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Exhibit 10.10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
effective as of the 1st day of June, 1999 (the "Effective Date") by and between
Xxxxxx & Xxxxx Corporation, an Ohio corporation ("Employer"), and Xxxx X.
Xxxxxxxx ("Executive").
WHEREAS, Employer desires to employ Executive as its Chief Executive
Officer, and Executive desires to be so employed by Employer, upon the terms and
subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Employer and Executive, intending
to be legally bound, agree as follows:
1. EMPLOYMENT. Employer hereby employs Executive as its Chief Executive
Officer upon the terms and conditions and for the compensation herein provided.
Executive hereby agrees to be so employed and to fulfill the duties of Chief
Executive Officer. Executive shall also serve as a member of Employer's Board of
Directors.
2. DUTIES AND POWER. For so long as Executive is employed by Employer,
Executive agrees as follows: to devote his full and exclusive business time and
attention to the business of Employer and of any subsidiaries or affiliates of
Employer (excluding reasonable vacations and sick leave in accordance with
Employer's policies consistent with his position) and to perform all duties in a
professional and prudent manner. As Chief Executive Officer, Executive shall
report directly to the Board of Directors of Employer, have no other officer or
employee of Employer senior to him and have full power, authority, duties and
responsibilities customarily associated with the position as Chief Executive
Officer, including, without limitation, authority, direction and control over
day-to-day business, financial and personnel matters of Employer, subject to the
lawful and reasonable policies and guidelines as may be established by the Board
of Directors of Employer. Executive agrees to devote his full business time to
the performance of services hereunder and not to engage in any other activity or
own any interest that would conflict with the interest of Employer or would
interfere with his responsibilities to Employer and the performance of his
duties hereunder; provided, however, that: (i) passive investments of less than
5% of the outstanding securities of any corporation shall be deemed not to
violate this provision; (ii) Executive may engage in activities involving
charitable, educational, religious, industry, trade and similar types of
organizations, speaking engagements and similar type activities to the extent
that such other activities do not detract from the performance by Executive of
his duties and obligations hereunder; and (iii) Executive may serve as an
outside director of other companies to the extent that such service does not
involve a conflict of interest and does not detract in any material respect from
the performance by Executive of his duties and obligations hereunder. Without
limiting the generality of the foregoing, TPG Partners II, L.P. has approved,
subject to approval of Employer's Board of Directors, Executive's continued
affiliation with Xxxxxxxx & Xxxxxxxxxx Advisors. Executive shall perform his
duties at Employer's office in North Canton, Ohio, except that a reasonable
amount of business-related
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travel may be required.
3. COMPENSATION AND BENEFITS. For all services rendered by Executive
pursuant to this Agreement, Employer shall compensate Executive as follows:
(a) BASE COMPENSATION. Subject to the terms and conditions set forth
herein, Employer (or, at Employer's option, any subsidiary or affiliate of
Employer for which Executive also provides services hereunder) shall pay to
Executive a salary of at least $300,000 per annum (such annual compensation as
it may be increased from time to time shall be referred to herein as the "Base
Compensation"). Executive's Base Compensation will be paid in accordance with
Employer's customary payroll practices (but not less frequently than monthly),
and will be prorated based upon the number of days elapsed in any partial year.
Base Compensation shall be reviewed annually by the Compensation Committee of
Employer's Board of Directors and may be increased at the sole discretion of
such Committee.
(b) BONUS. Executive may be awarded an annual bonus based on the
attainment of certain goals to be agreed upon by Executive and Employer's Board
of Directors on or before March 1 of the applicable year (but on or before
December 31, 1999 in the case of the goals for 1999). Such annual bonus is
targeted to be 50% of Executive's Base Compensation (the "Target Bonus"), but
may be increased (up to a maximum of 100% of Base Compensation) or decreased by
the Board of Directors in its discretion depending on the extent to which the
goals are exceeded or not met.
(c) BENEFITS. Executive shall be entitled, as an employee of Employer,
to employee retirement and welfare benefits, perquisites and other executive
benefits substantially comparable to those employee benefits made available to
the senior executive management of Employer, including, but not limited to,
401(k) plan and medical benefit plan participation and no less than four weeks
of vacation per year. For purposes of the vacation entitlement, Executive shall
receive credit for his prior 29 years of service in the industry. Executive
shall be entitled to reimbursement by Employer for financial and tax planning
advisory services at rates customary to the local area, not to exceed $25,000 on
an annual basis.
(d) EXPENSES. Executive shall be entitled to reimbursement by Employer
for his ordinary and necessary business expenses incurred in the performance of
his duties under this Agreement if supported by reasonable documentation as
required by Employer in accordance with its usual practices.
(e) COUNTRY CLUB MEMBERSHIP. Executive shall be entitled to utilize
Employer's membership at Glenmoor Country Club at Employer's expense. Executive
will be responsible for all expenses incurred by him in connection with his use
of the Country Club except for expenses that are payable or reimbursable under
Section 3(d).
(f) RELOCATION. Employer will reimburse Executive for his actual and
reasonable relocation expenses incurred in connection with Executive's
relocation to Canton, Ohio pursuant to Employer's relocation policy. In addition
to those expenses normally reimbursable under said relocation policy, Employer
will reimburse Executive for his reasonable temporary living
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expenses for up to 4 months in an amount not to exceed $5,000 per month and for
commuting expenses between West Virginia and Ohio for up to four months at the
standard IRS reimbursement rate of $.31 per mile. In addition, Employer shall
reimburse Executive for all reasonable closing costs associated with the sale of
Executive's West Virginia residence (the "Current Residence") and closing costs
associated with Executive's purchase and financing of a new primary residence in
Ohio. For purposes of this Section, "closing costs" shall mean loan origination
fees, loan discount fees, appraisal fees, credit report fees, assumption fees,
settlement or closing fees, title examination fees, title insurance binder,
document preparation fees, notary fees, attorneys' fees, real estate brokers'
commissions, title insurance fees, recording fees, tax stamps, transfer taxes,
survey fees and costs of pest, radon and home inspections. In addition, Employer
shall pay Executive an amount determined by its accountants to be equal to
Executive's federal, state and local taxes on the foregoing reimbursements (the
"Tax Gross-up") and the federal, state and local taxes on the Tax Gross-up, all
to the end that Executive be held harmless, on an after-tax basis, from the tax
impact thereof. Executive will use his best efforts (which, for purposes of this
Agreement, shall mean reasonable efforts) on and after the date of execution of
this Agreement to sell his Current Residence. In the event that Executive does
not sell or have an agreement to sell the Current Residence before September 1,
1999, Employer shall offer to purchase the Current Residence from Executive for
$233,500.00 in cash. In addition, Employer shall offer to purchase the Current
Residence from Executive for $233,500.00 in cash if prior to September 1, 1999
Executive has an agreement to sell the Current Residence but such sale is not
consummated prior to October 31, 1999. If Executive shall accept such offer of
Employer, the closing of such purchase and sale shall occur no later than one
hundred twenty (120) days from the Effective Date. If prior to September 1, 1999
Executive receives an offer from a third party to purchase the Current Residence
for less than $233,500, and if, with the consent of Employer, Executive accepts
such offer, Employer shall pay to Executive in cash an amount equal to the
shortfall plus a Tax Gross-up and the federal, state and local taxes on the Tax
Gross-up, all to the end that Executive be held harmless, on an after-tax basis,
from the tax impact on the shortfall payment.
(g) LEGAL EXPENSES. Employer will reimburse Executive for reasonable
attorneys' fees incurred in connection with review of this Agreement by
Executive's attorney.
(h) LIABILITY FOR TAXES. Except as otherwise provided in Section 3(f)
and Section 4(f), Employer shall have no liability for any tax liability of
Executive attributable to any payment made under this Agreement except for
customary employer liability for federal and state employee taxes (e.g., social
security, Medicare, etc.). Employer may withhold from any such payment such
amounts as may be required by applicable provisions of the Internal Revenue
Code, other tax laws, and the rules and regulations of the Internal Revenue
Service and other tax agencies in effect at the time of any such payment.
4. TERMINATION OF EMPLOYMENT.
(a) EMPLOYMENT AT WILL. The parties acknowledge and agree that
Executive's employment hereunder is employment at will. Notwithstanding any
other provision contained in this Agreement, either Executive or Employer may
terminate Executive's employment hereunder
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at any time with or without Cause (as defined below) at its or his election upon
prior written notice (a "Termination Notice") to the other. A Termination Notice
shall be effective upon delivery to the other party and the termination shall be
effective as of the date set forth in such Termination Notice (hereinafter, the
"Termination Date').
(b) DEFINITION OF "CAUSE". For purposes of this Agreement, the term
"Cause" shall mean Executive's personal dishonesty, fraud or deceit, willful
misconduct, a serious breach of a fiduciary duty involving personal profit,
conviction of a felony (including via a guilty or nolo contendere plea), willful
neglect of duties by Executive or material breach by Executive of the provisions
of Sections 2, 6, 7 or 8 of this Agreement; provided, however, that
unsatisfactory job performance shall not be considered Cause for termination of
the Executive's employment by the Company. Executive shall be afforded a
reasonable opportunity to cure any willful neglect of his duties and any other
alleged material breach of this Agreement according to the following terms.
Employer's Board of Directors shall give Executive written notice stating with
reasonable specificity the nature of the circumstances determined by the Board
of Directors in good faith to constitute willful neglect or other material
breach. Executive shall have thirty (30) days from his receipt of such notice to
cure such circumstances or such breach if such breach is reasonably susceptible
of cure. If, in the reasonable good faith judgment of the Board of Directors,
the alleged breach is not reasonably susceptible to cure, or such circumstances
or material breach has not been satisfactorily cured within such thirty (30) day
cure period, such neglect of duties or material breach shall thereupon
constitute "Cause" hereunder.
(c) TERMINATION WITHOUT CAUSE. Employer may terminate Executive's
employment under this Agreement at any time with or without any Cause shown.
Upon any such termination without Cause, Executive shall be entitled to the
following:
(i) Executive shall receive severance pay as follows:
(A) If Executive is terminated during 1999, then
he will be paid $1,350,000 which is equal to
three years of salary ($900,000) plus three
years of Target Bonus ($450,000);
(B) If Executive is terminated during 2000, then
he will be paid three times the sum of his
annualized 1999 W-2 compensation from
Employer and the annualized bonus, if any,
earned by Executive for 1999 but not paid
until 2000. W-2 Compensation shall refer to
the wages and other compensation reported by
Employer to the Internal Revenue Service on
IRS Form W-2.
(C) If Executive is terminated after 2000, he
will be paid an amount equal to three times
his total W-2 compensation from Employer for
the previous calendar year. W-2 compensation
shall refer to the wages and other
compensation reported by Employer to the
Internal Revenue Service on IRS Form W-2.
(ii) Executive will be eligible to elect to continue, for
himself and his eligible
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dependents, health benefits in accordance with the
provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
All of the above severance payments and benefits shall be subject to
normal withholding of taxes and other authorized deductions. Executive
acknowledges and agrees that the provisions of this Section 4(c) state his
entire and exclusive rights, entitlements and remedies against Employer, its
successors, assigns, affiliates, employees and representatives for termination
without any Cause shown by Employer; provided, however, that the Executive also
shall be entitled to receive all salary, bonus, benefits and expense
reimbursement which have accrued as of the Termination Date. As a material
inducement to Employer to enter into this Agreement, Executive represents that
he will make no other claims in any such event.
(d) TERMINATION FOR DEATH OR PERMANENT DISABILITY. In the event that
Executive's employment by Employer is terminated because of death or Permanent
Disability (as defined below), then, subject to all applicable laws, Executive
(or Executive's estate) shall be entitled to receive only that salary, bonus,
benefits and expense reimbursements which have accrued as of the Termination
Date. For purposes of this Agreement, "Permanent Disability" shall mean the
inability of Executive, by reason of any ailment or illness, or physical or
mental condition, to devote substantially all of his time during normal business
hours to the daily performance of Executive's duties as required under this
Agreement for a continuous period of six (6) months, as reflected in the
opinions of three qualified physicians, one of which has been selected by
Employer, one of which has been selected by Executive, and one of which has been
selected by the other two physicians, jointly.
(e) TERMINATION FOR CAUSE OR TERMINATION BY THE EXECUTIVE. In the event
that Executive elects to terminate his employment under this Agreement (except
as otherwise provided below), or if Executive is terminated for Cause, then
Executive shall not be entitled to receive any severance pay or compensation
except such base compensation, benefits, bonuses and expense reimbursement as
shall have accrued prior to the Termination Date. Notwithstanding any provision
of this Agreement to the contrary, in the event Executive elects to terminate
his employment either (i) at any time following the occurrence of any event
constituting Good Reason (as defined below) or (ii) within the thirty (30)-day
period beginning six (6) months after the occurrence of a Change of Control (as
defined below in Section 5(g)(iii)) regardless of the reason for such
termination, such termination shall be deemed to constitute a termination by
Employer without Cause, and Executive shall be entitled to all of the payments
and benefits set forth in Section 4(c). For purposes of this Agreement, "Good
Reason" means any of the following: (i) a substantial and adverse change in
Executive's status or position as Chief Executive Officer and a key employee of
Employer, or a substantial reduction in the duties and responsibilities
previously exercised by Executive, or any failure to reappoint or reelect
Executive to, such position, except in connection with the termination of
Executive's employment for Cause or Permanent Disability, or as a result of
Executive's death; (ii) a reduction (other than for Cause) by Employer in
Executive's Base Compensation; (iii) a relocation of Executive's principal place
of work to any location that is more than 25 miles from Canton, Ohio; (iv) a
sale or other exchange or transfer (whether by merger, reorganization or
otherwise) of substantially all of the shares or assets of Employer; or (v) a
material breach of the
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provisions of this Agreement by Employer. Notwithstanding the foregoing, a
termination of employment by Executive will be deemed to be for "Good Reason"
only if Executive elects to terminate employment within ninety (90) days after
he knows or should know that an event constituting Good Reason has occurred;
provided, however, that Executive's continued employment following the
occurrence of such an event shall not constitute consent to, or a waiver of
rights with respect to, any other event constituting Good Reason hereunder.
Executive acknowledges and agrees that the provisions of this Section state his
entire and exclusive rights, entitlements and remedies against the Employer, its
successors, assigns, affiliates and representatives if he elects to terminate
his employment and/or is terminated with Cause. As a material inducement to
Employer to enter into this Agreement, Executive represents to Employer that he
will make no other claim in any such event.
(f) CERTAIN ADDITIONAL PAYMENTS BY EMPLOYER.
(i) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined
that any economic benefit or payment or distribution
by Employer to or for the benefit of the Employee,
whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement
or otherwise (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Internal
Revenue Code or any Applicable Interest and Penalties
(as defined below) with respect to such excise tax
(such excise tax, together with any Applicable
Interest and Penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Executive
shall be entitled to receive an additional payment (a
"Gross-Up-Payment") in an amount such that after
payment by Executive of all taxes (including any
Applicable Interest and Penalties imposed with
respect to such taxes), including any Excise Tax
imposed upon the Gross-Up Payment, Executive retains
an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments. For purposes of this
Agreement, "Applicable Interest and Penalties" means
all interest and penalties payable by Executive with
respect to excise tax imposed under Section 4999 of
the Internal Revenue Code other than interest or
penalties determined by the Accounting Firm (as
defined below) to be primarily attributable to
unreasonable delay on the part of Executive.
(ii) Subject to the provisions of Section 4(f)(iii), all
determinations required to be made under this Section
4(f), including whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment,
shall be made by Employer's regular outside
independent public accounting firm (the "Accounting
Firm") which shall provide detailed supporting
calculations both to Employer and Executive within 15
business days of the Effective Date of Termination,
if applicable, or such earlier time as is requested
by Employer. The initial Gross-Up Payment, if any, as
determined pursuant to this Section 4(f)(ii), shall
be paid to Executive within 5 days of the receipt of
the Accounting Firm's determination. Any
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determination by the Accounting Firm shall be binding
upon Employer and Executive. As a result of the
uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by
Employer should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that Employer exhausts its
remedies pursuant to Section 4(f)(iii) and Executive
thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by Employer
to or for the benefit of Executive.
(iii) Executive shall notify Employer in writing of any
claim by the Internal Revenue Service that, if
successful, would require the payment by Employer of
the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten
business days after the later of either (i) the date
Executive has actual knowledge of such claim, or (ii)
ten days after the Internal Revenue Service issues to
Executive either a written report proposing
imposition of the Excise Tax or a statutory notice of
deficiency with respect thereto, and shall apprise
Employer of the nature of such claim and the date on
which such claim is requested to be paid. Executive
shall not pay such claim prior to the expiration of
the thirty-day period following the date on which he
gives such notice to Employer (or such shorter period
ending on the date that any payment of taxes with
respect to such claim is due). If Employer notifies
Executive in writing prior to the expiration of such
period that it desires to contest such claim,
Executive shall: (i) give Employer any information
reasonably requested by Employer relating to such
claim, (ii) take such action in connection with
contesting such claim as Employer shall reasonably
request in writing from time to time, including,
without limitation, accepting legal representation
with respect to such claim by an attorney reasonably
selected by Employer, (iii) cooperate with Employer
in good faith in order effectively to contest such
claim, (iv) permit Employer to participate in any
proceedings relating to such claim; provided,
however, that Employer shall bear and pay directly
all costs and expenses (including additional interest
and penalties) incurred in connection with such
contest and shall indemnify and hold 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 contest.
Without limitation of the foregoing provisions of
this Section 4(f)(iii), Employer shall control all
proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and
all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct
Executive to request or accede to a request for an
extension of the statute of limitations with respect
only to
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the tax claimed, or pay the tax claimed and xxx for a
refund or contest the claim in any permissible
manner, and 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 Employer shall
determine; provided, however, that if Employer
directs Executive to pay such claim and xxx for a
refund, Employer shall advance the amount of such
payment to Executive, on an interest-free basis and
shall indemnify and hold 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;
and further provided that any extension of the
statute of limitations requested or acceded to by
Executive at Employer's request and relating to
payment of taxes for the taxable year of Executive
with respect to which such contested amount is
claimed to be due is limited solely to such contested
amount. Furthermore, Employer's control of the
contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder
and 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.
(iv) If, after the receipt by Executive of an amount
advanced by Employer pursuant to Section 4(f)(iii),
Executive becomes entitled to receive any refund with
respect to such claim, Executive shall (subject to
Employer's complying with the requirements of Section
4(f)(iii)) promptly pay to Employer the amount of
such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If,
after the receipt by Executive of an amount advanced
by Employer pursuant to Section 4(f)(iii), a
determination is made that Executive shall not be
entitled to any refund with respect to such claim and
Employer does not notify Executive in writing of its
intent to contest such denial of refund prior to the
expiration of thirty days after such determination,
then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
(v) In the event that any state or municipality or
subdivision thereof shall subject any Payment to any
special tax which shall be in addition to the
generally applicable income tax imposed by such
state, municipality, or subdivision with respect to
receipt of such Payment, the foregoing provisions of
this Section 4(f) shall apply, mutatis mutandis, with
respect to such special tax.
5. STOCK OPTION.
(a) TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. Subject to the terms
and
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conditions of this Agreement, Employer hereby grants to Executive an option
("Option") to purchase 139,383 shares of common stock of Employer (the "Option
Shares"), which number Employer represents equals one and one-quarter percent
(1.25%) of the outstanding common stock of Employer as of the date hereof
(calculated on a fully-diluted basis and assuming exercise and conversion of all
outstanding or committed options, warrants and convertible securities). The
Option granted pursuant to this first paragraph of Section 5(a) is referred to
in this Agreement as the "Initial Option."
Upon the date of completion of the issuance and sale by Employer to the
Permitted Holders (as defined in Section 5(g) below) after the date hereof of
new equity securities (excluding issuances associated with currently outstanding
or committed convertible securities) for an aggregate purchase price of at least
$30 million (the "Trigger Date"), Employer will increase, on a one-time basis,
the foregoing number of Option Shares to that number equal to one and
one-quarter percent (1.25%) of the outstanding common stock of Employer on the
Trigger Date (calculated on a fully-diluted basis and assuming exercise and
conversion of all then outstanding or committed options, warrants and
convertible securities, including those issued or issuable in connection with
any such issuance and sale of equity securities). The supplemental Option
granted pursuant to this second paragraph of Section 5(a) is referred to in this
Agreement as the "Supplemental Option." References in this Agreement to the
"Option" shall be deemed to include both the Initial Option and the Supplemental
Option.
(b) VESTING. One-fourth (1/4) of the Option Shares (I.E., 34,845
shares) shall vest and be exercisable on the first anniversary of the date of
this Agreement and one-twelfth (1/12) of the remaining Option Shares (I.E.,
8,711 shares) shall vest and be exercisable at the end of each three (3) month
period thereafter until all Option Shares have vested, provided, however, in
order for Option Shares eligible to vest for any period to vest, Executive must
have remained an executive or member of the Board of Directors of Employer from
the date hereof through the last day of the relevant period. The Board of
Directors of Employer, in its discretion, may from time to time accelerate the
vesting of any or all of the Option Shares.
The Supplemental Option shall be vested and shall vest in the future as
though it had been granted on the date hereof (i.e., one-fourth (1/4) of such
additional Option Shares shall vest and be exercisable on the first anniversary
of the date of this Agreement and one-twelfth (1/12) of the remaining additional
Option Shares shall vest and be exercisable at the end of each three (3) month
period thereafter.)
(c) EXERCISE PRICE AND METHOD OF PAYMENT.
(i) EXERCISE PRICE. The exercise price of the Option (the
"Exercise Price") shall be, in the case of the
Initial Option, $0.01 per share, provided however,
that upon the grant of the Supplemental Option, the
Exercise Price shall be adjusted to an amount as is
determined by Executive and the Compensation
Committee of the Board of Directors to be the fair
market value of the underlying Option Shares as of
the date of the Trigger Date. The parties shall
negotiate in good faith to determine the adjusted
Exercise
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Price within sixty (60) days of the date of grant of
the Supplemental Option (the "Negotiation Period"),
and if the parties fail to agree within such time,
the adjusted Exercise Price shall be determined in
accordance with the appraisal procedures set forth
below as promptly as practicable. The parties shall
agree on an independent investment banking or
appraisal firm of national repute (an "Appraiser")
within thirty (30) days after the last day of the
Negotiation Period, and if the parties fail to agree
on an Appraiser within such 30-day period, each party
shall select an independent Appraiser within twenty
(20) days after the last day of such 30-day period.
The two (2) Appraisers so selected shall each
independently determine the fair market value of the
Option Shares, and if the difference between the two
appraisals does not exceed twenty percent (20%) of
the lower of the two appraisals, the adjusted
Exercise Price shall be conclusively deemed to be the
average of the two appraisals. If the difference
between the two appraisals exceeds twenty percent
(20%) of the lower of the two appraisals, the two
Appraisers shall select a third independent Appraiser
who shall independently value the Option Shares and
whose appraisal shall be conclusively deemed to be
the fair market value of the Option Shares and such
value shall be the adjusted Exercise Price. In
determining the "fair market value," Employer shall
be valued on a going-concern basis. Employer shall
pay the fees and expenses of the Appraisers.
(ii) METHOD OF PAYMENT. Payment of the Exercise Price per
share, together with payment of any tax withholding
amounts, is due in full upon exercise of any or all
vested Option Shares. Executive may elect, to the
extent permitted by applicable statutes and
regulations, to make payment of the Exercise Price
and the tax withholding amounts under one of the
following alternatives:
(A) Payment of the exercise price per share in
cash (including check) at the time of
exercise;
(B) Payment by delivery of already-owned shares
of common stock of Employer, owned free and
clear of any liens, claims, encumbrances or
security interests, or by having withheld
shares of common stock otherwise issuable
upon exercise of the Option, which common
stock shall be valued at its fair market
value on the date of exercise; or
(C) Payment by any combination of the methods of
payment permitted by Sections 5(c)(ii)(A)
and 5(c)(ii)(B).
(iii) WHOLE SHARES. This Option may not be exercised for
any number of Option Shares which would require the
issuance of anything other than
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whole shares.
(d) APPLICABLE LAWS OR REGULATIONS.
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(i) Executive acknowledges and understands that neither
the Option, the Option Shares nor any other of the
securities of Employer have been registered under the
Securities Act of 1933, as amended (the "Act"), or
qualified under any state securities laws or
regulations ("Blue Sky Laws") in reliance upon the
nonpublic offering exemption from the registration
requirements of the Act and similar exemptions under
the Blue Sky Laws. Executive hereby acknowledges and
agrees that he is acquiring the Option and any Option
Shares which he may subsequently acquire, solely for
his own account and not with a view to or for sale in
connection with any distribution of the Option or
Option Shares, and that Executive either (A) has such
knowledge and experience in financial and business
matters that he is capable of evaluating the merits
and risks of the proposed investment and therefore
has the capacity to protect his own interests in
connection with the acquisition of the Option Shares,
or (B) has a preexisting personal or business
relationship with Employer or one or more of its
officers, directors or controlling persons. In the
event Executive exercises any of this Option as
provided herein, Executive consents to the placement
of any and all legends on any certificates evidencing
ownership of the Option Shares and all restrictions
on transfer of the Option Shares which may, in the
determination of Employer or its counsel, be
appropriate or required by law.
(ii) Employer's obligations to sell and deliver Option
Shares are subject to, and conditional upon, such
compliance as Employer deems necessary or advisable
with federal and state laws, rules and regulations
applying to the authorization, issuance, listing or
sale of securities, and this Option may not be
exercised unless (A) the Option Shares have been
registered under a then currently effective
registration statement under the Act, or (B) a
determination is made by counsel to Employer that
such registration is not required under applicable
securities laws.
(iii) Executive shall indemnify, defend and hold harmless
Employer and its officers, directors and stockholders
from and against any and all claims, demands, losses,
costs, expenses (including without limitation
attorney's fees) that arise from, relate to or result
from any breach of, or failure of Executive to
perform, any of Executive's representations,
warranties or covenants set forth in Section 5(d)(i).
(e) TERM.
(i) The term of this Option commences on the date hereof
and shall automatically expire on June 1, 2009 (the
"Expiration Date") unless this
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Option expires sooner as set forth below. In no event
may this option be exercised on or after the
Expiration Date.
(ii) This option shall terminate prior to the Expiration
Date as follows:
(A) If Executive ceases to be an employee or
director of Employer, whichever last occurs,
for any reason other than death, retirement
or disability, this Option may be exercised
(to the extent that Executive was entitled
to exercise the same on the date of such
cessation) within a period of three (3)
months following such cessation, but not
later than the expiration date described in
Section 5(e)(i), and upon expiration of such
period, this Option shall terminate;
PROVIDED, HOWEVER, that this Option will
immediately terminate if Executive's
employment is terminated by Employer for
Cause.
(B) If Executive ceases to be an employee or
director of Employer, whichever last occurs,
by reason of death, retirement or permanent
disability, the Option may be exercised (to
the extent Executive was entitled to
exercise the same on the date of such death,
retirement or permanent disability) within a
period of twelve (12) months following such
cessation, but not later than the expiration
date described in Section 5(e)(i), and upon
expiration of such period, this Option shall
terminate.
(f) EXERCISE.
(i) This Option may be exercised by Executive from time
to time, to the extent Option Shares have vested, by
delivering a notice of exercise in the form set forth
in Exhibit A hereto, or such other form then
designated by Employer (the "Notice of Exercise")
together with the aggregate exercise price to the
corporate secretary of Employer, or to such other
person as Employer may designate, during regular
business hours, together with such additional
documents as Employer may then require in its
discretion. The date of exercise shall be the date of
Employer's receipt of the Notice of Exercise.
(ii) By exercising this Option, Executive agrees that:
(A) as a precondition to the completion of any
exercise of this Option, Employer may
require Executive to enter an arrangement
providing for the payment by Executive to
Employer of any tax withholding obligation
of Employer arising by reason of: (1) the
exercise of this Option; (2) the lapse of
any substantial risk of forfeiture to which
the shares are subject at the time of
exercise; or (3) the disposition of shares
acquired upon such exercise.
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Executive also agrees that any exercise of
this Option has not been completed and that
Employer is under no obligation to issue any
common stock to Executive until such an
arrangement is established or Employer's tax
withholding obligations are satisfied, as
reasonably determined by Employer; and
(B) Employer (or a representative of the
underwriters) may, in connection with the
first underwritten registration of the
offering of any equity securities of
Employer under the Act, require that
Executive not sell or otherwise transfer or
dispose of any shares of common stock or
other securities of Employer during such
period (not to exceed one hundred eighty
(180) days or, if less, the period of time
any other executive officer of Employer is
so restricted) following the effective date
of the registration statement of Employer
filed under the Act as may be requested by
Employer or the representative of the
underwriters. Executive further agrees that
Employer may impose stop-transfer
instructions with respect to securities
subject to the foregoing restrictions until
the end of such period.
(g) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
(i) In the event of any change in the number or nature of
issued and outstanding shares of common stock of
Employer by reason of any stock dividend, stock
split, recapitalization, merger, rights offering,
share exchange or other change in the corporate or
capital structure of Employer, which increases,
decreases, or exchanges the shares of common stock of
Employer for a different number or kind of shares or
other securities, an appropriate and proportionate
adjustment (to the extent necessary or appropriate,
as determined by the Board of Directors of Employer,
in its discretion) shall be made in (A) the number of
shares or other securities subject to the Option, and
(B) the Exercise Price.
(ii) In the event of a merger, consolidation, sale or
exchange of all or substantially all of the assets of
Employer, or other corporate reorganization of
Employer, other than a Change in Control (as
hereinafter defined), the Board of Directors of
Employer, in its discretion, may, but is not
obligated to do, either of the following: (A) pay in
cash the difference between the Exercise Price and
the consideration receivable in the transaction by a
holder of common stock of Employer for the number of
Option Shares unexercised, whether or not vested, or
(B) provide that Executive shall receive, upon
exercise of the Option, the stock or other
securities, cash or property to which Executive would
have been entitled if Executive had exercised the
Option and had been a holder of record of shares of
common stock of employer on the record date fixed for
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determination of holders of shares of common stock of
Employer entitled to receive such stock or other
securities, cash or property at the same aggregate
price as the aggregate Exercise Price of the Option
Shares, with adjustments as set forth in Section
5(g)(i).
(iii) In the event of a Change in Control, all Option
Shares shall immediately become exercisable in full.
For purposes of this Agreement, a "Change in Control"
shall mean the following and shall be deemed to occur
if:
(A) Prior to the occurrence of an underwritten
public offering of the Company's equity
securities, any of the following events
occurs:
(x) Any individual, entity or group (within
the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act
of 1934, as amended) (each, a "Person"),
other than a Permitted Holder, becomes
the beneficial owner (within the meaning
of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as
amended) of 50% or more of either the
then outstanding shares of common stock
("Outstanding Common Stock") or the
combined voting power of Employer's then
outstanding securities entitled to vote
generally in the election of directors
("Employer Voting Securities"); or
(y) Consummation by Employer of the sale or
other disposition by Employer of all or
substantially all of Employer's assets
or a merger, consolidation or other
reorganization of Employer with any
other Person, other than:
(1) a merger, consolidation or
other reorganization that would
result in the voting securities of
Employer outstanding immediately
prior thereto (or, in the case of a
reorganization or merger or
consolidation that is preceded or
accomplished by an acquisition or
series of related acquisitions by
any person, by tender or exchange
offer or otherwise, of voting
securities representing 50% or more
of the combined voting power of all
securities of Employer, immediately
prior to such acquisition or the
first acquisition in such series of
acquisitions) continuing to
represent, either by remaining
outstanding or by being converted
into voting securities of another
entity, more than 50% of the
combined voting power of the voting
securities of Employer or such other
entity outstanding immediately after
such reorganization or merger or
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consolidation (or series of related
transactions involving such a
reorganization or merger or
consolidation), or
(2) a merger, consolidation or other
reorganization effected to implement
a recapitalization or
reincorporation of Employer (or
similar transaction) that does not
result in a material change in
beneficial ownership of the voting
securities of Employer or its
successor.
(B) following the occurrence of an underwritten
public offering of Employer's equity
securities, any of the following events
occur:
(w) the acquisition in one or more
transactions by any Person, other
than a Permitted Holder, becomes the
beneficial owner (within the meaning
of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as
amended) of greater than thirty
percent (30%) of the Outstanding
Common Stock or Employer Voting
Securities; or
(x) the consummation of a merger,
reorganization, consolidation, share
exchange, transfer of assets or
other transaction having similar
effect involving Employer, unless,
following such transaction, stock
possessing at least fifty percent
(50%) of the Outstanding Common
Stock and the outstanding Employer
Voting Securities of the corporation
resulting from such transaction is
beneficially owned, directly or
indirectly, by Permitted Holders, or
Persons who were beneficial owners
of the Outstanding Common Stock and
Employer Voting Securities,
respectively, immediately prior to
such transaction; or
(y) individuals who are members of the
Board of Directors of Employer as of
the Effective Date of this Agreement
(the "Incumbent Directors") cease
for any reason to constitute at
least a majority of the members of
the Board; provided, however, that
any individual becoming a director
subsequent to the date of this
Agreement whose appointment to the
Board or nomination for election by
Employer was approved by a vote of
at least a majority of the Incumbent
Directors then in office (unless
such appointment or election was at
the request of an unrelated third
party who has taken steps reasonably
calculated to result in a Change in
Control as described in paragraphs
(w) or (x) above and who has
indicated publicly an intent to
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seek control of Employer) shall be
treated from the date of his or her
appointment or election as an
Incumbent Director; or
(z) consummation of a complete
liquidation or dissolution of
Employer.
For purposes of this Agreement, "Permitted Holders" means (i) TPG
Partners II, L.P., TPG Parallel II, L.P. and TPG Investors II, L.P. (the
"Investors"), (ii) any investment partnership or fund management by the
principals of TPG II, (iii) any partners of the Investors, (iv) members of the
immediate family of the persons described in (iii) and trusts for the benefit of
members of their immediate family, (iv) the respective affiliates (within the
meaning ascribed to such term in Rule 405 of the Securities Act of 1933, as
amended) of Persons described in (i) through (iv), and (v) any Person acting in
the capacity of an underwriter in connection with a public or private offering
of Employer's equity securities.
(h) DELIVERY OF CERTIFICATES, RIGHTS IN OPTION SHARES. Upon the due
exercise of the Option in accordance with the provisions of this Agreement,
Employer shall deliver to the Executive at the main office of Employer, or such
other place as shall be mutually acceptable, a certificate or certificates
representing such shares of common stock to which the Option shall have been so
exercised. Neither Executive, his estate nor his transferees by will or the laws
of descent and distribution shall be, or have any rights or privileges of, a
stockholder of Employer with respect to any Option Shares issuable upon exercise
of the Option, unless and until certificates representing such Option Shares
shall have been issued and delivered.
(i) TRANSFERABILITY. This Option is not transferable, except by will or
by the laws of descent and distribution, and is exercisable only by Executive
during the life of Executive. Notwithstanding the foregoing, by delivering
written notice to Employer, in a form satisfactory to Employer, Executive may
designate a third party who, in the event of the death of Executive, shall
thereafter be entitled to exercise this Option.
(j) NO EMPLOYMENT RIGHT. Nothing in this Option shall be deemed to
create in any way whatsoever any obligation on the part of Executive to continue
in the employ of Employer, or of Employer to continue employment of Executive
with Employer. In addition, nothing in this Option shall obligate Employer or
any affiliate of Employer, or their respective stockholders, board of directors,
officers, or employees to continue any relationship which Executive might have
as a director or consultant for Employer or affiliate of Employer.
6. NONDISCLOSURE.
(a) CONFIDENTIAL INFORMATION. Executive hereby acknowledges that in
connection with his employment by Employer he will be exposed to and may obtain
certain information (including, without limitation, procedures, memoranda,
notes, records and customer and supplier lists whether such information has been
or is made, developed or compiled by Executive or otherwise has been or is made
available to him) regarding the business and operations of Employer and its
subsidiaries or affiliates. Executive further acknowledges that such
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information and procedures are unique, valuable, considered trade secrets and
deemed proprietary by Employer. For purposes of this Agreement, such information
and procedures shall be referred to as "Confidential Information," except that
the following shall not be considered Confidential Information: (i) information
disclosed on a non-confidential basis to third parties by Employer (but not by
Executive in violation of this Agreement), (ii) information released from
confidential treatment by written consent of Employer, and (iii) information
lawfully available to the general public.
(b) USE OF CONFIDENTIAL INFORMATION. Executive agrees that all
Confidential Information is and will remain the property of Employer. Executive
further agrees, except as otherwise required by law and for disclosures
occurring in the good faith performance of his duties for Employer, while
employed by Employer hereunder and thereafter, to hold in the strictest
confidence all Confidential Information, and not to, directly or indirectly,
duplicate, sell, use, lease, commercialize, disclose or otherwise divulge to any
person or entity any portion of the Confidential Information or use any
Confidential Information for his own benefit or profit or allow any person,
entity or third party, other than Employer and authorized executives of the
same, to use or otherwise gain access to any Confidential Information.
(c) TRADE SECRET. It is the intention of the parties that to the extent
any Confidential Information may constitute a "trade secret" as defined by Ohio
law, then, in addition to the remedies set forth in this Agreement, Employer may
elect to bring an action against Executive in the case of any actual or
threatened misappropriation of any such trade secret by Executive.
(d) NO REMEDY AT LAW. Regardless of whether any of the Confidential
Information shall constitute a trade secret as defined by Ohio law, Executive
expressly recognizes and agrees that the restrictions contained in this Section
6 represent a reasonable and necessary protection of the legitimate interests of
Employer, that his failure to observe and comply with his covenants and
agreements herein will cause irreparable harm to Employer, that it is and will
continue to be difficult to ascertain the harm and damages to Employer that such
a failure by Executive could cause, and that a remedy at law for such failure by
Executive will be inadequate.
7. NON-INTERFERENCE, NON-SOLICITATION AND NON-COMPETITION COVENANTS.
(a) ACKNOWLEDGMENT OF ACCESS. Pursuant to this Agreement, Executive has
agreed to become Chief Executive Officer of Employer and to comply with the
non-disclosure provisions contained in Section 6 hereof. Executive recognizes
and acknowledges that he will be given access to certain of Employer's
Confidential Information (as defined in Section 6(a)), and have access to and
authority to develop relationships with customers of Employer because of his
position and status as Employer's Chief Executive Officer, which he would not
otherwise attain. In consideration of the foregoing, Executive agrees to comply
with the terms of this Section 7.
(b) RESTRICTED PERIOD. The restraints imposed by this Section 7 shall
apply during any period that Executive continues to receive payment of Base
Compensation hereunder, and for a period of one year thereafter (the "Restricted
Period"); provided, however, that, notwithstanding anything contained herein to
the contrary, the restraints imposed by this Section 7 shall not apply following
the termination of Executive's employment with Employer by Employer without
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Cause. In the event that any Court having jurisdiction should find that the
Restricted Period is so long and/or the scope (distance) (as set forth below) is
so broad as to constitute an undue hardship on Executive, then, in such event
only, the Restricted Period and area limitations shall be valid for the maximum
time and area for which they could be legally made and enforced.
(c) COVENANT. During the Restricted Period, Executive shall not, as an
executive (other than as an executive of Employer or an affiliate thereof),
employee, employer, stockholder, officer, director, partner, consultant,
advisor, proprietor, lender, provider of capital or other ownership, operational
or management capacity, directly or indirectly, (i) solicit or hire any employee
of Employer or otherwise interfere with or disrupt the employment relationship
between Employer and any employee, (ii) solicit or do business with (A)
Employer's customers with whom Employer did business while Executive was
employed under this Agreement, or (B) individuals or entities who Executive met
as a result of his position with Employer while Executive was employed under
this Agreement, that (in the case of either clause (A) or (B)) results in
competition with Employer in any county, parish or other comparable jurisdiction
within a state, province or nation located in North America in which any of such
customers have operations (other than customers whose business relationship with
Employer has terminated for at least 90 days) or in which Employer has conducted
business while Executive was employed under this Agreement (collectively, the
"Restricted Area"), or (iii) be associated with any entity engaged in the
business of oil and/or gas exploration, development, production, distribution
and/or marketing in the Restricted Area that results in competition with
Employer (but excluding association due to ownership of less than 5% of the
outstanding securities of any such entity).
(d) REASONABLENESS. Executive expressly recognizes and agrees that the
restraints imposed by this Section 7 are (i) reasonable as to time, geographic
limitation and scope of activity to be restrained; (ii) reasonably necessary to
the enjoyment by Employer of the value of its assets and to protect its
legitimate interests; and (iii) not oppressive. Executive further expressly
recognizes and agrees that the restraints imposed by this Section 7 represent a
reasonable and necessary restriction for the protection of the legitimate
interests of Employer, that the failure by the Executive to observe and comply
with the covenants and agreements in this Section 7 will cause irreparable harm
to Employer, that it is and will continue to be difficult to ascertain the harm
and damages to Employer that such a failure by the Executive would cause, that
the consideration received by the Executive for entering into these covenants
and agreements is fair, that the covenants and agreements and their enforcement
will not deprive Executive of his ability to earn a reasonable living in the oil
and gas industry or otherwise, and that Executive has acquired knowledge and
skills in his field that will allow him to obtain employment without violating
these covenants and agreements. Executive further expressly acknowledges that he
has been encouraged to and has consulted independent counsel, and has reviewed
and considered this Agreement with that counsel before executing this Agreement.
8. MEMORANDA, NOTES, RECORDS, ETC. All memoranda, notes, records,
software, customer lists or other documents (including, but not limited to,
those in electronic form) made or compiled by Executive or otherwise made
available to him concerning the business of Employer or its subsidiaries or
affiliates shall be Employer's property and shall be delivered to Employer upon
the expiration or termination of Executive's employment hereunder or at any
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other time upon request by Employer, and Executive shall retain no copies of
those documents; provided, however, that Executive may retain copies of personal
information and information concerning his compensation and benefits
entitlements and other employee rights. Executive shall never at any time have
or claim any right, title or interest in any material or matter of any sort
prepared for or used in connection with the business or promotion of Employer.
9. ENFORCEMENT. The parties hereto recognize that the covenants of
Executive hereunder are special, unique and of extraordinary character.
Accordingly, it is the intention of the parties that, in addition to any other
rights and remedies which Employer may have in the event of any breach of this
Agreement, Employer shall be entitled, and hereby is expressly and irrevocably
authorized by Executive, INTER ALIA, to demand and obtain specific performance,
including without limitation temporary and permanent injunctive relief, and all
other appropriate equitable relief against Executive in order to enforce against
Executive, or in order to prevent any breach or any threatened breach by
Executive of, the covenants and agreements contained herein. In case of any
breach of this Agreement, nothing herein contained shall be construed to prevent
Employer from seeking such other remedy in the courts as it may elect or invoke.
10. MISCELLANEOUS.
(a) NON-DELEGATION OF DUTIES. Executive may not delegate the
performance of any of his obligations or duties hereunder, or assign any rights
hereunder, without the prior written consent of Employer. Any such purported
delegation or assignment in the absence of such written consent shall be null
and void with no force or effect. Notwithstanding the foregoing, nothing herein
shall prevent Executive from the appropriate delegation of tasks to other
executives, employees, assistants and other service providers.
(b) BINDING EFFECT. This Agreement shall be binding on and inure to the
benefit of the parties hereto and their respective heirs, representatives,
successors and permitted assigns and any receiver, trustee in bankruptcy or
representative of the creditors of each such person. Employer shall require any
successor (whether direct or indirect, by purchase, merger, reorganization,
consolidation, acquisition of property or stock, liquidation, or otherwise) to
all or a significant portion of its assets, by agreement in form and substance
satisfactory to Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that Employer would be
required to perform this Agreement if no such succession had taken place.
Regardless whether such agreement is executed, this Agreement shall be binding
upon any successor of Employer in accordance with the operation of law and such
successor shall be deemed the "Employer" for purposes of this Agreement.
(c) SURVIVAL OF COVENANTS. Notwithstanding anything contained in this
Agreement, in the event Executive's employment is terminated for any reason
whatsoever, the covenants and agreements of Executive contained in Sections 4,
5, 6, 7, 8, 9 and 10, and the covenants of Employer contained in Sections 4 and
5 hereof shall survive any such termination and shall not lapse except as
provided herein.
(d) SEVERABILITY/MODIFICATION. If any term or provision of this
Agreement is held or deemed to be invalid or unenforceable, in whole or in part,
by a court of competent jurisdiction,
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such term or provision shall be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement.
(e) GOVERNING LAW. This Agreement is entered into in Ohio, and the
construction, validity and interpretation of this Agreement shall be governed by
the laws of the State of Ohio without regard to the laws of conflicts of laws
thereof.
(f) ARBITRATION. In the event of any dispute, controversy or claim
between Employer and Executive arising out of or relating to the interpretation,
application or enforcement of any provision of this Agreement (other than with
respect to provisions under Section 4(f) of this Agreement), either Employer or
Executive may, by written notice to the other, require such dispute or
difference to be submitted to arbitration. The arbitrator shall be selected by
agreement of the parties or, if they do not agree on an arbitrator within 30
days after one party has notified the other of his or its desire to have the
question settled by arbitration, then the arbitrator shall be selected pursuant
to the procedures of the American Arbitration Association (the "AAA") in Canton,
Ohio. The determination reached in such arbitration shall be final and binding
on all parties. Enforcement of the determination by such arbitrator may be
sought in any court of competent jurisdiction. Unless otherwise agreed by the
parties, any such arbitration shall take place in Canton, Ohio, and shall be
conducted in accordance with the Commercial Arbitration Rules of the AAA.
(g) EFFECTIVENESS; ENTIRE AGREEMENT; AMENDMENT. This Agreement contains
the entire understanding and agreement between the parties relating to the
subject matter hereof, and it supersedes all previous and contemporaneous
negotiations, commitments, writings and understandings. Neither this Agreement
nor any provision hereof may be waived, modified, amended, changed, discharged
or terminated, except by an agreement in writing signed by the party against
whom enforcement of any waiver, modification, change, amendment, discharge or
termination is sought.
(h) NOTICES. Any notice required or permitted to be given under the
provisions of this Agreement shall be in writing and shall be deemed to have
been duly given on the date of delivery if delivered personally to the party to
whom notice is to be given (or to the appropriate address below), or on the
third day after mailing if mailed to the party to whom notice is to be given by
certified or registered mail, return receipt requested, postage prepaid, or by
courier, addressed as follows, or to such other person at such other address as
any party may request in writing to the other party to this Agreement:
TO EXECUTIVE: Xxxx X. Xxxxxxxx
c/x Xxxxxx & Blake Corporation
0000 Xxxxxxxx Xxxx
Xxxxx Xxxxxx, Xxxx 00000
TO EMPLOYER: Xxxxxx & Xxxxx Corporation
0000 Xxxxxxxx Xxxx
Xxxxx Xxxxxx, Xxxx 00000
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Any party may change its address for purposes of this paragraph by giving the
other parties written notice of the new address in the manner set forth above.
(i) HEADINGS. The section headings herein are for convenience only and
shall not be used in interpreting or construing this Agreement.
(j) INDEMNIFICATION. Employer shall defend and hold Executive harmless
to the fullest extent permitted by applicable law in connection with any civil
or criminal claim, action, suit, investigation or proceeding arising out of or
relating to performance by Executive of services for, or action of Executive as
a director, officer or employee of Employer, or of any other person or
enterprise at the request of Employer. Expenses incurred by Executive in
defending any such claim, action, suit, investigation or proceeding shall be
paid by Employer in advance of the final disposition thereof upon the receipt by
Employer of an undertaking by or on behalf of Executive to repay said amount if
it shall ultimately be determined that Executive is not entitled to be
indemnified hereunder; provided, however, that this indemnification arrangement
shall not apply to a nonderivative action commenced by Employer against
Executive. The foregoing shall be in addition to, and shall not be deemed to
limit in any respect, any indemnification rights Executive may have by law,
contract, charter, by-law or otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement to be effective as of the Effective Date.
EXECUTIVE:
/s/ Xxxx X. Xxxxxxxx
---------------------------
Xxxx X. Xxxxxxxx
EMPLOYER:
XXXXXX & BLAKE CORPORATION,
an Ohio Corporation
By: /s/ Xxxxxxx X. Xxxxx, III
-------------------------------
Title: Chairman, Compensation
Committee of the Board
of Directors
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EXHIBIT A
NOTICE OF EXERCISE
Xxxxxx & Blake Corporation
Date of Exercise:
Ladies and Gentlemen:
This constitutes notice under my stock option that I elect to purchase
the number of shares for the price set forth below.
Stock option dated
Number of shares as to which option is
exercised
Certificates to be issued in
name of:
Total exercise price: $
Cash payment delivered herewith: $
By this exercise, I agree (i) to provide such additional documents as
Executive may reasonably require and (ii) to provide for the payment by me to
Executive of your withholding obligation, if any, relating to the exercise of
this option.
I hereby make the following certifications and representations with
respect to the number of shares of Common Stock of Employer listed above (the
"SHARES"), which are being acquired by me for my own account upon exercise of
the Option as set forth above:
I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "ACT"), and are deemed to constitute
"restricted securities" under Rule 701 and "control securities" under Rule 144
promulgated under the Act. I warrant and represent to Employer that I have no
present intention of distributing or selling said Shares, except as permitted
under the Act and any applicable state securities laws.
I further acknowledge that I will not be able to resell the Shares for
at least ninety (90) days after the stock of Employer becomes publicly traded
(i.e., subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934) under Rule 701 and
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that more restrictive conditions apply to affiliates of Employer under Rule 144.
I further acknowledge that all certificates representing any of the
Shares subject to the provisions of the Option shall have endorsed thereon
appropriate legends reflecting the foregoing limitations, as well as any legends
reflecting restrictions pursuant to Employer's Articles of Incorporation, Bylaws
and/or applicable securities laws.
I further agree that, if required by Employer (or a representative of
the underwriters) in connection with an underwritten registration of the
offering of any securities of Employer under the Act, I will not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of Employer during such period (not to exceed one hundred eighty (180) days or,
if less, the period of time any other executive officer of Employer is so
restricted) following the effective date of the registration statement of
Employer filed under the Act (the "EFFECTIVE DATE") as may be requested by
Employer or the representative of the underwriters. I further agree that
Employer may impose stop-transfer instructions with respect to securities
subject to the foregoing restrictions until the end of such period.
Very truly yours,
Xxxx X. Xxxxxxxx
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AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
THIS AMENDMENT TO EMPLOYMENT AGREEMENT is dated the 1st day of
November, 1999 by and between Xxxxxx & Blake Corporation, an Ohio
corporation ("Employer"), and Xxxx X. Xxxxxxxx ("Executive").
WHEREAS, Employer and Executive are parties to an Employment Agreement,
dated as of June 1, 1999 (the "Employment Agreement"), and the parties hereto
have agreed to amend certain provisions of the Employment Agreement on the terms
set forth below.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:
1. The last sentence of Section 3(c) of the Employment Agreement is
hereby amended to read in its entirety as follows:
"Executive shall be entitled to reimbursement by Employer for financial
and tax planning advisory services at rates customary to the local area
and for uninsured expenses associated with an annual physical
examination by a physician selected by him, provided that the foregoing
reimbursements shall not in the aggregate exceed $25,000 on an annual
basis."
2. The last sentence of Section 3(f) of the Employment Agreement is
hereby amended to read in its entirety as follows:
"If prior to September 1, 1999 Executive receives an offer from a third
party to purchase the Current Residence for less than $233,500, and if,
with the consent of Employer, Executive accepts such offer, Employer
shall pay to Executive in cash an amount equal to the shortfall plus a
Tax Gross-up and the federal, state and local taxes on the Tax
Gross-up, all to the end that Executive be held harmless, on an
after-tax basis, from the tax impact on the shortfall payment."
3. Section 3(g) of the Employment Agreement is hereby amended by adding
the following at the end thereof:
"In addition, Employer shall pay Executive an amount determined by its
accountants to be equal to Executive's federal, state and local taxes
on the foregoing reimbursements (the "Tax Gross-up") and the federal,
state and local taxes on the Tax Gross-up, all to the end that
Executive be held harmless, on an after-tax basis, from the tax impact
thereof."
4. The last two sentences of Section 4(b) of the Employment Agreement
are hereby amended to read in their entirety as follows:
25
"Executive shall have thirty (30) days from his receipt of such notice
to cure such circumstances or such breach if such breach is reasonably
susceptible to cure. If, in the reasonable good faith judgment of the
Board of Directors, the alleged breach is not reasonably susceptible to
cure, or such circumstances or material breach has not been
satisfactorily cured within such thirty (30) day cure period, such
neglect of duties or material breach shall thereupon constitute `Cause'
hereunder."
5. The second and third sentences of Section 4(e) of the Employment
Agreement are amended and a new fourth sentence has been added to such section
as follows:
"Notwithstanding any provision of this Agreement to the contrary, in
the event Executive elects to terminate his employment either (i)
following the occurrence of any event constituting Good Reason (as
defined below) or (ii) within the thirty (30)-day period beginning six
(6) months after the occurrence of a Change of Control (as defined
below in Section 5(g)(iii)) regardless of the reason for such
termination, such termination shall be deemed to constitute a
termination by Employer without Cause, and Executive shall be entitled
to all of the payments and benefits set forth in Section 4(c). For
purposes of this Agreement, "Good Reason means any of the following:
(i) a substantial and adverse change in Executive's status or position
as Chief Executive Officer and a key employee of Employer, or a
substantial reduction in the duties and responsibilities previously
exercised by Executive, or any failure to reappoint or reelect
Executive to, such position, except in connection with the termination
of Executive's employment for Cause or Permanent Disability, or as a
result of Executive's death; (ii) a reduction (other than for Cause) by
Employer in Executive's Base Compensation; (iii) a relocation of
Executive's principal place of work to any location that is more than
25 miles from Canton, Ohio; (iv) a sale or other exchange or transfer
(whether by merger, reorganization or otherwise) of substantially all
of the shares or assets of Employer; or (v) a material breach of the
provisions of this Agreement by Employer. Notwithstanding the
foregoing, a termination of employment by Executive will be deemed to
be for `Good Reason' only if Executive elects to terminate employment
within ninety (90) days after he knows or should know that an event
constituting Good Reason has occurred; provided, however, that
Executive's continued employment following the occurrence of such an
event shall not constitute consent to, or a waiver of rights with
respect to, any other event constituting Good Reason hereunder."
6. The first sentence of Section 4(f)(ii) is hereby amended to read in
its entirety as follows:
" Subject to the provisions of Section 4(f)(iii), all determinations
required to be made under this Section 4(f), including whether a
Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by Employer's regular outside independent public
accounting firm (the "Accounting Firm") which shall provide detailed
supporting calculations both to Employer and Executive within 15
business days of the
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Effective Date of Termination, if applicable, or such earlier time as is
requested by Employer."
7. The first sentence of Section 5(b) is hereby amended to read in its
entirety as follows:
One-fourth (1/4) of the Option Shares (I.E., 34,845 shares) shall vest
and be exercisable on the first anniversary of the date of this
Agreement and one-twelfth (1/12) of the remaining Option Shares (I.E.,
8,711 shares) shall vest and be exercisable at the end of each three
(3) month period thereafter until all Option Shares have vested,
provided, however, in order for Option Shares eligible to vest for any
period to vest, Executive must have remained an executive or member of
the Board of Directors of Employer from the date hereof through the
last day of the relevant period.
8. RATIFICATION. Except as specifically amended hereby, the Employment
Agreement, and all of the terms and conditions thereof, are hereby ratified and
confirmed and shall remain in full force and effect.
IN WITNESS WHEREOF, Employer has caused this Agreement to be executed
by its duly authorized officers, and Executive has signed this Agreement, all as
of the day and year first above written.
EXECUTIVE:
/s/ Xxxx X. Xxxxxxxx
------------------------------------
Xxxx X. Xxxxxxxx
EMPLOYER:
XXXXXX & XXXXX CORPORATION,
an Ohio Corporation
By: /s/ Xxxxxxx X. Xxxxx, III
------------------------------------
Xxxxxxx X. Xxxxx, III
Chairman
Title: Compensation & Organizational
Committee
------------------------------------
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