EXHIBIT 99
STAY IN PLACE AGREEMENT
OF
JAMES E. DOUBLES
This Stay in Place Agreement (the "Agreement") between TSI
Incorporated, a Minnesota corporation (the "Company"), and James E. Doubles (the
"Executive") is effective as of June 16, 1999.
BACKGROUND
A. The Company believes it is in its best interests and its
stockholders' best interests to retain the services of the Executive in the
event of a threat or occurrence of a Change in Control (as defined in Section
2.1 below) and to ensure his continued dedication and efforts in such event.
B. In order to induce the Executive to remain an employee of the
Company, particularly in the event of a threat or the occurrence of a Change in
Control, the Company desires to enter into this Agreement with the Executive to
provide him with certain benefits if a Constructive Discharge, as defined in
Section 2.2 below, or a Termination Without Good Cause, as defined in Section
2.3 below, occurs within two years following a Change in Control of the Company.
AGREEMENT
In consideration of the foregoing premises and the covenants
contained in this Agreement, the parties agree as follows:
1. TERM OF AGREEMENT. Subject to the conditions set forth in Section
4, this Agreement shall continue until December 31, 2000; provided, however,
that if a Change in Control occurs on or before December 31, 2000, this
Agreement shall continue in full force and effect for two years thereafter.
2. DEFINITIONS.
2.1 CHANGE IN CONTROL. For the purposes of this
Agreement, "Change in Control" shall mean any one of the following:
(a) a "Change in Control" of the Company of a nature
that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act");
(b) the sale, lease, transfer, conveyance or other
disposition (pursuant to a sale of assets, a merger or consolidation
or similar transaction, in one or a series of related transactions,
of all or substantially all of the assets of the Company taken as a
whole to any "person" (as defined below)) or a merger, consolidation
or similar transaction to which the Company is a party if, following
the effective date of such merger, consolidation or similar
transaction, the individuals and entities who were stockholders of
the Company, as applicable, immediately prior to the effective date
of such merger or consolidation have beneficial ownership (as
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act) of less
than 50% of the combined voting power of the surviving corporation
following the effective date of such merger or consolidation;
(c) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) that, as of the date hereof, does not
own 30% or more of the Company and becomes the "beneficial
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owner" (as defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the then
outstanding securities of the applicable entity;
(d) any "person" (as such is used in Sections 13(d) and
14(d) of the Exchange Act) becomes, through or pursuant to a "tender
offer," as that term is used in the Exchange Act and Regulations
promulgated by the Securities and Exchange Commission thereunder,
the "beneficial owner" (as defined in Rule 13d-3 and Rule 13d-5
under the Exchange Act), directly or indirectly, of securities of
the Company representing 30% or more of the combined voting power of
the then outstanding securities of the applicable entity;
(e) a majority of the Board of Directors is not made up
of individuals who are members of the Board of Directors as of the
effective date of this Agreement;
(f) the adoption by the Company of a plan providing for
the liquidation or dissolution of the Company.
2.2 CONSTRUCTIVE DISCHARGE. A "Constructive Discharge"
will be deemed to have occurred if, after a Change in Control: (a)
the Company, its successors or assigns, assigns the Executive a
position, duties, responsibilities or status that are less desirable
to the Executive than the Executive's position, duties,
responsibilities and/or status immediately prior to the Change in
Control; (b) there is an adverse change in the titles or offices the
Executive held immediately prior to the Change in Control; (c) the
Company, its successors or assigns, relocates the Executive to a
location that is more than 30 miles from the Company's current
headquarters in Shoreview, Minnesota; (d) the Company reduces the
Executive's base salary, cash or stock performance bonus, or fringe
benefits or fails to pay the Executive any material compensation or
benefits to which the Executive is entitled within ten days of the
date due; or (e) the Company breaches any of its obligations under
this Agreement or any other Agreement with the Executive.
2.3 TERMINATION WITHOUT GOOD CAUSE. For purposes of this
Agreement, "Termination Without Good Cause" shall be deemed to exist
if after a Change in Control the Executive is terminated by the
Company for any reason other than "Good Cause." "Good Cause" shall
be deemed to be (a) the conviction of the Executive, by a court of
competent jurisdiction, of a felony committed by the executive
during the term of this Agreement; (b) the written confession by the
Executive of a felony committed during the term of this Agreement;
or (c) the conviction of or written confession by the Executive to
the embezzlement or misappropriation of funds of the Company, which
embezzlement or misappropriation was committed by the Executive
during the term of this Agreement.
2.4 SUCCESSORS AND ASSIGNS. For purposes of this
Agreement, "Successors and Assigns" shall mean a corporation or
other entity or person acquiring all or substantially all the stock,
assets, and/or business of the Company (including this Agreement)
whether by agreement, operation of law, or otherwise.
3. MANDATORY PAYMENTS. If a Constructive Discharge or Termination
Without Good Cause occurs within two years following a Change in Control, the
Company, its successors or assigns, shall pay the Executive the full amount of
the accrued but unpaid salary and fringe benefits he has earned through his last
day of employment plus a cash bonus equal to a pro rata portion of 20% of
salary, plus a cash payment (calculated on the basis of his rate of salary then
in effect) for all unused vacation time which he may have accrued and any unpaid
reimbursement expenses he is entitled to receive as of his last day of
employment. In addition, if a Constructive Discharge or Termination Without Good
Cause occurs within one year of the
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Change in Control, the Company shall make a severance payment to the Executive
equal to twice the then current annual salary and fringe benefits plus cash
bonus equal to 40% of that annual salary, or if a Constructive Discharge or
Termination Without Good Cause occurs more than one year but less than two years
following the Change in Control, the Company shall make a severance payment to
the Executive equal to the then current annual salary and fringe benefits plus
cash bonus equal to 20% of that annual salary. All of the above amounts (except
for unpaid salary and vacation which shall be paid immediately) shall be paid to
the Executive within 30 days of his last day of employment. The Company's
obligation to make these payments to the Executive is subject to fulfillment of
all the conditions described in Section 4.
4. CONDITIONS PRECEDENT TO PAYMENT OF COMPENSATION. Payments of the
compensation under Section 3 is contingent on the Executive satisfying both of
the following conditions: (a) the Executive does not voluntarily resign his
employment (absent a Constructive Discharge that arises after a Change in
Control occurs), and (b) after a Change in Control occurs, the Executive does
not have his employment Terminated for Good Cause.
5. RESTRICTIVE COVENANTS.
5.1 NONCOMPETITION. Executive agrees that, as a
condition of receiving benefits under this Agreement, he/she will
not, without prior written consent of the Company which will not be
unreasonably withheld, render service directly or indirectly to any
competing organization, wherever located, for a period of 18 months
following the Date of Constructive Discharge or Termination Without
Good Cause, in connection with the design, implementation,
development, manufacture, marketing, sale, merchandising, leasing,
servicing or promotion of any product, process, system or service of
any person, firm, corporation, organization other than Company, in
existence or under development, which utilizes a trade secret,
competes with, or has a usage allied to, a product, process, system,
or service produced, developed, or used by Company. Executive agrees
that violation of this covenant not to compete with Company shall be
considered a breach of this Agreement.
5.2 CONFIDENTIALITY. Executive further agrees and
acknowledges his/her existing obligations that at all times during
and subsequent to his/her employment with Company, he/she will not
divulge or appropriate to his/her own use or the uses of others any
trade secret or Company confidential information pertaining to the
business of Company, or any of its subsidiaries, obtained during
his/her employment by Company or any of its subsidiaries.
5.3 NONSOLICITATION OF EMPLOYEES. Executive further
agrees that, during his/her employment with Company and for a period
of 18 months following the Date of Constructive Discharge or
Termination Without Good Cause, Executive will not, directly or
indirectly, solicit or induce, or attempt to solicit or induce, any
employee, current or future, of Company to leave Company for any
reason whatsoever, or hire any current or future employee of Company
without the Company's prior written consent.
5.4 COOPERATION. Notwithstanding the foregoing,
Executive agrees to cooperate, for a period up to four months, to
the extent reasonably requested by Company, in an orderly transfer
of the responsibilities of Executive to his/her successor. Unless
otherwise agreed by Company and Executive, such cooperation shall
consist of consulting services only at a rate of six days per month
for the first two months and three days per month for the last two
months and shall not require full-time employment. Any reasonable
expenses incurred by Executive in connection with such services
shall be advanced or reimbursed to Executive, as the parties may
agree.
5.5 ACKNOWLEDGEMENT OF PERFORMANCE. Executive
acknowledges that irreparable damage would occur to the Company in
the event any of the provisions of this Section 5 were not performed
in accordance with their specific terms or were otherwise breached.
Accordingly, the Company shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Section 5
and to enforce specifically the terms and provisions hereof in any
court of competent jurisdiction in the United States of America or
any state thereof, in addition to any other remedy to which the
Company may be
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entitled at law or in equity.
6. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the Company, its Successors and Assigns, and the
Company shall require any Successors and Assigns to expressly assume and agree
to perform the Company's obligation under this Agreement. Neither this Agreement
nor any right or interest thereunder shall be assignable or transferable by the
Executive, his beneficiaries or legal representatives, except by will or by the
laws of descent and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal representative.
7. NOTICES. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, to the recipient at
the address indicated below:
To the Company:
TSI Incorporated
500 Cardigan Road
P.O. Box 64394
St. Paul, MN 55164-0394
Attention: Human Resource Department
To the Executive:
James E. Doubles
9055 N 55 St.
Lake Elmo, MN 55042
or such other address or to the attention of such other persons as the recipient
party shall have specified by prior written notice to the sending party.
8. WAIVER. No provision of this Agreement may be modified, waived,
or discharged unless such modification, waiver, or discharge is agreed to in
writing and signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto 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.
9. GOVERNING LAW; PAYMENT OF EXPENSES. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Minnesota without giving effect to the conflict of laws principles thereof.
Any action brought by any party to this Agreement shall be brought and
maintained in a court of competent jurisdiction in Ramsey County in the State of
Minnesota. If it is determined that any party has acted in bad faith in bringing
or defending its rights hereunder, such party shall reimburse the prevailing
party its expenses in bringing or defending such action, including reasonable
legal fees.
10. SEVERABILITY. To the extent any provision of this Agreement
shall be invalid or unenforceable, it shall be considered deleted from this
Agreement and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect. The Executive
acknowledges the uncertainty of the law in this respect and expressly stipulates
that this Agreement be given the construction which renders its provisions valid
and enforceable to the maximum extent (not exceeding its
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express terms) possible under applicable law.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements, if
any, understandings, and arrangements, oral or written, between the parties
hereto with respect to the subject matter covered by this Agreement.
The parties have executed this Agreement on August 17, 1999,
effective as of the day and year first above written.
TSI INCORPORATED
By /s/ Kenneth J. Roering
----------------------
Kenneth J. Roering
Chairman of the Committee of Outside Directors
/S/ James E. Doubles
-------------------------------------------------------
James E. Doubles
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Exhibit
STAY IN PLACE AGREEMENT
OF
LOWELL D. NYSTROM
This Stay in Place Agreement (the "Agreement") between TSI
Incorporated, a Minnesota corporation (the "Company"), and Lowell D. Nystrom
(the "Executive") is effective as of June 16, 1999.
BACKGROUND
A. The Company believes it is in its best interests and its
stockholders' best interests to retain the services of the Executive in the
event of a threat or occurrence of a Change in Control (as defined in Section
2.1 below) and to ensure his continued dedication and efforts in such event.
B. In order to induce the Executive to remain an employee of the
Company, particularly in the event of a threat or the occurrence of a Change in
Control, the Company desires to enter into this Agreement with the Executive to
provide him with certain benefits if a Constructive Discharge, as defined in
Section 2.2 below, or a Termination Without Good Cause, as defined in Section
2.3 below, occurs within two years following a Change in Control of the Company.
AGREEMENT
In consideration of the foregoing premises and the covenants
contained in this Agreement, the parties agree as follows:
1. TERM OF AGREEMENT. Subject to the conditions set forth in Section
4, this Agreement shall continue until December 31, 2000; provided, however,
that if a Change in Control occurs on or before December 31, 2000, this
Agreement shall continue in full force and effect for two years thereafter.
2. DEFINITIONS.
2.1 CHANGE IN CONTROL. For the purposes of this
Agreement, "Change in Control" shall mean any one of the following:
(a) a "Change in Control" of the Company of a nature
that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act");
(b) the sale, lease, transfer, conveyance or other
disposition (pursuant to a sale of assets, a merger or consolidation
or similar transaction, in one or a series of related transactions,
of all or substantially all of the assets of the Company taken as a
whole to any "person" (as defined below)) or a merger, consolidation
or similar transaction to which the Company is a party if, following
the effective date of such merger, consolidation or similar
transaction, the individuals and entities who were stockholders of
the Company, as applicable, immediately prior to the effective date
of such merger or consolidation have beneficial ownership (as
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act) of less
than 50% of the combined voting power of the surviving corporation
following the effective date of such merger or consolidation;
(c) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) that, as of the date hereof, does not
own 30% or more of the Company and becomes the "beneficial
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owner" (as defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the then
outstanding securities of the applicable entity;
(d) any "person" (as such is used in Sections 13(d) and
14(d) of the Exchange Act) becomes, through or pursuant to a "tender
offer," as that term is used in the Exchange Act and Regulations
promulgated by the Securities and Exchange Commission thereunder,
the "beneficial owner" (as defined in Rule 13d-3 and Rule 13d-5
under the Exchange Act), directly or indirectly, of securities of
the Company representing 30% or more of the combined voting power of
the then outstanding securities of the applicable entity;
(e) a majority of the Board of Directors is not made up
of individuals who are members of the Board of Directors as of the
effective date of this Agreement;
(f) the adoption by the Company of a plan providing for
the liquidation or dissolution of the Company.
2.2 CONSTRUCTIVE DISCHARGE. A "Constructive Discharge"
will be deemed to have occurred if, after a Change in Control: (a)
the Company, its successors or assigns, assigns the Executive a
position, duties, responsibilities or status that are less desirable
to the Executive than the Executive's position, duties,
responsibilities and/or status immediately prior to the Change in
Control; (b) there is an adverse change in the titles or offices the
Executive held immediately prior to the Change in Control; (c) the
Company, its successors or assigns, relocates the Executive to a
location that is more than 30 miles from the Company's current
headquarters in Shoreview, Minnesota; (d) the Company reduces the
Executive's base salary, cash or stock performance bonus, or fringe
benefits or fails to pay the Executive any material compensation or
benefits to which the Executive is entitled within ten days of the
date due; or (e) the Company breaches any of its obligations under
this Agreement or any other Agreement with the Executive.
2.3 TERMINATION WITHOUT GOOD CAUSE. For purposes of this
Agreement, "Termination Without Good Cause" shall be deemed to exist
if after a Change in Control the Executive is terminated by the
Company for any reason other than "Good Cause." "Good Cause" shall
be deemed to be (a) the conviction of the Executive, by a court of
competent jurisdiction, of a felony committed by the executive
during the term of this Agreement; (b) the written confession by the
Executive of a felony committed during the term of this Agreement;
or (c) the conviction of or written confession by the Executive to
the embezzlement or misappropriation of funds of the Company, which
embezzlement or misappropriation was committed by the Executive
during the term of this Agreement.
2.4 SUCCESSORS AND ASSIGNS. For purposes of this
Agreement, "Successors and Assigns" shall mean a corporation or
other entity or person acquiring all or substantially all the stock,
assets, and/or business of the Company (including this Agreement)
whether by agreement, operation of law, or otherwise.
3. MANDATORY PAYMENTS. If a Constructive Discharge or Termination
Without Good Cause occurs within two years following a Change in Control, the
Company, its successors or assigns, shall pay the Executive the full amount of
the accrued but unpaid salary and fringe benefits he has earned through his last
day of employment plus a cash bonus equal to a pro rata portion of 15% of
salary, plus a cash payment (calculated on the basis of his rate of salary then
in effect) for all unused vacation time which he may have accrued and any unpaid
reimbursement expenses he is entitled to receive as of his last day of
employment. In addition, if a Constructive Discharge or Termination Without Good
Cause occurs within one year of the
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Change in Control, the Company shall make a severance payment to the Executive
equal to the then current annual salary and fringe benefits plus cash bonus
equal to 15% of that annual salary, or if a Constructive Discharge or
Termination Without Good Cause occurs more than one year but less than two years
following the Change in Control, the Company shall make a severance payment to
the Executive equal to one-half the then current annual salary and fringe
benefits plus cash bonus equal to 7 1/2% of that annual salary. All of the above
amounts (except for unpaid salary and vacation which shall be paid immediately)
shall be paid to the Executive within 30 days of his last day of employment. The
Company's obligation to make these payments to the Executive is subject to
fulfillment of all the conditions described in Section 4.
4. CONDITIONS PRECEDENT TO PAYMENT OF COMPENSATION. Payments of the
compensation under Section 3 is contingent on the Executive satisfying both of
the following conditions: (a) the Executive does not voluntarily resign his
employment (absent a Constructive Discharge that arises after a Change in
Control occurs), and (b) after a Change in Control occurs, the Executive does
not have his employment Terminated for Good Cause.
5. RESTRICTIVE COVENANTS.
5.1 NONCOMPETITION. Executive agrees that, as a
condition of receiving benefits under this Agreement, he/she will
not, without prior written consent of the Company which will not be
unreasonably withheld, render service directly or indirectly to any
competing organization, wherever located, for a period of 9 months
following the Date of Constructive Discharge or Termination Without
Good Cause, in connection with the design, implementation,
development, manufacture, marketing, sale, merchandising, leasing,
servicing or promotion of any product, process, system or service of
any person, firm, corporation, organization other than Company, in
existence or under development, which utilizes a trade secret,
competes with, or has a usage allied to, a product, process, system,
or service produced, developed, or used by Company. Executive agrees
that violation of this covenant not to compete with Company shall be
considered a breach of this Agreement.
5.2 CONFIDENTIALITY. Executive further agrees and
acknowledges his/her existing obligations that at all times during
and subsequent to his/her employment with Company, he/she will not
divulge or appropriate to his/her own use or the uses of others any
trade secret or Company confidential information pertaining to the
business of Company, or any of its subsidiaries, obtained during
his/her employment by Company or any of its subsidiaries.
5.3 NONSOLICITATION OF EMPLOYEES. Executive further
agrees that, during his/her employment with Company and for a period
of 9 months following the Date of Constructive Discharge or
Termination Without Good Cause, Executive will not, directly or
indirectly, solicit or induce, or attempt to solicit or induce, any
employee, current or future, of Company to leave Company for any
reason whatsoever, or hire any current or future employee of Company
without the Company's prior written consent.
5.4 COOPERATION. Notwithstanding the foregoing,
Executive agrees to cooperate, for a period up to four months, to
the extent reasonably requested by Company, in an orderly transfer
of the responsibilities of Executive to his/her successor. Unless
otherwise agreed by Company and Executive, such cooperation shall
consist of consulting services only at a rate of six days per month
for the first two months and three days per month for the last two
months and shall not require full-time employment. Any reasonable
expenses incurred by Executive in connection with such services
shall be advanced or reimbursed to Executive, as the parties may
agree.
5.5 ACKNOWLEDGEMENT OF PERFORMANCE. Executive
acknowledges that irreparable damage would occur to the Company in
the event any of the provisions of this Section 5 were not performed
in accordance with their specific terms or were otherwise breached.
Accordingly, the Company shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Section 5
and to enforce specifically the terms and provisions hereof in any
court of competent jurisdiction in the United States of America or
any state thereof, in addition to any other remedy to which the
Company may be
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entitled at law or in equity.
6. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the Company, its Successors and Assigns, and the
Company shall require any Successors and Assigns to expressly assume and agree
to perform the Company's obligation under this Agreement. Neither this Agreement
nor any right or interest thereunder shall be assignable or transferable by the
Executive, his beneficiaries or legal representatives, except by will or by the
laws of descent and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal representative.
7. NOTICES. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, to the recipient at
the address indicated below:
To the Company:
TSI Incorporated
500 Cardigan Road
P.O. Box 64394
St. Paul, MN 55164-0394
Attention: Human Resource Department
To the Executive:
Lowell D. Nystrom
988 Brenner Ave
Roseville, MN 55113
or such other address or to the attention of such other persons as the recipient
party shall have specified by prior written notice to the sending party.
8. WAIVER. No provision of this Agreement may be modified, waived,
or discharged unless such modification, waiver, or discharge is agreed to in
writing and signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto 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.
9. GOVERNING LAW; PAYMENT OF EXPENSES. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Minnesota without giving effect to the conflict of laws principles thereof.
Any action brought by any party to this Agreement shall be brought and
maintained in a court of competent jurisdiction in Ramsey County in the State of
Minnesota. If it is determined that any party has acted in bad faith in bringing
or defending its rights hereunder, such party shall reimburse the prevailing
party its expenses in bringing or defending such action, including reasonable
legal fees.
10. SEVERABILITY. To the extent any provision of this Agreement
shall be invalid or unenforceable, it shall be considered deleted from this
Agreement and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect. The Executive
acknowledges the uncertainty of the law in this respect and expressly stipulates
that this Agreement be given the construction which renders its provisions valid
and enforceable to the maximum extent (not exceeding its
-24-
express terms) possible under applicable law.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements, if
any, understandings, and arrangements, oral or written, between the parties
hereto with respect to the subject matter covered by this Agreement.
The parties have executed this Agreement on August 17, 1999,
effective as of the day and year first above written.
TSI INCORPORATED
By: /s/ James E. Doubles
------------------------
James E. Doubles, Chairman of the Board
/s/ Lowell D. Nystrom
-------------------------
Lowell D. Nystrom
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Exhibit
STAY IN PLACE AGREEMENT
OF
ROBERT F. GALLAGHER
This Stay in Place Agreement (the "Agreement") between TSI
Incorporated, a Minnesota corporation (the "Company"), and Robert F. Gallagher
(the "Executive") is effective as of June 16, 1999.
BACKGROUND
A. The Company believes it is in its best interests and its
stockholders' best interests to retain the services of the Executive in the
event of a threat or occurrence of a Change in Control (as defined in Section
2.1 below) and to ensure his continued dedication and efforts in such event.
B. In order to induce the Executive to remain an employee of the
Company, particularly in the event of a threat or the occurrence of a Change in
Control, the Company desires to enter into this Agreement with the Executive to
provide him with certain benefits if a Constructive Discharge, as defined in
Section 2.2 below, or a Termination Without Good Cause, as defined in Section
2.3 below, occurs within two years following a Change in Control of the Company.
AGREEMENT
In consideration of the foregoing premises and the covenants
contained in this Agreement, the parties agree as follows:
1. TERM OF AGREEMENT. Subject to the conditions set forth in Section
4, this Agreement shall continue until December 31, 2000; provided, however,
that if a Change in Control occurs on or before December 31, 2000, this
Agreement shall continue in full force and effect for two years thereafter.
2. DEFINITIONS.
2.1 CHANGE IN CONTROL. For the purposes of this
Agreement, "Change in Control" shall mean any one of the following:
(a) a "Change in Control" of the Company of a nature
that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act");
(b) the sale, lease, transfer, conveyance or other
disposition (pursuant to a sale of assets, a merger or consolidation
or similar transaction, in one or a series of related transactions,
of all or substantially all of the assets of the Company taken as a
whole to any "person" (as defined below)) or a merger, consolidation
or similar transaction to which the Company is a party if, following
the effective date of such merger, consolidation or similar
transaction, the individuals and entities who were stockholders of
the Company, as applicable, immediately prior to the effective date
of such merger or consolidation have beneficial ownership (as
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act) of less
than 50% of the combined voting power of the surviving corporation
following the effective date of such merger or consolidation;
(c) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) that, as of the date hereof, does not
own 30% or more of the Company and becomes the "beneficial
-26-
owner" (as defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the then
outstanding securities of the applicable entity;
(d) any "person" (as such is used in Sections 13(d) and
14(d) of the Exchange Act) becomes, through or pursuant to a "tender
offer," as that term is used in the Exchange Act and Regulations
promulgated by the Securities and Exchange Commission thereunder,
the "beneficial owner" (as defined in Rule 13d-3 and Rule 13d-5
under the Exchange Act), directly or indirectly, of securities of
the Company representing 30% or more of the combined voting power of
the then outstanding securities of the applicable entity;
(e) a majority of the Board of Directors is not made up
of individuals who are members of the Board of Directors as of the
effective date of this Agreement;
(f) the adoption by the Company of a plan providing for
the liquidation or dissolution of the Company.
2.2 CONSTRUCTIVE DISCHARGE. A "Constructive Discharge"
will be deemed to have occurred if, after a Change in Control: (a)
the Company, its successors or assigns, assigns the Executive a
position, duties, responsibilities or status that are less desirable
to the Executive than the Executive's position, duties,
responsibilities and/or status immediately prior to the Change in
Control; (b) there is an adverse change in the titles or offices the
Executive held immediately prior to the Change in Control; (c) the
Company, its successors or assigns, relocates the Executive to a
location that is more than 30 miles from the Company's current
headquarters in Shoreview, Minnesota; (d) the Company reduces the
Executive's base salary, cash or stock performance bonus, or fringe
benefits or fails to pay the Executive any material compensation or
benefits to which the Executive is entitled within ten days of the
date due; or (e) the Company breaches any of its obligations under
this Agreement or any other Agreement with the Executive.
2.3 TERMINATION WITHOUT GOOD CAUSE. For purposes of this
Agreement, "Termination Without Good Cause" shall be deemed to exist
if after a Change in Control the Executive is terminated by the
Company for any reason other than "Good Cause." "Good Cause" shall
be deemed to be (a) the conviction of the Executive, by a court of
competent jurisdiction, of a felony committed by the executive
during the term of this Agreement; (b) the written confession by the
Executive of a felony committed during the term of this Agreement;
or (c) the conviction of or written confession by the Executive to
the embezzlement or misappropriation of funds of the Company, which
embezzlement or misappropriation was committed by the Executive
during the term of this Agreement.
2.4 SUCCESSORS AND ASSIGNS. For purposes of this
Agreement, "Successors and Assigns" shall mean a corporation or
other entity or person acquiring all or substantially all the stock,
assets, and/or business of the Company (including this Agreement)
whether by agreement, operation of law, or otherwise.
3. MANDATORY PAYMENTS. If a Constructive Discharge or Termination
Without Good Cause occurs within two years following a Change in Control, the
Company, its successors or assigns, shall pay the Executive the full amount of
the accrued but unpaid salary and fringe benefits he has earned through his last
day of employment plus a cash bonus equal to a pro rata portion of 15% of
salary, plus a cash payment (calculated on the basis of his rate of salary then
in effect) for all unused vacation time which he may have accrued and any unpaid
reimbursement expenses he is entitled to receive as of his last day of
employment. In addition, if a Constructive Discharge or Termination Without Good
Cause occurs within one year of the
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Change in Control, the Company shall make a severance payment to the Executive
equal to the then current annual salary and fringe benefits plus cash bonus
equal to 15% of that annual salary, or if a Constructive Discharge or
Termination Without Good Cause occurs more than one year but less than two years
following the Change in Control, the Company shall make a severance payment to
the Executive equal to one-half the then current annual salary and fringe
benefits plus cash bonus equal to 7 1/2% of that annual salary. All of the above
amounts (except for unpaid salary and vacation which shall be paid immediately)
shall be paid to the Executive within 30 days of his last day of employment. The
Company's obligation to make these payments to the Executive is subject to
fulfillment of all the conditions described in Section 4.
4. CONDITIONS PRECEDENT TO PAYMENT OF COMPENSATION. Payments of the
compensation under Section 3 is contingent on the Executive satisfying both of
the following conditions: (a) the Executive does not voluntarily resign his
employment (absent a Constructive Discharge that arises after a Change in
Control occurs), and (b) after a Change in Control occurs, the Executive does
not have his employment Terminated for Good Cause.
5. RESTRICTIVE COVENANTS.
5.1 NONCOMPETITION. Executive agrees that, as a
condition of receiving benefits under this Agreement, he/she will
not, without prior written consent of the Company which will not be
unreasonably withheld, render service directly or indirectly to any
competing organization, wherever located, for a period of 9 months
following the Date of Constructive Discharge or Termination Without
Good Cause, in connection with the design, implementation,
development, manufacture, marketing, sale, merchandising, leasing,
servicing or promotion of any product, process, system or service of
any person, firm, corporation, organization other than Company, in
existence or under development, which utilizes a trade secret,
competes with, or has a usage allied to, a product, process, system,
or service produced, developed, or used by Company. Executive agrees
that violation of this covenant not to compete with Company shall be
considered a breach of this Agreement.
5.2 CONFIDENTIALITY. Executive further agrees and
acknowledges his/her existing obligations that at all times during
and subsequent to his/her employment with Company, he/she will not
divulge or appropriate to his/her own use or the uses of others any
trade secret or Company confidential information pertaining to the
business of Company, or any of its subsidiaries, obtained during
his/her employment by Company or any of its subsidiaries.
5.3 NONSOLICITATION OF EMPLOYEES. Executive further
agrees that, during his/her employment with Company and for a period
of 9 months following the Date of Constructive Discharge or
Termination Without Good Cause, Executive will not, directly or
indirectly, solicit or induce, or attempt to solicit or induce, any
employee, current or future, of Company to leave Company for any
reason whatsoever, or hire any current or future employee of Company
without the Company's prior written consent.
5.4 COOPERATION. Notwithstanding the foregoing,
Executive agrees to cooperate, for a period up to four months, to
the extent reasonably requested by Company, in an orderly transfer
of the responsibilities of Executive to his/her successor. Unless
otherwise agreed by Company and Executive, such cooperation shall
consist of consulting services only at a rate of six days per month
for the first two months and three days per month for the last two
months and shall not require full-time employment. Any reasonable
expenses incurred by Executive in connection with such services
shall be advanced or reimbursed to Executive, as the parties may
agree.
5.5 ACKNOWLEDGEMENT OF PERFORMANCE. Executive
acknowledges that irreparable damage would occur to the Company in
the event any of the provisions of this Section 5 were not performed
in accordance with their specific terms or were otherwise breached.
Accordingly, the Company shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Section 5
and to enforce specifically the terms and provisions hereof in any
court of competent jurisdiction in the United States of America or
any state thereof, in addition to any other remedy to which the
Company may be
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entitled at law or in equity.
6. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the Company, its Successors and Assigns, and the
Company shall require any Successors and Assigns to expressly assume and agree
to perform the Company's obligation under this Agreement. Neither this Agreement
nor any right or interest thereunder shall be assignable or transferable by the
Executive, his beneficiaries or legal representatives, except by will or by the
laws of descent and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal representative.
7. NOTICES. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, to the recipient at
the address indicated below:
To the Company:
TSI Incorporated
500 Cardigan Road
P.O. Box 64394
St. Paul, MN 55164-0394
Attention: Human Resource Department
To the Executive:
Robert F. Gallagher
4292 Norma Avenue
Arden Hills, MN 55112
or such other address or to the attention of such other persons as the recipient
party shall have specified by prior written notice to the sending party.
8. WAIVER. No provision of this Agreement may be modified, waived,
or discharged unless such modification, waiver, or discharge is agreed to in
writing and signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto 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.
9. GOVERNING LAW; PAYMENT OF EXPENSES. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Minnesota without giving effect to the conflict of laws principles thereof.
Any action brought by any party to this Agreement shall be brought and
maintained in a court of competent jurisdiction in Ramsey County in the State of
Minnesota. If it is determined that any party has acted in bad faith in bringing
or defending its rights hereunder, such party shall reimburse the prevailing
party its expenses in bringing or defending such action, including reasonable
legal fees.
10. SEVERABILITY. To the extent any provision of this Agreement
shall be invalid or unenforceable, it shall be considered deleted from this
Agreement and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect. The Executive
acknowledges the uncertainty of the law in this respect and expressly stipulates
that this Agreement be given the construction which renders its provisions valid
and enforceable to the maximum extent (not exceeding its
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express terms) possible under applicable law.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements, if
any, understandings, and arrangements, oral or written, between the parties
hereto with respect to the subject matter covered by this Agreement.
The parties have executed this Agreement on August 17, 1999,
effective as of the day and year first above written.
TSI INCORPORATED
By: /s/ James E. Doubles
-----------------------
James E. Doubles, Chairman of the Board
/s/ Robert F. Gallagher
--------------------------
Robert F. Gallagher
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