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EXHIBIT 10-E
XXXX WORLD HEADQUARTERS
December 12, 1998
Southwood J. Xxxxxxx
Xxxx Corporation
0000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Dear Xx. Xxxxxxx:
The Corporation is on this date entering into an amended and restated
employment agreement with you (the Employment Agreement). As a separate and
additional inducement for you to enter into the amended and restated Employment
Agreement and to provide you with reasonable assurance that the purposes of the
Employment Agreement will not be frustrated as a result of the cost of its
enforcement should a dispute arise out of or relate to any provision of the
Employment Agreement, the Corporation hereby agrees to pay, in consideration of
and following your execution of the amended and restated Employment Agreement,
all legal expenses, including costs, which you may incur in any such dispute in
accordance with the terms and conditions of the Memorandum attached to this
letter. This letter supersedes a corresponding letter (and Memorandum) dated
December 8, 1997 which shall no longer be of any force or effect.
It is suggested that you retain this letter and the Memorandum with the
Employment Agreement and your other documents of value. For the Corporation's
files please acknowledge receipt and your agreement on the enclosed copy of this
letter and return it in an envelope marked "Confidential" to the Secretary of
Xxxx Corporation.
Sincerely,
XXXX CORPORATION
By: /S/ XXXXXX X. XXXXXXX
---------------------------------
Chairman of the Board
of Directors
By: /S/ R. B. PRIORY
---------------------------------
Chairman of the Compensation
Committee
My agreement to and receipt of the
foregoing letter and the Memorandum
is hereby acknowledged this 12TH
day of JUNE , 1999. ----
---------------
/S/ X. X. XXXXXXX
------------------------------------
Southwood X. Xxxxxxx
People Finding A Better Way
XXXX CORPORATION
P.O. Box 1000 Toledo, Ohio 43697, Tel: (000) 000-0000 Fax: (000) 000-0000
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Memorandum of Terms and Conditions
Relating to Legal Fees and Expenses
Referred to in Letter dated December 12, 1998
from Xxxx Corporation to the Executive (The "Letter")
-----------------------------------------------------
1. The words used in this memorandum and in the Letter shall have the
same meaning as in the Employment Agreement. Reference hereafter to the Letter
shall be deemed to refer also to this memorandum.
2. The Corporation's obligations under the Letter shall become
effective if and when any claim or dispute by or against the Executive or anyone
claiming under or through the Executive (such person being hereinafter referred
to as the "beneficiary"), or any dispute between the Executive or his
beneficiary and the Corporation or any third party, should arise out of or
relate to the Employment Agreement or the Letter, or both, or the validity,
operation, interpretation, enforceability or breach thereof.
3. The Corporation shall, upon presentation of appropriate commercial
vouchers, pay all legal expenses, including all reasonable legal fees, court
costs, arbitration costs, and ordinary and necessary out-of-pocket expenses of
attorneys, billed to and payable by the Executive or the beneficiary in
connection with bringing, prosecuting, defending, litigating, arbitrating,
negotiating or settling such dispute or claim, provided that
(a) the Executive or his beneficiary shall repay to the
Corporation any such expenses theretofore paid by or on behalf of the
Corporation if and to the extent that the Executive and his beneficiary shall
fail to prevail in such dispute or claim and such expenses were not incurred by
the Executive and his beneficiary while acting in good faith, and provided
further, that
(b) in the case of any claim or dispute by the Executive or
his beneficiary, such claim shall be timely made, or notice of such dispute
timely given, in writing, with specific reference to the provisions of the
Letter, delivered in the same manner as provided in Section 14(b) of the
Employment Agreement, in no event later than three (3) years after the
occurrence of the event giving rise to such claim or dispute.
4. (a) At such time after the date of the Employment Agreement as the
Corporation shall receive written demand by the
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Executive or, in the event of his death, by his beneficiary, together with a
statement signed by an attorney selected by the Executive or his beneficiary
stating that in the opinion of such attorney a suit or claim described in
paragraph 2 above exists which could reasonably be expected to lead to
litigation, the Corporation will set aside in trust an amount equal to (i) the
Annual Base Salary payable to the Executive under the provisions of Section 3(a)
of the Employment Agreement for the month immediately preceding the month in
which such demand shall have been made or, if no such salary was payable for
such month, for the first month preceding the month in which such demand shall
have been made for which such salary was payable, multiplied by (ii) twelve
(12).
(b) Such amount and any income thereon shall be held, paid and
applied by the trustee of such trust for the purpose of assuring and securing
payment of the Corporation's obligations under paragraph 3 above. As and when
any funds are paid out by the trustee, the Corporation shall replenish same by
payment to the trustee of an amount equal to the funds so paid by the trustee.
Any funds remaining in the trust at such time as the trustee, in its sole
discretion, reasonably exercised, determines, upon the advice of counsel and
after consultation with the Corporation and the Executive or, in the event of
his death, his beneficiary, that all obligations of the parties under the
Employment Agreement and the Letter have been substantially satisfied, shall be
repaid by the trustee to the Corporation.
(c ) The trustee of such trust, the fees and expenses of which
shall be paid by the Corporation, shall be a national or state bank or trust
company having a combined capital, surplus and undivided profits and reserves of
not less than Ten Million Dollars ($10,000,000) which is duly authorized and
qualified to do business in the state in which the Executive resides at the time
of such demand.
5. The following provisions of the Employment Agreement shall be deemed
applicable to the Letter to the same extent as if incorporated herein at length,
with the term "this Letter" being deemed substituted for the term "this
Agreement" where appropriate in any such provision: Section 5(e)(i), relating to
arbitration and judicial proceedings; Section 11, relating to successors to the
Corporation; Section 12(a), relating to the
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definition of "beneficiary"; Section 13, relating to amendment, modification and
waiver; Section 14(a), relating to governing law and captions; Section 14(b),
relating to notices; Section 14(c), relating to severability; Section 14(d),
relating to withholding; Section 14(f), relating to the entirety of the Letter;
Section 14(g), relating to non-assignability and the like; Section 14(j),
relating to specific performance and the like; Section 14(m), relating to the
meaning of Executive after death or during incompetence; and Section 14(n),
relating to legal holidays.
6. The Letter is not intended to enlarge, diminish or otherwise alter
in any way the Executive's rights, duties and obligations and those of the
Corporation under the Employment Agreement.
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5
EMPLOYMENT AGREEMENT
BETWEEN
XXXX CORPORATION
AND
SOUTHWOOD X. XXXXXXX
DATED DECEMBER 12, 1998
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TABLE OF CONTENTS
SECTION PAGE
Recitals ...................................................................................................1
1. Employment and Term................................................................................1
2. Position and Duties of the Executive...............................................................2
(a) Position..................................................................................2
(b) Duties....................................................................................3
(c) Location of Office........................................................................4
3. Compensation.......................................................................................4
(a) Salary....................................................................................4
(b) Additional Compensation...................................................................4
(c) Incentive, Stock and Savings Plans........................................................5
(d) Retirement and Welfare Benefit Plans......................................................5
(e) Expenses..................................................................................6
(f) Fringe Benefits...........................................................................6
(g) Office and Support Staff..................................................................6
(h) Vacation and Other Absences...............................................................7
(i) Benefits Shall Not Be Reduced Under Certain Circumstances.................................7
(j) Supplemental Retirement Annuity...........................................................8
4. Termination of Employment.........................................................................11
(a) Death or Disability......................................................................11
(b) Cause....................................................................................12
(c) Good Reason..............................................................................14
(d) Notice of Termination....................................................................15
(e) Date of Termination......................................................................16
5. Obligations of the Corporation Upon Termination...................................................16
(a) Termination Other Than for Cause.........................................................16
(b) Termination On or After Change of Control................................................19
(c) Cause; Other Than for Good Reason........................................................19
(d) Death or Disability......................................................................20
(e) Resolution of Disputes...................................................................20
(i) Right of Election by Executive to Arbitrate or Sue..............................20
(ii) Third-Party Stakeholder.........................................................21
(f) Benefits are in Addition to Supplemental Retirement Annuity..............................22
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6. Non-exclusivity of Rights.........................................................................22
7. Full Settlement...................................................................................22
8. Golden Parachute Tax Payments.....................................................................23
9. Confidential Information..........................................................................24
10. Competition.......................................................................................25
11. Successors........................................................................................27
12. Certain Definitions...............................................................................27
(a) Beneficiary..............................................................................28
(b) Change of Control........................................................................28
(c) Change of Control Date...................................................................30
(d) Change of Control Period.................................................................30
13. Amendment or Modification; Waiver................................................................30
14. Miscellaneous.....................................................................................30
Exhibit A .................................................................................................34
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DEFINED TERMS
-------------
DEFINED TERMS* SECTION PAGE
-------------- ------- ----
Accounting Firm 8(b) 23
Accrued Obligation 5(a)(i)(3) 16
ACP 3(b) 5
Affiliate 2(a) 3
Affiliated Company 3(a) 4
Agreement Introduction 1
Annual Base Salary 3(a) 4
Annual Bonus 3(b) 4
Beneficiary 12(a) 28
Board 3(a) 4
Cause 4(b) 12
Change of Control 12(b) 28
Change of Control Date 12(c) 30
Change of Control Period 12(d) 30
Code 5(a)(ii) 17
Competition 10(c) 26
Corporation Introduction 1
11(b) 27
14(e) 31
Date of Termination 4(e) 16
Disability 4(a)(ii) 12
Disability Effective Date 4(a)(ii) 12
Employment Period 1(a) 1
Excise Tax 8(a) 23
Executive Introduction 1
Gross-Up Payment 8(a) 23
--------
*Each listed term is intended to include both the singular and
plural form of the term.
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DEFINED TERMS
-------------
DEFINED TERMS* SECTION PAGE
-------------- ------- ----
Highest Average Monthly Compensation 3(j)(vi) 11
Notice of Termination 4(d) 15
Other Benefits 5(a)(v) 19
Payment 8(a) 23
Pension and Retirement Pro gram of the Corporation 3(j)(vii) 11
Renewal Date 1(c) 2
Service 3(j)(viii) 11
Subsidiary 2(a) 3
Target Annual Bonus 3(b) 5
Terminal Date 1(b) 1
Termination 5(a) 16
Termination Period 5(a)(ii) 17
Welfare Benefit Continuation 5(a)(iii) 18
-------------
*Each listed term is intended to include both the singular and plural
form of the term.
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AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement")
made and entered into as of this 12th day of December, 1998, by and between XXXX
CORPORATION, a Virginia corporation whose principal place of business is located
at 0000 Xxxx Xxxxxx, Xxxxxx, Xxxx (the "Corporation"), and Southwood X. Xxxxxxx
(the "Executive");
WHEREAS, the Executive is a principal executive officer of the
Corporation and an integral part of its management; and
WHEREAS, the Corporation wishes to assure itself of the
continuing services of the Executive and to assure the Executive of continued
employment during the period of employment hereunder; and
WHEREAS, the Executive is willing to commit himself to remain
in the employ of the Corporation during such period on terms and conditions
substantially similar to those on which other senior executive officers of the
Corporation are employed, and to forego opportunities elsewhere during such
period; and
WHEREAS, the parties have entered into an Agreement dated
December 14, 1992, as amended from time to time thereafter (the "Prior
Agreement"); and
WHEREAS, the parties wish to amend and restate the Prior
Agreement (as it had been amended from time to time thereafter) in its entirety;
NOW, THEREFORE, IN CONSIDERATION of the mutual promises,
covenants and agreements set forth below, it is hereby agreed as follows:
1. EMPLOYMENT AND TERM.
(a) The Corporation agrees to continue the employment of the
Executive, and the Executive agrees to remain in the employ of the Corporation,
in accordance with the terms and provisions of this Agreement, for the period
set forth below (the "Employment Period").
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(b) The Employment Period under this Agreement shall commence
as of December 12, 1998, and, subject only to the provisions of Section 4 below
relating to termination of employment, shall continue until (i) the close of
business on December 31, 2001 or (ii) such later date as shall result from the
operation of subparagraph (c) below (the "Terminal Date").
(c) Commencing on December 31, 1998, and on each anniversary
of such date (such date and each such annual anniversary thereof, the "Renewal
Date") the Terminal Date set forth in subparagraph (b) above shall be extended
so as to occur three (3) years from the Renewal Date unless either party shall
have given notice to the other party that the Terminal Date is not to be
extended or further extended.
2. POSITION AND DUTIES OF THE EXECUTIVE.
(a) POSITION. It is contemplated that during the Change of
Control Period (as defined in Section 12(d), below), the Executive will continue
to serve as a principal officer of the Corporation and as a member of its Board
of Directors if serving as a member of the Board of Directors immediately prior
to the Change of Control Date, with the office(s) and title(s), reporting
responsibility, and duties and responsibilities of the Executive immediately
prior to the Change of Control Date. The Executive hereby agrees that at any
time prior to the Change of Control Date, the Board of Directors of the
Corporation (or the individual to whom the Executive reports) may, without the
Executive's consent, change the Executive's office(s), title(s), reporting
responsibility, and duties or responsibilities.
The office(s), title(s), reporting responsibility, duties and
responsibilities of the Executive on the date of this Agreement, as the same may
be changed from time to time after the date of this Agreement in accordance with
the provisions of the previous paragraph, shall be summarized in Exhibit A to
this Agreement, it being understood and agreed that if, as and when the
office(s), title(s), reporting responsibility, duties or responsibilities of the
Executive shall be so changed after the date of this Agreement, Exhibit A shall
be deemed to be, and shall be updated by the parties to reflect such change;
PROVIDED, HOWEVER, that Exhibit A is
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intended only as a memorandum for the convenience of the parties and shall be
disregarded if, and to the extent that, Exhibit A shall fail to reflect
accurately the office(s), title(s), reporting responsibility, duties or
responsibilities of the Executive as so changed after the date of this Agreement
because the parties shall have failed to update Exhibit A as aforesaid.
At all times during the Change of Control Period, the
Executive shall hold a position of responsibility and importance and a position
of scope, with the functions, duties and responsibilities attached thereto, at
least equal in responsibility and importance and in scope to and commensurate
with his position described in general terms above in this Section 2(a) and
intended to be summarized in Exhibit A to this Agreement.
During the Employment Period the Executive shall, without
compensation other than that herein provided, also serve and continue to serve,
if and when elected and re-elected, as an officer or director, or both, of any
United States Subsidiary, division or Affiliate of the Corporation.
For all purposes of this Agreement, (i) a Subsidiary shall
mean a corporation or other entity, of which 50% or more of the voting
securities or other equity interests is owned directly, or indirectly through
one or more intermediaries, by the Corporation, and (ii) an Affiliate shall mean
a corporation or other entity which is not a Subsidiary and which directly, or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, the Corporation. For the purpose of this
definition, the terms "control," "controls" and "controlled" mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a corporation or other entity, whether through
the ownership of voting securities, by contract, or otherwise.
(b) DUTIES. Throughout the Employment Period the Executive
shall devote his full time and undivided attention during normal business hours
to the business and affairs of the Corporation except for reasonable vacations
and except for illness or incapacity, but nothing in this Agreement shall
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preclude the Executive from devoting reasonable periods required for:
(i) serving as a director or member of a committee or
any organization involving no conflict of interest with the interests
of the Corporation;
(ii) delivering lectures, fulfilling speaking
engagements, teaching at educational institutions;
(iii) engaging in charitable and community
activities; and
(iv) managing his personal investments;
provided that such activities do not materially interfere with the regular
performance of his duties and responsibilities under this Agreement.
(c) LOCATION OF OFFICE. During the Change of Control Period,
the office of the Executive shall be located at the principal offices of the
Corporation, within the greater Toledo, Ohio area, and the Executive shall not
be required to locate his office elsewhere without his prior written consent,
nor shall he be required to be absent therefrom on travel status or otherwise
more than thirty (30%) of the working days in any calendar year nor for more
than ten (10) consecutive days at any one time.
3. COMPENSATION.
The Executive shall receive the following compensation for his
services:
(a) SALARY. So long as the Executive is employed by the
Corporation, he shall be paid an annual base salary, payable not less often than
monthly, at the rate of not less than $100,000 per month with such increases as
shall be awarded from time to time in accordance with the Corporation's regular
administrative practices of other salary increases applicable to executives of
the Corporation, subject to any and all required withholdings and deductions for
Social
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Security, income taxes and the like (the "Annual Base Salary"). The Board of
Directors of the Corporation (the "Board") may from time to time direct such
upward adjustments to Annual Base Salary as the Board deems to be necessary or
desirable; PROVIDED, HOWEVER, that during the Change of Control Period (as
defined in Section 12(d) below), the Annual Base Salary shall be reviewed at
least annually and shall be increased at any time and from time to time but not
less often than annually and shall be substantially consistent with increases in
base salary generally awarded in the ordinary course of business to other senior
executives of the Corporation and its Affiliated Companies (a term which, as
used in this Agreement, shall mean a Subsidiary or Affiliate of the Corporation)
and, in addition, shall be adjusted effective as of January lst of each calendar
year commencing in the Change of Control Period to reflect increases in the cost
of living during the preceding calendar year. Annual Base Salary shall not be
reduced after any increase thereof pursuant to this Section 3(a). Any increase
in Annual Base Salary shall not serve to limit or reduce any other obligation of
the Corporation under this Agreement.
(b) ADDITIONAL COMPENSATION. So long as the Executive is
employed by the Corporation, he shall be eligible to receive annual short-term
incentive awards or bonuses (such award or bonus is hereinafter referred to as
"Short-Term Award" or "Annual Bonus") from the Xxxx Corporation Additional
Compensation Plan, and from any successor or replacement plan (the Xxxx
Corporation Additional Compensation Plan and such successor or replacement plans
being referred to herein collectively as the "ACP"), in accordance with the
terms thereof; PROVIDED, HOWEVER, that, with respect to each fiscal year of the
Corporation ending during the Change of Control Period, the Executive shall be
awarded (whether under the terms of the ACP or otherwise) an Annual Bonus in an
amount that shall not be less than fifty percent (50%) of his Annual Base Salary
rate in effect on the last day of such fiscal year (which amount shall be
prorated if such fiscal year shall be less than 12 months) (the "Target Annual
Bonus"). Each Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the Annual
Bonus is awarded, unless the receipt of such Annual Bonus is deferred in
accordance with the terms of the ACP.
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(c) INCENTIVE, STOCK AND SAVINGS PLANS. So long as the
Executive is employed by the Corporation, he shall be and continue to be a full
participant in the Xxxx Corporation 1997 Stock Option Plan, the ACP (providing
for Short-Term Awards) and in any and all other incentive, stock, savings or
retirement plans, practices or policies in which executives of the Corporation
participate that are in effect on the date hereof and that may hereafter be
adopted, including, without limitation, any stock option, stock purchase or
stock appreciation plans, or any successor plans that may be adopted by the
Corporation with, except in the case of the ACP after the commencement of the
Change of Control Period, at least the same reward opportunities, if any, that
have heretofore been provided to the Executive. Nothing in this Agreement shall
preclude improvement of reward opportunities in such plans or other plans in
accordance with the practice of the Corporation on or after the date of this
Agreement. Any provision of the ACP or of this Agreement to the contrary
notwithstanding, any Short-Term Awards made to the Executive during the Change
of Control Period (whether for services rendered prior to or after the Change of
Control Date) shall be paid wholly in cash as soon as practicable after the
awards are made.
(d) RETIREMENT AND WELFARE BENEFIT PLANS. The Executive, his
dependents and Beneficiary, including, without limitation, any beneficiary of a
joint and survivor or other optional method of payment applicable to the payment
of benefits under the Pension and Retirement Program of the Corporation, as
defined in Section 3(j)(vii) below, shall be entitled to all payments and
benefits and service credit for benefits during the Employment Period to which
other senior executives of the Corporation, their dependents and their
beneficiaries are entitled under the terms of employee retirement and welfare
benefit plans and practices of the Corporation, including, without limitation,
the Pension and Retirement Program of the Corporation (as defined in Section
3(j)(vii) below), the Corporation's Savings and Investment Plan, its Stock
Purchase Plan, its Stock Award Plan, its Income Protection Plan for Management
and Certain Other Employees providing layoff and severance benefits, its 1989
Restricted Stock Plan, its Excess Benefits Plan, its Supplemental Benefits Plan,
its death benefit plans (consisting of
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its Group Insurance Plan for Management Employees providing life insurance,
accidental death and dismemberment insurance, and travel accident insurance),
its disability benefit plans (consisting of its salary continuation, sickness
and accident and long-term disability benefits programs), its medical, dental
and health and welfare plans and other present or equivalent successor plans and
practices of the Corporation, its Subsidiaries and divisions, for active and
retired employees, for which officers, their dependents and beneficiaries, are
eligible, and to all payments or other benefits under any such plan or practice
subsequent to the Employment Period as a result of participation in such plan or
practice during the Employment Period.
(e) EXPENSES. So long as the Executive is employed by the
Corporation, he shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the polices,
practices and procedures of the Corporation and its Affiliated Companies from
time to time in effect, commensurate with his position and on a basis at least
comparable to that of other senior executives of the Corporation.
(f) FRINGE BENEFITS. So long as the Executive is employed by
the Corporation, he shall be entitled to fringe benefits, including, without
limitation, the business and personal use of an automobile, and payment or
reimbursement of club initiation fees and dues, in accordance with the plans,
practices, programs and policies of the Corporation and its Affiliated Companies
from time to time in effect, commensurate with his position and at least
comparable to those received by other senior executives of the Corporation.
(g) OFFICE AND SUPPORT STAFF. So long as the Executive is
employed by the Corporation, he shall be entitled to an office or offices of a
size and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, commensurate with his position and at least
comparable to those received by other senior executives of the Corporation.
(h) VACATION AND OTHER ABSENCES. So long as the Executive is
employed by the Corporation, he shall be entitled
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to paid vacation and such other paid absences whether for holidays, illness,
personal time or any similar purposes, in accordance with the plans, policies,
programs and practices of the Corporation and its Affiliated Companies in effect
from time to time, commensurate with his position and at least comparable to
those received by other senior executives of the Corporation.
(i) BENEFITS SHALL NOT BE REDUCED UNDER CERTAIN CIRCUMSTANCES.
Nothing in this Agreement shall preclude the Corporation from amending or
terminating any employee benefit or welfare plan or practice, but, it being the
intent of the parties that the Executive shall continue to be entitled during
the Employment Period to perquisites as set forth in this Section 3 and to
benefits and service credit for benefits under Section 3(d) above at least equal
to those attached to his position on February 13, 1984, the date of the original
agreement between the parties, and except as provided in the last sentence of
this Section 3(i), nothing in this Agreement shall operate or be construed to
reduce, or authorize a reduction without the Executive's written consent in, the
level of such perquisites, benefits or service credit for benefits; in the event
of any such reduction, by amendment or termination of any plan or practice or
otherwise, the Executive, his dependents and Beneficiary, shall continue to be
entitled to perquisites, benefits and service credit for benefits at least equal
to the perquisites, benefits and service credit for benefits under such plans or
practices that he or his dependents and Beneficiary would have received if such
reduction had not taken place. If and to the extent that such perquisites,
benefits and service credits are not payable or provided under any such plans or
practices by reason of such amendment or termination thereof, the Corporation
itself shall pay or provide therefor. Notwithstanding the foregoing provisions
of this Section 3(i), the Executive hereby waives the benefit of the foregoing
minimum benefit protection only as it applies to the Xxxx Corporation Savings
and Investment Plan, and to its medical, dental and health plans for active and
retired employees. The Executive expressly does not waive the application of the
foregoing minimum benefit protection to any of the other benefit plans, programs
or practices enumerated in Section 3 above, including, without limitation, the
Pension and Retirement Program of the Corporation (including
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the lump sum discount factor in effect on February 13, 1984), its death benefit
plans, its disability benefit plans, and its Income Protection Plan for
Management and Certain Other Employees. The Executive reserves the right to
cancel the above waiver, prospectively, at any future time by giving written
notice to the Corporation of such cancellation. Nothing in this Section 3(i)
shall be construed to prohibit the Corporation from amending or terminating any
employee benefit or welfare plan or practice to reduce benefits, so long as such
reduction applies to all salaried Corporation employees covered by such plan or
practice equally and such reduction is adopted prior to the commencement of the
Change of Control Period.
(j) SUPPLEMENTAL RETIREMENT ANNUITY.
(i) If the Service of the Executive, including,
without limitation, the period set forth in Section 5(a)(iv)(2) below,
relating to the period between the Date of Termination and the end of
the Termination Period, shall terminate other than for Cause as defined
in Section 4(b) below, and if the Executive shall have a total of not
less than fifteen (15) years of Service, as defined in subparagraph
(viii) of this Section 3(j), whether or not consecutive, the Executive,
subject to compliance with the provisions of Sections 9 and 10 below,
relating to confidential information and Competition, respectively, and
after the Executive's death, his Beneficiary shall be entitled to the
supplemental retirement annuity provided by this Section 3(j) in
addition to all other benefits to which the Executive (or his
Beneficiary), may be entitled including, without limitation, benefits
under the Pension and Retirement Program of the Corporation.
Such supplemental retirement annuity shall be payable by the
Corporation on a straight life annuity basis commencing on the first day of the
month coinciding with or next following the latest of
(1) termination of Service;
(2) attainment by the Executive of age 55; and
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(3) if the Executive had not previously retired with 15 years
or more of Service, the expiration of the Employment
Period;
and continuing on the first day of each month thereafter during his lifetime.
(ii) The monthly payment provided for in Section
3(j)(i) above shall be equal to fifty percent (50%) (or if higher, the
percentage which is the product of 1.6% multiplied by the Executive's
Credited Service at retirement, as such Credited Service is determined
by application of the definition of Credited Service under the Xxxx
Corporation Retirement Plan), of the Executive's Highest Average
Monthly Compensation, as defined in Section 3(j)(vi), less the sum of
(1) commencing at the earliest date that it could be
payable on or after termination of Service, the
aggregate monthly retirement benefit payable to the
Executive for life on a straight life annuity basis
under the Pension and Retirement Program of the
Corporation to the extent attributable to
contributions of the Corporation, its Subsidiaries
and Affiliates;
(2) commencing at the earliest date that it could be
payable on or after termination of Service, the
aggregate monthly retirement or disability benefit
payable to the Executive for life on a straight life
annuity basis following his retirement or termination
from employment by the Corporation, its Subsidiaries
and Affiliates, to the extent attributable to
contributions other than by the Executive under
pension or retirement plans of all corporations,
organizations or entities other than the Corporation,
its Subsidiaries and Affiliates;
(3) commencing at the earliest date payable on or after
termination of Service, 50% of the monthly primary
Social Security benefit that
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would be or would have been payable to the Executive
in the absence of any compensation that may at the
time be or have been earned by him; and
(4) commencing at the earliest date payable on or after
termination of Service and continuing until no longer
payable, the aggregate monthly disability benefit
payable to the Executive under disability benefit
plans and pension plans of the Corporation, its
Subsidiaries and Affiliates to the extent
attributable to contributions of the Corporation, its
Subsidiaries and Affiliates.
(iii) The Executive may elect to receive payment of
the supplemental retirement annuity provided by this Section 3(j),
under a joint and survivor or any other optional method of payment
available under the Xxxx Corporation Retirement Plan, including,
without limitation, any deferment in the time of payment thereof. The
amount of the benefit payable pursuant to any form of payment under
this Section 3(j) shall be determined by applying the mortality
assumptions, interest rates, and other factors contained in the Xxxx
Corporation Retirement Plan that would be applicable to the form of
payment elected by the Executive (subject, however, to any actuarial
factor that may apply as a result of the operation of Section 3(i));
PROVIDED THAT, if a lump sum distribution is made hereunder, the amount
of the lump sum distribution shall be actuarially equivalent to the
monthly benefit prescribed by Section 3(j)(ii), calculated using the
basis described in subparagraph (1) or (2), below, whichever produces
the larger lump sum amount:
(1) the lump sum amount calculated on the basis of the
"applicable interest rate" (as in effect for the
November preceding the calendar year in which the
calculation is made) and the "applicable mortality
table," both as defined in Section 417(e) of the
Internal Revenue Code; or
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(2) the lump sum amount calculated on the basis of the
actuarial equivalent factor used to convert the
Executive's Earned Benefit Account into a life
annuity under the Xxxx Corporation Retirement Plan at
the time the calculation is made, subject to any lump
sum discount factor that might apply as a result of
the operation of Section 3(i) of this Agreement.
If it is determined that the Executive is subject to federal income
taxation on an amount in respect of the supplemental retirement annuity
prior to the distribution of all of such amount to him, the Corporation
shall forthwith pay to the Executive all (or the balance) of such
amount as is includable in the Executive's federal gross income and
correspondingly reduce future payments, if any, of the supplemental
retirement annuity.
(iv) In the event the Executive should die prior to
terminating Service with the Corporation, the Executive's surviving
spouse to whom he is then married, or if no such surviving spouse is
then living, his Beneficiary, shall be entitled to receive a lump sum
benefit equal to 100% of the benefit to which the Executive would have
been entitled under this Section 3(j), as if the Executive had retired
on the date of his death and elected a lump sum benefit hereunder.
(v) In the event that the Corporation defaults in
payment of all or any part of the supplemental retirement annuity
provided above in this Section 3(j) and fails to remedy such default
within thirty days after having received notice from the Executive or
his Beneficiary, the Corporation shall thereupon pay to the Executive
or his Beneficiary, as the case may be, in full discharge of its
obligations under this Section 3(j), (1) a lump sum amount actuarially
equivalent (based on the same assumptions and discount factors as would
be applicable under the Xxxx Corporation Retirement Plan) to the future
payments otherwise payable under this Section 3(j), and (2) an amount
equal to any and all past due payments under this Section 3(j).
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(vi) The term "Highest Average Monthly Compensation"
shall mean the sum of (1) one-twelfth (1/12) of the Annual Base Salary
provided in Section 3(a) at the rate being paid at the time the
Executive's termination of employment occurred, and (2) one-twelfth
(1/12) of the average of the highest Annual Bonuses payable to the
Executive for any three (3) consecutive full or partial fiscal years
during his employment by the Corporation, PROVIDED, HOWEVER, that,
solely for purposes of this Section 3(j), and for no other purposes
under this Agreement, with respect to 1994 and subsequent years' Annual
Bonuses, only that portion of the Employee's Annual Bonus as does not
exceed 125% of his Annual Base Salary will be considered.
(vii) The term "Pension and Retirement Program of the
Corporation" shall mean the Xxxx Corporation Retirement Plan, the Xxxx
Corporation Excess Benefits Plan, the Xxxx Corporation Supplemental
Benefits Plan, and any other supplemental, early retirement and similar
plan or plans of the Corporation, its Subsidiaries and Affiliates,
providing for pension or retirement benefits that may be applicable to
the Executive and that are in effect on the date hereof or may
hereafter be adopted or substituted for any such plan, but exclusive of
the Xxxx Corporation Savings and Investment Plan and any similar plan
or plans.
(viii) The term "Service" shall mean employment as an
employee by the Corporation, any Subsidiary or Affiliate thereof or any
corporation the capital stock or assets of which have been acquired by,
or which has been merged into or consolidated with the Corporation or
any Subsidiary or Affiliate thereof.
4 TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY.
(i) The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
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(ii) If the Corporation determines in good faith that
the Disability (as defined below) of the Executive has occurred during
the Employment Period, it may give to the Executive written notice in
accordance with Section 14(b) below of its intention to terminate the
Executive's employment. In such event, the Employment Period shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), PROVIDED, that within the
30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive from
the Executive's duties with the Corporation on a full-time basis for
180 consecutive business days as a result of incapacity due to mental
or physical illness which is determined to be total and permanent by a
physician selected by the Corporation or its insurers and acceptable to
the Executive or the Executive's legal representative (such agreement
as to acceptability not to be withheld unreasonably).
(b) CAUSE. The Corporation may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, the termination of the Executive's employment shall be deemed to have
been for "Cause" only
(i) if termination of his employment shall have been
the result of his conviction of, or plea of guilty or nolo contendere
to, the charge of having committed a felony (whether or not such
conviction is later reversed for any reason), or
(ii) if there has been a breach by the Executive
during the Employment Period of the provisions of Section 2(b),
relating to the time to be devoted to the affairs of the Corporation,
or of Section 9, relating to confidential information, and such breach
results in demonstrably material injury to the Corporation, and, with
respect to any alleged breach of Section 2(b) hereof, the Executive
shall have either failed to remedy such alleged breach within thirty
days from his receipt
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of written notice from the Secretary of the Corporation pursuant to
resolution duly adopted by the Board of Directors of the Corporation
after notice to the Executive and an opportunity to be heard demanding
that he remedy such alleged breach, or shall have failed to take all
reasonable steps to that end during such thirty-day period and
thereafter;
PROVIDED, that there shall have been delivered to the Executive a certified copy
of a resolution of the Board of Directors of the Corporation adopted by the
affirmative vote of not less than three-fourths of the entire membership of the
Board of Directors called and held for that purpose and at which the Executive
was given an opportunity to be heard, finding that the Executive was guilty of
conduct set forth in subparagraph (i) or (ii) above, specifying the particulars
thereof in detail.
Anything in this Section 4(b) or elsewhere in this Agreement
to the contrary notwithstanding, the employment of the Executive shall in no
event be considered to have been terminated by the Corporation for Cause if
termination of his employment took place
(1) as the result of bad judgment or negligence on the
part of the Executive, or
(2) because of an act or omission believed by the
Executive in good faith to have been in or not
opposed to the interests of the Corporation, or
(3) for any act or omission in respect of which a
determination could properly be made that the
Executive met the applicable standard of conduct
prescribed for indemnification or reimbursement or
payment of expenses under (A) the Bylaws of the
Corporation, or (B) the laws of the State of
Virginia, or (C) the directors' and officers'
liability insurance of the Corporation, in each case
either as in effect at the time of this Agreement or
in effect at the time of such act or omission, or
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(4) as the result of an act or omission which occurred
more than twelve calendar months prior to the
Executive's having been given notice of the
termination of his employment for such act or
omission unless the commission of such act or such
omission could not at the time of such commission or
omission have been known to a member of the Board of
Directors of the Corporation (other than the
Executive, if he is then a member of the Board of
Directors), in which case more than twelve calendar
months from the date that the commission of such act
or such omission was or could reasonably have been so
known, or
(5) as the result of a continuing course of action which
commenced and was or could reasonably have been known
to a member of the Board of Directors of the
Corporation (other than the Executive, if he is then
a member of the Board of Directors) more than twelve
calendar months prior to notice having been given to
the Executive of the termination of his employment.
(c) GOOD REASON. Following a Change of Control (as defined in
Section 12(b) below), the Executive may terminate his employment for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean the occurrence
after the Change of Control Date of any of the following events:
(i) Failure to elect or reelect the Executive to the
Board of Directors of the Corporation, if the Executive shall have been
a member of the Board of Directors on the date of this Agreement or at
any time thereafter during the Employment Period, or failure to elect
or reelect the Executive to, or removal of the Executive from, the
office(s) described in Section 2(a) above and intended to be summarized
in Exhibit A to this Agreement.
(ii) A significant change in the nature or scope of
the authorities, powers, functions or duties attached to the position
described in Section 2 above and
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intended to be summarized in Exhibit A to this Agreement, or a
reduction in compensation, which is not remedied within 30 days after
receipt by the Corporation of written notice from the Executive.
(iii) A determination by the Executive made in good
faith that as a result of a Change of Control, and a change in
circumstances thereafter and since the date of this Agreement
significantly affecting his position, he is unable to carry out the
authorities, powers, functions or duties attached to his position and
contemplated by Section 2 of this Agreement and the situation is not
remedied within 30 days after receipt by the Corporation of written
notice from the Executive of such determination.
(iv) A breach by the Corporation of any provision of
this Agreement not embraced within the foregoing clauses (i), (ii) and
(iii) of this Section 4(c) which is not remedied within 30 days after
receipt by the Corporation of written notice from the Executive.
(v) The liquidation, dissolution, consolidation or
merger of the Corporation or transfer of all or a significant portion
of its assets unless a successor or successors (by merger,
consolidation or otherwise) to which all or a significant portion of
its assets have been transferred shall have assumed all duties and
obligations of the Corporation under this Agreement but without
releasing the corporation that is the original party to this Agreement;
PROVIDED, that in any event set forth in this Section 4(c), the Executive shall
have elected to terminate his employment under this Agreement, upon not less
than ten and not more than ninety days' advance written notice to the
Corporation, attention of the Secretary, given, except in the case of a
continuing breach, within three calendar months after (A) failure to be so
elected or reelected, or removal, (B) expiration of the thirty-day cure period
with respect to such event, or (C) the closing date of such liquidation,
dissolution, consolidation, merger or transfer of assets, as the case may be.
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An election by the Executive to terminate his employment given
under the provisions of this Section 4(c) shall not be deemed a voluntary
termination of employment by the Executive for the purpose of this Agreement or
any plan or practice of the Corporation.
(d) NOTICE OF TERMINATION. Any termination by the Corporation
for Cause, or by the Executive for Good Reason, shall be communicated by Notice
of Termination to the other party hereto given in accordance with Section 14(b)
below. For purposes of this Agreement, a "Notice of Termination" means a written
notice which
(i) indicates the specific termination provision
in this Agreement relied upon,
(ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision
so indicated and
(iii) if the Date of Termination (as defined in
Section 4(e) below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than
fifteen days after the giving of such notice).
(e) DATE OF TERMINATION. "Date of Termination" means
(i) if the Executive's employment is terminated by
the Corporation for Cause, or by the Executive for Good Reason, the
date of receipt of the Notice of Termination or any later date
specified therein, as the case may be,
(ii) if the Executive's employment is terminated by
the Corporation other than for Cause or Disability, the Date of
Termination shall be the date on which the Corporation notifies the
Executive of such termination and
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(iii) if the Executive's employment is terminated by
reason of death or Disability, the Date of Termination shall be the
date of death of the Executive or the Disability Effective Date, as the
case may be.
5 OBLIGATIONS OF THE CORPORATION UPON TERMINATION.
(a) TERMINATION OTHER THAN FOR CAUSE. If, during the
Employment Period, the Corporation shall terminate the Executive's employment
other than for Cause or the Executive shall terminate his employment following a
Change of Control for Good Reason (termination in any such case referred to as
"Termination"):
(i) the Corporation shall pay the Executive in a
lump sum in cash within 30 days after the Date of Termination the sum
of
(1) the Executive's Annual Base Salary through the Date
of Termination to the extent not theretofore paid,
(2) the product of (x) the Target Annual Bonus and (y) a
fraction, the numerator of which is the number of
days in the current fiscal year through the Date of
Termination, and the denominator of which is 365, and
(3) any compensation previously deferred by the Executive
(together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2), and (3) shall
be hereinafter referred to as the "Accrued
Obligations"); and
(ii) at the end of the month next following the
Termination, and at the end of each month thereafter until the earliest
of the end of the Employment Period, three years following the Date of
Termination, or until the Executive shall attain the age of 65 years,
but in no event beyond the end of the month in which the death of the
Executive shall have occurred or
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the end of the sixth month following the Disability Effective Date
(such period to be called the "Termination Period"), the Corporation
shall pay to the Executive an amount equal to the Highest Average
Monthly Compensation; PROVIDED, HOWEVER, that such amount shall be
reduced by any other amounts payable to the Executive in respect of
salary or bonus continuation to be received by the Executive under any
severance plan, policy or arrangement of the Corporation; and,
PROVIDED, FURTHER, that if the Date of Termination occurs on or after
the occurrence of a Change of Control, such amount shall be paid as a
lump-sum within 30 days following the Date of Termination, such
lump-sum calculated based upon the present value (within the meaning of
Section 28OG(d)(4) of the Internal Revenue Code of 1986 as amended (the
"Code")) of the payments which would be made absent the Change of
Control; and
(iii) During the Termination Period, or such longer
period as any plan, program, practice or policy may provide, the
Corporation shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 3(d) above if the Executive's employment
had not been terminated in accordance with the most favorable plans,
practices, programs or policies of the Corporation and its Affiliated
Companies as in effect and applicable generally to other senior
executives of the Corporation and its Affiliated Companies and their
families during the 90-day period immediately preceding the Date of
Termination or, if more favorable to the Executive, as in effect at any
time thereafter or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other senior
executives of the Corporation and its Affiliated Companies and their
families, PROVIDED, HOWEVER, that if the Executive becomes reemployed
with another employer and is eligible to receive medical or other
welfare benefits under another employer-provided plan, the medical and
other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of
eligibility
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(such continuation of such benefits for the applicable period herein
set forth shall be hereinafter referred to as "Welfare Benefit
Continuation"). For purposes of determining eligibility of the
Executive for retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be considered to have
remained employed until the end of the Termination Period and to have
retired on the date of the end of the Termination Period. To the extent
that any benefits referred to in this Section 5(a)(iii) shall not be
payable or provided under any such plan by reason of the Executive's no
longer being an employee of the Corporation as the result of
Termination, the Corporation shall itself pay, or provide for payment
of, such benefits and the service credit for benefits provided for in
Section 5(a)(iv) below, to the Executive, his dependents and
Beneficiary; and
(iv) The period from the Date of Termination until
the end of the Termination Period shall be considered:
(1) Service with the Corporation for the purpose of
continued credits under the employee benefit plans
referred to in Section 3(d) above and all other
benefit plans of the Corporation applicable to the
Executive or his Beneficiary as in effect immediately
prior to Termination but prior to any reduction of
benefits thereunder as the result of amendment or
termination during the Employment Period;
(2) Service within the meaning of Section 3(j)(viii)
above for purposes of Section 3(j) above; and
(3) Employment with the Corporation for purposes of
determining payments and other rights in respect of
awards made or accrued and award opportunities
granted prior to Termination under the executive
incentive plans referred to in Section 3(c) above and
all other incentive
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plans of the Corporation in which the Executive was a
participant prior to Termination; and
(v) to the extent not theretofore paid or provided,
the Corporation shall timely pay or provide to the Executive and/or the
Executive's family any other amounts or benefits required to be paid or
provided or which the Executive and/or the Executive's family is
eligible to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the Corporation
and its Affiliated Companies as in effect and applicable generally to
other senior executives of the Corporation and its Affiliated Companies
and their families during the 90-day period immediately preceding the
Date of Termination or, if more favorable to the Executive, as in
effect generally thereafter with respect to other senior executives of
the Corporation and its Affiliated Companies and their families (such
other amounts and benefits shall be referred to below as the "Other
Benefits").
(b) TERMINATION ON OR AFTER CHANGE OF CONTROL. If Termination
shall have occurred coincidental with a Change of Control or during the Change
of Control Period, any provision of Section 5(a)(iv) above or of the ACP to the
contrary notwithstanding, upon such Termination, the Corporation shall pay or
distribute to the Executive on an accelerated basis, to the extent, if any, not
theretofore accelerated, any and all outstanding Short-Term Awards, or
installments thereof, under the ACP that shall have been awarded to the
Executive prior to Termination and deferred for payment subsequent to
termination of employment, with any such accelerated payment based on the value,
determined in accordance with such plan (or successor plan), of such awards or
installments (and any increments thereon) on the Termination Date, and such
accelerated payment or distribution shall constitute a complete discharge of the
Corporation's obligation in respect of the Short-Term Awards so paid or
distributed.
(c) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment Period, the
Corporation shall have no further obligations to the Executive under this
Agreement other than
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the obligation to pay the Executive's Annual Base Salary, any compensation
previously deferred by the Executive (together with any accrued interest or
earnings thereon), and accrued vacation pay through the Date of Termination, in
each case to the extent not theretofore paid, and any other amounts or benefits
to which the Executive and/or the Executive's family is otherwise entitled under
the terms of any employee benefit or incentive plan of the Corporation. If the
Executive terminates employment during the Employment Period, excluding a
termination for Good Reason following a Change of Control, the Corporation shall
have no further obligations to the Executive, other than to pay the Executive's
Annual Base Salary, any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon), and accrued vacation
pay through the termination date, in each case to the extent not theretofore
paid, any other benefits to which the Executive and/or the Executive's family is
otherwise entitled under the terms of any employee benefit or incentive plan of
the Corporation, and, if the Executive is otherwise eligible under the
provisions of Section 3(j) of this Agreement, he shall also be entitled to
receive the supplemental retirement annuity described in such Section 3(j).
(d) DEATH OR DISABILITY.
(i) In the event of the death of the Executive during
the Employment Period, the legal representative of the Executive shall
be entitled to the compensation provided for in Sections 3(a) and 3(b)
above for the month in which death shall have taken place, at the rate
being paid at the time of death, and the Employment Period shall be
deemed to have ended as of the close of business on the last day of the
month in which death shall have occurred but without prejudice to any
payments due in respect of the Executive's death. Further, in the event
the Executive should die prior to terminating Service with the
Corporation, the Executive's surviving spouse or Beneficiary, as the
case may be, shall be entitled to receive the supplemental retirement
annuity pursuant to Section 3(j)(iv).
(ii) In the event of the Disability of the Executive
during the Employment Period, the Executive
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shall be entitled to the compensation provided for in Sections 3(a) and
3(b) above, at the rate being paid on the Disability Effective Date,
for the period of such Disability but not in excess of six months. The
amount of any payments due under this Section 5(d)(ii) shall be reduced
by any payments to which the Executive may be entitled for the same
period because of disability under any disability or pension plan of
the Corporation or of any Subsidiary or Affiliate thereof.
(e) RESOLUTION OF DISPUTES.
(i) RIGHT OF ELECTION BY EXECUTIVE TO ARBITRATE OR
SUE. In the event that the Executive's employment shall be terminated
by the Corporation during the Employment Period and such termination is
alleged to be for Cause, or the Executive's right to terminate his
employment under Section 4(c) above shall be questioned by the
Corporation, or the Corporation shall withhold payments or provision of
benefits for any other reason, the Executive shall have the right, in
addition to all other rights and remedies provided by law, at his
election either to seek arbitration within the Toledo, Ohio area under
the rules of the American Arbitration Association by serving a notice
to arbitrate upon the Corporation or to institute a judicial
proceeding, in either case within ninety days after having received
notice of termination of his employment or notice in any form that the
termination of his employment under Section 4(b) above is subject to
question or that the Corporation is withholding or proposes to withhold
payments or provision of benefits.
(ii) THIRD-PARTY STAKEHOLDER. In the event that the
Corporation defaults on any obligation set forth in Section 5(a) above,
relating to Termination, and shall have failed to remedy such default
within thirty (30) days after having received written notice of such
default from the Executive, in addition to all other rights and
remedies that the Executive may have as a result of such default, the
Executive may demand and the Corporation shall thereupon be required to
deposit, with the third-party stakeholder hereinafter described, an
amount equal to the undiscounted value of any and all
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undischarged, future obligations of the Corporation under Section 5(a)
above and such amount shall thereafter be held, paid, applied or
distributed by such third-party stakeholder for the purpose of
satisfying such undischarged, future obligations of the Corporation
when and to the extent that they become due and payable. Any interest
or other income on such amount shall be retained by the third-party
stakeholder and applied, if necessary, by it to satisfy such
obligations, PROVIDED, HOWEVER, that any interest or other income that
is earned on such undischarged, future obligations after the date that
the third-party stakeholder determines, in its sole discretion, that
such obligations are due and owing to the Executive, shall be paid to
the Executive as earned. To the extent not theretofore expended, such
amount (including any remaining unexpended interest or other income)
shall be repaid to the Corporation at such time as the third-party
stakeholder, in its sole discretion, reasonably exercised, determines,
upon the advice of counsel and after consultation with the Corporation
and the Executive or, in the event of his death, his Beneficiary, that
all obligations of the Corporation under Section 5(a) above have been
substantially satisfied.
Such amount shall, in the event of any question, be
determined jointly by the firm of certified public accountants
regularly employed by the Corporation and a firm of certified public
accountants selected by the Executive, in each case upon the advice of
actuaries to the extent the certified public accountants consider
necessary, and, in the event such two firms of accountants are unable
to agree on a resolution of the question, such amount shall be
determined by an independent firm of certified public accountants
selected jointly by both firms of accountants.
The third-party stakeholder, the fees and expenses of
which shall be paid by the Corporation, shall be a national or state
bank or trust company having a combined capital, surplus and undivided
profits and reserves of not less than Ten Million Dollars ($10,000,000)
which is duly authorized and qualified to
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do business in the state in which the Executive resides at the time of
such default.
(f) BENEFITS ARE IN ADDITION TO SUPPLEMENTAL RETIREMENT
ANNUITY. Any provision of this Agreement to the contrary notwithstanding, the
payments, benefits, service credit for benefits and other matters provided by
this Section 5, including without limitation Section 5(a) above, in the event of
a Termination, are in addition to any payments, benefits, service credit for
benefits and other matters provided by Section 3(j) above relating to a
supplemental retirement annuity that may apply in such event.
6 NON-EXCLUSIVITY OF RIGHTS.
Except as provided in Sections 5(a)(ii), 5(b) and 5(c) above,
nothing in this Agreement shall prevent or limit the Executive's continuing or
future participation in any plan, program, policy or practice provided by the
Corporation or any of its Affiliated Companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement entered into after the date
hereof with the Corporation or any of its Affiliated Companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of, or any contract or agreement
entered into after the date hereof with, the Corporation or any of its
Affiliated Companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
7 FULL SETTLEMENT.
The Corporation's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Corporation may have against the Executive or others.
In no event shall the Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the Executive
under any of the
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provisions of this Agreement and, except as provided in Section 5(a)(iii) above,
such amounts shall not be reduced whether or not the Executive obtains other
employment.
8 GOLDEN PARACHUTE TAX PAYMENTS.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution involving a change of control of the Corporation, by the
Corporation or any other person or entity, 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, but determined without regard to any
additional payments required under this Section 8) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code (or any successor
provision) or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") from the Corporation 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, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and 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 Payments.
(b) All calculations and determinations required to be made
under this Section 8, including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by Price Waterhouse (or any
successor thereto by merger or operation of law) (the "Accounting Firm"). In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the change of control, the Executive shall
appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne
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solely by the Corporation. Any Gross-Up Payment, as determined pursuant to this
Section 8, shall be paid by the Corporation to the Executive within five days of
the receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Corporation and the Executive.
(c) The Executive shall promptly notify the Corporation in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Corporation of the Gross-Up Payment.
The Corporation shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such claim and shall indemnify and hold the Executive harmless, on an
after-tax basis, for 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 limitation on the foregoing provisions of
this Section 8(c), the Corporation shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or to 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, as the Corporation
shall determine; PROVIDED, HOWEVER, that if the Corporation directs the
Executive to pay such claim and sue for a refund, the Corporation 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 tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance.
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Furthermore, the Corporation's control of the contest 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.
9 CONFIDENTIAL INFORMATION.
(a) The Executive agrees not to disclose, either while in the
Corporation's employ or at any time thereafter, to any person not employed by
the Corporation, or not engaged to render services to the Corporation, except
with the prior written consent of an officer authorized to act in the matter by
the Board of Directors of the Corporation, any confidential information obtained
by him while in the employ of the Corporation, including, without limitation,
information relating to any of the Corporation's inventions, processes,
formulae, plans, devices, compilations of information, methods of distribution,
customers, client relationships, marketing strategies or trade secrets;
PROVIDED, HOWEVER, that this provision shall not preclude the Executive from use
or disclosure of information known generally to the public or of information not
considered confidential by persons engaged in the business conducted by the
Corporation or from disclosure required by law or Court order. The agreement
herein made in this Section 9(a) shall be in addition to, and not in limitation
or derogation of, any obligations otherwise imposed by law upon the Executive in
respect of confidential information and trade secrets of the Corporation, its
Subsidiaries and Affiliates.
(b) The Executive also agrees that upon leaving the
Corporation's employ he will not take with him, without the prior written
consent of an officer authorized to act in the matter by the Board of Directors
of the Corporation, and he will surrender to the Corporation any record, list,
drawing, blueprint, specification or other document or property of the
Corporation, its Subsidiaries and Affiliates, together with any copy and
reproduction thereof, mechanical or otherwise, which is of a confidential nature
relating to the Corporation, its Subsidiaries and Affiliates, or, without
limitation, relating to its or their methods of distribution, client
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relationships, marketing strategies or any description of any formulae or secret
processes, or which was obtained by him or entrusted to him during the course of
his employment with the Corporation.
10 COMPETITION.
(a) Subject to the provisions of Section 5(e) above relating
to resolution of disputes, there shall be no obligation on the part of the
Corporation to make any further payments provided for in Section 3(j) above
relating to payment of a supplemental retirement annuity, if the Executive
shall, during the period that such payments are being made or benefits provided,
engage in Competition with the Corporation as hereinafter defined, provided all
of the following shall have taken place:
(i) the Secretary of the Corporation, pursuant to
resolution of the Board of Directors of the Corporation, shall have
given written notice to the Executive that, in the opinion of the Board
of Directors, the Executive is engaged in such Competition, specifying
the details;
(ii) the Executive shall have been given a reasonable
opportunity upon reasonable notice to appear before and to be heard by
the Board of Directors prior to the determination of the Board
evidenced by such resolution;
(iii) the Executive shall neither have ceased to
engage in such Competition within thirty days from his receipt of such
notice nor diligently taken all reasonable steps to that end during
such thirty-day period and thereafter.
Notwithstanding any provision to the contrary contained
herein, in the event of a Termination, as defined in Section 5(a) above, this
Section 10(a) shall not apply following a Change of Control.
(b) The Executive agrees in addition to the provisions
relating to Competition set forth in Section 10(a) above that he will not engage
in Competition at any time (i) during
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the Employment Period, and (ii) except in the event of a Termination, during the
thirty-six (36) months immediately following the termination of his employment
with the Corporation.
(c) The word "Competition" for the purposes of this
Agreement shall mean
(i) taking a management position with or control of a
business engaged in the design, development, manufacture, marketing or
distribution of products, which constituted 15% or more of the sales of
the Corporation and its Subsidiaries and Affiliates during the last
fiscal year of the Corporation preceding the termination of the
Executive's employment, in any geographical area in which the
Corporation, its Subsidiaries or Affiliates is at the time engaging in
the design, development, manufacture, marketing or distribution of such
products; PROVIDED, HOWEVER, that in no event shall ownership of less
than 5% of the outstanding capital stock entitled to vote for the
election of directors of a corporation with a class of equity
securities held of record by more than 500 persons, standing alone, be
deemed Competition with the Corporation within the meaning of this
Section 10,
(ii0 soliciting any person who is a customer of the
businesses conducted by the Corporation, or any business in which the
Executive has been engaged on behalf of the Corporation and its
Subsidiaries or Affiliates at any time during the term of this
Agreement on behalf of a business described in clause (i) of this
Section 10,
(iii0 inducing or attempting to persuade any employee
of the Corporation or any of its Subsidiaries or Affiliates to
terminate his employment relationship in order to enter into employment
with a business described in clause (i) of this Subsection 10(c), or
(iv) making or publishing any statement which is, or
may reasonably be considered to be, disparaging of the Corporation or
any of its Subsidiaries or Affiliates, or directors, officers,
employees or the operations or
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products of the Corporation or any of its Subsidiaries or Affiliates,
except to the extent the Executive, during the Employment Period, makes
the statement to employees or other representatives of the Corporation
or any of its Subsidiaries or Affiliates in furtherance of the
Corporation's business and the performance of his services hereunder.
11. SUCCESSORS.
Except as otherwise provided herein,
(a This Agreement shall be binding upon and shall inure to the
benefit of the Executive, his heirs and legal representatives, and the
Corporation and its successors as provided in this Section 11.
(b This Agreement shall be binding upon and inure to the
benefit of the Corporation and any successor of the Corporation, including,
without limitation, any corporation or corporations acquiring, directly or
indirectly, 50% or more of the outstanding securities of the Corporation, or all
or substantially all of the assets of the Corporation, whether by merger,
consolidation, sale or otherwise (and such successor shall thereafter be deemed
embraced within the term "the Corporation" for the purposes of this Agreement),
but shall not otherwise be assignable by the Corporation.
12. CERTAIN DEFINITIONS.
The following defined terms used in this Agreement shall have
the meanings indicated:
(a BENEFICIARY. The term "Beneficiary" as used in this
Agreement shall, in the event of the death of the Executive, mean an individual
or individuals and/or an entity or entities, including, without limitation, the
Executive's estate, duly designated on a form filed with the Corporation by the
Executive to receive any amount that may be payable after his death or, if no
such individual, individuals, entity or entities has or have been so designated,
or is at the time in existence or able to receive any such amount, the
Executive's estate.
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(b CHANGE OF CONTROL. A "Change of Control" shall be
deemed to have occurred if the event set forth in any one of the following
paragraphs shall have occurred:
(i) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation (not including in
the securities Beneficially Owned by such Person any
securities acquired directly from the Corporation or its
Affiliates) representing 20% or more of the combined voting
power of the Corporation's then outstanding securities,
excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clause (1) of
paragraph (iii) below; or
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and
any new director whose appointment or election by the Board or
nomination for election by the Corporation's stockholders was
approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were
directors on the date hereof or whose appointment, election or
nomination for election was previously so approved or
recommended. For purposes of the preceding sentence, any
director whose initial assumption of office is in connection
with an actual or threatened election contest, including but
not limited to a consent solicitation, relating to the
election of directors of the Corporation, shall not be
counted; or
(iii) there is consummated a merger or consolidation of the
Corporation or any direct or indirect Subsidiary of the
Corporation with any other corporation, other than (1) a
merger or consolidation which would result in the voting
securities of the Corporation 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
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parent thereof) at least 50% of the combined voting power of
the securities of the Corporation or such surviving entity or
any parent thereof outstanding immediately after such merger
or consolidation, or (2) a merger or consolidation effected to
implement a recapitalization of the Corporation (or similar
transaction) in which no Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the
Corporation (not including in the securities Beneficially
Owned by such Person any securities acquired directly from the
Corporation or its Affiliates) representing 20% or more of the
combined voting power of the Corporation's then outstanding
securities; or
(iv) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation or
there is consummated an agreement for the sale or disposition
by the Corporation of all or substantially all of the
Corporation's assets, other than a sale or disposition by the
Corporation of all or substantially all of the Corporation's
assets to an entity, at least 50% of the combined voting power
of the voting securities of which are owned by stockholders of
the Corporation in substantially the same proportions as their
ownership of the Corporation immediately prior to such sale.
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the
Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from
time to time.
"Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Corporation or any of its Subsidiaries, (ii) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Corporation or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities or (iv) a corporation
owned, directly or indirectly, by the stockholders of the Corporation
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in substantially the same proportions as their ownership of stock of the
Corporation.
(c CHANGE OF CONTROL DATE. The "Change of Control Date" shall
mean the first date on which a Change of Control occurs. Anything in this
Agreement to the contrary notwithstanding, if a Change of Control occurs and if
the Executive's employment with the Corporation is terminated or the Executive
ceases to have the position with the Corporation set forth in Section 2(a) above
prior to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination or cessation (i) was at the
request of a third party who has taken steps reasonably calculated to effect the
Change of Control or (ii) otherwise arose in connection with or anticipation of
the Change of Control, then for all purposes of this Agreement the "Change of
Control Date" shall mean the date immediately prior to the date of such
termination or cessation.
(d CHANGE OF CONTROL PERIOD. The "Change of Control Period"
shall mean the period commencing on the Change of Control Date and ending on the
last day of the Employment Period.
13. AMENDMENT OR MODIFICATION; WAIVER.
No provision of this Agreement may be amended, modified or
waived unless such amendment, modification or waiver shall be authorized by the
Board of Directors of the Corporation or any authorized committee of the Board
of Directors and shall be agreed to in writing, signed by the Executive and by
an officer of the Corporation thereunto duly authorized. Except as otherwise
specifically provided in this Agreement, no waiver by either party hereto of any
breach by the other party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of a subsequent
breach of such condition or provision or a waiver of a similar or dissimilar
provision or condition at the same time or at any prior or subsequent time.
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14. MISCELLANEOUS.
(a This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without reference to principles
of conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
(b All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
IF TO THE EXECUTIVE: COPY TO:
------------------- -------
Xx. Xxxxxxxxx X. Xxxxxxx Xx. Xxxxxxxxx X. Xxxxxxx
c/o Xxxx Corporation 00000 Xxxxxx Xxxxxx
0000 Xxxx Xxxxxx Xxxxxxxxxx, Xxxx 00000
Xxxxxx, Xxxx 00000
IF TO THE CORPORATION:
---------------------
Xxxx Corporation
0000 Xxxx Xxxxxx
Xxxxxx, Xxxx 00000
Attention: Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d The Corporation may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as it determines is required
to be withheld pursuant to any applicable law or regulation.
(e When used herein in connection with plans, programs and
policies relating to the Executive, employees,
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compensation, benefits, perquisites, executive benefits, services and similar
words and phrases, the word "Corporation" shall be deemed to include all
wholly-owned Subsidiaries of the Corporation.
(f This instrument contains the entire agreement of the
parties concerning the subject matter, and all promises, representations,
understandings, arrangements and prior agreements concerning the subject matter
are merged herein and superseded hereby, including, without limitation, the
agreements between the parties dated February 13, 1984, December 10, 1990,
December 14, 1992, and December 8, 1997.
(g No right, benefit or interest hereunder, shall be subject
to anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
(h The Executive shall not have any right, title, or interest
whatsoever in or to any investments which the Corporation may make to aid it in
meeting its obligations under this Agreement.
(i Subject to the provisions of Section 5(e) above, all
payments to be made under this Agreement shall be paid from the general funds of
the Corporation and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of amounts payable under
this Agreement.
(j The Corporation and the Executive recognize that each party
will have no adequate remedy at law for breach by the other of any of the
agreements contained in this Agreement and, in the event of any such breach, the
Corporation and the Executive hereby agree and consent that the other shall be
entitled to a decree of specific performance, mandamus or other appropriate
remedy to enforce performance of such agreements.
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(k Subject to the provisions of Section 5(e) above, nothing
contained in this Agreement shall create or be construed to create a trust of
any kind, or a fiduciary relationship between the Corporation and the Executive
or any other person.
(l Subject to the provisions of Section 5(e) above, to the
extent that any person acquires a right to receive payments from the Corporation
under this Agreement, except to the extent provided by law such right shall be
no greater than the right of an unsecured general creditor of the Corporation.
(m In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to refer to his legal representative or,
where appropriate, to his Beneficiary.
(n If any event provided for in this Agreement is scheduled to
take place on a legal holiday, such event shall take place on the next
succeeding day that is not a legal holiday.
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IN WITNESS WHEREOF, the Executive and, pursuant to due
authorization from its Board of Directors, the Corporation have caused this
Agreement to be executed as of the day and year first above written.
XXXX CORPORATION
By /S/ XXXXXX X. XXXXXXX
------------------------------------
Name:
Title:
By /S/ R. B. PRIORY
------------------------------------
Chairman of the
Compensation Committee
Attest:
/S/ XXX X. XXXXXXX
--------------------
Assistant Secretary
/S/ X. X. XXXXXXX
------------------------------------
Executive
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Exhibit A to Agreement made as of December 12, 1998
between Xxxx Corporation and Southwood X. Xxxxxxx
---------------------------------------------------
As of February 18, 1999, for purposes of Section 2(a),
the office and title of the Executive is Chairman of the Board
of Directors of the Corporations;
the reporting responsibility of the Executive is to report
directly and only to the Board of Directors of the Corporation; and
the duties and responsibilities of the Executive are:
The Executive shall continue to serve as the principal officer
of the Corporation and as general manager of all operations
and affairs of the Corporation, its subsidiaries, affiliates
and divisions, at all times having the authority, powers and
duties of the person charged with the general management of
the business and affairs of the Corporation, with authority to
manage and direct all operations and affairs of the
Corporation, its subsidiaries, affiliates and divisions, and
to employ and discharge all employees thereof subject to
approval of the Board of Directors of the Corporation with
respect to elected officers of the Corporation. The Executive
shall serve as Chairman of the Policy Committee of the
Corporation and as Co-Chairman of the Strategic Operating
Committee of the Corportion. The Executive shall continue to
report to and be responsible only to the Board of Directors of
the Corporation, with all employees of the Corporation, its
subsidiaries, affiliates and divisions reporting directly or
indirectly to him.
40
