EXHIBIT 10.6
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this
"Agreement") is made as of November 30, 1998 by and between Scott C.
Anixter ("Executive") and ANICOM, INC., a Delaware corporation (the
"Company").
PRELIMINARY RECITALS
WHEREAS, the Company is engaged in the business of selling and
distributing communication related wire, cable, fiber optics and computer
network and connectivity products (the "Business").
WHEREAS, Executive is currently employed by the Company as the
Chairman and Chief Executive Officer of the Company, pursuant to that
certain Executive Employment Agreement, dated January 15, 1995, by and
between the Company and Executive (the "Current Employment Agreement").
WHEREAS, Executive has extensive knowledge and a unique
understanding of the operation of the Business.
WHEREAS, the Company and Executive desire to continue Executive's
employment relationship with the Company in his present position, all under
the terms and conditions set forth herein.
WHEREAS, the parties hereto desire to amend and restate the
Current Employment Agreement in the form of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants in this
Agreement and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Company and Executive agree as
follows:
1. Employment of Executive. The Company hereby employs Executive
as the Company's Chairman and Chief Executive Officer, and Executive hereby
accepts such employment and agrees to act as Chairman and Chief Executive
Officer of the Company, all in accordance with the terms and conditions of
this Agreement.
2. Term of Employment. Subject to the termination provisions set
forth in Section 8 below, Executive's employment under this Agreement shall
commence on the date of this Agreement and shall continue for an initial
period of three (3) years (the "Initial Employment Period"). The Company
and Executive may agree by mutual consent to extend this Agreement for
subsequent periods (the Initial Employment Period and any subsequent term
thereof shall hereinafter be referred to as the "Employment Period"). If,
at least ninety (90) days before the expiration of any Employment Period,
the Company gives Executive a written offer to extend the
Employment Period for a subsequent term of at least three (3) years
following the end of such Employment Period on economic terms not less
favorable to Executive as those set forth herein and Executive does not
accept such offer in writing within thirty (30) days after delivery of such
offer, then the expiration of such Employment Period shall constitute
termination without Good Reason by Executive for purposes of this
Agreement. If, at least ninety (90) days before the expiration of any
Employment Period, the Company does not give Executive a written offer to
extend the Employment Period for a subsequent term of at least three (3)
years following the end of such Employment Period on economic terms not
less favorable to Executive as those set forth herein, then the expiration
of such Employment Period shall constitute termination by the Company
without Cause for purposes of this Agreement.
3. Offices and Duties. Subject to Section 8, during the Employment
Period, Executive will perform the duties of Chairman and Chief Executive
Officer of the Company as described in the Company's Bylaws and such other
duties as the Board of Directors of the Company ("Board") may prescribe
from time to time, consistent with Executive's title. Executive agrees that
during the Employment Period, he will devote substantially all of his
business time and attention to fulfill his duties under this Agreement.
4. Board Representation. As of the date hereof, Executive is a
member of Class I of the Board, the term of which runs until the 1999
annual meeting of stockholders. During the Employment Period, the Company
shall use its reasonable efforts to recommend Executive for nomination by
the Board for election at the 1999 annual meeting of stockholders and each
subsequent annual meeting of stockholders during the Employment Period at
which his term on the Board would otherwise expire.
5. Compensation.
5.1 Base Salary. During the Employment Period, the
Company will pay Executive a base salary at a rate of $400,000 per
annum (the "Base Salary"), payable in accordance with the
Company's normal payroll practices for executive officers. The
Compensation Committee of the Board ("Compensation Committee")
shall perform an annual review of Executive's Base Salary based on
Executive's performance of his duties and the Company's normal
practice for executive salary review; provided that, in no event
shall Executive's Base Salary for any year be less than $400,000.
5.2 Bonus Payments. Executive shall be eligible to
receive an annual bonus ("Bonus Payments"), in an amount to be
determined by the Compensation Committee, in its sole discretion,
based upon Executive's and the Company's performance and the
achievement of goals and objectives approved by the Compensation
Committee. During the first quarter of 1999 and prior to each year
thereafter, the Compensation Committee shall establish a minimum
Bonus Payment for such year, and, if the Compensation Committee
determines, in its sole discretion, that a Bonus Payment is
warranted at the end of a particular year, Executive shall receive
at least the minimum Bonus Payment for such year.
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5.3 Stock Options. Executive shall be eligible to receive
an annual grant of options to purchase the Company's common stock,
in an amount to be determined by the Compensation Committee, in
its sole discretion, based upon Executive's and the Company's
performance and the achievement of goals and objectives approved
by such members of the Compensation Committee. During the first
quarter of 1999 and prior to each year thereafter, the
Compensation Committee shall establish a minimum option grant for
such year, and, if the Compensation Committee determines, in its
sole discretion, that option grants are warranted at the end of a
particular year, Executive shall receive a grant of stock options
to purchase at least a number of shares of the Company's common
stock having a value equal to the minimum option grants for such
year.
5.4 Automobile Allowance. During the Employment Period,
the Company shall provide Executive with a monthly automobile
allowance of $1,250 (the "Automobile Allowance").
5.5 Transaction Bonus. Within fifteen (15) business days
following the effective date of a Change in Control, the Company
(or its successor or assigns) shall pay to Executive the
Transaction Bonus Amount.
5.6 Benefits. Executive will be entitled to participate
in group life and medical insurance plans, profit-sharing and
similar plans, and other "fringe benefits" (collectively,
"Benefits"), comparable to those made available by the Company to
its other senior executive employees, in accordance with the terms
of such plans.
5.7 Withholding. All compensation payable to Executive
under this Agreement is stated in gross amount and will be subject
to all applicable withholding taxes, other normal payroll
deductions, and any other amounts required by law to be withheld.
5.8 Expenses. The Company, in accordance with its
policies and past practices, will pay or reimburse Executive for
all expenses (including travel and entertainment expenses)
reasonably incurred by Executive during the Employment Period in
connection with the performance of Executive's duties under this
Agreement, provided that Executive, if so requested by the Board,
must provide to the Company documentation or evidence of expenses
for which Executive seeks reimbursement.
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6. Covenant Not to Compete.
6.1 Executive's Acknowledgment. Executive agrees and
acknowledges that in order to assure the Company that it will retain its
value and that of the Business as a going concern, it is necessary that
Executive undertake not to utilize his special knowledge of the Business
and his relationships with customers and suppliers to compete with the
Company.
Executive further acknowledges that:
(a) the Company is currently engaged in the Business;
(b) Executive has occupied a position of trust and
confidence with the Company prior to the date of this Agreement
and will continue to acquire an intimate knowledge of all
proprietary and confidential information concerning the Business;
(c) the agreements and covenants contained in this
Section 6 are essential to protect the Company and the goodwill of
the Business;
(d) the Company would be irreparably damaged if Executive
were to provide services to any person or entity in violation of
the provisions of this Agreement;
(e) the scope and duration of the Restrictive Covenants
are reasonably designed to protect a protectible interest of the
Company and are not excessive in light of the circumstances; and
(f) Executive has a means to support himself and his
dependents other than by engaging in the Business, or a business
similar to the Business, and the provisions of this Section 6 will
not impair such ability.
6.2 Non-Compete. The "Restricted Period" for purposes of
this Agreement shall be the period of time commencing on the date hereof
and ending on the date three (3) years after termination of Executive's
employment for any reason; provided that, if Executive's employment with
the Company is terminated by Executive for Good Reason or by the Company
without Cause, then the payments to which Executive is entitled under
Sections 9.1, 9.2 and 9.4, shall be paid to Executive in consideration for
the survival of the Restricted Period beyond the effective date of
termination of Executive's employment. Executive hereby agrees that at all
times during the Restricted Period, Executive shall not, directly or
indirectly, as executive, agent, consultant, stockholder, director,
co-partner or in any other individual or representative capacity, own,
operate, manage, control, engage in, invest in or participate in any manner
in, act as a consultant or advisor to, render services for (alone or in
association with any person, firm, corporation or entity), or otherwise
assist any person or entity that engages in or owns, invests in, operates,
manages or controls any venture or enterprise that directly or indirectly
engages or proposes to engage in the Business anywhere within the United
States and Canada (the "Territory"); provided, however, that nothing
contained herein shall be construed to prevent Executive from investing in
the stock of any competing corporation listed on a national securities
exchange or traded in the over-the-counter market, but only if Executive is
not involved in the
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business of said corporation and if Executive and his associates (as such
term is defined in Regulation 14(A) promulgated under the Securities
Exchange Act of 1934, as in effect on the date hereof), collectively, do
not own more than an aggregate of two percent (2%) of the stock of such
corporation.
6.3 Non-Solicitation. Without limiting the generality of
the provisions of Section 6.2 above, Executive hereby agrees that, during
the Restricted Period, Executive will not, directly or indirectly, solicit,
or participate as executive, agent, consultant, stockholder, director,
partner or in any other individual or representative capacity in any
business which solicits, business from any Person which is or was a
customer or vendor of the Business during the Restricted Period, or from
any successor in interest to any such Person for the purpose of marketing,
selling or providing any such Person any services or products offered by or
available from the Company, or encouraging any such Person to terminate or
otherwise alter his, her or its relationship with the Company.
6.4 Interference with Employee Relationships. During the
Restricted Period, Executive shall not, directly or indirectly, as
executive, agent, consultant, stockholder, director, co-partner or in any
other individual or representative capacity, without the prior written
consent of the Company, employ or engage, recruit or solicit for employment
or engagement, any individual who is employed or engaged by the Company at
that time, or has been employed or engaged by the Company during the six
(6) months prior thereto, or otherwise seek to influence or alter any such
individual's relationship with the Company.
6.5 Blue-Pencil. If any court of competent jurisdiction
shall at any time deem the term of this Agreement or any particular
Restrictive Covenant too lengthy or the Territory too extensive, the other
provisions of this Section 6 shall nevertheless stand, and the Restricted
Period shall be deemed to be the longest period permissible by law under
the circumstances and the Territory shall be deemed to comprise the largest
territory permissible by law under the circumstances. The court in each
case shall reduce the Restricted Period and/or the Territory to permissible
duration or size.
7. Confidential Information. During the term of this Agreement and
thereafter, Executive shall keep secret and retain in strictest confidence,
and shall not, without the prior written consent of the Company, furnish,
make available or disclose to any Person or use for the benefit of himself
or any Person party, any Confidential Information, except to the extent
reasonably necessary to carry out Executive's duties and responsibilities
to the Company. As used in this Section 7, "Confidential Information" shall
mean any information relating to the Business or affairs of the Company,
including but not limited to information relating to financial statements,
business plans, forecasts, purchasing plans, customer identities, potential
customers, employees, suppliers, equipment, programs, strategies and
information, analyses, profit margins or other proprietary information used
by the Company in connection with the Business of the Company; provided,
however, that Confidential Information shall not include any information
which is in the public domain or becomes known in the industry through no
wrongful act on the part of Executive. Executive acknowledges that the
Confidential Information is vital, sensitive, confidential and proprietary
to the Company.
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8. Termination.
8.1 The Company may terminate Executive's employment
hereunder at any time, without Cause (as defined in Section 10),
upon not less than ninety (90) days notice to Executive.
8.2 The Company may terminate Executive's employment
hereunder at any time for Cause by providing to Executive written
notice of termination stating the grounds for termination for
Cause and such termination shall take effect immediately upon
notice of termination.
8.3 Executive may terminate his employment hereunder at
any time, with or without Good Reason (as defined in Section 10),
upon not less than ninety (90) days notice (thirty (30) days
notice if Executive terminates following a Change in Control) to
the Company. Upon notice of such termination from Executive, the
Company may (i) require Executive to continue to perform his
duties hereunder on the Company's behalf during such notice
period, (ii) limit or impose reasonable restrictions on
Executive's activities during such notice period as it deems
necessary, or (iii) accept Executive's notice of termination as
Executive's resignation from the Company (including a resignation
from any position as director of the Company) at any time during
such notice period. If the Company at any time during the notice
period chooses to accept Executive's notice of termination as
Executive's resignation from the Company, then the effective date
of such termination shall be the date as of which such resignation
is accepted.
8.4 The Employment Period will terminate immediately upon
the death or Disability of Executive.
8.5 Following the effective date of termination by
Executive without Good Reason or by the Company for Cause,
Executive will not be entitled to receive any further compensation
(whether in the form of Base Salary, Bonus Payments, or Benefits
or otherwise) other than accrued but unpaid Base Salary through
the effective date of termination. Upon termination by the Company
without Cause, termination by Executive for Good Reason, death or
Disability, Executive (or his estate) will be entitled to receive
(i) all accrued but unpaid Base Salary through the effective date
of such termination, (ii) a pro rata portion of the minimum Bonus
Payment for the year in which such termination occurs, and (iii)
any amounts payable pursuant to Sections 9.1, 9.2 and 9.4 below,
but all other obligations of the Company to pay Executive any
further compensation, whether in the form of Base Salary, Bonus
Payments, or Benefits (other than death and Disability benefits,
if any) or otherwise, will terminate.
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9. Additional Obligations Upon Termination.
9.1 Termination Without Cause. If Executive's employment
with the Company is terminated at any time prior to, upon or after
a Change in Control, (i) by the Company without Cause, or (ii) by
Executive for Good Reason, or (iii) due to the death or Disability
of Executive, then in addition to the amounts payable in
accordance with Section 8.5 above, and in consideration for the
Restrictive Covenants, the Company shall pay and provide to
Executive the following:
(a) Within thirty (30) days after the effective
date of termination of employment (for purposes of this
Section 9, the "Effective Date") the Company shall pay to
Executive or his estate, a lump sum cash payment, in an
amount equal to the Termination Payment;
(b) for a period of thirty-six (36) months after
the Effective Date, (i) Executive and his dependents
shall continue to be covered by all survivor rights,
insurance and benefit programs in type and amount at
least equivalent to those provided to him and his
dependents by the Company immediately prior to the
Effective Date, and (ii) Executive shall continue to
receive from the Company the Automobile Allowance set
forth in Section 5(d) above;
(c) any stock options then held by Executive or
his permitted assignees shall immediately vest as of the
Effective Date; and
(d) the Company, at its sole expense, shall
provide Executive with outplacement services consistent
with those services customarily provided by the Company
to its senior executive employees.
9.2 Termination After a Change in Control. If Executive's
employment with the Company is terminated after a Change in
Control, then in addition to the amounts payable in accordance
with Section 8.5 above, Executive shall be entitled to the
following:
(a) if, during the six (6) month period,
beginning on the one hundred eightieth (180th) day
following such Change in Control, Executive terminates
his employment with the Company without Good Reason, then
within five (5) business days after the Effective Date,
the Company shall pay and provide to Executive: (i) a
lump sum cash payment, in an amount equal to the sum of
(x) Executive's highest Base Salary, plus (y) the amount
of the highest Bonus Payment received by Executive, in
any of the three (3) years immediately preceding the year
in which the Effective Date occurs; and (ii) all benefits
specified under Sections 9.1(b), 9.1(c) and 9.1(d) above.
For purposes of providing Executive benefits under
Section 9.1(b), benefits shall be equivalent to those
provided to Executive and his dependents immediately
prior to the Change in Control; provided that, if
participation in any one or more of such arrangements is
not possible under the terms thereof, the Company
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will provide substantially identical benefits outside of
the programs and cost of this coverage shall be paid by
the Company.
(b) if, at any time following a Change in Control, Executive's
employment is terminated (i) by the Company without Cause, or (ii) by
Executive with or without Good Reason, or (iii) due to the death or
Disability of Executive, the Company thereafter shall pay to Executive or
his spouse an annual amount equal to the Annual Payment, payable in equal
monthly installments, for a period equal to the greater of (i) the life of
Executive, or (ii) the life of Executive's spouse as of the Effective Date,
so long as she is married to Executive at the date of Executive's death. If
Executive shall die before Executive's spouse and Executive's spouse is
married to Executive at the date of Executive's death, whether before or
after the payments of the Annual Payment described above shall have
commenced, then the Annual Payment shall be paid to Executive's spouse. If
Executive shall not be married at the time of his death, then the Company
shall have no payment obligations following his death pursuant to this
Section 9.2(b).
9.3 Rabbi Trust. Prior to the consummation of a Change in
Control, the Company shall establish a "rabbi trust" for the
benefit of Executive into which there shall be contributed by the
Company cash in the amount sufficient to satisfy the Company's
obligations to pay Executive the amounts to which he is entitled
under Sections 5.5, 9.1(a) and 9.2(a). Any instruments
establishing such rabbi trust shall be substantially in the form
and substance of Exhibit 9.3 attached hereto.
9.4 Gross-Up Payments. If all or any portion of the
amounts payable to Executive under this Section 9, either alone or
together with other payments which Executive has the right to
receive from the Company, constitute "excess parachute payments"
(within the meaning of Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code"), that are subject to the excise
tax imposed by Section 4999 of the Code (or similar tax and/or
assessment), the Company (or its successor or assigns) shall
increase the amounts payable pursuant to this Agreement to the
extent necessary to place Executive in the same after-tax position
as he would have been in had no such excise tax been imposed on
the payments hereunder. The determination of the amount of any
such excise taxes shall initially be made by the independent
accounting firm employed by the Company immediately prior to the
Change in Control. If, at a later date, it is determined that the
amount of excise taxes payable by Executive is greater than the
amount initially so determined, then the Company (or its successor
or assigns) shall pay Executive an amount equal to the sum of (i)
such additional excise taxes, (ii) any interest, fines and
penalties resulting from such underpayment, plus (iii) an amount
necessary to reimburse Executive for any income, excise or other
taxes payable by Executive with respect to the amount specified in
(i) and (ii) above, and the reimbursement provided by this (iii).
9.5 No Mitigation. Executive shall not be required to
mitigate damages or the amount of any payment provided for or
referred to in this Section 9 by seeking other employment or
otherwise, nor shall the amount of any payment provided for or
referred to in this Section 9 be reduced by any compensation
earned by the Executive as the result of
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employment by another employer after the termination of the Executive's
employment, or otherwise.
9.6 Release. As a condition to Executive's right to
receive any severance payments and benefits made hereto in this
Section 9, the Company shall require that (i) Executive execute
and deliver to the Company a general release, whereby Executive
shall release the Company, it successor, assigns, officers,
directors and agents from any and all claims, liabilities and
obligations relating to or arising out of this Agreement, and (ii)
Executive shall not be in breach of any Restrictive Covenant.
9.7 Termination in Anticipation of a Change in Control.
If the Company terminates Executive's employment without Cause
during the period commencing six (6) months prior to the earlier
of (i) public announcement by the Company of a Change in Control,
or (ii) the execution by the Company of a definitive agreement
with regard to a Change in Control, and ending on (and including)
the date of the Change in Control, such termination shall be
regarded as a termination after such Change in Control for
purposes of this Agreement, including without limitation, for
purposes of Sections 5.5 and 9.
9.8 Pooling. Notwithstanding anything contained in this
Agreement to the contrary, if any terms of this Agreement would
cause a Corporate Transaction to be ineligible for pooling of
interest accounting, and such Corporate Transaction would be
eligible for such accounting treatment but for such terms, the
Compensation Committee may modify or adjust the terms of this
Agreement so that pooling of interest accounting shall be
available.
10. Definitions. As used in this Agreement:
"Affiliate" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated association or
other entity (other than the Company) that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the Company including, without limitation, any member of an
affiliated group of which the Company is a common parent corporation as
provided in Section 1504 of the Code.
"Anixter Family" means Alan B. Anixter, William R. Anixter, Scott
C. Anixter, their spouses, heirs and any group (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), of which any of the foregoing persons is a member for
purposes of acquiring, holding or disposing of securities of the Company,
any trust established by or for the benefit of any of the foregoing and any
other entity controlled by or for the benefit of any of the foregoing.
"Annual Payment" means an amount equal to the greater of (i) fifty
percent (50%) of the sum of (x) the average of Executive's Base Salary for
the year in which the Change in Control occurs and each of the two (2)
years immediately prior thereto, plus (y) the average of the amount of the
minimum Bonus Payment for the year in which the Change in Control occurs
and the Bonus Payment for each of the two (2) years immediately prior
thereto, or (ii) the Minimum Annual
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Payment; provided if, as of the effective date of the Change in Control,
the Present Value of the Annual Payments payable to Scott Anixter, Carl
Putnam and Donald Welchko (collectively, the "Eligible Executives"), in the
aggregate, after taking into account any gross-up payments payable to any
of them with respect to such Annual Payments pursuant to Section 9.4 of
their respective employment agreements (the "Gross-up Payments"), exceed
two percent (2%) of the Transaction Value (the "Aggregate Cap"), the Annual
Payments payable to each of the Eligible Executives shall be reduced pro
rata based on their relative levels of Annual Payment so that the Present
Value of such Annual Payments, in the aggregate, after taking into account
any Gross-up Payments with respect thereto, equal the Aggregate Cap. If the
foregoing calculation of the Aggregate Cap would result in Executive's
Annual Payment being less than the Minimum Annual Payment, Executive's
Annual Payment shall not be reduced below the Minimum Annual Payment unless
and until each of the other Eligible Executive's Annual Payment has first
been reduced to his respective Minimum Annual Payment. The Annual Payment
shall be determined by the Compensation Committee prior to the Change in
Control, in consultation with a nationally recognized actuarial, accounting
or consulting firm selected by the Compensation Committee to determine the
Present Value of the Annual Payments; provided if the foregoing
determination cannot be made prior to the Change in Control, such
determination shall be made as soon as practicable following the Change in
Control by the persons who were members of the Compensation Committee
immediately prior to the Change in Control regardless of whether such
persons remain on the Board of Directors or Compensation Committee after
the Change in Control.
"Cause" means (a) an act of fraud or dishonesty by Executive that
results in material gain or personal enrichment of Executive at the
Company's expense, (b) Executive's conviction of a felony-class crime
(other than relating to the operation of a motor vehicle), (c) any material
breach by Executive of any provision of this Agreement that, if curable,
has not been cured by Executive within thirty days of written notice of
such breach from the Company, (d) Executive willfully engaging in gross
misconduct materially injurious to the Company that, if curable, has not
been cured by Executive within thirty days of written notice specifying the
alleged willful gross misconduct and material injury, or (e) any
intentional act or gross negligence on the part of Executive that has a
material, detrimental effect on the reputation or Business of the Company.
The decision to terminate Executive's employment for Cause, to take other
action or to take no action in response to such occurrence shall be in the
sole and exclusive discretion of the Board.
"Change in Control" means the happening of any of the following events:
(a) An acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a "Person") of the beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
twenty percent (20%) or more of the combined voting power of the
then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a
Change in Control: (A) any acquisition by the Company or by an
employee benefit plan (or related trust) sponsored or maintained
by the Company or an Affiliate, (B) any acquisition by a member or
members of the Anixter Family, (C) any acquisition by a lender to
the Company pursuant to a debt restructuring of the Company, (D)
any acquisition by, or consummation of a Corporate Transaction
with an
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Affiliate, (E) a Non-Control Transaction, or (F) an acquisition by
a Person of the beneficial ownership of twenty percent (20%) or
more, but less than fifty percent (50%) of the combined voting
power of the then Outstanding Company Voting Securities unless
Executive's employment is terminated by the Company without Cause
or by Executive for Good Reason, within twenty-four (24) months
following such acquisition;
(b) A change in the composition of the Board such that
the individuals who, as of the date hereof, constitute the Board
(such Board shall be hereinafter referred to as the "Incumbent
Board") cease for any reason to constitute at least a majority of
the Board; provided, however, for purposes of this Section 10(b),
that any individual who becomes a member of the Board subsequent
to the date hereof whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least a
majority of those individuals who are members of the Board and who
were also members of the Incumbent Board (or deemed to be such
pursuant to this provision) shall be considered as though such
individual were a member of the Incumbent Board; but, provided,
further, that any such individual whose initial assumption of
office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual
or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board shall not be so considered as a
member of the Incumbent Board;
(c) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially
all of the assets of the Company (a "Corporate Transaction"), in
each case, unless the Corporate Transaction is a Non-Control
Transaction; or
(d) Approval by stockholders of the Company of a complete
liquidation or dissolution of the Company.
"Closing Share Price" means the average closing price of the
Company's common stock as reported on the NASDAQ National Market and
published in The Wall Street Journal (Midwest Edition), for each of the ten
(10) consecutive trading days on the effective date of the Change in
Control.
"Disability" will be deemed to have occurred whenever Executive
has suffered physical or mental illness, injury, or infirmity that renders
Executive unable to perform the essential functions of his job with or
without reasonable accommodation.
"Good Reason" means the occurrence of any of the following events,
unless (i) such event occurs with Executive's express prior written
consent, (ii) the event is an isolated, insubstantial or inadvertent action
or failure to act which was not in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by Executive, or
(iii) the event occurs in connection with termination of Executive's
employment for Cause, Disability or death:
(a) the assignment to Executive by the Company of any
duties which are, in any material respect, inconsistent with, a
diminution of or an adverse change in Executive's
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position, duty, title, office, responsibility or status with the
Company, including without limitation, any material diminution of
Executive's position or responsibility in the decision or
management processes of the Company, reporting relationships, job
description, duties, responsibilities, or any removal of Executive
from, or any failure to reelect Executive to, such position;
(b) a reduction by the Company in Executive's rate of
Base Salary during the Employment Period;
(c) any failure to either continue in effect any material
Benefits or to substitute and continue other plans, policies,
programs or arrangements providing Executive with substantially
similar benefits, or the taking of any action which would
substantially and adversely affect Executive's participation in or
materially reduce Executive's Benefits or compensation;
(d) any failure by any successor or assignee of the
Company to continue this Agreement in full force and effect or any
breach of this Agreement by the Company (or any successor or
assignee of the Company), unless such breach is cured within
thirty (30) days of receiving written notice of the breach from
Executive; or
(e) following a Change in Control, the relocation of the
executive offices of the Company to a location that is more than
fifty (50) miles from the executive offices of the Company as of
the effective date of such Change in Control.
"Minimum Annual Payment" means $200,000.
"Non-Control Transaction" means a Corporate Transaction as a
result of which the Outstanding Company Voting Securities immediately prior
to such Corporate Transaction would entitle the holders thereof immediately
prior to such Corporate Transaction to exercise, directly or indirectly,
more than fifty percent (50%) of the combined voting power of all of the
shares of capital stock entitled to vote generally in election of directors
of the corporation resulting from such Corporate Transaction immediately
after such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or all
or substantially all of the Company's assets either directly or through one
or more subsidiaries).
"Person" means any individual, corporation, trust, proprietorship,
association, governmental body, agency or subdivision or other entity.
"Present Value" means the present value of the Annual Payments as
of the effective date of the Change in Control as determined by a
nationally recognized actuarial, accounting or consulting firm selected by
the Compensation Committee, after taking into account reasonable
assumptions, including as to life expectancy and discount rates.
"Termination Payment" means an amount equal to the greater of (i)
the sum of Executive's Base Salary plus his minimum Bonus Payment for the
remaining term of the then current Employment Period, or (ii) two(2) (the
"Multiple") times the sum of (x) Executive's highest Base
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Salary plus (y) the amount of the highest Bonus Payment received by
Executive, in any of the three years immediately preceding the year in
which the Effective Date occurs; provided that, if the Effective Date
occurs during the thirty-six (36) months following a Change in Control, the
Multiple shall be equal to three (3) (rather than two (2)) for purposes of
clause (ii) above.
"Transaction Bonus Amount" means:
(i) if the Closing Share Price is less than or equal to
$13.00 per share, an amount equal to the Transaction Payment; or
(ii) if the Closing Share Price is greater than $13.00
per share but less than $17.00 per share, an amount equal to the
Transaction Payment times the sum of (x) one (1), plus (y) a fraction, the
numerator of which is the Closing Share Price minus $13.00, and the
denominator of which is equal to $17.00 minus $13.00; or
(iii) if the Closing Share Price is $17 per share or
greater, an amount equal to two (2) times the Transaction Payment.
The amounts per share set forth above in subparagraphs (i), (ii) and (iii)
shall be equitably adjusted by the Compensation Committee to reflect any
stock split, stock dividend, recapitalization or similar event.
"Transaction Payment" means the sum of (x) Executive's highest
Base Salary, plus (y) the amount of the highest Bonus Payment received by
Executive, in any of the three (3) years immediately prior to the year in
which the Change in Control occurs.
"Transaction Value" means (i) with respect to a Corporate
Transaction, the total amount of cash, securities, contractual arrangements
and other properties paid or payable, directly or indirectly in connection
with such Corporate Transaction including, without limitation; (a) amounts
paid to any party pursuant to covenants not to compete or other similar
arrangements; and (b) amounts paid to holders of any warrants, stock
purchase rights, convertible securities or similar rights of the Company
and to holders of any options or stock appreciation rights issued by the
Company (whether or not vested); and (c) amount of any short term debt and
long term liabilities of the Company (including the principal amount of any
indebtedness for borrowed money) (1) indirectly or directly assumed or
acquired by the Company or any other party, or otherwise repaid or retired,
in connection with or in anticipation of the Corporate Transaction, (2)
existing on the Company's balance sheet at the time of a Corporate
Transaction (if such Corporate Transaction takes the form of a merger,
consolidation or a purchase of stock) or (3) assumed in connection with a
Corporate Transaction (if such Corporate Transaction takes the form of a
purchase of assets); and (d) in the event the Corporate Transaction takes
the form of a recapitalization, restructuring, spin-off, split-off or
similar transaction, Transaction Value shall include the fair market value
of (A) the equity securities of the Company retained by the Company's
security holders following a Corporate Transaction and (B) any securities
received by the Company's security holders in exchange for or in respect of
securities of the target company following such Corporate Transaction (all
such securities received by such security holders being deemed to have been
paid to such security holders in such Corporate Transaction, and (ii) with
respect to a Change in Control that is not a Corporate
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Transaction, the enterprise value of the Company, as determined as soon as
practicable, following the Change in Control by the persons who were
members of the Compensation Committee immediately prior to the Change in
Control regardless of whether such persons remain on the Board of Directors
or the Compensation Committee following the Change in Control, in
consultation with such investment bankers or other advisors as such persons
may deem appropriate.
11. Remedies. Executive acknowledges and agrees that the covenants
set forth in Sections 6 and 7 of this Agreement (collectively, the
"Restrictive Covenants") are reasonable and necessary for the protection of
the Company's business interests, that irreparable injury will result to
the Company if Executive breaches any of the terms of the Restrictive
Covenants, and that in the event of Executive's actual or threatened breach
of any such Restrictive Covenants, the Company will have no adequate remedy
at law. Executive accordingly agrees that in the event of any actual or
threatened breach by him of any of the Restrictive Covenants, the Company
shall be entitled to immediate temporary injunctive and other equitable
relief, without bond and without the necessity of showing actual monetary
damages, subject to hearing as soon thereafter as possible. Nothing
contained herein shall be construed as prohibiting the Company from
pursuing any other remedies available to it for such breach or threatened
breach, including the recovery of any damages which it is able to prove.
12. Miscellaneous.
(a) Notices. All notices and other communication between
the parties pursuant to this Agreement must be in writing and will
be deemed given when delivered in person, one (1) business day
after being dispatched by a nationally recognized overnight
courier service, three (3) business days after being deposited in
the U.S. Mail, registered or certified mail, return receipt
requested, or when sent by facsimile (with receipt acknowledged
and a copy sent for next day delivery by a nationally recognized
overnight courier service), to the Company at the address or
facsimile number of its principal office in the Chicago, Illinois
metropolitan area and to Executive (or his representatives) at his
address or facsimile as shown on the Company's records. Executive
(or his representatives) may change his address or facsimile
number for notice purposes by delivering notice to the Company in
accordance with this Section 12(a). All notices sent to the
Company shall also be delivered to Katten Muchin & Zavis, 525 West
Monroe Street, Suite 1600, Chicago, Illinois 60661-3693,
Attention: Jeffrey R. Patt, Esq., Facsimile No.: (312-902-1061).
(b) Governing Law. This Agreement will be subject to and
governed by the laws of the State of Illinois, without regard to
principles of conflicts of laws.
(c) Binding Effect. This Agreement will be binding upon
and inure to the benefit of the parties and their respective
heirs, legal representatives, executors, administrators,
successors, and assigns, subject to the limitations on assignment
in Section 12(h).
(d) Entire Agreement. This Agreement constitutes the
entire Agreement between the parties with respect to the subject
matter of this Agreement and supersedes any other agreements,
whether oral or written, between the parties with respect to the
subject matter of this Agreement.
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(e) Modification. No change or modification of this
Agreement will be valid unless it is in writing and signed by both
of the parties. No waiver of any provision of this Agreement will
be valid unless in writing and signed by the person or party to be
charged.
(f) Severability. If any provision of this Agreement is,
for any reason, invalid or unenforceable, the remaining provisions
of this Agreement will nevertheless be valid and enforceable and
will remain in full force and effect. Any provision of this
Agreement that is held invalid or unenforceable by a court of
competent jurisdiction will be deemed modified to the extent
necessary to make it valid and enforceable and as so modified will
remain in full force and effect.
(g) Headings. The headings in this Agreement are inserted
for convenience only and are not to be considered in the
interpretation of construction of the provisions of this
Agreement.
(h) Assignability. This Agreement may not be assigned by
either party without the prior written consent of the other party,
except that the Company may assign its rights to, and cause its
obligations under this Agreement to be assumed by, any person or
entity to whom or to which the Company simultaneously transfers by
sale, merger, or otherwise all or substantially all of its assets.
(i) No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by Executive
and the Company to express their mutual intent, and no rule of
strict construction will be applied against Executive or the
Company.
(j) Arbitration. Except for any claim or dispute which
gives rise or could give rise to equitable relief under this
Agreement, at the request of Executive, or the Company, any
disagreement, dispute, controversy or claim arising out of or
relating to this Agreement or the breach hereof shall be settled
exclusively and finally by arbitration. The arbitration shall be
conducted in accordance with such rules and before such arbitrator
as the parties shall agree and if they fail to so agree within
fifteen (15) days after demand for arbitration, such arbitration
shall be conducted in accordance with the Federal Arbitration Act
and the National Rules for the Resolution of Employment Disputes
of the American Arbitration Association which are then in effect
(hereinafter referred to as "AAA Rules"). Such arbitration shall
be conducted in Chicago, Illinois, or in such other city as the
parties to the dispute may designate by mutual consent. The
arbitral tribunal shall consist of three arbitrators (or such
lesser number as may be agreed upon by the parties) selected
according to the procedure set forth in the AAA Rules in effect on
the date hereof and the arbitrators shall be empowered to order
any remedy which is appropriate to the proceedings and issues
presented to them. Any party to a decision rendered in such
arbitration proceedings may seek an order enforcing the same by
any court having jurisdiction.
(k) Legal Expenses. The Company shall pay the legal
expenses incurred by Executive for review of this Agreement by his
legal counsel, up to an amount not to exceed $10,000. If Executive
takes legal action to enforce the Company's obligations under this
Agreement and Executive prevails in such action, the Company shall
reimburse Executive
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for all reasonable expenses (including reasonable attorney's fees)
actually incurred by Executive in such action.
[signature page to follow]
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IN WITNESS WHEREOF, the parties have executed this Amended and
Restated Executive Employment Agreement as of the date first above written.
ANICOM, INC.
By: /s/ CARL E. PUTNAM
--------------------------
Carl E. Putnam, President
EXECUTIVE:
/s/ SCOTT C. ANIXTER
-------------------------------
Scott C. Anixter
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EXHIBIT 9.3
FORM OF RABBI TRUST