AMENDED AND RESTATED] CHANGE-OF-CONTROL EMPLOYMENT AGREEMENT
EXHIBIT 10.1
[AMENDED AND
RESTATED] CHANGE-OF-CONTROL EMPLOYMENT AGREEMENT
AGREEMENT, effective as of the 1st day of January, 2009, by and between ▇▇▇▇▇
International, Inc., a Delaware Corporation (the “Company”) and [ ] (the “Executive”).
[WHEREAS, the Executive and the Company are parties to that certain change-of-control employment
agreement dated [ ] (the “Original Agreement”); and
WHEREAS, the Executive and the
Company desire to amend and restate the Original Agreement;
and]
WHEREAS, the Board of Directors of the Company (the “Board”), has determined that it is in
the best interests of the Company and its shareholders 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. Therefore, in order
to accomplish these objectives, the Board has caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
Certain Definitions. (a) The “Effective Date”, shall mean the first date
during the Change of Control Period (as defined in Section l (b)) on which a Change of Control (as
defined in Section 2) occurs. Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Executive’s employment with the Company is terminated by the
Company within the 12 months prior to the date on which the Change of Control occurs, which Change
of Control is a “change in control event” within the meaning of Section 409A of the Code, 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 such Change of Control
or (ii) otherwise arose in connection with or anticipation of such Change of Control (such a
termination of employment, an “Anticipatory Termination”), then for all purposes of this
Agreement the “Effective Date” shall mean the date immediately prior to the date of such
termination of employment. Notwithstanding the foregoing, the Executive and the Company
acknowledge that, except as may otherwise be provided under this Agreement or any other written
agreement between the Executive and the Company, the employment of the Executive by the Company is
“at will.”
The “Change of Control Period” shall mean the period commencing on the date hereof and
ending on the third anniversary of the date hereof; provided, however, that commencing on the date
one year after the date hereof, and on each annual anniversary of such date (such date and each
annual anniversary thereof shall be hereinafter referred to as the “Renewal Date”), unless
previously terminated, the Change of Control Period shall be automatically extended so as to
terminate three years from such Renewal Date, unless at least 60 days prior to the Renewal Date the
Company shall give notice to the Executive that the Change of Control Period shall not be so
extended.
Change of Control. For the purpose of this Agreement, a “Change of Control”
shall mean:
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 30% or more of either (i) the then outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or (ii) 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 (a), the following acquisitions shall not constitute a Change
of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company or (iv) any acquisition pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or
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 shareholders, 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 was 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; or
Consummation of a reorganization, merger, statutory share exchange or consolidation or similar
transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or
substantially all of the assets of the Company, or the acquisition of assets or stock of another
entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each
case, unless, following such Business Combination, (i) 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 60 % of, respectively, the then
outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the
combined voting power of the then outstanding voting securities entitled to vote generally in the
election of directors (or, for a non-corporate entity, equivalent securities), as the case may be,
of the corporation resulting from such Business Combination (including, without limitation, an
entity 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, (ii) no Person
(excluding any entity resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such entity resulting from such Business Combination) beneficially
owns, directly or indirectly, 30% or more of, respectively, the then outstanding shares of common
stock (or, for a non-corporate entity, equivalent securities) of the entity resulting from such
Business Combination or the combined voting power of the then outstanding voting securities (or,
for a non-corporate entity, equivalent securities) of such entity except to the extent that such
ownership existed prior to the Business Combination and (iii) at least a majority of the members of
the board of directors (or, for a non-corporate entity, equivalent governing body) of the entity
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
Approval by the shareholders of the Company of a complete liquidation or dissolution of the
Company.
Employment Period. The Company hereby agrees to continue the Executive in its employ,
and the Executive hereby agrees to remain in the employ of the Company subject to the terms and
conditions of this Agreement, for the period commencing on the Effective Date and ending on the
third anniversary of such date (the “Employment Period”).
Terms of Employment. (a) Position and Duties. (i) During the Employment
Period, (A) the Executive’s position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised and assigned at any time
during the 120-day period immediately preceding the Effective Date and (B) the Executive’s services
shall be performed at the location where the Executive was employed immediately preceding the
Effective Date or any office or location less than 35 miles from such location.
During the Employment Period, and excluding any periods of vacation and sick leave to which
the Executive is entitled, the Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s
reasonable best efforts to perform faithfully and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage personal investments, so long as
such activities do not significantly interfere with the performance of the Executive’s
responsibilities as an employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive’s responsibilities to the
Company.
Compensation. (i) Base Salary. During the Employment Period, the Executive shall
receive an annual base salary (“Annual Base Salary”), which shall be paid at a monthly
rate, at least equal to 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 twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual Base Salary shall be reviewed no
more than 12 months after the last salary increase awarded to the Executive prior to the Effective
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 Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased. As used in this Agreement, the term “affiliated
companies” shall include any company controlled by, controlling or under common control with the
Company.
Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for each
fiscal year ending during the Employment Period, an annual bonus (the “Annual Bonus”) in
cash (i) under the Company’s annual incentive plan based upon meeting the targets in the Annual
Incentive Plan, provided that the Executive’s target bonus percentage shall be at least equal to
the Executive’s target bonus percentage for the fiscal year prior to the Effective Date or equal to
an increase in the target bonus percentage given to any similarly situated executive after the
Effective Date, or, if higher, (ii) under any annual incentive plan or discretionary award by the
Company to similarly situated executives which is enacted or approved after the Effective Date.
Each
such Annual Bonus shall be paid no later than two and a half months after the end 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 pursuant to an arrangement that
meets the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”).
Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be
entitled to participate in all incentive, savings and retirement plans, practices, policies and
programs applicable generally to other peer executives of the Company and its affiliated companies,
but 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, it any, that such distinction is applicable), savings opportunities and retirement
benefit opportunities, 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 Effective Date or if more favorable to the Executive, those provided generally at any
time after the Effective Date to other peer executives of the Company and its affiliated companies.
Welfare Benefit Plans. During the Employment Period, the Executive and/or the
Executive’s-family, as the case may be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer executives of the Company and its
affiliated companies, but 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 Effective Date or, if more favorable to the Executive,
those provided generally at any time after the Effective Date to other peer executives of the
Company and its affiliated companies.
Expenses. During the Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and its affiliated companies in effect
for the Executive at any time during the 120-day period immediately preceding the Effective Date
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.
Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe
benefits, including, without limitation, tax and financial planning services, payment of club dues,
and, if applicable, use of an automobile and payment of related expenses, in accordance with the
most favorable plans, practices, programs and policies of the Company and its affiliated companies
in effect for the Executive at any time during the 120-day period immediately preceding the
Effective Date 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.
Office and Support Staff. During the Employment Period, the Executive shall be entitled to an
office or offices of a size and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of the foregoing provided to
the Executive by the Company and its affiliated companies at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive, as provided
generally at any time thereafter with respect to other peer executives of the Company and its
affiliated companies.
Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date 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.
Termination of Employment. (a) Death or Disability. The Executive’s
employment shall terminate automatically upon the Executive’s death during the Employment Period.
If the Company determines in good faith that the Disability of the Executive has occurred during
the Employment Period (pursuant to the definition of Disability set forth below), it may give to
the Executive written notice in accordance with Section 12(b) of this Agreement of its intention to
terminate the Executive’s employment. In such event, the Executive’s employment with the Company
shall terminate effective on the 30th day after receipt of such notice by the Executive (the
“Disability Effective Date”), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive’s duties. For purposes
of this Agreement, “Disability” shall mean the absence of the Executive from the
Executive’s duties with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable to the Executive or
the Executive’s legal representative.
Cause. The Company may terminate the Executive’s employment during the Employment
Period for Cause. For purposes of this Agreement, “Cause” shall mean:
the willful and continued failure of the Executive to perform substantially the Executive’s
duties with the Company or one of its affiliates (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for substantial performance
is delivered to the Executive by the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Board or Chief Executive Officer believes that the
Executive has not substantially performed the Executive’s duties, or
the willful engaging by the Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of the Executive, shall be
considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or omission was in the best interests of the
Company. Any act, or failure to act, based upon (A) authority given pursuant to a resolution duly
adopted by the Board or, if the Company is not the ultimate parent of a group of affiliated
companies and is not publicly-traded, the board of directors or equivalent governing body of the
ultimate parent of the Company (the “Applicable Board”), [(B) the instructions of the Chief
Executive Officer or a senior officer of the Company]1 or (C) the advice of counsel for
the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of employment of the Executive
shall not be deemed to be for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the Applicable Board (excluding the Executive, if the Executive is a member of
the Applicable Board) at a meeting of the Applicable Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an opportunity, together
with counsel, to be heard before the Applicable Board), finding that, in the good faith opinion of
the Applicable Board, the Executive is guilty of the conduct described in subparagraph (i) or (ii)
above, and specifying the particulars thereof in detail.
Good Reason. The Executive’s employment may be terminated by the Executive for Good
Reason. For purposes of this Agreement, “Good Reason” shall mean:
the assignment to the Executive of any duties inconsistent in any respect with the Executive’s
position (including status, offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any other action by the
Company which results in a diminution in such position, authority, duties or responsibilities
(including as a result of the Company’s ceasing to be a publicly traded entity), 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;
any failure by the Company to comply with any of the provisions of Section 4(b) of this
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;
the Company’s requiring the Executive to be based at any office or location other than as
provided in Section 4(a)(i)(B) hereof or to travel on Company business to a substantially greater
extent than required immediately prior to the Effective Date;
any purported termination by the Company of the Executive’s employment otherwise than as
expressly permitted by this Agreement; or
any failure by the Company to comply with and satisfy Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of “Good Reason” made by
the Executive shall be conclusive. Anything in this Agreement to the contrary notwithstanding, a
termination by the Executive for any reason during the 30-day period immediately following the
first anniversary of the Effective Date shall be deemed to be a termination for Good Reason for all
purposes of this Agreement. The Executive’s mental or physical incapacity following the occurrence
of any of the circumstances described in clauses (i) through (v) shall not affect the Executive’s
ability to terminate employment for Good Reason and the Executive’s death following delivery of a
Notice of Termination for Good Reason shall not affect the Executive’s estate’s entitlement to
severance payments and benefits provided hereunder upon a termination of employment for Good
Reason. Notwithstanding anything herein to the contrary, the Executive’s resignation under this
Agreement with or without Good Reason shall in no way affect the Executive’s ability to terminate
employment by reason of the Executive’s retirement or to be eligible to receive benefits under any
retirement or pension plan of the Company and its affiliates.
Notice of Termination. Any termination by the Company for Cause, or by the Executive
for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in
accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a “Notice of
Termination” means a written notice which indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to
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provide a basis for termination of the Executive’s employment under the provision so indicated
and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty 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.
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 or without Good Reason,
the date of receipt of the Notice of Termination or any later date specified therein, 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 termination and (iii) if the Executive’s employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be. Notwithstanding the foregoing, unless mutually agreed in
writing by the Company and the Executive, in no event shall the Date of Termination occur until the
Executive experiences, and the Company and the Executive shall take all steps necessary (including
with regard to any post-termination services by the Executive) to ensure that any termination
described in this Section 5 constitutes a “separation from service” within the meaning of Section
409A of the Code, and notwithstanding anything contained herein to the contrary, the date on which
such separation from service takes place shall be the “Date of Termination.”
Obligations of the Company upon Termination. (a) Good Reason; Other Than for
Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the
Executive’s employment other than for Cause or Disability or the Executive shall terminate
employment for Good Reason:
the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of
Termination the aggregate of the following amounts:
the sum of (1) the Executive’s Annual Base Salary through the Date of Termination
to the extent not theretofore paid, (2) the product of (x) the higher of (I) the
highest Annual Bonus paid to the Executive for the last three full fiscal years prior
to the Effective Date and (II) the Annual Bonus paid or payable, including any bonus
or portion thereof which has been earned but deferred (and annualized for any fiscal
year consisting of less than twelve full months or during which the Executive was
employed for less than twelve full months), for the most recently completed fiscal
year during the Employment Period, if any (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 365 (the “Pro-Rata Bonus”) and (3) any accrued
vacation pay, in each case to the extent not theretofore paid (the sum of the amounts
described in clauses (1) and (3) shall be hereinafter referred to as the “Accrued
Obligations”); provided, that notwithstanding the foregoing, if the
Executive has made an irrevocable election under any deferred compensation arrangement
subject to Section 409A of the Code to defer any portion of the Annual Base Salary
Bonus described in clause (1) above, then for all purposes of this Section 6
(including, without limitation, Sections 6(b) through 6(d)), such deferral election,
and the terms of the applicable plan, agreement, or other arrangement shall apply to
the same portion of the amount described in such clause (1), and such portion shall
not be considered as part of the “Accrued Obligations” but shall instead be an “Other
Benefit” (as defined below); and
the amount equal to the product of (1) the Termination Multiple (as defined
below) and (2) the sum of (x) the Executive’s Annual Base Salary and (y) the Highest
Annual Bonus; and
an amount equal to the excess of (a) the actuarial equivalent of the benefit
under any excess or supplemental retirement plan in which the Executive participates
(the “SERP”) which the Executive would receive if the Executive’s employment
continued for a number of years after the Date of Termination equal to the Termination
Multiple, assuming for this purpose that all accrued benefits are fully vested, and,
assuming that the Executive’s compensation in each of such years is that required by
Section 4(b)(i) and Section 4(b)(ii), over (b) the actuarial equivalent of the
Executive’s actual benefit (paid or payable), if any, under the SERP as of the Date of
Termination (the “Additional SERP Payment”);
for a number of years after the Executive’s Date of Termination equal to the Termination
Multiple, or such longer period as may be provided by the terms of the appropriate plan, program,
practice or policy (the “Benefits Continuation Period”), the Company shall continue health
care and life insurance 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)(iv) of this 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, the health care benefits provided during the
Benefit Continuation Period shall be provided in such a manner that such benefits (and the costs
and premiums thereof) are excluded from the Executive’s income for federal income tax
purposes and, if the Company reasonably determines that providing continued coverage under one
or more of its health care benefit plans contemplated herein could be taxable to the Executive, the
Company shall provide such benefits at the level required hereby through the purchase of individual
insurance coverage; provided, however, that if the Executive becomes reemployed
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 purposes
of determining eligibility (but not the time of commencement of benefits) of the Executive for
retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be
considered to have remained employed until a number of years after the Date of Termination equal to
the Termination Multiple and to have retired on the last day of such period and the Company shall
take such actions as are necessary to cause the Executive to commence in the applicable retiree
benefit plans as of the applicable benefit commencement date;
the Company shall, at its sole expense as incurred, provide the Executive with outplacement
services the scope and provider of which shall be selected by the Executive in his sole discretion;
provided, that such outplacement benefits shall end not later than the last day of the second
calendar year that begins after the Date of Termination; and
to the extent not theretofore paid or provided, the Company shall timely pay or provide to the
Executive any other amounts or benefits required to be paid or provided or which the Executive is
eligible to receive under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and benefits shall be hereinafter referred
to as the “Other Benefits”).
Notwithstanding the foregoing provisions of Section 6(a)(i), and except as otherwise provided in
Section 12(h) with respect to an Anticipatory Termination, in the event that the Executive is a
“specified employee” within the meaning of Section 409A of the Code (as determined in accordance
with the methodology established by the Company as in effect on the Date of Termination) (a
“Specified Employee”), amounts that constitute “nonqualified deferred compensation” within
the meaning of Section 409A of the Code and that would otherwise be payable under this Section
6(a)(i) during the six-month period immediately following the Date of Termination (other than the
Accrued Obligations) shall instead be paid, with interest on any delayed payment at the applicable
federal rate provided for in Section 7872(f)(2)(A) of the Code (“Interest”), or provided on
the first business day after the date that is six months following the Executive’s “separation from
service” within the meaning of Section 409A of the Code (the “Delayed Payment Date”).
For purposes of this Section 6, “Termination Multiple” shall mean (x) three, if the Date of
Termination occurs on or prior to the first anniversary of the Effective Date, (y) two, if the Date
of Termination occurs after the first anniversary of the Effective Date and on or prior to the
second anniversary of the Effective Date and (z) one, if the Date of Termination occurs after the
second anniversary of the Effective Date and on or prior to the third anniversary of the Effective
Date.
Death. If the Executive’s employment is terminated by reason of the Executive’s death
during the Employment Period, this Agreement shall terminate without further obligations to the
Executive’s legal representatives under this Agreement, other than for payment of Accrued
Obligations, payment of the Pro-Rata Bonus and the timely payment or provision of Other Benefits.
Accrued Obligations (subject to the proviso set forth in Section 6(a)(i)(A) to the extent
applicable) and the Pro-Rata Bonus shall be paid to the Executive’s estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination. With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Executive’s estate and/or beneficiaries shall be entitled to
receive, benefits at least equal to the most favorable benefits provided by the Company and
affiliated companies to the estates and beneficiaries of peer executives of the Company and such
affiliated companies under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their beneficiaries at any time
during the 120-day period immediately preceding the Effective Date or, if more-favorable to the
Executive’s estate and/or the Executive’s beneficiaries, as in effect on the date of the
Executive’s death with respect to other peer executives of the Company and its affiliated companies
and their beneficiaries.
Disability. If the Executive’s employment is terminated by reason of the Executive’s
Disability during the Employment Period, this Agreement shall terminate without further obligations
to the Executive, other than for payment of Accrued Obligations and the timely payment or provision
of Other Benefits. Accrued Obligations (subject to the proviso set forth in Section 6(a)(i)(A) to
the extent applicable) and the Pro-Rata Bonus shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination; provided, that in the event that the Executive
is a Specified Employee, the Pro-Rata Bonus shall be paid, with Interest, to the Executive on the
Delayed Payment Date. With respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at least equal to the most
favorable of those generally provided by the Company and its affiliated companies to disabled
executives and/or their families in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to other peer executives and
their families at any time during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive’s family, as in effect at any time
thereafter generally with respect to other peer executives of the Company and its affiliated
companies and their families.
Cause; Other than for Good Reason. If the Executive’s employment shall be terminated
for Cause during the Employment Period, this Agreement shall terminate without further obligations
to the Executive other than the obligation to pay to the Executive (x) his Annual Base Salary
through the Date of Termination (subject to the proviso set forth in Section 6(a)(i)(A) to the
extent applicable) and (y) Other Benefits, in each case to the extent theretofore unpaid. If
the Executive voluntarily terminates employment during the Employment Period, excluding a
termination for Good Reason, this Agreement shall terminate without further obligations to the
Executive, other than for payment of the Accrued Obligations and the Pro-Rata Bonus and the timely
payment or provision of Other Benefits. In such case, all Accrued Obligations (subject to the
proviso set forth in Section 6(a)(i)(A) to the extent applicable) and the Pro-Rata Bonus shall be
paid to the Executive in a lump sum in cash within 30 days of the Date of Termination;
provided, that in the event that the Executive is a Specified Employee, the Pro-Rata Bonus
shall be paid, with Interest, to the Executive on the Delayed Payment Date.
Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the
Executive’s continuing or future participation in any plan, program, policy or practice provided by
the Company or any of its affiliated companies and for which the Executive may qualify, nor,
subject to Section 12(g), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or agreement except
as explicitly modified by this Agreement.
Full Settlement. The Company’s obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be affected by any setoff,
counterclaim, recoupment, defense or other claim, right or action which the Company may have
against the Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and such amounts shall not be reduced whether or not
the Executive obtains other employment. The Company agrees to pay as incurred (within 10 days
following the Company’s receipt of an invoice from the Executive) at any time from the Effective
Date of this Agreement through the Executive’s remaining lifetime (or, if longer, through the
20th anniversary of the Effective Date), to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur as a result of any contest (regardless
of the outcome thereof) by the Company, the Executive or others of the validity or enforceability
of, or liability under, any provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of any payment pursuant to
this Agreement), plus in each case Interest. In order to comply with Section 409A of the Code, in
no event shall the payments by the Company under this Section 8 be made later than the end of the
calendar year next following the calendar year in which such fees and expenses were incurred,
provided, that the Executive shall have submitted an invoice for such fees and expenses at least 10
days before the end of the calendar year next following the calendar year in which such fees and
expenses were incurred. The amount of such legal fees and expenses that the Company is obligated
to pay in any given calendar year shall not affect the amount of legal fees and expenses that the
Company is obligated to pay in any other calendar year, and the Executive’s right to have the
Company pay such legal fees and expenses may not be liquidated or exchanged for any other benefit.
Certain Additional Payments by the Company. (a) Anything in this Agreement to the
contrary notwithstanding and except as set forth below, in the event it shall be determined that
any payment or distribution by the Company or its affiliates to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required under this Section 9)
(a “Payment”) would be subject to excise or other similar tax (but excluding penalties
imposed pursuant to Section 409A of the Code), or federal income tax above the rate ordinarily
applicable to wages and salaries paid in the ordinary course of business, whether as a result of
the provisions of Sections 280G and 4999 of the Code, any similar or analogous provisions of any
statute or regulation adopted subsequent to the date hereof, or otherwise, or any interest or
penalties are incurred by the Executive with respect to such tax (such excise tax, other similar
tax or federal income tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then the Executive shall be entitled to
receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment
by the Executive of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, but excluding penalties
imposed pursuant to Section 409A of the Code, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 9(a), if it shall be determined that the Executive is entitled to a
Gross-Up Payment, but that the Payments do not exceed 110% of the greatest amount (the “Reduced
Amount”) that could be paid to the Executive such that the receipt of Payments would not give
rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive and the Payments,
in the aggregate, shall be reduced to the Reduced Amount. The reduction of the amounts payable
hereunder, if applicable, shall be made by reducing the payments and benefits under the following
sections in the following order: (i) Section 6(a)(i)(B),(ii) Section 6(a)(i)(C), (iii) Section
6(a)(i)(A)(2) and (iv) Section 6(a)(ii). For purposes of reducing the Payments to the Reduced
Amount, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the
reduction of the amount payable under this Agreement would not result in a reduction of the
Payments to the Reduced Amount, no amounts payable under the Agreement shall be reduced pursuant to
this Section 9(a). The Company’s obligation to make Gross-Up Payments under this Section 9 shall
not be conditioned upon the Executive’s termination of employment.
Subject to the provisions of Section 9(c), all determinations required to be made under this
Section 9, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by a certified public accounting
firm as may be designated by the Executive (the “Accounting Firm”) which shall provide
detailed supporting calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change of Control, the Executive shall
appoint another nationally recognized accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been
made by the Company should have been made (“Underpayment”), consistent with the
calculations required to be made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 9(c) and the Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.
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 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. The Executive shall not pay such
claim prior to the expiration of the 30-day period following the date on which the Executive 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 the Company desires to contest such claim, the Executive shall:
give the Company any information reasonably requested by the Company relating to such claim,
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,
cooperate with the Company in good faith in order effectively to contest such claim, and
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 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 9(c), the Company shall control all proceedings taken in connection with such
contest and, at its sole discretion, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the applicable taxing authority in respect of such claim
and may, at its sole discretion, either pay the tax claimed to the appropriate taxing authority on
behalf of the Executive and direct the Executive to ▇▇▇ for a refund or 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 pays
such claim and directs the Executive to ▇▇▇ for a refund, the Company shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such payment or with respect to any imputed
income with respect to such payment; 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 a Gross-Up Payment or payment by the Company of an
amount on the Executive’s behalf pursuant to Section 9(c), the Executive becomes entitled to
receive any refund with respect to the Excise Tax to which such Gross-Up Payment relates or with
respect to such claim, the Executive shall (subject to the Company’s complying with the
requirements of Section 9(c), if applicable) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable thereto). If, after
payment by the Company of an amount on the Executive’s behalf pursuant to Section 9(c), 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 30 days after such determination, then the amount of such
payment shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Company
to the Executive within five days of the receipt of the Accounting Firm’s determination;
provided that, the Gross-Up Payment shall in all events be paid no later than the end of
the Executive’s taxable year next following the Executive’s taxable year in which the Excise
Tax (and any income or other related taxes or interest or penalties thereon) on a Payment are
remitted to the Internal Revenue Service or any other applicable taxing authority or, in the case
of amounts relating to a claim described in Section 9(c) that does not result in the remittance of
any federal, state, local and foreign income, excise, social security and other taxes, the calendar
year in which the claim is finally settled or otherwise resolved. Notwithstanding any other
provision of this Section 9, the Company may, in its sole discretion, withhold and pay over to the
Internal Revenue Service or any other applicable taxing authority, for the benefit of the
Executive, all or any portion of any Gross-Up Payment, and the Executive hereby consents to such
withholding.
Confidential Information. The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive’s employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After termination of the
Executive’s employment with the Company, the Executive shall not, without the prior written consent
of the Company or as may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those designated by it.
In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under this Agreement.
Successors. (a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s legal representatives.
This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place. As
used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
Miscellaneous. (a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified otherwise than by a written agreement executed by
the parties hereto or their respective successors and legal representatives.
All notices and other communications hereunder shall be in writing and shall be given by hand
delivery to the other party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive: |
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| [ ] | ||
| at the address set forth in his personnel file at ▇▇▇▇▇ International, Inc. | ||
If to the Company: |
||
| ▇▇▇▇▇ International, Inc. | ||
| ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ | ||
| ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Fax: (▇▇▇) ▇▇▇-▇▇▇▇ | ||
| Attention: General Counsel |
or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.
The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.
The Company may withhold from any amounts payable under this Agreement such Federal, state,
local or foreign taxes as shall be required to be withheld pursuant to any applicable law or
regulation.
The Executive’s or the Company’s failure to insist upon strict compliance with any provision
of this Agreement or the failure to assert any right the Executive or the Company may have
hereunder, including, without limitation, the right
of the Executive to terminate employment for Good Reason pursuant to Section 5(c)(i)-(v) of
this Agreement, shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
The Agreement is intended to comply with the requirements of Section 409A of the Code or an
exemption or exclusion therefrom and, with respect to amounts that are subject to Section 409A of
the Code, shall in all respects be administered in accordance with Section 409A of the Code. Each
payment under this Agreement shall be treated as a separate payment for purposes of Section 409A of
the Code. In no event may the Executive, directly or indirectly, designate the calendar year of
any payment to be made under this Agreement. If the Executive dies following the Date of
Termination and prior to the payment of any amounts delayed on account of Section 409A of the Code,
such amounts shall be paid to the personal representative of the Executive’s estate within 30 days
after the date of the Executive’s death. All reimbursements and in-kind benefits provided under
this Agreement that constitute deferred compensation within the meaning of Section 409A of the Code
shall be made or provided in accordance with the requirements of Section 409A of the Code,
including, without limitation, that (i) in no event shall reimbursements by the Company under this
Agreement be made later than the end of the calendar year next following the calendar year in which
the applicable fees and expenses were incurred, provided, that the Executive shall have submitted
an invoice for such fees and expenses at least 10 days before the end of the calendar year next
following the calendar year in which such fees and expenses were incurred; (ii) the amount of
in-kind benefits that the Company is obligated to pay or provide in any given calendar year shall
not affect the in-kind benefits that the Company is obligated to pay or provide in any other
calendar year; (iii) the Executive’s right to have the Company pay or provide such reimbursements
and in-kind benefits may not be liquidated or exchanged for any other benefit; and (iv) in no event
shall the Company’s obligations to make such reimbursements or to provide such in-kind benefits
apply later than the Executive’s remaining lifetime (or if longer, through the 20th anniversary of
the Effective Date). Prior to the Effective Date but within the time period permitted by the
applicable Treasury Regulations or other applicable guidance, the Company may, in consultation with
the Executive, modify the Agreement, in the least restrictive manner necessary and without any
diminution in the value of the payments to the Executive, in order to cause the provisions of the
Agreement to comply with the requirements of Section 409A of the Code, so as to avoid the
imposition of accelerated tax, additional tax and/or penalties on the Executive pursuant to Section
409A of the Code.
Subject to Section 1(a), the Executive’s employment may be terminated by either the Executive
or the Company at any time prior to the Effective Date, in which case the Executive shall have no
further rights under this Agreement. From and after the Effective Date, except as specifically
provided herein, this Agreement shall supersede any other agreement between the parties with
respect to the subject matter hereof[; provided, that the terms of the Employment Agreement
by and between the Company and the Executive dated as of December 10, 1987 (the “Employment
Agreement”), without giving effect to any amendments entered into thereto prior to the Effective
Date shall remain in full force and effect; provided, further, that in the event of
a Change of Control or an Anticipatory Termination, the terms of this Agreement shall control,
except with respect to any Accrued Obligations (as defined herein)].
Notwithstanding any provision in this Agreement to the contrary, in the event of an
Anticipatory Termination, any payments that are deferred compensation within the meaning of Section
409A of the Code that the Company shall be required to pay pursuant to Section 6(a)(i) of this
Agreement shall be paid on the date of such Change of Control and any payments or benefits that are
not deferred compensation within the meaning of Section 409A of the Code that the Company shall be
required to pay or provide pursuant to Section 6(a) of this Agreement shall be paid or shall
commence being provided on the date of the Change of Control. Interest with respect to the period,
if any, from the date of the Change of Control through the actual date of payment shall be paid on
any delayed cash amounts.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name on its behalf, all as of the day and year first above written.
| [Executive] | ||||
▇▇▇▇▇
INTERNATIONAL, INC.
|
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| By: | ||||