UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): March 30, 2020

 

NORTHWEST PIPE COMPANY

(Exact name of registrant as specified in its charter)

 

OREGON

0-27140

93-0557988

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

 

201 NE Park Plaza Drive, Suite 100

Vancouver, WA 98684

(Address of principal executive offices and Zip Code)

 

Registrant’s telephone number, including area code: 360-397-6250

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

         Title of each class         

    Trading Symbol(s)  

    Name of each exchange on which registered     

Common Stock, par value $0.01 per share

NWPX

Nasdaq Global Select Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company    ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐

 


 

 

Item 5.02.

DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS

 

 

 

Resignation of Robin Gantt

On October 8, 2019, Ms. Gantt informed the Board of Directors of her intention to retire from her position as Senior Vice President and Chief Financial Officer of Northwest Pipe Company (the “Company”) on March 31, 2020, as previously disclosed in the Company’s Current Report on Form 8‑K filed with the Securities and Exchange Commission (“SEC”) on October 9, 2019. On March 31, 2020, Robin Gantt resigned from her position.

 

On March 30, 2020, the Company entered into a Separation Agreement (the “Agreement”) with Ms. Gantt, pursuant to which Ms. Gantt will continue to be employed by the Company as a Consultant beginning April 1, 2020. The Agreement has a one-year term, provides for an annual base salary of $324,480 paid in 24 equal installments, and provides coverage under the Company’s employee benefit plans. Pursuant to the Agreement, the Company has affirmed the terms of Ms. Gantt’s unvested restricted stock units (“RSUs”) to allow the 938 RSUs scheduled to vest on January 15, 2021 to vest as scheduled. In addition, the vesting of the 938 RSUs scheduled to vest on January 17, 2022 will be accelerated to also vest on January 15, 2021. The Agreement provides for the forfeiture by Ms. Gantt of any performance stock units that are unvested at the time of her resignation. Pursuant to the Agreement, Ms. Gantt will be required to comply with certain confidentiality requirements.

 

The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the agreement, which is filed herewith as Exhibit 10.1 and incorporated herein by reference.

 

 

 

Aaron Wilkins Appointed Chief Financial Officer

In connection with the Company’s succession plan previously disclosed in its Current Report on Form 8-K filed with the SEC on October 9, 2019, the Board of Directors appointed Aaron Wilkins to succeed Ms. Gantt as Senior Vice President and Chief Financial Officer effective April 1, 2020.

 

On April 1, 2020, the Company entered into a Change in Control Agreement with Mr. Wilkins replacing his prior change in control agreement that was entered into in August 2016. The new Change in Control Agreement extends the expiration date for the Change in Control Agreement to July 31, 2021 and increases his multiple for certain payouts upon a change in control (as defined in the Change in Control Agreement) from one to two. Other than such changes, the terms of the new Change in Control Agreement are the same as the prior change in control agreement.

 

Under the Change in Control Agreement, if Mr. Wilkins’s employment is terminated within two years after a change in control either by the Company without “Cause” (as defined in the Change in Control Agreement) or by Mr. Wilkins for “Good Reason” (as defined in the Change in Control Agreement), Mr. Wilkins will be entitled to receive his full base salary through the date of termination and any benefits or awards (both cash and stock) that have been earned or are payable through the date of termination plus (i) a lump sum payment equal to two years’ base salary and (ii) an amount equal to two times the average cash bonuses paid to Mr. Wilkins during the previous three years. In addition, Mr. Wilkins would be entitled to the continuation of health and insurance benefits for certain periods and all outstanding equity compensation awards would immediately become fully vested, unless the award provides different vesting terms on a change in control of the Company. In the event that the payments made to Mr. Wilkins would be deemed to be a “parachute payment” under the Internal Revenue Code of 1986, Mr. Wilkins may choose to accept payment of a reduced amount that would not be deemed to be a “parachute payment.” If the payment made to Mr. Wilkins is deemed to be a “parachute payment”, he is responsible for the payment of any resulting taxes.

 

The foregoing description of the Change in Control Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the agreement, which is filed herewith as Exhibit 10.2 and incorporated herein by reference.

 

Item 9.01.

FINANCIAL STATEMENTS AND EXHIBITS

 

 

 

Exhibits

 

 

(d)

10.1  Separation Agreement dated March 30, 2020 between Northwest Pipe Company and Robin Gantt

 

 

 

10.2  Change in Control Agreement dated April 1, 2020 between Northwest Pipe Company and Aaron Wilkins

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized on April 3, 2020.

 

 

NORTHWEST PIPE COMPANY

 

(Registrant)

 

 

 

 

By

/s/ Aaron Wilkins

 

 

Aaron Wilkins,

 

 

Senior Vice President, Chief Financial Officer, and Corporate Secretary

 

ex_180058.htm

Exhibit 10.1

 

March 27, 2020

 

Robin Gantt

 

 

Re:     Confidential Employment Separation Agreement

 

Dear Robin:

 

As we discussed, you have notified Northwest Pipe Co. (the “Company”) that you wish to resign, and the Company has accepted your resignation from your full time role, effective March 31, 2020.

 

Provided below in Part I (“Separation from Employment”) are details regarding your final pay and other employment benefits. You will receive your final pay and the other benefits described in Part I regardless of whether you decide to sign the agreement described in Part II below. Part II (“Confidential Separation Agreement”) provides you with additional separation pay if you voluntarily agree to certain terms and conditions.

 

Part I. Separation from Employment

 

1.     Final Pay. Your resignation will be effective and your employment with the Company will end on March 31, 2020. You will receive your final paycheck and pay for your accrued but unused vacation on that day or shortly thereafter in accordance with applicable law.

 

If you have any monies due to you for outstanding business expenses, please submit them for review, approval and payment in accordance with Company policy.

 

2.     Performance Share Units. In accordance with the terms of the Performance Share Unit Agreement, your shares that vest on March 31, 2020 shall vest on that date. Any shares that are unvested at the time your employment ends will be forfeited.

 

3.     Other Benefit Plans. Your other benefits will continue in accordance with the terms of applicable benefits plans. If you have any questions regarding your other benefits, contact Megan Kendrick, Vice President of Human Resources at 360-397-6312.

 

4.     Return of Company Property. On your last day of employment or immediately thereafter, you must return any and all Company property in your possession or control, including but not limited to any Company credit cards, keys, card keys, employee badges, computers, cell phones, tablet devices, documents (including all financial and accounting documents), manuals, customer and product lists and information, equipment, supplies, strategic planning information, and human resources information, as well as any other property belonging to the Company or any Company-owned or affiliated company.

 

The above compensation and benefits will be provided to you regardless of whether you sign the Confidential Continued Employment/Separation Agreement in Part II below. The agreement below provides for Separation Pay and Separation Benefits on the terms and conditions described below.

 

 

 

Part II. Confidential Continued Employment/Separation Agreement

 

This Confidential Continued Employment/Separation Agreement (the “Agreement”) sets forth an amicable arrangement for the termination of your employment by providing you with Continued Employment, pay and benefits in exchange for, among other things, a release of claims. This Agreement is not an acknowledgement of wrongdoing by you or the Company. If you enter into this Agreement, you agree that you are doing so voluntarily.

 

1.     Continued Employment. You will remain a Company employee from April 1, 2020 until March 31, 2021 (the “Continued Employment Period”). During that time, your title will be Consultant. In that role, you will be expected to be reasonably available to the Company to provide consulting services. You and the Company estimate that such services will take 8-10 hours per month, but that amount may increase or decrease during the Continued Employment Period at the Company’s discretion, provided that it shall not exceed 80 hours in any one month. The Company expects that most if not all of this work can be performed remotely, though you agree to be available to come into the office as reasonably requested from time to time by the Company during the Continued Employment Period.

 

2.     Pay and Benefits During Continued Employment Period. The Company shall pay you $324,480, less applicable deductions and withholdings, to be paid in 24 equal installments in accordance with the Company’s regular payroll cycles, with the exception of the final payment which will be paid within ten (10) days following the Effective Date of this Supplemental Release and Waiver (see section 7 and appendix I). You will be eligible for the same benefits, including health insurance, generally made available to Company employees but you will not be eligible for any incentive compensation programs.

 

The Continued Employment Period and the pay and benefits provided in this Agreement are in lieu of all other forms of severance or other compensation payments under any Company policy, plan, practice or agreement (excluding vested retirement benefits). They are unique and exclusive to you, and are available to you only if you execute and do not revoke this Agreement. They constitute additional benefits and compensation to which you would not otherwise be entitled. By accepting this Agreement, you hereby waive any other benefits and compensation that may be provided under any other agreement or the Company’s (or any of its subsidiaries’ or affiliates’) policies, plans or practices (excluding vested retirement benefits).

 

3.     Treatment of Restricted Stock Units. In accordance with the terms of the Restricted Stock Unit agreement (“RSU agreement”), your unvested Restricted Stock Units are subject to forfeiture when your employment ends. If approved by the Board of Directors, the Company will modify the RSU agreement as follows: The 938 restricted stock units scheduled to vest on January 15, 2021 shall vest on that date. Vesting of the 938 restricted stock units scheduled to vest on January 17, 2022 will be accelerated to also vest on January 15, 2021. Vesting of these shares on January 15, 2021 shall be permitted notwithstanding the fact that you will no longer be a Company employee.

 

 

 

4.     Release of Claims. In consideration for the Continued Employment Period and the pay and benefits provided in this Agreement, you and your heirs, executors, representatives, agents, insurers, administrators, successors and assigns fully waive, release and discharge the Company, including, without limitation, all of the Company’s related corporations, affiliates, parents, subsidiaries, joint ventures, and current and former directors, officers, employees, agents, attorneys, insurers, shareholders, representatives and assigns (the “Released Parties”), from any and all liability, damages, claims or causes of action, direct or indirect, known or unknown, relating in any way to your employment with the Company or the termination of that employment. You acknowledge and understand that by entering into this Agreement, you are waiving and releasing any legal claims you may have relating to your employment at the Company and the termination of that employment.

 

This release also includes, but is not limited to, all claims against the Released Parties under any local, state or federal laws, including but not limited to ERISA, 29 U.S.C. § 1001, et seq.; Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, as amended; the Post Civil War Civil Rights Acts, 42 U.S.C. §§ 1981-1988; the Civil Rights Act of 1991; the Equal Pay Act; the Americans with Disabilities Act; the Family and Medical Leave Act; the Rehabilitation Act of 1973; the Uniformed Services Employment and Reemployment Rights Act; the Fair Labor Standards Act; Executive Order 11246; the Sarbanes-Oxley Act, as amended; the Worker Adjustment and Retraining Notification Act, as amended; the National Labor Relations Act, as amended; the Genetic Information Nondiscrimination Act; and all other federal, state, or local common or statutory law theories and all federal, state, or local labor, employment or wage laws that may legally be waived.

 

This release and the ADEA release in Section 5 do not waive any rights you may have, if any, in vested retirement benefits with the Company or for unemployment compensation benefits with a state agency. The releases also do not prevent you from pursuing a claim that the Company has violated the terms of this Agreement. Your releases also do not prevent you from filing a claim for discrimination, or participating in an investigation, with the Equal Employment Opportunity Commission, the National Labor Relations Board or any applicable state labor agency, but you agree not to accept any monetary damages or other compensation for any claim.

 

5.     Specific Release of ADEA Claims. In further consideration of the Separation Pay and Separation Benefits provided to you in this Agreement, you hereby irrevocably and unconditionally fully and forever waive, release and discharge the Released Parties from any and all claims, whether known or unknown, from the beginning of time to the date of your execution of this Agreement, arising under the Age Discrimination in Employment Act (“ADEA”), as amended, and its implementing regulations, including the Older Workers’ Benefit Protection Act. By signing this Agreement, you hereby acknowledge and confirm that (i) you have read this Agreement in its entirety and understand all of its terms; (ii) you have been advised of and have availed yourself of your right to consult with your attorney prior to executing this Agreement; (iii) you knowingly, freely and voluntarily agree to all of the terms and conditions set out in this Agreement, including, without limitation, the waiver, release and covenants contained herein; (iv) you are executing this Agreement, including the waiver and release, in exchange for good and valuable consideration in addition to anything of value to which you are otherwise entitled; (v) you were given at least twenty-one (21) days to consider the terms of this Agreement and consult with an attorney of your choice, although you may sign it sooner if desired; (vi) you understand that you have seven (7) days from the date you sign this Agreement to revoke the release in this Section by delivering notice of revocation to Megan Kendrick, Vice President of Human Resources at mkendrick@nwpipe.com by e-mail before the end of such seven (7)-day period; and (vii) you understand that the release contained in this paragraph does not apply to rights and claims that may arise after the date on which you sign this Agreement. The parties agree that any changes to this Agreement, whether material or not, do not restart the running of the twenty-one (21)-day period.

 

 

 

If you sign and do not revoke this Section, this Agreement will become effective, in its entirety, on the eighth (8th) day after you sign this Agreement (the “Effective Date”).

 

6.     Covenant Not to Sue. You agree not to lodge, file or bring any suit, charge, complaint or other form of action against the Company or its directors, trustees, servants, officers, agents, employees, subsidiaries, affiliates, divisions, insurers, successors or assigns, relating in any way whatsoever to any matters released herein. This paragraph does not apply to charges filed with the Equal Employment Opportunity Commission or an equivalent state agency.

 

7.     Supplemental Release. You further agree that you will sign a supplemental release, in a form similar to that attached here as Exhibit A, on or shortly after your last day of employment.

 

8.     Acknowledgement of Receipt of Wages. You acknowledge that you have been paid in full all sums due and owing by virtue of your employment with the Company.

 

9.     Confidentiality of Agreement. You agree to hold confidential the terms and conditions of this Agreement, except as otherwise provided by law. You may, however, discuss the terms and conditions of this Agreement with your significant other, attorney and tax advisor. You agree that you will take all steps reasonably necessary to ensure that those parties to whom disclosure is permitted will maintain the confidentiality of this Agreement and that you will be personally liable if they violate the confidentiality of this Agreement. In no manner will this obligation prevent you from responding to any government agency, court order or subpoena with truthful and accurate information.

 

10.     Confidentiality Obligations. You acknowledge that you have a duty as a former employee of the Company to keep confidential all proprietary or confidential information obtained by you during the course of your employment with the Company. During the course of your employment, you have had access to and have used substantial amounts of Company confidential and proprietary information, including but not limited to proprietary processes and procedures; financial and accounting information; strategic planning information; human resources information; Company policies, procedures and objectives; Company operating information; and customer and supplier information (“Confidential Information”). You agree to maintain the strict confidentiality of all Confidential Information after your employment at the Company ends and at all times in the future except when required by law, e.g., upon subpoena by a government agency. You agree to immediately notify the Company in writing upon receipt of such a summons, subpoena or other request for any Confidential Information. You understand that your disclosure of Confidential Information to anyone may subject you and any other user of that information to legal and equitable claims by the Company.

 

 

 

11.     Non-Disparagement. You agree that you will not in any way disparage or harm the name or reputation of the Company, any Company-owned business or any Company affiliate, including any such entities’ past or present officers, directors, employees, agents or attorneys, in either their personal or official capacities. In no manner will this obligation prevent you from responding to any government agency, court order or subpoena with truthful and accurate information.

 

12.     Cooperation with Company Matters. You agree that, if requested by the Company, you will cooperate and provide truthful and accurate information to the Company in connection with matters about which you have knowledge or in defense of threatened, ongoing or future litigation, claims, or administrative or arbitration proceedings against the Company or any of its affiliates. After the Continued Employment Period ends, the Company will reimburse you for such time at an hourly rate of compensation that is based on your annual base salary at the Company as of March 31, 2020.

 

13.     Right to Seek Injunctive Relief. You acknowledge that any breach of your obligations under the confidentiality and non-disparagement provisions of this Agreement would constitute a material breach of the Agreement. You further acknowledge that the Company’s remedy at law for any actual or threatened breach of those obligations would be inadequate and that the Company will, in addition to whatever remedies it may have at law or in equity under this Agreement, be entitled to immediate injunctive relief from any actual or threatened breach of those provisions.

 

14.     Entire Agreement; Applicable Law. This Agreement reflects the entire agreement and understanding between you and the Company and supersedes and replaces all other oral or written understandings regarding your employment except: the Performance Share Unit Agreement and the Restricted Stock Unit Agreement. You acknowledge that you are not relying upon any other representations, arrangements or understandings in signing this Agreement. This Agreement shall be construed in accordance with and governed by the statutes and common law of the State of Oregon. No changes may be made to the terms of this Agreement except in a writing signed by you and the Company’s President. The jurisdiction of the federal and state courts in Multnomah shall be exclusive.

 

15.     Severability. If any portion or provision of this Agreement is held invalid or unenforceable, the remainder of the Agreement will be deemed severable, will not be affected, and will remain in full force and effect.

 

16.     Voluntary Execution. You acknowledge that you have read this Agreement and understand it, and that you are entering into it voluntarily.

 

If you agree to this Agreement, please sign and return it to me. If you have any questions concerning this Agreement, please feel free to contact me. I thank you for all you have done for the Company during your employment and wish you success in the future.

 

 

 

  Sincerely,
   
   
   /s/ Scott Montross
   
   
  Scott Montross
  President and CEO
  Northwest Pipe Company

 

I have carefully reviewed the Confidential Continued Employment/Separation Agreement set forth in Part II above. I understand that it includes a release of legal claims, and I knowingly and voluntarily accept its terms.

 

 

 

 /s/ Robin Gantt   March 30, 2020
Employee signature   Date
     
     
Robin Gantt    
Employee name printed    

                         

 

 

ATTACHMENT 1
SUPPLEMENTAL RELEASE AND WAIVER

 

Pursuant to the terms of the Confidential Continued Employment/Separation Agreement between Northwest Pipe Company and Robin Gantt, effective ______, 2020, the parties agree as follows:

 

Final Pay. Your final pay under the Confidential Continued Employment/Separation Agreement will be paid in a lump sum within ten (10) days following the Effective Date of this Supplemental Release and Waiver.

 

Supplemental Release and Waiver. In consideration for these separation benefits and those provided in the Confidential Continued Employment/Separation Agreement, and to the fullest extent permitted under applicable law, you release the Company, including, without limitation, all of the Company’s related corporations, affiliates, parents, subsidiaries, joint ventures, and current and former directors, officers, employees, agents, attorneys, insurers, shareholders, representatives and assigns (the “Released Parties”), from any claims you might have, whether known or unknown to you at this time, in connection with your employment or your separation from employment. This release includes any claims you might have under applicable state, federal, or local law dealing with employment, contract, wage and hour, tort, or civil rights matters including, but not limited to, applicable state civil rights or wage payment laws, the Employee Retirement Income Security Act (ERISA), Title VII of the Civil Rights Act of 1964, the Post-Civil War Civil Rights Acts (42 U.S.C. §§ 1981-1988), the Civil Rights Act of 1991, the Age Discrimination in Employment Act, the Older Workers' Benefit Protection Act, the Rehabilitation Act of 1973, the Americans with Disabilities Act, the Equal Pay Act, the Family and Medical Leave Act, the Uniformed Services Employment and Reemployment Rights Act, the Fair Labor Standards Act, sections 503 and 504 of the Vocational Rehabilitation Act, the Rehabilitation Act of 1973, the Worker Adjustment and Retraining Notification Act, Executive Order 11246, and Oregon employment statutes, all as amended, and any regulations under such laws.

 

This release does not affect any rights you might have for benefits under any applicable medical insurance, disability, workers’ compensation, unemployment compensation, or retirement programs. This release also does not prevent you from filing a claim with the Equal Employment Opportunity Commission or the applicable state labor agency, but you agree not to accept any monetary damages or other compensation for any claim.

 

Older Workers Benefit Protection Act. Pursuant to the Older Workers Benefit Protection Act, you acknowledge that: (a) the Company encourages you to consult with an attorney prior to executing this Supplemental Release and Waiver; (b) you have read the release and understand the effect of your release and that you are releasing legal rights; (c) you are aware of certain rights to which you may be entitled under certain statutes and laws identified in the release; (d) you have had at least twenty-one (21) days to consider this Supplemental Release and Waiver, which ran concurrent with your continued employment pursuant to your Separation Agreement; (e) you do not waive rights or claims under the federal Age Discrimination in Employment Act that may arise after the date this waiver is executed; and (f) as consideration for executing this Supplemental Release and Waiver, you have received additional benefits and compensation of value to which you would not otherwise be entitled. You may revoke your acceptance of this Supplemental Release and Waiver within seven days of your acceptance by sending a written statement to that effect addressed to the attention of ___________________. Unless you revoke it within those seven days, this Supplemental Release and Waiver will be effective on the eighth day after you have signed it (“Effective Date”).

 

 

 

Accepted ____________, 20__

 

Robin Gantt

 

__________________________

[Employee’s signature]

 

 

Accepted _____________, 20__

 

__________________________

[Executive’s signature]

 

_________________________ [Printed name of Executive]

_________________________[Title]

Northwest Pipe, Company

 

 

 

ex_180059.htm

Exhibit 10.2

 

 

April 1, 2020

 

Aaron Wilkins

 

 

Northwest Pipe Company, an Oregon corporation (the “Company”), considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its shareholders. In this connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control (as defined in Section 3 hereof) may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders. Accordingly, the Board of Directors of the Company (the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management to their assigned duties without distraction in circumstances arising from the possibility of a Change in Control of the Company.

 

In order to induce you to remain in the employ of the Company, this letter agreement (“Agreement”), which has been approved by the Board, sets forth the severance benefits which the Company agrees will be provided to you in the event your employment with the Company is terminated in connection with a Change in Control of the Company under the circumstances described below. The Company and you have entered into a prior letter agreement regarding change in control severance benefits dated August 1, 2016. Upon your signature of this Agreement, the prior letter agreement shall be amended and restated in its entirety in the form of this Agreement.

 

1.     Right to Terminate. The Company or you may terminate your employment at any time, subject to the Company’s obligations to provide the benefits hereinafter specified in accordance with the terms hereof.

 

2.     Term of Agreement. This Agreement shall commence on the date hereof and shall continue in effect until July 31, 2021; provided, however, that commencing on August 1, 2021 and each August 1st thereafter, the term of this Agreement shall automatically be extended for one additional year unless at least ninety (90) days prior to such August 1st date, the Company or you shall have given notice that this Agreement shall not be extended; provided, however, that this Agreement shall continue in effect for a period of twenty-four (24) months beyond the term provided herein if a Change in Control shall have occurred during such term. Notwithstanding anything in this Section 2 to the contrary, this Agreement shall terminate if you or the Company terminate your employment prior to the earlier of Shareholder Approval (as defined in Section 3 hereof), if applicable, or a Change in Control.

 

 

 

 

3.     Change in Control; Shareholder Approval; Person.

 

3.1     For purposes of this Agreement, a “Change in Control” shall mean the occurrence of any of the following events:

 

3.1.1     The consummation of:

 

(a)     any consolidation, merger or plan of share exchange involving the Company (a “Merger”) other than a Merger which would result in securities of the Company ordinarily having the right to vote for the election of directors (“Voting Securities”) outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity or a parent of the surviving entity) more than 50% of the combined voting power of the Voting Securities of such surviving entity or parent outstanding immediately after the Merger;

 

(b)     any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Company: or

 

(c)     the adoption of any plan or proposal for the liquidation or dissolution of the Company.

 

3.1.2     At any time during a period of two consecutive years, individuals who at the beginning of such period constituted the Board (“Incumbent Directors”) shall cease for any reason to constitute at least a majority thereof unless each new director elected during such two-year period was nominated or elected by a vote of at least two-thirds (2/3rds) of the Incumbent Directors then in office and voting (with new directors nominated or elected by two-thirds (2/3rds) of the Incumbent Directors also being deemed to be Incumbent Directors); or

 

3.1.3     Any Person [(as hereinafter defined)] shall, as a result of any purchase or other acquisition of Company Shares 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, as amended), 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 the Voting Securities) an equity interest in an entity that acquires the Company in a Change in Control otherwise described under subparagraph 3.1.1 above, or (2) you are part of a group that constitutes a Person which becomes a beneficial owner of Voting Securities in a transaction that otherwise would have resulted in a Change in Control under subparagraph 3.1.3 above.

 

Page 2

 

3.2     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.

 

3.3     For purposes of this Agreement, the term “Person” shall mean and include any individual, corporation, partnership, group, association or other “person,” as such term is used in Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended, other than the Company or any employee benefit plan(s) sponsored by the Company.

 

4.     Termination Following Shareholder Approval or Change In Control. If a Change in Control occurs and at any time after the earlier of Shareholder Approval, if applicable, or the Change in Control and on or before the second anniversary of the Change in Control, your employment is terminated, you shall be entitled to the benefits provided in Section 5.3 hereof unless such termination is (a) because of your death, (b) by the Company for Cause or Disability or (c) by you other than for Good Reason (as all such capitalized terms are hereinafter defined).

 

4.1     Disability. Termination by the Company of your employment based on “Disability” shall mean termination because of your absence from your duties with the Company on a full-time basis for one hundred eighty (180) consecutive days as a result of your incapacity due to physical or mental illness, unless within thirty (30) days after Notice of Termination (as hereinafter defined) is given to you following such absence you shall have returned to the full-time performance of your duties.

 

4.2     Cause. Termination by the Company of your employment for “Cause” shall mean termination upon (a) the willful and continued failure by you to substantially perform your reasonably assigned duties with the Company consistent with those duties assigned to you prior to the Change in Control (other than any such failure resulting from your incapacity due to physical or mental illness) which failure shall not have been corrected within thirty (30) days after a demand for substantial performance is delivered to you by the Chairman of the Board or President of the Company which specifically identifies the manner in which such executive believes that you have not substantially performed your duties and such notice is delivered within ninety (90) days of such circumstances, or (b) the willful engaging by you in illegal conduct which is materially and demonstrably injurious to the Company. For purposes of this paragraph 4.2, no act, or failure to act, on your part shall be considered “willful” unless done, or omitted to be done, by you in knowing bad faith and without reasonable belief that your action or omission was in, or not opposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the 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 two-thirds (2/3rds) of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of the conduct set forth above in (a) or (b) of this paragraph 4.2 and specifying the particulars thereof in detail.

 

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4.3     Good Reason. Termination by you of your employment for “Good Reason” shall mean termination by you of your employment with the Company based on the occurrence after Shareholder Approval, if applicable, or the Change in Control, of any of the following circumstances, provided you give Notice of Termination within ninety (90) days after notice to you of such circumstances and such circumstances are not fully corrected by the Company within thirty (30) days after your notice:

 

4.3.1     a change in your status, title, position(s) or responsibilities as an officer of the Company which constitutes an adverse change 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, Disability or as a result of your death or by you other than for Good Reason;

 

4.3.2     a reduction by the Company in your base salary as in effect on the date hereof or as the same may be increased from time to time except for across-the-board salary reductions similarly affecting all management personnel of the Company and all management personnel of any Person in control of the Company;

 

4.3.3     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;

 

4.3.4     the failure by the Company to provide and credit you with the number of paid vacation days to which you are then entitled in accordance with the Company’s normal vacation policy as in effect immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control;

 

4.3.5     the Company’s requiring you to be based more than twenty-five (25) 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;

 

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4.3.6     the failure of the Company to pay to you any portion of your compensation or compensation under any deferred compensation program of the Company;

 

4.3.7     the failure by the Company to obtain from any Successor (as hereinafter defined) the assumption or assent to this Agreement contemplated by Section 6 hereof within thirty (30) days after a Change in Control;

 

4.3.8     any material breach of this Agreement by the Company; or

 

4.3.9     any purported termination by the Company of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph 4.4 below (and, if applicable, paragraph 4.2 above); and for purposes of this Agreement no such purported termination shall be effective.

 

For 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, medical, disability, accident, life insurance, or relocation plan or policy or any other plan, program or policy of the Company intended to benefit employees.

 

4.4     Notice of Termination. Any purported termination by the Company or by you following the earlier of Shareholder Approval, if applicable, or a Change in Control shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.

 

4.5     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 you shall not have returned to the performance of your duties on a full-time basis during such thirty (30) day period), (b) if your employment is to be terminated by the Company for Cause, the date on which a Notice of Termination is given, and (c) if your employment is to be terminated by you or by the Company for any other reason, the date specified in the Notice of Termination (which, in the case of termination for Good Reason shall be not less than thirty (30) days nor more than sixty (60) days from the date such Notice of Termination is given), unless an earlier date has been agreed to by the party receiving the Notice of Termination either in advance of, or after, receiving such Notice of Termination. Notwithstanding anything in the foregoing to the contrary, if the party receiving the Notice of Termination has not previously agreed to the termination, then within thirty (30) days after any Notice of Termination is given, or, if later, prior to the Date of Termination, the party receiving such Notice of Termination may notify the other party that a dispute exists concerning the termination, in which event the Date of Termination shall be the date set either by mutual written agreement of the parties or by the arbitrators in a proceeding as provided in Section 12 hereof; and provided, further, that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. 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 Regulation Section 1.409A-1(h).

 

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5.     Compensation Upon Termination or During Disability.

 

5.1     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 paragraphs 4.1, 4.4 and 4.5 hereof. Thereafter, your benefits shall be determined in accordance with the Plans then in effect.

 

5.2     If your employment shall be terminated for Cause or as a result of your death following the earlier of Shareholder Approval, if applicable, or a Change in Control of the Company, the Company shall pay you your full base salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards (including both the cash and stock components) which pursuant to the terms of any Plans have been earned or become payable, but which have not yet been paid to you. Thereupon the Company shall have no further obligations to you under this Agreement.

 

5.3     If a Change in Control occurs and after the earlier of Shareholder Approval, if applicable, or the Change in Control and on or before the second anniversary of the Change in Control your employment with the Company shall be terminated (a) by the Company other than for Cause or Disability or (b) by you for Good Reason, then, you shall be entitled to, and shall be paid, without regard to any contrary provisions of any Plan, a severance benefit as follows:

 

5.3.1     Within five (5) days of the Date of Termination, the Company shall pay your full base salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards (including both cash and stock components) which pursuant to the terms of any Plans have been earned or become payable, but which have not yet been paid to you (including amounts which previously had been deferred at your request);

 

5.3.2     as severance pay and in lieu of any further salary for periods subsequent to the Date of Termination, within five (5) days of the later of the Date of Termination or the Change in Control, the Company shall pay to you in a single payment an amount in cash equal to (i) the higher of (A) two (2) times your annual base salary at the rate in effect just prior to the time a Notice of Termination is given, or (B) two (2) times your annual base salary in effect immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control, plus (ii) two (2) times the average of the cash bonuses paid to you during the previous three (3) years;

 

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5.3.3     for a twenty-four (24) 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 and your dependents with life, accident, medical and dental 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 paragraph 5.3.3 to the extent that a similar benefit is actually received by you from a subsequent employer during such twenty-four (24) month period, and any such benefit actually received by you shall be reported to the Company;

 

5.3.4     any and all outstanding equity compensation awards (whether options, restricted stock units or otherwise) under any Plan held by you shall immediately vest and become exercisable in full; provided, however, that if the award agreement for any such award provides different vesting terms on a change in control of the Company, the terms of the award agreement shall control and this paragraph 5.3.4 shall not apply; and

 

5.3.5     within five (5) days of the Date of Termination, the Company shall pay you for any vacation time earned but not taken at the Date of Termination, at an hourly rate equal to your annual base salary as in effect immediately prior to the time a Notice of Termination is given divided by 2080.

 

5.4     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”), if any portion of the Specified Benefits (as defined below) would be subject to the excise tax payable by you imposed by Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended, or any successor provisions (the “IRC”), and if you would receive a greater after-tax benefit from the Capped Benefit (as defined below) than from the Specified Benefits, the Capped Benefit shall be paid to you in lieu of the Specified Benefits. The “Specified Benefits” are the amounts (including the monetary value of any non-cash benefits) otherwise payable pursuant to this Agreement and any Other Arrangement. The “Capped Benefit” equals the Specified Benefits, reduced by the minimum amount necessary to prevent any portion of the Specified Benefits from being a “parachute payment” as defined in IRC Section 280G(b)(2). 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 IRC Section 4999 and all federal, state and local taxes required to be paid by you in respect of the receipt of such payments. If you receive the Capped Benefit, you may determine the extent to which each of the Specified Benefits shall be reduced. The parties recognize that there is some uncertainty regarding the computations under IRC Section 280G which must be applied to determine the Capped Benefit. Accordingly, the parties agree that, after the severance benefit is paid, the amount of the Capped Benefit may be retroactively adjusted to the extent any subsequent Internal Revenue Service regulations, rulings, audits or other pronouncements establish that the original calculation of the Capped Benefit was incorrect. In that case, amounts shall be paid or reimbursed between the parties so that you will have received the severance benefit you would have received if the Capped Benefit had originally been calculated correctly. Moreover, in determining whether you will receive the Specified Benefits or the Capped Benefit, any potential tax consequences to the Company under IRC Section 280G or otherwise will not be taken into account.

 

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5.5     Except as specifically provided above, the amount of any payment provided for in this Section 5 shall not be reduced, offset or subject to recovery by the Company by reason of any compensation earned by you as the result of employment by another employer after the Date of Termination, or otherwise. Your entitlements under Section 5.3 are in addition to, and not in lieu of any rights, benefits or entitlements you may have under the terms or provisions of any Plan.

 

6.     Successors; Binding Agreement.

 

6.1     The Company will seek to have any Successor (as hereinafter defined), by agreement in form and substance satisfactory to you, assume the Company’s obligations under this Agreement or assent to the fulfillment by the Company of its obligations under this Agreement. This Agreement will be binding upon and inure to the benefit of the Company and any Successor (and such Successor shall thereafter be deemed the “Company” for purposes of this Agreement), but will not otherwise be assignable, transferable or delegable by the Company. For purposes of this Agreement, “Successor” shall mean any Person that succeeds to, or has the practical ability to control (either immediately or with the passage of time), the Company’s business directly, by merger, consolidation or purchase of assets, or indirectly, by purchase of the Voting Securities or otherwise.

 

6.2     This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there be no such designee, to your estate.

 

7.     Fees and Expenses. The Company shall pay all legal fees and related legal expenses incurred by you as a result of (i) your termination following 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 any such termination) or (ii) your seeking to obtain or enforce any right or benefit provided by this Agreement.

 

8.     Survival. The respective obligations of, and benefits afforded to, the Company and you as provided in Section 5, 6, 7 and 12 of this Agreement shall survive termination of this Agreement.

 

9.     Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid and addressed to the address of the respective party set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the Chairman of the Board or President of the Company, with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

 

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10.     Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in a writing signed by you and the Chairman of the Board or President of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Oregon.

 

11.     Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

12.     Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Portland, Oregon by three arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators’ award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. The Company shall bear all costs and expenses arising in connection with any arbitration proceeding pursuant to this Section 12.

 

13.     Related Agreement.

 

13.1      You and the Company are parties to a Long Term Incentive Plan Agreement dated as of April 19, 2016 (“LTIP Agreement”). The LTIP Agreement provides for a cash severance benefit payable to you and continuation of your health insurance benefits if your employment is terminated without cause (as defined therein) before the final regular payroll date of 2017, and these benefits are payable regardless of whether a Change in Control occurs. If you become entitled to severance benefits under both the LTIP Agreement and Section 5.3 of this Agreement, you shall be entitled to receive a cash severance equal to the larger of the cash severance benefit under the LTIP Agreement or the benefit provided under Section 5.3.2 of this Agreement, without duplication, and you shall be entitled to continuation of health insurance benefits for the longer of the period provided for under the LTIP Agreement or the period provided for under Section 5.3.3 of this Agreement, without duplication. For the avoidance of doubt, the LTIP Agreement shall be considered an Other Arrangement for purposes of Section 5.4 of this Agreement.

 

13.2     Except as provided in this Section 13, nothing in this Agreement shall prevent or limit your continuing or future participation in any plan, program, policy or practice provided by the Company and for which you may qualify, nor shall anything in this Agreement limit or otherwise affect such rights as you may have under any contract or agreement with the Company. Amounts which are vested benefits or which you are otherwise entitled to receive under any plan, policy, practice or program of, or any contract or agreement with, the Company at or subsequent to this Agreement shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

 

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14.     Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same instrument.

 

15.     409A Interpretation.  This Agreement (and ☒all payments and other benefits provided ☒under this Agreement and provided under ☒any other agreement incorporated by ☒reference) are intended to be exempt from the requirements ☒of IRC Section 409A to the ☒maximum extent possible, whether pursuant ☒to the short-term deferral exception ☒described in Treasury Regulation Section ☒☒1.409A-1(b)(4), the involuntary separation ☒pay plan exception described in Treasury ☒Regulation Section 1.409A-1(b)(9)(iii), or ☒otherwise.  To the extent IRC Section 409A is ☒applicable to such payments and benefits, the Company intends that this Agreement (and such ☒payments and benefits) comply with the ☒deferral, payout and other limitations and ☒restrictions imposed under IRC Section ☒☒409A.  Notwithstanding any other provision ☒of this Agreement to the contrary, this ☒Agreement shall be interpreted, operated and ☒administered in a manner consistent with ☒such intentions. ☒

 

16.     Payments to Specified Employee.  Notwithstanding any other provision of this ☒Agreement to the contrary, you shall not be entitled to any payment pursuant to this ☒Agreement prior to the earliest date permitted under IRC Section 409A.  If at the time of your termination of employment, you are a “specified employee,” as defined in ☒Treasury Regulation Section 1.409A-1(i) and determined using the identification methodology ☒selected by the Company from time to time, or if none, the default methodology under ☒IRC Section 409A, and a payment or benefit provided for in this Agreement would be subject to ☒additional tax under IRC Section 409A if such payment or benefit is paid within six (6) months ☒after your termination, then such payment or benefit required under this Agreement shall ☒not be paid (or commence to be paid) during the six (6) month period immediately following your termination, but shall instead be accumulated and paid to you (or, if you have died, to your estate) on the earlier of (i) the tenth (10th) business day ☒following your death or (ii) the first (1st) business day of the seventh month following ☒your termination of employment.☒

 

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If this Agreement correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this Agreement which will then constitute our agreement on this subject.

 

  Sincerely,
   
   /s/ Scott J. Montross
   
  Scott J. Montross
  President and Chief Executive Officer
   
   
AGREED AND ACCEPTED:  
   
   
 /s/ Aaron Wilkins  

 

 

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