EMPLOYMENT AGREEMENT
Exhibit 10(ee)
THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of the 28th day of
May, 2003, by and between X. XXXXXXXX, INC., a Delaware corporation (the “Company”), X. Xxxxxxxx
Inc. Limited, a corporation organized under the laws of the United Kingdom and a wholly-owned
subsidiary of the Company (the “Employer”), and XXXX X. XXXXXX (the “Employee”).
WHEREAS, the Employer and the Board of Directors of the Company desire to provide for the
continued employment of the Employee as a member of the Employer’s management, and believe that
such continued employment is in the best interest of the Employer, the Company and the Company’s
stockholders. The Employee is willing to commit himself continue to serve the Employer, on the
terms and conditions herein provided;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained,
the parties hereto agree as follows:
1. DEFINED TERMS
The definitions of capitalized terms used in this Agreement (unless stated where first
used) are provided in the last Section hereof.
2. EMPLOYMENT; EMPLOYER’S OBLIGATIONS
2.1 Employment. The Employer hereby continues to employ the Employee as General
Manager-Europe for the Employer, and the Employee hereby accepts such continued employment upon the
terms and conditions herein contained.
2.2 Employer’s Obligations. If the Employer ceases to be an Employer hereunder on a
certain date, the Employer’s obligations under this Agreement shall cease to accrue on such
date.
3. DUTIES AND CONDITIONS OF EMPLOYMENT
3.1 Duties. The Employee shall devote his entire business time, attention and
energies to the Employer and shall not engage in any conduct which shall reflect adversely upon the
Employer. The Employee shall perform such duties for the Employer as may be assigned to one in his
employment status and capacity by the Chief Executive Officer of the Company or the Board. The
Employee shall serve diligently and to the best of his ability.
During his employment by the Employer, the Employee shall not, without the Company’s prior
written consent, be engaged in any other business activity, whether or not such business activity
is pursued for gain, profit or other pecuniary advantage, except that notwithstanding the
foregoing, he may invest his personal funds for his own account; provided that such investment
shall be passive and not controlling in any such investment and subject to the provisions of
Section 13.2 hereof and provided further that he will not be required to provide any substantial
services on behalf of such enterprise. Notwithstanding the foregoing, the
Employee may serve on the Boards of Directors of other corporations during the Term as long as such
service does not interfere with the performance of his duties hereunder.
3.2 Conditions. The Employee shall be provided with suitable office space,
furnishings, secretarial and administrative assistance. Without the Employee’s consent, the
Employee shall not be required to report principally to an office located more than five hundred
(500) miles from his principal office at the date of this Agreement, except to the extent the
Employee may be required to report to the Company’s principal office.
4. TERM OF AGREEMENT; TERMINATION OF EMPLOYMENT; ESCROW DURING DISPUTE
4.1 Term of Agreement. The Employer hereby employs the Employee for a Term commencing
as of the date hereof and ending May 28, 2006. At the end of June 2003 and at the end of each
calendar month thereafter up to and including the end of the calendar month in which Employee’s
62nd birthday occurs, this Agreement shall automatically be extended for one (1) month unless
either party shall give notice to the other of non-extension prior to the end of such calendar
month; provided, however, if a Change in Control shall have occurred during the Term of this
Agreement, Sections 7 and 8 and 10 through 21 of this Agreement shall continue in effect until at
least the end of the Change-in-Control Protective Period (whether or not the Term of the Agreement
shall have expired for other purposes).
4.2 Termination of Employment Prior to a Change in Control. Prior to any Change in
Control, the Company may terminate the employment of the Employee for Cause pursuant to this
Agreement. Prior to any Change in Control, the Employee may terminate his employment pursuant to
this Agreement if the Employer fails to make full and timely payments of all sums provided for in
Sections 5 and 6 hereof (subject to Section 7.2 hereof), or otherwise shall breach its covenants
hereunder in any material respect.
4.3 Escrow during a Termination Dispute. Prior to any Change in Control, if the
Employee shall be terminated for Cause, and, within 30 days of such termination, shall notify the
Employer and the Company of his intention to adjudicate such termination as improper, the Company
agrees that it will deposit (or will cause the Employer to deposit) with KeyBank National
Association, Cleveland, Ohio, as Escrow Agent the installments of the Employee’s Base Salary (as
provided in Section 5 below) as the same would have become payable but for such termination. In the
event of a final adjudication by a tribunal of competent jurisdiction that such termination was not
for Cause, then the amounts so deposited in escrow, plus any interest earned by the Escrow Agent
thereon, shall be delivered promptly to the Employee. If such adjudication shall be in favor of the
Employer, the Escrow Agent shall return the sums so deposited, plus such interest, to the Company
or the Employer, as the case may be.
The escrowed salary shall not be deemed to be liquidated damages but the Employer
shall be entitled to a credit against any such award to the extent of the sums so
delivered to the Employee.
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5. COMPENSATION
The Employer agrees to pay to the Employee as compensation for his services hereunder a Base
Salary initially equal to the fixed annual salary currently being paid to the Employee by the
Employer as shown on the Employer’s employment records, payable in substantially equal weekly,
biweekly, bimonthly or monthly installments, as the case may be, in the manner currently being
paid to the Employee. The Base Salary may be discretionarily increased by the Chief Executive
Officer of the Company from time to time as the Chief Executive Officer deems appropriate in its
reasonable business judgment. The Base Salary in effect from time to time shall not be decreased
during the Term (except as provided in Section 7.2).
It is understood and agreed that the Employee’s compensation may not be limited to his Base
Salary and that the Employee may receive an annual bonus in the amount, if any, determined
annually by the Chief Executive Officer of the Company.
The Employee shall also participate in employee compensation and benefit plans available
generally to employees of the Employer on a level appropriate to his position and shall receive the
employee fringe benefits available generally to employees of the Employer having comparable levels
of responsibility and status (including, without limitation, the use of a company car).
6. EXPENSES
The Employee is authorized to incur reasonable expenses for promoting the business of the
Employer, including expenses for entertainment, travel and similar items. The Employer shall
reimburse the Employee for all such expenses upon the presentation by the Employee, from time to
time, of an itemized account of such expenditures.
7. PRE-TERMINATION COMPENSATION; DISABILITY
7.l Normal Pre-Termination Compensation. If the Employee’s employment shall be
terminated for any reason during the Term (or, if later, prior to the end of the Change-in-Control
Protective Period), the Employer shall pay the Employee’s Base Salary to the Employee through the
Date of Termination at the rate in effect at the time the Notice of Termination is given (subject
to Section 7.2 hereof), together with all compensation and benefits payable to the Employee through
the Date of Termination under the terms of any compensation or benefit plan, program or arrangement
maintained by the Employer during such period. Subject to Sections 8, 9, 10 and 11 hereof, after
completing the expense reimbursements required by Section 6 hereof and making the payments and
providing the benefits required by this Section 7, the Employer shall have no further obligations
to the Employee under this Agreement.
7.2 Disability Adjustment to Base Salary Payments. During the Term (or, if
later, at any time prior to the end of the Change-in-Control Protective Period), during any period
that the Employee fails to perform the Employee’s full-time duties with the Employer as a result of
incapacity due to physical or mental illness (but in no event for more than twenty-four (24)
months), the Employer shall pay only sixty percent (60%) of the Employee’s Base Salary to the
Employee at the rate in effect at the commencement of any such period (less amounts, if any,
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payable to the Employee at or prior to the time of any such Base Salary payment under disability
benefit plans of the Employer or under any governmental disability insurance program). After six
(6) months of Disability, the Employer shall have the right to terminate the Employee’s employment
pursuant to this Agreement and all Base Salary payments (except the sixty percent (60%) payments
pursuant to the foregoing sentence) shall cease. Except to the extent provided in this Section 7.2,
all Base Salary payments to the Employee shall be abated during the period of Disability. Subject
to Sections 8, 9, 10 and 11 hereof, after completing the expense reimbursements required by Section
6 hereof and making the payments and providing the benefits required by this Section 7, the
Employer shall have no further obligations to the Employee under this Agreement.
8. NORMAL POST-TERMINATION PAYMENTS; CONTINUATION PAY; TERMINATION PAY; PROMPT PAYMENT
8.1 Normal Post-Termination Payments. If the Employee’s employment shall be terminated
for any reason during the Term of this Agreement (or, if later, prior to the end of the
Change-in-Control Protective Period), the Employer shall pay the Employee’s normal post-termination
compensation and benefits to the Employee as such payments become due. Subject to Section 10
hereof, such post-termination compensation and benefits shall be determined under, and paid in
accordance with, the Employer’s retirement, insurance and other compensation or benefit plans,
programs and arrangements (other than this Agreement).
8.2 Continuation Pay; Termination Pay. Notwithstanding anything to the contrary in
Section 7.2, 9.1 or 10.1(A) hereof, if the laws governing this Agreement (or the laws governing the
effects of any termination of the employment of the Employee) shall require that the Employer
continue to pay or otherwise compensate the Employee for any period of time following termination
of the Employee’s employment (“Continuation Pay”) or if such laws require certain amounts of
severance pay, termination compensation or the like (collectively, “Termination Pay”), then to the
fullest extent permitted by law any payments to the Employee pursuant to Section 7.2, 9.1 or
10.1(A) hereof shall be included in the calculation of Continuation Pay and Termination Pay and
such payments shall be deducted from the amount of Continuation Pay or Termination Pay due the
Employee.
8.3 Prompt Payment. Any payments due under Section 5, 6, 7 or 9 hereof or this Section
8 shall be made promptly after the event giving rise to the obligation and shall be made to the
Employee or in accordance with Section 14.2 hereof, as the case may be.
9. POST-TERMINATION PAYMENTS UPON TERMINATION (PRIOR TO A CHANGE IN CONTROL) BY DEATH OR BY THE EMPLOYER WITHOUT CAUSE
9.1 Death Benefit. If the Employee’s employment shall be terminated by death
during the Term (or, if later, prior to the end of the Change-in-Control Protective Period), then,
in addition to the compensation and benefits provided by Sections 7.1 and 8 hereof, the Employer
shall pay a lump sum amount equal to sixty percent (60%) of the Base Salary for twenty-four (24)
months in accordance with Section 14.2.
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9.2 Termination by the Employer without Cause. If the Employer shall terminate
the Employee’s employment during the Term and prior to a Change in Control, without Cause (and not
for Disability or in connection with the Employee’s death), the Employer shall pay the Employee his
Base Salary throughout the remaining Term and annual bonuses during the remaining Term, each of
which bonuses shall be equal to one-half (1/2) times the average annual bonus paid to the Employee
during the most recent five (5) calendar years of the Employee’s employment by any of the Companies
(prorated for any partial years in the remaining Term).
10. SEVERANCE PAYMENTS; TOTAL PAYMENTS.
10.1 Severance Payments.
The Employer shall pay the Employee the payments described in this Section 10.1 (the
“Severance Payments”) upon the termination of the Employee’s employment following a Change in
Control and prior to the end of the Change-in-Control Protective Period, in addition to any
payments and benefits to which the Employee is entitled under Sections 5, 6, 7 and 8.1 hereof,
unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability, or
(iii) by the Employee without Good Reason. For purposes of this Agreement, the Employee’s
employment shall be deemed to have been terminated by the Company without Cause following a Change
in Control or by the Employee with Good Reason following a Change in Control, as the case may be,
if (i) the Employee’s employment is terminated without Cause prior to a Change in Control and such
termination was at the request or direction of a Person who has entered into an agreement with the
Company the consummation of which would constitute a Change in Control, (ii) the Employee
terminates his employment with Good Reason prior to a Change in Control and the circumstance or
event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the
Employee’s employment is terminated by the Company without Cause prior to a Change in Control (but
following a Potential Change in Control) and such termination is otherwise in connection with or in
anticipation of a Change in Control which actually occurs. For purposes of any determination
regarding the applicability of the immediately preceding sentence, any position taken by the
Employee shall be presumed to be correct unless the Company establishes to the Committee by clear
and convincing evidence that such position is not correct.
(A) In lieu of any further salary payments to the Employee for periods subsequent
to the Date of Termination and in lieu of any severance benefit otherwise payable to the
Employee, the Employer shall pay to the Employee a lump sum severance payment, in cash,
equal to three (3) times the sum of (i) the higher of the Employee’s Base Salary in effect
immediately prior to the occurrence of the event or circumstance upon which the Notice of
Termination is based or the Employee’s Base Salary in effect immediately prior to the Change
in Control, and (ii) the higher of the annual bonus earned by the Employee from the Employer
in respect of the Employer’s fiscal year immediately preceding that in which the Date of
Termination occurs or the average annual bonus so earned in respect of the three fiscal
years immediately preceding that in which the Change in Control occurs.
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(B) Notwithstanding any provision of any annual incentive plan to the contrary, the
Employer shall pay to the Employee a lump sum amount, in cash, equal to the sum of (i) any
annual incentive compensation which has been allocated or awarded to the Employee by the
Employer for a completed fiscal year preceding the Date of Termination and which, as of the
Date of Termination, is contingent only upon the continued employment of the Employee to a
subsequent date, and (ii) a pro rata portion to the Date of Termination of a deemed annual
bonus for the Employer’s fiscal year in which the Date of Termination occurs, calculated by
multiplying (i) the higher of the annual bonus earned by the Employee from the Employer with
respect to the immediately preceding fiscal year or the average annual bonus earned by the
Employee with respect to the immediately preceding three fiscal years of the Employer by
(ii) the fraction obtained by dividing the number of days in the fiscal year of the Employer
in which termination occurs up to and including the Date of Termination by 365.
(C) For the thirty-six (36) month period immediately following the Date of Termination,
the Employer shall arrange to provide the Employee with life, disability, accident and
health insurance benefits substantially similar to those which the Employee is receiving
immediately prior to the Notice of Termination (without giving effect to any amendment to
such benefits made subsequent to a Change in Control, which amendment adversely affects in
any manner the Employee’s entitlement to or the amount of such benefits). Benefits otherwise
receivable by the Employee pursuant to this Section 10.1(C) shall be reduced to the extent
comparable benefits are actually received by or made available to the Employee without cost
during the thirty-six (36) month period following the Employee’s termination of employment
(and any such benefits actually received by or made available to the Employee shall be
reported to the Employer by the Employee).
10.2 The payments provided in Sections 10.1(A) and (B) hereof shall be made not later than
the fifth day following the Date of Termination; provided, however, that if the
amounts of such payments cannot be finally determined on or before such day, the Employer shall pay
to the Employee on such day an estimate, as determined in good faith by the Employer of the minimum
amount of such payments to which the Employee is clearly entitled and shall pay the remainder of
such payments (together with interest at one hundred twenty percent (120%) of the rate provided in
section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event
later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Employer to the Employee, payable on the fifth (5th) business day
after demand by the Employer (together with interest at one hundred twenty percent (120%) of the
rate provided in section 1274(b)(2)(B) of the Code). At the time that payments are made under this
Section, the Employer shall provide the Employee with a written statement setting forth the manner
in which such payments were calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Employer has received from outside counsel, auditors
or consultants (and any such opinions or advice which are in writing shall be attached to the
statement). In the event the Employer should fail to pay when due the amounts described in Sections
10.1(A), (B) and (C) hereof, the Employee shall also be entitled to receive from the Employer an
amount representing interest on any such unpaid amounts from the due date, as determined under this
Section 10.2
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(without regard to any extension of the Date of Termination pursuant to Section 11.3 hereof), to
the date of payment at one hundred twenty percent (120%) of the rate provided in section
1274(b)(2)(B) of the Code.
10.3 The Employer also shall pay to the Employee all legal fees and expenses incurred by
the Employee (i) in disputing in good faith any issue relating to the termination of the
Employee’s employment following a Change in Control and prior to the end of the Change-in-Control
Protective Period, or (ii) in seeking in good faith to obtain or enforce any benefit or right
provided by this Agreement. Such payments shall be made within five (5) business days after
delivery of the Employee’s written requests for payment accompanied with such evidence of fees and
expenses incurred as the Employer reasonably may require.
11. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE.
11.1 Notice of Termination. During the Term (and, if longer, until the end of the
Change-in-Control Protective Period), any purported termination of the Employee’s employment (other
than by reason of death) shall be communicated by written Notice of Termination from the Employee
to the Employer and the Company or from the Employer or the Company to the Employee in accordance
with Section 15 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a
notice which shall indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee’s employment under the provision so indicated. Further, with respect to
any purported termination of the Employee’s employment after a Change in Control and prior to the
end of the Change-in-Control Protective Period, a Notice of Termination for Cause is required to
include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Board at a meeting of the Board, which was called and held
for the purpose of considering such termination (after reasonable notice to the Employee and an
opportunity for the Employee, together with the Employee’s counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, the Employee was guilty of conduct set forth
in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in
detail.
11.2 Date of Termination. “Date of Termination,” with respect to any purported
termination of the Employee’s employment during the Term (and, if longer, prior to the end of the
Change-in-Control Protective Period), shall mean (i) if the Employee’s employment is terminated for
Disability, thirty (30) days after Notice of Termination is given (provided that the Employee shall
not have returned to the full-time performance of the Employee’s duties during such thirty (30) day
period), and (ii) if the Employee’s employment is terminated for any other reason, the date
specified in the Notice of Termination (which, in the case of a termination by the Employer, shall
not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case
of a termination by the Employee, shall not be less than fifteen (15) days nor more than sixty (60)
days, respectively, from the date such Notice of Termination is given).
11.3 Dispute Concerning Termination. With respect to any purported termination of the
Employee’s employment after a Change in Control and prior to the end of the
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Change-in-Control Protective Period, if within fifteen (15) days after any Notice of Termination is
given, or, if later, prior to the Date of Termination (as determined without regard to this Section
11.3), the party receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be extended until the date on
which the dispute is finally resolved, either by mutual written agreement of the parties or by a
final judgment, order or decree of a court of competent jurisdiction (which is not appealable or
with respect to which the time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended by a notice of
dispute given by the Employee only if such notice is given in good faith and the Employee pursues
the resolution of such dispute with reasonable diligence.
11.4 Compensation During Dispute. If a purported termination occurs following a
Change in Control and prior to the end of the Change-in-Control Protective Period and the Date of
Termination is extended in accordance with Section 11.3 hereof, the Employer shall continue to pay
the Employee the full compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, salary) and continue the Employee as a participant in all
compensation, benefit and insurance plans in which the Employee was participating when the notice
giving rise to the dispute was given, until the Date of Termination, as determined in accordance
with Section 11.3 hereof. Amounts paid under this Section 11.4 are in addition to all other amounts
due under this Agreement (other than those due under Section 7.1 hereof) and shall not be offset
against or reduce any other amounts due under this Agreement.
12. NO MITIGATION
The Employer agrees that, if the Employee’s employment with the Employer terminates following
a Change in Control and prior to the end of the Change-in-Control Protective Period, the Employee
is not required to seek other employment or to attempt in any way to reduce any amounts payable to
the Employee by the Employer pursuant to Section 10 hereof or Section 11.4 hereof. Further, the
amount of any payment or benefit provided for in this Agreement (other than Section 10.1(C) hereof)
shall not be reduced by any compensation earned by the Employee as the result of employment by
another employer, by retirement benefits, by offset against any amount claimed to be owed by the
Employee to the Employer, or otherwise.
13. CONFIDENTIALITY; NON-COMPETITION AND NON SOLICITATION
13.1 Confidentiality. The Companies’ methods, plans for doing business, processes,
pricing, compounds, customers and supplies are vital to the Companies and, to the extent not made
public by the Companies, constitute confidential information subject to the Companies’ proprietary
rights therein. The Employee covenants and agrees that during the Term and at all times thereafter,
the Employee will not, directly or indirectly, make known, divulge, furnish, make available or use,
otherwise than in the regular course of the Employee’s employment by the Employer, any invention,
product, process, apparatus or design of any of the Companies, or any knowledge or information in
respect thereof (including, but not limited to, business methods and techniques), or any other
confidential or so-called “insider” information of
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any of the Companies. This covenant shall apply without regard to the time or circumstances of any
termination of the Employee’s employment.
13.2 Non-competition and Non-solicitation. The Employee covenants and agrees that during the period of three (3) years following any termination of the
Employee’s employment which occurs prior to a Change in Control, the Employee will not, directly or indirectly, either as an individual for the Employee’s own account or as an investor, or
other participant in, or as an employee, agent, or representative of, any other business
enterprise:
| (i) | solicit, employ, entice, take away or interfere with, or attempt to solicit, employ, entice, take away or interfere with, any employee of the Employer or the Companies; or | ||
| (ii) | engage or participate in or finance, aid or be connected with any enterprise which competes with the business of the Companies, or any of them. |
The geographical limitations of the foregoing shall include any country in which the Companies or
any of them shall be doing business as of such date of such termination. This covenant shall apply
without regard to the circumstances of any termination of the Employee’s employment which occurs
prior to a Change in Control.
13.3 The Employee acknowledges that the covenants contained in this Section 13 are of the essence of this Agreement and said covenants shall be construed as independent
of any other provisions of this Agreement. Recognizing the irreparable nature of the injury that
could result from the Employee’s violation of any of the covenants and agreement to be
performed and/or observed by the Employee pursuant to the provisions of this Section 13, and
that damages would be inadequate compensation, it is agreed that any violations by the
Employee of the provisions of this Section 13, shall be the proper subject for immediate
injunctive and other equitable relief to the Company or the Employer, as the case may be.
14. SUCCESSORS; BINDING AGREEMENT
14.1 In addition to any obligations imposed by law upon any successor to the Company or the
Employer, 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.
Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle the Employee to compensation
from the Employer in the same amount and on the same terms as the Employee would be entitled to
hereunder if the Employee were to terminate the Employee’s employment for Good Reason after a
Change in Control, except that, for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination. Except as provided in
this Section 14.1, this Agreement shall not be assignable by any party without the written consent
of the other parties hereto.
14.2 This Agreement shall inure to the benefit of and be enforceable by the Employee’s
personal or legal representatives, executors, administrators, successors, heirs,
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distributees, devisees and legatees. If the Employee shall die while any amount would still be
payable to the Employee hereunder (other than amounts which, by their terms, terminate upon the
death of the Employee) if the Employee had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to the executors,
personal representatives or administrators of the Employee’s estate.
15. NOTICES
For purposes 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 when delivered or mailed
by United States registered mail, return receipt requested, postage prepaid (or the international
equivalent thereof), addressed, if to the Employee, to the address shown for the Employee in the
personnel records of the Employer and, if to the Employer or the Company, to the address set forth
below, or to such other address as such party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective only upon actual
receipt:
To the Employer or the Company:
Xxxxxx X. Xxxxxxxx
Chief Financial Officer and Executive Vice President-Finance and Administration
X. Xxxxxxxx, Inc.
X.X. Xxx 0000
Xxxxx, Xxxx 00000-0000
Chief Financial Officer and Executive Vice President-Finance and Administration
X. Xxxxxxxx, Inc.
X.X. Xxx 0000
Xxxxx, Xxxx 00000-0000
With a copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxxx, Xxxxxxx & Xxxxxxx LLP
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Xxxxxx, Xxxxxxx & Xxxxxxx LLP
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
16. MISCELLANEOUS
No provision of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by the Employee and such officers of
the Company and the Employer as may be specifically designated by their respective Boards. No
waiver by any party hereto at any time of any breach by any 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. This Agreement supersedes any other agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof which have been made by
either party, except as expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of the State of Ohio.
All references to sections of the Exchange Act or the Code shall be
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deemed also to refer to any successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding required under federal, state or local
law and any additional withholding to which the Employee has agreed. The obligations of the
Company, the Employer and the Employee under this Agreement which by their nature may require
(partial or total) performance after the expiration of the Term or the Change-in-Control
Protective Period (including, without limitation, those under Sections 5 through 11 and Section
13 hereof) shall survive such expiration.
17. VALIDITY
The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall remain in full
force and effect.
18. COUNTERPARTS
This Agreement may be executed in several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument.
19. SETTLEMENT
OF DISPUTES AFTER CHANGE IN CONTROL; ARBITRATION
After a Change in Control and prior to the end of the Change-in-Control Protective Period, all
claims by the Employee for benefits under this Agreement shall be directed to and determined by the
Committee and shall be in writing. Any denial by the Committee of a claim for benefits under this
Agreement shall be delivered to the Employee in writing and shall set forth the specific reasons
for the denial and the specific provisions of this Agreement relied upon. The Committee shall
afford a reasonable opportunity to the Employee for a review of the decision denying a claim and
shall further allow the Employee to appeal to the Committee a decision of the Committee within
sixty (60) days after notification by the Committee that the Employee’s claim has been denied.
Notwithstanding any provision of this Agreement to the contrary, the Employee shall be entitled to
seek specific performance of the Employee’s right to be paid until the Date of Termination during
the pendency of any dispute or controversy arising under or in connection with this Agreement.
20. GUARANTEE OF EMPLOYER’S OBLIGATIONS
The Company hereby guarantees all the obligations of the Employer created by this
Agreement. The guarantee of the Company shall be called upon only to the extent that the
Employer’s obligations are not satisfied by the Employer.
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21. DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings indicated below:
(A) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange
Act.
(B) “Board” shall mean the Board of Directors of a corporation; unless otherwise
indicated, “Board” shall mean the Board of Directors of the Company.
(C) “Cause” for termination by the Company of the Employee’s employment (which the Company
has the authority to do so through its control of the Employer as its parent company) shall mean
the following:
(I) with respect to a termination as to which the Notice of Termination is duly
given prior to a Change in Control, the Employee’s breach of his covenants herein
contained, the Employee’s gross neglect of his duties hereunder, the Employee’s
knowingly committing misfeasance or knowingly permitting nonfeasance of his duties
in any material respect, or the Employee’s committing a felony; and
(II) with respect to a termination as to which the Notice of Termination is
duly given following a Change in Control, (i) the willful and continued failure by
the Employee to substantially perform the Employee’s duties with the Employer (other
than any such failure resulting from the Employee’s incapacity due to physical or
mental illness or any such actual or anticipated failure after the issuance of a
Notice of Termination for Good Reason by the Employee pursuant to Section 11.1
hereof) after a written demand for substantial performance is delivered to the
Employee by the Board, which demand specifically identifies the manner in which the
Board believes that the Employee has not substantially performed the Employee’s
duties, or (ii) the willful engaging by the Employee in conduct which is
demonstrably and materially injurious to the Company or its subsidiaries, monetarily
or otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act,
or failure to act, on the Employee’s part shall be deemed “willful” unless done, or
omitted to be done, by the Employee not in good faith and without reasonable belief
that the Employee’s act, or failure to act, was in the best interest of the Employer
and (y) in the event of a dispute concerning the application of this provision, no
claim by the Company or the Employer that Cause exists shall be given effect unless
the Company or the Employer establishes to the Committee by clear and convincing
evidence that Cause exists.
(D) A
“Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:
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(I) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates other than in connection with the acquisition
by the Company or its affiliates of a business) representing 25% or more of either the then
outstanding shares of common stock of the Company or the combined voting power of the Company’s
then outstanding securities; or
(II) the following individuals cease for any reason to constitute a majority of the number of
directors then serving: individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is in connection with an actual
or threatened election contest, including but not limited to a consent solicitation, relating to
the election of directors of the Company) whose appointment or election by the Board or nomination
for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved; or
(III) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation or approve the issuance
of voting securities of the Company in connection with a merger or consolidation
of the Company (or any direct or indirect subsidiary of the Company) pursuant to
applicable stock exchange requirements, other than (i) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity or any parent thereof), in combination with the ownership of any
trustee or other fiduciary holding securities under an employee benefit plan of the
Company or any subsidiary of the Company, at least 75% of the combined voting
power of the voting securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Company or its subsidiaries other than in connection with the acquisition
by the Company or its subsidiaries of a business) representing 25% or more of
either the then outstanding shares of common stock of the Company or the
combined voting power of the Company’s then outstanding securities; or
(IV) the stockholders of the Company approve a plan of complete liquidation or dissolution
of the Company or an agreement for the sale or disposition by the Company of all or substantially
all of the Company’s assets, other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity, at least 75% of the combined voting power
of the
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voting securities of which are owned by stockholders in substantially the same
proportions as their ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, no “Change in Control” shall be deemed to have occurred if
there is consummated any transaction or series of integrated transactions immediately following
which the record holders of the common stock of the Company immediately prior to such transaction
or series of transactions continue to have substantially the same proportionate ownership in an
entity which owns all or substantially all of the assets of the Company immediately following such
transaction or series of transactions.
Further, notwithstanding the foregoing, any event or transaction which would otherwise
constitute a Change in Control (a “Transaction”) shall not constitute a Change in Control for
purposes of this Agreement if, in connection with the Transaction, the Employee participates as an
equity investor in the acquiring entity or any of its affiliates (the “Acquiror”). For purposes of
the preceding sentence, the Employee shall not be deemed to have participated as an equity investor
in the Acquiror by virtue of (i) obtaining beneficial ownership of any equity interest in the
Acquiror as a result of the grant to the Employee of an incentive compensation award under one or
more incentive plans of the Acquiror (including, but not limited to, the conversion in connection
with the Transaction of incentive compensation awards of the Employer into incentive compensation
awards of the Acquiror), on terms and conditions substantially equivalent to those applicable to
other employees of the Employer with comparable levels of responsibility and status immediately
prior to the Transaction, after taking into account normal differences attributable to job
responsibilities, title and similar matters, (ii) obtaining beneficial ownership of any equity
interest in the Acquiror on terms and conditions substantially equivalent to those obtained in the
Transaction by all other stockholders of the Company, or (iii) passive ownership of less than three
percent (3%) of the stock of the Acquiror.
(E) “Change-in-Control Protective Period” shall mean the period from the occurrence of a Change in Control until the later of the second anniversary of such Change in
Control or, if such Change in Control shall be caused by the stockholder approval of a merger or consolidation described in Section 21(D)(III) hereof, the second anniversary of the
consummation of such merger or consolidation.
(F) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
(G) “Committee” shall mean (i) the individuals (not fewer than three in number) who, immediately prior to a Potential Change in Control, constitute the Compensation
Committee of the Board, plus (ii) in the event that fewer than three individuals are available from the group specified in clause (i) above for any reason, such individuals as may be appointed by the individual or individuals so available (including for this purpose any individual or individuals previously so appointed under this clause (ii)); provided, however, that the maximum number of individuals constituting the Committee shall not exceed five.
(H) “Companies” shall mean, collectively, the Company and each corporation which is now
and hereafter shall become a subsidiary of, or a parent of, the Company, together with their
respective successors and assigns.
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(I) “Company” shall have the meaning stated in the introductory paragraph to this
Agreement and, except in determining under Section 21(D) hereof whether or not any Change in
Control of the Company has occurred, any successor to its business and/or assets which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
(J) “Continuation Pay” shall mean those payments so described in Section 8.2 hereof.
(K) “Date of Termination” shall have the meaning stated in Section 11.2 hereof.
(L) “Disability” shall be deemed the reason for the termination by the Employer of the
Employee’s employment, if, as a result of the Employee’s incapacity due to physical or mental
illness, the Employee shall have been absent from the full-time performance of the Employee’s
duties with the Employer for a period of six (6) consecutive months, the Employer shall have given
the Employee a Notice of Termination for Disability, and, within thirty (30) days after such Notice
of Termination is given, the Employee shall not have returned to the full-time performance of the
Employee’s duties.
(M) “Employee” shall mean the individual named in the first paragraph of this Agreement.
(N) “Employer” shall have the meaning stated in the introductory paragraph to this
Agreement. The status of such corporation as an Employer shall continue only so long as the
corporation (or any successor to its business and/or assets) is a direct or indirect subsidiary of
the Company.
(O) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from
time to time.
(P) “Good Reason” for termination by the Employee of the Employee’s employment shall
mean the occurrence (without the Employee’s express prior written consent) after any Change in
Control, or after any Potential Change in Control under the circumstances described in the second
sentence of Section 10.1 hereof (treating all references in paragraphs (I) through (VII) below to a
“Change in Control” as references to a “Potential Change in Control”), of any one of the following
acts by the Employer, or failures by the Employer to act, unless, in the case of any act or failure
to act described in paragraph (I), (V), (VI) or (VII) below, such act or failure to act is
corrected prior to the Date of Termination specified in the Notice of Termination given in respect
thereof:
(I) the assignment to the Employee of any duties inconsistent with the
Employee’s employment status with the Employer in effect immediately prior to a
Change in Control or a substantial adverse alteration in the nature or status of the
Employee’s responsibilities from those in effect immediately prior to the Change in
Control (other than any such alteration primarily attributable to the fact that the
Company may no longer be a public company);
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(II) a reduction by the Employer in the Employee’s annual base salary as in effect on the date
hereof or as the same may be increased from time to time except for across-the-board salary
reductions similarly affecting all employees of the Employer and all employees of any Person in
control of the Employer with comparable levels of responsibility and status to Employee;
(III) the relocation of the Employer’s principal executive offices to a location more than
fifty (50) miles from the location of such offices immediately prior to the Change in Control or
the Employer’s requiring the Employee to be based anywhere other than the Employer’s principal
executive offices except for required travel on the Employer’s business to an extent substantially
consistent with the Employee’s present business travel obligations;
(IV) the failure by the Employer, without the Employee’s consent, to pay to the Employee any
portion of the Employee’s current compensation, or to pay to the Employee any portion of an
installment of deferred compensation under any deferred compensation program of the Employer,
within seven (7) days of the date such compensation is due;
(V) the failure by the Employer to continue in effect any compensation plan in which the
Employee participates immediately prior to the Change in Control which is material to the
Employee’s total compensation, unless an equitable arrangement (embodied in an ongoing substitute
or alternative plan) has been made with respect to such plan, or the failure by the Employer to
continue the Employee’s participation therein (or in such substitute or alternative plan) on a
basis not materially less favorable, both in terms of the amount of benefits provided and the level
of the Employee’s participation relative to other participants, as existed at the time of the
Change in Control;
(VI) the failure by the Employer to continue to provide the Employee with benefits
substantially similar to those enjoyed by the Employee under any of the Employer’s pension, life
insurance, medical, health and accident, or disability plans in which the Employee was
participating at the time of the Change in Control, the taking of any action by the Employer which
would directly or indirectly materially reduce any of such benefits or deprive the Employee of any
material fringe benefit enjoyed by the Employee at the time of the Change in Control, or the
failure by the Employer to provide the Employee with the number of paid vacation days to which the
Employee is entitled on the basis of years of service with the Employer in accordance with the
Employer’s normal vacation policy in effect at the time of the Change in Control; or
(VII) any purported termination of the Employee’s employment which is not effected pursuant to
a Notice of Termination satisfying the requirements of Section 11.1 hereof; for purposes of this
Agreement, no such purported termination shall be effective.
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The Employee’s right to terminate the Employee’s employment for Good Reason shall not be
affected by the Employee’s incapacity due to physical or mental illness. The Employee’s continued
employment shall not constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
For purposes of any determination regarding the existence of Good Reason, any claim by the
Employee that Good Reason exists shall be presumed to be correct unless the Employer establishes to
the Committee by clear and convincing evidence that Good Reason does not exist.
(Q) “Notice of Termination” shall have the meaning stated in Section 11.1 hereof.
(R) “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
(S) “Potential Change in Control” shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:
(1) the Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control;
(2) the Company or any Person publicly announces an intention to take or
to consider taking actions which, if consummated, would constitute a Change in
Control;
(3) any Person becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 15% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s
then outstanding securities; or
(4) the Board adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control has occurred.
(T) “Severance Payments” shall mean those payments described in Section 10.1 hereof.
(U) “Term” shall mean the period of time described in Section 4.1 hereof (including
any extension or continuation described therein).
(V) “Termination Pay” shall mean those payments so described in Section 8.2 hereof.
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(W) “Total Payments” shall mean those payments described in Section 10.2 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed (the
corporate signatory by the respective officer duly authorized) as of the day and year first above
written.
| /s/ Xxxx X. Xxxxxx | ||||
| XXXX X. XXXXXX (“Employee”) | ||||
| X. XXXXXXXX INC. LIMITED (“Employer”) |
||||
| By | /s/ Xxxxx X. Xxxxxx | |||
| Xxxxx X. Xxxxxx, Director | ||||
| By | /s/ Xxxxxx X. Xxxxxxxx | |||
| Xxxxxx X. Xxxxxxxx, Director | ||||
| X. XXXXXXXX, INC. (“Company”) |
||||
| By | /s/ Xxxxx X. Xxxxxx | |||
| Xxxxx X. Xxxxxx, President | ||||
| By | /s/ Xxxxxx X. Xxxxxxxx | |||
| Xxxxxx X. Xxxxxxxx, Executive Vice President | ||||
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