1
Exhibit 10.2
AGREEMENT
---------
THIS AGREEMENT made as of [Date] by and between VENATOR GROUP, INC., a New
York corporation with its principal office at 233 Broadway, New York, New York
10279 (the "Company") and [Executive], residing at [Address] (the "Executive").
W I T N E S S E T H:
--------------------
WHEREAS, the Company believes that the establishment and maintenance of a
sound and vital management of the Company is essential to the protection and
enhancement of the interests of the Company and its shareholders; and
WHEREAS, the Company wishes to offer a form of protection to the Executive,
as one of a select group of officers and key employees of the Company and its
Affiliates, in the event the Executive's employment with the Control Group
terminates; and
WHEREAS, the Company also recognizes that the possibility of a Change in
Control of the Company, with the attendant uncertainties and risks, might result
in the departure or distraction of the Executive to the detriment of the
Company; and
WHEREAS, the Company wishes to induce the Executive to remain with the
Control Group, and to reinforce and encourage the Executive's continued
attention and dedication, when faced with the possibility of a Change in Control
of the Company; and
WHEREAS, this Agreement amends and supersedes any employment agreement,
severance plan, policy and/or practice of the Company in effect for the
Executive.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Definitions. The following terms shall have the meanings set forth in
this section as follows:
(a) "Affiliate" shall mean the Company and any entity affiliated with the
Company within the meaning of Code Section 414(b) with respect to a controlled
group of corporations, Code Section 414(c) with respect to trades or businesses
under common control with the Company, Code Section 414(m) with respect to
affiliated service groups and any other entity required to be aggregated with
the Company under Section 414(o) of the Code. No entity shall be treated as an
Affiliate for any period during which it is not part of the controlled group,
under common control or otherwise required to be aggregated under Code Section
414.
(b) "Beneficiary" shall mean the individual designated by the Executive, on
a form acceptable by the Committee, to receive benefits payable under this
Agreement in the event of the Executive's death. If no Beneficiary is
designated, the Executive's Beneficiary shall be his or her spouse, or if the
Executive is not survived by a spouse, the Executive's estate.
(c) "Board" shall mean the Board of Directors of the Company.
1
2
(d) "Bonus" shall mean an amount equal to the target bonus expected to be
earned by the Executive under the Company's Annual Incentive Compensation Plan
or such other annual bonus plan or program that may then be applicable to the
Executive in a fiscal year, if the applicable target performance goal is
satisfied.
(e) "Cause" shall mean (with regard to the Executive's termination of
employment with the Control Group): (i) the refusal or willful failure by the
Executive to substantially perform his or her duties, (ii) with regard to the
Control Group or any of their assets or businesses, the Executive's dishonesty,
willful misconduct, misappropriation, breach of fiduciary duty or fraud, or
(iii) the Executive's conviction of a felony (other than a traffic violation) or
any other crime involving, in the sole discretion of the Committee, moral
turpitude.
(f) "Change in Control" shall have the meaning set forth in Appendix A
attached hereto.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended and as
hereafter amended from time to time.
(h) "Committee" shall mean the Compensation Committee of the Board or an
administrative committee appointed by the Compensation Committee.
(i) "Competition" shall mean the (i) participating, directly or indirectly,
as an individual proprietor, stockholder, officer, employee, director, joint
venturer, investor, lender, or in any capacity whatsoever (within the United
States of America, or in any country where any of the Executive's former
employing members of the Control Group does business) in a business in
competition with any business conducted by any member of the Control Group for
which the Executive worked at any time, provided, however, that such
participation shall not include (A) the mere ownership of not more than 1
percent of the total outstanding stock of a publicly held company; (B) the
performance of services for any enterprise to the extent such services are not
performed, directly or indirectly, for a business in which any of the Employee's
employing members of the Control Group is engaged; or (C) any activity engaged
in with the prior written approval of the Board or the Committee; or (ii)
intentional recruiting, soliciting or inducing, of any employee or employees of
the Control Group to terminate their employment with, or otherwise cease their
relationship with the former employing members of the Control Group where such
employee or employees do in fact so terminate their employment.
(j) "Control Group" shall mean the Company and its Affiliates.
(k) "Good Reason" shall mean (with respect to an Executive's termination of
employment with the Control Group): (i) any material demotion of the Executive
or any material reduction in the Executive's authority or responsibility, except
in each case in connection with the termination of the Executive's employment
for Cause or disability or as a result of the Executive's death, or temporarily
as a result of the Executive's illness or other absence; (ii) prior to a Change
2
3
in Control, a reduction in the Executive's rate of base salary as payable from
time to time, other than a reduction that occurs in connection with, and in the
same percentage as, an across-the-board reduction over any three-year period in
the base salaries of all executives of the Company of a similar level and where
the reduction is less than 20 percent of the Executive's base salary measured
from the beginning of such three-year period; (iii) on or after a Change in
Control, any reduction in the Executive's rate of base salary as payable from
time to time; (iv) a reduction in the Executive's annual bonus classification
level other than in connection with a redesign of the applicable bonus plan that
affects all employees at the Executive's bonus level; (v) a failure of the
Company to continue in effect the benefits applicable to, or the Company's
reduction of the benefits applicable to, the Executive under any benefit plan or
arrangement (including without limitation, any pension, life insurance, health
or disability plan) in which the Executive participates as of the date of the
Change in Control without implementation of a substitute plan(s) providing
materially similar benefits in the aggregate to those discontinued or reduced,
except for a discontinuance of, or reduction under, any such plan or arrangement
that is legally required and/or generally applies to all executives of the
Company of a similar level, provided that in either such event the Company
provides similar benefits (or the economic effect thereof) to the Executive in
any manner determined by the Company; or (vi) failure of any successor to the
Company to assume in writing the obligations hereunder.
(l) "Salary" shall mean an Executive's base monthly cash compensation rate
for services paid to the Executive by the Company or an Affiliate at the time of
his or her termination of employment from the Control Group. Salary shall not
include commissions, bonuses, overtime pay, incentive compensation, benefits
paid under any qualified plan, any group medical, dental or other welfare
benefit plan, noncash compensation or any other additional compensation but
shall include amounts reduced pursuant to an Executive's salary reduction
agreement under Sections 125 or 401(k) of the Code (if any) or a nonqualified
elective deferred compensation arrangement to the extent that in each such case
the reduction is to base salary.
(m) "Severance Benefit" shall mean (i) in the case of the Executive's
termination of employment that does not occur within the 12 month period
following a Change in Control, two weeks' Salary plus prorated Bonus multiplied
by the Executive's Years of Service, with a minimum of 26 weeks; or (ii) in the
case of an Executive's termination of employment within the 12 month period
following a Change in Control, two weeks' Salary plus prorated Bonus multiplied
by the Executive's Years of Service, with a minimum of 78 weeks. The Executive's
prorated Bonus for one week shall equal the Executive's Bonus divided by 52. In
no event, however, shall the Severance Benefit payable to an Executive hereunder
be less than 12 months' Salary.
(n) "Severance Period" shall mean (i) in the case of the Executive's
termination of employment that does not occur within the 12 month period
following a Change in Control, two weeks multiplied by the Executive's Years of
Service, with a minimum of 52 weeks; or (ii) in the case of an Executive's
termination of employment within the 12 month period following a Change in
Control, two weeks multiplied by the Executive's Years of Service, with a
minimum of 78 weeks.
(o) "Year of Service" shall mean each 12 consecutive month period
commencing on the Executive's date of hire by the Company or an Affiliate and
each anniversary thereof in which the Executive is paid by the Company or an
Affiliate for the performance of full-time services as an Executive. For
purposes of this section, full-time services shall mean that the Employee is
employed for at least 30 hours per week. A Year of Service shall include any
period during which an Employee is not working due to disability, leave of
absence or layoff so long as he or she is being paid by the
3
4
Employer (other than through any employee benefit plan). A Year of Service also
shall include service in any branch of the armed forces of the United States by
any person who is an Executive on the date such service commenced, but only to
the extent required by applicable law.
2. Term. The initial term of this Agreement shall end on December 31 of the
year following the year in which this Agreement is entered into. On December 31
of each year, the term shall be automatically renewed for an additional one year
so that the term shall then be for two years, unless the Committee notifies the
Executive prior to any December 31 that the term shall not be renewed.
Notwithstanding anything in this Agreement to the contrary, if the Company
becomes obligated to make any payment to the Executive pursuant to the terms
hereof at or prior to the expiration of this Agreement, then this Agreement
shall remain in effect until all of the Company's obligations hereunder are
fulfilled.
3. Benefits Upon Termination. In the event the Executive's employment with
the Control Group is terminated without Cause or the Executive terminates
employment with the Control Group within 60 days after the occurrence of a Good
Reason event with regard to the Executive, the Executive shall be entitled to a
Severance Benefit as set forth below.
(a) The Executive shall receive 50 percent of his or her Severance Benefit
in the form of a lump sum cash payment as soon as administratively feasible
following his or her termination of employment with the Control Group, provided,
however, that interest shall be payable beginning on the tenth day following
such termination of employment at the prime rate of interest as stated in The
Wall Street Journal.
(b) The Executive shall receive the remaining 50 percent of his or her
Severance Benefit in the form of a lump sum cash payment as soon as
administratively feasible following the one year anniversary of the Executive's
termination of employment with the Control Group, subject to (c) below,
provided, however, that interest shall be payable beginning on the tenth day
following such termination of employment at the prime rate of interest as stated
in The Wall Street Journal. Notwithstanding the foregoing, if a Change in
Control occurs prior to the Executive's receipt of the remaining 50 percent of
his or her Severance Benefit, the Executive shall receive such remaining 50
percent within 10 days following the Change in Control (and, if not paid within
such 10 day period, with interest payable beginning on the tenth day following
the Change in Control at the prime rate of interest as stated in The Wall Street
Journal).
(c) The Executive shall only be entitled to the portion of his or her
Severance Benefit described in (b) above if the Executive does not engage in
Competition during the one year period following his or her termination of
employment with the Control Group and if the Executive has not materially
violated the provisions of Section 14 hereof. If the Executive does engage in
Competition or violates the provisions of Section 14 during such one year
period, the portion of the Executive's Severance Benefit described in (b) above
shall be forfeited. If the restriction set forth in this subsection is found by
any court of competent jurisdiction to be unenforceable because it extends for
too long a period of time or over too great a range of activities or in too
broad a geographic area, it shall be interpreted to extend over the maximum
period of time, range of activities or geographic area as to which it may be
enforceable.
4
5
(d) Notwithstanding anything to the contrary contained herein, if the
Executive's employment with the Control Group is terminated as described in the
introductory paragraph to this Section 3 following a Change in Control, (i) the
Executive shall receive 100 percent of his or her Severance Benefit in the form
of a lump sum cash payment within 10 days following his or her termination of
employment with the Control Group (and, if not paid within such 10 day period,
with interest payable beginning on the tenth day following such termination of
employment at the prime rate of interest as stated in The Wall Street Journal),
and (ii) the restriction on competition contained in Section 3(c) shall not
apply.
(e) The Executive shall continue, to the extent permitted under legal and
underwriting requirements (if any), to participate during his or her Severance
Period in any group medical, dental or life insurance plan he or she
participated in prior to his or her termination of employment, under
substantially similar terms and conditions as an active Employee; provided
participation in such group medical, dental and life insurance benefits shall
correspondingly cease at such time as the Executive becomes eligible for a
future employer's medical, dental and/or life insurance coverage (or would
become eligible if the Executive did not waive coverage). Notwithstanding the
foregoing, the Executive may not continue to participate in such plans on a
pre-tax or tax-favored basis. Notwithstanding anything else herein, the
Executive shall not be entitled to any benefits during the Severance Period
other than the benefits provided in Section 3 herein and, without limiting the
generality of the foregoing, the Executive specifically shall not be entitled to
continue to participate in any group disability or voluntary accidental death or
dismemberment insurance plan he or she participated in prior to his or her
termination of employment. Without limiting the generality of the foregoing, the
Executive shall not accrue additional benefits under any pension plan of the
Employer (whether or not qualified under Section 401(a) of the Code) during the
Severance Period, provided, however, that payment of any Severance Benefit shall
be included in the Executive's earnings for purposes of calculating the
Executive's benefit under the Venator Group Retirement Plan, Venator Group
401(k) Plan, and Venator Group Excess Cash Balance Plan.
(f) In the event of the Executive's death after becoming eligible for the
portion of the Severance Benefit described in (a) above and prior to payment of
such amount, such portion of the Severance Benefit shall be paid to the
Executive's Beneficiary. In addition to the foregoing, in the event of the
Executive's death prior to payment of the portion of the Severance Benefit
described in (b) above, such amount shall be paid to the Executive's
Beneficiary, but only to the extent that the Executive satisfied the provisions
set forth in (c) above for the period following the Executive's termination of
employment with the Control Group and prior to his or her death.
(g) Notwithstanding anything else herein, to the extent the Executive would
be subject to the excise tax under Section 4999 of the Code on the amounts in
(a) or (b) above and such other amounts or benefits he or she received from the
Company and its Affiliates required to be included in the calculation of
parachute payments for purposes of Sections 280G and 4999 of the Code, the
amounts provided under this Agreement shall be automatically reduced to an
amount one dollar less than that, when combined with such other amounts and
benefits required to be so included, would subject the Executive to the excise
tax under Section 4999 of the Code, if, and only if, the reduced amount received
by the Executive, would be greater than the unreduced amount to be received by
the Executive minus the excise tax payable under Section 4999 of the Code on
such amount and the
5
6
other amounts and benefits received by the Executive and required to be included
in the calculation of a parachute payment for purposes of Sections 280G and 4999
of the Code.
4. No Duty to Mitigate/Set-off. The Company agrees that if the Executive's
employment with the Company is terminated during the term of this Agreement, the
Executive shall not be required to seek other employment or to attempt in any
way to reduce any amounts payable to the Executive by the Company pursuant to
this Agreement. Further, except to the extent provided for in Section 3(c), the
amount of the Severance Benefit provided for in this Agreement shall not be
reduced by any compensation earned by the Executive or benefit provided to the
Executive as the result of employment by another employer or otherwise. Except
as otherwise provided herein, the Company's obligations to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive. The Executive shall retain any and
all rights under all pension plans, welfare plans, equity plans and other plans,
including other severance plans, under which the Executive would otherwise be
entitled to benefits.
5. Funding. Severance Benefits shall be funded out of the general assets of
the Company as and when they are payable under this Agreement. The Executive
shall be solely a general creditor of the Company. If the Company decides to
establish any advance accrued reserve on its books against the future expense of
benefits payable hereunder, or if the Company is required to fund a trust under
this Agreement, such reserve or trust shall not under any circumstances be
deemed to be an asset of this Agreement.
6. Administration. This Agreement shall be administered by the Committee.
The Committee (or its delegate) shall have the exclusive right, power, and
authority, in its sole and absolute discretion, to administer, apply and
interpret the Agreement and to decide all matters arising in connection with the
operation or administration of the Agreement. Without limiting the generality of
the foregoing, the Committee shall have the sole and absolute discretionary
authority: (a) to take all actions and make all decisions with respect to the
eligibility for, and the amount of, benefits payable under the Agreement; (b) to
formulate, interpret and apply rules, regulations and policies necessary to
administer the Agreement in accordance with its terms; (c) to decide questions,
including legal or factual questions, relating to the calculation and payment of
benefits under the Agreement; (d) to resolve and/or clarify any ambiguities,
inconsistencies and omissions arising under the Agreement; (e) to decide for
purposes of paying benefits hereunder, whether, based on the terms of this
Agreement, a termination of employment is for Good Reason or for Cause; and (f)
except as specifically provided to the contrary herein, to process and approve
or deny benefit claims and rule on any benefit exclusions. All determinations
made by the Committee (or any delegate) with respect to any matter arising under
the Agreement shall be final, binding and conclusive on all parties.
Decisions of the Committee shall be made by a majority of its members
attending a meeting at which a quorum is present (which meeting may be held
telephonically), or by written action in accordance with applicable law. All
decisions of the Committee on any question concerning the interpretation and
administration of the Agreement shall be final, conclusive and binding upon all
parties.
6
7
No member of the Committee and no officer, director or employee of the
Company or any other Affiliate shall be liable for any action or inaction with
respect to his or her functions under this Agreement unless such action or
inaction is adjudged to be due to gross negligence, willful misconduct or fraud.
Further, no such person shall be personally liable merely by virtue of any
instrument executed by him or her or on his or her behalf in connection with
this Agreement.
The Company shall indemnify, to the full extent permitted by law and its
Certificate of Incorporation and By-laws (but only to the extent not covered by
insurance) its officers and directors (and any employee involved in carrying out
the functions of the Company under the Agreement) and each member of the
Committee against any expenses, including amounts paid in settlement of a
liability, which are reasonably incurred in connection with any legal action to
which such person is a party by reason of his or her duties or responsibilities
with respect to the Agreement, except with regard to matters as to which he or
she shall be adjudged in such action to be liable for gross negligence, willful
misconduct or fraud in the performance of his or her duties.
7. Claims Procedures. Any claim by the Executive or Beneficiary
("Claimant") with respect to participation, contributions, benefits or other
aspects of the operation of the Agreement shall be made in writing to the
Secretary of the Company or such other person designated by the Committee from
time to time for such purpose. If the designated person receiving a claim
believes, following consultation with the Chairman of the Committee, that the
claim should be denied, he or she shall notify the Claimant in writing of the
denial of the claim within 90 days after his or her receipt thereof (this period
may be extended an additional 90 days in special circumstances and, in such
event, the Claimant shall be notified in writing of the extension). Such notice
shall (a) set forth the specific reason or reasons for the denial making
reference to the pertinent provisions of the Agreement on which the denial is
based, (b) describe any additional material or information necessary to perfect
the claim, and explain why such material or information, if any, is necessary,
and (c) inform the Claimant of his or her right pursuant to this section to
request review of the decision.
A Claimant may appeal the denial of a claim by submitting a written request
for review to the Committee, within 60 days after the date on which such denial
is received. Such period may be extended by the Committee for good cause shown.
The claim will then be reviewed by the Committee. A Claimant or his or her duly
authorized representative may discuss any issues relevant to the claim, may
review pertinent documents and may submit issues and comments in writing. If the
Committee deems it appropriate, it may hold a hearing as to a claim. If a
hearing is held, the Claimant shall be entitled to be represented by counsel.
The Committee shall decide whether or not to grant the claim within 60 days
after receipt of the request for review, but this period may be extended by the
Committee for up to an additional 60 days in special circumstances. Written
notice of any such special circumstances shall be sent to the Claimant. Any
claim not decided upon in the required time period shall be deemed denied. All
interpretations, determinations and decisions of the Committee with respect to
any claim shall be made in its sole discretion based on the Agreement and other
relevant documents and shall be final, conclusive and binding on all persons.
8. Incompetency; Payments to Minors. In the event that the Committee finds
that a Participant is unable to care for his or her affairs because of illness
or accident, then benefits payable hereunder, unless claim has been made
therefor by a duly appointed guardian, committee, or other
7
8
legal representative, may be paid in such manner as the Committee shall
determine, and the application thereof shall be a complete discharge of all
liability for any payments or benefits to which such Participant was or would
have been otherwise entitled under this Agreement. Any payments to a minor
pursuant to this Agreement may be paid by the Committee in its sole and absolute
discretion (a) directly to such minor; (b) to the legal or natural guardian of
such minor; or (c) to any other person, whether or not appointed guardian of the
minor, who shall have the care and custody of such minor. The receipt by such
individual shall be a complete discharge of all liability under the Agreement
therefor.
9. Withholding. The Company shall have the right to make such provisions as
it deems necessary or appropriate to satisfy any obligations it may have to
withhold federal, state or local income or other taxes incurred by reason of
payments pursuant to this Agreement. In lieu thereof, the Employer shall have
the right to withhold the amount of such taxes from any other sums due or to
become due from the Employer to the Executive upon such terms and conditions as
the Committee may prescribe.
10. Assignment and Alienation. Except as provided herein, the benefits
payable under this Agreement shall not be subject to alienation, transfer,
assignment, garnishment, execution or levy of any kind, and any attempt to cause
any benefits to be so subjected shall not be recognized.
11. Successors; Binding Agreement. 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, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to
expressly assume and agree in writing 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. This Agreement shall inure to the benefit
of and be enforceable by the Executive's 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 if the Executive had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's Beneficiary, or the executors,
personal representatives or administrators of the Executive's estate.
12. Miscellaneous. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officer as may be specifically
designated by the Board. 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 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. All references to sections of the Code or any other law
shall be deemed also to refer to any successor provisions to such sections and
laws.
13. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
8
9
14. Confidentiality. The Executive shall not at any time during the term of
this Agreement, or thereafter, communicate or disclose to any unauthorized
person, or use for the Executive's own account, without the prior written
consent of the Board, any proprietary processes, or other confidential
information of the Company or any subsidiary concerning their business or
affairs, accounts or customers, it being understood, however, that the
obligations of this section shall not apply to the extent that the aforesaid
matters (a) are disclosed in circumstances in which the Executive is legally
required to do so, or (b) become generally known to and available for use by the
public other than by the Executive's wrongful act or omission.
15. Severability. If any provisions of this Agreement shall be declared to
be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
16. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three arbitrators in New York, New York, or in such other city
in which the Executive is then located, in accordance with the rules of the
American Arbitration Association then in effect. The determination of the
arbitrators, which shall be based upon a de novo interpretation of this
Agreement, shall be final and binding and judgment may be entered on the
arbitrators' award in any court having jurisdiction. The Company shall pay all
costs of the American Arbitration Association and the arbitrator.
17. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its
subsidiary companies and for which the Executive may qualify.
18. Governing Law. This Agreement shall be construed, interpreted, and
governed by the Employee Retirement Income Security Act of 1974, as amended. To
the extent not so governed, it shall be governed by the laws of the State of New
York (without reference to rules relating to conflicts of law).
19. Top-hat Plan. This Agreement is intended to be a "top-hat" welfare plan
within the meaning of Department of Labor Regulation Section 2520.104-24.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and the Executive's hand has hereunto been set as of the date first set
forth above.
VENATOR GROUP, INC.
By:____________________________
____________________________
[Executive]
9
10
APPENDIX A
----------
Change in Control
-----------------
A Change in Control shall mean any of the following: (i) (A) the making of
a tender or exchange offer by any person or entity or group of associated
persons or entities (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 (a "Person") (other than the Company or its
Affiliates) for shares of common stock of the Company pursuant to which
purchases are made of securities representing at least twenty percent (20%) of
the total combined voting power of the Company's then issued and outstanding
voting securities; (B) the merger or consolidation of the Company with, or the
sale or disposition of all or substantially all of the assets of the Company to,
any Person other than (a) 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 or parent entity) fifty percent (50%) or
more of the combined voting power of the voting securities of the Company or
such surviving or parent entity outstanding immediately after such merger or
consolidation; or (b) a merger or capitalization effected to implement a
recapitalization of the Company (or similar transaction) in which no Person is
or becomes the beneficial owner, directly or indirectly (as determined under
Rule 13d-3 promulgated under the Securities Exchange Act of 1934), of securities
representing more than the amounts set forth in (C) below; (C) the acquisition
of direct or indirect beneficial ownership (as determined under Rule 13d-3
promulgated under the Securities Exchange Act of 1934), in the aggregate, of
securities of the Company representing twenty percent (20%) or more of the total
combined voting power of the Company's then issued and outstanding voting
securities by any Person acting in concert as of the date of this Agreement;
provided, however, that the Board may at any time and from time to time and in
the sole discretion of the Board, as the case may be, increase the voting
security ownership percentage threshold of this item (C) to an amount not
exceeding forty percent (40%); or (D) the approval by the shareholders of the
Company of any plan or proposal for the complete liquidation or dissolution of
the Company or for the sale of all or substantially all of the assets of the
Company; or (ii) during any period of not more than two (2) consecutive years,
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
agreement with the Company to effect a transaction described in clause (i))
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.
srexec
10