EXHIBIT (10)(c)
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT ("Agreement") made and entered into as of the 1st day
of May, 1999, and amended and restated as of December 1, 2001, by and between
THE XXXXXXXX AND XXXXXXXX COMPANY, a corporation existing under the laws of the
State of Ohio ("Xxxxxxxx"), and XXXXX X. XXXXXXXXXX ("Employee").
W I T N E S S E T H:
WHEREAS, Xxxxxxxx and Employee desire to enter into this Agreement on the
terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing premises and of the mutual
promises set forth below, Xxxxxxxx and Employee hereby agree as follows:
1. DEFINITIONS.
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For purposes of this Agreement, the terms set forth below shall have the
following meanings:
(a) "Annual Compensation Value" shall mean Employee's then-current Base
Compensation plus an amount equal to the average of all Bonuses (excluding any
compensation attributable to stock options of any type granted by Xxxxxxxx)
earned by Employee during the three (3) calendar years preceding the date upon
which the valuation is made.
(b) "Base Compensation" shall mean the then-current annual base salary
(exclusive of Bonuses) of Employee.
(c) "Bonuses" shall mean bonus payments earned by Employee under Xxxxxxxx'
Incentive Compensation Plans and under any future bonus or incentive
compensation plans of Xxxxxxxx for its executive officers. Currently Xxxxxxxx
has in effect the following
Incentive Compensation Plans: the Annual Bonus Plan, the Intermediate Bonus Plan
and the Personal Performance Plan, true and correct copies of which have been
delivered to Employee.
(d) "Change in Control" shall mean the occurrence of any of the following:
(i) Any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") (other than
Xxxxxxx X. Xxxxx, Xx., his children or his grandchildren, Xxxxxxxx, any trustee
or other fiduciary holding securities under an employee benefit plan of Xxxxxxxx
or any company owned, directly or indirectly, by the shareholders of Xxxxxxxx in
substantially the same proportions as their ownership of stock of Xxxxxxxx), who
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of Xxxxxxxx representing
twenty percent (20%) or more of the combined voting power of Xxxxxxxx' then
outstanding securities;
(ii) during any period of two consecutive years (not including any
period prior to the execution of this Plan), individuals who at the beginning of
such period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with Xxxxxxxx to effect
a transaction described in clause (i), (iii) or (iv) of this Section) who
election by Xxxxxxxx' shareholders was approved by a vote of at least two-thirds
(2/3) of the directors at the beginning of the period or whose election or
nomination for election was previously so approved cease for any reason to
constitute at least a majority thereof;
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(iii) the consummation of a merger or consolidation of Xxxxxxxx or any
direct or indirect subsidiary of Xxxxxxxx with any other corporation, other than
(1) a merger or consolidation which would result in the voting securities of
Xxxxxxxx outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof) more than
50% of the combined voting power of the voting securities of Xxxxxxxx or such
surviving entity or parent thereof outstanding immediately after such merger or
consolidation or (2) a merger or consolidation effected to implement a
recapitalization of Xxxxxxxx (or similar transaction) in which no "person" (as
hereinabove defined) is or becomes the beneficial owner, directly or indirectly,
of securities of Xxxxxxxx (not including in the securities beneficially owned by
such person any securities acquired directly from Xxxxxxxx or its affiliates
other than in connection with the securities acquired directly from Xxxxxxxx or
its affiliates other than in connection with the acquisition by Xxxxxxxx or its
affiliates of a business) representing twenty percent (20%) or more of the
combined voting power of Xxxxxxxx' then outstanding securities; or
(iv) the shareholders of Xxxxxxxx approve a plan of liquidation,
dissolution or winding up of Xxxxxxxx or an agreement for the sale or
disposition by Xxxxxxxx of all or substantially all of Xxxxxxxx' assets.
(e) "Discharge For Cause" shall be construed to have occurred whenever
occasioned by reason of felonious acts on the part of Employee, actions by
Employee involving serious moral turpitude or his misconduct in such manner as
to bring substantial and material discredit upon Xxxxxxxx, following the giving
of thirty (30) days' written notice to Employee specifying the respect in which
Xxxxxxxx claims Employee has violated this provision and the failure, inability
or unwillingness of Employee to remedy the situation to the satisfaction of
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Xxxxxxxx within said thirty-day period. In establishing whether a Discharge For
Cause shall have occurred, the standard for judgment shall be the level of
conduct by Employee and by other comparably situated executive officers prior to
the alleged improper activity of Employee for which the Discharge For Cause has
been made.
(f) "Escrow Agreement" shall mean the agreement dated May 1, 1999 entered
into between Xxxxxxxx and Bank One, NA, a copy of which is attached hereto and
made a part hereof as Exhibit A.
(g) "Escrow Agent" shall mean Bank One, NA.
(h) "Escrow Amount" shall mean the amounts placed in escrow by Xxxxxxxx
pursuant to subsection (e)(iii) of Section 7 of this Agreement.
(i) "Escrow Funding Event" shall mean the occurrence of any of the
following events:
(i) Class A Common Shares of Xxxxxxxx have been acquired other than
directly from Xxxxxxxx in exchange for cash or property by any person (other
than Xxxxxxx X. Xxxxx, Xx., his children or his grandchildren, Xxxxxxxx, any
trustee or other fiduciary holding securities under an employee benefit plan of
Xxxxxxxx, or any company owned directly or indirectly by the shareholders of
Xxxxxxxx in substantially the same proportions as their ownership of the stock
of Xxxxxxxx) who either thereby becomes the owner of more than nine and one half
percent (9.5%) of Xxxxxxxx' outstanding Class A Common Shares, or having
directly or indirectly become the owner of more than five percent (5%) of
Xxxxxxxx' Class A Common Shares either alone or in conjunction with another
person has expressed an intent to continue acquiring Xxxxxxxx' outstanding Class
A Common Shares so as to become thereby the owner of more than nine and one-half
percent (9.5%) of such stock either directly or indirectly;
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(ii) Any person (other than Xxxxxxx X. Xxxxx, Xx., his children or
grandchildren, Xxxxxxxx, any trustee or other fiduciary holding securities under
an employee benefit plan of Xxxxxxxx, or any company owned directly or
indirectly by the shareholders of Xxxxxxxx in substantially the same proportions
as their ownership of stock of Xxxxxxxx) has made a tender offer for, or a
request for invitations for tenders of, Class A Common Shares of Xxxxxxxx.
(iii) Any person forwards or causes to be forwarded to shareholders of
Xxxxxxxx proxy statement(s) in any period of twenty-four (24) consecutive
months, soliciting proxies, to elect to the Board of Xxxxxxxx two (2) or more
candidates who were not nominated as candidates in proxy statements forwarded to
shareholders during such period by the Board; or
(iv) The Board adopts a resolution to the effect that, for purposes of this
Agreement, an Escrow Funding Event has occurred.
(j) "Final Annual Compensation" shall mean Employee's Base Compensation at
the time of termination of employment plus an amount equal to the average of all
Bonuses (excluding any compensation attributable to stock options of any type
granted by Xxxxxxxx) earned by Employee during the three (3) calendar years
preceding his termination of employment.
(k) "Final Average Annual Compensation" shall mean the average of
Employee's Base Compensation and Bonuses (excluding any compensation
attributable to stock options of any type granted by Xxxxxxxx) as determined for
the five (5) consecutive calendar years of the last ten (10) calendar years
preceding and including the calendar year in which Employee's employment
terminates which yields the highest sum.
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(l) "Pension Plan" shall mean the existing Xxxxxxxx and
Xxxxxxxx Company Non-Union Pension Plan, as the same may be amended from time to
time.
(m) "Retirement Benefits" shall mean payments to Employee
based upon his lifetime in an annual amount equal to a designated percentage of
Employee's Final Average Annual Compensation or, in the case of Section 7(d)
below, Final Annual Compensation, which shall be comprised of the sum of (i)
Employee's primary Social Security retirement benefits when he is entitled to
receive such benefit (age sixty-two (62)) [until that time an amount equal to
the primary Social Security retirement benefit shall be paid to Employee from
Xxxxxxxx' Supplemental Plan], (ii) Employee's pension benefits determined as a
life annuity (without regard to actual payment form) under the Pension Plan and
deferred compensation payments under the Non-Qualified Deferred Compensation and
Disability Benefit Agreement dated May 1, 1999 between Employee and Xxxxxxxx, or
such other non-contributory deferred compensation agreement(s) then existing
between Xxxxxxxx and Employee, and (iii) such amount of supplemental retirement
benefits under the Supplemental Plan as shall be necessary to achieve the
designated percentage of Employee's Final Average Annual Compensation or, in the
case of Section 7(d) below, Final Annual Compensation. In addition to said
annual amount, Retirement Benefits shall include a continuation of coverage for
the remainder of Employee's life under Xxxxxxxx-sponsored medical benefits and
life insurance programs, but only to the extent applicable to participants in
Xxxxxxxx' Qualified Retiree Medical Plans. For purposes of determining the
amount of supplemental retirement benefits to be made by Xxxxxxxx pursuant to
the Supplemental Plan, the method of payment of retirement benefits to Employee
pursuant to the Pension Plan shall determine the amount and method of payment of
the supplemental retirement payments pursuant to the Supplemental Plan. These
supplemental retirement
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payments by Xxxxxxxx pursuant to the Supplemental Plan shall continue so long as
pension benefits are payable under the Pension Plan and shall be in addition to
the pension benefit payments under the Pension Plan.
(n) "Supplemental Plan" shall mean Xxxxxxxx' existing Supplemental
Retirement Plan, as the same may be amended from time to time.
2. TERMS AND DUTIES.
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(a) The term of this Agreement shall continue from the date hereof and end
on May 1, 2004. Employee shall be employed by Xxxxxxxx as President and Chief
Operating Officer or such other reasonably equivalent position designated by the
Board, consistent with the provisions of this Agreement. In addition, Employee
agrees to perform such other duties as may be specifically designated for him
from time to time by the Board, consistent with the provisions of this
Agreement. Xxxxxxxx shall recommend to the Board that Employee be appointed as a
Director. Subject to Employee's willingness to so extend his employment,
Xxxxxxxx may extend the term of this Agreement for additional renewal periods of
not less than one (1) year each by giving written notice thereof not less than
twelve (12) months prior to May 1, 2004, initially and not less than twelve (12)
months prior to each succeeding renewal term termination date thereafter.
(b) At all times Employee will, to the best of his ability, energy and
skill, faithfully perform all of the duties that may be required of him from
time to time by the Board and diligently devote his entire working time,
attention and efforts to the business affairs and best interests of Xxxxxxxx,
except for absences for sickness and vacations. If the Board determines that any
outside activity engaged in by him is detrimental to the best interests of
Xxxxxxxx, he will discontinue such outside activity within thirty (30) days
after written notice from the Board.
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(c) For a period of two (2) years from and after Employee's employment with
Xxxxxxxx shall have terminated (provided, however, in the event of termination
of Employee's employment due to Xxxxxxxx' decision not to renew this Agreement
the period shall be one (1) year if the renewal period ending is also one (1)
year) and after he shall have ceased receiving retirement (provided that such
retirement benefits have then begun to be paid during the two (2) year (or one
(1) year) period mentioned in this Section 2(c)), severance or disability
benefits under this Agreement, whichever shall last occur, and during the period
of his employment by Xxxxxxxx, he will not, directly or indirectly, further the
affairs of any other corporation, partnership, or any business enterprise by
employment of any kind, investment therein (except as otherwise permitted under
Section 8(d) below), counseling or otherwise, if the same is in competition with
Xxxxxxxx, without the written consent of the Board. This provision, however,
shall not be construed to prevent him from pursuing personal investments in any
business or enterprise which is not in competition with Xxxxxxxx and which do
not interfere with his employment and the performance of his duties to Xxxxxxxx
hereunder.
3. COMPENSATION AND FRINGE BENEFITS.
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(a) The Base Compensation of Employee during the term of this Agreement
shall be $500,000, which may be increased from time to time by the Board or, in
the case of any proposed decrease, such other amount as mutually may be agreed
upon by Employee and Xxxxxxxx; provided, however, that such Base Compensation
may not be reduced below said rate of $500,000 without Employee's consent,
unless necessitated by general business conditions adversely affecting Xxxxxxxx'
operations; but, in the event of a reduction, his Base Compensation shall be
fair and reasonable, and any disagreement concerning the same shall be resolved
by arbitration in the manner provided in Section 9 below. Employee's Base
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Compensation shall be reviewed at least annually to determine whether in view of
Xxxxxxxx' performance during the year any increase is warranted. Responsibility
for this determination rests within the sole discretion of the Board, and this
provision shall not be construed as requiring any such increase for any given
year.
(b) Employee shall participate in the non-qualified deferred plan referred
to in Section 1(m) above and the bonus plan arrangements under the Incentive
Compensation Plans (or their equivalent) for executive officers of Xxxxxxxx and
shall be entitled to such awards under any future bonus, incentive, or similar
compensation plans of Xxxxxxxx, as shall, in the determination of the Board, be
appropriate and consistent with the purposes of such plans and with the awards
granted to other executive officers of Xxxxxxxx.
(c) Employee shall be eligible to participate in the Stock Option Plan
-1995 of Xxxxxxxx and shall be entitled to the grant of such options to purchase
shares of Class A Common Stock ("Common Stock") of Xxxxxxxx under any other
future stock option plans for employees and to participate in such other
executive compensation incentive plans awarding stock as shall, in the
determination of the Board, be appropriate and consistent with the purposes of
the plans and with the grants of such options to the executive officers of
Xxxxxxxx. Effective the date hereof, Xxxxxxxx hereby awards Employee
non-qualified stock options covering 300,000 shares of Common Stock on the terms
and conditions of the Stock Option Agreements entered into between the parties
simultaneously herewith and attached hereto as Exhibits B and C and made a part
hereof.
(d) Xxxxxxxx hereby agrees to grant to Employee additional non-qualified
stock options covering 200,000 shares of Common Stock at the option price of one
cent ($.01)
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per share. The Stock Option Agreement to be used for this option is attached
hereto as Exhibit D and made a part hereof.
(e) In addition to the specific benefits provided for Employee under the
terms of this Agreement, Xxxxxxxx shall provide him with other fringe benefits
(including bonuses, vacations, health and disability insurance, pension plan
participation and others) at least equivalent to those of the other executive
officers of Xxxxxxxx and as set forth on Exhibit E attached hereto and made a
part hereof. Notwithstanding anything contained herein or in any Incentive
Compensation Plans in which Employee participates, Xxxxxxxx shall pay to
Employee a bonus of at least $350,000 for the period ended September 30, 1999,
payable not later than November 30, 1999; provided, however, Employee shall be
continuously employed by Xxxxxxxx from the date hereof at least through
September 30, 1999.
4. EXPENSES
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Employee shall be reimbursed for his reasonable business-related expenses
incurred for the benefit of Xxxxxxxx in accordance with Xxxxxxxx' policies
governing such reimbursement in effect from time to time. Such expenses shall
include, but shall not be limited to, travel, lodging away from home,
entertainment, and meals. With respect to any expenses which are reimbursed by
Xxxxxxxx to Employee, Employee shall account to Xxxxxxxx in sufficient detail to
entitle Xxxxxxxx to a federal income tax deduction for such reimbursed item if
such item is deductible.
5. RETIREMENT AND EARLY RETIREMENT BENEFITS.
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(a) If Employee continues his employment with Xxxxxxxx until he attains age
sixty-two (62), he shall be entitled to receive at the time of his retirement,
Retirement Benefits at a level equal to sixty percent (60%) of his Final Average
Annual Compensation. If Employee
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continues his employment with Xxxxxxxx beyond age sixty-two (62), the level of
his retirement benefits as a percentage of his Final Average Annual Compensation
shall be increased by one percent (1%) for each additional twelve (12) month
period over age sixty-two (62) with a maximum Retirement Benefit of sixty-three
percent (63%) of Final Average Annual Compensation.
(b) For each year prior to age sixty-two (62) Employee is employed by
Xxxxxxxx, his Retirement Benefits as a percentage of his Final Average Annual
Compensation shall accrue at the rate of four percent (4%) per year, payable
beginning at age sixty-two (62). As an example, if Employee terminates
employment due to death, disability, resignation or otherwise after ten (10)
years of employment with Xxxxxxxx, he shall be entitled to a Retirement Benefit
equal to forty percent (40%) of his Final Average Annual Compensation payable
beginning at age sixty-two (62). For purposes of this paragraph, a "year of
employment" shall mean each twelve (12) month period or part thereof from the
date hereof in which Employee works at least 1,000 hours.
(c) In the event Employee remains continuously employed with Xxxxxxxx at
least until May 1, 2009, he shall be entitled to an early retirement benefit
payable commencing on the date of termination of employment which shall be
actuarially reduced to reflect the fact that payments shall commence prior to
age sixty-two (62).
(d) To the extent Employee receives any similar benefits under the Pension
Plan, Supplemental Plan or other Xxxxxxxx benefit plan for any of its employees,
such benefits shall be included in calculating the amount to which Employee
shall be entitled under Sections 5(a) and 5(b) above; provided, however, that in
no event shall the benefits described in Sections 5(a) and 5(b) above be reduced
by the provisions of this Section 5(d).
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6. DISABILITY AND DEATH BENEFITS.
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(a) If Employee becomes disabled prior to his retirement he shall be
entitled to an annual disability benefit equal to fifty percent (50%) of his
Annual Compensation Value; provided, however, that such annual benefit under
this Agreement shall not exceed $500,000. The disability benefit shall be
provided through the then existing Xxxxxxxx sponsored disability plan with
Xxxxxxxx making any additional contributions as may be necessary to pay Employee
the required amount, and said benefit shall also be offset by any Retirement
Benefits which Employee may then be receiving. The disability benefit, including
any Xxxxxxxx required contribution, shall be paid so long as and on the same
terms and conditions as the payments being made under the Xxxxxxxx sponsored
disability plan. See Section 7(c) below.
(b) In the event of Employee's death while still employed by Xxxxxxxx
pursuant to this Agreement, Employee shall be entitled to Retirement Benefits
calculated as if he had elected retirement as of the day before his actual
death. Xxxxxxxx shall also pay to such beneficiary or beneficiaries as he shall
have designated by written notice delivered to Xxxxxxxx prior to his death, or
failing such written notice, to his estate, an amount equal to the Base
Compensation plus the Bonuses, if any, which Employee would have received or
which would have been accrued for his benefit during the period of six (6)
months immediately following his death if he had lived and had been employed by
Xxxxxxxx during that period. Such payment shall be made in one lump sum or in
six (6) equal monthly installments as Xxxxxxxx shall elect and shall be in
addition to the proceeds of any insurance policies carried on Employee's life
with respect to which he has the right to designate beneficiaries. Also,
Xxxxxxxx shall pay to Employee's spouse an amount, periodically as such payments
are required to be made by said spouse, to enable her to continue medical
coverage for her and her dependents in the same
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manner as immediately prior to Employee's death for a period expiring at the
earlier of: (i) her death; (ii) forty-two (42) months after Employee's death; or
(iii) eligibility for regular Medicare and Medicaid or any successor programs
furnished by the government. Thereafter, Xxxxxxxx shall make available to
Employee's spouse (including her dependents), at her cost, such medical coverage
as shall be available to a person of her then age under the then-existing
Xxxxxxxx-sponsored medical benefits program, but only to the extent coverage is
available under such program.
7. TERMINATION; DISCHARGE.
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(a) TERMINATION OR DISCHARGE WITHOUT CAUSE. Xxxxxxxx reserves the right to
discharge Employee at any time and for any reason; but such discharge, unless a
Discharge For Cause, shall not extinguish the obligation of Xxxxxxxx to provide
Employee (and, in the event of his prior death, his designated beneficiary or
beneficiaries or his estate) with the following severance benefits:
(i) If Xxxxxxxx does not renew this Agreement, Employee shall be entitled
to receive for a period expiring one (1) year from May 1, 2004 (or any renewal
termination date thereof if the renewal term then ending is also one (1) year)
payments from Xxxxxxxx in an amount equal to his Annual Compensation Value,
which shall be reduced by seventy percent (70%) of the amount of compensation
received by Employee from any subsequent employment obtained by him during said
payment period.
(ii) If such discharge occurs prior to May 1, 2004 (or thereafter if the
renewal term then ending is greater than one (1) year), Employee shall be
entitled to receive for a period expiring two (2) years from the date of
discharge, payments from Xxxxxxxx in an amount equal to his Annual Compensation
Value, which shall be reduced by seventy percent (70%) of the
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amount of compensation received by Employee from any subsequent employment
obtained by him during said payment period.
(iii) Employee shall be entitled, during the period expiring on the earlier
of Employee's securing other employment or two (2) years from the date of
discharge (or such longer period as required by law), to continuing coverage
under the then-existing Xxxxxxxx-sponsored medical benefits program, which, at
the option of Xxxxxxxx, may be provided outside of such program through the
purchase of insurance or otherwise.
(iv) For purposes of determining Employee's benefits under the Supplemental
Plan, Employee shall receive credit toward his Years of Service under the
Supplemental Plan for the time period that he receives or is entitled to receive
payments under subsections (i) or (ii) of this Section 7(a). In addition, during
the time period that he receives or is entitled to receive payments under said
subsections (i) or (ii) of this Section 7(a), Employee's Base Compensation shall
be deemed to be increased by the annual economic range adjustment for Xxxxxxxx'
salaried employees announced in October of each year (or, if there is no such
announced economic range adjustment in a given year, by an assumed five (5%)
increase for that year) in order to calculate his highest earnings during five
(5) consecutive years out of the last ten (10) years prior to retirement under
the Supplemental Plan, and his Final Annual Compensation (see Section 7(d)
below) and Final Average Annual Compensation shall be deemed to increase in the
same manner for purposes of determining the amount of his Retirement Benefits
under this Agreement.
(v) Employee shall be reimbursed for up to $20,000 for out-placement fees
if he chooses to seek other employment following his discharge by Xxxxxxxx.
Employee shall not be obligated to seek other employment in order to mitigate
his damages resulting from his discharge.
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(vi) In addition to all of the foregoing, Employee shall be entitled to
receive the payments required of Xxxxxxxx under the non-qualified deferred
agreement referred to in Section 1(m) above in accordance with the terms of such
agreement(s).
Employee acknowledges that he shall remain subject to and bound by the
restrictive provisions of Section 8 below.
(b) DISCHARGE FOR CAUSE. If Employee's employment with Xxxxxxxx is
terminated by a Discharge For Cause, regardless of whether such Discharge For
Cause occurs after the occurrence of any of the events set forth in Sections
7(d) or 7(e) below, he shall be entitled to receive only his Base Compensation
up to the date of his discharge and no further payments hereunder shall be
required from Xxxxxxxx; provided, however, that Employee shall be entitled to
receive his benefits, if any, under the Pension Plan and the payments required
of Xxxxxxxx under his then-existing deferred compensation agreement(s) with
Xxxxxxxx in accordance with the terms of such agreement(s). Employee shall
remain subject to the restrictive provisions of Section 8 below for a period for
two (2) years from the date of discharge. Should Employee disagree that his
discharge was a Discharge For Cause the question shall be submitted to
arbitration in accordance with Section 9 below.
(c) TERMINATION DUE TO DISABILITY. If, by reason of illness, disability, or
other incapacity certified by two (2) physicians competent to do so in the
opinion of Xxxxxxxx' Board of Directors, Employee is unable to perform the
duties required of him under this Agreement for a period of six (6) consecutive
months, Xxxxxxxx, following the giving of thirty (30) days' written notice to
Employee and the failure of Employee by reason of illness, disability, or other
incapacity to resume his duties within such thirty (30) days and thereafter
perform the same for a period of two (2) consecutive months, may terminate
Employee's employment by giving him
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written notice thereof; and in that event all obligations of Xxxxxxxx hereunder
shall cease on the date such notice of termination is given except for payment
of the disability benefits under Section 6 above and except that Employee's
Retirement Benefits shall continue to accrue at the rate of four percent (4%)
per year for each year he continues to receive disability payments under said
Section 6.
(d) BENEFITS UPON TERMINATION UNDER CERTAIN CIRCUMSTANCES. If Employee
voluntarily terminates his employment or Employee is discharged by Xxxxxxxx and
such discharge is not a Discharge For Cause, and if such voluntary termination
or involuntary discharge takes place within eighteen (18) months after the
occurrence of any of the following events:
(i) Employee is required by Xxxxxxxx, prior to a Change in Control, to
perform duties or services which differ significantly from those performed by
him on the effective date hereof or which are not ordinarily and generally
performed by a President and Chief Operating Officer (or either one of the
foregoing positions) of a corporation similar in size and scope to Xxxxxxxx; or
(ii) The nature of the duties or services which Xxxxxxxx, prior to a Change
in Control, requires him to perform necessitates absence overnight from his
place of residence on the effective date hereof, because of travel involving the
business or affairs of Xxxxxxxx, for more than ninety (90) days during any
period of twelve (12) consecutive months; Employee shall be entitled to receive
from Xxxxxxxx all of the severance benefits set forth in Section 7(a) above,
except that Employee's right to receive his Retirement Benefits shall be based
upon his Final Annual Compensation, as the same may be adjusted pursuant to
Section 7(a)(iv) above. Employee shall remain subject to and bound by the
restrictive provisions of Section 8 below.
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(e) BENEFITS UPON A CHANGE IN CONTROL. Xxxxxxxx recognizes that the threat
of a Change in Control would be of significant concern to Employee. The
following provisions provide termination protection for Employee in the event of
a Change in Control. These provisions, among other purposes, are intended to
xxxxxx and encourage Employee's continued attention and dedication to his duties
in the event of such potentially disturbing and disruptive circumstances.
Xxxxxxxx, therefore, agrees to do the following:
(i) If Xxxxxxxx terminates Employee's employment for any reason other than
a Discharge for Cause, or if Employee terminates his employment with Xxxxxxxx
voluntarily for any reason other than disability or retirement within the
twenty-four (24) month period following a Change in Control, Employee shall be
entitled to receive from Xxxxxxxx the following benefits:
(A) A lump sum severance payment (the "Severance Payment"), in cash,
equal to three (3) times the sum of (i) the higher of Employee's annual Base
Compensation in effect immediately prior to the occurrence of the event or
circumstance upon which such termination of employment is based or in effect
immediately prior to the Change in Control, and (ii) the average of Employee's
Bonuses during the three (3) calendar years immediately preceding the year in
which the date of termination occurs.
(B) Employee shall be entitled, during the period expiring on the
earlier of his securing other employment or twenty-four (24) months from the
date of such termination of employment (or such longer period as required by
law), to continued coverage under the Xxxxxxxx sponsored medical benefits
program in existence on such date of termination or, if such continued coverage
is barred, Xxxxxxxx shall provide equivalent medical benefit coverage through
the purchase of insurance or otherwise.
(C) For purposes of determining Employee's benefits under the
Supplemental Plan, Employee shall receive credit toward his Years of Service
under the Supplemental Plan for the two (2) year period following such
termination of employment. In
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addition, with respect to the two (2) year period following such termination of
employment, Employee's Base Compensation shall be deemed to be increased by the
annual economic range adjustment for Xxxxxxxx' salaried employees announced in
October of each year (or, if there is no such announced economic range
adjustment in a given year, by an assumed five percent (5%) increase for that
year) in order to calculate his highest earnings during five (5) consecutive
years out of the last ten (10) years prior to retirement under the Supplemental
Plan.
(D) Employee shall be reimbursed for up to $20,000 for outplacement
fees if he chooses to seek other employment following his discharge by Xxxxxxxx.
Employee shall not be obligated to seek other employment in order to mitigate
his damages resulting from his discharge.
(E) In addition to all of the foregoing, Employee shall be entitled to
receive the payments required of Xxxxxxxx under his then-existing deferred
compensation agreement(s) with Xxxxxxxx in accordance with the terms of such
agreement(s), and the retirement benefit provided for in Section 5 of this
Agreement.
The benefits provided in this Section 7(e) shall be in lieu of any benefits
provided under Section 7(d) of this Agreement.
(ii) Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by Employee in connection
with a Change in Control or the termination of Employee's employment (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with Xxxxxxxx, any person whose actions result in a Change in Control
or any person affiliated with Xxxxxxxx or such person) (all such payments and
benefits, including the Severance Payment, being hereinafter called "Total
Payments") would be subject (in whole or part), to an excise tax pursuant to
Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended (the
"Code") (such tax hereinafter referred to as the "Excise Tax"), then the
Severance Payment shall be reduced to the extent
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necessary so that no portion of the Total Payments is subject to Excise Tax
(after taking into account any reduction in the Total Payments provided by
reason of Section 280G of the Code in such other plan, arrangement or agreement)
if (A) the net amount of such Total Payments, as so reduced, (and after
deduction of the net amount of federal, state and local income tax on such Total
Payments), is greater than (B) the excess of (i) the net amount of such Total
Payments, without reduction (but after deduction of the net amount of federal,
state and local income tax on such Total Payments), over (ii) the amount of
Excise Tax to which Employee would be subject in respect of such Total Payments.
For purposes of determining whether and the extent to which the Total Payments
will be subject to the Excise Tax, (i) no portion of the Total Payments the
receipt or enjoyment of which Employee shall have effectively waived in writing
prior to the date of this termination of employment shall be taken into account,
(ii) no portion of the Total Payments shall be taken into account which in the
opinion of tax counsel selected by Xxxxxxxx does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, (including by
reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax,
no portion of such Total Payment shall be taken into account which constitutes
reasonable compensation for services actually rendered, within the meaning of
Section 280G(b)(4)(B) of the Code, in excess of the base amount as defined in
Section 280G(b)(3) of the Code allowable to such reasonable compensation, and
(iii) the value of any non-cash benefit or any deferred payment or benefit
included in the Total Payments shall be determined by Xxxxxxxx in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code. Prior to the
fifth day following the date of Employee's termination of employment, Xxxxxxxx
shall provide Employee with its calculation of the amounts referred to in this
Section and such supporting materials as are reasonably necessary for Employee
to evaluate Xxxxxxxx' calculations. If Employee objects to
19
Xxxxxxxx' calculations, he shall notify Xxxxxxxx of his objections prior to the
initial payment date set forth in Section 7(e)(vi) hereof, and Xxxxxxxx shall
pay to Employee such portion of the Severance Payment (up to one hundred percent
(100%) thereof) as Employee determines is necessary to result in Employee's
receiving the greater of clauses (A) and (B) of this Section.
(iii) Upon the occurrence of an Escrow Funding Event, Xxxxxxxx shall pay
into an escrow account at the Escrow Agent an amount equal to three (3) times
the sum of (i) Employee's Base Compensation in effect immediately prior to the
Escrow Funding Event and (ii) the average of Employee's Bonuses during the three
(3) calendar years immediately preceding the year in which the Escrow Funding
Event occurs. Subsequent to the delivery to the Escrow Agent of the Escrow
Amount, Xxxxxxxx shall, in the event that either Employee's Base Compensation is
increased (or decreased) or he receives a Bonus that affects the amount
described in Section 7(e)(i)(A), unless the Escrow Amount shall theretofore have
been released pursuant to this subsection, recalculate the Escrow Amount as of
the date such change in Base Compensation or receipt of Bonus occurs, treating
the Escrow Funding Event as having occurred on such date. If the amount so
calculated exceeds the fair market value of the Escrow Amount, Xxxxxxxx shall
promptly (and in no event later than seven (7) days from such date) pay to the
Escrow Agent an amount in cash (or marketable securities or any combination
thereof) equal to such excess. If the Escrow Amount so calculated is less than
the fair market value of the Escrow Amount then held in the escrow account, the
Escrow Agent, upon receipt of a written request from Xxxxxxxx, shall distribute
to Xxxxxxxx such difference in cash; provided, however, that this sentence shall
not apply after the occurrence of a Change in Control.
(iv) Unless the parties otherwise agree, Xxxxxxxx may withdraw the Escrow
Amount when and only when two (2) years have expired from the date of deposit
and no proper
20
demand pursuant to Section 7(e)(vi) below has been made during the time, or when
the conditions requiring the deposit have ceased to exist for a period of ninety
(90) days without a demand right having been created, or when Employee's right
to a payment under this Section 7(e) has been forfeited, whichever occurs first.
If, before the expiration of such period or forfeiture, there shall occur
another Escrow Funding Event, Xxxxxxxx will not be required to make an
additional deposit, but the two (2) year period shall then be measured from the
date of the last such event. Notwithstanding a deposit with the Escrow Agent
pursuant to subsection (iii) of this Section 7(e), Employee shall continue to be
entitled to receive all of the benefits from Xxxxxxxx under this Agreement until
a termination of employment shall occur.
(v) Xxxxxxxx shall pay the charges of the Escrow Agent for its services
under the Escrow Agreement, and Xxxxxxxx will be entitled to any interest or
other income arising from the date of the deposit of the Escrow Amount until all
payments have been made under the Escrow Agreement to Employee. All interest or
other income arising from the Escrow Amount deposited with the Escrow Agent
shall be paid monthly to Xxxxxxxx.
(vi) If Xxxxxxxx terminates Employee's employment for any reason but a
Discharge for Cause, or if Employee terminates his employment with Xxxxxxxx
voluntarily for any reason other than disability or retirement within the
twenty-four (24) month period following the date of a Change in Control, the
Escrow Agent, upon written demand made on or after the tenth (10th) day
following such termination of employment, shall pay the Escrow Amount in
accordance with this Section and Employee shall no longer be subject to the
restrictive provisions of Section 8 below, except for Section 8(e). Employee
shall notify the Escrow Agent prior to the tenth (10th) day following his
termination of employment as to whether he has accepted the determination of
Xxxxxxxx of the amount of the Severance Payments pursuant to
21
Section 7(e) (iii). If he has accepted such determination, Xxxxxxxx shall
provide the Escrow Agent with Xxxxxxxx' written determination as set forth in
Section 7(e) (iii) and the Escrow Agent shall pay to Employee all or a portion
of the Escrow Amount as provided in such determination, and any remaining amount
shall be paid to Xxxxxxxx. If Employee does not accept Xxxxxxxx' determination,
Employee shall provide to the Escrow Agent his determination of the Severance
Payment, and the Escrow Agent shall pay to Employee all or a portion of the
Escrow Amount as provided in Employee's determination and any remaining amount
shall be paid to Xxxxxxxx.
(vii) In the event that, following the creation of a demand right pursuant
to Section 7(e)(vi) above, Employee incurs any costs or expenses, including
attorneys' fees, in the enforcement of rights under this Section 7(e) or under
any plan for the benefit of employees of Xxxxxxxx, including without limitation
the stock option plan, pension plans, payroll-based stock ownership plan, tax
deferred savings and protection plan, bonus arrangements, supplemental pension
plan, deferred compensation agreements, incentive compensation plans, and life
insurance and compensation program, then, unless Xxxxxxxx or the consolidated,
surviving or transferee entity in the event of a consolidation, merger or sale
of assets, is wholly successful in defending against the enforcement of such
rights, Xxxxxxxx, or such consolidated, surviving or transferee entity, shall
promptly pay to Employee all such costs and expenses.
8. NON-COMPETITION; CONFIDENTIALITY.
---------------------------------
(a) In order to protect Xxxxxxxx, it is understood that a covenant not to
compete is a necessary and appropriate adjunct to the other provisions of this
Agreement. Therefore, should Employee at any time determine prior to the
expiration of this Agreement that he does not desire to remain an employee of
Xxxxxxxx and shall terminate his employment for
22
any reason other than the grounds specified in Section 7(e) above, or should he
be Discharged For Cause by Xxxxxxxx, Employee shall remain subject to the
restrictive provisions hereinafter set forth. In addition, these restrictive
provisions shall remain in full force and effect at any other time (subject to
the limitations set forth in Sections 8(b) and 8(c) below) during which payments
are required to be made by Xxxxxxxx pursuant to the retirement (Section 5),
severance (Section 7, except for Section 7(e)(vi)) or disability (Section 6)
provisions of this Agreement. These restrictive provisions are as follows:
(b) For a period of two (2) years from and after Employee's employment with
Xxxxxxxx shall have terminated (provided, however, in the event of termination
of Employee's employment due to Xxxxxxxx' decision not to renew this Agreement
the period shall be one (1) year if the renewal period ending is also one (1)
year) and after he shall have ceased receiving retirement (provided that such
retirement benefits have then begun to be paid during the two (2) year (or one
(1) year) period mentioned in this Section 8(b)), severance or disability
benefits under this Agreement, whichever shall last occur, he shall not,
directly or indirectly, compete with Xxxxxxxx or any of its related or
affiliated companies. For purposes of this Agreement, competition with Xxxxxxxx
or any of its related or affiliated companies shall include the manufacture,
distribution, and sale of business forms and computer hardware and software and
the furnishing of EDP services which are similar in nature or function to the
products and/or services then being furnished by Xxxxxxxx for sale in the same
vertical markets in which Xxxxxxxx' products and/or services are then being
marketed at the time of Employee's termination of employment or upon the
cessation of any retirement, severance or disability benefits under this
Agreement.
23
(c) From and after the execution of this Agreement and for a period of two
(2) years after termination (provided, however, in the event of termination of
Employee's employment due to Xxxxxxxx' decision not to renew this Agreement the
period shall be one (1) year if the renewal period ending is also one (1) year)
of his employment with Xxxxxxxx and after he shall have ceased receiving
retirement (provided that such retirement benefits have then begun to be paid
during the two (2) year (or one (1) year) period mentioned in this Section
8(c)), severance or disability benefits under this Agreement, whichever shall
last occur, Employee shall not, directly or indirectly, by direct participation,
by purchase of stocks or bonds or other evidences of indebtedness, by loaning of
money, by guarantee of loans of others, by gift to establish or assist others,
or in any other manner or fashion, engage in any such restricted activity in
competition with Xxxxxxxx or any of its related or affiliated companies, nor
shall he assist any present employees of Xxxxxxxx or any other person similarly
to engage in such competing business for the full two-year prohibition period
set forth in this Agreement.
(d) The restrictive provisions of this Section 8, however, are in no way
intended to prohibit Employee from acquiring in open market transactions
investments in equity stock or evidences of indebtedness of a corporation if the
said stock or if the said evidence of indebtedness is traded on a national or
regional securities exchange or in the over-the-counter market and the
investment therein represents no more than five percent (5%) of the outstanding
securities of the issue being acquired. Moreover, it is not the intention of
this Section 8 to limit in any way Employee's ability to invest in businesses
not competitive with Xxxxxxxx.
(e) Employee shall keep secret and inviolate all knowledge or information
of a confidential nature (which is not then nor later, through no breach of this
Agreement, in the public domain), including all unpublished matters related to,
without limitation thereof, the
24
business, properties, accounts, books and records, research and development
information, processes, procedures, products, know-how, trade secrets,
memoranda, devices, suppliers, and customers of Xxxxxxxx which he may now know
or hereafter come to know as a result of his affiliation in business with
Xxxxxxxx.
(f) All copyrights, improvements, discoveries and inventions and all
claims, interest and rights thereto relating to any part of the business of
Xxxxxxxx conceived, developed or made by Employee, either alone or with others,
during the period of his employment, and whether conceived, developed or made
during his regular working hours or at any other time during such period, shall
be and are the sole property of Xxxxxxxx and Employee hereby assigns to Xxxxxxxx
all right, title and interest in and to such copyrights, improvements,
discoveries and inventions. Further, Employee will, at any time in the future
upon Xxxxxxxx' request, execute specific assignments of any said copyrights,
improvements, discoveries and inventions as well as execute all documents and
perform all lawful acts which Xxxxxxxx deems necessary or advisable to vest full
ownership thereof in Xxxxxxxx, to register same in the name of Xxxxxxxx or its
designee or otherwise to provide legal protection for Xxxxxxxx' ownership
interests therein.
(g) This Agreement shall be without geographical limitation in continental
North America and, in addition, in any other areas of the world in which
Xxxxxxxx or any of its related or affiliated companies shall be doing business
at the time of the proposed competing entry into business by Employee, it being
agreed that the contacts of Employee and the potential scope of operation of
Xxxxxxxx is without any limitation within the area of prohibition. Any violation
of this covenant may be enforced by specific performance in any court of
competent jurisdiction within the area of limitation imposed by this provision.
If any court of competent jurisdiction shall determine that either the period or
the territory covered by this provision
25
against competition in unreasonable, said provision shall not be determined to
be null, void, and of no effect but shall be reformed by said court to impose a
reasonable period or a reasonable geographical limitation, as the case may be.
9. RESOLUTION OF DISPUTES; ARBITRATION.
------------------------------------
(a) Except for the breach or threatened breach by Employee of
the noncompetition provisions of this Agreement which may be enforced by
appropriate injunctive relief at the option of Xxxxxxxx, any dispute or
controversy arising out of or relating to this Agreement, including, but not
limited to, whether Employee has been Discharged for Cause, shall be submitted
to and settled by arbitration in Dayton, Ohio in accordance with the rules then
pertaining of the American Arbitration Association.
(b) Should Employee disagree that his termination was due to a
Discharge for Cause, the question shall, within thirty (30) days after the
termination, be submitted to arbitration by three (3) arbitrators, one of whom
shall be selected by Xxxxxxxx, another of whom shall be selected by Employee,
and the third of whom shall be selected by the two arbitrators so appointed. The
decision of these arbitrators on the question shall be final and conclusive upon
Xxxxxxxx and upon Employee and his wife or widow, personal representatives,
designated beneficiaries and heirs, and shall be enforceable in any court having
competent jurisdiction thereof. A discharge which is eventually determined under
arbitration to have been a Discharge for Cause, or no arbitration having been
requested and the discharge being one which Xxxxxxxx had determined was for a
Discharge for Cause, shall extinguish any and all liability of Xxxxxxxx under
this Agreement from and after the date of termination.
(c) The arbitrators for all other disputes or controversies
under this Agreement shall be selected as set forth above and the parties shall
select the arbitrators within thirty (30)
26
days after demand from Employee or Xxxxxxxx to the other to settle matters by
arbitration. As stated above, the decision of the arbitrators shall be final and
conclusive.
10. NONASSIGNABLE RIGHTS.
---------------------
Employee, his wife, or his widow after his death, or his personal
representatives, designated beneficiaries and heirs, shall not have the right to
anticipate or commute, or to sell, assign, transfer, or otherwise alienate or
convey the right to receive any payments hereunder, whether by his, her or their
voluntary or involuntary act, or by operation of law and, in particular, that
any payments due hereunder shall not be subject to attachment or garnishment or
any other legal proceedings by any creditor, or be in any way responsible for
the debts or liabilities of Employee or his wife or his widow after his death or
his personal representatives, designated beneficiaries and heirs. Should
Employee or his wife or his widow after his death or his personal
representatives, designated beneficiaries and heirs, voluntarily attempt to
breach this Section of this Agreement, Xxxxxxxx' liability to make payments
hereunder from and after the date of said attempt shall be extinguished; and
should any attempt be made to reach the payments by other than Employee or his
wife or his widow after his death or his personal representatives, designated
beneficiaries and heirs, Xxxxxxxx shall make each payment as it becomes due to
such person or persons for the sole benefit of Employee or his wife or his widow
or his personal representatives, designated beneficiaries and heirs, as the case
may be, as Xxxxxxxx may deem expedient.
11. UNFUNDED AGREEMENT.
-------------------
(a) Xxxxxxxx' obligation under this Agreement shall be unfunded, but
Xxxxxxxx reserves the right to provide for its liability under this Agreement in
any manner it deems advisable, including the purchasing of such assets
(including an insurance policy or
27
policies on Employee's life) as it may deem necessary or proper; provided,
however, that Employee's insurability or non-insurability shall in no way affect
Xxxxxxxx' obligations pursuant to this Agreement. Any asset so purchased by
Xxxxxxxx shall be the sole property of Xxxxxxxx and shall not be deemed to
provide funding of Xxxxxxxx' obligations under this Agreement.
(b) In the event Xxxxxxxx determines to purchase any insurance policy or
policies on Employee's life, Employee agrees to submit to such examination and
to supply information as may be required by the insurer.
(c) Any policy so purchased by Xxxxxxxx shall be issued so that Xxxxxxxx is
the sole, full, and complete owner of the policy or policies, with the right and
power to exercise any and all privileges and options thereof or available under
the rules of the issuing insurer without the consent of any other persons.
(d) Employee, his wife, or his widow after his death, or his designated
beneficiaries, personal representatives, heirs, successors and assigns shall
have no claim or rights with respect to, and shall have no property or equitable
interests whatsoever in, any specific funds or assets of Xxxxxxxx and shall have
only the status of a general creditor with respect to Xxxxxxxx hereunder.
12. FACILITY OF PAYMENT.
--------------------
In the event of a physical or mental illness or disability of Employee or
of his widow after his death or of his designated beneficiaries at a time when
he or she (or they) is (are) entitled to payments hereunder, such payments as
may be due shall be paid to such person or persons for the benefit of Employee
or his widow or his designated beneficiaries, as the case may be, as Xxxxxxxx
or, if applicable, the Escrow Agent may deem proper. In the event of Employee's
death after he has made demand pursuant to Section 7(e)(v) above, the Escrow
28
Agent shall pay such amounts as thereafter are due to such beneficiary or
beneficiaries as Employee shall have designated in writing, or failing such
writing, to his estate. No liability shall accrue to Xxxxxxxx or Escrow Agent
for any alleged payment to an improper person or representative if so made after
such reasonable investigation and Xxxxxxxx and Escrow Agent shall have no
responsibility to see to the proper application of such payments.
13. MISCELLANEOUS PROVISIONS.
-------------------------
(a) All notices required or permitted to be given under this Agreement
shall be in writing and shall be mailed, postage prepaid, by registered or
certified mail or personally delivered, if to Xxxxxxxx, addressed to:
The Xxxxxxxx and Xxxxxxxx Company
Attention: Vice President, Corporate Finance
and Chief Financial Officer
000 Xxxxx Xxxxxx Xx.
Xxxxxx, Xxxx 00000
and, if to Employee, addressed to:
Xxxxx X. Xxxxxxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
Either party may change the address to which notices to such party are to be
sent by giving written notice of such change to the other party in the manner
specified in this provision.
(b) (i) This Agreement shall be binding upon Employee, his wife, and upon
his or her heirs, executors, administrators, designated beneficiaries and upon
anyone claiming under him or his wife or widow, and upon Xxxxxxxx and its
successor or assigns.
(ii) Xxxxxxxx shall not merge or consolidate with any other entity unless
and until such other entity shall expressly assume Xxxxxxxx' obligations under
this Agreement or Xxxxxxxx has provided an appropriate alternative arrangement
covering its contingent liabilities
29
under this Agreement, and Xxxxxxxx shall not voluntarily dissolve without first
providing an appropriate arrangement covering its contingent liabilities under
this Agreement.
(c) This Agreement may be amended, but only with the consent of Employee
during his lifetime and, after his death only with the consent of his widow
during her lifetime or his other designated beneficiaries during their lifetime,
as the case may be. Any agreement of amendment shall be executed with the same
formality as this Agreement.
(d) This Agreement supersedes any prior agreements or understandings
covering the subject matter hereof, either written or oral, between the parties.
(e) This Agreement shall be construed under the laws of the State of Ohio.
(f) The paragraph headings used in this Agreement are for convenience of
reference only and shall not be considered in construing this Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto set their respective
hands on November ____, 2001.
THE XXXXXXXX AND XXXXXXXX COMPANY
By________________________________
Xxxxxxx X. Xxxxxxx
General Counsel and Secretary
XXXXX X. XXXXXXXXXX
__________________________________
Xxxxx X. Xxxxxxxxxx
30
