UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 21, 2011
NORTHWEST PIPE COMPANY
(Exact name of registrant as specified in its charter)
| OREGON | 0-27140 | 93-0557988 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
5721 SE Columbia Way, Suite 200
Vancouver, WA 98661
(360) 397-6250
(Address, including zip code, and telephone number, including
area code, of registrant’s principal executive offices)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 5.02. | DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS |
On April 21, 2011, Northwest Pipe Company (the “Company”) entered into an Amended and Restated Executive Employment Agreement (the “Amended Employment Agreement”) with Richard A. Roman, the Company’s President and Chief Executive Officer. The Amended Employment Agreement provides for an annual base salary of $530,000 and eligibility to participate in the Company’s cash and stock incentive plans and all other employee benefit plans available to the Company’s employees. The Amended Employment Agreement is for a term ending June 30, 2012. If Mr. Roman’s employment is terminated by the Company for Cause (as defined in the Amended Employment Agreement), or if Mr. Roman terminates his employment without Good Reason (as defined in the Amended Employment Agreement), or in the event of Mr. Roman’s death or disability, the Company will pay Mr. Roman’s base salary through the date of termination. If Mr. Roman’s employment is terminated by the Company without Cause or if Mr. Roman terminates his employment for Good Reason, the Company will continue to pay Mr. Roman’s base salary for the remainder of the term of Amended Employment Agreement. Mr. Roman will be paid an additional amount equal to his annual base salary if his employment is terminated (i) by the Company without Cause; (ii) by Mr. Roman for Good Reason; (iii) as a result of Mr. Roman’s death or disability; or (iv) as a result of the expiration of the term of the Amended Employment Agreement. Also on April 21, 2011, Mr. Roman was awarded a cash bonus of $125,000.
On April 21, 2011, the Company entered into a change in control agreement (the “Change in Control Agreement”) with Robin Gantt, the Company’s Vice President and Chief Financial Officer. The Change in Control Agreement is for a term ending July 19, 2011, with automatic one-year extensions unless either party gives 90 days prior written notice that the term of the Agreement shall not be so extended. If a Change in Control (as defined in the Change in Control Agreement) occurs during the term of the Change in Control Agreement, the Change in Control Agreement will continue in effect until two years after the Change in Control. If Ms. Gantt’s employment is terminated within two years after a Change in Control either (i) by the Company without Cause (as defined in the Change in Control Agreement) or (ii) by Ms. Gantt for Good Reason (as defined in the Change in Control Agreement), Ms. Gantt will be entitled to receive her full base salary through the date of termination and any benefits or awards (both cash and stock) that have been earned or are payable through the date of termination plus (a) a lump sum payment equal to two years’ base salary and (b) an amount equal to two times the average cash bonus paid to Ms. Gantt during the previous three years. In addition, Ms. Gantt would be entitled to the continuation of health and insurance benefits for certain periods and all outstanding unvested stock options would immediately become fully vested. In the event that the payments made under the Change in Control Agreement would be deemed to be a “parachute payment” under the Internal Revenue Code of 1986, Ms. Gantt may choose to accept payment of a reduced amount that would not be deemed to be a “parachute payment.”
The foregoing descriptions of the Amended Employment Agreement and the Change in Control Agreement do not purport to be complete and are qualified in their entirety by the full text of such Agreements, which are filed herewith as Exhibits 10.1 and 10.2 and are incorporated herein by reference.
| Item 9.01. | FINANCIAL STATEMENTS AND EXHIBITS |
| (d) | Exhibits. |
| 10.1 | Amended and Restated Executive Employment Agreement between Northwest Pipe Company and Richard A. Roman dated as of April 21, 2011. | |
| 10.2 | Change in Control Agreement between Northwest Pipe Company and Robin Gantt dated as of April 21, 2011. | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on April 25, 2011.
| NORTHWEST PIPE COMPANY | ||
| (Registrant) | ||
| By | /s/ ROBIN GANTT | |
| Robin Gantt, | ||
| Vice President and Chief Financial Officer | ||
Exhibit 10.1
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
| PARTIES: | Northwest Pipe Company 5721 SE Columbia Way, Suite 200 Vancouver, WA 98661 |
(“Company”) | ||
| Richard A. Roman 1984 SW 16th Avenue Portland, OR 97201 |
(“Executive”) | |||
EFFECTIVE DATE: April 21, 2011
RECITALS
Company and Executive entered into an Executive Employment Agreement dated and effective as of March 29, 2010. Company and Executive want to amend and restate the Executive Employment Agreement to reflect the terms and conditions set forth in this Agreement. Therefore, in exchange for the mutual promises set forth below, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 “Base Salary” means regular cash compensation paid on a periodic basis exclusive of benefits, bonuses or incentive payments.
1.2 “Board” means the Board of Directors of Company.
1.3 “Cause” means Executive committed any one or more of the following: (i) the willful failure to perform any material duties under this Agreement or negligence of Executive in the performance of such duties, and if such failure or negligence is susceptible of cure, the failure to effect such cure within 30 days after written notice of such failure or negligence is given to Executive; (ii) use of alcohol or illegal drugs which interferes with the performance of Executive’s duties hereunder; (iii) theft, embezzlement, fraud, misappropriation of funds, other acts of dishonesty or the intentional violation of any law, ethical rule or fiduciary duty relating to Executive’s employment by Company; (iv) commission of, or plea of guilty or nolo contendere to, a felony or any act involving moral turpitude; (v) the violation of any non-disclosure, non-compete, or proprietary rights agreement between Executive and Company, or (vi) willful breach of any written policies or procedures of Company which causes or is reasonably expected to cause substantive and demonstrable harm to Company, or the willful violation of any material provision of this Agreement, and if such violation or breach is susceptible of cure, the failure to effect such cure within 30 days after written notice of such breach is given to Executive.
1.4 “Disability” means the inability of Executive to perform his duties under this Agreement, with or without reasonable accommodation, because of physical or mental incapacity for a period of at least 12 weeks.
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AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (Richard A. Roman) |
1.5 “Good Reason” means (i) a material and adverse diminution in the powers, duties and responsibilities of Executive with Company; or (ii) any demand by the Board that Executive engage in illegal activity in the performance of his duties for Company (as determined by Company’s legal advisors which are reasonably acceptable to the Executive); or (iii) any willful violation of the material provisions of this Agreement by Company.
ARTICLE II
EMPLOYMENT, DUTIES AND TERM
2.1 Employment. Upon the terms and conditions set forth in this Agreement, Company hereby employs Executive as its President and Chief Executive Officer (CEO) and Executive accepts such employment. Except as expressly provided herein, termination of this Agreement by either party shall also terminate Executive’s employment by Company, and vice versa.
2.2 Duties. Executive shall devote his full-time and best efforts to Company and to fulfilling his duties under this Agreement. Executive shall comply with Company’s policies and procedures to the extent they are not inconsistent with this Agreement, in which case the provisions of this Agreement prevail.
2.3 Term. This Agreement shall continue in effect from the Effective Date until June 30, 2012, unless extended prior to that date by written agreement of the parties (the “Term”), unless earlier terminated in accordance with Article IV.
ARTICLE III
COMPENSATION AND EXPENSES
3.1 Base Salary. For all services rendered under this Agreement, Company shall pay Executive an annual Base Salary of at least Five Hundred Thirty Thousand Dollars ($530,000). Executive’s Base Salary shall not be decreased unless agreed to in writing by the Executive.
3.2 Additional Compensation. Company shall pay Executive additional compensation in the amount of Five Hundred Thirty Thousand Dollars ($530,000) within thirty (30) days after the earlier to occur of the following: (i) Company’s termination of Executive’s employment without Cause; (ii) Executive’s termination of Executive’s employment for Good Reason; (iii) the termination of Executive’s employment as a result of Executive’s death or Disability; or (iv) the termination of this Agreement and Executive’s employment upon the expiration of the Term of this Agreement; provided that Executive signs and does not revoke a general release of claims in a form satisfactory to Company.
3.3 Incentive Compensation and Fringe Benefits. Executive shall be eligible to participate in the Company’s Short-Term Incentive (Bonus) Plan and the Company’s Long-Term Incentive (2007 Stock Incentive) Plan. Executive shall be entitled to all benefits made available to employees generally, and to participate in all Company-sponsored fringe benefit plans made available to other executives of Company (medical, dental, 401K, etc.). Executive shall be entitled to four weeks paid vacation during each calendar year of the Term (pro-rated for any partial year during the Term).
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AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (Richard A. Roman) |
3.4 Business Expenses. Company shall, in accordance with, and to the extent of, its policies in effect from time to time, bear all ordinary and necessary business expenses reasonably incurred by Executive in performing his duties as an employee of Company, provided that Executive accounts promptly for such expenses to Company in the manner prescribed from time to time by Company.
3.5 Taxes and Withholding. All amounts payable to Executive under this Agreement shall be net of amounts required to be withheld by law.
ARTICLE IV
TERMINATION
4.1 Early Termination. This Article sets forth the terms for termination of this Agreement. Except as otherwise provided in this Agreement, any termination of Executive’s employment shall also constitute a termination of this Agreement, and vice versa.
4.2 Termination for Cause or without Good Reason. Company may terminate this Agreement for Cause and Executive may terminate his employment without Good Reason immediately upon written notice. In the event of termination for Cause or without Good Reason pursuant to this Section 4.2, Executive shall be paid his Base Salary through the date of termination.
4.3 Termination Without Cause or with Good Reason. Company may terminate this Agreement and Executive’s employment without Cause and Executive may terminate this Agreement and his employment with Good Reason upon written notice. In the event Company terminates this Agreement without Cause or Executive terminates this Agreement with Good Reason pursuant to this Section 4.3, and provided Executive signs and does not revoke a general release of claims in a form satisfactory to Company, Company shall continue to pay Executive’s Base Salary for the remainder of the Term.
4.4 Termination in the Event of Death or Disability. This Agreement shall terminate in the event of Executive’s death or Disability. In the event of termination due to Executive’s death or Disability pursuant to this Section 4.4, Executive shall be paid his Base Salary through the date of termination.
4.5 Benefits Upon Termination. Upon termination of employment for any reason, Executive shall be entitled to benefits as provided under the terms of the applicable benefit plans in which he is participating as of the termination date.
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AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (Richard A. Roman) |
4.6 Entire Termination Payment. The compensation provided for in this Article IV and Section 3.2 shall constitute Executive’s sole remedy for termination pursuant to this Article. Executive shall not be entitled to any other termination or severance payment that may be payable to Executive under any other agreement between Executive and Company or under any policy in effect at, preceding or following the date of termination. Notwithstanding the foregoing, if Executive continues to serve as a member of the Company’s Board of Directors after termination of this Agreement and Executive’s employment, Company shall not be prohibited from paying Executive additional amounts as compensation for such Board service, it being presently expected that any such compensation would be on the same terms and conditions as the compensation paid to members of the Board of Directors who are not employed by Company.
ARTICLE V
CONFLICT OF INTEREST
5.1 During the term of employment with Company, Executive will engage in no activity or employment which may conflict with the interest of Company, and will comply with Company’s policies and guidelines pertaining to business conduct and ethics.
ARTICLE VI
RESTRICTIVE COVENANTS
6.1 Confidentiality. “Confidential Information” is data, in both tangible and intangible form, that has been researched, compiled, developed and/or maintained by Company, and that is not generally known within the industry. Confidential Information includes, but is not limited to, trade secrets, customer lists, techniques, plans, methods, data, tables, calculations, information, ideas, knowledge, data, and know-how related to products, processes, software, designs, formulae, tests, research, business and/or marketing plans and strategies, costs, profits, pricing, personnel and financial information, capitalization and other corporate data and information, and information about or obtained from customers, authors, suppliers, consultants, licensees, or affiliates. Confidential Information also includes information Company has received from third parties in confidence.
6.1.1 Executive shall not use or disclose Confidential Information, in any form, for any purpose, except in the course of and for the purposes of Executive’s employment with Company.
6.1.2 Executive will obtain no right, title or interest in the Confidential Information, or any related information or data. The Confidential Information and related information shall remain the sole property of Company.
6.1.3 Executive shall return all Confidential Information, including all copies in any form, to Company immediately upon termination of Executive’s employment with Company, or earlier upon request.
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AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (Richard A. Roman) |
6.2 Return of Property. In the course of Executive’s employment with Company, Executive may be provided with equipment, supplies, keys, credits cards, software, and other property for business use (collectively, “Company Property”). Executive shall return all Company Property immediately upon termination of Executive’s employment, or otherwise immediately on Company’s request.
6.3 Non-solicitation. For one year after Executive’s employment with Company terminates, regardless of the reason for termination, Executive shall not (a) directly or indirectly solicit business from any person or entity which then is or was a Company customer, client or prospect during the twelve (12) months prior to termination, (b) induce any such person or entity to cease or reduce their business relationship with Company; (c) induce any person to leave the employment of Company; or (d) directly or indirectly hire or use the services of any Company employee unless Executive obtains Company’s written consent. Executive will not aid others in doing anything Executive is prohibited from doing himself under this paragraph, whether as an employee, officer, director, shareholder, partner, consultant or otherwise. For purposes of this paragraph, the term “solicit” includes (i) responding to requests for proposals and invitations for bids, (ii) initiating contacts with customers, clients, or prospects of Company for the purpose of advising them that Executive is no longer employed by Company and is available for work that is competitive with the services offered by Company, and (iii) participating in joint ventures or acting as a consultant or subcontractor or employee of others who directly solicit business prohibited by this Agreement. The term “Company employee” includes any then current employee of Company or any person who has left the employ of Company within the then previous six (6) months. The terms “Company client” and “Company customer” include any parent corporation, subsidiary corporation, affiliate corporation or partner or joint venture of a client or customer. “Company prospect” means any person or entity to whom Company has submitted a bid or proposal within the then immediately preceding six (6) months.
6.4 Noncompetition. For one year following the termination of Executive’s employment for any reason, Executive will not directly or indirectly Compete (defined below) with Company anywhere Company is doing or planning to do business, nor will Executive engage in any other activity that would conflict with Company’s business, or interfere with Executive’s obligations to Company. “Compete” means directly or indirectly: (i) have any financial interest in, (ii) join, operate, control or participate in, or be connected as an officer, employee, agent, independent contractor, partner, principal or shareholder with (except as holder of not more than five percent (5%) of the outstanding stock of any class of a corporation, the stock of which is actively publicly traded) or (iii) provide services in any capacity to those participating in the ownership, management, operation or control of, and/or (iv) act as a consultant or subcontractor to, a Competitive Business (defined below). “Competitive Business” means any corporation, proprietorship, association or other entity or person engaged in the sale, production and/or development of products or the rendering of services of a kind similar to or competitive with that sold, produced, developed or rendered by Company as of the date Executive’s employment terminates.
6.5 Continuation of Obligations. Except to the extent this Agreement provides otherwise, the restrictions of and Executive’s obligations under this Article VI will continue after Executive’s employment terminates, regardless of the reason for termination. Executive hereby consents to Company providing a copy of this Agreement to any person or entity to whom Executive may provide services after his employment with Company terminates, whether as an employee or independent contractor.
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AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (Richard A. Roman) |
6.6 Consent to Injunction. Executive acknowledges that Company would suffer irreparable harm for which monetary damages alone would not adequately compensate Company if Executive breached his obligations under this Article VI. For that reason, Executive agrees Company shall be entitled to injunctive relief to enjoin any breach or threatened breach under this Article VI and that the amount of any bond required to be posted by Company in support of injunctive relief shall be no more than Five Hundred Dollars ($500). The injunctive relief provided for in this Section 6.6 shall be in addition to any other available remedies.
ARTICLE VII
GENERAL PROVISIONS
7.1 Successors and Assigns. Except as otherwise provided in Article VI, this Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, administrators, executors, legatees, and heirs. In that this Agreement is a personal services contract, it may not be assigned by Executive.
7.2 Survival. Article VI and Sections 7.1, 7.3, 7.5, 7.6, 7.7, 7.8, and 7.9 shall survive termination of this Agreement.
7.3 Notices. All notices, requests and demands given to or made pursuant hereto shall, except as otherwise specified herein, be in writing and be delivered or mailed to any such party at its address as set forth at the beginning of this Agreement. Either party may change its address, by notice to the other party given in the manner set forth in this Section. Any notice, if mailed properly addressed, postage prepaid, registered or certified mail, shall be deemed dispatched on the registered date or that stamped on the certified mail receipt, and shall be deemed received within the third business day thereafter or when it is actually received, whichever is sooner.
7.4 Caption. The various headings or captions in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement.
7.5 Governing Law and Jurisdiction. This Agreement shall be interpreted and enforced in accordance with the laws of the State of Washington, without regard to conflict of law principles. The exclusive jurisdiction for any action to interpret or enforce this Agreement shall be Portland, Oregon.
7.6 Attorney Fees. In the event of any suit, action or arbitration to interpret or enforce this Agreement, the prevailing party shall be entitled to its attorney fees, costs, and out-of-pocket expenses, at trial and on appeal.
7.7 Mediation. In the case of any dispute arising under this Agreement which cannot be settled by reasonable discussion, the parties agree that, prior to commencing any proceeding, they will first engage the services of a professional mediator agreed upon by the parties and
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AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (Richard A. Roman) |
attempt in good faith to resolve the dispute through confidential nonbinding mediation. Each party shall bear one-half ( 1/2) of the mediator’s fees and expenses and shall pay all of its own attorneys’ fees and expenses related to the mediation. This Section 7.6 shall not apply to any action to enforce Executive’s obligations under Article VI.
7.8 Severability. The provisions of this Agreement are severable. The parties agree that any provision of this Agreement or its application that is held invalid shall be modified as necessary to render it valid and enforceable. If any provision of this Agreement or its application is held invalid and cannot be modified to render it valid and enforceable, the invalidity shall not affect other obligations, provisions, or applications of this Agreement which can be given effect without the invalid provisions or applications.
7.9 Waivers. The failure of either party to demand strict performance of any provision of this Agreement shall not constitute a waiver of any provision, term, covenant, or condition of this Agreement or of the right to demand strict performance in the future.
7.10 Modification. This Agreement may not be and shall not be modified or amended except by written instrument signed by the parties hereto.
7.11 Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes all prior or contemporaneous oral or written understandings, statements, representations or promises with respect to its subject matter. This Agreement was the subject of negotiation between the parties and, therefore, the parties agree that the rule of construction requiring that the agreement be construed against the drafter shall not apply to the interpretation of this Agreement.
| RICHARD A. ROMAN | NORTHWEST PIPE COMPANY | |||||
|
|
By: |
| ||||
| William R. Tagmyer | ||||||
| Date: April 21, 2011 | Chairman of the Board | |||||
| Date: April 21, 2011 | ||||||
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AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (Richard A. Roman) |
Exhibit 10.2
Northwest Pipe Company
5721 SE Columbia Way Suite 200
Vancouver WA 98661
(360) 397-6250
April 21, 2011
Robin Gantt
Vice President and Chief Financial Officer
Northwest Pipe Company
5721 SE Columbia Way Suite 200
Vancouver WA 98661
Dear Robin:
Northwest Pipe Company, an Oregon corporation (the “Company”), considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interest of the Company and its shareholders. In this connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders. Accordingly, the Board of Directors of the Company (the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management to their assigned duties without distraction in circumstances arising from the possibility of a Change in Control of the Company.
In order to induce you to remain in the employ of the Company, this letter agreement, which has been approved by the Board, sets forth the severance benefits which the Company agrees will be provided to you in the event your employment with the Company is terminated subsequent to a “Change in Control” of the Company under the circumstances described below.
1. Right to Terminate. The Company or you may terminate your employment at any time, subject to the Company’s obligations to provide the benefits hereinafter specified in accordance with the terms hereof.
2. Term of Agreement. This Agreement shall commence on the date hereof and shall continue in effect until July 19, 2011; provided, however, that commencing on July 19, 2011 and each July 19, 2011 thereafter, the term of this Agreement shall automatically be extended for one additional year unless at least 90 days prior to such July 19, 2011 date, the Company or you shall have given notice that this Agreement shall not be extended; provided, however, that this Agreement shall continue in effect for a period of twenty-four (24) months beyond the term provided herein if a Change in Control, as defined in Section 3 hereto shall have occurred during such term. Notwithstanding anything in this Section 2 to the contrary, this Agreement shall terminate if you or the Company terminate your employment prior to a Change in Control as defined in Section 3 hereof.
3. Change in Control; Person.
3.1 For purposes of this Agreement, a “Change in Control” shall mean the occurrence of any of the following events:
3.1.1 The approval by the shareholders of the Company of:
(a) any consolidation, merger or plan of share exchange involving the Company (a “Merger”) in which the Company is not the continuing or surviving corporation or pursuant to which shares of Common Stock of the Company (“Company Shares”) would be converted into cash, securities or other property, other than a Merger involving Company Shares in which the holders of Company Shares immediately prior to the Merger have the same proportionate ownership of common stock of the surviving corporation immediately after the Merger,
(b) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Company; or
(c) the adoption of any plan or proposal for the liquidation or dissolution of the Company.
3.1.2 At any time during a period of two consecutive years, individuals who at the beginning of such period constituted the Board (“Incumbent Directors”) shall cease for any reason to constitute at least a majority thereof unless each new director elected during such two-year period was nominated or elected by two-thirds of the Incumbent Directors then in office and voting (with new directors nominated or elected by two-thirds of the Incumbent Directors also being deemed to be Incumbent Directors); or
3.1.3 Any Person (as hereinafter defined) shall, as a result of a tender or exchange offer, open market purchases, or privately negotiated purchases from anyone other than the Company, have become the beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of securities of the Company ordinarily having the right to vote for the election of directors (“Voting Securities”) representing thirty percent (30%) or more of the combined voting power of the then outstanding Voting Securities.
Notwithstanding anything in the foregoing to the contrary, unless otherwise determined by the Board, no Change in Control shall be deemed to have occurred for purposes of this Agreement if (1) you acquire (other than on the same basis as all other holders of the Company Shares) an equity interest in an entity that acquires the Company in a Change in Control otherwise described under subparagraph 3.1.1 above, or (2) you are part of a group that constitutes a Person which becomes a beneficial owner of Voting Securities in a transaction that otherwise would have resulted in a Change in Control under subparagraph 3.1.3 above.
3.2 For purposes of this Agreement, the term “Person” shall mean and include any individual, corporation, partnership, group, association or other “person,” as such term is used in Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”), other than the Company or any employee benefit plan(s) sponsored by the Company.
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4. Termination Following Change In Control. If a Change in Control shall have occurred, you shall be entitled to the benefits provided in Section 5.3 hereof upon the termination of your employment within twenty-four (24) months after such Change in Control unless such termination is (a) because of your death, (b) by the Company for Cause or Disability or (c) by you other than for Good Reason (as all such capitalized terms are hereinafter defined).
4.1 Disability. Termination by the Company of your employment based on “Disability” shall mean termination because of your absence from your duties with the Company on a full-time basis for one hundred eighty (180) consecutive days as a result of your incapacity due to physical or mental illness, unless within thirty (30) days after Notice of Termination (as hereinafter defined) is given to you following such absence you shall have returned to the full-time performance of your duties.
4.2 Cause. Termination by the Company of your employment for “Cause” shall mean termination upon (a) the willful and continued failure by you to substantially perform your reasonably assigned duties with the Company consistent with those duties assigned to you prior to the Change in Control (other than any such failure resulting from your incapacity due to physical or mental illness) which failure shall not have been corrected within thirty (30) days after a demand for substantial performance is delivered to you by the Chairman of the Board or President of the Company which specifically identifies the manner in which such executive believes that you have not substantially performed your duties, or (b) the willful engaging by you in illegal conduct which is materially and demonstrably injurious to the Company. For purposes of this paragraph 4.2, no act, or failure to act, on your part shall be considered “willful” unless done, or omitted to be done, by you in knowing bad faith and without reasonable belief that your action or omission was in, or not opposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the corporation. Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than two-thirds of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of the conduct set forth above in (a) or (b) of this paragraph 4.2 and specifying the particulars thereof in detail.
4.3 Good Reason. Termination by you of your employment for “Good Reason” shall mean termination based on:
4.3.1 a change in your status, title, position(s) or responsibilities as an officer of the Company which, in your judgment (which shall be exercised in good faith), constitutes an adverse change from your status, title, position(s) and responsibilities as in effect immediately prior to the Change in Control, or the assignment to you of any duties or responsibilities which, in your judgment (which shall be exercised in good faith), are inconsistent
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with such status, title or position(s), or any removal of you from or any failure to reappoint or reelect you to such position(s), except in connection with the termination of your employment for Cause, Disability or as a result of your death or by you other than for Good Reason;
4.3.2 a reduction by the Company in your base salary as in effect immediately prior to the Change in Control;
4.3.3 the failure by the Company to continue in effect any Plan (as hereinafter defined) in which you are participating at the time of the Change in Control (or Plans providing you with at least substantially similar benefits) other than as a result of the normal expiration of any such Plan in accordance with its terms as in effect at the time of the Change in Control, or the taking of any action, or the failure to act, by the Company which would adversely affect your continued participation in any of such Plans on at least as favorable a basis to you as is the case on the date of the Change in Control or which would materially reduce your benefits in the future under any of such Plans or deprive you of any material benefit enjoyed by you at the time of the Change in Control;
4.3.4 the failure by the Company to provide and credit you with the number of paid vacation days to which you are then entitled in accordance with the Company’s normal vacation policy as in effect immediately prior to the Change in Control;
4.3.5 the Company’s requiring you to be based anywhere other than within ten (10) miles of where your office is located immediately prior to the Change in Control except for required travel on the Company’s business to an extent substantially consistent with the business travel obligations which you undertook on behalf of the Company prior to the Change in Control;
4.3.6 the failure by the Company to obtain from any Successor (as hereinafter defined) the assumption or assent to this Agreement contemplated by Section 6 hereof within thirty (30) days after a Change in Control; or
4.3.7 any purported termination by the Company of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph 4.4 below (and, if applicable, paragraph 4.2 above); and for purposes of this Agreement no such purported termination shall be effective.
For purpose of this Agreement, “Plan” shall mean any compensation plan such as an incentive, stock option or restricted stock plan or any employee benefit plan such as a thrift, pension, profit sharing, medical, disability, accident, life insurance, or relocation plan or policy or any other plan, program or policy of the Company intended to benefit employees.
4.4 Notice of Termination. Any purported termination by the Company or by you following a Change in Control shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.
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4.5 Date of Termination. “Date of Termination” shall mean (a) if your employment is to be terminated for Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the performance of your duties on a full-time basis during such thirty (30) day period), (b) if your employment is to be terminated by the Company for Cause, the date on which a Notice of Termination is given, and (c) if your employment is to be terminated by you or by the Company for any other reason, the date specified in the Notice of Termination, which shall be a date no earlier than ninety (90) days after the date on which a Notice of Termination is given, unless an earlier date has been agreed to by the party receiving the Notice of Termination either in advance of, or after, receiving such Notice of Termination. Notwithstanding anything in the foregoing to the contrary, if the party receiving the Notice of Termination has not previously agreed to the termination, then within thirty (30) days after any Notice of Termination is given, the party receiving such Notice of Termination may notify the other party that a dispute exists concerning the termination, in which event the Date of Termination shall be the date set either by mutual written agreement of the parties or by the arbitrators in a proceeding as provided in Section 12 hereof.
5. Compensation Upon Termination or During Disability.
5.1 During any period following a Change in Control that you fail to perform your duties as a result of incapacity due to physical or mental illness, you shall continue to receive your full base salary at the rate then in effect and any benefits or awards under any Plans shall continue to accrue during such period, to the extent not inconsistent with such Plans, until your employment is terminated pursuant to and in accordance with paragraphs 4.1, 4.4 and 4.5 hereof. Thereafter, your benefits shall be determined in accordance with the Plans then in effect.
5.2 If your employment shall be terminated for Cause or as a result of your death following a Change in Control of the Company, the Company shall pay you your full base salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards (including both the cash and stock components) which pursuant to the terms of any Plans have been earned or become payable, but which have not yet been paid to you. Thereupon the Company shall have no further obligations to you under this Agreement.
5.3 If within twenty-four (24) months after a Change in Control shall have occurred, as defined in Section 3 above, your employment by the Company shall be terminated (a) by the Company other than for Cause or Disability or (b) by you for Good Reason, then, by no later than the fifth day following the Date of Termination (except as otherwise provided), you shall be entitled to, and shall be paid, without regard to any contrary provisions of any Plan, a severance benefit (the “Severance Benefit”) equal to either (x) the Specified Benefits (as defined in subsection 5.3.1 below), or (y) the Capped Benefit (as defined in subsection 5.3.2 below). You shall be entitled, in your sole discretion, to elect to receive either the Specified Benefits or the Capped Benefit.
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5.3.1 The “Specified Benefits” are as follows:
(a) the Company shall pay your full base salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards (including both cash and stock components) which pursuant to the terms of any Plans have been earned or become payable, but which have not yet been paid to you (including amounts which previously had been deferred at your request);
(b) as severance pay and in lieu of any further salary for periods subsequent to the Date of Termination, the Company shall pay to you in a single payment an amount in cash equal to (i) an amount equal to two (2) times the higher of (A) your annual base salary at the rate in effect just prior to the time a Notice of Termination is given, or (B) your annual base salary in effect immediately prior to the Change in Control of the Company, plus (ii) an amount equal to two (2) times the average of the cash bonuses paid to you during the previous three years;
(c) for a twenty-four (24) month period after the Date of Termination, the Company shall arrange to provide you and your dependents with life, accident, medical and dental insurance benefits substantially similar to those which you were receiving immediately prior to the Change in Control of the Company. Notwithstanding the foregoing, the Company shall not provide any benefit otherwise receivable by you pursuant to this paragraph 5.3.1(c) to the extent that a similar benefit is actually received by you from a subsequent employer during such twenty-four (24) month period, and any such benefit actually received by you shall be reported to the Company;
(d) any and all outstanding options to purchase stock of the Company (or any Successor) held by you shall immediately vest and become exercisable in full; and
(e) the Company shall pay you for any vacation time earned but not taken at the Date of Termination, at an hourly rate equal to your annual base salary as in effect immediately prior to the time a Notice of Termination is given divided by 2080.
5.3.2 The “Capped Benefit” equals the Specified Benefits, reduced by the minimum amount necessary to prevent any portion of the Specified Benefits from being a “parachute payment” as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (“IRC”), or any successor provision. The amount of the Capped Benefit shall therefore equal (1) three times the “base amount” as defined in IRC, Section 280G(b)(3)(A) reduced by $1 (One Dollar), and further reduced by (2) the present value of all other payments and benefits you are entitled to receive from the Company that are contingent upon a Change in Control of the Company within the meaning of IRC Section 280G(b)(2)(A)(i), including accelerated vesting of options and other awards under the Company’s stock option plans, and increased by (3) all Specified Benefits that are not contingent upon a Change in Control within the meaning of IRC Section 280G(b)(2)(A)(i). If you receive the Capped Benefit, you may determine the extent to which each of the Specified Benefits shall be reduced. The parties recognize that there is some uncertainty regarding the computations under IRC Section 280G which must be applied to determine the Capped Benefit. Accordingly, the parties agree that, after the Severance Benefit is paid, the amount of the Capped Benefit may be retroactively adjusted to the extent any subsequent Internal Revenue Service regulations, rulings, audits or other pronouncements establish that the original calculation of the Capped Benefit was incorrect. In that case, amounts shall be paid or reimbursed between the parties so that you will have received the Severance Benefit you would have received if the Capped Benefit had originally been calculated correctly.
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5.4 Except as specifically provided above, the amount of any payment provided for in this Section 5 shall not be reduced, offset or subject to recovery by the Company by reason of any compensation earned by you as the result of employment by another employer after the Date of Termination, or otherwise. Your entitlements under Section 5.3 are in addition to, and not in lieu of any rights, benefits or entitlements you may have under the terms or provisions of any Plan.
6. Successors; Binding Agreement.
6.1 The Company will seek to have any Successor (as hereinafter defined), by agreement in form and substance satisfactory to you, assume the Company’s obligations under this Agreement or assent to the fulfillment by the Company of its obligations under this Agreement. Failure of the Company to obtain such assumption or assent prior to or at the time a Person becomes a Successor shall constitute Good Reason for termination by you of your employment and, if a Change in Control of the Company has occurred, shall entitle you immediately to the benefits provided in Section 5.3 hereof upon delivery by you of a Notice of Termination which the Company, by executing this Agreement, hereby assents to. This Agreement will be binding upon and inure to the benefit of the Company and any Successor (and such Successor shall thereafter be deemed the “Company” for purposes of this Agreement), but will not otherwise be assignable, transferable or delegable by the Company. For purposes of this Agreement, “Successor” shall mean any Person that succeeds to, or has the practical ability to control (either immediately or with the passage of time), the Company’s business directly, by merger, consolidation or purchase of assets, or indirectly, by purchase of the Company’s Voting Securities or otherwise.
6.2 This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there be no such designee, to your estate.
7. Fees and Expenses. The Company shall pay all legal fees and related legal expenses incurred by you as a result of (i) your termination following a Change in Control of the Company (including all such fees and expenses, if any, incurred in contesting or disputing any such termination) or (ii) your seeking to obtain or enforce any right or benefit provided by this Agreement.
8. Survival. The respective obligations of, and benefits afforded to, the Company and you as provided in Section 5, 6, 7 and 12 of this Agreement shall survive termination of this Agreement.
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9. Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid and addressed to the address of the respective party set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the Chairman of the Board or President of the Company, with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing. In accordance herewith, except that notice of change of address shall be effective only upon receipt.
10. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in a writing signed by you and the Chairman of the Board or President of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or of 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. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Oregon.
11. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
12. Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Portland, Oregon by three arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators’ award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. The Company shall bear all costs and expenses arising in connection with any arbitration proceeding pursuant to this Section 12.
13. Related Agreements. To the extent that any provision of any other agreement between the Company or any of its subsidiaries and you shall limit, qualify or be inconsistent with any provision of this Agreement, then for purposes of this Agreement, while the same shall remain in force, the provision of this Agreement shall control and such provision of such other agreement shall be deemed to have been superseded, and to be of no force or effect, as if such other agreement had been formally amended to the extent necessary to accomplish such purpose.
14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same instrument.
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If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject.
| Sincerely, |
| Richard A. Roman President and Chief Executive Officer |
| AGREED AND ACCEPTED: |
|
|
| Robin Gantt Vice President and Chief Financial Officer |
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