Exhibit 10(a)
CANCELLATION AGREEMENT
THIS AGREEMENT is made and entered into as of November 1, 2002 by and among
Xxxxxx-Xxxxxxxx Corporation (the "Company"), Xxxxxxx X. Xxxxxxxx (the
"Executive") and the Irrevocable Trust Creating Vested Trusts for Children of X.
X. Xxxxxxxx dated August 16, 1999 (the "Trust").
RECITALS
A. The Company and the Executive are parties to an Exchange Agreement
dated as of October 29, 1999 (the "Exchange Agreement") whereby the Executive
agreed to the surrender of a portion of his future base pay in exchange for the
Company's agreement to be bound by the terms of an Executive Estate Protection
Plan Document (as defined in the Exchange Agreement).
B. The Company, the Executive and the Trust are parties to an Executive
Estate Protection Agreement dated as of October 29, 1999 (the "EEP Agreement")
whereby the Company has agreed to provide life insurance for the benefit of the
Executive and his wife by funding the premiums on a Policy (as defined in the
EEP Agreement) to be owned by the Trust.
C. Subsequent to the execution of the Exchange Agreement and the EEP
Agreement:
(1) the Internal Revenue Service has proposed regulations (the "Tax
Regulations") which may negatively affect both the Executive and the Company
from a financial standpoint; and
(2) Congress has enacted the Xxxxxxxx-Xxxxx Act of 2002 (together
with the Tax Regulations, the "Recent Developments").
D. As a result of the Recent Developments, the Executive has requested
that the Company and the Trust agree to the cancellation of their respective
obligations under the Exchange Agreement and EEP Agreement.
E. The Company and the Trust are willing to accommodate the Executive's
request to cancel their respective obligations under the Exchange Agreement and
the EEP Agreement pursuant to the terms and conditions stated herein.
AGREEMENT
1. The Executive, the Company and the Trust agree that the Exchange
Agreement and the EEP Agreement shall be cancelled effective November 1, 2002
(the "Effective Date") and, except as specifically provided herein, no party
shall have any further obligation thereunder. For the avoidance of doubt, as of
the Effective Date, (a) Monthly Surrenders (as defined in the Exchange
Agreement) shall no longer be deducted from the Executive's future base pay from
the Company; and (b) the Company shall have no further obligation to pay
premiums for the Policy, including without limitation the premium payment due on
the Effective Date.
2. As of the Effective Date, the Trust and the Company shall instruct the
Insurer (as defined in the EEP Agreement) in writing that they wish to surrender
the Policy for its cash value (the "Cash Value"), payable to the Company as
repayment for the funds provided by the Company for the acquisition and
maintenance of the Policy. The Cash Value shall belong to the Company.
3. As of the Effective Date, the Company shall credit the Executive's
account in the Company's Executive Deferral Plan (the "EDP Account") with an
amount equal to 28.6% of the Cash Value (the "EDP Credit"). The EDP Credit shall
be allocated to the EDP Account in the same manner as the Executive's current
investment elections for the EDP Account.
4. The provisions contained in Section 4 of the Exchange Agreement which
obligate the Company to disregard the Surrendered Compensation for purposes of
determining the Executive's benefits under the Company's Supplemental Executive
Retirement Program shall survive the cancellation of the Exchange Agreement.
5. This Agreement shall be governed by and construed under the laws of the
State of Ohio.
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IN WITNESS WHEREOF, the Company, the Executive and the Trust have executed
this Agreement as of the date first above written.
XXXXXX-XXXXXXXX CORPORATION
By: /s/Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
/s/Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
IRREVOCABLE TRUST
CREATING VESTED TRUSTS FOR CHILDREN
OF X. X. XXXXXXXX DATED August 16, 1999
By: /s/Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
Trustee
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