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Exhibit
10.17
CHANGE IN CONTROL
AGREEMENT
THIS CHANGE IN CONTROL
AGREEMENT made as of this day of
, 2007, by and between Zep Inc. (the “Company”) and
(the “Executive”).
WITNESSETH:
WHEREAS, Executive is a key
executive of the Company; and
WHEREAS, the Board of
Directors of the Company (the “Board”) recognizes that
the possibility of a Change in Control (as hereinafter defined)
exists and that the threat of or the occurrence of a Change in
Control can result in significant distractions of its key
management personnel because of the uncertainties inherent in such
a situation; and
WHEREAS, the Board has
determined that it is essential and in the best interest of the
Company and its stockholders to retain the services of the
Executive in the event of a threat or occurrence of a Change in
Control and to ensure his continued dedication and efforts in such
event without undue concern for his personal financial and
employment security; and
WHEREAS, Executive has
previously entered into an Amended and Restated Change In Control
Agreement, dated as of April 21, 2006 (the “Prior
Agreement”), with Acuity Brands, Inc. (“Acuity
Brands”), the former parent company of the Company, providing
the Executive with certain compensation and benefits in the event
his employment is terminated in connection with a change in control
of Acuity Brands; and
WHEREAS, in order to continue
to induce the Executive to provide services to the Company
(including its subsidiary corporations), particularly in the event
of a threat or the occurrence of a Change in Control, the Company
desires to enter into this Change in Control Agreement (the
“Agreement”) with the Executive to provide the
Executive with certain benefits in the event his employment is
terminated as a result of, or in connection with, a Change in
Control and to provide the Executive with certain other benefits
whether or not the Executive’s employment is
terminated.
NOW, THEREFORE, in
consideration of the respective agreements of the parties contained
herein, it is agreed as follows:
1. Term of Agreement
.
(a) Unless earlier terminated
as hereinafter provided, this Agreement shall commence on the date
hereof and shall be for a rolling, two-year term (the
“Term”) and shall be deemed to extend automatically,
without further action by either the Company or Executive, each day
for an additional day, such that the remaining term of the
Agreement shall continue to be two years; provided ,
however , that either party may, by written notice to the
other, cause this Agreement to cease to extend automatically and,
upon such notice, the “Term” of this Agreement shall be
the two-year period following the date of such notice and this
Agreement shall terminate upon the expiration of such Term. This
Agreement shall not be considered an
employment agreement and in no way
guarantees Executive the right to continue in the employment of the
Company or its affiliates. Executive’s employment is
considered employment at will, subject to Executive’s right
to receive payments and benefits upon certain terminations of
employment as provided below.
(b) Notwithstanding the
foregoing, (1) the term of this Agreement shall not expire
during a Threatened Change in Control Period or prior to the
expiration of two (2) years after the occurrence of a Change
in Control and (2) prior to a Change in Control and other than
during a Threatened Change in Control Period, the term of this
Agreement shall expire on the date the Executive terminates
employment (except in circumstances that entitle the Executive to
compensation and benefits hereunder), unless such termination was
at the request of a Third Party or otherwise occurred in connection
with, or in anticipation of, a Change in Control.
(c) Each place in this
Agreement where a reference to the “Company” appears
that relates to the Executive’s employment, termination of
employment or performing services, including the definitions of
“Cause” and “Good Reason,” such reference
shall mean and include any subsidiary of the Company which is the
primary employer of the Executive. Further, in each place where
this Agreement refers to a benefit plan or program, payment of
compensation, compensation arrangement or other similar plan or
program maintained by the Company, such reference shall include any
plan, program or arrangement maintained or established by a
subsidiary of the Company. Notwithstanding the foregoing, the
references in the definitions of “Change in Control,”
“Threatened Change in Control Period” and similar
references to changes in ownership and control of the Company shall
mean and refer to Zep Inc., a Delaware corporation.
(d) As of the date hereof,
this Agreement is intended to, and shall, supersede and replace in
its entirety the compensation and benefits provided under
Executive’s Prior Agreement, and the Prior Agreement shall be
of no further force or effect.
2. Definitions
.
(a) Cause . For
purposes of this Agreement, “Cause” shall mean a
reasonable determination by the Company that the Executive
(a) intentionally and continually failed to substantially
perform his duties with the Company (other than a failure resulting
from the Executive’s incapacity due to physical or mental
illness) which failure continued for a period of at least thirty
(30) days after a written notice of demand for substantial
performance has been delivered to the Executive specifying the
manner in which the Executive has failed to substantially perform,
or (b) intentionally engaged in conduct which is demonstrably
and materially injurious to the Company, monetarily or otherwise or
was convicted of a misdemeanor or felony involving moral turpitude;
provided , however that no termination of the
Executive’s employment shall be for Cause as set forth in
clause (b) above until (x) there shall have been
delivered to the Executive a copy of a written notice setting forth
that the Executive was guilty of the conduct set forth in clause
(b) and specifying the particulars thereof in detail, and
(y) the Executive shall have been provided an opportunity to
be heard by the Board or a committee of the Board (with the
assistance of the Executive’s counsel if the Executive so
desires). No act, nor failure to act, on the Executive’s
part, shall be considered “intentional”
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unless he has acted, or failed to act,
with a lack of good faith and without a reasonable belief that his
action or failure to act was in the best interest of the Company.
Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by the Executive after a Notice of
Termination is given by the Executive shall constitute Cause for
purposes of this Agreement.
2.2 Change in Control
. For purposes of this Agreement, a “Change in Control”
shall mean any of the following events:
(a) The acquisition (other
than from the Company in an acquisition that is approved by the
Incumbent Board) by any “Person” (as the term person is
used for purposes of Sections 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the “1934 Act”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the 1934 Act) of twenty percent (20%) or more of the
combined voting power of the Company’s then outstanding
voting securities; or
(b) The individuals who, as
of October 31, 2007, are members of the Board (the
“Incumbent Board”), cease for any reason to constitute
at least two-thirds of the Board; provided , however
, that if the election, or nomination for election by the
Company’s stockholders, of any new director was approved by a
vote of at least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Agreement, be considered as a
member of the Incumbent Board; or
(c) Consummation of a merger
or consolidation involving the Company if the stockholders of the
Company, immediately before such merger or consolidation do not, as
a result of such merger or consolidation, own, directly or
indirectly, more than sixty percent (60%) of the combined
voting power of the then outstanding voting securities of the
corporation resulting from such merger or consolidation in
substantially the same proportion as their ownership of the
combined voting power of the voting securities of the Company
outstanding immediately before such merger or consolidation;
or
(d) Consummation of a
complete liquidation or dissolution of the Company or of the sale
or other disposition of all or substantially all of the assets of
the Company.
Notwithstanding the
foregoing, a Change in Control shall not be deemed to occur
pursuant to Section 2.2(a), solely because twenty percent
(20%) or more of the combined voting power of the
Company’s then outstanding securities is acquired by
(i) a trustee or other fiduciary holding securities under one
or more employee benefit plans maintained by the Company or any of
its subsidiaries or (ii) any corporation which, immediately
prior to such acquisition, is owned directly or indirectly by the
stockholders of the Company in the same proportion as their
ownership of stock in the Company immediately prior to such
acquisition (hereinafter referred to as “Related
Persons”).
(e) Notwithstanding anything
contained in this Agreement to the contrary, if the
Executive’s employment is terminated prior to a Change in
Control and the Executive reasonably demonstrates that such
termination (1) was at the request of a Third Party
(as
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hereinafter defined) or
(2) otherwise occurred in connection with, or in anticipation
of, a Change in Control (including, without limitation, during a
Threatened Change in Control Period), then for all purposes of this
Agreement, the date of a Change in Control shall mean the date
immediately prior to the date of such termination of the
Executive’s employment.
2.3 Confidential
Information . For purpose of this Agreement,
“Confidential Information” shall mean all technical,
business, and other information relating to the business of the
Company or its subsidiaries or affiliates, including, without
limitation, technical or nontechnical data, formulae, compilations,
programs, devices, methods, techniques, processes, financial data,
financial plans, product plans, and lists of actual or potential
customers or suppliers, which (i) derives economic value,
actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons, and
(ii) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy or confidentiality. Such
information and compilations of information shall be subject to
protection under this Agreement whether or not such information
constitutes a trade secret and is separately protectable at law or
in equity as a trade secret.
2.4 Disability . For
purposes of this Agreement, “Disability” shall have the
meaning ascribed to such term in the Company’s long-term
disability plan or policy covering the Executive, or in the absence
of such plan or policy, a meaning consistent with
Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended. The determination of Disability shall be made by the
Company in a manner consistent with the requirements of
Section 409A.
2.5 (a) Good Reason .
For purposes of this Agreement, “Good Reason” shall
mean the occurrence coincident with or after a Change in Control of
any of the events or conditions described in Subsections
(1) through (8) hereof:
(1) a change in the
Executive’s status, title, position or responsibilities
(including reporting responsibilities) which, in the
Executive’s reasonable judgment, represents an adverse change
from his status, title, position or responsibilities as in effect
immediately prior thereto; the assignment to the Executive of any
duties or responsibilities which, in the Executive’s
reasonable judgment, are inconsistent with his status, title,
position or responsibilities; or any removal of the Executive from
or failure to reappoint or reelect him to any of such offices or
positions, except in connection with the termination of his
employment for Disability, Cause, as a result of his death or by
the Executive other than for Good Reason;
(2) a reduction in the
Executive’s base salary or any failure to pay the Executive
any compensation or benefits to which he is entitled within five
days of the date due;
(3) the Company’s
requiring Executive to be based more than 50 miles from the primary
workplace where Executive is based immediately prior to the Change
in Control except for reasonably required travel on the
Company’s business which is not greater than such travel
requirements prior to the Change in Control;
(4) the failure by the
Company (A) to continue in effect (without reduction in
benefit level, and/or reward opportunities) any compensation or
employee benefit
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plan in which the Executive was
participating immediately prior to the Change in Control,
including, but not limited to, the plans listed on Appendix A in
which Executive is participating, unless a substitute or
replacement plan has been implemented which provides substantially
identical compensation or benefits to the Executive or (B) to
provide the Executive with compensation and benefits, in the
aggregate, at least equal (in terms of benefit levels and/or reward
opportunities) to those provided for under each other compensation
or employee benefit plan, program and practice as in effect
immediately prior to the Change in Control (or as in effect
following the Change in Control, if greater);
(5) the insolvency or the
filing (by any party, including the Company) of a petition for
bankruptcy of the Company;
(6) any material breach by
the Company of any provision of this Agreement;
(7) any purported termination
of the Executive’s employment for Cause by the Company which
does not comply with the terms of Section 2.1; or
(8) the failure of the
Company to obtain an agreement, satisfactory to the Executive, from
any successor or assign of the Company to assume and agree to
perform this Agreement, as contemplated in Section 9
hereof.
(b) Any event or condition
described in Sections 2.5(a)(1) through (8) which occurs prior
to a Change in Control but which the Executive reasonably
demonstrates (1) was at the request of a third party who has
indicated an intention or taken steps reasonably calculated to
effect a Change in Control (a “Third Party”), or
(2) otherwise arose in connection with or in anticipation of a
Change in Control, shall constitute Good Reason for purposes of
this Agreement notwithstanding that it occurred prior to the Change
in Control.
(c) The Executive’s
right to terminate his employment pursuant to this Section 2.5
shall not be affected by his incapacity due to physical or mental
illness.
2.6 Threatened Change in
Control . For purposes of this Agreement, a Threatened Change
in Control shall mean the occurrence of any of the following
events:
(a) when the Company is aware
of or is contemplating, a proposal (a “Proposal”) for
any Person other than a Related Person (1) to acquire five
percent (5%) or more of the voting power of the
Company’s outstanding securities, or (2) to merge or
consolidate with another entity, transfer or sell assets of the
Company, or liquidate or dissolve the Company, in each case
described in this clause (2) in a transaction that would
constitute a Change in Control; or
(b) any Person other than a
Related Person,
(1) acquires five percent
(5%) or more of the voting power of the Company’s
outstanding securities, other than as a holder whose investment in
the Company is
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eligible to be reported on Schedule 13G
pursuant to Rule 13d-1 (b) (1) promulgated under the
Exchange Act, or
(2) initiates a tender or
exchange offer to acquire such number of securities as would result
in such Person holding twenty percent (20%) or more of the
voting power of the Company’s outstanding securities,
or
(3) solicits proxies for
votes to elect members of the Board at a shareholders’
meeting of the Company.
2.7 Threatened Change in
Control Period . For purposes of this Agreement, a Threatened
Change in Control Period shall mean the period commencing on the
date that a Threatened Change in Control has occurred and ending
upon:
(a) the date the Proposal
referred to in Section 2.6(a) is abandoned;
(b) the acquisition of five
percent (5%) of the voting power of the Company’s
outstanding securities by the Person referred to in
Section 2.6(a)(1) if such acquisition does not constitute a
Threatened Change in Control under
Section 2.6(b)(1);
(c) (1) the date when any
Person described in Section 2.6(b)(1) shall own less than five
percent (5%) of the voting power of the Company’s
outstanding securities, (2) shall have abandoned the tender or
exchange offer, or (3) shall not have elected a member of the
Board as the case may be; or
(d) the date a Change in
Control occurs.
2.8 1934 Act . The
Securities Exchange Act of 1934, as amended.
3. Termination of
Employment .
3.1 If, during the term of
this Agreement, the Executive’s employment with the Company
shall be terminated coincident with or within two (2) years
following the occurrence of a Change in Control, the Executive
shall be entitled t
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