Exhibit 10.5
TERMINATION BENEFITS AGREEMENT
This Termination Benefits Agreement ("Agreement") is made and entered
into as of , 1997 by and between
BCP/Essex Holdings Inc., a Delaware corporation (hereinafter
referred to as the "Corporation"), and , a resident
of the State of Indiana (hereinafter referred to as "Employee").
W I T N E S S E T H
WHEREAS, Employee is now serving as __________ of the Corporation and
as ________ of the Corporation's subsidiary, Essex Group, Inc. ("Essex"); and
WHEREAS, the Corporation believes that Employee has made valuable
contributions to the productivity and profitability of the Corporation and
Essex; and
WHEREAS, the Corporation desires to encourage Employee to continue to
make such contributions and not to seek or accept employment elsewhere; and
WHEREAS, the Corporation, therefore, desires to assure Employee of
certain benefits in case of any termination or significant redefinition of the
terms of his employment with the Corporation subsequent to any Change in Control
of the Corporation.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained and the mutual benefits herein provided, the
Corporation and Employee hereby agree as follows:
1. The term of this Agreement shall be from the date hereof through
December 31, 1998; provided, however, that such term shall be automatically
extended for an additional year on December 31, 1997 and on December 31 of each
year thereafter unless either party hereto gives written notice to the other
party not to so extend prior to November 30 of the year before which the
Agreement would otherwise terminate. Notwithstanding the foregoing, if a
Change in Control of the Corporation (as defined in Section 2 below) shall occur
prior to the expiration of the original term or any extensions of the term of
this Agreement, then the term of this Agreement shall automatically become a
term of two (2) years commencing on the date of any such Change in Control.
2. As used in this Agreement, "Change in Control" of the Corporation
means any of the following that occurs during the term of this Agreement:
(A) The acquisition by any individual, entity or group (a "Person")
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) other than
Bessemer Holdings, L.P. ("BHLP"), or any affiliate of BHLP (collectively,
"the BH Group") of (X) beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act as in effect from time to time)
of thirty-five percent (35%) or more of either (a) the then outstanding
shares of common stock of the Corporation or (b) the combined voting
power of the then outstanding voting securities of the Corporation
entitled to vote generally in the election of directors and (Y)
beneficial ownership of a greater percentage than the BH Group of either
(a) the then outstanding shares of common stock of the Corporation or (b)
the combined voting power of the then outstanding voting securities of
the Corporation entitled to vote generally in the election of directors;
provided, however, that the following acquisitions shall not constitute
an acquisition of control: (i) any acquisition directly from the
Corporation (excluding an acquisition by virtue of the exercise of a
conversion privilege), (ii) any acquisition by the Corporation, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Corporation or any corporation controlled by the
Corporation, or (iv) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions described in
clauses (i), (ii) and (iii) of subsection (C) of this Section 2 are
satisfied;
(B) Individuals who, as of the date hereof or, in the event of an
initial public offering of equity securities of the Corporation or Essex
pursuant to an
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effective registration statement under the Securities Act of 1933, as
amended, other than in connection with any employee benefit or similar
plan (an "IPO"), the date that the IPO is closed, constitute the Board of
Directors of the Corporation (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board of Directors of the
Corporation (the "Board"); provided, however, that any individual
becoming a director subsequent to the date hereof or the date of the IPO
whose election, or nomination for election by the Corporation'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 were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption
of office occurs as a result of either an actual or threatened election
contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board;
(C) Approval by the shareholders of, and the consummation by, the
Corporation of a reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or consolidation, (i) more
than fifty percent (50%) of, respectively, the then outstanding shares of
common stock of the corporation resulting from such reorganization,
merger or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
outstanding Corporation common stock and outstanding Corporation voting
securities immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation, of the
outstanding Corporation common stock and outstanding Corporation voting
securities, as the case may be, (ii) no Person (excluding the
Corporation, any employee benefit plan or related trust of the
Corporation or such corporation resulting from such reorganization,
merger or consolidation and any Person
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beneficially owning, immediately prior to such reorganization, merger or
consolidation, directly or indirectly, thirty-five percent (35%) or more
of the outstanding Corporation common stock or outstanding voting
securities of the Corporation, as the case may be) beneficially owns,
directly or indirectly, (X) thirty-five percent (35%) or more of, either
the then outstanding shares of common stock of the corporation resulting
from such reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (Y) a
greater percentage than the BH Group of either the then outstanding
shares of common stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting power of
the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors and (iii) at least a
majority of the members of the board of directors of the corporation
resulting from such reorganization, merger or consolidation were members
of the Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or consolidation;
or
(D) Approval by the shareholders of the Corporation of (i) a
complete liquidation or dissolution of the Corporation or (ii) the sale
or other disposition of all or substantially all of the assets of the
Corporation, other than to a corporation with respect to which following
such sale or other disposition (a) more than fifty percent (50%) of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all
or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the outstanding Corporation common
stock and outstanding Corporation voting securities immediately prior to
such sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other disposition, of
the outstanding Corporation common stock and outstanding Corporation
voting securities, as the case may be, (b) no Person (excluding the
Corporation and any employee benefit plan
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or related trust of the Corporation or such corporation and any Person
beneficially owning, immediately prior to such sale or other disposition,
directly or indirectly, thirty-five percent (35%) or more of the
outstanding Corporation common stock or outstanding Corporation voting
securities, as the case may be) beneficially owns, directly or
indirectly, (X) thirty-five percent (35%) or more of, either the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors and
(Y) beneficial ownership of a greater percentage than the BH Group of
either the then outstanding shares of common stock of such corporation
or the combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election of
directors and (c) at least a majority of the members of the board of
directors of such corporation were members of the Incumbent Board at the
time of the execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the
Corporation.
3. The Corporation shall provide Employee with the benefits set forth
in Section 6 of this Agreement upon any termination of Employee's employment
during the term of this Agreement by the Corporation following a Change in
Control for any reason except the following:
(A) Termination by reason of Employee's death.
(B) Termination by reason of Employee's "disability". For purposes
hereof, "disability" shall be defined as Employee's inability by reason
of illness or other physical or mental disability to perform the duties
required by his employment for any consecutive One Hundred Eighty (180)
day period, provided that notice of any termination by the Corporation
because of Employee's "disability" shall have been given to Employee
prior to the resumption by him of the performance of such duties.
(C) Termination upon Employee reaching his normal retirement date,
which for purposes of this Agreement shall be deemed to be the end of the
month during which employee reaches sixty-five (65) years of age.
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(D) Termination for "cause". As used in this Agreement, the term
"cause" means fraud, dishonesty, theft of corporate assets, or other
gross misconduct by Employee. Notwithstanding the foregoing, Employee
shall not be deemed to have been terminated for cause unless and until
there shall have been delivered to him a copy of a resolution duly
adopted by the affirmative vote of not less than a majority of the entire
membership of the Corporation's Board at a meeting called and held for
the purpose (after reasonable notice to such Employee and an opportunity
for such Employee, together with his counsel, to be heard before such
Board), finding that, in the good faith opinion of such Board, Employee
was guilty of conduct constituting "cause" and specifying the particulars
thereof in detail.
4. The Corporation shall also provide Employee with the benefits set
forth in Section 6 of this Agreement upon any termination of Employee's
employment with the Corporation during the term of this Agreement, at Employee's
option, after a Change in Control followed by the happening of any one of the
following events:
(A) Without Employee's express written consent, the assignment of
Employee to any duties that, in Employee's reasonable judgment, are
materially inconsistent with his positions, duties, responsibilities or
status with the Corporation immediately prior to the Change in Control or
a substantial reduction of his duties or responsibilities that, in
Employee's reasonable opinion, does not represent a promotion from his
position, duties or responsibilities immediately prior to the Change in
Control.
(B) A reduction by the Corporation in Employee's salary from the
level of such salary immediately prior to the Change in Control.
(C) The failure by the Corporation to continue in effect any
incentive, bonus or other compensation plan in which Employee
participates, including but not limited to any stock option plan or
incentive compensation program, unless an equitable arrangement (embodied
in an ongoing substitute or alternative plan), has been made with respect
to such plan in connection with the Change in Control, or the failure by
the
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Corporation to continue Employee's participation therein, or any action by
the Corporation that would directly or indirectly materially reduce
Employee's participation therein.
(D) The failure by the Corporation to continue to provide Employee
with benefits that collectively are substantially similar to those
enjoyed by Employee or to which Employee was entitled at the time of a
Change in Control.
(E) The Corporation's requiring Employee to be based anywhere other
than the metropolitan area where the Corporation office at which he was
based immediately prior to the Change in Control was located, except for
required travel on the Corporation's business in accordance with the
Corporation's past management practices.
(F) Any failure of the Corporation to obtain the assumption of the
obligation to perform this Agreement by any successor as contemplated in
Section 10 hereof.
(G) Any failure by the Corporation or its shareholders, as the case
may be, to reappoint or reelect Employee to a corporate office held by
him immediately prior to the Change in Control or his removal from any
such office excluding any seat held at such time on the Corporation's
Board of Directors.
(H) The effectiveness of a resignation, tendered at any time, either
before or after a Change in Control and regardless of whether formally
characterized as voluntary or otherwise, by Employee of any corporate
office held by him immediately prior to the Change in Control except any
seat held at such time on the Corporation's Board of Directors, at the
request of the Corporation or at the request of any Person obtaining
control of the Corporation in such Change in Control.
(I) Any purported termination of the Employee's employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of Section 5 hereof (and, if applicable, Section 3(D)
hereof); and for purposes of this Agreement, no such purported
termination shall be effective.
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(J) Any request by the Corporation that Employee participate in an
unlawful act.
(K) Any breach by the Corporation of any of the provisions of this
Agreement or any failure by the Corporation to carry out any of its
obligations hereunder.
Notwithstanding anything in this Section 4 to the contrary, Employee's right to
terminate Employee's employment pursuant to this Section 4 shall not be affected
by Employee's incapacity due to physical or mental illness. Employee's right to
obtain the benefits of Section 6 of this Agreement pursuant to this Section 4 is
conditioned upon Employee exercising his option to terminate his employment
within 180 days of one of the events described in this Section 4.
5. Any termination of Employee's employment with the Corporation as
contemplated by Section 3 hereof (except subsection 3(A)) or by Employee as
contemplated by Section 4 hereof shall be communicated by written "Notice of
Termination" to the other party hereto. Any "Notice of Termination" given by
Employee pursuant to Section 4 or given by the Corporation in connection with a
termination as to which the Corporation believes it is not obligated to provide
Employee with benefits set forth in Section 6 hereof shall indicate the specific
provisions of this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for such
termination.
6. Subject to the conditions and exceptions set forth in Section 3
and Section 4 hereof, the following benefits, less any amounts required to be
withheld therefrom under any applicable federal, state or local income tax,
other tax, or social security laws or similar statutes, shall be paid to
Employee upon any termination of his employment with the Corporation subsequent
to a Change in Control:
(A) Within thirty (30) days following such a termination, Employee
shall be paid, at his then effective salary, for services performed
through the date of his termination. In addition, any earned but unpaid
amount of any bonus or incentive payment shall be paid to Employee within
thirty (30) days following the termination of his employment.
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(B) Within thirty (30) days following such a termination, Employee
shall be paid a lump sum payment of an amount equal to _____ (_) times
Employee's "Base Amount." For purposes hereof, Base Amount is defined as
Employee's annual base salary at the time of the Change in Control plus
the cash incentive compensation actually paid to the Employee during the
12 months prior to the Change in Control.
(C) Employee acknowledges and agrees that payment in accordance with
subsections 6 (A) and 6 (B) shall be deemed to constitute a full
settlement and discharge of any and all obligations of the Corporation to
Employee arising out of his employment with the Corporation and the
termination thereof, except for any vested rights Employee may then have
under any insurance, pension, supplemental pension, thrift, employee
stock ownership, or stock option plans sponsored or made available by the
Corporation.
7. The Corporation is aware that upon the occurrence of a Change in
Control the Board of Directors or a shareholder of the Corporation may then
cause or attempt to cause the Corporation to refuse to comply with its
obligations under this Agreement, or may cause or attempt to cause the
Corporation to institute, or may institute, litigation seeking to have this
Agreement declared unenforceable, or may take or attempt to take other action to
deny Employee the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement could be frustrated. It is the
intent of the Corporation that Employee not be required to incur the expenses
associated with the enforcement of his rights under this Agreement by litigation
or other legal action, nor be bound to negotiate any settlement of his rights
hereunder, because the cost and expense of such legal action or settlement would
substantially detract from the benefits intended to be extended to Employee
hereunder. Accordingly, if following a Change in Control it should appear to
Employee that the Corporation has failed to comply with any of its obligations
under this Agreement or in the event that the Corporation or any other person
takes any action to declare this Agreement void or unenforceable, or institutes
any litigation or other legal action designed to deny, diminish or to recover
from Employee the benefits entitled to be provided to the Employee hereunder,
and that Employee has complied with all of his obligations under this Agreement,
the Corporation irrevocably
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authorizes Employee from time to time to retain counsel of his choice, at the
expense of the Corporation as provided in this Section 7, to represent Employee
in connection with the initiation or defense of any litigation or other legal
action, whether such action is by or against the Corporation or any director,
officer, shareholder, or other person affiliated with the Corporation, in any
jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Corporation and such counsel, the Corporation
irrevocably consents to Employee entering into an attorney-client relationship
with such counsel, and in that connection the Corporation and Employee agree
that a confidential relationship shall exist between Employee and such counsel.
The reasonable fees and expenses of counsel selected from time to time by
Employee as hereinabove provided shall be paid or reimbursed to Employee by the
Corporation on a regular, periodic basis upon presentation by Employee of a
statement or statements prepared by such counsel in accordance with its
customary practices, up to a maximum aggregate amount of One Hundred Thousand
Dollars ($100,000). Any legal expenses incurred by the Corporation by reason of
any dispute between the parties as to enforceability of or the terms contained
in this Agreement as provided by this Section 7, notwithstanding the outcome of
any such dispute, shall be the sole responsibility of the Corporation, and the
Corporation shall not take any action to seek reimbursement from Employee for
such expenses. Notwithstanding any limitation contained in this Section 7 to
the contrary, Employee shall be entitled to payment or reimbursement of legal
expenses in excess of One Hundred Thousand Dollars ($100,000) if the expenses
were incurred as a result of a dispute under this Agreement in which Employee
obtains a final judgment in his favor from a court of competent jurisdiction or
his claim is settled by the Corporation prior to the rendering of a judgment by
such a court.
8. Employee is not required to mitigate the amount of benefit
payments to be made by the Corporation pursuant to this Agreement by seeking
other employment or otherwise, nor shall the amount of any benefit payments
provided for in this Agreement be reduced by any compensation earned by Employee
as a result of employment by another employer or which might have been earned by
Employee had Employee sought such employment, after the date of termination of
his employment with the Corporation or otherwise.
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9. In order to induce the Corporation to enter into this Agreement,
Employee hereby agrees as follows:
(A) He will keep confidential and not improperly divulge for the
benefit of any other party any of the Corporation's confidential
information and business secrets including, but not limited to,
confidential information and business secrets relating to such matters as
the Corporation's finances, operations and customer lists. All of the
Corporation's confidential information and business secrets shall be the
sole and exclusive property of the Corporation.
(B) For a period of two years after Employee's employment with the
Corporation ceases, Employee shall not either on his own account or for
any other person, firm or company solicit or endeavor to cause any
employee of the Corporation to leave his employment or to induce or
attempt to induce any such employee to breach any employment agreement
with the Corporation.
In the event of a breach or threatened breach by Employee of the provisions of
this Section 9, the Corporation shall be entitled to an injunction restraining
Employee from committing or continuing such breach. Nothing herein contained
shall be construed as prohibiting the Corporation from pursuing any other
remedies available to it for such breach or threatened breach including the
recovery of damages from Employee. The covenants of this Section 9 shall run
not only in favor of the Corporation and its successors and assigns, but also in
favor of its subsidiaries and their respective successors and assigns and shall
survive the termination of this Agreement.
10. The Corporation shall 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 Corporation, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such agreement
prior to the effectiveness of any such succession during the term of this
Agreement shall be a breach of this Agreement and shall entitle Employee to
compensation from the Corporation in the same amount and on the same terms as
Employee would be entitled hereunder if he were to terminate his employment
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pursuant to Section 4 hereof, except that for purposes of implementing the
foregoing, the date on which succession becomes effective shall be deemed the
date of termination of Employee's employment with the Corporation. As used in
this Agreement, "Corporation" shall mean corporation as hereinbefore defined and
any successor to the business or assets of it as aforesaid which executes and
delivers the agreement provided for in this Section 10 or which otherwise
becomes bound by all of the terms and provisions of this Agreement by operation
of law.
11. Should Employee die while any amounts are payable to him
hereunder, this Agreement shall inure to the benefit of and be enforceable by
Employee's executors, administrators, heirs, distributees, devisees and legatees
and all amounts payable hereunder shall be paid in accordance with the terms of
this Agreement to Employee's devisee, legatee or other designee or if there be
no such designee, to his estate.
12. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to Employee:
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If to the Corporation:
BCP/Essex Holdings Inc.
0000 Xxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: General Counsel
or to such other address as any party may have furnished to the other party in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
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13. The validity, interpretation, and performance of this Agreement
shall be governed by the laws of the State of Indiana. The parties agree that
all legal disputes regarding this Agreement will be resolved in Fort Xxxxx,
Indiana, and irrevocably consent to service of process in such City for such
purpose.
14. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by Employee and the Corporation. No waiver by any party hereto at any
time of any breach by any other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or any prior or subsequent time. No agreements or representation, oral
or otherwise, express or implied, with respect to the subject matter hereof have
been made by any party which are not set forth expressly in this Agreement.
15. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
16. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which together will constitute
one and the same Agreement.
17. This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder, except as provided in
Section 10 and Section 11 above. Without limiting the foregoing, Employee's
right to receive payments hereunder shall not be assignable or transferable
whether by pledge, creation of a security interest or otherwise, other than a
transfer by his Will or by the laws of descent and distribution as set forth in
Section 11 hereof, and in the event of any attempted assignment or transfer
contrary to this Section 17, the Corporation shall have no liability to pay any
amount so attempted to be assigned or transferred.
Any benefits payable under this Agreement shall be paid solely from
the general assets of the Corporation. Neither Employee nor Employee's
beneficiary shall have
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interest in any specific assets of the Corporation under the terms of this
Agreement. This Agreement shall not be considered to create an escrow account,
trust fund or other funding arrangement of any kind or a fiduciary relationship
between Employee and the Corporation.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above set forth.
BCP/ESSEX HOLDINGS INC.
By:
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Name:
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Its:
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Name:
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