Exhibit 10(a)
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the 1st day of May, 1999, as amended and restated as of December 1, 2001, and as
further amended and restated as of September 2, 2003 by and between THE XXXXXXXX
AND XXXXXXXX COMPANY, a corporation existing under the laws of the State of Ohio
("Xxxxxxxx"), and XXXXX X. XXXXXXXXXX ("Employee").
W I T N E S S E T H:
WHEREAS, Xxxxxxxx and Employee desire to enter into this Agreement on
the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing premises and of the
mutual promises set forth below, Xxxxxxxx and Employee hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the terms set forth below shall
have the following meanings:
(a) "Annual Compensation Value" shall mean Employee's then-current Base
Compensation plus an amount equal to the average of all Bonuses (excluding any
compensation attributable to stock options of any type granted by Xxxxxxxx and
any compensation determined by the Board of Directors to be a long-term
incentive arrangement) earned by Employee during the three (3) calendar years
preceding the date upon which the valuation is made.
(b) "Base Compensation" shall mean the then-current annual base salary
(exclusive of Bonuses) of Employee.
(c) "Bonuses" shall mean bonus payments earned by Employee under
Xxxxxxxx' incentive compensation plans and under any future bonus or incentive
compensation plans of Xxxxxxxx for its executive officers. Currently Xxxxxxxx
has in effect the following incentive compensation plans: the Annual Bonus Plan
and the Personal Performance Plan, true and correct copies of which have been
delivered to Employee.
(d) "Change in Control" shall mean the occurrence of any of the
following:
(i) Any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than Xxxxxxx X. Xxxxx, Xx., his children or his grandchildren, Xxxxxxxx,
any trustee or other fiduciary holding securities under an employee benefit plan
of Xxxxxxxx or any company owned, directly or indirectly, by the shareholders of
Xxxxxxxx in substantially the same proportions as their ownership of stock of
Xxxxxxxx), who is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of Xxxxxxxx
representing twenty percent (20%) or more of the combined voting power of
Xxxxxxxx' then outstanding securities;
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(ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with Xxxxxxxx to effect a transaction described in clause (i), (iii) or (iv) of
this Section) whose election by Xxxxxxxx' shareholders was approved by a vote of
at least two-thirds (2/3) of the directors at the beginning of the period or
whose election or nomination for election was previously so approved, cease for
any reason to constitute at least a majority thereof;
(iii) Xxxxxxxx is merged or consolidated with another
corporation and as a result of such merger or consolidation less than 50% of the
outstanding voting securities of the surviving or resulting corporation are
owned in the aggregate by the former shareholders of Xxxxxxxx, as the same shall
have existed immediately prior to such merger or consolidation;
(iv) Xxxxxxxx is liquidated or dissolved, or there occurs a
sale or disposition of all or substantially all of Xxxxxxxx' assets.
(e) "Discharge For Cause" shall be construed to have occurred whenever
occasioned by (i) reason of felonious acts on the part of Employee, (ii) actions
by Employee involving serious moral turpitude, (iii) Employee's misconduct in
such manner as to bring substantial and material discredit upon Xxxxxxxx, (iv)
Employee's breach of the non-competition provisions of Section 8(a), or (v)
Employee's breach of the confidentiality provisions of Section 8(b) which is
reasonably determined by the Board of Directors to cause material harm to
Xxxxxxxx, and following the giving of thirty (30) days' written notice to
Employee specifying the respect in which Xxxxxxxx claims Employee has violated
this provision and the failure, inability or unwillingness of Employee to remedy
the situation to the satisfaction of Xxxxxxxx within said thirty-day period. In
establishing whether a Discharge For Cause shall have occurred, the standard for
judgment shall be the level of conduct by Employee and by other comparably
situated executive officers prior to the alleged improper activity of Employee
for which the Discharge For Cause has been made.
(f) "Final Annual Compensation" shall mean Employee's Base Compensation
at the time of termination of employment plus an amount equal to the average of
all Bonuses (excluding any compensation attributable to stock options of any
type granted by Xxxxxxxx and any compensation determined by the Board of
Directors to be a long-term incentive arrangement) earned by Employee during the
three (3) calendar years preceding his termination of employment.
(g) "Final Average Annual Compensation" shall mean the average of
Employee's Base Compensation and Bonuses (excluding any compensation
attributable to stock options of any type granted by Xxxxxxxx and any
compensation determined by the Board of Directors to be a long-term incentive
arrangement) for the five (5) consecutive calendar years out of the prior ten
(10) calendar years which yields the highest sum. For purposes of this
calculation, the tenth calendar year shall be the full or partial year in which
Employee's employment terminates, and Base Compensation and Bonuses for such
year shall be annualized.
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(h) "Pension Plan" shall mean the existing Xxxxxxxx and Xxxxxxxx
Company Non-Union Pension Plan, as the same may be amended or replaced from time
to time.
(i) "Retirement Benefits" shall mean payments to Employee based upon
his lifetime in an annual amount equal to a designated percentage of Employee's
Final Average Annual Compensation or, in the case of Section 7(d) below, Final
Annual Compensation, which shall be comprised of the sum of (i) Employee's
primary Social Security retirement benefits when he is entitled to receive such
benefit (age sixty-two (62)) [until that time an amount equal to the primary
Social Security retirement benefit shall be paid to Employee from Xxxxxxxx'
Supplemental Plan], (ii) Employee's pension benefits determined as a life
annuity (without regard to actual payment form) under the Pension Plan and
deferred compensation payments under the Non-Qualified Deferred Compensation and
Disability Benefit Agreement dated May 1, 1999 between Employee and Xxxxxxxx, or
such other non-contributory deferred compensation agreement(s) then existing
between Xxxxxxxx and Employee (the "Non-Qualified Deferred Compensation Plan"),
and (iii) such amount of supplemental retirement benefits under the Supplemental
Plan as shall be necessary to achieve the designated percentage of Employee's
Final Average Annual Compensation or, in the case of Section 7(d) below, Final
Annual Compensation. In addition to said annual amount, Retirement Benefits
shall include a continuation of coverage for the remainder of Employee's life
under Xxxxxxxx-sponsored medical benefits and life insurance programs, but only
if and to the extent applicable to participants in Xxxxxxxx' Qualified Retiree
Medical Plans. For purposes of determining the amount of supplemental retirement
benefits to be made by Xxxxxxxx pursuant to the Supplemental Plan, the method of
payment of retirement benefits to Employee pursuant to the Pension Plan shall
determine the amount and method of payment of the supplemental retirement
payments pursuant to the Supplemental Plan. These supplemental retirement
payments by Xxxxxxxx pursuant to the Supplemental Plan shall continue so long as
pension benefits are payable under the Pension Plan and shall be in addition to
the pension benefit payments under the Pension Plan.
(j) "Supplemental Plan" shall mean Xxxxxxxx' existing Supplemental
Retirement Plan, as the same may be amended or replaced from time to time.
2. TERMS AND DUTIES.
(a) The term of this Agreement shall continue from the date hereof and
end on October 1, 2008 (the "Initial Term"). Employee shall be employed by
Xxxxxxxx as President, Chief Executive Officer and Chairman, or as Chief
Executive Officer and either President or Chairman, consistent with the
provisions of this Agreement. In addition, Employee agrees to perform such other
duties as may be specifically designated for him from time to time by the Board,
consistent with the provisions of this Agreement. Xxxxxxxx shall recommend to
the Board that Employee be appointed as a Director. Subject to Employee's
willingness to so extend his employment, Xxxxxxxx may extend the term of this
Agreement for additional renewal periods of not less than one (1) year each
(each, a "Renewal Term") by giving written notice thereof not less than twelve
(12) months prior to October 1, 2008, initially and not less than twelve (12)
months prior to each succeeding Renewal Term termination date thereafter.
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(b) At all times Employee will, to the best of his ability, energy and
skill, faithfully perform all of the duties that may be required of him from
time to time by the Board and diligently devote his entire working time,
attention and efforts to the business affairs and best interests of Xxxxxxxx,
except for absences for sickness and vacations. If the Board determines that any
outside activity engaged in by him is detrimental to the best interests of
Xxxxxxxx, he will discontinue such outside activity within thirty (30) days
after written notice from the Board.
3. COMPENSATION AND FRINGE BENEFITS.
(a) The Base Compensation of Employee during the term of this Agreement
shall be $620,000, which may be increased from time to time by the Board or, in
the case of any proposed decrease, such other amount as mutually may be agreed
upon by Employee and Xxxxxxxx; provided, however, that such Base Compensation
may not be reduced below said rate of $620,000 without Employee's consent,
unless necessitated by general business conditions adversely affecting Xxxxxxxx'
operations; but, in the event of a reduction, his Base Compensation shall be
fair and reasonable, and any disagreement concerning the same shall be resolved
by arbitration in the manner provided in Section 9 below. Employee's Base
Compensation shall be reviewed at least annually to determine whether in view of
Xxxxxxxx' performance during the year any increase is warranted. Responsibility
for this determination rests within the sole discretion of the Board, and this
provision shall not be construed as requiring any such increase for any given
year.
(b) Employee shall participate in the Non-Qualified Deferred
Compensation Plan and the bonus plan arrangements under the incentive
compensation plans for executive officers of Xxxxxxxx in effect from time to
time and shall be entitled to such awards under any future bonus, incentive, or
similar compensation plans of Xxxxxxxx, as shall, in the determination of the
Board, be appropriate and consistent with the purposes of such plans and with
the awards granted to other executive officers of Xxxxxxxx.
(c) Employee shall be eligible to participate in the Stock Option Plan
-1995 of Xxxxxxxx, as amended or replaced from time to time, and shall be
entitled to the grant of such options to purchase shares of Class A Common Stock
("Common Stock") of Xxxxxxxx under any other future stock option plans for
employees and to participate in such other executive compensation incentive
plans awarding stock as shall, in the determination of the Board, be appropriate
and consistent with the purposes of the plans and with the grants of such
options to the executive officers of Xxxxxxxx, including but not limited to any
restricted stock program approved by Xxxxxxxx' shareholders.
(d) In addition to the specific benefits provided for Employee under
the terms of this Agreement, Xxxxxxxx shall provide him with other fringe
benefits (including bonuses, vacations, health and disability insurance, pension
plan participation and others) at least equivalent to those of the other
executive officers of Xxxxxxxx and as set forth on Exhibit A attached hereto and
made a part hereof.
4. EXPENSES. Employee shall be reimbursed for his reasonable business-related
expenses incurred for the benefit of Xxxxxxxx in accordance with Xxxxxxxx'
policies governing such
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reimbursement in effect from time to time. Such expenses shall include, but
shall not be limited to, travel, lodging away from home, entertainment, and
meals. With respect to any expenses which are reimbursed by Xxxxxxxx to
Employee, Employee shall account to Xxxxxxxx in sufficient detail to entitle
Xxxxxxxx to a federal income tax deduction for such reimbursed item if such item
is deductible.
5. RETIREMENT AND EARLY RETIREMENT BENEFITS.
(a) If Employee continues his employment with Xxxxxxxx until he attains
age sixty-two (62), he shall be entitled to receive at the time of his
retirement, Retirement Benefits at a level equal to sixty percent (60%) of his
Final Average Annual Compensation. If Employee continues his employment with
Xxxxxxxx beyond age sixty-two (62), the level of his retirement benefits as a
percentage of his Final Average Annual Compensation shall be increased by one
percent (1%) for each additional twelve (12) month period over age sixty-two
(62) with a maximum Retirement Benefit of sixty-three percent (63%) of Final
Average Annual Compensation.
(b) For each year prior to age sixty-two (62) Employee is employed by
Xxxxxxxx, his Retirement Benefits as a percentage of his Final Average Annual
Compensation shall accrue at the rate of four percent (4%) per year, payable
beginning at age sixty-two (62). As an example, if Employee terminates
employment due to death, disability, resignation or otherwise after ten (10)
years of employment with Xxxxxxxx, he shall be entitled to a Retirement Benefit
equal to forty percent (40%) of his Final Average Annual Compensation payable
beginning at age sixty-two (62). For purposes of this paragraph, a "year of
employment" shall mean each twelve (12) month period or part thereof from the
date hereof in which Employee works at least 1,000 hours.
(c) In the event Employee remains continuously employed with Xxxxxxxx
at least until October 1, 2008, he shall be entitled to an early retirement
benefit payable commencing on the date of termination of employment which shall
be actuarially reduced to reflect the fact that payments shall commence prior to
age sixty-two (62).
(d) To the extent Employee receives any similar benefits under the
Pension Plan, Supplemental Plan or other Xxxxxxxx benefit plan for any of its
employees, such benefits shall be included in calculating the amount to which
Employee shall be entitled under Sections 5(a) and 5(b) above; provided,
however, that in no event shall the benefits described in Sections 5(a) and 5(b)
above be reduced by the provisions of this Section 5(d).
6. DEATH BENEFITS. In the event of Employee's death while still employed by
Xxxxxxxx pursuant to this Agreement, provided that the appropriate
representative(s) of his estate executes, delivers to Xxxxxxxx and does not
rescind a waiver of claims on a form provided by Xxxxxxxx that releases
Xxxxxxxx, its employees, officers, directors and related entities from any and
all claims arising out of or related to Employee's employment or termination of
employment:
(a) Employee shall be entitled to Retirement Benefits calculated as if
he had elected retirement as of the day before his actual death.
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(b) Xxxxxxxx shall also pay to such beneficiary or beneficiaries as he
shall have designated by written notice delivered to Xxxxxxxx prior to his
death, or failing such written notice, to his estate, an amount equal to the
Base Compensation plus the Bonuses, if any, which Employee would have received
or which would have been accrued for his benefit during the period of six (6)
months immediately following his death if he had lived and had been employed by
Xxxxxxxx during that period. Such payment shall be made in one lump sum or in
six (6) equal monthly installments as Xxxxxxxx shall elect and shall be in
addition to the proceeds of any insurance policies carried on Employee's life
with respect to which he has the right to designate beneficiaries.
(c) Xxxxxxxx shall pay to Employee's spouse an amount, periodically as
such payments are required to be made by said spouse, to enable her to continue
medical coverage for her and her dependents in substantially the same manner as
immediately prior to Employee's death for a period expiring at the earlier of:
(i) her death; (ii) forty-two (42) months after Employee's death; or (iii)
eligibility for regular Medicare and Medicaid or any successor programs
furnished by the government. Thereafter, Xxxxxxxx shall make available to
Employee's spouse (including her dependents), at her cost, such medical coverage
as shall be available to a person of her then age under the then-existing
Xxxxxxxx-sponsored medical benefits program, but only to the extent coverage is
available under such program.
7. TERMINATION; DISCHARGE.
(a) Termination or Discharge Without Cause.
(i) Xxxxxxxx reserves the right to discharge Employee at any
time and for any reason; but such discharge, unless a Discharge For Cause, shall
not extinguish the obligation of Xxxxxxxx to provide Employee with the following
severance benefits, provided that Employee executes, delivers to Xxxxxxxx and
does not rescind a waiver of claims on a form provided by Xxxxxxxx that releases
Xxxxxxxx, its employees, officers, directors and related entities from any and
all claims arising out of or related to Employee's employment or termination of
employment:
(A) Employee shall be entitled to receive for a period
of the lesser of two (2) years or the remainder of the Initial Term or Renewal
Term, as the case may be, but in no event for a period less than one (1) year,
(I) his Annual Compensation Value, paid in accordance with the Xxxxxxxx' then
existing payroll policy (the "Cash Payment"); however, such amount shall be
reduced by seventy percent (70%) of the amount of compensation received by
Employee after six (6) months following his discharge from any subsequent
employment obtained by him during said payment period; and (II) continuing
coverage under the then-existing Xxxxxxxx-sponsored medical benefits program;
however, if Employee's participation in such program is barred, or otherwise at
the option of Xxxxxxxx, substantially similar coverage may be provided outside
of such program through the purchase of insurance or otherwise; provided further
that such coverage shall expire at such time as Employee secures other
employment.
(B) For purposes of determining Employee's benefits
under the Supplemental Plan, Employee shall receive credit toward his Years of
Service under the Supplemental Plan for the time period that he receives or is
entitled to receive payments under this Section 7(a). In addition, during the
time period that he receives or is entitled to receive payments under
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this Section 7(a), Employee's Base Compensation shall be deemed to be increased
by the annual economic range adjustment for Xxxxxxxx' salaried employees
announced in October of each year (or, if there is no such announced economic
range adjustment in a given year, by an assumed five (5%) increase for that
year) in order to calculate his highest earnings during five (5) consecutive
years out of the last ten (10) years prior to retirement under the Supplemental
Plan, and his Final Annual Compensation (see Section 7(d) below) and Final
Average Annual Compensation shall be deemed to increase in the same manner for
purposes of determining the amount of his Retirement Benefits under this
Agreement.
(C) Employee shall be reimbursed for up to $20,000 for
out-placement fees if he chooses to seek other employment following his
discharge by Xxxxxxxx. Employee shall not be obligated to seek other employment
in order to mitigate his damages resulting from his discharge.
(D) In addition to all of the foregoing, Employee shall
be entitled to receive the payments required of Xxxxxxxx under the Non-Qualified
Deferred Compensation Plan in accordance with the terms of such agreement(s) and
Retirement Benefits in accordance with Section 5.
(ii) In the event of termination of employment under this
Section 7(a), Employee shall be subject to and bound by all of the restrictive
provisions of Section 8 below; provided, however, that Employee shall be subject
to the non-competition restrictions of Section 8(a) only if Employee receives
the Cash Payment provided for in Section 7(a)(i)(A)(I).
(b) Discharge For Cause.
(i) If Employee's employment with Xxxxxxxx is terminated by a
Discharge For Cause, regardless of whether such Discharge For Cause occurs after
the occurrence of any of the events set forth in Sections 7(d) or 7(e) below, he
shall be entitled to receive only his Base Compensation up to the date of his
discharge and no further payments hereunder shall be required from Xxxxxxxx;
provided, however, that Employee shall be entitled to receive his benefits, if
any, under the Pension Plan and the payments required of Xxxxxxxx under the
Non-Qualified Deferred Compensation Plan in accordance with the terms of such
agreement(s).
(ii) In the event of termination of employment under this
Section 7(b), Employee acknowledges that he shall remain subject to and bound by
the restrictive provisions of Section 8 below.
(iii) Should Employee disagree that his discharge was a
Discharge For Cause the question shall be submitted to arbitration in accordance
with Section 9 below.
(c) Termination Due To Disability.
(i) If, by reason of illness, disability, or other incapacity
certified by two (2) physicians competent to do so in the opinion of Xxxxxxxx'
Board of Directors, Employee is
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unable to perform the duties required of him under this Agreement for a period
of six (6) consecutive months, Xxxxxxxx, following the giving of thirty (30)
days' written notice to Employee and the failure of Employee by reason of
illness, disability, or other incapacity to resume his duties within such thirty
(30) days and thereafter perform the same for a period of two (2) consecutive
months, may terminate Employee's employment by giving him written notice
thereof. Employee shall cooperate with Xxxxxxxx and the physicians appointed by
Xxxxxxxx and submit to reasonable medical examinations.
(ii) Provided that Employee delivers to Xxxxxxxx and does not
rescind a waiver of claims on a form provided by Xxxxxxxx that releases
Xxxxxxxx, its employees, officers, directors and related entities from any and
all claims arising out of or related to Employee's employment or termination of
employment:
(A) Employee shall be entitled to an annual disability
benefit equal to fifty percent (50%) of his Annual Compensation Value; provided,
however, that such annual benefit under this Agreement shall not exceed
$620,000. The disability benefit shall be provided through the then existing
Xxxxxxxx sponsored disability plan with Xxxxxxxx making any additional
contributions as may be necessary to pay Employee the required amount. The
disability benefit, including any Xxxxxxxx required contribution, shall be paid
so long as and on the same terms and conditions as the payments being made under
the Xxxxxxxx sponsored disability plan.
(B) Employee shall be entitled to Retirement Benefits
under Section 5 above, and Employee's Retirement Benefits shall continue to
accrue at the rate of four percent (4%) per year for each year he continues to
receive disability payments under Section 7(c)(ii)(A), subject to the
limitations set forth in Section 5(a). Except as set forth in this Section 7(c),
all obligations of Xxxxxxxx hereunder shall cease on the date such notice of
termination is given.
(iii) In the event of termination of employment under this
Section 7(c), Employee acknowledges that he shall remain subject to and bound by
the restrictive provisions of Section 8 below.
(d) Benefits Upon Termination Following Changed Circumstances.
(i) If Employee voluntarily terminates his employment within
eighteen (18) months after the occurrence of any of the following events:
(A) Employee is required by Xxxxxxxx, prior to a Change
in Control, to perform duties or services which differ significantly from those
performed by him on the effective date hereof or which are not ordinarily and
generally performed by a Chief Executive Officer of a corporation similar in
size and scope to Xxxxxxxx;
(B) The nature of the duties or services which Xxxxxxxx,
prior to a Change in Control, requires him to perform necessitates absence
overnight from his place of residence on the effective date hereof, because of
travel involving the business or affairs of
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Xxxxxxxx, for more than ninety (90) days during any period of twelve (12)
consecutive months; or
(C) Employee no longer is a Director of Xxxxxxxx (except
as a result of Employee's death, resignation or removal pursuant to O.R.C. Sec.
1701.58);
(ii) Then, provided that Employee delivers to Xxxxxxxx and does
not rescind a waiver of claims on a form provided by Xxxxxxxx that releases
Xxxxxxxx, its employees, officers, directors and related entities from any and
all claims arising out of or related to Employee's employment or termination of
employment, Employee shall be entitled to receive from Xxxxxxxx all of the
severance benefits set forth in Section 7(a) above, except that Employee's right
to receive his Retirement Benefits shall be based upon his Final Annual
Compensation, as the same may be adjusted pursuant to Section 7(a)(i)(B) above.
(iii) In the event of termination of employment under this
Section 7(d), Employee shall be subject to and bound by all of the restrictive
provisions of Section 8 below; provided, however, that Employee shall be subject
to the non-competition restrictions of Section 8(a) only if Employee receives
the Cash Payment provided for in Section 7(a)(i)(A)(I).
(e) Benefits Upon a Change In Control.
(i) Xxxxxxxx recognizes that the threat of a Change in Control
would be of significant concern to Employee. The following provisions provide
termination protection for Employee in the event of a Change in Control. These
provisions, among other purposes, are intended to xxxxxx and encourage
Employee's continued attention and dedication to his duties in the event of such
potentially disturbing and disruptive circumstances. For purposes of this
Section 7(e), "Good Reason" means that following a Change in Control (i)
Employee's Base Compensation is reduced below the amount of such Base
Compensation in effect immediately preceding the Change in Control without
Employee's written consent; (ii) Employee's fringe benefits (including bonuses,
vacation, health and disability insurance, etc.) cease to be substantially
equivalent to those in effect immediately preceding the Change in Control
without Employee's written consent; (iii) Employee is required by Xxxxxxxx to
perform duties or services which differ significantly from those performed by
him prior to the Change in Control, or which are not ordinarily and generally
performed by a Chief Executive Officer of a corporation similar in size and
scope to Xxxxxxxx; (iv) the nature of the duties or services which Xxxxxxxx
requires him to perform necessitates absence overnight from his place of
residence prior to the Change in Control, because of travel involving the
business affairs of Xxxxxxxx, for more than ninety (90) days during any period
of twelve (12) consecutive months.
(ii) If Xxxxxxxx terminates Employee's employment for any reason
other than a Discharge for Cause, or if Employee terminates his employment with
Xxxxxxxx for Good Reason within the twenty-four (24) month period following a
Change in Control, provided that Employee delivers to Xxxxxxxx and does not
rescind a waiver of claims on a form provided by Xxxxxxxx that releases
Xxxxxxxx, its employees, officers, directors and related entities from any
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and all claims arising out of or related to Employee's employment or termination
of employment, Employee shall be entitled to receive from Xxxxxxxx the following
benefits:
(A) A lump sum severance payment (the "Severance
Payment"), in cash, equal to three (3) times the sum of (i) the higher of
Employee's annual Base Compensation in effect immediately prior to the
occurrence of the event or circumstance upon which such termination of
employment is based or in effect immediately prior to the Change in Control, and
(ii) the average of Employee's Bonuses (excluding any compensation attributable
to stock options of any type granted by Xxxxxxxx and any compensation determined
by the Board of Directors to be a long-term incentive arrangement) during the
three (3) calendar years immediately preceding the year in which the date of
termination occurs.
(B) Employee shall be entitled, during the period
expiring on the earlier of his securing other employment or twenty-four (24)
months from the date of such termination of employment, to continued coverage
under the Xxxxxxxx-sponsored medical benefits program in existence on such date
of termination or, if such continued coverage is barred, or otherwise at the
option of Xxxxxxxx, Xxxxxxxx shall provide substantially equivalent medical
benefit coverage through the purchase of insurance or otherwise.
(C) For purposes of determining Employee's benefits
under the Supplemental Plan, Employee shall receive credit toward his Years of
Service under the Supplemental Plan for the two (2) year period following such
termination of employment. In addition, with respect to the two (2) year period
following such termination of employment, Employee's Base Compensation shall be
deemed to be increased by the annual economic range adjustment for Xxxxxxxx'
salaried employees announced in October of each year (or, if there is no such
announced economic range adjustment in a given year, by an assumed five percent
(5%) increase for that year) in order to calculate his highest earnings during
five (5) consecutive years out of the last ten (10) years prior to retirement
under the Supplemental Plan.
(D) Employee shall be reimbursed for up to $20,000 for
outplacement fees if he chooses to seek other employment following his discharge
by Xxxxxxxx. Employee shall not be obligated to seek other employment in order
to mitigate his damages resulting from his discharge.
(E) In addition to all of the foregoing, Employee shall
be entitled to receive the payments required of Xxxxxxxx under the Non-Qualified
Deferred Compensation Plan in accordance with the terms of such agreement(s),
and the Retirement Benefits provided for in Section 5 of this Agreement.
(F) The benefits provided in this Section 7(e) shall be
in lieu of any benefits provided under Section 7(d) of this Agreement.
(iii) Notwithstanding any other provisions of this Agreement, in
the event that any payment or benefit received or to be received by Employee in
connection with a Change in Control or the termination of Employee's employment
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with Xxxxxxxx, any person whose
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actions result in a Change in Control or any person affiliated with Xxxxxxxx or
such person) (all such payments and benefits, including the Severance Payment,
being hereinafter called "Total Payments") would be subject (in whole or part),
to an excise tax pursuant to Sections 280G and 4999 of the Internal Revenue Code
of 1986, as amended (the "Code") (such tax hereinafter referred to as the
"Excise Tax"), then the Severance Payment shall be reduced to the extent
necessary so that no portion of the Total Payments is subject to Excise Tax
(after taking into account any reduction in the Total Payments provided by
reason of Section 280G of the Code in such other plan, arrangement or agreement)
if (A) the net amount of such Total Payments, as so reduced, (and after
deduction of the net amount of federal, state and local income tax on such Total
Payments), is greater than (B) the excess of (i) the net amount of such Total
Payments, without reduction (but after deduction of the net amount of federal,
state and local income tax on such Total Payments), over (ii) the amount of
Excise Tax to which Employee would be subject in respect of such Total Payments.
For purposes of determining whether and the extent to which the Total Payments
will be subject to the Excise Tax, (i) no portion of the Total Payments the
receipt or enjoyment of which Employee shall have effectively waived in writing
prior to the date of this termination of employment shall be taken into account,
(ii) no portion of the Total Payments shall be taken into account which in the
opinion of tax counsel selected by Xxxxxxxx does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, (including by
reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax,
no portion of such Total Payment shall be taken into account which constitutes
reasonable compensation for services actually rendered, within the meaning of
Section 280G(b)(4)(B) of the Code, in excess of the base amount as defined in
Section 280G(b)(3) of the Code allowable to such reasonable compensation, and
(iii) the value of any non-cash benefit or any deferred payment or benefit
included in the Total Payments shall be determined by Xxxxxxxx in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code. Prior to the
fifth day following the date of Employee's termination of employment, Xxxxxxxx
shall provide Employee with its calculation of the amounts referred to in this
Section and such supporting materials as are reasonably necessary for Employee
to evaluate Xxxxxxxx' calculations. If Employee objects to Xxxxxxxx'
calculations, he shall notify Xxxxxxxx of his objections within 5 days of
receipt of the calculation from Xxxxxxxx and Xxxxxxxx shall pay to Employee such
portion of the Severance Payment (up to one hundred percent (100%) thereof) as
Employee determines is necessary to result in Employee's receiving the greater
of clauses (A) and (B) of this Section.
(iv) In the event of termination of employment under this
Section 7(e), Employee shall be subject to all of the restrictive provisions of
Section 8; provided, however, that Employee shall be subject to the
non-competition restrictions of Section 8(a) only if Employee receives the
Severance Payment provided for in Section 7(e)(ii)(A).
(v) In the event that, following the creation of Employee's
right to receive the payments pursuant to Section 7(e)(ii), Employee incurs any
costs or expenses, including attorneys' fees, in the enforcement of rights under
this Section 7(e) or under any plan for the benefit of employees of Xxxxxxxx,
including without limitation the stock option plan, pension plans, payroll-based
stock ownership plan, tax deferred savings and protection plan, bonus
arrangements, supplemental pension plan, deferred compensation agreements,
incentive compensation plans, and life insurance and compensation program, then,
unless Xxxxxxxx or the consolidated, surviving or transferee entity in the event
of a consolidation, merger or sale of
11
assets, is wholly successful in defending against the enforcement of such
rights, Xxxxxxxx, or such consolidated, surviving or transferee entity, shall
promptly pay to Employee all such costs and expenses.
(f) Termination Which Causes Material Harm.
(i) Notwithstanding any other provision of this Agreement, if
Employee ceases his performance of duties for any reason other than disability,
changed circumstance under Section 7(d), or Good Reason under Section 7(e), and
the Board of Directors determines that such cessation has caused Xxxxxxxx
material harm, he shall be entitled to receive only his Base Compensation up to
the date of his termination and no further payments hereunder shall be required
from Xxxxxxxx; provided, however, that Employee shall be entitled to receive his
benefits, if any, under the Pension Plan and the payments required of Xxxxxxxx
under the Non-Qualified Deferred Compensation Plan in accordance with the terms
of such agreement(s). Material harm includes but is not limited to failure by
Employee to provide at least 180 days prior written notice of termination, or
such lesser notice reasonably determined by the Board of Directors to constitute
sufficient notice.
(ii) In the event of termination of employment under this
Section 7(f), Employee acknowledges that he shall remain subject to and bound by
the restrictive provisions of Section 8 below.
8. NON-COMPETITION; CONFIDENTIALITY.
(a) Non-Competition.
(i) In order to protect Xxxxxxxx, it is understood that a
covenant not to compete is a necessary and appropriate adjunct to this
Agreement. During Employee's employment and for a period of two (2) years from
and after Employee's employment with Xxxxxxxx shall have terminated for any
reason and after he shall have ceased receiving Retirement Benefits (provided
that such Retirement Benefits have begun to be paid during such two (2) year
period), severance benefits or disability benefits, whichever shall be the last
to occur, but in no event longer than five (5) years from and after termination
of employment, Employee shall not compete with Xxxxxxxx. Employee shall be
deemed to be competing with Xxxxxxxx if Employee: (i) calls on, solicits, takes
away, accepts or attempts to do business in the "Restricted Business" (as
defined below) with any person or entity that is presently a client or customer
of Xxxxxxxx (or any of its related or affiliated entities) or about which
Employee learned or had access to "Xxxxxxxx' Confidential Information" (as
defined below) while a Xxxxxxxx employee, except for the benefit of Xxxxxxxx;
and/or (ii) enters into or attempts to enter into any business engaged in the
Restricted Business anywhere Xxxxxxxx does business (whether acting (alone or in
association) as an agent, representative, consultant, officer, director,
independent contractor, employee, owner, partner, limited partner, joint
venturer, investor, creditor, stockholder or member); and/or (iii) hires or
attempts to hire for Employee's or another person's behalf, any employee who is
at the time of the hire or attempted hire an employee of Xxxxxxxx or any of its
related or affiliated entities.
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(ii) For the purposes of this Agreement, the "Restricted
Business" means: the provision of (i) information technology (including customer
relationship management and web services) solutions or related services
(including consulting, training, networking/communication and support services),
or (ii) forms or other consumables to entities that are engaged in the
manufacture, distribution, sale (retail or wholesale), short-term rental,
extended-term lease or general or special service or repair of new or used
automobiles, pickups, trucks, vans, motorcycles, recreational vehicles or other
vehicles (including fleets) or the installation, repair, sale or distribution of
parts or accessories for new or used automobiles, pickups, trucks, vans,
motorcycles, recreational vehicles or other vehicles, or boats.
(iii) Employee specifically acknowledges and agrees that the
geographic restriction on Employee's ability to compete with Xxxxxxxx, as set
forth in this Agreement, is reasonable and necessary to protect Xxxxxxxx'
business interests in the relevant market. Employee understands that the
Xxxxxxxx Confidential Information (as defined below) may be used to Xxxxxxxx'
disadvantage should Employee work for or otherwise become associated with a
Xxxxxxxx competitor anywhere that Xxxxxxxx does business, regardless of the
competitor's specific geographic location.
(iv) Notwithstanding the foregoing, ownership of voting
securities or other equity interests representing less than one percent (1%) of
the voting power of an entity the securities of which are traded on a national
securities exchange or in the over-the-counter market shall not constitute
competing with Xxxxxxxx or any of its related or affiliated companies.
(b) Confidentiality.
(i) "Xxxxxxxx Confidential Information" includes, among other
things:
(A) any information relating to Xxxxxxxx' financial
position, business operations, plans or strategies, research and development and
personnel;
(B) the names of Xxxxxxxx' actual or prospective
customers and the nature of Xxxxxxxx' relationships (including types, prices and
amounts of products acquired or anticipated to be acquired from Xxxxxxxx) with
such customers, including specific individuals associated with customers,
compiled in a format such as an account record card, customer buying patterns,
group run concepts and combination ordering patterns of Xxxxxxxx' customers,
information related to, for instance, special needs, sizes, ink, thickness,
paper type for particular applications of Xxxxxxxx' customers, information
related to value added services provided by Xxxxxxxx to its customers,
information related to targeted and/or anticipated product or service needs of
Xxxxxxxx' customers and the policies and/or business practices of Xxxxxxxx'
customers;
(C) sales, marketing, operational and product
development plans and forecasts, including identification of Xxxxxxxx' most
profitable customer accounts and service/product lines, information related to
vendors used by Xxxxxxxx to service Xxxxxxxx' customers, creativity concepts on
multiple location accounts developed or implemented by Xxxxxxxx and Xxxxxxxx'
production costs;
13
(D) non-public price lists and sales volume and other
information, including the prices at which Xxxxxxxx sells products or services
to particular customers or customer groups;
(E) Xxxxxxxx' various computer systems and information
technology, as such systems and technology may exist from time to time,
including without limitation, computer and related equipment, computer programs
(whether identified as software, firmware or other and on whatever media),
databases, documentation, manuals, hardware and software support systems and
methods, techniques or algorithms of organizing or applying the same;
(F) developments, improvements, inventions and processes
that are or may be produced in the course of Xxxxxxxx' operations;
(G) confidential and private matters of Xxxxxxxx'
customers and potential customers submitted to Xxxxxxxx for handling and
processing;
(H) any information licensed to Xxxxxxxx on a
confidential basis from third parties for Xxxxxxxx' own internal use and/or for
sublicense to end users; and
(I) any other information, not generally known,
concerning Xxxxxxxx or its operations, products, personnel, customers or
business, acquired, disclosed or made known to Employee while in the employ of
Xxxxxxxx which, if used or disclosed other than in the performance of Employee's
job duties for Xxxxxxxx, could with reasonable possibility adversely affect the
business of Xxxxxxxx or give to a competitor a competitive advantage.
(ii) Employee will not, during Employee's employment with
Xxxxxxxx or for a period of two (2) years following termination of employment
for any reason, use for Employee's own benefit or, without the prior written
consent of Xxxxxxxx, disclose to any person (other than in the ordinary conduct
of Xxxxxxxx' business) any Xxxxxxxx Confidential Information. Employee
acknowledges and agrees that Employee's obligations not to disclose any Xxxxxxxx
Confidential Information, as that term is defined herein or otherwise under the
law, is in addition to any obligation Employee has pursuant to (i) any other
agreement Employee has entered into or may in the future enter into with
Xxxxxxxx; and (ii) any applicable law.
(c) Ownership of Inventions.
(i) Employee will fully and completely disclose to Xxxxxxxx
during Employee's employment with Xxxxxxxx any inventions, ideas, works of
authorship and other trade secrets or confidential and proprietary information
made, developed and/or conceived by Employee alone or jointly with others
arising out of or relating to Employee's employment by Xxxxxxxx.
(ii) Employee agrees that any inventions, ideas or original
works of authorship, in whole or in part conceived or made by Employee, which
are made through the use of any Xxxxxxxx Confidential Information or any
Xxxxxxxx equipment, facilities, supplies or time, which relate to Xxxxxxxx'
business or Xxxxxxxx' actual or demonstrably anticipated research and
development, or which resulted or result from any work performed by Employee for
Xxxxxxxx,
14
shall belong exclusively to Xxxxxxxx and shall be deemed Xxxxxxxx' Confidential
Information whether or not fixed in a tangible medium of expression. Without
limiting the foregoing, Employee agrees that any such original works of
authorship shall be deemed to be "works made for hire" and that Xxxxxxxx shall
be deemed the author thereof under the U.S. Copyright Act. In any event,
Employee hereby irrevocably assigns and transfers to Xxxxxxxx all rights, title
and interest in such works, including, but not limited to, copyrights.
(iii) Employee hereby assigns to Xxxxxxxx, its successors or
assigns, any and all inventions, patents and rights in patents, and applications
for patents both in the United States and in any foreign country, in connection
with any of Employee's inventions, improvements or developments, whether
existing now or created in the future, and to do any and all acts, and to
execute any and all instruments, which Xxxxxxxx may request to secure to itself,
its successors or assigns, all rights relating to such inventions or
improvements or developments or patents or applications in the United States or
in any foreign country, including the right to file in Xxxxxxxx' name.
(d) Return of Materials. Within three (3) business days following the
termination of employment, in any manner or for any reason, Employee will
promptly return to Xxxxxxxx all Xxxxxxxx equipment and other property in
Employee's possession, custody or control including, but not limited to,
documents and any copies of documents pertaining to Xxxxxxxx' Confidential
Information.
(e) Breach. In the event of a breach by Employee of his obligations under
this Section 8, all of Xxxxxxxx' obligations under this Agreement shall cease.
9. RESOLUTION OF DISPUTES; ARBITRATION.
(a) Except for the breach or threatened breach by Employee of the
noncompetition or other provisions of Section 8 of this Agreement which may be
enforced by appropriate injunctive relief at the option of Xxxxxxxx, any dispute
or controversy arising out of or relating to this Agreement, including, but not
limited to, whether Employee has been Discharged For Cause, shall be submitted
to and settled by arbitration in Dayton, Ohio in accordance with the rules then
pertaining of the American Arbitration Association.
(b) Should Employee disagree that his termination was due to a Discharge
For Cause, the question shall, within thirty (30) days after the termination, be
submitted to arbitration by three (3) arbitrators, one of whom shall be selected
by Xxxxxxxx, another of whom shall be selected by Employee, and the third of
whom shall be selected by the two arbitrators so appointed. The decision of
these arbitrators on the question shall be final and conclusive upon Xxxxxxxx
and upon Employee and his wife or widow, personal representatives, designated
beneficiaries and heirs, and shall be enforceable in any court having competent
jurisdiction thereof. A discharge which is eventually determined under
arbitration to have been a Discharge For Cause, or no arbitration having been
requested and the discharge being one which Xxxxxxxx had determined was for a
Discharge for Cause, shall extinguish any and all liability of Xxxxxxxx under
this Agreement from and after the date of termination.
15
(c) The arbitrators for all other disputes or controversies under this
Agreement shall be selected as set forth above and the parties shall select the
arbitrators within thirty (30) days after demand from Employee or Xxxxxxxx to
the other to settle matters by arbitration. As stated above, the decision of the
arbitrators shall be final and conclusive.
10. NONASSIGNABLE RIGHTS. Employee, his wife, or his widow after his death, or
his personal representatives, designated beneficiaries and heirs, shall not have
the right to anticipate or commute, or to sell, assign, transfer, or otherwise
alienate or convey the right to receive any payments hereunder, whether by his,
her or their voluntary or involuntary act, or by operation of law and, in
particular, that any payments due hereunder shall not be subject to attachment
or garnishment or any other legal proceedings by any creditor, or be in any way
responsible for the debts or liabilities of Employee or his wife or his widow
after his death or his personal representatives, designated beneficiaries and
heirs. Should Employee or his wife or his widow after his death or his personal
representatives, designated beneficiaries and heirs, voluntarily attempt to
breach this Section of this Agreement, Xxxxxxxx' liability to make payments
hereunder from and after the date of said attempt shall be extinguished; and
should any attempt be made to reach the payments by other than Employee or his
wife or his widow after his death or his personal representatives, designated
beneficiaries and heirs, Xxxxxxxx shall make each payment as it becomes due to
such person or persons for the sole benefit of Employee or his wife or his widow
or his personal representatives, designated beneficiaries and heirs, as the case
may be, as Xxxxxxxx may deem expedient.
11. UNFUNDED AGREEMENT.
(a) Xxxxxxxx' obligation under this Agreement shall be unfunded, but
Xxxxxxxx reserves the right to provide for its liability under this Agreement in
any manner it deems advisable, including the purchasing of such assets
(including an insurance policy or policies on Employee's life) as it may deem
necessary or proper; provided, however, that Employee's insurability or
non-insurability shall in no way affect Xxxxxxxx' obligations pursuant to this
Agreement. Any asset so purchased by Xxxxxxxx shall be the sole property of
Xxxxxxxx and shall not be deemed to provide funding of Xxxxxxxx' obligations
under this Agreement.
(b) In the event Xxxxxxxx determines to purchase any insurance policy or
policies on Employee's life, Employee agrees to submit to such examination and
to supply information as may be required by the insurer.
(c) Any policy so purchased by Xxxxxxxx shall be issued so that Xxxxxxxx is
the sole, full, and complete owner of the policy or policies, with the right and
power to exercise any and all privileges and options thereof or available under
the rules of the issuing insurer without the consent of any other persons.
(d) Employee, his wife, or his widow after his death, or his designated
beneficiaries, personal representatives, heirs, successors and assigns shall
have no claim or rights with respect to, and shall have no property or equitable
interests whatsoever in, any specific funds or assets of Xxxxxxxx and shall have
only the status of a general creditor with respect to Xxxxxxxx hereunder.
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12. FACILITY OF PAYMENT. In the event of a physical or mental illness or
disability of Employee or of his widow after his death or of his designated
beneficiaries at a time when he or she (or they) is (are) entitled to payments
hereunder, such payments as may be due shall be paid to such person or persons
for the benefit of Employee or his widow or his designated beneficiaries, as the
case may be, as Xxxxxxxx may deem proper. No liability shall accrue to Xxxxxxxx
for any alleged payment to an improper person or representative if so made after
such reasonable investigation and Xxxxxxxx shall have no responsibility to see
to the proper application of such payments.
13. MISCELLANEOUS PROVISIONS.
(a) All notices required or permitted to be given under this Agreement
shall be in writing and shall be mailed, postage prepaid, by registered or
certified mail or personally delivered, if to Xxxxxxxx, addressed to:
The Xxxxxxxx and Xxxxxxxx Company
Attention: Vice President, Corporate Finance and Chief
Financial Officer
Xxx Xxxxxxxx Xxx
Xxxxxxxxx, Xxxx 00000
and, if to Employee, at Employee's place of residence as then
listed in the records of Xxxxxxxx.
Either party may change the address to which notices to such party are to be
sent by giving written notice of such change to the other party in the manner
specified in this provision.
(b) This Agreement shall be binding upon Employee, his wife, and upon his
or her heirs, executors, administrators, designated beneficiaries and upon
anyone claiming under him or his wife or widow, and upon Xxxxxxxx and its
successor or assigns.
(c) In the event of Employee's death or a judicial determination of his
incompetence, reference in this Agreement to Employee shall be deemed, where
appropriate, to refer to his beneficiary, estate or other legal representative.
(d) Xxxxxxxx shall not merge or consolidate with, or sell all or
substantially all of its assets to, any other entity unless and until such other
entity shall expressly assume Xxxxxxxx' obligations under this Agreement or
Xxxxxxxx has provided an appropriate alternative arrangement covering its
contingent liabilities under this Agreement, and Xxxxxxxx shall not voluntarily
dissolve without first providing an appropriate arrangement covering its
contingent liabilities under this Agreement.
(e) This Agreement may be amended, but only with the consent of Employee
during his lifetime and, after his death only with the consent of his widow
during her lifetime or his other designated beneficiaries during their lifetime,
as the case may be. Any agreement of amendment shall be executed with the same
formality as this Agreement.
17
(f) This Agreement supersedes any prior agreements or understandings
covering the subject matter hereof, either written or oral, between the parties.
(g) This Agreement shall be construed under the laws of the State of Ohio.
(h) The paragraph headings used in this Agreement are for convenience of
reference only and shall not be considered in construing this Agreement.
(i) Each provision of this Agreement is severable. Should any court or
other tribunal of competent jurisdiction declare any provision(s) of this
Agreement invalid or unenforceable by reason of any rule of law or public
policy, all other provisions hereof shall remain in full force and effect.
Employee hereby authorizes any court or other tribunal of competent jurisdiction
to modify any provision(s) held to be invalid or unenforceable to the extent
necessary to permit such provision(s) to be legally enforced to the maximum
extent permissible and to then enforce the provision(s) as modified.
IN WITNESS WHEREOF, the parties hereto have hereunto set their respective
hands on ________________, 2003.
THE XXXXXXXX AND XXXXXXXX COMPANY
By:
--------------------------------
Xxxxxxx X. Xxxxxxx
General Counsel and Secretary
-----------------------------------
XXXXX X. XXXXXXXXXX
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EXHIBIT A
SCHEDULE OF FRINGE BENEFITS
PURSUANT TO SECTION 3(d)
------------------------
Benefit Amount
------- ------
Annual Physical Exam maximum of $1,500
Auto/Gas Allowance $1,200 monthly
Income Tax Planning and Preparation,
Estate Planning and Will Preparation $15,000 in initial year
(includes initial service and updates) and $10,000 annually
thereafter
Corporate aircraft (personal use) Yes; in connection with
company business use
Employee may include
personal passengers,
subject to seat
availability. Employee
shall receive W-2 for
personal use value per
IRS regulations
Vacation Five (5) weeks annually
at mutually agreed times
19
