EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of the
1st day of January, 2003, between RPM International Inc., a Delaware corporation
(the "Company"), and Xxxxxx X. Xxxx ("Executive").
WHEREAS, Executive is currently Vice President - Environmental
and Regulatory Affairs of the Company; and
WHEREAS, the Board of Directors of the Company recognizes the
importance of Executive's continuing contribution to the future growth and
success of the Company and desires to assure the Company and its shareholders of
Executive's continued employment in an executive capacity and to compensate him
therefor; and
WHEREAS, Executive is desirous of committing himself to
continue to serve the Company on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein contained, the parties
hereto agree as follows:
1. Term of Employment. The Company hereby agrees to
continue to employ Executive, and Executive hereby agrees to continue to serve
the Company, on the terms and conditions set forth herein for the period
commencing as of the date hereof and expiring on May 31, 2003 (the "Employment
Period"). The Employment Period shall automatically be extended on May 31 of
each year for a period of one year from such date unless, not later than March
31 of such year, the Company or Executive has given notice to the other party
that it or he, as the case may be, does not wish to have the Employment Period
extended. In addition, in the event of a Change in Control, the Employment
Period shall automatically be extended for a period of three years beginning on
the date of the Change in Control and ending on the third anniversary of the
date of such Change in Control (unless further extended under the immediately
preceding sentence). In any case, the Employment Period may be terminated
earlier under the terms and conditions set forth herein.
2. Position and Duties. Executive shall serve as Vice
President - Environmental and Regulatory Affairs reporting to the Senior Vice
President, General Counsel of the Company (or his designee) and shall have
responsibility for the environmental and health and safety regulatory matters of
the Company and shall have such other titles, powers and duties as may from time
to time be assigned by the Senior Vice President, General Counsel (or his
designee) or the Board of Directors of the Company; provided, however, that such
duties are consistent with his present duties and his position with the Company.
Executive shall devote substantially all his working time and efforts to the
continued success of the business and affairs of the Company.
3. Place of Employment. In connection with his
employment by the Company, Executive shall not be required to relocate or move
from his existing principal residence in Brecksville, Ohio, and shall not be
required to perform services which would make the continuance of his principal
residence in Brecksville, Ohio, unreasonably difficult or inconvenient for him.
The Company shall give Executive at least six months' advance notice of any
proposed relocation of its
Medina, Ohio offices to a location more than 50 miles from Medina, Ohio and, if
Executive in his sole discretion chooses to relocate his principal residence,
the Company shall promptly pay (or reimburse him for) all reasonable relocation
expenses (consistent with the Company's past practice for similarly situated
senior executive officers) incurred by him relating to a change of his principal
residence in connection with any such relocation of the Company's offices from
Medina, Ohio.
4. Compensation.
(a) Base Salary. During the Employment Period, Executive
shall receive a base salary at the rate of not less than One Hundred Five
Thousand Dollars ($105,000) per annum ("Base Salary"), payable in substantially
equal monthly installments at the end of each month during the Employment Period
hereunder. It is contemplated that annually in the first quarter of each fiscal
year of the Company the Compensation Committee of the Board of Directors (the
"Compensation Committee") will review Executive's Base Salary and other
compensation during the Employment Period and, at the discretion of the
Compensation Committee, it may increase his Base Salary and other compensation,
effective as of June 1 of such fiscal year, based upon his performance, then
generally prevailing industry salary scales, the Company's results of
operations, and other relevant factors. Any increase in Base Salary or other
compensation shall in no way limit or reduce any other obligation of the Company
hereunder and, once established at an increased specified rate, Executive's Base
Salary hereunder shall not be reduced without his written consent.
(b) Incentive Compensation. In addition to his Base
Salary, Executive shall be entitled to receive such annual cash incentive
compensation ("Incentive Compensation") during the Employment Period as the
Compensation Committee may determine in its sole discretion based upon the
Company's results of operation and other relevant factors. At the election of
Executive, such annual Incentive Compensation may be received by Executive as
soon as possible, but no later than 90 days after the close of the Company's
fiscal year for which such Incentive Compensation is granted, or the payment may
be deferred provided Executive gives written notice no later than May 31 of the
current fiscal year to the Chairman of the Compensation Committee that he elects
to defer payment, which notice shall also state the date(s) on which he desires
to be paid.
(c) Expenses. During the Employment Period, Executive
shall be entitled to receive prompt reimbursement for all reasonable business
expenses incurred by him (in accordance with Company practice) in performing
services hereunder, provided that Executive properly accounts therefor in
accordance with either Company policies or guidelines established by the
Internal Revenue Service if such are less burdensome.
(d) Participation in Benefit Plans. During the Employment
Period, but subject to the terms of this Subsection 4(d), Executive shall be
entitled to continue to participate in or receive benefits under the Benefit
Plans, subject to and on a basis consistent with the terms, conditions and
overall administration of the Benefit Plans. Except with respect to any benefits
related to salary reductions authorized by Executive, nothing paid or awarded to
Executive under any Benefit Plan presently in effect or made available in the
future shall reduce or be deemed to be in lieu of compensation to Executive
pursuant to any other provision of this Section 4. Executive shall not be
eligible to participate in the Split Dollar Life Insurance or the Restricted
Stock Plan before June 1, 2003 and participation in such arrangement and plan
after such time shall be subject
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to and on a basis consistent with the terms, conditions and overall
administration of such arrangement and plan, including the requirement that
participation in the Restricted Stock Plan be approved by the Compensation
Committee and other applicable eligibility criteria. In addition, Executive's
right to participate in any Benefit Plan shall be subject to the applicable
eligibility criteria for participation and Executive shall not be entitled to
any benefits under, or based on, any Benefit Plan for any purposes of this
Agreement if Executive does not during the Employment Period satisfy the
eligibility criteria for participation in such plan.
(e) Vacations. During the Employment Period, Executive
shall be entitled to the same number of paid vacation days in each fiscal year
determined by the Company from time to time for its other senior executive
officers, but not less than four weeks in any fiscal year, to be taken at such
time or times as is desired by Executive after consultation with Executive's
direct report (or the designated vacation coordinator) to avoid scheduling
conflicts (prorated in any fiscal year during which Executive is employed
hereunder for less than the entire such year in accordance with the number of
days in such fiscal year during which he is so employed). Executive also shall
be entitled to all paid holidays given by the Company to its other salaried
employees.
(f) Other Benefits. During the Employment Period,
Executive shall be entitled to continue to receive the fringe benefits
appertaining to his position with the Company in accordance with present
practice, including the use of the most recent model of a full-sized automobile.
During the Employment Period, Executive shall be entitled to the full-time use
of an office and furniture at the Company's offices in Medina, Ohio, and shall
be entitled to the full-time use of a secretary paid by the Company.
5. Termination Outside of Protected Period.
(a) Events of Termination. At any time other than during
the Protected Period, the Employment Period shall terminate immediately upon the
occurrence of any of the following events: (i) expiration of the Employment
Period; (ii) the death of Executive; (iii) the expiration of 30 days after the
Company gives Executive written notice of its election to terminate the
Employment Period upon the Disability of Executive, if before the expiration of
such 30-day period Executive has not returned to the performance of his duties
hereunder on a full-time basis; (iv) the resignation of Executive; (v) the
Company's termination of the Employment Period for Cause; or (vi) the Company's
termination of the Employment Period at any time, without Cause, for any reason
or no reason. For purposes of Subsections 5(b) and 5(c), expiration of the
Employment Period upon a notice of the Company under Section 1 that it does not
wish to have the Employment Period extended shall be deemed a termination
without Cause pursuant to Subsection 5(a)(vi) and expiration of the Employment
Period upon a notice of Executive under Section 1 that he does not wish to have
the Employment Period extended shall be deemed a resignation of Executive
pursuant to Subsection 5(a)(iv).
(b) Compensation Upon Termination. This Subsection 5(b)
sets forth the payments and benefits to which Executive is entitled under any
termination of employment pursuant to Subsection 5(a).
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(i) Death; Disability. During any period in
which Executive fails to perform his duties hereunder as a result of incapacity
due to physical or mental illness, Executive shall continue to receive his full
Base Salary only until his employment is terminated pursuant to Subsection
5(a)(ii) or (iii). Upon termination of the Employment Period under Subsection
5(a)(ii) or (iii), Executive shall no longer be entitled to participate in the
Benefit Plans, except as required by applicable law or as governed by the
Benefit Plans including the Group Long Term Disability Insurance in which
Executive participates immediately prior to such termination, but Executive
shall be entitled to receive his Earned Incentive Compensation, if any, promptly
after the Termination Date.
(ii) Resignation or Cause. If Executive's
employment is terminated pursuant to Subsection 5(a)(iv) or (v), the Company
shall pay Executive his full Base Salary through the Termination Date at the
rate in effect at such time. The Company shall then have no further obligations
to Executive under this Agreement and Executive shall no longer be entitled to
participate in the Benefit Plans, except as required by applicable law.
(iii) Termination Without Cause. If Executive's
employment is terminated without Cause pursuant to Subsection 5(a)(vi), then in
lieu of any further salary payments to Executive for periods subsequent to the
Termination Date, the Company shall pay to Executive no later than 30 calendar
days following such date, a lump sum amount equal to the sum of (A) 150% of
Executive's Base Salary in effect as of such date and (B) the amount of
Executive's Earned Incentive Compensation. Executive also shall be entitled to
certain continuing benefits under the terms of Subsection 5(c). Notwithstanding
any other provision of this Subsection 5(b)(iii), Subsection 5(c) or this
Agreement, the Company shall have no obligation to make the lump-sum payment
referred to in this Subsection 5(b)(iii) or provide any continuing benefits or
payment referred to in Subsection 5(c) unless (X) Executive executes and
delivers to the Company a Release and Waiver of Claims and (Y) Executive
refrains from revoking, rescinding or otherwise repudiating such Release and
Waiver of Claims for all applicable periods during which Executive may revoke
it.
(c) Additional Benefits Following Termination under
Subsection 5(a)(vi). This Subsection 5(c) sets forth the benefits to which
Executive shall be entitled, in addition to those set forth in Subsection
5(b)(iii), following a termination of the Employment Period under Subsection
5(a)(vi). Executive shall not be entitled to the benefit of any provision of
this Subsection 5(c) following a termination of the Employment Period under any
other provision hereof.
(i) Continuing Benefit Plans. For a period of 18
months following such a Termination Date, Executive shall also be entitled to
continue to participate, on the same terms and conditions as active employees,
in the Continuing Benefit Plans in which Executive participated immediately
prior to the Termination Date, except that (A) Executive shall be entitled to
Estate/Financial Planning Benefits for a period of only six months following the
Termination Date and (B) if Executive's continued participation is not possible
and Executive does not continue to participate under the terms of any such
Continuing Benefit Plan, the Company shall instead pay to Executive, promptly
upon presentation to the Company of an invoice or receipt for payment, the
amount Executive spends to receive comparable coverage
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under such a comparable plan for such 18-month period. Notwithstanding the
foregoing sentence, the Company's obligations to Executive with respect to
continued benefits under the Continuing Benefit Plans shall be deemed satisfied
to the extent of any such comparable benefits which are provided to Executive by
another employer. During such continuation period, Executive shall be
responsible for paying the normal employee share of the applicable premiums for
coverage under the Continuing Benefit Plans. The Company shall have the right to
modify, amend or terminate the Continuing Benefit Plans (other than the
Estate/Financial Planning Benefits) following the Termination Date and
Executive's continued participation therein shall be subject to such
modification, amendment or termination if such modification, amendment or
termination applies generally to the then-current participants in such plan.
Upon completion of the 18-month period following such a Termination Date, the
Company shall afford Executive the opportunity to continue Executive's coverage
under the Continuing Benefit Plans (other than the Estate/Financial Planning
Benefits), at Executive's expense, for an additional period under COBRA
Continuation Coverage, so long as Executive timely elects to receive COBRA
Continuation Coverage under the terms thereof and otherwise complies with the
conditions of continuation of benefits under COBRA Continuation Coverage.
(ii) Limited Benefit Plans. After such a
Termination Date, Executive shall no longer be entitled to participate as an
active employee in, or receive any additional or new benefits under, the Limited
Benefit Plans, except as set forth in this Subsection 5(c)(ii) and except for
such benefits, if any, available under such plans to former employees. If such
Termination Date occurs on or after June 1, 2003, Executive shall be entitled to
the following additional benefits:
(A) Continued coverage, for a period of 18
months after the Termination Date, under the Split Dollar Life Insurance, with
the Company paying such expenses as it otherwise would have paid thereunder if
Executive had continued to be employed, all on the terms of the Split Dollar
Life Insurance;
(B) A lump-sum payment to be paid under the
Restricted Stock Plan equal to the cash value of the benefits Executive would
have received (if any) had he continued to participate in and receive annual
awards under the Restricted Stock Plan on a basis consistent with his past
practice for a period of 18 months after the Termination Date, determined and
payable in accordance with the terms of the Restricted Stock Plan and the
Company's past practice; and
(C) The lapse of all restrictions on
transfer and forfeiture provisions to which Executive's awards under the
Restricted Stock Plan (if any) are subject, so that any restricted shares
previously awarded to Executive under such plan shall be nonforfeitable and
freely transferable thereafter, all on the terms of the Restricted Stock Plan or
the agreements thereunder.
(d) Notice of Termination. Any termination by the Company
pursuant to Subsection 5(a)(iii), (v) or (vi) or by Executive pursuant to
Subsection 5(a)(iv) shall be communicated to the other party hereto by written
notice of termination, which shall state in reasonable detail the facts upon
which the termination has occurred.
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6. Termination During Protected Period.
(a) Events of Termination. During the Protected Period,
the Employment Period shall terminate immediately upon the occurrence of any of
the following events: (i) the death of Executive; (ii) the expiration of 30 days
after the Company gives Executive written notice of its election to terminate
the Employment Period upon the Disability of Executive, if before the expiration
of such 30-day period Executive has not returned to the performance of his
duties hereunder on a full-time basis; (iii) the resignation of Executive
without delivering Notice of Termination for Good Reason; (iv) the Company's
termination of the Employment Period for Cause; (v) the Company's termination of
the Employment Period at any time, without Cause, for any reason or no reason;
or (vi) Executive's termination of the Employment Period for Good Reason by
delivery of Notice of Termination for Good Reason to the Company during the
Protected Period indicating that an event constituting Good Reason has occurred,
provided that Executive's failure to object in writing to an event alleged to
constitute Good Reason within six months of the date of occurrence of such event
shall be deemed a waiver of such event by Executive and Executive thereafter may
not terminate the Employment Period under this Subsection 6(a)(vi) based on such
event.
(b) Compensation Upon Termination. This Subsection 6(b)
sets forth the payments and benefits to which Executive is entitled under any
termination of employment pursuant to Subsection 6(a).
(i) Death; Disability. During any period in
which Executive fails to perform his duties hereunder as a result of incapacity
due to physical or mental illness, Executive shall continue to receive his full
Base Salary only until his employment is terminated pursuant to Subsection
6(a)(i) or (ii). Upon termination of the Employment Period under Subsection
6(a)(i) or (ii), Executive shall no longer be entitled to participate in the
Benefit Plans, except as required by applicable law or as governed by the
Benefit Plans including the Group Long Term Disability Insurance in which
Executive participates immediately prior to such termination, but Executive
shall be entitled to receive his Earned Incentive Compensation, if any, promptly
after the Termination Date.
(ii) Resignation or Cause. If Executive's
employment is terminated pursuant to Subsection 6(a)(iii) or (iv), the Company
shall pay Executive his full Base Salary through the Termination Date at the
rate in effect at such time. The Company shall then have no further obligations
to Executive under this Agreement and Executive shall no longer be entitled to
participate in the Benefit Plans, except as required by applicable law.
(iii) Termination Without Cause or for Good
Reason. If Executive's employment is terminated by the Company without Cause
pursuant to Subsection 6(a)(v) or by Executive for Good Reason pursuant to
Subsection 6(a)(vi), then in lieu of any further salary payments to Executive
for periods subsequent to the Termination Date, the Company shall pay to
Executive no later than 30 calendar days following such date, a lump sum amount
equal to the sum of (A) 150% of Executive's Base Salary in effect as of such
date and (B) the amount of Executive's Earned Incentive Compensation. Executive
also shall be entitled to certain continuing benefits
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under the terms of Subsection 6(c). Notwithstanding any other provision of this
Subsection 6(b)(iii), Subsection 6(c), Section 7 or this Agreement, the Company
shall have no obligation to make the lump-sum payment referred to in this
Subsection 6(b)(iii), to provide any continuing benefits or payment referred to
in Subsection 6(c), or to make any Gross-Up Payment unless (X) Executive
executes and delivers to the Company a Release and Waiver of Claims and (Y)
Executive refrains from revoking, rescinding or otherwise repudiating such
Release and Waiver of Claims for all applicable periods during which Executive
may revoke it.
(c) Additional Benefits Following Termination under
Subsections 6(a)(v) or (vi). This Subsection 6(c) sets forth the benefits to
which Executive shall be entitled, in addition to those set forth in Subsection
6(b)(iii), following a termination of the Employment Period under Subsection
6(a)(v) or (vi). Executive shall not be entitled to the benefit of any provision
of this Subsection 6(c) following a termination of the Employment Period under
any other provision hereof.
(i) Continuing Benefit Plans. For a period of 18
months following such a Termination Date, Executive shall also be entitled to
continue to participate, on the same terms and conditions as active employees,
in the Continuing Benefit Plans in which Executive participated immediately
prior to the Termination Date, except that (A) Executive shall be entitled to
Estate/Financial Planning Benefits for a period of only six months following the
Termination Date and (B) if Executive's continued participation is not possible
and Executive does not continue to participate under the terms of any such
Continuing Benefit Plan, the Company shall instead pay to Executive, promptly
upon presentation to the Company of an invoice or receipt for payment, the
amount Executive spends to receive comparable coverage under such a comparable
plan for such 18-month period. Notwithstanding the foregoing sentence, the
Company's obligations to Executive with respect to continued benefits under the
Continuing Benefit Plans shall be deemed satisfied to the extent of any such
comparable benefits which are provided to Executive by another employer. During
such continuation period, Executive shall be responsible for paying the normal
employee share of the applicable premiums for coverage under the Continuing
Benefit Plans. The Company shall have the right to modify, amend or terminate
the Continuing Benefit Plans (other than the Estate/Financial Planning Benefits)
following the Termination Date and Executive's continued participation therein
shall be subject to such modification, amendment or termination if such
modification, amendment or termination applies generally to the then-current
participants in such plan. Upon completion of the 18-month period following such
a Termination Date, the Company shall afford Executive the opportunity to
continue Executive's coverage under the Continuing Benefit Plans (other than the
Estate/Financial Planning Benefits), at Executive's expense, for an additional
period under COBRA Continuation Coverage, so long as Executive timely elects to
receive COBRA Continuation Coverage under the terms thereof and otherwise
complies with the conditions of continuation of benefits under COBRA
Continuation Coverage.
(ii) Limited Benefit Plans. After such a
Termination Date, Executive shall no longer be entitled to participate as an
active employee in, or receive any additional or new benefits under, the Limited
Benefit Plans, except as set forth in this Subsection 6(c)(ii) and except for
such benefits, if any, available under such plans to former employees. If such
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Termination Date occurs on or after June 1, 2003, Executive shall be entitled to
the following additional benefits:
(A) The Company shall make a lump sum
18-month premium payment to the carrier equal to the premiums that the Company
would have paid under the Split Dollar Life Insurance if Executive had continued
to be employed for 18 months following the Termination Date, all on the terms of
the Split Dollar Life Insurance. In addition, immediately following such premium
payment, the Company shall execute such documents as necessary to cause the full
ownership of the Split Dollar Life Insurance policy related to Executive and all
of its values to transfer to Executive. The Company shall be responsible for the
payment of all costs imposed by the carrier to carry out such transfer;
(B) A lump-sum payment to be paid under the
Restricted Stock Plan equal to the cash value of the benefits Executive would
have received (if any) had he continued to participate in and receive annual
awards under the Restricted Stock Plan on a basis consistent with his past
practice for a period of 18 months after the Termination Date, determined and
payable in accordance with the terms of the Restricted Stock Plan and the
Company's past practice; and
(C) The lapse of all restrictions on
transfer and forfeiture provisions to which Executive's awards under the
Restricted Stock Plan (if any) are subject, so that any restricted shares
previously awarded to Executive under such plan shall be nonforfeitable and
freely transferable thereafter, all on the terms of the Restricted Stock Plan or
the agreements thereunder.
(d) Notice of Termination. Any termination by the Company
pursuant to Subsection 6(a)(ii), (iv) or (v) or by Executive pursuant to
Subsection 6(a)(iii) shall be communicated to the other party hereto by written
notice of termination, which shall state in reasonable detail the facts upon
which the termination has occurred. A termination pursuant to Subsection
6(a)(vi) shall be communicated by Notice of Termination for Good Reason.
(e) Notice of Change in Control. The Company shall give
Executive written notice of the occurrence of any event constituting a Change in
Control as promptly as practical, and in no case later than 10 calendar days,
after the occurrence of such event.
(f) Deemed Termination After Change in Control. Any
termination of the employment of Executive by the Company without Cause or the
removal of Executive as an elected officer or Director of the Company or a
Subsidiary following the commencement of any discussion with or communication
from a third party that ultimately results in a Change in Control shall be
deemed to be a termination or removal, respectively, of Executive after a Change
in Control for purposes of this Agreement. In the event Executive is entitled to
the benefits under this Agreement as contemplated by the preceding sentence,
then for purposes of Subsections 6(b)(iii) and 6(c) and Section 7, the
Termination Date shall be deemed to be the date of the Change in Control if the
employment of Executive was terminated before such date.
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(g) Set-Off. There shall be no right of set-off or
counterclaim against, or delay in, any payment by the Company to Executive of
the Lump-Sum Payment or any Gross-Up Payment in respect of any claim against or
debt or obligation of Executive, whether arising hereunder or otherwise.
(h) Interest on Overdue Payments. Without limiting the
rights of Executive at law or in equity, if the Company fails to make the
Lump-Sum Payment or any Gross-Up Payment on a timely basis, the Company shall
pay interest on the amount thereof at an annualized rate equal to the rate in
effect, at the time such payment should have been made, under the 401(k) Plan
for loans to participants in such plan.
(i) Outplacement Assistance. Promptly after a request in
writing from Executive following a termination of the Employment Period under
Subsection 6(a)(v) or (vi), the Company shall retain a professional outplacement
assistance service firm reasonably acceptable to Executive, at the Company's
expense, to provide outplacement assistance to Executive during the Protected
Period. Such services shall be appropriate to Executive's position with the
Company. Executive shall not be entitled to such services, however, following a
termination of the Employment Period under Subsection 6(a)(i), (ii), (iii) or
(iv).
(j) PARS Plan. If Executive participates in the PARS Plan
and a Change in Control occurs as determined under the PARS Plan, then Executive
shall be entitled to the lapse of transfer restrictions imposed on any grant of
restricted stock to Executive under the PARS Plan, all as determined under and
subject to the terms of the PARS Plan.
7. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be determined (as hereafter
provided) that any payment or distribution by the Company or any of its
Affiliates to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, performance
share, performance unit, restricted stock, stock appreciation right or similar
right, or the lapse or termination of any restriction on, or the vesting or
exercisability of, any of the foregoing (individually and collectively, a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being considered
"contingent on a change in ownership or control" of the Company, within the
meaning of Section 280G of the Code (or any successor provision thereto), or to
any similar tax imposed by state or local law, or to any interest or penalties
with respect to such taxes (such tax or taxes, together with any such interest
and penalties, being hereafter collectively referred to as the "Excise Tax"),
then Executive shall be entitled to receive an additional payment or payments
(individually and collectively, a "Gross-Up Payment"). The Gross-Up Payment
shall be in an amount such that, after payment by Executive of all taxes
(including any interest or 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 Payment.
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(b) Subject to the provisions of Subsection 7(f), all
determinations required to be made under this Section 7, including whether an
Excise Tax is payable by Executive and the amount of such Excise Tax and whether
a Gross-Up Payment is required to be paid by the Company to Executive and the
amount of such Gross-Up Payment, if any, shall be made (i) by
PricewaterhouseCoopers (or its successor) (the "Accounting Firm"), regardless of
any services that PricewaterhouseCoopers (or its successor) has performed or may
be performing for the Company, or (ii) if PricewaterhouseCoopers (or its
successor) is serving as accountant or auditor for the individual, entity or
group effecting a Change in Control, or cannot (because of limitations under
applicable law or otherwise) make the determinations required to be made under
this Section 7, then by another nationally recognized accounting firm selected
by Executive and reasonably acceptable to the Company (which accounting firm
shall then be the "Accounting Firm" hereunder). The Company, or Executive if he
selects the Accounting Firm, shall direct the Accounting Firm to submit its
determination and detailed supporting calculations to both the Company and
Executive within 30 calendar days after the Termination Date, if applicable, and
any such other time or times as may be requested by the Company or Executive. If
the Accounting Firm determines that any Excise Tax is payable by Executive, the
Company shall pay the required Gross-Up Payment to Executive within five
business days after the Company's receipt of such determination and calculations
with respect to any Payment to Executive. If the Accounting Firm determines that
no Excise Tax is payable by Executive, it shall, at the same time as it makes
such determination, furnish the Company and Executive an opinion that Executive
has substantial authority not to report any Excise Tax on his federal, state or
local income or other tax return. As a result of the uncertainty in the
application of Section 4999 of the Code (or any successor provision thereto) and
the possibility of similar uncertainty regarding applicable state or local tax
law at the time of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made (an "Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts or fails
to pursue its remedies pursuant to Subsection 7(f) and Executive thereafter is
required to make a payment of any Excise Tax, Executive shall direct the
Accounting Firm to determine the amount of the Underpayment that has occurred
and to submit its determination and detailed supporting calculations to both the
Company and Executive as promptly as possible. Any such Underpayment shall be
promptly paid by the Company to, or for the benefit of, Executive as a Gross-Up
Payment within five business days after the Company's receipt of such
determination and calculations.
(c) The Company and Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or Executive, as the case may be, reasonably requested
by the Accounting Firm, and otherwise cooperate with the Accounting Firm in
connection with the preparation and issuance of the determinations and
calculations contemplated by Subsection 7(b). Any determination by the
Accounting Firm as to the amount of any Gross-Up Payment or Underpayment shall
be binding upon the Company and Executive.
(d) The federal, state and local income or other tax
returns filed by Executive shall be prepared and filed on a consistent basis
with the determination of the Accounting Firm with respect to the Excise Tax
payable by Executive. Executive shall make proper payment of
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the amount of any Excise Tax, and at the request of the Company, provide to the
Company true and correct copies (with any amendments) of his federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company, evidencing such
payment. If prior to the filing of Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, Executive
shall within five business days pay to the Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Subsection 7(b) shall be borne by the Company.
(f) Executive shall notify the Company in writing of any
claim by the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by the Company of a Gross-Up Payment. Such
notification shall be given as promptly as practicable but no later than 10
business days after Executive actually receives notice of such claim and
Executive shall further apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid (in each case, to the extent
known by Executive). Executive shall not pay such claim prior to the earlier of
(x) the expiration of the 30-calendar-day period following the date on which he
gives such notice to the Company and (y) the date that any payment of an amount
with respect to such claim is due. If the Company notifies Executive in writing
prior to the expiration of such period that it desires to contest such claim,
Executive shall:
(i) provide the Company with any written records
or documents in his possession relating to such claim reasonably requested by
the Company;
(ii) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney competent in respect of the subject matter
and reasonably selected by the Company;
(iii) cooperate with the Company in good faith in
order effectively to contest such claim; and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless Executive, on an after-tax basis,
for and against any Excise Tax or income tax, including interest and penalties
with respect thereto, imposed as a result of such representation and payment of
costs and expenses. Without limiting the foregoing provisions of this Subsection
7(f), the Company shall control all proceedings taken in connection with the
contest of any claim contemplated by this Subsection 7(f) and, at its sole
option, may pursue or forego any and all
11
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim (provided, however, that Executive may
participate therein at his own cost and expense) and may, at its option, either
direct Executive to pay the tax claimed and file 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 the Company shall
determine; provided, however, that if the Company directs Executive to pay the
tax claimed and file for a refund, the Company shall advance the amount of such
payment to Executive on an interest-free basis and shall indemnify and hold
Executive harmless, on an after-tax basis, from any Excise Tax or income or
other tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
Executive with respect to which the contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
any such contested claim 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.
(g) If, after the receipt by Executive of an amount
advanced by the Company pursuant to Subsection 7(f), Executive receives any
refund with respect to such claim, Executive shall (subject to the Company's
complying with the requirements of Subsection 7(f)) promptly pay to the Company
the amount of such refund (together with any interest paid or credited thereon
after any taxes applicable thereto). If, after the receipt by Executive of an
amount advanced by the Company pursuant to Subsection 7(f), a determination is
made that Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 calendar days after
the Company is notified of such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of any such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid by the Company to Executive pursuant to this Section 7.
8. Binding Agreement; Successors. This Agreement shall
inure to the benefit of and be binding upon Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee, or other designee or, if there be no
such designee, to Executive's estate. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of the Company, including,
without limitation, any person acquiring directly or indirectly all or
substantially all of the assets of the Company, whether by merger,
consolidation, sale or otherwise (and such successor shall thereafter be deemed
the "Company" for the purposes of this Agreement). The Company shall require any
such successor to assume and agree to perform this Agreement.
9. Restrictive Covenants.
(a) Non-Competition. During the Employment Period and for
a period of 18 months following the Termination Date, Executive shall not,
directly or indirectly, own, manage,
12
operate, control or participate in the ownership, management, operation or
control of, or be connected as an officer, employee, partner or director with,
or have any financial interest in, any business which is in substantial
competition with any business conducted by the Company or by any group, division
or Subsidiary of the Company, in any area where such business is being conducted
at the time of such termination. Ownership of 5% or less of the voting stock of
any corporation which is required to file periodic reports with the Securities
and Exchange Commission under the Exchange Act shall not constitute a violation
hereof.
(b) Non-Solicitation. Executive shall not directly or
indirectly, at any time during the Employment Period and for 18 months
thereafter, solicit or induce or attempt to solicit or induce any employee,
sales representative or other representative, agent or consultant of the Company
or any group, division or Subsidiary of the Company (collectively, the "RPM
Group") to terminate his, her or its employment, representation or other
relationship with the RPM Group or in any way directly or indirectly interfere
with such a relationship.
(c) Confidentiality.
(i) Executive shall keep in strict confidence,
and shall not, directly or indirectly, at any time during or after the
Employment Period, disclose, furnish, publish, disseminate, make available or,
except in the course of performing his duties of employment hereunder, use any
Confidential Information. Executive specifically acknowledges that all
Confidential Information, whether reduced to writing, maintained on any form of
electronic media, or maintained in the mind or memory of Executive and whether
compiled by the RPM Group, and/or Executive, derives independent economic value
from not being readily known to or ascertainable by proper means by others who
can obtain economic value from its disclosure or use, that reasonable efforts
have been made by the RPM Group to maintain the secrecy of such information,
that such information is the sole property of the RPM Group and that any
disclosure or use of such information by Executive during the Employment Period
(except in the course of performing his duties and obligations hereunder) or
after the termination of the Employment Period shall constitute a
misappropriation of the RPM Group's trade secrets.
(ii) Executive agrees that upon termination of
the Employment Period, for any reason, Executive shall return to the Company, in
good condition, all property of the RPM Group, including, without limitation,
the originals and all copies of any materials, whether in paper, electronic or
other media, that contain, reflect, summarize, describe, analyze or refer or
relate to any items of Confidential Information.
10. Notice. All notices, requests and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given (a) when hand delivered, (b) when dispatched by electronic
facsimile transmission (with receipt electronically confirmed), (c) one business
day after being sent by recognized overnight delivery service, or (d) three
business days after being sent by registered or certified mail, return receipt
requested, postage prepaid, and in each case addressed as follows (or addressed
as otherwise specified by notice under this Section):
13
If to Executive:
Xxxxxx X. Xxxx
00000 Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxx 00000
Facsimile: Not applicable
If to the Company:
RPM International Inc.
0000 Xxxxx Xxxx
X.X. Xxx 000
Xxxxxx, Xxxx 00000
Facsimile: 000-000-0000
Attn: Secretary
11. Withholding. The Company may withhold from any
amounts payable under or in connection with this Agreement all federal, state,
local and other taxes as may be required to be withheld by the Company under
applicable law or governmental regulation or ruling.
12. Amendments; Waivers. No provision of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing, and is signed by Executive and by another
executive officer of the Company. No waiver by either party hereto at any time
of any breach by the other party hereto of, 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.
13. Jurisdiction. 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 conflict of law principles of
such State. Executive and the Company each agree that the state and federal
courts located in the State of Ohio shall have jurisdiction in any action, suit
or proceeding against Executive or the Company based on or arising out of this
Agreement and each of Executive and the Company hereby (a) submits to the
personal jurisdiction of such courts, (b) consents to service of process in
connection with any such action, suit or proceeding and (c) waives any other
requirement (whether imposed by statute, rule of court or otherwise) with
respect to personal jurisdiction, venue or service of process.
14. Equitable Relief. Executive and the Company
acknowledge and agree that the covenants contained in Section 9 are of a special
nature and that any breach, violation or evasion by Executive of the terms of
Section 9 will result in immediate and irreparable injury and harm to the
Company, for which there is no adequate remedy at law, and will cause damage to
the Company in amounts difficult to ascertain. Accordingly, the Company shall be
entitled to the remedy of injunction, as well as to all other legal or equitable
remedies to which the
14
Company may be entitled (including, without limitation, the right to seek
monetary damages), for any breach, violation or evasion by Executive of the
terms of Section 9.
15. Validity. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect. In the event that any provision of Section 9 is found by
a court of competent jurisdiction to be invalid or unenforceable as against
public policy, such court shall exercise its discretion in reforming such
provision to the end that Executive shall be subject to such restrictions and
obligations as are reasonable under the circumstances and enforceable by the
Company.
16. 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 shall constitute one and the same instrument.
17. Headings; Definitions. The headings contained herein
are for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement. Certain capitalized terms used in this
Agreement are defined on Schedule A attached hereto.
18. No Assignment. This Agreement may not be assigned by
either party without the prior written consent of the other party, except as
provided in Section 8.
19. Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the employment of Executive and
supersedes any and all other agreements, either oral or in writing, with respect
to the employment of Executive.
20. Enforcement Costs. The Company is aware that upon the
occurrence of a Change in Control the Board of Directors or a shareholder of the
Company may then cause or attempt to cause the Company to refuse to comply with
its obligations under this Agreement, or may cause or attempt to cause the
Company to institute, or may institute, litigation seeking to have this
Agreement declared unenforceable, or may take, or attempt to take, other action
to deny Executive the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement could be frustrated. It is the
intent of the Company that Executive not be required to incur the expenses
associated with the enforcement of 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 Executive hereunder, nor be
bound to negotiate any settlement of his rights hereunder under threat of
incurring such expenses. Accordingly, if, following a Change in Control, it
should appear to Executive that the Company has failed to comply with any of its
obligations under this Agreement or the Company or any other person takes any
action to declare this Agreement void or unenforceable, or institutes any
litigation or other legal action designed to deny, diminish or recover from
Executive the benefits intended to be provided to Executive hereunder, and
Executive has complied with all of his obligations under Section 9, then the
Company irrevocably authorizes Executive from time to time to retain counsel of
his choice at the expense of the Company as provided in this Section 20 to
represent 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, shareholder or other person affiliated with the Company, in
any jurisdiction.
15
The Company's obligations under this Section 20 shall not be conditioned on
Executive's success in the prosecution or defense of any such litigation or
other legal action. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to Executive entering into an attorney-client relationship with such
counsel, and in that connection the Company and Executive agree that a
confidential relationship shall exist between Executive and such counsel. The
reasonable fees and expenses of counsel selected from time to time by Executive
as hereinabove provided shall be paid or reimbursed to Executive by the Company
on a regular, periodic basis upon presentation by Executive of a statement or
statements prepared by such counsel in accordance with its customary practices,
up to a maximum aggregate amount of $500,000. Notwithstanding the foregoing,
this Section 20 shall not apply at any time unless a Change in Control has
occurred.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
IN THE PRESENCE OF: RPM INTERNATIONAL INC.
/s/ Xxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxxxx
--------------------------- ----------------------------------
Xxxxx X. Xxxxxxxx, President and
Chief Executive Officer
/s/ J.R. Xxxxxxx And: /s/ P. Xxxxx Xxxxxxxx
--------------------------- ---------------------------------
P. Xxxxx Xxxxxxxx, Secretary
The "Company"
/s/ Xxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxx
----------------------------- --------------------------------
Xxxxxx X. Xxxx
"Executive"
16
Schedule A
Certain Definitions
As used in this Agreement, the following capitalized terms shall have
the following meanings:
"401(k) Plan" means the RPM International Inc. 401(k) Plan and any
successor plan or arrangement.
"Affiliate" of a specified entity means an entity that directly, or
indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the entity specified.
"Average Incentive Compensation" means an amount equal to the average
amount of the annual Incentive Compensation payable to Executive
(without regard to any reduction thereof elected by Executive pursuant
to any qualified or non-qualified compensation reduction arrangement
maintained by the Company, including, without limitation, the Deferred
Compensation Plan) for the three most recent completed fiscal years (or
for such shorter period during which Executive has been employed by the
Company) preceding the Termination Date in which the Company paid
Incentive Compensation to executive officers of the Company or in which
the Company considered and declined to pay Incentive Compensation to
executive officers of the Company.
"Benefit Plans" means the Continuing Benefit Plans and the Limited
Benefit Plans.
"Cause" means a determination of the Board of Directors (without the
participation of Executive) of the Company pursuant to the exercise of
its business judgment, that either of the following events has
occurred: (a) Executive has engaged in willful and intentional acts of
dishonesty or gross neglect of duty or (b) Executive has breached
Section 9.
"Change in Control" shall mean the occurrence at any time of any of the
following events:
(a) The Company is merged or consolidated or
reorganized into or with another corporation or other legal person or
entity, 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, person or entity
immediately after such transaction are held in the aggregate by the
holders of Voting Stock immediately prior to such transaction;
(b) The Company sells or otherwise transfers all
or substantially all of its assets to any other corporation or other
legal person or entity, and less than a majority of the combined voting
power of the then-outstanding securities of such corporation, person or
entity immediately after such sale or transfer is held in the aggregate
by the holders of Voting Stock immediately prior to such sale or
transfer;
A-1
(c) There is a report filed on Schedule 13D or
Schedule TO (or any successor schedule, form or report), each as
promulgated pursuant to 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 l3d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities
representing 15% or more of the Voting Power;
(d) The Company files a report or proxy
statement with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) 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
(e) If during any period of two consecutive
years, individuals, who at the beginning of any such period, constitute
the Directors cease for any reason to constitute at least a majority
thereof, unless the nomination for election by the Company's
shareholders of each new Director was approved by a vote of at least
two-thirds of the Directors then in office who were Directors at the
beginning of any such period.
Notwithstanding the foregoing provisions of
paragraphs (c) and (d) of this definition, a "Change in Control" shall
not be deemed to have occurred for purposes of this Agreement (i)
solely because (A) the Company, (B) a Subsidiary, or (C) any
Company-sponsored employee stock ownership plan or other employee
benefit plan of the Company or any Subsidiary, or any entity holding
shares of Voting Stock for or pursuant to the terms of any such plan,
either files or becomes obligated to file a report or proxy statement
under or in response to Schedule 13D, Schedule TO, 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 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, (ii) solely because any other
person or entity either files or becomes obligated to file a report on
Schedule 13D or Schedule TO (or any successor schedule, form or report)
under the Exchange Act, disclosing beneficial ownership by it of shares
of Voting Stock, but only if both (A) the transaction giving rise to
such filing or obligation is approved in advance of consummation
thereof by the Company's Board of Directors and (B) at least a majority
of the Voting Power immediately after such transaction is held in the
aggregate by the holders of Voting Stock immediately prior to such
transaction, or (iii) solely because of a change in control of any
Subsidiary.
Notwithstanding the foregoing definition or anything
contained in this Agreement, a "Change in Control" shall not be deemed
to have occurred as a result of (i) RPM, Inc., an Ohio corporation, or
the Company entering into the Merger Agreement or the Reorganization
Agreement or (ii) the consummation by RPM, Inc., an Ohio corporation,
or the Company of any of the transactions contemplated by the Merger
A-2
Agreement or the Reorganization Agreement. As used herein, "Merger
Agreement" shall mean the Agreement and Plan of Merger, dated as of
August 29, 2002, among RPM, Inc., an Ohio corporation, the Company, and
RPM Merger Company, an Ohio corporation and wholly-owned subsidiary of
the Company, and "Reorganization Agreement" shall mean the
Reorganization Agreement, dated as of October 15, 2002, by and between
RPM, Inc., an Ohio corporation, and the Company.
"COBRA Continuation Coverage" means the health care continuation
requirements under the federal Consolidated Omnibus Budget
Reconciliation Act, as amended, Part VI of Subtitle B of Title I of the
Employee Retirement Income Security Act of 1974, as amended, and Code
Section 4980B(f), or any successor provisions thereto.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Confidential Information" means trade secrets and confidential
business and technical information of the RPM Group and its customers
and vendors, without limitation as to when or how Executive may have
acquired such information. Such Confidential Information shall include,
without limitation, the RPM Group's manufacturing, selling and
servicing methods and business techniques, training, service and
business manuals, promotional materials, vendor and product
information, product development plans, internal financial statements,
sales and distribution information, business plans, marketing
strategies, pricing policies, corporate alliances, business
opportunities, the lists of actual and potential customers as well as
other customer information, technology, know-how, processes, data,
ideas, techniques, inventions (whether patentable or not), formulas,
terms of compensation and performance levels of RPM Group employees,
and other information concerning the RPM Group's actual or anticipated
business, research or development, or which is received in confidence
by or for the RPM Group from any other person and all other
confidential information to the extent that such information is not
intended by the RPM Group for public dissemination.
"Continuing Benefit Plans" means only the following employee benefit
plans and arrangements of the Company in effect on the date hereof, or
any successor plan or arrangement in which Executive is eligible to
participate immediately before the Termination Date:
(a) The RPM International Inc. Health and Welfare Plan
(including medical, dental and prescription drug
benefits); and
(b) Estate/Financial Planning Benefits.
"Deferred Compensation Plan" means the RPM International Inc. Deferred
Compensation Plan, as amended from time to time, in which executive
officers of the Company are eligible to participate and any such
successor plan or arrangement.
"Director" means a member of the Board of Directors of the Company.
A-3
"Disability," when determined at any time other than during the
Protected Period, means the inability of Executive for a continuous
period in excess of 150 days to perform the essential functions of his
position on an active full-time basis with or without reasonable
accommodations by reason of a disability condition; a certificate from
a physician acceptable to both the Company and Executive to the effect
that Executive is or has been disabled and incapable of performing the
essential functions of his position with or without reasonable
accommodations as previously performed shall be conclusive of the fact
that Executive is incapable of performing such services and is, or has
been, disabled for the purposes of this Agreement. "Disability," when
determined at any time during the Protected Period, means a "Total
Disability" (as defined and determined under the Group Long Term
Disability Insurance) that entitles Executive to receive the "Total
Disability Benefit" under the Group Long Term Disability Insurance.
Whether determined during or outside of the Protected Period, the
Company and Executive acknowledge and agree that the essential
functions of Executive's position are unique and critical to the
Company and that a disability condition that causes Executive to be
unable to perform the essential functions of his position under the
circumstances described above will constitute an undue hardship on the
Company.
"Earned Incentive Compensation" means the sum of:
(a) The amount of any Incentive Compensation
payable but not yet paid for the fiscal year preceding the fiscal year
in which the Termination Date occurs. If the Compensation Committee has
determined such amount prior to the Termination Date, then such amount
shall be the amount so determined by the Compensation Committee. If the
Compensation Committee has not determined such amount prior to the
Termination Date, then such amount shall equal the amount of the
Average Incentive Compensation. For purposes of this paragraph (a), any
Incentive Compensation deferred by Executive pursuant to any qualified
or non-qualified compensation reduction arrangement maintained by the
Company, including, without limitation, the Deferred Compensation Plan,
shall be deemed to have been paid on the date of deferral; and
(b) An amount equal to the Average Incentive
Compensation multiplied by a fraction, the numerator of which is the
number of days in the current fiscal year of the Company that have
expired before the Termination Date and the denominator of which is
365.
"Estate/Financial Planning Benefits" means those estate and financial
planning services (a) in effect on the date hereof in which Executive
is eligible to participate or (b) that the Company makes available at
any time before the Termination Date to the executives and key
management employees of the Company and in which Executive is then
eligible to participate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder, as such law, rules and
regulations may be amended from time to time.
A-4
"Good Reason" means a determination by Executive made in good faith
that, upon or after the occurrence of a Change in Control, any of the
following events has occurred without Executive's express written
consent: (a) a significant reduction in the nature or scope of the
title, authority or responsibilities of Executive from those held by
Executive immediately prior to the Change in Control; (b) a reduction
in Executive's Base Salary from the amount in effect on the date of the
Change in Control; (c) a reduction in Executive's Incentive
Compensation from the amount of Executive's Average Incentive
Compensation, unless such reduction results solely from the Company's
results of operations; (d) the failure by the Company to offer to
Executive an economic value of benefits reasonably comparable to the
economic value of benefits under the Benefit Plans in which Executive
participates at the time of the Change in Control; or (e) a material
breach by the Company of the terms of Section 3.
"Gross-Up Payment" shall have the meaning given such term in Section 7.
"Group Long Term Disability Insurance" means the Group Long Term
Disability Insurance sponsored by the Company and provided by the
Continental Casualty Company, Chicago, Illinois, as currently in effect
and as the same may be amended from time to time, and any successor
long-term disability insurance sponsored by the Company in which the
executives and key management employees of the Company are eligible to
participate.
"Limited Benefit Plans" means all the Company's employee benefit plans
and arrangements in effect at any time and in which the executives and
key management employees of the Company are eligible to participate,
excluding the Continuing Benefit Plans, but including, without
limitation, the following employee benefit plans and arrangements or
any successor or new plan or arrangement made available in the future
to the executives and key management employees of the Company and in
which Executive is eligible to participate before the Termination Date:
(a) The 401(k) Plan;
(b) The RPM International Inc. Retirement Plan;
(c) The Supplemental Executive Retirement Plan;
(d) Stock option plans and other equity-based incentive
plans, including the RPM International Inc. 1996
Stock Option Plan and the Restricted Stock Plan;
(e) The Split Dollar Life Insurance;
(f) The RPM International Inc. Incentive Compensation
Plan;
(g) The Deferred Compensation Plan;
A-5
(h) The RPM International Inc. Employee Stock Purchase
Plan;
(i) The Group Long Term Disability Insurance;
(j) RPM International Inc. Group Life Insurance;
(k) RPM International Inc. Group Accidental Death &
Dismemberment Insurance;
(l) The RPM International Inc. Group Carve Out Plan (also
known as GRIP);
(m) The RPM International Inc. Business Travel Insurance
Plan;
(n) The fringe benefits appertaining to Executive's
position with the Company referred to in Subsection
4(f), including the use of an automobile;
(o) Health Care Reimbursement Account; and
(p) Dependent Care Reimbursement Account.
"Lump-Sum Payment" means, collectively, the lump-sum payments that may
be payable to Executive pursuant to the first sentence of Subsection
6(b)(iii) and pursuant to Subsection 6(c)(ii)(B).
"Notice of Termination for Good Reason" means a written notice
delivered by Executive in good faith to the Company under Subsection
6(a)(vi) setting forth in reasonable detail the facts and circumstances
that have occurred and that Executive claims in good faith to be an
event constituting Good Reason.
"PARS Plan" means the RPM International Inc. 2002 Performance
Accelerated Restricted Stock Plan and any successor plan or arrangement
thereto.
"Protected Period" means that period of time commencing on the date of
a Change in Control and ending two years after such date.
"Release and Waiver of Claims" means a written release and waiver by
Executive, to the fullest extent allowable under applicable law and in
form reasonably acceptable to the Company, of all claims, demands,
suits, actions, causes of action, damages and rights against the
Company and its Affiliates whatsoever which he may have had on account
of the termination of his employment, including, without limitation,
claims of discrimination, including on the basis of sex, race, age,
national origin, religion, or handicapped status, and any and all
claims, demands and causes of action for severance or other termination
pay. Such Release and Waiver of Claims shall not, however, apply to the
obligations of the Company arising under this Agreement, any
indemnification agreement between Executive and the Company, any
retirement plans, any stock option agreements, COBRA Continuation
Coverage or rights of indemnification Executive may
A-6
have under the Company's Certificate of Incorporation or By-laws (or
comparable charter document) or by statute.
"Restricted Stock Plan" means the RPM International Inc. 1997
Restricted Stock Plan and any successor plan or arrangement thereto,
but shall not be deemed to mean or include the PARS Plan.
"Split Dollar Life Insurance" means the Company's Split Dollar Life
Insurance arrangements in effect on the date hereof or any successor
arrangement that the Company makes available at any time before the
Termination Date to the executives and key management employees of the
Company and in which Executive is then eligible to participate.
"Subsidiary" means a corporation, company or other entity (a) more than
50 percent of whose outstanding shares or securities (representing the
right to vote for the election of directors or other managing
authority) are, or (b) which does not have outstanding shares or
securities (as may be the case in a partnership, joint venture or
unincorporated association), but more than 50 percent of whose
ownership interest representing the right generally to make decisions
for such other entity is, now or hereafter, owned or controlled,
directly or indirectly, by the Company.
"Supplemental Executive Retirement Plan" means the RPM International
Inc. Benefit Restoration Plan in effect on the date hereof or any
successor plan that the Company makes available at any time before the
Termination Date to the executives and key management employees of the
Company and in which Executive is then eligible to participate.
"Termination Date" means the effective date of the termination of the
Employment Period.
"Voting Power" means, at any time, the total votes relating to the
then-outstanding securities entitled to vote generally in the election
of Directors.
"Voting Stock" means, at any time, the then-outstanding securities
entitled to vote generally in the election of Directors.
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