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Exhibit 10.4
SEVERANCE AGREEMENT
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THIS SEVERANCE AGREEMENT (this "Agreement"), dated as of
October 25, 1996, is made and entered into by and between Xxxxxx & Xxxxx
Corporation, an Ohio corporation (the "Corporation"), and _____________ (the
"Executive").
WITNESSETH:
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WHEREAS, the Executive is a senior executive or a key employee
of the Company (as defined herein) and has made and is expected to continue to
make major contributions to the short- and long-term profitability, growth and
financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case for most
publicly held companies, the possibility of a Change in Control (as defined
below) exists;
WHEREAS, the Company desires to assure itself of both present
and future continuity of management and desires to establish certain minimum
severance benefits for certain of its senior executives, including the
Executive, applicable in the event of a Change in Control;
WHEREAS, the Company wishes to ensure that its senior
executives are not practically disabled from discharging their duties in respect
of a proposed or actual transaction involving a Change in Control; and
WHEREAS, the Company desires to provide additional inducement
for the Executive to continue to remain in the ongoing employ of the Company.
NOW, THEREFORE, the Company and the Executive agree as
follows:
1. CERTAIN DEFINED TERMS. In addition to terms
defined elsewhere herein, the following terms have the following meanings
when used in this Agreement with initial capital letters:
(a) "Base Pay" means the Executive's annual base salary at a
rate not less than the Executive's annual fixed or base compensation as
in effect for Executive immediately prior to the occurrence of a Change
in Control or such higher rate as may be determined from time to time
by the Board or a committee thereof. "Base Pay" shall include any
portion of the Executive's annual base salary the receipt of which the
Executive has elected to defer.
(b) "Board" means the Board of Directors of the
Corporation.
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(c) "Cause" means that, prior to any termination
pursuant to Section 3(b), the Executive shall have
committed:
(i) an intentional act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment
with the Company;
(ii) intentional wrongful damage to property of
the Company; or
(iii) intentional wrongful disclosure of secret
processes or confidential information of the Company;
and any such act shall have been materially harmful to the Company. For
purposes of this Agreement, no act or failure to act on the part of the
Executive shall be deemed "intentional" if it was due primarily to an
error in judgment or negligence, but shall be deemed "intentional" only
if done or omitted to be done by the Executive not in good faith and
without reasonable belief that his action or omission was in the best
interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for "Cause" hereunder
unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less
than three quarters of the Board then in office at a meeting of the
Board called and held for such purpose, after reasonable notice to the
Executive and an opportunity for the Executive, together with his
counsel (if the Executive chooses to have counsel present at such
meeting), to be heard before the Board, finding that, in the good faith
opinion of the Board, the Executive had committed an act constituting
"Cause" as herein defined and specifying the particulars thereof in
detail. Nothing herein will limit the right of the Executive or his
beneficiaries to contest the validity or propriety of any such
determination.
(d) "Change in Control" means the occurrence during
the Term of any of the following events:
(i) The Company is merged, consolidated or reorganized
into or with another corporation or other legal person, and as
a result of such merger, consolidation or reorganization less
than a majority of the combined voting power of the
then-outstanding Voting Stock of the corporation or person
surviving such merger, consolidation or reorganization,
immediately after such transaction, are beneficially held,
directly or indirectly, in the aggregate by the beneficial
holders of Voting Stock of the Corporation immediately prior
to such transaction;
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(ii) The Corporation sells or otherwise transfers all or
substantially all of its assets to another corporation or
other legal person, and as a result of such sale or transfer
less than a majority of the combined voting power of the
then-outstanding Voting Stock of such corporation or person
immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock of the Corporation
immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as
promulgated pursuant to the Exchange Act, disclosing that any
person (as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing
25% or more of the combined voting power of the
then-outstanding Voting Stock of the Corporation;
(iv) The Corporation files a report or proxy statement
with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to Form 8-K or Schedule
14A (or any successor schedule, form or report or item
therein) that a change in control of the Company has occurred
or will occur in the future pursuant to any then-existing
contract or transaction; or
(v) If, during any period of two consecutive years,
individuals who at the beginning of any such period constitute
the Directors of the Corporation cease for any reason to
constitute at least a majority thereof; PROVIDED, HOWEVER,
that for purposes of this clause (v) each Director who is
first elected, or first nominated for election by the
Corporation's stockholders, by a vote of at least two-thirds
of the Directors of the Corporation (or a committee thereof)
then still in office who were Directors of the Corporation
at the beginning of any such period will be deemed to have
been a Director of the Corporation at the beginning of such
period.
Notwithstanding the foregoing provisions of Paragraph (iii) or (iv) of
this Subsection, unless otherwise determined in a specific case by
majority vote of the Board, a "Change in Control" shall not be deemed
to have occurred for purposes of Paragraph (iii) or (iv) of this
Subsection solely because (A) the Corporation, (B) a Subsidiary,
(C) any Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company, (D) any person or group of which
employees of the Company or a Subsidiary control a greater
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than 25% interest unless the Board determines that such person or
group is making a "hostile acquisition", or (E) any person or group of
which the Executive is an affiliate either files or becomes obligated
to file a report or a proxy statement under or in response to Schedule
13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) under the Exchange Act
disclosing beneficial ownership by it of shares of Voting Stock,
whether in excess of 25% or otherwise, or because the Corporation
reports that a change in control of the Corporation has occurred or
will occur in the future by reason of such beneficial ownership.
(e) "Company" means the Corporation and its Subsidiaries.
(f) "Employee Benefits" means the perquisites, benefits and
service credit for benefits as provided under any and all employee
retirement income and welfare benefit policies, plans, programs or
arrangements in which Executive is entitled to participate, including
without limitation any stock option, stock purchase, stock
appreciation, savings, pension, supplemental executive retirement, or
other retirement income or welfare benefit, deferred compensation,
incentive compensation, group or other life, health, medical/hospital
or other insurance (whether funded by actual insurance or self-insured
by the Company), disability, salary continuation, expense reimbursement
and other employee benefit policies, plans, programs or arrangements
that may now exist or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter by the Company,
providing perquisites, benefits and service credit for benefits at
least as great in the aggregate as are payable thereunder prior to a
Change in Control.
(g) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(h) "Incentive Pay" means an annual amount equal to not less
than the highest aggregate annual bonus (whether paid in cash or stock
and regardless of any election to defer actual payment of all or any
portion of such bonus), incentive or other payments of compensation
(including the stock portion of the profit-sharing payment contributed
by the Company to the Xxxxxx & Xxxxx Corporation 401(k) Profit Sharing
Plan, but not cash or stock payments in lieu of distributions of
restricted stock which vested in any year or stock options), in
addition to Base Pay, made or to be made in regard to services rendered
in any calendar year during the three calendar years immediately
preceding the year in which the Change in Control occurred pursuant to
any bonus, incentive, profit-sharing, performance, discretionary pay or
similar agreement, policy, plan, program or
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arrangement (whether or not funded) of the Company, or any successor
thereto providing benefits at least as great as the benefits payable
thereunder prior to a Change in Control.
(i) "Severance Period" means the period of time commencing on
the date of the first occurrence of a Change in Control and continuing
until the earliest of (i) the second anniversary of the occurrence of
the Change in Control, (ii) the Executive's death, or (iii) the
Executive's attainment of age 65.
(j) "Subsidiary" means an entity in which the Company directly
or indirectly beneficially owns 50% or more of the outstanding Voting
Stock.
(k) "Term" means the period commencing as of the date hereof
and expiring as of the later of (i) the close of business on December
31, 1998, or (ii) the expiration of the Severance Period; PROVIDED,
HOWEVER, that (A) commencing on January 1, 1998 and each January 1
thereafter, the term of this Agreement will automatically be extended
for an additional year unless, not later than September 30 of the
immediately preceding year, the Corporation or the Executive shall have
given notice that it or the Executive, as the case may be, does not
wish to have the Term extended and (B) subject to the last sentence of
Section 10, if, prior to a Change in Control, the Executive ceases for
any reason to be an employee of the Company and any Subsidiary,
thereupon without further action the Term shall be deemed to have
expired and this Agreement will immediately terminate and be of no
further effect. For purposes of this Subsection, the Executive shall
not be deemed to have ceased to be an employee of the Company and any
Subsidiary by reason of the transfer of Executive's employment between
the Corporation and any Subsidiary, or among any Subsidiaries.
(l) "Termination Date" means the date on which the Executive's
employment with the Company is terminated (the effective date of which
shall be the date of termination, or such other date that may be
specified by the Executive if the termination is pursuant to Section
3(b)).
(m) "Voting Stock" means securities entitled to vote generally
in the election of directors.
2. OPERATION OF AGREEMENT. This Agreement will be effective
and binding immediately upon its execution, but, anything in this Agreement to
the contrary notwithstanding, this Agreement will not be operative unless and
until a Change in Control occurs. Upon the occurrence of a Change in Control at
any time during the Term, without further action, this Agreement shall become
immediately operative.
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3. TERMINATION FOLLOWING A CHANGE IN CONTROL. (a) In the event
of the occurrence of a Change in Control, the Executive's employment may be
terminated by the Company during the Severance Period and the Executive shall be
entitled to the benefits provided by Section 4 unless such termination is the
result of the occurrence of one or more of the following events:
(i) The Executive's death;
(ii) If the Executive becomes permanently disabled within
the meaning of, and begins actually to receive disability
benefits pursuant to, the long-term disability plan in effect
for, or applicable to, Executive immediately prior to the
Change in Control; or
(iii) Cause.
If, during the Severance Period, the Executive's employment is
terminated by the Company or any Subsidiary other than pursuant to
Paragraph (i), (ii) or (iii) of this Subsection, the Executive will be
entitled to the benefits provided by Section 4.
(b) In the event of the occurrence of a Change in Control, the
Executive may terminate employment with the Company and any Subsidiary
during the Severance Period with the right to the benefits provided in
Section 4 upon the occurrence of one or more of the following events
(regardless of whether any other reason, other than Cause as
hereinabove provided, for such termination exists or has occurred,
including without limitation other employment):
(i) Failure to elect or reelect or otherwise to
maintain the Executive in the office or the position, or a
substantially equivalent office or position, of or with the
Company and/or a Subsidiary, as the case may be, which the
Executive held immediately prior to a Change in Control, or
the removal of the Executive as a Director of the Corporation
(or any successor thereto) if the Executive shall have been a
Director of the Corporation immediately prior to the Change in
Control;
(ii) (A) A significant adverse change in the nature or
scope of the authorities, powers, functions, responsibilities
or duties attached to the position with the Company and any
Subsidiary which the Executive held immediately prior to the
Change in Control, (B) a reduction in the aggregate of the
Executive's Base Pay and Incentive Pay received from the
Company and any Subsidiary, or (C) the termination or denial
of the Executive's rights to Employee Benefits or a reduction
in the scope or value thereof, any of which is not remedied by
the Company within 10 calendar days after receipt by the
Corporation of written notice
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from the Executive of such change, reduction or termination,
as the case may be;
(iii) The liquidation, dissolution, merger, consolidation
or reorganization of the Corporation or transfer of all or
substantially all of its business and/or assets, unless the
successor or successors (by liquidation, merger,
consolidation, reorganization, transfer or otherwise) to which
all or substantially all of its business and/or assets have
been transferred (directly or by operation of law) assumed all
duties and obligations of the Company under this Agreement
pursuant to Section 12(a);
(iv) The Company relocates its principal executive
offices, or requires the Executive to have his principal
location of work changed, to any location that is in excess of
25 miles from the location thereof immediately prior to the
Change in Control, or requires the Executive to travel away
from his office in the course of discharging his
responsibilities or duties hereunder at least 20% more (in
terms of aggregate days in any calendar year or in any
calendar quarter when annualized for purposes of comparison to
any prior year) than was required of Executive in any of the
three full years immediately prior to the Change in Control
without, in either case, his prior written consent; or
(v) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the
Company or any successor thereto.
(c) A termination by the Company pursuant to Subsection (a) of
this Section or by the Executive pursuant to Subsection (b) of this
Section will not affect any rights that the Executive may have pursuant
to any agreement, policy, plan, program or arrangement of the Company
providing Employee Benefits, which rights shall be governed by the
terms thereof.
4. SEVERANCE COMPENSATION. (a) If, following the occurrence of
a Change in Control, the Company terminates the Executive's employment
during the Severance Period other than pursuant to Section 3(a), or if
the Executive terminates his employment pursuant to Section 3(b), the
Company will pay to the Executive the following amounts within five
business days after the Termination Date and continue to provide to the
Executive the following benefits:
(i) A lump sum payment in an amount equal to two
times the sum of (A) Base Pay (at the highest rate in effect
for any period prior to the Termination Date),
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plus (B) Incentive Pay (determined in accordance with
the standards set forth in Section 1(h)).
(ii) (A) For a period of 36 months following the
Termination Date (the "Continuation Period"), the Company will
arrange to provide the Executive with Employee Benefits that
are welfare benefits (but not stock option, stock purchase,
stock appreciation or similar compensatory benefits)
substantially similar to those that the 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
3(b)(ii)), except that the level of any such Employee Benefits
to be provided to the Executive may be reduced in the event of
a corresponding reduction generally applicable to all
recipients of or participants in such Employee Benefits, and
(B) such Continuation Period will be considered service with
the Company for the purpose of determining service credits and
benefits due and payable to the Executive under the Company's
retirement income, supplemental executive retirement and other
benefit plans of the Company applicable to the Executive, his
dependents or his beneficiaries immediately prior to the
Termination Date. In addition, the Company shall provide the
Executive, at the Executive's election, with either
outplacement services by a firm selected by the Executive, at
the expense of the Company in an amount up to 20% of the
Executive's Base Pay, or reimbursement of reasonable
outplacement expenses actually incurred by the Executive, in
an amount up to 15% of the Executive's Base Pay. If and to the
extent that any benefit described in Subparagraph (A) or (B)
of this Paragraph 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 the Executive, his
dependents and beneficiaries, of such Employee Benefits.
Without otherwise limiting the purposes or effect of Section
6, Employee Benefits otherwise receivable by the Executive
pursuant to Subparagraph (A) of this Paragraph will be reduced
to the extent comparable welfare benefits are actually
received by the Executive from another employer during the
Continuation Period following the Executive's Termination
Date, and any such benefits actually received by the Executive
shall be reported by the Executive to the Corporation. If the
continued health coverage under Subparagraph (A) of this
Paragraph is provided through participation in the Company's
group health plan, then following such period of continued
health care coverage, the Executive will be eligible to elect
to continue, for himself and his eligible dependents, health
benefits in accordance with the
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provisions of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended.
(b) Upon the occurrence of any of the events described in the
third paragraph of Section 8 of the Company's Stock Option Plan, each
stock option granted to the Executive under such Plan then outstanding
but not exercisable shall immediately become and be exercisable in full
in accordance with the terms of such Plan and the applicable option
agreement between the Corporation and the Executive.
(c) Without limiting the rights of the Executive at law or in
equity, if the Company fails to make any payment or provide any benefit
required to be made or provided hereunder on a timely basis, the
Company will pay interest on the amount or value thereof at an
annualized rate of interest equal to the "prime rate" as quoted from
time to time during the relevant period in the Northeast Edition of THE
WALL STREET JOURNAL. Such interest will be payable as it accrues on
demand. Any change in such prime rate will be effective on and as of
the date of such change.
(d) Notwithstanding any provision of this Agreement to the
contrary, the parties' respective rights and obligations under this
Section and under Sections 6 and 8 will survive any termination or
expiration of this Agreement or the termination of the Executive's
employment following a Change in Control for any reason whatsoever.
5. QUALIFIED PLAN BENEFITS. Upon the occurrence of a Change in
Control, the Executive's account in the Xxxxxx & Xxxxx Corporation
401(k) Profit Sharing Plan shall become 100% vested and nonforfeitable.
6. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in
this Agreement to the contrary notwithstanding, in the event that this
Agreement shall become operative and it shall be determined (as
hereafter provided) that any payment or distribution by the
Corporation or any of its affiliates to or for the benefit of the
Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise pursuant to or by
reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, stock appreciation
right or similar right, or the lapse or termination of any restriction
on or the vesting or exercisability of any of the foregoing (a
"Payment"), would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code") (or any
successor provision thereto) by reason of being considered "contingent
on a change in ownership or control" of the Corporation, within the
meaning of Section 280G of the Code (or any successor provision
thereto) or to any
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similar tax imposed by state or local law, or any interest or penalties
with respect to such tax (such tax or taxes, together with any such
interest and penalties, being hereafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an
additional payment or payments (collectively, a "Gross-Up Payment");
PROVIDED, HOWEVER, that no Gross-up Payment shall be made with respect
to the Excise Tax, if any, attributable to (i) any incentive stock
option, as defined by Section 422 of the Code ("ISO") granted prior to
the execution of this Agreement, or (ii) any stock appreciation or
similar right, whether or not limited, granted in tandem with any ISO
described in clause (i). The Gross-Up Payment shall be in an amount
such that, after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including
any Excise Tax imposed upon the Gross-Up Payment, the Executive retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payment.
(b) Subject to the provisions of Subsection (f) of this
Section, all determinations required to be made under this Section,
including whether an Excise Tax is payable by the Executive and the
amount of such Excise Tax and whether a Gross-Up Payment is required to
be paid by the Company to the Executive and the amount of such Gross-Up
Payment, if any, shall be made by a nationally recognized accounting
firm (the "Accounting Firm") selected by the Executive in his sole
discretion. The Executive shall direct the Accounting Firm to submit
its determination and detailed supporting calculations to both the
Company and the Executive within 30 calendar days after the Termination
Date, if applicable, and any such other time or times as may be
requested by the Company or the Executive. If the Accounting Firm
determines that any Excise Tax is payable by the Executive, the Company
shall pay the required Gross-Up Payment to the Executive within five
business days after receipt of such determination and calculations with
respect to any Payment to the Executive. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall, at
the same time as it makes such determination, furnish the Company and
the Executive an opinion that the Executive has substantial authority
not to report any Excise Tax on his federal, state or local income or
other tax return. As a result of the uncertainty in the application of
Section 4999 of the Code (or any successor provision thereto) and the
possibility of similar uncertainty regarding applicable state or local
tax law at the time of any determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have
been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the
event that the Company exhausts or fails to pursue its remedies
pursuant to
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Subsection (f) of this Section and the Executive thereafter is required
to make a payment of any Excise Tax, the Executive shall direct the
Accounting Firm to determine the amount of the Underpayment that has
occurred and to submit its determination and detailed supporting
calculations to both the Company and the Executive as promptly as
possible. Any such Underpayment shall be promptly paid by the Company
to, or for the benefit of, the Executive within five business days
after receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or the Executive, as the
case may be, reasonably requested by the Accounting Firm, and otherwise
cooperate with the Accounting Firm in connection with the preparation
and issuance of the determinations and calculations contemplated by
Subsection (b) of this Section. Any determination by the Accounting
Firm as to the amount of the Gross-Up Payment shall be binding upon the
Company and the Executive.
(d) The federal, state and local income or other tax returns
filed by the Executive shall be prepared and filed on a consistent
basis with the determination of the Accounting Firm with respect to the
Excise Tax payable by the Executive. The Executive shall make proper
payment of the amount of any Excise Payment, and at the request of the
Company, provide to the Company true and correct copies (with any
amendments) of his federal income tax return as filed with the Internal
Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment.
If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting
Firm determines that the amount of the Gross-Up Payment should be
reduced, the Executive shall within five business days pay to the
Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations
contemplated by Subsection (b) of this Section shall be borne by the
Company. If such fees and expenses are initially paid by the Executive,
the Company shall reimburse the Executive the full amount of such fees
and expenses within five business days after receipt from the Executive
of a statement therefor and reasonable evidence of his payment thereof.
(f) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service or any other taxing authority
that, if successful, would require the
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payment by the Company of a Gross-Up Payment. Such notification shall
be given as promptly as practicable but no later than 10 business days
after the Executive actually receives notice of such claim and the
Executive shall further apprise the 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 the Executive). The Executive shall not pay such
claim prior to the earlier of (i) the expiration of the 30-calendar-day
period following the date on which he gives such notice to the Company
and (ii) the date that any payment of amount with respect to such claim
is due. If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the
Executive shall:
(i) provide the Company with any written records or
documents in his 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 harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this Subsection,
the Company shall control all proceedings taken in connection with the
contest of any claim contemplated by this Subsection 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, however, that the Executive may
participate therein at his own cost and expense) and may, at its
option, either direct the Executive to pay the tax claimed and xxx for
a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts,
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as the Company shall determine; PROVIDED, HOWEVER, that if the Company
directs the Executive to pay the tax claimed and xxx for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income or other
tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and PROVIDED FURTHER, HOWEVER, that any
extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which the
contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the 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 the Executive shall be
entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Subsection (f) of this Section, the
Executive receives any refund with respect to such claim, the Executive
shall (subject to the Company's complying with the requirements of
Subsection (f) of this Section) 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 the receipt by the
Executive of an amount advanced by the Company pursuant to Subsection
(f) of this Section, a determination is made that the Executive shall
not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to
contest such denial or refund prior to the expiration of 30 calendar
days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of any such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid by the Company to the Executive pursuant to this
Section.
7. NO MITIGATION OBLIGATION. The Company hereby acknowledges
that it will be difficult and may be impossible for the Executive to find
reasonably comparable employment following the Termination Date. In addition,
the Company acknowledges that its severance pay plans applicable in general to
its salaried employees do not provide for mitigation, offset or reduction of any
severance payment received thereunder. Accordingly, the payment of the severance
compensation by the Company to the Executive in accordance with the terms of
this Agreement is hereby acknowledged by the Company to be reasonable, and the
Executive will not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise, nor will any
profits, income, earnings or other benefits from any source whatsoever create
any mitigation, offset, reduction or any other obligation on the part
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of the Executive hereunder or otherwise, except as expressly provided in the
last sentence of Section 4(a)(ii).
8. LEGAL FEES AND EXPENSES. (a) It is the intent of the
Company that the Executive not be required to incur legal fees and the
related expenses associated with the interpretation, enforcement or
defense of Executive's rights under this Agreement by litigation or
otherwise because the cost and expense thereof would substantially
detract from the benefits intended to be extended to the Executive
hereunder. Accordingly, if it should appear to the Executive that the
Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes or
threatens to take any action to declare this Agreement void or
unenforceable, or institutes any litigation or other action or
proceeding designed to deny, or to recover from, the Executive the
benefits provided or intended to be provided to the Executive
hereunder, the Company irrevocably authorizes the Executive from time
to time to retain counsel of Executive's choice, at the expense of the
Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense,
including without limitation 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 the Executive's entering into an
attorney-client relationship with such counsel, and in that connection
the Company and the Executive agree that a confidential relationship
shall exist between the Executive and such counsel. Without respect to
whether the Executive prevails, in whole or in part, in connection with
any of the foregoing, the Company will pay and be solely financially
responsible for any and all attorneys' and related fees and expenses
incurred by the Executive in connection with any of the foregoing.
(b) Without limiting the obligations of the Company pursuant
to Subsection (a) of this Section, in the event a Change in Control
occurs, the performance of the Company's obligations under this Section
shall be secured by amounts deposited or to be deposited in trust
pursuant to certain trust agreements to which the Corporation shall
be a party, which amounts deposited shall in the aggregate be not less
than $250,000, providing that the fees and expenses of counsel
selected from time to time by the Executive pursuant to Subsection (a)
of this Section shall be paid, or reimbursed to the Executive if paid
by the Executive, either in accordance with the terms of such trust
agreements, or, if not so provided, on a regular, periodic basis upon
presentation by the Executive to the trustee of a statement
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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 Subsection shall not limit the rights of the Executive
hereunder. Subject to the foregoing, the Executive shall have the
status of a general unsecured creditor of the Company and shall have no
right to, or security interest in, any assets of the Company or any
Subsidiary.
9. CONFIDENTIAL INFORMATION. (a) The Executive acknowledges
and agrees that in the performance of his duties as an officer and/or
employee of the Company, he was and may be brought into frequent
contact with, had or may have had access to, and/or became or may
become informed of confidential and proprietary information of the
Company and/or information which is a trade secret of the Company
(collectively, "Confidential Information"), as more fully described in
Subsection (b) of this Section. The Executive acknowledges and agrees
that the Confidential Information of the Company gained by the
Executive during his association with the Company was or will be
developed by and/or for the Company through substantial expenditure of
time, effort and money and constitutes valuable and unique property of
the Company.
(b) The Executive will keep in strict confidence, and will
not, directly or indirectly, at any time, disclose, furnish,
disseminate, make available, use or suffer to be used in any manner any
Confidential Information of the Company without limitation as to when
or how the Executive may have acquired such Confidential Information.
The Executive specifically acknowledges that Confidential Information
includes any and all information, whether reduced to writing (or in a
form from which information can be obtained, translated, or derived
into reasonably usable form), or maintained in the mind or memory of
the Executive and whether compiled or created by the Company, which
derives independent economic value from not being readily known to or
ascertainable by proper means by others who can obtain economic value
from the disclosure or use of such information, that reasonable efforts
have been put forth by the Company to maintain the secrecy of
Confidential Information, that such Confidential Information is and
will remain the sole property of the Company, and that any retention or
use by the Executive of Confidential Information after the termination
of the Executive's employment with and services for the Company shall
constitute a misappropriation of the Company's Confidential
Information.
(c) The Executive further agrees that he shall return, within
ten (10) days of the effective date of his termination as an employee
of the Company, in good condition, all property of the Company then in
his
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possession, including, without limitation, (i) property, documents
and/or all other materials (including copies, reproductions, summaries
and/or analyses) which constitute, refer or relate to Confidential
Information of the Company, (ii) keys to Company property, (iii) files
and (iv) blueprints or other drawings.
(d) The Executive further acknowledges and agrees that his
obligation of confidentiality shall survive, regardless of any other
breach of this Agreement or any other agreement, by any party hereto,
until and unless such Confidential Information of the Company shall
have become, through no fault of the Executive, generally known to the
public or the Executive is required by law (after providing the Company
with notice and opportunity to contest such requirement) to make
disclosure. The Executive's obligations under this Section are in
addition to, and not in limitation or preemption of, all other
obligations of confidentiality which the Executive may have to the
Company under general legal or equitable principles or statutes.
10. EMPLOYMENT RIGHTS. Nothing expressed or implied in this
Agreement will create any right or duty on the part of the Company or the
Executive to have the Executive remain in the employment of the Company or any
Subsidiary prior to or following any Change in Control. Any termination of
employment of the Executive or the removal of the Executive from the office or
position in the Company or any Subsidiary prior to a Change in Control but
following the commencement of any discussion with any third person that
ultimately results in a Change in Control shall be deemed to be a termination or
removal of the Executive after a Change in Control for purposes of this
Agreement.
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 is required to withhold pursuant to any law or government regulation
or ruling.
12. SUCCESSORS AND BINDING AGREEMENT. (a) The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all
of the business or assets of the Company, by agreement in form and
substance satisfactory to the Executive, expressly to assume and agree
to perform this Agreement in the same manner and to the same extent the
Company would be required to perform if no such succession had taken
place. This Agreement will be binding upon and inure to the benefit of
the Company and any successor to the Company, including without
limitation any persons acquiring directly or indirectly all or
substantially all of the business or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise (and such
successor shall thereafter be deemed the "Company" for the purposes of
this Agreement), but will
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not otherwise be assignable, transferable or delegable by
the Company.
(b) This Agreement will inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and
legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Subsections (a) and (b) of
this Section. Without limiting the generality or effect of the
foregoing, the Executive's right to receive payments hereunder will not
be assignable, transferable or delegable, whether by pledge, creation
of a security interest, or otherwise, other than by a transfer by
Executive's will or by the laws of descent and distribution and, in the
event of any attempted assignment or transfer contrary to this
Subsection, the Company shall have no liability to pay any amount so
attempted to be assigned, transferred or delegated.
13. NOTICES. For all purposes of this Agreement, all
communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in writing and
will be deemed to have been duly given when hand delivered or dispatched by
electronic facsimile transmission (with receipt thereof orally confirmed), or
five business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid, or three business
days after having been sent by a nationally recognized overnight courier service
such as Federal Express or UPS, addressed to the Corporation (to the attention
of the Secretary of the Corporation) at its principal executive office and to
the Executive at his principal residence, or to such other address as any party
may have furnished to the other in writing and in accordance herewith, except
that notices of changes of address shall be effective only upon receipt.
14. GOVERNING LAW. The validity, interpretation, construction
and performance of this Agreement will be governed by and construed in
accordance with the substantive laws of the State of Ohio, without giving effect
to the principles of conflict of laws of such State.
15. VALIDITY. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstances will not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
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16. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Corporation. No waiver by
either party hereto at any time of any breach by the other party hereto or
compliance with any condition or provision of this Agreement to be performed by
such other party will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. This Agreement
supersedes and completely replaces any prior severance or employment agreement
previously applicable to the Executive. No agreements or representations, oral
or otherwise, expressed or implied with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. References to Sections are to references to Sections of this
Agreement.
17. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered as of the date first above written.
XXXXXX & XXXXX CORPORATION
By:_______________________
Title:____________________
___________________________
[Executive]
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