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EXHIBIT 10.36
DT INDUSTRIES, INC.
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (the "Agreement") between DT
INDUSTRIES, INC., a Delaware corporation (hereinafter referred to as the
"Company") and Xxxx X. Xxxxxx (hereinafter referred to as the "Executive"), is
and shall become effective May 1, 2001 (the "Effective Date"). Capitalized terms
used and not elsewhere defined in this Agreement are defined in Section 1,
below.
W I T N E S S E T H:
WHEREAS, the Executive has entered into an employment agreement with
the Company as of May 1, 2001 (the "Employment Agreement"); and
WHEREAS, the Company's Board of Directors (the "Board") has determined
that it is in the best interests of the Company and its members to assure that
the Company will have the Executive's continued dedication, notwithstanding the
possibility, threat, or occurrence of a Change of Control of the Company. The
Board believes it is imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created by a pending
or threatened Change of Control, to encourage the Executive's full attention and
dedication to the Company currently and in the event of any threatened or
pending Change of Control, and to provide the Executive with compensation and
benefits arrangements upon a Change of Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) As used in this Agreement, the term "Affiliates" includes
any corporation or business which directly or indirectly controls or is
controlled by or under common control with the Company.
(b) Change of Control. For the purpose of this Agreement, a
"Change of Control" means:
(i) the acquisition, other than from the Company, by any
individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) of
beneficial ownership of 25% or more of the then
outstanding shares of common stock of the Company or
the combined voting power of the then outstanding
voting securities of the Company entitled to vote
generally in the election of directors; provided,
however, that any acquisition by the Company or any
of
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its Subsidiaries, or any employee benefit plan (or
related trust) of the Company or its Subsidiaries, or
any corporation with respect to which, following such
acquisition, more than 50% of, respectively, the then
outstanding shares of common stock of such
corporation and the combined voting power of the then
outstanding voting securities of such corporation
entitled to vote generally in the election of
directors is then beneficially owned, directly or
indirectly, by all or substantially all of the
individuals and entities who were the beneficial
owners respectively, of the common stock and voting
securities of the Company in substantially the same
portion as their ownership, immediately prior to such
acquisition, of the then outstanding shares of common
stock of the Company or the combined voting power of
the then outstanding voting securities of the Company
entitled to vote generally in the election of
directors as the case may be, shall not constitute a
Change of Control;
(ii) individuals who constitute the Board as of the
Effective Date hereof (the "Incumbent Board") cease
for any reason to constitute at least a majority of
the Board, provided that any individual becoming a
director subsequent to such date whose election, or
nomination for election by the Company's
shareholders, was approved by a vote of at least a
majority of the directors then comprising the
Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual
whose initial assumption of office is in connection
with an actual or threatened election contest (as
determined in the sole and absolute discretion of the
Incumbent Board) relating to the election of the
directors of the Company (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
(iii) approval by the shareholders of the Company of a
reorganization, merger or consolidation of the
Company, in each case, with respect to which the
individuals and entities who were the respective
beneficial owners of the common stock and voting
securities of the Company immediately prior to such
reorganization, merger or consolidation do not,
following such reorganization, merger or
consolidation, beneficially own, directly or
indirectly, more than 50% of, respectively, the then
outstanding voting securities entitled to vote
generally in the election of directors, as the case
may be, of the corporation resulting from such
reorganization, merger or consolidation, or a
complete liquidation or dissolution of the Company or
of the sale or other disposition of all or
substantially all of the assets of the Company.
(c) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
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(d) "Extended Employment Period" shall mean the period
commencing on the Extension Date and ending on the second anniversary of such
date.
(e) "Extension Date" means the date on which a Change of
Control occurs. Anything in this Agreement to the contrary notwithstanding, if
the Executive's employment with the Company is terminated or the Executive
ceases to be an officer of the Company prior to the Extension Date, and if it is
reasonably demonstrated by the Executive that such termination of employment or
cessation of status as an officer (i) was at the request of a third party who
has taken steps reasonably calculated to effect the Change of Control or (ii)
otherwise arose in connection with or anticipation of the Change of Control,
then for all purposes of this Agreement the "Extension Date" shall mean the date
immediately prior to the date of such termination of employment or cessation of
status as an officer.
(f) "Subsidiary" means any corporation or other entity whether
domestic or foreign, in which the Company has or obtains, directly or
indirectly, a proprietary interest of more than 50% by reason of stock ownership
or otherwise.
2. TERM AND APPLICATION. The Term of this Agreement shall commence on
the Effective Date and shall terminate, except to the extent that any obligation
under this Agreement remains unpaid as of such time, on the second anniversary
from the Effective Date (subject to earlier termination by reason of termination
of employment with the Company); provided, however, that on and after the
Extension Date the Term of this Agreement shall be the Extended Employment
Period. Thereafter, the Term of this Agreement shall automatically extend for
12-month periods, unless not later than three months before the last day of the
Term of this Agreement, the Company or the Executive shall have given written
notice to the other of its intention not to extend this Agreement and the
Employment Agreement, or unless this Agreement is earlier terminated in
accordance with its terms. The Company may not provide a notice of non-renewal
of this Agreement without simultaneously providing a notice of non-renewal of
the Employment Agreement. Receipt by the Executive of a notice of non-renewal of
this Agreement and the Employment Agreement, pursuant to this Section 2, shall
constitute "Good Reason" for purposes of this Agreement and the Employment
Agreement.
3. RENEWAL OF EMPLOYMENT AGREEMENT. Upon the occurrence of the
Extension Date, the term of the Employment Agreement shall be extended through
the Extended Employment Period, as modified by this Agreement. Thereafter, the
term of the Employment Agreement will be automatically extended for 12-month
periods, unless not later than three months before the last day of the term of
the Employment Agreement, the Company or the Executive shall have given written
notice to the other of its intention not to extend this Agreement and the
Employment Agreement, or unless the Employment Agreement is earlier terminated
in accordance with its terms. The Company may not provide a notice of
non-renewal of the Employment Agreement without simultaneously providing a
notice of non-renewal of this Agreement. If there is a conflict between the
Employment Agreement and this Agreement, this Agreement shall supersede the
Employment Agreement, provided that the Executive shall receive the more
valuable payment, right or benefit under the Employment Agreement (including
without limitation,
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the continuation of medical benefits under the Employment Agreement) and this
Agreement. In no event shall any payment, right or benefit under the Employment
Agreement be reduced, eliminated or otherwise adversely affected by this
Agreement. In no event shall the Executive receive any payment, right or benefit
under both this Agreement and the Employment Agreement with respect to the same
date of termination of employment with the Company.
4. VESTING OF STOCK AWARDS. In the event of a Change of Control of the
Company, all restrictions on stock options and restricted shares granted prior
to the Extension Date shall automatically lapse and the time periods relating to
the exercise or vesting of stock options and restricted shares shall be
accelerated so that such awards will be fully vested and exercisable as of the
Extension Date. Any stock options that become exercisable pursuant to this
Section 4 shall remain exercisable during the remainder of their term (as
determined in accordance with the provisions of the applicable option award
agreement.)
5. TERMINATION BY THE COMPANY WITHOUT CAUSE AND TERMINATION BY THE
EXECUTIVE FOR GOOD REASON DURING THE EXTENDED EMPLOYMENT PERIOD. Subject to the
Executive's compliance with the non-competition, non-solicitation and
confidentiality provisions of the Employment Agreement and subject to the
Executive's execution of the General Release and Cooperation Agreement described
in the Employment Agreement, upon the Executive's termination during the
Extended Employment Period by the Company without "Cause" (as defined in the
Employment Agreement) or voluntarily by the Executive for "Good Reason" (as
defined in the Employment Agreement), the Company shall be obligated to provide,
the following, in lieu of any amounts otherwise payable in Section 7 of the
Employment Agreement:
(a) the Company shall pay to the Executive in a lump sum in
cash within thirty (30) days following the date of termination of employment
with the Company the aggregate of the following amounts:
(i) the unpaid portion of annual base salary at the rate
payable, in accordance with the Executive's
Employment Agreement, at the date of termination of
employment with the Company, prorated through such
date of termination;
(ii) an amount equal to two (2) times the Executive's
annual base salary at the rate payable, in accordance
with the Executive's Employment Agreement;
(iii) an amount equal to two (2) times the Executive's
target bonus under the Company's bonus program; and
(iv) to the extent not otherwise provided in this
Agreement, all vested, nonforfeitable amounts owing
or accrued at the date of termination of employment
with the Company under any other compensation
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and benefit plans, programs and agreements in which
the Executive participated, will be paid under the
terms and conditions of the plans, programs and
arrangements (and agreements and documents
thereunder) pursuant to which such compensation and
benefits were granted;
(b) the Executive's benefits under all qualified retirement
plans shall be fully vested; and
(c) the Executive's medical, dental and vision benefits shall
be continued on the same basis as offered to active salaried employees of the
Company as of the Extension Date for two years or until such earlier time as the
Executive becomes employed and eligible for comparable or better benefits under
a plan of the new employer; and continuation coverage under COBRA shall commence
at the end of such two year period.
The foregoing shall be in lieu of all salary, bonuses, or incentive or
performance based compensation for the remainder of the Extended Employment
Period and any severance benefits to which the Executive may otherwise be
entitled.
6. EXCISE TAXES. Anything in this Agreement or in the Employment
Agreement to the contrary notwithstanding, if (a) any payment or benefit to
which the Executive is entitled from the Company (the "Payments," which shall
include the vesting of a stock award or other benefit or property) is more
likely than not to be subject to the tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (or any successor provision to that section)
and (b) reduction of the Payments to the amount necessary to avoid such tax
would result in the Executive retaining an amount more than he would retain it
if the Payments were made without such reduction but after the application of
such tax, the Payments shall be reduced to the extent required to avoid
application of such tax. The Executive shall be entitled to select the order in
which Payments are to be reduced in accordance with the preceding sentence.
Determination of whether Payments would result in the application of the tax
imposed under Section 4999, and the amount of reduction that is necessary so
that no such tax is applied, shall be made, at the Company's expense, by the
independent accounting firm employed by the Company immediately prior to the
occurrence of any Change of Control of the Company which will result in the
imposition of such tax.
7. SUCCESSORS AND ASSIGNS.
(a) This Agreement is personal to the Executive and without
the prior written consent of the Company the Executive's obligations under this
Agreement will not be assignable by the Executive. This Agreement will inure to
the benefit of and be enforceable by the Executive's heirs, executors,
administrators, legal representatives and assigns.
(b) This Agreement will inure to the benefit of and be binding
upon the Company and its successors and assigns.
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(c) The Company will require any successor to, or purchaser or
acquirer of (in each case, whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise), all or substantially all of the
business and/or assets of the Company to assume expressly 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, purchase or acquisition had
taken place.
8. INDEMNIFICATION. All rights to indemnification by the Company now
existing in favor of the Executive as provided in the Company's Articles of
Incorporation or Bylaws or pursuant to other agreements in effect on or
immediately prior to the Extension Date shall continue in full force and effect
from the Extension Date (including all periods after the expiration of the Term
of this Agreement), and the Company shall also advance expenses for which
indemnification may be ultimately claimed as such expenses are incurred to the
fullest extent permitted under applicable law, subject to any requirement that
the Executive provide an undertaking to repay such advances if it is ultimately
determined that the Executive is not entitled to indemnification; provided,
however, that any determination required to be made with respect to whether
Executive's conduct complies with the standards required to be met as a
condition of indemnification or advancement of expenses under applicable law and
the Company's Articles of Incorporation or Bylaws or other agreement shall be
made by independent counsel mutually acceptable to the Executive and the Company
(except to the extent otherwise required by law). Any other provision herein to
the contrary notwithstanding, the Company shall not be obligated to (a)
indemnify or advance expenses to the Executive with respect to claims initiated
or brought voluntarily by the Executive and not by way of defense (except with
respect to actions or proceedings to establish or enforce a right to
indemnification under this Agreement or any other agreement or insurance policy
or under the Company's Articles of Incorporation or Bylaws) or (b) indemnify the
Executive for expenses and the payment of profits arising from the purchase and
sale by the Executive of securities in violation of Section 16(b) of the
Securities Exchange Act of 1934. After the Effective Date, the Company shall not
amend its Articles of Incorporation or Bylaws or any agreement in any manner
which adversely affects the rights of the Executive to indemnification
thereunder. In addition, the Company will maintain directors' and officers'
liability insurance in effect and covering acts and omissions of the Executive,
during the Term and for a period of six years thereafter, on terms customary for
companies that are similar to the Company.
9. GENERAL RELEASE AND COOPERATION AGREEMENT. Notwithstanding anything
in this Agreement or the Employment Agreement to the contrary and in
consideration therefor, severance benefits hereunder shall only become payable
by the Company if the Executive executes and delivers to the Company a General
Release and Cooperation Agreement on or after the date of the written Notice of
Termination of Executive's employment and in substantially the form attached as
Exhibit A to the Employment Agreement.
10. NOTICE. Any notice required or permitted to be given under this
Agreement shall be in writing, signed by the party or parties giving or making
the same, and shall be served on the person or persons for whom it was intended
or who should be
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advised or notified, by Federal Express or other similar overnight service. If
the notice is sent to the Executive, the notice should be sent to the address
listed on the signature page of this Agreement or to such other address
furnished by the Executive in writing in accordance herewith. If the notice is
sent to the Company, the notice should be sent to:
DT Industries, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: President
With a copy to:
DT Industries, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: General Counsel
or to such other address as furnished by the Company in writing in accordance
herewith. Notice and communications will be effective when actually received by
the addressee.
11. MISCELLANEOUS.
(a) This Agreement shall be subject to and governed by and the
laws of the State of Ohio, without reference to principles of conflict of laws.
The captions of this Agreement are not part of the provisions hereof and will
have no force or effect.
(b) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason, will not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
(c) This Agreement may not be modified except by an agreement
in writing executed by the parties hereto.
(d) The invalidity or unenforceability of any provision of
this Agreement will not affect the validity or enforceability of any other
provision of this Agreement.
(e) The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as may be required to be
withheld pursuant to any applicable law or regulation.
(f) This Agreement shall supersede any and all prior change of
control agreements or understandings, written or oral, with the Executive.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
DT INDUSTRIES, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
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Its: President and Chief Executive Officer
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/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
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Xxxxxx
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Xxxx, Xxxxx and Zip Code
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