This Change of Control Agreement involves
Title: CHANGE IN CONTROL SEVERANCE AGREEMENT
Governing Law: Minnesota Date: 5/8/2008
Industry: Constr. - Supplies and Fixtures Sector: Capital Goods
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT is made effective as of the 5 th day of May, 2008, between Apogee Enterprises, Inc., a Minnesota corporation, with its principal offices at Wells Fargo Financial Center, 7900 Xerxes Avenue South, Suite 1800, Minneapolis, Minnesota 55431 (the “ Company ”) and Gregory A. Silvestri (“ Executive ”), residing at 4820 West Sunnyslope Road, Edina, Minnesota 55424.
WHEREAS, this Agreement is intended to specify the financial arrangements that the Company will provide to Executive upon Executive’s separation from employment with the Company and all subsidiaries of the Company (collectively, the “ Apogee Entities ”) under any of the circumstances described herein; and
WHEREAS, this Agreement is entered into by the Company in the belief that it is in the best interests of the Company and its shareholders to provide stable conditions of employment for Executive notwithstanding the possibility, threat or occurrence of certain types of change in control, thereby enhancing the Company’s ability to attract and retain highly qualified people.
NOW, THEREFORE, to assure the Company that it will have the continued dedication of Executive notwithstanding the possibility, threat or occurrence of a bid to take over control of the Company, and to induce Executive to remain in the employ of the Apogee Entities, and for other good and valuable consideration, the Company and Executive agree as follows:
1. Term of Agreement . The term of this Agreement shall commence on the date hereof as first written above and shall continue through December 31, 2008; provided that commencing on January 1, 2009 and each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless, not later than September 30 of the preceding year, the Board of Directors of the Company (a majority of which, at such time, shall be composed of Continuing Directors) shall have authorized, by majority vote, management of the Company to give notice to Executive, and the Company shall have given such notice, that the Company does not wish to extend this Agreement; and provided, further, that, notwithstanding any such notice by the Company not to extend, this Agreement shall continue in effect for a period of 24 months beyond the term provided herein if a Change in Control (as defined in Section 3(a) hereof) shall have occurred during such term.
2. Termination of Employment .
(a) Prior to a Change in Control . Prior to a Change in Control, any Apogee Entity may terminate Executive from employment with such Apogee Entity at will, with or without Cause (as defined in Section 3(c) hereof), at any time. Executive’s rights upon termination of employment from all Apogee Entities prior to a Change in Control shall be governed by the employing Apogee Entity’s standard employment termination policy applicable to Executive in effect at the time of termination and the provisions of the offer of employment letter from the Company to Executive dated June 27, 2007.
(b) After a Change in Control .
(i) From and after the date of a Change in Control during the term of this Agreement, neither the Company nor the Apogee Entity then employing Executive shall terminate Executive from employment with the Company or any Apogee Entity except as provided in this Section 2(b) or as a result of Executive’s Disability (as defined in Section 3(d) hereof) or his death.
(ii) From and after the date of a Change in Control during the term of this Agreement, the Company (or the other Apogee Entity then employing Executive) shall have the right to terminate Executive from employment with the Apogee Entities at any time during the term of this Agreement for Cause, by
written notice to Executive, specifying the particulars of the conduct of Executive forming the basis for such termination, such notice to be effective on the 30th day following delivery thereof to Executive if Executive has not substantially cured the conduct identified in such notice.
(iii) From and after the date of a Change in Control during the term of this Agreement:
|(A)||the Company (or the other Apogee Entity then employing Executive) shall have the right to terminate Executive’s employment without Cause, at any time; and|
|(B)||Executive shall, upon the occurrence of such a termination by the Company or such other Apogee Entity without Cause, or upon the voluntary termination of Executive’s employment by Executive for Good Reason (as defined in Section 3(b) hereof), be entitled to receive the benefits provided in Section 4 hereof. Executive shall evidence a voluntary termination for Good Reason by written notice to the Company given within 60 days after the date of the occurrence of any event that Executive knows or should reasonably have known constitutes Good Reason for voluntary termination. Such notice need only identify Executive and set forth in reasonable detail the facts and circumstances claimed by Executive to constitute Good Reason.|
3. Definitions .
(a) A “ Change in Control ” shall mean:
(i) a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or successor provision thereto, whether or not the Company is then subject to such reporting requirement including, without limitation, any of the following events:
|(A)||the consummation of any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company’s common stock would be converted into cash, securities, or other property, other than a merger of the Company in which all or substantially all of the holders of the Company’s common stock immediately prior to the consolidation or merger own more than 65% of the common stock of the surviving corporation immediately after the merger in the same relative proportions as their ownership of the Company’s common stock immediately prior to the consolidation or merger;|
|(B)||any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company;|
|(C)||any reorganization, reverse stock split, or recapitalization of the Company which would result in a Change in Control; or|
|(D)||any transaction or series of related transactions having, directly or indirectly, the same effect as any of the foregoing; or any agreement, contract, or other arrangement providing for any of the foregoing.|
(ii) any “ person ” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “ Beneficial Owner ” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing 35% or more of the combined voting power of the Company’s then outstanding securities;
(iii) the Continuing Directors (as defined in Section 3(e) hereof) cease to constitute a majority of the Company’s Board of Directors; or
(iv) the majority of the Continuing Directors determine in their sole and absolute discretion that there has been a change in control of the Company.
(b) “ Good Reason ” shall mean the occurrence of any of the following events, in each case, after the Executive has provided written notice to the Company of the occurrence of such event and the Company has failed to cure, to the Executive’s reasonable satisfaction, the cause of such event within thirty (30 days after the date of such written notice, except for the occurrence of such an event in connection with the termination or reassignment of Executive’s employment by the Company (or any other Apogee Entity then employing Executive) for Cause, for Disability or for death:
(i) the assignment to Executive of employment duties or responsibilities which are not at least of materially comparable responsibility and status as the employment duties and responsibilities held by Executive immediately prior to a Change in Control, or any removal of Executive from or any failure to reelect or reappoint Executive to any positions held by Executive immediately prior to a Change in Control, except in connection with the termination of his employment for Disability, retirement or Cause, or as a result of Executive’s death, or by Executive other than for Good Reason;
(ii) a material reduction by the Company (or any other Apogee Entity then employing Executive) in Executive’s base salary as in effect immediately prior to a Change in Control or as the same may be increased from time to time during the term of this Agreement;
(iii) the Company’s (or any other Apogee Entity then employing Executive) requiring Executive to be based anywhere other than within 50 miles of Executive’s office location immediately prior to a Change in Control, except for requirements of temporary travel on the Company’s business to an extent substantially consistent with Executive’s business travel obligations immediately prior to a Change in Control;
(iv) the failure by the Company to obtain, as specified in Section 5(a) hereof, an assumption of the obligations of the Company to perform this Agreement by any successor to the Company; or
(v) any material breach by the Company of this Agreement.
(c) “ Cause ” shall mean termination by the Company (or any other Apogee Entity then employing Executive) of Executive’s employment based upon (i) the willful and continued failure by Executive substantially to perform his duties and obligations (other than any such failure resulting from his incapacity due to physical or mental illness or any such actual or anticipated failure resulting from Executive’s termination for Good Reason) or (ii) the willful engaging by Executive in misconduct which is materially injurious to the Company, monetarily or otherwise. For purposes of this Section 3(c), no action or failure to act on Executive’s part shall be considered “ willful ” unless done, or omitted to be done, by Executive in bad faith and without reasonable belief that his action or omission was in the best interests of the Company.
(d) “ Disability ” shall mean any physical or mental condition which would qualify Executive for a disability benefit under any long-term disability plan maintained by the Company (or any other Apogee Entity then employing Executive) either before or after a Change in Control.
(e) “ Continuing Director ” shall mean any person who is a member of the Board of Directors of the Company, who is not an Acquiring Person (as hereinafter defined) or an Affiliate or Associate (as hereinafter defined) of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and who (i) was a member of the Board of Directors on the date of this Agreement as first written above or (ii) subsequently becomes a member of the Board of Directors, if such person’s initial nomination for election or initial election to the Board of Directors is recommended or approved by a majority of the Continuing Directors. For purposes of this Section 3(e): “ Acquiring Person ” shall mean any “ person ” (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) who or which, together with all Affiliates and Associates of such person, is the Beneficial Owner of 10% or more of the shares of Common Stock of the Company then outstanding, but shall not include the Company, any subsidiary of the Company or any employee benefit plan of the Company or of any subsidiary of the Company or any entity holding shares of Common Stock organized, appointed or established for, or pursuant to the terms of, any such plan; and “ Affiliate ” and “ Associate ” shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.
4. Benefits upon Termination under Section 2(b)(iii) .
(a) After a Change in Control .
(i) Upon the termination (voluntary or involuntary) of the employment of Executive pursuant to Section 2(b)(iii) hereof, Executive shall be entitled to receive the benefits specified in this Section 4. The amounts due to Executive under subparagraphs (i), (ii), (iii) or (iv) of this Section 4(a) shall be paid to Executive not later than one business day prior to the date that the termination of Executive’s employment becomes effective (the “ Employment Termination Date ”). All benefits to Executive pursuant to this Section 4(a) shall be subject to any applicable income, payroll or other taxes required by law to be withheld. As used in Subsection 4(a)(iii), the term, “ termination of employment ,” and other similar terms used in such Subsection, shall be construed to have the same meaning as is given to the term, “ Separation from Service ,” in Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”).
(ii) The Company shall pay to Executive (A) the full base s