Exhibit 10P
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT is made as of the ______ day of ___________,
__________, between Apogee Enterprises, Inc., a Minnesota corporation, with its
principal offices at Norwest Financial Center, 7900 Xerxes Avenue South, Suite
1800, Minneapolis, Minnesota 55431 (the "Company") and ____________
("Executive"), residing at _______________________________.
W I T N E S S E T H T H A T:
WHEREAS, this Agreement is intended to specify the financial arrangements
that the Company will provide to Executive upon Executive's separation from
employment with the Company and all subsidiaries of the Company (collectively,
the "Apogee Entities") under any of the circumstances described herein; and
WHEREAS, this Agreement is entered into by the Company in the belief that
it is in the best interests of the Company and its shareholders to provide
stable conditions of employment for Executive notwithstanding the possibility,
threat or occurrence of certain types of change in control, thereby enhancing
the Company's ability to attract and retain highly qualified people.
NOW, THEREFORE, to assure the Company that it will have the continued
dedication of Executive notwithstanding the possibility, threat or occurrence of
a bid to take over control of the Company, and to induce Executive to remain in
the employ of the Apogee Entities, and for other good and valuable
consideration, the Company and Executive agree as follows:
1. Term of Agreement. The term of this Agreement shall commence on the date
hereof as first written above and shall continue through December 31, 2000;
provided that commencing on January 1, 2001 and each January 1 thereafter, the
term of this Agreement shall automatically be extended for one additional year
unless, not later than September 30 of the preceding year, the Board of
Directors of the Company (a majority of which, at such time, shall be composed
of Continuing Directors) shall have authorized, by majority vote, management of
the Company to give notice to Executive, and the Company shall have given such
notice, that the Company does not wish to extend this Agreement; and provided,
further, that, notwithstanding any such notice by the Company not to extend,
this Agreement shall continue in effect for a period of 24 months beyond the
term provided herein if a Change in Control (as defined in Section 3(i) hereof)
shall have occurred during such term.
2. Termination of Employment
(i) Prior to a Change in Control. Prior to a Change in Control, any
Apogee Entity may terminate Executive from employment with such Apogee
Entity at will, with or without Cause (as defined in Section 3(iii)
hereof), at any time. Executive's rights upon
termination of employment from all Apogee Entities prior to a Change in
Control shall be governed by the employing Apogee Entity's standard
employment termination policy applicable to Executive in effect at the time
of termination.
(ii) After a Change in Control
(a) From and after the date of a Change in Control during the
term of this Agreement, neither the Company nor the Apogee Entity then
employing Executive shall terminate Executive from employment with the
Company or any Apogee Entity except as provided in this Section 2(ii)
or as a result of Executive's Disability (as defined in Section 3(iv)
hereof) or his death.
(b) From and after the date of a Change in Control during the
term of this Agreement, the Company (or the other Apogee Entity then
employing Executive) shall have the right to terminate Executive from
employment with the Apogee Entities at any time during the term of
this Agreement for Cause, by written notice to Executive, specifying
the particulars of the conduct of Executive forming the basis for such
termination, such notice to be effective on the 30th day following
delivery thereof to Executive if Executive has not substantially cured
the conduct identified in such notice.
(c) From and after the date of a Change in Control during the
term of this Agreement: (I) the Company (or the other Apogee Entity
then employing Executive) shall have the right to terminate
Executive's employment without Cause, at any time; and (II) Executive
shall, upon the occurrence of such a termination by the Company or
such other Apogee Entity without Cause, or upon the voluntary
termination of Executive's employment by Executive for Good Reason (as
defined in Section 3(ii) hereof), or upon Executive's voluntary
termination of his employment with the Company or such other Apogee
Entity for any reason during the 30-consecutive-day period commencing
on the first anniversary of the date on which the Change in Control
shall have occurred and ending on the 30th day immediately following
the first anniversary on which the Change in Control occurs, be
entitled to receive the benefits provided in Section 4 hereof.
Executive shall evidence a voluntary termination for Good Reason by
written notice to the Company given within 60 days after the date of
the occurrence of any event that Executive knows or should reasonably
have known constitutes Good Reason for voluntary termination. Such
notice need only identify Executive and set forth in reasonable detail
the facts and circumstances claimed by Executive to constitute Good
Reason.
3. Definitions
(i) A "Change in Control" shall mean:
(a) a change in control 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"), or successor
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provision thereto, whether or not the Company is then subject to such
reporting requirement including, without limitation, any of the
following events:
(I) the consummation of any consolidation or merger of the
Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's common
stock would be converted into cash, securities, or other
property, other than a merger of the Company in which the holders
of the Company's common stock immediately prior to the
consolidation or merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the
merger; or
(II) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company;
(b) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "Beneficial Owner" (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing 35% or more of
the combined voting power of the Company's then outstanding
securities;
(c) the Continuing Directors (as defined in Section 3(v) hereof)
cease to constitute a majority of the Company's Board of Directors; or
(d) the majority of the Continuing Directors determine in their
sole and absolute discretion that there has been a change in control
of the Company.
(ii) "Good Reason" shall mean the occurrence of any of the following
events, except for the occurrence of such an event in connection with the
termination or reassignment of Executive's employment by the Company (or
any other Apogee Entity then employing Executive) for Cause, for Disability
or for death:
(a) the assignment to Executive of employment duties or
responsibilities which are not of comparable responsibility and status
as the employment duties and responsibilities held by Executive
immediately prior to a Change in Control, or a change in Executive's
titles or offices as in effect immediately prior to a Change in
Control of the Company, or any removal of Executive from or any
failure to reelect or reappoint Executive to any of such positions,
except in connection with the termination of his employment for
Disability, retirement or Cause, or as a result of Executive's death,
or by Executive other than for Good Reason;
(b) a reduction by the Company (or any other Apogee Entity then
employing Executive) in Executive's base salary as in effect
immediately prior to a Change in Control or as the same may be
increased from time to time during the term of this Agreement or the
Company's (or any other Apogee Entity then employing Executive)
failure to increase Executive's base salary (within 12 months of
Executive's last increase
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in base salary) after a Change in Control of the Company in an amount
which at least equals, on a percentage basis, the average percentage
increase in base salary for all executive officers of the Company
effected during the preceding 12 months;
(c) any failure by the Company (or any other Apogee Entity then
employing Executive) to continue in effect any incentive plan or
arrangement (including, without limitation, any incentive compensation
plan, long-term incentive plan, bonus or contingent bonus arrangements
or credits, the right to receive performance awards, or similar
incentive compensation benefits) in which Executive is participating,
or is eligible to participate, at the time of a Change in Control of
the Company (or any other plans or arrangements providing Executive
with substantially similar benefits) or the taking of any action by
the Company (or such other Apogee Entity), including an amendment or
modification to any such plan or arrangement (except as may be
required by applicable law), which would adversely affect Executive's
participation in any such plan or arrangement;
(d) the Company's (or any other Apogee Entity then employing
Executive) requiring Executive to be based anywhere other than within
50 miles of Executive's office location immediately prior to a Change
in Control, except for requirements of temporary travel on the
Company's business to an extent substantially consistent with
Executive's business travel obligations immediately prior to a Change
in Control;
(e) except to the extent otherwise required by applicable law,
the failure by the Company (or any other Apogee Entity then employing
Executive) to continue in effect any benefit or compensation plan,
stock ownership plan, stock purchase plan, bonus plan, life insurance
plan, health-and-accident plan or disability plan in which Executive
is participating or is eligible to participate immediately prior to a
Change in Control (or plans providing Executive with substantially
similar benefits), the taking of any action by the Company (or such
other Apogee Entity) which would adversely affect Executive's
participation in, or materially reduce Executive's benefits under, any
of such plans or deprive Executive of any material fringe benefit
enjoyed by Executive immediately prior to such Change in Control;
(f) the failure by the Company (or any other Apogee Entity then
employing Executive) to provide Executive with the number of paid
vacation days to which Executive is entitled immediately prior to such
Change in Control in accordance with the Company's (or any other
Apogee Entity's) vacation policy as then in effect;
(g) the failure by the Company to obtain, as specified in Section
5(i) hereof, an assumption of the obligations of the Company to
perform this Agreement by any successor to the Company; or
(h) any material breach by the Company of this Agreement.
(iii) "Cause" shall mean termination by the Company (or any other
Apogee Entity then employing Executive) of Executive's employment based
upon (a) the willful and
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continued failure by Executive substantially to perform his duties and
obligations (other than any such failure resulting from his incapacity due
to physical or mental illness or any such actual or anticipated failure
resulting from Executive's termination for Good Reason) or (b) the willful
engaging by Executive in misconduct which is materially injurious to the
Company, monetarily or otherwise. For purposes of this Section 3(iii), no
action or failure to act on Executive's part shall be considered "willful"
unless done, or omitted to be done, by Executive in bad faith and without
reasonable belief that his action or omission was in the best interests of
the Company.
(iv) "Disability" shall mean any physical or mental condition which
would qualify Executive for a disability benefit under any long-term
disability plan maintained by the Company (or any other Apogee Entity then
employing Executive) either before or after a Change in Control.
(v) "Continuing Director" shall mean any person who is a member of the
Board of Directors of the Company, who is not an Acquiring Person (as
hereinafter defined) or an Affiliate or Associate (as hereinafter defined)
of an Acquiring Person, or a representative of an Acquiring Person or of
any such Affiliate or Associate, and who (a) was a member of the Board of
Directors on the date of this Agreement as first written above or (b)
subsequently becomes a member of the Board of Directors, if such person's
initial nomination for election or initial election to the Board of
Directors is recommended or approved by a majority of the Continuing
Directors. For purposes of this Section 3(v): "Acquiring Person" shall mean
any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) who or which, together with all Affiliates and Associates of
such person, is the Beneficial Owner of 10% or more of the shares of Common
Stock of the Company then outstanding, but shall not include the Company,
any subsidiary of the Company or any Executive benefit plan of the Company
or of any subsidiary of the Company or any entity holding shares of Common
Stock organized, appointed or established for, or pursuant to the terms of,
any such plan; and "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 promulgated under the
Exchange Act.
4. Benefits upon Termination under Section 2(ii)(c) After a Change in
Control
(i) Upon the termination (voluntary or involuntary) of the employment
of Executive pursuant to Section 2(ii)(c) hereof, Executive shall be
entitled to receive the benefits specified in this Section 4. The amounts
due to Executive under subparagraphs (a), (b), (c) or (d) of this Section
4(i) shall be paid to Executive not later than one business day prior to
the date that the termination of Executive's employment becomes effective
(the "Employment Termination Date"). All benefits to Executive pursuant to
this Section 4(i) shall be subject to any applicable income, payroll or
other taxes required by law to be withheld.
(a) The Company shall pay to Executive (x) the full base salary
earned by him and unpaid through the date that the termination of
Executive's employment becomes effective, at the rate in effect at the
time written notice of termination (voluntary or involuntary) was
given, (y) any amount earned by Executive as a bonus with respect to
the fiscal year of the Company preceding the termination of his
employment if such
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bonus has not theretofore been paid to Executive, and (z) an amount
representing credit for any vacation earned or accrued by him but not
taken;
(b) In lieu of any further base salary payments to Executive for
periods subsequent to the date that the termination of Executive's
employment becomes effective, the Company shall pay as severance pay
to Executive (a "Severance Payment") a lump-sum cash amount equal to
the sum of:
(I) an amount equal to the bonus Executive earned with
respect to the fiscal year of the Company preceding the
termination of his employment, or Executive's maximum target
bonus for the fiscal year in which the Employment Termination
Date occurs, whichever is greater (the "Target Bonus"),
multiplied by a fraction, the numerator of which is equal to the
number of full months in the year Executive terminates employment
that have elapsed at the Employment Termination Date, and the
denominator of which is twelve (12), plus
(II) the sum of Executive's (A) annual base salary (as in
effect in the month preceding the month in which the termination
becomes effective or as in effect in the month preceding the
Change in Control, whichever is higher) and (B) the Target Bonus;
(c) Notwithstanding any provision to the contrary in the Amended
and Restated 1987 Apogee Enterprises, Inc. Partnership Plan (the
"Partnership Plan") (or in any other agreement or plan in existence
between the Company and Executive at the Employment Termination Date),
any rights Executive may have at any time under the Partnership Plan
and which are deferred at the time of the Employment Termination Date
shall immediately become vested and the Company shall pay to Executive
any amounts due or which have been promised under the Partnership Plan
to Executive;
(d) The Company shall also pay to Executive all legal fees and
expenses incurred by Executive as a result of such termination of
employment (including all fees and expenses, if any, incurred by
Executive in seeking to obtain or enforce any right or benefit
provided to Executive by this Agreement whether by arbitration or
otherwise);
(e) Notwithstanding any other agreement in existence between the
Company and Executive at the Employment Termination Date, all stock
options or shares of restricted stock owned or held by Executive or
promised to be payable to Executive by the Company shall be
immediately vested in Executive without further restriction and
Executive shall be treated at that time as the unrestricted owner of
such Company stock options and stock, subject to applicable
constraints under federal and state securities laws; and
(f) Any and all contracts, agreements or arrangements between the
Company and/or any other Apogee Entity and Executive prohibiting or
restricting Executive from owning, operating, participating in, or
providing employment or consulting services to, any business or
company competitive with the Company or such other Apogee Entity at
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any time or during any period after the Employment Termination Date,
shall be deemed terminated and of no further force or effect as of the
Employment Termination Date, to the extent, but only to the extent,
such contracts, agreements or arrangements so prohibit or restrict
Executive; provided that, the foregoing provision shall not constitute
a license or right to use any proprietary information of the Company
or such other Apogee Entity and shall in no way affect any such
contracts, agreements or arrangements insofar as they relate to
nondisclosure and nonuse of proprietary information of the Company or
such other Apogee Entity notwithstanding the fact that such
nondisclosure and nonuse may prohibit or restrict Executive in certain
competitive activities.
(ii) Executive shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or
otherwise. The amount of any payment or benefit provided in this Section 4
shall not be reduced by any compensation earned by Executive as a result of
any employment by another employer.
(iii) Upon the occurrence of a Change in Control, the Company shall
cause its independent auditors promptly to review, at the Company's sole
expense, the applicability of Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code") to the "Total Payments" (as defined in
Section 4(iv) below) to be received by Executive. If such auditors
determine that, after taking into account the provisions of Section 4(iv)
hereof, any of the Total Payments would be subject to the excise tax
imposed by Section 4999 of the Code, or any interest or penalties with
respect to such tax (such excise tax, together with interest and penalties,
are collectively referred to as the "Excise Tax"), then, in addition to any
amounts payable under foregoing provisions of this Section 4, the Company
shall pay an additional cash payment (a "Gross-Up Payment") within 30 days
of such determination equal to the Excise Tax imposed on the Total
Payments, including any Excise Tax or any other income taxes that may be
imposed on such Gross-Up Payment. If no determination by the Company's
auditors is made prior to the time a tax return reflecting the Total
Payments is required to be filed by Executive, Executive will be entitled
to receive a Gross-Up Payment calculated on the basis of the Total Payments
reported by him in such tax return, within 30 days of the filing of such
tax return. In all events, if any tax authority determines that a greater
Excise Tax should be imposed on the Total Payments than is determined by
the Company's independent auditors or reflected in Executive's tax return
pursuant to this subparagraph (iii), Executive shall be entitled to receive
the full Gross-Up Payment calculated on the basis of the amount of Excise
Tax determined to be payable by such tax authority from the Company within
30 days of such determination.
(iv) As used herein, "Total Payments" shall mean, collectively, any
payment or benefit received or to be received by Executive in connection
with a Change in Control of the Company or termination of Executive's
employment (whether payable pursuant to the terms of this Agreement or any
other plan, contract, agreement or arrangement with the Company, with any
person whose actions result in a Change in Control of the Company or with
any person constituting a member of an "affiliated group" as defined in
Section 280G(d)(5) of the Code) with the Company or with any person whose
actions result in a Change in Control of the Company. For purposes of
calculating Total Payments, (a) no portion of the Total Payments the
receipt or enjoyment of which Executive shall have effectively waived in
writing prior to the date of payment of the Severance Payment shall be
taken into account; (b) no portion of the
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Total Payments shall be taken into account which in the opinion of tax
counsel selected by the Company and acceptable to Executive does not
constitute a "parachute payment" within the meaning of Section 280G(b)(2)
of the Code; (c) the value of any benefit provided by Section 4(i)(f) of
this Agreement shall not be taken into account in computing Total Payments;
and (d) the value of any other non-cash benefit or of any deferred cash
payment included in the Total Payments shall be determined by the Company's
independent auditors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code. In case of uncertainty as to whether all or
some portion of a payment is or is not payable to Executive under this
Agreement, the Company shall initially make the payment to Executive, and
Executive agrees to refund to the Company any amounts ultimately determined
not to have been payable under the terms hereof.
5. Successors and Binding Agreement
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company), by
agreement in form and substance satisfactory to Executive, to expressly
assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Executive to compensation from the Company in
the same amount and on the same terms as Executive would be entitled
hereunder if Executive terminated his employment after a Change in Control
for Good Reason, except that for purposes of implementing the foregoing,
the date on which any such succession becomes effective shall be deemed the
Employment Termination Date. As used in this Agreement, "Company" shall
mean the Company and any successor to its business and/or assets which
executes and delivers the agreement provided for in this Section 5(i) or
which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(ii) This Agreement is personal to Executive, and Executive may not
assign or transfer any part of his rights or duties hereunder, or any
compensation due to him hereunder, to any other person. Notwithstanding the
foregoing, this Agreement shall inure to the benefit of and be enforceable
by Executive's personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees.
6. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in the
Minneapolis-St. Paul metropolitan area, in accordance with the applicable rules
of the American Arbitration Association then in effect. Judgment may be entered
on the arbitrator's award in any court having jurisdiction. In the event that
Executive engages counsel to arbitrate any dispute hereunder (which arbitration
results in an award to Executive of any kind) or to enforce such an award, all
costs and expenses incurred by Executive, including reasonable attorney's fees
and expenses, with respect to such arbitration or enforcement thereof shall be
reimbursed to Executive by the Company promptly upon Executive's submission of a
request therefor.
7. Modification; Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in a writing
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signed by Executive and such officer as may be specifically designated by the
Board of Directors of the Company. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
8. Notice. All notices, requests, demands and all other communications
required or permitted by either party to the other party by this Agreement
(including, without limitation, any notice of termination of employment and any
notice of an intention to arbitrate) shall be in writing and shall be deemed to
have been duly given when delivered personally or received by certified or
registered mail, return receipt requested, postage prepaid, at the address of
the other party, as first written above (directed to the attention of the Board
of Directors and Corporate Secretary in the case of the Company). Either party
hereto may change its address for purposes of this Section 8 by giving 15 days'
prior notice to the other party hereto.
9. Severability. If any term or provision of this Agreement or the
application hereof to any person or circumstances shall to any extent be invalid
or unenforceable, the remainder of this Agreement or the application of such
term or provision to persons or circumstances other than those as to which it is
held invalid or unenforceable shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
10. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11. Governing Law. This Agreement has been executed and delivered in the
State of Minnesota and shall in all respects be governed by, and construed and
enforced in accordance with, the laws of the State of Minnesota, including all
matters of construction, validity and performance.
12. Effect of Agreement; Entire Agreement. The Company and Executive
understand and agree that this Agreement is intended to reflect their agreement
only with respect to payments and benefits upon termination in certain cases and
is not intended to create any obligation on the part of either party to continue
employment. This Agreement supersedes any and all other oral or written
agreements or policies made relating to the subject matter hereof and
constitutes the entire agreement of the parties relating to the subject matter
hereof; provided that this Agreement shall not supersede or limit in any way
Executive's rights under any benefit plan, program or arrangements in accordance
with their terms.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
its name by a duly authorized director and officer, and Executive has hereunto
set his hand, all as of the date first written above.
APOGEE ENTERPRISES, INC.
By
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Russell Huffer
Its Chief Executive Officer and
President
EXECUTIVE
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SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT is made as of the _____ day of___________,
__________, between Apogee Enterprises, Inc., a Minnesota corporation, with its
principal offices at Norwest Financial Center, 7900 Xerxes Avenue South, Suite
1800, Minneapolis, Minnesota 55431 (the "Company") and
___________________________________ ("Executive"),
_____________________________________.
W I T N E S S E T H T H A T:
WHEREAS, this Agreement is intended to specify the financial
arrangements that the Company will provide to Executive upon Executive's
separation from employment with the Company and all subsidiaries of the Company
(collectively, the "Apogee Entities") under any of the circumstances described
herein; and
WHEREAS, this Agreement is entered into by the Company in the belief
that it is in the best interests of the Company and its shareholders to provide
stable conditions of employment for Executive notwithstanding the possibility,
threat or occurrence of certain types of change in control, thereby enhancing
the Company's ability to attract and retain highly qualified people.
NOW, THEREFORE, to assure the Company that it will have the continued
dedication of Executive notwithstanding the possibility, threat or occurrence of
a bid to take over control of the Company, and to induce Executive to remain in
the employ of the Apogee Entities, and for other good and valuable
consideration, the Company and Executive agree as follows:
1. Term of Agreement. The term of this Agreement shall commence on the
date hereof as first written above and shall continue through December 31, 2000;
provided that commencing on January 1, 2001 and each January 1 thereafter, the
term of this Agreement shall automatically be extended for one additional year
unless, not later than September 30 of the preceding year, the Board of
Directors of the Company (a majority of which, at such time, shall be composed
of Continuing Directors) shall have authorized, by majority vote, management of
the Company to give notice to Executive, and the Company shall have given such
notice, that the Company does not wish to extend this Agreement; and provided,
further, that, notwithstanding any such notice by the Company not to extend,
this Agreement shall continue in effect for a period of 24 months beyond the
term provided herein if a Change in Control (as defined in Section 3(i) hereof)
shall have occurred during such term.
2. Termination of Employment
(i) Prior to a Change in Control. Prior to a Change in Control, any
Apogee Entity may terminate Executive from employment with such Apogee Entity at
will, with or without Cause (as defined in Section 3(iii) hereof), at any time.
Executive's rights upon termination of employment from all Apogee Entities prior
to a Change in Control shall be
governed by the employing Apogee Entity's standard employment termination policy
applicable to Executive in effect at the time of termination.
(ii) After a Change in Control
(a) From and after the date of a Change in Control during the
term of this Agreement, neither the Company nor the Apogee Entity then
employing Executive shall terminate Executive from employment with the
Company or any Apogee Entity except as provided in this Section 2(ii)
or as a result of Executive's Disability (as defined in Section 3(iv)
hereof) or his death.
(b) From and after the date of a Change in Control during the
term of this Agreement, the Company (or the other Apogee Entity then
employing Executive) shall have the right to terminate Executive from
employment with the Apogee Entities at any time during the term of this
Agreement for Cause, by written notice to Executive, specifying the
particulars of the conduct of Executive forming the basis for such
termination, such notice to be effective on the 30th day following
delivery thereof to Executive if Executive has not substantially cured
the conduct identified in such notice.
(c) From and after the date of a Change in Control during the
term of this Agreement: (I) the Company (or the other Apogee Entity
then employing Executive) shall have the right to terminate Executive's
employment without Cause, at any time; and (II) Executive shall, upon
the occurrence of such a termination by the Company or such other
Apogee Entity without Cause, or upon the voluntary termination of
Executive's employment by Executive for Good Reason (as defined in
Section 3(ii) hereof), or upon Executive's voluntary termination of his
employment with the Company or such other Apogee Entity for any reason
during the 30-consecutive-day period commencing on the first
anniversary of the date on which the Change in Control shall have
occurred and ending on the 30th day immediately following the first
anniversary on which the Change in Control occurs, be entitled to
receive the benefits provided in Section 4 hereof. Executive shall
evidence a voluntary termination for Good Reason by written notice to
the Company given within 60 days after the date of the occurrence of
any event that Executive knows or should reasonably have known
constitutes Good Reason for voluntary termination. Such notice need
only identify Executive and set forth in reasonable detail the facts
and circumstances claimed by Executive to constitute Good Reason.
3. Definitions
(i) A "Change in Control" shall mean:
(a) a change in control 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"), or successor provision thereto, whether or not the
Company is then subject to such reporting requirement including,
without limitation, any of the following events:
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(I) the consummation of any consolidation or merger
of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the
Company's common stock would be converted into cash,
securities, or other property, other than a merger of the
Company in which the holders of the Company's common stock
immediately prior to the consolidation or merger have the same
proportionate ownership of common stock of the surviving
corporation immediately after the merger; or
(II) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Company;
(b) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "Beneficial Owner" (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing 35% or more of
the combined voting power of the Company's then outstanding securities;
(c) the Continuing Directors (as defined in Section 3(v)
hereof) cease to constitute a majority of the Company's Board of
Directors; or
(d) the majority of the Continuing Directors determine in
their sole and absolute discretion that there has been a change in
control of the Company.
(ii) "Good Reason" shall mean the occurrence of any of the following
events, except for the occurrence of such an event in connection with the
termination or reassignment of Executive's employment by the Company (or any
other Apogee Entity then employing Executive) for Cause, for Disability or for
death:
(a) the assignment to Executive of employment duties or
responsibilities which are not of comparable responsibility and status
as the employment duties and responsibilities held by Executive
immediately prior to a Change in Control, or a change in Executive's
titles or offices as in effect immediately prior to a Change in Control
of the Company, or any removal of Executive from or any failure to
reelect or reappoint Executive to any of such positions, except in
connection with the termination of his employment for Disability,
retirement or Cause, or as a result of Executive's death, or by
Executive other than for Good Reason;
(b) a reduction by the Company (or any other Apogee Entity
then employing Executive) in Executive's base salary as in effect
immediately prior to a Change in Control or as the same may be
increased from time to time during the term of this Agreement or the
Company's (or any other Apogee Entity then employing Executive) failure
to increase Executive's base salary (within 12 months of Executive's
last increase in base salary) after a Change in Control of the Company
in an amount which at least
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equals, on a percentage basis, the average percentage increase in base
salary for all executive officers of the Company effected during the
preceding 12 months;
(c) any failure by the Company (or any other Apogee Entity
then employing Executive) to continue in effect any incentive plan or
arrangement (including, without limitation, any incentive compensation
plan, long-term incentive plan, bonus or contingent bonus arrangements
or credits, the right to receive performance awards, or similar
incentive compensation benefits) in which Executive is participating,
or is eligible to participate, at the time of a Change in Control of
the Company (or any other plans or arrangements providing Executive
with substantially similar benefits) or the taking of any action by the
Company (or such other Apogee Entity), including an amendment or
modification to any such plan or arrangement (except as may be required
by applicable law), which would adversely affect Executive's
participation in any such plan or arrangement;
(d) the Company's (or any other Apogee Entity then employing
Executive) requiring Executive to be based anywhere other than within
50 miles of Executive's office location immediately prior to a Change
in Control, except for requirements of temporary travel on the
Company's business to an extent substantially consistent with
Executive's business travel obligations immediately prior to a Change
in Control;
(e) except to the extent otherwise required by applicable law,
the failure by the Company (or any other Apogee Entity then employing
Executive) to continue in effect any benefit or compensation plan,
stock ownership plan, stock purchase plan, bonus plan, life insurance
plan, health-and-accident plan or disability plan in which Executive is
participating or is eligible to participate immediately prior to a
Change in Control (or plans providing Executive with substantially
similar benefits), the taking of any action by the Company (or such
other Apogee Entity) which would adversely affect Executive's
participation in, or materially reduce Executive's benefits under, any
of such plans or deprive Executive of any material fringe benefit
enjoyed by Executive immediately prior to such Change in Control;
(f) the failure by the Company (or any other Apogee Entity
then employing Executive) to provide Executive with the number of paid
vacation days to which Executive is entitled immediately prior to such
Change in Control in accordance with the Company's (or any other Apogee
Entity's) vacation policy as then in effect;
(g) the failure by the Company to obtain, as specified in
Section 5(i) hereof, an assumption of the obligations of the Company to
perform this Agreement by any successor to the Company; or
(h) any material breach by the Company of this Agreement.
(iii) "Cause" shall mean termination by the Company (or any other
Apogee Entity then employing Executive) of Executive's employment based upon (a)
the willful and continued failure by Executive substantially to perform his
duties and obligations (other than any
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such failure resulting from his incapacity due to physical or mental illness or
any such actual or anticipated failure resulting from Executive's termination
for Good Reason) or (b) the willful engaging by Executive in misconduct which is
materially injurious to the Company, monetarily or otherwise. For purposes of
this Section 3(iii), no action or failure to act on Executive's part shall be
considered "willful" unless done, or omitted to be done, by Executive in bad
faith and without reasonable belief that his action or omission was in the best
interests of the Company.
(iv) "Disability" shall mean any physical or mental condition which
would qualify Executive for a disability benefit under any long-term disability
plan maintained by the Company (or any other Apogee Entity then employing
Executive) either before or after a Change in Control.
(v) "Continuing Director" shall mean any person who is a member of the
Board of Directors of the Company, who is not an Acquiring Person (as
hereinafter defined) or an Affiliate or Associate (as hereinafter defined) of an
Acquiring Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, and who (a) was a member of the Board of Directors on
the date of this Agreement as first written above or (b) subsequently becomes a
member of the Board of Directors, if such person's initial nomination for
election or initial election to the Board of Directors is recommended or
approved by a majority of the Continuing Directors. For purposes of this Section
3(v): "Acquiring Person" shall mean any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) who or which, together with all
Affiliates and Associates of such person, is the Beneficial Owner of 10% or more
of the shares of Common Stock of the Company then outstanding, but shall not
include the Company, any subsidiary of the Company or any Executive benefit plan
of the Company or of any subsidiary of the Company or any entity holding shares
of Common Stock organized, appointed or established for, or pursuant to the
terms of, any such plan; and "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 promulgated under the
Exchange Act.
4. Benefits upon Termination under Section 2(ii)(c) After a Change in
Control
(i) Upon the termination (voluntary or involuntary) of the employment
of Executive pursuant to Section 2(ii)(c) hereof, Executive shall be entitled to
receive the benefits specified in this Section 4. The amounts due to Executive
under subparagraphs (a), (b), (c) or (d) of this Section 4(i) shall be paid to
Executive not later than one business day prior to the date that the termination
of Executive's employment becomes effective (the "Employment Termination Date").
All benefits to Executive pursuant to this Section 4(i) shall be subject to any
applicable income, payroll or other taxes required by law to be withheld.
(a) The Company shall pay to Executive (x) the full base
salary earned by him and unpaid through the date that the termination
of Executive's employment becomes effective, at the rate in effect at
the time written notice of termination (voluntary or involuntary) was
given, (y) any amount earned by Executive as a bonus with respect to
the fiscal year of the Company preceding the termination of his
employment if such
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bonus has not theretofore been paid to Executive, and (z) an amount
representing credit for any vacation earned or accrued by him but not
taken;
(b) In lieu of any further base salary payments to Executive
for periods subsequent to the date that the termination of Executive's
employment becomes effective, the Company shall pay as severance pay to
Executive (a "Severance Payment") a lump-sum cash amount equal to the
sum of:
(I) an amount equal to the bonus Executive earned
with respect to the fiscal year of the Company preceding the
termination of his employment, or Executive's maximum target
bonus for the fiscal year in which the Employment Termination
Date occurs, whichever is greater (the "Target Bonus"),
multiplied by a fraction, the numerator of which is equal to
the number of full months in the year Executive terminates
employment that have elapsed at the Employment Termination
Date, and the denominator of which is twelve (12), plus
(II) twenty-four (24) times the sum of (A)
Executive's monthly base salary (as in effect in the month
preceding the month in which the termination becomes effective
or as in effect in the month preceding the Change in Control,
whichever is higher) and (B) one-twelfth (1/12) of the Target
Bonus;
(c) Notwithstanding any provision to the contrary in the
Amended and Restated 1987 Apogee Enterprises, Inc. Partnership Plan
(the "Partnership Plan") (or in any other agreement or plan in
existence between the Company and Executive at the Employment
Termination Date), any rights Executive may have at any time under the
Partnership Plan and which are deferred at the time of the Employment
Termination Date shall immediately become vested and the Company shall
pay to Executive any amounts due or which have been promised under the
Partnership Plan to Executive;
(d) The Company shall also pay to Executive all legal fees and
expenses incurred by Executive as a result of such termination of
employment (including all fees and expenses, if any, incurred by
Executive in seeking to obtain or enforce any right or benefit provided
to Executive by this Agreement whether by arbitration or otherwise);
(e) Notwithstanding any other agreement in existence between
the Company and Executive at the Employment Termination Date, all stock
options or shares of restricted stock owned or held by Executive or
promised to be payable to Executive by the Company shall be immediately
vested in Executive without further restriction and Executive shall be
treated at that time as the unrestricted owner of such Company stock
options and stock, subject to applicable constraints under federal and
state securities laws; and
(f) Any and all contracts, agreements or arrangements between
the Company and/or any other Apogee Entity and Executive prohibiting or
restricting Executive from owning, operating, participating in, or
providing employment or consulting services to, any business or company
competitive with the Company or such other Apogee Entity at
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any time or during any period after the Employment Termination Date,
shall be deemed terminated and of no further force or effect as of the
Employment Termination Date, to the extent, but only to the extent,
such contracts, agreements or arrangements so prohibit or restrict
Executive; provided that, the foregoing provision shall not constitute
a license or right to use any proprietary information of the Company or
such other Apogee Entity and shall in no way affect any such contracts,
agreements or arrangements insofar as they relate to nondisclosure and
nonuse of proprietary information of the Company or such other Apogee
Entity notwithstanding the fact that such nondisclosure and nonuse may
prohibit or restrict Executive in certain competitive activities.
(ii) Executive shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise.
The amount of any payment or benefit provided in this Section 4 shall not be
reduced by any compensation earned by Executive as a result of any employment by
another employer.
(iii) Upon the occurrence of a Change in Control, the Company shall
cause its independent auditors promptly to review, at the Company's sole
expense, the applicability of Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code") to the "Total Payments" (as defined in Section 4(iv)
below) to be received by Executive. If such auditors determine that, after
taking into account the provisions of Section 4(iv) hereof, any of the Total
Payments would be subject to the excise tax imposed by Section 4999 of the Code,
or any interest or penalties with respect to such tax (such excise tax, together
with interest and penalties, are collectively referred to as the "Excise Tax"),
then, in addition to any amounts payable under foregoing provisions of this
Section 4, the Company shall pay an additional cash payment (a "Gross-Up
Payment") within 30 days of such determination equal to the Excise Tax imposed
on the Total Payments, including any Excise Tax or any other income taxes that
may be imposed on such Gross-Up Payment. If no determination by the Company's
auditors is made prior to the time a tax return reflecting the Total Payments is
required to be filed by Executive, Executive will be entitled to receive a
Gross-Up Payment calculated on the basis of the Total Payments reported by him
in such tax return, within 30 days of the filing of such tax return. In all
events, if any tax authority determines that a greater Excise Tax should be
imposed on the Total Payments than is determined by the Company's independent
auditors or reflected in Executive's tax return pursuant to this subparagraph
(iii), Executive shall be entitled to receive the full Gross-Up Payment
calculated on the basis of the amount of Excise Tax determined to be payable by
such tax authority from the Company within 30 days of such determination.
(iv) As used herein, "Total Payments" shall mean, collectively, any
payment or benefit received or to be received by Executive in connection with a
Change in Control of the Company or termination of Executive's employment
(whether payable pursuant to the terms of this Agreement or any other plan,
contract, agreement or arrangement with the Company, with any person whose
actions result in a Change in Control of the Company or with any person
constituting a member of an "affiliated group" as defined in Section 280G(d)(5)
of the Code) with the Company or with any person whose actions result in a
Change in Control of the Company. For purposes of calculating Total Payments,
(a) no portion of the Total Payments the receipt or enjoyment of which Executive
shall have effectively waived in writing prior to the date of payment of the
Severance Payment shall be taken into account; (b) no portion of the
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Total Payments shall be taken into account which in the opinion of tax counsel
selected by the Company and acceptable to Executive does not constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code; (c)
the value of any benefit provided by Section 4(i)(f) of this Agreement shall not
be taken into account in computing Total Payments; and (d) the value of any
other non-cash benefit or of any deferred cash payment included in the Total
Payments shall be determined by the Company's independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code. In case of
uncertainty as to whether all or some portion of a payment is or is not payable
to Executive under this Agreement, the Company shall initially make the payment
to Executive, and Executive agrees to refund to the Company any amounts
ultimately determined not to have been payable under the terms hereof.
5. Successors and Binding Agreement
(i) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise to all or substantially all of
the business and/or assets of the Company), by agreement in form and substance
satisfactory to Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle Executive to
compensation from the Company in the same amount and on the same terms as
Executive would be entitled hereunder if Executive terminated his employment
after a Change in Control for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Employment Termination Date. As used in this
Agreement, "Company" shall mean the Company and any successor to its business
and/or assets which executes and delivers the agreement provided for in this
Section 5(i) or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(ii) This Agreement is personal to Executive, and Executive may not
assign or transfer any part of his rights or duties hereunder, or any
compensation due to him hereunder, to any other person. Notwithstanding the
foregoing, this Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators, heirs,
distributees, devisees and legatees.
6. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
the Minneapolis-St. Paul metropolitan area, in accordance with the applicable
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction. In the event
that Executive engages counsel to arbitrate any dispute hereunder (which
arbitration results in an award to Executive of any kind) or to enforce such an
award, all costs and expenses incurred by Executive, including reasonable
attorney's fees and expenses, with respect to such arbitration or enforcement
thereof shall be reimbursed to Executive by the Company promptly upon
Executive's submission of a request therefor.
7. Modification; Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in a writing
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signed by Executive and such officer as may be specifically designated by the
Board of Directors of the Company. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
8. Notice. All notices, requests, demands and all other communications
required or permitted by either party to the other party by this Agreement
(including, without limitation, any notice of termination of employment and any
notice of an intention to arbitrate) shall be in writing and shall be deemed to
have been duly given when delivered personally or received by certified or
registered mail, return receipt requested, postage prepaid, at the address of
the other party, as first written above (directed to the attention of the Board
of Directors and Corporate Secretary in the case of the Company). Either party
hereto may change its address for purposes of this Section 8 by giving 15 days'
prior notice to the other party hereto.
9. Severability. If any term or provision of this Agreement or the
application hereof to any person or circumstances shall to any extent be invalid
or unenforceable, the remainder of this Agreement or the application of such
term or provision to persons or circumstances other than those as to which it is
held invalid or unenforceable shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
10. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11. Governing Law. This Agreement has been executed and delivered in
the State of Minnesota and shall in all respects be governed by, and construed
and enforced in accordance with, the laws of the State of Minnesota, including
all matters of construction, validity and performance.
12. Effect of Agreement; Entire Agreement. The Company and Executive
understand and agree that this Agreement is intended to reflect their agreement
only with respect to payments and benefits upon termination in certain cases and
is not intended to create any obligation on the part of either party to continue
employment. This Agreement supersedes any and all other oral or written
agreements or policies made relating to the subject matter hereof and
constitutes the entire agreement of the parties relating to the subject matter
hereof; provided that this Agreement shall not supersede or limit in any way
Executive's rights under any benefit plan, program or arrangements in accordance
with their terms.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its name by a duly authorized director and officer, and Executive
has hereunto set his hand, all as of the date first written above.
APOGEE ENTERPRISES, INC.
By
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Russell Huffer
Its Chief Executive Officer and President
EXECUTIVE
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