EXHIBIT 10.15
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EXECUTION COPY
SEVERANCE COMPENSATION AGREEMENT
SEVERANCE COMPENSATION AGREEMENT, effective as of September 19, 2001 by
and between Change Technology Partners, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxxx (the "Executive").
WHEREAS, the Company and the Executive are parties to an employment
agreement effective as of September 19, 2001 (the "Employment Agreement")
providing for the employment of the Executive by the Company for a period and
upon the other terms and conditions therein stated; and
WHEREAS, the Company considers the maintenance of a sound and vital
senior management to be essential to protecting and enhancing the interests of
the Company and its shareholders; and
WHEREAS, the Company considers the maintenance of a sound and vital
senior management to be essential to protecting and enhancing the interests of
the Company and its shareholders; and
WHEREAS, the Company recognizes that, as is the case with many publicly
owned corporations, the possibility of a change in control of the Company may
arise and that such possibility, and the uncertainty and questions which it may
raise among senior management, may result in the departure or distraction of
senior management personnel to the detriment of the Company and its
shareholders; and
WHEREAS, accordingly, the Company has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's senior management to their assigned
duties and long-range responsibilities without distraction in circumstances
arising from the possibility of a change in control of the Company; and
WHEREAS, the Company believes it important and in the best interests of
the Company and its shareholders, should the Company face the possibility of a
change in control, that the senior management of the Company be able to assess
and advise the Board of Directors of the Company (the "Board of Directors")
whether such a proposed change in control would be in the best interests of the
Company and its shareholders and to take such other action regarding such a
proposal as the Board of Directors might determine to be appropriate, without
senior management being influenced by the uncertainties of their own employment
situations; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Company in the event of any actual or threatened change in control of the
Company, the Company has determined to set forth the severance benefits which
the Company will provide to the Executive under the circumstances set forth
below.
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NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINITIONS.
(a) All capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Employment Agreement.
(b) "Change in Control" shall mean the occurrence of any
of the following events:
(i) any person, within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or group of persons, within the meaning of Exchange
Act Rule 13d-5, other than the Company or any of its subsidiaries,
becomes a beneficial owner, directly or indirectly, of thirty percent
(30%) or more in voting power or amount of the Company's then
outstanding equity securities, without the approval of not less than
two-thirds of the Board of Directors in existence prior to such
ownership;
(ii) individuals who constitute the Board of
Directors on any day (the "Incumbent Board") cease for any reason other
than their deaths or resignations to constitute at least a majority of
the Board of Directors on the following day (which day shall be
considered the day upon which occurs the Change in Control); PROVIDED
that any individual becoming a director subsequent to -------- the date
of this Agreement whose election or nomination for election by the
Company's shareholders was approved by a vote of not less than
three-quarters of the Incumbent Board or not less than two-thirds of
the then incumbent Nominating Committee of the Board of Directors shall
be for purposes of this subsection considered as though such person
were a member of the Incumbent Board;
(iii) the necessary majority of the Company's
shareholders approve any reorganization (other than a mere change in
identity, form or place of organization of the Company, however
effected), merger or consolidation of the Company, or any other
transaction with one or more business entities or persons as a result
of which the stock of the Company is exchanged for or converted into
cash or property or securities not issued by the Company, or as a
result of which there is a change in ownership of existing equity
securities of the Company or issuance of new equity securities of the
Company (or the right or option to acquire such equity securities)
which equals or exceeds thirty percent (30 %) in voting power or amount
of the equity securities of the Company outstanding upon completion of
such transaction, unless such reorganization, merger consolidation or
other transaction shall have been affirmatively recommended to the
Company's shareholders by not less than two-thirds of the Incumbent
Board;
(iv) the necessary majority of the Company's
shareholders approve the sale of (or agreement to sell or grant of a
right or option
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to purchase as to) all or substantially all of these assets of the
Company to any person or business entity, unless such sale or other
transaction shall have been affirmatively recommended to the Company's
shareholders by not less than two-thirds of the Board of Directors;
(v) the dissolution or liquidation of the
Company;
(vi) the occurrence of any circumstance having
the effect that a majority of the persons who were nominated for
election as directors by the Board of Directors shall fail to become
directors of the Company other than because of their death or
withdrawal;
(vii) a change in control of a nature that would
be required to be reported in response to Item l(a) of the Current
Report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Exchange Act, unless such change in control
is approved by not less than two-thirds of the Incumbent Board; and
(viii) such other events as the Board may
designate.
2. TERMINATION OF EMPLOYMENT. If the Executive is an employee of
the Company on the day before a Change in Control and the Executive's employment
with the Company is terminated by the Company without "cause" within one year
from the date of such Change in Control, the Company hereby agrees to provide to
the Executive the following benefits:
(a) a lump sum payment, payable in cash, cashier's check
or by wire, within ten (10) business days from the date of such termination of
employment equal to 1.5 times the Executive's average base salary, incentive
compensation, bonus and any other amounts which may be included in the
Executive's income as compensation from the Company) over the most recent five
(5) years (or such lesser time as the Executive was employed by the Company as
an employee) preceding the year in which occurred the Change in Control;
(b) a lump sum payment, payable in cash, cashier's check
or by wire, within ten (10) business days from the date of such termination of
employment in an amount equal to any amounts forfeited, on account of such
termination of employment, under any employee pension benefit plan, as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), maintained or contributed to by the Company and participated
in by the Executive at any time between the day before the Change in Control and
the day of the Executive's termination of employment;
(c) to the extent not otherwise payable to the Executive,
continued coverage of the Executive and the Executive's beneficiaries for a
period extending through the latter of the date the Executive commences any
subsequent full-time employment for pay and the date that is three (3) years
after the Executive's termination of employment, under all employee welfare
benefit plans, as defined in Section 3(1) of
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ERISA, maintained or contributed to by the Company and covering the Executive at
any time between the day before the Change in Control and the day of the
Executive's termination of employment; such continuation coverage shall (i) be
provided at the expense of the Company to the extent so provided prior to the
termination of employment, (ii) as of the time the coverage is being provided be
identical to the highest level of coverage provided under each such plan to the
Executive and the Executive's beneficiaries at any time between the day before
the Change in Control and the day of the Executive's termination of employment,
and (iii) not be conditioned upon, or discriminate on the basis or lack of,
evidence of insurability; and
(d) all benefits provided for by the Employment Agreement
under such circumstances, reduced by all benefits provided pursuant to (a)
through (c) above.
3. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER
CONTRACTUAL RIGHTS.
(a) The Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise, nor shall the amount of any payment
provided for under this Agreement be reduced by any compensation earned by the
Executive as the result of employment by another employer after the date of
termination of his employment with the Company or otherwise.
(b) Except as expressly provided in Section 2(d), the
provisions of this Agreement, and any payment provided for hereunder, shall not
reduce any amounts otherwise payable, supersede, affect or in any way diminish
the Executive's existing rights, or rights which would accrue solely as a result
of the passage of time, under any applicable law or any pension benefit or
welfare benefit plan, employment agreement or other contract, plan or
arrangement.
4. LIMITATION ON BENEFITS; ATTORNEY'S FEES; INTEREST.
(a) Notwithstanding any provisions to the contrary in
this Agreement, if any part of the payments provided for under Section 2 of this
Agreement (the "Agreement Payments") would if paid constitute a "parachute
payment" under Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), then the Agreement Payments shall be payable to the Executive only
if (i) the sum of the value of the Agreement Payments and of the value of all
other payments to or for the benefit of the Executive that constitute "parachute
payments" less the amount of any excise taxes payable under Code Section 4999,
and any similar or comparable taxes in connection with such sum, is greater than
(ii) the greatest value of payments in the nature of compensation contingent
upon a change in control that could be paid at such time to or for the benefit
of the Executive and not constitute a "parachute payment" (the Alternative
Payment"); otherwise, only the Alternative Payments shall be payable to the
Executive. For purposes of this Section 4(a), the value of payments shall be
determined in accordance with Code Section 280G(d)(4) and any regulations issued
thereunder.
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(b) The determination of the operation of Section 4(a)
and of any reduction in benefits necessary thereunder shall be made by the
Executive upon reasonable advice of the Executive's counselor accountant, except
that, should the Internal Revenue Service ever determine to the Executive's
satisfaction that any of the payments provided under this Agreement constitute a
"parachute payment," the Executive shall repay to the Company an amount
sufficient at that time to prevent any of such payments from constituting a
"parachute payment". In any case in which the level of benefits provided for
under this Agreement is reduced or not provided to the Executive on account of
the operation of Section 4(a), the Executive may select those benefits which are
to be reduced or not provided.
(c) If the Company shall fail to pay or provide at any
time any benefits under this Agreement or under any benefit plan, agreement or
arrangement established, agreed to or contracted for by the Company for the
benefit of or with the Executive, the Executive shall be entitled to consult
with independent counsel, and the Company shall pay the reasonable fees and
expenses of such counsel for the Executive in advising him in connection
therewith or in bringing any proceedings, or in defending any proceedings,
involving the Executive's rights under this Agreement, such right to
reimbursement to be immediate upon the presentment by the Executive of written
xxxxxxxx of such reasonable fees and expenses. The Executive shall be entitled
to interest at the "prime rate" established from time to time by the Bank of New
York for any payments of such expenses, or any other payments following the
Executive's termination of employment) that are overdue.
(d) The Company shall have the right to withhold from all
payments due hereunder all income and excise taxes required to be withheld by
applicable law and regulations.
5. GOVERNING LAW. This agreement shall be governed by and
construed in accordance with the laws of the State Connecticut.
6. MISCELLANEOUS.
(a) If any rights pursuant to Section 2 above have
accrued to the Executive prior to the Executive's death or judicial
determination of the Executive's incompetence, but have not been fully satisfied
hereunder at the time of such event, such rights shall survive and shall inure
to the benefit of the Executive's heirs, beneficiaries and legal representative.
Otherwise, this Agreement shall terminate upon the Executive's death or judicial
determination of the Executive's incompetence.
(b) Nothing herein (other than as provided in Section
2(d)) shall be deemed to affect or alter the Executive's current employment
status and the status of the Employment Agreement.
(c) In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining
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provisions or portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
7. NOTICE. All notices or communications hereunder shall be given
in accordance with the requirements for notices contained in the Employment
Agreement.
8. AMENDMENT; TERMINATION; WAIVER. No provisions of this
Agreement may be amended, modified or waived and this Agreement may not be
terminated unless such is authorized by a majority of the Board of Directors and
agreed to in writing by the Executive; PROVIDED that if the Term, as such may be
extended, expires, this Agreement shall simultaneously be terminated. No waiver
by either party hereto of any breach by the other party hereto of any condition
or any provision of this Agreement to be performed by such other party shall be
deemed a waiver of a subsequent breach of such condition or provision or waiver
of a similar or dissimilar condition or provision at the same time or any
subsequent time.
9. SUCCESSORS.
(a) Except as otherwise provided herein, the Company's
rights, duties and obligations under this Agreement shall be binding upon and
inure to the benefit of the Company and any successor of the Company, including,
without limitation, any business entity or business entities acquiring directly
or indirectly all or substantially all of the assets or shares of stock whether
by merger, consolidation, sale or otherwise -and such successor shall thereafter
be deemed the "Company" for all purposes of this Agreement - but such rights,
duties and obligations shall not otherwise be assignable by the Company.
(b) Within thirty (30) days following a Change in
Control, the Company (including any successor of the Company) shall in writing
affirm to the Executive its obligations under this Agreement, and any failure by
the Company to so affirm this Agreement shall, for purposes of this Agreement
only, be considered a termination of employment without "cause".
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IN WITNESS WHEREOF, the Company has caused this Severance Compensation
Agreement to be executed by its duly authorized officer, and the Executive has
signed and delivered this Agreement as of the date above-written .
CHANGE TECHNOLOGY PARTNERS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Compensation Committee Chairman
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
