AGREEMENT
Exhibit 10.3
This Agreement (this “Agreement”), dated as of March 16, 2007, is entered into by and between
The Xxxxxx & Sessions Co., an Ohio corporation (the “Company”), and Xxxx X. Xxxxxxx (“Xxxxxxx”).
RECITALS
WHEREAS, Xxxxxxx is retiring as an employee of the Company effective as of the earlier of (i)
April 30, 2007 and (ii) the date of the Company’s annual meeting of shareholders held in 2007 (such
date, the “Effective Date”);
WHEREAS, the Company believes that Xxxxxxx’x expertise and knowledge will continue to enhance
the Company’s business following the Effective Date; and
WHEREAS, the Company and the Governance, Nominating and Compensation Committee (the
“Committee”) of the Board of Directors (the “Board”) of the Company has asked Xxxxxxx to serve his
remaining term as a director (which term expires at the Company’s annual meeting of shareholders in
2008), to serve as non-executive Chairman of the Board, and to perform certain other services under
the terms and conditions of this Agreement, commencing on the Effective Date.
NOW, THEREFORE, in consideration of (a) the mutual covenants and agreements set forth in this
Agreement, and (b) other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. Services.
(a) Capacity. The Company hereby retains Xxxxxxx from and after the
Effective Date on a non-exclusive consultant basis with respect to the business of the Company and
its subsidiaries for the purpose of assistance and advice regarding the Company’s exploration of
strategic alternatives. Xxxxxxx hereby accepts such position upon the terms and the conditions set
forth herein, and shall perform such duties as may be mutually agreed upon by the Committee and
Xxxxxxx.
(b) Non-Executive Chairman of the Board. In addition to the services
described in Section 1(a), from and after the Effective Date, Xxxxxxx will continue to
serve as a director on the Board until the expiration of his current term, and will serve as the
non-executive Chairman of the Board.
(c) Term and Operation. This Agreement shall continue until, and shall end
upon: (i) with respect to the services to be performed pursuant to Section 1(a), the first
anniversary of the Effective Date, (ii) with respect to his service as a director, until his term
expires at the annual meeting of the Company’s annual meeting of shareholders in 2008 and (iii)
with respect to his role as non-executive Chairman of the Board, upon the earlier of (A) Xxxxxxx’x
retirement from the Board or (B) the Committee’s request for his resignation as non-executive
Chairman of the Board. Notwithstanding the foregoing, this Agreement may be terminated by either
party in writing upon 30 days written notice to the other party. This Agreement will terminate
automatically on the death of Xxxxxxx.
(d) Compensation. In consideration of Xxxxxxx’x performance of the services
under this Agreement and for his service on the Board from and after the Effective Date, the
Company will pay Xxxxxxx $350,000, payable as follows: (i) $150,000 on the last day of the sixth
month following the Effective Date, (ii) $25,000 on the last day of each succeeding month after the
month described in clause (i); $25,000 on the last day of the month after the first anniversary at
the Effective Date; and (iii) $25,000 on the last day of the month after the second anniversary of
the Effective Date. Xxxxxxx will not be entitled to any other compensation or Board fees in
connection with the services to be performed under this Agreement (including for his service as a
director and non-executive Chairman of the Board), other than as set forth in this Agreement.
Notwithstanding the foregoing, for the period during 2007 that Xxxxxxx is an employee of the
Company, the Company will pay to Xxxxxxx any amount of his salary that was earned during such
period but remains unpaid as of the Effective Date. Any such amounts will be paid at the time and
in the manner such amounts otherwise would have been paid to Xxxxxxx. The Company will also pay to
Xxxxxxx a portion of any bonus he would have earned during 2007 pursuant to any bonus, incentive,
profit sharing, performance, discretionary pay or similar policy, plan, program or arrangement of
the Company. The portion of any such bonus to be paid to Xxxxxxx will be determined on a pro rata
basis based on the number of days in 2007 that Xxxxxxx was an employee of the Company (i.e., the
number of days in 2007 prior to the Effective Date). The amount of any bonus Xxxxxxx will be
entitled to for 2007 will be calculated as the higher of (i) the amount actually earned by Xxxxxxx
or (ii) the target amount of Xxxxxxx’x bonus for 2007 (in either case, pro rated as set forth
above). Such pro rated bonus will be payable at the time and in the manner such bonus otherwise
would have been paid to Xxxxxxx (subject to acceleration as set forth in Section 1(e)).
(e) Acceleration of Payments. All payments that would have been payable to
Xxxxxxx under this Agreement but that remain unpaid upon a “Change in Control” will automatically
become due and payable to Xxxxxxx in one lump sum upon a Change in Control For purposes of this
Agreement “Change in Control” will have the same meaning as is ascribed to such term in the
Company’s Amended and Restated 1998 Incentive Equity Plan, as amended or as may be amended prior to
the consummation of any such Change in Control, but only if such Change in Control is also a change
in the ownership or effective control of the Company or in the ownership of a substantial portion
of the assets of the Company (within the meaning of Section 404A(a)(2)(A)(v) of the Internal
Revenue Code.
(f) Reimbursement of Expenses. The Company shall reimburse Xxxxxxx for all
reasonable expenses incurred by Xxxxxxx in the performance of Xxxxxxx’x duties under this
Agreement. Xxxxxxx shall not be obligated to make any advance to or for the account of the
Company, nor shall Xxxxxxx be obligated to incur any expense for the account of the Company without
assurance that the necessary funds for the discharge of such expense will be provided.
Notwithstanding the foregoing, all significant expenses to be incurred by Xxxxxxx in connection
with this Agreement shall require the prior approval of the Committee.
(g) Car Lease. On the Effective Date (or as soon as reasonably practicable
thereafter), the Company will assign to Xxxxxxx the lease relating to the automobile leased by the
Company that is being used by Xxxxxxx.
2. Termination of Executive Change-in-Control Agreement. Effective as of
the date of this Agreement, the Executive Change-in-Control Agreement, between the Company and
Xxxxxxx, dated as of March 20, 1990, as amended as of January 1, 2000 (and as may have been further
amended), is hereby terminated. Notwithstanding any other provision of this Agreement, this
Section 2 and the termination of the Change-in-Control Agreement is effective immediately.
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3. Independent Contractor. From and after the Effective Date, Xxxxxxx will
at all times be and remain an independent contractor. Xxxxxxx shall be free to exercise Xxxxxxx’x
own judgment as to the manner and method of providing the services to the Company described in
Section 1(a), subject to applicable laws and requirements reasonably imposed by the
Company. Xxxxxxx acknowledges and agrees that, from and after the Effective Date, Xxxxxxx will not
be treated as an employee of the Company or any of its affiliates for purposes of federal, state,
local or foreign income tax withholding, nor unless otherwise specifically provided by law, for
purposes of the Federal Insurance Contributions Act, the Social Security Act, the Federal
Unemployment Tax Act or any Worker’s Compensation law of any state or country and for purposes of
benefits provided to employees of the Company or any of its affiliates under any employee benefit
plan. Xxxxxxx acknowledges and agrees that as an independent contractor, Xxxxxxx will be required,
from and after the Effective Date, to pay any applicable taxes on the fees paid to Xxxxxxx.
Xxxxxxx shall indemnify, hold harmless and defend the Company for all tax and other liabilities
(including, without limitation, reasonable fees and expenses of attorneys and other professionals)
arising out of or relating to Xxxxxxx’x failure to report and pay all employment income taxes or
other taxes due on taxable amounts paid to or on behalf of Xxxxxxx by the Company.
4. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid or unenforceable in any respect under any
applicable law, such invalidity or unenforceability shall not affect any other provision, but this
Agreement shall be reformed, construed and enforced as if such invalid or unenforceable provision
had never been contained herein.
5. Complete Agreement. This Agreement embodies the complete agreement and
understanding between the parties with respect to the subject matter hereof and effective as of its
date supersedes and preempts any prior understandings, agreements or representations by or between
the parties, written or oral, which may have related to the subject matter hereof in any way.
6. Counterparts. This Agreement may be executed in separate counterparts,
each of which shall be deemed to be an original and both of which taken together shall constitute
one and the same agreement.
7. Successors and Assigns. This Agreement shall bind and inure to the
benefit of and be enforceable by Xxxxxxx, the Company and their respective heirs, executors,
personal representatives, successors and assigns, except that neither party may assign any rights
or delegate any obligations hereunder without the prior written consent of the other party. Xxxxxxx
hereby consents to the assignment by the Company of all of its rights and obligations hereunder to
any successor to the Company by merger or consolidation or purchase of all or substantially all of
the Company’s assets, provided such transferee or successor assumes the liabilities of the Company
hereunder.
8. Choice of Law. This Agreement shall be governed by, and construed in
accordance with, the internal, substantive laws of the State of Ohio. The parties agree that the
state and federal courts located in the State of Ohio shall have jurisdiction in any action, suit
or proceeding based on or arising out of this Agreement, and each Xxxxxxx hereby: (a) submits to
the personal jurisdiction of such courts; (b) consents to service of process in connection with any
action, suit or proceeding; and (c) waives any other requirement (whether imposed by statute, rule
of court or otherwise) with respect to personal jurisdiction, venue or service of process.
9. Amendment and Waiver. The provisions of this Agreement may be amended or
waived only with the prior written consent of the Company and Xxxxxxx, and no course of conduct or
failure or
delay in enforcing the provisions of this Agreement shall affect the validity, binding effect
or enforceability of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first
above written.
| THE XXXXXX & SESSIONS CO. |
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| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||
| Name: Xxxxxxx X. Xxxxxxxx | ||||
| Title: Chief Executive Officer | ||||
| /s/ Xxxx X. Xxxxxxx | ||||
| Xxxx X. Xxxxxxx | ||||
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