EXHIBIT 10.11 - AGREEMENT RELATING TO EMPLOYMENT
Agreement Relating to Employment in the form of the attached entered into with
the following Employee as of the date indicated:
X.X. Xxxxxxx August 14, 1995
-27-
Date
Name
Address
RE: Agreement Relating To Employment
Dear Mr. __________:
XXXX INDUSTRIES, INC, (the "Company") considers it in the best interests
of its stockholders to xxxxxx the continuous employment of key management
personnel. In this connection, the Board of Directors of the Company (the
"Board") recognizes that, the possibility of a change in control may exist and
that such possibility, and the uncertainty and questions which it may arise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders.
Therefore, in order to induce you to remain in the employment of the
Company, the Company agrees that you shall receive the severance benefits set
forth in this letter agreement ("Agreement") in the event your employment with
the Company is terminated subsequent to a "change in control of the Company"
(as defined in Section 2 hereof) under the circumstances described below.
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof
and shall continue in effect through December 31, 1995; and each January 1,
thereafter, the term of this Agreement shall automatically be extended for one
additional year, provided, if a change in control of the Company shall have
occurred during the original or extended term of this Agreement, this
Agreement shall continue in effect for a period of thirty-six (36) months
beyond the month in which such change in control occurred.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless
there shall have been a change in control of the Company, as set forth below.
For purposes of this Agreement, a "change in control of the Company" shall be
deemed to have occurred if:
(a) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended [the "Exchange
Act"], other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company,
or any Company owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their
ownership of stock of the Company) becomes the "beneficial owner"
(as defined in Rule 13d-3 promulgated under the Exchange
-28-
Mr. __________
Date
-2-
Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the
Company's then outstanding securities;
(b) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new
director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction
described in clauses (a), (c) or (d) of this Section) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote at least two-thirds of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved cease for any reason to
constitute a majority thereof;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other Company, other than (1) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of
the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger
or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than 50% of the combined voting power of the
Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all of substantially all of the
Company's assets.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. If any of the events
described in Section 2 hereof constituting a change in control of the Company
shall have occurred, you shall be entitled to the benefits provided in
Subsection 4(iv) hereof upon the subsequent termination of your employment
during the term of this Agreement unless such termination is (a) because of
your death, Disability or Retirement, (b) by the Company for Cause, or (c) by
you other than for Good Reason.
-29-
Mr. __________
Date
-3-
(i) DISABILITY; RETIREMENT. If, as a result of your incapacity
due to physical or mental illness, you shall have been absent
from the full-time performance of your duties with the Company
for six (6) consecutive months, and within thirty (30) days
after written notice of termination is given you shall have
not returned to the full-time performance of your duties, your
employment may be terminated for "Disability". Termination by
the Company or you of your employment based on "Retirement"
shall mean termination in accordance with the Company's
retirement policy at normal retirement age generally
applicable to its salaried employees or in accordance with any
retirement arrangement established with your consent with
respect to you.
(ii) CAUSE. Termination by the Company of your employment for
"Cause" shall mean termination upon (a) the willful and
continued failure by you to substantially perform your duties
with the Company (other than any such failure resulting from
your incapacity due to physical or mental illness or any such
actual or anticipated failure after the issuance of a Notice
of Termination, as defined in Subsection 3(iv), by you for
Good Reason) after a written demand for substantial
performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes
that you have not substantially performed your duties, or (b)
the willful engaging by you in conduct which is demonstrably
and materially injurious to the Company, monetarily or
otherwise. For purposes (of this Subsection, no act, or
failure to act, on your part shall be deemed "willful" unless
done, or omitted to be done, by you not in good faith and
without reasonable belief that your action or omission was in
the best interest of the Company. You may be terminated for
Cause only after there shall have been delivered to you a copy
of a resolution duly adopted by the affirmative vote of not
less then two thirds (2/3) of the entire membership of the
Board at a meeting of the Board called and held for such
purpose (after reasonable notice to you and an opportunity for
you, together with your counsel, to be heard before the
Board), finding that in the good faith opinion of the Board
you were guilty of conduct set forth above in clauses (a) or
(b) of the first sentence of this Subsection and specifying
the particulars thereof in detail.
-30-
Mr. __________
Date
-4-
(iii) GOOD REASON. You shall be entitled to terminate your employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, any of the following:
(a) a substantial adverse alteration in the nature or status of
your responsibilities from those in effect immediately prior
to a change in control of the Company other than any such
alteration primarily attributable to the fact that the Company
may no longer be a public company;
(b) a reduction by the Company in your annual base salary as in
effect on the date hereof or as the same may be increased from
time to time;
(c) the failure of the Company, without your consent, to pay to
you any portion of your current compensation, or to pay to you
any portion of an installment of deferred compensation under
any deferred compensation program of the Company, within seven
(7) days of the date such compensation is due;
(d) the failure by the Company to continue in effect any
compensation plan in which you participate including but not
limited to the Company's Incentive Compensation Plan and the
Company's Stock Option Plan, or any substitute plans adopted
prior to the change in control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan in connection
with the change in control of the Company, or
the failure by the Company to continue your participation
therein on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at
the time of the change in control;
(e) the failure by the Company to continue to provide you with
benefits substantially similar to those enjoyed by you under
any of the Company's pension, life insurance, medical, health
and accident, or disability plans in which you were
participating at the time of a change in control of the
Company, the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits
or deprive you of any material fringe benefits enjoyed by you
at the time of the change in control of the Company, or the
failure by the Company to provide you with the number of paid
vacation days to which you are entitled on the basis of years
of service with the Company in accordance with the Company's
normal vacation policy in effect at the time of the change in
control;
-31-
Mr. __________
Date
-5-
(f) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this
Agreement, as contemplated in Section 5 hereof; or
(g) any purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (iv) below (and, if applicable, the
requirements of Subsection (ii) above); for purposes of this
Agreement, no such purported termination shall be effective.
(h) a determination by you in good faith that, following a change
in control, you are no longer able to perform your duties and
responsibilities with the Company.
Your right to terminate your employment pursuant to this Subsection shall be
affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(iv) NOTICE OF TERMINATION. Any purported termination of your
employment by the Company or by you shall be communicated by
written Notice of Termination to the other party hereto in
accordance with Section 6 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so
indicated.
(v) DATE OF TERMINATION, ETC. "Date of Termination" shall mean
(a) if your employment is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided that
you shall not have returned to the full-time performance of
your duties during such thirty (30) day period), and (b) if
your employment is terminated pursuant to Subsection (ii) and
(iii) above or for any other reason (other than Disability),
the date specified in the Notice of Termination which, in the
case of a termination pursuant to Subsection (ii) above shall
not be less than thirty (30) days, and in the case of a
termination pursuant to Subsection (iii) above shall not be
less than thirty (30) nor more than sixty (60) days,
respectively, from the date such Notice of Termination is
given); provided that if within thirty (30) days after any
Notice of Termination is given the party receiving such Notice
of Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be
the date on which the dispute is finally determined, either by
-32-
Mr. __________
Date
-6-
mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of
a court of competent jurisdiction (which is not appealable or
the time for appeal therefrom having expired and no appeal
having been perfected); provided further that the Date of
Termination shall be extended by a notice of dispute only if
such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute,
the Company will continue to pay you your full compensation in
effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary) and continue you
as a participant in all compensation, benefit and insurance
plans in which you were participating when the notice giving
rise to the dispute was given, until the dispute is finally
resolved in accordance with this Subsection. Amounts paid
under this Subsection are in addition to all other amounts due
under this Agreement and shall not be offset against or reduce
any other amounts due under this Agreement except to the
extent otherwise provided in paragraph (c) of Subsection
4(iv).
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY. Following a
change in Control of the Company, as defined by Section 2, upon
termination of your employment or during a period of disability you
shall be entitled to the following benefits:
(i) During any period that you fail to perform your full-time
duties with the Company as a result of incapacity due to
physical or mental illness, you shall continue to receive your
base salary at the rate in effect at the commencement of any
such period, together with all compensation payable to you
under the Company's long-term disability insurance program or
other [plan during such period, until this Agreement is
terminated pursuant to Section 3(i) hereof. Thereafter, your
benefits shall be determined in accordance with the Company's
insurance and retirement programs then in effect.
(ii) If your employment shall be terminated by the Company for
Cause or by you other than for Good Reason, Disability, death
or Retirement, the Company shall pay you your full base salary
through the Date of Termination at the rate in effect at the
time Notice of Termination is given, plus all other amounts to
which you are entitled under any compensation plan of the
Company at the time such payments are due, and the Company
shall have no further obligations to you under this Agreement.
-33-
Mr. __________
Date
-7-
(iii) if your employment shall be terminated by you for Retirement,
or by reason of your death, your benefits shall be determined
in accordance with the Company's retirement and insurance
programs then in effect.
(iv) If your employment by the Company shall be terminated (a) by
the Company other than for Cause or Disability or (b) by you
for Good Reason or Retirement, then you shall be entitled to
the benefits provided below:
(A) the Company shall pay you your full base salary through
the Date of Termination at the rate in effect at the time
Notice of Termination is given, plus other amounts to
which you are entitled under any compensation plan of the
Company, at the time such payments are due except as
otherwise provided below;
(B) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall
pay as severance pay to you a lump sum severance payment
(together with payments provided in paragraphs C, D, and E
below, the "Severance Payment") equal to 300% of the
greater of (i,) your annual base salary in effect on the
Date of Termination or (ii) your annual base salary in
effect immediately prior to the change in control of the
Company and 300% of the average of the annual bonus paid
to you for the three full fiscal years preceding the
termination.
(C) If any of the Severance Payments will be subject to the
tax (the "Excise Tax") imposed by section 4999 of the
Internal Revenue Code, (or any similar tax that may
hereafter be imposed) the Company shall pay to you at the
time specified in Subsection (D), below, an additional
amount (the "Gross-Up Payment") such that the net amount
retained by you, after deduction of any Excise Tax on the
Total Payments (as hereinafter defined) and any federal,
state and local income tax and Excise Tax upon the payment
provided for by this subsection, shall be equal to the
Total Severance Payments. For purposes of determining
whether any of the Severance Payments will be subject to
the Excise Tax and the amount of such Excise Tax, (a) any
other payments or benefits received or to be received by
you in connection with a change in control of the Company
or your termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions
result in a change in control of the Company or any person
-34-
Mr. __________
Date
-8-
affiliated with the Company or such person) (which
together with the Severance Payments, constitute the
"Total Payments") shall be treated as "parachute payments"
within the meaning of section 28OG(b)(2) of the Code, and
all "excess parachute payments" within the meaning of
section 28OG(b)(1) shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel selected
by the Company's independent auditors and acceptable to
you such other payments or benefits(in whole or in part)
do not constitute parachute payments, or such excess
parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered
within the meaning of section 28OG(b)(4) of the Code in
excess of the base amount within the meaning of section
28OG(b)(3) of the Code, or are otherwise not subject to
the Excise Tax, (b) the amount of the Total Payments which
shall be treated as subject to the Excise Tax shall be
equal to the lesser of (1) the total amount of the Total
Payments of (2) the amount of excess parachute payments
within the meaning of section 28OG(b)(1) (after applying
clause (q) above, and (c) the value of any non-cash
benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in
accordance with the principles of section 28OG(d)(3) and
(4) of the Code. For purposes of determining the amount of
the Gross-Up Payment, you shall be deemed to pay federal
income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and
locality of your residence on the Date of Termination, net
of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local
taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account
hereunder at the time of termination of your employment,
you shall repay to the Company at the time that the amount
of such reduction in Excise Tax is finally determined the
portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state and
local income tax imposed on the Gross-Up Payment being
repaid by you if such repayment results in a reduction in
Excise Tax and/or a federal and state and local income tax
deduction) plus interest on the amount of such repayment
at the rate provided in section 1274(b)(2)(B) of the Code.
In the event that the Excise Tax is determined to exceed
the amount taken into account hereunder at the time of the
-35-
Mr. __________
Date
-9-
termination of your employment (including by reason of any
payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the
Company shall make an additional gross-up payment in
respect of such excess (plus any interest payable with
respect to such excess) at the time that the amount of
such excess is finally determined.
(D) The payment provided for in paragraph (B), above, shall be
made not later than the fifth day following the Date of
Termination, provided, however, that if the amounts of
such payments, and the limitation on such payments set
forth in paragraph (C), above, cannot be finally
determined on or before such day, the Company shall pay to
you on such day an estimate, as determined in good faith
by the Company, of the minimum amount of such payments and
shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of
the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth day after the
Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute
a loan by the Company to you, payable on the fifth day
after demand by the Company (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Code).
(E) The Company shall also pay to you all legal fees and
expenses incurred by you as a result of such termination
(including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking
to obtain or enforce early right or benefit provided by
this Agreement).
(v) If your employment shall be terminated (a) by the Company
other than for Cause, Retirement or Disability or (b) by you
for Good Reason, then for a twenty-four (24) month period
after such termination, the Company shall arrange to provide
you with life, disability, accident and health insurance
benefits substantially similar to those which you are
receiving immediately prior to the Notice of Termination.
(vi) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other
employment or otherwise, nor shall the amount of any payment
or benefit provided for in this Section 4 be reduced by any
compensation earned by you as the result of employment by
another employer, by retirement benefits, by offset against
-36-
Mr. __________
Date
-10-
any amount claimed to be owing by you to the Company, or
otherwise.
(vii) In addition to all other amounts payable to you under this
Section 4, you shall be entitled to receive all benefits
payable to you under the Company's retirement programs.
5. SUCCESSORS; BINDING AGREEMENT
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the
Company to expressly assume and agree to 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. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall
entitle you to compensation from the Company in the same
amount and on the same terms as you would be entitled
hereunder if you terminate your employment for Good Reason
following a change in control of the Company, except for
purposes of implementing the foregoing, the date on which any
succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees
to perform this Agreement by operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued
to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement
to your devisee, legatee or other designee or, if there is no
such designee, to your estate.
6. PRIOR AGREEMENT. This Agreement is in full and complete substitution
for any prior employment agreement including, if applicable, the certain
Employment Agreement dated December 1, 1981 and the certain agreement dated
October 20, 1988.
7. NOTICE. 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 United States
registered mail, return receipt requested, postage prepaid, addressed to the
-37-
Mr. __________
Date
-11-
respective addresses set forth on the first page of this Agreement, provided
that all notice to the Company shall be directed to the attention of the Board
with a copy to the Secretary 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
receipt.
8. 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 you and such officer as may be specifically designated
by the Board. 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 expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the Commonwealth of Pennsylvania. All reference 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. The obligations of the Company under Section 4 shall survive the
expiration of the term of this Agreement.
9. VALIDITY. The invalidity or unenforceability of any provision 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.
10. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Erie, Pennsylvania in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction; provided, however, that you shall be
entitled to seek specific performance of your right to be paid until the Date
of Termination during the pendency of any dispute or controversy arising under
or in connection with this Agreement.
Upon your acceptance of the terms set forth in this letter by signing and
returning a copy to the Secretary of the Company, this letter will then
constitute an agreement of the Company.
-38-
Mr. __________
Date
-12-
Very truly yours,
Chairman, Management Development and
Compensation Committee of the Board of
Directors
AGREED TO this ________________ day
of ____________________ 1995
____________________________________________________
SIGNATURE
-39-
