Exhibit 11
EMPLOYMENT AGREEMENT
THIS AGREEMENT by and among Niagara Corporation, a Delaware
corporation (the "Company"), Niagara LaSalle Corporation, a Delaware
corporation and a wholly owned subsidiary of the Company ("Niagara LaSalle"),
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (the "Executive"), dated as of the first day of January,
1999.
W I T N E S S E T H
WHEREAS, the Executive serves the Company as its Chairman,
Chief Executive Officer and President and serves Niagara LaSalle as its
Chairman; and
WHEREAS, the Company wishes to provide for the continued
employment by the Company of the Executive, and the Executive wishes to
continue to serve the Company, on the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, it is hereby agreed as follows:
1. EMPLOYMENT PERIOD. The Company shall employ the
Executive, and the Executive shall serve the Company, on the terms and
conditions set forth in this Agreement, for the period beginning on the date
hereof (the "Effec tive Date") and ending on the fifth anniversary of the
Effective Date (together with any extensions made pursuant to this Section 1,
the "Employment Period"). Com mencing on the third anniversary of the
Effective Date and each subsequent anniver sary thereof (each of such third
and subsequent anniversaries, an "Extension Date"), the term of this
Agreement shall automatically be extended for one additional year unless, at
least three months prior to the applicable Extension Date, the Company or the
Executive shall have given notice not to extend this Agreement.
2. POSITION AND DUTIES. (a) During the Employment Period,
the Executive shall continue to serve the Company as its Chairman, Chief
Executive Officer and President and shall serve Niagara LaSalle as its
Chairman and Chief Executive Officer; in each case with such duties and
responsibilities as are consistent with past practice and are customarily
assigned to such positions, and such other duties and responsibilities not
inconsistent therewith as may from time to time be assigned to him by the
Board of Directors of the Company (the "Board") or the Board of Directors of
Niagara LaSalle, as applicable.
(b) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
shall 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 under this
Agreement, use the Executive's reasonable best efforts to carry out such
responsibilities faithfully and efficiently. It shall not be considered a
violation of the foregoing for the Executive to pursue his other business
interests or to serve on corporate, industry, civic or charitable boards or
committees, 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.
(c) The Company's headquarters shall be located in New
York, New York, and the Executive shall be based primarily in New York, New
York (or such other location as may be approved by the Board and the
Executive), except for such reasonable travel obligations as do not
materially exceed the Executive's present travel obligations.
3. COMPENSATION. (a) BASE SALARY. During the Employment
Period, the Company shall pay the Executive a base salary at the annual rate
of not less than $480,000, subject to increase by the Board if warranted by
the Com pany's growth during such period ("Annual Base Salary"). Annual Base
Salary shall be payable in accordance with the Company's regular payroll
practice for its senior executives, as in effect from time to time. Any
increase in the Annual Base Salary shall not limit or reduce any other
obligation of the Company under this Agreement. The Annual Base Salary shall
not be reduced after any such increase, and the term "Annual Base Salary"
shall thereafter refer to the Annual Base Salary as so in creased.
(b) ANNUAL BONUS. With respect to each of the Company's
fiscal years occurring during the Employment Period, the Company shall,
subject to the immediately following sentence, pay the Executive an annual
bonus, in cash (the "Annual Bonus"), equal in amount to 50 % of Annual Base
Salary, as in effect on the first day of the Company's fiscal year with
respect to which the Annual Bonus is paid (the "Target Bonus"), based upon
achievement by the Company of an EBITDA target approved by the Compensation
Committee of the Board (the "Committee") for such year, and increasing by 1 %
of such Annual Base Salary for each 1% increment in EBITDA in excess of such
target. The EBITDA target shall be based on opera tions existing at the time
the target is approved, but the target may be amended by the Compensation
Committee based upon corporate acquisitions or dispositions, or other
relevant factors. The Company shall seek the approval of its shareholders for
the Annual Bonus during the Employment Period at its annual shareholders'
meeting following the execution of this Agreement, and the Annual Bonus shall
be paid only if such approval is obtained. If such approval is not obtained,
the Company and the Executive shall negotiate in good faith to structure an
alternative incentive compen sation arrangement to fairly compensate the
Executive. For purposes of this Agree ment, EBITDA shall mean the Company's
earnings before interest, taxes, depreciation and amortization, as
determined in accordance with the Company's audited financial statements.
(c) STOCK OPTIONS. During the Employment Period, the
Executive shall receive annual grants of stock options pursuant to a stock
option plan of the Company, in such amount as the Committee may in its
discretion determine.
(d) SERP. Commencing on the first day of the month
following the month in which the Executive's employment with the Company and
Niagara LaSalle terminates for any reason, the Executive shall be entitled to
receive retirement income in an annual amount equal to the product of (1) the
Executive's Final Average Pay, (2) (subject to Section 5(a)(ii)), the number
of years, including fractional parts thereof, of the Executive's service with
the Company and (3) 2.5 %. Such retirement income shall be paid to the
Executive during his lifetime and, upon his death, an amount equal to 50 % of
such retirement income shall be paid to his surviving spouse during her
lifetime. For purposes of the SERP, Final Average Pay shall mean the average
of Executive's combined Annual Base Salary and Annual Bonus for the three
consecutive years during the ten years immediately preceding the year in
which occurs the Executive's termination of employment during which such
average is highest.
(e) MEDICAL COVERAGE. The Executive and his spouse and
their dependent children shall be entitled to receive health, medical, dental
and hospitalization coverage on a basis at least as favorable (on an
after-tax basis) as is provided to such persons on the date hereof, such
coverage to be provided during the Employment Period and, with respect to the
Executive and his surviving spouse, during each of their lifetimes, and, with
respect to their dependent children, for such period as coverage is permitted
under the terms of the Company's insurance policy as in effect on the date
hereof.
(f) FRINGE BENEFITS. During the Employment Period, the
Executive shall be entitled to receive six weeks' paid vacation each year and
paid holidays, each in accordance with past practice; Company automobile,
payment of private club membership fees and dues and any other currently
provided fringe benefits in accordance with past practice; and individual tax
advice and other financial planning services not to exceed in the aggregate
an annual amount of $25,000.
(g) OTHER BENEFITS. During the Employment Period the
Executive shall be entitled to participate in all other employee benefit
plans, practices, policies and programs of the Company on a basis at least as
favorable as any other executive of the Company.
4. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The
Executive's employment shall terminate automatically upon the Executive's
death during the Employment Period. The Company shall be entitled to
terminate the Executive's employment because of the Executive's Disability
during the Employment Period. "Disability" means that (i) the Executive has
been unable, for the period specified in the Company's disability plan for
senior executives, but not less than a period of 180 consecutive business
days, to perform the Executive's duties under this Agreement, as a result of
physical or mental illness or injury, and (ii) a physician selected by the
Company or its insurers, and reasonably acceptable to the Executive or the
Executive's legal representative, has determined that the Executive is
disabled within the meaning of the applicable disability plan for senior
executives. A termination of the Executive's employment by the Company for
Disability shall be communicated to the Executive by written notice, and
shall be effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), unless the Executive returns to
full-time performance of the Executive's duties before the Disability
Effective Date.
(b) TERMINATION BY THE COMPANY. (i) the Company may
terminate the Executive's employment during the Employment Period for Cause
or without Cause. "Cause" means the conviction of the Executive for the
commission of a felony, or willful gross misconduct by the Executive in
connection with his employment by the Company, in either case that results in
material and demonstrable financial harm to the Company. 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 that is based upon
authority given pursuant to a resolution duly adopted by the Board, or 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. In the event of a dispute concerning the
application of this provision, no claim by the Company that Cause exists
shall be given effect unless the Company establishes to the Board by clear
and convincing evidence that Cause exists.
(ii) A termination of the Executive's employment for Cause
shall be not be effective unless it is accomplished in accordance with the
following proce dures. The Company shall give the Executive written notice
("Notice of Termination for Cause") of its intention to terminate the
Executive's employment for Cause, setting forth in reasonable detail the
specific conduct of the Executive that it considers to constitute Cause and
the specific provisions of this Agreement on which it relies, and stating the
date, time and place of the Special Board Meeting for Cause. The "Special
Board Meeting for Cause" means a meeting of the Board called and held
specifically and exclusively for the purpose of considering the Executive's
termination for Cause, that takes place not less than twenty nor more than
thirty business days after the Executive receives the Notice of Termination
for Cause. The Executive shall be given an opportunity, together with
counsel, to be heard at the Special Board Meeting for Cause. The Executive's
termination for Cause shall be effective when and if a resolution is duly
adopted at the Special Board Meeting for Cause by affirmative vote of
two-thirds of the entire membership of the Board stating that, in the good
faith opinion of the Board, the Executive is guilty of the conduct described
in the Notice of Termination for Cause and that such conduct constitutes
Cause under this Agreement.
(c) GOOD REASON. (i) The Executive may terminate employment
for Good Reason or without Good Reason. For purposes of this Agreement, "Good
Reason" shall mean any material breach of this Agreement by the Company that
is not remedied by the Company promptly after receipt of notice thereof from
the Executive.
(ii) A termination of employment by the Executive for Good
Reason shall be effectuated by giving the Company written notice ("Notice of
Termination for Good Reason") of the termination, setting forth in reasonable
detail the specific conduct of the Company that constitutes Good Reason and
the specific provision(s) of this Agreement on which the Executive relies. A
termination of employment by the Executive for Good Reason shall be effective
on the fifth business day following the date when the Notice of Termination
for Good Reason is given, unless the notice sets forth a later date (which
date shall in no event be later than 30 days after the notice is given).
(iii) The failure to set forth any fact or circumstance in
a Notice of Termination for Good Reason shall not constitute a waiver of the
right to assert, and shall not preclude the party giving notice from
asserting, such fact or circumstance in an attempt to enforce any right under
or provision of this Agreement.
(iv) A termination of the Executive's employment by the
Executive without Good Reason shall be effected by giving the Company written
notice of the termination.
(d) DATE OF TERMINATION. The "Date of Termination" means
the date of the Executive's death, the Disability Effective Date, the date on
which the termination of the Executive's employment by the Company for Cause
or without Cause or by the Executive for Good Reason is effective, or the
date on which the Executive gives the Company notice of a termination of
employment without Good Reason, as the case may be.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) OTHER THAN FOR CAUSE, DEATH OR DISABILITY, OR FOR GOOD
REASON. If, during the Employment Period, the Company terminates the Execu
tive's employment for any reason other than Cause, death or Disability, or
the Executive terminates employment for Good Reason, the Company shall
(i) pay to the Executive, in a lump sum in cash, within
five business days after the Date of Termination, (A) an amount equal to the
product of (1) the greater of three and the number of years, including
fractional parts thereof, remaining until the date on which the Employment
Period would have ended had the termination of the Executive's employment
hereunder not been terminated (such number, the "Severance Multiple"), and
(2) the sum of the Executive's then current Annual Base Salary (without
giving effect to reductions thereto) and the average Annual Bonus earned in
respect of the three years preceding the Date of Termination or, if greater,
the Target Bonus for the year in which occurs the Date of Termination; and
(B) the Accrued Obligations (as defined in paragraph (b) of this Section);
and
(ii) provide additional years of service credit under the
SERP equal in number to the Severance Multiple; and
(iii) shall continue to provide life insurance benefits to
the Executive, for a period of years equal in number to the Severance
Multiple, at least equal to those provided to the Executive prior to the
events giving rise to the Executive's termination of employment; and
(iv) take all actions necessary to cause all of the
Executive's outstanding equity awards, to the extent then forfeitable, to
immediately and fully vest and, to the extent then not exercisable, to become
immediately and fully exercisable, and any posttermination exercise period
associated with such awards to commence on the anniversary of the Date of
Termination equal in number to the Severance Multiple;
and the Company shall have no further obligations under this Agreement,
except as specified in Section 6 below.
(b) DEATH AND DISABILITY. If the Executive's employment is
terminated by reason of the Executive's death or Disability during the
Employment Period, the Company shall pay to the Executive or, in the case of
the Executive's death, to the Executive's designated beneficiaries (or, if
there is no such beneficiary, to the Executive's estate or legal
representative), in a lump sum in cash within 30 days after the Date of
Termination, the sum of the following amounts (the "Accrued Obligations"):
(1) any portion of the Executive's Annual Base Salary through the Date of
Termination that has not yet been paid; (2) an amount equal to the product of
(A) the Target Bonus that the Executive would have been eligible to earn for
the year during which such termination occurs, and (B) a fraction, the
numerator of which is the number of days in such year through the Date of
Termination, and the denomina tor of which is 365; and (3) all compensation
and benefits payable to the Executive under the terms of the Company's
compensation and benefit plans, programs or arrangements as in effect
immediately prior to the Date of Termination.
(c) BY THE COMPANY FOR CAUSE; BY THE EXECUTIVE OTHER THAN
FOR GOOD REASON. If the Executive's employment is terminated by the Company
for Cause or the Executive voluntarily terminates employ ment, other than for
Good Reason, during the Employment Period, the Company shall pay to the
Executive in a lump sum in cash within 30 days of the Date of Termination,
(1) any portion of the Executive's Annual Base Salary through the Date of
Termination that has not been paid; and (2) all compensation and benefits
payable to the Executive under the terms of the Company's compensation and
benefit plans, programs or arrangements as in effect immediately prior to the
Date of Termination.
(d) (i) In the event that any payment or benefit received
or to be received by the Executive pursuant to the terms of this agreement
(the "Contract Payments") or of any other plan, arrangement or agreement of
the Company (or any affiliate) ("Other Payments" and, together with the
Contract Payments, the "Pay ments") would be subject to the excise tax (the
"Excise Tax") imposed by section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code") as determined as provided below, the Company shall
pay to the Executive, at the time specified in Section 5(d)(ii) below, an
additional amount (the "Gross-Up Payment") such that the net amount retained
by the Executive, after deduction of the Excise Tax on the Payments and any
federal, state and local income and employment tax and the Excise Tax upon
the Gross-Up Payment, and any interest, penalties or additions to tax payable
by the Executive with respect thereto, shall be equal to the total present
value (using the applicable federal rate (as defined in section 1274(d) of
the Code in such calculation) of the Payments at the time such Payments are
to be made. For purposes of determining whether any of the Payments will be
subject to the Excise Tax and the amounts of such Excise Tax, (1) the total
amount of the Payments shall be treated as "parachute payments" within the
meaning of section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of section 280G(b)(1) of the Code shall be
treated as subject to the Excise Tax, except to the extent that, in the
opinion of the Company's independent auditor (the "Auditor"), a Payment (in
whole or in part) does not constitute a "parachute payment" within the
meaning of section 280G(b)(2) of the Code, or such "excess parachute
payments" (in whole or in part) are not subject to the Excise Tax, (2) the
amount of the Payments that shall be treated as subject to the Excise Tax
shall be equal to the lesser of (A) the total amount of the Payments or (B)
the amount of "excess parachute payments" within the meaning of section
280G(b)(1) of the Code (after applying clause (1) hereof), and (3) the value
of any noncash benefits or any deferred payment or benefit shall be
determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income taxes
at the highest marginal rate of federal income taxation applicable to
individuals in the calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest marginal rates of taxation
applicable to individuals as are in effect in the state and locality of the
Executive's residence in the calendar year in which the Gross-Up Payment is
to be made, net of the maximum reduction in federal income taxes that
can be obtained from deduction of such state and local taxes, taking into
account any limitations applicable to individuals subject to federal income
tax at the highest marginal rates.
(ii) The Gross-Up Payments provided for in Section 5(d)(i)
hereof shall be made upon the earlier of (i) ten days following termination
of the Executive's employment or (ii) the imposition upon the Executive or
payment by the Executive of any Excise Tax.
(iii) If it is established pursuant to a final
determination of a court or an Internal Revenue Service proceeding or the
opinion of the Auditor that the Excise Tax is less than the amount taken into
account under Section 5(d)(i) hereof, the Executive shall repay to the
Company within thirty (30) days of the Executive's receipt of notice of such
final determination or opinion the portion of the Gross-Up Payment
attributable to such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local income and
employment tax imposed on the Gross-Up Payment being repaid by the Executive
if such repayment results in a reduction in Excise Tax or a federal, state
and local income and employment tax deduction) plus any interest received by
the Executive on the amount of such repayment. If it is established pursuant
to a final determination of a court or an Internal Revenue Service proceeding
or the opinion of the Auditor that the Excise Tax exceeds the amount taken
into account hereunder (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional Gross-Up Payment in respect of such
excess within thirty (30) days of the Company's receipt of notice of such
final determination or opinion.
(iv) In the event of any change in, or further
interpretation of, sections 280G or 4999 of the Code and the regulations
promulgated thereunder, the Executive shall be entitled, by written notice to
the Company, to request an opinion of the Auditor regarding the application
of such change to any of the foregoing, and the Company shall use its best
efforts to cause such opinion to be rendered as promptly as practicable. All
fees and expenses of the Auditor incurred in connection with this agreement
shall be borne by the Company.
6. 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 compa ▇▇▇▇ for which the Executive may qualify, nor shall anything
in this Agreement 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. Vested benefits and other amounts that the Executive is
otherwise entitled to receive under any plan, policy, practice or program of,
or any contract of agreement with, the Company or any of its affiliated
companies on or after the Date of Termination shall be payable in accordance
with the terms of each such plan, policy, practice, program, contract or
agreement, as the case may be, except as explicitly modified by this
Agreement.
7. FULL SETTLEMENT. The Company's obligation to make the
payments provided for in, and otherwise to perform its obligations under,
this Agreement shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action that 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, regardless of whether the
Executive obtains other employment.
8. CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
informa tion, knowledge or data relating to the Company or any of its
affiliated companies and their respective businesses that the Executive
obtains during the Executive's employment by the Company or any of its
affiliated companies and that is not public knowledge (other than as a result
of the Executive's violation of this Section 8) ("Confidential Information").
The Executive shall not communicate, divulge or disseminate Confidential
Information at any time during or after the Executive's employment with the
Company, except with the prior written consent of the Company or as
otherwise required by law or legal process.
9. ATTORNEYS' FEES. The Company agrees to pay, as incurred,
to the fullest extent permitted by law, all legal fees and expenses that the
Executive may incur in good faith as a result of any contest (regardless of
the outcome) by the Company, the Executive or others of the validity or
enforceability of or liability under, or otherwise involving, any provision
of this Agreement, together with interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.
10. SUCCESSORS; JOINT OBLIGORS. (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.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company 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 Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "the Company" shall
mean both the Company as defined above and any such successor that assumes
and agrees to perform this Agreement, by operation of law or otherwise.
(d) The Company and Niagara LaSalle shall be jointly and
severally liable to the Executive for all obligations hereunder.
11. MISCELLANEOUS. (a) This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York, 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 except by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications under this
Agreement 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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If to the Company:
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or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 11. Notices and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement. If any provision of this Agreement shall be held
invalid or unenforce able in part, the remaining portion of such provision,
together with all other provi sions of this Agreement, shall remain valid and
enforceable and continue in full force and effect to the fullest extent
consistent with law.
(d) Notwithstanding any other provision of this Agreement,
the Company may withhold from amounts payable under this Agreement all
federal, state, local and foreign taxes that are required to be withheld by
applicable laws or regulations.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provisions of, or to assert, any right under, this
Agreement (including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to paragraph (c) of Section 4
of this Agreement) shall not be deemed to be a waiver of such provision or
right or of any other provision of or right under this Agreement.
(f) The Executive and the Company acknowledge that this
Agree ment supersedes any other agreement between them concerning the subject
matter hereof.
(g) The rights and benefits of the Executive under this
Agreement may not be anticipated, assigned, alienated or subject to
attachment, garnishment, levy, execution or other legal or equitable process
except as required by law. Any attempt by the Executive to anticipate,
alienate, assign, sell, transfer, pledge, encum ber or charge the same shall
be void. Payments hereunder shall not be considered assets of the Executive
in the event of insolvency or bankruptcy.
(h) This Agreement may be executed in several counterparts,
each of which shall be deemed an original, and said counterparts shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and the Company and Niagara LaSalle have caused this
Agreement to be executed in their names on their behalf, all as of the day
and year first above written.
NIAGARA CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman of the
Compensation Committee
NIAGARA LASALLE CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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