AMENDED AND RESTATED SEVERANCE AGREEMENT
Exhibit 99.5
AMENDED AND RESTATED
SEVERANCE AGREEMENT
SEVERANCE AGREEMENT
THIS
AMENDED AND RESTATED SEVERANCE AGREEMENT (“Agreement”) is
entered into as of the 13th day of
November, 2006, by and between OM Group, Inc., a Delaware corporation (the “Company”)
and Xxxxxxx Xxxxxxx Xxxxx, an executive officer of the Company (the “Executive”).
WHEREAS, the Company wishes to assure itself of the continuity of the Executive’s services;
WHEREAS, the Company and the Executive desire for this Amended and Restated Severance
Agreement to amend and supersede the Severance Agreement, dated November 7, 2005, between the
Company and the Executive (the “Prior Agreement”) and any other Severance Agreements entered into
prior to the date hereof; and
WHEREAS, the Company and the Executive accordingly desire to enter into this Agreement on the
terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, it is
hereby agreed by and between the parties as follows:
1. Term of Agreement. The “Term” of this Agreement shall commence
on the date hereof and end on December 31, 2008; provided, however, that the Compensation
Committee of the Board of Directors may extend the Term in one year increments. Notwithstanding
the foregoing, this Agreement shall terminate automatically in the event that any payment is made
pursuant to Sections 5(c)-(g) of the Amended and Restated Change in Control Agreement between the
Executive and the Company dated November 13, 2006.
2. Termination. (a) For purposes of this Agreement, “Termination”
shall mean: (i) termination of the employment of the Executive by the Company during the Term, for
any reason other than death, Disability (as defined below), or Cause (as described below), (ii) the
assignment of any duties inconsistent with the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities, or any other action by
the Company which results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith
and which is remedied by the Company promptly after receipt of notice thereof given by Executive or
(iii) a material change in the Executive’s reporting structure, including such change as would
result from the resignation or termination of Xxxxxx X. Xxxxxxxxx as Chief Executive Officer of the
Company. Resignation by the Executive for any other reason, including, without limitation, the
Executive’s retirement pursuant to a duly adopted retirement policy of the Company or otherwise,
shall not be treated as a “Termination” under this Agreement.
(b) For purposes of this Agreement, “Disability” shall mean that the Executive is physically
or mentally incapacitated for a period of one hundred eighty (180) consecutive days
such that the Executive cannot substantially perform the Executive’s duties of employment with
the Company on a full-time basis.
(c) For purposes of this Agreement, “Cause” shall mean (i) commission of a felony by the
Executive (other than felonious operation of a motor vehicle), (ii) fraud, embezzlement or
misappropriation of funds, in each case involving or against the Company or any of its subsidiaries
or affiliates, (iii) an act or series of acts of dishonesty in the course of employment that are
materially inimical to the best interests of the Company or a subsidiary and, if the act or acts
are capable of being cured, the Executive fails to cure or take all reasonable steps to cure within
30 days of notice from the Company to the Executive, and (iv) other than for Disability, the
Executive abandons and consistently fails to attempt to perform her duties and responsibilities for
30 consecutive days after the Company has advised her in writing of that failure.
3. Termination date and notice. Any notice of Termination of the
Executive’s employment by the Company or the Executive for any reason under Section 2 above shall
be upon no less than fifteen (15) days’ advance written notice (“Notice of Termination”). The date
of termination shall be the date specified by the Company or the Executive in the Notice of
Termination (“Date of Termination”). Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if personally delivered or
sent by registered or certified mail or by prepaid overnight courier to the Executive at the last
address the Executive has filed in writing with the Company or, in the case of the Company, to the
attention of the Secretary of the Company, at its principal executive offices.
4. Severance benefits. In the event of a Termination described in
Section 2 above, the Company shall pay to the Executive as severance pay, in a lump sum, the
following amounts:
| (a) | the Executive’s full base salary earned through the Termination Date at the rate in effect prior to the date Notice of Termination is given, to the extent not theretofore paid; | ||
| (b) | an amount equal to 1.5 times Executive’s annual base salary in effect prior to the date Notice of Termination is given; and | ||
| (c) | the Executive’s bonus for the previously completed fiscal year of the Company, to the extent not theretofore paid. |
The payments described in this Section 4 shall be payable on or before the tenth (10th) day
following the Termination Date pursuant to the Company’s normal payroll practices, provided that
the Executive executes a general release, which shall be in a form mutually satisfactory to the
Company and Executive and which shall include provisions that are customary for a general release,
including (i) provisions addressing the Executive’s release of the Company from any future
liability or suit, (ii) provisions addressing nonsolicitation of other Company Executives and
confidentiality, (iii) a six-month noncompete agreement pursuant to which Executive shall agree not
to acquire any financial or beneficial interest in, be employed by, or own, manage, operate or
control any entity (A) which is primarily engaged in any type of
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business in which either the Company or its subsidiaries have been actively engaged, and (B) for
which the Executive has primary responsibility to act as general counsel immediately prior to the
Termination Date, (iv) provisions addressing nondisparagement of the Company and its officers,
directors, employees and agents; provided that the Company shall make a reciprocal commitment not
to disparage the Executive, and (v) the waiver of continued participation in any employee benefit
or welfare plans. Notwithstanding anything to the contrary contained in this Section 4, if any
payment to the Executive would constitute a “deferral of compensation” under Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), and the Executive is a “specified employee”
(as such phrase is defined in Section 409A of the Code), the Executive (or the Executive’s
beneficiary) will receive payment of the amounts described in this Section 4 upon the earlier of
(1) six (6) months following the Executive’s “separation from service” with the Company (as such
phrase is defined in Section 409A of the Code) or (2) the Executive’s death.
5. Withholding. All payments to the Executive under this Agreement
will be subject to all applicable withholding of state and federal taxes.
6. Non-Alienation. The Executive shall not have any right to
pledge, hypothecate, anticipate or in any way create a lien upon any amounts provided under this
Agreement; and no amounts payable hereunder shall be assignable in anticipation of payment either
by voluntary or involuntary acts, or by operation of law. Nothing in this Section 6 shall limit
the Executive’s rights or powers to dispose of the Executive’s property by Last Will and Testament
or limit any rights or powers which the Executive’s executor or administrator would otherwise have.
This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or
legal representatives, executors, administrators, successors, heirs, designees, devisees and
legatees. If the Executive should die while any amount is still payable to the Executive hereunder
had the Executive continued to live, all such amounts shall be paid in accordance with the terms of
this Agreement to the Executive’s designated beneficiary or beneficiaries (pursuant to a written
beneficiary designation signed, dated, and delivered to the Company prior to the Executive’s
death), or if there are no beneficiaries, to the Executive’s estate.
7. Amendment, etc. This Agreement may be amended or canceled by
mutual agreement of the parties in writing without the consent of any other person, and so long as
the Executive lives, no person, other than the parties hereto, shall have any rights under or
interest in this Agreement or the subject matter hereof. This Agreement supersedes and replaces in
its entirety any prior agreement relating to the subject matter hereof, including, without
limitation, the Prior Agreement.
8. Successors. This Agreement shall be binding upon and inure to
the benefit of the Company and any successor of the Company.
9. Employment Status. Nothing herein shall be deemed to create an
employment agreement between the Company and the Executive providing for the employment of the
Executive by the Company for any fixed period of time. The Executive’s employment with the Company
is terminable at will by the Company or the Executive, and each shall have the right to terminate
the Executive’s employment with the Company at any time, with or without Cause,
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subject to (i) the notice provisions of this Agreement, and (ii) the Company’s obligation to
provide severance benefits if and as required by Section 4.
10. Severability. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original but all of which together shall constitute one and
the same document.
12. Section 409A of the Code. To the extent applicable, it is
intended that the compensation arrangements under this Agreement be in full compliance with Section
409A of the Code. To the extent any provision in this Agreement is or will be in violation of
Section 409A of the Code, the Agreement shall be amended in such manner as the parties may agree
such that the Agreement is or remains in compliance with Section 409A and the intent of the parties
is maintained to the maximum extent possible. Reference to Section 409A of the Code is to Section
409A of the Internal Revenue Code of 1986, as amended, and will also include any proposed,
temporary or final regulations, or any other guidance, promulgated with respect to such Section by
the U.S. Department of the Treasury or the Internal Revenue Service.
IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement as of the day
and year first above written.
| COMPANY: | ||||
| OM GROUP, INC. | ||||
| By: /s/ Xxxxxx X. Xxxxx | ||||
| Title: Vice President, Human Resources | ||||
| EXECUTIVE: | ||||
| /s/ Xxxxxxx Xxxxxxx Sachs | ||||
| Xxxxxxx Xxxxxxx Xxxxx | ||||
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