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Exhibit 10(k)
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of this 14th day of May, 1997, by and between X. XXXXXXXX, INC., a Delaware
corporation (the "Employer"), and XXXXX X. XXXXXX (the "Employee").
WHEREAS, the Board of Directors of the Employer desires to provide for
the continued employment of the Employee as a member of the Employer's
management, in the best interest of the Employer and its stockholders. The
Employee is willing to commit himself continue to serve the Employer, on the
terms and conditions herein provided;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereto agree as follows:
1. DEFINED TERMS
The definitions of capitalized terms used in this Agreement (unless
stated where first used) are provided in the last Section hereof.
2. EMPLOYMENT
The Employer hereby continues to employ the Employee as Treasurer of
the Employer, and the Employee hereby accepts such continued employment upon the
terms and conditions herein contained.
3. DUTIES AND CONDITIONS OF EMPLOYMENT
3.1 DUTIES. The Employee shall devote his entire business time,
attention and energies to the Employer and shall not engage in any conduct which
shall reflect adversely upon the Companies. The Employee shall perform such
duties for the Companies as may be assigned to one in his executive status and
capacity by the Board. The Employee shall serve diligently and to the best of
his ability.
During his employment by the Employer, the Employee shall not, without
the Employer's prior written consent, be
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engaged in any other business activity, whether or not such business activity is
pursued for gain, profit or other pecuniary advantage, except that
notwithstanding the foregoing, he may invest his personal funds for his own
account; provided that such investment shall be passive and not controlling in
any such investment and subject to the provisions of Section 13.2 hereof and
provided further that he will not be required to provide any substantial
services on behalf of such enterprise. Notwithstanding the foregoing, the
Employee may serve on the Boards of Directors of other corporations during the
Term as long as such service does not interfere with the performance of his
duties hereunder.
3.2 CONDITIONS. The Employee shall be provided with suitable office
space, furnishings, secretarial and administrative assistance. Without the
Employee's consent, the Employee shall not be required to report principally to
an office located more than five hundred (500) miles from his principal office
at the date of this Agreement.
4. TERM OF AGREEMENT; TERMINATION OF EMPLOYMENT; ESCROW DURING DISPUTE
4.1 TERM OF AGREEMENT. The Employer hereby employs the Employee for a
Term commencing as of the date hereof and ending May 14, 1999. At the end of
June 1997 and at the end of each calendar month thereafter up to and including
March 31, 2010, this Agreement shall automatically be extended for one (1) month
unless either party shall give notice to the other of non-extension prior to the
end of such calendar month; provided, however, if a Change in Control shall have
occurred during the Term of this Agreement, Sections 7 and 8 and 10 through 20
of this Agreement shall continue in effect until at least the end of the
Change-in-Control Protective Period (whether or not the Term of the Agreement
shall have expired for other purposes).
4.2 TERMINATION OF EMPLOYMENT PRIOR TO A CHANGE IN CONTROL. Prior to
any Change in Control, the Employer may terminate the employment of the Employee
for Cause pursuant to this Agreement. Prior to any Change in Control, the
Employee may terminate his employment pursuant to this Agreement if the Employer
fails to make full and timely payments of all sums provided for in Sections 5
and 6 hereof (subject to Section 7.2 hereof), or otherwise shall breach its
covenants hereunder in any material respect.
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4.3 ESCROW DURING A TERMINATION DISPUTE. Prior to any Change in
Control, if the Employee shall be terminated for Cause, and, within 30 days of
such termination, shall notify the Employer of his intention to adjudicate such
termination as improper, the Employer agrees that it will deposit with KeyBank
National Association, Cleveland, Ohio, as Escrow Agent the installments of the
Employee's Base Salary (as provided in Section 5 below) as the same would have
become payable but for such termination. In the event of a final adjudication by
a tribunal of competent jurisdiction that such termination was not for Cause,
then the amounts so deposited in escrow, plus any interest earned by the Escrow
Agent thereon, shall be delivered promptly to the Employee. If such adjudication
shall be in favor of the Employer, the Escrow Agent shall return the sums so
deposited, plus such interest, to the Employer.
The escrowed salary shall not be deemed to be liquidated damages but
the Employer shall be entitled to a credit against any such award to the extent
of the sums so delivered to the Employee.
5. COMPENSATION
The Employer agrees to pay to the Employee as compensation for his
services hereunder a Base Salary initially equal to the fixed annual salary
currently being paid to the Employee as shown on the Employer's employment
records, payable in substantially equal weekly, biweekly, bimonthly or monthly
installments, as the case may be, in the manner currently being paid to the
Employee. The Base Salary may be discretionarily increased by the Board from
time to time as the Board deems appropriate in its reasonable business judgment.
The Base Salary in effect from time to time shall not be decreased during the
Term (except as provided in Section 7.2).
It is understood and agreed that the Employee's compensation
may not be limited to his Base Salary and that the Employee may receive an
annual bonus in the amount, if any, determined annually by the Employer.
The Employee shall also participate in employee compensation and
benefit plans available generally to executives of the Employer (including,
without limitation, any tax-qualified profit sharing plan, nonqualified profit
sharing plan, life insurance plan and health insurance plan) on a level
appropriate to his position and shall receive the employee fringe benefits
available generally to executives of the
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Employer (including, without limitation, the use of a company car).
6. EXPENSES
The Employee is authorized to incur reasonable expenses for promoting
the business of the Employer, including expenses for entertainment, travel and
similar items. The Employer shall reimburse the Employee for all such expenses
upon the presentation by the Employee, from time to time, of an itemized account
of such expenditures.
7. PRE-TERMINATION COMPENSATION; DISABILITY
7.1 NORMAL PRE-TERMINATION COMPENSATION. If the Employee's employment
shall be terminated for any reason during the Term (or, if later, prior to the
end of the Change-in-Control Protective Period), the Employer shall pay the
Employee's Base Salary to the Employee through the Date of Termination at the
rate in effect at the time the Notice of Termination is given (subject to
Section 7.2 hereof), together with all compensation and benefits payable to the
Employee through the Date of Termination under the terms of any compensation or
benefit plan, program or arrangement maintained by the Employer during such
period. Subject to Sections 8, 9, 10 and 11 hereof, after completing the expense
reimbursements required by Section 6 hereof and making the payments and
providing the benefits required by this Section 7, the Employer shall have no
further obligations to the Employee under this Agreement.
7.2 DISABILITY ADJUSTMENT TO BASE SALARY PAYMENTS. During the Term (or,
if later, at any time prior to the end of the Change-in-Control Protective
Period), during any period that the Employee fails to perform the Employee's
full-time duties with the Employer as a result of incapacity due to physical or
mental illness (but in no event for more than twenty-four (24) months), the
Employer shall pay only sixty percent (60%) of the Employee's Base Salary to the
Employee at the rate in effect at the commencement of any such period (less
amounts, if any, payable to the Employee at or prior to the time of any such
Base Salary payment under disability benefit plans of the Employer or under the
Social Security disability insurance program). After six (6) months of
Disability, the Employer shall have the right to terminate the Employee's
employment pursuant to this Agreement and all Base Salary payments (except the
sixty percent (60%) payments pursuant to the foregoing sentence) shall cease.
Except to the extent
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provided in this Section 7.2, all Base Salary payments to the Employee shall be
abated during the period of Disability. Subject to Sections 8, 9, 10 and 11
hereof, after completing the expense reimbursements required by Section 6 hereof
and making the payments and providing the benefits required by this Section 7,
the Employer shall have no further obligations to the Employee under this
Agreement.
8. NORMAL POST-TERMINATION PAYMENTS; CONTINUATION PAY; TERMINATION PAY;
PROMPT PAYMENT
8.1 NORMAL POST-TERMINATION PAYMENTS. If the Employee's employment
shall be terminated for any reason during the Term of this Agreement (or, if
later, prior to the end of the Change-in-Control Protective Period), the
Employer shall pay the Employee's normal post-termination compensation and
benefits to the Employee as such payments become due. Subject to Section 10
hereof, such post-termination compensation and benefits shall be determined
under, and paid in accordance with, the Employer's retirement, insurance and
other compensation or benefit plans, programs and arrangements (other than this
Agreement).
8.2 CONTINUATION PAY; TERMINATION PAY. Notwithstanding anything to the
contrary in Section 7.2, 9.1 or 10.1(A) hereof, if the laws governing this
Agreement shall require that the Employer continue to pay or otherwise
compensate the Employee for any period of time following termination of the
Employee's employment ("Continuation Pay") or if such laws require certain
amounts of severance pay, termination compensation or the like (collectively,
"Termination Pay"), then to the fullest extent permitted by law any payments to
the Employee pursuant to Section 7.2, 9.1 or 10.1(A) hereof shall be included
in the calculation of Continuation Pay and Termination Pay and such
payments shall be deducted from the amount of Continuation Pay or Termination
Pay due the Employee.
8.3 PROMPT PAYMENT. Any payments due under Section 5, 6, 7 or 9 hereof
or this Section 8 shall be made promptly after the event giving rise to the
obligation and shall be made to the Employee or in accordance with Section 14.2
hereof, as the case may be.
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9. POST-TERMINATION PAYMENTS UPON TERMINATION (PRIOR TO A CHANGE IN
CONTROL) BY DEATH OR BY THE EMPLOYER WITHOUT CAUSE
9.1 DEATH BENEFIT. If the Employee's employment shall be terminated by
death during the Term (or, if later, prior to the end of the Change-in-Control
Protective Period), then, in addition to the compensation and benefits provided
by Sections 7.1 and 8 hereof, the Employer shall pay a lump sum amount equal to
sixty percent (60%) of the Base Salary for twenty-four (24) months in accordance
with Section 14.2.
9.2 TERMINATION BY THE EMPLOYER WITHOUT CAUSE. If the Employer shall
terminate the Employee's employment during the Term and prior to a Change in
Control, without Cause (and not for Disability or in connection with the
Employee's death), the Employer shall pay the Employee his Base Salary
throughout the remaining Term and annual bonuses during the remaining Term, each
of which bonuses shall be equal to one-half (1/2) times the average annual bonus
paid to the Employee during the most recent five (5) calendar years of the
Employee's employment by any of the Companies (prorated for any partial years
in the remaining Term).
10. SEVERANCE PAYMENTS; DEDUCTIBILITY.
10.1 SEVERANCE PAYMENTS.
Subject to Section 10.2 hereof, the Employer shall pay the Employee the
payments described in this Section 10.1 (the "Severance Payments") upon the
termination of the Employee's employment following a Change in Control and
prior to the end of the Change-in-Control Protective Period, in addition to any
payments and benefits to which the Employee is entitled under Sections 5, 6, 7
and 8.1 hereof, unless such termination is (i) by the Employer for Cause, (ii)
by reason of death or Disability, or (iii) by the Employee without Good Reason.
For purposes of this Agreement, the Employee's employment shall be deemed to
have been terminated by the Employer without Cause following a Change in Control
or by the Employee with Good Reason following a Change in Control, as the case
may be, if (i) the Employee's employment is terminated without Cause prior to a
Change in Control and such termination was at the request or direction of a
Person who has entered into an agreement with the Employer the consummation of
which would constitute a Change in Control, (ii) the Employee terminates his
employment with Good Reason prior to a Change in Control and the circum-
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stance or event which constitutes Good Reason occurs at the request or
direction of such Person, or (iii) the Employee's employment is terminated by
the Employer without Cause prior to a Change in Control (but following a
Potential Change in Control) and such termination is otherwise in connection
with or in anticipation of a Change in Control which actually occurs. For
purposes of any determination regarding the applicability of the immediately
preceding sentence, any position taken by the Employee shall be presumed to be
correct unless the Employer establishes to the Committee by clear and
convincing evidence that such position is not correct.
(A) In lieu of any further salary payments to the
Employee for periods subsequent to the Date of Termination and in lieu
of any severance benefit otherwise payable to the Employee, the
Employer shall pay to the Employee a lump sum severance payment, in
cash, equal to two (2) times the sum of (i) the higher of the
Employee's Base Salary in effect immediately prior to the occurrence
of the event or circumstance upon which the Notice of Termination is
based or the Employee's Base Salary in effect immediately prior to
the Change in Control, and (ii) the higher of the annual bonus earned
by the Employee in respect of the Employer's fiscal year immediately
preceding that in which the Date of Termination occurs or the average
annual bonus so earned in respect of the three fiscal years
immediately preceding that in which the Change in Control occurs.
(B) Notwithstanding any provision of any annual
incentive plan to the contrary, the Employer shall pay to the Employee
a lump sum amount, in cash, equal to the sum of (i) any annual
incentive compensation which has been allocated or awarded to the
Employee for a completed fiscal year preceding the Date of Termination
and which, as of the Date of Termination, is contingent only upon the
continued employment of the Employee to a subsequent date, and (ii) a
pro rata portion to the Date of Termination of a deemed annual bonus
for the Employer's fiscal year in which the Date of Termination occurs,
calculated by multiplying (i) the higher of the annual bonus earned by
the Employee with respect to the immediately preceding fiscal year or
the average annual bonus earned by the Employee with respect to the
immediately preceding three fiscal years of the Employer by (ii) the
fraction obtained by dividing the number of days in the fiscal year of
the
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Employer in which termination occurs up to and including the Date of
Termination by 365.
(C) For the twenty-four (24) month period immediately
following the Date of Termination, the Employer shall arrange to
provide the Employee with life, disability, accident and health
insurance benefits substantially similar to those which the Employee
is receiving immediately prior to the Notice of Termination (without
giving effect to any amendment to such benefits made subsequent to a
Change in Control, which amendment adversely affects in any manner the
Employee's entitlement to or the amount of such benefits); PROVIDED,
HOWEVER, that, unless the Employee consents to a different method
(after taking into account the effect of such method on the calculation
of "parachute payments" pursuant to Section 10.2 hereof), such health
insurance benefits shall be provided through a third-party insurer.
Benefits otherwise receivable by the Employee pursuant to this Section
10.1(C) shall be reduced to the extent comparable benefits are actually
received by or made available to the Employee without cost during the
twenty-four (24) month period following the Employee's termination of
employment (and any such benefits actually received by or made
available to the Employee shall be reported to the Employer by the
Employee). If the Severance Payments shall be decreased pursuant to
Section 10.2 hereof, and the Section 10.1(C) benefits which remain
payable after the application of Section 10.2 hereof are thereafter
reduced pursuant to the immediately preceding sentence because of the
receipt or availability of comparable benefits, the Employer shall, at
the time of such reduction, pay to the Employee the least of (a) the
amount of the decrease made in the Severance Payments pursuant to
Section 10.2 hereof, (b) the amount of the subsequent reduction in
these Section 10.1(C) benefits, or (c) the maximum amount which can be
paid to the Employee without being, or causing any other payment to be,
nondeductible by reason of section 280G of the Code.
10.2 DEDUCTIBILITY.
(A) Notwithstanding any other provisions of this Agreement, in the
event that any payment or benefit received or to be received by the Employee in
connection with a Change in Control or the termination of the Employee's
employment (whether pursuant to the terms of this Agreement or any other plan,
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arrangement or agreement with the Employer, any Person whose actions result in a
Change in Control or any Person affiliated with the Employer or such Person)
(all such payments and benefits, including the Severance Payments, being
hereinafter called "Total Payments") would not be deductible (in whole or part),
by the Employer, an affiliate or Person making such payment or providing such
benefit as a result of section 280G of the Code, then, to the extent necessary
to make such portion of the Total Payments deductible (and after taking into
account any reduction in the Total Payments provided by reason of section 280G
of the Code in such other plan, arrangement or agreement), the cash Severance
Payments shall first be reduced (if necessary, to zero), and the noncash
Severance Payments shall thereafter be reduced (if necessary, to zero);
PROVIDED, HOWEVER, that the Employee may elect (at any time prior to the
delivery of a Notice of Termination hereunder) to have the noncash Severance
Payments reduced (or eliminated) prior to any reduction of the cash Severance
Payments.
(B) For purposes of this limitation, (i) no portion of the Total
Payments the receipt or enjoyment of which the Employee shall have effectively
waived in writing prior to the delivery of a Notice of Termination shall be
taken into account, (ii) no portion of the Total Payments shall be taken into
account which in the opinion of tax counsel (the "Tax Counsel") reasonably
acceptable to the Employee and selected by the accounting firm which was,
immediately prior to the Change in Control, the Employer's independent auditor
(the "Auditor") does not constitute a "parachute payment" within the meaning of
section 280G(b)(2) of the Code, including by reason of section 280G(b)(4)(A) of
the Code, (iii) the Severance Payments shall be reduced only to the extent
necessary so that the Total Payments (other than those referred to in clauses
(i) or (ii)) in their entirety constitute reasonable compensation for services
actually rendered within the meaning of section 280G(b)(4)(B) of the Code or are
otherwise not subject to disallowance as deductions by reason of section 280G of
the Code, in the opinion of the Tax Counsel, and (iv) the value of any noncash
benefit or any deferred payment or benefit included in the Total Payments shall
be determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code.
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(C) If it is established pursuant to a final determination of a court
or an Internal Revenue Service proceeding that, notwithstanding the good faith
of the Employee and the Employer in applying the terms of this Section 10.2, the
aggregate "parachute payments" paid to or for the Employee's benefit are in an
amount that would result in any portion of such "parachute payments" not being
deductible by reason of section 280G of the Code, then the Employee shall have
an obligation to pay the Employer upon demand an amount equal to the sum of (i)
the excess of the aggregate "parachute payments" paid to or for the Employee's
benefit over the aggregate "parachute payments" that could have been paid to or
for the Employee's benefit without any portion of such "parachute payments"
not being deductible by reason of section 280G of the Code; and (ii) interest on
the amount set forth in clause (i) of this sentence at one hundred twenty
percent (120%) of the rate provided in section 1274(b)(2)(B) of the Code from
the date of the Employee's receipt of such excess until the date of such
payment.
10.3 The payments provided in Sections 10.1(A) and (B) hereof shall be
made not later than the fifth day following the Date of Termination; PROVIDED,
HOWEVER, that if the amounts of such payments, and the limitation on such
payments set forth in Section 10.2 hereof, cannot be finally determined on or
before such day, the Employer shall pay to the Employee on such day an estimate,
as determined in good faith by the Employer, in accordance with Section 10.2
hereof, of the minimum amount of such payments to which the Employee is clearly
entitled and shall pay the remainder of such payments (together with interest
at one hundred twenty percent (120%) of the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but
in no event later than the thirtieth (30th) day after the Date of Termination.
In the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a loan by
the Employer to the Employee, payable on the fifth (5th) business day after
demand by the Employer (together with interest at one hundred twenty percent
(120%) of the rate provided in section 1274(b)(2)(B) of the Code). At the time
that payments are made under this Section, the Employer shall provide the
Employee with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Employer has received from outside
counsel, auditors or consultants (and any such opinions or advice which are in
writing shall be
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attached to the statement). In the event the Employer should fail to pay when
due the amounts described in Sections 10.1(A), (B) and (C) hereof or in Section
10.2 hereof, the Employee shall also be entitled to receive from the Employer an
amount representing interest on any such unpaid amounts from the due date, as
determined under this Section 10.3 (without regard to any extension of the Date
of Termination pursuant to Section 11.3 hereof), to the date of payment at one
hundred twenty percent (120%) of the rate provided in section 1274(b)(2)(B) of
the Code.
10.4 The Employer also shall pay to the Employee all legal fees and
expenses incurred by the Employee (i) in disputing in good faith any issue
relating to the termination of the Employee's employment following a Change in
Control and prior to the end of the Change-in-Control Protective Period, (ii) in
seeking in good faith to obtain or enforce any benefit or right provided by this
Agreement, or (iii) in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder. Such payments shall be made within five (5)
business days after delivery of the Employee's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Employer
reasonably may require.
11. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE.
11.1 NOTICE OF TERMINATION. During the Term (and, if longer, until the
end of the Change-in-Control Protective Period), any purported termination of
the Employee's employment (other than by reason of death) shall be communicated
by written Notice of Termination from one party hereto to the other party hereto
in accordance with Section 15 hereof. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee's employment under the provision so indicated.
Further, with respect to any purported termination of the Employee's employment
after a Change in Control and prior to the end of the Change-in-Control
Protective Period, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of the
Board which was called and held for the purpose of considering such termi-
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nation (after reasonable notice to the Employee and an opportunity for the
Employee, together with the Employee's counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, the Employee was guilty of
conduct set forth in clause (i) or (ii) of the definition of Cause herein, and
specifying the particulars thereof in detail.
11.2 DATE OF TERMINATION. "Date of Termination," with respect to any
purported termination of the Employee's employment during the Term (and, if
longer, prior to the end of the Change-in-Control Protective Period), shall mean
(i) if the Employee's employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that the Employee shall not have
returned to the full-time performance of the Employee's duties during such
thirty (30) day period), and (ii) if the Employee's employment is terminated for
any other reason, the date specified in the Notice of Termination (which, in the
case of a termination by the Employer, shall not be less than thirty (30) days
(except in the case of a termination for Cause) and, in the case of a
termination by the Employee, shall not be less than fifteen (15) days nor more
than sixty (60) days, respectively, from the date such Notice of Termination is
given).
11.3 DISPUTE CONCERNING TERMINATION. With respect to any purported
termination of the Employee's employment after a Change in Control and prior to
the end of the Change-in-Control Protective Period, if within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 11.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be extended
until the date on which the dispute is finally resolved, either by mutual
written agreement of the parties or by a final judgment, order or decree of a
court of competent jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no appeal has been
perfected); PROVIDED, HOWEVER, that the Date of Termination shall be extended
by a notice of dispute given by the Employee only if such notice is given in
good faith and the Employee pursues the resolution of such dispute with
reasonable diligence.
11.4 COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control and prior to the end of the Change-in-Control
Protective Period and the Date of Termination is extended in accordance with
Section 11.3
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hereof, the Employer shall continue to pay the Employee the full compensation
in effect when the notice giving rise to the dispute was given (including, but
not limited to, salary) and continue the Employee as a participant in all
compensation, benefit and insurance plans in which the Employee was
participating when the notice giving rise to the dispute was given, until the
Date of Termination, as determined in accordance with Section 11.3 hereof.
Amounts paid under this Section 11.4 are in addition to all other amounts due
under this Agreement (other than those due under Section 7.1 hereof) and shall
not be offset against or reduce any other amounts due under this Agreement.
12. NO MITIGATION
The Employer agrees that, if the Employee's employment with the
Employer terminates following a Change in Control and prior to the end of the
Change-in-Control Protective Period, the Employee is not required to seek other
employment or to attempt in any way to reduce any amounts payable to the
Employee by the Employer pursuant to Section 10 hereof or Section 11.4 hereof.
Further, the amount of any payment or benefit provided for in this Agreement
(other than Section 10.1(C) hereof) shall not be reduced by any compensation
earned by the Employee as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by the
Employee to the Employer, or otherwise.
13. CONFIDENTIALITY; NON-COMPETITION AND NON-SOLICITATION
13.1 CONFIDENTIALITY. The Companies' methods, plans for doing business,
processes, pricing, compounds, customers and supplies are vital to the Companies
and, to the extent not made public by the Companies, constitute confidential
information subject to the Companies' proprietary rights therein. The Employee
covenants and agrees that during the Term and at all times thereafter, the
Employee will not, directly or indirectly, make known, divulge, furnish, make
available or use, otherwise than in the regular course of the Employee's
employment by the Employer, any invention, product, process, apparatus or
design of any of the Companies, or any knowledge or information in respect
thereof (including, but not limited to, business methods and techniques), or
any other confidential or so-called "insider" information of any of the
Companies. This
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covenant shall apply without regard to the time or circumstances of any
termination of the Employee's employment.
13.2 NON-COMPETITION AND NON-SOLICITATION. The Employee covenants and
agrees that during the period of one (1) year following any termination of the
Employee's employment which occurs prior to a Change in Control, the Employee
will not, directly or indirectly, either as an individual for the Employee's own
account or as an investor, or other participant in, or as an employee, agent, or
representative of, any other business enterprise:
(i) solicit, employ, entice, take away or interfere with, or
attempt to solicit, employ, entice, take away or interfere
with, any employee of the Employer or the Companies; or
(ii) engage or participate in or finance, aid or be connected with
any enterprise which competes with the business of the
Companies, or any of them.
The geographical limitations of the foregoing shall include any country in which
the Companies or any of them shall be doing business as of such date of such
termination. This covenant shall apply without regard to the circumstances of
any termination of the Employee's employment which occurs prior to a Change in
Control.
13.3 The Employee acknowledges that the covenants contained in this
Section 13 are of the essence of this Agreement and said covenants shall be
construed as independent of any other provisions of this Agreement. Recognizing
the irreparable nature of the injury that could result from the Employee's
violation of any of the covenants and agreement to be performed and/or observed
by the Employee pursuant to the provisions of this Section 13, and that damages
would be inadequate compensation, it is agreed that any violations by the
Employee of the provisions of this Section 13, shall be the proper subject for
immediate injunctive and other equitable relief to the Employer.
14. SUCCESSORS; BINDING AGREEMENT
14.1 In addition to any obligations imposed by law upon any successor
to the Employer, the Employer will require any successor (whether direct or
indirect, by purchase, merger,
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consolidation or otherwise) to all or substantially all of the business and/or
assets of the Employer to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Employer would be required to
perform it if no such succession had taken place. Failure of the Employer to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Employee to
compensation from the Employer in the same amount and on the same terms as the
Employee would be entitled to hereunder if the Employee were to terminate the
Employee's employment for Good Reason after a Change in Control, except that,
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. Except as
provided in this Section 14.1, this Agreement shall not be assignable by either
party without the written consent of the other party hereto.
14.2 This Agreement shall inure to the benefit of and be enforceable by
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Employee shall
die while any amount would still be payable to the Employee hereunder (other
than amounts which, by their terms, terminate upon the death of the Employee) if
the Employee had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
executors, personal representatives or administrators of the Employee's estate.
15. NOTICES
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, addressed, if to the Employee, to the
address shown for the Employee in the personnel records of the Employer and, if
to the Employer, to the address set forth below, or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon actual
receipt:
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To the Employer:
Xxxxxx X. Xxxxxxxx
Chief Financial Officer and Executive
Vice President-Finance and Administration
X. Xxxxxxxx, Inc.
P. O. Xxx 0000
Xxxxx, Xxxx 00000-0000
With a copy to:
Xxxxx X. Xxxxxx, Esq.
Berick, Xxxxxxxx & Xxxxx Co., L.P.A.
1350 Xxxxx Center
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
16. MISCELLANEOUS
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed
by the Employee and such officer as may be specifically designated by the Board.
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. This Agreement supersedes the Employment Agreement between the Employer
and the Employee dated as of December 28, 1990 and any other agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof which have been made by either party, except as expressly
set forth in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Ohio. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law and any additional withholding to which the
Employee has agreed. The obligations of the Employer and the Employee under
this Agreement which by their nature may require (partial or total) performance
after the expiration of the Term or the Change-in-Control Protective Period
(including, without limitation, those under Sections 5 through 11 and Section
13 hereof) shall survive such expiration.
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17. VALIDITY
The invalidity or unenforceability of any provision 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.
18. COUNTERPARTS
This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
19. SETTLEMENT OF DISPUTES AFTER CHANGE IN CONTROL; ARBITRATION
After a Change in Control and prior to the end of the Change-in-Control
Protective Period, all claims by the Employee for benefits under this Agreement
shall be directed to and determined by the Committee and shall be in writing.
Any denial by the Committee of a claim for benefits under this Agreement shall
be delivered to the Employee in writing and shall set forth the specific reasons
for the denial and the specific provisions of this Agreement relied upon. The
Committee shall afford a reasonable opportunity to the Employee for a review of
the decision denying a claim and shall further allow the Employee to appeal to
the Committee a decision of the Committee within sixty (60) days after
notification by the Committee that the Employee's claim has been denied. Any
further dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Akron, Ohio, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction. Notwithstanding any provision of this Agreement to the contrary,
the Employee shall be entitled to seek specific performance of the Employee's
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
20. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings indicated below:
(A) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
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(B) "Board" shall mean the Board of Directors of the Employer.
(C) "Cause" for termination by the Employer of the Employee's
employment shall mean the following:
(I) with respect to a termination as to which the Notice of
Termination is duly given prior to a Change in Control, the Employee's
breach of his covenants herein contained, the Employee's gross neglect
of his duties hereunder, the Employee's knowingly committing
misfeasance or knowingly permitting nonfeasance of his duties in any
material respect, or the Employee's committing a felony; and
(II) with respect to a termination as to which the Notice of
Termination is duly given following a Change in Control, (i) the
willful and continued failure by the Employee to substantially perform
the Employee's duties with the Employer (other than any such failure
resulting from the Employee's incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of
a Notice of Termination for Good Reason by the Employee pursuant to
Section 11.1 hereof) after a written demand for substantial performance
is delivered to the Employee by the Board, which demand specifically
identifies the manner in which the Board believes that the Employee has
not substantially performed the Employee's duties, or (ii) the willful
engaging by the Employee in conduct which is demonstrably and
materially injurious to the Employer or its subsidiaries, monetarily
or otherwise. For purposes of clauses (i) and (ii) of this definition,
(x) no act, or failure to act, on the Employee's part shall be deemed
"willful" unless done, or omitted to be done, by the Employee not in
good faith and without reasonable belief that the Employee's act, or
failure to act, was in the best interest of the Employer and (y) in the
event of a dispute concerning the application of this provision, no
claim by the Employer that Cause exists shall be given effect unless
the Employer establishes to the Committee by clear and convincing
evidence that Cause exists.
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(D) A "Change in Control" shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have occurred:
(I) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Employer (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Employer or its affiliates other than in connection
with the acquisition by the Employer or its affiliates of a business)
representing 25% or more of either the then outstanding shares of
common stock of the Employer or the combined voting power of the
Employer's then outstanding securities; or
(II) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is
in connection with an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of
directors of the Employer) whose appointment or election by the Board
or nomination for election by the Employer's stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so
approved; or
(III) the stockholders of the Employer approve a merger or
consolidation of the Employer with any other corporation or approve the
issuance of voting securities of the Employer in connection with a
merger or consolidation of the Employer (or any direct or indirect
subsidiary of the Employer) pursuant to applicable stock exchange
requirements, other than (i) a merger or consolidation which would
result in the voting securities of the Employer outstanding immediately
prior to such merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof), in combination with the
ownership of any trustee or other fiduciary holding securities under an
employee
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benefit plan of the Employer or any subsidiary of the Employer, at
least 75% of the combined voting power of the voting securities of the
Employer or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of the Employer
(or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Employer
(not including in the securities Beneficially Owned by such Person any
securities acquired directly from the Employer or its subsidiaries
other than in connection with the acquisition by the Employer or its
subsidiaries of a business) representing 25% or more of either the then
outstanding shares of common stock of the Employer or the combined
voting power of the Employer's then outstanding securities; or
(IV) the stockholders of the Employer approve a plan of
complete liquidation or dissolution of the Employer or an agreement for
the sale or disposition by the Employer of all or substantially all of
the Employer's assets, other than a sale or disposition by the Employer
of all or substantially all of the Employer's assets to an entity, at
least 75% of the combined voting power of the voting securities of
which are owned by stockholders in substantially the same proportions
as their ownership of the Employer immediately prior to such sale.
Notwithstanding the foregoing, no "Change in Control" shall be deemed
to have occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of the common stock
of the Employer immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Employer immediately
following such transaction or series of transactions.
Further, notwithstanding the foregoing, any event or transaction which
would otherwise constitute a Change in Control (a "Transaction") shall not
constitute a Change in Control for purposes of this Agreement if, in connection
with the Transaction, the Employee participates as an equity investor in the
acquiring entity or any of its affiliates (the
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"Acquiror"). For purposes of the preceding sentence, the Employee shall not be
deemed to have participated as an equity investor in the Acquiror by virtue of
(i) obtaining beneficial ownership of any equity interest in the Acquiror as a
result of the grant to the Employee of an incentive compensation award under one
or more incentive plans of the Acquiror (including, but not limited to, the
conversion in connection with the Transaction of incentive compensation awards
of the Employer into incentive compensation awards of the Acquiror), on terms
and conditions substantially equivalent to those applicable to other executives
of the Employer immediately prior to the Transaction, after taking into account
normal differences attributable to job responsibilities, title and similar
matters, (ii) obtaining beneficial ownership of any equity interest in the
Acquiror on terms and conditions substantially equivalent to those obtained in
the Transaction by all other stockholders of the Employer, or (iii) passive
ownership of less than three percent (3%) of the stock of the Acquiror.
(E) "Change-in-Control Protective Period" shall mean the period from
the occurrence of a Change in Control until the later of the second anniversary
of such Change in Control or, if such Change in Control shall be caused by the
stockholder approval of a merger or consolidation described in Section
20(E)(III) hereof, the second anniversary of the consummation of such merger or
consolidation.
(F) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(G) "Committee" shall mean (i) the individuals (not fewer than three in
number) who, immediately prior to a Potential Change in Control, constitute the
Compensation Committee of the Board, plus (ii) in the event that fewer than
three individuals are available from the group specified in clause (i) above for
any reason, such individuals as may be appointed by the individual or
individuals so available (including for this purpose any individual or
individuals previously so appointed under this clause (ii)); provided, however,
that the maximum number of individuals constituting the Committee shall not
exceed five.
(H) "Companies" shall mean, collectively, the Employer and each
corporation which is now and hereafter shall become a subsidiary of, or a parent
of, the Employer, together with their respective successors and assigns.
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(I) "Continuation Pay" shall mean those payments so described in
Section 8.2 hereof.
(J) "Date of Termination" shall have the meaning stated in Section 11.2
hereof.
(K) "Disability" shall be deemed the reason for the termination by the
Employer of the Employee's employment, if, as a result of the Employee's
incapacity due to physical or mental illness, the Employee shall have been
absent from the full-time performance of the Employee's duties with the
Employer for a period of six (6) consecutive months, the Employer shall have
given the Employee a Notice of Termination for Disability, and, within thirty
(30) days after such Notice of Termination is given, the Employee shall
not have returned to the full-time performance of the Employee's duties.
(L) "Employee" shall mean the individual named in the first paragraph
of this Agreement.
(M) "Employer" shall mean X. Xxxxxxxx, Inc. and, except in determining
under Section 20(E) hereof whether or not any Change in Control of the Employer
has occurred, any successor to its business and/or assets which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
(N) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(O) "Good Reason" for termination by the Employee of the Employee's
employment shall mean the occurrence (without the Employee's express prior
written consent) after any Change in Control, or after any Potential Change in
Control under the circumstances described in the second sentence of Section 10.1
hereof (treating all references in paragraphs (I) through (VII) below to a
"Change in Control" as references to a "Potential Change in Control"), of any
one of the following acts by the Employer, or failures by the Employer to act,
unless, in the case of any act or failure to act described in paragraph (I),
(V), (VI) or (VII) below, such act or failure to act is corrected prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof:
(I) the assignment to the Employee of any duties inconsistent
with the Employee's status as an executive officer of the Employer or a
substantial adverse alteration in the nature or status of the
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Employee's responsibilities from those in effect immediately prior to
the Change in Control (other than any such alteration primarily
attributable to the fact that the Employer may no longer be a public
company);
(II) a reduction by the Employer in the Employee's annual base
salary as in effect on the date hereof or as the same may be increased
from time to time except for across-the-board salary reductions
similarly affecting all executives of the Employer and all executives
of any Person in control of the Employer;
(III) the relocation of the Employer's principal executive
offices to a location more than fifty (50) miles from the location of
such offices immediately prior to the Change in Control or the
Employer's requiring the Employee to be based anywhere other than the
Employer's principal executive offices except for required travel on
the Employer's business to an extent substantially consistent with the
Employee's present business travel obligations;
(IV) the failure by the Employer, without the Employee's
consent, to pay to the Employee any portion of the Employee's current
compensation, or to pay to the Employee any portion of an installment
of deferred compensation under any deferred compensation program of the
Employer, within seven (7) days of the date such compensation is due;
(V) the failure by the Employer to continue in effect any
compensation plan in which the Employee participates immediately prior
to the Change in Control which is material to the Employee's total
compensation, including but not limited to the Employer's 1991 Stock
Incentive Plan and Nonqualified Profit Sharing Plan or any substitute
plans adopted prior to the Change in Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has
been made with respect to such plan, or the failure by the Employer to
continue the Employee's participation therein (or in such substitute
or alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of the
Employee's
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participation relative to other participants, as existed at the time of
the Change in Control;
(VI) the failure by the Employer to continue to provide the
Employee with benefits substantially similar to those enjoyed by the
Employee under any of the Employer's pension, life insurance, medical,
health and accident, or disability plans in which the Employee was
participating at the time of the Change in Control, the taking of any
action by the Employer which would directly or indirectly materially
reduce any of such benefits or deprive the Employee of any material
fringe benefit enjoyed by the Employee at the time of the Change in
Control, or the failure by the Employer to provide the Employee with
the number of paid vacation days to which the Employee is entitled on
the basis of years of service with the Employer in accordance with the
Employer's normal vacation policy in effect at the time of the Change
in Control; or
(VII) any purported termination of the Employee's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 11.1 hereof; for purposes of this
Agreement, no such purported termination shall be effective.
The Employee's right to terminate the Employee's employment for Good
Reason shall not be affected by the Employee's incapacity due to physical or
mental illness. The Employee's continued employment shall not constitute consent
to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
For purposes of any determination regarding the existence of Good
Reason, any claim by the Employee that Good Reason exists shall be presumed to
be correct unless the Employer establishes to the Committee by clear and
convincing evidence that Good Reason does not exist.
(P) "Notice of Termination" shall have the meaning stated in Section
11.1 hereof.
(Q) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not
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include (i) the Employer or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the Employer or
any of its subsidiaries, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation owned,
directly or indirectly, by the stockholders of the Employer in substantially the
same proportions as their ownership of stock of the Employer.
(R) "Potential Change in Control" shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall have occurred:
(1) the Employer enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;
(2) the Employer or any Person publicly announces an intention
to take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(3) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Employer representing 15% or more of
either the then outstanding shares of common stock of the Employer or
the combined voting power of the Employer's then outstanding
securities; or
(4) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has
occurred.
(S) "Severance Payments" shall mean those payments described in Section
10.1 hereof.
(T) "Term" shall mean the period of time described in Section 4.1
hereof (including any extension or continuation described therein).
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(U) "Termination Pay" shall mean those payments so described in Section
8.2 hereof.
(V) "Total Payments" shall mean those payments described in Section
10.2 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed (the corporate signatory by the respective officer duly authorized)
as of the day and year first above written.
/s/ Xxxxx X. Xxxxxx
--------------------------------------------
Xxxxx X. Xxxxxx
X. XXXXXXXX, INC.
By /s/ Xxxxx X. Xxxxxx
------------------------------------------
Xxxxx X. Xxxxxx, Secretary
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