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EXHIBIT 10(kk)
SUPPLEMENTAL TARGET PENSION BENEFIT AGREEMENT
THIS AGREEMENT made as of the ____ day of ____________, 1996,
between THE XXXXX GROUP INC., a Delaware corporation (the "Company"), having
its principal executive offices at Beachwood, Ohio and XXXXXX X. XXXX, of
Cleveland Heights, Ohio ("Executive").
RECITALS
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A. Executive is the President and Chief Executive Officer of
the Company and has been employed by the Company in a key executive capacity
since 1970, and it is expected that he will continue to contribute
substantially to the growth and success of the Company during his employment by
it; and in order to assure to the Company the continued benefit of the
experience and advice and the ability and services of the Executive, the
Company and the Executive entered into an Employment Agreement providing for
the continued employment of the Executive as Chief Executive Officer of the
Company upon the terms and conditions therein set forth (hereinafter referred
to as the "Employment Agreement");
B. The Company maintains a tax-qualified retirement plan for
employees designated as The Xxxxx Group Inc. Corporate Retirement Plan (the
"Pension Plan"), which is intended to meet the requirements of a "qualified
plan" under the Internal Revenue Code of 1986, as amended (the "Code"), and a
nonqualified retirement plan for certain employees designated as The Xxxxx
Group Inc. Restoration Plan (the "Restoration Plan"), which is intended to
supplement benefits payable under the Pension Plan by restoring benefits that
cannot be provided under the Pension Plan because of limitations imposed under
the Internal Revenue Code and because of reductions in compensation pursuant to
The Xxxxx Group Inc. Deferred Compensation Plan;
C. This Agreement is intended to provide an aggregate level
of pension benefits to the Executive which exceeds the benefits payable to the
Executive under the Pension Plan and the Restoration Plan.
NOW, THEREFORE, in consideration of the premises and of the
Executive's services and significant contributions to the Company, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Words and phrases used herein with initial
capital letters which are defined in the Pension Plan are used herein as so
defined, unless otherwise specifically defined
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herein or the context clearly indicates otherwise. The following words and
phrases when used in this Agreement with initial capital letters shall have the
following respective meanings, unless the context clearly indicates otherwise:
SECTION 1.1(1). "401(k) PLAN BENEFIT" shall mean the account
balance attributable to employer matching contributions that the Executive
would have had as of the date of determination under The Xxxxx Group Inc.
Employee Before-Tax Savings Plan if the Company had made the maximum employer
matching contributions permissible under such plan for the Executive for each
year and such contributions had accumulated at the rate of 8% compounded
annually.
SECTION 1.1(2). "401(k) PLAN BENEFIT OFFSET" shall mean a
single life annuity, payable monthly, that is the actuarial equivalent of the
Executive's 401(k) Plan Benefit as of the date of determination hereunder. For
this purpose, actuarial equivalence shall be determined using the actuarial
assumptions that would be used under the Pension Plan as of the date of
determination hereunder to calculate a lump sum distribution.
SECTION 1.1(3). "ACCELERATING EVENT" shall mean the
occurrence of any of the following at any time after the date the Executive
ceases to be the Chief Executive Officer of the Company:
(a) The quarterly financial statement of the Company
indicates that the tangible net worth of the Company and its subsidiaries taken
as a whole (calculated in accordance with generally accepted accounting
principles), is less than $90,000,000, provided that such tangible net worth at
the time the Executive ceased to be Chief Executive Officer was at least
$130,000,000 or, if such tangible net worth at the time the Executive ceased to
be Chief Executive Officer was less than $130,000,000, the tangible net worth
of the Company declines by $40,000,000; or
(b) The Company breaches any material provision of this
Agreement including, without limitation, failure by the Company to make timely
payment of any Supplemental Pension Benefit, and failure by the Company to
rectify such breach within thirty (30) days after written notice of such breach
is given to the Company by the Executive; or
(c) The Company makes a general assignment for the benefit of
creditors or the Company's indebtedness under any loan agreement(s) with its
principal lending bank or group of banks is accelerated; or
(d) A proceeding under the federal Bankruptcy Code (or a
similar state law) is instituted by or against the Company and, if such
proceeding is instituted against the Company, is consented to or acquiesced in
by the Company or the Company fails
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for a period of sixty (60) days after the commencement thereof to use its best
efforts to obtain the dismissal thereof; or
(e) A receiver or trustee in bankruptcy is appointed for the
Company.
SECTION 1.1(4). "ACTUAL PENSION PLAN BENEFIT" shall mean the
amount of the monthly benefit in fact payable to the Executive or his
Beneficiary under the Pension Plan.
SECTION 1.1(5). "BENEFICIARY" shall mean the person
designated by the Executive on a form provided by the Committee to receive the
Death Benefit upon the Executive's death.
SECTION 1.1(6). "BOARD" shall mean the Board of Directors of
the Company.
SECTION 1.1(7). "CAUSE" shall have the meaning set forth in
Section 4.1(b).
SECTION 1.1(8). "CHANGE IN CONTROL" shall mean the occurrence
of any of the following:
(1) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or any corporation owned,
directly or indirectly, by all stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities;
(2) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board of Directors of the
Company (the "Board"), and any new director (other than a director designated
by a person who has entered into an agreement with the Company to effect a
transaction described in clause (1), (3) or (4) of this section) whose election
by the Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-third (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
(3) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (a) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving
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entity) more than 80% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation or (b) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person (as
hereinabove defined) acquires more than 30% of the combined voting power of the
Company's then outstanding securities; or
(4) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
SECTION 1.1(9). "CODE" shall mean the Internal Revenue Code
of 1986, as it has been and may be amended from time to time.
SECTION 1.1(10). "COMMENCEMENT DATE" shall mean the first day
as of which a Supplemental Target Pension Benefit is payable hereunder.
SECTION 1.1(11). "COMMITTEE" shall mean the Management
Compensation Committee of the Board of Directors of the Company.
SECTION 1.1(12). "COMPETITIVE OPERATION" shall have the
meaning set forth in Section 4.1(a).
SECTION 1.1(12). "DEATH BENEFIT" shall mean the benefit
determined under Section 3.1 of this Agreement.
SECTION 1.1(13). "DISABILITY BENEFIT" shall mean the
Supplemental Target Pension Benefit determined under Section 2.3 of this
Agreement.
SECTION 1.1(14). "DISABILITY PLAN" shall mean The Xxxxx Group
Inc. Group Long Term Disability Insurance Plan (including supplemental
disability insurance benefits provided for the Executive thereunder).
SECTION 1.1(15). "DISABLED" shall mean the Executive's
inability to perform the material duties, in an undiminished capacity, of his
own occupation.
SECTION 1.1(16). "EMPLOYMENT AGREEMENT" shall mean the
Employment Agreement between the Executive and the Company dated June 25, 1991,
as such agreement may be amended from time to time, and any agreement that
replaces or supersedes such agreement.
SECTION 1.1(17). "FIVE-YEAR AVERAGE EARNINGS" shall have the
same meaning given to such term under the Pension Plan, but without regard to
(i) the limitations set forth in Sections 401(a)(17) and 414(q)(6) of the Code
and (ii) any reductions in the amount of the Executive's base pay or bonus
pursuant to The
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Xxxxx Group, Inc. Deferred Compensation Plan or any other similar nonqualified
deferred compensation plan maintained by the Company.
SECTION 1.1(18). "GOOD REASON" shall have the same meaning
given to such term under the Employment Agreement.
SECTION 1.1(19). "GROSS BENEFIT" shall mean a monthly amount
equal to one-twelfth of 1.733% of the Executive's Five Year Average Earnings,
multiplied by the number of his years of Credited Service, not in excess of
thirty (30) years, as of his Commencement Date.
SECTION 1.1(20). "PENSION PLAN" shall mean The Xxxxx Group
Inc. Corporate Retirement Plan as such plan may be amended from time to time.
SECTION 1.1(21). "RESTORATION PLAN" shall mean The Xxxxx
Group Inc. Restoration Plan as such plan may be amended from time to time.
SECTION 1.1(22). "RESTORATION PLAN BENEFIT" shall mean the
amount of the monthly benefit payable to or with respect to the Executive under
the Restoration Plan.
SECTION 1.1(23). "SOCIAL SECURITY BENEFIT" shall mean the
estimated primary Social Security benefit payable on a monthly basis to the
Executive upon the date of his termination of employment or, if he terminates
his employment prior to his attainment of age 62, upon his attainment of age
62, based on the Social Security law in effect on the date of the termination
of employment of the Executive, without cost of living adjustments or increases
in the Social Security taxable wage base after such date, and assuming that the
Executive has no future Social Security earnings following his date of
termination of employment. The Social Security Benefit hereunder shall be
calculated as of the date of determination hereunder and shall not be subject
to later modification even if the Executive's actual Social Security award
differs from the Social Security Benefit hereunder.
SECTION 1.1(24). "SUPPLEMENTAL TARGET PENSION BENEFIT" shall
mean the retirement benefit payable to or with respect to the Executive under
this Agreement.
ARTICLE II
TARGET BENEFITS
SECTION 2.1. NORMAL RETIREMENT. (a) If the Executive retires
on or after his attainment of age 65, he shall be entitled to receive a monthly
Supplemental Target Pension Benefit, expressed as a single life annuity
commencing on the first day of the month following his retirement, equal to (A)
his
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Gross Benefit, reduced by (B) the sum of the following: (i) the Actual Pension
Plan Benefit payable to the Executive as a single life annuity commencing on
the Commencement Date; (ii) the Restoration Plan Benefit payable to the
Executive as a single life annuity commencing on the Commencement Date; (iii)
the Executive's 401(k) Plan Benefit Offset as of the Commencement Date; and
(iv) the Executive's Social Security Benefit payable as a single life annuity
commencing on the Commencement Date.
(b) Subject to Sections 2.5 and 2.6, a Supplemental Target
Pension Benefit payable to the Executive pursuant to this Section shall
commence on the first day of the month following the Executive's retirement.
SECTION 2.2. EARLY RETIREMENT. (a) If the Executive
terminates employment before he becomes entitled to a benefit under Section
2.1, he shall be entitled to receive a monthly Supplemental Target Pension
Benefit, expressed as a single life annuity commencing on the date determined
pursuant to subsection (b) of this Section (without regard to Sections 2.5 and
2.6), equal to (A) his Gross Benefit, reduced by (B) four-twelfths of one
percent (4/12%) per month for each month (if any) by which the Commencement
Date precedes the month in which he attains (or would attain) age 65, and
further reduced by (C) the sum of the following: (i) the Actual Pension Plan
Benefit payable to the Executive as a single life annuity commencing on the
Commencement Date; (ii) the Restoration Plan Benefit payable to the Executive
as a single life annuity commencing on the Commencement Date; (iii) the
Executive's 401(k) Plan Benefit Offset as of the Commencement Date; and (iv)
for each month after the later of the Commencement Date or the Executive's
attainment of age 62, the Executive's Social Security Benefit payable as a
single life annuity commencing on the later of the Commencement Date or the
Executive's attainment of age 62.
(b) Subject to Sections 2.5 and 2.6, a Supplemental Target
Pension Benefit payable to the Executive pursuant to this Section shall
commence on the first day of any month elected by the Executive after the later
of the Executive's retirement date or the Executive's attainment of age 55,
provided that (i) payment of such benefit shall commence at the same time as
payments of the Executive's Actual Pension Plan Benefit commence under the
Pension Plan and (ii) payment of such benefit shall commence no later than the
first day of the month following the Executive's attainment of age 65.
SECTION 2.3. DISABILITY BENEFIT. (a) If the Executive
becomes Disabled, he shall be entitled to a Disability Benefit, expressed as a
single life annuity commencing on the date determined pursuant to subsection
(b) of this Section (without regard to Sections 2.5 and 2.6), equal to (A) his
Gross Benefit, reduced by (B) four-twelfths of one percent (4/12%) per month
for each month (if any) by which the Commencement Date precedes the month in
which he attains (or would attain) age 65,
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further reduced by (C) the sum of the following: (i) for each month after the
later of the Commencement Date or the Executive's attainment of age 55, the
Actual Pension Plan Benefit payable to the Executive as a single life annuity
commencing on the later of the Commencement Date or the Executive's attainment
of age 55; (ii) for each month after the later of the Commencement Date or the
Executive's attainment of age 55, the Restoration Plan Benefit payable to the
Executive as a single life annuity commencing on the later of the Commencement
Date or the Executive's attainment of age 55; (iii) the Executive's 401(k) Plan
Benefit offset as of the Commencement Date; and (iv) for each month after the
later of the Commencement Date or the Executive's attainment of age 62, the
Executive's Social Security Benefit payable as a single life annuity commencing
on the later of the Commencement Date or the Executive's attainment of age 62.
(b) Subject to Sections 2.5 and 2.6, a Disability Benefit
payable to the Executive pursuant to this Section shall commence on the first
day of any month after the termination of all benefits payable to the Executive
under the Disability Plans, as elected by the Executive, provided that payment
of the Disability Benefit shall commence no later than the first day of the
month following the later of (i) the Executive's attainment of age 65 or (ii)
the termination of all benefits payable to the Executive under the Disability
Plans.
SECTION 2.4. MAXIMUM BENEFIT. In no event shall the amount
of the Executive's Supplemental Target Pension Benefit exceed an annual amount
of $250,000 reduced by four-twelfths of one percent (4/12%) for each month (if
any) by which the Executive's Supplemental Target Pension Benefit commences
before the Executive's attainment of age 65.
SECTION 2.5. DURATION OF PAYMENTS. (a) Subject to Section
2.6 and subsections (b) and (c) of this Section, the Executive's Supplemental
Target Pension Benefit, once commenced, shall continue to be paid on the first
day of each month until (and shall terminate with the payment made on) the
first day of the month in which the Executive's death occurs.
(b) Notwithstanding subsection (a) of this Section, the
Executive's Disability Benefit shall terminate upon the Executive's recovery
from his Disability. Upon termination of his Disability Benefit, the Executive
shall be restored to his position under this Agreement prior to his Disability,
and the Executive shall be entitled either to resume participation in this
Agreement (if he is reemployed by the Company in a position entitling him to so
participate), or to receive such other benefits as he may be eligible for under
the terms of this Agreement based on his Credited Service at the time of his
Disability.
(c) Notwithstanding the foregoing, in the event of (i) the
occurrence of an Accelerating Event or (ii) the termination
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of the Executive's employment within the two-year period following a Change in
Control either by the Executive for Good Reason or by the Company (A) other
than for Cause or (B) because the Executive is Disabled, the Supplemental
Target Pension Benefit accrued but unpaid as of the date of the Accelerating
Event or such termination of employment shall become immediately payable and
shall be paid in the form of a lump sum payment equal to the present value of
such accrued but unpaid Supplemental Target Pension Benefit. Such lump sum
amount shall be calculated by using the interest rate and other actuarial
assumptions of the Pension Plan used to determine lump sum equivalents
thereunder in effect on the date of the Accelerating Event or such termination
of employment. If the event triggering a lump sum payment under this
subsection is a termination of employment within two years following a Change
in Control, the Executive's accrued but unpaid Restoration Plan Benefit shall
be transferred to and paid under this Agreement and shall not be applied as an
offset or reduction against the Executive's Gross Benefit, notwithstanding the
other provisions of this Agreement.
SECTION 2.6. FORM OF PAYMENT. (a) Subject to Section 2.5,
the Supplemental Target Pension Benefit or Disability Benefit to which the
Executive is entitled hereunder shall be payable in the form of a single life
annuity, unless the Executive elects an optional form of benefit pursuant to
subsection (b) of this Section.
(b) The Executive may elect to receive his Supplemental
Target Pension Benefit or Disability Benefit in any of the optional forms of
benefit payment available under the Pension Plan at the Commencement Date.
Spousal consent shall not be required in order for the Executive to elect any
such optional form. Each optional form shall be the actuarial equivalent of
the Supplemental Target Pension Benefit or Disability Benefit payable as a
single life annuity, actuarial equivalence being determined by using the
interest rate and other actuarial assumptions of the Pension Plan used to
determine actuarial equivalent payment options thereunder.
ARTICLE III
DEATH BENEFIT
SECTION 3.1. AMOUNT OF DEATH BENEFIT. (a) If the Executive
dies prior to commencement of benefit payments under this Agreement, his
designated Beneficiary shall be entitled to receive a monthly benefit, payable
for the Beneficiary's life, equal to:
(1) the survivor annuity portion of the Executive's Gross
Benefit, stated as a joint and 50% survivor annuity, commencing as of
the later of the date of the Executive's death or the date he would
have attained age 55, with the
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designated Beneficiary as his contingent annuitant, reduced by
(2) the sum of:
(A) the actuarial equivalent, stated as a single
life annuity payable at the time death benefits commence under
this Agreement, of the amount, if any, paid from the Pension
Plan to the designated death beneficiary under the Pension
Plan, plus
(B) the actuarial equivalent, stated as a single
life annuity payable at the time death benefits commence under
this Agreement, of the amount paid from The Xxxxx Group Inc.
Restoration Plan to the designated death beneficiary under
such plan, plus
(C) the actuarial equivalent, stated as a single
life annuity payable at the time death benefits commence under
this Agreement, of the Executive's 401(k) Plan Benefit, plus
(D) for each month after the earliest month for
which the designated Beneficiary is entitled to receive a
portion of the Executive's primary Social Security Benefit,
the estimated benefit, if any, the designated Beneficiary is
to receive from Social Security that is attributable to the
Executive's employment and earnings history with the Company.
SECTION 3.2. TIME OF PAYMENTS. Subject to Section 2.4(c), if
the Beneficiary is the recipient of death benefit payments under the Pension
Plan, the Beneficiary's Death Benefit under this Agreement shall commence at
the same time as benefits commence to such Beneficiary under the Pension Plan.
If the Beneficiary is not the recipient of death benefit payments under the
Pension Plan, the Death Benefit payable under this Agreement shall commence as
of the first day of the month following the later of the date of the
Executive's death or the date he would have attained age 55. The Beneficiary
may select a later date for benefit commencement hereunder in which case the
Death Benefit will be actuarially adjusted to reflect such later commencement.
ARTICLE IV
FORFEITURE
SECTION 4.1. FORFEITURE. (a) All rights to receive any
Supplemental Target Pension Benefits (other than Supplemental Pension Target
Benefits already paid in the event of forfeiture under subparagraph (ii) below)
under this Agreement will be forfeited if, but only if:
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(i) the term of the Executive's employment with the Company
shall be terminated by the Company for Cause; or
(ii) during the period prior to, and for two (2) years following,
the date of termination of the Executive's employment with the Company, (A) the
Executive shall have, without the written consent of the Board, (I) directly or
indirectly, whether as principal, agent, stockholder, employee, consultant or
in any other capacity, engaged in or had a financial interest in any company or
enterprise which is in substantial competition with any business actively
conducted by the Company or any of its subsidiaries (a "Competitive
Operation"), provided, however, that this paragraph shall not be deemed to
preclude or limit the Executive's right to own not to exceed three percent (3%)
of the stock or other securities of any corporation, the shares of which are
registered under Section 12 of the Securities Exchange Act of 1934, or (II)
hired for any personal or business purpose any person who is an employee (other
than a clerical, administrative or secretarial employee) of the Company at the
date of such hiring or who was such within six (6) months prior thereto, and
the Secretary of the Company, pursuant to resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board, obtained at a meeting called for the purpose after notice to the
Executive and an opportunity for him to be heard, shall have given written
notice to the Executive that he is participating in a Competitive Operation or
has hired a person described in the preceding clause (II), as the case may be,
and the Executive shall have neither ceased to participate in the Competitive
Operation nor discontinued the employment of such person, as the case may be,
within thirty (30) days from his receipt of such notice or diligently taken all
reasonable steps to cease to participate in the Competitive Operation or to
discontinue the employment of such person during such thirty (30) day period
and thereafter, or (B) the Executive shall have, without the written consent of
the Board, disclosed or communicated to any person, firm or corporation any
information not generally available to the public concerning any of the
Company's inventions, experimental developments, secret processes, or
confidential or trade secrets of the Company, except as may be reasonably
necessary or appropriate in connection with the performance by the Executive of
his duties to the Company, and such disclosure or communication results in
material injury to the Company, and there shall have been delivered to the
Executive a certified copy of a resolution of the Board adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board obtained at a meeting 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 the foregoing clauses (A) or (B), specifying the
particulars thereof in detail.
(b) For purposes of this Agreement, the term of the
Executive's employment with the Company shall be considered to have been
terminated for "Cause" only
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(i) if the Executive willfully shall have failed to
substantially perform his duties to the Company, except by reason of total or
partial incapacity due to accident or physical or mental illness;
(ii) if the Executive shall have engaged in or performed
an act or acts of dishonesty constituting a felony under the laws of the United
States or any state thereof or Canada or any province thereof and resulting or
intended to result directly or indirectly in gain or personal enrichment at the
expense of the Company;
(iii) if the Executive shall have, without the written
consent of the Board, participated in a Competitive Operation or shall have
hired a person described in paragraph Section 4.1(a)(ii)(A)(II) above or shall
not have promptly disclosed to the Company all inventions, discoveries,
processes and improvements relating to the business of the Company or any of
its subsidiaries made or conceived by him during the term of his employment by
the Company or shall not have executed such instruments and documents
reasonably requested by the Company to transfer and/or assign all rights
therein to the Company, and the Secretary of the Company, pursuant to
resolution duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board, obtained at a meeting called for the
purpose after notice to the Executive and an opportunity for him to be heard,
shall have given written notice to the Executive that he is participating in a
Competitive Operation or has hired a person described in Section
4.1(a)(ii)(A)(II) or has failed to perform all of his obligations relating to
the inventions, discoveries, processes and improvements described above, as the
case may be, and the Executive shall have neither ceased to participate in the
Competitive Operation nor discontinued the employment of such person nor
performed his obligations relating to such inventions, discoveries, processes
and improvements, as the case may be, within thirty (30) days of his receipt of
such notice nor diligently taken all reasonable steps to cease to participate
in the Competitive Operation or to discontinue the employment of such person or
to perform such obligations during such thirty (30) day period and thereafter;
or
(iv) if the Executive shall have, without the written
consent of the Board, disclosed or communicated to any person, firm or
corporation any information not generally available to the public concerning
any of the Company's inventions, experimental developments, secret processes,
or confidential or trade secrets of the Company, except as may be reasonably
necessary or appropriate in connection with the performance by the Executive of
his duties to the Company, and such disclosure or communication results in
material injury to the Company;
and there shall have been delivered to the Executive a certified copy of a
resolution of the Board adopted by the affirmative vote
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of not less than a majority of the entire membership of the Board obtained at a
meeting 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 subparagraphs (i), (ii), (iii) or (iv) above, specifying the
particulars thereof in detail.
Anything in this Subsection 4.1 to the contrary
notwithstanding, the employment of the Executive shall in no event be
considered to have been terminated by the Company for Cause if termination of
his employment took place (v) as the result of bad judgment or negligence on
the part of the Executive other than willful misconduct or gross negligence,
(vi) 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 of payment of expenses of an officer or
director under the By-Laws or Certificate of Incorporation of the Company or
the laws of the State of Delaware or for directors' and officers' liability
insurance of the Company, in each case as in effect at the time of such act of
omission, (vii) as the result of an act or omission which occurred more than
twelve (12) calendar months prior to the Executive's having been given notice
of termination for such act or omission unless the commission of such act or
such omission was not or could not reasonably have been, at the time of such
commission or omission, known to at least one-third of the members of the
Board, in which case more than twelve (12) calendar months from the date that
the commission of such act or such omission was or could reasonably have been
so known, or (viii) as the result of a continuing course of action which
commenced and was or could reasonably have been known to at least one-third of
the members of the Board more than twelve (12) calendar months prior to notice
having been given to the Executive of the termination of his employment.
SECTION 4.2 The provisions of Section 4.1(a) shall not apply
if the employment of the Executive with the Company is involuntarily terminated
other than for Cause.
ARTICLE V
AMENDMENT AND TERMINATION
SECTION 5.1. AMENDMENT. The Board of Directors of the
Company and the Executive may, at any time, agree to amend any or all of the
provisions of this Agreement. Any such amendment shall be expressed in a
written instrument executed by an appropriate officer of the Company and by the
Executive and shall become effective as of the date designated in such
instrument or, if no such date is specified, on the date of its execution.
SECTION 5.2. TERMINATION. (a) The Board of Directors of the
Company does hereby reserve the right to terminate this Agreement at any time
without the consent of the Executive, his
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Beneficiary or any other person. Such termination shall be expressed in an
instrument executed by an appropriate officer of the Company and shall become
effective as of the date designated in such instrument, or if no date is
specified, on the date of its execution.
(b) Upon any termination of this Agreement, the Executive's
Supplemental Target Pension Benefit shall be determined and distributed to him
(or his Beneficiary) as otherwise provided in Article II.
SECTION 5.3. LIMITATIONS ON AMENDMENT AND TERMINATION.
Notwithstanding the foregoing provisions of this Article, no amendment or
termination of this Agreement shall, without the consent of the Executive (or,
in the case of his death, his Beneficiary), adversely affect the vested
Supplemental Target Pension Benefit under this Agreement of the Executive or
Beneficiary as such Benefit exists on the date of such amendment or
termination.
SECTION 5.4. EFFECT OF TERMINATION. Notwithstanding any
provision of this Agreement to the contrary, in the event of a termination of
this Agreement, the Company, in its sole and absolute discretion, shall have
the right to accelerate the time and/or manner of distribution of benefits in
pay status hereunder, including, without limitation, by providing for the
payment of a single lump sum payment (i) to the Executive if he is employed as
of the date of termination of this Agreement or (ii) to the Executive or his
Beneficiary if either is then entitled to benefit payments, in an amount equal
to the Actuarial Equivalent of such remaining unpaid benefit. If the effect on
the Executive of the payment of any such lump sum amount is to increase the sum
of the highest marginal federal, state and local income tax rates that apply to
such lump sum payment over the sum of the highest such rates that would apply
to the Executive's receipt of his Supplemental Target Pension Benefit in the
form of a single life annuity, the Company shall make an additional lump sum
payment to the Executive in an amount sufficient, on an after-tax basis, to
eliminate such effect.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. LIMITATION ON RIGHTS OF THE EXECUTIVE AND
BENEFICIARIES - NO LIEN. This Agreement is an unfunded, nonqualified plan and
the entire cost of this Agreement shall be paid from the general assets of the
Company. No trust has been established for the Executive or Beneficiaries. No
liability for the payment of benefits under this Agreement shall be imposed
upon any officer, director, employee, or stockholder of the Company. Nothing
contained herein shall be deemed to create a lien in favor of the Executive or
Beneficiary on any assets of the Company. The Company shall have no obligation
to purchase
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any assets that do not remain subject to the claims of the creditors of the
Company for use in connection with this Agreement. Each Executive and
Beneficiary shall have the status of a general unsecured creditor of the
Company and shall have no right to, prior claim to, or security interest in,
any assets of the Company.
SECTION 6.2. NONALIENATION. No right or interest of the
Executive or his Beneficiary under this Agreement shall be anticipated,
assigned (either at law or in equity) or alienated by the Executive or his
Beneficiary, nor shall any such right or interest be subject to attachment,
garnishment, levy, execution or other legal or equitable process or in any
manner be liable for or subject to the debts of the Executive or Beneficiary.
If the Executive or Beneficiary shall attempt to or shall alienate, sell,
transfer, assign, pledge or otherwise encumber his benefits under this
Agreement or any part thereof, or if by reason of his bankruptcy or other event
happening at any time such benefits would devolve upon anyone else or would not
be enjoyed by him, then the Company may terminate his interest in any such
benefit and hold or apply it to or for his benefit or the benefit of his
spouse, children or other person or persons in fact dependent upon him, or any
of them, in such a manner as the Company may deem proper; provided, however,
that the provisions of this sentence shall not be applicable to the surviving
spouse of any deceased Executive if the Company consents to such
inapplicability, which consent shall not unreasonably be withheld.
SECTION 6.3. EMPLOYMENT RIGHTS. Employment rights shall not
be enlarged or affected hereby. The Company shall continue to have the right
to discharge or retire the Executive, with or without cause.
SECTION 6.4. ADMINISTRATION OF AGREEMENT.
(a) The Committee shall be responsible for the general
administration of this Agreement and for carrying out the provisions hereof.
The Committee shall interpret where necessary, in its reasonable and good faith
judgment, the provisions of this Agreement and, except as otherwise provided in
the Agreement, shall determine the rights and status of the Executive and
Beneficiaries hereunder (including, without limitation, the amount of any
Supplemental Target Pension Benefit to which the Executive or Beneficiary may
be entitled under this Agreement).
(b) The Committee may, from time to time, delegate all or
part of the administrative powers, duties and authorities assigned to it under
this Agreement to such person or persons, office or committee as it shall
select.
SECTION 6.5. CLAIMS PROCEDURE. Whenever there is denied,
whether in whole or in part, a claim for benefits under
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this Agreement filed by any person (herein referred to as the "Claimant"), the
Committee shall transmit a written notice of such decision to the Claimant,
which notice shall be written in a manner calculated to be understood by the
Claimant and shall contain a statement of the specific reasons for the denial
of the claim and a statement advising the Claimant that, within 60 days of the
date on which he receives such notice, he may obtain review of such decision in
accordance with the procedures hereinafter set forth. Within such 60-day
period, the Claimant or his authorized representative may request that the
claim denial be reviewed by filing with the Committee a written request
therefor, which request shall contain the following information:
(a) the specific portions of the denial of his claim which
the Claimant requests the Committee to review;
(b) a statement by the Claimant setting forth the basis upon
which he believes the Committee should reverse the previous denial of his claim
for benefits and accept his claim as made; and
(c) any written material which the Claimant desires the
Committee to examine in its consideration of his position as stated pursuant to
Subsection (b) above.
Within 60 days of the date the Claimant files the written
request for review, the Committee shall conduct a full and fair review of the
decision denying the Claimant's claim for benefits. Within 60 days of the date
of such review, the Committee shall render its written decision on review,
written in a manner calculated to be understood by the Claimant, specifying the
reasons and the Agreement provisions upon which its decision was based.
SECTION 6.6. EFFECT ON OTHER BENEFITS. Benefits payable to
or with respect to the Executive under the Pension Plan, the Restoration Plan
or any other Company-sponsored (qualified or nonqualified) plan, if any, are in
addition to those provided under this Agreement.
SECTION 6.7. PAYMENT TO GUARDIAN. If a benefit payable
hereunder is payable to a minor, to a person declared incompetent or to a
person incapable of handling the disposition of his property, the Company may
direct payment of such benefit to the legal guardian or legal representative of
such minor, incompetent or person. The Company may require such proof of
incompetency, minority, incapacity or guardianship as it may deem appropriate
prior to distribution of the benefit. Such distribution shall completely
discharge the Company from all liability with respect to such benefit.
SECTION 6.8. EFFECT OF QUALIFIED DOMESTIC RELATIONS ORDER.
In the event that any portion of the Executive's benefit under the Pension Plan
is allocated to an alternate payee
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pursuant to the terms of a qualified domestic relations order, the Executive's
Supplemental Target Pension Benefit hereunder shall be calculated without
taking into account such allocation. In no event may an alternate payee
receive a distribution or an allocation of any portion of a Supplemental Target
Pension Benefit hereunder.
SECTION 6.9. WITHHOLDING/TAXES. To the extent required by
applicable law, the Company shall withhold from the Supplemental Target Pension
Benefit any taxes required to be withheld therefrom by a federal, state or
local government.
SECTION 6.10. EXPENSES. The Company shall pay all expenses
incurred in the administration and operation of this Agreement.
SECTION 6.11. ARBITRATION; LEGAL EXPENSES. Any dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration, conducted before a panel of three arbitrators in
Cleveland, Ohio, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrators' award
in any court having jurisdiction. The expense of such arbitration, as well as
all other reasonable legal fees and expenses incurred by the Executive in
connection with the resolution of any dispute arising under this Agreement,
shall be borne by the Company.
SECTION 6.12. GOVERNING LAW. This Agreement shall be
regulated, construed and administered under the laws of the State of Ohio,
except when preempted by federal law.
SECTION 6.13. GENDER AND NUMBER. For purposes of
interpreting the provisions of this Agreement, the masculine gender shall be
deemed to include the feminine, the feminine gender shall be deemed to include
the masculine, and the singular shall include the plural, unless otherwise
clearly required by the context.
SECTION 6.14. SEVERABILITY. If any provision of this
Agreement or the application thereof to any circumstances(s) or person(s) is
held to be invalid by a court of competent jurisdiction, the remainder of the
Agreement and the application of such provision to other circumstances or
persons shall not be affected thereby.
SECTION 6.15. NOTICES. All notices required or permitted to
be given under this Agreement shall be given in writing and shall be deemed
sufficiently given if delivered by and/or mailed by registered or certified
mail, return receipt requested, to his residence at 0000 Xxxxxxxxxx Xxxx, Xxxxx
00, Xxxxxxxxx Xxxxxxx, Xxxx 00000, in the case of the Executive, and to its
principal executive offices at 00000 Xxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxx
00000-0000, Attention: Secretary, in the case of
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the Company. Either party may by like notice to the other party change the
address at which it is to receive notices hereunder.
SECTION 6.16. SUCCESSORS AND ASSIGNS. This Agreement shall
be binding upon and inure to the benefit of the Company, its successors and
assigns, and the Executive, his heirs, executors, administrators and legal
representatives. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
SECTION 6.17. ENTIRE AGREEMENT. This Agreement sets forth
the entire agreement of the parties hereto in respect of the subject matter
contained herein and supersedes, with respect to such subject matter, all prior
agreements, promises, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, employee or
representative of any party hereto (except such plans adopted by the Company
which apply to other employees as well as to the Executive, such as the
Company's Pension Plan, Restoration Plan or Deferred Compensation Plan); and
any prior agreement (or portion thereof) of the parties hereto in respect of
the subject matter contained herein (including, without limitation, Sections
7(d)(vii) and 7(d)(viii) of the Employment Agreement and the entirety of the
Supplemental Pension Benefit Agreement between the Company and the Executive
dated June 25, 1991) is hereby terminated and cancelled.
IN WITNESS WHEREOF, The Xxxxx Group Inc. has caused this
Supplemental Target Pension Benefit Agreement to be signed by its proper
officer and Executive has hereunto set his hand this _____ day of
________________, 1996.
ATTEST: THE XXXXX GROUP INC.
______________________________ By:___________________________
Secretary Title:
WITNESS:
______________________________ ______________________________
XXXXXX X. XXXX
