EXHIBIT (10)(d)
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EMPLOYMENT AGREEMENT
AGREEMENT made and entered into the 7th day of May, 2001, and amended
and restated as of December 1, 2001, by and between THE XXXXXXXX AND XXXXXXXX
COMPANY, a corporation existing under the laws of the State of Ohio (hereinafter
referred to as the "Employer"), and Xxxx X. Xxxxxxx (hereinafter referred to as
"Employee")
WITNESSETH:
WHEREAS, Employee is currently an employee of the Employer; and
WHEREAS, Employer considers Employee a key member of the management
team of Employer and in order to induce and encourage Employee to remain with
Employer, Employer desires to provide Employee with additional benefits of
employment as set forth herein; and
WHEREAS, the Employer also recognizes that a major change in the
control of the Employer would be of significant concern to Employee; and
WHEREAS, the parties hereto desire to set forth their mutual agreement
regarding the terms of Employee's employment under certain specified
circumstances in order to induce and encourage Employee to remain with Employer
and to xxxxxx and encourage continued attention and dedication to Employee's
assigned duties in the event of a major change in the control of the Employer.
NOW, THEREFORE, in consideration of the foregoing premises, Employee's
continued employment for any period after execution of this Agreement, and the
mutual promises set forth herein, the parties hereby agree as follows:
1. DEFINITIONS.
For purposes of this Agreement:
(a) "Base Compensation" shall mean the then-current annual base
salary (exclusive of Bonuses) of Employee, as the same may be fixed from time to
time by the Board of Directors or its Compensation Committee or, if applicable,
by the appropriate executive officer of Employer.
(b) "Bonuses" shall mean bonus payments earned by Employee
under Employer's Incentive Compensation Plans and under any future bonus or
incentive compensation plans of Employer for its executive officers in which
Employee participates.
(c) "Change in Control" shall mean the occurrence of any of
the following events:
(i) Any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT") (other than Xxxxxxx X.
Xxxxx, Xx., his children or his grandchildren,
Employer, any trustee or other fiduciary holding
securities under an employee benefit plan of Employer
or any company owned, directly or indirectly, by the
shareholders of Employer in substantially the same
proportions as their ownership of stock of Employer),
who is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of Employer representing
twenty percent (20%) or more of the combined voting
power of Employer's then outstanding securities;
(ii) during any period of two consecutive years (not
including any period prior to the execution of this
Plan), individuals who at the beginning of such
period constitute the Board, and any new director
(other than a director designated by a person who has
entered into an agreement with Employer to effect a
transaction described in clause (i), (iii) or (iv) of
this Section) who election by Employer's shareholders
was approved by a vote of at least two-thirds (2/3)
of the directors at the beginning of the period or
whose election or nomination for election was
previously so approved cease for any reason to
constitute at least a majority thereof;
(iii) the consummation of a merger or consolidation of
Employer or any direct or indirect subsidiary of
Employer with any other corporation, other than (1) a
merger or consolidation which would result in the
voting securities of Employer outstanding immediately
prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by
being converted into voting securities of the
surviving entity or any parent thereof) more than 50%
of the combined voting power of the voting securities
of Employer or such surviving entity or parent
thereof outstanding immediately after such merger or
consolidation or (2) a merger or consolidation
effected to implement a recapitalization of Employer
(or similar transaction) in which no "person" (as
hereinabove defined) is or becomes the beneficial
owner, directly or indirectly, of securities of
Employer (not including in the securities
beneficially owned by such person any securities
acquired directly from Employer or its affiliates
other than in connection with the securities acquired
directly from Employer or its affiliates other than
in connection with the acquisition by Employer or its
affiliates of a business) representing twenty percent
(20%) or more of the combined voting power of
Employer's then outstanding securities; or
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(iv) the shareholders of Employer approve a plan of
liquidation, dissolution or winding up of Employer or
an agreement for the sale or disposition by Employer
of all or substantially all of Employer's assets.
(d) "Disability" or "Disabled" shall mean the inability of
Employee, because of any mental or physical illness or incapacity, to perform
substantially the duties of his employment with the Employer as determined under
the Employer's long-term disability program.
(e) "Discharge For Cause" shall be construed to have occurred
whenever occasioned by reason of felonious acts on the part of Employee, actions
by Employee involving serious moral turpitude or his misconduct in such manner
as to bring substantial and material discredit upon Employer, following the
giving of thirty (30) days' written notice to Employee specifying the respect in
which Employer claims Employee has violated this provision and the failure,
inability or unwillingness of Employee to remedy the situation to the
satisfaction of Employer within said thirty-day period. In establishing whether
a Discharge For Cause shall have occurred, the standard for judgment shall be
the level of conduct by Employee and by other comparably situated executive
officers prior to the alleged improper activity of Employee for which the
Discharge For Cause has been made.
(f) "Escrow Agreement" shall mean the agreement entered into
simultaneously herewith between Employer and Bank One Trust Company, NA, a copy
of which is attached hereto and made a part hereof as Exhibit A.
(g) "Escrow Agent" shall mean Bank One Trust Company, NA.
(h) "Escrow Amount" shall mean the amounts placed in escrow by
Employer pursuant to subsection (a) of Section 2 of this Agreement.
(i) "Escrow Funding Event" shall mean the occurrence of any of
the following events:
(i) Class A Common Shares of Employer have been acquired
other than directly from Employer in exchange for
cash or property by any person (other than Xxxxxxx
X. Xxxxx, Xx., his children or his grandchildren,
Employer, any trustee or other fiduciary holding
securities under an employee benefit plan of
Employer, or any company owned directly or
indirectly by the shareholders of Employer in
substantially the same proportions as their
ownership of the stock of Employer) who either
thereby becomes the owner of more than nine and
one-half percent (9.5%) of Employer's outstanding
Class A Common Shares, or having directly or
indirectly become the owner of more than five
percent (5%) of Employer's Class A Common Shares
either alone or in conjunction with another person
has expressed an intent to continue acquiring
Employer's outstanding Class A Common Shares so as
to become
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thereby the owner of more than nine and one-half
percent (9.5%) of such stock either directly or
indirectly;
(ii) Any person (other than Xxxxxxx X. Xxxxx, Xx., his
children or grandchildren, Employer any trustee or
other fiduciary holding securities under an employee
benefit plan of Employer, or any company owned
directly or indirectly by the shareholders of
Employer in substantially the same proportions as
their ownership of the stock of Employer) has made a
tender offer for, or a request for invitations for
tenders of, Class A Common Shares of Employer;
(iii) Any person forwards or causes to be forwarded to
shareholders of Employer proxy statement(s) in any
period of twenty-four (24) consecutive months,
soliciting proxies, to elect to the Board of
Directors of Employer two (2) or more candidates who
were not nominated as candidates in proxy statements
forwarded to shareholders during such period by the
Board of Directors of Employer; or
(iv) The Board of Directors of the Employer adopts a
resolution to the effect that, for purposes of this
Agreement, an Escrow Funding Event has occurred.
(j) "Retirement Benefits" shall mean the benefits payable to
Employee under the Employer's Retirement Benefit Plans.
(i) "Retirement Benefit Plans" shall mean:
(ii) The Officers' Supplemental Plan;
(iii) The Non-Qualified Deferred Compensation Plan;
(iv) The Officers' Salary Continuation Plan; and
(v) The Retirement Plan,
as each of the foregoing may be amended, supplemented or succeeded by another
plan from time to time.
2. PAYMENT OF RETIREMENT BENEFITS.
(a) Upon the happening of any of the events set forth below at any
time after the date hereof, Employee shall be entitled to receive
Retirement Benefits payable in accordance with Employer's
Retirement Benefit Plans in which Employee then participates. If
such event occurs at any time from the date hereof through
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December 31, 2002, the Retirement Benefits shall be calculated as
if the Employee was age 58 rather than actual age at the time of
the event. If such event occurs at any time from January 1, 2003
through May 31, 2012, the Retirement Benefits shall be calculated
as if the Employee was age 62 rather than actual age at the time
of the event; provided, however, that the portion of Employee's
Retirement Benefits under the Employer's Retirement Plan (as
referred to in Section 1(l)(iv) above) shall be calculated without
making any age adjustment. Employee shall be entitled to the
Retirement Benefits in the event any of the following occurs:
(i) the Employee's death;
(ii) the Employee's Disability;
(iii) the termination of Employee's employment by Employer at any
time and for any reason unless such termination is a
Discharge for Cause;
(iv) if, prior to a Change in Control, Employee voluntarily
terminates his employment with Employer upon giving the
Employer at least 180 days written notice; and
(v) if, after a Change in Control, Employee voluntarily
terminates his employment upon the giving of at least 180
days written notice for reasons other than as set forth in
subsection (a) of Section 5 of this Agreement, or his
employment is terminated pursuant to subsection (b)(i) of
Section 5 of this Agreement.
(b) Employer and Employee agree that the Retirement Benefits provided
hereunder shall be in lieu of all other benefits to which Employee
may then be entitled upon the happening of any of the events set
forth in subsections (i) through (v) of Section 2(a) of this
Agreement, except that Employee shall in all events be entitled
to:
(i) those benefits required by law;
(ii) retiree medical coverage to the extent and on the same
terms and conditions then being provided by Employer;
(iii) any amounts necessary to replace up to age 62 any "Social
Security" payments that are taken into consideration (but
not yet paid to him due to his age at the time Retirement
Benefits hereunder are being paid) for purposes of
calculating his Retirement Benefits; and
(iv) in the event of a Change in Control, Employee shall be
entitled to the Retirement Benefits and the benefits set
forth in Section 5 of this Agreement.
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Employee shall also be entitled to exercise all then outstanding stock options
in Employer to the extent said options are exercisable in accordance with the
terms thereof; provided, however, that upon an event giving rise to the payment
of Retirement Benefits hereunder, Employee shall for purposes of such options be
considered retired and have the right to exercise such options as fully as if he
had remained continuously employed by the Employer.
3. STOCK OPTIONS AWARD.
Effective December 28, 2000, Employer hereby awards Employee
non-qualified stock options consisting of 90,000 shares of the Class A Common
Stock of Employer at the option price of $20.06 per share. The Stock Option
Agreement to be used for this option is attached hereto as EXHIBIT B and made a
part hereof.
4. PAYMENTS INTO ESCROW.
(a) Upon the occurrence of an Escrow Funding Event within five (5)
years after the date of this Agreement, Employer shall pay into an escrow
account at the Escrow Agent an amount equal to two and ninety-nine one
hundredths (2.99) times the sum of the (i) higher of Employee's annual Base
Compensation in effect immediately prior to the occurrence of the event or
circumstance upon which such termination of employment is based or in effect
immediately prior to the Change in Control, and (ii) the average of Employee's
Bonuses during the three (3) calendar years immediately preceding the year in
which the date of termination occurs. Subsequent to the delivery to the Escrow
Agent of the Escrow Amount, Employer shall, in the event that either Employee's
Base Compensation is increased (or decreased) or he receives a Bonus that
affects the amount described in this subsection, unless the Escrow Amount shall
theretofore have been released pursuant to subsection (b) of this Section,
recalculate the Escrow Amount as of the date such change in Base Compensation or
receipt of Bonus occurs, treating the Escrow Funding Event as having occurred on
such date. If the amount so calculated exceeds the fair market value of the
Escrow Amount, Employer shall promptly (and in no event later than seven (7)
days from such date) pay to the Escrow Agent an amount in cash (or marketable
securities or any combination thereof) equal to such excess. If the Escrow
Amount so calculated is less than the fair market value of the Escrow Amount
then held in the escrow account, the Escrow Agent, upon receipt of a written
request from Employer, shall distribute to Employer such difference in cash;
provided, however, that this sentence shall not apply after the occurrence of a
Change in Control. The Escrow Amount shall be governed by the terms and
conditions of this Agreement and the Escrow Agreement.
(b) Unless the parties otherwise agree, the Employer may withdraw the
Escrow Amount when and only when two (2) years have expired from the date of
deposit and no proper demand pursuant to subsection (b) (i) of Section 5 of this
Agreement has been made during that time, or when the conditions requiring the
deposit have ceased to exist for a period of ninety (90) days without a demand
right having been created, or when Employee's right to a payment under this
Agreement has been forfeited, whichever occurs first. If, before the expiration
of such periods or forfeiture, there shall occur another Escrow Funding Event,
the Employer will not be required to make an additional deposit, but the two (2)
year period shall
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then be measured from the date of the last such event. Notwithstanding a deposit
with the Escrow Agent pursuant to subsection (a) of this Section, Employee shall
continue to be entitled to receive all of the normal and usual benefits from
Employer until a termination of employment shall occur.
(c) The Employer shall pay the charges of the Escrow Agent for its
services under the Escrow Agreement, and the Employer will be entitled to any
interest or other income arising from the date of the deposit of the Escrow
Amount until all payments have been made under the Escrow Agreement to Employee.
All interest or other income arising from the Escrow Amount deposited with the
Escrow Agent shall be paid monthly to Employer.
(d) In the event that, following the creation of a demand right
pursuant to Section 5 of this Agreement, Employee incurs any costs or expenses,
including attorneys' fees, in the enforcement of rights under this Agreement or,
subject to the limitations set forth in subsection (b) of Section 2 of this
Agreement, under any plan for the benefit of employees of the Employer,
including without limitation the stock option plan, pension plans, payroll-based
stock ownership plan, tax deferred savings and protection plan, bonus
arrangements, supplemental pension plan, deferred compensation agreements,
incentive compensation plans, and life insurance and compensation program, then,
unless the Employer or the consolidated, surviving or transferee entity in the
event of a consolidation, merger or sale of assets, is wholly successful in
defending against the enforcement of such rights, the Employer, or such
consolidated, surviving or transferee entity, shall promptly pay to Employee all
such costs and expenses.
5. EMPLOYMENT TERMS AND SEVERANCE BENEFITS AFTER CHANGE IN CONTROL.
(a) After a Change in Control has occurred: (i) The Employer shall not
reduce Employee's Base Compensation below the amount of such Base Compensation
in effect immediately preceding the Change in Control without Employee's written
consent; (ii) The Employer shall continue to provide Employee with fringe
benefits (including bonuses, vacation, health and disability insurance, etc.) at
least equivalent to those of other similarly situated executive officers of the
Employer; (iii) Employee shall not be required by the Employer to perform duties
or services which differ significantly from those performed by him prior to the
Change in Control, or which are not ordinarily and generally performed by a
similarly situated executive of a corporation; (iv) The nature of the duties or
services which the Employer requires him to perform shall not necessitate
absence overnight from his place of residence on the effective date hereof,
because of travel involving the business affairs of the Employer for more than
ninety (90) days during any period of twelve (12) consecutive months.
(b) (i) If the Employer terminates Employee's employment or if
Employee terminates his employment with Employer for any of
the reasons specified in subsection (a) of this Section within
the twenty-four (24) month period following the date of a
Change in Control, the Escrow Agent upon written demand from
Employee shall pay promptly to the Employee the Escrow Amount
in one (1) lump sum in cash.
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(ii) Employee shall also be entitled to the following benefits
commencing as of the date of the payment of the Escrow Amount
to Employee:
A. During the period expiring on the earlier of Employee
securing other employment or twenty-four (24) months
from date of payment of the Escrow Amount (or such
longer period as required by law) to continued
coverage under the Employer's sponsored medical
benefits program in existence on such date of
payment, or, if such continued coverage is barred,
Employer shall provide equivalent medical benefit
coverage through the purchase of insurance or
otherwise.
B. In addition to the Retirement Benefits being
calculated pursuant to subsection (a) of Section 2 of
this Agreement, for purposes of determining
Employee's benefits under Employer's Supplemental
Plan, Employee shall receive credit toward his Years
of Service under the Supplemental Plan for the two
(2) year period following his termination of
employment. In addition, with respect to the two (2)
year period following such termination of employment,
Employee's Base Compensation shall be deemed to be
increased by the annual economic range adjustment for
Employer's salaried employees announced in October of
each year (or, if there is no such announced economic
range adjustment in a given year, by an assumed five
percent (5%) increase for that year) in order to
calculate his highest earnings during five (5)
consecutive years out of the last ten (10) years
prior to retirement under the Supplemental Plan.
C. Employee shall be reimbursed for up to $20,000 for
outplacement fees if he chooses to seek other
employment following his termination of employment
with Employer.
(c) Notwithstanding anything to the contrary in this Section, Employee
shall not be entitled to any payments pursuant to subsection (b) (i) of this
Section if Employee dies prior to making a demand for payment pursuant to
subsection (b) (i) of this Section, or if the Employer terminates Employee's
employment because of a Discharge for Cause, because of Employee's Disability,
or if Employee voluntarily terminates his employment with the Employer for
reasons other than as set forth in subsection (a) of this Section; provided,
however, Employee shall continue to be entitled to receive the Retirement
Benefits and to have his Retirement Benefits calculated pursuant to subsection
(a) of Section 2 of this Agreement in the event, prior to making a demand for
payment pursuant to subsection (b)(i) of this Section, he dies, becomes Disabled
or voluntarily terminates his employment upon giving at least 180 days written
notice for reasons other than as set forth in subsection (a) of this Section.
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(d) Employee shall not be required to mitigate damages with respect to
the amount of any payments provided for in subsection (b) of this Section by
seeking other employment or otherwise. Employee's sole remedy under this
Agreement for a breach by the Employer of subsection (a) of this Section shall
be to terminate employment and receive any payments to which he is entitled
under Section 2 of this Agreement and subsection (b) of this Section.
(e) Should Employee disagree that his termination was due to a
Discharge For Cause, the question shall, within thirty (30) days after the
termination of employment, be submitted to arbitration by three (3) arbitrators,
one of whom shall be selected by Employer, another of whom shall be selected by
Employee, and the third of whom shall be selected by the two arbitrators so
appointed. The arbitration shall take place in Dayton, Ohio in accordance with
the then rules of the American Arbitration Association. The decision of these
arbitrators on the question shall be final and conclusive upon Employer and upon
Employee and his wife or widow, personal representatives, designated
beneficiaries and heirs, and shall be enforceable in any court having competent
jurisdiction thereof. A termination which is eventually determined under
arbitration to have been a Discharge For Cause, or no arbitration having been
requested and the termination being one which Employer has determined was a
Discharge For Cause, shall extinguish any and all liability of Employer under
this Agreement from and after the date of the termination of employment.
6. CONFIDENTIALITY; ENFORCEMENT.
(a) Employee shall keep secret and inviolate all knowledge or
information of a confidential nature (which is not then nor later, through no
breach of this Agreement, in the public domain), including all unpublished
matters related to, without limitation thereof, the business, properties,
accounts, books and records, research and development information, processes,
procedures, products, know-how, trade secrets, memoranda, devices, suppliers,
and customers of Employer which he may now know or hereafter come to know as a
result of his affiliation in business with Employer.
(b) All copyrights, improvements, discoveries and inventions and all
claims, interests and rights thereto relating to any part of the business of
Employer conceived, developed or made by Employee, either alone or with others,
during the period of his employment, and whether conceived, developed or made
during his regular working hours or at any other time during such period, shall
be and are the sole property of Employer and Employee hereby assigns to Employer
all right, title and interest in and to such copyrights, improvements,
discoveries and inventions. Further, Employee will, at any time in the future
upon Employer's request, execute specific assignments of any said copyrights,
improvements, discoveries and inventions as well as execute all documents and
perform all lawful acts which Employer deems necessary or advisable to vest full
ownership thereof in Employer, to register same in the name of Employer or its
designee or otherwise to provide legal protection for Employer's ownership
interests therein.
(c) Any violation of this Section 6 by Employee may be enforced by
Employer by specific performance or appropriate injunctive relief in any court
of competent
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jurisdiction. Any other dispute or controversy arising under this Agreement
shall be settled by arbitration in the manner set forth in subsection (e) of
Section 5 of this Agreement.
7. UNFUNDED AGREEMENT.
The Employer's obligations under this Agreement are unfunded other than
from the date of deposit of the Escrow Amount, but the Employer reserves the
right to provide for its liability under this Agreement in any manner it deems
advisable, including the purchasing of such assets as it may deem necessary or
proper. Any asset so purchased by the Employer shall be the sole property of the
Employer and shall not be deemed to provide funding of the Employer's
obligations under this Agreement. Any other provision in this Agreement to the
contrary notwithstanding, Employee shall be only an unsecured general creditor
of the Employer with respect to all payments to be made under the terms of this
Agreement and shall have no claim, equity, interest, or right in or to any
specific assets or funds of the Employer as security for said payments other
than the Escrow Amount.
8. NON-ASSIGNABLE RIGHTS.
Employee shall not have the right to anticipate or commute with any
third party, or to sell, assign, transfer, or otherwise alienate or convey the
right to receive any payments hereunder, whether by his voluntary or involuntary
act, or by operation of law and, in particular, that any payments due hereunder
shall not be subject to attachment or garnishment or any other legal proceedings
by any creditor, or be in any way responsible for the debts or liabilities of
Employee. Should any attempt be made to reach any payments hereunder by other
than Employee, the Escrow Agent shall make each payment as it becomes due to
such person or persons, for the sole benefit of Employee upon written direction
from Employee.
9. FACILITY OF PAYMENT; LIMITATION.
In the event of a Disability of Employee after Employee has made demand
hereunder, such payments as may thereafter be due shall be paid to such person
or persons for the benefit of Employee as directed by Employee. In the event of
Employee's death after he has made demand, the Escrow Agent shall pay such
amounts as thereafter are due to such beneficiary or beneficiaries as Employee
shall have designated in writing on Exhibit C attached hereto and made a part
hereof, or failing such writing, to his estate. No liability shall accrue to the
Employer or Escrow Agent for any alleged payment to an improper person or
representative if so made after such reasonable investigation and the Employer
and Escrow Agent shall have no responsibility to see to the proper application
of such payments.
Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by Employee in connection
with a Change in Control or the termination of Employee's employment (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with Employer, any person whose actions result in a Change in Control
or any person affiliated with Employer or such person)(all such payments and
benefits, including the Escrow Amount, being hereinafter called "Total
Payments") would be subject (in whole or part), to an excise tax pursuant to
Sections 280G and
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4999 of the Internal Revenue Code of 1986, as amended (the "Code") (such tax
hereinafter referred to as the "Excise Tax"), then the Escrow Amount shall be
reduced to the extent necessary so that no portion of the Total Payments is
subject to Excise Tax (after taking into account any reduction in the Total
Payments provided by reason of Section 280G of the Code in such other plan,
arrangement or agreement) if (A) the net amount of such Total Payments, as so
reduced, (and after deduction of the net amount of federal, state and local
income tax on such Total Payments), is greater than (B) the excess of (i) the
net amount of such Total Payments, without reduction (but after deduction of the
net amount of federal, state and local income tax on such Total Payments), over
(ii) the amount of Excise Tax to which Employee would be subject in respect of
such Total Payments. For purposes of determining whether and the extent to which
the Total Payments will be subject to the Excise Tax, (i) no portion of the
Total Payments the receipt or enjoyment of which Employee shall have effectively
waived in writing prior to the date of this termination of employment shall be
taken into account, (ii) no portion of the Total Payments shall be taken into
account which in the opinion of tax counsel selected by Employer does not
constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the
Code, (including by reason of Section 280G(b)(4)(A) of the Code) and, in
calculating the Excise Tax, no portion of such Total Payment shall be taken into
account which constitutes reasonable compensation for services actually
rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of
the base amount as defined in Section 280G(b)(3) of the Code allowable to such
reasonable compensation, and (iii) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
by Employer in accordance with the principles of Sections 280G(d)(3) and (4) of
the Code. Prior to the fifth day following the date of Employee's termination of
employment, Employer shall provide Employee with its calculation of the amounts
referred to in this paragraph and such supporting materials as are reasonably
necessary for Employee to evaluate Employer's calculations. If Employee objects
to Employer's calculations, he shall notify Employer of his objections prior to
the initial payment date set forth in Section 5 hereof, and Employer shall pay
to Employee such portion of the Total Payments (up to one hundred percent (100%)
thereof) as Employee determines is necessary to result in Employee receiving the
greater of clauses (A) and (B) of this paragraph.
10. RESPONSIBILITY FOR LEGAL EFFECT.
Neither party hereto makes any representations or warranties, express
or implied, or assumes any responsibility concerning the legal, tax, or other
implications or effects of this Agreement. The Employer and the Escrow Agent
shall take all actions required by law with respect to any payments due
hereunder including but not limited to, withholding of tax from such payments.
11. INDEPENDENCE OF AGREEMENT; EMPLOYMENT TERMINATION.
This Agreement shall be independent of any other contract or agreement
that may exist between the parties hereto from time to time. This Agreement
shall not restrict the Employer's rights to terminate Employee's employment with
the Employer nor Employee's rights to terminate employment with the Employer;
provided, however, that the Employer shall not terminate Employee's employment
prior to a Change in Control solely to avoid its
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obligations to make payments required in the event of a Change in Control. No
merger or consolidation with any other entity, or sale of all or substantially
all of Employer's assets constituting an Escrow Funding Event, or thereafter a
Change in Control shall occur without assumption of the Agreement by the
purchaser or payment by purchaser or Employer of the sums set forth in
subsection (a) of Section 4 of this Agreement.
12. SECTION HEADINGS.
The Section headings used in this Agreement are for convenience of
reference only and shall not be considered in construing this Agreement.
13. NOTICES.
Any notices required or permitted to be given under this Agreement
shall be sufficient if in writing and if personally delivered or sent by
certified or registered mail to his residence as last shown on the employment
records of the Employer in the case of Employee, or to the corporate
headquarters to the attention of the President in the case of the Employer.
14. NON-WAIVER.
The waiver by the Employer or Employee of a breach of any provision of
this Agreement by Employee or the Employer shall not operate or be construed as
a waiver of any subsequent breach by Employee or the Employer of the same or any
other provision hereof.
15. ENTIRE AGREEMENT; AMENDMENT.
This Agreement represents the entire understanding of the parties with
respect to the subject matter hereof and supersedes all previous understandings,
written or oral, including the agreement between the parties dated August 17,
1998, which shall be rendered null and void. Any amendment to this Agreement
shall be executed in writing with the same formality as this Agreement.
16. BINDING EFFECT.
This Agreement shall be binding upon Employee and the Employee's heirs,
executors, administrators, successors and assigns and upon the Employer and its
successors and assigns.
17. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
November ___, 2001.
THE XXXXXXXX AND XXXXXXXX COMPANY
By:
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Xxxxx X. Xxxxxxxxxx
President and Chief Executive Officer
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Xxxx X. Xxxxxxx
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EXHIBIT A
ESCROW AGREEMENT
This Escrow Agreement made and entered into as of this 7th day of May,
2001 by and between THE XXXXXXXX AND XXXXXXXX COMPANY, an Ohio corporation
(hereinafter referred to as "Xxxxxxxx") and BANK ONE TRUST COMPANY, N.A.
(hereinafter referred to as the "Escrow Agent").
WITNESSETH:
WHEREAS, Xxxxxxxx, has adopted a policy of providing termination pay
protection for certain of its key management personnel under conditions set
forth in an agreement dated May 7, 2001 (hereinafter referred to as the
"Agreement"); and
WHEREAS, Xxxxxxxx has identified Xxxx X. Xxxxxxx (hereinafter referred
to as "Employee") as key management personnel and has entered into the Agreement
with him; and
WHEREAS, certain required protective payments under the Agreement are
to be paid to an escrow account at the Escrow Agent;
NOW, THEREFORE, in consideration of the covenants and agreements
contained in this Escrow Agreement, the parties hereby do agree as follows:
1. ACCEPTANCE OF ESCROW. The Escrow Agent shall serve as Escrow Agent
in accordance with the provisions of this Escrow Agreement, and the duties of
the Escrow Agent shall be solely those imposed by this Escrow Agreement.
2. TERMS. The Escrow Agent shall receive, hold and disburse funds as
Escrow Agent in accordance with the Agreement, in the form attached hereto as
Exhibit A and made a part hereof. The Escrow Agent acknowledges that it has
reviewed and is familiar with the Agreement and shall be bound by the
obligations, terms and conditions therein relating to the Escrow Agent and its
duties.
However, the Escrow Agent is not a party to or bound by the Agreement,
except as specifically provided for therein and as provided in Sections 2, 4, 6,
7 and 8 of this Escrow Agreement. The Escrow Agent shall be liable for only such
funds and items as are actually deposited and received by it for the purposes of
said escrow.
3. INDEMNIFICATION. So long as the Escrow Agent shall follow the terms
of this Escrow Agreement and any instructions issued hereunder in good faith,
relying upon documents which it believes to be genuine and properly signed and
executed, it shall be held free, clear and harmless and shall incur no liability
hereunder. Xxxxxxxx shall indemnify and hold the Escrow Agent harmless from any
loss, liability, cost, or expense, including reasonable legal fees and expenses,
which may arise or be incurred by reason of this Escrow Agreement or the Escrow
Agent's performance in good faith of any duty or obligation hereunder.
The Escrow Agent shall not be liable for any error of judgment or for
any act done or omitted by it in good faith, or for anything which it may in
good faith do or refrain from doing in connection with said escrow; nor will any
liability be incurred by the Escrow Agent if, in the event of any dispute or
question as to the construction of this Escrow Agreement or any demand or notice
hereunder, the Escrow Agent acts in accordance with the opinion of its legal
counsel.
4. INVESTMENTS BY ESCROW AGENT; INCOME. The Escrow Agent shall invest
escrow funds in federally-insured interest bearing accounts selected by Xxxxxxxx
or in any one or more of the following investments, selected by the Escrow
Agent:
(a) Certificates of Deposit of United States commercial banks holding
membership in the Federal Reserve System. Such U.S. banks shall have
minimum total assets of $1,000,000,000 and shall not be currently
listed on any publicly-disclosed report of U.S. banks having financial
problems warranting close monitoring by the Federal Reserve Board.
(b) Euro-dollar Certificates of Deposit issued by the twenty-five (25)
largest United States commercial banks, which banks shall have minimum
total assets of $1,000,000,000 and shall not be currently listed on
any publicly-disclosed report of U.S. banks having financial problems
warranting close monitoring by the Federal Reserve Board.
(c) Bankers Acceptances of United States commercial banks holding
membership in the Federal Reserve System. Such U.S. banks shall have
minimum total assets of $1,000,000,000 and shall not be currently
listed on any publicly-disclosed report of U.S. banks having financial
problems warranting close monitoring by the Federal Reserve Board.
(d) United States Treasury Bills.
(e) United States Treasury Notes.
(f) United States Government Guaranteed "Project Notes" and/or Tax-Exempt
Notes rated MIG 1 by Xxxxx'x rating agency.
(g) Debt instruments issued by the following five United States Government
agencies:
Federal Intermediate Credit Banks
Banks for Cooperatives
Federal Land Banks
Federal Home Loan Banks
Federal National Mortgage Association
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(h) Commercial Paper rated Prime-1 by Xxxxx'x rating agency or rated A-1
by Standard & Poors rating agency.
(i) Money market funds (including those managed by the Escrow Agent) the
assets of which are obligations of or guaranteed by the United States
of America (or repurchase agreements fully collateralized by such
obligations) and which funds are rated, at the time of purchase, "Am"
or "Am-G" or higher by Standard & Poors rating agency.
In addition, with respect to any corporation's commercial paper being
purchased, such corporation's long-term debt, if any, must be rated either A by
Xxxxx'x rating agency or A by Standard & Poors rating agency.
The total investments in the above-described approved Certificates of
Deposit, Bankers Acceptances, Commercial Paper, and/or Tax-Exempt Notes shall be
limited to a maximum of $1,000,000 at any one time in any one single bank,
corporation, state and/or municipality.
With respect to funds deposited in escrow by Xxxxxxxx pursuant to the
terms of the Agreement, principal shall be used only for the payments to the
Employee. Any and all income on invested funds shall be paid to Xxxxxxxx in
accordance with subsection (c) of Section 2 of the Agreement. Fees of the Escrow
Agent shall be paid by Xxxxxxxx in accordance with subsection (c) of Section 2
of the Agreement.
With respect to funds deposited pursuant to the Agreement, the Escrow
Agent shall be authorized to invest such funds. The Escrow Agent will maintain
such liquidity in the investments as will permit them to be cashed when
necessary to fund the required distributions to Employee.
5. TERMINATION. This Escrow Agreement and all obligations of the Escrow
Agent shall terminate upon satisfaction by the Escrow Agent of all of its
obligations under this Escrow Agreement and the Agreement.
6. ADVERSE CLAIMS. Escrow Agent shall make delivery or disbursement of
the funds deposited hereunder in accordance with the terms of the Escrow
Agreement and the Agreement, regardless of any disagreement or the presentation
of any adverse claims or demands of any person, unless such person shall have
obtained an injunction from a court having proper jurisdiction, enjoining Escrow
Agent from making such delivery or disbursement. Escrow Agent shall not become
liable to Xxxxxxxx or to any other person, for or because of such delivery or
disbursement of such funds, even with knowledge of a disagreement or adverse
claim or demand.
7. DEMANDS. Except in cases where demand or notice by a single party is
specifically provided for in this Escrow Agreement or in the Agreement, the
Escrow Agent shall not be bound to recognize any notice, demand or change of
instructions as having any effect on this escrow unless given in writing and
signed by all parties considered by the Escrow Agent to be affected thereby.
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8. NOTICES. Any notice required or permitted to be given hereunder
shall be given in writing and shall be sufficiently delivered if sent by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
Bank One Trust Company, NA
000 Xxxx Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attention: Corporate Trust Department
The Xxxxxxxx and Xxxxxxxx Company
000 X. Xxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
Attn: General Counsel
Should the address of any party identified above change for the purposes herein,
such party shall give written notice of the new address to the other parties
identified above.
All notice hereunder to the Escrow Agent shall be given in writing to
an officer of the Escrow Agent. Unless written notice shall so be given, the
Escrow Agent shall not be required to take or be bound by said notice or to take
action concerning such notice. If written notice be properly given and the
Escrow Agent is required upon receipt thereof to take any action hereunder and
such action involves any expense or liability, the Escrow Agent shall not be
required to take any such action unless it is indemnified against such expense
or liability in a manner reasonably satisfactory to the Escrow Agent. At the
time of depositing funds into escrow on behalf of Employee, Xxxxxxxx shall
deliver to the Escrow Agent a written notice setting forth such person's name
and address, and social security number identifying the amounts being deposited
on such person's behalf, and the conditions of the Agreement, which have been
met and which, therefore, require that such deposit be made.
9. RECORD KEEPING. The Escrow Agent shall maintain records showing the
amount and date of all deposits made by Xxxxxxxx for the benefit of Employee and
the amount and date of all disbursements made to Employee, his heirs, successors
and assigns. Xxxxxxxx shall be given access to said records at reasonable times
upon request.
10. ESCROW FEE. Xxxxxxxx shall pay to the Escrow Agent for its services
hereunder an escrow fee based upon the then-current schedule of charges for such
services promulgated by the Escrow Agent and shall pay additional reasonable
compensation for any further or extraordinary service which the Escrow Agent may
be required to render pursuant to the terms of this Escrow Agreement.
11. BINDING EFFECT. This Escrow Agreement shall be binding upon and
inure to the heirs, executors, administrators, personnel representatives,
successors and assigns of all parties hereto.
12. MISCELLANEOUS. Employee is acknowledged to be third party
beneficiary upon the deposit of any amounts under this Escrow Agreement for his
benefit. This Escrow
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Agreement may be modified or amended only by a writing signed (i) by all parties
hereto, (ii) by the third party beneficiary and (iii) by any other person the
Escrow Agent considers to be affected by said modification or amendment. This
Escrow Agreement shall be construed and enforced in accordance with the laws of
the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have set their respective hands
the year and date first hereinabove written.
THE XXXXXXXX AND XXXXXXXX COMPANY
By:
---------------------------------------------
"XXXXXXXX"
BANK ONE TRUST COMPANY, NA
By:
---------------------------------------------
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EXHIBIT B
Xxxx X. Xxxxxxx
Executive Vice President and Chief Financial Officer
STOCK OPTION AGREEMENT
GRANTED UNDER THE XXXXXXXX AND XXXXXXXX COMPANY
STOCK OPTION PLAN -- 1995
NONQUALIFIED STOCK OPTION -- GRANT NUMBER 040219
A Nonqualified Stock Option is hereby granted this 28th day of
December, 2000 (the "Grant Date") by The Xxxxxxxx and Xxxxxxxx Company (the
"Company") to Xxxx X. Xxxxxxx (the "Employee") in accordance with the provisions
of the Company's Stock Option Plan -- 1995 (the "Plan").
On May 7, 2001 the Employee and the Company entered into an Agreement
(the "Agreement") conferring certain benefits of employment on Employee.
In order to give the Employee additional incentive to contribute to the
success of the Company, to induce the Employee to remain in the employ of the
Company and to encourage the Employee to secure or increase on reasonable terms
stock ownership in the Company, the Company effective December 28, 2000 hereby
grants to the Employee a Nonqualified Stock Option (the "Option") to purchase
all or any part of a total of 90,000 of the Company's Class A Common Shares, no
par value per share (the "Option Shares" or "Shares"), at a price of $20.06 per
Option Share, subject to and upon the following terms and conditions:
1. The term of the Option shall be ten (10) years from the Grant Date and
shall expire on December 28, 2010 (the "Expiration Date"), unless earlier
terminated in accordance with the provisions of the Plan.
2. The Option Shares shall be exercisable in whole or in part at any time
beginning as follows: twenty-five percent (25%) December 28, 2001; an
additional twenty-five percent (25%) December 28, 2002; an additional
twenty-five percent (25%) December 28, 2003; and an additional twenty-five
percent (25%) December 28, 2004. In the event of a Change in Control (as
defined in the Plan), all options outstanding on the date of such Change in
Control (including this Option) shall become immediately and fully
exercisable. To the extent the Option is then exercisable, it may be
exercised in whole or in part at any time or from time to time within the
exercise period, subject to the provisions of the Plan. The exercise of the
Option shall be effectuated by submitting to the Secretary of the Company
at its office in Dayton, Ohio: (a) written notice of intent to exercise the
Option with respect to a specified number of Option Shares; (b) payment, in
cash, or by check payable to the Company, or with already-owned shares of
the Company, or a combination of such already-owned shares and cash, of the
full amount of the purchase price for the number of Option Shares with
respect to which the Option is then being exercised; and (c) payment in
cash or by check of the full amount of all federal, state, and local taxes,
if any, that the Company is required by law to withhold
with respect to such exercise. The Option may not be exercised for a
fraction of an Option Share.
3. The Option is not transferable other than by will or by laws of descent and
distribution and may be exercised during the lifetime of the Employee only
by the Employee.
4. If Employee's employment is terminated by the Company other than due to a
Discharge For Cause(as defined in the Agreement), Employee shall be deemed
to have elected retirement for purposes of the Plan, and the Option,
subject to the Expiration Date, shall become exercisable by the Employee,
as if he had remained continuously employed by the Company. If Employee's
employment is terminated by death, the Option, to the extent not
theretofore exercised on the date of death, may be exercised within one
year after the date of death, subject to the Expiration Date, by the person
to whom the Option is transferred by will or the applicable laws of descent
and distribution. If Employee's termination is a Discharge For Cause (as
defined in the Agreement), all options (including this Option) not
previously exercised shall immediately terminate. If the Employee
voluntarily terminates his employment upon giving the Company at least 180
days written notice, or if his employment terminates due to disability (as
defined in the Employment Agreement), the Option, subject to the Expiration
Date, shall be exercisable by the Employee in the manner and to the extent
the Employee was entitled to exercise the Option as of the date of such
termination. Other than as set forth in the Employment Agreement, nothing
contained herein shall give the Employee any right with respect to
continuance of employment with the Company or any subsidiary nor restrict
in any way the right of the Company or any subsidiary to terminate his or
her employment at any time.
5. In the event of any change in the Option Shares by reason of a merger,
consolidation, reorganization, recapitalization, stock dividend, stock
split-up, combination or exchange of shares, or other change in the
corporate structure (provided that the Company remains as the surviving
entity upon the completion of any of the foregoing transactions) the number
and class of Option Shares and the option price per Option Share shall be
appropriately adjusted by the Committee, whose determination in each case
shall be conclusive.
6. Anything to the contrary notwithstanding, if the Company is the subject of
a merger, acquisition, or other reorganization in which the Company is not
to be the surviving entity, the Company shall, in its discretion
(exercisable by the affirmative vote of 75% of the Directors of the Company
in office immediately prior to the proposed transaction), have the right to
cancel the Option immediately prior to the effective date of such merger,
acquisition, or reorganization, by giving written notice to the Employee or
his or her personal representative of its intention to do so and by
permitting the purchase during the thirty (30) day period next preceding
such effective date of all Option Shares.
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7. Neither the Employee nor his or her legal representative shall be or have
any of the rights or privileges of a shareholder of the Company in respect
to any of the Option Shares unless and until certificates representing such
Option Shares have been issued.
8. (a) This Option is subject to all laws and regulations of any governmental
authority which may be applicable hereto; notwithstanding any
provisions hereof, the holder of this Option shall not be entitled to
exercise such Option nor shall the Company be obligated to issue any
Option Shares hereunder to the holder if such exercise or issuance
shall constitute a violation by the Employee or the Company of any
provisions of any such law or regulation.
(b) The Company, in its discretion, may postpone the issuance and delivery
of Option Shares upon any exercise of this Option until completion of
any stock exchange listing or registration or other qualification of
such Shares under any state or federal law, rule, or regulation as the
Company may consider appropriate and may require any person exercising
this Option to make such representations and furnish such information
as it may consider appropriate in connection with the issuance of the
Option Shares in compliance with applicable law. Under such
circumstances, the Company shall proceed with reasonable promptness to
complete any such listing, registration, or other qualification.
(c) Option Shares issued and delivered upon exercise of this Option may be
subject to such restrictions on trading, including appropriate
legending of certificates to that effect, as the Company, in its
discretion, shall determine necessary to satisfy applicable legal
requirements and obligations.
(d) The Employee, for himself or herself and his or her transferees by
will or the laws of descent and distribution, by accepting this
Option: (i) represents that acquisition of the Option Shares shall be
for investment purposes only; (ii) agrees that he or she will not
sell, pledge, hypothecate, or otherwise distribute such Option Shares
or any interest therein unless a registration statement covering such
Option Shares is in effect under the Securities Act of 1933, as now or
hereafter amended (the "ACT"), or unless counsel for the Company shall
have rendered to the Company an opinion that such sale, pledge,
hypothecation, or other such distribution may be carried out without
registration of such Option Shares under the Act; and (iii) agrees
that an appropriate legend may be placed on the stock certificate or
certificates evidencing ownership of Option Shares acquired hereunder,
which legend shall reflect the restrictions on disposition contained
herein; provided, however, that the foregoing representations and
agreements in this Paragraph (d) of Section 8 with respect to the
Option Shares shall be inoperative and shall expire in the event that
either: (A) the Option Shares shall be registered under the Act; or
(B) in the opinion of counsel for the Company, such representations
and agreements are not necessary under the Act or any rule or
regulation promulgated pursuant thereto.
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9. The terms of this Agreement specifically incorporate and are subject to the
terms and conditions of the Plan, a copy of which has been furnished to the
Employee, as the same may be amended from time to time in the future;
provided, however, that this Option cannot be altered to the detriment of
the Employee, without his consent.
10. Inability of the Company to obtain from any regulatory body having
jurisdiction, the authority deemed by the Company's counsel to be necessary
to the lawful issuance of any Option Shares hereunder shall relieve the
Company of any liability in respect of the non-issuance of such Option
Shares as to which such requisite authority shall not have been obtained.
11. The interpretation, performance, and enforcement of this option shall be
governed by the laws of the State of Ohio.
THE XXXXXXXX AND XXXXXXXX COMPANY
By:
---------------------------------------------
Xxxxx X. Xxxxxxxxxx
President and Chief Executive Officer
ATTEST:
---------------------------------
Xxxxxxx X. Xxxxxxx
General Counsel & Secretary
December 28, 2000 Nonqualified Stock Option Agreement
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Acceptance of December 28, 2000
NONQUALIFIED STOCK OPTION
I have reviewed a copy of The Xxxxxxxx and Xxxxxxxx Company Stock
Option Plan -- 1995, and agree to be bound by all of the terms and conditions
thereof and of this Agreement.
----------------------------------------
(Signature)
XXXX X. XXXXXXX
----------------------------------------
(Printed Name)
----------------------------------------
(Social Security Number)
Dated: May 7, 2001, but effective
as of December 28, 2000
DO NOT RETURN THIS COPY
THIS COPY SHOULD REMAIN WITH YOUR AGREEMENT
5
EXHIBIT C
BENEFICIARY DESIGNATION
TO: The President of The Xxxxxxxx and Xxxxxxxx Company
Pursuant to the Agreement dated May 7, 2001 the undersigned hereby
designates the following beneficiary (beneficiaries) to receive any benefits
which may be payable under said Agreement subsequent to the undersigned's death:
(1) Xxxxx X. Xxxxxxx.
(2) If the beneficiary (beneficiaries) named in (1) above is not living or is
no longer in existence, as the case may be, then to: Xxxxxxxx X. Xxxxxxx
and Xxxxxxx X. Xxxxxxx in equal portions.
This Beneficiary Designation revokes all prior designations made by the
undersigned and is subject to all the terms of the Agreement.
Dated: May 7, 2001
------------------------------------
Xxxx X. Xxxxxxx
