1
Exhibit 10.1
February 19, 1999
PERSONAL AND CONFIDENTIAL
-------------------------
Xxxxxx X. Xxxxxxxx
Xxxxxxx & Xxxxx, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
RE: Salary Continuation Agreement
-----------------------------
Dear Xxxxx:
This letter sets forth the terms of the agreement between Xxxxxxx &
Xxxxx, Inc. (the "Company") and you with regard to the circumstances under which
you are entitled to receive from the Company a continuation of your salary in
the event of a termination of your employment with the Company.
In consideration of your acceptance on January 1, 1999 of the
appointment as President and Chief Executive Officer of the Company and your
agreement that so long as you are an executive officer of the Company, you will
perform to the best of your abilities the duties of your office, the Company
agrees with you as follows:
1. DEFINITIONS. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
(a) "Base Salary" means your annual salary as most recently
fixed by the Board of Directors of the Company which is, on the date of
this Agreement, $400,000 per year.
(b) "Change of Control" means and shall be deemed to have
occurred on (i) the date of approval by shareholders of the Company of
a definitive agreement providing either for the merger or consolidation
of the Company into or with another corporation, if the Company will
not be the surviving corporation or will become a subsidiary of another
corporation, or for the sale of all or substantially all of the assets
of the
2
Xxxxxx X. Xxxxxxxx
February 19, 1999
Page 2
Company; (ii) the date upon which the Company is provided a copy of a
Schedule 13D (filed pursuant to Section 13(d) of the Securities
Exchange Act of 1934) indicating that a group or person has become the
holder of 20% or more of the outstanding voting shares of the Company
provided such group or person is not controlled by Xxxxxxx X. Xxxxx XX
and/or relatives of his; or (iii) the date of a change in the
composition of the Board of Directors of the Company such that
individuals who were members of the Board of Directors on the date two
years prior to such change (or who were subsequently elected to fill a
vacancy in the Board, or were subsequently nominated for election by
the Company's shareholders, by the affirmative vote of at least two
thirds of the directors then still in office who were directors at the
beginning of such two year period) no longer constitutes a majority of
the Board of Directors of the Company.
(c) "Misconduct" means (i) a willful failure or refusal on
your part to perform properly the duties of your employment to the
extent of your ability to do so, (ii) dishonesty or disloyalty in
relation to the Company, or (iii) your engaging in, or rendering
services or assistance to a business which is in, competition with any
business conducted the Company.
2. TERMINATION OF EMPLOYMENT. If your employment with the
Company is terminated either (i) by action of the Board of Directors of the
Company otherwise than for your Misconduct, (ii) by your resignation with the
consent of the Board of Directors of the Company, or (iii) by reason of a sale
or other disposition by the Company of its business (including a discontinuance
of operations), the Company shall pay to you an amount equal to your Base
Salary; provided, however, that if your termination of employment under this
paragraph occurs within three years after a Change of Control, then the Company
shall pay you an amount equal to three times your Base Salary.
3. EXECUTIVE OFFICER STATUS. If you shall be removed from, or
shall fail to be re-elected to, an executive office with the Company otherwise
than by reason of Misconduct and if you shall resign from employ of the Company
within thirty (30) days following the date on which you cease to be an executive
officer of the Company, the Company will pay to you an amount equal to your Base
Salary; provided, however, that if your termination of employment under this
paragraph occurs within three years after a Change of Control, then the Company
shall pay you an amount equal to three times your
3
Xxxxxx X. Xxxxxxxx
February 19, 1999
Page 3
Base Salary.
4. SALARY REDUCTION. If your Base Salary shall be reduced by
more than fifteen percent (15%) other than in the course of a general temporary
salary reduction, affecting all or substantially all of the executives cf the
Company, due to adverse business conditions or a financial crisis on the part of
the Company, and if you shall resign from the employ of the Company within
thirty (30) days after receiving notice of such salary reduction, the Company
will pay to you an amount equal to your Base Salary; provided, however, that if
your termination of employment under this paragraph occurs within three years
after a Change of Control, then the Company shall pay you an amount equal to
three times your Base Salary. For the purposes of this paragraph, any such
reduction in your Base Salary will be considered to meet the foregoing
requirements if such reduction, together with all other similar reductions in
your Base Salary which occurred during the period of two (2) years immediately
preceding the date of such reduction, shall aggregate more than fifteen percent
(15%) of your Base Salary in effect at the beginning of such two-year period
together with any increases in your salary which shall have occurred during such
period.
5. PAYMENT; TERMINATION OF AGREEMENT AND PAYMENTS AT AGE 65.
In the event the Company becomes obligated pursuant to the terms of this
Agreement to pay you an amount equal to your Base Salary or three times your
Base Salary, then such amounts shall be paid in consecutive equal monthly
installments, with the number of monthly installments being twelve (12) in the
event the amount to be paid is equal to your Base Salary and thirty-six (36)
installments in the event the amount to be paid is equal to three times your
Base Salary. The first installment shall be paid on the 15th day of the month
following the month in which your employment is terminated.
On the date you reach age 65, this Agreement shall
automatically terminate and be null and void. In the event you are receiving
payments under this Agreement at the time you reach age 65, no further payments
shall he made to you pursuant to this Agreement after you reach age 65.
6. BINDING ON SUCCESSORS. This Agreement shall inure to the
benefit of, and be binding upon any successor, whether by merger, consolidation
or purchase, to the business or all or substantially all of the assets of the
Company. It is acknowledged that if the Company should be a
4
Xxxxxx X. Xxxxxxxx
February 19, 1999
Page 4
party to a merger or consolidation with another corporation, that this Agreement
shall be binding upon the surviving entity by operation of law. In the event the
Company sells all or substantially all of its assets, then the Company shall
require the purchasing party to expressly assume and agree to perform this
Agreement. In the event the Company fails to obtain such agreement of the
purchasing party in form and substance reasonably satisfactory to you prior to
the acquisition of such assets of the Company by the purchasing party and if,
within six months after the acquisition of such assets by the purchasing party,
you cease to be employed by the Company and are not employed by the purchasing
party for any reason, including your resignation from any such employment, your
employment shall be considered for all purposes of this Agreement as having been
terminated by reason of the sale by the Company of its business after a Change
of Control as provided in clause (iii) of paragraph 2.
7. ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in Dayton, Ohio, in accordance with the Rules of the American
Arbitration Association, and judgment upon the award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction thereof.
8. SAVINGS CLAUSE. In the event that it is determined that any
payment by the Company to cr for your benefit (whether paid or payable pursuant
to the terms of this Agreement or otherwise) would be subject to the 20% tax
pursuant to Section 4999 of the Internal Revenue Code, as amended (the "Code"),
then the aggregate present value of amounts payable to or for your benefit
pursuant to this Agreement (such payments pursuant to this Agreement are
hereinafter referred to as "Agreement Payments") shall be reduced to the Reduced
Amount. For purposes of this section, the "Reduced Amount" shall be defined as
an amount expressed in present value which maximizes the aggregate present value
of Agreement Payments without causing any payments to be subject to the 20% tax
pursuant to Section 4999 of the Code. The foregoing provisions of this paragraph
shall not apply and shall be null and void if within 10 days after the
termination of your employment with the Company, you notify the Company in
writing that the application of the foregoing provisions of this paragraph 8
would, on an after-tax basis, likely result in an economic detriment to you.
When executed by you, this Agreement shall become effective as
of January 1, 1999, and the Salary Continuation Agreement between the
5
Xxxxxx X. Xxxxxxxx
February 19, 1999
Page 5
Company and you, dated December 9, 1997, shall terminate as of January 1, 1999.
If the foregoing accurately sets forth your agreement with the Company, please
so indicate your agreement and acceptance by signing in the space provided
below.
Very truly yours,
/s/ Xxxxxxx X. Xxxxx XX
Xxxxxxx X. Xxxxx XX
Chairman of the Board
ACCEPTED AND AGREED TO:
/s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Dated: February 26, 1999
