EXHIBIT 10(iii)(b)
CHANGE IN CONTROL AGREEMENT
This CHANGE IN CONTROL AGREEMENT ("Agreement") is made and entered into
the 7th day of May, 2001, as amended and restated as of the 1st day of December,
2001, and as amended and restated as of the 11th day of November, 2003 by and
between THE XXXXXXXX AND XXXXXXXX COMPANY, a corporation existing under the laws
of the State of Ohio (hereinafter referred to as the "Employer"), and Xxxx X.
Xxxxxxx (hereinafter referred to as "Employee").
WITNESSETH:
WHEREAS, Employee is currently an employee of the Employer; and
WHEREAS, Employer considers Employee a key member of the management
team of Employer and in order to induce and encourage Employee to remain with
Employer, Employer desires to provide Employee with additional benefits of
employment as set forth herein; and
WHEREAS, Employer also recognizes that a major change in the control of
the Employer would be of significant concern to Employee; and
WHEREAS, the parties hereto desire to set forth their mutual agreement
regarding the terms of Employee's employment under certain specified
circumstances in order to induce and encourage Employee to remain with Employer
and to xxxxxx and encourage continued attention and dedication to Employee's
assigned duties in the event of a major change in the control of Employer;
NOW, THEREFORE, in consideration of the foregoing premises, Employee's
continued employment for any period after execution of this Agreement, and the
mutual promises set forth herein, the parties hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Base Compensation" shall mean the then-current annual base
salary (exclusive of Bonuses) of Employee, as the same may be fixed from time to
time by the Board of Directors or its Compensation Committee or, if applicable,
by the appropriate executive officer of Employer.
(b) "Bonuses" shall mean bonus payments earned by Employee under
Employer's incentive compensation plans and under any future bonus or incentive
compensation plans of Employer for its executive officers in which Employee
participates.
(c) "Change in Control" shall mean the occurrence of any of the
following events
(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,
Employer, any trustee or other fiduciary holding securities under an employee
benefit plan of Employer or any company owned, directly or indirectly, by the
shareholders of Employer in substantially the same proportions as their
ownership of stock of Employer), who is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Employer representing twenty percent (20%) or more of the combined
voting power of Employer's then outstanding securities;
(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 Employer to effect a transaction described in clause (i),
(iii) or (iv) of this Section) whose election by Employer's 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;
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(iii) Employer 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 Employer, as the same shall
have existed immediately prior to such merger or consolidation;
(iv) Employer is liquidated or dissolved, or there occurs
a sale or disposition of all or substantially all of Employer's assets.
(d) "Disability" shall mean the inability of Employee, because of
any mental or physical illness or incapacity, to perform substantially the
duties of his employment with the Employer as determined under the Employer's
long-term disability program.
(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
Employer, (iv) Employee's breach of the non-competition provisions of the
Officer Agreement executed by Employee as of October 17,2002 (the "Officer
Agreement") which agreement is incorporated herein by reference, or (v)
Employee's breach of the confidentiality provisions of the Officer Agreement
which is reasonably determined by the Board of Directors to cause material harm
to Employer, and following the giving of thirty (30) days' written notice to
Employee specifying the respect in which Employer claims Employee has violated
this provision and the failure, inability or unwillingness of Employee to remedy
the situation to the satisfaction of Employer 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) "Retirement Benefits" shall mean the benefits payable to
Employee under the Employer's Retirement Benefit Plans.
(g) "Retirement Benefit Plans" shall mean:
(i) The Officers' Supplemental Plan;
(ii) The Non-Qualified Deferred Compensation Plan;
(iii) The Officers' Salary Continuation Plan; and
(iv) The Retirement Plan.
as each of the foregoing may be amended, supplemented or succeeded by another
plan from time to time.
2. PAYMENT OF RETIREMENT BENEFITS.
(a) Upon the happening of any of the events set forth below,
Employee shall be entitled to receive Retirement Benefits payable in accordance
with Employer's Retirement Benefit Plans in which Employee then participates. If
such event occurs at any time prior to December 31, 2002, the Retirement
Benefits shall be calculated as if the Employee was age 58 rather than actual
age at the time of the event. If such event occurs at any time from January 1,
2003 through May 31, 2012, the Retirement Benefits shall be calculated as if the
Employee was age 62 rather than actual age at the time of the event; provided,
however, that the portion of Employee's Retirement Benefits under the Employer's
Retirement Plan shall be calculated without making any age adjustment. Employee
shall be entitled to the Retirement Benefits in the event any of the following
occurs:
(i) the Employee's death;
(ii) the Employee's Disability;
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(iii) the termination of Employee's employment by Employer
at any time and for any reason unless such termination is a Discharge For Cause;
(iv) if, prior to a Change in Control, Employee
voluntarily terminates his employment with Employer upon giving the Employer at
least 180 days written notice; and
(v) if, after a Change in Control, Employee voluntarily
terminates his employment upon the giving of at least 180 days written notice
for reasons other than as set forth in Section 4(a) of this Agreement, or his
employment is terminated pursuant to Section 4(b) of this Agreement.
(b) Employer and Employee agree that the Retirement Benefits
provided hereunder shall be in lieu of all other benefits to which Employee may
then be entitled upon the happening of any of the events set forth in Section
2(a)(i) through (v) of this Agreement, except that Employee shall in all events
be entitled to:
(i) those benefits required by law;
(ii) retiree medical coverage to the extent and on the
same terms and conditions then being provided by Employer;
(iii) any amounts necessary to replace up to age 62 any
"Social Security" payments that are taken into consideration (but not yet paid
to him due to his age at the time Retirement Benefits hereunder are being paid)
for purposes of calculating his Retirement Benefits; and
(iv) in the event of a Change in Control, Employee shall
be entitled to the Retirement Benefits and the benefits set forth in Section 4
of this Agreement.
Employee shall also be entitled to exercise all then outstanding stock
options in Employer to the extent said options are exercisable in accordance
with the terms thereof; provided, however, that upon an event giving rise to the
payment of Retirement Benefits hereunder, Employee shall for purposes of such
options be considered retired and have the right to exercise such options as
fully as if he had remained continuously employed by the Employer.
3. STOCK OPTIONS AWARD.
Effective December 28, 2000, Employer awarded Employee non-qualified
stock options consisting of 90,000 shares of the Class A Common Stock of
Employer at the option price of $20.06 per share.
4. BENEFITS UPON A CHANGE OF CONTROL.
(a) After a Change in Control has occurred, if such Change in
Control occurs within five (5) years of the original date of this Agreement: (i)
Employer shall not reduce Employee's Base Compensation below the amount of such
Base Compensation in effect immediately preceding the Change in Control without
Employee's written consent; (ii) Employer shall continue to provide Employee
with fringe benefits (including bonuses, vacation, health and disability
insurance, etc.) substantially equivalent to those of other similarly situated
executive officers of the Employer; (iii) Employee shall not be required by the
Employer 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 similarly situated executive of a corporation; (iv) the
nature of the duties or services which the Employer requires him to perform
shall not necessitate absence overnight from his place of residence prior to the
Change in Control because of travel involving the business affairs of the
Employer for more than ninety (90) days during any period of twelve (12)
consecutive months.
(b) After a Change in Control has occurred, if such Change in
Control occurs within five (5) years of the original date of this Agreement, if
the Employer terminates Employee's employment for any reason other than a
Discharge For Cause, or if Employee terminates his employment with Employer for
any of the reasons specified in Section 4(a) within the twenty-four (24) month
period following the date of a Change in Control, provided that Employee
delivers to Employer and does not rescind a waiver of claims on a form provided
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by Employer that releases Employer, 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 Employer the following benefits:
(i) A lump sum severance payment (the "Severance
Payment"), in cash, equal to two and ninety-nine one hundredths (2.99) times the
sum of the (i) 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 Employer 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.
(ii) During the period expiring on the earlier of Employee
securing other employment or twenty-four (24) months from date of such
termination of employment, continued coverage under the Employer's sponsored
medical benefits program in existence on such date of termination, or, if such
continued coverage is barred, or otherwise at the option of Employer, Employer
shall provide substantially equivalent medical benefit coverage through the
purchase of insurance or otherwise.
(iii) In addition to the Retirement Benefits being
calculated pursuant to Section 2(a) of this Agreement, for purposes of
determining Employee's benefits under the Officers' Supplemental Plan, Employee
shall receive credit toward his Years of Service under the Officers'
Supplemental Plan for the two (2) year period following his 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 Employer's 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 Officers' Supplemental Plan.
(iv) Employee shall be reimbursed for up to $20,000 for
outplacement fees if he chooses to seek other employment following his
termination of employment with Employer.
(c) Notwithstanding anything to the contrary in this Section 4(c),
Employee shall not be entitled to any payments pursuant to Section 4(b) if
Employee dies prior to making a claim for payment pursuant to Section 4(b), or
if the Employer terminates Employee's employment because of a Discharge for
Cause, because of Employee's Disability, or if Employee voluntarily terminates
his employment with the Employer for reasons other than as set forth in Section
4(a); provided, however, Employee shall continue to be entitled to receive the
Retirement Benefits and to have his Retirement Benefits calculated pursuant to
Section 2(a) of this Agreement in the event, prior to making a demand for
payment pursuant to Section 4(b), he dies, becomes Disabled or voluntarily
terminates his employment upon giving at least 180 days written notice for
reasons other than as set forth in Section 4(a).
(d) Employee shall not be required to mitigate damages with
respect to the amount of any payments provided for in Section 4(b) by seeking
other employment or otherwise. Employee's sole remedy under this Agreement for a
breach by the Employer of Section 4(a) shall be to terminate employment and
receive any payments to which he is entitled under Section 2 and Section 4(b).
(e) Should Employee disagree that his termination was due to a
Discharge For Cause, the question shall, within thirty (30) days after the
termination of employment, be submitted to arbitration by three (3) arbitrators,
one of whom shall be selected by Employer, another of whom shall be selected by
Employee, and the third of whom shall be selected by the two arbitrators so
appointed. The arbitration shall take place in Dayton, Ohio in accordance with
the then rules of the American Arbitration Association. The decision of these
arbitrators on the question shall be final and conclusive upon Employer 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 termination which is eventually determined under
arbitration to have been a Discharge For Cause, or no arbitration having been
requested and the termination being one which Employer has determined was a
Discharge For Cause, shall extinguish any and all liability of Employer under
this Agreement from and after the date of the termination of employment.
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(f) In the event that, following the creation of Employee's right
to receive the payments pursuant to Section 4(b) of this Agreement, Employee
incurs any costs or expenses, including attorneys' fees, in the enforcement of
rights under this Agreement or under any plan for the benefit of employees of
the Employer, 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 the Employer or the consolidated, surviving or transferee
entity in the event of a consolidation, merger or sale of assets, is wholly
successful in defending against the enforcement of such rights, the Employer, or
such consolidated, surviving or transferee entity, shall promptly pay to
Employee all such costs and expenses.
5. INJUNCTIVE RELIEF
Employee agrees that, in the event of a breach or threatened breach by
Employee of this Agreement, Employer's remedies at law would be inadequate, and
Employer shall be entitled to an injunction (without any bond or other security
being required), but nothing here shall be construed to preclude Employer from
pursuing any action or further remedy, at law or in equity, for any breach or
threatened breach including, but not limited to, the recovery of damages.
Employee further agrees that Employee will be responsible for attorneys' fees
and other legal expenses incurred by Employer or its successors and assigns to
enforce any of the covenants in this Agreement.
6. UNFUNDED AGREEMENT
The Employer's obligations under this Agreement are unfunded, but the
Employer reserves the right to provide for its liability under this Agreement in
any manner it deems advisable, including the purchasing of such assets as it may
deem necessary or proper. Any asset so purchased by the Employer shall be the
sole property of the Employer and shall not be deemed to provide funding of the
Employer's obligations under this Agreement. Any other provision in this
Agreement to the contrary notwithstanding, Employee shall be only an unsecured
general creditor of the Employer with respect to all payments to be made under
the terms of this Agreement and shall have no claim, equity, interest, or right
in or to any specific assets or funds of the Employer as security for said
payments.
7. NON-ASSIGNABLE RIGHTS
Employee shall not have the right to anticipate or commute with any
third party, or to sell, assign, transfer, or otherwise alienate or convey the
right to receive any payments hereunder, whether by his 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. Should any attempt be made to reach any payments hereunder by other
than Employee, Employer shall make each payment as it becomes due to such person
or persons, for the sole benefit of Employee as Employer may deem expedient.
8. FACILITY OF PAYMENT; LIMITATION
(a) In the event of a Disability of Employee after Employee is
entitled to payments hereunder, such payments as may thereafter be due shall be
paid to such person or persons for the benefit of Employee as Employer may deem
proper after reasonable investigation. In the event of Employee's death after he
is entitled to payments hereunder, the Employer shall pay such amounts as
thereafter are due to such beneficiary or beneficiaries as Employee shall have
designated in writing on Exhibit A attached hereto and made a part hereof, or
failing such writing, to his estate. No liability shall accrue to the Employer
for any alleged payment to an improper person or representative if so made after
such reasonable investigation and the Employer shall have no responsibility to
see to the proper application of such payments.
(b) 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 Employer, any person whose actions result in a Change in
Control or any person affiliated with Employer or such person) (all such
payments and benefits, including the Severance Payment, being hereinafter called
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"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
Employer 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 Employer 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, Employer shall provide Employee with its calculation
of the amounts referred to in this paragraph and such supporting materials as
are reasonably necessary for Employee to evaluate Employer's calculations. If
Employee objects to Employer's calculations, he shall notify Employer of his
objections within five (5) days after receipt of the calculation from Employer
and Employer shall pay to Employee such portion of the Total Payments (up to one
hundred percent (100%) thereof) as Employee determines is necessary to result in
Employee receiving the greater of clauses (A) and (B) of this paragraph.
9. RESPONSIBILITY FOR LEGAL EFFECT
Neither party hereto makes any representations or warranties, express
or implied, or assumes any responsibility concerning the legal, tax, or other
implications or effects of this Agreement. The Employer shall take all actions
required by law with respect to any payments due hereunder including but not
limited to, withholding of tax from such payments.
10. INDEPENDENCE OF AGREEMENT; EMPLOYMENT TERMINATION
This Agreement shall be independent of any other contract or agreement
that may exist between the parties hereto from time to time. This Agreement
shall not restrict the Employer's rights to terminate Employee's employment with
the Employer nor Employee's rights to terminate employment with the Employer;
provided, however, that the Employer shall not terminate Employee's employment
prior to a Change in Control solely to avoid its obligations under this
Agreement. No Change in Control shall occur without assumption of the Agreement
by the purchaser or payment by purchaser or Employer of the sums set forth in
Section 4(b).
11. SECTION HEADINGS
The Section headings used in this Agreement are for convenience of
reference only and shall not be considered in construing this Agreement.
12. NOTICES
Any notices required or permitted to be given under this Agreement
shall be sufficient if in writing and if personally delivered or sent by
certified or registered mail to his residence as last shown on the employment
records of the Employer in the case of Employee, or to the corporate
headquarters to the attention of the President in the case of the Employer.
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13. NON-WAIVER
The waiver by the Employer or Employee of a breach of any provision of
this Agreement by Employee or the Employer shall not operate or be construed as
a waiver of any subsequent breach by Employee or the Employer of the same or any
other provision hereof.
14. ENTIRE AGREEMENT; AMENDMENT
This Agreement and the documents incorporated by reference herein
represent the entire understanding of the parties with respect to the subject
matter hereof and supersedes all previous understandings, written or oral,
including the agreement between the parties dated August 17, 1998, which shall
be rendered null and void. Any amendment to this Agreement shall be executed in
writing with the same formality as this Agreement.
15. BINDING EFFECT
This Agreement shall be binding upon Employee and the Employee's heirs,
executors, administrators, successors and assigns and upon the Employer and its
successors and assigns.
16. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio.
17. SEVERABILITY.
Each provision of the Agreement is severable. Should any court or other
tribunal of competent jurisdiction declare any provision(s) of the 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 permissible and
to then enforce the provision(s) as modified.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of November 11, 2003.
THE XXXXXXXX AND XXXXXXXX COMPANY
By /s/ XXXXX X. XXXXXXXXXX
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Xxxxx X. Xxxxxxxxxx
CEO, Chairman and President
/s/ XXXX X. XXXXXXX
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Xxxx X. Xxxxxxx
CinLibrary/1364046.2
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