EXHIBIT 10.07
EXECUTION COPY
AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT
This AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT ("Agreement") is
made and entered into the 7th day of August, 2006 (the "Effective Date") by and
between THE XXXXXXXX AND XXXXXXXX COMPANY, a corporation existing under the laws
of the State of Ohio (hereinafter referred to as the "Employer"), and [___]
(hereinafter referred to as the "Employee").
WITNESSETH:
WHEREAS, the Employee is currently an employee of the Employer; and
WHEREAS, the Employee and the Employer are currently parties to a Change in
Control Agreement (the "Original Agreement"); and
WHEREAS, the Employee and the Employer desire to amend and restate the
Original Agreement; and
WHEREAS, the Employer considers the Employee a key member of the management
team of the Employer and recognizes that the occurrence of a change in the
control of the Employer would be of significant concern to the Employee; and
WHEREAS, the parties hereto desire to set forth their mutual agreement
regarding the terms of the Employee's employment under certain specified
circumstances in order to xxxxxx and encourage continued attention and
dedication to the Employee's assigned duties in the event of such circumstances;
NOW, THEREFORE, in consideration of the foregoing premises, the Employee's
continued employment for any period after execution of this Agreement, and the
mutual promises set forth herein, the parties hereby agree as follows:
1. DEFINITIONS.
For purposes of this Agreement:
(a) "Base Compensation" shall mean the then-current annual base salary
(exclusive of Bonuses) of the Employee, as the same may be fixed from
time to time by the Board of Directors of the Employer (the "Board")
or its Compensation Committee or, if applicable, by the appropriate
executive officer of the Employer.
(b) "Bonuses" shall mean bonus payments earned by the Employee under the
Employer's incentive compensation plans and under any future bonus or
incentive compensation plans of the Employer for its officers in which
the Employee participates.
(c) "Change in Control" shall mean the occurrence of any of the following
events:
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(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (a) the then outstanding shares of common stock of the
Employer (the "Outstanding Employer Common Stock") or (b) the
combined voting power of the then outstanding voting securities
of the Employer entitled to vote generally in the election of
directors (the "Outstanding Employer Voting Securities");
PROVIDED, HOWEVER, that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change in Control:
(a) any acquisition directly from the Employer, (b) any
acquisition by the Employer, (c) any acquisition by Xxxxxxx X.
Xxxxx, Xx., his children or his grandchildren, (d) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Employer or any corporation
controlled by the Employer or (e) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(a), (b) and (c) of subsection (iii) of this Section 1(c);
(ii) Individuals who, as of the Effective Date, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, PROVIDED that any individual
becoming a director subsequent to the Effective Date whose
election, or nomination for election by the Employer's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection
with an actual or threatened election contest or other actual or
threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board;
(iii) Consummation by the Employer of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Employer, the acquisition
of assets of another corporation, a statutory share exchange or
other similar transactions (a "Corporate Transaction"), in each
case, unless, following such Corporate Transaction, (a) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Employer
Common Stock and Outstanding Employer Voting Securities
immediately prior to such Corporate Transaction beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
the corporation
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resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction
owns the Employer or all or substantially all of the Employer's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction of the
Outstanding Employer Common Stock and Outstanding Employer Voting
Securities, as the case may be, (b) no Person (excluding (i)
Xxxxxxx X. Xxxxx, Xx., his children or his grandchildren and (ii)
any employee benefit plan (or related trust) of the Employer or
such corporation resulting from such Corporate Transaction)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the
combined voting power of the then outstanding voting securities
of such corporation except to the extent that such ownership
existed prior to the Corporate Transaction and (c) at least a
majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction were
members of the Incumbent Board at the time of the execution of
the initial agreement, or at the time of the action of the Board,
providing for such Corporate Transaction; or
(iv) Approval by the shareholders of the Employer of a complete
liquidation or dissolution of the Employer.
(d) "Date of Termination" means (1) if the Employee's employment is
terminated by the Employer due to a Discharge For Cause, or by the
Employee for Good Reason, the date of receipt of the Notice of
Termination or any later date specified in the Notice of Termination,
(which date shall not be more than 30 days after the giving of such
notice), as the case may be, (2) if the Employee's employment is
terminated by the Employer other than due to a Discharge For Cause or
Disability, the date on which the Employer notifies the Employee of
such termination, (3) if the Employee resigns without Good Reason, the
date on which the Employee notifies the Employer of such termination,
and (4) if the Employee's employment is terminated by reason of death
or Disability, the date of death of the Employee or the Disability
Effective Date (as defined below), as the case may be.
(e) "Disability" means the absence of the Employee from the Employee's
duties with the Employer on a full-time basis for 180 consecutive
business days as a result of incapacity due to mental or physical
illness that is determined to be total and permanent by a physician
selected by the Employer or its insurers and acceptable to the
Employee or the Employee's legal representative. If the Employer
determines in good faith that the Disability (as defined herein) of
the Employee has occurred during the Term (pursuant to the definition
of "Disability"), and gives to the
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Employee written notice in accordance with Section 14 of its intention
to terminate the Employee's employment for Disability, the Employee's
employment with the Employer shall terminate effective on the 30th day
after receipt of such notice by the Employee (the "Disability
Effective Date"), PROVIDED that, within the 30 days after such
receipt, the Employee shall not have returned to full-time performance
of the Employee's duties.
(f) "Discharge For Cause" shall be construed to have occurred whenever
occasioned by (i) reason of felonious acts on the part of the
Employee, actions by the Employee involving serious moral turpitude,
or the Employee's material misconduct, in each case which has
diminished or has a reasonably foreseeable risk of diminishing either
the Employer's reputation or the Employee's ability to act on the
Employer's behalf, (ii) the Employee's material breach of the
non-competition provisions of the Officer Agreement executed by the
Employee (the "Officer Agreement") which agreement is incorporated
herein by reference, or (iii) the Employee's material breach of the
confidentiality provisions of the Officer Agreement. The discharge of
employment of the Employee shall not be deemed to be a Discharge For
Cause unless and until there shall have been delivered to the Employee
a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board or, if
the Employer is no longer publicly traded on an established securities
market and any parent of the Employer is publicly traded, the board of
directors of such parent(s) of the Employer at a meeting of such board
(excluding the Employee, if the Employee is a member of such board)
called and held for such purpose (after reasonable notice is provided
to the Employee and the Employee is given an opportunity, together
with counsel for the Employee, to be heard before the board), finding
that, in the good faith opinion of the board, the Employee is guilty
of the conduct described in Section 1(f)(i), 1(f)(ii) or 1(f)(iii),
and specifying the particulars thereof in detail.
In the event the Employee contests that the Employee's discharge was a
Discharge For Cause, such claim shall be submitted to arbitration in
accordance with Section 12 below.
(g) "Good Reason" shall mean the occurrence or failure to cause the
occurrence of any of the following, without the Employee's written
consent: (i) the Employee's Base Compensation or target Bonus
opportunity is reduced below the amount of such Base Compensation or
target Bonus opportunity in effect immediately preceding the Change in
Control; (ii) the Employee's benefits or fringe benefits (including
bonuses, vacation, health and disability insurance, etc.) cease to be
substantially equivalent to those in effect immediately preceding the
Change in Control; (iii) there is a material diminution of (or a
change which is materially inconsistent with) the Employee's position
(including offices or titles), authority, duties, responsibility or
reporting responsibility as in effect
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immediately prior to the Change in Control, excluding for this purpose
an isolated, insubstantial and inadvertent action not taken in bad
faith and that is remedied by the Employer promptly after receipt of
notice thereof given by the Employee; PROVIDED, HOWEVER, that in no
event will there be deemed to be Good Reason solely by reason (A) of
the consummation of a Change in Control (including by reason of the
Company becoming a subsidiary of another company); or (B) of the
Employee ceasing to serve as an executive of a publicly held
corporation; (iv) the nature of the duties or services which the
Employer or any successor requires the Employee to perform
necessitates absence overnight from his place of residence prior to
the Change in Control, because of travel involving the business
affairs of the Employer, for more than ninety (90) days during any
period of twelve (12) consecutive months unless such travel is
consistent with the Employee's travel obligations in effect
immediately preceding the Change in Control; (v) the Employee is
required to be based at a location other than the principal executive
offices of the Employer if the Employee was employed at such location
immediately preceding the date of such Change in Control; (vi) the
Employee's principal place of employment is relocated in excess of
fifty (50) miles from Dayton, Ohio; or (vii) any failure by the
Employer to comply with and satisfy the obligations set forth in
Section 6(b). The Employee's mental or physical incapacity following
the occurrence of an event described in clauses (i) through (vii)
shall not affect the Employee's ability to terminate employment for
Good Reason.
Prior to terminating employment for Good Reason, the Employee may
request in the Employee's sole discretion (by written notice to the
Employer) a determination by final and binding arbitration in
accordance with Section 12 below of whether Good Reason exists. If the
arbitrator determines that Good Reason does not exist, the Employee
may continue employment without prejudice.
(h) "Notice of Termination" means a written notice that (1) indicates the
specific termination provision in this Agreement relied upon, (2) to
the extent applicable, sets 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, and (3) if the
Date of Termination (as defined above) is other than the date of
receipt of such notice, specifies the Date of Termination (which Date
of Termination shall be not more than 30 days after the giving of such
notice). Any termination by the Employer due to a Discharge For Cause,
or by the Employee for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section
14. The failure by the Employee or the Employer to set forth in the
Notice of Termination any fact or circumstance that contributes to a
showing of Good Reason or a Discharge For Cause shall not waive any
right of the Employee or the Employer, respectively, hereunder or
preclude the Employee or the Employer, respectively, from asserting
such fact or
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circumstance in enforcing the Employee's or the Employer's respective
rights hereunder.
(i) "Retirement Plan" shall mean the Employer's existing Retirement Plan
as the same may be amended or replaced from time to time, including
the Employer's 401(k) Plan (the "401(k) Plan").
(j) "Supplemental Plan" shall mean the Employer's existing Supplemental
Retirement Plan (the "DB Supplemental Plan") as the same may be
amended or replaced from time to time, including under any account
based supplemental plan established by the Employer (the "DC
Supplemental Plan").
(k) "Term" shall mean the term of this Agreement as described in Section 2
hereof.
2. TERM OF AGREEMENT
(a) The term of this Agreement shall be the period commencing on the
Effective Date and terminating on January 31, 2008 (the "Initial
Term"). At the end of the Initial Term and on each subsequent
anniversary of such date, the term of this Agreement shall renew
automatically for a period of one (1) year (the "Initial Term" and
each such renewed term of the Agreement to be the "Term"); PROVIDED,
HOWEVER, that upon the occurrence of a Change in Control, the Term
shall automatically be extended for 24 months from the date of such
Change in Control, and shall thereafter renew automatically for a
period of one (1) year at the end of such 24-month period and on each
subsequent anniversary of such date unless, at least 90 days prior to
such renewal date, the Employer shall give written notice to the
Employee that the Term shall not be so extended; PROVIDED, FURTHER,
HOWEVER, that in no event shall this Agreement terminate prior to the
Employer's satisfaction of all of the Employer's obligations to
Employee hereunder.
3. BENEFITS TO THE EMPLOYEE.
(a) Upon the occurrence of a Change in Control during the Term, the
Employer shall not take any actions or inactions which would otherwise
give the Employee the right to terminate employment hereunder for Good
Reason (as defined in Section 1(g) above).
(b) If, during the Term, (A) a Change in Control shall occur and
thereafter, either (i) the Employer terminates the Employee's
employment for any reason other than a Discharge For Cause within the
twenty-four (24) month period following the date of the Change in
Control or (ii) the Employee terminates his employment with the
Employer for Good Reason within the twenty-four (24) month period
following the date of the Change in Control or (B) a Change in Control
shall occur and if the Employee's
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employment with the Employer is terminated by the Employer for any
reason other than a Discharge For Cause prior to the date on which the
Change in Control occurs (in which case the Change in Control will be
deemed to have occurred immediately prior to the date of such
termination for purposes of this Agreement), and if it is reasonably
demonstrated by the Employee that such termination of employment (1)
was at the request of a third party that has taken steps reasonably
calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, and in either
case, PROVIDED that the Employee delivers to the Employer and does not
rescind a waiver of claims substantially in the form attached as
Exhibit A hereto, the Employer shall pay or provide to the Employee
the following benefits:
(i) No later than 10 days following the Date of Termination, Bonuses
for the fiscal year in which termination occurs equal to the
Employee's target Bonuses for such year (collectively, the
"Target Annual Bonus") multiplied by a fraction, the numerator of
which is the number of days the Employee was employed in the year
of the Date of Termination and the denominator of which is 365.
For purposes of this Agreement, "Target Annual Bonus" shall be no
less than the Employee's last Target Annual Bonus prior to the
Change in Control.
(ii) No later than 10 days following the Date of Termination, a lump
sum severance payment (the "Severance Payment"), in cash, equal
to 2.99 times the sum of (i) the higher of the Employee's annual
Base Compensation (a) in effect immediately prior to the
occurrence of the event or circumstance upon which such
termination of employment is based or (b) in effect immediately
prior to the Change in Control and, (ii) the higher of (a) the
Target Annual Bonus and (b) the average of the Employee's annual
Bonuses (excluding any compensation attributable to the
Employer's grant of any stock options, restricted stock, stock
appreciation rights or other stock incentives and any
compensation determined by the Board of Directors to be a
long-term incentive arrangement) during the three (3) fiscal
years immediately preceding the year in which the Date of
Termination occurs, or if the Employee has received Bonuses in
fewer than three (3) fiscal years prior to termination, the sum
of the annual Bonuses received for each fiscal year prior to the
Date of Termination shall be divided by the number of years in
which the Employee received annual Bonuses (any partial year
bonus shall be annualized for purposes of this provision).
(iii) During the period expiring on the earlier of the Employee
securing other employment or thirty-six (36) months from the Date
of Termination, continued coverage under the Employer's sponsored
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medical benefits program in existence on such Date of
Termination, or, if such continued coverage is barred, or
otherwise at the option of the Employer, the Employer shall
provide substantially equivalent medical benefit coverage through
the purchase of insurance or otherwise (at substantially
equivalent cost, including tax treatment, to the Employee).
(iv) For purposes of determining the Employee's benefits under the
Supplemental Plan and the Retirement Plan, the Employee shall
receive credit toward his "Years of Service" under each of the
Supplemental Plan and the Retirement Plan for the three (3) year
period following his termination of employment (the "Three Year
Period") (it being understood that upon a termination of the
Employee's employment under Section 3(b) such Three Year Period
will be the number of years (without duplication) credited
pursuant to Section 9(a)(ii) of the DB Supplemental Plan (or any
applicable successor provision of the DB Supplemental Plan or any
applicable successor plan, including the DC Supplemental Plan).
In addition, with respect to the Three Year Period, for purposes
of determining "Final Average Pay" as referred to in Section 2(a)
of the DB Supplemental Plan or any successor provision under the
DB Supplemental Plan or any Supplemental Plan, each of the
Employee's Base Compensation and Bonus (it being understood that
for purposes hereof Bonus shall mean Target Annual Bonus) shall
be deemed to be increased (but not decreased) by an incremental
five percent (5%) for each year during the Three Year Period.
Thus, for purposes of determining "Final Average Pay" as referred
to in Section 2(a) of the DB Supplemental Plan or any successor
provision under the DB Supplemental Plan or any Supplemental
Plan, assuming, solely for illustrative purposes, that the sum of
Employee's Base Compensation and Bonus (it being understood that
for purposes hereof Bonus shall mean Target Annual Bonus) during
the year of the Date of Termination were $500,000, the deemed
increases contemplated by the immediately preceding sentence
would cause the sum of Employee's Base Compensation and Bonus (it
being understood that for purposes hereof Bonus shall mean Target
Annual Bonus) to be deemed as follows during the Three Year
Period: $525,000 in year one (1), $551,250 in year two (2) and
$578,813 in year three (3). Under the DB Supplemental Plan, in
order to calculate the Employee's highest earnings during five
(5) consecutive years out of the last ten (10) years prior to
retirement under the DB Supplemental Plan (and for purposes of
determining such highest earnings the Employee will be treated as
retiring under the DB Supplemental Plan immediately following the
end of the Three Year Period). Notwithstanding anything to the
contrary in any Supplemental Plan, the Employee shall not be
subject to any minimum service
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requirement in the Supplemental Plan. Any credited service under
this Section which would apply for purposes of additional
benefits under the 401(k) Plan shall not provide any additional
benefits under the 401(k) Plan, but such benefits shall be paid
out as additional benefits under the DC Supplemental Plan. If the
DB Supplemental Plan has been frozen as of the Date of
Termination, no additional service will be credited under the DB
Supplemental Plan and the additional contributions (based on
three (3) additional years of maximum Employer contributions,
including transition contributions) will be made to the DC
Supplemental Plan within ten (10) days following the Date of
Termination without discount for the contributions being made
early in a lump sum. For the avoidance of doubt, in no event will
the Severance Payment (as defined below) or the Gross-Up Payment
(as defined below) be included in Employee's earnings for the
purpose of calculating Employee's benefit under the Retirement
Plan or the Supplemental Plan.
(v) The Employee shall be reimbursed for up to $20,000 for
outplacement fees if he chooses to seek other employment
following his termination of employment with the Employer.
(c) Notwithstanding anything to the contrary in this Agreement, the
Employee shall not be entitled to any payments pursuant to Section
3(b) if prior to a termination of the Employee's employment by the
Employer other than due to a Discharge For Cause or by the Employee
for Good Reason:
(i) The Employee dies;
(ii) The Employer terminates the Employee's employment because of a
Discharge For Cause or as a result of the Employee's Disability;
or
(iii)The Employee voluntarily terminates his employment with the
Employer for reasons other than for Good Reason.
(d) In the event of termination of employment under Section 3(b), the
Employee shall not be subject to the non-competition provisions of the
Officer Agreement or any other agreement.
(e) The Employee shall not be required to mitigate damages with respect to
the amount of any payments provided for in Section 3(b) by seeking
other employment or otherwise nor, except as provided for in Section
3(b)(iii), shall any compensation received by the Employee from any
other sources reduce any payments or benefits to which the Employee is
entitled under this Agreement. The Employer's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations
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hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense, or other claim, right or action that the Employer
may have against the Employee or others.
(f) In the event of a Change in Control, (i) any applicable
performance-based vesting goals with respect to stock-based awards
granted to the Employee shall be deemed 100% met and (ii) all
stock-based awards shall vest in full, in each case immediately prior
to the occurrence of such Change in Control. For purpose of this
Section 3(f), stock-based awards shall include stock options,
restricted shares, restricted units and any other equity-based
compensation awards.
(g) Effective upon a Change in Control, the Employee's rights under the
Employer's relocation policy then in effect, including any applicable
addenda thereto (the "Relocation Policy") shall become irrevocable,
PROVIDED that, in addition to any such rights under the Relocation
Policy (i) the Employee shall not be required to reimburse the
Employer or any successor thereto for any amounts that the Employee
has, or is otherwise entitled to, receive pursuant to the Relocation
Policy and (ii) the Employer or any successor thereto shall make the
Employee whole with respect to any expenses incurred by the Employee
due to any relocation (whether or not consummated), including any
applicable tax gross-ups.
(h) Effective upon a Change in Control, the Employer or the consolidated,
surviving or transferee entity in the event of a consolidation, merger
or sale of assets, shall pay as incurred (within 10 days following the
Employer's receipt of an invoice from the Employee) to the full extent
permitted by law all legal fees and expenses that the Employee may
reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Employer, the Employee or others with respect to the
enforcement of the Employee's rights under this Agreement or under any
plan for the benefit of employees of the Employer, including without
limitation, the Employer's stock plans, Supplemental Plan,
payroll-based stock ownership plan, tax deferred savings and
protection plan, bonus arrangements, supplemental pension plan,
deferred compensation agreements, incentive compensation plans, and
life insurance and compensation program; PROVIDED, HOWEVER, that the
Employee shall be required to reimburse the Employer or such
consolidated, surviving or transferee entity for the cost of such
legal fees and expenses if the Employee is deemed by the arbitrator or
court, as the case may be, to have brought or defended such contest in
bad faith.
4. INJUNCTIVE RELIEF.
The Employee agrees that, in the event of a breach or threatened breach by
the Employee of this Agreement, the Employer's remedies at law would be
inadequate, and the Employer shall be entitled to an injunction (without
any bond
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or other security being required), but nothing here shall be construed to
preclude the Employer from pursuing any action or further remedy, at law or
in equity, for any breach or threatened breach including, but not limited
to, the recovery of damages.
5. UNFUNDED AGREEMENT.
The Employer's obligations under this Agreement are unfunded, but the
Employer reserves the right to provide for its liability under this
Agreement in any manner it deems advisable, including the purchasing of
such assets as it may deem necessary or proper. Any asset so purchased by
the Employer shall be the sole property of the Employer and shall not be
deemed to provide funding of the Employer's obligations under this
Agreement. Any other provision in this Agreement to the contrary
notwithstanding, the Employee shall be only an unsecured general creditor
of the Employer with respect to all payments to be made under the terms of
this Agreement and shall have no claim, equity, interest, or right in or
to any specific assets or funds of the Employer as security for said
payments.
6. ASSIGNMENT OF RIGHTS AND DUTIES.
(a) The Employee shall not have the right to anticipate or commute with
any third party, or to sell, assign, transfer, or otherwise alienate
or convey the right to receive any payments hereunder, whether by his
voluntary or involuntary act, or by operation of law and, in
particular, any payments due hereunder shall not be subject to
attachment or garnishment or any other legal proceedings by any
creditor, or be in any way responsible for the debts or liabilities of
the Employee. Should any attempt be made to reach any payments
hereunder by other than the Employee, the Employer shall make each
payment as it becomes due to such person or persons, for the sole
benefit of the Employee as the Employer may deem expedient.
(b) The Employer shall assign the rights and duties hereunder to any
person, firm, corporation or other business entity that succeeds to
substantially all of the assets and operations of the Employer. This
Agreement shall not be terminated by any merger in which the Employer
is not the surviving or resulting corporation, or on any transfer of
all or substantially all of the Employer's assets. In the event of any
such merger or transfer of assets, the provisions of this Agreement
shall be binding on and inure to the benefit of the surviving business
entity or the business entity to which such assets shall be
transferred.
7. FACILITY OF PAYMENT; LIMITATION.
In the event of a Disability of the Employee after the Employee is
entitled to payments hereunder, such payments as may thereafter be due
shall be paid to such person or persons for the benefit of the Employee as
the Employer may deem
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proper after reasonable investigation. In the event of the Employee's death
after the Employee is entitled to payments hereunder, the Employer shall
pay such amounts as thereafter are due to such beneficiary or beneficiaries
as the Employee shall have designated in writing on Exhibit B attached
hereto and made a part hereof, or failing such writing, to his estate. No
liability shall accrue to the Employer for any alleged payment to an
improper person or representative if so made after such reasonable
investigation and the Employer shall have no responsibility to see to the
proper application of such payments.
8. CERTAIN ADDITIONAL PAYMENTS BY THE EMPLOYER.
(a) Anything in this Agreement to the contrary notwithstanding and except
as set forth below, in the event it shall be determined that any
Payment would be subject to the Excise Tax, then the Employee shall be
entitled to receive an additional payment (the "Gross-Up Payment") in
an amount such that, after payment by the Employee of all taxes (and
any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 8(a), if it
shall be determined that the Employee is entitled to the Gross-Up
Payment, but that the Parachute Value of all Payments does not exceed
110% of the Safe Harbor Amount, then no Gross-Up Payment shall be made
to the Employee and the amounts payable under this Agreement shall be
reduced so that the Parachute Value of all Payments, in the aggregate,
equals the Safe Harbor Amount. The reduction of the amounts payable
hereunder, if applicable, shall be made by first reducing the payments
under Section 3(b)(ii), unless an alternative method of reduction is
elected by the Employee, and in any event shall be made in such a
manner as to maximize the Value of all Payments actually made to the
Employee. For purposes of reducing the Payments to the Safe Harbor
Amount, only amounts payable under this Agreement (and no other
Payments) shall be reduced. If the reduction of the amount payable
under this Agreement would not result in a reduction of the Parachute
Value of all Payments to the Safe Harbor Amount, no amounts payable
under the Agreement shall be reduced pursuant to this Section 8(a).
The Employer's obligation to make Gross-Up Payments under this Section
8 shall not be conditioned upon the Employee's termination of
employment.
(b) Subject to the provisions of Section 8(c), all determinations required
to be made under this Section 8, including whether and when a Gross-Up
Payment is required, the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be
made by PricewaterhouseCoopers LLP, or such other nationally
recognized certified public accounting firm as may be designated by
the Employee (the "Accounting Firm"). The Accounting Firm shall
provide detailed
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supporting calculations both to the Employer and the Employee within
15 business days of the receipt of notice from the Employee that there
has been a Payment or such earlier time as is requested by the
Employer. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting
the Change in Control, the Employee may appoint another nationally
recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Employer. Any Gross-Up Payment, as
determined pursuant to this Section 8, shall be paid by the Employer
to the Employee within 5 days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be
binding upon the Employer and the Employee. As a result of the
uncertainty in the application of Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code") at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments that will not have been made by the Employer should
have been made (the "Underpayment"), consistent with the calculations
required to be made hereunder. In the event the Employer exhausts its
remedies pursuant to Section 8(c) and the Employee thereafter is
required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and
any such Underpayment shall be promptly paid by the Employer to or for
the benefit of the Employee.
(c) The Employee shall notify the Employer in writing of any claim by the
Internal Revenue Service that, if successful, would require the
payment by the Employer of the Gross-Up Payment. Such notification
shall be given as soon as practicable, but no later than 10 business
days after the Employee is informed in writing of such claim. The
Employee shall apprise the Employer of the nature of such claim and
the date on which such claim is requested to be paid. The Employee
shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Employee gives such notice to the
Employer (or such shorter period ending on the date that any payment
of taxes with respect to such claim is due). If the Employer notifies
the Employee in writing prior to the expiration of such period that
the Employer desires to contest such claim, the Employee shall:
(i) give the Employer any information reasonably requested by the
Employer relating to such claim,
(ii) take such action in connection with contesting such claim as the
Employer shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by
the Employer,
13
(iii) cooperate with the Employer in good faith in order effectively
to contest such claim, and
(iv) permit the Employer to participate in any proceedings relating to
such claim;
PROVIDED, HOWEVER, that the Employer shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest, and shall indemnify and
hold the Employee harmless, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties) imposed as a
result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 8(c),
the Employer shall control all proceedings taken in connection with
such contest, and, at its sole discretion, may pursue or forgo any
and all administrative appeals, proceedings, hearings and
conferences with the applicable taxing authority in respect of such
claim and may, at its sole discretion, either pay the tax claimed to
the appropriate taxing authority on behalf of the Employee and
direct the Employee to xxx for a refund or contest the claim in any
permissible manner, and the Employee 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 Employer shall determine; PROVIDED, HOWEVER, that, if the
Employer pays such claim and directs the Employee to xxx for a
refund, the Employer shall indemnify and hold the Employee harmless,
on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties) imposed with respect to such payment or with
respect to any imputed income in connection with such payment; and
PROVIDED, FURTHER, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Employee
with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Employer's
control of the contest shall be limited to issues with respect to
which the Gross-Up Payment would be payable hereunder, and the
Employee 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.
(d) If, after the receipt by the Employee of a Gross-Up Payment or payment
by the Employer of an amount on the Employee's behalf pursuant to
Section 8(c), the Employee becomes entitled to receive any refund with
respect to the Excise Tax to which such Gross-Up Payment relates or
with respect to such claim, the Employee shall (subject to the
Employer's complying with the requirements of Section 8(c), if
applicable) promptly pay to the Employer the amount of such refund
(together with any interest paid or credited thereon after taxes
applicable thereto). If, after payment by the Employer of an amount on
the Employee's behalf pursuant to Section 8(c), a determination is
made that the Employee shall not be
14
entitled to any refund with respect to such claim and the Employer
does not notify the Employee in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such
determination, then the amount of such payment shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
(e) Notwithstanding any other provision of this Section 8, the Employer
may, in its sole discretion, withhold and pay over to the Internal
Revenue Service or any other applicable taxing authority, for the
benefit of the Employee, all or any portion of any Gross-Up Payment,
and the Employee hereby consents to such withholding.
(f) Definitions. The following terms shall have the following meanings for
purposes of this Section 8.
(i) "Excise Tax" shall mean the excise tax imposed by Section 4999 of
the Code, together with any interest or penalties imposed with
respect to such excise tax.
(ii) "Parachute Value" of a Payment shall mean the present value as of
the date of the change of control for purposes of Section 280G of
the Code of the portion of such Payment that constitutes a
"parachute payment" under Section 280G(b)(2), as determined by
the Accounting Firm for purposes of determining whether and to
what extent the Excise Tax will apply to such Payment.
(iii) A "Payment" shall mean any payment or distribution in the nature
of compensation (within the meaning of Section 280G(b)(2) of the
Code) to or for the benefit of the Employee, whether paid or
payable pursuant to this Agreement or otherwise.
(iv) The "Safe Harbor Amount" means 2.99 times the Employee's "base
amount," within the meaning of Section 280G(b)(3) of the Code.
(v) "Value" of a Payment shall mean the economic present value of a
Payment as of the date of the change of control for purposes of
Section 280G of the Code, as determined by the Accounting Firm
using the discount rate required by Section 280G(d)(4) of the
Code.
9. RESPONSIBILITY FOR LEGAL EFFECT.
Neither party hereto makes any representations or warranties, express or
implied, or assumes any responsibility concerning the legal, tax, or other
implications or effects of this Agreement. The Employer shall take all
actions required by law with respect to any payments due hereunder
including but not limited to, withholding of tax from such payments.
15
10. INDEPENDENCE OF AGREEMENT; EMPLOYMENT TERMINATION.
This Agreement shall be independent of any other contract or agreement that
may exist between the parties hereto from time to time. This Agreement
shall not restrict the Employer's rights to terminate the Employee's
employment with the Employer nor the Employee's rights to terminate
employment with the Employer; PROVIDED, HOWEVER, that the Employer shall
not terminate the Employee's employment prior to a Change in Control solely
to avoid its obligations under this Agreement.
11. SECTION 409A OF THE CODE
The benefits provided under this Agreement, including without limitation
any severance pay provided under Section 3, shall comply with Section 409A
of the Code and the regulations thereunder. To the extent so required in
order to comply with Section 409A of the Code, amounts and benefits to be
paid or provided under this Agreement shall be paid or provided to the
Employee in a single lump sum on the first business day after the date that
is six months following the Employee's "separation from service" within the
meaning of Section 409A of the Code. To the extent that the Employee's
entitlement to continued coverage under the Employer's health and welfare
benefit plans is so delayed, (i) the Employee shall be entitled to COBRA
continuation coverage under Section 4980B of the Code ("COBRA Coverage")
during such period of delay, (ii) the Employer shall reimburse the Employee
for any employer portions of such COBRA Coverage in the seventh month
following the date of such "separation from service", and (iii) such
continued coverage shall begin in the seventh month following such
"separation from service".
12. ARBITRATION.
(a) Any dispute or controversy arising out of or relating to this
Agreement, including, but not limited to, whether the Employee has
been Discharged For Cause or whether the Employee can terminate his
employment hereunder for Good Reason, shall be submitted to and
settled by arbitration in Dayton, Ohio in accordance with the rules
then-pertaining of the American Arbitration Association applicable to
employment disputes to the extent that such rules are not inconsistent
with this Section 12.
(b) Any dispute submitted to arbitration hereunder shall be heard by a
panel of three (3) arbitrators, one of whom shall be selected by the
Employer, another of whom shall be selected by the Employee, and the
third of whom shall be selected by the two arbitrators so appointed.
The decision of a majority of this panel of arbitrators on the
question submitted shall be final and conclusive upon the Employer and
upon the Employee and his spouse or widow or widower, personal
representatives, designated beneficiaries and heirs, and shall be
enforceable in any court having competent jurisdiction thereof. The
Employer shall bear the fees and
16
expenses of the arbitrators and costs charged by the American
Arbitration Association to administer the arbitration. The Employer
shall, in turn, reimburse the Employee for all reasonable fees and
costs incurred by the Employee in connection with such arbitration as
such fees and costs are incurred (as soon as practicable following
receipt of an invoice from the Employee), PROVIDED, that if the
arbitrator determines the Employee has proceeded in such arbitration
in bad faith, the Employee shall return such reimbursements as soon as
practicable after such determination.
13. SECTION HEADINGS.
The Section headings used in this Agreement are for convenience of
reference only and shall not be considered in construing this Agreement.
14. NOTICES.
Any notices required or permitted to be given under this Agreement,
including without limitation, a Notice of Termination, shall be sufficient
if in writing and if personally delivered or sent by certified or
registered mail to his residence as last shown on the employment records of
the Employer in the case of the Employee, or to the corporate headquarters
to the attention of the President in the case of the Employer.
15. NON-WAIVER.
The waiver by the Employer or the Employee of a breach of any provision of
this Agreement by the Employee or the Employer shall not operate or be
construed as a waiver of any subsequent breach by the Employee or the
Employer of the same or any other provision hereof.
16. ENTIRE AGREEMENT; AMENDMENT
This Agreement and the documents incorporated by reference herein represent
the entire understanding of the parties with respect to the subject matter
hereof and supersedes all previous understandings, written or oral. Any
amendment to this Agreement shall be executed in writing with the same
formality as this Agreement.
17. BINDING EFFECT.
This Agreement shall be binding upon the Employee and the Employee's heirs,
executors, administrators, successors and assigns and upon the Employer and
its successors and assigns.
18. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Ohio without regard to that state's conflict of laws
principles.
17
19. SEVERABILITY.
Each provision of the Agreement is severable. Should any court or other
tribunal of competent jurisdiction declare any provision(s) of the
Agreement invalid or unenforceable by reason of any rule of law or public
policy, all other provisions hereof shall remain in full force and effect.
The Employee hereby authorizes any court or other tribunal of competent
jurisdiction to modify any provision(s) held to be invalid or unenforceable
to the extent permissible and to then enforce the provision(s) as modified.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
18
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
EMPLOYER:
THE XXXXXXXX AND XXXXXXXX COMPANY
By:
----------------------------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Chief Executive Officer
EMPLOYEE:
-------------------------------------------
SIGNATURE PAGE TO
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
RELEASE OF CLAIMS
For and in consideration of the payments and other benefits due to [___]
(the "EMPLOYEE") pursuant to the Amended and Restated Change in Control
Agreement, dated as of August 7, 2006 (the "AGREEMENT"), by and between the
Employee and The Xxxxxxxx and Xxxxxxxx Company (the "COMPANY") and for other
good and valuable consideration, Employee hereby releases the Company, its
divisions, affiliates, subsidiaries, parents, branches, predecessors,
successors, assigns, officers, directors, trustees, employees, agents,
shareholders, administrators, representatives, attorneys, insurers and
fiduciaries, past, present and future (the "RELEASED PARTIES") from any and all
claims of any kind arising out of, or related to, Employee's employment with the
Company, its affiliates and subsidiaries (collectively, with the Company, the
"AFFILIATED ENTITIES"), and Employee's separation from employment with the
Affiliated Entities, which Employee now has or may have against the Released
Parties, whether known or unknown to Employee, by reason of facts which have
occurred on or prior to the date that Employee has signed this Release. Such
released claims include, without limitation, any and all claims relating to the
foregoing under federal, state or local laws pertaining to employment,
including, without limitation, the Age Discrimination in Employment Act
("ADEA"), Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C.
Section 2000e ET. SEQ., the Fair Labor Standards Act, as amended, 29 U.S.C.
Section 201 ET. SEQ., the Americans with Disabilities Act, as amended, 42 U.S.C.
Section 12101 ET. SEQ. the Reconstruction Era Civil Rights Act, as amended, 42
U.S.C. Section 1981 ET. SEQ., the Rehabilitation Act of 1973, as amended, 29
U.S.C. Section 701 ET. SEQ., the Family and Medical Leave Act of 1992, 29 U.S.C.
Section 2601 ET. SEQ., and any and all state or local laws regarding employment
discrimination and/or federal, state or local laws of any type or description
regarding employment, including but not limited to any claims arising from or
derivative of Employee's employment with the Affiliated Entities, as well as any
and all such claims under state contract or tort law.
Employee has read this Release of Claims carefully, acknowledges that
Employee has been given at least 21 days to consider all of its terms and has
been advised to consult with any attorney and any other advisors of Employee's
choice prior to executing this Release of Claims, and Employee fully understands
that by signing below Employee is voluntarily giving up any right which Employee
may have to xxx or bring any other claims against the Released Parties,
including any rights and claims under the ADEA. Employee also understands that
Employee has a period of seven days after signing this Release of Claims within
which to revoke his agreement, and that neither the Company nor any other person
is obligated to make any payments or provide any other benefits to Employee
pursuant to the Agreement until eight days have passed since Employee's signing
of this Release of Claims without Employee's signature having been revoked other
than any accrued obligations or other benefits payable pursuant to the terms of
the Company's normal payroll practices or employee benefit plans. Finally,
Employee has not been forced or pressured in any manner whatsoever to sign this
Release of Claims, and Employee agrees to all of its terms voluntarily. Employee
understands that in order to revoke this Release of Claims, Employee must send a
written revocation of Employee's intent to do so to [NAME AND ADDRESS OF NOTICE
PERSON].
A-1
Notwithstanding anything else herein to the contrary, this Release of
Claims shall not affect: (i) any rights that Employee may have with respect to
matters which by their terms, are to be performed after the date hereof by the
Company (including, without limitation, obligations to Employee under any stock
option, stock award or agreements or obligations under any pension, deferred
compensation, retention or other compensation or benefit plan, all of which
shall remain in effect in accordance with their terms); (ii) rights to
indemnification Employee may have under (A) applicable corporate law, (B) the
by-laws or certificate of incorporation of the Affiliated Entities, (C) any
other agreement between Employee and a Released Party, (D) as an insured under
any director's and officer's liability insurance policy now or previously in
force or (E) Section 7.05 of the Agreement and Plan of Merger, dated as of
August 7, 2006, among the Company, Universal Computer System Holding, Inc. and
Racecar Acquisition Co.; (iii) any right Employee may have to obtain
contribution in the event of the entry of judgment against Employee as a result
of any act or failure to act for which both Employee and any of the Affiliated
Entities are jointly responsible; (iv) any rights that Employee may have under
the Agreement to the extent not satisfied, including without limitation any
rights to reimbursement of legal fees and expenses; and (v) any rights of
Employee as a shareholder of the Company or any of the Affiliated Entities.
This Release of Claims, and the attached covenants, are final and binding
and may not be changed or modified except in a writing signed by both parties.
------------------------- -------------------------
Date [___]
------------------------- -------------------------
Date The Xxxxxxxx and Xxxxxxxx Company
A-2
EXHIBIT B
BENEFICIARY DESIGNATION
TO: THE XXXXXXXX AND XXXXXXXX COMPANY
Pursuant to the Agreement dated August 7, 2006, the undersigned hereby
designates the following beneficiary (beneficiaries) to receive any benefits
which may be payable under said Agreement subsequent to the undersigned's death:
(1) -------------------------------------------------------------------------
-------------------------------------------------------------------------------
(2) If the beneficiary (beneficiaries) named in (1) above is not living or is no
longer in existence, as the case may be, then to:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
This Beneficiary Designation revokes all prior designations made by the
undersigned and is subject to all the terms of the Agreement.
Dated: --------------, 2006
-------------------------------------------
