Exhibit 10.2
CHANGE IN CONTROL
AGREEMENT
BETWEEN QUANEX BUILDING PRODUCTS CORPORATION
AND [CEO]
This Agreement
between Quanex Building Products Corporation, a Delaware
corporation (the “Company”), and [CEO] (the
“Executive”) is effective as of the Effective Date (as
defined herein).
W I T N E S S E T
H:
Whereas, the Company
considers it to be in the best interests of its stockholders to
encourage the continued employment of certain key employees of the
Company notwithstanding the possibility, threat or occurrence of a
Change in Control of the Company (as that phrase is defined in
Section 2); and
Whereas, the
Executive is a key employee of the Company; and
Whereas, the Company
believes that the possibility of the occurrence of a Change in
Control of the Company may result in the termination by the
Executive of the Executive’s employment by the Company or in
the distraction of the Executive from the performance of his duties
to the Company, in either case to the detriment of the Company and
its stockholders; and
Whereas, the Company
previously recognized that the Executive could suffer adverse
financial and professional consequences if a Change in Control of
the Company were to occur and entered into this Agreement to
protect the Executive if a Change in Control of the Company occurs;
and
Whereas , under
current Internal Revenue Service guidance, the Agreement is subject
to Section 409A of the Internal Revenue Code of 1986, as
amended by the American Jobs Creation Act of 2004
(“Section 409A”);
Now, Therefore , the
parties agree, effective as stated above, as follows:
Section 1. Other Employment Arrangements .
(a) Except as specified below in this paragraph, this
Agreement does not affect the Executive’s existing or future
employment arrangements with the Company unless a Change in Control
of the Company shall have occurred before the expiration of the
term of this Agreement. The Executive’s employment with the
Company shall continue to be governed by the Executive’s
existing or future employment agreements with the Company, if any,
or, in the absence of any employment agreement, shall continue to
be at the will of the Board of Directors or, if the Executive is
not an officer of the Company at the time of the termination of the
Executive’s employment with the Company, the will of the
Chief Executive Officer of the Company, except that if (i) a
Change in Control of the Company shall have occurred before the
expiration of the term of this Agreement, and (ii) the
Executive’s employment with the Company is terminated
(whether by the Executive or the Company or automatically as
provided in Section 3) after the occurrence of that Change in
Control of the Company, then the Executive shall be entitled to
receive certain benefits as provided in this Agreement.
(b) Notwithstanding anything contained in this Agreement to
the contrary, if following the commencement of any discussion with
a third person that ultimately results in a Change in Control of
the Company, (i) the Executive’s employment with the
Company is terminated, (ii) the Executive is removed from any
material duties or position with the Company, (iii) the
Executive’s Base Salary is reduced, or (iv) the
Executive’s annual bonus is reduced to an amount less than
the Benchmark Bonus, then for all
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purposes of this
Agreement, such Change in Control of the Company shall be deemed to
have occurred on the date immediately prior to the date of such
termination, removal, or reduction.
(c) Nothing in this Agreement shall prevent or limit the
Executive’s continuing or future participation in any plan,
program, policy or practice of or provided by the Company or any of
its Affiliates and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company
or any of its Affiliates. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any
plan, program, policy or practice of or provided by, or any
contract or agreement with, the Company or any of its Affiliates at
or subsequent to the date of termination of the Executive’s
employment with the Company shall be payable or otherwise provided
in accordance with such plan, program, policy or practice or
contract or agreement except as explicitly modified by this
Agreement.
Section 2. Change in Control of the Company .
For purposes of this Agreement, a “Change in Control of the
Company” shall mean the occurrence of any of the following
after the Effective Date:
(a) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) (a “ Covered Person”) of beneficial ownership
(within the meaning of rule 13d-3 promulgated under the Exchange
Act) of 20 percent or more of either (i) the then
outstanding shares of the common stock of the Company (the
“Outstanding Company Common Stock”), or (ii) the
combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors
(the “Outstanding Company Voting Securities”);
provided , however , that for purposes of this
subsection (a) of this Section 2, the following
acquisitions shall not constitute a Change in Control of the
Company: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any entity controlled by
the Company, or (iv) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (c) of this
Section 2; or
(b) individuals who, as of the Effective Date, constitute the
Board of Directors (the “Incumbent Board”) cease for
any reason to constitute at least a majority of the Board of
Directors; provided , however , that any individual
becoming a director subsequent to the Effective Date whose
election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Covered Person other than the Board;
or
(c) the consummation of (xx) a reorganization, merger or
consolidation or sale of the Company, or (yy) a disposition of
all or substantially all of the assets of the Company (a
“Business Combination”), in each case, unless,
following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, direct or indirectly, more
than 80 percent of, respectively, the then outstanding shares
of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately
prior to such Business Combination of the Outstanding Company
Common Stock and Outstanding
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Company Voting
Securities, as the case may be, (ii) no Covered Person
(excluding any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly,
20 percent or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then
outstanding voting securities of such corporation, except to the
extent that such ownership existed prior to the Business
Combination, and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such
Business Combination, were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action of
the Board of Directors, providing for such Business Combination;
or
(d) the approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.
Section 3. Term of This Agreement . The term of
this Agreement shall begin on the Effective Date and, unless
automatically extended pursuant to the second sentence of this
Section 3, shall expire on the first to occur of:
(i) the Executive’s death or the
Executive’s Disability, which events shall also be deemed
automatically to terminate Executive’s employment by the
Company;
(ii) the termination by the Executive or
the Company of the Executive’s employment by the Company;
or
(iii) the end of the last day (the
“Expiration Date”) of:
(1) the three-year period beginning on the
Effective Date (or any period for which the term of this
Agreement shall have been automatically extended pursuant to the
second sentence of this Section 3) if no Change in Control
of the Company shall have occurred during that three-year period
(or any period for which the term of this Agreement shall have
been automatically extended pursuant to the second sentence of
this Section 3); or
(2) if one or more Changes in Control of
the Company shall have occurred during the three-year period
beginning on the Effective Date (or any period for which the
term of this Agreement shall have been automatically extended
pursuant to the second sentence of this Section 3), the
three-year period beginning on the date on which the last Change
in Control of the Company occurred.
If (i) the term of
this Agreement shall not have expired as a result of the occurrence
of one of the events described in clause (i) or (ii) of
the immediately preceding sentence, and (ii) the Company shall
not have given notice to the Executive at least ninety
(90) days before the Expiration Date that the term of this
Agreement will expire on the Expiration Date, then the term of this
Agreement shall be automatically extended for successive one-year
periods (the first such period to begin on the day immediately
following the Expiration Date) unless the Company shall have given
notice to the Executive at least ninety (90) days before the
end of any one-year period for which the term of this Agreement
shall have been automatically extended that such term will expire
at the end of that one-year period. The expiration of the term of
this Agreement shall not terminate this Agreement itself or affect
the right of the Executive or the Executive’s legal
representatives to enforce the payment of any amount or other
benefit to which the Executive was
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entitled before the
expiration of the term of this Agreement or to which the Executive
became entitled as a result of the event (including the
termination, whether by the Executive or the Company or
automatically as provided in this Section 3, of the
Executive’s employment by the Company) that caused the term
of this Agreement to expire.
Section 4. Event of Termination for Cause . An
“Event of Termination for Cause”shall have occurred if,
after a Change in Control of the Company, the Executive shall have
committed:
(i) gross negligence or willful misconduct
in connection with his duties or in the course of his employment
with the Company;
(ii) an act of fraud, embezzlement or theft
in connection with his duties or in the course of his employment
with the Company;
(iii) intentional wrongful damage to
property of the Company;
(iv) intentional wrongful disclosure of
secret processes or confidential information of the Company;
or
(v) an act leading to a conviction of a
felony or a misdemeanor involving moral turpitude.
For purposes of this
Agreement, no act, or failure to act, on the part of the Executive
shall be deemed “intentional”if it was due primarily to
an error in judgment or negligence, but shall be deemed
“intentional” only if done, or omitted to be done, by
the Executive not in good faith and without reasonable belief that
his action or omission was in the best interest of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated as a result of an “Event of Termination
for Cause” hereunder unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters of the Board
of Directors then in office at a meeting of the Board of Directors
called and held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with his
counsel, to be heard before the Board of Directors), finding that,
in the good faith opinion of the Board of Directors, the Executive
had committed an act set forth above in this Section 4 and
specifying the particulars thereof in detail. Nothing herein shall
limit the right of the Executive or his legal representatives to
contest the validity or propriety of any such determination.
Section 5. An Event of Termination for Good
Reason . An “Event of Termination for Good Reason”
shall mean the occurrence of any of the following on or after a
Change in Control of the Company:
(i) the Company or the Successor assigns to
the Executive any duties inconsistent with the Executive’s
position (including offices, titles and reporting requirements),
authority, duties or responsibilities with the Company in effect
immediately before the occurrence of the first Change in Control
of the Company or otherwise make any change in any such
position, authority, duties or responsibilities;
(ii) the Company or the Successor removes
the Executive from, or fails to re-elect or appoint the
Executive to, any duties or position with the Company that were
assigned or held by the Executive immediately before the
occurrence of the first Change in Control of the Company, except
that a nominal change in the Executive’s title that is
merely descriptive and does not affect rank or status shall not
constitute such an event;
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(iii) the Company or the Successor takes
any other action that results in a material diminution in such
position, authority, duties or responsibilities or otherwise
take any action that materially interferes therewith;
(iv) the Company or the Successor reduces
the Executive’s annual base salary as in effect
immediately before the occurrence of the first Change in Control
of the Company or as the Executive’s annual base salary
may be increased from time to time after that occurrence (the
“Base Salary”);
(v) the Company or the Successor reduces
the Executive’s annual bonus (x) to an amount less
than $700,000 at any time on or prior to the third anniversary
of the Effective Date, or (y) to an amount less than the
average of the two annual bonuses earned by such Executive with
respect to the two preceding years at any time after the third
anniversary of the Effective Date (the amount determined
pursuant to clause (x) or (y), as applicable, is referred
to herein as the “Benchmark Bonus”);
(vi) the Company or the Successor relocates
the Executive’s principal office outside of the portion of
the metropolitan area of the City of Houston, Texas that is
located within the highway known as
“Beltway 8”;
(vii) the Company or the Successor fails to
(x) continue in effect any bonus, incentive, profit
sharing, performance, savings, retirement or pension policy,
plan, program or arrangement (such policies, plans, programs and
arrangements collectively being referred to herein as
“Basic Benefit Plans”), including, but not limited
to, any deferred compensation, supplemental executive retirement
or other retirement income, stock option, stock purchase, stock
appreciation, or similar policy, plan, program or arrangement of
the Company, in which the Executive was a participant
immediately before the occurrence of the first Change in Control
of the Company, or any substitute plan adopted by the Board of
Directors and in which the Executive was a participant
immediately before the occurrence of the last Change in Control
of the Company, unless an equitable and reasonably comparable
arrangement (embodied in a substitute or alternative benefit or
plan) shall have been made with respect to such Basic Benefit
Plan promptly following the occurrence of the last Change in
Control of the Company, or (y) continue the
Executive’s participation in any Basic Benefit Plan (or
any substitute or alternative plan) on substantially the same
basis, both in terms of the amount of benefits provided to the
Executive (which are in any event always subject to the terms of
any applicable Basic Benefit Plan) and the level of the
Executive’s participation relative to other participants,
as existed immediately before the occurrence of the first Change
in Control of the Company;
(viii) the Company or the Successor fails
to continue to provide the Executive with benefits substantially
similar to those enjoyed by the Executive under any of the
Company’s other Executive benefit plans, policies,
programs and arrangements, including, but not limited to, life
insurance, medical, dental, health, hospital, accident or
disability plans, in which the Executive was a participant
immediately before the occurrence of the first Change in Control
of the Company;
(ix) the Company or the Successor takes any
action that would directly or indirectly materially reduce any
other non-contractual benefits that were provided to the
Executive by the Company immediately before the occurrence of
the first Change in Control of the Company or deprive the
Executive of any material fringe benefit enjoyed
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by the Executive immediately before the occurrence
of the first Change in Control of the Company;
(x) the Company or the Successor fails to
provide the Executive with the number of paid vacation days to
which the Executive was entitled in accordance with the
Company’s vacation policy in effect immediately before the
occurrence of the first Change in Control of the Company;
(xi) the Company or the Successor fails to
continue to provide the Executive with office space, related
facilities and support personnel (including, but not limited to,
administrative and secretarial assistance) (y) that are
both commensurate with Executive’s responsibilities to and
position with the Company immediately before the occurrence of
the first Change in Control of the Company and not materially
dissimilar to the office space, related facilities and support
personnel provided to other Executives of the Company having
comparable responsibility to the Executive, or (z) that are
physically located at the Company’s principal executive
offices;
(xii) the Company or the Successor requires
the Executive to perform a majority of his duties outside the
Company’s principal executive offices for a period of more
than 21 consecutive days or for more than 90 days in any
calendar year;
(xiii) the Company or the Successor fails
to honor any provision of any employment agreement Executive has
or may in the future have with the Company or fail to honor any
provision of this Agreement;
(xiv) the Company or the Successor gives
effective notice of an election to terminate at the end of the
term or extended the term of any employment agreement Executive
has or may in the future have with the Company or the Successor
in accordance with the terms of any such agreement; or
(xv) the Company or the Successor purports
to terminate the Executive’s employment by the Company
unless notice of that termination shall have been given to the
Executive pursuant to, and that notice shall meet the
requirements of, Section 6.
Section 6. Notice of Termination If a Change in
Control of the Company shall have occurred before the expiration of
the term of this Agreement, any subsequent termination by the
Executive or the Company of the Executive’s employment by the
Company, or any determination of the Executive’s Disability,
shall be communicated by notice to the other party that shall
indicate the specific paragraph of Section 7 pursuant to which
the Executive is to receive benefits as a result of the
termination. If the notice states that the Executive’s
employment by the Company has been automatically terminated as a
result of the Executive’s Disability, the notice shall
(i) specifically describe the basis for the determination of
the Executive’s Disability, and (ii) state the date of
the determination of the Executive’s Disability, which date
shall be not more than ten (10) days before the date such
notice is given. If the notice is from the Company and states that
the Executive’s employment by the Company is terminated by
the Company as a result of the occurrence of an Event of
Termination for Cause, the notice shall specifically describe the
action or inaction of the Executive that the Company believes
constitutes an Event of Termination for Cause and shall be
accompanied by a copy of the resolution satisfying Section 4.
If the notice is from the Executive and states that the
Executive’s employment by the Company is terminated by the
Executive as a result of the occurrence of an Event of Termination
for Good Reason, the notice shall specifically describe the action
or inaction of the Company that the Executive believes constitutes
an Event of Termination for Good Reason. Each notice given pursuant
to
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this Section 6
(other than a notice stating that the Executive’s employment
by the Company has been automatically terminated as a result of the
Executive’s Disability) shall state a date, which shall be
not fewer than thirty (30) days nor more than sixty (60) days
after the date such notice is given, on which the termination of
the Executive’s employment by the Company is effective. The
date so stated in accordance with this Section 6 shall be the
“Termination Date”. If a Change in Control of the
Company shall have occurred before the expiration of the term of
this Agreement, any subsequent purported termination by the Company
of the Executive’s employment by the Company, or any
subsequent purported determination by the Company of the
Executive’s Disability, shall be ineffective unless that
termination or determination shall have been communicated by the
Company to the Executive by notice that meets the requirements of
the foregoing provisions of this Section 6 and the provisions
of Section 9.
Section 7. Benefits Payable on Change in Control and
Termination . (a) If (x) a Change in Control of the
Company shall have occurred before the expiration of the term of
this Agreement, and (y) the Executive’s employment by
the Company is terminated (whether by the Executive or the Company
or automatically as provided in Section 3) after the
occurrence of that Change in Control of the Company, the Executive
shall be entitled to the following benefits:
(i) If the Executive’s employment by
the Company is terminated (x) by the Company as a result of
the occurrence of an Event of Termination for Cause, or
(y) by the Executive before the occurrence of an Event of
Termination for Good Reason, then the Company shall pay to the
Executive the Base Salary accrued through the Termination Date
but not previously paid to the Executive, and the Executive
shall be entitled to any other amounts or benefits provided
under any plan, policy, practice, program, contract or
arrangement of or with the Company, including, but not limited
to, the Basic Benefit Plans and the Other Benefit Plans, which
shall be governed by the terms thereof (except as explicitly
modified by this Agreement).
(ii) If the Executive’s employment by
the Company is automatically terminated as a result of the
Executive’s death or the Executive’s Disability,
then (x) the Company shall pay to the Executive the Base
Salary accrued through the date of the occurrence of that event
but not previously paid to the Executive, and (y) the
Executive shall be entitled to any other amounts or benefits
provided under any plan, policy, practice, program, contract or
arrangement of or with the Company, including, but not limited
to, the Basic Benefit Plans and the Other Benefit Plans, which
shall be governed by the terms thereof (except as explicitly
modified by this Agreement).
(iii) If the Executive’s employment
by the Company is terminated (x) by the Company otherwise
than as a result of the occurrence of an Event of Termination
for Cause, or (y) by the Executive after the occurrence of
an Event of Termination for Good Reason, then the Executive
shall be entitled to the following:
(1) the Company shall pay to the Executive
the Base Salary and compensation for earned but unused vacation
time accrued through the Termination Date but not previously
paid to the Executive;
(2) the Company shall pay to the Executive
an amount equal to the product of (A) the greater of
(I) the Executive’s target performance bonus for the
Fiscal Year in which the Termination Date occurs and
(II) the Executive’s performance bonus for the Fiscal
Year preceding the Fiscal Year in which the Termination Date
occurs (including any deferred portion thereof) (the greater of
the amounts described in clauses
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(I) and (II) of this
Section 7(a)(iii)(2)(A) bein
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