Source: http://corpdocs.gmianalyst.com/contracts/ceo_13911.htm
Timestamp: 2017-08-21 23:37:18
Document Index: 757915535

Matched Legal Cases: ['§ 1001', '§ 2000', '§ 1981', '§ 1981', '§ 792', '§ 503', '§ 12101', '§1']

SEVERANCE AGREEMENT DATED DECEMBER 19, 2008
Mr. Gregg S. Kantor
1709 SW Westwood Ct
In connection with your promotion to the position of President and Chief Executive Officer of Northwest Natural Gas Company, an Oregon corporation (the “Company”), and to induce you to accept this position, the Company agrees to provide you certain severance benefits in the event your employment with the Company is terminated under the circumstances described below.
1. Cash Severance Benefit. Subject to Section 5, if the Company terminates your employment without Cause (as defined below) on or before December 31, 2013, the Company shall pay to you in a single payment an amount in cash equal to a percentage of your annual base salary in effect on the date of termination determined as follows: 100% of your salary if your date of termination is on or before December 31, 2009, 80% of your salary if your date of termination is on or before December 31, 2010, 60% of your salary if your date of termination is on or before December 31, 2011, 40% of your salary if your date of termination is on or before December 31, 2012, and 20% of your salary if your date of termination is on or before December 31, 2013.
2. ESRIP Benefit Enhancement. Under the terms of Section 2.02 of the Company’s Executive Supplemental Retirement Income Plan (“ESRIP”), you will become eligible for an early retirement benefit if you remain as a Company employee until your 55th birthday on April 30, 2012, and you will generally receive a reduced benefit under Section 2.05 of the ESRIP if your employment terminates before then. Subject to Section 5, if the Company terminates your employment without Cause before April 30, 2012, you shall be treated as eligible for early retirement benefits under Section 2.02 of the ESRIP.
3. Cause. Termination by the Company of your employment for “Cause” shall mean termination upon (a) the willful and continued failure by you to perform substantially your assigned duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness) after a demand for substantial performance is delivered to you by the Chairman of the Board 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 (ii), 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 of Directors 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 Company.
4. Benefit Exclusions. No benefits shall be provided to you under this Agreement if (a) you terminate your employment with the Company whether or not you believe you have good reason for such termination, (b) your employment terminates as a result of your death or your Total and Permanent Disability (as defined in the ESRIP), or (c) you become entitled to the Change in Control Severance Benefit (as defined in the ESRIP).
5. Release and Payment. In consideration for and as a condition precedent to receiving the severance benefits outlined in this Agreement, you agree to execute a release of claims substantially in the form attached as Exhibit A (the “Release”). You agree to execute and deliver the Release to the Company within the later of (a) 21 days after the date you receive the Release or (b) the last day of your employment. Any payments required under this Agreement will be payable only after receipt by the Company of your signed Release and expiration of any required revocation period, and the Company shall not be obligated to make any payments if you do not deliver the signed Release within the time period specified in this Section 5.
6. Successors; Binding Agreement. 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. 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 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.
8. 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.
10. 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, which award shall be a final and binding determination of the dispute or controversy, in any court having jurisdiction.
11. 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.
/s/ MARK S. DODSON
Agreed to this 19th day
of December, 2008.
/s/ GREGG S KANTOR
Instructions to Employee: This document is important. Before signing it:
Take time to review it. You have 21 calendar days to consider this Release of Claims before signing it. You also have a period of up to seven (7) days after the date you sign this Release of Claims in which to revoke it in writing by delivering a written statement to Lea Anne Doolittle.
As we have discussed, your employment with Northwest Natural Gas Company (“NW Natural” or the “Company”) is ending effective , 2 (“Termination Date”). On behalf of NW Natural, I want to thank you for your service and express our best wishes to you in your future endeavors.
The Company and you are parties to a Severance Agreement dated December 19, 2008 (the “Severance Agreement”) pursuant to which the Company has agreed to provide you certain severance compensation. Under the Severance Agreement, you will receive severance compensation to which you are not otherwise entitled. As a condition precedent to receiving this compensation, you are required to agree to the terms and conditions described in this Release of Claims (this “Release”) which include a general release of legal claims you may have against the Company or its employees. If you choose not to execute this Release, you will not receive the severance compensation.
You have 21 calendar days to consider this Release before signing it. You also have a period of up to seven days after the date you sign this Release in which to revoke it in writing by delivering a written statement to Lea Anne Doolittle, Vice President of Human Resources, NW Natural, 220 NW Second Ave, Portland, OR 97209.
Regardless of whether you choose to execute this Release, you will timely receive upon termination (a) all wages owed to you, including accrued but unused VST pay; and (b) further correspondence regarding your rights to continue group health insurance as provided under applicable law.
Please carefully review and consider the terms of this Release as set forth below.
1. Separation of Employment. Your employment with the Company is ending effective , 2 , the Termination Date defined herein, whether or not you choose to sign this Release. Until that date, you will be on a paid leave of absence. As described in more detail in Paragraph 16 below, you have until , 2 to consider this Release and, if you choose to enter into this Release, you must execute it on or before that date.
2. Severance Benefits. You understand that if you sign and do not revoke this Release, the Company will provide you with the severance benefits set forth in the Severance Agreement.
3. Effect of Release on Other Compensation and Benefits.
Health, Disability and Life Insurance Plans. Except as otherwise specified in this Release, this Release does not alter any rights you may have as a terminated employee under the Company’s group health, disability, life insurance or other health or welfare plans.
Retirement and Retiree Health and Life Insurance Benefits. This Release does not alter any vested rights to benefits in the Company’s retirement plans, including the Company’s 401(k) plan; nor does this Release affect your eligibility for retiree health and life insurance benefits provided by the Company’s retiree health and life insurance plans, if you otherwise qualify for participation in those plans.
COBRA. Your regular health coverage will continue through , 2 . Pursuant to COBRA, you may, if eligible, continue your group health benefits for a period of eighteen (18) months from termination of your employment at your sole expense. You will receive additional information explaining rates and your options under COBRA in separate correspondence. This Release has no impact on your COBRA rights.
Stock Option Awards. Stock options that you have been awarded under the Northwest Natural Gas Company Restated Stock Option Plan (formerly known as the 1985 Stock Option Plan) (the “Stock Option Plan”), if any, will be governed by the terms of your stock option agreement and the Stock Option Plan.
Treatment of Severance Payment. You understand that, pursuant to the rules of the Company’s 401(k) plan, the severance payment cannot be contributed to the Company’s 401(k) plan. You also understand that because of pension benefit rules, the severance payment will not be considered earnings in the calculation of your pension benefits under the Northwest Natural Gas Company Retirement Plan for Non-Bargaining Unit Employees or the Northwest Natural Gas Company Executive Supplemental Retirement Income Plan.
Waiver of Participation in Other Compensation or Employee Benefit Plans. You understand that the Company will not provide you any other severance, compensation, termination benefits or payments of any kind except those specified in the Severance Agreement. You understand that you will not earn or accrue any additional employee benefits after your Termination Date and that you will not be eligible for any 2 annual incentive awards payable in February/March of 2 , or any 2 incentive awards.
4. Release of Claims. In consideration for the severance benefits described in the Severance Agreement, and to the full extent permitted by applicable law, you fully release and discharge the Company, its related corporations or other business entities, and all current and former officers, directors, employees, agents, insurers, shareholders, representatives and assigns (“Released Parties”), from any and all claims, liabilities, damages, or causes of action of any kind relating to your employment or the termination of your employment. This release includes, but is not limited to, any and all claims, whether known or unknown to you at this time, under any contract, express or implied, or under any common law theory, or under any law relating to employment. This release also includes, but is not limited to all claims for additional compensation, benefits or wages in any form, reimbursements, reemployment or reinstatement, severance pay, damages, whether actual or presumed, for equitable relief including injunction, and for all other known or unknown claims or remedies. You understand that this provision means that you are waiving and releasing claims that you may have and that you will not be able to sue the Company based on actions that may have occurred relating to your employment at the Company.
This release expressly includes, but is not limited to, any and all claims under any state, federal or local law or other authority, and any claim arising under any state or federal statutes pertaining to wages, conditions of employment or discrimination in employment, and any claim under the Oregon Revised Statutes including but not limited chapters 652, 653, 654, 656.019, 659 and 659A and similar provisions in other states; ERISA, 29 USCA § 1001, et seq.; Title VII of the Civil Rights Act of 1964, 42 USCA § 2000e as amended; the Family and Medical Leave Act; the Post Civil War Civil Rights Acts (42 USCA §§ 1981-1988); the Civil Rights Act of 1991, 42 USCA § 1981, et seq.; the Equal Pay Act of 1963; the Fair Labor Standards Act; the Occupational Safety and Health Act of 1970; the Rehabilitation Act of 1973, 29 USCA § 792; §§ 503 and 504 of the Vocational Rehabilitation Act of 1973; the Americans with Disabilities Act, 42 USCA § 12101, et seq.; the Age Discrimination in Employment Act; the Vietnam Era Veterans Readjustment Assistance Act; the Uniformed Services Employment and Reemployment Rights Act; the Davis-Bacon Act; the Walsh-Healey Act; the Contract Work Hours and Safety Standards Act; Executive Order 11246; any regulations under or amendments of such authorities and any contract, tort and all other common law and statutory theories up to and including the effective date of this Release.
You acknowledge and represent that you were not denied any leave or leave rights under the Family and Medical Leave Act, the Oregon Family Leave Act or any similar state law, and that you received all wages, benefits and other compensation due to you under the Fair Labor Standards Act, similar state law or other applicable law or agreement.
You also understand that nothing in this Release will affect your vested retirement benefits, if any, or either party’s ability to enforce this Release. Likewise, nothing in this Release shall prevent any challenge to the enforceability of this Release under the Older Workers Benefit Protection Act.
5. No Future Claims. To the full extent permitted by law, you promise and covenant that you will not initiate, prosecute, or maintain any legal claim, or proceeding of any kind or nature whatsoever against the Company related in any way to your employment. However, this covenant shall not prevent either party from seeking to enforce this Release or to challenge the enforceability of this Release under the Older Workers Benefit Protection Act.
6. Agreement to Assist in Transition. Prior to your Termination Date, you agree that, upon the Company’s request, you will cooperate in providing prompt and reliable information to assist the Company in its transition of any of your former job functions.
7. Protection of Confidential Information and Nondisparagement.
Confidentiality and Ownership of Company Information. You agree and acknowledge that during the course of your employment you had access to certain information not generally known to the public relating to business plans or strategic plans of the Company; technology, trade secrets, processes, work in progress or other proprietary information that derives economic value, actual or potential, from not being generally known to the public or other persons who can obtain economic value from its disclosure or use; and any other confidential or proprietary information concerning the Company or its affiliates. You further agree that all such information is and shall remain the exclusive property of the Company whether or not such information was conceived or developed by the Company or you. You agree that you will not at any time use, disclose or in any way allow the use or disclosure of any such information, without the prior written permission of the Company.
Nondisparagement. Except as otherwise required by law, you agree that you will not publish any statement (orally, in writing or in any other form), or participate in the making of any statement which is disparaging or detrimental in any way to the Company, its services, affairs or operations.
Equitable Relief. You acknowledge that in the event you breach any of the provisions of Paragraph 7, the Company will suffer irreparable injury because money damages would be inadequate to safeguard the Company’s protectible interests. In the event of an actual or threatened breach of any of these provisions, you consent to the granting, by any court having jurisdiction and without the
necessity of proving actual monetary loss, of an injunction or other equitable relief enjoining any breach of the above-referenced provisions. You further agree that the prevailing party in any action to enforce Paragraph 7 of this Release shall be entitled to recover reasonable costs and attorneys’ fees, including costs of appeal.
8. Unemployment. The Company will not contest any claim you may make for unemployment insurance benefits from the State, should you choose to seek such benefits. You should instruct the State representative to direct any unemployment inquiries to Kat Rosenbaum in the Human Resources Department. NW Natural is not responsible for information provided in response to any inquiry that is directed to anyone other than Ms. Rosenbaum.
9. Return of Company Property. You agree to return all Company property, including keys, car keys, security cards, and all computer discs, hardware, software and other materials belonging to the Company, and you agree not to retain or attempt to use any Company property.
10. Review Period. You understand and acknowledge that you have 21 calendar days to consider this Release before executing it and that you have a period of seven days after execution of this Release in which you may elect to revoke the Release, as further explained in Paragraph 16 below.
11. Agreement to Repay. You agree to repay any amounts received under the Severance Agreement and to pay the reasonable attorneys’ fees, costs, and any damages the Company or any Released Parties may incur in the event that an arbitrator or court of competent jurisdiction determines that you have breached any of the terms of this Release, or that any representation you made in this Release is false.
12. Entire Agreement. This Release and the Severance Agreement constitute the entire agreement between the Company and you as to their subject matter, and fully supersede any prior agreements or understandings between the parties. This Release cannot be amended except in a writing signed by you and an authorized representative of the Company. You understand that no one is authorized to make representations or promises to you beyond what is in this Release. You acknowledge that you have not relied on any representations, promises, or agreements of any kind made to you in connection with your decision to sign this Release, except for those set forth in this document.
13. Severability. If any of the provisions of this Release are declared by any court or arbitrator of competent jurisdiction to be illegal, invalid, or otherwise unenforceable, the remaining portion, terms and provisions of this Release shall nevertheless remain in full force and effect in a manner that, as fully as possible, effectuates the intention of the parties to this Release. Moreover, if one or more of the provisions in this Release, for any reason, shall be held to be excessively broad as to scope or subject to be unenforceable at law, such provision or provisions shall be construed by the appropriate judge or arbitrator by limiting or reducing it or them, so as to be enforceable to the maximum extent compatible with the applicable law.
14. Dispute Resolution. Any disputes arising in connection with the terms or enforcement of this Release, except as otherwise provided in Paragraph 7 above, shall be resolved by confidential mediation or binding arbitration in accordance with the procedures of the Arbitration Service of Portland or other procedures agreed upon by you and the Company. In accordance with applicable law, this dispute resolution provision shall not apply to any action challenging the enforceability of this Release under the Older Workers Benefit Protection Act.
15. Applicable Law. You acknowledge that this Release will be governed by the laws of the State of Oregon, and you agree that this Release will be deemed to have been jointly prepared by you and the Company, and any uncertainty or ambiguity existing herein shall not be interpreted against any party as a preparer, but according to the application of other rules on the interpretation of contracts, if any such uncertainty or ambiguity exists.
16. Acknowledgment, Time for Acceptance and Revocation of Release.
You understand that your employment with the Company is ending on , 2 , (the Termination Date), whether or not you sign this Release.
By signing below, you acknowledge that (a) you have read this Release and understand the effect of the release provision and that you are releasing legal claims that you may have; (b) you have had adequate time to consider this Release and you enter into the Release voluntarily; (c) as consideration for executing this Release, you will receive severance benefits to which you would not otherwise be entitled; and (d) you hereby are advised to review this Release with an attorney (at your own expense) before signing this Release.
You acknowledge that you were first provided with this Release on , 2 (“Receipt Date”) and that you have been apprised that you have 21 calendar days from the Receipt Date (or until close of business on , 2 ) to consider this Release.
You understand that to accept the terms of this Release, you must sign and return the Release to Kat Rosenbaum in Human Resources on or before , 2 . If you do not sign the Release by that date, you will not receive any benefits under the Severance Agreement.
You further acknowledge that, after signing this Release, you have seven (7) days in which you may revoke the Release. If you choose to revoke the Release, you must provide written notice to Lea Anne Doolittle, Vice President of Human Resources, NW Natural Gas Company, 220 NW Second Ave, Portland, OR 97209. This Release shall not become effective, and you shall not be entitled to any benefits under the Severance Agreement, until after the expiration of the revocation period without revocation by you.
TAKE THIS RELEASE HOME, READ IT, AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS BEFORE SIGNING IT. THIS RELEASE INCLUDES A RELEASE OF KNOWN AND UNKNOWN CLAIMS AND IS A LEGAL CONTRACT. NEITHER THE COMPANY NOR ITS REPRESENTATIVES ARE IN A POSITION TO GIVE YOU ADVICE.
EX-10.O 15 dex10o.htm FORM OF CHANGE IN CONTROL SEVERANCE AGREEMENT
Re: Change in Control Severance Agreement
Northwest Natural Gas 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 interests of the Company. 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, its customers 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 severance benefits which the Company agrees will be provided to you in the event your employment with the Company is terminated in connection with a Change in Control (as defined in Section 3 hereof) under the circumstances described below. The Company and you have entered into a prior letter agreement regarding change in control severance benefits dated December 14, 2006. Upon your signature of this letter agreement, the prior agreement shall be amended and restated in its entirety in the form of this agreement.
(i) Except as otherwise provided in paragraph (ii) below, the Company or you may terminate your employment at any time, subject to the Company’s providing the benefits hereinafter specified in accordance with the terms hereof.
(ii) In the event of a Potential Change in Control (as defined in Section 3 hereof), you agree that you will not leave the employ of the Company (other than as a result of Disability, as such term is hereinafter defined) and will render the services contemplated in the
recitals to this Agreement until the earliest of (a) a date which is 270 days from the occurrence of such Potential Change in Control, or (b) a termination of your employment pursuant to which you become entitled under this Agreement to receive the benefits provided in Section 5(iii) below.
2. Term of Agreement. This Agreement shall commence on the date hereof and shall continue in effect until December 31, 2009; provided, however, that commencing on January 1, 2010 and each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless at least 90 days prior to such January 1 date, the Company or you shall have given notice that this Agreement shall not be extended (provided that no such notice may be given by the Company during the pendency of a Potential Change in Control); and provided, further, 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 shall have occurred during such term. Notwithstanding anything in this Section 2 to the contrary, this Agreement shall terminate automatically if you or the Company terminate your employment prior to the earlier of Shareholder Approval (as defined in Section 3 hereof), if applicable, or the Change in Control. In addition, the Company may terminate this Agreement during your employment if, prior to the earlier of Shareholder Approval, if applicable, or the Change in Control, you cease to hold your current position with the Company, except by reason of a promotion.
3. Change in Control; Potential Change in Control; Shareholder Approval; Person.
(i) For purposes of this Agreement, a “Change in Control” shall mean the occurrence of any of the following events:
(1) any consolidation, merger or plan of share exchange involving the Company (a “Merger”) as a result of which the holders of outstanding securities of the Company ordinarily having the right to vote for the election of directors (“Voting Securities”) immediately prior to the Merger do not continue to hold at least 50% of the combined voting power of the outstanding Voting Securities of the surviving corporation or a parent corporation of the surviving corporation immediately after the Merger, disregarding any Voting Securities issued to or retained by such holders in respect of securities of any other party to the Merger; or
(2) 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;
(B) 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; provided, however, that the term “Incumbent Director” shall also include each new director elected during such two-year period whose nomination or election was approved by two-thirds of the Incumbent Directors then in office; or
(C) 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 Voting Securities representing twenty percent (20%) 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 shares of Common Stock of the Company) an equity interest in an entity that acquires the Company in a Change in Control otherwise described under subparagraph (A) 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 (C) above.
(ii) For purposes of this Agreement, a “Potential Change in Control” shall be deemed to have occurred if:
(B) any Person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; or
(C) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.
(iii) For purposes of this Agreement, “Shareholder Approval” shall be deemed to have occurred if the shareholders of the Company approve an agreement entered into by the Company, the consummation of which would result in the occurrence of a Change in Control.
(iv) 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 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), other than the Company or any employee benefit plan sponsored by the Company.
4. Termination Following Shareholder Approval or Change in Control. If a Change in Control occurs, you shall be entitled to the benefits provided in Section 5(iii) hereof in the event that (x) a Date of Termination (as defined in Section 4(v) below) of your employment with
the Company occurred or occurs after the earlier of Shareholder Approval, if applicable, or the Change in Control and no later than twenty-four (24) months after the Change in Control, or (y) your employment with the Company is terminated by you for Good Reason (as defined below) based on an event occurring concurrent with or subsequent to the earlier of Shareholder Approval, if applicable, or the Change in Control and your Notice of Termination (as defined in Section 4(iv) below) in connection therewith shall have been given no later than twenty-four (24) months after the Change in Control; provided, however, that if any such termination is (a) because of your death, (b) by the Company for Cause (as defined below) or Disability, or (c) by you other than for Good Reason based on an event occurring concurrent with or subsequent to the earlier of Shareholder Approval, if applicable, or the Change in Control, then you shall not be entitled to the benefits provided in Section 5(iii) hereof.
(i) 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 is given to you following such absence you shall have returned to the full-time performance of your duties.
(ii) Cause. Termination by the Company of your employment for “Cause” shall mean termination upon (a) the willful and continued failure by you to perform substantially your assigned duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness) 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 (ii), 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 Company. 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 three-quarters 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 (ii) and specifying the particulars thereof in detail.
(iii) Good Reason. Termination by you of your employment with the Company for “Good Reason” shall mean termination by you of your employment with the Company based on any of the following events provided you give Notice of Termination after
the occurrence of any of the following events and no later than 30 days after the later of (1) notice to you of such event, or (2) the Change in Control:
(A) a change in your status, title, position(s) or responsibilities as an officer of the Company which does not represent a promotion from your status, title, position(s) and responsibilities as in effect immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control, or the assignment to you of any duties or responsibilities which are inconsistent 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 or Disability or as a result of your death or by you other than for Good Reason;
(B) a reduction by the Company in your base salary as in effect immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control;
(C) the failure by the Company to continue in effect any Plan (as hereinafter defined) in which you are participating immediately prior to the earlier of Shareholder Approval, if applicable, or 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 immediately prior to the earlier of Shareholder Approval, if applicable, or 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 immediately prior to the earlier of Shareholder Approval, if applicable, or 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 immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control;
(D) 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 earlier of Shareholder Approval, if applicable, or the Change in Control;
(E) the Company’s requiring you to be based more than 30 miles from where your office is located immediately prior to the earlier of Shareholder Approval, if applicable, or 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 earlier of Shareholder Approval, if applicable, or the Change in Control;
(F) the failure by the Company to obtain from any Successor (as hereinafter defined) the assent to this Agreement contemplated by Section 7 hereof;
(G) any purported termination by the Company of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph (iv) below (and, if applicable, paragraph (ii) above); and for purposes of this Agreement, no such purported termination shall be effective; or
(H) the failure by the Company to pay you any portion of your current compensation, to credit your Deferred Compensation Plan account in accordance with your previous election, or to pay you any portion of an installment of deferred compensation under any Plan in which you participated, within seven (7) days of the date such compensation is due.
For purposes 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, deferred compensation, medical, disability, accident, life insurance, or relocation plan or policy or any other plan, program or policy of the Company intended to benefit employees.
(iv) Notice of Termination. Any purported termination by the Company or by you (other than termination due to your death, which shall terminate your employment automatically) following the earlier of Shareholder Approval, if applicable, or a Change in Control shall be communicated by 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.
(A) With respect to any Notice of Termination given by you for Good Reason, such Notice of Termination may indicate that such termination for Good Reason shall be conditioned upon, and postponed until, the date on which it is finally determined, either by mutual written agreement of the parties or by the arbitrators in a proceeding as provided in Section 13 hereof, that Good Reason exists for such termination. If a Notice of Termination given by you for Good Reason indicates that such termination shall be so conditioned and postponed, then, if the Company disputes the existence of Good Reason, the Company shall, within thirty (30) days after the Notice of Termination is given, notify you that a dispute exists concerning the termination, whereupon Section 13 hereof shall apply to such dispute. If no such notice is given by the Company within such 30-day period, then a final determination that Good Reason exists shall be deemed to have occurred on the date thirty (30) days after the Notice of Termination for Good Reason is given.
(1) if, at any time before the Date of Termination determined pursuant to this Agreement with respect to any purported termination by you of your employment with the Company, there exists a basis for the Company to terminate
your employment for Cause, then the Company may, regardless of whether or not you have given Notice of Termination for Good Reason and regardless of whether or not Good Reason exists, terminate your employment for Cause, in which event you shall not be entitled to the benefits provided in Section 5(iii) hereof, and
(2) if you die or your employment is terminated based on Disability after you have given Notice of Termination for Good Reason and before the Date of Termination determined under this Agreement with respect to that Notice of Termination, and it is subsequently finally determined that Good Reason existed at the time your employment terminated, then termination of your employment shall be deemed to have occurred for Good Reason (and not due to your death or Disability) and you shall be entitled to the benefits provided in Section 5(iii) hereof.
(v) Date of Termination. “Date of Termination” shall mean the date your employment with the Company is terminated following the earlier of Shareholder Approval, if applicable, or a Change in Control, which date shall be determined as follows:
(A) if your employment is to be terminated for Disability, thirty (30) days after Notice of Termination is given (provided that, if you shall have returned to the performance of your duties on a full-time basis during such thirty (30) day period, then the termination for Disability contemplated by the Notice of Termination shall not occur),
(B) if your employment is terminated due to your death, the date of your death,
(C) if your employment is to be terminated by the Company other than for Disability, or if your employment is to be terminated by you without a claim of Good Reason, the date specified in the Notice of Termination, and
(D) if your employment is to be terminated by you for Good Reason, the date ninety (90) days after the date on which a Notice of Termination is given, unless either:
(1) an earlier date has been agreed to by the Company either in advance of, or after, receiving such Notice of Termination (in which case such earlier date shall be the Date of Termination),
(2) pursuant to and in accordance with Section 4(iv) you have indicated in your Notice of Termination that you are conditioning your termination upon (and postponing such termination until) the date on which it is finally determined that Good Reason exists for such termination (in which case the later of such date as determined in accordance with Section 4(iv) above, or the date otherwise determined under this Section 4(v)(D), shall be the Date of Termination),
(3) the Company shall not have notified you within fifteen (15) days after a Notice of Termination for Good Reason is given that it intends to fully correct the circumstances giving rise to Good Reason (in which case the date fifteen (15) days after the Notice of Termination shall be the Date of Termination), or
(4) if the Company gives notice as provided in Section 4(v)(D)(3) and if the circumstances giving rise to Good Reason are fully corrected on or prior to the date that is ninety (90) days after such Notice of Termination was given, then the termination for Good Reason contemplated by such Notice of Termination shall not occur.
(E) You shall not be obligated to perform any services after the Date of Termination that would prevent the termination of your employment on such Date of Termination from qualifying as a “separation from service” as defined in Treasury Regulations §1.409A-1(h).
(i) During any period following the earlier of Shareholder Approval, if applicable, or 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 Sections 4(i) and 4(v) hereof. Thereafter, your benefits shall be determined in accordance with the Plans then in effect.
(ii) If your employment shall be terminated for Cause or as a result of death following the earlier of Shareholder Approval, if applicable, or a Change in Control, 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 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.
(iii) If a Change in Control occurs and either (a) after the earlier of Shareholder Approval, if applicable, or the Change in Control and no later than twenty-four (24) months after the Change in Control, a Date of Termination of your employment with the Company occurred or occurs as a result of a termination by the Company other than for Cause or Disability, or (b) your employment with the Company is terminated by you for Good Reason based on an event occurring concurrent with or subsequent to the earlier of Shareholder Approval, if applicable, or the Change in Control and your Notice of Termination in connection therewith shall have been given no later than twenty-four (24) months after the Change in Control, then, by no later than the fifth day following the later of the Date of Termination or the Change in Control (except as
may otherwise be provided), you shall be entitled, without regard to any contrary provisions of any Plan, to a severance benefit 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 which pursuant to the terms of any Plans have been earned or become payable, but which have not yet been paid to you; provided, however, that with respect to a termination of your employment for Good Reason based on a reduction by the Company in your base salary as in effect immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control, the Company shall pay your full base salary through the Date of Termination at the rate in effect just prior to such reduction plus any benefits or awards which pursuant to the terms of any Plans have been earned or become payable, but which have not yet been paid to you;
(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 ( ) times the sum of (1) the greater of (i) your annual rate of base salary in effect on the Date of Termination or (ii) your annual rate of base salary in effect immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control and (2) the greater of (i) the average of the last three annual bonuses (annualized in the case of any bonus paid with respect to a partial year) paid to you preceding the Date of Termination or (ii) the average of the last three annual bonuses (annualized in the case of any bonus paid with respect to a partial year) paid to you preceding the earlier of Shareholder Approval, if applicable, or the Change in Control; provided, however, that if your age on the Date of Termination (your “Age”) is more than 61, the amount payable to you under this subparagraph (B) shall be reduced by multiplying the amount otherwise determined as set forth above by 90% if your Age is 62, by 60% if your Age is 63, by 30% if your Age is 64, and by 0% if your Age is 65 or more; and
(C) for a ( ) month period after the Date of Termination (specifically including a Date of Termination that occurs after Shareholder Approval and prior to a Change in Control), the Company shall arrange to provide you, your spouse and your dependents with life, accident and health insurance benefits substantially similar to those which you were receiving immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control. Notwithstanding the foregoing, the Company shall not provide any benefit otherwise receivable by you pursuant to this subparagraph (C) to the extent that a similar benefit is actually received by you from a subsequent employer during such ( ) month period, and any such benefit actually received by you shall be reported to the Company.
(iv) 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(iii) 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. Parachute Payments. Notwithstanding any other provision in this Agreement or any other agreement or arrangement between the Company and you with respect to compensation or benefits (each an “Other Arrangement”), in the event that the provisions of Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended, or any successor provisions (the “Code”), would cause you to receive a greater after-tax benefit from the Capped Benefit (as defined below) than from the amounts (including the monetary value of any non-cash benefits) otherwise payable pursuant to this Agreement or any Other Arrangement (the “Specified Benefits”), the Capped Benefit shall be paid to you in lieu of the Specified Benefits. The “Capped Benefit” shall equal the Specified Benefits, reduced by the amount necessary to prevent any portion of the Specified Benefits from being a “parachute payment” as defined in Section 280G(b)(2) of the Code. The Capped Benefit would therefore equal 2.99 multiplied by your applicable “base amount” as defined in Section 280G(b)(3) of the Code. For purposes of determining whether you would receive a greater after-tax benefit from the Capped Benefit than from the Specified Benefits, there shall be taken into account any excise tax that would be imposed under Section 4999 of the Code and all federal, state and local taxes required to be paid by you in respect of the receipt of such payments. The parties acknowledge that the application of Section 280G is uncertain in many respects and agree that the Company shall make all calculations and determinations under this section (including application and interpretation of the Code and related regulatory, administrative and judicial authorities) in good faith, which calculations and determinations shall be conclusive absent manifest error. The Company shall provide you with a reasonable opportunity to review and comment on the Company’s calculations of the Capped Benefit and to request which of the Specified Benefits shall be reduced. If, after payment of any amount under this Agreement or any Other Arrangement, it is determined that the calculation of the Capped Benefit was calculated incorrectly, the amount of the Capped Benefit will be adjusted, the Company shall pay to you any additional amount that should have been paid to you, and you shall repay to the Company any amount that should not have been paid to you, in each case with interest at the discount rate applicable under Section 280G(d)(4) of the Code.
(i) Upon your written request, the Company will seek to have any Successor (as hereinafter defined), by agreement in form and substance satisfactory to you, assent to the fulfillment by the Company of its obligations under this Agreement. 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.
(ii) This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees,
8. Fees and Expenses. The Company shall pay to you all legal fees and related expenses incurred by you in good faith as a result of (i) your termination following the earlier of Shareholder Approval, if applicable, or a Change in Control (including all such fees and expenses, if any, incurred in contesting or disputing in good faith any such termination) or (ii) your seeking to obtain or enforce in good faith any right or benefit provided by this Agreement.
9. Survival. The respective obligations of, and benefits afforded to, the Company and you as provided in Sections 5, 6, 7(ii), 8 and 13 of this Agreement shall survive termination of this Agreement, but only with respect to a Change in Control occurring during the term of this Agreement.
10. 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.
11. 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.
13. 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, which award shall be a final and binding determination of
the dispute or controversy, 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 of the arbitrators arising in connection with any arbitration proceeding pursuant to this Section 13.
14. 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.
15. 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.