AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this
"Agreement") is made as of March 29, 2000 by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
("Executive") and ANICOM, INC., a Delaware corporation (the "Company").
PRELIMINARY RECITALS
WHEREAS, the Company is engaged in the business of selling and
distributing communication related wire, cable, fiber optics and computer
network and connectivity products (the "Business").
WHEREAS, Executive is currently employed by the Company as the Chairman
of the Board of Directors, pursuant to that certain Amended and Restated
Executive Employment Agreement, dated November 30, 1998, by and between the
Company and Executive (the "Current Employment Agreement").
WHEREAS, Executive has extensive knowledge and a unique understanding
of the operation of the Business.
WHEREAS, the Company and Executive desire to continue Executive's
employment relationship with the Company in a new position as Chairman Emeritus
and Director of Strategic Development, all under the terms and conditions set
forth herein.
WHEREAS, the parties hereto desire to amend and restate the Current
Employment Agreement in the form of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and Executive agree as follows:
1. Duties and Extent of Service.
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1.1 Duties. The Company hereby employs Executive as the
Company's Chairman of the Board of Directors ("Chairman") until May 17,
2000, and thereafter its Chairman Emeritus and Director of Strategic
Development, and Executive hereby accepts such employment and agrees to
act in such capacities, all in accordance with the terms and conditions
of this Agreement. Subject to Section 7, during the Employment Period,
Executive will perform such duties as the Board of Directors of the
Company ("Board") may prescribe from time to time, consistent with
Executive's title.
1.2 Extent of Service. It is understood that Executive's
duties shall not require his full-time attention. However, Executive
agrees that during the Employment Period, he will devote as much of his
business time and attention as is reasonably required to fulfill his
duties under this Agreement. Notwithstanding the foregoing, nothing in
this Agreement shall preclude Executive from devoting reasonable
periods of time and effort to (i) charitable, community and personal
activities, (ii) management of his personal investment assets, and
(iii) with the approval of the Board of Directors of the Company, which
approval shall not be unreasonably withheld, serving as a director or
advisor of any other business entity; provided, however, that in each
case, such activity does not interfere in any material respect with the
performance by Executive of his duties hereunder, and does not violate
Section 5 hereof.
1.3 Right to Become a Consultant. The parties to this
Agreement acknowledge and agree that, at any time during the Employment
Period, Executive may elect to become a consultant of the Company,
either directly or through an entity of which Executive is the majority
owner, rather than an employee of the Company. In connection with any
such election, Executive may transfer all of his rights under this
Agreement to any such entity which will be providing such services.
Upon any such election by Executive, all references herein to
Executive's employment will be deemed to refer to the engagement as a
consultant of Executive or the entity to which he has assigned this
Agreement and all references herein to Executive will be deemed to
refer to Executive or the entity to which he has assigned this
Agreement, except that the covenants set forth in Section 5 shall refer
to both Executive and any such entity, and the terms of Sections 4.3,
4.4 and 4.6 shall refer to Executive individually. Furthermore, if
Executive elects to become a consultant, he and the Company agree to
abide by the following terms:
(a) it is understood that Executive will not have set
hours of work, and will not be required to be at the Company
for a particular number of hours during the day or week;
(b) Executive will not be required to spend all of
his time performing services for the Company;
(c) Executive will hire, supervise and pay his own
assistants, supply them with the materials they need to do
their work, and will be responsible for their results;
(d) the parties acknowledge and agree that Executive
will be an independent contractor and that no employee of
Executive shall be deemed an employee or agent of the Company;
the Company shall exercise no supervision or control with
respect to the provision of any consulting services, except to
the extent that the Company provides specifications,
descriptions, time schedules, or goals for projects and
exercises the right to evaluate Executive's work product under
this Agreement; and
(e) Executive will pay all of his own travel and
business expenses, subject to reimbursement by the Company.
2. Term. Executive's employment under this Agreement shall commence on
April 1, 2000 and shall continue for a period of five (5) years (the "Employment
Period"), subject to the termination provisions set forth in Section 7. If, at
least ninety (90) days before the expiration of any Employment Period, the
Company gives Executive a written offer to extend the Employment Period for a
subsequent term of at least three (3) years following the end of such Employment
Period on economic terms not less favorable to Executive than those set forth
herein and Executive does not accept such offer in writing within thirty (30)
days after delivery of such offer, then the expiration of such Employment Period
shall constitute termination without Good Reason by Executive for purposes of
this Agreement. If, at least ninety (90) days before the expiration of any
Employment Period, the Company does not give Executive a written offer to extend
the Employment Period for a subsequent term of at least three (3) years
following the end of such Employment Period on economic terms not less favorable
to Executive than those set forth herein, then the expiration of such Employment
Period shall constitute termination by the Company without Cause for purposes of
this Agreement.
3. Board Representation. As of the date hereof, Executive is a member
of Class I of the Board, the term of which runs until the 2002 annual meeting of
stockholders. During the Employment Period, the Company shall recommend
Executive for nomination by the Board for election at the 2002 annual meeting of
stockholders and each subsequent annual meeting of stockholders during the
Employment Period at which his term on the Board would otherwise expire.
4. Compensation.
4.1 Base Salary. During the Employment Period, the Company
will pay Executive a base salary at a rate of $400,000 per annum (the
"Base Salary"), payable in accordance with the Company's normal payroll
practices for executive officers. The Compensation Committee of the
Board ("Compensation Committee") shall perform an annual review of
Executive's Base Salary based on Executive's performance of his duties
and the Company's normal practice for executive salary review; provided
that, in no event shall Executive's Base Salary for any year be less
than $400,000. The first annual review of Executive's Base Salary shall
occur no later than August 31, 2000, and any increase in Base Salary
awarded during that annual review shall be effective July 1, 2000.
Subsequent annual reviews shall be completed within sixty (60) days
after the end of the Company's fiscal year and any increases in Base
Salary shall be effective January 1 and paid retroactive to that date.
4.2 Bonus Payments. During the Employment Period, Executive
shall be eligible to receive an annual bonus ("Bonus Payments"), in an
amount to be determined by the Compensation Committee, in its sole
discretion, based upon Executive's and the Company's performance and
the achievement of goals and objectives approved by the Compensation
Committee. The performance criteria to be used with respect to the
calendar year ending on December 31, 2000 are attached hereto as
Exhibit A (the "2000 Matrix"). The criteria for the Bonus Payments for
which Executive shall be eligible in future years shall be on
substantially the same terms and on no less favorable economic terms
than would be received using the 2000 Matrix. Bonus payments shall be
made to Executive within sixty (60) days after the end of the Company's
fiscal year. Performance criteria for subsequent fiscal years will be
determined on or before the later of the sixtieth day after the end of
the previous fiscal year or thirty days after a reasonable proposal is
presented by management with respect thereto.
4.3 Stock Options. During the Employment Period, Executive
shall be eligible to receive an annual grant of options to purchase the
Company's common stock, in an amount to be determined by the
Compensation Committee, in its sole discretion, based upon Executive's
and the Company's performance and the achievement of goals and
objectives approved by the Compensation Committee. Stock options shall
be awarded to Executive within sixty days after the end of the
Company's fiscal year or prior to the Company's annual earnings
release, whichever occurs first.
4.4 Automobile Allowance. During the Employment Period, the
Company shall provide Executive with a monthly automobile allowance of
$1,600 (the "Automobile Allowance").
4.5 Transaction Bonus. If a Change in Control occurs within
the five (5) year period commencing on the date of this Agreement (the
"Scheduled Term"), the Company (or its successor or assigns) shall pay
to Executive a transaction bonus of $1,500,000, payable in cash within
fifteen (15) business days following the effective date of the Change
in Control, regardless of whether Executive remains employed by the
Company as of such effective date or any time prior thereto. This
provision shall survive any termination of this Agreement.
4.6 Benefits. During the Employment Period, Executive will be
entitled to participate in group life and medical insurance plans,
profit-sharing and similar plans, and other "fringe benefits" which are
currently offered or may be offered in the future by the Company
(collectively, "Benefits"), a summary description of which is attached
hereto as Exhibit B, comparable to those made available by the Company
to its other senior executive employees, in accordance with the terms
of such plans. If Executive does not qualify for certain of the
Benefits upon any change in status from employee of the Company to a
consultant thereto, Executive may purchase replacement Benefits, for
which he will be reimbursed by the Company. In no event shall any of
the Benefits made available to Executive when he is engaged by the
Company as a consultant be less favorable than those now enjoyed by
Executive or be diminished in any way.
4.7 Vacation. Executive shall be entitled to take such
vacation as is reasonable, consistent with past practice, provided that
such vacation does not conflict with the Company's interests or
interfere with the performance of Executive's duties hereunder, with
pay.
4.8 Withholding. All compensation payable to Executive under
this Agreement is stated in gross amount and will be subject to all
applicable withholding taxes, other normal payroll deductions, and any
other amounts required by law to be withheld. Subsequent to an
assignment of this Agreement by Executive to a company of which he is a
majority owner (the "Assignee") pursuant to Section 1.3 above, the
Assignee will comply with and be responsible for all applicable
withholding and tax reporting obligations relating to Executive's
compensation under this Agreement.
4.9 Expenses. During the Employment Period, the Company, in
accordance with its policies and past practices, will pay or reimburse
Executive for all expenses (including legal, accounting, travel and
entertainment expenses) reasonably incurred by Executive during the
Employment Period in connection with the performance of Executive's
duties under this Agreement, so long as Executive provides the Company
reasonable documenation or evidence of the expenses for which Executive
seeks reimbursment.
5. Covenant Not to Compete.
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5.1 Executive's Acknowledgment. Executive agrees and
acknowledges that in order to assure the Company that it will retain
its value and that of the Business as a going concern, it is necessary
that Executive undertake not to utilize his special knowledge of the
Business and his relationships with customers and suppliers to compete
with the Company. Executive further acknowledges that:
(a) the Company is currently engaged in the Business;
(b) Executive has occupied a position of trust and confidence with the
Company prior to the date of this Agreement and will continue to
acquire an intimate knowledge of all proprietary and confidential
information concerning the Business;
(c) the agreements and covenants contained in this Section 5 are essential
to protect the Company and the goodwill of the Business;
(d) the Company would be irreparably damaged if Executive were to provide
services to any person or entity in violation of the provisions of this
Agreement;
(e) the scope and duration of the Restrictive Covenants are reasonably
designed to protect a protectible interest of the Company and are not
excessive in light of the circumstances; and
(f) Executive has a means to support himself and his dependents other than
by engaging in the Business, or a business similar to the Business, and
the provisions of this Section 5 will not impair such ability.
5.2 Non-Compete. The "Restricted Period" for purposes of this
Agreement shall commence on the date of this Agreement and shall
continue until the later of April 1, 2005 or the third year anniversary
of the termination of this Agreement; provided that, if Executive's
employment with the Company is terminated by Executive for Good Reason
or by the Company without Cause, or by Executive without Good Reason
after January 1, 2002 or upon a Change in Control, then the payments to
which Executive is entitled under Section 8.1 or 8.2, as the case may
be, shall be paid to Executive in consideration for the survival of the
Restricted Period beyond the Effective Date. Executive hereby agrees
that at all times during the Restricted Period, Executive shall not,
directly or indirectly, as executive, agent, consultant, stockholder,
director, co-partner or in any other individual or representative
capacity, own, operate, manage, control, engage in, invest in or
participate in any manner in, act as a consultant or advisor to, render
services for (alone or in association with any person, firm,
corporation or entity), or otherwise assist any person or entity that
engages in or owns, invests in, operates, manages or controls any
venture or enterprise that directly or indirectly engages or proposes
to engage in the Business anywhere within the United States and Canada
(the "Territory").
5.3 Non-Solicitation. Without limiting the generality of the
provisions of Section 5.2 above, Executive hereby agrees that, during
the Restricted Period, Executive will not, directly or indirectly,
solicit, or participate as executive, agent, consultant, stockholder,
director, partner or in any other individual or representative capacity
in any business which solicits, business from any Person which is or
was a customer or vendor of the Business during the Restricted Period,
or from any successor in interest to any such Person for the purpose of
marketing, selling or providing any such Person any services or
products offered by or available from the Company, or encouraging any
such Person to terminate or otherwise alter his, her or its
relationship with the Company.
5.4 Interference with Employee Relationships. During the
Restricted Period, Executive shall not, directly or indirectly, as
executive, agent, consultant, stockholder, director, co-partner or in
any other individual or representative capacity, without the prior
written consent of the Company, recruit or solicit for employment or
engagement, any individual who is employed or engaged by the Company at
that time, or has been employed or engaged by the Company during the
six (6) months prior thereto, or otherwise seek to influence or alter
any such individual's relationship with the Company.
5.5 Blue-Pencil. If any court of competent jurisdiction shall
at any time deem the term of this Agreement or any particular
Restrictive Covenant too lengthy or the Territory too extensive, the
other provisions of this Section 5 shall nevertheless stand, and the
Restricted Period shall be deemed to be the longest period permissible
by law under the circumstances and the Territory shall be deemed to
comprise the largest territory permissible by law under the
circumstances. The court in each case shall reduce the Restricted
Period and/or the Territory to permissible duration or size.
5.6 Investment Exception. Notwithstanding the foregoing,
nothing contained in this Section 5 shall be construed to prevent
Executive from investing in the stock of any competing corporation
listed on a national securities exchange or traded in the
over-the-counter market, but only if Executive is not involved in the
business of said corporation and if Executive and his associates (as
such term is defined in Regulation 14(A) promulgated under the
Securities Exchange Act of 1934, as in effect on the date hereof),
collectively, do not own more than an aggregate of two percent (2%) of
the stock of such corporation.
6. Confidential Information. During the term of this Agreement and
thereafter, Executive shall keep secret and retain in strictest confidence, and
shall not, without the prior written consent of the Company, furnish, make
available or disclose to any Person or use for the benefit of himself or any
Person, any Confidential Information, except to the extent reasonably necessary
to carry out Executive's duties and responsibilities to the Company or to the
extent required by law or to comply with the lawful subpoena of any
administrative or governmental body, in which case Executive shall give prompt
notice of such subpoena to Company. As used in this Section 6, "Confidential
Information" shall mean any information relating to the Business or affairs of
the Company, including but not limited to information relating to financial
statements, business plans, forecasts, purchasing plans, customer identities,
potential customers, employees, suppliers, equipment, programs, strategies and
information, analyses, profit margins or other proprietary information used by
the Company in connection with the Business of the Company; provided, however,
that Confidential Information shall not include any information which is in the
public domain or becomes known in the industry through no wrongful act on the
part of Executive. Executive acknowledges that the Confidential Information is
vital, sensitive, confidential and proprietary to the Company.
7. Termination.
7.1 Without Cause. The Company may terminate Executive's
employment hereunder at any time, without Cause (as defined in Section
9), upon not less than ninety (90) days written notice to Executive.
Upon notice of such termination from the Company, the Company may (i)
require Executive to continue to perform his duties hereunder on the
Company's behalf during such notice period, (ii) limit or impose
reasonable restrictions on Executive's activities during such notice
period as it deems necessary, or (iii) choose any date within the
notice period as the effective date of Executive's termination,
provided, however, that the Company will continue to pay Executive's
Base Salary during such notice period.
7.2 For Cause. The Company may terminate Executive's
employment hereunder at any time for Cause by providing to Executive
written notice of termination stating the grounds for termination for
Cause and such termination shall take effect immediately upon notice of
termination. The decision to terminate Executive's employment for
Cause, to take other action or to take no action in response to such
occurrence shall be in the sole and exclusive discretion of the Board.
7.3 By Executive. Executive may terminate his employment
hereunder at any time, with or without Good Reason (as defined in
Section 9), upon not less than ninety (90) days notice (thirty (30)
days notice if Executive terminates following a Change in Control) to
the Company. Upon notice of such termination from Executive, the
Company may (i) require Executive to continue to perform his duties
hereunder on the Company's behalf during such notice period, (ii) limit
or impose reasonable restrictions on Executive's activities during such
notice period as it deems necessary, or (iii) accept Executive's notice
of termination as Executive's resignation from the Company (including a
resignation from any position as director of the Company) at any time
during such notice period. If the Company at any time during the notice
period chooses to accept Executive's notice of termination as
Executive's resignation from the Company, then the effective date of
such termination shall be the date as of which such resignation is
accepted, provided, however, that the Company will continue to pay
Executive's Base Salary during such notice period.
7.4 Death or Disability. The Employment Period will terminate
immediately upon the death or Disability of Executive.
7.5 Salary and Benefit Accruals. Following the effective date
of termination by Executive without Good Reason or by the Company for
Cause, Executive will not be entitled to receive any further
compensation (whether in the form of Base Salary, Bonus Payments, or
Benefits or otherwise) other than those payments set forth in Section
8.2 below and accrued but unpaid Base Salary, through the Effective
Date. Upon termination by the Company without Cause, termination by
Executive for Good Reason, death or Disability, Executive (or his
estate) will be entitled to receive (i) all accrued but unpaid Base
Salary through the Effective Date, (ii) Bonus Payment for the year in
which such termination occurs, determined by multiplying the prior
year's Bonus Payment by a fraction equal to the number of days elapsed
in the current year through the effective date of termination (the
"Effective Date") divided by 365, and (iii) any amounts payable
pursuant to Section 8.1 below, but all other obligations of the Company
to pay Executive any further compensation, whether in the form of Base
Salary, Bonus Payments, or Benefits (other than death and Disability
benefits, if any) or otherwise, will terminate.
8. Additional Obligations Upon Termination.
8.1 Termination Without Cause. If Executive's employment with
the Company is terminated at any time during the Employment Period (i)
by the Company without Cause, or (ii) by Executive for Good Reason, or
(iii) due to the death or Disability of Executive, then in addition to
the amounts payable in accordance with Section 7.5 above, and in
consideration for the Restrictive Covenants, the Company shall pay and
provide to Executive the following:
(a) Within thirty (30) days after the Effective Date,
the Company shall pay to Executive or his estate, a lump sum
cash payment, in an amount equal to the Termination Payment;
(b) for the remainder of the Scheduled Term,
Executive shall continue to receive from the Company the
Automobile Allowance set forth in Section 4.4 above;
(c) until such time as either Executive or his spouse
reaches the age of 65, Executive and his dependents shall
continue to be covered by all survivor rights, insurance and
Benefit programs in type and amount at least equivalent to
those provided to him and his dependents by the Company
immediately prior to the Effective Date;
(d) any stock options then held by Executive or his
permitted assignees shall immediately vest as of the Effective
Date; and
(e) the Company, at its sole expense, shall provide
Executive with outplacement services consistent with those
services customarily provided by the Company to its senior
executive employees.
8.2 Termination by Executive.
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(a) If, in the absence of a Change in Control,
Executive terminates without Good Reason after January 1,
2002, then, in consideration for the survival of the
Restricted Period beyond the Effective Date, in addition to
the amounts payable in accordance with Section 7.5 above, the
Company shall pay and provide to Executive: (i) an annual
amount during the balance of the Scheduled Term equal to
one-half of Executive's highest total compensation (consisting
of Base Salary and Bonus Payment) in any of the five (5) years
prior to the year in which the Effective Date occurs, payable
in accordance with the Company's normal payroll practices, and
(ii) all Benefits specified under Sections 8.1(b) and (c)
above.
(b) If, after the twelve (12) month period following
a Change in Control, Executive terminates his employment with
the Company without Good Reason, then in addition to the
amounts payable in accordance with Section 7.5 above, within
five (5) business days after the Effective Date, the Company
shall pay and provide to Executive: (i) a lump sum cash
payment, in an amount equal to (x) one-half of Executive's
highest total compensation (consisting of Base Salary and
Bonus Payment) in any of the five (5) years prior to the year
in which the Effective Date occurs, multiplied by (y) the
number of years remaining in the Scheduled Term, and (ii) all
Benefits specified under Sections 8.1(b), 8.1(c), 8.1(d) and
8.1(e) above.
8.3 No Mitigation. Executive shall not be required to mitigate
damages or the amount of any payment provided for or referred to in
this Section 8 by seeking other employment or otherwise, nor shall the
amount of any payment provided for or referred to in this Section 8 be
reduced by any compensation earned by the Executive as the result of
employment by another employer after the termination of the Executive's
employment, or otherwise.
8.4 Release. As a condition to Executive's right to receive
any severance payments and Benefits made hereto in this Section 8, the
Company shall require that (i) Executive execute and deliver to the
Company a general release, whereby Executive shall release the Company,
it successor, assigns, officers, directors and agents from any and all
claims, liabilities and obligations relating to or arising out of this
Agreement or any employment-related claims Executive may have after a
Change in Control, including but not limited to claims brought under
the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991,
the Age Discrimination in Employment Act, the Employee Retirement
Income Security Act, the Americans with Disabilities Act, any other
federal, state or local laws regarding employment discrimination or
termination of employment and the common law of any state relating to
employment contracts, wrongful discharge, defamation or any other
matter arising under common law, and (ii) Executive shall not be in
breach of any Restrictive Covenant.
8.5 Termination in Anticipation of a Change in Control. If the
Company terminates Executive's employment without Cause during the
period commencing six (6) months prior to the earlier of (i) public
announcement by the Company of a Change in Control, or (ii) the
execution by the Company of a definitive agreement with regard to a
Change in Control, and ending on (and including) the date of the Change
in Control, such termination shall be regarded as a termination after
such Change in Control for purposes of this Agreement, including
without limitation, for purposes of Sections 4.5 and 8.
9. Definitions. As used in this Agreement:
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"Affiliate" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated association or other
entity (other than the Company) that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company including, without limitation, any member of an affiliated group of
which the Company is a common parent corporation as provided in Section 1504 of
the Code.
"Anixter Family" means ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, their spouses, heirs and any group (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), of which any of the foregoing persons is a member for purposes of
acquiring, holding or disposing of securities of the Company, any trust
established by or for the benefit of any of the foregoing and any other entity
controlled by or for the benefit of any of the foregoing.
"Cause" means (a) an act of fraud or dishonesty by Executive that
results in material gain or personal enrichment of Executive at the Company's
expense, (b) Executive's conviction of a felony-class crime (other than relating
to the operation of a motor vehicle), (c) any material breach by Executive of
any provision of this Agreement that, if curable, has not been cured by
Executive within thirty days of written notice of such breach from the Company,
(d) Executive willfully engaging in gross misconduct materially injurious to the
Company that, if curable, has not been cured by Executive within thirty days of
written notice specifying the alleged willful gross misconduct and material
injury, or (e) any intentional act or gross negligence on the part of Executive
that has a material, detrimental effect on the reputation or Business of the
Company. The decision to terminate Executive's employment for Cause, to take
other action or to take no action in response to such occurrence shall be in the
sole and exclusive discretion of the Board.
"Change in Control" means the happening of any of the following events:
(a) An acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of twenty percent (20%) or more of the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this subsection (a), the following acquisitions shall not
constitute a Change in Control: (A) any acquisition by the Company or
by an employee benefit plan (or related trust) sponsored or maintained
by the Company or an Affiliate, (B) any acquisition by a member or
members of the Anixter Family, (C) any acquisition by a lender to the
Company pursuant to a debt restructuring of the Company, (D) any
acquisition by, or consummation of a Corporate Transaction with an
Affiliate, (E) a Non-Control Transaction, or (F) an acquisition by a
Person of the beneficial ownership of twenty percent (20%) or more, but
less than fifty percent (50%) of the combined voting power of the then
Outstanding Company Voting Securities unless Executive's employment is
terminated by the Company without Cause or by Executive for Good
Reason, within twenty-four (24) months following such acquisition;
(b) A change in the composition of the Board such that the
individuals who, as of the date hereof, constitute the Board (such
Board shall be hereinafter referred to as the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board;
provided, however, for purposes of this Section 9(b), that any
individual who becomes a member of the Board subsequent to the date
hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of those
individuals who are members of the Board and who were also members of
the Incumbent Board (or deemed to be such pursuant to this provision)
shall be considered as though such individual were a member of the
Incumbent Board; but, provided, further, that any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board shall not be so considered as a member of
the Incumbent Board;
(c) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets
of the Company (a "Corporate Transaction"), in each case, unless the
Corporate Transaction is a Non-Control Transaction; or
(d) Approval by stockholders of the Company of a complete
liquidation or dissolution of the Company.
"Disability" will be deemed to have occurred whenever Executive has
suffered physical or mental illness, injury, or infirmity that renders Executive
unable to perform the essential functions of his job with or without reasonable
accommodation.
"Good Reason" means the occurrence of any of the following events,
unless (i) such event occurs with Executive's express prior written consent,
(ii) the event is an isolated, insubstantial or inadvertent action or failure to
act which was not in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by Executive, or (iii) the event occurs in
connection with termination of Executive's employment for Cause, Disability or
death:
(a) the assignment to Executive by the Company of any duties
which are, in any material respect, inconsistent with, a diminution of
or an adverse change in Executive's position, duty, title, office,
responsibility or status with the Company, including without
limitation, any material diminution of Executive's position or
responsibility in the decision or management processes of the Company,
reporting relationships, job description, duties, responsibilities, any
removal of Executive from, or any failure to reelect Executive to, such
position, any failure of Executive to be reelected to the Board of
Directors, or any requirement that Executive travel outside of the
Chicago metropolitan area any greater amount of time than he currently
travels on behalf of the Company;
(b) a reduction by the Company in Executive's rate of Base
Salary during the Employment Period;
(c) any failure to either continue in effect any material
Benefits or to substitute and continue other plans, policies, programs
or arrangements providing Executive with substantially similar
Benefits, or the taking of any action which would substantially and
adversely affect Executive's participation in or materially reduce
Executive's Benefits or compensation;
(d) any failure by any successor or assignee of the Company to
continue this Agreement in full force and effect or any breach of this
Agreement by the Company (or any successor or assignee of the Company),
unless such breach is cured within thirty (30) days of receiving
written notice of the breach from Executive; or
(e) following a Change in Control, the relocation of the
executive offices of the Company to a location that is more than fifty
(50) miles from the executive offices of the Company as of the
effective date of such Change in Control.
"Non-Control Transaction" means a Corporate Transaction as a result of
which the Outstanding Company Voting Securities immediately prior to such
Corporate Transaction would entitle the holders thereof immediately prior to
such Corporate Transaction to exercise, directly or indirectly, more than fifty
percent (50%) of the combined voting power of all of the shares of capital stock
entitled to vote generally in election of directors of the corporation resulting
from such Corporate Transaction immediately after such Corporate Transaction
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries).
"Person" means any individual, corporation, trust, proprietorship,
association, governmental body, agency or subdivision or other entity.
"Termination Payment" means an amount equal to (i) two-thirds of
Executive's highest total compensation (consisting of Base Salary and Bonus
Payment) in any of the five (5) years prior to the year in which the Effective
Date occurs, multiplied by (ii) the number of years or portions thereof
remaining in the Scheduled Term.
10. Remedies. Executive acknowledges and agrees that the covenants set
forth in Sections 5 and 6 of this Agreement (collectively, the "Restrictive
Covenants") are reasonable and necessary for the protection of the Company's
business interests, that irreparable injury will result to the Company if
Executive breaches any of the terms of the Restrictive Covenants, and that in
the event of Executive's actual or threatened breach of any such Restrictive
Covenants, the Company will have no adequate remedy at law. Executive
accordingly agrees that in the event of any actual or threatened breach by him
of any of the Restrictive Covenants, the Company shall be entitled to immediate
temporary injunctive and other equitable relief, without bond and without the
necessity of showing actual monetary damages, subject to hearing as soon
thereafter as possible. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other remedies available to it for
such breach or threatened breach, including the recovery of any damages which it
is able to prove.
11. Miscellaneous.
-------------
11.1 Notices. All notices and other communication between the
parties pursuant to this Agreement must be in writing and will be
deemed given when delivered in person, one (1) business day after being
dispatched by a nationally recognized overnight courier service, three
(3) business days after being deposited in the U.S. Mail, registered or
certified mail, return receipt requested, or when sent by facsimile
(with receipt acknowledged and a copy sent for next day delivery by a
nationally recognized overnight courier service), to the Company at the
address or facsimile number of its principal office in the Chicago,
Illinois metropolitan area and to Executive (or his representatives) at
his address or facsimile as shown on the Company's records. Executive
(or his representatives) may change his address or facsimile number for
notice purposes by delivering notice to the Company in accordance with
this Section 11.1. All notices sent to the Company shall also be
delivered to ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.,
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇.
11.2 Governing Law. This Agreement will be subject to and
governed by the laws of the State of Illinois, without regard to
principles of conflicts of laws.
11.3 Binding Effect. This Agreement will be binding upon and
inure to the benefit of the parties and their respective heirs, legal
representatives, executors, administrators, successors, and assigns,
subject to the limitations on assignment in Section 11.8.
11.4 Entire Agreement. This Agreement constitutes the entire
Agreement between the parties with respect to the subject matter of
this Agreement and supersedes any other agreements, whether oral or
written, between the parties with respect to the subject matter of this
Agreement, except as otherwise provided in that certain letter
agreement of even date between the Company and Executive regarding
post-employment medical benefits, a copy of which is attached hereto as
Exhibit C.
11.5 Modification. No change or modification of this Agreement
will be valid unless it is in writing and signed by both of the
parties. No waiver of any provision of this Agreement will be valid
unless in writing and signed by the person or party to be charged.
11.6 Severability. If any provision of this Agreement is, for
any reason, invalid or unenforceable, the remaining provisions of this
Agreement will nevertheless be valid and enforceable and will remain in
full force and effect. Any provision of this Agreement that is held
invalid or unenforceable by a court of competent jurisdiction will be
deemed modified to the extent necessary to make it valid and
enforceable and as so modified will remain in full force and effect.
11.7 Headings. The headings in this Agreement are inserted for
convenience only and are not to be considered in the interpretation of
construction of the provisions of this Agreement.
11.8 Assignability. This Agreement may not be assigned by
either party without the prior written consent of the other party,
except that (i) the Company may assign its rights to, and cause its
obligations under this Agreement to be assumed by, any person or entity
to whom or to which the Company simultaneously transfers by sale,
merger, or otherwise all or substantially all of its assets and (ii)
Executive may assign this Agreement in accordance with Section 1.3 of
this Agreement.
11.9 No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by Executive and the
Company to express their mutual intent, and no rule of strict
construction will be applied against Executive or the Company.
11.10 Arbitration. Except for any claim or dispute which gives
rise or could give rise to equitable relief under this Agreement, at
the request of Executive, or the Company, any disagreement, dispute,
controversy or claim arising out of or relating to this Agreement or
the breach hereof shall be settled exclusively and finally by
arbitration. The arbitration shall be conducted in accordance with such
rules and before such arbitrator as the parties shall agree and if they
fail to so agree within fifteen (15) days after demand for arbitration,
such arbitration shall be conducted in accordance with the Federal
Arbitration Act and the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association which are then in
effect (hereinafter referred to as "AAA Rules"). Such arbitration shall
be conducted in Chicago, Illinois, or in such other city as the parties
to the dispute may designate by mutual consent. The arbitral tribunal
shall consist of three arbitrators (or such lesser number as may be
agreed upon by the parties) selected according to the procedure set
forth in the AAA Rules in effect on the date hereof and the arbitrators
shall be empowered to order any remedy which is appropriate to the
proceedings and issues presented to them. Any party to a decision
rendered in such arbitration proceedings may seek an order enforcing
the same by any court having jurisdiction.
11.11 Legal Expenses. If Executive takes legal action to
enforce the Company's obligations under this Agreement and Executive
prevails in such action to any significant extent, the Company shall
reimburse Executive for all reasonable expenses (including reasonable
attorney's fees) actually incurred by Executive in such action.
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Executive Employment Agreement as of the date first above written.
ANICOM, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, President
EXECUTIVE:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
1099662v3
EXHIBIT C
March 29, 2000
▇▇▇▇▇ ▇▇▇▇▇▇▇, Chairman
Anicom, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Post-Employment Medical Benefits
Dear ▇▇▇▇▇:
Anicom, Inc. (the "Company") is grateful to you for your many long years of
excellent and distinguished leadership. In consideration of and recognition for
these past services and your continuing contribution to the Company pursuant to
the terms of that Amended and Restated Executive Employment Agreement between
you and the Company dated as of March __, 2000 (the "Employment Agreement"), the
Company has agreed to provide to you, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and your dependent children
under the age of twenty-six (▇▇▇▇▇ and the children collectively referred to
herein as the "Covered Persons") post-employment medical benefits in
satisfaction of the Company's obligations under Sections 4.6 and 8.1(c) of the
Employment Agreement.
1. You and the Covered Persons will continue to be covered, with coverage
equivalent to the coverage you and the Covered Persons have as of the
date hereof, under the Company's existing group medical benefit plan
(including vision and dental benefits subject to limits then in effect
for the Company's active employees) for active employees (collectively,
the "Plan") until the date you cease to be eligible for such coverage
under the terms of the Plan. When you cease to be eligible under the
Plan, you may be eligible for health benefit continuation coverage
under the Plan pursuant to Federal law ("COBRA") under the same terms
and conditions that apply to other COBRA-eligible individuals. If so,
you agree to elect to receive such COBRA coverage. This generally would
provide you with 18 months of coverage under the Plan. The Company will
be responsible for paying any required premium for coverage.
2. Upon the date your (and the Covered Person's) coverage under the
preceding paragraph has expired, you and the Covered Persons will be
eligible for Company-provided retiree medical benefits (including
vision and dental benefits subject to limits then in effect for the
Company's active employees) (the "Benefits"), subject to the following
terms and conditions:
(i) You will receive reimbursement from the Company for physician,
hospitalization and prescription drug expenses ("Expenses")
incurred by you and the Covered Persons which are not
otherwise reimbursable or payable by another payor, including
but not limited to, another employer's group health plan,
Medicare, or first or third party insurance (such as an
automobile insurance policy). Notwithstanding the foregoing,
you will not be required to seek any other insurance or
reimbursement or otherwise take any action to mitigate the
costs to the Company of providing the Benefits set forth in
this letter.
(ii) Reimbursement by the Company of Expenses may be subject to a
calendar year deductible in an amount not to exceed $1,000,
which amount will apply to Expenses incurred by you and/or the
Covered Persons in the aggregate.
(iii) You and ▇▇▇▇▇ will take all necessary steps to obtain coverage
under Medicare Parts A and B when you are first eligible for
such coverages and you will seek reimbursement on a primary
basis under such programs. You will give the Company
subrogation rights to the extent of Expenses reimbursed by the
Company in connection with an injury or accident.
(iv) The terms of this letter supersede any other obligation of the
Company with respect to post-employment medical benefits for
you and the Covered Persons.
(v) All reimbursements made will be treated by the Company as
taxable payments to you and the Covered Persons, and the
Company will report such payments on an IRS Form 1099.
Notwithstanding the foregoing, to the extent you are not
employed by the Company or otherwise fully covered by any of
the Company's health insurance programs, the Company will
provide the Benefits to you and the Covered Persons pursuant
to one or more health insurance policies to the extent such
coverage is available with respect to you and the Covered
Persons, and otherwise the Company will cooperate with you to
minimize the tax consequences to you and the Covered Persons
of the Benefits hereunder provided, however, in no event shall
the Company's reimbursements to any Covered Person exceed one
million dollars ($1,000,000) (a) prior to a Change in Control
or (b) if you are a Consultant pursuant to section 1.3 of the
Employment Agreement at the time a Change in Control occurs.
(vi) In no event shall the Benefits provided by this Agreement be
less favorable than those enjoyed by you and the Covered
Persons as of the date hereof.
3. Once you have signed the duplicate copy of this letter, this letter
will constitute an Agreement binding on the Company and any successors
or assigns of the Company, including, without limitation, any successor
corporation following any Change in Control of the Company (as defined
in the Employment Agreement).
4. In the event you desire to pursue a claim relating to this Agreement,
it shall be settled exclusively by arbitration in Chicago, Illinois by
at least two but not more than three arbitrators in accordance with the
rules of the American Arbitration Association in effect at the time of
submission of the arbitration. Judgment may be entered on he
arbitrator's award in any court having jurisdiction. If you prevail in
such arbitration to any significant extent, you will be entitled to
reimbursement of your reasonable legal costs and expenses incurred in
pursuing and enforcing your claim plus interest on all past due claims
at the prime rate of interest plus 2% as published from time to time in
the Midwest edition of The Wall Street Journal.
5. Except as otherwise set forth above, the Employment Agreement remains
in full force and effect.
6. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
If you agree to the aforementioned terms and conditions, please signify your
consent by executing the extra copy of this letter and returning it to me.
ANICOM, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇, President and
Chief Executive Officer
Agreed to and accepted this __day of March, 2000:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
