Exhibit 10-F(2)
CHANGE OF CONTROL AGREEMENT
BETWEEN
XXXX CORPORATION
AND
[NAME OF EXECUTIVE]
DATED DECEMBER 8, 2003
TABLE OF CONTENTS
SECTION PAGE
------- ----
Recitals ....................................................................................................... 1
1. OPERATION OF AGREEMENT; EMPLOYMENT AND TERM............................................................ 1
2. POSITION AND DUTIES OF THE EXECUTIVE................................................................... 2
(A) Position...................................................................................... 2
(B) Duties........................................................................................ 3
(C) Location Of Office............................................................................ 3
3. COMPENSATION........................................................................................... 3
(A) Salary........................................................................................ 3
(B) Additional Compensation....................................................................... 4
(C) Incentive, Stock And Savings Plans............................................................ 4
(D) Retirement And Welfare Benefit Plans.......................................................... 4
(E) Expenses...................................................................................... 5
(F) Fringe Benefits............................................................................... 5
(G) Office And Support Staff...................................................................... 5
(H) Vacation And Other Absences................................................................... 5
(I) Benefits Shall Not Be Reduced Under Certain Circumstances..................................... 5
(J) Certain Retirement And Severance Definitions.................................................. 6
4. TERMINATION OF EMPLOYMENT.............................................................................. 7
(A) Death Or Disability........................................................................... 7
(B) Cause......................................................................................... 7
(C) Good Reason................................................................................... 8
(D) Notice Of Termination......................................................................... 9
(E) Date Of Termination........................................................................... 10
5. OBLIGATIONS OF THE CORPORATION UPON TERMINATION........................................................ 10
(A) Termination Other Than For Cause.............................................................. 10
(B) [intentionally left blank].................................................................... 13
(C) Cause; Other Than For Good Reason............................................................. 13
(D) Death Or Disability........................................................................... 13
(E) Resolution Of Disputes........................................................................ 13
(1) Right Of Election By Executive To Arbitrate Or Xxx................................... 13
(2) Third-Party Stakeholder.............................................................. 14
6. NON-EXCLUSIVITY OF RIGHTS.............................................................................. 15
7. FULL SETTLEMENT........................................................................................ 15
8. CERTAIN ADDITIONAL PAYMENTS BY THE CORPORATION......................................................... 15
9. CONFIDENTIAL INFORMATION............................................................................... 18
10. COMPETITION............................................................................................ 19
11. SUCCESSORS............................................................................................. 19
12. CERTAIN DEFINITIONS.................................................................................... 20
(A) Beneficiary................................................................................... 20
(B) Change Of Control............................................................................. 20
(C) Change Of Control Date........................................................................ 22
13. AMENDMENT OR MODIFICATION; WAIVER...................................................................... 22
14. MISCELLANEOUS.......................................................................................... 22
Exhibit A
Exhibit B
i
DEFINED TERMS
DEFINED TERMS* SECTION PAGE
------------- ------- ----
Accounting Firm 8(B) 16
Accrued Obligations 5(A)(1)(c) 11
ACP 3(B) 4
Affiliate 2(A)(5) 2
Affiliated Companies 3(A) 3
Agreement Introduction 1
Annual Base Salary 3(A) 3
Annual Bonus 3(B) 4
Beneficial Owner 12(B) 21
Beneficiary 12(A) 20
Board 3(A) 3
Business Combination 12(B)(3) 20
Cause 4(B) 7
Change of Control 12(B) 20
Change of Control Date 12(C) 21
COC Employment Period 1(B) 1
Code 3(I) 5
Competition 10(B) 19
Corporation Introduction 1
14(E) 23
Date of Termination 4(E) 10
Disability 4(A)(2) 7
Disability Effective Date 4(A)(2) 7
Exchange Act 12(B) 21
Excise Tax 8(F)(1) 18
Executive Introduction 1
Good Reason 4(C) 8
Gross-Up Payment 8(A) 15
Incumbent Board 12(B)(2) 20
Notice of Termination 4(D) 10
Other Benefits 5(A)(5) 12
Parachute Value 8(F)(2) 18
Payment 8(F)(3) 18
Pension and Retirement Program of the Corporation 3(J)(2) 6
Person 12(B) 21
Prior Voting Securities 12(B)(3) 21
Renewal Date 1(D) 1
Safe Harbor Amount 8(F)(4) 18
---------------------
* Each listed term is intended to include both the singular and plural
form of the term.
ii
SERP Retirement Date 5(A)(3) 11
Service 3(J)(3) 7
Severance Compensation 3(J)(1) 6
Short-Term Award 3(B) 4
Spinoff 12(B) 21
Subsidiary 2(A)(5) 2
Terminal Date 1(A) 1
Termination 5(A) 10
Termination Period 5(A)(2) 11
Underpayment 8(B) 16
Value 8(F)(5) 18
iii
THIS CHANGE OF CONTROL AGREEMENT (the "Agreement") made and entered
into as of this 8th day of December, 2003, by and between XXXX CORPORATION, a
Virginia corporation whose principal place of business is located at 0000 Xxxx
Xxxxxx, Xxxxxx, Xxxx (the "Corporation"), and __________ (the "Executive");
WHEREAS, the Executive is a principal executive officer of the
Corporation and an integral part of its management; and
WHEREAS, the Corporation wishes to assure both itself and the Executive
of continuity of management in the event of any actual or threatened Change of
Control of the Corporation; and
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive could reasonably expect in the
absence of a Change of Control of the Corporation, and, accordingly, this
Agreement, though taking effect upon execution thereof, will be operative only
upon a Change of Control of the Corporation, as that term is hereafter defined;
NOW, THEREFORE, IN CONSIDERATION of the mutual promises, covenants and
agreements set forth below, it is hereby agreed as follows:
1. OPERATION OF AGREEMENT; EMPLOYMENT AND TERM.
(A) This Agreement shall be effective immediately upon its
execution by the parties hereto but, anything in this Agreement to the contrary
notwithstanding, neither the Agreement nor any provision thereof, except for
this Section 1(A), Section 1(D), Section 2(A)(2), Section 11, Section 12(B),
Xxxxxxx 00, xxx Xxxxxxxx 00(X), (X), (X), (X), (X) and (O), shall be operative
unless and until there has been a Change of Control of the Corporation, as
defined in Section 12(B) below, prior to December 31, 2005 or such later date as
shall result from the operation of Section 1(D) below (the "Terminal Date") and
while the Executive is in the employ of the Corporation. Upon such a Change of
Control of the Corporation, this Agreement and all provisions thereof shall
become operative immediately.
(B) The Corporation hereby agrees to continue the employment of
the Executive, and the Executive hereby agrees to remain in the employ of the
Corporation, in accordance with the terms and provisions of this Agreement, for
the period set forth below (the "COC Employment Period").
(C) The COC Employment Period under this Agreement shall commence
on the date this Agreement becomes operative pursuant to the provisions of
Sections 1(A) above and, subject only to the provisions of Section 4 below
relating to termination of employment, shall continue until the third
anniversary of a Change of Control of the Corporation.
(D) Commencing on December 31, 2003, and on each anniversary of
such date (such date and each such annual anniversary thereof, the "Renewal
Date"), the Terminal Date set forth in Section 1(A) above shall be extended so
as to occur three (3) years from the Renewal Date unless either party shall have
given notice to the other party that the Terminal Date is not to be extended or
further extended.
2. POSITION AND DUTIES OF THE EXECUTIVE.
(A) Position.
(1) It is contemplated that during the COC Employment
Period the Executive will continue to serve as a principal officer of
the Corporation and as a member of its Board of Directors if serving as
a member of the Board of Directors immediately prior to a Change of
Control, as defined in Section 12(B) below, with the office(s) and
title(s), reporting responsibility and duties and responsibilities of
the Executive on the date of this Agreement, as the same may be changed
from time to time after the date of this Agreement and prior to the
date this Agreement becomes operative pursuant to the provisions of
Section 1(a) above.
(2) The office(s), title(s), reporting responsibility,
duties and responsibilities of the Executive on the date of this
Agreement, as the same may be changed from time to time after the date
of this Agreement and prior to the date this Agreement becomes
operative pursuant to the provisions of Section 1(A) above, shall be
summarized in Exhibit A to this Agreement, it being understood and
agreed that if, as when the office(s), title(s), reporting
responsibility, duties and responsibilities of the Executive shall be
changed prior to the date this Agreement becomes operative pursuant to
the provisions of Section 1(A) above, Exhibit A shall be deemed to be
and shall be updated by the parties to reflect such change; provided,
however, that Exhibit A is intended only as memorandum for the
convenience of the parties and shall be disregarded if and to the
extent that, at the time this Agreement becomes operative, Exhibit A
shall fail to reflect accurately the office(s), title(s), reporting
responsibility, duties or responsibilities of the Executive at the time
because the parties shall have failed to update Exhibit A as aforesaid
after the last such change prior to the date this Agreement shall have
become operative.
(3) At all times during the COC Employment Period, the
Executive shall hold a position of responsibility and importance and a
position of scope, with the functions, duties and responsibilities
attached thereto, at least equal in responsibility and importance and
in scope to and commensurate with his position described in general
terms above in this Section 2(A) and intended to be summarized in
Exhibit A to this Agreement.
(4) During the COC Employment Period the Executive shall,
without compensation other than that herein provided, also serve and
continue to serve, if and when elected and re-elected, as an officer or
director, or both, of any United States Subsidiary, division or
Affiliate of the Corporation.
(5) For all purposes of this Agreement, (1) a
"Subsidiary" shall mean a corporation or other entity, of which 50% or
more of the voting securities or other equity interests is owned
directly, or indirectly through one or more intermediaries, by the
Corporation, and (2) an "Affiliate" shall mean a corporation or other
entity which is not a Subsidiary and which directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Corporation. For the purpose of this
definition, the terms "control", "controls" and "controlled" mean the
possession, direct or indirect, of the power to direct or cause the
direction of the management and poli-
-2-
cies of a corporation or other entity, whether through the ownership of
voting securities, by contract, or otherwise.
(B) Duties. Throughout the COC Employment Period the Executive
shall devote his full time and undivided attention during normal business hours
to the business and affairs of the Corporation except for reasonable vacations
and except for illness or incapacity, but nothing in this Agreement shall
preclude the Executive from devoting reasonable periods required for:
(1) serving as a director or member of a committee or any
organization involving no conflict of interest with the interests of
the Corporation;
(2) delivering lectures, fulfilling speaking engagements,
teaching at educational institutions;
(3) engaging in charitable and community activities; and
(4) managing his personal investments;
provided, that such activities do not materially interfere with the regular
performance of his duties and responsibilities under this Agreement.
(C) Location Of Office. During the COC Employment Period, the
office of the Executive shall be located at the principal offices of the
Corporation, within the greater Toledo, Ohio area, and the Executive shall not
be required to locate his office elsewhere without his prior written consent,
nor shall he be required to be absent therefrom on travel status or otherwise
more than thirty (30%) of the working days in any calendar year nor for more
than ten (10) consecutive days at any one time.
3. COMPENSATION.
The Executive shall receive the following compensation for his
services:
(A) Salary. So long as the Executive is employed by the
Corporation, he shall be paid an annual base salary, payable not less often than
monthly, at the rate of not less than $_________ per month with such increases
as shall be awarded from time to time in accordance with the Corporation's
regular administrative practices of other salary increases applicable to
executives of the Corporation, subject to any and all required withholdings and
deductions for Social Security, income taxes and the like (the "Annual Base
Salary"). The Board of Directors of the Corporation (the "Board") may from time
to time direct such upward adjustments to Annual Base Salary as the Board deems
to be necessary or desirable; provided, however, that during the COC Employment
Period, the Annual Base Salary shall be reviewed at least annually and shall be
increased at any time and from time to time but not less often than annually and
shall be substantially consistent with increases in base salary generally
awarded in the ordinary course of business to other senior executives of the
Corporation and its "Affiliated Companies" (a term which, as used in this
Agreement, shall mean a Subsidiary or Affiliate of the Corporation) and, in
addition, shall be adjusted effective as of January lst of each calendar year
commencing in the COC Employment Period to reflect increases in the cost of
living during the preceding calendar year. Annual Base Salary shall not be
reduced after any increase thereof pursuant to this Section 3(A).
-3-
Any increase in Annual Base Salary shall not serve to limit or reduce any other
obligation of the Corporation under this Agreement.
(B) Additional Compensation. So long as the Executive is employed
by the Corporation, he shall be eligible to receive annual short-term incentive
awards or bonuses (such award or bonus is hereinafter referred to as "Short-Term
Award" or "Annual Bonus") from the Xxxx Corporation Additional Compensation
Plan, and from any successor or replacement plan (the Xxxx Corporation
Additional Compensation Plan and such successor or replacement plans being
referred to herein collectively as the "ACP"), in accordance with the terms
thereof; provided, however, that, with respect to each fiscal year of the
Corporation ending during the COC Employment Period, the Executive shall be
awarded (whether under the terms of the ACP or otherwise) an Annual Bonus in an
amount that shall not be less than fifty percent (50%) of his Annual Base Salary
rate in effect on the last day of such fiscal year (which amount shall be
prorated if such fiscal year shall be less than 12 months). Each Annual Bonus
shall be paid no later than the end of the third month of the fiscal year next
following the fiscal year for which the Annual Bonus is awarded, unless the
receipt of such Annual Bonus is deferred in accordance with the terms of the
ACP.
(C) Incentive, Stock And Savings Plans. So long as the Executive
is employed by the Corporation, he shall be and continue to be a full
participant in the Xxxx Corporation 1997 Stock Option Plan, the ACP (providing
for Short-Term Awards) and in any and all other incentive, stock, savings or
retirement plans, practices or policies in which executives of the Corporation
participate that are in effect on the date hereof and that may hereafter be
adopted, including, without limitation, any stock option, stock purchase or
stock appreciation plans, or any successor plans that may be adopted by the
Corporation with, except in the case of the ACP after the commencement of the
COC Employment Period, at least the same reward opportunities, if any, that have
heretofore been provided to the Executive. Nothing in this Agreement shall
preclude improvement of reward opportunities in such plans or other plans in
accordance with the practices in effect on the first day of the calendar month
that this Agreement becomes operative. Any provision of the ACP or of this
Agreement to the contrary notwithstanding, any Short-Term Awards made to the
Executive (whether for services rendered prior to or after the date this
Agreement becomes operative) shall be paid wholly in cash as soon as practicable
after the awards are made.
(D) Retirement And Welfare Benefit Plans. The Executive, his
dependents and Beneficiary, including, without limitation, any beneficiary of a
joint and survivor or other optional method of payment applicable to the payment
of benefits under the Pension and Retirement Program of the Corporation, as
defined in Section 3(J)(2) below, shall be entitled to all payments and benefits
and service credit for benefits during the COC Employment Period to which other
senior executives of the Corporation, their dependents and their beneficiaries
are entitled under the terms of employee retirement and welfare benefit plans
and practices of the Corporation, including, without limitation, the Pension and
Retirement Program of the Corporation (as defined in Section 3(J)(2) below), the
Corporation's Savings and Investment Plan, its Stock Purchase Plan, its Stock
Award Plan, its Income Protection Plan for Management and Certain Other
Employees providing layoff and severance benefits, its 1989 and 1999 Restricted
Stock Plans, its Excess Benefits Plan, its Supplemental Benefits Plan, its death
benefit plans (consisting
-4-
of its Group Insurance Plan for Management Employees providing life insurance,
accidental death and dismemberment insurance, and travel accident insurance),
its disability benefit plans (consisting of its salary continuation, sickness
and accident and long-term disability benefits programs), its medical, dental
and health and welfare plans and other present or equivalent successor plans and
practices of the Corporation, its Subsidiaries and divisions, for active and
retired employees, for which officers, their dependents and beneficiaries, are
eligible, and to all payments or other benefits under any such plan or practice
subsequent to the COC Employment Period as a result of participation in such
plan or practice during the COC Employment Period.
(E) Expenses. So long as the Executive is employed by the
Corporation, he shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the polices,
practices and procedures of the Corporation and its Affiliated Companies from
time to time in effect, commensurate with his position and on a basis at least
comparable to that of other senior executives of the Corporation.
(F) Fringe Benefits. So long as the Executive is employed by the
Corporation, he shall be entitled to fringe benefits, including, without
limitation, the business and personal use of an automobile, and payment or
reimbursement of club initiation fees and dues, in accordance with the plans,
practices, programs and policies of the Corporation and its Affiliated Companies
from time to time in effect, commensurate with his position and at least
comparable to those received by other senior executives of the Corporation.
(G) Office And Support Staff. So long as the Executive is employed
by the Corporation, he shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive personal secretarial
and other assistance, commensurate with his position and at least comparable to
those received by other senior executives of the Corporation.
(H) Vacation And Other Absences. So long as the Executive is
employed by the Corporation, he shall be entitled to paid vacation and such
other paid absences whether for holidays, illness, personal time or any similar
purposes, in accordance with the plans, policies, programs and practices of the
Corporation and its Affiliated Companies in effect from time to time,
commensurate with his position and at least comparable to those received by
other senior executives of the Corporation.
(I) Benefits Shall Not Be Reduced Under Certain Circumstances.
Nothing in this Agreement shall preclude the Corporation from amending or
terminating any employee benefit or welfare plan or practice, but, it being the
intent of the parties that the Executive shall continue to be entitled during
the COC Employment Period to perquisites as set forth in this Section 3 and to
benefits and service credit for benefits under Section 3(D) above at least equal
to those attached to his position on the date of this Agreement (except that, in
converting a monthly retirement benefit, which is payable under any plan that is
a component of the Pension and Retirement Program of the Corporation, into a
lump sum payment, the lump sum distribution shall be actuarially equivalent to
the monthly benefit provided under such Pension and Retirement Program,
calculated using the following basis, whichever produces a larger lump sum
amount: (x) the lump sum amount calculated on the basis of the "applicable
interest rate" (as in effect for the November preceding the calendar year in
which the calculation is made) and the "applicable mortality table", both as
defined in Section 417(e) of the Internal Revenue Code of 1986 as amended (the
"Code"); or (y) the lump sum amount calculated on the basis of the actuarial
equivalent factor used to convert the Executive's Earned Benefit Account into a
life annuity un-
-5-
der the Xxxx Corporation Retirement Plan at the time the calculation was made),
and except as provided in the last sentence of this Section 3(I), nothing in
this Agreement shall operate or be construed to reduce, or authorize a reduction
without the Executive's written consent in, the level of such perquisites,
benefits or service credit for benefits; in the event of any such reduction, by
amendment or termination of any plan or practice or otherwise, the Executive,
his dependents and Beneficiary, shall continue to be entitled to perquisites,
benefits and service credit for benefits at least equal to the perquisites,
benefits and service credit for benefits under such plans or practices that he
or his dependents and Beneficiary would have received if such reduction had not
taken place. If and to the extent that such perquisites, benefits and service
credits are not payable or provided under any such plans or practices by reason
of such amendment or termination thereof, the Corporation itself shall pay or
provide therefor. Notwithstanding the foregoing provisions of this Section 3(I),
the Executive hereby waives the benefit of the foregoing minimum benefit
protection only as it applies to the Xxxx Corporation Savings and Investment
Plan, and to its medical, dental and health plans for active and retired
employees. The Executive expressly does not waive the application of the
foregoing minimum benefit protection to any of the other benefit plans, programs
or practices enumerated in Section 3 above, including, without limitation, the
Pension and Retirement Program of the Corporation, its death benefit plans, its
disability benefit plans, and its Income Protection Plan for Management and
Certain Other Employees. The Executive reserves the right to cancel the above
waiver, prospectively, at any future time by giving written notice to the
Corporation of such cancellation. Nothing in this Section 3(I) shall be
construed to prohibit the Corporation from amending or terminating any employee
benefit or welfare plan or practice to reduce benefits, so long as such
reduction applies to all salaried Corporation employees covered by such plan or
practice equally and such reduction is adopted prior to the Change of Control
Date.
(J) Certain Retirement And Severance Definitions.
(1) The term "Severance Compensation" shall mean the sum
of (1) one-twelfth (1/12) of the Annual Base Salary provided in Section
3(A) at the rate being paid at the time the Executive's termination of
employment occurred, and (2) one-twelfth (1/12) of the greater of (x)
the average of the highest Annual Bonuses payable to the Executive for
any three (3) consecutive full or partial fiscal years during his
employment by the Corporation or (y) the Executive's target annual
bonus (currently 60%) in effect under the ACP as of the Date of
Termination (which, for purposes of this Section 3(J) and
notwithstanding any reduction following the Change of Control Date,
shall not be less than the Executive's target annual bonus as of
immediately prior to the Change of Control Date), provided, however,
that, solely for purposes of determining the Executive's benefit under
the Pension and Retirement Program of the Corporation, with respect to
1994 and subsequent years' Annual Bonuses, only that portion of the
Executive's Annual Bonus as does not exceed 125% of his Annual Base
Salary will be considered.
(2) The term "Pension and Retirement Program of the
Corporation" shall mean the Xxxx Corporation Retirement Plan, the Xxxx
Corporation Excess Benefits Plan, the Xxxx Corporation Supplemental
Benefits Plan, and any other supplemental, early retirement and similar
plan or plans of the Corporation, its Subsidiaries and Affiliates,
providing for pension or retirement benefits that may be applicable to
the Executive and that are in effect on the date hereof or may
hereafter be adopted or substituted for any such
-6-
plan, but exclusive of the Xxxx Corporation Savings and Investment Plan
and any similar plan or plans.
(3) The term "Service" shall mean employment as an
employee by the Corporation, any Subsidiary or Affiliate thereof or any
corporation the capital stock or assets of which have been acquired by,
or which has been merged into or consolidated with the Corporation or
any Subsidiary or Affiliate thereof.
4. TERMINATION OF EMPLOYMENT.
(A) Death Or Disability.
(1) The Executive's employment shall terminate
automatically upon the Executive's death during the COC Employment
Period.
(2) If the Corporation determines in good faith that the
Disability (as defined below) of the Executive has occurred during the
COC Employment Period, it may give to the Executive written notice in
accordance with Section 14(B) below of its intention to terminate the
Executive's employment. In such event, the COC Employment Period shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided, that within the
30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive from
the Executive's duties with the Corporation on a full-time basis for
180 consecutive business days as a result of incapacity due to mental
or physical illness which is determined to be total and permanent by a
physician selected by the Corporation or its insurers and acceptable to
the Executive or the Executive's legal representative (such agreement
as to acceptability not to be withheld unreasonably).
(B) Cause. The Corporation may terminate the Executive's
employment during the COC Employment Period for Cause. For purposes of this
Agreement, the termination of the Executive's employment shall be deemed to have
been for "Cause" only
(1) if termination of his employment shall have been the
result of his conviction of, or plea of guilty or nolo contendere to,
the charge of having committed a felony (whether or not such conviction
is later reversed for any reason), or
(2) if there has been a breach by the Executive during
the COC Employment Period of the provisions of Section 2(B), relating
to the time to be devoted to the affairs of the Corporation, or of
Section 9, relating to confidential information, and such breach
results in demonstrably material injury to the Corporation, and, with
respect to any alleged breach of Section 2(B) hereof, the Executive
shall have either failed to remedy such alleged breach within thirty
days from his receipt of written notice from the Secretary of the
Corporation pursuant to resolution duly adopted by the Board of
Directors of the Corporation after notice to the Executive and an
opportunity to be heard demanding that he remedy such alleged breach,
or shall have failed to take all reasonable steps to that end during
such thirty-day period and thereafter;
-7-
provided, that there shall have been delivered to the Executive a certified copy
of a resolution of the Board of Directors of the Corporation adopted by the
affirmative vote of not less than three-fourths of the entire membership of the
Board of Directors called and held for that purpose and at which the Executive
was given an opportunity to be heard, finding that the Executive was guilty of
conduct set forth in subparagraph (1) or (2) above, specifying the particulars
thereof in detail.
Anything in this Section 4(B) or elsewhere in this Agreement to the
contrary notwithstanding, the employment of the Executive shall in no event be
considered to have been terminated by the Corporation for Cause if termination
of his employment took place
(1) as the result of bad judgment or negligence
on the part of the Executive, or
(2) because of an act or omission believed by
the Executive in good faith to have been in or not
opposed to the interests of the Corporation, or
(3) for any act or omission in respect of which
a determination could properly be made that the
Executive met the applicable standard of conduct
prescribed for indemnification or reimbursement or
payment of expenses under (A) the Bylaws of the
Corporation, or (B) the laws of the State of
Virginia, or (C) the directors' and officers'
liability insurance of the Corporation, in each case
either as in effect at the time of this Agreement or
in effect at the time of such act or omission, or
(4) as the result of an act or omission which
occurred more than twelve calendar months prior to
the Executive's having been given notice of the
termination of his employment for such act or
omission unless the commission of such act or such
omission could not at the time of such commission or
omission have been known to a member of the Board of
Directors of the Corporation (other than the
Executive, if he is then a member of the Board of
Directors), in which case more than twelve calendar
months from the date that the commission of such act
or such omission was or could reasonably have been so
known, or
(5) as the result of a continuing course of
action which commenced and was or could reasonably
have been known to a member of the Board of Directors
of the Corporation (other than the Executive, if he
is then a member of the Board of Directors) more than
twelve calendar months prior to notice having been
given to the Executive of the termination of his
employment.
(C) Good Reason. The Executive may terminate his employment during
the COC Employment Period for Good Reason. For purposes of this Agreement, "Good
Reason" shall
-8-
mean the occurrence (without the Executive's express written consent) of any of
the following events, unless in the case of any act or failure to act described
in clauses (1), (2), (3), (4) or (5) below, such act or failure to act is
corrected by the Corporation within 30 days after receipt by the Corporation of
written notice from the Executive in respect of such event:
(1) Failure to elect or reelect the Executive to the
Board of Directors of the Corporation, if the Executive shall have been
a member of the Board of Directors on the date of this Agreement or at
any time thereafter during the COC Employment Period, or a substantial
diminution in the Executive's title(s) or office(s) described in
Section 2(A) above and intended to be summarized in Exhibit A to this
Agreement, or the removal of Executive from any such positions.
(2) A material change or diminution in the position,
duties, responsibilities or status of the Executive that is adversely
inconsistent with the position, duties, responsibilities or status
attached to the position described in Section 2 above and intended to
be summarized in Exhibit A to this Agreement.
(3) The Executive's compensation, annual bonus
opportunity or benefit entitlements as in effect immediately prior to
the Change of Control or as increased following the Change of Control
are reduced.
(4) A breach by the Corporation of any provision of this
Agreement not embraced within the foregoing clauses (1), (2) and (3) of
this Section 4(C).
(5) The liquidation, dissolution, consolidation or merger
of the Corporation or transfer of all or a significant portion of its
assets unless a successor or successors (by merger, consolidation or
otherwise) to which all or a significant portion of its assets have
been transferred shall have assumed all duties and obligations of the
Corporation under this Agreement but without releasing the corporation
that is the original party to this Agreement;
provided, that in any event set forth in this Section 4(C), the Executive shall
have elected to terminate his employment under this Agreement, upon not less
than ten and not more than ninety days' advance written notice to the
Corporation, attention of the Secretary, given, except in the case of a
continuing breach, within three calendar months after (A) failure to be so
elected or reelected, or removal, (B) expiration of the 30-day cure period with
respect to such event, or (C) the closing date of such liquidation, dissolution,
consolidation, merger or transfer of assets, as the case may be. The Executive's
mental or physical incapacity following the occurrence of an event described
above in clauses (1) through (5) shall not affect the Executive's ability to
terminate employment for Good Reason.
An election by the Executive to terminate his employment for Good
Reason under the provisions of this Section 4(C) shall not be deemed a voluntary
termination of employment by the Executive for the purpose of this Agreement or
any plan or practice of the Corporation.
(D) Notice Of Termination. Any termination by the Corporation for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party
-9-
hereto given in accordance with Section 14(B) below. For purposes of this
Agreement, a "Notice of Termination" means a written notice which
(1) indicates the specific termination provision in this
Agreement relied upon,
(2) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated and
(3) if the Date of Termination (as defined in Section
4(E) below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than fifteen days
after the giving of such notice).
(E) Date Of Termination. "Date of Termination" means
(1) if the Executive's employment is terminated by the
Corporation for Cause, or by the Executive for Good Reason, the later
of (a) the date of receipt of the Notice of Termination or any later
date specified therein, as the case may be or (b) the end of any
applicable 30-day cure period described in Section 4(C),
(2) if the Executive's employment is terminated by the
Corporation other than for Cause or Disability, the Date of Termination
shall be the date on which the Corporation notifies the Executive of
such termination and
(3) if the Executive's employment is terminated by reason
of death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date, as the case
may be.
5. OBLIGATIONS OF THE CORPORATION UPON TERMINATION.
(A) Termination Other Than For Cause. If, during the COC
Employment Period, the Corporation shall terminate the Executive's employment
other than for Cause or the Executive shall terminate his employment following a
Change of Control for Good Reason (termination in any such case referred to as
"Termination") and subject to the Executive entering into and not revoking a
release (unless the Corporation determines not to request such release)
substantially in the form set forth as Exhibit B hereto:
(1) the Corporation shall pay the Executive in a lump sum
in cash within 30 days after the Date of Termination the sum of
(a) the Executive's Annual Base Salary through
the Date of Termination to the extent not
theretofore paid,
(b) to the extent that Annual Bonus has not been
paid to the Executive in respect of the
fiscal year in which the Date of Termination
occurs, the product of (x) the Executive's
target annual bonus in effect under the ACP
as of the Date of Termination (which, for
purposes of Section 3(J) and notwithstanding
any reduction following
-10-
the Change of Control Date, shall not be
less than the Executive's target annual
bonus as of immediately prior to the Change
of Control Date) and (y) a fraction, the
numerator of which is the number of days in
the current fiscal year through the Date of
Termination, and the denominator of which is
365, and
(c) any compensation previously deferred by the
Executive (together with any accrued
interest or earnings thereon) and any
accrued vacation pay, in each case to the
extent not theretofore paid (the sum of the
amounts described in clauses (a), (b), and
(c) shall be hereinafter referred to as the
"Accrued Obligations"); and
(2) The Corporation shall pay the Executive in a lump sum
in cash within 30 days after the Date of Termination an amount equal to
the Executive's Severance Compensation for the period from the Date of
Termination until the earlier of (x) the third anniversary of the Date
of Termination and (y) the date upon which the Executive attains the
age of sixty-five (65) years (the "Termination Period"); provided,
however, that such amount would be reduced by any other amounts payable
to the Executive in respect of salary or bonus continuation to be
received by the Executive under any severance plan, policy or
arrangement of the Corporation; and
(3) During the Termination Period, or such longer period
as any plan, program, practice or policy may provide, the Corporation
shall continue benefits to the Executive and/or the Executive's family
at least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described
in Section 3(D) above if the Executive's employment had not been
terminated in accordance with the most favorable plans, practices,
programs or policies of the Corporation and its Affiliated Companies as
in effect and applicable generally to other senior executives of the
Corporation and its Affiliated Companies and their families during the
90-day period immediately preceding the Date of Termination or, if more
favorable to the Executive, as in effect at any time thereafter or, if
more favorable to the Executive, as in effect generally at any time
thereafter with respect to other senior executives of the Corporation
and its Affiliated Companies and their families or, if more favorable
to the Executive, as in effect immediately prior to the Change of
Control, if applicable, provided, however, that if the Executive
becomes reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer-provided plan,
the medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such
applicable period of eligibility. For purposes of determining
eligibility of the Executive for retiree benefits pursuant to such
plans, practices, programs and policies, the Executive shall be
considered to have remained employed until the end of the Termination
Period and to have retired on the date of the end of the Termination
Period. Notwithstanding the foregoing, and for purposes of clarity,
solely with respect to Appendix A of the Corporation's Supplemental
Benefits Plan, if the Date of Termination is on or prior to December
31, 2009, the Executive shall be considered to have remained employed
until the earlier of December 31, 2009 or the end of the Termination
Period (such date, the "SERP Retirement Date") and to have retired on
the SERP Retirement Date. To the extent that any benefits referred to
in this Section 5(A)(3) shall not be pay-
-11-
able or provided under any such plan by reason of the Executive's no
longer being an employee of the Corporation as the result of
Termination, the Corporation shall itself pay, or provide for payment
of, such benefits and the service credit for benefits provided for in
Section 5(A)(4) below, to the Executive, this dependents and
Beneficiary; and
(4) The period from the Date of Termination until the end
of the Termination Period shall be considered:
(a) Service with the Corporation for the purpose
of continued credits under the employee
benefit plans referred to in Section 3(D)
above and all other benefit plans of the
Corporation applicable to the Executive or
his Beneficiary as in effect immediately
prior to Termination but prior to any
reduction of benefits thereunder as the
result of amendment or termination during
the COC Employment Period; provided, that,
solely with respect to Appendix A of the
Corporation's Supplemental Benefits Plan, if
the Date of Termination is earlier than
December 31, 2009, the Executive shall be
considered to have remained employed until
the SERP Retirement Date and to have retired
on the SERP Retirement Date, and
(b) Employment with the Corporation for purposes
of determining payments and other rights in
respect of awards made or accrued and award
opportunities granted prior to Termination
under the executive incentive plans referred
to in Section 3(C) above and all other
incentive plans of the Corporation in which
the Executive was a participant prior to
Termination; and
(5) In addition to the severance and other benefits
described in Sections 5(a)(1) through 5(a)(4) above, to the extent not
theretofore paid or provided, the Corporation shall timely pay or
provide to the Executive and/or the Executive's dependents and/or heirs
any other amounts or benefits required to be paid or provided to such
individuals under any plan, program, policy or practice or contract or
agreement of the Corporation and its Affiliated Companies as in effect
and applicable generally to other senior executives of the Corporation
and its Affiliated Companies and their families during the 90-day
period immediately preceding the Date of Termination or, if more
favorable to the Executive, as in effect generally thereafter with
respect to other senior executives of the Corporation and its
Affiliated Companies and their families (such other amounts and
benefits shall be referred to below as the "Other Benefits"); and
(6) During the Termination Period, the Corporation shall
continue to provide to the Executive the financial, estate and tax
planning services that were provided to the Executive during the 90-day
period immediately prior to the Change of Control or, if more favorable
to the Executive, as in effect generally at any time thereafter with
respect to other senior executives of the Corporation and its
Affiliated Companies; and
-12-
(7) The Corporation shall pay on behalf of Executive the
fee of an independent outplacement firm selected by the Executive for
outplacement services in an amount equal to the actual fee for such
service up to a total of $35,000.
(B) [intentionally left blank]
(C) Cause; Other Than For Good Reason. If the Executive's
employment shall be terminated for Cause during the COC Employment Period, the
Corporation shall have no further obligations to the Executive under this
Agreement other than the obligation to pay the Executive's Annual Base Salary,
any compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon), and accrued vacation pay through the Date of
Termination, in each case to the extent not theretofore paid, and any other
amounts or benefits to which the Executive and/or the Executive's family is
otherwise entitled under the terms of any employee benefit or incentive plan of
the Corporation. If the Executive terminates employment during the COC
Employment Period, excluding a termination for Good Reason following a Change of
Control, the Corporation shall have no further obligations to the Executive,
other than to pay the Executive's Annual Base Salary, any compensation
previously deferred by the Executive (together with any accrued interest or
earnings thereon), and accrued vacation pay through the termination date, in
each case to the extent not theretofore paid, any other benefits to which the
Executive and/or the Executive's family is otherwise entitled under the terms of
any employee benefit or incentive plan of the Corporation.
(D) Death Or Disability.
(1) In the event of the death of the Executive during the
COC Employment Period, the legal representative of the Executive shall
be entitled to the compensation provided for in Sections 3(A) and 3(B)
above for the month in which death shall have taken place, at the rate
being paid at the time of death, and the COC Employment Period shall be
deemed to have ended as of the close of business on the last day of the
month in which death shall have occurred but without prejudice to any
payments due in respect of the Executive's death.
(2) In the event of the Disability of the Executive
during the COC Employment Period, the Executive shall be entitled to
the compensation provided for in Sections 3(A) and 3(B) above, at the
rate being paid on the Disability Effective Date, for the period of
such Disability but not in excess of six months.
The amount of any payments due under this Section 5(D)(2)
shall be reduced by any payments to which the Executive may be entitled
for the same period because of disability under any disability or
pension plan of the Corporation or of any Subsidiary or Affiliate
thereof.
(E) Resolution Of Disputes.
(1) Right Of Election By Executive To Arbitrate Or Xxx.
In the event that the Executive's employment shall be terminated by the
Corporation during the COC Employment Period and such termination is
alleged to be for Cause, or the Executive's right to terminate his
employment under Section 4(C) above shall be questioned by the
Corpo-
-13-
ration, or the Corporation shall withhold payments or provision of
benefits for any other reason, the Executive shall have the right, in
addition to all other rights and remedies provided by law, at his
election either to seek arbitration within the Toledo, Ohio area under
the rules of the American Arbitration Association by serving a notice
to arbitrate upon the Corporation or to institute a judicial
proceeding, in either case within ninety days after having received
notice of termination of his employment or notice in any form that the
termination of his employment under Section 4(B) above is subject to
question or that the Corporation is withholding or proposes to withhold
payments or provision of benefits.
(2) Third-Party Stakeholder. In the event that the
Corporation defaults on any obligation set forth in Section 5(A) above,
relating to Termination, and shall have failed to remedy such default
within thirty (30) days after having received written notice of such
default from the Executive, in addition to all other rights and
remedies that the Executive may have as a result of such default, the
Executive may demand and the Corporation shall thereupon be required to
deposit, with the third-party stakeholder hereinafter described, an
amount equal to the undiscounted value of any and all undischarged,
future obligations of the Corporation under Section 5(A) above and such
amount shall thereafter be held, paid, applied or distributed by such
third-party stakeholder for the purpose of satisfying such
undischarged, future obligations of the Corporation when and to the
extent that they become due and payable. Any interest or other income
on such amount shall be retained by the third-party stakeholder and
applied, if necessary, by it to satisfy such obligations, provided,
however, that any interest or other income that is earned on such
undischarged, future obligations after the date that the third-party
stakeholder determines, in its sole discretion, that such obligations
are due and owing to the Executive, shall be paid to the Executive as
earned. To the extent not theretofore expended, such amount (including
any remaining unexpended interest or other income) shall be repaid to
the Corporation at such time as the third-party stakeholder, in its
sole discretion, reasonably exercised, determines, upon the advice of
counsel and after consultation with the Corporation and the Executive
or, in the event of his death, his Beneficiary, that all obligations of
the Corporation under Section 5(A) above have been substantially
satisfied.
Such amount shall, in the event of any question, be determined
jointly by the firm of certified public accountants regularly employed
by the Corporation and a firm of certified public accountants selected
by the Executive, in each case upon the advice of actuaries to the
extent the certified public accountants consider necessary, and, in the
event such two firms of accountants are unable to agree on a resolution
of the question, such amount shall be determined by an independent firm
of certified public accountants selected jointly by both firms of
accountants.
The third-party stakeholder, the fees and expenses of which
shall be paid by the Corporation, shall be a national or state bank or
trust company having a combined capital, surplus and undivided profits
and reserves of not less than Ten Million Dollars ($10,000,000) which
is duly authorized and qualified to do business in the state in which
the Executive resides at the time of such default.
-14-
6. NON-EXCLUSIVITY OF RIGHTS.
Except as provided in Sections 5(A)(2), 5(B) and 5(C) above, nothing in
this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the
Corporation or any of its Affiliated Companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement entered into after the date
hereof with the Corporation or any of its Affiliated Companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of, or any contract or agreement
entered into after the date hereof with, the Corporation or any of its
Affiliated Companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
7. FULL SETTLEMENT.
The Corporation's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Corporation may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and, except as provided in Section
5(A)(3) above, such amounts shall not be reduced whether or not the Executive
obtains other employment.
8. CERTAIN ADDITIONAL PAYMENTS BY THE CORPORATION.
(A) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any Payment
would be subject to the Excise Tax, then the Executive shall be entitled to
receive an additional payment (the "Gross-Up Payment") in an amount such that,
after payment by the Executive of all taxes (and any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 8(A), if it shall be
determined that the Executive is entitled to the Gross-Up Payment, but that the
Parachute Value of all Payments does not exceed 110% of the Safe Harbor Amount,
then no Gross-Up Payment shall be made to the Executive and the amounts payable
under this Agreement shall be reduced so that the Parachute Value of all
Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of the
amounts payable hereunder, if applicable, shall be made by first reducing the
payments under Section 5(A)(2), unless an alternative method of reduction is
elected by the Executive, and in any event shall be made in such a manner as to
maximize the Value of all Payments actually made to the Executive. For purposes
of reducing the Payments to the Safe Harbor Amount, only amounts payable under
this Agreement (and no other Payments) shall be reduced. If the reduction of the
amount payable under this Agreement would not result in a reduction of the
Parachute Value of all Payments to the Safe Harbor Amount, no amounts payable
under the Agreement shall be reduced pursuant to this Section 8(A). The
Cor-
-15-
poration's obligation to make Gross-Up Payments under this Section 8 shall not
be conditioned upon the Executive's termination of employment.
(B) Subject to the provisions of Section 8(C), all determinations
required to be made under this Section 8, including whether and when a Gross-Up
Payment is required, the amount of such Gross-Up Payment and the assumptions to
be utilized in arriving at such determination, shall be made by the
Corporation's independent auditors as of the Change of Control or any earlier
date of a determination hereunder (the "Accounting Firm"). The Accounting Firm
shall provide detailed supporting calculations both to the Corporation and the
Executive within 15 business days of the receipt of notice from the Executive
that there has been a Payment or such earlier time as is requested by the
Corporation. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change of Control or
the appointment of the Accounting Firm is not permitted by law, the Executive
may appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Corporation. Any Gross-Up Payment, as
determined pursuant to this Section 8, shall be paid by the Corporation to the
Executive within 5 days of the receipt of the Accounting Firm's determination.
Any determination by the Accounting Firm shall be binding upon the Corporation
and the Executive. As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments that will not have been made by
the Corporation should have been made (the "Underpayment"), consistent with the
calculations required to be made hereunder. In the event the Corporation
exhausts its remedies pursuant to Section 8(C) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Corporation to or for the benefit of
the Executive.
(C) The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment. Such notification shall be
given as soon as practicable, but no later than 10 business days after the
Executive is informed in writing of such claim. The Executive shall apprise the
Corporation of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which the Executive gives
such notice to the Corporation (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Corporation
notifies the Executive in writing prior to the expiration of such period that
the Corporation desires to contest such claim, the Executive shall:
(1) give the Corporation any information reasonably
requested by the Corporation relating to such claim,
(2) take such action in connection with contesting such
claim as the Corporation shall reasonably request in writing from time
to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Corporation,
-16-
(3) cooperate with the Corporation in good faith in order
effectively to contest such claim, and
(4) permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest, and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties) imposed as a result of such representation and payment
of costs and expenses. Without limitation on the foregoing provisions of this
Section 8(C), the Corporation shall control all proceedings taken in connection
with such contest, and, at its sole discretion, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the
applicable taxing authority in respect of such claim and may, at its sole
discretion, either pay the tax claimed to the appropriate taxing authority on
behalf of the Executive and direct the Executive to xxx for a refund or contest
the claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Corporation
shall determine; provided, however, that, if the Corporation pays such claim and
directs the Executive to xxx for a refund, the Corporation shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties) imposed with respect to such
payment or with respect to any imputed income in connection with such payment;
and provided, further, that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Corporation's control of the contest shall be limited
to issues with respect to which the Gross-Up Payment would be payable hereunder,
and the Executive shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any other taxing
authority.
(D) If, after the receipt by the Executive of a Gross-Up Payment
or payment by the Corporation of an amount on the Executive's behalf pursuant to
Section 8(C), the Executive becomes entitled to receive any refund with respect
to the Excise Tax to which such Gross-Up Payment relates or with respect to such
claim, the Executive shall (subject to the Corporation's complying with the
requirements of Section 8(C), if applicable) promptly pay to the Corporation the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after payment by the Corporation of an amount on
the Executive's behalf pursuant to Section 8(C), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Corporation does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then the amount of such payment shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
(E) Notwithstanding any other provision of this Section 8, the
Corporation may, in its sole discretion, withhold and pay over to the Internal
Revenue Service or any other applicable taxing authority, for the benefit of the
Executive, all or any portion of any Gross-Up Payment, and the Executive hereby
consents to such withholding.
-17-
(F) Definitions. The following terms shall have the following
meanings for purposes of this Section 8.
(1) "Excise Tax" shall mean the excise tax imposed by
Section 4999 of the Code, together with any interest or penalties
imposed with respect to such excise tax.
(2) "Parachute Value" of a Payment shall mean the present
value as of the date of the change of control for purposes of Section
280G of the Code of the portion of such Payment that constitutes a
"parachute payment" under Section 280G(b)(2), as determined by the
Accounting Firm for purposes of determining whether and to what extent
the Excise Tax will apply to such Payment.
(3) A "Payment" shall mean any payment or distribution in
the nature of compensation (within the meaning of Section 280G(b)(2) of
the Code) to or for the benefit of the Executive, whether paid or
payable pursuant to this Agreement or otherwise.
(4) The "Safe Harbor Amount" means 2.99 times the
Executive's "base amount," within the meaning of Section 280G(b)(3) of
the Code.
(5) "Value" of a Payment shall mean the economic present
value of a Payment as of the date of the change of control for purposes
of Section 280G of the Code, as determined by the Accounting Firm using
the discount rate required by Section 280G(d)(4) of the Code.
9. CONFIDENTIAL INFORMATION.
(A) The Executive agrees not to disclose, either while in the
Corporation's employ or at any time thereafter, to any person not employed by
the Corporation, or not engaged to render services to the Corporation, except
with the prior written consent of an officer authorized to act in the matter by
the Board of Directors of the Corporation, any confidential information obtained
by him while in the employ of the Corporation, including, without limitation,
information relating to any of the Corporation's inventions, processes,
formulae, plans, devices, compilations of information, methods of distribution,
customers, client relationships, marketing strategies or trade secrets;
provided, however, that this provision shall not preclude the Executive from use
or disclosure of information known generally to the public or of information not
considered confidential by persons engaged in the business conducted by the
Corporation or from disclosure required by law or Court order. The agreement
herein made in this Section 9(A) shall be in addition to, and not in limitation
or derogation of, any obligations otherwise imposed by law upon the Executive in
respect of confidential information and trade secrets of the Corporation, its
Subsidiaries and Affiliates.
(B) The Executive also agrees that upon leaving the Corporation's
employ he will not take with him, without the prior written consent of an
officer authorized to act in the matter by the Board of Directors of the
Corporation, and he will surrender to the Corporation any record, list, drawing,
blueprint, specification or other document or property of the Corporation, its
Subsidiaries and Affiliates, together with any copy and reproduction thereof,
mechanical or otherwise, which is of a confidential nature relating to the
Corporation, its Subsidiaries and Affiliates, or, without limitation, relating
to its or their methods of distribution, client relationships, market-
-18-
ing strategies or any description of any formulae or secret processes, or which
was obtained by him or entrusted to him during the course of his employment with
the Corporation.
10. COMPETITION.
(A) The Executive hereby agrees that he will not engage in
Competition at any time (i) during the COC Employment Period, (ii) during the
thirty-six (36) months immediately following any termination of his employment
with the Corporation that is not a Termination and (iii) in the event of a
Termination, during the twelve (12) months immediately following the
Termination.
(B) The word "Competition" for the purposes of this Agreement
shall mean:
(1) taking a management position with or control of a
business engaged in the design, development, manufacture, marketing or
distribution of products, which constituted 15% or more of the sales of
the Corporation and its Subsidiaries and Affiliates during the last
fiscal year of the Corporation preceding the termination of the
Executive's employment, in any geographical area in which the
Corporation, its Subsidiaries or Affiliates is at the time engaging in
the design, development, manufacture, marketing or distribution of such
products; provided, however, that in no event shall ownership of less
than 5% of the outstanding capital stock entitled to vote for the
election of directors of a corporation with a class of equity
securities held of record by more than 500 persons, standing alone, be
deemed Competition with the Corporation within the meaning of this
Section 10,
(2) soliciting any person who is a customer of the
businesses conducted by the Corporation, or any business in which the
Executive has been engaged on behalf of the Corporation and its
Subsidiaries or Affiliates at any time during the term of this
Agreement on behalf of a business described in clause (i) of this
Section 10(B),
(3) inducing or attempting to persuade any employee of
the Corporation or any of its Subsidiaries or Affiliates to terminate
his employment relationship in order to enter into employment with a
business described in clause (i) of this Subsection 10(B), or
(4) making or publishing any statement which is, or may
reasonably be considered to be, disparaging of the Corporation or any
of its Subsidiaries or Affiliates, or directors, officers, employees or
the operations or products of the Corporation or any of its
Subsidiaries or Affiliates, except to the extent the Executive, during
the COC Employment Period, makes the statement to employees or other
representatives of the Corporation or any of its Subsidiaries or
Affiliates in furtherance of the Corporation's business and the
performance of his services hereunder.
11. SUCCESSORS.
Except as otherwise provided herein,
-19-
(A) This Agreement shall be binding upon and shall inure to the
benefit of the Executive, his heirs and legal representatives, and the
Corporation and its successors as provided in this Section 11.
(B) This Agreement shall be binding upon and inure to the benefit
of the Corporation and any successor of the Corporation, including, without
limitation, any corporation or corporations acquiring, directly or indirectly,
50% or more of the outstanding securities of the Corporation, or all or
substantially all of the assets of the Corporation, whether by merger,
consolidation, sale or otherwise (and such successor shall thereafter be deemed
embraced within the term "the Corporation" for the purposes of this Agreement),
but shall not otherwise be assignable by the Corporation.
12. CERTAIN DEFINITIONS.
The following defined terms used in this Agreement shall have the
meanings indicated:
(A) Beneficiary. The term "Beneficiary" as used in this Agreement
shall, in the event of the death of the Executive, mean an individual or
individuals and/or an entity or entities, including, without limitation, the
Executive's estate, duly designated on a form filed with the Corporation by the
Executive to receive any amount that may be payable after his death or, if no
such individual, individuals, entity or entities has or have been so designated,
or is at the time in existence or able to receive any such amount, the
Executive's estate.
(B) Change Of Control. A "Change of Control" shall mean the first
to occur of any of the following events:
(1) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation (not including
in the securities Beneficially Owned by such Person any securities
acquired directly from the Corporation or its Affiliates) representing
20% or more of the combined voting power of the Corporation's then
outstanding securities, excluding any Person who becomes such a
Beneficial Owner in connection with any acquisition pursuant to a
transaction that complies with Sections 12(B)(3)(a), 12(B)(3)(b) and
12(B)(3)(c); or
(2) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the date of this Agreement, constitute the Board
(the "Incumbent Board") and any new director whose appointment or
election by the Board or nomination for election by the Corporation's
stockholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors on the date hereof or whose appointment, election or
nomination for election was previously so approved or recommended. For
purposes of the preceding sentence, any director whose initial
assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation,
relating to the election of directors of the Corporation, shall not be
treated as members of the Incumbent Board; or
(3) there is consummated a merger, reorganization,
statutory share exchange or consolidation or similar corporate
transaction involving the Corporation or any direct
-20-
or indirect Subsidiary of the Corporation, a sale or other disposition
of all or substantially all of the assets of the Corporation, or the
acquisition of assets or stock of another entity by the Corporation or
any of its Subsidiaries (each a "Business Combination"), in each case
unless, immediately following such Business Combination, (a) the voting
securities of the Corporation outstanding immediately prior to such
Business Combination (the "Prior Voting Securities") continue to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity of the Business Combination
or any parent thereof) at least 50% of the combined voting power of the
securities of the Corporation or such surviving entity or any parent
thereof outstanding immediately after such Business Combination, (b) no
Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Corporation or the surviving entity of the Business
Combination or any parent thereof (not including in the securities
Beneficially Owned by such Person any securities acquired directly from
the Corporation or its Affiliates) representing 20% or more of the
combined voting power of the securities of the Corporation or surviving
entity of the Business Combination or any parent thereof, except to the
extent that such ownership existed prior to the Business Combination
and (c) at least a majority of the members of the board of directors of
the Corporation or the surviving entity of the Business Combination or
any parent thereof were members of the Incumbent Board at the time of
the execution of the initial agreement or of the action of the Board
providing for such Business Combination; or
(4) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation.
Notwithstanding the foregoing, any disposition of all or substantially all of
the assets of the Corporation pursuant to a spinoff, splitup or similar
transaction (a "Spinoff") shall not be treated as a Change of Control if,
immediately following the Spinoff, holders of the Prior Voting Securities
immediately prior to the Spinoff continue to beneficially own, directly or
indirectly, more than 50% of the combined voting power of the then outstanding
securities of both entities resulting from such transaction, in substantially
the same proportions as their ownership, immediately prior to such transaction,
of the Prior Voting Securities; provided, that if another Business Combination
involving the Corporation occurs in connection with or following a Spinoff, such
Business Combination shall be analyzed separately for purposes of determining
whether a Change of Control has occurred;
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the
Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from
time to time.
"Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Corporation or any of its Subsidiaries, (ii) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Corporation or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities or (iv) a corporation
owned, directly or indirectly, by the stockholders of the Corporation in
substantially the same proportions as their ownership of stock of the
Corporation.
-21-
(C) Change Of Control Date. The "Change of Control Date" shall
mean the first date on which a Change of Control occurs. Anything in this
Agreement to the contrary notwithstanding, if a Change of Control occurs and if
the Executive's employment with the Corporation is terminated or the Executive
ceases to have the position with the Corporation set forth in Section 2(A) above
prior to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination or cessation (i) was at the
request of a third party who has taken steps reasonably calculated to effect the
Change of Control or (ii) otherwise arose in connection with or anticipation of
the Change of Control, then for all purposes of this Agreement the "Change of
Control Date" shall mean the date immediately prior to the date of such
termination or cessation.
13. AMENDMENT OR MODIFICATION; WAIVER.
No provision of this Agreement may be amended, modified or waived
unless such amendment, modification or waiver shall be authorized by the Board
of Directors of the Corporation or any authorized committee of the Board of
Directors and shall be agreed to in writing, signed by the Executive and by an
officer of the Corporation thereunto duly authorized. Except as otherwise
specifically provided in this Agreement, no waiver by either party hereto of any
breach by the other party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of a subsequent
breach of such condition or provision or a waiver of a similar or dissimilar
provision or condition at the same time or at any prior or subsequent time.
14. MISCELLANEOUS.
(A) This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without reference to principles
of conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
(B) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive: Copy to:
If to the Corporation:
Xxxx Corporation
0000 Xxxx Xxxxxx
Xxxxxx, Xxxx 00000
Attention: Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
-22-
(C) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(D) The Corporation may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as it determines is required
to be withheld pursuant to any applicable law or regulation.
(E) When used herein in connection with plans, programs and
policies relating to the Executive, employees, compensation, benefits,
perquisites, executive benefits, services and similar words and phrases, the
word "Corporation" shall be deemed to include all wholly-owned Subsidiaries of
the Corporation.
(F) This instrument contains the entire agreement of the parties
concerning the subject matter, and all promises, representations,
understandings, arrangements and prior agreements concerning the subject matter
are merged herein and superseded hereby, including, without limitation, the
agreement between the parties dated December 8, 1997.
(G) No right, benefit or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
(H) The Executive shall not have any right, title, or interest
whatsoever in or to any investments which the Corporation may make to aid it in
meeting its obligations under this Agreement.
(I) Subject to the provisions of Section 5(E) above, all payments
to be made under this Agreement shall be paid from the general funds of the
Corporation and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of amounts payable under
this Agreement.
(J) The Corporation and the Executive recognize that each party
will have no adequate remedy at law for breach by the other of any of the
agreements contained in this Agreement and, in the event of any such breach, the
Corporation and the Executive hereby agree and consent that the other shall be
entitled to a decree of specific performance, mandamus or other appropriate
remedy to enforce performance of such agreements.
(K) Subject to the provisions of Section 5(E) above, nothing
contained in this Agreement shall create or be construed to create a trust of
any kind, or a fiduciary relationship between the Corporation and the Executive
or any other person.
(L) Subject to the provisions of Section 5(E) above, to the extent
that any person acquires a right to receive payments from the Corporation under
this Agreement, except to the extent provided by law such right shall be no
greater than the right of an unsecured general creditor of the Corporation.
-23-
(M) In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to refer to his legal representative or,
where appropriate, to his Beneficiary.
(N) If any event provided for in this Agreement is scheduled to
take place on a legal holiday, such event shall take place on the next
succeeding day that is not a legal holiday.
(O) This Agreement is not intended to and shall not infer or imply
any right on the part of the Executive to continue in the employ of the
Corporation, or any Subsidiary or Affiliate of the Corporation, prior to a
Change of Control, and is not intended in any way to limit the right of the
Corporation to terminate the employment of the Executive, with or without
assigning a reason therefor, at any time prior to a Change of Control. Nor is
this Agreement intended to nor shall it require or imply an obligation on the
part of the Executive to continue in the employment of the Corporation, or any
Subsidiary or Affiliate of the Corporation, prior to a Change of Control.
Neither the Corporation nor the Executive shall incur any liability under this
Agreement if the employment of the Executive shall be terminated by the
Corporation or by the Executive prior to a Change of Control.
-24-
IN WITNESS WHEREOF, the Executive and, pursuant to due authorization
from its Board of Directors, the Corporation have caused this Agreement to be
executed as of the day and year first above written.
XXXX CORPORATION
By: ______________________________
Chairman of the Compensation
Committee
__________________________________
Executive
-25-
Exhibit A to Agreement
Made as of December 8, 2003 Between
Xxxx Corporation and [Name of Executive]
As of December 8, 2003, for purposes of Section 2(A),
The office(s) and title(s) of the Executive are:
Exhibit B To Agreement
Made as of December 8, 2003 Between
Xxxx Corporation and [Name of Executive]
FORM OF RELEASE AGREEMENT
This Release Agreement ("Release") is entered into as of this ______day
of ________, hereinafter "Execution Date", by and between [Executive Full Name]
(hereinafter "Executive"), and [Employer Full Name] and its successors and
assigns (hereinafter, the "Corporation"). The Executive and the Corporation are
sometimes collectively referred to as the "Parties".
1. The Executive's employment with the Corporation is terminated effective
[Month, Day, Year] (hereinafter "Termination Date"). The Corporation
agrees to provide the Executive the severance benefits provided for in
his/her Change of Control Agreement with the Corporation, dated as of [
] (the "COC Agreement"), after he/she executes this Release and the
Release becomes effective pursuant to its terms [FOR 40+ and does not
revoke it as permitted in Section 4 below, the expiration of such
revocation period being the "Effective Date")].
2. Executive represents that he has not filed, and will not file, any
complaints, lawsuits, administrative complaints or charges relating to
his employment with, or resignation from, the Corporation[; provided,
however, that nothing contained in this Section 2 shall prohibit
Executive from bringing a claim to challenge the validity of the ADEA
Release in Section 4 herein]. In consideration of the benefits
described in Section 1, for himself and his heirs, administrators,
representatives, executors, successors and assigns (collectively,
"Releasers"), Executive agrees to release the Corporation, its
subsidiaries, affiliates, and their respective parents, direct or
indirect subsidiaries, divisions, affiliates and related companies or
entities, regardless of its or their form of business organization, any
predecessors, successors, joint ventures, and parents of any such
entity, and any and all of their respective past or present
shareholders, partners, directors, officers, employees, consultants,
independent contractors, trustees, administrators, insurers, agents,
attorneys, representatives and fiduciaries, including without
limitation all persons acting by, through, under or in concert with any
of them (collectively, the "Released Parties"), from any and all
claims, charges, complaints, causes of action or demands relating to
his employment or termination of employment that Executive and his
Releasers now have or have ever had against the Released Parties,
whether known or unknown. This Release specifically excludes claims,
charges, complaints, causes of action or demand that (a) post-date the
Termination Date, (b) relate to unemployment compensation claims, (c)
involve rights to benefits in which Executive is vested as of the
Termination Date under any employee benefit plans and arrangements of
the Corporation, (d) relate to claims for indemnification by Employee,
or (e) involve obligations owed to Executive by the Corporation under
the COC Agreement.
3. The Corporation, on its own behalf and on behalf of the Released
Parties, hereby releases Executive from all claims, causes of actions,
demands or liabilities which arose against the Executive on or before
the time it signs this Agreement, whether known or unknown. This
Paragraph, however, does not apply to or adversely affect any claims
against Executive which allege or involve obligations owed by him to
the Corporation under the COC Agree-
ment. The Corporation will indemnify Executive for reasonable
attorneys' fees, costs and damages which may arise in connection with
any proceeding by the Corporation or any Released Party which is
inconsistent with this Release by the Corporation and the Released
Parties.
4. [FOR EMPLOYEES OVER 40 ONLY -- In further recognition of the above,
Executive hereby voluntarily and knowingly waives all rights or claims
that he/she may have against the Released Parties arising under the Age
Discrimination in Employment Act of 1967, as amended ("ADEA"), other
than any such rights or claims that may arise after the date of
execution of this Release. Executive specifically agrees and
acknowledges that: (A) the release in this Section 4 was granted in
exchange for the receipt of consideration that exceeds the amount to
which he/she would otherwise be entitled to receive upon termination of
his/her employment; (B) he/she has hereby been advised in writing by
the Corporation to consult with an attorney prior to executing this
Release; (C) the Corporation has given him/her a period of up to
twenty-one (21) days within which to consider this Release, which
period shall be waived by the Executive's voluntary execution prior to
the expiration of the twenty-one day period, and he/she has carefully
read and voluntarily signed this Release with the intent of releasing
the Released Parties to the extent set forth herein; and (D) following
his/her execution of this Release he/she has seven (7) days in which to
revoke his/her release as set forth in this Section 4 only and that, if
he/she chooses not to so revoke, the Release in this Section 4 shall
then become effective and enforceable and the payment listed above
shall then be made to him/her in accordance with the terms of this
Release. To cancel this Release, Executive understands that he/she must
give a written revocation to the General Counsel of the Corporation at
[ ]*, either by hand delivery or certified mail within the seven-day
period. If he/she rescinds the Release, it will not become effective or
enforceable and he/she will not be entitled to any benefits from the
Corporation.]
5. If any provision of this Release is held invalid, the invalidity of
such provision shall not affect any other provisions of this Release.
This Release is governed by, and construed and interpreted in
accordance with the laws of the State of [ ], without regard to
principles of conflicts of law. Employee consents to venue and personal
jurisdiction in the State of [ ] for disputes arising under this
Release. This Release represents the entire understanding with the
Parties with respect to subject matter herein, and no other inducements
or representations have been made or relied upon by the Parties. This
Release shall be binding upon and inure to the benefit of Employee, his
heirs and legal representatives, and the Corporation and its successors
as provided in this Section 5. Any modification of this Release must be
made in writing and be signed by Executive and the Corporation.
---------------------
* Insert address.
ACCEPTED AND AGREED TO:
___________________________ ________________________________
[Employer Full Name] [Employee Full Name]
Dated:____________________________ Dated:_____________________________
