CHANGE OF CONTROL AGREEMENT BETWEEN
XXXX X. XXXXX AND
QUIXOTE CORPORATION
THIS CHANGE OF CONTROL AGREEMENT, dated as of December 1, 1997 (the
"Agreement"), is by and between Quixote Corporation, a Delaware corporation
having its principal offices at Xxx Xxxx Xxxxxx Xxxxx, Xxxxxxx, XX, 00000 ("the
Company"), and Xxxx X. Xxxxx, an employee of the Company (the "Employee").
WHEREAS, the Employee is presently serving as an employee and elected
officer of the Company; and
WHEREAS, the Board of Directors of the Company ("the Board") has
recognized and continues to recognize that the Employee's contribution to the
growth and success of the Company has been, and is expected to continue to be,
substantial and desires to assure the Company of the Employee's continued
employment by assuring her of fair treatment if that relationship is terminated;
and
WHEREAS, the Company and the Employee agree that, as a result of
various factors, it is desirable to enter into this Change of Control Agreement;
and
WHEREAS, the Company desires to retain the Employee's services and the
Employee is willing to continue her employment as an employee and elected
officer of the Company on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and conditions contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. CERTAIN DEFINED TERMS.
(a) "Change of Control", as used herein, shall mean a
change in control of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934 ("Exchange Act"); provided that, without limitation, such a
change in control shall be deemed to have occurred if : (i) any person (as that
term is defined in Section 13(d) and Section 14(d) of the Exchange Act) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company representing twenty percent (20%) or more of the combined voting power
of the Company's then outstanding securities; or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
all members of the Board who are not employed by the Company (the "Outside
Directors") shall cease for any reason to constitute at least a majority of the
Outside Directors, unless the election of each Outside Director, who was not an
Outside Director at the beginning of such period, was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of such period; or, (iii) there shall be consummated (A) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company's
common stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company's common stock
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (B) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company, or, (iv) the stockholders of the Company approve a plan or proposal for
the liquidation or dissolution of the Company.
(b) "Constructive Termination", as used herein, shall mean any
one or more of the following occurrences within three (3) years following the
Effective Date of a
-2-
Change of Control: (i) the Employee is assigned any duties inconsistent in
any material adverse respect with the Employee's position, authority, duties
or responsibilities immediately prior to the Effective Date of the Change of
Control referred to above, or any other action by the Company which results
in a diminution in any material adverse respect of the Employee's position,
authority, duties or responsibilities as the same existed immediately prior
to the Effective Date of the Change of Control referred to above, (ii) the
Employee's total compensation (when taken as a whole including fringe
benefits and the manner of determining incentive compensation) is changed in
a material adverse way or the Company fails to obtain the assumption of the
obligation to perform this Agreement by any successor as contemplated in
Section 8 hereof, or (iii) the Company requires the Employee to be based
outside of a radius of thirty (30) miles from the location of the Company's
present corporate offices (except for required travel on Company business to
an extent substantially consistent with the Employee's business travel
obligations immediately prior to such change in control); PROVIDED, HOWEVER,
that none of the foregoing shall be a Constructive Termination if any of the
foregoing actions are taken by the Company for Cause (as defined in
subsection 1(d) hereof).
(c) "Effective Date", as used herein, shall mean the first date
on which a Change of Control (as defined in Section 1(a)) occurs.
(d) "Cause" For purposes of this Agreement, the Company shall
have "Cause" to terminate the Employee's employment upon (i) the willful failure
by the Employee to substantially perform her duties, other than such failure
resulting from the Employee's incapacity due to physical or mental illness, (ii)
the willful engaging by the Employee in gross misconduct materially and
demonstrably injurious to the Company or its subsidiaries or (iii) the
commission by the Employee of a crime which is a felony. For the purpose of
this subsection (d), no act, or the failure to act, on the Employee's part shall
be considered "willful" unless done, or omitted to
-3-
be done, by him not in good faith and without reasonable belief that her
action or omission was in the best interest of the Company or subsidiaries.
Notwithstanding the foregoing, the Employee shall not be deemed to have been
terminated for Cause under subsections (i), (ii) or (iii) of the first
sentence of this subsection (d), unless and until there shall have been
delivered to the Employee a copy of a resolution, duly adopted by the
affirmative vote of not less than two-thirds (2/3) of the entire membership
of the Company's Board of Directors at a meeting of the Board called and held
for that purpose (after reasonable notice to the Employee and an opportunity
for him, together with her counsel, to be heard before the Board), finding
that in the good faith opinion of the Board, the Employee was guilty of
conduct set forth above in clause (i), (ii) or (iii) of the first sentence of
this subsection (d) and specifying the particulars thereto in detail.
(e) "Disability" For purposes of this Agreement, an Employee's
"Disability" shall occur if the Employee is absent from her duties as an
employee of the Company on a full-time basis for six (6) consecutive months
following a Change of Control of the Company and if she qualifies for long-term
disability under the Company's long-term disability insurance plan.
2. TERMINATION. If the Employee is terminated for a reason other
than death, Disability, Cause or voluntary resignation not constituting a
Constructive Termination, or is subject to a Constructive Termination (a
Constructive Termination or termination for a reason other than death,
Disability, Cause or voluntary resignation not constituting a Constructive
Termination referred to herein as a "Termination"), within three (3) years
following the Effective Date of a Change of Control, the Employee will be
entitled to receive the benefits set forth below:
(a) ACCELERATED VESTING. If a Termination of the Employee
occurs
-4-
within three (3) years following the Effective Date of a Change of Control,
the vesting of all rights listed on EXHIBIT A ("Rights") shall be accelerated
to the date on which the Employee is terminated or is subject to a
Constructive Termination.
(b) SALARY CONTINUATION. If a Termination of the Employee
occurs within three (3) years following the Effective Date of a Change of
Control:
(i) The Employee shall have a right to receive her
full base salary through the date of Termination at the rate in effect
at the time Termination occurs, and in lieu of any further salary
payment to the Employee for periods subsequent to the date of
Termination, the Company shall pay to the Employee in cash an amount
equal to three (3) times the sum of (A) the higher of the Employee's
base salary at the date of Termination or on the date when a Change of
Control of the Company occurs plus (B) the average of the bonus
payment plus other incentive compensation made to the Employee for the
two (2) full fiscal years preceding the fiscal year in which a Change
of Control of the Company occurs. At the option of the Employee, such
payment shall be made in a lump sum not later than 5 days after the
date of Termination or in substantially equal semimonthly
installments, commencing no later than the fifth day following the
date of Termination and continuing for a period of thirty-six (36)
months following the date of Termination. In the event (A) the
Company shall fail to make any payment to the Employee which is
required under this subsection within ten (10) days of the date that
such payment is due and (B) such failure to pay continues, following
written notification by the Employee to the Company of such failure to
make payment, for more than seven (7) additional days thereafter, all
remaining installments or payments payable to the Employee shall be
accelerated
-5-
and shall become immediately due and payable by the Company, without
any discounting to present value, with interest accruing on any unpaid
portion thereof at the rate of twelve percent (12%) per annum.
(ii) The Company shall provide to Employee all benefits she
was entitled to immediately prior to the date of Termination during
the Salary Continuation Period, as defined below, including but not
limited to all group insurance plans in which the Employee was
entitled to participate immediately prior to the date of the
Termination, provided that the Employee's continued participation is
possible under the terms of such plans (as, for example, it may not
possible if the Employee elects the lump sum payment option described
in subsection 2(b)(i) above), failing which the Company shall arrange
to provide the Employee with alternative benefits and/or insurance
substantially similar to those provided under the then current benefit
and insurance plans unless it is not commercially feasible to do so.
If the cost of providing such benefits is more than 150% of the cost
of providing such benefits for the Employee prior to the date of
Termination, then the parties agree that it shall be deemed not
commercially feasible to do so.
(iii) The Salary Continuation Period as used in
this Section 2(b) shall mean three (3) years from the date of a
Termination of the Employee.
(c) MITIGATION. The Employee shall not be required to
mitigate the amount of any payment provided for in subsection 2(b) by seeking
other employment or otherwise, nor shall the amount of any payment provided for
in subsection 2(b) be reduced by any compensation earned by the Employee as a
result of employment by another employer after
-6-
the date of Termination, or otherwise.
3. RIGHTS APPLY ONLY ON CHANGE OF CONTROL. The rights granted
under this Change of Control Agreement only apply upon a Change of Control and
subsequent Termination and supersede the severance or other similar rights
accruing upon a Change of Control and subsequent Termination under any other
agreement, including without limitation the Key Employee Severance Agreement,
dated as of January 10, 1997 by and between the Company and the Employee (the
"Key Employee Severance Agreement").
4. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois applicable to
agreements made and to be performed in Illinois, without giving effect to
conflicts of law principles.
5. HEADINGS. The section headings of this Agreement are for
reference only and are to be given no effect in the construction or
interpretation of this Agreement.
6. SEVERABILITY. If any part or provision of this Agreement shall
be declared invalid or unenforceable by a court of competent jurisdiction, said
provision or part shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining parts or
provisions of this Agreement.
7. WAIVER. Any party may waive compliance by another party with any
of the provisions of this Agreement. No waiver of any provision shall be
construed as a waiver of any other provision. Any waiver must be in writing.
8. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding on
and inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to
create any third party beneficiary rights in any person or entity (including any
employee or person engaged by the Company in any capacity) not a party to this
Agreement. The Company will require any successor (whether direct or indirect,
-7-
by merger, purchase, consolidation or otherwise) of the Company to make an
express assumption of the obligations hereunder and cause any successor (whether
direct or indirect, by merger, purchase, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to agree to
perform all parts and provisions under 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. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Employee to compensation from the Company in the
same amount and on the same terms as he would be entitled to hereunder if he is
subject to a Construction Termination, except for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the date of Termination. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to the business and/or
assets of the Company which executes and delivers the agreement provided for in
this section 8, or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law.
This Agreement and all rights of the Employee hereunder shall inure to the
benefit of, and be enforceable by the Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Employee should die after any amounts shall become
payable to him hereunder, all such amounts, unless otherwise provided for
herein, shall be paid in accordance with the terms of this Agreement to the
Employee's devisee, legatee or other designee or, if there be no such devisee or
other designee, to the Employee's estate.
9. LEGAL FEES. The Company shall pay, or reimburse the Employee
for, all legal fees and expenses incurred by the Employee as a result of any
Termination of her employment hereunder after a Change of Control of the
Company, including all such fees and
-8-
expenses, if any, incurred contesting or disputing in good faith any such
Termination or in seeking to obtain or enforce any right or benefit provided
by this Agreement.
10. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Chicago, Illinois in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction; PROVIDED, HOWEVER, that the Employee shall be
entitled to seek specific performance of her right to be paid until the date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
11. COUNTERPARTS. This Agreement may be signed in any number of
counterparts and all such counterparts shall be read together and construed as
but one and the same document.
12. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally, or sent by facsimile transmission, receipt confirmed, one day after
sent by recognized overnight courier, or five (5) days after deposit in the
United States mail, postage prepaid, registered or certified mail, return
receipt requested, to the parties at the following addresses (or to such other
address as a party may have specified by notice duly given to the other party in
accordance with this provision):
If to the Employee:
At the Employee's then current business or residence address as shown
on the records of the Company, with a copy to such other person as the
Employee may have specified by notice duly given to the Company in
accordance with this provision.
-9-
If to the Company:
Quixote Corporation
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: President
IN WITNESS WHEREOF the parties have executed this Agreement, in
triplicate, on the date first written above.
Quixote Corporation Employee
/s/ Xxxxxx X. Xxxxxxxx, Xx. /s/ Xxxx X. Xxxxx
________________________________ ________________________________
By: Chief Executive Officer Xxxx X. Xxxxx
-10-
EXHIBIT A
All rights granted to Employee under the Company's plans including, but not
limited to the following:
1993 Long-Term Stock Ownership Incentive Plan
Incentive Savings Plan
-11-
