AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT
Exhibit 99.4
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
CHANGE IN CONTROL AGREEMENT
This Amended and Restated Change in Control Agreement (this “Agreement”), dated as of
November 13, 2006, is made by and between OM Group, Inc., a Delaware corporation (the
“Company”), and Xxxxxx X. Xxxxxxxxx (“Executive”).
WHEREAS, the Company considers it essential to the best interest of the Company and its
stockholders that its management be encouraged to remain with the Company and to continue to devote
its full attention to the Company’s business;
WHEREAS, the Company recognizes that the possibility of a change in control may occur and that
the uncertainty arising as a result of a potential change in control may result in the departure or
distraction of management personnel to the detriment of the Company and its stockholders;
WHEREAS, the Company’s Board of Directors (the “Board”) has determined that
appropriate steps should be taken to reinforce and encourage the continued attention and dedication
of key members of the Company’s management, including Executive, to their assigned duties without
distraction in the face of a potential Change in Control; and
WHEREAS, the Company and the Executive desire for this Amended and Restated Change in Control
Agreement to amend and supersede the Change in Control Agreement, dated June 13, 2005, between the
Company and the Executive (the “Prior Agreement”) and any other Change in Control
Agreements entered into prior to the date hereof;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained,
the Company and Executive hereby agree as follows:
1. Definitions.
(a) “Additional Compensation” has the meaning set forth in Section 5(d).
(b) “Affiliate” means a person or entity that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control with, the person or
entity specified.
(c) “Agreement” has the meaning set forth in the Preamble.
(d) “Base Compensation” has the meaning set forth in Section 5(d).
(e) “Board” has the meaning set forth in the recitals.
(f) “Business Combination” has the meaning set forth in Section 1(h).
(g) “Cause” means (i) the willful and continued failure by Executive to perform his
duties with the Company (other than for Death, Disability or Good Reason), after a written demand
for substantial performance is delivered to Executive by the Board that specifically identifies the
manner in which the Board believes Executive has failed to perform his duties, or (ii) illegal
conduct or gross misconduct by Executive involving moral turpitude that is materially and
demonstrably injurious to the Company. For purposes of clause (ii) of the preceding sentence, no
act or failure to act shall constitute “Cause” unless it is done, or omitted to be done, in bad
faith or without Executive’s reasonable belief that such action or omission was in, or not opposed
to, the best interests of the Company. Any act, or failure to act, based upon authority given
Executive pursuant to a resolution duly adopted by the Board or based upon the advice of counsel
for the Company shall be conclusively presumed to be undertaken in good faith and in the best
interests of the Company. No termination of Executive by the Company shall be deemed to have been
for “Cause” under either of clauses (i) or (ii) of the first sentence of this clause (f) unless the
termination is pursuant to an action taken by a majority of the members of the Board then in office
and, before the vote on that action is taken by the Board, Executive is first given notice by the
Board, in reasonable detail, of the alleged act or acts by Executive that give rise to the proposed
vote and Executive is given the opportunity to respond to those allegations at a duly called
meeting of the Board at which Executive may be represented by counsel;
(h) “Change in Control” means the occurrence of any of the following: (i) the
acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 33% or more of the then outstanding Voting Shares;
provided, however, that the following acquisitions shall not constitute a Change in
Control: (1) any acquisition directly from the Company; (2) any acquisition by the Company; (3) any
acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company
or any Subsidiary; or (4) any acquisition by any Person pursuant to a transaction that complies
with clauses (A), (B) and (C) of Section 1(h)(iii) below; or (ii) individuals who, as of
the date of this Agreement, constitute the Board (the “Incumbent Board”) cease for any
reason (other than death or disability) to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the date
hereof, whose election, or nomination for election by the Company’s stockholders, was approved by a
vote of at least two-thirds of the directors then comprising the Incumbent Board (either by a
specific vote or by approval of the proxy statement of the Company in which such person is named as
a nominee for director, without objection to such nomination) shall be considered as though such
individual was a member of the Incumbent Board, but excluding for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or threatened election contest
(within the meaning of Rule 14a-11 of the Exchange Act) with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or (iii) consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the Company (a “Business
Combination”), in each case, unless following such Business Combination, (A) all or
substantially all of the individuals and entities who were the beneficial owners of the Voting
Shares immediately prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of, respectively, the then-outstanding shares of common stock and the combined voting
power of the then-outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the entity resulting from such Business Combination (including,
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without limitation, an entity that as a result of such transaction owns the Company or
substantially all of the Company’s assets either directly or through one or more subsidiaries) in
substantially the same proportions relative to each other as their ownership immediately prior to
such Business Combination of the Voting Shares, (B) no Person (excluding any entity resulting from
such Business Combination or any employee benefit plan (or related trust) sponsored or maintained
by the Company or such entity resulting from such Business Combination) beneficially owns, directly
or indirectly, 15% or more of, respectively, the then-outstanding shares of common stock of the
entity resulting from such Business Combination, or the combined voting power of the
then-outstanding voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (C) at least a majority of the members of the board
of directors of the entity resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or the action of the Board providing
for such Business Combination; or (iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
(i) “COBRA Period” has the meaning set forth in Section 6(a).
(j) “Code” means the Internal Revenue Code of 1986, as amended from time to time.
(k) “Company” means OM Group, Inc., a Delaware corporation, and any successor to its
business and/or assets which executes and delivers the agreement provided for in Section 12
of this Agreement or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(l) “Company Shares” has the meaning set forth in Section 5(e).
(m) “Disability” has the meaning set forth in Section 4(c).
(n) “Effective Date” has the meaning set forth in Section 3(b).
(o) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(p) “Excise Tax” has the meaning set forth in Section 10(a).
(q) “Executive” has the meaning set forth in the Preamble.
(r) “Firm” has the meaning set forth in Section 10(b).
(s) “Good Reason” means: (i) Executive’s base salary is reduced from the highest level
in effect at any time during the one year period ending on the date of any Change in Control; (ii)
the aggregate compensatory opportunities provided to Executive under any and all incentive, option,
restricted stock, or other compensatory plans that were available to him and in effect at any time
during the one year period ending on the date of any Change in Control (the “Pre-Change
Compensatory Plans”) are reduced below the aggregate compensatory opportunities that were
available to Executive under the Pre-Change Compensatory Plans during the last fiscal year of the
Company ending before the occurrence of any Change in Control or during the one year period ending
on the date of any Change of Control, whichever period had the higher aggregate compensatory
opportunities for Executive (the “Pre-Change Xxxxxxxxx
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Xxxxxxxxxxxx Xxxxxxxxxxxxx”) unless Executive is provided with substitute incentive,
option, restricted stock, and other compensatory plans that provide to Executive, in the aggregate,
compensatory opportunities that are at least substantially equivalent to the Pre-Change Aggregate
Compensatory Opportunities; (iii) following notice by Executive to the Surviving Entity and an
opportunity by the Surviving Entity to cure, Executive is excluded from full participation in any
incentive, option, restricted stock, or other compensation plan that is generally applicable to
executive officers of the Surviving Entity after the Change in Control; (iv) the headquarters of
the Surviving Entity is located outside of the Cleveland metropolitan area; (v) the Surviving
Entity requires Executive to be based at or generally work from a primary business location that is
outside of the Cleveland metropolitan area or the Surviving Entity requires Executive to travel on
business to a substantially greater extent than required immediately prior to the Effective Date;
(vi) Executive determines in good faith that his responsibilities, duties, or authorities with the
Surviving Entity are materially reduced from those in effect with respect to the Company before the
Change in Control and the reduction has not been cured within thirty days after Executive gives
notice to the board of directors of the Surviving Entity of his election to terminate his
employment based upon that reduction; (vii) Executive determines in good faith that as a result of
the Change in Control he is unable to carry out the authorities, powers, functions,
responsibilities, or duties as Chief Executive Officer of the Surviving Entity as those
authorities, powers, functions, responsibilities, or duties attached to that position with respect
to the Company as in effect before the Change in Control and the board of directors of the
Surviving Entity fails to fully address those issues (as determined by Executive in good faith)
within thirty days after Executive gives notice to the board of directors of the Surviving Entity
of his determination under this clause; (viii) Executive determines in good faith that the board of
directors of the Surviving Entity has adopted, explicitly or implicitly, a strategic plan for the
Surviving Entity for any period after any Change in Control that varies materially from the
strategic plan of the Company as that plan existed immediately before any member of the Board took
any action that either was intended to result, directly or indirectly, in a Change in Control, or
was in anticipation of, or reaction to, an anticipated Change in Control; (ix) Executive is not, or
ceases to be, for any reason other than Death, Disability, or voluntary resignation, a member of
the board of directors of the Surviving Entity; or (x) any failure by the Company to comply with
and satisfy Section 12 of this Agreement.
(t) “Gross-Up Payment” has the meaning set forth in Section 10(a).
(u) Incumbent Board” has the meaning set forth in Section 1(h).
(v) “Notice of Termination” has the meaning set forth in Section 4.
(w) “OMG Related Persons” has the meaning set forth in Section 9(c).
(x) “Options” has the meaning set forth in Section 5(e).
(y) “Payment” has the meaning set forth in Section 10(a).
(z) “Person” has the meaning set forth in Section 1(h).
(aa) “Prior Agreement” has the meaning set forth in the recitals.
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(bb) “Release”
has the meaning set forth in Section 5.
(cc) “Retirement”
has the meaning set forth in Section 4(b).
(dd) “Subsidiary” means an entity in which the Company directly or indirectly
beneficially owns 50% or more of the outstanding securities entitled to vote generally in the
election of directors of the entity.
(ee) “Surviving Entity” means the entity surviving or resulting from any Change in
Control involving the Company or (if the Company becomes a subsidiary in the transaction) the
ultimate parent of the Company.
(ff) “Term” means the period of time described in Section 2 hereof (including
any extension, continuation or termination described therein).
(gg) “Termination
Date” has the meaning set forth in Section 4.
(hh) “Underpayment”
has the meaning set forth in Section 10(b).
(ii) “Voting Shares” means at any time, the then-outstanding securities entitled to
vote generally in the election of directors of the Company.
(jj) “Without Cause” means termination of Executive’s employment for reasons other
than for Death, Retirement, Disability or Cause.
2. Term.
The Term of this Agreement shall commence on the date first written above and shall continue
in effect through December 31, 2009; provided, however, that commencing on January
1, 2009 and each January 1 thereafter, the Term shall be automatically extended for one (1)
additional year unless, not later than September 30 of the preceding year, the Company or Executive
shall have given written notice to the other party electing not to extend the Term; and
provided further, that if a Change in Control shall have occurred during the Term,
the Term shall expire on the last to occur of (x) the last day of the twelfth (12th) month
following the month in which such Change in Control occurred or (y) the last day of the scheduled
term of employment of Executive under any written employment agreement in effect between Executive
and the Company at any time before any Change in Control. Notwithstanding any other provision
hereof, the Term shall expire upon (a) any termination of Executive’s employment prior to a Change
in Control, so long as such termination is not done in anticipation of or in connection with a
Change in Control, and (b) Executive’s death or resignation prior to a Change in Control.
3. Change in Control.
(a) No benefits shall be payable hereunder unless a Change in Control occurs, and, during the
Term, Executive’s employment with the Company is terminated either by Executive for Good Reason or
by the Company Without Cause. This Agreement is not intended to apply to termination of Executive’s
employment by reason of death, Disability or Retirement.
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(b) The first date upon which a Change in Control as defined above takes place shall be known
as the “Effective Date.” Notwithstanding anything in this Agreement to the contrary, if a
Change in Control occurs and if Executive’s employment with the Company is terminated by the
Company prior to the date on which the Change in Control occurs, and if it is reasonably
demonstrated by Executive that such termination (i) was at the request of a third party who had
taken steps reasonably calculated to effect a Change in Control or (ii) was by the Company and
arose with or in anticipation of a Change in Control, then for all purposes of this Agreement,
Executive’s employment shall be deemed to have been terminated by the Company Without Cause under
Section 4(f) of this Agreement and the “Effective Date” shall mean the date
immediately prior to the Termination Date (as defined in Section 4 hereof).
4. Termination of Employment.
Executive’s employment with the Company shall or may be terminated, as the case may be, for
any of the following reasons:
(a) termination of Executive’s employment due to Executive’s death;
(b) termination of Executive’s employment by Executive at or after the attainment of age
sixty-five (65) or pursuant to a duly adopted retirement policy of the Company
(“Retirement”);
(c) termination of Executive’s employment either by Executive or by the Company after
Executive is physically or mentally incapacitated for a period of one hundred eighty (180)
consecutive days such that Executive cannot substantially perform Executive’s duties of employment
with the Company on a full-time basis (“Disability”);
(d) the Company may terminate Executive’s employment at any time for Cause but only if the
Company has Cause both (i) as defined in this Agreement and (ii) as defined in any written
employment agreement between Executive and the Company that remains in effect as of the date of the
Change in Control (For the avoidance of doubt, the Company may not at any time after a Change in
Control terminate Executive’s employment for cause under the terms of any employment agreement
between Executive and the Company unless the Company also has Cause, as defined in this Agreement,
to terminate Executive’s employment);
(e) Executive may terminate his employment for Good Reason; and
(f) the Company may terminate Executive’s employment at any time Without Cause.
Except in the case of Retirement or death or as otherwise provided in Section 3(b) hereof,
termination of Executive’s employment shall be effective only as of the earliest date (hereinafter
referred to as the “Termination Date”) specified by either Executive or the Company in a
written notice of termination (“Notice of Termination”) delivered to the other party
hereto.
5. Severance Pay.
If a Change in Control occurs, and, during the Term, Executive’s employment with the Company
is terminated either by Executive for Good Reason or by the Company Without Cause,
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then in addition to all other benefits that Executive has earned prior to such termination or
to which Executive is otherwise entitled, the Company shall pay to Executive as severance pay, in a
lump sum, the following amounts:
(a) 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) Executive’s bonus for the previously completed fiscal year of the Company, to the extent
not theretofore paid;
(c) Executive’s target bonus (i.e. based on achievement of performance goals at the 100%
level) for the fiscal year in which the Notice of Termination was given, pro rated to reflect the
number of days Executive was employed with the Company during such fiscal year;
(d) an amount equal to the product of (i) the sum of (x) Executive’s annual base salary at the
highest rate in effect at any time before the Termination Date (whether before or after any Change
in Control) and (y) the amount of any Additional Compensation (hereinafter defined) (the sum of
such annual base salary and Additional Compensation shall be referred to as Executive’s “Base
Compensation”) and (ii) the number three (3). The term “Additional Compensation” means
the quotient of (i) the sum of (x) Executive’s annual (measured by a fiscal year) total incentive
compensation, commissions, bonuses, amounts deferred under any non-qualified deferred compensation
program of the Company declared and/or received for each of the last three full fiscal years
immediately preceding the Effective Date, and (y) any elective contributions that are made by or on
behalf of Executive under any plan maintained by the Company that are not includible in gross
income under Section 125 or 402(e)(3) of the Internal Revenue Code of 1986, as amended from time to
time, but excluding moving or educational reimbursement expenses, amounts realized from the
exercise of any stock options, sale of restricted stock, and imputed income attributable to any
fringe benefit, divided by (ii) three; provided, however, that in the event
Executive was employed by the Company for a period of time less than three full fiscal years
immediately preceding the Effective Date, the foregoing provisions shall be adjusted to cause
Executive’s Additional Compensation to be determined based upon the average of such payments and
benefits for the number of full fiscal years immediately preceding the Effective Date in which
Executive was employed by the Company; provided further that in the event Executive
was employed by the Company for a period of time less than one full fiscal year, the foregoing
provisions shall be adjusted to cause Executive’s Additional Compensation to be determined based
upon the projected target annual payments and benefits that would be provided to Executive
immediately preceding the Effective Date; and provided further that the dollar value of Additional
Compensation for these purposes shall not be less than $950,000.
(e) in lieu of shares of common stock of the Company, par value $0.01 per share (“Company
Shares”) issuable upon exercise of options (“Options”), if any, granted to Executive
under any Company stock option plan (which Options shall be deemed canceled upon the making of the
payment herein referred to), Executive shall receive an amount in cash equal to the aggregate
spread between the exercise prices of all such Options that are outstanding and held by Executive
(whether or not then fully vested or exercisable and taking into account only options as to which
the exercise price is less than the higher of (i) or (ii) as set forth below) and the
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higher of (i) the mean of the high and low trading prices of Company Shares on the New York
Stock Exchange on the Termination Date or (ii) the highest price per Company Share actually paid in
connection with any Change in Control;
(f) all unvested shares of restricted stock of the Company, if any, granted to Executive under
any Company equity compensation plan, shall immediately vest and shall be redeemed by the Company
for an amount in cash equal to the higher of (i) the mean of the high and low trading prices of
Company Shares on the New York Stock Exchange on the Termination Date or (ii) the highest price per
Company Share actually paid in connection with any Change in Control;
(g) an amount of cash equal to any unvested portion of Executive’s interest in any of the
Company’s nonqualified retirement plans or tax-qualified pension plans as of the Termination Date.
Executive will be required to deliver a written instrument in form and substance reasonably
satisfactory to the Company releasing the Company and its Affiliates from any and all claims or
causes of action of any kind arising from or relating to Executive’s employment with the Company (a
“Release”) before receiving payments hereunder. The payments described in this Section
5 shall be payable on or before the fifth (5th) day following the expiration of any
revocation period relating to such Release. Notwithstanding anything to the contrary contained in
this Section 5, if any payment to Executive, the payment date of which is determined by
reference to Executive’s termination of employment, would constitute a “deferral of compensation”
under Section 409A of the Code and Executive is a “specified employee” (as such phrase is defined
in Section 409A of the Code), Executive (or Executive’s beneficiary) will receive payment of the
amounts described in this Section 5 upon the earlier of (i) six (6) months following
Executive’s “separation from service” with the Company (as such phrase is defined in Section 409A
of the Code) or (ii) Executive’s death. The payments described in Sections 5(c)-(g) shall
be in lieu of all other severance agreements or arrangements otherwise due to Executive under any
other agreement, plan, arrangement or understanding between the Company and Executive.
6. Welfare Benefit Plans.
If a Change in Control occurs, and, during the Term, Executive’s employment with the Company
is terminated either by the Executive for Good Reason or by the Company Without Cause, then:
(a) For a period of eighteen (18) months following the Termination Date (the “COBRA
Period”), the Company will arrange to provide Executive, at no cost to Executive, with health
benefits substantially similar to those that Executive was receiving or entitled to receive
immediately prior to the Termination Date (or, if greater, immediately prior to the reduction,
termination, or denial described in
Section 1(s)(ii)), except that the level of such
benefit to be provided to Executive may be reduced in the event of a corresponding reduction
generally applicable to all recipients of or participants in such benefits. The COBRA Period shall
be considered to be the period during which Executive shall be eligible for continuation coverage
under Section 4980B of the Code, and the Company shall reimburse Executive for the amount of
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the premiums for such continuation coverage; provided, however, that without
otherwise limiting the purposes or effect of Section 8, the benefits otherwise receivable
by Executive pursuant to this Section 6(a) will be reduced to the extent comparable
benefits are actually received by Executive from another employer during the COBRA Period following
Executive’s Termination Date, and any such benefits actually received by Executive shall be
reported by Executive to the Company. If and to the extent that any benefit described in this
Section 6(a) is not or cannot be paid or provided under any policy, plan, program or
arrangement of the Company or any Subsidiary, as the case may be, then the Company will itself pay
or provide for the payment to Executive, his dependents and beneficiaries, of such benefits.
Notwithstanding the foregoing, if the Company determines that the provision of benefits under this
Section 6(a) is likely to result in negative tax consequences to Executive, the Company
will use its reasonable best efforts to make other arrangements to provide a substantially similar
benefit to Executive that does not have such negative tax consequences, which may include, making a
lump sum payment at the earliest time permitted under Section 409A of the Code, in an amount equal
to the Company’s reasonable determination of the present value of any such benefits that, if
provided, would result in negative tax consequences to Executive and/or providing such benefit
through insurance coverage on Executive’s behalf.
(b) Executive will also be entitled to (i) a lump sum payment in an amount equal to the
present value of the cost of health coverage for an additional eighteen (18) months, provided that
if the payment described in this Section 6(b)(i) is subject to tax, the Company will pay to
Executive an additional amount such that after payment by Executive of all taxes so imposed on such
benefits and on such payments, Executive retains an amount equal to such taxes and (ii) an
additional lump sum payment equal to the product of the lump sum payment set forth in Section
5(d) above multiplied by .15, which payment is intended to cover the cost of continuing, for
an additional three years, disability coverage and the other benefit plans, programs and
arrangements that Executive is entitled to participate in during his employment with the Company.
(c) For a period of thirty-six (36) months following the Termination Date, the Company will
arrange to provide Executive with term life insurance benefits substantially similar to those that
Executive was receiving or entitled to receive immediately prior to the Termination Date (or, if
greater, immediately prior to the reduction, termination, or denial described in Section
1(s)(ii)), except that the level of such benefit to be provided to Executive may be reduced in
the event of a corresponding reduction generally applicable to all recipients of or participants in
such benefits. Without otherwise limiting the purposes or effect of Section 8, benefits
otherwise receivable by Executive pursuant to this
Section 6(c) will be reduced to the
extent comparable benefits are actually received by Executive from another employer during the
Continuation Period following Executive’s Termination Date, and any such benefits actually received
by Executive shall be reported by Executive to the Company.
7. Outplacement Services.
If a Change in Control occurs, and, during the Term, Executive’s employment with the Company
is terminated either by Executive for Good Reason or by the Company Without Cause, the Company
shall provide Executive reasonable outplacement services for a period of up to one year of a nature
customarily provided at Executive’s executive officer level.
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8. No Mitigation Required.
Executive shall not be required to mitigate the amount of any payment or benefit provided for
in Section 5 or 6 by seeking other employment or otherwise. Notwithstanding the
foregoing, benefits otherwise receivable under Section 6 of this Agreement shall be reduced
to the extent that and for any period during which Executive is eligible to receive substantially
similar benefits from another employer.
9. Restrictive Covenants of Executive.
(a) Noncompetition. If a Change in Control occurs, and, during the Term, Executive’s
employment with the Company is terminated either by Executive for Good Reason or by the Company
Without Cause, and Executive is receiving payments from the Company pursuant to this Agreement,
then for a period of one (1) year from the Termination Date, Executive agrees not to, without the
written consent of the Company, either directly or indirectly, engage in, make any investment in,
advise or consult with, assist or render any services to any person or entity in competition with
the business of the Company or its subsidiaries. Notwithstanding the foregoing, Executive may own
less than one (1) percent of the combined voting power of all issued and outstanding voting
securities of any publicly-held corporation whose stock is traded on a major stock exchange or
quoted on NASDAQ.
(b) Confidential Information. Executive hereby agrees that Executive shall not at any
time (whether employed by the Company or not), either directly or indirectly, disclose or make
known to any person or entity or use any confidential information, trade secret, or proprietary
information that Executive acquired during the course of Executive’s employment with the Company
that has not become public knowledge (other than by Executive’s actions in violation of this
Agreement). Executive further agrees that upon the termination of Executive’s employment with the
Company, or at any time upon the request of the Company, Executive shall deliver to the Company any
and all literature, documents, correspondence, and other materials and records furnished to
Executive by the Company during the course of Executive’s employment with the Company. In no event
shall an asserted violation of the provisions of this Section 9(b) constitute a basis for
deferring or withholding any amounts otherwise payable to Executive under this Agreement.
(c) Non-Disparagement. Executive agrees that during his employment and at all times
thereafter, he will not, unless compelled by a court or governmental agency, make, or cause to be
made, any statement, observation or opinion, or communicate any information (whether oral or
written) regarding the Company, or its Affiliates, together with their respective directors,
partners, officers or employees (such entities, collectively, the “OMG Related Persons”),
which disparages the reputation or business of the Company or the OMG Related Persons;
provided, however, that such restriction shall not apply to statements,
observations, opinions or communications made in good faith in the fulfillment of Executive’s
duties with the Company; and provided further, that such restriction shall cease to apply and shall
be of no further force and effect from and after the occurrence of a Change in Control.
(d) No Other Restrictive Covenants Apply. If any Change in Control occurs, the
restrictive covenants in this Section 9 shall apply according to their respective terms and
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Executive shall be released, effective as of the date of the Change in Control, from any and
all other restrictive covenants that may be included in any written employment agreement between
Executive and the Company that would otherwise survive the Change in Control.
10. Additional Payments.
(a) Notwithstanding anything in this Agreement to the contrary, in the event it is determined
(as hereafter provided) that any payment or distribution to or for Executive’s benefit, whether
paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement or
similar right (a “Payment”), would be subject to the excise tax imposed by Section 4999 of
the Code (or any successor provision thereto), or any interest or penalties with respect to such
excise tax (such excise tax, together with any such interest and penalties, are hereafter
collectively referred to as the “Excise Tax”), then Executive shall be entitled to receive
an additional payment or payments (a “Gross-Up Payment”) in an amount such that, after
payment by Executive of all taxes (including federal, state, and local taxes and any interest or
penalties imposed with respect to such taxes and including any Excise Tax) imposed upon the
Gross-Up Payment, Executive retains (or has withheld and credited on Executive’s behalf for tax
purposes) an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 10(e) hereof, all determinations required to
be made under this Section 10, (including whether an Excise Tax is payable by Executive,
the amount of such Excise Tax, whether a Gross-Up Payment is required, and the amount of such
Gross-Up Payment) shall be made by a nationally-recognized legal or accounting firm (the
“Firm”) selected by Executive in Executive’s sole discretion. Executive agrees to direct
the Firm to submit its determination and detailed supporting calculations to both Executive and the
Company within fifteen (15) calendar days after the Termination Date, if applicable, or such
earlier time or times as may be requested by Executive or the Company. If the Firm determines that
any Excise Tax is payable by Executive and that a Gross-Up Payment is required, the Company shall
pay Executive the required Gross-Up Payment within five (5) business days after receipt of such
determination and calculations. If the Firm determines that no Excise Tax is payable by Executive,
it shall, at the same time as it makes such determination, furnish Executive with an opinion that
Executive has substantial authority not to report any Excise Tax on Executive’s federal income tax
return. Any determination by the Firm as to the amount of the Gross-Up Payment shall be binding
upon Executive and the Company. As a result of the uncertainty in the application of Section 4999
of the Code (or any successor provision thereto) at the time of the initial determination by the
Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company
should have been made (an “Underpayment”). In the event that the Company exhausts its
remedies pursuant to Section 10(e) hereof and Executive thereafter is required to make a
payment of any Excise Tax, Executive may direct the Firm to determine the amount of the
Underpayment (if any) that has occurred and to submit its determination and detailed supporting
calculations to both Executive and the Company as promptly as possible. Any such Underpayment shall
be promptly paid by the Company to Executive, or for Executive’s benefit, within five (5) business
days after receipt of such determination and calculations.
11
(c) Executive and the Company shall each provide the Firm access to and copies of any books,
records and documents in the possession of the Company or Executive, as the case may be, reasonably
requested by the Firm, and otherwise cooperate with the Firm in connection with the preparation and
issuance of the determination contemplated by Section 10(b) hereof.
(d) The fees and expenses of the Firm for its services in connection with the determinations
and calculations contemplated by Section 10(b) hereof shall be borne by the Company. If
such fees and expenses are initially paid by Executive, the Company shall reimburse Executive the
full amount of such fees and expenses within five business days after receipt from Executive of a
statement therefor and reasonable evidence of Executive’s payment thereof.
(e) Executive agrees to notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of a Gross-Up Payment. Such
notification shall be given as promptly as practicable but no later than ten (10) business days
after Executive actually receives notice of such claim. Executive agrees to further apprise the
Company of the nature of such claim and the date on which such claim is requested to be paid (in
each case, to the extent known by Executive). Executive agrees not to pay such claim prior to the
earlier of (i) the expiration of the 30-calendar-day period following the date on which Executive
gives such notice to the Company and (ii) the date that any payment or amount with respect to such
claim is due. If the Company notifies Executive in writing at least five (5) business days prior to
the expiration of such period that it desires to contest such claim, Executive agrees to:
| (i) | provide the Company with any written records or documents in Executive’s possession relating to such claim reasonably requested by the Company, | ||
| (ii) | take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including without limitation accepting legal representation with respect to such claim by an attorney competent in respect of the subject matter and reasonably selected by the Company, | ||
| (iii) | cooperate with the Company in good faith in order effectively to contest such claim, and | ||
| (iv) | permit the Company to participate in any proceedings relating to such claim, provided, however, that the Company shall bear and pay directly all costs and expenses (including interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for and against any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limiting the foregoing provisions of this Section 10(e), the Company shall control all proceedings taken in connection with the contest of any claim contemplated by this Section 10(e) and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim (provided, |
12
| however, that Executive may participate therein at Executive’s own cost and expense) and may, at its option, either direct Executive to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs Executive to pay the tax claimed and xxx for a refund, the Company shall advance the amount of such payment to Executive on an interest-free basis and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax including interest or penalties with respect thereto, imposed with respect to such advance; and provided further, that any extension of the statute of limitations relating to payment of taxes for Executive’s taxable year with respect to which the contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of any such contested claim shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. |
(f) If, after the receipt by Executive of an amount advanced by the Company pursuant to
Section 10(e) hereof, Executive receives any refund with respect to such claim, Executive
agrees (subject to the Company’s complying with the requirements of Section 10(e) hereof)
to promptly pay to the Company the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after Executive’s receipt of an amount
advanced by the Company pursuant to Section 10(e) hereof, a determination is made that
Executive is not entitled to any refund with respect to such claim and the Company does not notify
Executive in writing of its intent to contest such denial of refund prior to the expiration of
thirty (30) calendar days after such determination, then such advance shall be forgiven and shall
not be required to be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid pursuant to this Section 10.
(g) Notwithstanding the foregoing provisions of this Section 10, Gross-Up Payments,
including any Underpayment, will be made only in a manner and to the extent (and at the earliest
date(s)) such that Section 409A of the Code will not be violated.
11. Withholding of Taxes.
The Company may withhold from any amounts payable under this Agreement all federal, state,
city or other taxes as the Company reasonably determines to be required pursuant to any law or
government regulation, order or ruling.
12. Successors, Binding Agreement.
The Company shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substances satisfactory to Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that the
13
Company would be required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle Executive to compensation from the Company in the same
amount and on the same terms as Executive would be entitled hereunder if the Company had terminated
Executive’s employment Without Cause after a Change in Control occurring at the time of succession,
except that for purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Termination Date. This Agreement shall inure to the benefit
of and be enforceable by Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should die while any amounts
would still be payable to Executive hereunder if Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to
Executive’s devises, legates, or other designee or, if there be no such designee, to Executive’s
estate.
13. Notices.
Notices and all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by (i) United States registered
mail, return receipt requested, postage prepaid, or (ii) reputable overnight courier service (i.e.
Federal Express), in each case, addressed to the respective address set forth in this Section
13 or to such other address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective only upon receipt:
| To the Company: | OM Group, Inc. | ||
| 0000 Xxx Xxxxx | |||
| 000 Xxxxxx Xxxxxx | |||
| Xxxxxxxxx, XX 00000 | |||
| Attn: General Counsel | |||
| To Executive: | Xxxxxx X. Xxxxxxxxx | ||
| 00000 Xxxxxxxx Xxxx Xxxx. | |||
| Xxxxx, Xxxx 00000 | |||
| with a copy to: | Xxx X. Xxxxxxx | ||
| Xxxxxxxx Xxxx LLP | |||
| 0000 Xxx Xxxxx | |||
| 000 Xxxxxx Xxxxxx | |||
| Xxxxxxxxx, Xxxx 00000 |
14. Miscellaneous.
No provisions of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge is agreed to in writing signed by Executive and such officer as
may be specifically designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar
14
provisions or conditions at the same or at any prior or subsequent time. This Agreement
constitutes the entire agreement between the Company and Executive with respect to the subject
matter hereof and, except to the extent a specific compensation program provides for benefits upon
a change in control relative to that program, which provisions shall remain in effect, no
agreements or representations, oral or otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not set forth expressly in this Agreement.
Without limiting the generality of the foregoing, this Agreement supersedes and replaces in its
entirety any prior agreement relating to the subject matter hereof, including, without limitation,
the Prior Agreement.
15. Validity.
The invalidity or unenforceability of any one or more provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement, which shall remain
in full force and effect.
16. Counterparts.
This Agreement may be executed in one or more counterparts, any of which may be executed and
delivered via facsimile, each of which shall be deemed to be an original, and all of which together
shall constitute one and the same instrument.
17. Jurisdiction, Choice of Law.
The validity, interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Ohio. In the event of any dispute or controversy arising under or in
connection with this Agreement Executive and the Company hereby irrevocably consent to the
jurisdiction of the Common Pleas Court of the State of Ohio (Cuyahoga County) or the United States
District Court for the Northern District of Ohio.
18. Legal Fees and Expenses.
(a) It is the intent of the Company that Executive not be required to incur the legal expenses
associated with (i) the interpretation of any provision in, or obtaining of any right or benefit
under, this Agreement or (ii) the enforcement of his rights under this Agreement by litigation or
other legal action, because the cost and expense thereof would substantially detract from the
benefits intended to be extended to Executive hereunder. Accordingly, the Company irrevocably
authorizes Executive from time to time to retain counsel of his choice, at the expense of the
Company as hereafter provided, to represent Executive in connection with the interpretation or
enforcement of this Agreement, including the initiation or defense of any litigation or other legal
action, whether by or against the Company or any Director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the Company irrevocably consents
to Executive’s entering into an attorney-client relationship with such counsel, and in that
connection the Company and Executive agree that a confidential relationship shall exist between
Executive and such counsel. The Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys’ and related fees and expenses
15
incurred by Executive under this Section 18, but only if, and to the extent and at the
earliest date(s) that, such actions are determined to be permitted without violating Section 409A
of the Code.
(b) Without limiting the obligations of the Company pursuant to Section 18(a), in the
event a Change in Control occurs, the performance of the Company’s obligations under Sections
5, 6 and 7 and this Section 18 will be secured by amounts deposited or to be deposited
in trust pursuant to certain trust agreements to which the Company will be a party providing that
the benefits to be paid pursuant to Sections 5, 6 and 7 and the fees and expenses of
counsel selected from time to time by Executive pursuant to Section 18(a) will be paid, or
reimbursed to Executive if paid by Executive, either in accordance with the terms of such trust
agreements, or, if not so provided, on a regular, periodic basis upon presentation by Executive to
the trustee of a statement or statements prepared by such counsel in accordance with its customary
practices. Any failure by the Company to satisfy any of its obligations under this Section
18(b) will not limit the rights of Executive hereunder. Subject to the foregoing, Executive
will have the status of a general unsecured creditor of the Company and will have no right to, or
security interest in, any assets of the Company or any Subsidiary.
19. 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. In
particular, to the extent that Executive becomes entitled to a payment or benefit under this
Agreement that would constitute a “deferral of compensation” under Section 409A of the Code and the
date that the payment would be made or benefit provided does not constitute a permitted
distribution date under Section 409A(a)(2) of the Code, then notwithstanding anything to the
contrary in this Agreement, such payment or benefit will be made or provided, to the extent
necessary to comply with the provisions of Section 409A of the Code, to Executive on the earlier of
(a) Executive’s “separation from service” with the Company (determined in accordance with Section
409A); provided, however, that if Executive is a “specified employee” (within the
meaning of Section 409A), Executive’s date of payment shall be the date that is six months after
the date of Executive’s separation of service with the Company, or (b) Executive’s death.
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.
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
| OM GROUP, INC. | ||||||
| By: /s/ Xxxxxxx Xxxxx | ||||||
| Name: Xxxxxxx Xxxxx | ||||||
| Title: Vice President and Chief Financial Officer | ||||||
| ACCEPTED AND AGREED TO
AS OF THIS 13th DAY OF NOVEMBER, 2006 |
||||||
| /s/ Xxxxxx X. Xxxxxxxxx | ||||||
| Xxxxxx X. Xxxxxxxxx | ||||||
