provided for
in this Agreement shall be in writing and shall be delivered personally or
sent by registered or certified mail, return receipt requested, postage
prepaid, or sent by facsimile or prepaid overnight courier to the parties at
the addresses set forth below (or such other addresses as shall be specified
by the parties by like notice). Such notices, demands, claims and other
communications shall be deemed given:
(a) in the case of delivery by overnight service with guaranteed next
day delivery, the next day or the day designated for delivery;
(b) in the case of certified or registered U.S. mail, five days after
deposit in the U.S. mail; or
(c) in the case of facsimile, the date upon which the transmitting
party received confirmation of receipt by facsimile, telephone or
otherwise;
provided, however, that in no event shall any such communications be
deemed to be given later than the date they are actually received.
Communications that are to be delivered by the U.S. mail or by overnight
service are to be delivered to the addresses set forth below:
to the Company:
Zenith Electronics Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to the Executive:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Zenith Electronics Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
All notices to the Company shall be directed to the attention of Chairman
of the Board of Directors of the Company, with a copy to the General
Counsel of the Company. Each party, by written notice furnished to the
other party, may modify the applicable delivery address, except that notice
of change of address shall be effective only upon receipt.
16. Costs of Enforcement. The following provisions of this
paragraph 16 shall apply if it becomes necessary or desirable for the
Executive to retain legal counsel or incur other costs and expenses in
connection with either enforcing any and all of his rights under this
Agreement or defending against any allegations of breach of this
Agreement by the Company:
(a) The Executive shall be entitled to recover from the Company
reasonable attorneys' fees, costs and expenses incurred by him in
connection with such enforcement or defense.
(b) Payments required under this paragraph 16 shall be made by the
Company to the Executive (or directly to the Executive's attorney)
at the time the attorneys' fees, costs, and expenses are incurred by
the Executive.
(c) The Executive shall be entitled to select his legal counsel;
provided, however, that such right of selection shall not affect the
requirement that any costs and expenses reimbursable under this
paragraph 16 be reasonable.
(d) The Executive's rights to payments under this paragraph 16 shall
not be affected by the final outcome of any dispute with the
Company; provided, however, that to the extent that the court
shall determine that under the circumstances recovery by the
Executive of all or a part of any such fees and costs and expenses
would be unjust, the Executive shall not be entitled to such
recovery; and to the extent that such amount have been recovered
by the Executive previously, the Executive shall repay such
amounts to the Company.
17. Survival of Agreement. Except as otherwise expressly
provided in this Agreement, the rights and obligations of the parties to this
Agreement shall survive the termination of the Executive's employment
with the Company.
18. Entire Agreement. Except as otherwise provided herein, this
Agreement (including the Exhibits attached hereto) constitutes the entire
agreement between the parties concerning the subject matter hereof and
supersedes all prior and contemporaneous agreements, if any, between the
parties relating to the subject matter hereof.
IN WITNESS THEREOF, the Executive has hereunto set his
hand, and the Company has caused these presents to be executed in its
name and on its behalf, and its corporate seal to be hereunto affixed, all as
of the day and year first above written.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Zenith Electronics Corporation
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
ATTEST:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Assistant Secretary
(SEAL)
EXHIBIT 1
SHARE UNIT AWARDS
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Under paragraph 2(c) of the employment agreement (the
"Agreement") between Zenith Electronics Corporation (the "Company")
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "Executive"), the Executive is entitled to
receive a cash payment based on 150,000 shares of common stock of the
Company ("Company Stock"). Except as otherwise expressly provided in
the Agreement, this Exhibit 1 sets forth the terms and conditions of such
award.
(a) A "Stock Account" shall be established by the Company in the
name of the Executive, which will reflect an unfunded obligation
of the Company to pay cash to the Executive, as determined in
accordance with this Exhibit 1.
(b) As of the Effective Date, 150,000 Share Units shall be allocated
to the Executive's Stock Account.
(c) As of the record date for the payment of any dividend with respect
to Company Stock which record date occurs on or after the
Effective Date and on or before the Date of Termination, the
Executive's Stock Account will be credited with additional Share
Units equal to (i) the amount of the dividends or other distribution
that would have been paid with respect to the number of shares of
Company Stock equal to the number of Share Units credited to
the Stock Account as of the dividend record date; divided by (ii)
the Fair Market Value of a share of Company Stock on the day
such dividend is payable.
(d) Except as otherwise provided in the Agreement, the Executive's
right to Share Units allocated to his Stock Account shall become
vested in accordance with the following:
(i) The Executive shall be vested in 25% of the Share Units as of
December 31, 1997, if the Executive is then employed by the
Company.
(ii) The Executive shall be vested in 25% of the Share Units as of
December 29, 1998, if the Executive is then employed by the
Company.
(iii) The Executive shall be vested in 25% of the Share Units in
proportion to the achievement of performance goals for the 1997
Performance Period and 25% of the Share Units in proportion to
the achievement of the performance goals for the 1998
Performance Period.
(e) If the Executive remains in the employ of the Company through
the end of the Agreement Term (i.e., through December 29,
1998), or is otherwise entitled to such cash payments under the
Agreement, he shall receive a cash payment from the Company
equal to the Fair Market Value of the vested Share Units credited
to his Stock Account as of his Date of Termination.
(f) The cash to be paid to the Executive with respect to Share Units
credited to his Stock Account following his Date of Termination
shall be distributed within 20 days after such Date of
Termination, provided that no such payment shall be made prior
to the Executive's Date of Termination.
(g) In the event of recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation, rights
offering, separation, reorganization or liquidation, or other change
in the corporate structure or shares of the Company, the Share
Units and the right to shares of Company Stock shall be adjusted
to the same extent such adjustment would be made with respect to
shares awarded under the 1987 Zenith Stock Incentive Plan (the
"Stock Incentive Plan").
(h) The Company shall use a procedure to grant the Share Units
under this Exhibit 1 so that, to the extent that the grant is a
"purchase" for purposes of Section 16(b) of the Securities
Exchange Act of 1934, the grant will be exempt from Section
16(b) by reason of SEC Rule 16b-3 (or other SEC rules).
(i) For purposes of this Agreement:
(i) The "Fair Market Value" of a Share Unit as of any date shall
be the Fair Market Value of a share of Company Stock on that
date.
(ii) The "Fair Market Value" of a share of Company Stock as of
any date shall be determined on the same manner as is used to
determine such fair market value in establishing the minimum
option exercise price for a stock option under the Stock Incentive
Plan.
(iii) For purposes of determining the amount of cash to be
distributed to the Executive with respect to Share Units credited
to his Stock Account as of his Date of Termination, the "Fair
Market Value" of a Share Unit shall be determined as of the Date
of Termination.
EXHIBIT 2
STOCK OPTION AWARDS
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Under paragraph 2(d) of the employment agreement (the
"Agreement") between Zenith Electronics Corporation (the "Company")
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "Executive"), the Executive is entitled to
receive the award of options to purchase 150,000 shares of common stock
of the Company ("Company Stock"). Except as otherwise expressly
provided in the Agreement, this Exhibit 2 sets forth the terms and
conditions of such options.
(a) As of the Effective Date, the Executive shall be granted an option
to purchase 100,000 shares of Company stock. As of January 1,
1998 if the Executive is then employed by the Company, the
Executive shall be granted an option to purchase an additional
50,000 shares of Company stock. The option exercise price per
share of Company Stock under each option shall equal the fair
market value of a share of Company Stock on the date the option
is granted.
(b) The option granted as of the Effective Date shall first become
exercisable with respect to 50% of the shares covered thereby as
of January 1, 1998, if the Executive is then employed by the
Company. The option granted as of the Effective Date shall first
become exercisable with respect to the remaining 50% of the
shares covered thereby as of December 29, 1998, if the Executive
is then employed by the Company. The option granted as of
January 1, 1998 shall first become exercisable with respect to
100% of the shares covered thereby as of December 29, 1998, if
the Executive is then employed by the Company.
(c) If the Executive continues to be employed by the Company
through the last day of the Agreement Term, all unexercised stock
options then held by the Executive shall be exercisable by the
Executive (or his executor or assigns) through the third
anniversary of the last day of the Agreement Term.
(d) If the Executive dies after the Date of Termination, but before the
expiration of the period during which options are exercisable by
the Executive under the Agreement (including this Exhibit 2),
such options shall continue to be exercisable until such expiration
of the period by the Executive's estate (or his executor or assigns
or, if applicable, the beneficiary designated by the Executive).
(e) The options granted under this Exhibit 2 shall not be incentive
stock options.
(f) The options granted under this Exhibit 2 will provide that after
the option has been granted, and prior to its exercise, the options
may be transferred by the Executive, for no consideration, to or
for the benefit of the Executive's Immediate Family (including,
without limitation, to a trust for the benefit of the Executive's
Immediate Family or to a partnership for members of a
Executive's Immediate Family), subject to such limits as the
Committee may establish, and the transferee shall remain subject
to all the terms and conditions applicable to the options prior to
such transfer. The Executive's "Immediate Family" shall mean
the Executive's spouse, children, stepchildren, adoptive
relationships, sisters, brothers and grandchildren (and, for this
purpose, shall also include the Executive).
(g) The Company shall use a procedure to grant the options under
this Exhibit 2 so that, to the extent that the grant is a "purchase"
for purposes of Section 16(b) of the Securities Exchange Act of
1934, the grant will be exempt from Section 16(b) by reason of
SEC Rule 16b-3 (or other SEC rules).
(h) The options awarded under this Exhibit 2 shall be granted under
and subject to the terms and conditions of the 1987 Zenith Stock
Incentive Plan.
ZENITH ELECTRONICS CORPORATION
EMPLOYEE SHARE UNIT AGREEMENT
THIS AGREEMENT, entered into as of January 1, 1997 (the
"Agreement Date"), by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "Executive"),
and Zenith Electronics Corporation, a Delaware corporation (the
"Company");
WITNESSETH THAT:
WHEREAS, pursuant to the terms of Exhibit 1 of the
employment agreement between the Executive and the Company dated
January 1, 1997 (the "Employment Agreement"), the Company is to
establish a stock account in the name of the Executive, which will reflect
an unfunded obligation of the Company to pay cash to the Executive,
based on the value of units representing shares of Company stock
allocated to the Stock Account, and the rights provided by this Agreement
are in settlement of that obligation;
NOW, THEREFORE, IT IS AGREED, by and between the
Company and the Executive, as follows:
1. Establishment of Stock Account. As of the Effective Date, the
Company shall establish a Stock Account, which shall be used to record
the number of Share Units allocated for the benefit of the Executive.
2. Adjustments to Stock Account. The Stock Account shall be
adjusted in accordance with the following:
(a) As of the Effective Date, 150,000 Share Units shall be allocated
to the Stock Account for the benefit of the Executive, which
150,000 Share Units shall be the opening account balance of the
Stock Account.
(b) As of the record date for the payment of any dividend with respect
to common stock of the Company ("Stock"), which record date
occurs on or after the Effective Date, and on or before the Date of
Termination, the Stock Account will be credited with additional
Share Units equal to (i) the amount of the dividends or other
distributions that would have been paid with respect to the
number of shares of Stock equal to the number of Share Units
credited to the Stock Account as of the dividend record date;
divided by (ii) the Fair Market Value of a share of Stock on the
day such dividend is payable. For purposes of this Agreement,
the term "Date of Termination" shall be defined as set forth in the
Employment Agreement.
(c) Immediately after distribution of the Value of the vested portion
of the Stock Account in accordance with paragraph 6, the number
of Share Units allocated to the Stock Account shall be reduced to
zero, and the Stock Account shall be cancelled.
3. Adjustment to Share Units. In the event of any stock split,
stock dividend, recapitalization, reorganization, merger, consolidation,
combination, exchange of shares, liquidation, spin-off or other similar
change in capitalization or event with respect to Stock, or any distribution
to holders of Stock which would not otherwise result in a corresponding
adjustment to the number of Share Units allocated to the Stock Account in
accordance with paragraph 2, the Share Units allocated to the Stock
Account shall be adjusted by the committee (the "Committee") which
administers the 1987 Zenith Stock Incentive Plan (the "Plan") to the same
extent such adjustment would be made with respect to shares awarded
under the Plan.
4. Statement of Stock Account. As soon as practicable after the
end of calendar year 1997 and calendar year 1998, the Company shall
provide the Executive with a statement of the transactions in his Stock
Account during that year and the number of Share Units allocated to his
Stock Account as of the end of the year.
5. Vesting. The Executive shall be vested in the Share Units
allocated to the Stock Account as of his Date of Termination in
accordance with the following:
(a) The Executive shall be vested 25% of the Share Units allocated to
the Stock Account as of his Date of Termination, if the
Executive's Date of Termination has not occurred before
December 31, 1997.
(b) The Executive shall be vested in an additional 25% of the Share
Units allocated to the Stock Account as of his Date of
Termination, if the Executive's Date of Termination has not
occurred before December 29, 1998.
(c) The Executive shall be vested in 25% of the Share Units allocated
to the Stock Account as of his Date of Termination, in proportion
to the achievement of performance goals for the 1997
Performance Period, and shall be vested in the remaining 25% of
the Share Units allocated to the Stock Account as of his Date of
Termination, in proportion to the achievement of the performance
goals for the 1998 Performance Period, as those Performance
Periods and performance goals are established in accordance with
the Employment Agreement.
(d) Notwithstanding the foregoing provisions of this paragraph 5, the
Executive shall become vested in 100% of the Share Units
allocated to his Stock Account as of his Date of Termination
(which vesting shall be deemed to occur prior to the determination
and distribution of the Value of his Stock Account in accordance
with paragraph 6), if the Executive's Date of Termination occurs
prior to December 29, 1998 under circumstances described in
paragraph 3(b) of the Employment Agreement (relating to the
Executive's being Disabled), under circumstances described in
paragraph 3(d) of the Employment Agreement (relating to
constructive discharge), or under circumstances described in
paragraph 3(f) of the Employment Agreement (relating to
termination by the Company without Cause), or the Date of
Termination occurs prior to December 29, 1998 by reason of his
death.
6. Distribution. On, or within 20 days after, the Executive's Date
of Termination, but in no event prior to the Date of Termination, the
Executive shall receive a cash payment from the Company equal to the
Value of the vested portion of the Stock Account, determined as of the
Date of Termination, and based on the vesting provisions set forth in
paragraph 5. The "Value" of the Stock Account as of the Date of
Termination shall equal the product of: (a) number of Share Units
(including fractional Share Units) allocated to the Stock Account as of
that date; multiplied by (b) the Fair Market Value of a share of Stock.
The Value of the vested portion of the Stock Account shall be equal to the
Value of the Stock Account, but proportionately reduced to reflect the
portion of the Share Units allocated to the Stock Account that is not
vested on the Date of Termination. As used in this Agreement, the "Fair
Market Value" of a share of Stock shall mean the closing transaction price
of a share of Stock as reported in The Wall Street Journal as New York
Stock Exchange Composite Transactions for the date as of which such
value is being determined or, if there shall be no reported transaction on
such date, on the next preceding date for which a transaction was
reported; provided that if the Fair Market Value for any date cannot be
determined as above provided, Fair Market Value shall be determined by
the Committee by whatever means or method as the Committee, in the
good faith exercise of its discretion, shall at such time deem appropriate.
7. Withholding. All amounts payable under this Agreement shall
be subject to withholding of all applicable taxes, and the Executive shall
also be responsible for payment of any withholding taxes which become
due with respect to such payment prior to the date such payment occurs.
8. Heirs. Any amounts payable to the Executive under this
Agreement that are not paid at the time of the Executive's death shall be
paid at the time and in the form determined in accordance with the
provisions of this Agreement, to the beneficiary designated by the
Executive in writing filed with the Committee in such form and at such
time as the Committee shall require. If a deceased Executive fails to
designate a beneficiary, or if the designated beneficiary of the deceased
Executive dies before the Executive or before complete payment of the
amounts distributable under this Agreement, the Committee shall direct
that benefits to be paid under this Agreement be paid to the legal
representative or representatives of the estate of the last to die of the
Executive and his beneficiary.
9. Transferability. The interests of the Executive under this
Agreement may not be sold, transferred, assigned, pledged, hypothecated,
encumbered or otherwise disposed of (whether by operation of law or
otherwise) or be subject to execution, attachment or similar process, other
than by will or the laws of descent and distribution.
10. Limitation of Implied Rights. Neither the Executive nor any
other person shall, by reason of the establishment of the Stock Account, or
by reason of the allocation of Share Units to that account, acquire any
right in or title to any assets, funds or property of the Company
whatsoever prior to the date of distribution with respect to the Stock
Account. The Executive shall have only a contractual right to the cash
distributable under this Agreement, unsecured by any assets of the
Company. Nothing contained in this Agreement shall constitute a
guarantee by the Company that the assets of the Company shall be
sufficient to provide any benefits specified under this Agreement.
11. Share Units Confer No Rights as Stockholder. The
Executive shall not be considered a stockholder of the Company by reason
of the allocation of Share Units to the Stock Account, and shall not be
entitled to any privileges of Stock ownership with respect to Share Units.
12. Counterparts. This Agreement may be executed in two
counterparts each of which shall be deemed an original and both of which
together shall constitute one and the same instrument.
13. Successors. This Agreement shall be binding upon and inure
to the benefit of any successor or successors of the Company and any
person or persons who shall, upon the death of the Executive, acquire any
rights hereunder in accordance with this Agreement.
14. Governing Law. This Agreement and all determinations
made and actions taken pursuant hereto, to the extent not governed by the
laws of the United States, shall be governed by the laws of the State of
Illinois and construed in accordance therewith without giving effect to
principles of conflicts of laws.
15. Amendment. This Agreement may be amended by written
Agreement of the Executive and the Company, without the consent of any
other person.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the Agreement Date.
ZENITH ELECTRONICS CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Attest:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Assistant Secretary
ZENITH ELECTRONICS CORPORATION
EMPLOYEE STOCK OPTION AGREEMENT
THIS AGREEMENT, entered into as of January 1, 1997 (the
"Agreement Date"), by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "Executive"),
and Zenith Electronics Corporation, a Delaware corporation (the
"Company");
WITNESSETH THAT:
WHEREAS, the Company maintains the 1987 Zenith Stock
Incentive Plan (the "Plan"), which is incorporated into and forms a part of
this Agreement; and
WHEREAS, pursuant to the terms of paragraph (a) of Exhibit 2
of the employment agreement between the Executive and the Company
dated January 1, 1997 (the "Employment Agreement"), the Executive is
entitled to receive an option to purchase 100,000 shares of common stock
of the Company, par value $1.00 ("Stock"), and the option award
reflected by this Agreement, which is made under the Plan, is in settlement
of that obligation (which award is in addition to the grant of an option to
purchase 50,000 shares of Stock, to be made to the Executive as of
January 1, 1998, subject to the terms of the Employment Agreement);
NOW, THEREFORE, IT IS AGREED, by and between the
Company and the Executive, as follows:
1. Award and Purchase Price. Subject to the terms of this
Agreement and the Plan, the Executive is hereby granted an option to
purchase a total of 100,000 shares of Stock (the "Option"). The price of
each share of Stock subject to the Option shall be $10.875. The Option is
not intended to constitute an "incentive stock option" as that term is used
in Code section 422.
2. Exercise Date. The Option shall become exercisable with
respect to 50,000 shares of Stock as of January 1, 1998, if the Executive's
Date of Termination has not occurred before that date; and the Option
shall become exercisable with respect to the remaining 50,000 shares of
Stock as of December 29, 1998, if the Executive's Date of Termination
has not occurred before that date. The Option shall become fully
exercisable on the Executive's Date of Termination (regardless of the
extent to which is was exercisable immediately prior to the Date of
Termination), if the Executive's Date of Termination occurs prior to
December 29, 1998 under circumstances described in paragraph 3(b) of
the Employment Agreement (relating to the Executive's being Disabled),
under circumstances described in paragraph 3(d) of the Employment
Agreement (relating to constructive discharge), or under circumstances
described in paragraph 3(f) of the Employment Agreement (relating to
termination by the Company without Cause), or the Executive's Date of
Termination occurs prior to December 29, 1998 by reason of his death.
For purposes of this Agreement, the term "Date of Termination" shall be
defined as set forth in the Employment Agreement.
3. Expiration Date. The Option shall expire on, and shall not be
exercisable after, the "Expiration Date" determined in accordance with the
following:
(a) If the Executive's Date of Termination occurs on or after
December 29, 1998, the Expiration Date shall be December 29,
2000.
(b) If the Executive's Date of Termination occurs prior to December
29, 1998 under circumstances described in paragraph 3(b) of the
Employment Agreement (relating to the Executive's being
Disabled), under circumstances described in paragraph 3(d) of the
Employment Agreement (relating to constructive discharge), or
under circumstances described in paragraph 3(f) of the
Employment Agreement (relating to termination by the Company
without Cause), or if the Executive's Date of Termination occurs
prior to December 29, 1998 by reason of his death, the Expiration
Date shall be the three-year anniversary of his Date of
Termination.
(c) If the Executive's Date of Termination occurs prior to December
29, 1998 under circumstances described in paragraph 3(c) of the
Employment Agreement (relating to the Executive's termination
for Cause) or paragraph 3(e) of the Employment Agreement
(relating to the Executive's resignation), the Expiration Date shall
be the 90-day anniversary of the Date of Termination.
In no event, however, shall the Expiration Date be later than the ten-year
anniversary of the Agreement Date. No portion of the Option shall be
exercisable after the Executive's Date of Termination except to the extent
that it is exercisable on the Executive's Date of Termination; provided,
however, that, subject to the limitations in paragraphs (a), (b) and (c),
next above, the Option shall remain exercisable after the Executive's Date
of Termination to the extent that it becomes exercisable on the Executive's
Date of Termination in accordance with the provisions of paragraph 2 of
this Agreement.
4. Method of Exercise. Any portion of the Option that is
exercisable may be exercised in whole or in part in accordance with the
following:
(a) The Option may be exercised by filing a written notice with the
Treasurer of the Company, provided that the notice is filed on or
before the date the Option expires. The exercise notice shall
specify the number of whole shares of Stock to be purchased, and
shall accompanied by payment therefor in full (or arrangement
made for such payment to the Company's satisfaction) either (i) in
cash, (ii) by delivery of previously owned whole shares of Stock
(which the Executive has held for at least six months prior to the
delivery of such shares or which the Executive purchased on the
open market, and in each case for which the Executive has good
title, free and clear of all liens and encumbrances) having a Fair
Market Value, determined as of the date of exercise, equal to the
aggregate purchase price payable pursuant to the Option by
reason of such exercise, (iii) in cash by a broker-dealer acceptable
to the Company to whom the Executive has submitted an
irrevocable notice of exercise or (iv) a combination of (i) and (ii).
The Executive shall execute such documents in connection with
the Option exercise as the Company may reasonably request. The
Committee shall have sole discretion to disapprove of an election
pursuant to any of clauses (ii), (iii) and (iv) and, to the extent that
the Executive is subject to Section 16 of the Exchange Act, the
Company may require that the method of making such payment
be in compliance with Section 16 and the rules and regulations
thereunder. Any fraction of a share of Stock which would be
required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Executive. No
certificate representing a share of Stock shall be delivered until
the full purchase price therefor has been paid.
(b) Upon the exercise of the Option, in whole or in part, the Company
shall deliver or cause to be delivered one or more certificates representing
the number of shares purchased against full payment therefor. The
Company shall pay all original issue or transfer taxes and all fees and
expenses incident to such delivery, except as otherwise provided in
paragraph 5.
(c) As used in this Agreement, the "Fair Market Value" of a share of
Stock shall mean the closing transaction price of a share of Stock
as reported in The Wall Street Journal as New York Stock
Exchange Composite Transactions for the date as of which such
value is being determined or, if there shall be no reported
transaction on such date, on the next preceding date for which a
transaction was reported; provided that if the Fair Market Value
for any date cannot be determined as above provided, Fair Market
Value shall be determined by the Committee by whatever means
or method as the Committee, in the good faith exercise of its
discretion, shall at such time deem appropriate.
5. Withholding.
(a) As a condition precedent to the delivery of Stock upon
exercise of the Option, the Executive shall, upon request by the Company,
pay to the Company in addition to the purchase price of the shares, such
amount as the Company may be required, under all applicable federal,
state, local or other laws or regulations, to withhold and pay over as
income or other withholding taxes (the "Required Tax Payments") with
respect to such exercise of the Option. If the Executive shall fail to
advance the Required Tax Payments after request by the Company, the
Company may, in its discretion, deduct any Required Tax Payments from
any amount then or thereafter payable by the Company to the Executive.
(b) The Executive may elect to satisfy his obligation to advance
the Required Tax Payments (which, for purposes of this paragraph (b),
shall include such increased amount as the Company may be required to
withhold by reason of an election by the Executive) by any of the
following means: (i) a cash payment to the Company, (ii) delivery to the
Company of previously owned whole shares of Stock (which the
Executive has held for at least six months prior to the delivery of such
shares or which the Executive purchased on the open market and in each
case for which the Executive has good title, free and clear of all liens and
encumbrances) having a Fair Market Value, determined as of the date the
obligation to withhold or pay taxes first arises in connection with the
Option (the "Tax Date"), equal to the Required Tax Payments, (iii)
authorizing the Company to withhold whole shares of Stock which would
otherwise be delivered upon exercise of the Option having an aggregate
Fair Market Value determined as of the Tax Date equal to the Required
Tax Payments, (iv) a cash payment by a broker-dealer acceptable to the
Company to whom the Executive has submitted an irrevocable notice of
exercise or (v) any combination of (i), (ii) and (iii); provided, however,
that the Committee shall have sole discretion to disapprove of an election
pursuant to any of clauses (ii)-(v) and, to the extent that the Executive is
subject to Section 16 of the Exchange Act, the Company may require that
the method of satisfying any such obligation be in compliance with
Section 16 and the rules and regulations thereunder. Any fraction of a
share of Stock which would be required to satisfy any such obligation
shall be disregarded and the remaining amount due shall be paid in cash
by the Executive.
6. Heirs. Subject to the terms of the Plan, any benefits to be
provided to the Executive under this Agreement that have not been
provided at the time of the Executive's death shall be provided at the time
and in the form determined in accordance with the provisions of this
Agreement, to the beneficiary designated by the Executive in writing filed
with the Committee in such form and at such time as the Committee shall
require. If a deceased Executive fails to designate a beneficiary, or if the
designated beneficiary of the deceased Executive dies before the Executive
or before complete provision of the benefits under this Agreement, the
Committee shall direct that benefits to be provided under this Agreement
be provided to the legal representative or representatives of the estate of
the last to die of the Executive and his beneficiary.
7. Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event with respect to Stock, or any distribution to holders
of Stock other than a regular cash dividend, the number and class of
securities subject to the Option and the purchase price per security shall
be appropriately adjusted by the Committee without an increase in the
aggregate purchase price. If any adjustment would result in a fractional
security being subject to the Option, the Company shall pay the
Executive, in connection with the first exercise of the Option occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the
excess, if any, of (A) the Fair Market Value on the exercise date over (B)
the exercise price of the Option. The decision of the Committee regarding
any such adjustment shall be final, binding and conclusive.
8. Transferability.
(a) Except to the extent otherwise provided in paragraph (b) next
below, the Option may not be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise), or be subject to execution,
attachment or similar process, other than by will or the laws of
descent and distribution. During the Executive's lifetime, the
Option shall be exercisable only by the Executive.
(b) Notwithstanding the foregoing provisions of this paragraph 8, the
Option may be transferred by the Executive for no consideration
to or for the benefit of the Executive's Immediate Family
(including, without limitation, to a trust for the benefit of an
Executive's Immediate Family or to a partnership for members of
an Executive's Immediate Family), subject to such limits and
exceptions as the Committee may establish, and the transferee
shall remain subject to all the terms and conditions applicable to
the Option prior to such transfer. The foregoing right to transfer
the Option shall also apply to the right to consent to amendments
to the Option agreement. The Executive's "Immediate Family"
shall mean the Executive's spouse, children, stepchildren, adoptive
relationships, sisters, brothers and grandchildren (and, for this
purpose, shall also include the Executive).
9. Definitions. Except where the context clearly implies or
indicates the contrary, a word, term, or phrase used in the Plan is similarly
used in this Agreement.
10. Notices. All notices, request or other communications
provided for in this Agreement shall be made, if to the Company, to
Zenith Electronics Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Treasurer, and if the Executive, to the
Executive's last known address set forth in the records of the Company, or
such other address as shall be provided to the Company in writing by the
Executive. All notices, requests or other communications provided for in
this Agreement shall be made in writing either (a) by personal delivery to
the party entitled thereto, (b) by facsimile with confirmation of receipt, (c)
by mailing in the United States mails to the last known address of the
party entitled thereto or (d) by express courier service. The notice,
request or other communication shall be deemed to be received upon
personal delivery, upon confirmation of receipt of facsimile transaction or
upon receipt by the party entitled thereto if by United States mail or
express courier service; provided, however, that if a notice, request or
other communication sent to the Company is not received during regular
business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
11. Option Confers No Rights as Stockholder. The Executive
shall not be entitled to any privileges of ownership with respect to shares
of Stock subject to the Option unless and until purchased and delivered
upon the exercise of the Option, in whole or in part, and the Executive
becomes a stockholder of record with respect to such delivered shares; and
the Executive shall not be considered a stockholder of the Company with
respect to any such shares not so purchased and delivered.
12. Agreement Subject to the Plan. This Agreement is subject to
the provisions of the Plan and shall be interpreted in accordance therewith.
The Executive hereby acknowledges receipt of a copy of the Plan.
13. Counterparts. This Agreement may be executed in two
counterparts each of which shall be deemed an original and both of which
together shall constitute one and the same instrument.
14. Successors. This Agreement shall be binding upon and inure
to the benefit of any successor or successors of the Company and any
person or persons who shall, upon the death of the Executive, acquire any
rights hereunder in accordance with this Agreement or the Plan.
15. Governing Law. This Agreement, the Option and all
determinations made and actions taken pursuant hereto and thereto, to the
extent not governed by the laws of the United States, shall be governed by
the laws of the State of Illinois and construed in accordance therewith
without giving effect to principles of conflicts of laws.
16. Amendment. This Agreement may be amended by written
Agreement of the Executive and the Company, without the consent of any
other person.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the Agreement Date.
ZENITH ELECTRONICS CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Attest:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Assistant Secretary