Exhibit 10.11
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
made and entered into effective as of the 1st day of July, 2001 (the "Effective
Date") by and between Xxxxxx & Xxxxx Corporation, an Ohio corporation
("Employer"), and Xxxx X. Xxxxxxxx ("Executive").
WHEREAS, Executive presently serves as Chief Executive Officer of
Employer pursuant to the terms of an Employment Agreement, dated as of June 1,
1999, as amended by the first and second amendment thereto (the "Prior
Agreement"); and
WHEREAS, Employer desires to continue to employ Executive as its Chief
Executive Officer as of and after the Effective Date and Executive desires to be
so employed by Employer, upon the terms and subject to the conditions set forth
in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Employer and Executive, intending
to be legally bound, agree as follows:
1. EMPLOYMENT. Employer hereby employs Executive as its Chief Executive
Officer upon the terms and conditions and for the compensation herein provided.
Executive hereby agrees to be so employed and to fulfill the duties of Chief
Executive Officer. Executive shall also serve as a member of Employer's Board of
Directors. This Agreement shall, as of the Effective Date, replace the Prior
Agreement in its entirety. The term of Executive's employment under this
Agreement shall commence on the Effective Date and end on the third anniversary
of that date. The term may be extended only by the written agreement of the
parties. Upon termination of Executive's employment at or after the end of term,
as such term may be extended, Executive and his spouse shall be entitled to the
benefit described in Section 4(c)(iv) of this Agreement.
2. DUTIES AND POWER. For so long as Executive is employed by Employer,
Executive agrees as follows: to devote his full and exclusive business time and
attention to the business of Employer and of any subsidiaries or affiliates of
Employer (excluding reasonable vacations and sick leave in accordance with
Employer's policies consistent with his position) and to perform all duties in a
professional and prudent manner. As Chief Executive Officer, Executive shall
report directly to the Board of Directors of Employer, have no other officer or
employee of Employer senior to him and have full power, authority, duties and
responsibilities customarily associated with the position as Chief Executive
Officer, including, without limitation, authority, direction and control over
day-to-day business, financial and personnel matters of Employer, subject to the
lawful and reasonable policies and guidelines as may be established by the Board
of Directors of Employer. Executive agrees to devote his full business time to
the performance of services hereunder and not to engage in any other activity or
own any interest that would conflict with the interest of Employer or would
interfere with his
responsibilities to Employer and the performance of his duties hereunder;
provided, however, that: (i) passive investments of less than 5% of the
outstanding securities of any corporation shall be deemed not to violate this
provision; (ii) Executive may engage in activities involving charitable,
educational, religious, industry, trade and similar types of organizations,
speaking engagements and similar type activities to the extent that such other
activities do not detract from the performance by Executive of his duties and
obligations hereunder; and (iii) Executive may serve as an outside director of
other companies to the extent that such service does not involve a conflict of
interest and does not detract in any material respect from the performance by
Executive of his duties and obligations hereunder. Executive shall perform his
duties at Employer's office in North Canton, Ohio, except that a reasonable
amount of business-related travel may be required.
3. COMPENSATION AND BENEFITS. For all services rendered by Executive
pursuant to this Agreement, Employer shall compensate Executive as follows:
(a) BASE COMPENSATION. Subject to the terms and conditions set forth
herein, Employer (or, at Employer's option, any subsidiary or affiliate of
Employer for which Executive also provides services hereunder) shall pay to
Executive a salary of at least $325,000 per annum on and after July 1, 2001 and
$350,000 on and after January 1, 2003. Such annual compensation as it may be
increased from time to time shall be referred to herein as the "Base
Compensation". Executive's Base Compensation will be paid in accordance with
Employer's customary payroll practices (but not less frequently than monthly),
and will be prorated based upon the number of days elapsed in any partial year.
Subject to the minimum Base Compensation requirements set forth above, Base
Compensation shall be reviewed annually by the Compensation Committee of
Employer's Board of Directors and may be further increased at the sole
discretion of such Committee.
(b) BONUS. Executive may be awarded an annual bonus based on the
attainment of certain goals to be agreed upon by Executive and Employer's Board
of Directors on or before March 1 of the applicable year. Such annual bonus is
targeted to be 50% of Executive's Base Compensation (the "Target Bonus"), but
may be increased (up to a maximum of 100% of Base Compensation) or decreased by
the Board of Directors in its discretion depending on the extent to which the
goals are exceeded or not met. Notwithstanding the foregoing, in the event that
a Change in Control (as defined below) shall occur, Executive shall be entitled
to a minimum guaranteed bonus for each of the fiscal year of Employer in which
such Change in Control occurs (the "Current Year") and the immediately preceding
fiscal year (the "Preceding Year") of 50% of Executive's Base Compensation for
each such year (the "Minimum Bonus"). The Minimum Bonus for the Current Year and
the Preceding Year shall be paid on the closing date of the Change in Control
transaction; provided, however, that, in the case of the Minimum Bonus for the
Preceding Year, if the closing of such Change in Control transaction occurs
after the payment date of Executive's bonus for the Preceding Year, then, on the
closing date of Change in Control transaction, Employer shall pay to Executive
an amount equal to the excess, if any, of the Minimum Bonus for the Preceding
Year over the amount of bonus theretofore paid to Executive with respect to
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the Preceding Year; provided, however, that if such bonus paid with respect to
the Preceding Year equals or exceeds the Minimum Bonus that would otherwise be
due under this Section 3(b) with respect to such Preceding Year upon the closing
of the Change in Control transaction, then no such Minimum Bonus for the
Preceding Year shall be paid. In addition to the foregoing, Executive shall be
entitled to receive (i) an Annual Retention Bonus of $330,000 on each June 30 of
2002, 2003 and 2004 if he is still in the employ of Employer on each such date,
payment of such Annual Retention Bonuses to be accelerated and paid in full upon
the closing date of any Change in Control transaction, and (ii) a Special
Retention Bonus of $1,000,000 to be paid on the closing date of any Change in
Control transaction that occurs during, or within six (6) months after the
expiration of, the term of this Agreement, provided such Special Retention Bonus
shall not be payable if Executive is employed as the Chief Executive Officer of
the surviving company in such Change in Control transaction.
(c) BENEFITS. Executive shall be entitled, as an employee of Employer,
to employee retirement and welfare benefits, perquisites and other executive
benefits substantially comparable to those employee benefits made available to
the senior executive management of Employer, including, but not limited to,
401(k) plan and medical benefit plan participation and no less than five (5)
weeks of vacation per year. For purposes of the vacation entitlement, Executive
shall receive credit for his prior 32 years of service in the industry.
(d) CERTAIN REIMBURSEMENTS. Executive shall be entitled to
reimbursement by Employer for financial and tax planning advisory services at
rates customary to the local area and for uninsured expenses associated with an
annual physical examination by a physician selected by him. In addition, in each
year during the term of this Agreement, Executive shall be entitled to perform
up to three (3) weeks of his service hereunder at a health resort of Executive's
choosing. During any such stay at a health resort, Executive shall be expected
to perform services as Chief Executive Officer of the Company, but his hours
shall be at his sole discretion. Employer shall reimburse Executive for all
expenses associated with such stay, and Employer shall further pay Executive an
amount determined by its accountants to be equal to Executive's federal, state
and local taxes on the foregoing reimbursement (the "Health Resort Tax
Gross-Up") and the federal, state and local taxes on the Health Resort Tax
Gross-Up, all to the end that Executive be held harmless, on an after-tax basis,
from the tax impact thereof. Employer will also reimburse Executive for
reasonable attorneys' fees and expenses incurred in connection with review of
this Agreement by Executive's attorney. In addition, Employer shall pay
Executive an amount determined by its accountants to be equal to Executive's
federal, state and local taxes on the foregoing reimbursement (the "Legal
Expense Tax Gross-up") and the federal, state and local taxes on the Legal
Expense Tax Gross-up, all to the end that Executive be held harmless, on an
after-tax basis, from the tax impact thereof. Notwithstanding the foregoing, the
total amount paid or reimbursed to Executive under this Section 3(d) shall not
exceed $35,000 in any calendar year.
(e) EXPENSES. Executive shall be entitled to reimbursement by Employer
for his ordinary and necessary business expenses incurred in the performance of
his duties
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under this Agreement if supported by reasonable documentation as required by
Employer in accordance with its usual practices.
(f) LIABILITY FOR TAXES. Except as otherwise provided in Section 3(d)
and Section 4(f), Employer shall have no liability for any tax liability of
Executive attributable to any payment made under this Agreement except for
customary employer liability for federal and state employee taxes (e.g., social
security, Medicare, etc.). Employer may withhold from any such payment such
amounts as may be required by applicable provisions of the Internal Revenue
Code, other tax laws, and the rules and regulations of the Internal Revenue
Service and other tax agencies in effect at the time of any such payment.
4. TERMINATION OF EMPLOYMENT.
(a) TERMINATION NOTICE. Notwithstanding any other provision contained
in this Agreement, either Executive or Employer may terminate Executive's
employment hereunder at any time with or without Cause (as defined below) at its
or his election upon prior written notice (a "Termination Notice") to the other.
A Termination Notice shall be effective upon delivery to the other party and the
termination shall be effective as of the date set forth in such Termination
Notice (hereinafter, the "Termination Date').
(b) DEFINITION OF "CAUSE". For purposes of this Agreement, the term
"Cause" shall mean Executive's personal dishonesty, fraud or deceit, willful
misconduct, a serious breach of a fiduciary duty involving personal profit,
conviction of a felony (including via a guilty or nolo contendere plea), willful
neglect of duties by Executive or material breach by Executive of the provisions
of Sections 2, 6, 7 or 8 of this Agreement; provided, however, that
unsatisfactory job performance shall not be considered Cause for termination of
the Executive's employment by the Company. Executive shall be afforded a
reasonable opportunity to cure any willful neglect of his duties and any other
alleged material breach of this Agreement according to the following terms.
Employer's Board of Directors shall give Executive written notice stating with
reasonable specificity the nature of the circumstances determined by the Board
of Directors in good faith to constitute willful neglect or other material
breach. Executive shall have thirty (30) days from his receipt of such notice to
cure such circumstances or such breach if such breach is reasonably susceptible
to cure. If, in the reasonable good faith judgment of the Board of Directors,
the alleged breach is not reasonably susceptible to cure, or such circumstances
or material breach has not been satisfactorily cured within such thirty (30) day
cure period, such neglect of duties or material breach shall thereupon
constitute "Cause" hereunder.
(c) TERMINATION WITHOUT CAUSE. Employer may terminate Executive's
employment under this Agreement at any time with or without any Cause shown.
Upon any such termination without Cause, or upon a resignation by Executive with
Good Reason as described in Section 4(e), Executive shall be entitled to the
following:
(i) For the period from the termination date through the
then-remaining term of this Agreement (the
"Continuation Period"), Executive shall
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be entitled to continuation of his base salary, at
the rate in effect on the termination date. This
salary continuation shall be payable in accordance
with Employer's regular payroll practices. The
amount, if any, of such salary continuation that
remains unpaid upon the occurrence of a Change in
Control shall be accelerated and paid in full upon
the closing date of such Change in Control
transaction.
(ii) For each month commencing with the month in which the
date of termination occurs and ending with the last
month of the Continuation Period, Employer shall pay
to Executive a payment equal to one-twelfth (1/12) of
Executive's Target Bonus for the fiscal year in which
the date of termination occurs. The amount, if any,
of such monthly payments that remains unpaid upon the
occurrence of a Change in Control shall be
accelerated and paid in full upon the closing date of
such Change in Control transaction.
(iii) Executive shall receive the Annual Retention Bonuses
as and when such amounts would have been payable had
Executive's employment continued for the balance of
the term of this Agreement. The amount, if any, of
such Annual Retention Bonuses that remains unpaid
upon the occurrence of a Change in Control shall be
accelerated and paid in full upon the closing date of
such Change in Control transaction.
(iv) Executive and his spouse shall be entitled to
continued health benefits on the same basis as if
Executive had continued as an active employee of
Employer until Executive attains Medicare benefit
eligibility. For the longer of the duration of the
Continuation Period, or two years following the date
of termination, Employer shall bear the full cost
thereof, and thereafter Executive shall bear such
cost at Employer's COBRA rate. With the approval of
Executive, which approval shall not be unreasonably
withheld, Employer may provide the foregoing coverage
through the acquisition of insurance or other means
provided that the benefits are substantially similar
to the benefits provided under Employer's health
benefit plans as in effect from time to time.
(v) If a Change in Control occurs within six (6) months
following the date of termination, Executive shall
receive the $1,000,000 Special Retention Bonus on the
closing Date of such Change in Control transaction.
Notwithstanding the foregoing, the aggregate amount of the payments to
Executive under clauses (i), (ii), (iii) and (v) above shall not exceed
$1,990,000. If the payments under clauses (i), (ii), (iii) and (v) above must be
reduced in accordance with the immediately preceding sentence, such reduction
shall be effected by reducing the
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payments in the inverse of the order in which they are due to be paid and on a
pro rata basis to payments due on the same date.
All of the above severance payments and benefits shall be subject to
normal withholding of taxes and other authorized deductions. Executive
acknowledges and agrees that the provisions of this Section 4(c) state his
entire and exclusive rights, entitlements and remedies against Employer, its
successors, assigns, affiliates, employees and representatives for termination
without any Cause shown by Employer; provided, however, that the Executive also
shall be entitled to receive all salary, bonus, benefits and expense
reimbursement which have accrued as of the Termination Date. The payments
provided in this Section 4(c) are conditioned upon and subject to the Executive
complying with the restrictive covenants provided in Sections 6 and 7 hereof and
upon the Executive executing a general release and waiver (in a form
substantially similar to the form attached hereto as Exhibit A). Except as
provided in Section 4(f), if applicable, Employer shall have no additional
obligations under this Agreement.
(d) TERMINATION FOR DEATH OR PERMANENT DISABILITY. In the event that
Executive's employment by Employer is terminated because of death or Permanent
Disability (as defined below), then, subject to all applicable laws, Executive
(or Executive's estate) shall be entitled to receive only that salary, bonus,
benefits and expense reimbursements which have accrued as of the Termination
Date, and Executive, or, in the event of Executive's death, Executive's
surviving spouse, if any, shall be entitled to the benefit described in Section
4(c)(iv). For purposes of this Agreement, "Permanent Disability" shall mean the
inability of Executive, by reason of any ailment or illness, or physical or
mental condition, to devote substantially all of his time during normal business
hours to the daily performance of Executive's duties as required under this
Agreement for a continuous period of six (6) months, as reflected in the
opinions of three qualified physicians, one of which has been selected by
Employer, one of which has been selected by Executive, and one of which has been
selected by the other two physicians, jointly.
(e) TERMINATION FOR CAUSE OR TERMINATION BY THE EXECUTIVE. In the event
that Executive elects to terminate his employment under this Agreement (except
as otherwise provided below), or if Executive is terminated for Cause, then
Executive shall not be entitled to receive any severance pay or compensation
except such base compensation, benefits, bonuses and expense reimbursement as
shall have accrued prior to the Termination Date. Notwithstanding any provision
of this Agreement to the contrary, in the event Executive elects to terminate
his employment either (i) following the occurrence of any event constituting
Good Reason (as defined below) or (ii) for any reason after the occurrence of a
Change of Control (as defined below in Section 5(g)(iii)) regardless of the
reason for such termination, such termination shall be deemed to constitute a
termination by Employer without Cause, and Executive shall be entitled to all of
the payments and benefits set forth in Section 4(c). For purposes of this
Agreement, "Good Reason means any of the following: (i) a substantial and
adverse change in Executive's status or position as Chief Executive Officer and
a key employee of Employer, or a substantial reduction in the duties and
responsibilities previously exercised by Executive, or any failure to reappoint
or reelect Executive to, such position,
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except in connection with the termination of Executive's employment for Cause or
Permanent Disability, or as a result of Executive's death; (ii) a reduction
(other than for Cause) by Employer in Executive's Base Compensation; (iii) a
relocation of Executive's principal place of work to any location that is more
than 25 miles from Canton, Ohio; (iv) a sale or other exchange or transfer
(whether by merger, reorganization or otherwise) of substantially all of the
shares or assets of Employer; or (v) a material breach of the provisions of the
Agreement by Employer. Notwithstanding the foregoing, a termination of
employment by Executive will be deemed to be for "Good Reason" only if Executive
elects to terminate employment within ninety (90) days after he knows or should
know that an event constituting Good Reason has occurred; provided, however,
that Executive's continued employment following the occurrence of such an event
shall not constitute consent to, or a waiver of rights with respect to, any
other event constituting Good Reason hereunder. Executive acknowledges and
agrees that the provisions of this Section state his entire and exclusive
rights, entitlements and remedies against the Employer, its successors, assigns,
affiliates and representatives if he elects to terminate his employment and/or
is terminated with Cause. The payments provided in this Section 4(e) are
conditioned upon and subject to the Executive complying with the restrictive
covenants provided in Sections 6 and 7 hereof and upon the Executive executing a
general release and waiver (in a form substantially similar to the form attached
hereto as Exhibit A). Except as provided in Section 4(f), if applicable,
Employer shall have no additional obligations under this Agreement.
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(f) CERTAIN ADDITIONAL OBLIGATIONS OF EMPLOYER.
(i) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined
that any economic benefit or payment or distribution
by Employer to or for the benefit of the Employee,
whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement
or otherwise (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Internal
Revenue Code or any Applicable Interest and Penalties
(as defined below) with respect to such excise tax
(such excise tax, together with any Applicable
Interest and Penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Executive
shall be entitled to receive an additional payment (a
"Gross-Up-Payment") in an amount such that after
payment by Executive of all taxes (including any
Applicable Interest and Penalties imposed with
respect to such taxes), including any Excise Tax
imposed upon the Gross-Up Payment, Executive retains
an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments. For purposes of this
Agreement, "Applicable Interest and Penalties" means
all interest and penalties payable by Executive with
respect to excise tax imposed under Section 4999 of
the Internal Revenue Code other than interest or
penalties determined by the Accounting Firm (as
defined below) to be primarily attributable to
unreasonable delay on the part of Executive.
(ii) Subject to the provisions of Section 4(f)(iii), all
determinations required to be made under this Section
4(f), including whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment,
shall be made by Employer's regular outside
independent public accounting firm (the "Accounting
Firm") which shall provide detailed supporting
calculations both to Employer and Executive within 15
business days of the Effective Date of Termination,
if applicable, or such earlier time as is requested
by Employer. The initial Gross-Up Payment, if any, as
determined pursuant to this Section 4(f)(ii), shall
be paid to Executive within 5 days of the receipt of
the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding
upon Employer and Executive. As a result of the
uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by
Employer should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that Employer exhausts its
remedies pursuant to Section 4(f)(iii) and Executive
thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment
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that has occurred and any such Underpayment shall be
promptly paid by Employer to or for the benefit of
Executive.
(iii) Executive shall notify Employer in writing of any
claim by the Internal Revenue Service that, if
successful, would require the payment by Employer of
the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten
business days after the later of either (i) the date
Executive has actual knowledge of such claim, or (ii)
ten days after the Internal Revenue Service issues to
Executive either a written report proposing
imposition of the Excise Tax or a statutory notice of
deficiency with respect thereto, and shall apprise
Employer of the nature of such claim and the date on
which such claim is requested to be paid. Executive
shall not pay such claim prior to the expiration of
the thirty-day period following the date on which he
gives such notice to Employer (or such shorter period
ending on the date that any payment of taxes with
respect to such claim is due). If Employer notifies
Executive in writing prior to the expiration of such
period that it desires to contest such claim,
Executive shall: (i) give Employer any information
reasonably requested by Employer relating to such
claim, (ii) take such action in connection with
contesting such claim as Employer shall reasonably
request in writing from time to time, including,
without limitation, accepting legal representation
with respect to such claim by an attorney reasonably
selected by Employer, (iii) cooperate with Employer
in good faith in order effectively to contest such
claim, (iv) permit Employer to participate in any
proceedings relating to such claim; provided,
however, that Employer shall bear and pay directly
all costs and expenses (including additional interest
and penalties) incurred in connection with such
contest and shall indemnify and hold Executive
harmless, on an after-tax basis, for any Excise Tax
or income tax, including interest and penalties with
respect thereto, imposed as a result of such contest.
Without limitation of the foregoing provisions of
this Section 4(f)(iii), Employer shall control all
proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and
all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct
Executive to request or accede to a request for an
extension of the statute of limitations with respect
only to the tax claimed, or pay the tax claimed and
xxx for a refund or contest the claim in any
permissible manner, and Executive agrees to prosecute
such contest to a determination before any
administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as
Employer shall determine; provided, however, that if
Employer directs Executive to pay such claim and xxx
for a refund, Employer shall advance the amount of
such payment to Executive, on an
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interest-free basis and shall indemnify and hold
Executive harmless, on an after-tax basis, from any
Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect
to such advance or with respect to any imputed income
with respect to such advance; and further provided
that any extension of the statute of limitations
requested or acceded to by Executive at Employer's
request and relating to payment of taxes for the
taxable year of Executive with respect to which such
contested amount is claimed to be due is limited
solely to such contested amount. Furthermore,
Employer's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would
be payable hereunder and Executive shall be entitled
to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any
other taxing authority.
(iv) If, after the receipt by Executive of an amount
advanced by Employer pursuant to Section 4(f)(iii),
Executive becomes entitled to receive any refund with
respect to such claim, Executive shall (subject to
Employer's complying with the requirements of Section
4(f)(iii)) promptly pay to Employer the amount of
such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If,
after the receipt by Executive of an amount advanced
by Employer pursuant to Section 4(f)(iii), a
determination is made that Executive shall not be
entitled to any refund with respect to such claim and
Employer does not notify Executive in writing of its
intent to contest such denial of refund prior to the
expiration of thirty days after such determination,
then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
(v) In the event that any state or municipality or
subdivision thereof shall subject any Payment to any
special tax which shall be in addition to the
generally applicable income tax imposed by such
state, municipality, or subdivision with respect to
receipt of such Payment, the foregoing provisions of
this Section 4(f) shall apply, mutatis mutandis, with
respect to such special tax.
(vi) Employer will reimburse Executive for reasonable
attorneys' fees and expenses incurred following the
occurrence of a Change in Control in connection with
the enforcement of any of Executive's rights under
this Agreement provided that Executive substantially
prevails in such action. In addition, Employer shall
pay Executive an amount determined by its accountants
to be equal to Executive's federal, state and local
taxes on the foregoing reimbursement (the
"Enforcement Expense Tax Gross-up") and the federal,
state and
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local taxes on the Enforcement Expense Tax Gross-up,
all to the end that Executive be held harmless, on an
after-tax basis, from the tax impact thereof.
5. STOCK OPTIONS.
(a) TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. Subject to the terms
and conditions of this Agreement, Employer granted to Executive, effective June
1, 1999, an option ("Option") to purchase 139,383 shares of common stock of
Employer. The Option granted pursuant to this first paragraph of Section 5(a) is
referred to in this Agreement as the "Initial Option."
Effective March 22, 2000, Employer granted to Executive an additional
Option to purchase 69,692 shares of common stock of Employer (the "March 2000
Option").
Effective as of December 31, 2001, Employer grants to Executive an
additional Option to purchase 100,000 shares of common stock of Employer (the
"December 2001 Option") and the parties agree to the cancellation and
termination of the Option to purchase 25,000 shares of common stock of Employer
at an exercise price of $3.59 per shares that was granted to Executive prior to
the date of this Agreement.
References in this Agreement to the "Options" shall be deemed to refer
to the Initial Option, the March 2000 Option and the December 2001 Option.
References in this Agreement to the "Option Shares" shall be deemed to refer to
the shares of common stock of Employer issuable upon exercise of the Options.
(b) VESTING. The Initial Option shall be vested as follows: One-fourth
(1/4) of the Option Shares (I.E., 34,845 shares) shall vest and be exercisable
on June 1, 2000 and one-twelfth (1/12) of the remaining Option Shares (I.E.,
8,711 shares) shall vest and be exercisable at the end of each three (3) month
period thereafter until all Option Shares have vested, provided, however, in
order for Option Shares eligible to vest for any period to vest, Executive must
have remained an executive or member of the Board of Directors of Employer from
the date hereof through the last day of the relevant period. The Board of
Directors of Employer, in its discretion, may from time to time accelerate the
vesting of any or all of the Option Shares.
The March 2000 Option shall be vested as follows: One-fourth (1/4) of
the Option Shares (I.E., 17,423 shares) shall vest and be exercisable on March
22, 2001, and of the remaining Option Shares, 4,356 Option Shares shall vest and
be exercisable at the end of each of the first eleven three (3) month periods
thereafter, and 4,353 Option Shares shall vest and be exercisable at the end of
the twelfth three month period thereafter, until all such Option Shares have
vested, provided, however, in order for Option Shares eligible to vest for any
period to vest, Executive must have remained an executive or member of the Board
of Directors of Employer from the date hereof through the last day of the
relevant period. The Board of Directors of Employer, in its discretion may from
time to time accelerate the vesting of any or all of the Option Shares.
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The December 2001 Option shall be vested as follows: One-fourth (1/4)
of the Option Shares (I.E., 25,000 shares) shall vest and be exercisable on June
30, 2003, and of the remaining Option Shares, 25,000 Option Shares shall vest
and be exercisable at the end of each of September 30, 2003, December 31, 2003
and March 31, 2004, until all such Option Shares have vested, provided, however,
in order for Option Shares eligible to vest for any period to vest, Executive
must have remained an executive or member of the Board of Directors of Employer
from the date hereof through the last day of the relevant period. The Board of
Directors of Employer, in its discretion may from time to time accelerate the
vesting of any or all of the Option Shares.
(c) EXERCISE PRICE AND METHOD OF PAYMENT.
(i) EXERCISE PRICE. The exercise price (the "Exercise
Price") of the Initial Option shall be $0.01 per
share. The Exercise Price of the March 2000 Option
shall be $0.21 per share and the Exercise Price of
the December 2001 Option shall be $2.14 per share.
(ii) METHOD OF PAYMENT. Payment of the Exercise Price per
share, together with payment of any tax withholding
amounts, is due in full upon exercise of any or all
vested Option Shares. Executive may elect, to the
extent permitted by applicable statutes and
regulations, to make payment of the Exercise Price
and the tax withholding amounts under one of the
following alternatives:
(A) Payment of the exercise price per share in
cash (including check) at the time of
exercise;
(B) Payment by delivery of already-owned shares
of common stock of Employer, owned free and
clear of any liens, claims, encumbrances or
security interests, or by having withheld
shares of common stock otherwise issuable
upon exercise of the Option, which common
stock shall be valued at its fair market
value on the date of exercise; or
(C) Payment by any combination of the methods of
payment permitted by Sections 5(c)(ii)(A)
and 5(c)(ii)(B).
(iii) WHOLE SHARES. The Options may not be exercised for
any number of Option Shares which would require the
issuance of anything other than whole shares.
(d) APPLICABLE LAWS OR REGULATIONS.
(i) Executive acknowledges and understands that neither
the Options, the Option Shares nor any other of the
securities of Employer have been registered under the
Securities Act of 1933, as amended (the "Act"), or
qualified under any state securities laws or
regulations ("Blue Sky Laws") in reliance upon the
nonpublic offering
-12-
exemption from the registration requirements of the
Act and similar exemptions under the Blue Sky Laws.
Executive hereby acknowledges and agrees that he is
acquiring the Options and any Option Shares which he
may subsequently acquire, solely for his own account
and not with a view to or for sale in connection with
any distribution of the Options or Option Shares, and
that Executive either (A) has such knowledge and
experience in financial and business matters that he
is capable of evaluating the merits and risks of the
proposed investment and therefore has the capacity to
protect his own interests in connection with the
acquisition of the Option Shares, or (B) has a
preexisting personal or business relationship with
Employer or one or more of its officers, directors or
controlling persons. In the event Executive exercises
any of the Options as provided herein, Executive
consents to the placement of any and all legends on
any certificates evidencing ownership of the Option
Shares and all restrictions on transfer of the Option
Shares which may, in the determination of Employer or
its counsel, be appropriate or required by law.
(ii) Employer's obligations to sell and deliver Option
Shares are subject to, and conditional upon, such
compliance as Employer deems necessary or advisable
with federal and state laws, rules and regulations
applying to the authorization, issuance, listing or
sale of securities, and the Options may not be
exercised unless (A) the Option Shares have been
registered under a then currently effective
registration statement under the Act, or (B) a
determination is made by counsel to Employer that
such registration is not required under applicable
securities laws.
(iii) Executive shall indemnify, defend and hold harmless
Employer and its officers, directors and stockholders
from and against any and all claims, demands, losses,
costs, expenses (including without limitation
attorney's fees) that arise from, relate to or result
from any breach of, or failure of Executive to
perform, any of Executive's representations,
warranties or covenants set forth in Section 5(d)(i).
(e) TERM.
(i) The term of the Options commences on the applicable
date of grant thereof, as set forth above, and shall
automatically expire on June 1, 2009 (the "Expiration
Date") unless the Options expire sooner as set forth
below. In no event may the options be exercised on or
after the Expiration Date.
(ii) The Options shall terminate prior to the Expiration
Date as follows:
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(A) If Executive ceases to be an employee or
director of Employer, whichever last occurs,
for any reason other than death, retirement
or disability or expiration of the term of
this Agreement, the Options may be exercised
(to the extent that Executive was entitled
to exercise the same on the date of such
cessation) within a period of three (3)
months following such cessation, but not
later than the expiration date described in
Section 5(e)(i), and upon expiration of such
period, the Options shall terminate;
PROVIDED, HOWEVER, that the Options will
immediately terminate if Executive's
employment is terminated by Employer for
Cause.
(B) If Executive ceases to be an employee or
director of Employer, whichever last occurs,
by reason of death, retirement or permanent
disability, or upon expiration of the term
of this Agreement, the Options may be
exercised (to the extent Executive was
entitled to exercise the same on the date of
such cessation of service) within a period
of twelve (12) months following such
cessation, but not later than the expiration
date described in Section 5(e)(i), and upon
expiration of such period, the Options shall
terminate.
(f) EXERCISE.
(i) This Options may be exercised by Executive from time
to time, to the extent Option Shares have vested, by
delivering a notice of exercise in the form set forth
in Exhibit A hereto, or such other form then
designated by Employer (the "Notice of Exercise")
together with the aggregate exercise price to the
corporate secretary of Employer, or to such other
person as Employer may designate, during regular
business hours, together with such additional
documents as Employer may then require in its
discretion. The date of exercise shall be the date of
Employer's receipt of the Notice of Exercise.
(ii) By exercising the Options, Executive agrees that:
(A) as a precondition to the completion of any
exercise of the Options, Employer may
require Executive to enter an arrangement
providing for the payment by Executive to
Employer of any tax withholding obligation
of Employer arising by reason of: (1) the
exercise of the Options; (2) the lapse of
any substantial risk of forfeiture to which
the shares are subject at the time of
exercise; or (3) the disposition of shares
acquired upon such exercise. Executive also
agrees that any exercise of the Options has
not been completed and that Employer is
under no obligation to issue any common
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stock to Executive until such an arrangement
is established or Employer's tax withholding
obligations are satisfied, as reasonably
determined by Employer; and
(B) Employer (or a representative of the
underwriters) may, in connection with the
first underwritten registration of the
offering of any equity securities of
Employer under the Act, require that
Executive not sell or otherwise transfer or
dispose of any shares of common stock or
other securities of Employer during such
period (not to exceed one hundred eighty
(180) days or, if less, the period of time
any other executive officer of Employer is
so restricted) following the effective date
of the registration statement of Employer
filed under the Act as may be requested by
Employer or the representative of the
underwriters. Executive further agrees that
Employer may impose stop-transfer
instructions with respect to securities
subject to the foregoing restrictions until
the end of such period.
(g) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
(i) In the event of any change in the number or nature of
issued and outstanding shares of common stock of
Employer by reason of any stock dividend, stock
split, recapitalization, merger, rights offering,
share exchange or other change in the corporate or
capital structure of Employer, which increases,
decreases, or exchanges the shares of common stock of
Employer for a different number or kind of shares or
other securities, an appropriate and proportionate
adjustment (to the extent necessary or appropriate,
as determined by the Board of Directors of Employer,
in its discretion) shall be made in (A) the number of
shares or other securities subject to the Options,
and (B) the Exercise Price.
(ii) In the event of a merger, consolidation, sale or
exchange of all or substantially all of the assets of
Employer, or other corporate reorganization of
Employer, other than a Change in Control (as
hereinafter defined), the Board of Directors of
Employer, in its discretion, may, but is not
obligated to do, either of the following: (A) pay in
cash the difference between the Exercise Price and
the consideration receivable in the transaction by a
holder of common stock of Employer for the number of
Option Shares unexercised, whether or not vested, or
(B) provide that Executive shall receive, upon
exercise of the Options, the stock or other
securities, cash or property to which Executive would
have been entitled if Executive had exercised the
Options and had been a holder of record of shares of
common stock of employer on the record date fixed for
determination of holders of shares of common stock of
Employer
-15-
entitled to receive such stock or other securities,
cash or property at the same aggregate price as the
aggregate Exercise Price of the Option Shares, with
adjustments as set forth in Section 5(g)(i).
(iii) In the event of a Change in Control, all Option
Shares shall immediately become exercisable in full.
For purposes of this Agreement, a "Change in Control"
shall mean the following and shall be deemed to occur
if:
(A) As a result of any transaction, any of the
following occur (1) the Permitted Holders no
longer beneficially own (within the meaning
of Rule 13d-3 promulgated under the
securities Exchange Act of 1934, as
amended), in the aggregate, at least 25% of
the outstanding shares of common stock of
Employer ("Outstanding Common Stock"), (2)
the Permitted Holders no longer beneficially
own (within the meaning of Rule 13d-3
promulgated under the Securities Exchange
Act of 1934, as amended), in the aggregate,
at least 50% of the combined voting power of
Employer's then outstanding securities
entitled to vote generally in the election
of directors ("Employer Voting Securities"),
or (3) any Person other than the Permitted
Holders becomes the beneficial owner (within
the meaning of Rule 13d-3 promulgated under
the Securities Exchange Act of 1934, as
amended) of an amount of Employer Voting
Securities (as defined below) that is
greater than the amount of Employer Voting
Securities that are then beneficially owned
(within the meaning of Rule 13d-3
promulgated under the Securities Exchange
Act of 1934, as amended), in the aggregate,
by the Permitted Holders; or
(B) Prior to the occurrence of an underwritten
public offering of the Company's equity
securities, any of the following events
occurs:
(x) Any individual, entity or group (within
the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act
of 1934, as amended) (each, a "Person"),
other than a Permitted Holder, becomes
the beneficial owner (within the meaning
of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as
amended) of 50% or more of the Employer
Voting Securities; or
(y) Consummation by Employer of the sale or
other disposition by Employer of all or
substantially all of Employer's assets
or a merger, consolidation or other
-16-
reorganization of Employer with any
other Person, other than:
(1) a merger, consolidation or other
reorganization that would result
in the voting securities of
Employer outstanding immediately
prior thereto (or, in the case
of a reorganization or merger or
consolidation that is preceded
or accomplished by an
acquisition or series of related
acquisitions by any person, by
tender or exchange offer or
otherwise, of voting securities
representing 50% or more of the
combined voting power of all
securities of Employer,
immediately prior to such
acquisition or the first
acquisition in such series of
acquisitions) continuing to
represent, either by remaining
outstanding or by being
converted into voting securities
of another entity, more than 50%
of the combined voting power of
the voting securities of
Employer or such other entity
outstanding immediately after
such reorganization or merger or
consolidation (or series of
related transactions involving
such a reorganization or merger
or consolidation), or
(2) a merger, consolidation or other
reorganization effected to
implement a recapitalization or
reincorporation of Employer (or
similar transaction) that does
not result in a material change
in beneficial ownership of the
voting securities of Employer or
its successor; or
(C) Following the occurrence of an underwritten
public offering of Employer's equity
securities, any of the following events
occur:
(w) the acquisition in one or more
transactions by any Person, other
than a Permitted Holder, becomes the
beneficial owner (within the meaning
of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as
amended) of greater than thirty
percent (30%) of the Employer Voting
Securities; or
(x) the consummation of a merger,
reorganization, consolidation, share
exchange, transfer of assets or
other transaction having similar
effect involving Employer, unless,
following such transaction, stock
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possessing at least fifty percent
(50%) of the outstanding Employer
Voting Securities of the corporation
resulting from such transaction is
beneficially owned, directly or
indirectly, by Permitted Holders, or
Persons who were beneficial owners
of the Employer Voting Securities
immediately prior to such
transaction; or
(y) individuals who are members of the
Board of Directors of Employer as of
the Effective Date of this Agreement
(the "Incumbent Directors") cease
for any reason to constitute at
least a majority of the members of
the Board; provided, however, that
any individual becoming a director
subsequent to the date of this
Agreement whose appointment to the
Board or nomination for election by
Employer was approved by a vote of
at least a majority of the Incumbent
Directors then in office (unless
such appointment or election was at
the request of an unrelated third
party who has taken steps reasonably
calculated to result in a Change in
Control as described in paragraphs
(w) or (x) above and who has
indicated publicly an intent to seek
control of Employer) shall be
treated from the date of his or her
appointment or election as an
Incumbent Director; or
(z) consummation of a complete
liquidation or dissolution of
Employer.
For purposes of this Agreement, "Permitted Holders" means (i) TPG
Partners II, L.P., TPG Parallel II, L.P. and TPG Investors II, L.P. (the
"Investors"), (ii) any investment partnership or fund management by the
principals of TPG II, (iii) any partners of the Investors, (iv) members of the
immediate family of the persons described in (iii) and trusts for the benefit of
members of their immediate family, (iv) the respective affiliates (within the
meaning ascribed to such term in Rule 405 of the Securities Act of 1933, as
amended) of Persons described in (i) through (iv), and (v) any Person acting in
the capacity of an underwriter in connection with a public or private offering
of Employer's equity securities.
(h) DELIVERY OF CERTIFICATES, RIGHTS IN OPTION SHARES. Upon the due
exercise of the Options in accordance with the provisions of this Agreement,
Employer shall deliver to the Executive at the main office of Employer, or such
other place as shall be mutually acceptable, a certificate or certificates
representing such shares of common stock to which the Options shall have been so
exercised. Neither Executive, his estate nor his transferees by will or the laws
of descent and distribution shall be, or have any rights or privileges of, a
stockholder of Employer with respect to any Option Shares
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issuable upon exercise of the Options, unless and until certificates
representing such Option Shares shall have been issued and delivered.
(i) TRANSFERABILITY. These Options are not transferable, except by will
or by the laws of descent and distribution, and shall be exercisable only by
Executive during the life of Executive. Notwithstanding the foregoing, by
delivering written notice to Employer, in a form satisfactory to Employer,
Executive may designate a third party who, in the event of the death of
Executive, shall thereafter be entitled to exercise the Options.
(j) NO EMPLOYMENT RIGHT. Nothing in the Options shall be deemed to
create in any way whatsoever any obligation on the part of Executive to continue
in the employ of Employer, or of Employer to continue employment of Executive
with Employer. In addition, nothing in the Options shall obligate Employer or
any affiliate of Employer, or their respective stockholders, board of directors,
officers, or employees to continue any relationship which Executive might have
as a director or consultant for Employer or affiliate of Employer.
6. NONDISCLOSURE.
(a) CONFIDENTIAL INFORMATION. Executive hereby acknowledges that in
connection with his employment by Employer he will be exposed to and may obtain
certain information (including, without limitation, procedures, memoranda,
notes, records and customer and supplier lists whether such information has been
or is made, developed or compiled by Executive or otherwise has been or is made
available to him) regarding the business and operations of Employer and its
subsidiaries or affiliates. Executive further acknowledges that such information
and procedures are unique, valuable, considered trade secrets and deemed
proprietary by Employer. For purposes of this Agreement, such information and
procedures shall be referred to as "Confidential Information," except that the
following shall not be considered Confidential Information: (i) information
disclosed on a non-confidential basis to third parties by Employer (but not by
Executive in violation of this Agreement), (ii) information released from
confidential treatment by written consent of Employer, and (iii) information
lawfully available to the general public.
(b) USE OF CONFIDENTIAL INFORMATION. Executive agrees that all
Confidential Information is and will remain the property of Employer. Executive
further agrees, except as otherwise required by law and for disclosures
occurring in the good faith performance of his duties for Employer, while
employed by Employer hereunder and thereafter, to hold in the strictest
confidence all Confidential Information, and not to, directly or indirectly,
duplicate, sell, use, lease, commercialize, disclose or otherwise divulge to any
person or entity any portion of the Confidential Information or use any
Confidential Information for his own benefit or profit or allow any person,
entity or third party, other than Employer and authorized executives of the
same, to use or otherwise gain access to any Confidential Information.
-19-
(c) TRADE SECRET. It is the intention of the parties that to the extent
any Confidential Information may constitute a "trade secret" as defined by Ohio
law, then, in addition to the remedies set forth in this Agreement, Employer may
elect to bring an action against Executive in the case of any actual or
threatened misappropriation of any such trade secret by Executive.
(d) NO REMEDY AT LAW. Regardless of whether any of the Confidential
Information shall constitute a trade secret as defined by Ohio law, Executive
expressly recognizes and agrees that the restrictions contained in this Section
6 represent a reasonable and necessary protection of the legitimate interests of
Employer, that his failure to observe and comply with his covenants and
agreements herein will cause irreparable harm to Employer, that it is and will
continue to be difficult to ascertain the harm and damages to Employer that such
a failure by Executive could cause, and that a remedy at law for such failure by
Executive will be inadequate.
7. NON-INTERFERENCE, NON-SOLICITATION AND NON-COMPETITION COVENANTS.
(a) ACKNOWLEDGMENT OF ACCESS. Pursuant to this Agreement, Executive has
agreed to become Chief Executive Officer of Employer and to comply with the
non-disclosure provisions contained in Section 6 hereof. Executive recognizes
and acknowledges that he will be given access to certain of Employer's
Confidential Information (as defined in Section 6(a)), and have access to and
authority to develop relationships with customers of Employer because of his
position and status as Employer's Chief Executive Officer, which he would not
otherwise attain. In consideration of the foregoing, Executive agrees to comply
with the terms of this Section 7.
(b) RESTRICTED PERIOD. The restraints imposed by this Section 7 shall
apply during any period that Executive continues to receive payment of Base
Compensation hereunder, and for a period of one year thereafter (the "Restricted
Period"); provided, however, that, notwithstanding anything contained herein to
the contrary, the restraints imposed by this Section 7 shall not apply following
the termination of Executive's employment with Employer by Employer without
Cause. In the event that any Court having jurisdiction should find that the
Restricted Period is so long and/or the scope (distance) (as set forth below) is
so broad as to constitute an undue hardship on Executive, then, in such event
only, the Restricted Period and area limitations shall be valid for the maximum
time and area for which they could be legally made and enforced.
(c) COVENANT. During the Restricted Period, Executive shall not, as an
executive (other than as an executive of Employer or an affiliate thereof),
employee, employer, stockholder, officer, director, partner, consultant,
advisor, proprietor, lender, provider of capital or other ownership, operational
or management capacity, directly or indirectly, (i) solicit or hire any employee
of Employer or otherwise interfere with or disrupt the employment relationship
between Employer and any employee, (ii) solicit or do business with (A)
Employer's customers with whom Employer did business while Executive was
employed under this Agreement, or (B) individuals or entities who Executive met
as a result of his position with Employer while Executive was employed
-20-
under this Agreement, that (in the case of either clause (A) or (B)) results in
competition with Employer in any county, parish or other comparable jurisdiction
within a state, province or nation located in North America in which any of such
customers have operations (other than customers whose business relationship with
Employer has terminated for at least 90 days) or in which Employer has conducted
business while Executive was employed under this Agreement (collectively, the
"Restricted Area"), or (iii) be associated with any entity engaged in the
business of oil and/or gas exploration, development, production, distribution
and/or marketing in the Restricted Area that results in competition with
Employer (but excluding association due to ownership of less than 5% of the
outstanding securities of any such entity).
(d) REASONABLENESS. Executive expressly recognizes and agrees that the
restraints imposed by this Section 7 are (i) reasonable as to time, geographic
limitation and scope of activity to be restrained; (ii) reasonably necessary to
the enjoyment by Employer of the value of its assets and to protect its
legitimate interests; and (iii) not oppressive. Executive further expressly
recognizes and agrees that the restraints imposed by this Section 7 represent a
reasonable and necessary restriction for the protection of the legitimate
interests of Employer, that the failure by the Executive to observe and comply
with the covenants and agreements in this Section 7 will cause irreparable harm
to Employer, that it is and will continue to be difficult to ascertain the harm
and damages to Employer that such a failure by the Executive would cause, that
the consideration received by the Executive for entering into these covenants
and agreements is fair, that the covenants and agreements and their enforcement
will not deprive Executive of his ability to earn a reasonable living in the oil
and gas industry or otherwise, and that Executive has acquired knowledge and
skills in his field that will allow him to obtain employment without violating
these covenants and agreements. Executive further expressly acknowledges that he
has been encouraged to and has consulted independent counsel, and has reviewed
and considered this Agreement with that counsel before executing this Agreement.
8. MEMORANDA, NOTES, RECORDS, ETC. All memoranda, notes, records,
software, customer lists or other documents (including, but not limited to,
those in electronic form) made or compiled by Executive or otherwise made
available to him concerning the business of Employer or its subsidiaries or
affiliates shall be Employer's property and shall be delivered to Employer upon
the expiration or termination of Executive's employment hereunder or at any
other time upon request by Employer, and Executive shall retain no copies of
those documents; provided, however, that Executive may retain copies of personal
information and information concerning his compensation and benefits
entitlements and other employee rights. Executive shall never at any time have
or claim any right, title or interest in any material or matter of any sort
prepared for or used in connection with the business or promotion of Employer.
9. ENFORCEMENT. The parties hereto recognize that the covenants of
Executive hereunder are special, unique and of extraordinary character.
Accordingly, it is the intention of the parties that, in addition to any other
rights and remedies which Employer may have in the event of any breach of this
Agreement, Employer shall be entitled, and hereby is expressly and irrevocably
authorized by Executive, INTER ALIA, to
-21-
demand and obtain specific performance, including without limitation temporary
and permanent injunctive relief, and all other appropriate equitable relief
against Executive in order to enforce against Executive, or in order to prevent
any breach or any threatened breach by Executive of, the covenants and
agreements contained herein. In case of any breach of this Agreement, nothing
herein contained shall be construed to prevent Employer from seeking such other
remedy in the courts as it may elect or invoke.
10. MISCELLANEOUS.
(a) NON-DELEGATION OF DUTIES. Executive may not delegate the
performance of any of his obligations or duties hereunder, or assign any rights
hereunder, without the prior written consent of Employer. Any such purported
delegation or assignment in the absence of such written consent shall be null
and void with no force or effect. Notwithstanding the foregoing, nothing herein
shall prevent Executive from the appropriate delegation of tasks to other
executives, employees, assistants and other service providers.
(b) BINDING EFFECT. This Agreement shall be binding on and inure to the
benefit of the parties hereto and their respective heirs, representatives,
successors and permitted assigns and any receiver, trustee in bankruptcy or
representative of the creditors of each such person. Employer shall require any
successor (whether direct or indirect, by purchase, merger, reorganization,
consolidation, acquisition of property or stock, liquidation, or otherwise) to
all or a significant portion of its assets, by agreement in form and substance
satisfactory to Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that Employer would be
required to perform this Agreement if no such succession had taken place.
Regardless whether such agreement is executed, this Agreement shall be binding
upon any successor of Employer in accordance with the operation of law and such
successor shall be deemed the "Employer" for purposes of this Agreement.
(c) SURVIVAL OF COVENANTS. Notwithstanding anything contained in this
Agreement, in the event Executive's employment is terminated for any reason
whatsoever, the covenants and agreements of Executive contained in Sections 4,
5, 6, 7, 8, 9 and 10, and the covenants of Employer contained in Sections 4 and
5 hereof shall survive any such termination and shall not lapse except as
provided herein.
(d) SEVERABILITY/MODIFICATION. If any term or provision of this
Agreement is held or deemed to be invalid or unenforceable, in whole or in part,
by a court of competent jurisdiction, such term or provision shall be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement.
(e) GOVERNING LAW. This Agreement is entered into in Ohio, and the
construction, validity and interpretation of this Agreement shall be governed by
the laws of the State of Ohio without regard to the laws of conflicts of laws
thereof.
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(f) ARBITRATION. In the event of any dispute, controversy or claim
between Employer and Executive arising out of or relating to the interpretation,
application or enforcement of any provision of this Agreement (other than with
respect to provisions under Section 4(f) of this Agreement), either Employer or
Executive may, by written notice to the other, require such dispute or
difference to be submitted to arbitration. The arbitrator shall be selected by
agreement of the parties or, if they do not agree on an arbitrator within 30
days after one party has notified the other of his or its desire to have the
question settled by arbitration, then the arbitrator shall be selected pursuant
to the procedures of the American Arbitration Association (the "AAA") in Canton,
Ohio. The determination reached in such arbitration shall be final and binding
on all parties. Enforcement of the determination by such arbitrator may be
sought in any court of competent jurisdiction. Unless otherwise agreed by the
parties, any such arbitration shall take place in Canton, Ohio, and shall be
conducted in accordance with the Commercial Arbitration Rules of the AAA.
(g) EFFECTIVENESS; ENTIRE AGREEMENT; AMENDMENT. This Agreement contains
the entire understanding and agreement between the parties relating to the
subject matter hereof, and it supersedes all previous and contemporaneous
negotiations, commitments, writings and understandings. Neither this Agreement
nor any provision hereof may be waived, modified, amended, changed, discharged
or terminated, except by an agreement in writing signed by the party against
whom enforcement of any waiver, modification, change, amendment, discharge or
termination is sought.
(h) NOTICES. Any notice required or permitted to be given under the
provisions of this Agreement shall be in writing and shall be deemed to have
been duly given on the date of delivery if delivered personally to the party to
whom notice is to be given (or to the appropriate address below), or on the
third day after mailing if mailed to the party to whom notice is to be given by
certified or registered mail, return receipt requested, postage prepaid, or by
courier, addressed as follows, or to such other person at such other address as
any party may request in writing to the other party to this Agreement:
To Executive: Xxxx X. Xxxxxxxx
------------ c/x Xxxxxx & Blake Corporation
0000 Xxxxxxxx Xxxx
Xxxxx Xxxxxx, Xxxx 00000
To Employer: Xxxxxx & Xxxxx Corporation
0000 Xxxxxxxx Xxxx
Xxxxx Xxxxxx, Xxxx 00000
Any party may change its address for purposes of this paragraph by giving the
other parties written notice of the new address in the manner set forth above.
(i) HEADINGS. The section headings herein are for convenience only and
shall not be used in interpreting or construing this Agreement.
-23-
(j) INDEMNIFICATION. Employer shall defend and hold Executive harmless
to the fullest extent permitted by applicable law in connection with any civil
or criminal claim, action, suit, investigation or proceeding arising out of or
relating to performance by Executive of services for, or action of Executive as
a director, officer or employee of Employer, or of any other person or
enterprise at the request of Employer. Expenses incurred by Executive in
defending any such claim, action, suit, investigation or proceeding shall be
paid by Employer in advance of the final disposition thereof upon the receipt by
Employer of an undertaking by or on behalf of Executive to repay said amount if
it shall ultimately be determined that Executive is not entitled to be
indemnified hereunder; provided, however, that this indemnification arrangement
shall not apply to a nonderivative action commenced by Employer against
Executive. The foregoing shall be in addition to, and shall not be deemed to
limit in any respect, any indemnification rights Executive may have by law,
contract, charter, by-law or otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement to be effective as of the Effective Date.
EXECUTIVE:
/s/ Xxxx X. Xxxxxxxx
---------------------------------------
Xxxx X. Xxxxxxxx
EMPLOYER:
XXXXXX & BLAKE CORPORATION,
an Ohio Corporation
By: /s/ Xxxxxxx X. Xxxxx III
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Xxxxxxx X. Xxxxx III
Chairman of the Compensation Committee
of the Board of Directors
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EXHIBIT A
GENERAL RELEASE AND WAIVER
In consideration of the payments and benefits (the
"Termination Benefits") to which the undersigned (the "Executive") is entitled
under Section 4(c) of the Amended and Restated Employment Agreement, dated
(the "Employment Agreement"), by and between the Executive and Xxxxxx & Xxxxx
Corporation (the "Employer"), and for other good and valuable consideration,
receipt of which is hereby acknowledged, the Executive agrees as follows:
1. CONFIRMATION OF TERMINATION. The Executive's employment
with the Employer shall terminate as of _____________________ (the "Termination
Date").
2. GENERAL RELEASE AND WAIVER
(a) EXECUTIVE HEREBY RELEASES, REMISES AND ACQUITS EMPLOYER
AND ALL OF ITS AFFILIATES, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
SUCCESSORS AND ASSIGNS (COLLECTIVELY REFERRED TO HEREIN AS THE "RELEASEES"),
JOINTLY AND SEVERALLY, FROM ANY AND ALL CLAIMS, KNOWN OR UNKNOWN, WHICH
EXECUTIVE OR EXECUTIVE'S HEIRS, SUCCESSORS OR ASSIGNS HAVE OR MAY HAVE AGAINST
ANY RELEASEE ARISING ON OR PRIOR TO THE DATE OF THIS GENERAL RELEASE AND WAIVER
(THIS "RELEASE") AND ANY AND ALL LIABILITY WHICH ANY SUCH RELEASEE MAY HAVE TO
EXECUTIVE, WHETHER DENOMINATED CLAIMS, DEMANDS, CAUSES OF ACTION, OBLIGATIONS,
DAMAGES OR LIABILITIES ARISING FROM ANY AND ALL BASES, HOWEVER DENOMINATED,
INCLUDING BUT NOT LIMITED TO THE AGE DISCRIMINATION IN EMPLOYMENT ACT, THE
AMERICANS WITH DISABILITIES ACT OF 1990, THE FAMILY AND MEDICAL LEAVE ACT OF
1993, TITLE VII OF THE UNITED STATES CIVIL RIGHTS ACT OF 1964, 42 U.S.C. sec.
1981, THE OHIO CIVIL RIGHTS ACT, secs. 124, 4111, 4112 OR 4123 OF THE OHIO
REVISED CODE ANNOTATED, OHIO COMMON LAW OR ANY OTHER FEDERAL, STATE, OR LOCAL
LAW AND ANY WORKERS' COMPENSATION OR DISABILITY CLAIMS UNDER ANY SUCH LAWS. THIS
RELEASE IS FOR ANY AND ALL CLAIMS INCLUDING BUT NOT LIMITED TO CLAIMS ARISING
FROM AND DURING EXECUTIVE'S EMPLOYMENT RELATIONSHIP WITH EMPLOYER AND ITS
AFFILIATES OR AS A RESULT OF THE TERMINATION OF SUCH RELATIONSHIP. EXECUTIVE
FURTHER AGREES THAT EXECUTIVE WILL NOT FILE OR PERMIT TO BE FILED ON EXECUTIVE'S
BEHALF ANY SUCH CLAIM. NOTWITHSTANDING THE PRECEDING SENTENCE OR ANY OTHER
PROVISION OF THIS AGREEMENT, THIS RELEASE IS NOT INTENDED TO INTERFERE WITH
EXECUTIVE'S RIGHT TO FILE A CHARGE WITH THE EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION IN CONNECTION WITH ANY CLAIM HE BELIEVES HE MAY HAVE AGAINST ANY OF
THE RELEASEES. HOWEVER, BY EXECUTING THIS RELEASE, EXECUTIVE HEREBY WAIVES THE
RIGHT TO RECOVER IN ANY PROCEEDING EXECUTIVE MAY BRING BEFORE THE EQUAL
EMPLOYMENT OPPORTUNITY COMMISSION OR ANY STATE HUMAN RIGHTS
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COMMISSION OR IN ANY PROCEEDING BROUGHT BY THE EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION OR ANY STATE HUMAN RIGHTS COMMISSION ON EXECUTIVE'S BEHALF. THIS
RELEASE IS FOR ANY RELIEF, NO MATTER HOW DENOMINATED, INCLUDING, BUT NOT LIMITED
TO, INJUNCTIVE RELIEF, WAGES, BACK PAY, FRONT PAY, COMPENSATORY DAMAGES, OR
PUNITIVE DAMAGES. THIS RELEASE SHALL NOT APPLY TO ANY OBLIGATION OF EMPLOYER
PURSUANT TO SECTION 4(c) OR, IF APPLICABLE, 4(f) OF THE EMPLOYMENT AGREEMENT OR
RIGHTS OF EXECUTIVE, IF ANY, TO INDEMNIFICATION AND/OR INSURANCE WITH RESPECT TO
HIS SERVICE TO OR FOR THE BENEFIT OF THE EMPLOYER AND ITS AFFILIATES AS AN
EMPLOYEE, DIRECTOR OR IN ANY OTHER CAPACITY.
(b) EXECUTIVE ACKNOWLEDGES THAT THE TERMINATION BENEFITS HE IS
RECEIVING PURSUANT TO THE EMPLOYMENT AGREEMENT IN CONNECTION WITH THE FOREGOING
RELEASE ARE IN ADDITION TO ANYTHING OF VALUE TO WHICH EXECUTIVE ALREADY IS
ENTITLED FROM EMPLOYER.
3. CERTAIN FORFEITURES IN EVENT OF BREACH
The Executive acknowledges and agrees that, notwithstanding
any other provision of this Agreement, in the event the Executive materially
breaches any of his obligations under this Agreement, the Executive will forfeit
his right to receive the Termination Benefits under the Employment Agreement to
the extent not theretofore paid to him as of the date of such breach and, if
already made as of the time of breach, the Executive agrees that he will
reimburse the Employer, immediately, for the amount of such payment.
4. NO ADMISSION
This Release does not constitute an admission of liability or
wrongdoing of any kind by the Employer or its affiliates.
5. HEIRS AND ASSIGNS
The terms of this Release shall be binding on the Executive
and his successors and assigns.
6. KNOWING AND VOLUNTARY WAIVER
The Executive acknowledges that, by the Executive's free and
voluntary act of signing below, the Executive agrees to all of the terms of this
Release and intends to be legally bound thereby.
The Executive understands and acknowledges that he may
consider whether to agree to the terms contained herein for a period of
twenty-one days after the Termination Date. However, the Termination Benefits
will be delayed until this Release is executed and delivered to the Employer;
provided that there shall be no such delay with respect to any Termination
Benefit that is due to be paid upon the closing date of a
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Change in Control (as defined in the Employment Agreement). The Executive
acknowledges that he has been advised to consult with an attorney prior to
executing this Release.
This Release will become effective, enforceable and
irrevocable on the eighth day after the date on which it is executed by the
Executive (the "Release Effective Date"). During the seven-day period prior to
the Effective Date, the Executive may revoke his agreement to accept the terms
hereof by serving notice in writing to the Employer of his intention to revoke.
If the Executive exercises his right to revoke hereunder, he shall forfeit his
right to receive any of the Termination Benefits provided for herein, and to the
extent such Termination Benefits have already been provided, the Executive
agrees that he will immediately reimburse the Employer for the amounts of such
payment.
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Xxxx X. Xxxxxxxx
Acknowledgment
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STATE OF _________________)
ss:
COUNTY OF_________________)
On the ____ day of __________, 20__, before me personally came Xxxx X. Xxxxxxxx
who, being by me duly sworn, did depose and say that he resides at
_________________; and did acknowledge and represent that he has had an
opportunity to consult with attorneys and other advisers of his choosing
regarding the Release attached hereto, that he has reviewed all of the terms of
the Release and that he fully understands all of its provisions, including,
without limitation, the general release and waiver set forth therein.
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Notary Public
Date:
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EXHIBIT B
NOTICE OF EXERCISE
Xxxxxx & Blake Corporation
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Date of Exercise:
-----------------
Ladies and Gentlemen:
This constitutes notice under my stock option that I elect to purchase
the number of shares for the price set forth below.
Stock option dated
--------------------------------
Number of shares as to which
option is exercised
--------------------------------
Certificates to be issued in
name of:
--------------------------------
Total exercise price: $
--------------------------------
Cash payment delivered herewith: $
--------------------------------
By this exercise, I agree (i) to provide such additional documents as
Executive may reasonably require and (ii) to provide for the payment by me to
Executive of your withholding obligation, if any, relating to the exercise of
this option.
I hereby make the following certifications and representations with
respect to the number of shares of Common Stock of Employer listed above (the
"SHARES"), which are being acquired by me for my own account upon exercise of
the Option as set forth above:
I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "ACT"), and are deemed to constitute
"restricted securities" under Rule 701 and "control securities" under Rule 144
promulgated under the Act. I warrant and represent to Employer that I have no
present intention of distributing or selling said Shares, except as permitted
under the Act and any applicable state securities laws.
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I further acknowledge that I will not be able to resell the Shares for
at least ninety (90) days after the stock of Employer becomes publicly traded
(i.e., subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934) under Rule 701 and that more restrictive
conditions apply to affiliates of Employer under Rule 144.
I further acknowledge that all certificates representing any of the
Shares subject to the provisions of the Option shall have endorsed thereon
appropriate legends reflecting the foregoing limitations, as well as any legends
reflecting restrictions pursuant to Employer's Articles of Incorporation, Bylaws
and/or applicable securities laws.
I further agree that, if required by Employer (or a representative of
the underwriters) in connection with an underwritten registration of the
offering of any securities of Employer under the Act, I will not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of Employer during such period (not to exceed one hundred eighty (180) days or,
if less, the period of time any other executive officer of Employer is so
restricted) following the effective date of the registration statement of
Employer filed under the Act (the "EFFECTIVE DATE") as may be requested by
Employer or the representative of the underwriters. I further agree that
Employer may impose stop-transfer instructions with respect to securities
subject to the foregoing restrictions until the end of such period.
Very truly yours,
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Xxxx X. Xxxxxxxx
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