EXHIBIT 10.14
EMPLOYEE SEVERANCE AGREEMENT
This Agreement is entered into and delivered and effective as of July 1,
1997.
WHEREAS, the Board of Directors and the Compensation Committee of The
Lamaur Corporation, a Delaware corporation (the "Company"), have determined it
to be in the best interests of the Company and its stockholders to provide
certain key employees (the "Designated Employees") with certain protection from
events that could occur in connection with certain changes of control of the
Company, and
WHEREAS, to accomplish this objective and encourage the Designated
Employees to continue employment with the Company, the Company desires to enter
into this Agreement.
NOW, THEREFORE, for good and valuable consideration, the Company and the
undersigned employee (the "Employee") hereby agree as follows:
1. Change of Control. "Change of Control" means the occurrence of any of
the following events:
(i) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing 35% or more of the total voting power
represented by the Company's then outstanding voting securities (other than any
person who owns in excess of 20% of such total voting power as of the date
hereof or other than any person who acquires 35% or more of such total voting
power with the approval of the Board), or any "person" is or becomes the
"beneficial owner", directly or indirectly, of securities of the Company
representing 50% or more of the total voting power represented by the Company's
then outstanding voting securities (other than any person who owns in excess of
20% of such total voting power as of the date hereof); or
(ii) A change in the composition of the Board of Directors of the Company
as a result of which fewer than a majority of the directors are "Incumbent
Directors." "Incumbent Directors" shall mean directors who either (A) are
directors of the Company as of the date hereof, or (B) are elected, or nominated
for election, to the Board of Directors with the affirmative votes (either by a
specific vote or by approval of the proxy statement of the Company in which such
person is named as a nominee for election as a director without objection to
such nominations) of at least three-quarters of the Incumbent Directors at the
time of such election or nomination (but shall not include an individual whose
election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors of the Company); or
(iii) The stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least fifty percent (50%) of the total voting power represented by
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets.
2. Involuntary Termination.
(i) "Involuntary Termination" shall mean:
(a) a termination by the Company of the Employee's employment with the
Company other than for Cause; or
(b) a material reduction of or material variation in the Employee's duties,
authority or responsibilities, relative to the Employee's duties, authority or
responsibilities as in effect immediately prior to such reduction or variation,
and the Employee resigns from employment with the Company in accordance with
Paragraph 2(ii) below; or
(c) a reduction by the Company in the base salary of the Employee as in
effect immediately prior to such reduction, and the Employee resigns from
employment with the Company in accordance with Paragraph 2(ii) below; or
(d) a reduction by the Company in the kind or level of employee benefits,
including bonuses, to which the Employee was entitled immediately prior to such
reduction with the result that the Employee's overall benefits package is
reduced, and the Employee resigns from employment with the Company in accordance
with Paragraph 2(ii) below; or
(e) the proposed relocation or the relocation of the Employee to a facility
or a location other than the Employee's then present location, and the Employee
resigns from employment with the Company in accordance with Paragraph 2(ii)
below.
(ii) For purposes of this paragraph, the Employee's resignation letter
shall set forth a final day of employment which shall be not less than one week
nor more than one month from the date the resignation letter is delivered to the
Company. The Company shall inform the Employee in writing no later than five
days from the delivery of the resignation letter if the Company does not agree
that an Involuntary Termination will occur on the resignation date and the
reasons for the Company's position. If the Company and the Employee do not agree
that an Involuntary Termination will occur on the resignation date:
(a) the burden of proving that an Involuntary Termination will not occur
shall be on the Company;
(b) the Employee may withdraw the resignation letter until a determination
is made that an Involuntary Termination will occur, and the Employee shall be
entitled to continue his employment as in effect at the time the Employee
delivered the resignation letter to the Company until a determination regarding
Involuntary Termination is made under Paragraphs 2(ii) and 10 hereof (subject to
the Company's right to terminate the Employee's employment with the Company
under Paragraph 2(i)(a)); and
(c) the determination whether an Involuntary Termination has occurred shall
be made based upon the facts and circumstances at the time the Employee
delivered the resignation letter to the Company and shall be made in accordance
with Paragraph 10 hereof.
A pending dispute or arbitration under this Paragraph shall not prevent an
Involuntary Termination occurring as a result of other action or inaction by the
Company.
3. Cash Severance Payment and Other Benefits. In the event of a Change of
Control and an Involuntary Termination of the Employee within 24 months of such
Change of Control, then as of the date of such Involuntary Termination:
(i) the Company shall pay in cash to the Employee on the date of the
Involuntary Termination an amount equal to one and one-half times the Employee's
most recent annual full-time base compensation in effect prior to such Change of
Control; and
(ii) the Company shall provide at the Company's expense medical, dental and
basic life insurance (one times base annual compensation) no less favorable than
such insurance in effect for the Employee and dependents during his or her most
recent full time period of employment prior to the Change of Control, for a
period equal to the shorter of eighteen months from end of the month in which
the Involuntary Termination occurs or the date such Employee becomes covered
under another insurance plan as a result of obtaining new employment. For the
purposes of Title X of the Consolidated Budget Reconciliation Act of 1985
("COBRA"), the date of the qualifying event for the Employee and his or her
covered dependents shall be the date upon which this Company-paid coverage
terminates; and.
(iii) the Company shall pay in cash to the Employee an amount equal to 25%
the Employee's most recent annual full-time base compensation in effect prior to
such Change of Control provided that such Employee's principal place of
residence at any time within twenty-four months from the Involuntary Termination
changes from the principal place of residence in effect immediately prior to the
Involuntary Termination and further provided that the payment under this
paragraph shall be reduced by the amount of any moving expenses paid by a new
employer of Employee; and.
(iv) at the option of the Employee within six months from the Involuntary
Termination, borrow from the Company the principal sum equal to one and one-half
times the Employee's most recent annual full-time base compensation in effect
immediately prior to such Change of Control at the lowest rate of interest
permitted by Internal Revenue Service Rules to avoid the imputation of income.
The loan shall be unsecured, be full recourse to the Employee, be due and
payable two years from the date of the Involuntary Termination, and be made
pursuant to the form of Promissory Note attached hereto as Exhibit A.
If a dispute arises under Paragraph 2 whether an Involuntary Termination will
occur, then the payments and benefits under this Paragraph shall be payable to
the Employee upon an Involuntary Termination even if that Involuntary
Termination occurs more than 24 months from the date of the Change of Control.
4. Cause. "Cause" shall mean:
(i) any willful act of personal dishonesty, fraud or misrepresentation
taken by the Employee in connection with his or her responsibilities as an
employee which was intended to result in substantial gain or personal enrichment
of the Employee; or
(ii) Employee's conviction of a felony on account of any act which was
materially and demonstrably injurious to the Company; or
(iii) the Employee's willful and continued failure to substantially perform
his or her principal duties and obligations of employment (other than any such
failure resulting from incapacity due to physical or mental illness), which
failure is not remedied in a reasonable period of time after receipt of written
notice from the Company. For the purposes of this Section, no act or failure to
act shall be considered "willful" unless done or omitted to be done in bad faith
and without reasonable belief that the act or omission was in or not opposed to
the best interests of the Company. Any act or failure to act based upon
authority given pursuant to a resolution duly adopted by the Board of Directors
of the Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done or omitted to be done in good faith and in the
best interests of the Company. Notwithstanding anything herein to the contrary,
the Employee shall not be deemed to have been terminated for Cause 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 three-quarters of the
entire membership of the Board of Directors of the Company at a meeting of the
Board called and held for the purpose (after reasonable notice to the Employee
and an opportunity for the Employee with Employee's counsel to be heard before
the Board) finding that in the good faith opinion of the Board the Employee was
properly terminated for Cause.
5. Voluntary Resignation; Termination for Cause. If the Employee's
continuous status as an employee of the Company terminates by reason of the
Employee's voluntary resignation (and not Involuntary Termination) or if the
Employee's continuous status as an employee of the Company is terminated for
Cause, in either case prior to a Change of Control and an Involuntary
Termination, then the Employee shall not be entitled to receive the severance
payment and other benefits.
6. Company's Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, merger or consolidation) shall assume the
obligations under this Agreement and agree expressly to perform the obligations
in the absence of a succession.
7. Successors. The terms of 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.
8. Modification Waiver. No provision of this Agreement shall be modified or
waived unless the modification or waiver is agreed to in writing and signed by
the Employee and by an authorized officer of the Company (other than the
Employee).
9. Entire Agreement. This Agreement represents the entire agreement of the
parties hereto with respect to the subject matter thereof.
10. Choice of Law, Arbitration. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
{Minnesota/California}. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
the County of {Hennepin, Minnesota/Marin, California}, by three arbitrators 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. The Company shall bear all costs and expenses arising out of or in
connection with any arbitration pursuant to this Section 10, including, without
limitation, attorneys' fees and costs of counsel to Employee. The Company shall
not be entitled to recover any costs or expenses arising out of or in connection
with any arbitration pursuant to this Section 10 from the Employee, including,
without limitation, attorneys' fees and costs of counsel, even if the Company
prevails in the arbitration.
11. No Employment Agreement. This Agreement shall not constitute an
employment agreement. The Employee's employment with the Company shall
constitute employment "at will," unless otherwise provided in some other written
agreement between the Company and Employee.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year set
forth above.
THE LAMAUR CORPORATION EMPLOYEE
By____________________________ ______________________________
Xxx X. Xxxx
Chairman of the Board and
Chief Executive Officer
EXHIBIT A TO EMPLOYEE SEVERANCE AGREEMENT
PROMISSORY NOTE
$________ {Xxxxxx, Minnesota/Mill Valley, California}
____________, 19__
For value received, the undersigned promises to pay to The Lamaur Corporation, a
Delaware corporation (the "Company"), the principal sum of $__________, together
with interest on the unpaid principal hereof from the date hereof at the rate of
___%, compounded annually.
Principal and interest shall be due and payable on (the date two years from the
date of the Involuntary Termination). Payments shall be made in lawful money of
the United States of America.
The undersigned may at any time prepay all or any portion of the principal or
interest owing hereunder.
The holder of this Note shall have full recourse against the undersigned.
Should any action be instituted for the collection of this Note, the reasonable
costs and attorneys' fees therein of the holder shall be paid by the
undersigned.
The validity, interpretation, construction and performance of this Note shall be
governed by the laws of the State of {Minnesota/California}.
______________________________
