EXHIBIT 10.1
CHANGE IN CONTROL AGREEMENT
BETWEEN
X. X. XXXXX CORPORATION
AND
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THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is made to be
effective as of May _____, 2005, by and between _____________________ (the
"Executive") and X. X. Xxxxx Corporation, an Ohio corporation (the
"Corporation").
BACKGROUND
In order to induce the Executive to remain in the employ of the
Corporation, the Corporation wishes to provide the Executive with certain
severance benefits in the event his employment with the Corporation terminates
subsequent to a change in control of the Corporation under the circumstances
described herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
DEFINITIONS. For purposes of this Agreement, the following terms shall
have the following meanings unless otherwise expressly provided in this
Agreement:
Change in Control. A "Change in Control" shall be deemed to have
occurred if (i) any "person" (as that term is used in Section 13(d) and Section
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") on
the date hereof, including any "group" as such term is used in Section 13(d)(3)
of the Exchange Act on the date hereof (an "Acquiring Person")), shall hereafter
acquire (or disclose the previous acquisition of) beneficial ownership (as that
term is defined in Section 13(d) of the Exchange Act and the rules thereunder on
the date hereof) of shares of the outstanding stock of any class or classes of
the Corporation which results in such person or group possessing more than 50.1%
of the total voting power of the Corporation's outstanding voting securities
ordinarily having the right to vote for the election of directors of the
Corporation (a "Control Acquisition"); or (ii) as the result of, or in
connection with, any tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of the
foregoing transactions (a "Transaction"), the persons who were directors of the
Corporation immediately before the completion of the Transaction shall cease to
constitute a majority of the Board of Directors of the Corporation or any
successor to the Corporation.
Disability. The Executive's employment shall be deemed to have been
terminated for "Disability" if, as a result of his incapacity due to physical or
mental illness, he shall have been absent from his duties with the Corporation
on a full-time basis for the entire period of four consecutive months, and
within 30 days after written notice of termination is given (which may occur
before or after the end of such four-month period) he shall not have returned to
the full-time performance of his duties.
Effective Period. The "Effective Period" means the 36-month period
following any Change in Control (even if such 36-month period shall extend
beyond the term of this Agreement or any extension hereof).
Termination for Cause. The Corporation shall have "Cause" to terminate
the Executive's employment hereunder upon (A) the willful and continued refusal
by the Executive to substantially perform his duties with the Corporation (other
than any such refusal resulting from his incapacity due to a Disability), (B)
failure of Executive to comply with any applicable law or regulation affecting
the Corporation's business, (C) the commission by Executive of an act of fraud
upon or an act evidencing bad faith or dishonesty toward the Corporation, (D)
conviction of Executive of any felony or misdemeanor
involving moral turpitude, (E) the misappropriation by Executive of any funds,
property, or rights of the Corporation, or (F) Executive's breach of any of the
provisions of this Agreement.
Termination For Good Reason. "Good Reason" shall mean, unless the
Executive shall have consented in writing thereto, termination by the Executive
of his employment because of any of the following:
a reduction in the Executive's title, duties, responsibilities or
status, as compared to such title, duties, responsibilities or status
immediately prior to the Change in Control or as the same may be increased after
the Change in Control;
the assignment to the Executive of duties inconsistent with the
Executive's office on the date of the Change in Control or as the same may be
increased after the Change in Control;
a reduction by the Corporation in the Executive's base salary as in
effect immediately prior to the Change in Control or as the same may be
increased after the Change in Control or a reduction by the Corporation after a
Change in Control in the Executive's total compensation (including bonus) so
that the Executive's total cash compensation in a given calendar year is less
than 90% of Executive's total compensation for the prior calendar year;
a requirement that the Executive relocate anywhere not mutually
acceptable to the Executive and the Corporation or the imposition on the
Executive of business travel obligations substantially greater than his business
travel obligations during the year prior to the Change in Control;
the relocation of the Corporation's principal executive offices to a
location outside the greater Columbus, Ohio area;
the failure by the Corporation to continue in effect any material
fringe benefit or compensation plan, retirement plan, life insurance plan,
health and accident plan or disability plan in which the Executive is
participating at the time of a Change in Control (or plans providing the
Executive with substantially similar benefits), the taking of any action by the
Corporation which would adversely affect the Executive's participation in or
materially reduce his benefits under any of such plans or deprive him of any
material fringe benefit enjoyed by him at the time of the Change in Control, or
the failure by the Corporation to provide him with the number of paid vacation
days to which he is then entitled on the basis of years of service with the
Corporation in accordance with the normal vacation policy in effect immediately
prior to the Change in Control; or
any breach of this Agreement on the part of the Corporation.
Notice of Termination. A "Notice of Termination" shall mean a notice
which shall set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment.
Date of Termination. "Date of Termination" shall mean (A) if this
Agreement is terminated for Disability, 30 days after a Notice of Termination is
given (provided that the Executive shall not have returned to the performance of
his duties on a full-time basis during such 30-day period), (B) if the
Executive's employment is terminated for Cause, the date specified in the Notice
of Termination, (C) if the Executive's employment is terminated by death, the
date of death, and (D) if the Executive's employment is terminated for any other
reason, the date on which a Notice of Termination is given, or, if the
Corporation terminates the Executive's employment without giving a Notice of
Termination, the date on which such termination is effective.
TERM. Unless sooner terminated as herein provided, the term of this
Agreement shall commence on the date hereof and shall continue until May ___,
2008 (the "Termination Date"). It is understood that no amounts or benefits
shall be payable under this Agreement unless (i) there shall have been a Change
in Control during the term of this Agreement and (ii) the Executive's employment
is terminated at any time during the Effective Period as provided in Section 5
hereof. It is further understood that the Corporation may terminate the
Executive's employment at any time before or after a Change in
Control, subject to the Corporation providing, if required to do so in
accordance with the terms hereof, the severance payments and benefits
hereinafter specified, which payments and benefits shall only be available if a
Change in Control has occurred prior to such termination. Prior to a Change in
Control, this Agreement shall terminate immediately if Executive's employment
with the Corporation is terminated for any reason.
SERVICES DURING CERTAIN EVENTS. In the event any person (as that term
is used in Section 1(i) above) commences a tender or exchange offer, distributes
proxy materials to the Corporation's shareholders or takes other steps to effect
a Change in Control, the Executive agrees he will not voluntarily terminate his
employment with the Corporation other than by reason of his retirement at normal
retirement age, and will continue to serve as a full-time employee of the
Corporation until such efforts to effect a Change in Control are abandoned or
terminated or until a Change in Control has occurred.
TERMINATION FOLLOWING A CHANGE IN CONTROL. Any termination of
Executive's employment by the Corporation for Cause, Disability or otherwise or
by the Executive for Good Reason, which, in any case, occurs at any time during
the Effective Period, shall be communicated by written Notice of Termination to
the other party.
COMPENSATION UPON TERMINATION FOLLOWING A CHANGE IN CONTROL.
For Cause. If, at any time during the Effective Period, the Executive's
employment shall be terminated for Cause, the Corporation shall pay the
Executive his full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given and the Corporation shall not
have any further obligations to the Executive under this Agreement.
Death or Disability. If, at any time during the Effective Period, the
Executive's employment is terminated by reason of the Executive's death or
Disability, the Corporation shall pay to the Executive or his legal
representative his full base salary through the Date of Termination, and the
Corporation shall have no further obligation to the Executive or his legal
representative under this Agreement after the Date of Termination.
For Good Reason or Without Cause. If the Executive's employment is
terminated at any time during the Effective Period by either: (a) the
Corporation for any reason other than for Cause, Disability, or death, or (b)
the Executive for Good Reason, then:
The Corporation shall pay to the Executive, not later than 30 days
following the Date of Termination, the Executive's accrued but unpaid base
salary through the Date of Termination plus compensation for current and
carried-over unused vacation and compensation days in accordance with the
applicable personnel policy.
In lieu of any further payments of salary to the Executive after the
Date of Termination, the Corporation shall pay to the Executive, not later than
30 days following the Date of Termination and notwithstanding any dispute
between the Executive and the Corporation as to the payment to the Executive of
any other amounts under this Agreement or otherwise, a lump sum cash severance
payment (the "Severance Payment") equal to the greater of (i) the total
compensation (including bonus) paid to or accrued for the benefit of the
Executive by the Corporation for services rendered during the fiscal year
immediately preceding the fiscal year in which a Change in Control of the
Corporation occurred or (ii) the total compensation (including bonus) paid to or
accrued for the benefit of the Executive by the Corporation for services
rendered during the twelve-month period immediately preceding the Date of
Termination.
The Executive's right to receive payments under this Agreement shall
not decrease the amount of, or otherwise adversely affect, any other benefits
payable to the Executive under any plan, agreement or arrangement relating to
employee benefits provided by the Corporation.
The Executive shall not be required to mitigate the amount of any
payment provided for in this section 5 by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for in this Section 5 be
reduced by any compensation earned by the Executive as the result of
employment by another employer or by reason of the Executive's receipt of or
right to receive any retirement or other benefits after the date of termination
of employment or otherwise.
NON-COMPETITION; CONFIDENTIALITY
Period. For a period of one year following the termination of
Executive's employment with the Corporation, Executive shall not, as a
shareholder, employee, officer, director, partner, consultant or otherwise,
engage directly or indirectly in any business or enterprise which is in
Competition with the Corporation; provided, however, that this Section 6(i)
shall not apply if (a) Executive's employment is terminated by the Company
without Cause, or (b) following a Change in Control, Executive's employment is
terminated by Executive for Good Reason. If Executive's employment is terminated
(a) by the Company without Cause or (b) by the Executive for Good Reason
following a Change of Control, Executive shall not, as a shareholder, employee,
officer, director, partner, consultant or otherwise, engage directly or
indirectly in any business or enterprise which is in Competition with the
Corporation for a period of months equal to the months severance paid to
Executive.
Competition with the Corporation. For purposes of this Agreement, (a)
the words "Competition with the Corporation" shall be deemed to include
competition with the Corporation or any entity controlling, controlled by or
under common control with the Corporation (an "Affiliate"), or their respective
successors or assigns, or the business of any of them, and (b) a business or
enterprise shall be deemed to be in Competition with the Corporation if it is
engaged in any business activity which is the same or comparable to any business
activity of the Corporation or any Affiliate from time to time during
Executive's employment with the Corporation in any geographic area of the United
States in which the Corporation or any Affiliate conducted such business.
Notwithstanding the foregoing, nothing herein contained shall prevent Executive
from purchasing and holding for investment less than 5% of the shares of any
corporation the shares of which are regularly traded either on a national
securities exchange or in the over-the-counter market.
Interpretation of Covenant. The parties hereto agree that the duration
and area for which the covenant not to compete set forth in this Section 6 is to
be effective are reasonable. In the event that any court determines that the
time period or the area, or both of them, are unreasonable and that such
covenant is to that extent unenforceable, the parties hereto agree that the
covenant shall remain in full force and effect for the greatest time period and
in the greatest area that would not render it unenforceable. The parties intend
that this covenant shall be deemed to be a series of separate covenants, one for
each and every county of each and every state of the United States of America
where the covenant not to compete is intended to be effective.
Prohibition on Disclosure or Use. Executive shall at all times keep and
maintain the confidentiality of Confidential Information (as defined below), and
Executive shall not, at any time, either during or subsequent to his employment
with the Corporation, either directly or indirectly, use any Confidential
Information for Executive's own benefit or divulge, disclose, or communicate any
Confidential Information to any person or entity in any manner whatsoever, other
than (a) to employees or agents of the Corporation having a need to know such
Confidential Information and only to the extent necessary to perform their
responsibilities on behalf of the Corporation and (b) in the performance of
Executive's employment duties to the Corporation.
Definition of Confidential Information. "Confidential Information"
shall mean any and all information (excluding information in the public domain)
related to the business of the Corporation or any Affiliate, including without
limitation all processes; inventions; trade secrets; computer programs;
engineering or technical data, drawings, or designs; manufacturing techniques;
information concerning pricing and pricing policies; marketing techniques; plans
and forecasts; new product information; information concerning suppliers;
methods and manner of operations; and information relating to the identity and
location of all past, present, and prospective customers.
Equitable Relief. Executive's obligations contained in this Section 6
are of special and unique character which gives them a peculiar value to the
Corporation, and the Corporation cannot be reasonably or adequately compensated
in damages in an action at law in the event Executive breaches such obligations.
Executive therefore expressly agrees that, in addition to any other rights or
remedies which Corporation may possess, the Corporation shall be entitled to
injunctive and other equitable relief in the
form of preliminary and permanent injunctions without bond or other security in
the event of any actual or threatened breach of said obligations by Executive.
The provisions of this Section 6 shall survive any termination of this
Agreement.
SUCCESSORS; BINDING AGREEMENT.
The Corporation 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 Corporation and its subsidiaries to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no succession had
taken place. Failure of the Corporation to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation in the same amount and on the same
terms as he would be entitled hereunder if he terminated his employment for Good
Reason during the Effective Period, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Corporation" shall
mean the Corporation as defined above and any successor to its business and/or
assets as aforesaid which executes and delivers the agreement provided for in
this Section 7 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law. Nothing contained in this Section 7 shall
be construed to modify or affect the definition of a "Change in Control"
contained in Section 1 hereof.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
ARBITRATION. Any dispute or controversy arising out of or relating to
this Agreement, or any breach thereof, shall be settled by arbitration in
accordance with the rules of the American Arbitration Association. The award of
the arbitrator shall be final, conclusive and nonappealable and judgment upon
such award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The arbitrator shall be an arbitrator qualified to serve
in accordance with the rules of the American Arbitration Association and one who
is approved by both the Corporation and the Executive. In the absence of such
approval, each party shall designate a person qualified to serve as an
arbitrator in accordance with the rules of the American Arbitration Association
and the two persons so designated shall select the arbitrator from among those
persons qualified to serve in accordance with the rules of the American
Arbitration Association. The arbitration shall be held in Columbus, Ohio or such
other place as may be agreed upon at the time by the parties to the arbitration.
NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given (i) on the third day after being mailed by United
States registered mail, return receipt requested, postage prepaid, or (ii) on
the following day if sent by a nationally registered overnight courier service,
addressed in the case of the Executive, to
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and in the case of the Corporation, to the principal executive offices of the
Corporation, provided that all notices to the Corporation shall be directed to
the attention of the Corporation's Chief Executive Officer with copies to the
Secretary of the Corporation and to its Board of Directors, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon
receipt.
MISCELLANEOUS. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and a duly authorized officer of the
Corporation. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time. No agreement or representation, oral or
otherwise, express or implied, with respect to the subject matter hereof has
been made by either party which is not set forth expressly in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws (but not the law of conflicts of laws) of the
State of Ohio.
VALIDITY. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date and year first above written.
X. X. XXXXX CORPORATION
By:
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Title:
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