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Exhibit 10(b)
EMPLOYMENT AGREEMENT
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This EMPLOYMENT AGREEMENT ("Agreement"), dated as of August 1, 1988, by and
between The Xxxxxx & Sessions Co., an Ohio corporation (the "Company"). and
Xxxx X. Xxxxxxx (the "Executive");
WITNESSETH:
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WHEREAS, the Executive is a senior executive of the Company and has
made and is expected to continue to make major contributions to the
profitability, growth and financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case for most publicly
held companies, the possibility of a Change in Control (as that term is
hereafter defined) exists;
WHEREAS, the Company desires to assure itself of both present and
future continuity of management in the event of a Change in Control and desires
to establish certain minimum compensation rights of its key senior executive
officers, including the Executive, applicable in the event of a Change in
Control;
WHEREAS, the Company wishes to ensure that its senior executives are
not practically disabled from discharging their duties upon a Change in
Control;
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits which the Executive could reasonably expect to
receive from the Company absent a Change in Control and, accordingly, although
effective and binding as of the date hereof, this Agreement shall become
operative only upon the occurrence of a Change in Control; and
WHEREAS, the Executive is willing to render services to the Company on
the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Operation of Agreement: (a) This Agreement shall be
effective and binding immediately upon its execution, but, anything in this
Agreement to the contrary notwithstanding, this Agreement shall not become
operative unless and until there shall have occurred a Change in Control. For
purposes of this Agreement, a "Change in Control" shall have occurred if at any
time during the Term (as that term is hereafter defined) any of the following
events shall occur:
(i) The Company is merged or consolidated or reorganized into or
with another corporation or other legal person, and as a result of such merger,
consolidation or reorganization less than a majority of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
Voting Stock (as that term is hereafter defined) of the Company immediately
prior to such transaction;
(ii) The Company sells or otherwise transfers all or substantially
all of its assets to any other corporation or other legal person, and less than
a majority of the combined voting power of the then-outstanding securities of
such corporation or person immediately after such
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sale or transfer is held in the aggregate by the holders of Voting Stock of the
Company immediately prior to such sale or transfer:
(iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), disclosing
that any person (as the term "person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) has become the beneficial owner (as the term
"beneficial owner" is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities representing 20%
or more of the combined voting power of the then outstanding securities
entitled to vote generally in the election of directors of the Company ("Voting
Stock");
(iv) The Company files any report, proxy statement or other
document with the Securities and Exchange Commission pursuant to the Exchange
Act or any rules or regulations presently in effect or hereafter promulgated
under such Act disclosing that a change in control of the Company has or may
have occurred or will or may occur in the future pursuant to any then-existing
contract or transaction; or
(v) If during any period of two consecutive years, individuals who
at the beginning of any such period constitute the Directors of the Company
cease for any reason to constitute at least a majority thereof, unless the
election, or the nomination for election by the Company's stockholders, of each
Director of the Company first elected during such period was approved by a vote
of at least two-thirds of the Directors of the Company then still in office who
were Directors of the Company at the beginning of any such period.
Notwithstanding the foregoing provisions of Section l(a)(iii) or l(a)(iv)
hereof, a "Change in Control" shall not be deemed to have occurred for purposes
of this Agreement solely because (i) the Company, (ii) an entity in which the
Company directly or indirectly beneficially owns 80% or more of the voting
securities, or (iii) any Company-sponsored employee stock ownership plan or any
other employee benefit plan of the Company, either files or becomes obligated
to file a report or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or
report or item therein) under the Exchange Act, disclosing beneficial ownership
by it of shares of Voting Stock, whether in excess of 20% or otherwise, or
because the Company reports that a change in control of the Company has or may
have occurred or will or may occur in the future by reason of such beneficial
ownership.
(b) Upon the occurrence of a Change in Control at any time during
the Term, this Agreement shall become immediately operative.
(c) The period during which this Agreement shall be in effect (the
"Term") shall commence as of the date hereof and shall expire as of the later
of (i) the close of business on December 31, 1993 or (ii) the expiration of the
Period of Employment (as that term is hereafter defined), provided, however,
that (A) commencing on January 1, 1990 and each January 1 thereafter prior to
the occurrence of a Change in Control, the term of this Agreement shall
automatically be extended for an additional year unless, not later than
December 30 of the immediately preceding year, the Company or the Executive
shall have given notice that it or he, as the case may be, does not wish to
have the Term extended, and (B) subject to Section 9 hereof, if, prior to a
Change in Control, the Executive ceases for any reason to be an officer of the
Company, thereupon the Term shall be deemed to have expired and this Agreement
shall immediately terminate and be of no further effect.
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2. EMPLOYMENT; PERIOD OF EMPLOYMENT: (a) Subject to the terms
and condition, of this Agreement, upon the occurrence of a Change in Control,
the Company shall continue the Executive in its employ and the Executive shall
remain in the employ of the Company for the period set forth in Section 2(b)
hereof (the "Period of Employment"), in the position and with substantially the
same duties and responsibilities that he had immediately prior to the Change in
Control, or to which the Company and the Executive may hereafter mutually agree
in writing. Throughout the Period of Employment, the Executive shall devote
substantially all of his time during normal business hours (subject to
vacations, sick leave and other absences in accordance with the policies of the
Company as in effect for senior executives immediately prior to the Change in
Control) to the business and affairs of the Company, but nothing in this
Agreement shall preclude the Executive from devoting reasonable periods of time
during normal business hours to (i) serving as a director, trustee or member of
or participant in any organization or business so long as such activity would
not constitute Competitive Activity (as that term is hereafter defined) if
conducted by the Executive after the Executive's Termination Date (as that term
is hereafter defined), (ii) engaging in charitable and community activities, or
(iii) managing his personal investments.
(b) The Period of Employment shall commence on the date of an
occurrence of a Change in Control and, subject only to the provisions of
Section 4 hereof, shall continue until the earlier of (i) the expiration of the
third anniversary of the occurrence of the Change in Control, (ii) the
Executive's death, or (iii) the Executive's attainment of age 65; provided,
however, that commencing on each anniversary of the Change of Control, the
expiration of the Period of Employment provided for under clause (i) of this
Section 2(b) shall automatically be extended for an additional year unless, not
later than 90 calendar days prior to such anniversary date, either the Company
or the Executive shall have given written notice to the other that the Period
of Employment shall not be so extended.
3. COMPENSATION DURING PERIOD OF EMPLOYMENT: (a) Upon the
occurrence s of a Change in 1, the Executive shall receive during the Period of
Employment (i) annual base salary at a rate not less than the Executive's
annual fixed or base compensation (payable monthly or otherwise as in effect
for senior executives of the Company immediately prior to the occurrence of a
Change in Control) or such higher rate as may be determined from time to time
by the Board of Directors of the Company (the "Board") or the Compensation
Committee thereof (the "Committee") (which base salary at such rate is herein
referred to as "Base Pay") and (ii) an annual amount equal to not less than the
average of the aggregate annual bonus, incentive or other payments of cash
compensation in addition to the amounts referred to in clause (i) above made or
to be made in regard to services rendered in any calendar year during (1) the
period of three calendar years immediately preceding the year in which the
Change in Control occurred or (2) subject to the proviso hereinafter set forth,
such lesser number of calendar years in respect of which the Executive shall
have received Incentive Pay, in either case pursuant to any bonus, incentive,
profit-sharing, performance, discretionary pay or similar policy, plan, program
or arrangement of the Company or any successor thereto providing benefits at
least as great as the benefits payable thereunder prior to a Change in Control
("Incentive Pay"), provided, however, that with the prior written consent of
the Executive, nothing herein shall preclude a change in the mix between Base
Pay and Incentive Pay so long as the aggregate cash compensation received by
the Executive in any one calendar year is not reduced in connection therewith
or as a result thereof, and provided further, however, that in no event shall
any increase in the Executive's aggregate cash compensation or any portion
thereof in any way diminish any other obligation of the Company under this
Agreement and, provided further that if a Change in Control occurs prior to
January 1, 1989 the Executive shall receive on or before December 31, 1988 and
during the ensuing Period of Employment an annual amount of Incentive Pay equal
to the maximum amount
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payable to him pursuant to the Incentive Compensation Plan for the Corporate
Office for the year 1988 assuming a 200% achievement level of the 1988 goals.
(b) For his service pursuant to Section 2(a) hereof, during the
Period of Employment the Executive shall be a full participant in and shall be
entitled to the perquisites, benefits and service credit for benefits as
provided under, any and all employee retirement income and welfare benefit
policies, plans, programs or arrangements in which senior executives of the
Company participate, including without limitation any stock option, stock
purchase, stock appreciation, savings, pension, supplemental executive
retirement or other retirement income or welfare benefit, deferred
compensation, incentive compensation, group and/or executive life, health,
medical/hospital or other insurance (whether funded by actual insurance or
self-insured by the Company), disability, salary continuation, expense
reimbursement and other employee benefit policies, plans, programs or
arrangements that may now exist or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter by the Company providing
perquisites, benefits and service credit for benefits at least as great as are
payable thereunder prior to a Change in Control (collectively, "Employee
Benefits"), provided, however, that except as expressly provided in, and
subject to the terms of, Section 5(a)(iii) hereof, the Executive's rights
thereunder shall be governed by the terms thereof and shall not be enlarged
hereunder or otherwise affected hereby. Subject to the proviso in the
immediately preceding sentence, if and to the extent such perquisites, benefits
or service credit for benefits are not payable or provided under any such
policy, plan, program or arrangement as a result of the amendment or
termination thereof, then the Company shall itself pay or provide therefor.
Nothing in this Agreement shall preclude improvement or enhancement of any such
Employee Benefits, provided that no such improvement shall in any way diminish
any other obligation of the Company under this Agreement.
(c) The Company has determined that the amounts payable pursuant
to this Section 3 constitute reasonable compensation for services to be
rendered during the Period of Employment.
4. Termination Following a Chance in Control: (a) In the event of
the occurrence of a Change in Control, the Executive's employment may be
terminated by the Company during the Period of Employment and the Executive
shall not be entitled to the benefits provided by Section 5 hereof only upon
the occurrence of one or more of the following events:
(i) The Executive's death;
(ii) If the Executive shall become permanently disabled within the
meaning of, and begins actually to receive disability benefits pursuant to,
the long-term disability plan in effect for senior executives of the
Company immediately prior to the Change in Control; or
(iii) For "Cause", which for purposes of this Agreement shall mean
that, prior to any termination pursuant to Section 4(b) hereof, the
Executive shall have committed:
(A) an intentional act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment with the
Company;
(B) intentional wrongful damage to property of the Company;
(C) intentional wrongful disclosure of secret processes or
confidential information of the Company; or
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(D) intentional wrongful engagement in any Competitive
Activity;
and any such act shall have been materially harmful to the Company.
For purposes of this Agreement, no act, or failure to act, on the part
of the Executive shall be deemed "intentional" if it was due primarily
to an error in judgment or negligence, but shall be deemed
"intentional" only if done, or omitted to be done, by the Executive
not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated
for "Cause" hereunder unless and until there shall have been delivered
to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the Board then in
office at a meeting of the Board called and held for such purpose
(after reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel, to be heard before the Board),
finding that, in the good faith opinion of the Board, the Executive
had committed an act set forth above in this Section 4(a)(iii) and
specifying the particulars thereof in detail. Nothing herein shall
limit the right of the Executive or his beneficiaries to contest the
validity or propriety of any such determination.
(b) In the event of the occurrence of a Change in Control, during
the Period of Employment the Executive shall be entitled to the benefits as
provided in Section 5 hereof upon the occurrence of one or more of the
following events:
(i) Any termination by the Company of the employment of the
Executive prior to the date upon which the Executive shall have attained
age 65, which termination shall be for any reason other than for Cause or
as a result of the death of the Executive or by reason of the Executive's
disability and the actual receipt of disability benefits in accordance with
Section 4(a)(ii) hereof; or
(ii) Termination by the Executive of his employment with the
Company upon the occurrence of any of the following events:
(A) Failure to elect, reelect or otherwise maintain the
Executive in the office or position in the Company which the Executive
held immediately prior to a Change in Control, or the removal of the
Executive as a Director of the Company (or any successor thereto) if
the Executive shall have been a Director of the Company immediately
prior to the Change in Control;
(B) A significant adverse change in the nature or scope
of the authorities, powers, functions, responsibilities or duties
attached to the position with the Company which the Executive held
immediately prior to the Change in Control, any reduction in the
aggregate of the Executive's Base Pay and Incentive Pay received from
the Company, or the termination of the Executive's rights to any
Employee Benefits to which he was entitled immediately prior to the
Change in Control or a reduction in scope or value thereof without the
prior written consent of the Executive, any of which is not remedied
within 10 calendar days after receipt by the Company of written notice
from the Executive of such change, reduction or termination. as the
case may be;
(C) A determination by the Executive made in good faith
that as a result of a Change in Control and a change in circumstances
thereafter significantly affecting his position, including without
limitation a change in the scope of the business or other activities
for which he was responsible immediately prior to the Change in
Control, he has been rendered substantially unable to carry out, has
been substantially hindered in
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the performance of, or has suffered a substantial reduction in, any of
the authorities, powers, functions, responsibilities or duties
attached to the position held by the Executive immediately prior to
the Change in Control, which situation is not remedied within 10
calendar days after written notice to the Company from the Executive
of such determination;
(D) The liquidation, dissolution, merger, consolidation
or reorganization of the Company or transfer of all or a significant
portion of its business and/or assets, unless the successor or
successors (by liquidation, merger, consolidation, reorganization or
otherwise) to which all or a significant portion of its business
and/or assets have been transferred (directly or by operation of law)
shall have assumed all duties and obligations of the Company under
this Agreement pursuant to Section 11 hereof;
(E) The Company shall relocate its principal executive
offices, or require the Executive to have his principal location of
work changed, to any location which is in excess of 50 miles from the
location thereof immediately prior to the Change of Control or the
Company shall require the Executive to travel away from his office in
the course of discharging his responsibilities or duties hereunder
significantly more (in terms of either consecutive days or aggregate
days in any calendar year) than was required of him prior to the
Change of Control without. in either case, his prior written consent;
or
(F) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the Company or any
successor thereto.
(c) A termination by the Company pursuant to Section 4(a) hereof
or by the Executive pursuant to Section 4(b) hereof shall not affect any rights
which the Executive may have pursuant to any agreement, policy, plan, program
or arrangement of the Company providing Employee Benefits, which rights shall
be governed by the terms thereof. If this Agreement or the employment of the
Executive is terminated under circumstances in which the Executive is not
entitled to any payments under Sections 3 or 5 hereof, the Executive shall have
no further obligation or liability to the Company hereunder with respect to his
prior or any future employment by the Company.
5. SEVERANCE COMPENSATION: (a) If, following the occurrence of a
Change in Control, the Company shall terminate the Executive's employment
during the Period of Employment other than pursuant to Section 4(a) hereof, or
if the Executive shall terminate his employment pursuant to Section 4(b)
hereof, the Company shall pay to the Executive the amount specified in Section
5(a)(i) hereof within five business days after the date (the "Termination
Date") that the Executive's employment is terminated (the effective date of
which shall be the date of termination or such other date that may be specified
by the Executive if the termination is pursuant to Section 4(b) hereof):
(i) In lieu of any further payments to the Executive for periods
subsequent to the Termination Date, a lump sum payment (the "Severance
Payment") in an amount equal to the present value (using a discount rate
prescribed for purposes of valuation computations under Section 280G of the
Code or any successor provision thereto, or if no such rate is so
prescribed, a rate equal to the then-applicable interest rate prescribed by
the Pension Benefit Guarantee Corporation for benefit valuations in
connection with non-multiemployer pension plan terminations assuming the
immediate commencement of benefit payments (the "Discount Rate")) of the
sum of (A) the aggregate Base Pay (at the greater of the highest rate in
effect either immediately preceding the occurrence of the Change in Control
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or during the Period of Employment) for each remaining year or partial year
of the Period of Employment which the Executive would have received had
such termination or breach not occurred, plus (B) the aggregate Incentive
Pay (calculated in accordance with the provisions of Section 3(a) hereof),
which the Executive would have received pursuant to this Agreement during
the remainder of the Period of Employment had his employment continued for
the remainder of the Period of Employment. Notwithstanding the foregoing
provisions of this Section 5(a)(i) but subject to the proviso hereinafter
set forth, if the Executive is a Disqualified Individual (as the term
"Disqualified Individual" is defined in Section 280G of the Code or any
successor provision thereto) and if any portion of the Severance Payment
would be an Excess Parachute Payment (as the term "Excess Parachute
Payment" is defined in Section 280G of the Code or any successor provision
thereto) but for the application of this sentence, then the amount of the
Severance Payment otherwise payable to the Executive pursuant to this
Agreement shall be reduced to the minimum extent necessary (but in no event
to less than zero) so that no portion of the Severance Payment, as so
reduced, constitutes an Excess Parachute Payment; provided, however, that
if the Executive's employment is terminated prior to January 1, 1989 in a
manner giving rise to a Severance Payment pursuant to this Section 5, then
the Executive shall receive (A) the Severance Payment calculated as set
forth in this Section 5(a)(i) but without regard to any required reduction
imposed to avoid causing such Severance Payment constitute an Excess
Parachute Payment and (B) such other amounts as shall be required to be
paid by the Company pursuant to Section 11 hereof if such Severance Payment
shall constitute an Excess Parachute Payment.
(ii) The determination of whether any reduction in the amount of
the Severance Payment is required pursuant to the last sentence of Section
5(a)(i) hereof shall be made, if requested by the Executive or the Company,
by Xxxxx, Day, Xxxxxx & Xxxxx or such other tax counsel selected by the
Company's independent accountants and acceptable to the Executive. The fact
that the Executive shall have his right to the Severance Payment reduced as
a result of the existence of the limitations contained in this Section 5(a)
shall not of itself limit or otherwise affect any rights of the Executive
to any Employee Benefit (which shall be determined pursuant to Section
5(a)(iii) hereof), or any other right arising other than pursuant to this
Agreement.
(iii) Except to the extent that the payments or benefits pursuant to
this Section 5(a)(iii) would result in a reduction of the amount of the
Severance Payment pursuant to the last sentence of Section 5(a)(i) hereof,
(A) for the remainder of the Period of Employment the Company shall arrange
to provide the Executive with Employee Benefits substantially similar to
those which the Executive was receiving or entitled to receive immediately
prior to the Termination Date (and if and to the extent that such benefits
shall not or cannot be paid or provided under any policy, plan, program or
arrangement of the Company solely due to the fact that the Executive is no
longer an officer or employee of the Company, then the Company shall itself
pay or provide for the payment to the Executive, his dependents and
beneficiaries, such Employee Benefits) and (B) without limiting the
generality of the foregoing, the remainder of the Period of Employment
shall be considered service with the Company for the purpose of service
credits under the Company's retirement income, supplemental executive
retirement and other benefit plans of the Company applicable to the
Executive or his beneficiaries immediately prior to the Termination Date.
Without otherwise limiting the purposes or effect of Section 6 hereof,
Employee Benefits payable to the Executive pursuant to this Section
5(a)(iii) by reason of any "welfare benefit plan" of the Company (as the
term "welfare benefit plan" is defined in Section 3(1) of the Employee
Retirement Income Act of 1974, as amended) shall be reduced to the extent
comparable welfare benefits are actually received by the Executive
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from another employer during such period following the Executive's
Termination Date until the expiration of the Period of Employment.
(b) There shall be no right of set-off or counterclaim in respect
of any claim, debt or obligation against any payment to or benefit for the
Executive provided for in this Agreement.
(c) Without limiting the rights of the Executive at law or in
equity, if the Company fails to make any payment required to be made hereunder
on a timely basis, the Company shall pay interest on the amount thereof at an
annualized rate of interest equal to the then- applicable Discount Rate.
6. NO MITIGATION OBLIGATION: The Company hereby acknowledges that
it will be difficult, and may be impossible, for the Executive to find
reasonably comparable employment following the Termination Date and that the
noncompetition covenant contained in Section 7 hereof will further limit the
employment opportunities for the Executive. In addition, the Company
acknowledges that its severance pay plan applicable in general to its salaried
employees does not provide for mitigation, offset or reduction of any severance
payment received thereunder. Accordingly, the parties hereto expressly agree
that the payment of the severance compensation by the Company to the Executive
in accordance with the terms of this Agreement will be liquidated damages, and
that the Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall any profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other obligation on
the part of the Executive hereunder or otherwise, except as expressly provided
in Section 5(a)(iii) hereof.
7. COMPETITIVE ACTIVITY: During a period ending on the date of
the first to occur of either the attainment by the Executive of age 65 or one
year following the Termination Date, if the Executive shall have received or
shall be receiving benefits under Section 5(a) hereof, the Executive shall not,
without the prior written consent of the Company, engage in any Competitive
Activity. For purposes of this Agreement, the term "Competitive Activity" shall
mean the Executive's participation, without the written consent of the Company,
in the management of any business enterprise if such enterprise engages in
substantial and direct competition with the Company and such enterprise's sales
of any product or service competitive with any product or service of the
Company amounted to 25% of such enterprise's net sales for its most recently
completed fiscal year and if the Company's net sales of said product or service
amounted to 25% of the Company's net sales for its most recently completed
fiscal year. "Competitive Activity" shall not include (i) the mere ownership of
securities in any such enterprise and the exercise of rights appurtenant
thereto or (ii) participation in the management of any such enterprise other
than in connection with the competitive operations of such enterprise.
8. LEGAL FEES AND EXPENSES: (a) It is the intent of the Company
that the Executive not be required to incur the expenses associated with the
enforcement of his rights under this Agreement by litigation or other legal
action because the cost and expense thereof would substantially detract from
the benefits intended to be extended to the Executive hereunder. Accordingly,
if it should appear to the 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 takes any action to declare this Agreement void or
unenforceable, or institutes any litigation designed to deny, or to recover
from, the Executive the benefits intended to be provided to the Executive
hereunder, the Company irrevocably authorizes the Executive from time to time
to retain counsel of his choice, at the expense of the Company as hereafter
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provided, to represent the Executive in connection with the initiation or
defense of any litigation or other legal action, whether by or against the
Company or any Director, officer, stockholder 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 the Executive's entering into an attorney-client
relationship with such counsel, and in that connection the Company and the
Executive agree that a confidential relationship shall exist between the
Executive and such counsel. The Company shall pay or cause to be paid and shall
be solely responsible for any and all attorneys' and related fees and expenses
incurred by the Executive as a result of the Company's failure to perform this
Agreement or any provision hereof or as a result of the Company or any person
contesting the validity or enforceability of this Agreement or any provision
hereof as aforesaid.
(b) To ensure that the provisions of this Agreement can be
enforced by the Executive, the Company shall establish certain trust
arrangements ("Trusts") with an independent banking association as Trustee
("Trustee"). The Company shall execute and deliver a Trust Agreement ("Trust
Agreement") and a Trust Agreement for Attorneys' Fees ("Trust Agreement for
Attorneys' Fees") between the Trustee and the Company, and when so executed and
delivered such Trust Agreement and Trust Agreement for Attorneys' Fees shall be
deemed to be a part of this Agreement and shall set forth the terms and
conditions relating to payment from the Trust under the Trust Agreement of
compensation and other benefits pursuant to Sections 3 and 5 hereof owed by the
Company, and payment from the Trust under the Trust Agreement for Attorneys'
Fees of attorneys' and related fees and expenses pursuant to Section 8(a)
hereof owed by the Company. The Executive shall first make demand on the
Company for any payments due the Executive pursuant to Section 8(a) hereof
prior to making demand therefor on the Trustee under the Trust Agreement for
Attorneys' Fees. Payments by such Trustee shall discharge the Company's
liability under Section 8(a) hereof only to the extent that trust assets are
used to satisfy such liability.
(c) Upon the occurrence of a Change in Control, the Company shall
promptly, to the extent it has not previously done so, and in any event within
five (5) business days:
(i) transfer to the Trustee to be added to the principal of the
Trust under the Trust Agreement a sum equal to the present value on the
date of the Change in Control of the payments to be made to the Executive
under the provisions of Section 5 hereof; provided, however, that the
Company shall not be required to transfer, in the aggregate, to the Trust
under the Trust Agreement a sum in excess of the maximum amount authorized
from time to time by its Directors. Any payments of compensation,
supplemental pension or other benefits by the Trustee pursuant to the Trust
Agreement shall, to the extent thereof, discharge the Company's obligation
to pay compensation, supplemental pension and other benefits hereunder, it
being the intent of the Company that assets in such Trust be held as
security for the Company's obligation to pay compensation, supplemental
pension and other benefits under this Agreement; and
(ii) transfer to the Trustee to be added to the principal of the Trust
under the Trust Agreement for Attorneys' Fees the sum of TWO HUNDRED FIFTY
THOUSAND DOLLARS ($250,000), it being the intent of the Company that assets
in such Trust be held as security for the company's obligation under
Section 8(a) hereof. The Executive understands and acknowledges that the
entire corpus of the Trust under the Trust Agreement for Attorneys' Fees
will be $250,000 and that said amount will be available to discharge not
only the obligations-of the Company to the Executive under Section 8(a)
hereof, but also similar obligations of the Company to other executives
under similar provisions.
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9. EMPLOYMENT RIGHTS: Nothing expressed or implied in this
Agreement shall create any right or duty on the part of the Company or the
Executive to have the Executive remain in the employment of the Company prior
to any Change in Control, provided, however, that any termination of employment
of the Executive or the removal of the Executive from the office or position in
the Company following the commencement of any discussion with a third person
that ultimately results in a Change in Control shall be deemed to be a
termination or removal of the Executive after a Change in Control for purposes
of this Agreement.
10. WITHHOLDING OF TAXES: The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or government regulation or ruling.
11. TAX PAYMENT: Notwithstanding any other provision hereof,
unless such action would be expressly prohibited by applicable law, if any
amount paid or payable pursuant to this Agreement for services to be rendered
during the Period of Employment or in connection with the payment of severance
compensation pursuant to Section 5 hereof is subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
the Company will pay to the Executive an additional amount in cash equal to the
amount necessary to cause the aggregate remuneration received by the Executive
under this Agreement for services to be rendered during the Period of
Employment or in connection with the payment of severance compensation,
including such additional cash payment (net of all federal, state and local
income taxes and all taxes payable as the result of the application of Sections
280G and 4999 of the Code) to be equal to the aggregate remuneration the
Executive would have received under this Agreement for services to be rendered
during the Period of Employment or in connection with the payment of severance
compensation, excluding such additional payment (net of all federal, state and
local income taxes), as if Sections 280G and 4999 of the Code (and any
successor provisions thereto) had not been enacted into law.
12. SUCCESSORS AND BINDING AGREEMENT: (a) The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent the Company would be
required to perform if no such succession had taken place. This Agreement shall
be binding upon and inure to the benefit of the Company and any successor to
the Company, including without limitation any persons acquiring directly or
indirectly all or substantially all of the business and/or assets of the
Company whether by purchase, merger, consolidation, reorganization or otherwise
(and such successor shall thereafter be deemed the "Company" for the purposes
of this Agreement), but shall not otherwise be assignable, transferable or
delegable by the Company.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and/or legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Section 12(a) hereof. Without limiting the generality of
the foregoing, the Executive's right to receive payments hereunder shall not be
assignable, transferable or delegable, whether by pledge, creation of a
security interest or otherwise, other than by a transfer by his will or by the
laws of descent and distribution and, in
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the event of any attempted assignment or transfer contrary to this Section
12(c), the Company shall have no liability to pay any amount so attempted to be
assigned. transferred or delegated.
(d) The Company and the Executive recognize that each party will
have no adequate remedy at law for breach by the other of any of the agreements
contained herein and, in the event of any such breach, the Company and the
Executive hereby agree and consent that the other shall be entitled to a decree
of specific performance, mandamus or other appropriate remedy to enforce
performance of this Agreement.
13. NOTICE: For all purposes of this Agreement, all communications
including without limitation notices, consents, requests or approvals, provided
for herein shall be in writing and shall be deemed to have been duly given when
delivered or five business days after having been mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company (to the attention of the Secretary of the Company) at
its principal executive office and to the Executive at his principal residence,
or to such other address as any party may have furnished to the other in
writing and in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
14. GOVERNING LAW: The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Ohio, without giving effect to the principles of conflict of laws of such
State.
15. VALIDITY: If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement
and the application of such provision to any other person or circumstances
shall not be affected, and the provision so held to be invalid, unenforceable
or otherwise illegal shall be reformed to the extent (and only to the extent)
necessary to make it enforceable, valid and legal.
16. MISCELLANEOUS: No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company. No waiver by
either party hereto at any time of any breach by the other party hereto or
compliance with any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
17. COUNTERPARTS: This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
THE XXXXXX & SESSIONS CO.
By /s/ Xxxxxx X. Every
----------------------------
Xxxxxx X. Every
Chairman of the Board and
Chief Executive Officer
/s/ Xxxx X. Xxxxxxx
----------------------------
Xxxx X. Xxxxxxx
