EXHIBIT 10.117
"CIC" Agreement
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THIS AGREEMENT dated as of August 31, 1999, is made by and between
Xxxxx & Xxxxxx Manufacturing Company, a Delaware Corporation, (the "Company")
and Xxxxx X. Xxxxx, III, Corporate Secretary and General Counsel ("Executive").
WHEREAS the Compensation and Nominating Committee of the Board of
Directors of the Company (the "Committee" and the "Board", respectively)
recognizes that, as is the case with many publicly held corporations, the
possibility of a Change in Control (as defined in the last Section hereof)
exists and that such possibility, and the resultant uncertainty as to the
Executive's responsibilities, compensation or continued employment, may result
in the departure or distraction of the Executive, and whereas the Board believes
it is important to the Company and the interests of its stockholders, should the
Company receive acquisition or combination proposals from outside parties, to
enable the Executive, without being distracted by the uncertainties of his own
employment situation, to perform his regular duties and to act objectively in
connection with any such proposals; and
WHEREAS the Company considers it essential to the best interests of the
Company, its shareholders, and its employees generally to agree to provide the
benefits set forth below;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
Company and the Executive hereby agree as follows:
1. Defined Terms. The definition of capitalized terms used in this
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Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date
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hereof and shall continue in effect until terminated by written agreement
between the Company and the Executive or until the Executive's employment with
the Company has been terminated under circumstances not involving a Change in
Control.
3. Company's Covenants Summarized. In consideration of the
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Executive's covenants set forth in Section 4 hereof, the Company agrees, under
the conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control. No amount or benefit shall be payable under this
Agreement unless there shall have been (or, under the terms hereof, there shall
be deemed to have been) a termination of the Executive's employment with the
Company following a Change in Control. This Agreement shall not be construed as
creating an express or implied contract of employment prior to the date of a
Change in Control and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be retained
in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that if the
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Company enters into an agreement described in Section 15(C)(v), or if there is a
public announcement described in Section 15(C)(vi), or if the Board adopts a
resolution described in Section 15(C)(vii), in each case regardless of whether
such agreement or the action or actions contemplated by such announcement or
resolution have yet resulted in a Change in Control, the Executive will, if
requested by the Company, remain in the employ of the Company until the earlier
of (A) a date specified in such request which is not later than three (3) months
after the date on which the actions ultimately resulting in a Change in Control
are consummated (but one (1) month if Section 15(C)(vi) is applicable), or (B)
the date of termination by the Executive of the Executive's employment for Good
Reason (determined, for purposes of this clause (B), without regard to Section
15(K)(a)) or by reason of death or Disability, or the efforts to effect a Change
in Control have been abandoned or terminated.
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5. Compensation Other Than Severance Payment.
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5.1. Following a Change in Control, during any period that the
Executive fails to perform the Executive's full-time duties with the Company as
a result of incapacity due to physical or mental illness, the Company shall pay
the Executive's full salary to the Executive at the rate in effect at the
commencement of such period (or the rate in effect immediately prior to the
Change in Control, if higher), together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability or the
Executive resumes full-time duties, subject to the other termination provisions
of this Agreement.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect at the
time the Notice of Termination is given (or the rate in effect immediately prior
to the Change in Control, if higher), together with all prorated compensation
and benefits payable to the Executive or creditable to his plan account under
the terms of any compensation or benefit plan, program or arrangement maintained
by the Company prior to the Date of Termination (or such terms as in effect
immediately prior to the Change in Control, if more favorable to the Executive)
were the Executive employed by the Company on the last day of the year. In the
case of the PIP payout, the amount to be paid shall be equal to the larger of
(i) the PIP amount that would be payable if all objectives were met 100% (payout
factor of 1.0) or (ii) the largest PIP amount paid to the Executive during the
past three years, in either case prorated for the period of the Executive's
employment during such year and paid in cash within 15 days of the date of
termination. In the case of the Perquisite Plan, the amount to be paid out is
such that, including amounts already paid to the Executive during the calendar
year of the Termination, 100% of the annual amount last awarded to the Executive
by the Committee prior to the Change in Control shall have been paid to the
Executive. In the case of the Company's Savings and Retirement Plan for
Management Employees ("SARP"), Employee Stock Ownership Plan and Trust ("ESOP"),
the excess benefit restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella
Pension Plan, and any other plan benefits under the first sentence of this
section for the year or period in which the Executive's termination of
employment occurs shall be determined without regard either to the right of the
Board to not authorize any contribution to the SARP, ESOP, SERP, or other plan
for that year or to any requirement in such plan or program that the Executive
continue employment until the end of such year or period and as so determined
shall be prorated for the period of the Executive's employment during such year
or period provided that if such contributions cannot validly be made pursuant to
the terms of the plans, then the amount that could not be so contributed to the
SARP, ESOP, or other plan shall be paid under this Agreement in cash in a lump
sum to the Executive within 15 days of the Date of Termination. In the case of
the Company's Long Term Deferred Cash Incentive Plan (the "LTDCIP"), for
purposes of the first sentence of this Section, there shall be paid to the
Executive in a cash lump sum payment within 15 days of the Date of Termination
an amount equal to the applicable pro rate portion, based on the days of the
Executive's employment in the year prior to the Date of Termination of the award
or credit that would have been credited to the Executive's account under the
LTDCIP for the calendar year in which the Date of Termination occurs assuming,
for such year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected as Adjusted Pretax Profit in the
Company's latest "BNS Five Year Plan - Base Case" provided to the Company's
investment banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had equaled
the Executive's percentage award opportunity specified in the most recent award
to the Executive preceding the Change in Control.
Upon a Change in Control, all options held by the Executive at such date
shall immediately vest and become exercisable and all restrictions on restricted
stock shall lapse, to the extent that such vesting or lapse has not occurred by
said date under the terms of the Equity Incentive Plan (or other applicable
plan).
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5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's
post-termination compensation and benefits to the Executive as such payments
become due, as determined under and paid in accordance with the Company's
retirement, insurance and other compensation or benefit plans, programs and
arrangements and agreements, including the plans referred to in Section 5.2,
other than this Agreement; provided, however, that the Severance Payments under
Section 6 of this Agreement shall be the only severance and benefits paid or
provided following a Change in Control for a termination by the Executive with
Good Reason or a termination by the Company Without Cause unless the Executive
elects within 30 days after the Termination Date to take such other payments and
benefits exclusively in lieu of the Severance Payments under Section 6.
6. Severance Payments.
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6.1. Subject to Section 6.2 hereof, the Company shall pay the
Executive the payments and benefits described in this Section 6.1 ("Severance
Payments"), in addition to the applicable payments and benefits described in
Section 5 hereof, upon any termination after a Change in Control by the Company
Without Cause or by the Executive for Good Reason.
(i) Within 15 days of the Date of Termination, the Company shall
make a lump sum cash payment to the Executive equal to the sum of
(a) the higher of the Executive's annual base salary in effect
immediately prior to the occurrence of the event or circumstance
upon which the Notice of Termination is based or in effect
immediately prior to the Change in Control, (b) the highest
annualized (for a partial year of service) annual aggregate
bonuses paid, or accrued to be paid if not then yet paid (or, in
the event that the Executive has been recently hired and has not
had a full fiscal year of employment and Profit Incentive Plan
opportunity, then the higher of the amount paid in the prior
year, recalculated as if the Executive had been employed for the
full entire year, or the planned amount of Profit Incentive Plan
bonus payout for the Executive for the year in which the
termination occurs) to the Executive under the Profit Incentive
Plan or its successor plan or by vote of the Board of Directors
(or a committee thereof) or bonuses of Sales Incentive
Compensation or other bonuses excluding any bonuses paid as part
of the hiring process, in each case determined (except as
provided above with respect to a recently hired Executive) over
the period beginning with the fifth (5th) year preceding the year
in which occurs the Change in Control and ending with the period
in which occurs the Date of Termination, and (c) the highest of
the Executive's Perquisite Plan award amount in effect
immediately prior to the occurrence of the event or circumstance
upon which Notice or Termination is based or in effect
immediately prior to the Change in Control or the Perquisite Plan
amount last paid to the Executive.
(ii) Within 15 days of the Date of Termination, the Company shall
make an additional lump sum cash severance payment to the
Executive equal to the annual level of contributions, credits or
other benefits the Executive was receiving (or that were being
made or were required to be made for the Executive's benefit) for
the most recent applicable plan period prior to the Change in
Control or prior to the Notice of Termination (whichever is more
favorable to the Executive under any employee benefits plan then
existing including the SARP, the ESOP, the "excess benefit"
restoration account under the Company's Supplemental Executive
Retirement Plan, the Company's Senior Executive Supplemental
Umbrella Pension Plan, the Company's matching contribution under
its 401(k) plan applicable to the Executive and (subject to the
following sentence) the LTDCIP (and in each case any successor
plan or arrangement), in each case based on the levels of
compensation taken into account under Section 6.1(i). In the case
of the LTDCIP the payment shall equal to an amount equal to the
award credit that would have been credited to the Executive's
account under the LTDCIP for the calendar year in which
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the Date of Termination occurs, assuming for such year, (i) the
Company's Adjusted Pretax Profit (as defined in the LTDCIP) had
equaled the amount projected for the applicable year as Adjusted
Pretax Profit (as defined in LTDCIP) in the Company's latest "BNS
Five Year Plan - Base Case" provided to the Company's investment
banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award
opportunity had equaled the percentage award opportunity which
was the Executive's most recent award level preceding the Change
in Control.
For the period of twelve (12) months following the Date of Termination, the
Company shall arrange to provide the Executive with any employee
welfare benefits including health, dental, disability, life, and
accident insurance benefits substantially similar to those which the
Executive is receiving on the same premium cost share basis as was
applicable to the Executive immediately prior to the Notice of
Termination or the Change in Control, whichever is more favorable to
the Executive (without utilizing or limiting the Executive's
subsequent resort to COBRA rights under applicable laws and without
giving effect to any reduction in such benefits subsequent to a Change
in Control which reduction constitutes Good Reason). Benefits
otherwise receivable by the Executive under any employee welfare
benefits including health, dental, disability, life, and accident
insurance pursuant to this Section 6.1(ii) shall be reduced to the
extent comparable benefits are actually received by or made available
to the Executive without cost or at a lower cost than was charged to
the Executive prior to the Change in Control or the Notice of
Termination (whichever is more favorable to the Executive) during the
twelve (12) month period following the Executive's termination of
employment (and any such benefits actually received or made available
by the Executive shall be reported to the Company by the Executive).
In the event that the Company self-insures with respect to one of
these benefits, such as for example dental benefits, then the
Executive shall be reimbursed for all dental expenses during the 12-
month period that would have been reimbursed under the self-funded
policy in effect prior to the Notice of Termination or the Change in
Control, whichever is more favorable to the Executive. If the benefits
provided to the Executive under this Section 6.1(ii) shall result in a
decrease, pursuant to Section 6.2, in the Severance Payments and as a
result the Section 6.1(ii) benefits are thereafter reduced pursuant to
the immediately preceding sentence because of the receipt or
availability of comparable benefits, the Company shall, at the time of
such reduction, pay to the Executive the lesser of (a) the amount of
the decrease made in the Severance Payments pursuant to Section 6.2,
or (b) the maximum amount which can be paid to the Executive without
being, or causing any other payment to be, nondeductible by reason of
section 280G of the Code.
6.2. Notwithstanding any other provisions of this Agreement, in the
event that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether or not received pursuant to the terms of this Agreement or
otherwise) (all such payments and benefits, including option benefits and the
Severance Payments, being hereinafter called the "Total Payments") would be
subject in whole or in part to the Excise Tax, then the Severance Payments shall
be reduced to the extent, but only to the extent, necessary so that no portion
of the Total Payments is subject to the Excise Tax; provided, that no such
reduction shall be effected unless the net amount of the Total Payments after
such reduction in the Severance Payments and after deduction of the net amount
of federal, state and local income taxes on such reduced Total Payments would be
greater than the excess of (A) the net amount of the Total Payments without such
reduction in the Severance Payments but after deduction of the net amount of
federal, state and local income taxes (other than the Excise Tax) on such
unreduced Total Payments, over (b) the Excise Tax to which the Total Payments
are subject. The determination as to whether a reduction in Severance Payments
is to be made under this Section 6.2 and, if so, the amount of any such
reduction shall be made by the firm of certified public accountants that had
been acting as the Company's auditors prior to the Change in Control or by such
other firm of certified public accountants, benefits consulting firm or legal
counsel as the Board may designate for such purpose, with the approval of the
Executive, prior to the Change in Control.
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The Company shall provide the Executive with the auditor's calculations
of the amounts referred to in this Section 6.2 and such supporting materials as
are reasonably necessary for the Executive to evaluate the Company's
calculations.
6.3. In the event of a termination following a Change in Control, the
Company also shall pay to the Executive all legal fees and expenses, if any,
incurred in disputing in good faith any such termination or in seeking in good
faith to obtain or enforce any payment, benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder). Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
6.4. During the period of one year from the Termination Date, the Company
shall engage, at the request of the Executive, made in writing in the
Termination Notice or within ten days of receipt by the Executive of a Notice of
Termination, a mutually agreed upon, full executive outplacement counseling
service of national reputation, reasonably proximate to the Executive's home or
home office, to assist the Executive in obtaining employment.
7. Termination Procedures and Compensation During Dispute.
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7.1. Notice of Termination. After a Change in Control, any purported
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termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10 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 the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership (excluding the Executive, if a
Director) of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
7.2. Date of Termination. "Date of Termination", with respect to any
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purported termination of the Executive's employment after a Change in Control
during the term of this Agreement, shall mean, subject to the provisions of
Section 7.3:
(A) if the Executive's employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided that
the Executive shall not have returned to the full-time performance of
the Executive's duties during such thirty (30) day period), and
(B) if the Executive's employment is terminated for any other reason,
the date specified in the Notice of Termination which, in the case of a
termination by the Company, shall not be less than thirty (30) days
(except in the case of a termination for Cause) and, in the case of a
termination by the Executive, shall not be less than fifteen (15) days
nor more than sixty (60) days from the date such Notice of Termination
is given.
7.3. Dispute Concerning Termination. If within fifteen (15) days after
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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 resolved, either by mutual written agreement of the parties, by
arbitrator's award, or, to the extent permitted by Section 14, by a final
judgment, order or decree of a court of competent jurisdiction on the
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arbitrator's award (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has 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.
7.4. Compensation During Dispute. If a purported termination occurs
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following a Change in Control and such termination is disputed in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation (including, but not limited to, salary) in effect when the
notice giving rise to the dispute was given and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other amounts
due under this Agreement (other than those due under Section 5.2 hereof) and
shall not be offset against or reduce any other amounts due under this
Agreement. In the event of such purported termination by the Company or the
Executive, the Executive need not provide any services to the Company and no
mitigation requirement shall apply.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of his rights under this Agreement
by an arbitration proceeding or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if the Executive determines in good faith that
the Company has failed to comply with any of its obligations under this
Agreement or if the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or arbitration
proceeding designed to deny, or to recover from the Executive the benefits
intended to be provided to the Executive hereunder or in the event of
arbitration proceedings instituted as contemplated by Section 7.3 above, the
Company confirms that it has irrevocably authorized the Executive from time to
time to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the arbitration
proceeding provided for above (or in any other legal proceeding), whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction which may adversely affect
Executive's rights under this Agreement. Without limiting the provisions of
Section 7.3 above, the Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' fees and related expenses incurred by the
Executive as a result of the Company's failure to perform this Agreement or any
provision thereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision thereof.
Interest at the rate of prime of The First National Bank of Boston (or its
successor) plus 2 shall be payable monthly on all amounts due but not
paid under this Agreement.
8. No Mitigation, etc. The Company agrees that, if the Executive's
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employment by the Company is terminated after a Change in Control, 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 6 or Section
7.4. Further, the amount of any payment or benefit provided for in Section 6
(other than the health or insurance benefits in Section 6.1(ii)) or Section 7.4
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.
In the event that the Executive's employment is terminated by the
Company after a Change in Control without Cause or by the Executive for Good
Reason, the Executive shall not be required to refrain from competition with
Company or any subsidiary but shall not be entitled to use or disclose trade
secrets or confidential information of the Company or any subsidiary.
9. Successors; Binding Agreement.
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9.1. In addition to any obligations imposed by law upon any successor
to the Company, the Company will require any successor (whether direct or
indirect, by purchase, merger 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 or promptly after the
effectiveness of any such succession, unless remedied within ten days after
written notice by the Executive to the Company, shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. In any event this agreement shall be binding
upon the Company and any successors or assignees.
9.2. This Agreement shall inure to the benefit of and be enforceable by
the Executive's guardian, personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. 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 executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
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communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered in hand or when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, 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:
To the Company:
Xxxxx & Xxxxxx Manufacturing Company
Precision Park
000 Xxxxxxxxxx Xxxx
Xxxxx Xxxxxxxxx, XX 00000
Attention: Secretary
To the Executive:
Xxxxx X. Xxxxx, III
00 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
11. Miscellaneous. No provision of this Agreement may be modified or
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waived unless such waiver or modification is agreed to in writing and signed by
the Executive 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 State of Delaware (other then its internal conflict of laws) 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.
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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. The obligations of the Company
and the Executive under Sections 6, 7, 8 and 14 shall survive the expiration of
the term of this Agreement.
The Company shall have no right of setoff against any payments required
to be made by the Company hereunder, and any claims by the Company against the
Executive may not be set off and must be made against the Executive in an
independent proceeding.
Nothing herein shall adversely affect any of the Executive's rights
under the terms of any option, employee benefit plan or agreement, including
without limitation the Long Term Deferred Cash Incentive Plan, the Supplemental
Executive Retirement Plan, the Senior Executive Supplemental Umbrella Pension
Plan, the Company's Salary and Retirement Plan for Management Employees and the
Employee Stock Ownership Plan and Trust, or any offer letter or employment
agreement, subject to the controlling provisions of Sections 5.3 and 6.
Nothing in this Agreement shall detract from or limit the Executive's
right to participate in any stock option, bonus or other plan which may become
applicable to executives of the Company resulting from any merger of
consolidation of the Company or sale of all or substantially all of the assets
of the Company.
12. Validity. The invalidity or unenforceability of any provision of
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this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect. In
addition, if any provision of this Agreement is held invalid or unenforceable by
a court of competent jurisdiction, then such provision shall be deemed modified
to the extent necessary to enable such provision to be valid and enforceable.
13. Counterparts. This Agreement may be executed in several
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counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive
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for benefits under this Agreement shall be directed to the Board c/o the
Secretary of the Company and shall be in writing. Any denial by the Board of a
claim for benefits under this Agreement shall be delivered to the Executive in
writing and shall set forth the specific reasons for the denial and the specific
provisions of this Agreement relied upon. The Board then shall afford a
reasonable opportunity to the Executive for a review of the decision denying a
claim and shall further allow the Executive to appeal to the Board a decision of
the Board within sixty (60) days after notification by the Board that the
Executive's claim has been denied. Any further dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration (except to the limited extent provided below) in Boston,
Massachusetts 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 the Executive shall be
entitled to seek specific performance of the Executive's 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 by a proceeding in such
arbitration or by a proceeding for such relief in the federal court in Boston or
the Massachusetts state court in Suffolk County. Each party irrevocably submits,
with respect to the matter specified in the proviso to the immediately preceding
sentence, to the jurisdiction of the United States District Court for the
Commonwealth of Massachusetts and to the jurisdiction of the Massachusetts state
court of Suffolk County for the purpose of any suit or other proceeding arising
out of or based upon this Agreement or the subject matter hereof and agrees that
any such proceeding shall be brought or maintained only in such courts and
waives, to the extent not prohibited by applicable law, and agrees not to assert
in any such proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that any such proceeding brought or
maintained in a court provided for above may not be properly brought or
maintained in such court, should be transferred to some other court or should be
stayed or dismissed by reason of the pendency of some other proceeding in some
other court, or that this Agreement or the subject matter hereof may not be
enforced in or by such court.
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15. Definitions. For purposes of this Agreement, the following terms
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shall have the meanings indicated below:
(A) "Board" shall have the meaning given it in the first "WHEREAS"
clause of this Agreement.
(B) "Cause" for termination by the Company of the Executive's
employment, after any Change in Control, shall mean:
(i) intentional commission of theft, embezzlement, or other
serious and substantial crimes against the Company, intentional
wrongful engagement in competitive activity with respect to any
business of the Company or its subsidiaries, or intentional
wrongful commission of material acts in clear and direct
contravention of instructions from the Board (or from the Chief
Executive Officer with respect to officers other than the Chief
Executive Officer); provided, however, that the termination for
Cause shall have been approved or ratified by the Board after
notice to the Executive, or
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to
be done, by the Executive not in good faith and without reasonable
belief that the Executive's act, or failure to act, was in the best
interest of the Company.
(C) 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.
(i) any "person" as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than (1) the Company; (2) any wholly-
owned or otherwise controlled subsidiary of the Company; (3) any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or of any subsidiary of the Company;
or (4) any company owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions
as their ownership of capital stock of the Company), is or becomes
the "beneficial owner" (as defined in Section 13(d) of the
Exchange Act), together with all Affiliates and Associates (as
such terms are used in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more
of the combined voting power of the Company's then outstanding
securities; or
(ii) the shareholders 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),
in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or any subsidiary of the Company, at least 65% 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" (with the exception given and
the method of determining "beneficial ownership" used in clause
(1) of this definition) acquires more than 30% of the combined
voting power of the Company's then outstanding securities; or
9
(iii) 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 clause (i), (ii), or (iv) of this
definition) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) 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 at least a majority thereof; or
(iv) the shareholders 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 or substantially all of the
Company's assets; or
(v) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control,
provided, however, that if such agreement requires approval by the
Company's shareholders of the agreement or transaction or the
satisfaction of other conditions, a Change in Control shall not be
deemed to have taken place unless and until such approval is
secured and all conditions are satisfied (but upon any such
approval and the satisfaction of such conditions and the
consummation of the transaction, a Change in Control shall be
deemed to have occurred on the date of execution of such
agreement); or
(vi) the Company or any person publicly announces an intention to
take or to consider taking actions which, if consummated, would
constitute a Change in Control, provided that a Change in Control
will not be deemed to have taken place unless and until actions
are taken that constitute a Change in Control (but upon the taking
of any such actions a Change in Control shall be deemed to have
occurred on the date of such announcement); or
(vii) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Change in Control will occur upon
the taking of certain action provided that the Change in Control
shall not be deemed to have taken place unless and until such
action is taken (but upon the taking of such action, a Change in
Control shall be deemed to have occurred on the date of such
resolution of the Board).
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(E) "Company" shall mean Xxxxx & Xxxxxx Manufacturing Company and any
successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law, or otherwise (except in
determining, under Section 15(C) hereof, whether or not any Change in
Control of the Company has occurred in connection with such
succession).
(F) "Date of Termination" shall have the meaning stated in Section 7.2
hereof.
(G) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment if, as a result of the
Executive's incapacity due to physical or mental illness, the Executive
shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6) consecutive
months, the Company shall have given the Executive a Notice of
Termination for Disability, and, within thirty (30) days after such
Notice of Termination is given, the Executive shall not have returned
to the full-time performance of the Executive's duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
10
(I) "Excise Tax" shall mean any excise tax imposed under section 4999
of the Code or any successor section.
(J) "Executive" shall mean the individual named in the first paragraph
of this Agreement.
(K) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express
written consent), within not more than three years after the Change in
Control, of any one of the following acts by the Company, or failures
by the Company to act, unless, in the case of any act or failure to act
described in paragraph (a), (d), (e), (f), (g), or (h) below, such act
or failure to act is corrected prior to the Date of Termination
specified in the Notice of Termination given in respect thereof:
(a) the assignment to the Executive of any duties inconsistent
with the Executive's status as a senior executive officer of
the Company or an adverse alteration in the nature or status
of the Executive's responsibilities, authority or reporting
relationships from those in effect immediately prior to the
Change in Control, as outlined on attached Exhibit A,
including, for the Chief Executive Officer, Chief Financial
Officer, Controller, Treasurer, Secretary and Corporate
Counsel and the Chief Information Officer, the change in
status from an officer of a "public company" to an officer
of a "private" company or a "public" company in which
another person owns more than 20% of the voting power;
(b) a reduction by the Company in the Executive's annual base
salary as in effect on the date hereof or as the same may be
increased from time to time;
(c) the relocation of the Company's principal executive office
to a location more than twenty (20) miles from the location
of such office immediately prior to the Change in Control or
the Company's requiring the Executive to be based anywhere
other than the Company's principal executive office, except
for required travel on the Company's business to an extent
substantially consistent with the Executive's present
business travel obligations prior to the Change in Control;
provided that if the Executive was not located prior to the
Change in Control at the principal executive office then
such office where the Executive was located shall be
substituted for the term "principal executive office";
(d) the failure, not corrected within five (5) days after
written notice thereof to the Company, by the Company,
without the Executive's consent, to pay to the Executive any
portion of the Executive's current compensation, or to pay
to the Executive 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;
(e) the failure, not corrected within five (5) days after
written notice thereof to the Company, by the Company to
continue in effect any compensation plan (until its stated
expiration date) in which the Executive participated
immediately prior to the Change in Control which is material
to the Executive's total compensation, including but not
limited to the Company's Equity Incentive Plan, the Profit
Incentive Plan, the LTDCIP, the Supplemental Executive
Retirement Plan, the Senior Executive Supplemental Umbrella
Pension Plan, the SARP and the ESOP (all of which plans are
deemed material) or any substitute plans adopted prior to
the Change in Control, but in each case only if such plan is
one in which the Executive participated immediately prior to
the Change in Control, unless a substantially equivalent
equitable arrangement, reasonably acceptable to the
Executive (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the
failure by the Company to continue the
11
Executive's participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable
than the basis on which benefits were provided or made
available to the Executive prior to the Change in Control.
For purposes of the preceding provision, it is understood
that the LTDCIP is a Company before tax profit based plan
and that effective continuity of this plan or any
substantial equivalent to it by definition requires with
regard to the determination of the benefit (i) continuity of
the existing organizations within the Company immediately
prior to the Change in Control whereby these revenue and
profit generating capability of each part and in total is no
less than it was immediately prior to the Change in Control,
(ii) the accounting and consolidation methodologies are
equivalent and (iii) the participant award factors remain
unchanged, and (iv) change of bases used in determining the
annual participant award credit or accrual within a fiscal
year shall require use of the new bases for the whole fiscal
year. If any of the above conditions (15(K)(e) (i), (ii),
(iii) or (iv)) is not satisfied, then the LTDCIP's
continuity or equivalency may only be achieved for purposes
of this paragraph by determining the annual participant
award credit or accrual based on the Company's planned
Adjusted Pretax Profit (as defined in the LTDCIP) for the
applicable period per the latest "BNS Five Year Plan - Base
Case" provided to the Company's investment banker prior to
the Change in Control (or if not available, the best
equivalent thereof).
(f) the failure, not corrected within five (5) days after
written notice thereof to the Company, by the Company to
continue to provide the Executive with benefits
substantially similar to those enjoyed by the Executive
under any of the Company's pension, life insurance, medial,
health and accident, or disability plans in which the
Executive was participating at the time of the Change in
Control (other than changes required by law), the taking of
any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the
Executive at the time of the Change in Control, or the
failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive is
entitled in accordance with the Company's normal vacation
policy in effect prior to the Change in Control;
(g) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 7.1; and for purposes
of this Agreement, no such purported termination shall be
effective; or
(h) any breach by the Company of any provision of this
Agreement, not corrected within 15 days after notice by the
Executive to the Company.
The Executive's right to terminate the Executive's employment for
Good Reason shall not be affected by the Executive's incapacity
due to physical or mental illness. The Executive's continued
performance shall not constitute consent to, or a waiver of rights
with respect to, any act or failure to act constituting Good
Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in Section
7.1 hereof.
(M) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include:
(i) the Company,
(ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or
12
(iii) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions
as their ownership of stock of the Company.
(N) "Severance Payments" shall mean those payments and benefits
described in Section 6.1 hereof.
(O) "Terminate Without Cause" shall mean a termination by the Company,
within not more than three years after the Change in Control, other
than a termination upon death, disability or retirement at age 65 (or
such later age as may be established by the Board of Directors or the
Compensation and Nominating Committee) or for Cause (as defined above).
(P) "Total Payments" shall mean those payments described in Section
6.2 hereof.
IN WITNESS WHEREOF, the undersigned parties have each executed or
caused this Agreement to be duly executed as of the date set forth above.
WITNESSED: XXXXX & XXXXXX MANUFACTURING COMPANY
________________________ By_______________________________________
Xxxxx X. Xxxxxx
Chairman of the Board of Directors,
President, and Chief Executive Officer
WITNESSED:
________________________ _________________________________________
Xxxxx X. Xxxxx, III
Corporate Secretary and General Counsel
13
Exhibit A
---------
Position
Corporate Secretary and General Counsel
Reporting and Responsibility
Reports to the President and Chief Executive Officer. The Corporate Secretary is
an elected officer of the corporation whose duties are generally described in
the corporation's by-laws and is a senior level member of management of the
corporation. The incumbent's duties include recording the minutes of meetings of
the Board of Directors and stockholders; assisting in the preparation of the
agendas and logistical arrangements for such meetings; drafting resolutions of
corporate actions to be taken; preparing annual and special proxy statements for
mailing to stockholders; managing the stock registrar and transfer activities;
managing relationships with New York Stock Exchange; certifying corporate
documents and actions taken at proceedings of Board and stockholder meetings;
administration of compensation of Board of Directors; maintenance of custody and
control of corporate legal entity documents; and responding to shareholder
inquiries concerning company stock.
The General Counsel advises and represents, either directly or in
association with outside counsel, the corporation in a variety of legal matters
affecting the corporation and its subsidiaries. The incumbent is responsible for
the overall management of litigation claims brought against or asserted by the
corporation; furnishing legal advice to and, where appropriate, drafting
necessary legal documents for corporate staff and operating management personnel
on matters relating to or affecting operation of the corporation's businesses,
including but not limited to the areas of commercial contracts, trade
regulation, product liability, intellectual property, corporate governance,
securities laws, filings, and compliance, and employment laws.
Headquartered in North Kingstown, Rhode Island.
