1
Exhibit 10.30
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (the "Agreement") is made as of June 1, 1999
by and between OM Group, Inc., a Delaware corporation ("Employer"), and Xxxxxx
X. Xxxxxx, of 000 Xxxxx Xxxxxxx Xxxx ("Executive").
WHEREAS, Employer and Executive desire to enter into this Agreement to
provide for Executive's continued employment with Employer.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS.
(a) Accounting Firm shall mean a nationally recognized
accounting firm (see section 11(b)).
(b) Agreement shall mean this Employment Agreement.
(c) Bank shall mean National City Bank or another bank having
combined capital surplus in excess of $500 million (see section 14(b)).
(d) Board shall mean the Board of Directors of the Employer
(see section 1(f)).
(e) Cause shall have the meaning set forth in section 10(iii).
(f) Change in Control shall mean the occurrence, at any time
during the Term of this Agreement, of any of the following events:
(i) The Employer is merged, consolidated or
reorganized into or with another corporation or other legal
person, and immediately after such merger, consolidation or
reorganization less than a majority of the combined voting
power of the then-outstanding securities of such corporation
or person immediately after such transaction are held in the
aggregate by the holders of Voting Stock (as that term is
hereafter defined) of the Employer immediately prior to such
transaction;
(ii) The Employer sells all or substantially all of
its assets to any other corporation or other legal person,
less than a majority of the combined voting power of the
then-outstanding securities of such corporation or person
immediately after such sale are held in the aggregate by the
holders of Voting Stock of the Employer immediately prior
to such sale;
2
(iii) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report),
each as promulgated pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), disclosing that any
person (as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing
20% or more of the combined voting power of the
then-outstanding securities entitled to vote generally in the
election of directors of the Employer ("Voting Stock");
(iv) The Employer files a report or proxy statement
with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to Form 8-K or Schedule
14A (or any successor schedule, form or report or item
therein) that a change in control of the Employer has or may
have occurred or will or may occur in the future pursuant to
any then-existing contract or transaction; or
(v) If during any period of two consecutive years,
individuals who at the beginning of any such period constitute
the Directors of the Employer cease for any reason to
constitute at least a majority thereof, provided, however,
that for purposes of this clause (v), each Director who is
first elected, or first nominated for election by the
Employer's stockholders by a vote of at least two-thirds of
the Directors of the Employer (or a committee thereof) then
still in office who were Directors of the Employer at the
beginning of any such period will be deemed to have been a
Director of the Employer at the beginning of such period.
Notwithstanding the foregoing provisions of Section 1(f)(iii) or 1(f)(iv)
hereof, unless otherwise determined in a specific case by majority vote of the
Board of Directors of the Employer (the "Board"), a Change in Control shall not
be deemed to have occurred for purposes of this Agreement solely because (i) the
Employer, (ii) an entity in which the Employer directly or indirectly
beneficially owns 50% or more of the voting securities (a "Subsidiary"), or
(iii) any Employer-sponsored employee stock ownership plan or any other employee
benefit plan of the Employer, either files or becomes obligated to file a report
or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form
8-K or Schedule 14A (or any successor schedule, form or report or item therein)
under the Exchange Act, disclosing beneficial ownership by it of shares of
Voting Stock, whether in excess of 20% or otherwise, or because the Employer
reports that a change in control of the Employer has or may have occurred or
will or may occur in the future by reason of such beneficial ownership.
3
(g) Code shall mean the Internal Revenue Code of 1986, as amended
(see section 11(a)).
(h) Discount Rate shall have the meaning set forth in section
4(a)(i).
(i) Employer shall mean the OM Group, Inc., a Delaware
corporation.
(j) Exchange Act shall mean the Securities Exchange Act of 1934,
as amended (see section 1(f)(iii)).
(k) Excise Tax shall have the meaning set forth in section 11(a).
(l) Executive shall mean the executive named in this Agreement.
(m) Gross-Up Payment shall have the meaning set forth in section
11(a).
(n) Initial Term shall have the meaning set forth in section
2(b).
(o) Intentional shall mean only if done, or omitted to be done,
by the Executive not in good faith and without reasonable belief that
his action or omission was in the best interest of the Employer (see
section 10(a)(iii)(D)).
(p) Letter of Credit shall mean an irrevocable standby letter of
credit (see section 14(b)).
(q) Payment shall have the meaning set forth in section 11(a).
(r) Renewal Term shall mean a renewal of the Initial Term (see
section 2(b)).
(s) Severance Payment shall mean a lump sum payment to the
Executive in lieu of any further payments for periods subsequent to the
Termination Date (see section 4(a)(i)).
(t) Subsidiary shall mean an entity in which the Employer
directly or indirectly beneficially owns 50% or more of the voting
securities (see section 1(f)).
(u) Termination Date shall mean the date that the Executive's
employment is terminated (see section 4(a)).
4
(v) Term of this Agreement shall mean the Initial Term as well
as any Renewal Term then in effect if the Initial Term has been
extended (see section 2(b)).
(w) Underpayment shall have the meaning set forth in section
11(b)).
(x) Voting Stock shall mean the then-outstanding securities
entitled to vote generally in the election of directors of the Employer
(see section 1(f)(iii)).
2. EMPLOYMENT. Employer agrees to employ Executive and Executive
accepts such continued employment upon the terms and subject to the conditions
set forth in this Agreement.
(a) SERVICES. For the term set forth in Section 2(b), Executive
shall serve as President and Chief Operating Officer, and shall render
such services of an executive and administrative character as is
consistent with such a position. For as long as Executive is so
employed, he shall devote his full productive time, energy and ability
to his duties, except for incidental attention to the management of his
personal investments. Executive may serve on the board of directors of
other companies or organizations so long as such participation does not
conflict with the interests or business of Employer or its subsidiaries
or materially interfere with the performance of his duties hereunder.
In addition, Executive will be nominated to serve on the OM Group, Inc.
board of directors to replace the retiring Chief Operating Officer,
expected to be December 31, 1999.
(b) TERM. Unless earlier terminated pursuant to the provisions
of Section 10, the Initial Term of this Agreement shall commence on the
date hereof and shall expire on May 31, 2002. If the Initial Term has
been renewed pursuant to the provisions of Section 13 (the "Renewal
Term"), the term of this Agreement shall extend through the expiration
of any Renewal Term then in effect, unless earlier terminated pursuant
to the provisions of Section 7. All references herein to the "Term of
this Agreement" shall be deemed to refer to the Initial Term as well as
any Renewal Term then in effect if the Initial Term has been extended
pursuant to Section 13.
3. COMPENSATION.
(a) BASE COMPENSATION. The base compensation to be paid Executive
by Employer for his services under this Agreement shall be at the
annual rate of $400,000 for the remainder of 1999, payable in equal
5
installments every calendar month. Thereafter, Executive's base
compensation shall be reviewed annually by the Board and may in the
sole discretion of the Board be increased (but not decreased) after
giving due consideration to the amounts paid to executives in
comparable positions with comparable responsibilities and authority.
(b) INCENTIVE COMPENSATION. In addition to the base compensation
provided for in Section 3(a) hereof, Executive shall be entitled to
receive an annual bonus of not less than 50% of the annual base
compensation then in effect under Section 3(a). In addition, Executive
will be immediately eligible to participate in the OM Group, Inc. 1998
Long Term Incentive Plan and the awarding of stock options by the
compensation committee of the OM Group, Inc. board of directors
pursuant to such Plan.
(c) FRINGE BENEFITS. In addition to the other compensation
payable to Executive pursuant to this Section 3, Executive shall be
entitled to receive for the Term of this Agreement but not limited to,
health insurance, disability insurance, group life insurance, club
memberships, education and seminar allowances, profit sharing,
automobile allowances, annual physical examinations, and other similar
benefits. The benefits to which Executive shall be entitled pursuant to
this Section 3(c) shall be approved by the Board or otherwise in
accordance with those benefits generally offered by Employer to its
executives and shall be reasonably related to the business of Employer
and its subsidiaries.
(d) VACATION. Executive shall be entitled to vacation benefits
substantially as provided by the Employer and its subsidiaries to
executives of comparable stature. Executive will be credited with 15
years of Continuous Service under the Vacation, Standard Holiday,
Personal Holiday Policy resulting in four weeks vacation under the
Policy.
(e) OPTIONS SHARES. Upon execution of this Agreement, Executive
will receive 15,000 option shares of OM Group, Inc. stock granted under
the OM Group, Inc. 1998 Long Term Incentive Compensation Plan at an
exercise price equal to the opening price the day this employment
contract is agreed upon.
(f) SHARE GRANT SUBJECT TO CONTINGENCY Upon execution of this
Agreement, Executive will receive a right to 15,000 shares of
restricted stock. The shares will vest as follows:
5,000 shares on the three year anniversary of the effective date of
this contract, i.e. June 1, 2002.
10,000 shares on the five year anniversary of the effective date of
this contract, i.e. June 1, 2004.
An amount representing accrued dividends will also be paid upon
vesting.
6
Shares will vest immediately in the event of a Termination by Employer
without Cause, death, permanent total disability, or in the event of a
Change in Control.
(g) RETIREMENT PROGRAMS Executive will be given credit for
previous consulting and other services with OM Group, Inc. and will be
immediately and fully vested in the OM Group, Inc. Profit Sharing Plan.
Further, Executive will immediately become a participant in the OM
Group, Inc. Benefit Restoration Plan or similar plan, and plan
documents required to effect such participation will be mutually agreed
upon.
4. SEVERANCE COMPENSATION.
(a) If, following the occurrence of a Change in Control, the
Employer shall terminate the Executive's employment during the Term of
this Agreement other than pursuant to Section 10(a) hereof, or if the
Executive shall terminate his employment pursuant to Section 10(b)
hereof, the Employer shall continue to provide the following benefits
and shall further pay to the Executive the following amounts within
five business days after the date (the "Termination Date") that the
Executive's employment is terminated (the effective date of which shall
be the date of termination or such other date that may be specified by
the Executive if the termination is pursuant to Section 10(b) hereof):
(i) In lieu of any further payments to the Executive for
periods subsequent to the Termination Date, but without affecting
the rights of the Executive referred to in Section 4(b) hereof, a
lump sum payment (the "Severance Payment") in an amount equal to
the present value (using a discount rate required to be utilized
for purposes of computations under Section 280G of the Code or
any successor provision thereto, or if no such rate is so
required to be used, a rate equal to the then-applicable interest
rate prescribed by the Pension Benefit Guarantee Corporation for
benefit valuations in connection with non-multiemployer pension
plan terminations assuming the immediate commencement of benefit
payments (the "Discount Rate")) of the sum of (A) the aggregate
Base Compensation (at the highest rate in effect for any period
prior to the Termination Date) for each remaining year or partial
year of the Term of this Agreement which the Executive would have
received had such termination or breach not occurred, plus (B)
the aggregate Incentive Compensation (determined in accordance
with the standards set forth in Section 3(b) hereof), which the
Executive would have received pursuant to this Agreement or any
agreement, policy, plan, program or arrangement referred to
therein during the remainder of the Term of
7
this Agreement had his employment continued for the remainder
of the Term of this Agreement (in which event the Executive
will no longer be entitled to Incentive Compensation under any
such agreement, policy, plan, program or arrangement except
for Incentive Compensation to which he was entitled for
service prior to the Termination Date).
(ii) For the remainder of the Term of this Agreement, the
Employer shall arrange to provide the Executive with Employee
Benefits that are welfare benefits, but not stock option, stock
purchase, stock appreciation, or similar compensatory benefits,
substantially similar to those which the Executive was receiving
or entitled to receive immediately prior to the Termination Date
(and if and to the extent that such benefits shall not or cannot
be paid or provided under any policy, plan, program or
arrangement of the Employer or any Subsidiary, as the case may
be, then the Employer shall itself pay or provide for the payment
to the Executive, his dependents and beneficiaries, such Employee
Benefits). Without otherwise limiting the purposes or effect of
Section 10 hereof, Employee Benefits otherwise receivable by the
Executive pursuant to the first sentence of this Section 4(a)(ii)
shall be reduced to the extent comparable welfare benefits are
actually received by the Executive from another employer during
such period following the Executive's Termination Date, and any
such benefits actually received by the Executive shall be
reported by the Executive to the Employer. Notwithstanding the
foregoing, the remainder of the Term of this Agreement shall be
considered service with the Employer for the purpose of
determining service credits and benefits due and payable to the
Executive under the Employer's retirement income, supplemental
executive retirement and other benefit plans of the Employer
applicable to the Executive or his beneficiaries immediately
prior to the Termination Date.
(b) Upon written notice given by the Executive to the Employer
prior to the occurrence of a Change in Control, the Executive, at his
sole option, without reduction to reflect the present value of such
amounts as aforesaid, may elect to have all or any of the Severance
Payment payable pursuant to Section 4(a)(i) hereof paid to him on a
quarterly or monthly basis during the remainder of the Term of this
Agreement.
(c) Without limiting the rights of the Executive at law or in
equity, if the Employer fails to make any payment required to be made
hereunder on a timely basis, the Employer shall pay interest on the
amount thereof at an annualized rate of interest equal to the
then-applicable Discount Rate.
8
(d) Notwithstanding any other provision hereof, the parties'
respective rights and obligations under this Section 4 will survive any
termination or expiration of this Agreement or the termination of the
Executive's employment for any reason whatsoever.
5. COVENANT NOT TO COMPETE.
(a) BASIC TERM. During the term of this Agreement and for a
period of one (1) year thereafter, Executive shall not, directly or
indirectly, within the United States, Western Europe or Southeast Asia
engage in any type of business in which either Employer or its
subsidiaries are then actively engaged; provided that Executive may,
without violating this Section 5, own directly or indirectly not more
than five percent (5%) of the outstanding capital stock of any public
company regardless of the business in which such public company is
engaged.
(b) AGREEMENT AS TO SCOPE. If, at the time of enforcement of any
provision of Section 5(a), a court of competent jurisdiction holds that
the restrictions stated therein are unreasonable under circumstances
then existing, the parties agree that the maximum period, scope, or
geographical area reasonable under such circumstances shall be
substituted for the period, scope, or geographical area stated therein.
6. NON-SOLICITATION. Executive agrees that, during the term of this
Agreement and for a period of one (1) year thereafter, he will not knowingly,
either directly or indirectly, for himself or for any other person or entity,
divert, call on, solicit, or take away, or attempt to divert, call on, solicit,
or take away present or actively solicited prospective employees or, with
respect to competitive products or services, any present or actively solicited
prospective suppliers (including, without limitation, cobalt suppliers) or
customers of Employer, or any of its controlled subsidiaries.
7. CONFIDENTIAL INFORMATION. Executive acknowledges that during the
course of his employment under this Agreement he will make use of, acquire and
add to confidential information of a special and unique nature and value
relating to such matters as trade secrets, systems, procedures, manuals,
confidential reports and lists of suppliers, customers and other business
contacts of Employer and its subsidiaries, as well as the nature and type of
services rendered to such persons. Executive agrees that he will not disclose to
an unauthorized person or use for his own account any of such information
without the prior written consent of the Board, unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of Executive's acts or omissions to act.
8. INVENTIONS AND PATENTS. Executive agrees that any inventions,
innovations or improvements in Employer's or its subsidiaries' method of
9
conducting their business (including new contributions, improvements, ideas and
discoveries, whether patentable or not) conceived or made by him during his
employment pursuant to this Agreement belong to Employer or its subsidiaries, as
the case may be. Executive shall perform any actions reasonably requested by the
Board to establish and confirm such ownership. Executive shall not claim any
right, title or interest of any kind with respect to such inventions,
innovations or improvements.
9. REMEDY FOR BREACH. In the event of a breach by Executive of any of
the provisions of Sections 5, 6, 7, or 8 Employer or its subsidiaries, as the
case may be, may, in addition to other rights and remedies existing in their
favor, apply to any court of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions thereof.
10. TERMINATION.
(a) In the event of the occurrence of a Change in Control, the
Executive's employment may be terminated by the Employer during the
Term of this Agreement and the Executive shall not be entitled to the
benefits provided by Sections 4 and 11 hereof only upon the occurrence
of one or more of the following events:
(i) The Executive's death;
(ii) If the Executive shall become permanently disabled within
the meaning of, and begins actually receiving disability benefits
pursuant to, the long-term disability plan in effect for senior
executives of the Employer immediately prior to the Change in
Control; or
(iii) "Cause," which for purposes of this Agreement shall mean
that, prior to any termination pursuant to Section 10(b) hereof,
the Executive shall have committed:
(A) an intentional act of fraud, embezzlement or theft
in connection with his duties or in the course of his
employment with the Employer and/or any Subsidiary;
(B) intentional wrongful damage to property of the
Employer and/or any Subsidiary;
(C) intentional wrongful engagement in any activity
prohibited by sections 5, 6, 7 or 8 hereof;
and any such act shall have been materially harmful to the
Employer. For purposes of this Agreement, no act, or failure to act, on
the part of the
10
Executive shall be deemed "intentional" if it was due primarily to an
error in judgment or negligence, but shall be deemed "intentional" only
if done, or omitted to be done, by the Executive not in good faith and
without reasonable belief that his action or omission was in the best
interest of the Employer. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for "Cause" hereunder
unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less
than three-quarters of the Board then in office at a meeting of the
Board called and held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with his
counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Executive had committed an act set forth
above in Section 10(a)(iii) and specifying the particulars thereof in
detail. Nothing herein shall limit the right of the Executive or his
beneficiaries to contest the validity or propriety of any such
determination.
(b) In the event of the occurrence of a Change in Control, this
Agreement may be terminated by the Executive during the Term of this
Agreement with the right to severance compensation as provided in
Sections 4 and 11 hereof upon the occurrence of one or more of the
following events (regardless of whether any other reason, other than
Cause as hereinabove provided, for such termination exists or has
occurred, including without limitation other employment):
(i) Any termination by the Employer of the employment of the
Executive prior to the date upon which the Executive shall have
attained age 65, which termination shall be for any reason other
than for Cause or as a result of the death of the Executive or by
reason of the Executive's disability and the actual receipt of
disability benefits in accordance with Section 10(a)(ii) hereof; or
(ii) Termination by the Executive of his employment with the
Employer and any Subsidiary within three years after the Change in
Control upon the occurrence of any of the following events:
(A) Failure to elect or reelect or otherwise to maintain
the Executive in the office or the position, or a
substantially equivalent office or position, of or with the
Employer and/or a Subsidiary, as the case may be, which the
Executive held immediately prior to a Change in Control, or
the removal of the Executive as a Director of the Employer
(or any successor thereto) if the Executive shall have been a
Director of the Employer immediately prior to the Change in
Control;
11
(B) A significant adverse change in the nature or scope
of the authorities, powers, functions, responsibilities or
duties attached to the position with the Employer and any
Subsidiary which the Executive held immediately prior to the
Change in Control, a reduction in the aggregate of the
Executive's Base Compensation and Incentive Compensation
received from the Employer and any Subsidiary, or the
termination or denial of the Executive's rights to Employee
Benefits as herein provided, any of which is not remedied
within 10 calendar days after receipt by the Employer of
written notice from the Executive of such change, reduction
or termination, as the case may be;
(C) A determination by the Executive made in good faith
that as a result of a Change in Control and a change in
circumstances thereafter significantly affecting his
position, including without limitation a change in the scope
of the business or other activities for which he was
responsible immediately prior to a Change in Control, he has
been rendered substantially unable to carry out, has been
substantially hindered in the performance of, or has suffered
a substantial reduction in, any of the authorities, powers,
functions, responsibilities or duties attached to the
position held by the Executive immediately prior to the
Change in Control, which situation is not remedied within 10
calendar days after written notice to the Employer from the
Executive of such determination;
(D) The liquidation, dissolution, merger, consolidation
or reorganization of the Employer or transfer of all or a
significant portion of its business and/or assets, unless the
successor or successors (by liquidation, merger,
consolidation, reorganization or otherwise) to which all or a
significant portion of its business and/or assets have been
transferred (directly or by operation of law) shall have
assumed all duties and obligations of the Employer under this
Agreement pursuant to Section 17 hereof;
(E) The Employer shall relocate its principal executive
offices, or require the Executive to have his principal
location of work changed, to any location which is in excess
of 25 miles from the location thereof immediately prior to
the Change of Control or to travel away from his office in
the course of discharging his responsibilities or duties
hereunder significantly more (in terms of either consecutive
days or
12
aggregate days in any calendar year) than was required of him
prior to the Change of Control without, in either case, his
prior written consent; or
(F) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the
Employer or any successor thereto.
(c) A termination by the Employer pursuant to Section 10(a)
hereof or by the Executive pursuant to Section 10(b) hereof shall not
affect any rights which the Executive may have pursuant to any
agreement, policy, plan, program or arrangement of the Employer
providing Employee Benefits (except as provided in Section 4(a)(ii)
hereof), which rights shall be governed by the terms thereof. If this
Agreement or the employment of the Executive is terminated under
circumstances in which the Executive is not entitled to any payments
under Sections 3, 4 or 11 hereof, the Executive shall have no further
obligation or liability to the Employer hereunder with respect to his
prior or any future employment by the Employer.
11. CERTAIN ADDITIONAL PAYMENTS BY EMPLOYER.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event that this Agreement shall become
operative and it shall be determined (as hereafter provided) that any
payment or distribution by the Employer or any of its affiliates to or
for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy,
plan, program or arrangement, including without limitation any stock
option, stock appreciation right or similar right, or the lapse or
termination of any restriction on or the vesting or exercisability of
any of the foregoing (individually and collectively a "Payment"), would
be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") (or any successor
provision thereto) by reason of being considered "contingent on a
change in ownership or control" of the Employer, within the meaning of
Section 280G of the Code (or any successor provision thereto), or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, being hereafter
collectively referred to as the "Excise Tax"), then the Executive shall
be entitled to receive an additional payment or payments (individually
and collectively, a "Gross-Up Payment"). The Gross-Up Payment shall be
in an amount such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such
taxes), including any Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payment.
13
(b) Subject to the provisions of Section 11(e) hereof, all
determinations required to be made under this Section 11, including
whether an Excise Tax is payable by the Executive and the amount of
such Excise Tax and whether a Gross-Up Payment is required to be paid
by the Employer to the Executive and the amount of such Gross-Up
Payment, if any, shall be made by a nationally recognized accounting
firm (the "Accounting Firm") selected by the Executive in his sole
discretion. The Executive shall direct the Accounting Firm to submit
its determination and detailed supporting calculations to both the
Employer and the Executive within 30 calendar days after the
Termination Date, if applicable, and any such other time or times as
may be requested by the Employer or the Executive. If the Accounting
Firm determines that any Excise Tax is payable by the Executive, the
Employer shall pay the required Gross-Up Payment to the Executive
within five business days after receipt of such determination and
calculations with respect to any Payment to the Executive. The federal
tax returns filed by the Executive shall be prepared and filed on a
consistent basis with the determination of the Accounting Firm with
respect to the Excise Tax payable by the Executive. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it
shall, at the same time as it makes such determination, furnish the
Employer and the Executive an opinion that the Executive has
substantial authority not to report any Excise Tax on his federal
income tax return. As a result of the uncertainty in the application of
Section 4999 of the Code (or any successor provision thereto) at the
time of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the
Employer should have been made (an "Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the
Employer exhausts or fails to pursue its remedies pursuant to Section
11(e) hereof and the Executive thereafter is required to make a payment
of any Excise Tax, the Executive shall direct the Accounting Firm to
determine the amount of the Underpayment that has occurred and to
submit its determination and detailed supporting calculations to both
the Employer and the Executive as promptly as possible. Any such
Underpayment shall be promptly paid by the Employer to, or for the
benefit of, the Executive within five business days after receipt of
such determination and calculations.
(c) The Employer and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of the Employer or the Executive, as the
case may be, reasonably requested by the Accounting Firm, and otherwise
cooperate with the Accounting Firm in connection with the preparation
and issuance of the determinations and calculations contemplated by
Section 11(b) hereof.
(d) The fees and expenses of the Accounting Firm for its services
in connection with the determinations and calculations contemplated
14
by Section 11(b) hereof shall be borne by the Employer. If such fees
and expenses are initially paid by the Executive, the Employer shall
reimburse the Executive the full amount of such fees and expenses
within five business days after receipt from the Executive of a
statement therefor and reasonable evidence of his payment thereof.
(e) The Executive 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 a Gross-Up Payment. Such
notification shall be given as promptly as practicable but no later
than 10 business days after the Executive actually receives notice of
such claim and the Executive shall further apprise the Employer of the
nature of such claim and the date on which such claim is requested to
be paid (in each case, to the extent known by the Executive). The
Executive shall not pay such claim prior to the earlier of (i) the
expiration of the 30-calendar-day period following the date on which he
gives such notice to the Employer and (ii) the date that any payment of
amount with respect to such claim is due. If the Employer notifies the
Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:
(i) provide the Employer with any written records or
documents in his possession relating to such claim reasonably
requested by the Employer;
(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
competent in respect of the subject matter and reasonably
selected by the Employer;
(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 interest and penalties)
incurred in connection with such contest and shall indemnify and hold
harmless the Executive, on an after-tax basis, for and against any
Excise Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of such representation and payment of
costs and expenses. Without limiting the foregoing provisions of this
Section 11(e), the Employer shall control all proceedings taken in
connection with the contest of any claim contemplated by this Section
11(e) and, at its sole option, may pursue or forego any and
15
all administrative appeals, proceedings, hearings and conferences with
the taxing authority in respect of such claim (provided however, that
the Executive may participate therein at his own cost and expense) and
may, at its option, either direct the Executive to pay the tax claimed
and xxx for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Employer shall determine;
provided, however, that if the Employer directs the Executive to pay
the tax claimed and xxx for a refund, the Employer shall advance the
amount of such payment to the Executive on an interest-free basis and
shall indemnify and hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax, including interest or penalties with
respect thereto, imposed with respect to such advance; and provided
further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with
respect to which the contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Employer's control of
any such contested claim shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Executive
shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing
authority.
(f) If, after the receipt by the Executive of an amount advanced
by the Employer pursuant to Section 11(e) hereof, the Executive
receives any refund with respect to such claim, the Executive shall
(subject to the Employer's complying with the requirements of Section
11(e) hereof) promptly pay to the Employer the amount of such refund
(together with any interest paid or credited thereon after any taxes
applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Employer pursuant to Section 11(e) hereof, a
determination is made that the Executive shall not be entitled to any
refund with respect to such claim and the Employer does not notify the
Executive in writing of its intent to contest such denial or refund
prior to the expiration of 30 calendar days after such determination,
then such advance shall be forgiven and shall not be required to be
repaid and the amount of any such advance shall offset, to the extent
thereof, the amount or Gross-Up Payment required to be paid by the
Employer to the Executive pursuant to this Section 11.
12. NO MITIGATION OBLIGATION. The Employer hereby acknowledges that it
will be difficult, and may be impossible, for the Executive to find reasonably
comparable employment following the Termination Date and that the noncompetition
covenant contained in Section 5 hereof will further limit the employment
opportunities for the Executive. In addition, the Employer acknowledges that its
severance compensation plans applicable in general to its
16
salaried employees do not provide for mitigation, offset or reduction of any
severance payment received thereunder. Accordingly, the parties hereto expressly
agree that the payment of the severance compensation by the Employer to the
Executive in accordance with the terms of this Agreement will be liquidated
damages, and that the Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise, nor shall any profits, income, earnings or other benefits from any
source whatsoever create any mitigation, offset, reduction or any other
obligation on the part of the Executive hereunder or otherwise, except as
expressly provided in Section 4(a)(ii) hereof.
13. RENEWAL. Unless either party gives written notice to the other
party at least six (6) months prior to the expiration of the Initial Term or any
Renewal Term then in effect, this Agreement shall automatically be renewed for
successive two (2) year Renewal Terms upon the same terms and conditions as were
in effect as of the commencement date of such Renewal Term.
14. LEGAL FEES AND EXPENSES.
(a) It is the intent of the Employer that the Executive not be
required to incur legal fees and the related expenses associated with
the enforcement or defense of his rights under this Agreement by
litigation or other legal action because the cost and expense thereof
would substantially detract from the benefits intended to be extended
to the Executive hereunder. Accordingly, if it should appear to the
Executive that the Employer has failed to comply with any of its
obligations under this Agreement or in the event that the Employer or
any other person takes or threatens to take any action to declare this
Agreement void or unenforceable, or institutes any litigation or other
action or proceeding designed to deny, or to recover from, the
Executive the benefits provided or intended to be provided to the
Executive hereunder, the Employer irrevocably authorizes the Executive
from time to time to retain counsel of his choice, at the expense of
the Employer as hereafter provided, to represent the Executive in
connection with the initiation or defense of any litigation or other
legal action, whether by or against the Employer or any Director,
officer, stockholder or other person affiliated with the Employer, in
any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Employer and such counsel, the Employer
irrevocably consents to the Executive's entering into an
attorney-client relationship with such counsel, and in that connection
the Employer and the Executive agree that a confidential relationship
shall exist between the Executive and such counsel. Without respect to
whether the Executive prevails, in whole or in part, in connection with
any of the foregoing, the Employer shall pay or cause to be paid and
shall be solely responsible for any and all attorneys' and related fees
and expenses incurred by the Executive in connection with any of the
foregoing.
17
(b) Without limiting the generality or effect of Section 14(a)
hereof, in order to ensure the benefits intended to be provided to the
Executive under Section 14(a) hereof, the Employer will promptly use
its best efforts to secure an irrevocable standby letter of credit (the
"Letter of Credit"), issued by National City Bank or another bank
having combined capital and surplus in excess of $500 million (the
"Bank") for the benefit of the Executive and certain other of the
officers of the Employer and providing that the fees and expenses of
counsel selected from time to time by the Executive pursuant to this
Section 14 shall be paid, or reimbursed to the Executive if paid by the
Executive, on a regular, periodic basis upon presentation by the
Executive to the Bank of a statement or statements prepared by such
counsel in accordance with its customary practices. The Employer shall
pay all amounts and take all action necessary to maintain the Letter of
Credit during the Term of this Agreement and for two years thereafter
and if, notwithstanding the Employer's complete discharge of such
obligations, such Letter of Credit shall be terminated or not renewed,
the Employer shall obtain a replacement irrevocable clean letter of
credit drawn upon a commercial bank selected by the Employer and
reasonably acceptable to the Executive, upon substantially the same
terms and conditions as contained in the Letter of Credit, or any
similar arrangement which, in any case, assures the Executive the
benefits of this Agreement without incurring any cost or expense in
connection therewith.
(c) Notwithstanding any other provision hereof, the parties'
respective rights and obligations under this Section 14 will survive
any termination or expiration of this Agreement or the termination of
the Executive's employment for any reason whatsoever.
15. EMPLOYMENT RIGHTS. Nothing expressed or implied in this Agreement
shall create any right or duty on the part of the Employer or the Executive to
have the Executive remain in the employment of the Employer prior to any Change
in Control; provided, however, that any termination of employment of the
Executive or the removal of the Executive from his office or position in the
Employer or any Subsidiary following the commencement of any discussion with a
third person that ultimately results in a Change in Control shall be deemed to
be a termination or removal of the Executive after a Change in Control for
purposes of this Agreement.
16. WITHHOLDING OF TAXES. The Employer may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or government regulation or ruling.
17. SUCCESSORS AND BINDING AGREEMENT.
(a) The Employer shall require any successor (whether direct
18
or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business and/or assets of
the Employer, by agreement in form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Employer would be required
to perform if no such succession had taken place. This Agreement shall
be binding upon and inure to the benefit of the Employer and any
successor to the Employer, including without limitation any persons
acquiring directly or indirectly all or substantially all of the
business and/or assets of the Employer whether by purchase, merger,
consolidation, reorganization or otherwise (and such successor shall
thereafter be deemed the "Employer" for the purposes of this
Agreement), but shall not otherwise be assignable, transferable or
delegable by the Employer.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and/or legatees.
(c) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except
as expressly provided in Sections 17(a) and 17(b) hereof. Without
limiting the generality of the foregoing, the Executive's right to
receive payments hereunder shall not be assignable, transferable or
delegable, whether by pledge, creation of a security interest or
otherwise, other than by a transfer by his will or by the laws of
descent and distribution and, in the event of any attempted assignment
or transfer contrary to this Section 17(c), the Employer shall have no
liability to pay any amount so attempted to be assigned, transferred or
delegated.
(d) The Employer and the Executive recognize that each party will
have no adequate remedy at law for breach by the other of any of the
agreements contained herein and, in the event of any such breach, the
Employer and the Executive hereby agree and consent that the other
shall be entitled to a decree of specific performance, mandamus or
other appropriate remedy to enforce performance of this Agreement.
18. NO SET-OFF. Neither Employer nor its subsidiaries shall have any
right of set-off or counterclaim, in respect of any claim, debt or obligation,
against the payments or benefits to be made or provided to Executive under this
Agreement.
19. NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally or mailed, first
class mail, postage prepaid, return receipt requested, or by any other express
delivery technique calling for receipted delivery, as follows:
19
(a) If to Executive:
Xxxxxx X. Xxxxxx
000 Xxxxx Xxxxxxx Xxxx
Xxxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) If to Employer or its subsidiaries:
OM Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Squire, Xxxxxxx & Xxxxxxx L.L.P.
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or such other address or to the attention of such other person as the recipient
shall have specified by prior written notice to the sending party. Any notice
under this Agreement will be deemed to have been given when so delivered or
mailed.
20. 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,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction,
20
such invalidity, illegality or unenforceability will not affect any other
provision or any other jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.
21. ENTIRE AGREEMENT. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
22. COUNTERPARTS. This Agreement may be executed on separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
23. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive, Employer, and their
respective successors and assigns; provided that Executive may not assign his
rights or delegate his obligations hereunder without the prior written consent
of Employer. Neither Employer nor its subsidiaries may assign their respective
rights hereunder with respect to the employment of Executive to any person or
entity other than to any of the controlled subsidiaries of the Employer.
24. CHOICE OF LAW. All questions concerning the construction, validity
and interpretation of the employment provisions of this Agreement will be
governed by the internal law, and not the law of conflicts, of the State of
Delaware.
25. AMENDMENTS AND WAIVERS. Any provision of this Agreement may be
amended or waived only with the prior written consent of Executive and Employer.
26. ALTERNATIVE DISPUTE RESOLUTION. Any dispute arising out of this
Agreement (except a dispute relating to this Section 26 or Exhibit A attached
hereto) shall be submitted to the Alternative Dispute Resolution procedures
described in Exhibit A attached hereto.
IN WITNESS WHEREOF, Employer has caused this Agreement to be executed
by its duly authorized officer and Executive has executed this Agreement as of
the date first above written.
"EMPLOYER"
OM GROUP, INC.
By: /s/Xxxxx X. Xxxxxx
--------------------------
21
Its: Chairman, CEO
-------------------------
"EXECUTIVE"
/s/ Xxxxxx X. Xxxxxx
-----------------------------
Printed Name: Xxxxxx X. Xxxxxx
-----------------------
