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EXHIBIT 10
XXXX CORPORATION
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement ("Agreement") dated as of this 30th
day of October, 1996 between Xxxx Corporation (the "Company"), and
_______________ (the "Key Employee").
WHEREAS, the Company's Board of Directors has determined that it is in
the best interests of the Company to provide certain benefits to the Key
Employee upon termination of employment as a result of a Change of Control of
the Company; and
WHEREAS, the severance benefits payable by the Company to the Key
Employee as provided herein are intended to ensure that the Key Employee
receives reasonable compensation given the specific circumstances of the Key
Employee's employment history with the Company;
NOW, THEREFORE, the Company adopts this Agreement to evidence the
Company's commitment to pay severance benefits to the Key Employee if the Key
Employee's employment with the Company terminates under the circumstances
described herein.
1. Effect on Other Plans Sponsored by the Company. The benefits
payable under this Agreement are in addition to the coverage and benefits
generally afforded to the Key Employee upon termination from the service of the
Company and any other programs sponsored by the Company including, but not
limited to, the Company's severance and stock option plans.
2. Definitions. The capitalized terms used in this Agreement shall
have the meaning set forth below.
(a) "Annual Compensation" shall mean the Key Employee's rate of base
salary paid or payable for the Company's fiscal year by the Company and any
incentive or bonus award paid or payable to the Key Employee for such fiscal
year.
(b) "Board" shall mean the Board of Directors of Xxxx Corporation.
(c) "Cause" shall mean (i) if the Key Employee is a party to a
written employment agreement with the Company, or any parent corporation or
subsidiary corporation thereof, which agreement contains a definition of "for
good cause" or "for cause" (or words of like import) for purposes of
termination of employment thereunder by the Company, or such parent corporation
or subsidiary corporation of the Company, "for
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good cause" or "for cause" as defined therein; or (ii) in all other cases: (A)
the wanton or willful commission by the Key Employee of an act, or the wanton
or willful omission or failure to act, that causes substantial damage (by
reason, without limitation, of financial exposure or loss, or damage to
reputation or goodwill) to the Company, or any parent corporation or subsidiary
corporation thereof; (B) the commission by the Key Employee of an act of fraud,
intentional misrepresentation, embezzlement, misappropriation or conversion in
the performance of such Key Employee's duties on behalf of the Company, or any
parent corporation or subsidiary corporation thereof; and (C) conviction of the
Key Employee for commission of a felony.
(d) "Change of Control" shall mean the date as of which: (i) 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 (ii) the stockholders of
the Company approve any plan or proposal for the liquidation or dissolution of
the Company; or (iii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), shall become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of 30% of the Company's outstanding common stock; or
(iv) during any period of two consecutive years, individuals who at the
beginning of such period constitute the entire board of directors of the
Company shall cease for any reason to constitute a majority thereof unless the
election, or the nomination for election by the Company's stockholders, of each
new director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Disability" shall mean termination of the Key Employee's
employment by the Company as a result of the Key Employee's incapacity due to
physical or mental illness or injury, provided that the Key Employee shall have
been absent from his duties with the Company on a full-time basis for at least
six consecutive months. The Compensation Committee of the Board shall make any
such determination with respect to a Key Employee hereunder.
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(g) "Good Reason" shall mean any of the following actions taken by
the Company without the Key Employee's written consent after a Change of
Control:
(i) the assignment to the Key Employee by the Company of
duties inconsistent with, or the reduction of the powers and functions
associated with, the Key Employee's position, duties, responsibilities
and status with the Company immediately prior to a Change of Control
or Potential Change of Control (as defined below), or an adverse
change in the Key Employee's titles or offices as in effect
immediately prior to a Change of Control or Potential Change of
Control, or any removal of the Key Employee from or any failure to
re-elect the Key Employee to any of such positions, except in
connection with the termination of his employment for Disability or
Cause or as a result of the Key Employee's death or by the Key
Employee other than for Good Reason;
(ii) A reduction by the Company in the Key Employee's base
salary as in effect on the date of a Change of Control or Potential
Change of Control, or as the same may be increased from time to time
during the term of his Agreement, or the Company's failure to increase
(within 12 months of the Key Employee's last increase in base salary)
the Key Employee's base salary after a Change of Control or Potential
Change of Control, unless such failure is the result of (A) a hiring
or salary freeze uniformly applied to all employees or (B) the Key
Employee's failure to meet preestablished and objective performance
criteria;
(iii) Company's principal executive offices shall be moved
to a location outside Dallas County, Texas.
(iv) Company shall require the Key Employee to be based
anywhere other than at the Company's principal executive offices or
the location where the Key Employee is based on the date of a Change
of Control or Potential Change of Control, or if the Key Employee
agrees to such relocation, the Company fails to reimburse the Key
Employee for moving and all other expenses incurred with such move;
(v) The Company shall fail to continue in effect any
Company-sponsored plan or benefit that is in effect on the date of a
Change of Control or Potential Change of Control, and provides (A)
incentive or bonus compensation, (B) fringe benefits such as vacation,
medical benefits, life insurance and accident insurance, (C)
reimbursement for reasonable expenses incurred by the Key
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Employee in connection with the performance of duties with the
Company, and (D) pension benefits such as a Code Section 401(k) plan;
(vi) Any material breach by the Company of any provision
of this Agreement; and
(vii) Any failure by the Company to obtain the assumption
of this Agreement by any successor or assign of the Company effected
in accordance with the provisions of Section 6.
(h) "Potential Change of Control" shall mean the date as of which (1)
the Company enters into an agreement the consummation of which, or the approval
by shareholders of which, would constitute a Change of Control; (ii) proxies
for the election of Directors of the Company are solicited by anyone other than
the Company; (iii) any person (including, but not limited to, any individual,
partnership, joint venture, corporation, association or trust) publicly
announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change of Control; or (iv) any other event
occurs which is deemed to be a Potential Change of Control by the Board and the
Board adopts a resolution to the effect that a Potential Change of Control has
occurred.
3. Term. The term of this Agreement shall be for the one-year
period commencing on the date of this Agreement and shall continue in effect
for each successive one-year period thereafter unless terminated in accordance
with this paragraph. This Agreement shall terminate upon the earliest of (a)
the date of termination of the Key Employee's employment by the Company if no
benefits are payable hereunder; (b) the date the Company satisfies its
obligation, if any, to make payments and provide benefits to the Key Employee
pursuant to this Agreement; and (c) the termination of this Agreement in
accordance with the provisions of Section 12 prior to the date the Key Employee
terminates employment with the Company.
4. Termination of Employment Following Change of Control. (a)
Except as otherwise provided under Section 4(b), below, if within two years
following a Change of Control the Key Employee terminates his employment with
the Company for Good Reason or the Company terminates the Key Employee's
employment for any reason other than Cause or Disability, the Company shall pay
or provide to the Key Employee the following benefits:
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(i) an amount equal to three times the Key Employee's
average Annual Compensation for any fiscal year
beginning with or within the three-year period
terminating on the date of termination of the Key
Employee's employment, which amount shall be paid to
the Key Employee in cash on or before the fifth day
following the date of termination;
(ii) for a period of three years following the date of
termination of employment, the Key Employee and
anyone entitled to claim under or through the Key
Employee shall be entitled to all benefits under the
group health care plan, dental care plan, life or
other insurance or death benefit plan, or other
present or future similar group employee benefit plan
or program of the Company for which key executives
are eligible at the date of a Change of Control, to
the same extent as if the Key Employee had continued
to be an employee of the Company during such period
and such benefits shall, to the extent not fully paid
under any such plan or program, be paid by the
Company; and
(iii) a lump sum payment equal to the actuarial equivalent
(determined by the Company in good faith with the
assistance of its accountants or actuaries) of the
Benefit that would have accrued under the Xxxx
Delaware, Inc. Supplemental Executive Retirement Plan
("SERP") if (A) the Key Employee remained a
participant in the SERP for the three-year period
commencing on the first day of the SERP's plan year
("Plan Year") in which the Key Employee's employment
with the Company terminated ("Measurement Period"),
(B) during each Plan Year in the Measurement Period
the Key Employee earned Benefit Points equal to the
highest number of Benefit Points earned by such Key
Employee in a Plan Year during the three-year period
ending on the last day of the Plan Year immediately
preceding the Plan Year in which his employment with
the Company terminated, and (C) the Key Employee's
Final Average Pay during the Measurement Period is
the greater of his monthly Base Salary on the date of
(1) a Potential Change of Control, (2) the Change of
Control or (3) the date of his termination of
employment.
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(b) In the event that (i) the Key Employee would otherwise be
entitled to the compensation and benefits described in Section 4(a) hereof
("Compensation Payments"), and (ii) the Company determines, based upon the
advice of tax counsel selected by the Company's independent auditors and
acceptable to the Key Employee, that, as a result of such Compensation Payments
and any other benefits or payments required to be taken into account under Code
Section 280G(b)(2) ("Parachute Payments"), any of such Parachute Payments would
be reportable by the Company as "excess parachute payments", such Compensation
Payments shall be reduced to the extent necessary to cause the Key Employee's
Parachute Payments to equal 2.99 times the "base amount" as defined in Code
Section 280G(b)(3) with respect to such Key Employee. However, such reduction
in the Compensation Payments shall be made only if, in the opinion of such tax
counsel, it would result in a larger Parachute Payment to the Key Employee than
payment of the unreduced Parachute Payments after deduction of the tax imposed
on and payable by the Key Employee under Section 4999 of the Code ("Excise
Tax"). The value of any non-cash benefits or any deferred payment or benefit
for purposes of this paragraph shall be determined by the Company's independent
auditors.
(c) The parties hereto agree that the payments provided under Section
4(a) or (b) above, as the case may be, are reasonable compensation in light of
the Key Employee's services rendered to the Company and that neither party
shall contest the payment of such benefits as constituting an "excess parachute
payment" within the meaning of Section 280G(b)(1) of the Code.
(d) Unless the Company determines that any Parachute Payments made
hereunder must be reported as "excess parachute payments" in accordance with
Section 4(b) above, neither party shall file any return taking the position
that the payment of such benefits constitutes an "excess parachute payment"
within the meaning of Section 280G(b)(1) of the Code.
5. No Obligation to Mitigate Damages. The Key Employee 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 Key Employee as the result of employment by another employer
after his termination, or otherwise.
6. Successor to the Company. The Company will require any successor
or assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to
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all or substantially all of the business and/or assets of the Company,
expressly, absolutely and unconditionally to assume and agree to perform the
obligations of the Company under the Plan and this Agreement in the same manner
and to the same extent that the Company would be required to perform such
obligations if no such succession or assignment had taken place.
7. Miscellaneous. No provisions of this Agreement may be waived
unless such waiver or modification is agreed to in a writing signed by the Key
Employee and the Company. No waiver by either party hereto at any time of any
breach by the 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 at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
This Agreement shall be governed by and construed in accordance with the laws
of the State of Delaware.
8. Validity. 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.
9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
10. Agreement Not an Employment Contract. This Agreement shall not
be deemed to constitute an employment contract between the Company and the Key
Employee, and nothing herein shall be deemed to give the Key Employee the right
to continue in the employ of the Company or interfere with the right of the
Company to discharge the Key Employee at any time.
11. Legal Fees and Expenses. The Company shall pay all legal fees,
expenses and damages which the Key Employee may incur as a result of the Key
Employee's instituting legal action to enforce his rights hereunder, or in the
event the Company contests the validity, enforceability or the Key Employee's
interpretation of, or determinations under, this Agreement. If the Key
Employee is the prevailing party or recovers any damages in such action, the
Key Employee shall be entitled to receive in addition thereto pre-judgment and
post-judgment interest on the amount of such damages.
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12. Amendment and Termination. This Agreement may be amended or
terminated at any time by the Company, or by resolution of the Board; provided
that without the written consent of the Key Employee, no termination or
amendment reducing the severance benefits provided hereunder shall be effective
prior to the expiration of the applicable one-year term of this Agreement
described in Section 3 during which the Board resolution is adopted. Further,
no amendment or termination shall be effective during a one-year term
commencing on the date of a Potential Change of Control of the Company without
the consent of the Key Employee or the two-year term of this Agreement
commencing on the date of a Change of Control of the Company without the
consent of the Key Employee. No amendment or termination shall affect any
rights of the Key Employee if he is entitled to benefits hereunder at the time
of such amendment or termination.
13. Funding of Benefits. The benefits payable to the Key Employee
hereunder shall not be funded in any manner and shall be paid by the Company
out of its general assets, which assets are subject to the claims of the
Company's creditors.
14. Withholding. There shall be deducted from the payment of any
benefit due under the Plan (a) the amount of any uncontested indebtedness,
obligation, or liability which the Key Employee has acknowledged in writing as
owing to the Company or any subsidiary of the Company, which has been agreed to
by the Key Employee, and (b) the amount of any tax required by any governmental
authority to be withheld and paid over by the Company to such governmental
authority for the account of the Key Employee entitled to such payment.
15. Assignment. Unless required by court order, the Key Employee
shall not have any rights to sell, assign, transfer, encumber, or otherwise
convey the right to receive the payment of any benefit due hereunder, which
payment and the rights thereto are expressly declared to be nonassignable and
nontransferable. Any attempt to do so shall be null and void and of no effect.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXX CORPORATION
By:
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For the Company
KEY EMPLOYEE
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ADDENDUM TO FORM OF CHANGE OF CONTROL AGREEMENT
The following agreements are substantially identical to the Form of Change of
Control Agreement shown here, except for the names and therefore are not filed
as separate documents in accordance with Exchange Act Rule 12b-31.
Form of Change of Control Agreement dated as of October 30, 1996 between Xxxx
Corporation (the "Company"), and the following "Key Employees":
1) Xxx Xxxxx
2) Xxxx Xxxxx
3) Xxx Xxxx
4) Xxxxxxx Xxxxxxxxx
5) Xxxx Xxxxxxxx
6) Xxxx Xxxxxxx
7) Xxxxx Xxxxx
8) Xxxxx Xxxx
9) Xxxx X. Xxxx
00) Xxxxxxx Xxxxxxxxxx
