EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.1
This Executive Employment Agreement (this “Agreement”) is effective as of May 1, 2009, between
X.X. Xxxxx Corporation, an Ohio corporation (the “Company”), and Xxxx X. Xxxxxx (the “Executive”).
WITNESSETH:
WHEREAS, the Company and the Executive previously entered into an Executive Employment
Agreement dated as of February 7, 2006, as amended and restated effective as of December 31, 2008
(the “2006 Agreement”);
WHEREAS, the Company and the Executive desire to enter into a new Executive Employment
Agreement subject to the terms and conditions contained herein; and
WHEREAS, the parties agree that this Agreement contains the entire understanding of the
parties and shall supersede and replace the 2006 Agreement in its entirety;
NOW THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and
of other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Position/Duties
(a) During the Employment Term (as defined in Section 2), the Executive shall serve as the
Chief Executive Officer and President of the Company. In his positions as Chief Executive Officer
and President, the Executive shall report exclusively to the Board of Directors of the Company (the
“Board”).
(b) In each of his respective capacities the Executive shall have the duties, authorities and
responsibilities for such positions set forth in the Company’s Code of Regulations. In addition,
the Executive shall have the duties, authorities and responsibilities (to the extent not
inconsistent with the Company’s Code of Regulations) commensurate with the duties, authorities and
responsibilities of persons in similar capacities in similarly sized companies and such other
duties and responsibilities as the Board shall designate that are consistent with the Executive’s
positions under this Agreement.
(c) During the Employment Term (as defined in Section 2), the Executive shall devote
substantially all of his business time (excluding periods of vacation and other approved leaves of
absence) to the performance of his duties with the Company, provided the foregoing shall not
prevent the Executive from (i) participating in charitable, civic, educational, professional,
community or industry affairs or, with prior written approval of the Board, serving on the boards
of directors or advisory boards of other companies, and (ii) managing his and his family’s personal
investments, so long as such activities do not materially interfere with the performance of his
duties hereunder or create a potential business conflict or the appearance thereof. If at any time
service on any board of directors or advisory board would, in the good faith judgment of the Board,
conflict with the Executive’s fiduciary duty to the Company or
create any appearance thereof, the Executive shall, as soon as reasonably practicable
considering
any fiduciary duty to the other entity, resign from such other board of directors or
advisory board after written notice of the conflict is received from the Board. Service on the
boards of directors or advisory boards disclosed by the Executive to the Company on which he was
serving as of the Effective Date previously have been approved.
2. Employment Term
With respect to the Executive’s position as Chief Executive Officer and President, the
Executive’s initial term of employment under this Agreement shall begin on May 1, 2009 (the
“Effective Date”) and shall end on the third anniversary thereof, unless sooner terminated as
provided in Section 5. Following the initial Employment Term, the Employment Term shall
automatically renew for additional one-year periods unless terminated pursuant to Section 5 or
unless either party gives the other ninety (90) days prior written notice of its intent not to
renew. The initial term and any renewal thereof are collectively referred to as the “Employment
Term.”
3. Compensation and Related Matters
(a) Annual Base Salary
The Company agrees to pay the Executive a base salary at an annual rate of not less than
$500,000 before all customary payroll deductions and withholdings. Base salary shall be payable in
accordance with the regular payroll practices of the Company, but not less frequently than monthly.
The base salary in effect for the Executive from time to time during the Employment Term shall
constitute “Base Salary” for purposes of this Agreement. The Executive’s Base Salary shall be
subject to annual review by the Board (or a committee thereof) and may be increased, but not
decreased, from time to time by the Board (or a committee thereof). No increase to Base Salary
shall be used to offset or otherwise reduce any obligations of the Company to the Executive
hereunder or otherwise.
(b) Annual Performance Bonus
During the Employment Term, the Executive shall be entitled to participate in the Company’s
senior management bonus program, as approved by the Compensation Committee of the Board, pursuant
to which the Executive shall have the opportunity to earn an annual bonus measured against Company
and individual performance. Any such annual bonus shall be paid in accordance with the terms of
the applicable bonus plan.
(c) Long-Term Incentive Plan
Beginning January 1, 2007 and annually thereafter, the Executive was and shall continue to be
entitled to participate in the X.X. Xxxxx Corporation Amended and Restated 2005 Long-Term Incentive
Plan or any successor plan thereto (the “Plan”) (for so long as the Plan remains in effect for
executives of the Company), in an amount determined annually by the Board or the Compensation
Committee of the Board that is commensurate with his position, but in no event shall such amount be
less than that offered to any other executive of the Company. Incentives shall be paid in the form
of options, restricted stock units or cash, as determined annually by the Board or the Compensation
Committee of the Board.
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(d) Other Awards
During the Employment Term, the Executive shall be eligible to participate in any bonus and
other incentive compensation plans and programs available to the Company’s senior executives at a
level commensurate with his position, other than existing plans and programs that have been
terminated or frozen as to new participants as of February 7, 2006.
4. Employee Benefits
(a) Benefit Plans
(i) Except for plans and programs that have been terminated or frozen as to new
participants as of February 7, 2006 and subject to Section 4(a)(ii), the Executive shall be
entitled to participate in all benefit plans of the Company that are available to the
Company’s senior executives, including, but not limited to, pension, thrift, profit sharing,
401(k), medical coverage, disability, education, or other retirement or welfare benefits
that the Company has adopted or may adopt, maintain or contribute to for the benefit of its
senior executives subject to satisfying the applicable eligibility requirements and any
other terms of any such plan. Such benefits, in the aggregate, shall be no less favorable
than the level of benefits provided to the Company’s senior executives as of February 7,
2006 (without taking into account any terminated or frozen plan); provided, however, that in
the event there is a reduction of employee benefits applicable to senior executives
generally, nothing herein shall preclude the Company’s ability to reduce the Executive’s
benefits consistent with such reduction.
(ii) Without limiting the generality of the foregoing, on January 15th of
each year during the Employment Term, the Company shall pay to the Executive an amount equal
to the product of 8.75%, multiplied by his Base Salary as in effect on the date of payment
in a lump sum. In exchange for such payment, the Executive agrees to relinquish any right
to participate in any long-term retirement plan or program of the Company now in effect or
hereafter established. Nothing in the foregoing shall be construed as a prohibition or
limitation of the Executive’s right to participate in the benefit plans and programs of the
Company described in Section 4(a)(i).
(b) Vacations
The Executive shall be entitled to annual paid vacation in accordance with the Company’s
policy applicable to senior executives, but in no event less than four (4) weeks per calendar year
(as prorated for partial years), which vacation may be taken at such times as the Executive elects
with due regard to the needs of the Company.
(c) Perquisites
During the Employment Term, the Company shall provide to the Executive all employee and
executive perquisites which other senior executives of the Company are generally entitled to
receive, in accordance with Company policy set by the Board from time to time, including country
club and health club memberships (initiation and dues). In addition to the foregoing, the Company
shall provide the Executive with (i) personal financial planning and tax services
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annually in an amount not to exceed $15,000 per year, (ii) an automobile allowance of $12,000
per year which shall be payable in substantially equal monthly installments on the first pay period
of each month, and (iii) monthly country club dues not to exceed $400 per month. The Company shall
have no right or claim to any automobile purchased by the Executive in whole or in part with the
automobile allowance.
(d) Business and Entertainment Expenses
Upon presentation of appropriate documentation, the Executive shall be reimbursed in
accordance with the Company’s expense reimbursement policy for all reasonable and necessary
business and entertainment expenses incurred in connection with the performance of his duties
hereunder.
5. Termination
For purposes of this Agreement, “termination” or any form thereof shall mean a “separation
from service,” within the meaning of Treasury Regulation §1.409A-1(h), with the Company and all
persons with whom the Company would be considered a single employer under Sections 414(b) and (c)
of the of the Internal Revenue Code of 1986, as amended (the “Code”). The Executive’s employment
and the Employment Term shall terminate on the first of the following to occur:
(a) Disability
Upon thirty (30) days prior written notice by the Company to the Executive of termination due
to Disability, provided, however, that during such thirty (30) day period, the Executive shall not
have returned to the full-time performance of his duties and responsibilities under this Agreement.
For purposes of this Agreement, “Disability” shall mean the Executive is determined to be disabled
under the Company’s long-term disability plan without regard to any requirement that the Executive
incur a loss of income, or if no such plan exists, the Executive is totally and permanently
disabled for a period of at least 120 consecutive days as determined by a physician selected by the
Company and reasonably acceptable to the Executive or the Executive’s legal representative.
(b) Death
Automatically on the date of death of the Executive.
(c) Cause
Upon written notice by the Company to the Executive of a termination for Cause. “Cause” shall
mean any of the following:
(i) gross negligence materially detrimental to the Company;
(ii) Executive’s conviction of, or plea of nolo contendere with respect to, any felony
or any lesser crime or offense which involves a breach of trust or fiduciary duty owed to
the Company or any of its affiliates;
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(iii) willful and continued failure of the Executive to perform the duties or
responsibilities of the positions held by him and such failure continues for thirty (30)
days after the Executive’s receipt of written notice from the Company setting forth the
specifics of such failure, unless such failure is the result of ill health or physical or
mental disability; or
(iv) intentional misconduct of the Executive which is materially and demonstrably
injurious to the Company.
(d) Without Cause
Upon written notice by the Company to the Executive of an involuntary termination without
Cause, other than for Disability or as a result of the Executive’s death.
(e) Good Reason
Upon written notice by the Executive to the Company that he intends to terminate his
employment hereunder for Good Reason and the failure of the Company, within ten (10) days of its
receipt of such written notice, to cure the condition cited by the Executive in such notice as
constituting Good Reason. For purposes of this Agreement, “Good Reason” means the occurrence of
any one of the following events unless the Executive specifically agrees in writing that such event
shall not be Good Reason:
(i) (A) the assignment to the Executive of any duty or responsibility without the
Executive’s consent that is inconsistent in any material respect with the position
(including, without limitation, his status, office and titles), authority, duties or
responsibilities as contemplated in Section 1, or (B) any other action by the Company
without the Executive’s consent which results in a material diminution in such positions,
authority, duties or responsibilities, which in case of either (A) or (B) continues for ten
(10) days after written notice of such action from the Executive to the Company;
(ii) any reduction, directly or indirectly, in the Executive’s Base Salary or any
material reduction in the extent of Executive’s participation in the plans referred to in
Section 3 or the extent of Executive’s entitlement to the employee benefits, expense
reimbursements, fringe benefits or perquisites referred to in Section 4 (other than plans
that are terminated or frozen as to new participants on February 7, 2006 or any reduction
that impacts all participants or that results pursuant to the terms of any such benefit
plan);
(iii) the failure of the Company to assign this Agreement to a successor to the Company
or failure of a successor to the Company to explicitly assume and agree to be bound by this
Agreement in a writing delivered to the Executive;
(iv) requiring the Executive to be principally based at any office or location more
than thirty (30) miles from the current corporate offices of the Company in Columbus, Ohio;
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(v) any failure of the Executive after his initial appointment or election to the Board
to be nominated by the Board (or the appropriate Board committee) at each subsequent
election of directors at which the Executive is up for election; or
(vi) any other failure by the Company to comply with any term, condition or provision
of this Agreement which continues for ten (10) days after written notice of such failure
from the Executive to the Company.
(f) Without Good Reason
Upon thirty (30) days’ prior written notice by the Executive to the Company of the Executive’s
termination of employment without Good Reason (which the Company may, in its sole discretion, make
effective earlier than any notice date).
6. Consequences of Termination
Subject to Section 7, the following amounts and benefits shall be due to the Executive upon
termination of employment during the Employment Term:
(a) Disability
If the Executive’s employment terminates by reason of Disability, the Company shall pay or
provide to the Executive (i) any unpaid Base Salary through the date of termination and any
vacation accrued in accordance with Company policy within thirty (30) days after the date of
termination; (ii) any unpaid bonus earned with respect to any fiscal year ending on or preceding
the date of termination in accordance with the applicable bonus plan; (iii) reimbursement for any
unreimbursed expenses incurred through the date of termination in accordance with the Company’s
expense reimbursement policy; and (iv) all other payments, benefits or fringe benefits to which the
Executive may be entitled under the terms of any applicable compensation arrangement or benefit,
equity or fringe benefit plan or program or grant or this Agreement (collectively, the “Accrued
Amounts”). In addition, the Executive shall receive (v) a Pro Rata Bonus as defined in Section
6(d)(vi)(B), payable at the time that annual bonuses are next paid to other senior executives of
the Company in accordance with the terms of the applicable bonus plan and (vi) an amount equal to
the payment the Executive received pursuant to Section 4(a)(ii) for the calendar year in which his
termination of employment occurs within seventy (70) days following the Executive’s termination of
employment.
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(b) Death
If the Executive’s employment terminates by reason of his death, the Executive’s estate (or to
the extent a beneficiary or beneficiaries has been designated, the named beneficiary(ies)) shall be
entitled to any Accrued Amounts at such times described in Section 6(a). In addition, the
Executive’s beneficiary(ies) shall receive a Pro Rata Bonus as defined in Section 6(d)(vi)(B)
below, payable at the time that annual bonuses are next paid to other senior executives of the
Company in accordance with the terms of the applicable bonus plan.
(c) Termination for Cause or Without Good Reason
If the Executive’s employment is terminated (i) by the Company for Cause, or (ii) by the
Executive without Good Reason, the Company shall pay to the Executive any Accrued Amounts at such
times described in Section 6(a).
(d) Termination Without Cause or for Good Reason Prior to a Change in Control
If the Executive’s employment is terminated by the Company (other than for Cause, Disability
or as a result of death) or by the Executive for Good Reason, and Section 8(b) is not applicable,
then:
(i) The Company shall pay or provide the Executive with the Accrued Amounts at such
times described in Section 6(a).
(ii) Any portion of the stock option granted to the Executive on February 7, 2006 that
is unvested on the date of termination shall become fully vested and remain exercisable for
twelve (12) months following termination, subject to Sections 12.03 and 12.04 of the Plan.
(iii) The Company shall continue to pay to the Executive his Base Salary at the rate in
effect on the employment termination date, (or, if greater, the Executive’s Base Salary in
effect immediately prior to any event described in Section 5(e)(ii)) for a period of twelve
(12) months beginning within seventy (70) days following his termination of employment in
accordance with the Company’s regular payroll policies.
(iv) Subject to his co-payment of premiums at the rate in effect on the date of his
termination of employment, the Executive shall be entitled to continue his participation for
one (1) year following termination of employment in all health and welfare plans in which
the Executive (and eligible dependents) is a participant at the time of such termination
upon the same terms and conditions (except for the requirements of the Executive’s continued
employment) in effect for active employees of the Company. Notwithstanding the foregoing,
(A) any amounts or benefits that will be paid or provided under this Section 6(d)(iv) with
respect to health or dental coverage after completion of the time period described in
Treasury Regulation §1.409A-1(b)(9)(v)(B) and (B) any other amounts or benefits that will be
paid or provided under this Section 6(d)(iv) shall be subject to the following requirements:
(I) the amount of expenses eligible for reimbursement or benefits provided during any
taxable year of the Executive may not
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affect the expenses eligible for reimbursement or benefits to be provided in any other
taxable year of the Executive; (II) any reimbursement of an eligible expense shall be made
on or before the last day of the taxable year of the Executive following the taxable year of
the Executive in which the expense was incurred; and (III) the right to such reimbursement
or benefit may not be subject to liquidation or exchange for another benefit. In the event
that the Executive obtains other employment that offers substantially similar or improved
benefits, as to any particular health or welfare plan, such continuation of coverage by the
Company for such similar or improved benefit under such plan under this Section 6(d)(iv)
shall immediately cease, provided that in no event shall any COBRA (or COBRA-equivalent)
benefits cease but they shall become secondary to the extent permitted by law while such
other benefits are in effect. To the extent such coverage cannot be provided under the
Company’s health or welfare plans without jeopardizing the tax status of such plans, for
underwriting reasons (e.g., disability benefits), the Company shall pay the Executive an
amount equal to the value thereof within 70 days following the Executive’s termination of
employment; provided that the “value” of benefits, if insured benefits, shall be the present
value (based on the two (2)-year U.S. Treasury rates as of the date of termination) of
premiums expected for coverage, and if not insurance benefits, shall be the present value of
the expected net cost (i.e., gross cost less any active employee premiums) to the Company to
provide such benefits. The continuation of health benefits under this Section 6(d)(iv)
shall reduce and count against the Executive’s rights under COBRA.
(v) The Company shall pay to the Executive an amount equal to the payment the Executive
received pursuant to Section 4(a)(ii) of this Agreement for the calendar year in which his
termination of employment occurs. Such payment shall be made within seventy (70) days
following the Executive’s termination of employment.
(vi) The Executive shall receive an amount, payable at the time that annual bonuses are
next paid to other senior executives pursuant to the terms of the applicable bonus plan,
equal to the greater of (A) the Executive’s target bonus opportunity under the Company’s
senior management bonus program for the plan year in which his termination of employment
occurs, determined without regard to any reduction in such target bonus opportunity that is
approved by the Board or the Compensation Committee of the Board after the beginning of such
plan year without the Executive’s consent; or (B) a pro-rata portion of the Executive’s
bonus for the performance year in which the Executive’s termination occurred (determined by
multiplying the amount the Executive would have received based upon actual performance had
employment continued through the end of the performance year by a fraction, the numerator of
which is the number of days that the Executive was employed by the Company during the
performance year in which the Termination occurred and the denominator of which is 365) (the
payment provided for in this subsection (B) is the “Pro Rata Bonus”).
(vii) The Company shall, at its sole expense as incurred, provide the Executive with
reasonable outplacement services, the scope and provider of which shall be selected by the
Executive in his sole discretion; provided, that (A) the total cost to the Company in
providing such services shall not exceed $20,000; and (B) the Executive must incur such
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expenses no later than December 31 of the second calendar year following the calendar
year in which the termination occurred.
(e) Six-Month Distribution Delay
Notwithstanding anything in this Agreement to the contrary, if the Executive is a “specified
employee” (within the meaning of Section 409A of the Code and the Treasury Regulations promulgated
thereunder and as determined under the Company’s policy for determining specified employees), on
the Executive’s date of termination and the Executive is entitled to a payment and/or a benefit
under this Agreement that is required to be delayed pursuant to Section 409A(a)(2)(B)(i) of the
Code, then such payment or benefit, as the case may be, shall not be paid or provided (or begin to
be paid or provided) until the first business day of the seventh month following the date of the
Executive’s termination of employment (or, if earlier, the date of the Executive’s death). The
first payment that can be made to the Executive following such postponement period shall include
the cumulative amount of any payments or benefits that could not be paid or provided during such
postponement period due to the application of Section 409A(a)(2)(B)(i) of the Code.
7. Mitigation/Release
The Executive shall not be required to mitigate the amount of any payment or benefit provided
for in Section 6 by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for the Executive in Section 6 be reduced by any other compensation earned by the
Executive as the result of employment by another employer or by reason of the Executive’s receipt
of or right to receive any retirement or other benefits after the date of termination of employment
or otherwise, except as set forth in this Agreement. As a condition to receiving the severance
compensation provided for in Section 6, the Executive shall execute and deliver to the Company a
release of claims (other than claims arising under this Agreement) against the Company in a form
satisfactory to the Company within sixty (60) days following the date of termination so long as the
Company executes and delivers to Executive a comparable release of claims against the Executive.
8. Change in Control Benefits
(a) Definition
For purposes of this Agreement, “Change in Control” shall mean the first to occur of any of
the following events:
(i) any “person” (as defined in Section 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)), excluding for this purpose, (A) the Company or
any subsidiary of the Company, or (B) any employee benefit plan of the Company or any
subsidiary of the Company, or any person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan which acquires beneficial
ownership of voting securities of the Company, is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power of the
Company’s then outstanding voting securities; provided,
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however, that no Change in Control will be deemed to have occurred as a result of a
change in ownership percentage resulting solely from an acquisition of securities by the
Company; or
(ii) persons who, as of the Effective Date, constitute the Board (the “Incumbent
Directors”) cease for any reason, including without limitation, as a result of a tender
offer, proxy contest, merger or similar transaction, to constitute at least a majority
thereof, provided that any person becoming a director of the Company subsequent to the
Effective Date shall be considered an Incumbent Director if such person’s election or
nomination for election was approved by a vote of at least fifty percent (50%) of the
Incumbent Directors; but provided further, that any such person whose initial assumption of
office is in connection with an actual or threatened election contest relating to the
election of members of the Board or other actual or threatened solicitation of proxies or
consents by or on behalf of a “person” (as defined in Section 13(d) and 14(d) of the
Exchange Act) other than the Board, including by reason of agreement intended to avoid or
settle any such actual or threatened contest or solicitation, shall not be considered an
Incumbent Director; or
(iii) consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a “Business
Combination”), in each case, unless, following such Business Combination, all or
substantially all of the individuals and entities who were the beneficial owners of
outstanding voting securities of the Company immediately prior to such Business Combination
beneficially own, directly or indirectly, more than fifty percent (50%) of 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 company resulting from such Business
Combination (including, without limitation, a company which, as a result of such
transaction, owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the outstanding voting
securities of the Company; or
(iv) approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.
Notwithstanding the foregoing, the Executive shall not be entitled to any payment or benefit under
Section 8(b) unless the Change in Control also constitutes a “change in control event” under
Section 409A of the Code and the Treasury Regulations promulgated thereunder.
(b) Effect
If, within twelve (12) months after a Change in Control of the Company, the Executive’s
employment is terminated by the Company or a successor to the Company for any reason other than for
Cause or Disability or due to the Executive’s death or if the Executive terminates his employment
for Good Reason:
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(i) The Company shall pay or provide the Executive with the Accrued Amounts at such
times described in Section 6(a).
(ii) The Executive shall receive, within thirty (30) days following his termination of
employment, a lump sum cash payment equal to two (2) times the sum of (A) his Base Salary
at the rate in effect on the employment termination date or, if greater, on the date of the
Change in Control, plus (B) an amount equal to the Executive’s target bonus opportunity in
effect at the time termination of employment occurs or, if greater, on the date of the
Change in Control.
(iii) In addition, for a period of one (1) year following any such termination of
employment, the Executive shall be entitled to continue his participation in all health and
welfare plans in which the Executive (and eligible dependents) participated at the time of
such termination upon the same terms and conditions (except for the requirements of the
Executive’s continued employment) in effect for active employees of the Company, including
any premium co-payment requirements. Notwithstanding the foregoing, (A) any amounts or
benefits that will be paid or provided under this Section 8(b)(ii) with respect to health or
dental coverage after completion of the time period described in Treasury Regulation
§1.409A-1(b)(9)(v)(B) and (B) any other amounts or benefits that will be paid or provided
under this Section 8(b)(ii) shall be subject to the following requirements: (I) the amount
of expenses eligible for reimbursement or benefits provided during any taxable year of the
Executive may not affect the expenses eligible for reimbursement or benefits to be provided
in any other taxable year of the Executive; (II) any reimbursement of an eligible expense
shall be made on or before the last day of the taxable year of the Executive following the
taxable year of the Executive in which the expense was incurred; and (III) the right to such
reimbursement or benefit may not be subject to liquidation or exchange for another benefit.
In the event that the Executive obtains other employment that offers substantially similar
or improved benefits, as to any particular health or welfare plan, such continuation of
coverage by the Company for such similar or improved benefit under such plan under this
Section 8(b)(ii) shall immediately cease, provided that in no event shall any COBRA (or
COBRA-equivalent) benefits or retiree benefits cease but they shall become secondary to the
extent permitted by law while such other benefits are in effect. To the extent such
coverage cannot be provided under the Company’s health or welfare plans without jeopardizing
the tax status of such plans, for underwriting reasons (e.g., disability benefits), the
Company shall pay the Executive an amount equal to the value thereof within 70 days
following the Executive’s termination of employment; provided that the “value” of benefits,
if insured benefits, shall be the present value (based on the two (2)-year U.S. Treasury
rates as of the date of termination) of premiums expected for coverage, and if not insurance
benefits, shall be the present value of the expected net cost (i.e., gross cost less any
active employee premiums) to the Company to provide such benefits. The continuation of
health benefits under this Section 8(b)(ii) shall reduce and count against the Executive’s
rights under COBRA.
(iv) The Company shall pay to the Executive an amount equal to the amount the Executive
received pursuant to Section 4(a)(ii) of this Agreement for the calendar
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year in which his termination of employment occurs. Such payment shall be made within
thirty (30) days following the Executive’s termination of employment.
If the Executive’s employment is terminated by the Company for Disability or Cause, if the
Executive’s employment terminates because of his death, or if the Executive terminates his
employment without Good Reason, and such termination of employment occurs following a Change in
Control, the effect of such termination shall be governed by Section 6.
(c) Excise Taxes
Notwithstanding any other provision of this Agreement, if any payments or distributions in the
nature of compensation to be made to or for the benefit of the Executive, whether paid or payable
pursuant to this Agreement or otherwise (including the vesting of stock options and any other
events that result in a “payment in the nature of compensation” within the meaning of Section 280G
of the Code), are characterized as “excess parachute payments” within the meaning of Section 280G
of the Code or any successor provision, then the Company shall either:
(i) pay to the Executive an additional amount equal to the excise taxes imposed by
Section 4999 of the Code or any successor provision on the Executive’s excess parachute
payments by December 31 of the calendar year following the calendar year in which the
Executive remits the related taxes, if such procedure provides the Executive with an
after-tax amount that is greater than the after-tax amount produced under the following
clause (ii); or
(ii) reduce the amounts otherwise payable to the Executive under this Agreement to the
maximum amount that may be paid to the Executive without any portion of any payment to the
Executive under this Agreement or any other agreement constituting an excess parachute
payment, if this procedure provides Executive with an after-tax amount that is greater than
the after-tax amount produced under clause (i) above.
If clause (ii) applies, within ten (10) days of the date of termination of employment, the Company
shall notify the Executive of the amount of the reduction. All after-tax amounts determined for
purposes of this Section 8(c) shall be made by a qualified tax advisor that is acceptable to the
Executive, whose fees shall be paid by the Company. Any reduction pursuant to this Section
8(c)(ii) shall be made in accordance with Section 409A of the Code.
9. Confidentiality, Nonsolicitation and Noncompensation
(a) Confidentiality
The Executive acknowledges that the services which he will be providing to and for the Company
or its affiliates will give him access to, and the Executive hereby agrees to hold in a fiduciary
capacity for the benefit of the Company, any and all secret or confidential information, knowledge
or data relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during his employment with the Company
and which shall not be in the public knowledge (other than by acts of the Executive or his
representative in violation of this Agreement). After the expiration or earlier termination of
this Agreement and the employment of the Executive hereunder, the Executive
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shall not, without prior written consent or the Company, or unless required to do so by order
of a court, communicate or divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an asserted violation of the provisions of
this Section 9(a) constitute a basis for deferring or withholding any amounts otherwise payable to
the Executive under this Agreement.
(b) Nonsolicitation
During the Executive’s employment with the Company and for the one (1) year period following
his termination, the Executive agrees that he will not, directly or indirectly, individually or on
behalf of any other person, firm, corporation or other entity, knowingly solicit, aid or induce (i)
any managerial level employee of the Company or any of its subsidiaries or affiliates to leave such
employment in order to accept employment with, or render services to or with any other person,
firm, corporation or other entity unaffiliated with the Company or knowingly take any action to
materially assist or aid any other person, firm, corporation or other entity in identifying or
hiring any such employee (provided, that the foregoing shall not be violated by general advertising
not targeted at Company employees or by serving as a reference for an employee with regard to an
entity with which the Executive is not affiliated), or (ii) any customer of the Company or any of
its subsidiaries or affiliates to purchase goods or services then sold by the Company or any of its
subsidiaries or other affiliates from another person, firm, corporation or other entity or assist
or aid any other person or entity in identifying or soliciting any such customer.
(c) Noncompetition
During the Executive’s employment hereunder and for the one (1) year period following his
termination, without the prior written consent of the Board, the Executive shall not, directly or
indirectly, own, manage, operate, control, be employed by (whether as an employee, consultant,
independent contractor or otherwise, and whether or not for compensation) or render services to any
person, firm, corporation or other entity, in whatever form, that operates as a wholesaler of one
or more product lines that are directly competitive to one or more of the product lines of the
Company or any of its subsidiaries on the date of termination of employment. The geographic scope
of the restriction set forth in the immediately preceding sentence shall include the United States
and any other country in which the Company, including its subsidiaries, markets or sells such
competing product line or lines. This Section 9(c) shall not prevent the Executive from owning not
more than one percent (1%) of the total shares of all classes of stock outstanding of any publicly
held entity engaged in such business.
(d) Equitable Relief and Other Remedies
The parties acknowledge and agree that the other party’s remedies at law for a breach or
threatened breach of any of the provisions of this Section 9 would be inadequate and, in
recognition of this fact, the parties agree that, in the event of such a breach or threatened
breach, in addition to any remedies at law, the other party, without posting any bond, shall be
entitled to obtain equitable relief in the form of specific performance, a temporary restraining
order, a temporary or permanent injunction or any other equitable remedy which may then be
available.
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(e) Reformation
If it is determined by a court of competent jurisdiction in any state that any restriction in
this Section 9 is excessive in duration or scope or is unreasonable or unenforceable under the laws
of that state, it is the intention of the parties that such restriction may be modified or amended
by the court to render it enforceable to the maximum extent permitted by the law of that state.
(f) Survival of Provisions
The obligations contained in this Section 9 shall survive the termination or expiration of the
Executive’s employment under this Agreement with the Company and shall be fully enforceable
thereafter.
10. No Assignments
(a) This Agreement is personal to each of the parties hereto. Except as provided in Section
10(b), no party may assign or delegate any rights or obligations hereunder without first obtaining
the written consent of the other party hereto.
(b) The Company may assign this Agreement to any successor to all or substantially all of the
business and/or assets of the Company provided the Company shall require such successor to
expressly assume and agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken place and shall deliver
a copy of such assignment to the Executive.
11. Notice
For the purpose of this Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of
delivery if delivered by hand, (b) on the date of transmission, if delivered by confirmed
facsimile, (c) on the first business day following the date of deposit if delivered by guaranteed
overnight delivery service, or (d) on the fourth business day following the date delivered or
mailed by United States registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
| If to the Executive: | At the address (or to the facsimile number) shown on the records of the Company |
|||
| If to the Company: | X.X. Xxxxx Corporation 00000 Xxxxxxxx Xxxx X.X. Xxxxxxxxxxxx, Xxxx 00000 Fax No.: (000) 000-0000 |
or to such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.
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12. Section Headings; Inconsistency
The section headings used in this Agreement are included solely for convenience and shall not
affect, or be used in connection with, the interpretation of this Agreement. In the event of any
inconsistency between the terms of this Agreement and any form, award, plan or policy of the
Company, the terms of this Agreement shall control; no provision in any policy, code, plan or
program related to a violation thereof being grounds for termination, or similar language, shall
result in a “cause” termination unless such violation is also Cause under this Agreement and the
provisions hereof are complied with, and the foregoing shall apply even if the Executive signs an
acknowledgment or otherwise agrees to the provisions of such policy, code, plan or program.
13. Severability
The provisions of this Agreement shall be deemed severable, and the invalidity or
unenforceability of any provision shall not affect the validity or enforceability of the other
provisions hereof.
14. 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. One or more
counterparts of this Agreement may be delivered by facsimile, with the intention that delivery by
such means shall have the same effect as delivery of an original counterpart thereof.
15. Arbitration
Any dispute or controversy arising under or in connection with this Agreement, other than
injunctive relief under Section 9(d) or damages for breach of Section 9, shall be settled
exclusively by arbitration, conducted before a single arbitrator in or around the Columbus, Ohio
area, administered by the American Arbitration Association (“AAA”) in accordance with its
Commercial Arbitration Rules then in effect. The single arbitrator shall be selected by the mutual
agreement of the Company and the Executive, unless the parties are unable to agree to an
arbitrator, in which case the arbitrator will be selected under the procedures of the AAA. The
arbitrator will have the authority to permit discovery and to follow the procedures that he or she
determines to be appropriate. The arbitrator will have no power to award consequential (including
lost profits), punitive or exemplary damages. The decision of the arbitrator will be final and
binding upon the parties hereto. Judgment may be entered on the arbitrator’s award in any court
having jurisdiction. Each party shall bear its own legal fees and costs and equally divide the
forum fees and cost of the arbitrator; provided, that if the Executive is a Prevailing Party (as
defined below), the Executive shall be entitled to recover all of his reasonable attorneys’ fees
and expenses incurred in connection with the dispute. A “Prevailing Party” is one who is
successful on any material substantive issue in the action and achieves either a judgment in such
party’s favor or some other affirmative recovery. Notwithstanding anything in this Section 15 to
the contrary, any amounts or benefits that will be paid or provided to the Executive under this
Section 15 shall be subject to the following requirements: (a) the expenses eligible for
reimbursement or benefits provided must relate to a dispute or controversy arising under or in
connection with this Agreement within three years following the Executive’s
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termination of employment; (b) the amount of expenses eligible for reimbursement or benefits
provided during any taxable year of the Executive may not affect the expenses eligible for
reimbursement or benefits to be provided in any other taxable year of the Executive; (c) any
reimbursement of an eligible expense shall be made on or before the last day of the taxable year of
the Executive following the taxable year of the Executive in which the expense was incurred; and
(d) the right to such reimbursement or benefit may not be subject to liquidation or exchange for
another benefit.
16. Indemnification
The Company hereby agrees to indemnify the Executive and hold him harmless to the fullest
extent permitted by applicable law against and in respect to any and all actions, suits,
proceedings, claims, demands, judgments, costs, expenses (including reasonable attorneys’ fees),
losses and damages resulting from the Executive’s good faith performance of his duties and
obligations with the Company. This provision is in addition to any other rights of indemnification
the Executive may have.
17. Liability Insurance
The Company shall cover the Executive under directors and officers liability insurance both
during and, while potential liability exists, after the term of this Agreement in the same amount
and to the same extent as the Company covers its other officers and directors.
18. Miscellaneous
No provision of this Agreement may be modified, waived or discharged unless such modification,
waiver or discharge is agreed to in writing and signed by the Executive and such officer or
director as may be 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 sets forth
the entire agreement of the parties hereto in respect of the subject matter contained herein and
supersedes all other agreements between the parties, including the 2006 Agreement. No agreements
or representations, oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not 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 without regard to its conflicts of law principles.
19. Code Section 409A
It is intended that any amounts payable or benefits provided under this Agreement and the
Company’s and the Executive’s exercise of authority or discretion hereunder shall comply with the
provisions of Section 409A of the Code and the Treasury Regulations promulgated thereunder, and
this Agreement will be interpreted, administered and operated accordingly. None of the Company,
the Board or the Compensation Committee of the Board shall have any liability to the Executive with
respect to any failure to comply with the requirements of Section 409A of the Code.
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20. Full Settlement
Except as set forth in this Agreement, the Company’s obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by
any circumstances, including, without limitation, set-off, counterclaim, recoupment, defense or
other claim, right or action which the Company may have against the Executive or others, except to
the extent any amounts are due the Company or its subsidiaries or affiliates pursuant to a judgment
against the Executive.
21. Representations
(a) The Company represents and warrants to the Executive that the execution of this Agreement
and the provision of all benefits and grants provided herein have been duly authorized by the
Company, and, upon the execution and delivery of this Agreement by the Executive, this Agreement
shall be the valid and binding obligation of the Company, enforceable in accordance with its terms,
except to the extent enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors’ rights generally and by the effect of general
principles of equity (regardless of whether enforceability is considered in a proceeding in equity
or at law).
(b) The Executive represents and warrants to the Company that he has the legal right to enter
into this Agreement and to perform all the obligations on his part to be performed hereunder in
accordance with its terms and that he is not a party to any agreement or understanding, written or
oral, which could prevent him from entering into this Agreement or performing all of his
obligations hereunder.
22. Withholding
The Company may withhold from any and all amounts payable under this Agreement such federal,
state and local taxes as may be required to be withheld pursuant to any applicable law or
regulation.
23. Public Announcements
The Company shall give the Executive a reasonable opportunity to review and comment on any
public announcement (including any filing with a governmental agency or stock exchange) relating to
this Agreement or the Executive’s employment by the Company; provided, however, that the Company
shall not be prohibited from making any disclosure required by law.
24. Prior Agreements
This Agreement supersedes all prior agreements and understandings between the Executive and
the Company, including the 2006 Agreement, regarding the terms and conditions of the Executive’s
employment with the Company and/or its affiliates. The parties agree that by entering into this
Agreement the Executive relinquishes any right or claim to any payment or benefits under the 2006
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
| X. X. XXXXX CORPORATION |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | SVP - Finance, CFO | |||
| /s/ Xxxx X. Xxxxxx | ||||
| XXXX X. XXXXXX | ||||
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