LILLY INDUSTRIES, INC.
CHANGE IN CONTROL AGREEMENT
XXX X. XXXXXXX
This CHANGE IN CONTROL AGREEMENT, dated as of September 26, 1997
evidences an agreement by and between LILLY INDUSTRIES, INC., an Indiana
corporation having its principal executive offices at 000 Xxxxx Xxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxx 00000 (the "Company"), and XXX X. XXXXXXX, an individual
residing at 000 Xxx Xxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 (the "Executive").
Background
A. The Board of Directors of the Company has determined that it is in
the best interests of the Company and its shareholders to assure that the
Company will have the continued undivided time, attention, loyalty, and
dedication of Executive, notwithstanding the possibility, threat or occurrence
of a Change in Control (as defined in subsection 3(b) hereof) of the Company.
B. The Board believes it is imperative to diminish the inevitable
distraction of Executive by virtue of the personal uncertainties and risks
created by pending or threatened Change in Control and to encourage Executive's
full undivided time, attention, loyalty, and dedication to the Company currently
and in the event of any threatened or pending Change in Control.
C. By this Agreement, the Board intends upon a Change in Control to
assure Executive with compensation and benefits arrangements if his employment
terminates as a result of a Change in Control which are competitive with those
of other corporations similarly situated to the Company. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into this
Agreement.
D. In reliance on this Agreement, Executive is willing to continue his
employment with the Company on the terms agreed to by the Executive and Company
from time to time.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Undertaking. Subject to Section 4, the Company agrees to pay or
provide to Executive the termination benefits specified in Section 2 hereof if:
(a) within three (3) years after, a Change in Control (as defined in subsection
3(b) hereof): either (i) the Company terminates the employment of Executive
before age sixty-five (65) for any reason other than Good Cause (as defined in
subsection 3(g) hereof), death, Disability (as defined in subsection 3(f)
hereof), or (ii) Executive voluntarily terminates his employment for Good Reason
(as defined in subsection 3(h) hereof), or (b) the employment of the Executive
is terminated before such a Change in Control, or an anticipated Change in
Control, and the Executive reasonably demonstrates that such termination
occurred in connection with, or in anticipation of such a Change in Control
(whether or not such Change in Control actually occurs).
- 1 -
2. Termination Benefits. Subject to Section 4, if Executive is entitled
to termination benefits pursuant to Section 1 hereof, the Company shall pay or
provide the following:
(a) Severance Pay. The Company shall pay to Executive in a
cash lump sum amount equal to the sum of:
(1) two (2) times the sum of (i) plus (ii) below:
(i) the Executive's annual base salary,
inclusive of any elective deferrals
made by Executive to the Company's
Employee 401(k) Savings Plan and
the Replacement Plan, at the rate
in effect as of the date of
termination of employment (or, at
Executive's election, at the rate
in effect on any date during the
period beginning on the first day
of the month immediately prior to
the occurrence of events
constituting "Good Reason" or a
Change in Control), plus
(ii) an amount equal to the targeted
variable compensation of the
Executive for the year in which
such termination occurs (or, if
Executive is advised of the amount
of such targeted amount after
events specified herein which
constitute "Good Reason," or the
targeted amount constitutes "Good
Reason," at Executive's election,
the variable compensation paid for
any fiscal year for which Executive
has actually received a variable
compensation payment either in the
twelve (12) months before a Change
in Control or any fiscal year after
a Change in Control), plus
(2) two (2) times an amount equal to any
contributions the Company would have
otherwise made on Executive's behalf to the
Company's Employee Stock Purchase Plan and
the Company's Supplemental Employee Stock
Purchase Plan during the twelve (12) months
following Executive's date of termination,
had Executive's employment and/or the plan
or amounts contributed thereto by the
Company on Executive's behalf not been
reduced or terminated (or, at Executive's
election, two (2) times an amount equal to
any contributions the Company made on
Executive's behalf to such plans for any
plan year ending either in the twelve (12)
months before a Change in Control or any
fiscal year after a Change in Control), plus
(3) two (2) times an amount equal to any
employer matching contributions the Company
would have otherwise made on Executive's
behalf to the Company's Employee 401(k)
Savings Plan
- 2 -
and under the Company's Executive
Replacement Plan during the twelve (12)
months following Executive's date of
termination, had Executive's employment
and/or the amounts contributed thereto by
the Company on Executive's behalf not been
reduced or terminated, and assuming
Executive made elective deferrals to the
maximum extent permitted by Section 402(g)
of the Internal Revenue Code of 1986, as
amended (the "Code") (or, at Executive's
election, two (2) times an amount equal to
any employer matching contributions made on
Executive's behalf to such plan or plans for
any plan year ending either in the twelve
(12) months before a Change in Control or
any fiscal year after a Change in Control).
The Company shall make such lump sum payments within an administratively
reasonable period (but not to exceed sixty (60) days) after the Release
Effective Date (as defined in Section 4(b) hereof). Such payments shall be in
addition to any salary, variable compensation or benefits earned or accrued by
the Executive for services rendered prior to his termination.
(b) Executive Retirement Benefit. If Executive was a
participant in the Company's Executive Retirement Plan as of the day
before the Change in Control, the Executive shall be entitled to
benefits under such plan in accordance with and subject to its terms
and conditions; provided, however, the Executive shall be credited with
two (2) additional "Years of Service" as defined in such plan after the
date of termination of employment of the Executive. Such Retirement
Plan refers to a "Severance Agreement" and such shall be deemed to be
this Change in Control Agreement.
(c) Health, Accident, and Life Insurance and Disability
Benefits. The Executive shall be entitled to continue for two (2) years
following the date of termination, at the Company's cost, Executive's
coverage under the Company's group insurance, health and accident,
life, and disability benefit plans in which Executive was entitled to
participate immediately prior to the Change in Control provided that
continued participation is possible under the general terms and
provisions of such plans, programs, and arrangements; provided,
however, such continuation coverage shall run concurrently with any
COBRA continuation coverage otherwise available to the Executive under
the terms of such plans. In the event Executive's participation in any
such plan, program, or arrangement is barred, or any such plan,
program, or arrangement is discontinued or the benefits thereunder are
materially reduced, the Company shall arrange to provide Executive with
benefits substantially similar to those which Executive would have
otherwise been entitled to receive under such plans, programs, and
arrangements prior thereto at the Company's cost.
(d) Acceleration of Stock Options. The Company shall
accelerate and make immediately exercisable any and all unmatured stock
options (whether or not such stock options are otherwise exercisable)
which Executive then holds to acquire securities from the Company;
provided, however, that Executive shall have ninety (90) days after
such
- 3 -
termination of employment to exercise any outstanding stock options and
after such ninety (90) days any and all unexpired stock options shall
lapse; and, provided, further, however, any tax benefit provisions with
respect to any stock options shall apply to any and all unmatured stock
options (whether or not such stock options are otherwise exercisable).
If as a result of such acceleration of incentive stock options the
$100,000 limitation would be exceeded with respect to an optionee, such
incentive stock options shall be converted, as of the date such
incentive stock options become exercisable, to non-qualified stock
options to the extent necessary to comply with the $100,000 limitation
and the Company shall pay to such optionee an additional cash payment
equal to the tax benefit to be received by the Company attributable to
its federal income tax deduction resulting from the exercise of such
converted non-qualified stock options.
3. Definitions. When the initial letter of a word or phrase is
capitalized herein, such word or phrase shall have the meaning hereinafter set
forth:
(a) "Affiliated Employer" means:
(1) a member of a controlled group of
corporations (as defined in Code Section
414(b)) of which the Company is a member; or
(2) an unincorporated trade or business which is
under common control (as defined in Code
Section 414(c)) with the Company.
(b) "Change in Control" shall be deemed to have occurred if:
(1) the Company shall become a party to an
agreement of merger, consolidation, or other
reorganization pursuant to which the Company
will be a constituent corporation and the
Company will not be the surviving or
resulting corporation, or which will result
in less than 50% of the outstanding voting
securities of the surviving or resulting
entity being owned by the former
shareholders of the Company;
(2) the Company shall become a party to an
agreement providing for the sale or other
disposition by the Company of all or
substantially all of the assets of the
Company to any individual, partnership,
joint venture, association, trust,
corporation, or other entity which is not an
Affiliated Employer;
(3) the acquisition by any individual, entity,
or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended from time
to time) of an aggregate of more than 20% of
the combined voting power of the then
outstanding Class A Stock of the Company.
- 4 -
(c) "Committee" means the Compensation Committee of the Board
to which the Board has delegated authority to administer and interpret
this Agreement.
(d) "Company" means Lilly Industries, Inc. and any successors
to Lilly Industries, Inc.
(e) "Confidential Information" means any information not in
the public domain and not previously disclosed to the public by the
Board or management of the Company or an Affiliated Employer with
respect to the products, facilities, methods, trade secrets and other
intellectual property, systems, procedures, manuals, confidential
reports, product price lists, customer lists, financial information,
business plans, prospects, or opportunities of the Company or an
Affiliated Employer, or any information which the Company or an
Affiliated Employer has designated as Confidential Information.
(f) "Disability" means a disability as determined for purposes
of any group disability insurance policy of the Company in effect for
the Executive which qualifies the Executive for permanent disability
insurance payments in accordance with such policy. The Committee may
require subsequent proof of continued Disability, prior to the
sixty-fifth (65th) birthday of the Executive, at intervals of not less
than six (6) months.
(g) "Good Cause" means: (1) conviction for a felony or
conviction for any crime or offense lesser than a felony involving the
property of the Company or an Affiliated Employer, whether such
conviction occurs before or after termination of employment; (2)
engaging in conduct that has caused demonstrable and material injury to
the Company or an Affiliated Employer, monetary or otherwise; (3) gross
dereliction of duties or other gross misconduct and the failure to cure
such situation within thirty (30) days after receipt of notice thereof
from the Committee; or (4) the disclosure or use of Confidential
Information to a party unrelated to the Company or an Affiliated
Employer other than in the normal and ordinary performance of service
for the Company or an Affiliated Employer. The determination as to
whether Good Cause exists shall be made by the Committee in good faith.
Notwithstanding anything herein to the contrary, no act or failure to
act of the Executive shall be considered to be "Good Cause" under this
Agreement unless it shall be done, or omitted to be done, by Executive
not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company.
(h) "Good Reason" means, without Executive's written consent:
(1) a substantial change in Executive's status,
position or responsibilities which does not
represent a promotion from Executive's
status, position or responsibilities as in
effect immediately prior to the Change in
Control; the assignment to Executive of any
material duties or responsibilities which
are clearly inconsistent with
- 5 -
Executive's status, position or
responsibilities; or any removal of
Executive from, or failure to reappoint or
reelect Executive to, any of such positions,
except in connection with the termination of
Executive's employment for Disability,
death, Good Cause, or by Executive other
than for Good Reason;
(2) a reduction by the Company in Executive's
annual base salary as in effect on the date
hereof, or as the same may be increased from
time to time during the term of this
Agreement, or the Company's failure to
increase (within twelve (12) months of
Executive's last increase in annual base
salary) Executive's annual base salary after
a Change in Control in an amount which at
least equals, on a percentage basis, eighty
percent (80%) of the average percentage
increase in annual base salary for all
corporate officers of the Company effected
in the preceding twelve (12) months;
(3) a change by the Company in the methodology
of computing Executive's bonus under the
Variable Compensation Plan or the
termination of such Plan or its replacement
with a plan using a methodology less
favorable to Executive than that used for
any fiscal year for which Executive has
actually received a variable compensation
payment either in the last fiscal year
before a Change in Control or any fiscal
year after a Change in Control;
(4) if Executive performed his principal duties
at the Company's executive offices in
Indianapolis, Indiana immediately before the
Change in Control, the relocation of the
Company's principal executive offices to a
location outside of the Indianapolis,
Indiana metropolitan area (which consists of
all counties which are contiguous to Xxxxxx
County, Indiana), or if Executive performed
his principal duties at a location other
than the Company's executive offices in
Indianapolis, Indiana immediately before the
Change in Control, the Company's requiring
Executive to be based at any place more than
forty (40) miles distance from the location
which Executive performed his principal
duties prior to a Change in Control, except
for required travel on the Company's
business to an extent substantially
consistent with Executive's business travel
obligations at the time of a Change in
Control;
(5) the failure by the Company to continue to
provide Executive with benefits (including
any variable compensation program)
substantially similar to, or of
substantially the same aggregate value to
the Executive, as those enjoyed by all other
corporate officers of the
- 6 -
Company or any Affiliated Employer from time
to time either before or after a Change in
Control;
(6) the failure of the Company to obtain an
agreement satisfactory to Executive (which
satisfaction may not be unreasonably
withheld) from any successor or assign of
the Company to assume and agree to perform
this Agreement;
(7) any purported termination of Executive's
employment which is not effected pursuant to
a Notice of Termination satisfying the
requirements of subsection 4(i) hereof; or
(8) any request by the Company that Executive
participate in an unlawful act or take any
action constituting a breach of Executive's
professional standard of conduct.
Notwithstanding anything in this subsection to the contrary, Executive's right
to terminate his employment for Good Reason pursuant to this subsection shall
not be affected by Executive's incapacity due to physical or mental illness.
(i) "Notice of Termination" means a notice which shall
indicate the date on which Executive's employment shall terminate and
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 Executive's employment
under the provision so indicated.
4. Conditions to Payments and Benefits.
(a) Internal Revenue Code Limits and Other Limits.
(1) Notwithstanding anything in this Agreement
to the contrary, in the event that Ernst &
Young or any other independent auditor
substituted for Ernst & Young pursuant to an
agreement in writing by and between the
Company and Executive (the "Auditor")
determines that any payment by the Company
to or for the benefit of Executive, whether
paid or payable pursuant to the terms of
this Agreement or otherwise (a "Payment"),
would be an "excess parachute payment"
within the meaning of Section 280G of the
Code, then the Company shall pay an
additional amount of money to the Executive
that will equal (based on the Executive's
good faith representations of the
Executive's income tax position for the year
of payment hereunder) the sum of (i) all
excise tax imposed on Executive by Section
4999 of the Code and (ii) all additional
state and federal income taxes
- 7 -
attributable to the additional payments to
the Executive pursuant to this Section
4(a)(1), including all state and federal
income taxes on the additional income tax
payments hereunder ("Additional Payment").
(2) If the Auditor determines that any Payment
would be such an "excess parachute payment"
because of Section 280G of the Code, then
the Company shall promptly give Executive
notice to that effect and a copy of the
detailed calculation thereof and the
Executive shall provide in writing within
ten (10) days of Executive's receipt of such
notice, a good faith representation of the
Executive's income tax position so that such
Additional Payment may be calculated. All
determinations made by the Auditor under
this Section 4 shall be binding upon the
Company and Executive and shall be made
within sixty (60) calendar days of
Executive's termination of employment.
Following such determination and the notices
hereunder and subject to the other
conditions set forth in this Section 4, the
Company shall pay to or distribute to, or
for the benefit of, Executive such amounts
as are then due to Executive under this
Agreement in the manner identified in
Section 2 and this Section 4 of this
Agreement, and shall promptly pay to or
distribute for the benefit of Executive in
the future such amounts as become due to
Executive under this Agreement.
(3) As a result of the uncertainty in the
application of Section 280G of the Code at
the time of the initial determination by the
Auditor hereunder, it is possible that
Additional Payment will have been made by
the Company which should not have been made
(an "Overpayment") or that an increase in
the Additional Payment which will not have
been made by the Company could have been
made (an "Underpayment"), consistent in each
case with the calculation of such excess
parachute payment hereunder. In the event
that the Auditor, based upon the assertion
of a deficiency by the Internal Revenue
Service against the Company or Executive
which the Auditor believes has a high
probability of success, determines that an
Overpayment has been made, such Overpayment
shall be treated for all purposes as a loan
to Executive which Executive shall repay to
the Company, together with interest at the
applicable federal rate provided for in
Section 7872(f)(2)(A) of the Code. In the
event that the Auditor, based upon
controlling precedent, determines that an
Underpayment has occurred, such Underpayment
shall promptly be paid by the Company to or
for the benefit of Executive, together with
interest at the applicable federal rate
provided for in Section 7872(f)(2)(A) of the
Code.
- 8 -
(b) Release of Claims. As a condition of the Executive
receiving from the Company the payments and benefits provided for in
this Agreement, which payments and benefits the Executive is not
otherwise entitled to receive, the Executive understands and agrees
that he will be required to execute a release of all claims against the
Company (arising out of matters occurring on or prior to such
termination) in the form attached hereto as Exhibit 1 (the "Release").
Executive acknowledges that he has been advised in writing to consult
with an attorney prior to executing the Release, and the Executive
agrees that he will consult with his attorney prior to executing the
Release. The Executive and the Company agree that Executive has a
period of twenty-one (21) days within which to consider this Release,
and has a period of seven (7) days following the execution of the
Release within which to revoke the Release. The parties also
acknowledge and agree that the Release shall not be effective or
enforceable until the seven (7) day revocation period expires. The date
on which this seven (7) day period expires shall be the effective date
of the Release (the "Release Effective Date").
THE EXECUTIVE AGREES THAT EXECUTION AND DELIVERY TO THE
COMPANY OF THE RELEASE REQUESTED BY THE COMPANY, AND THE PASSAGE OF ALL
NECESSARY WAITING PERIODS IN CONNECTION THEREWITH, SHALL BE A CONDITION
TO THE RECEIPT OF ANY PAYMENT OR BENEFITS TO BE PROVIDED BY THE COMPANY
UNDER THIS AGREEMENT. IF THE EXECUTIVE ELECTS NOT TO EXECUTE AND
DELIVER TO THE COMPANY THE RELEASE REQUESTED BY THE COMPANY, THE
EXECUTIVE SHALL NOT BE ENTITLED TO ANY PAYMENTS OR BENEFITS UNDER THIS
AGREEMENT AND ALL SUCH PAYMENTS AND BENEFITS SHALL BE FORFEITED.
5. Additional Provisions.
(a) Enforcement of Agreement. The Company is aware that upon
the occurrence of a Change in Control, the Board or a shareholder of
the Company may then cause or attempt to cause the Company to refuse to
comply with its obligations under this Agreement, or may cause or
attempt to cause the Company to institute, or may institute, litigation
seeking to have this Agreement declared unenforceable, or may take or
attempt to take other action to deny Executive the benefits intended
under this Agreement. In these circumstances, the purpose of this
Agreement could be frustrated. It is the intent of the Company that
Executive not be required to incur the expenses associated with the
enforcement of Executive's rights under this Agreement by litigation or
other legal action, nor that Executive be bound to negotiate any
settlement of Executive's rights hereunder, because the cost and
expense of such legal action or settlement would substantially detract
from the benefits intended to be extended to Executive hereunder.
Accordingly, if following a Change in Control it should appear to
Executive that the Company has failed to comply with any of its
obligations under this Agreement or in the event that the Company or
any other person (including the Internal Revenue Service) takes any
action to declare this Agreement void or unenforceable, or institutes
any litigation or other legal action designed to deny, diminish or to
recover from
- 9 -
Executive the benefits entitled to be provided to Executive hereunder,
and Executive has complied with all of his obligations under this
Agreement, the Company irrevocably authorizes Executive from time to
time to retain counsel of Executive's choice, at the expense of the
Company as provided in this subsection, to represent Executive in
connection with the initiation or defense of any litigation or other
legal action, whether such action is by or against the Company or any
director, officer, shareholder, or other person affiliated with the
Company, in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to Executive entering into an
attorney-client relationship with such counsel, and in that connection
the Company and Executive agree that a confidential relationship shall
exist between Executive and such counsel. The reasonable fees and
expenses of counsel selected from time to time by Executive as herein
above provided shall be paid or reimbursed to Executive by the Company
on a regular, periodic basis upon presentation by Executive of a
statement or statements prepared by such counsel in accordance with its
customary practices. Any legal expenses incurred by the Company by
reason of any dispute between the parties as to enforceability of or
the terms contained in this Agreement, notwithstanding the outcome of
any such dispute, shall be the sole responsibility of the Company, and
the Company shall not take any action to seek reimbursement from
Executive for such expenses.
(b) Severance Pay; No Duty to Mitigate. The amounts payable to
Executive under this Agreement shall not be treated as damages but as
severance compensation to which Executive is entitled by reason of
termination of Executive's employment in the circumstances contemplated
by this Agreement. The Company shall not be entitled to set off against
the amounts payable to Executive any amounts earned by Executive in
other employment after termination of Executive's employment with the
Company, or any amounts which might have been earned by Executive in
other employment, had Executive sought such other employment, or any
set-off, counterclaim, recoupment, defense, or any other claim, right,
or action which the Company may have against Executive or others.
(c) Notice of Termination. Any purported termination of
employment by the Company or by Executive shall be communicated by
written Notice of Termination to the other party hereto in accordance
with subsection 3(i) hereof and shall provide at least ten (10)
business days notice prior to the date of termination. Solely for
purposes of this Agreement, no such purported termination shall be
effective without such Notice of Termination.
(d) Assignment. This Agreement is personal to Executive and
without the prior written consent of the Company shall not be
assignable by Executive other than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by Executive's legal representatives. This Agreement shall
inure to the benefit of and be binding upon the Company and its
successors and assigns. The Company shall
- 10 -
assign this Agreement to any corporation or other business entity
succeeding to substantially all of the business and assets of the
Company by merger, consolidation, sale of assets, or otherwise and
shall obtain the assumption of this Agreement by such successor.
(e) Termination. The Board shall have the right to terminate
this Agreement, for any reason, upon twelve (12) months' written notice
to the Executive prior to a Change in Control.
(f) Amendment. The Board shall have the right to amend this
Agreement, for any reason, upon twelve (12) months' written notice to
the Executive prior to a Change in Control.
(g) Governing Law. This Agreement shall be governed by and
subject to the laws of the State of Indiana.
(h) Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other
provisions, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provision had not been contained herein.
(i) Captions. The captions in this Agreement are for
convenience and identification purposes only, are not an integral part
of this Agreement, and are not to be considered in the interpretation
of any part hereof.
(j) Source of Payment. For purposes of this Agreement,
employment and compensation paid by any direct or indirect subsidiary
of the Company will be deemed to be employment and compensation paid by
the Company.
(k) Notices. Except as specifically set forth in this
Agreement, all notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered in
person or sent by registered or certified mail, postage prepaid,
addressed as set forth above, or to such other address as shall be
furnished in writing by any party to the other.
(l) Waivers. The Executive's or the Company's failure to
insist upon strict compliance with any provision of this Agreement or
the failure to assert any right the Executive or the Company may have
hereunder, including, without limitation, the right of Executive to
terminate Executive's employment for Good Reason, shall not be deemed
to be a waiver of such provision or right, or of any other provision or
right of this Agreement.
(m) Non-exclusivity of Right. Nothing in this Agreement shall
prevent or limit Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
Affiliated Employers and for which Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as Executive may
have
- 11 -
under any contract or agreement with the Company or any Affiliated
Employer. Amounts which are vested benefits or which Executive is
otherwise entitled to receive under any plan, policy, practice or
program of, or any contract or agreement with, the Company or any
Affiliated Employer at or subsequent to the date of termination shall
be payable in accordance with such plan, policy, practice, program,
contract or agreement except as explicitly modified by this Agreement;
provided, however, this Agreement shall be the sole source of any and
all severance benefits that the Executive is entitled to receive, and
the Executive will not be entitled to participate in, or receive
benefits from, any other severance plan or severance policy or program
of the Company, and the Executive shall not be entitled to any
severance benefits other than as identified in this Agreement and the
Executive hereby waives any and all rights to any such other severance
benefits.
(n) Integration and Counterparts. This Agreement supercedes
all prior agreements between the parties with respect to the matters
covered herein. This Agreement may be signed in any number of
counterparts, each of which shall be deemed to be the original.
IN WITNESS WHEREOF, the Executive has executed and, pursuant to the
authorization from its Board, the Company has caused to be executed in its name
and on its behalf, all as of the day and year first above written.
"EXECUTIVE"
/s/ Xxx X. Xxxxxxx
-----------------------------------------------------
Xxx X. Xxxxxxx
"LILLY INDUSTRIES, INC."
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------------
Chairman of the Board
/s/ Van X. Xxxxx
-----------------------------------------------------
Chairman of the Compensation Committee
- 12 -
RELEASE OF ALL CLAIMS
In consideration of receiving from LILLY INDUSTRIES, INC. (the
"Company"), the payments and benefits provided for in the Change in Control
Agreement, dated as of ______________, (the "Change in Control Agreement")
between the Company and the undersigned (the "Executive"), which payments and
benefits the Executive was not otherwise entitled to receive, the Executive
unconditionally releases and discharges the Company from any and all claims,
causes of action, demands, lawsuits or other charges whatsoever, known or
unknown, directly or indirectly related to the Executive's employment with the
Company, except for a breach of the Company's obligations under the Change in
Control Agreement. The claims or actions released herein include, but are not
limited to, those based on allegations of wrongful discharge, breach of
contract, promissory estoppel, defamation, infliction of emotional distress, and
those alleging discrimination on the basis of race, color, sex, religion,
national origin, age, disability, or any other basis, including, but not limited
to, any claim or action under Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act of 1967, the Rehabilitation Act of 1973, the
Americans with Disabilities Act of 1990, the Equal Pay Act of 1963, the Civil
Rights Act of 1991, the Employee Retirement Income Security Act of 1974, or any
other federal, state, or local law, rule, ordinance, or regulation as presently
enacted or adopted and as each may hereafter be amended; PROVIDED, HOWEVER, THAT
THE EXECUTIVE DOES NOT WAIVE RIGHTS OR CLAIMS THAT MAY ARISE AFTER THE DATE OF
THIS RELEASE, OR THAT ARISE EITHER BEFORE OR AFTER THE DATE OF THIS RELEASE, OUT
OF CLAIMS FOR BENEFITS UNDER ANY EMPLOYEE PENSION, WELFARE, OR BENEFIT PLAN OR
PROGRAM OF THE COMPANY OR AS A RESULT OF THE COMPANY'S BREACH OF THE CHANGE IN
CONTROL AGREEMENT.
With respect to any claim that the Executive might have under the Age
Discrimination in Employment Act of 1967, as amended:
(i) The Executive's waiver of said rights or claims under the Age
Discrimination in Employment Act of 1967 is in exchange for the consideration
reflected in this Release;
(ii) The Executive acknowledges that he has been advised in writing to
consult with an attorney prior to executing this Release and that he has
consulted with his attorney prior to executing this Release;
(iii) The Executive acknowledges that he has been given a period of at
least twenty-one (21) days within which to consider this Release; and
(iv) The Executive and the Company agree that the Executive has a
period of seven (7) days following the execution of this Release within which to
revoke the Release.
Exhibit 1
The parties also acknowledge and agree that this Release shall not be effective
or enforceable until the seven (7) day revocation period expires. The date on
which this seven (7) day period expires shall be the effective date of this
Release.
The Executive further agrees, in consideration of receiving the
payments and benefits provided for in the Change in Control Agreement, not to
initiate or instigate any claims, causes of action or demands against the
Company in any way directly or indirectly related to the Executive's employment
with the Company or the termination of his employment except for a breach of the
Company's obligations under the Change in Control Agreement, and the Executive
agrees to reimburse, defend, and hold harmless the Company against any such
claims, causes of action or demands.
The Executive agrees that he or she will not seek, nor be entitled to,
employment with the Company, and hereby waives any future right to consideration
for employment by the Company. The Executive further agrees that if he or she
seeks employment with the Company in violation of this Agreement and is hired,
the Company shall have the right to immediately and unconditionally terminate
his or her employment without any reason and without recourse by the Executive.
The Executive understands that as used in this Release, the "Company"
includes its past, present and future officers, directors, trustees,
shareholders, parent corporations, employees, agents, subsidiaries, affiliates,
distributors, successors, and assigns, any and all employee benefit plans (and
any fiduciary of such plans) sponsored by the Company, and any other persons
related to the Company.
Xxx X. Xxxxxxx
Date
WITNESS:
Exhibit 1
