Exhibit 10.39
CHANGE IN CONTROL AGREEMENT
AGREEMENT dated as of May 25, 2000 by and between Xxxxxxxxxx.xxx, Inc.,
a Delaware corporation, and Xxxxxx Xxxxxxxxx (the "Executive").
WHEREAS, the Company (as defined herein) considers it essential to the
best interests of its stockholders to xxxxxx the continuous employment of key
management personnel; and
WHEREAS, the Company has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of the
Executive to his assigned duties with the Company without distraction in the
face of potentially disturbing circumstances arising from the possibility of a
Change in Control (as defined herein);
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and for other valuable consideration, the Company
and the Executive hereby agree as follows:
1. DEFINED TERMS. The definitions of certain capitalized terms used in
this Agreement are provided in the last section hereof.
2. PAYMENTS AFTER CHANGE IN CONTROL.
2.1 Upon the closing of a Change in Control on or prior to December 31,
2000, (i) the Executive's employment shall be terminated and (ii) the Company
shall pay the Executive in a single lump sum an amount equal to the Base Salary
(as in effect on the Date of Termination) that would be paid to the Executive
for a period of twenty-four (24) months if the Executive were still employed by
the Company during such period, together with all compensation and benefits
payable to the Executive through the Date of Termination under the terms of any
compensation or benefit plan, program or arrangement maintained by the Company.
2.2 For a twenty-four (24) month period after a Change in Control on or
prior to December 31, 2000, the Company, at its cost, shall continue to provide,
or arrange to provide, the Executive and his dependents with such insurance
(including, without limitation, the $3,000,000 term life insurance policy),
health and other fringe benefits (such as payment or reimbursement for gasoline
and cellular phone expenses) as were provided to the Executive immediately prior
to the Date of Termination (or substantially comparable benefits if a
continuation of benefits is not permitted under then existing insurance, health
or other benefit programs of the Company), such benefits to be provided to the
same extent and under the same terms and conditions as if the Executive were
still employed by the Company during such period. Any
medical benefits coverage provided pursuant to the immediately preceding
sentence is not intended to qualify as health insurance continuation coverage
required pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") and will not be charged against the COBRA continuation period.
Instead, the Executive's, and his or her dependents', opportunity to elect COBRA
continuation at their expense for the entire period otherwise allowed by law as
a result of the Executive's termination of employment will begin at the end of
the benefits continuation.
2.3 Notwithstanding any other provisions of this Agreement, in the
event that any payment or benefit received or to be received by the Executive
pursuant to any of the foregoing subsections of this Section 2 (all such
payments and benefits, the "Total Payments") is determined to be subject, in
whole or part, to Excise Tax (as defined below), then the Executive shall be
entitled to receive on the Date of Termination an additional lump-sum payment (a
"Gross-Up Payment") in an amount such that after payment by the Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including without limitation any income taxes and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount equal to the Total Payments.
All determinations required to be made under this Section 2.3, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by the Company's accountants or such other certified public accounting firm
reasonably acceptable to the Company as may be designated by the Executive,
which shall provide detailed supporting calculations both to the Company and the
Executive. For purposes of this Agreement, the term "Excise Tax" shall mean the
tax imposed by Section 4999 of the Code.
3. NO MITIGATION. The Executive is not required to seek other
employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to Section 2. Further, the amount of any
payment or benefit provided for in Section 2 shall not be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.
4. SUCCESSORS; BINDING AGREEMENT.
4.1 In addition to any obligations imposed by law upon any successor to
the Company, any such 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 shall perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place.
4.2 This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives. If the Executive shall die
while any amount would still be payable to the Executive hereunder (other than
amounts which, by their terms, terminate upon the death of the Executive) if the
Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
Executive's representatives.
5. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by a reputable overnight
delivery company or by United States certified or registered mail, return
receipt requested, postage prepaid, addressed (i) if to the Company, to
Xxxxxxxxxx.xxx, Inc., 00 Xxxxxxxxx Xxxxxx, Xxxxxxxx, XX 00000, Attn: President,
(ii) if to the Executive, to the most current address of the Executive reflected
in the books and records of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon actual receipt.
6. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. Except as expressly provided herein, 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. Other than the
employment offer letter dated August 27, 1999, between the Company and the
Executive (the "Letter Agreement"), 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 expressly set forth in this Agreement.
In the event that the Date of Termination occurs on or prior to December 31,
2000, this Agreement shall supercede the Letter Agreement in its entirety;
otherwise, however, the Letter Agreement shall remain in full force and effect.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the Commonwealth of Massachusetts, and this
Agreement shall be an instrument under seal. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections. Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed.
7. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
"Base Salary" shall mean the annual base salary of Three
Hundred Twenty-Five Thousand Dollars ($325,000) payable by the Company
to the Executive as of the date of this Agreement, such Base Salary
being subject to increase at the discretion of the Board
"Board" shall mean the Board of Directors of the Company.
A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have
been satisfied:
(A) a merger, consolidation or similar transaction in
which securities possessing more than 50% of the total
combined voting power of the Company's outstanding securities
are transferred to a person or persons different from the
persons who held those securities immediately prior to such
transaction;
(B) all or substantially all of the Company's assets
are sold, transferred, or otherwise disposed of to one or more
persons (other than any wholly owned subsidiary of the
Company) in a single transaction or series of related
transactions; or
(C) a change in ownership or control of the Company
effected through any of the following transactions: (i) any
person or related group of persons (other than the Company or
a person that directly or indirectly controls, is controlled
by, or is under common control with the Company) directly or
indirectly acquires beneficial ownership (determined pursuant
to Rule 13d-3 promulgated under the Exchange Act) of
securities possessing more than 50% of the total combined
voting power of the Company's outstanding securities pursuant
to a tender or exchange offer made directly to the Company's
stockholders, or (ii) over a period of 36 consecutive months
or less, there is a change in the composition of the Board
such that a majority of the Board members (rounded up to the
next whole number, if a fraction) ceases, by reason of one or
more proxy contests for the election of Board members, to be
composed of individuals who either (A) have been Board members
continuously since the beginning of such period, or (B) have
been elected or nominated for election as Board members during
such period by at least a majority of the Board members
described in the preceding clause (A) who were still in office
at the time such election or nomination was approved by the
Board.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Company" shall mean Xxxxxxxxxx.xxx, Inc., a Delaware corporation, and
any successor to its business and/or assets which assumes or agrees to perform
this Agreement, by operation of law or otherwise.
"Date of Termination" shall mean the date on which occurs the closing
of any event constituting a Change of Control.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
IN WITNESS WHEREOF, the Company and the Executive have executed and
delivered this Agreement on the date first written above.
XXXXXXXXXX.XXX, INC. EXECUTIVE
By: /s/ Xxxx Xxxx /s/ Xxxxxx Xxxxxxxxx
Xxxx Xxxx Xxxxxx Xxxxxxxxx
Chairman of the
Compensation Committee
