C&D TECHNOLOGIES, INC.
1400 Union Meeting Road
Blue Bell, Pennsylvania 19422-0858
Mr. Wade H. Roberts, Jr.
1385 Eaves Spring Road
Malvern, Pennsylvania 19355 As of October 22, 1998
Dear Mr. Roberts:
C&D TECHNOLOGIES, INC., a Delaware corporation (the
"Company"), agrees to employ you, and you agree to be employed by the Company,
on the following terms and conditions:
1. TERM OF EMPLOYMENT. Except for earlier termination as
provided in Section 9 below, your employment under this Agreement, and the term
of this Agreement, shall be for an initial period commencing on October 22, 1998
(the "Effective Date"), and terminating on the second anniversary of such date
(the "Initial Term"). After the Initial Term, this Agreement and your employment
hereunder shall be renewed automatically for successive terms of one year each
(each, a "Renewal Term"), unless prior to the end of the Initial Term or any
Renewal Term either party shall have given to the other party at least 90 days'
prior written notice (a "Termination Notice") of termination of this Agreement.
If a Termination Notice is given by either party, (a) the Company shall, without
any liability to you, have the right, exercisable at any time after the
Termination Notice is given, to elect any other person to the office or offices
in which you are then serving and to remove you from such office or offices, but
(b) except for the obligations set forth in Sections 3, 4 and 5, all other
obligations each of you and the Company have to the other, including the
Company's obligation to pay your compensation and make available the benefits to
which you are entitled hereunder, shall continue until the end of the Initial
Term or any Renewal Term, as the case may be, or thereafter, to the extent such
obligations survive pursuant to the terms of this Agreement.
2. COMPENSATION AND BENEFITS. (a) From and after the Effective
Date, you shall be compensated for performance of your obligations under this
Agreement at a rate of not less than $275,000 per annum (such salary, as
adjusted from time to time, hereinafter referred to as the "Base Salary"),
payable in such manner as is consistent with the Company's payroll practices for
executive employees. Effective upon any promotion to Chief Executive Officer
pursuant to Section 3(a), your Base Salary for the period subsequent to such
promotion shall increase to a minimum of $325,000 per annum as determined by the
Board of Directors in its sole discretion, and the Board of Directors may from
time to time thereafter consider future increases in Base Salary in its sole
discretion.
(b) You shall have the benefit of and be entitled to
participate in such employee benefit plans and programs, including life,
disability and medical insurance, pension, savings, retirement and other similar
plans, as the Company now has or hereafter may establish from time to time, and
in which you would be entitled to participate pursuant to the terms thereof,
including without limitation the Company's existing Supplemental Executive
Retirement Plan ("SERP"). The foregoing, however, shall not be construed to
require the Company to establish any such plans or to prevent the Company from
modifying or terminating any such plans, and no such action or failure thereof
shall affect this Agreement.
(c) You shall be entitled (i) to participate in the Company's
Incentive Compensation Plan each year in accordance with criteria and for
amounts approved by the Compensation Committee, and (ii) to be granted options,
to the extent (if any) approved by the Compensation Committee or the relevant
Option Committee, under the Company's stock option plans in effect from time to
time. Without limiting the foregoing, you shall have a targeted bonus for the
fiscal year ending January 31, 1999 of 40% of the Base Salary paid to you during
the period in which you were employed hereunder, and 40% of your Base Salary for
the following fiscal year increasing to 50% of your Base Salary for the portion
of such year following any promotion to Chief Executive Officer pursuant to
Section 3 (with the actual payment of any bonus described herein being dependent
on your achievement of targeted objectives). In addition, you shall as of the
Effective Date be granted a non-qualified stock option to purchase up to 25,000
shares of the Company's Common Stock ("Original Grant") pursuant to the
Company's 1998 Stock Option Plan, having an exercise price equal to the closing
price of the Company's Common Stock on the New York Stock Exchange on the
Effective Date, vesting in one-third increments on the first, second and third
anniversaries of the Effective Date and expiring 10 years from the Effective
Date, subject, however, to earlier vesting upon termination of this Agreement as
provided in Section 9(h) below and otherwise subject to the terms and conditions
contained in the Company's 1998 Stock Option Plan and current form of Option
Agreement.
(d) In the event of a Change of Control Termination of this
Agreement (as defined in Exhibit A hereto), you shall be entitled to certain
payments and benefits as provided in Exhibit A hereto, which payments and
benefits shall be in substitution for, not in addition to, the payments and
benefits otherwise payable under this Agreement in the event of termination.
(e) You shall be entitled to four weeks of vacation each year.
(f) The Company shall reimburse you annually for up to $5,000
of fees and expenses incurred by you for personal tax and financial planning
advice, upon presentation by you of appropriate substantiation of such fees and
expenses. You shall also be reimbursed for any reasonable legal fees incurred by
you in the negotiation and preparation of this Agreement.
(g) The Company shall provide you with a leased automobile of
reasonable size and quality suitable to your position, and shall pay or
reimburse you for insurance, repairs, maintenance and fuel expenses with regard
to such automobile. You acknowledge that some or all
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of the benefits provided under this Section 2(g) may constitute taxable income
for which you are responsible for payment of income taxes.
3. DUTIES. (a) During the term of your employment hereunder,
including any Renewal Term hereof, you shall serve and the Company shall employ
you as the President and Chief Operating Officer of the Company with such
executive duties and responsibilities consistent with such positions and stature
as the Board of Directors from time to time may determine. It is the current
intention of the Company to appoint you as Chief Executive Officer of the
Company, effective April 1, 1999, although your appointment to that office shall
be subject to the approval of the Board of Directors at that time in its
discretion; provided that, if you are not appointed as Chief Executive Officer,
you shall have the termination right set forth in Section 9(g) below. You shall
report to, and act under the general direction of, the Chairman of the Board of
Directors; PROVIDED, that upon any appointment hereunder as Chief Executive
Officer of the Company, you shall report to, and act under the general direction
of, the Board of Directors. You shall use your best efforts to carry out the
instructions of the Chairman of the Board of Directors or of the Board of
Directors, as the case may be. You shall be elected to the Board of Directors by
vote of the directors no later than September 29, 1998, such election be
effective upon the Effective Date. You shall thereafter be nominated, on an
annual basis so long as you continue to be employed under this Agreement, for
election by the stockholders as a director of the Company and, if elected, you
shall serve as a director, without additional compensation. In addition, at the
request of the Board of Directors, you shall serve as an officer and/or director
of any of the Company's subsidiaries, in all cases in conformity with the
organizational documents and the policies of the Board of Directors of each such
subsidiary, without additional compensation.
(b) You shall devote your entire business time and energies
during normal business hours to the business and affairs of the Company and its
subsidiaries. Nothing in this Section shall be construed as prohibiting you from
investing your personal assets in businesses in which your participation is
solely that of a passive investor in such form or manner as will not violate
Section 6 hereof or require any services on your part in the operation or
affairs of those businesses. You may also participate in philanthropic or civic
activities so long as they do not materially interfere with your performance of
your duties hereunder.
(c) You shall be subject to the Company's rules, practices and
policies applicable to the Company's senior executive employees.
4. WORKING AND OTHER FACILITIES. During the Initial Term and
any Renewal Term, you shall be provided with such working facilities and other
support services as are suitable to your position and appropriate for the
performance of your duties. In the event the Company's principal executive
offices are relocated to a location more than 50 miles from their present
location, the Company shall reimburse your moving expenses (including reasonable
costs relating to any interim living accommodations).
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5. EXPENSES. The Company shall reimburse you for all
reasonable expenses incurred by you in connection with your employment upon
presentation of appropriate documentation therefor in accordance with the
Company's expense reimbursement practices.
6. RESTRICTIVE COVENANTS. (a) During such time as you shall be
employed by the Company, and for a period of one year thereafter, you shall not,
without the written consent of the Board of Directors, directly or indirectly,
become associated with, render services to, invest in, represent, advise or
otherwise participate as an officer, employee, director, stockholder, partner or
agent of, or as a consultant for, any business anywhere in the world which is
competitive with the business in which the Company is engaged at the time your
employment with the Company ceases (a "Competitive Business"); PROVIDED,
HOWEVER, that (i) nothing herein shall prevent you from investing in up to 5% of
the securities of any company listed on a national securities exchange or quoted
on the NASDAQ quotation system, as long as your involvement with any such
company is solely that of a stockholder, and (ii) nothing herein is intended to
prevent you from being employed following the termination of your employment
with the Company by any business other than a Competitive Business. You
acknowledge that the provisions of this Section 6 are reasonable in light of the
Company's worldwide business operations and the position in which you will serve
at the Company and that they will not prevent you from obtaining employment
after the termination of this Agreement.
(b) The parties hereto intend that the covenant contained in
this Section 6 shall be deemed a series of separate covenants for each
appropriate jurisdiction. If, in any judicial proceeding, a court shall refuse
to enforce all the separate covenants deemed included in this Section 6 on
grounds that, taken together, they cover too extensive a geographic area, the
parties intend that those covenants (taken in order of the least populous
jurisdictions) which, if eliminated would permit the remaining separate
covenants to be enforced in that proceeding, shall, for the purpose of such
proceeding, be deemed eliminated from the provisions of this Section 6.
7. CONFIDENTIALITY, NONINTERFERENCE AND PROPRIETARY
INFORMATION. (a) In the course of your employment by the Company hereunder, you
will have access to Confidential or Proprietary Data or Information of the
Company. You shall not at any time divulge or communicate to any person, nor
shall you direct any Company employee to divulge or communicate to any person
(other than to a person bound by confidentiality obligations similar to those
contained herein and other than as necessary in performing your duties
hereunder) or use to the detriment of the Company or for the benefit of any
other person, any of such Confidential or Proprietary Data or Information,
except to the extent the same (i) becomes publicly known other than through a
breach of this Agreement by you, (ii) was known to you prior to the disclosure
thereof by the Company to you or (iii) is subsequently disclosed to you by a
third party who shall not have received it under any obligation of
confidentiality to the Company. The provisions of this Section 7(a) shall
survive your employment hereunder, whether by the normal expiration thereof or
otherwise, for as long as such data or information remains confidential. For
purposes of this Agreement, the term "Confidential or Proprietary Data or
Information" shall mean data or information not generally available to the
public, including personnel information, financial information, customer lists,
supplier lists, product and trading specifications, trade secrets, information
concerning product composition and formulas,
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tools and dies, drawings and schematics, manufacturing processes, information
regarding operations, systems and services, knowhow, computer and any other
processed or collated data, computer programs, and pricing, marketing, sales and
advertising data.
(b) You shall not, during the term of this Agreement and for a
period of one year after the termination of your employment by the Company, for
your own account or for the account of any other person, interfere in any
material respect with the Company's relationship with any of its suppliers,
customers or employees; PROVIDED, however, that you shall not be prohibited from
contacting suppliers or customers after termination of your employment with
regard to matters that do not violate your noncompetition or confidentiality
obligations contained in Sections 6(a) and 7(a); and, PROVIDED, FURTHER, that
such contacts do not interfere in any material respect with the Company's
relationship with such parties.
(c) You shall at all times promptly disclose to the Company,
in such form and manner as the Company reasonably may require, any inventions,
improvements or procedural or methodological innovations, programs, methods,
forms, systems, services, designs, marketing ideas, products or processes
(whether or not capable of being trade-marked, copyrighted or patented)
conceived or developed or created by you during and in connection with your
employment hereunder and which relate to the business of the Company
("Intellectual Property"). All such Intellectual Property shall be the sole
property of the Company. You shall execute such instruments and perform such
acts as reasonably may be requested by the Company to transfer to and perfect in
the Company all legally protectable rights in such Intellectual Property. If the
Company is unable for any reason to secure your signature on such instruments,
you hereby irrevocably appoint the Company and its officers and agents as your
agents and attorneys-in-fact to execute such instruments and to do such things
with the same legal force and effect as if executed or done by you.
(d) All written materials, records and documents made by you
or coming into your possession during your employment concerning any products,
processes or equipment, manufactured, used, developed, investigated or
considered by the Company or otherwise concerning the business or affairs of the
Company, shall be the sole property of the Company, and upon termination of your
employment, or upon the request of the Company during your employment, you shall
deliver the same to the Company. In addition, upon termination of your
employment, or upon request of the Company during your employment, you shall
deliver to the Company all other Company property in your possession or under
your control, including confidential or proprietary data or information and all
Company credit cards.
8. EQUITABLE RELIEF. With respect to the covenants contained
in SECTIONS 6 AND 7 of this Agreement, you acknowledge that any remedy at law
for any breach of said covenants may be inadequate and that the Company, in
addition to its rights at law, shall be entitled to specific performance or any
other mode of injunctive or other equitable relief to enforce its rights
hereunder.
9. TERMINATION; ADDITIONAL COMPENSATION. This Agreement, and
your employment hereunder, shall terminate prior to the end of the Initial Term
or any Renewal Term, upon the following terms and conditions:
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(a) This Agreement shall terminate automatically on the date
of your death.
(b) This Agreement shall be terminated, at the option of the
Company, if you are unable to perform a substantial portion of your duties
hereunder for any 120 days (whether or not consecutive) during any period of 365
consecutive days by reason of physical or mental disability. Notwithstanding the
foregoing, the Company shall continue to pay to you, until six months after
termination of your employment due to such disability, your Base Salary at the
rate in effect on the date of termination, but less any amounts paid to you
pursuant to any disability policy sponsored by or made available through the
Company ("Disability Policy"). After such six month period, you shall be
entitled to receive any amounts due and owing pursuant to any Disability Policy
to the extent you qualify therefor under the terms of such Disability Policy.
For purposes of this Agreement, "PHYSICAL OR MENTAL DISABILITY" shall mean your
inability, due to health reasons, to discharge properly your duties of
employment, supported by the opinion of a physician reasonably satisfactory to
both you and the Company. If the parties do not agree on a mutually satisfactory
physician within ten days of written demand by one or the other, a physician
shall be selected by the president of the Pennsylvania Medical Association, and
the physician shall, within 30 days thereafter, make a determination as to
whether disability exists and certify the same in writing. The services of the
physician shall be paid for by the Company. You shall fully cooperate with the
examining physician including submitting yourself to such examinations as may be
requested by the physician for the purpose of determining whether you are
disabled.
(c) This Agreement shall terminate immediately if your
employment is terminated hereunder for Cause. The term "Cause" shall mean, for
purposes of this Agreement: (i) an act or acts of willful material
misrepresentation, fraud or dishonesty by you which results in the personal
enrichment of you or another person or entity at the expense of the Company;
(ii) your admission, confession or conviction of any felony or any other crime
or offense involving misuse or misappropriation of money or other property;
(iii) any act involving gross moral turpitude by you which adversely affects the
Company; (iv) your continued material breach of any obligations under this
Agreement 30 days after the Company has given you notice thereof in reasonable
detail, if such breach has not been cured by you during such period; or (v) your
gross negligence or willful misconduct with respect to your duties or gross
misfeasance of office. Notwithstanding the foregoing and Section 1(d)(ii) of the
SERP, the definition of "Cause" solely for purposes of the SERP shall be the
definition of "Cause" contained in Section 1(d)(i) of the SERP.
(d) Upon termination of this Agreement for any reason other
than pursuant to Section 9(f) or (g) below, in addition to any other rights or
benefits to which you may be entitled under this Agreement, you shall be paid
all Accrued Obligations through the date of termination. The term "Accrued
Obligations" shall mean (i) your Base Salary through the date of termination;
(ii) any bonus earned pursuant to the terms of any applicable incentive
compensation or bonus plans of the Company but not yet paid with respect to any
fiscal year completed prior to termination; (iii) a prorated bonus for the
fiscal year in which termination occurs equal to the product of (x) any bonus
paid to you for the prior fiscal year of the Company multiplied by (y) a
fraction, the numerator of which is the number of days in the current fiscal
year during which you were employed by the Company, and the denominator of which
is 365; and (iv) any accrued vacation pay not yet paid by
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the Company; PROVIDED, that if termination is by the Company for Cause or by you
voluntarily, the term "Accrued Obligations" will not include the amounts
referred to in clause (iii) above. Upon termination of this Agreement (other
than by the Company for Cause or pursuant to Section 9(f) or (g) below or by you
in violation of this Agreement), (A) you shall also be entitled to all rights
and benefits under benefit and incentive plans (other than those relating to
bonuses) in accordance with the respective terms of those plans; (B) you shall
be reimbursed for all your business expenses incurred prior to termination in
accordance with Section 5 above; (C) the Company shall, at your request within
15 days after termination and at your expense, assign to you the lease and any
related purchase option for the automobile provided to you pursuant to Section
2(g), PROVIDED such lease and purchase option is assignable; and (D) to the
extent the Company's life insurance plan has a conversion option available upon
termination of employment, the Company shall make such option available to you.
Upon termination by the Company for Cause, you shall be reimbursed for all your
business expenses incurred prior to termination in accordance with Section 5
above. For purposes of clause (ii) above, a bonus shall be deemed to be earned
upon completion of the fiscal year to which it relates regardless of whether the
Board of Directors or its Compensation Committee has approved bonuses for such
year as of the date of termination.
(e) Except upon the occurrence of a Change of Control
Termination (as defined in Exhibit A), if your employment hereunder shall be
terminated by the Company (i) without Cause, other than pursuant to Section 9(a)
or 9(b), or (ii) as a result of nonrenewal pursuant to a Termination Notice
given by the Company under Section 1, then in addition to any other rights or
benefits to which you may be entitled, the Company shall, for a period of one
year after termination, (x) continue to pay you your Base Salary at the rate in
effect on the date of termination; (y) continue to provide you with a leased
automobile pursuant to Section 2(g); and (z) continue all other benefits
provided to you prior to termination (except not including any bonus with
respect to the period after termination); provided, however, that to the extent
the Company's benefit plans do not permit such continued participation or such
participation would have an adverse tax impact on such plans or on the other
participants in such plans or is otherwise prohibited by applicable law, the
Company may instead provide materially equivalent benefits to you outside such
plans (which, in the case of medical insurance benefits, may be provided by the
Company paying any COBRA premiums, COBRA coverage in any event to be measured
from the date of termination of employment).
(f) In the event of a Change of Control Termination, this
Agreement shall terminate in accordance with the terms of Exhibit A, and the
payments and benefits to which you shall be entitled shall be governed solely by
Exhibit A.
(g) In the event you either are notified by the Board of
Directors in writing that you will not be appointed Chief Executive Officer of
the Company or are not appointed, effective on or before April 30, 1999, to the
position of Chief Executive Officer of the Company, you shall have the right
upon fifteen (15) business days prior written notice to terminate this Agreement
("Elective Termination Notice"), provided that such notice is given no later
than sixty (60) days after the earlier of the date you are notified in writing
that you will not be appointed to such position or April 30, 1999. If you do not
give an Elective Termination Notice within such period, you shall continue to
serve as President and Chief Operating Officer under the terms of this
Agreement, which
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shall continue in full force and effect. If you give an Elective Termination
Notice within such period, this Agreement shall terminate (except for your
obligations under Sections 6, 7 and 8) and you shall be paid (i) the Accrued
Obligations described in Section 9(d)(i), (ii) and (iv) above and (ii) a
severance payment amount equal to $325,000, payable in equal installments during
the one year period following termination in accordance with the Company's
normal payroll practices. In addition, upon such termination, you shall be
entitled to the rights described in Section 9(d)(B), (C) and (D), and the
Company, for a period of one year following termination, shall continue to
provide you with a leased automobile pursuant to Section 2(g) and shall continue
your coverage under the Company's life and medical insurance plans, subject to
the proviso in the last sentence under Section 9(e) above. The foregoing right
to terminate this Agreement by giving an Elective Termination Notice shall
constitute the sole right or remedy you have in the event the Company fails to
appoint you Chief Executive Officer.
(h) In the event this Agreement is terminated for any reason
by the Company (other than due to death, disability or for Cause), or the
Company provides a Termination Notice as set forth in Section 1, upon
termination of your employment under this Agreement, any unvested options from
the Original Grant which you may own which would otherwise have vested within
one year from the date of termination shall be deemed to vest effective upon the
date of termination and become exercisable for a period of 90 days following the
date of termination. All other unvested options from the Original Grant shall
terminate. In the event of a termination by you pursuant to Section 9(g), all
unvested options under the Original Grant shall vest effective upon termination
and become exercisable for a period of 90 days following the date of
termination. In any event, any vested options from the Original Grant not
exercised within 90 days after termination of employment shall terminate.
10. REPRESENTATION. You hereby represent and warrant that you
are not subject to any employment agreement, non-competition or confidentiality
agreement or other commitment which either would be violated by your entering
into or performing your obligations under this Agreement or which would restrict
in any manner or interfere with the performance of your obligation under this
Agreement.
11. ENTIRE AGREEMENT; MODIFICATION; CONSTRUCTION. This
Agreement, together with Exhibit A hereto, constitutes the full and complete
understanding of the parties, and supersedes all prior agreements and
understandings, oral or written, between the parties, with respect to the
subject matter hereof. Exhibit A is hereby incorporated by reference and made a
part of this Agreement. Each party to this Agreement acknowledges that no
representations, inducements, promises or agreements, oral or otherwise, have
been made by either party, or anyone acting on behalf of either party, which are
not set forth herein. This Agreement may not be modified or amended except by an
instrument in writing signed by the party against which enforcement thereof may
be sought.
12. SEVERABILITY. Any term or provision of this Agreement that
is held to be invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of that invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
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and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction.
13. WAIVER OF BREACH. The waiver by either party of a breach
of any provision of this Agreement, which waiver must be in writing to be
effective, shall not operate as or be construed as a waiver of any subsequent
breach.
14. NOTICES. All notices hereunder shall be in writing and
shall be sent by messenger or by certified or registered mail, postage prepaid,
return receipt requested, if to you, to your residence set forth above, with a
copy to Davis, Riter, Parry & Hartmann, 1525 Locust Street, Philadelphia,
Pennsylvania 19102-3732, Attention: Herbert Hoffman, Esq. and if to the Company,
to the Vice President-Human Resources, at the Company's address set forth above,
with a copy to Proskauer Rose LLP, 1585 Broadway, New York, New York 10036,
Attention: Steven L. Kirshenbaum, Esq., or to such other address as either party
to this Agreement shall specify to the other.
15. ASSIGNABILITY; BINDING EFFECT. This Agreement shall not be
assignable by either party, except that it may be assigned to an acquiror of all
or substantially all of the assets of the Company or other successor the
Company, subject to your rights arising from a Change of Control as provided in
Exhibit A. This Agreement shall be binding upon and inure to the benefit of you,
your legal representatives, heirs and distributees, and shall be binding upon
and inure to the benefit of the Company, its successors and assigns.
16. GOVERNING LAW. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to the conflicts or choice of law provisions thereof.
17. ARBITRATION. Any controversy or claim arising out of or
relating to this contract, or the breach thereof, shall be settled in
Philadelphia, Pennsylvania or other mutually agreed location, by arbitration
administered by the American Arbitration Association under its Commercial
Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may
be entered in any court having jurisdiction thereof.
18. HEADINGS. The headings in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
19. COUNTERPARTS. This Agreement may be executed in several
counterparts each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
If you are in agreement with the foregoing, please sign the
duplicate original in the space provided below and return it to the Company.
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C&D TECHNOLOGIES, INC.
By:
Title:
Agreed as of the date
first above written:
/s/ Wade H. Roberts, Jr.
------------------------
Wade H. Roberts, Jr.
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EXHIBIT A TO EMPLOYMENT AGREEMENT ("AGREEMENT")
OF WADE H. ROBERTS, JR. ("EXECUTIVE")
(Capitalized terms used herein and not otherwise defined have the meanings given
to them in the Agreement.)
I. SPECIAL TERMINATION PROVISIONS. In the event a Change of Control (as defined
below) occurs, and within 24 months after such Change of Control: (a) the
Executive's employment with the Company is terminated by the Executive pursuant
to a Termination for Good Reason (as defined below); or (b) the Executive's
employment with the Company is terminated by the Company for any reason other
than death, disability or for Cause pursuant to Sections 9(a), (b) or (c) of the
Agreement; or (c) the Agreement is not renewed due to a Termination Notice given
by the Company, as provided in Section 1 of the Agreement (the events under
clauses (a), (b) and (c) herein collectively called a "Change of Control
Termination"), the Executive shall be entitled to receive the payments and
benefits set forth in Section III below.
II. DEFINITIONS. (a) CHANGE OF CONTROL. For purposes of the Agreement, a "Change
of Control" shall be deemed to have occurred if: (i) any person (as defined in
Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and as used in Sections 13(d) and 14(d) thereof)), excluding the
Company, any "Subsidiary" and any employee benefit plan sponsored or maintained
by the Company or any Subsidiary (including any trustee of any such plan acting
in his capacity as trustee), but including a "group" as defined in Section
13(d)(3) of the Exchange Act, becomes the beneficial owner of shares of the
Company having at least 30% of the total number of votes that may be cast for
the election of directors of the Company; (ii) the shareholders of the Company
shall approve any merger or other business combination of the Company, sale of
all or substantially all of the Company's assets or combination of the foregoing
transactions (a "Transaction"), other than a Transaction involving only the
Company and one or more of its Subsidiaries, or a Transaction immediately
following which the shareholders of the Company immediately prior to the
Transaction continue to have a majority of the voting power in the resulting
entity (excluding for this purpose any shareholder of the Company owning
directly or indirectly more than 10% of the shares of the other company involved
in the Transaction) and no person is the beneficial owner of 30% of the shares
of the resulting entity as contemplated by Section II(a)(i) above; or (iii)
within any 24 month period beginning on or after the date hereof, the persons
who were directors of the Company immediately before the beginning of such
period (the "Incumbent Directors") shall cease to constitute at least a majority
of the Board or the board of directors of any successor to the Company, PROVIDED
that any director who was not a director as of the date hereof shall be deemed
to be an Incumbent Director if such director was elected to the Board by, or on
the recommendation of or with the approval of, at least two-thirds of the
directors who then qualified as Incumbent Directors either actually or by prior
operation of this Section II(a)(iii), unless such election, recommendation or
approval was the result of an actual or threatened election contest of the type
contemplated by Regulation 14a-11 promulgated under the Exchange Act or any
successor provision. Notwithstanding the foregoing, no Change of Control of the
Company shall be deemed to have occurred for purposes of this Agreement by
reason of any actions or events in
which the Executive participates in a capacity other than in his capacity as an
executive or director of the Company.
(b) TERMINATION FOR GOOD REASON. For purposes of the
Agreement, a "Termination for Good Reason" means a termination by Executive by
written notice given within 90 days after the occurrence of the Good Reason
event. A notice of Termination for Good Reason shall indicate the specific
termination provision in Section II(c) relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
Termination for Good Reason. The failure by Executive to set forth in such
notice any facts or circumstances which contribute to the showing of Good Reason
shall not waive any right of Executive hereunder or preclude Executive from
asserting such fact or circumstance in enforcing his rights hereunder. The
notice of Termination for Good Reason shall provide for a date of termination
not less than 10 nor more than 60 days after the date such Notice of Termination
for Good Reason is given.
(c) GOOD REASON. For purposes of the Agreement, "Good Reason"
shall mean the occurrence, without Executive's express written consent, of any
of the following circumstances, unless such circumstances are fully corrected
prior to the date of termination specified in the notice of Termination for Good
Reason as contemplated in Section II(b) above: (i) any material diminution of
Executive's positions, duties or responsibilities hereunder (except in each case
in connection with the termination of Executive's employment for Cause pursuant
to Section 9(c) of the Agreement or due to disability or death pursuant to
Sections 9(a) or 9(b) of the Agreement, or temporarily as a result of
Executive's illness or other absence), or the assignment to Executive of duties
or responsibilities that are inconsistent with Executive's position under the
Agreement at the time of a Change of Control; (ii) removal of, or the
nonreelection of, the Executive from the officer positions with the Company
specified in the Agreement; (iii) relocation of the Company's principal
executive offices to a location more than 50 miles from its location at the time
of the Change of Control; (iv) failure by the Company, after a Change of
Control, (A) to continue any bonus plan, program or arrangement in which
Executive is entitled to participate immediately prior to the Change of Control
(the "Bonus Plans"), provided that any such Bonus Plans may be modified at the
Company's discretion from time to time but shall be deemed terminated if (x) any
such plan does not remain substantially in the form in effect prior to such
modification and (y) if plans providing Executive with substantially similar
benefits are not substituted therefor ("Substitute Plans"), or (B) to continue
Executive as a participant in the Bonus Plans and Substitute Plans on at least
the same basis as to potential amount of the bonus and substantially the same
level of criteria for achievability thereof as Executive participated in
immediately prior to any change in such plans or awards, in accordance with the
Bonus Plans and the Substitute Plans; (v) any material breach by the Company of
any provision of the Agreement; (vi) if the Executive is on the Board of
Directors at the time of a Change of Control, Executive's removal from or
failure to be reelected to the Board of Directors thereafter; or (vii) failure
of any successor to the Company to assume in a writing delivered to Executive
upon the assignee becoming such, the obligations of the Company hereunder.
III. PAYMENTS AND BENEFITS. Upon a Change of Control Termination, as provided in
Section I above, the Company shall pay or provide the Executive the following
payments and benefits:
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(a) The Company shall pay to the Executive in a lump sum
within five business days after the date of termination any Accrued Obligations.
(b) The Company shall pay to the Executive as severance pay,
not later than the fifth business day following the date of termination of
Executive's employment:
(i) a lump sum in an amount equal to two years of the
Executive's Base Salary (or the aggregate Base Salary the Executive would have
earned for the Term Balance, as defined below, if greater); and
(ii) a lump sum in an amount equal to the product of
(A) the annual bonus paid by the Company to the Executive based on the average
of the bonuses paid during the last two fiscal years of the Company ending prior
to the date of termination (or, if the Executive has been employed by the
Company for less than two years at the date of termination, an amount equal to
the average of the annual bonus payable to Executive under the Agreement with
respect to the fiscal year ending January 31, 1999 and Executive's targeted
bonus under the Agreement with respect to the fiscal year ending January 31,
2000), multiplied by (B) the greater of two or the number of years (including
fractions) remaining in the Term Balance.
For purposes of the Agreement, the term "Term Balance" shall mean the balance of
the Initial Term after termination, if termination occurs during the Initial
Term.
(c) As additional severance, the Company shall continue the
participation of the Executive and the Executive's dependents for the greater of
two years or the Term Balance (and at the same level and at the same charges to
the Executive) in all health, medical and accident, life and other welfare plans
(as defined in Section 3(1) of ERISA), in which the Executive was participating
immediately prior to the date of termination, except for any disability plans,
and shall provide the Executive with a leased automobile pursuant to Section
2(g) of the Agreement for such period; provided, however, that to the extent the
Company's plans do not permit such continued participation or such participation
would have an adverse tax impact on such plans or on the other participants in
such plans, the Company may instead provide materially equivalent benefits to
the Executive outside of such plans; provided, further, that under such
circumstances, (i) medical insurance benefits may be provided by the Company
paying any COBRA premiums (COBRA coverage, in any event, to be measured from the
date of termination of employment) and (ii) if the Company is unable to continue
the Executive's life insurance coverage, it shall pay the Executive an amount
equal to twice the premium paid during the year prior to termination or if the
Executive converts the insurance to an individual policy, the Company shall pay
the premium for such insurance for two years.
The Executive shall complete such forms and take such physical
examinations as reasonably requested by the Company. To the extent the Executive
incurs any tax obligation as a result of the provisions of this paragraph (c)
that the Executive would not have incurred if the Executive remained an employee
of the Company and had continued to participate in the benefit plans as an
employee, the Company shall pay to the Executive, at the time the tax is due, an
amount to cover such taxes and the taxes on the amount paid to cover such taxes.
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(d) To the extent permitted under the terms of the applicable
stock option or restricted stock plan (if any), any stock options that would
vest in the two years after termination, or during the Term Balance, if greater,
and any restricted stock that would become nonforfeitable in such two year
period or during the Term Balance, if greater, shall immediately vest or become
nonforfeitable, as the case may be, and the exercise period of any stock options
shall be extended as if the Executive remained employed until the end of such
additional two years, or the Term Balance, whichever is longer. In the event the
foregoing sentence becomes applicable, the Company agrees to cause the Board of
Directors to take all steps necessary to implement the foregoing sentence.
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