EXHIBIT 10.1
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is entered into this 28th day of
June, 2006 between XXXXXXX & XXXXX, INC., an Ohio corporation (the "Company"),
and XXXXX X. XXXXXXX ("Executive") under the following circumstances:
A. Executive is employed by the Company as its President and
Chief Executive Officer under a letter agreement dated May 18, 2004
(the "Letter Agreement"); and
B. The Board of Directors believes it is in the best interests
of the Company to further secure the services of Executive by entering
into this Agreement with Executive, and Executive desires to continue
in the employment of the Company upon the terms and conditions set
forth herein;
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS
CONTAINED HEREIN, THE COMPANY AND EXECUTIVE AGREE AS FOLLOWS:
SECTION 1. EMPLOYMENT. The Company hereby agrees to continue
to employ Executive, and Executive hereby agrees to continue in the employment
of the Company, during the Term of Employment, commencing on July 1, 2006, upon
the terms and conditions set forth herein, subject to earlier termination in
accordance with Section 5. The existing Letter Agreement shall terminate on June
30, 2006.
SECTION 2. TERM OF EMPLOYMENT. The "Term of Employment" of
Executive by the Company under this Agreement is the period commencing on the
June 1, 2006 (the "Effective Date") and ending on the earlier to occur of (i)
July 1, 2008 or (ii) the first day of the month next following Executive's
attainment of age 65 ("Normal Retirement Date"); provided, however, that
commencing on July 1, 2007, and on each annual anniversary of such date (such
date and each annual anniversary thereof is hereinafter referred to as the
"Renewal Date"), the Term of Employment shall be automatically extended an
additional year so as to terminate on the earlier of (i) two (2) years from such
Renewal Date or (ii) the first day of the month next following Executive's
Normal Retirement Date, unless, at least 60 days prior to the Renewal Date, the
Company or Executive shall give notice that the Term of Employment shall not be
so extended in which event this Agreement shall continue for the remainder of
its then current term and terminate as provided herein.
Exhibit No. 10.1 - 1
SECTION 3. POSITION AND DUTIES.
(a) Position. During the Term of Employment, the Company shall
employ Executive as, and Executive shall serve as, the President and Chief
Executive Officer of the Company, subject to the supervising powers of the Board
of Directors of the Company (the "Board").
(b) Powers and Duties. Executive shall have those powers and
duties consistent with the position of President and Chief Executive Officer in
a company the size and nature of the Company, which powers shall in all cases
include, without limitation, the power of supervision and control over, and
responsibility for, the general management and operations of the Company
(including the hiring and firing of employees and the appointment and
termination of senior officers other than executive officers), development and
implementation of a comprehensive strategic business plan, supervision of the
day-to-day executive management process, and acting as spokesperson for the
Company. All executive officers and other officers with direct operational
responsibilities shall report directly to Executive unless Executive in his sole
discretion delegates such reporting responsibilities, in whole or in part, to
another executive. Executive agrees to devote substantially all his working time
and attention to the business of the Company. Executive shall not, without the
prior consent of the Board, be directly or indirectly engaged in any other
trade, business or occupation for compensation requiring his personal services
during the Term of Employment. Nothing in this Agreement shall preclude
Executive from (i) engaging in charitable and community activities or from
managing his personal investments or (ii) serving as a member of the board of
directors of an unaffiliated company not in competition with the Company,
subject, however, with respect to each such board membership, to approval by the
Company's Board (not to be unreasonably withheld). During the Term of
Employment, Executive shall be nominated for re-election as a member of the
Board of Directors.
SECTION 4. COMPENSATION AND RELATED MATTERS.
(a) Base Salary. During the Term of Employment commencing with
June 1, 2006, Executive shall be compensated at an annual base salary of no less
than $525,000 (the base salary, at the rate in effect from time to time, is
hereinafter referred to as the "Base Salary"). The Board, or a committee
thereof, shall review and may, if appropriate, at its discretion, increase (but
not decrease without Executive's written consent, except that no such consent
shall be required in the case of a general salary reduction that would affect at
least three of the persons who were named executive officers in the Company's
proxy statement for its most recent annual meeting of shareholders) the annual
Base Salary during the Term of Employment. Base Salary shall be reviewed
annually and be adjusted to reflect (among other factors) Executive's
performance in regard to the corporate goals and objectives established for
Executive by the Board or a committee thereof. The Base Salary shall be payable
in equal semi-monthly installments.
(b) Annual Bonus. In addition to the Base Salary provided for
in Section 4(a), the Company shall provide annual cash bonus awards to Executive
under its Senior Executive Annual Cash Bonus Plan or substantially equivalent
successor plan (the "Annual Bonus Plan") in accordance with such plan and any
financial performance
Exhibit No. 10.1 - 2
targets thereunder (the "Annual Bonus") each fiscal year of the Company during
the Term of Employment. For the Company's fiscal year ending August 31, 2006,
Executive's target incentive opportunity under the Annual Bonus Plan has been
fixed at 60% of Base Salary (the target bonus as a percentage of Base Salary, as
in effect from time to time, is hereinafter referred to as the "Target Bonus
Percentage"). The Target Bonus Percentage shall be reviewed annually for
increase (but not decrease without Executive's consent) by the Board or a
committee thereof.
(c) Additional Compensation. Executive may be awarded
additional compensation, including equity-based incentive awards, such as, stock
options, performance shares and restricted shares, pursuant to the Company's
2004 Stock Incentive Plan As Amended or any future incentive compensation or
long-term compensation program established for the senior executive officers of
the Company (collectively the "Incentive Compensation Programs"), in an
appropriate manner for the position occupied by Executive and consistent with
his performance as evaluated by the Board. Except as otherwise provided herein,
compensation granted under such plans will be subject to the actual provisions
and conditions applicable to such plans.
(d) Expenses. During the Term of Employment, Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses incurred
by Executive in performing services hereunder, including all expenses of travel
and living while away from home on business or at the request of and in the
service of the Company, provided that such expenses are incurred and accounted
for in accordance with the policies and procedures established by the Company.
(e) Other Benefits. The Company shall maintain in full force
and effect, and Executive shall be entitled to continue to participate in, all
of the Company's employee benefit plans and arrangements in effect on the
Effective Date hereof in which Executive participates or plans or arrangements
providing Executive with at least equivalent benefits thereunder (the "Benefit
Plans"). Such plans and arrangements shall, among other things, provide to
Executive personal leave days, sick days and vacation time, short-term and
long-term disability coverage, tax counseling, and family medical coverage.
Executive shall be entitled to participate in, or receive benefits under, any
employee benefit plan or arrangement made available by the Company in the future
to its senior executives, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements. Nothing
paid to Executive under any Benefit Plan shall be deemed to be in lieu of the
Base Salary and Annual Bonus payable to Executive pursuant to Sections 4(a) and
(b). Any payments or benefits payable to Executive hereunder in respect of any
fiscal year during which Executive is employed by the Company for less than the
entire year shall, unless otherwise provided in the applicable plan or
arrangement, be prorated in accordance with the number of days in such fiscal
year during which he is so employed.
(f) Non-Exclusivity. Nothing in this Agreement shall prevent
Executive from being entitled to receive any additional compensation or benefits
as approved by the Company's Board; provided, however, that in no event shall
the Company make any loans to Executive that are in violation of the
Xxxxxxxx-Xxxxx Act of
Exhibit No. 10.1 - 3
2002, as such act may be amended or supplemented from time to time, and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
SECTION 5. TERMINATION.
(a) Termination of Employment Other Than by Executive.
Executive's employment hereunder may be terminated without any breach of this
Agreement only under the following circumstances:
(1) Death. Executive's employment hereunder shall terminate
upon his death.
(2) Disability. If the Company determines in good faith that
the Disability of Executive has occurred (pursuant to the definition of
"Disability" set forth below), it may give to Executive written notice
of its intention to terminate Executive's employment. In such event,
Executive's employment with the Company shall terminate effective on
the 30th day after the date of such notice, provided that, within such
30-day period, Executive shall not have returned to full-time
performance of Executive's duties. For purposes of this Agreement,
"Disability" means disability (either physical or mental) which, at
least one hundred eighty (180) days after its commencement, is
determined by a physician selected by the Company or its insurers and
acceptable to Executive or Executive's legal representative to be total
and permanent (such agreement as to acceptability not to be withheld
unreasonably).
(3) Cause. The Company has the right to terminate Executive's
employment for Cause, and such termination shall not be a breach of
this Agreement by the Company. "Cause" means termination of employment
for one of the following reasons: (i) the willful and continued failure
of Executive to perform substantially Executive's duties with the
Company or one of its Subsidiaries (other than any such failure
resulting from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to Executive by
the Board which specifically identifies the manner in which the Board
believes that Executive has failed to substantially perform his duties
and such failure is not cured within thirty (30) days of such written
notice; (ii) an act or acts of dishonesty taken by Executive and
intended to result in substantial personal enrichment of Executive at
the expense of the Company; (iii) the willful engaging by Executive in
illegal conduct or gross misconduct; or (iv) a clearly established
violation by Executive of the Company's Code of Conduct that is
materially and demonstrably injurious to the Company. Further, for
purposes of this Section 5(a), no act, or failure to act, on
Executive's part shall be deemed "willful" if done, or omitted to be
done, by Executive in good faith and with a reasonable belief that his
action or omission was in the best interest of the Company.
Exhibit No. 10.1 - 4
(b) Termination of Employment by Executive for Good Reason.
Executive may terminate his employment hereunder for Good Reason, provided that
Executive shall have delivered a Notice of Termination within ninety (90) days
after the occurrence of the event of Good Reason giving rise to such
termination. For purposes of this Agreement, "Good Reason" shall not mean a
termination resulting from non-renewal of this Agreement or the occurrence of
any of the events listed in the following subsections of this Section 5(b) if
they occurred in connection with the termination of Executive's employment
because of Disability or for Cause. "Good Reason" shall mean the occurrence of
one or more of the following circumstances, without Executive's express written
consent, that are not remedied by the Company within thirty (30) days of receipt
of Executive's Notice of Termination except that no 30-day period shall apply if
the reason for termination is a Change of Control as provided in Section
5(b)(5):
(1) The assignment to Executive of any duties materially
inconsistent with his position, duties, responsibilities, and status
with the Company, or any material limitation of the powers of Executive
not consistent with the powers of Executive contemplated by Section 3
hereof.
(2) The removal of Executive from, or any failure to appoint
or elect, or re-elect, Executive to the position of President and Chief
Executive Officer of the Company.
(3) The reduction in Executive's Base Salary, except as
permitted under Section 4(a), or Target Bonus Percentage without his
written consent.
(4) The failure of the Company to obtain the assumption of
this Agreement by any successor as provided in Section 12.
(5) The occurrence of a Change of Control of the Company and
Executive gives Notice of Termination within 30 days following the
first annual anniversary date of the occurrence of the Change of
Control and the Date of Termination occurs within such 30-day period.
(6) The failure of the Company to continue in effect any
material Benefit Plan that was in effect on the Effective Date or
provide Executive with substantially equivalent benefits other than a
reduction in benefits that occurs as part of a reduction in benefit
plans or programs affecting similarly situated employees of the
Company.
(7) The continued material breach for a period of 30 days by
the Company of any provision of this Agreement after a demand for
performance is delivered by Executive to the Company which specifically
identifies the manner in which Executive believes the Company has
materially breached this Agreement.
(c) Notice of Termination. Any termination of Executive's
employment by the Company or by Executive shall be communicated by written
Notice
Exhibit No. 10.1 - 5
of Termination to the other party. 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
Executive's employment under the provisions so indicated. In the case of any
Notice of Termination given by the Company to Executive, it shall be accompanied
by a resolution of the Board, certified by the Secretary of the Company, stating
that a resolution approving the giving of the Notice of Termination to Executive
was adopted by the affirmative vote of a majority of the members of the Board.
(d) Date of Termination. "Date of Termination" means the date
Notice of Termination is given by either the Company or Executive as the case
may be or any later date specified therein; provided, however, if Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of Executive or the effective date of
Disability, as the case may be, and if in the case of a termination for Good
Reason, the Date of Termination shall be the date specified in the Notice of
Termination, which date shall not be less than thirty (30) days (other than in
connection with a termination pursuant to Section 5(b)(5)) or more than forty 40
days after the Notice of Termination is given.
(e) Effect of Termination. Except as provided in the
immediately following sentence, this Agreement shall terminate and be of no
further force or effect after the Date of Termination associated with the
earliest to occur of the following: (i) Executive's death; (ii) Executive's
Disability; (iii) the Company's dismissal of Executive for Cause; or (iv)
voluntary termination of employment with Good Reason. The obligations of
Executive set forth in Sections 7 through 10 and the obligations of the Company
set forth in Section 6 shall survive any termination of this Agreement.
(f) Resignation of Offices. Upon the Date of Termination for
any reason (other than an expiration of the Term of Employment), Executive shall
be deemed to have resigned as a director and/or officer of the Company and any
similar positions he held with any Subsidiary of the Company.
SECTION 6. COMPENSATION UPON TERMINATION.
(a) Termination for Cause, Disability or Death or by Executive
Other than for Good Reason. If Executive's employment is terminated for Cause,
Disability, death or by Executive other than for Good Reason, regardless of
whether before or after a Change of Control:
(1) The Company shall pay Executive (i) his Base Salary
through the Date of Termination, (ii) any earned but unpaid bonus for
any prior fiscal year of the Company, (iii) Executive's Prorated Target
Bonus as defined at Section 21, and (iv) all other unpaid amounts, if
any, to which Executive is entitled as of the Date of Termination under
any compensation plan or program of the Company at the time such
payments are due; provided, however, if the termination is for Cause or
by Executive
Exhibit No. 10.1 - 6
other than for Good Reason, then Executive shall not be
entitled to, or paid, the items listed in clauses (ii) and (iii) of
this Section 6(a)(1);
(2) The Company shall reimburse Executive pursuant to the
Company's policy for reasonable business expenses incurred, but not
paid, prior to termination of employment, unless such termination
resulted from a misappropriation of Company funds; and
(3) Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to Executive following
termination to which he is otherwise entitled in accordance with the
terms and provisions of any plans or programs of the Company.
(b) Termination By the Company Other Than for Cause or on
Account of Disability or Death; Termination By Executive For Good Reason.
Executive's employment may be terminated without Cause by the Company or by
Executive for Good Reason provided in such event:
(1) The Company shall pay Executive no later than the
twentieth day following the Date of Termination (i) his Base Salary
through the Date of Termination, (ii) any earned but unpaid bonus for
any prior fiscal year of the Company, (iii) Executive's Prorated Target
Bonus as defined at Section 21, and (iv) all other unpaid amounts, if
any, to which Executive is entitled as of the Date of Termination;
(2) The Company shall pay, commencing on the first day of the
month following the month in which the Date of Termination occurs, to
Executive an amount equal to one-twelfth of his Base Salary plus
one-twelfth of his Target Bonus as defined at Section 21, for the
greater of (i) the number of months remaining in the Term of Employment
or (ii) twelve (12) months; provided, however, if Executive terminates
his employment pursuant to Section 5(b)(5) hereof or if within two (2)
years following a Change of Control (as hereinafter defined),
Executive's employment is terminated without Cause by the Company or
Executive terminates his employment for Good Reason, the Company shall
pay to Executive no later than the twentieth day following the Date of
Termination, in lieu of the foregoing monthly installment payments, an
aggregate amount equal to the product of (x) the sum of (1) Executive's
Base Salary and (2) the average annual bonus paid to Executive by the
Company with respect to the three fiscal years that immediately precede
the fiscal year in which the Date of Termination occurs (or such lesser
number of years that Executive was employed by the Company) and (y) the
number three (3.0), except that the number two (2) shall be substituted
for the number three (3) if termination was by Executive pursuant to
Section 5(b)(5);
Exhibit No. 10.1 - 7
(3) The Company shall maintain in full force and effect, for
the continued benefit of Executive (and his spouse and/or his
dependents, as applicable) for a period of twenty-four (24) months
following the Date of Termination the medical, hospitalization, and
dental programs, in which Executive (and his spouse and/or his
dependents, as applicable) participated immediately prior to the Date
of Termination at the level in effect and upon substantially the same
terms and conditions (including without limitation contributions
required by Executive for such benefits) as existed immediately prior
to the Date of Termination; provided, if Executive (or his spouse) is
eligible for Medicare or a similar type of governmental medical
benefit, such governmental benefit shall be the primary provider before
Company medical benefits are provided. If Executive (or his spouse
and/or his dependents) is prohibited from continued participation in
Company programs providing such benefits due to plan limitations or
governmental laws or regulations, the Company shall arrange to provide
Executive (and his spouse and/or his dependents, as applicable) with
the economic equivalent of such benefits which they otherwise would
have been entitled to receive under such plans and programs ("Continued
Benefits"). If Executive becomes reemployed with another employer and
is eligible to receive medical, hospitalization and dental benefits
under another employer-provided plan, the medical, hospitalization and
dental benefits described herein shall be secondary to those provided
under such other plan during the applicable period;
(4) The Company shall reimburse Executive (no later than the
twentieth day following the Date of Termination) pursuant to the
Company's policy for reasonable business expenses incurred, but not
paid, prior to the Date of Termination;
(5) All options, shares of restricted stock, performance
shares and any other equity based awards shall be and become fully
vested as of the Date of Termination and, notwithstanding any provision
to the contrary in the applicable Award Agreement, any such options may
be exercised and shall not expire until the earlier of (i) the
expiration of the option term as set forth in the Award Agreement or
(ii) the first annual anniversary of the Date of Termination provided
that this Section 6(b)(5) will not extend the term of an option beyond
a date that would result in the application of Section 409A of the
Code;
(6) Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to Executive following
termination to which he is otherwise entitled in accordance with the
terms and provisions of any plans or programs of the Company;
(7) Executive shall not be required to mitigate the amount of
any payment provided for in this Section 6(b) by seeking other
employment or otherwise, nor shall the amount of any payment provided
Exhibit No. 10.1 - 8
for in this Section 6(b) be reduced by any compensation earned by
Executive after the Date of Termination as the result of employment by
another employer or otherwise; and
(8) Notwithstanding anything to the contrary contained in this
Agreement, upon payment to Executive of the amounts provided for in
this Section 6(b) and Section 19, if any, the Company shall have no
further payment obligations to Executive in the event Executive
terminates his employment for Good Reason or the Company terminates
Executive's employment without Cause.
SECTION 7. CONFIDENTIAL INFORMATION. Executive acknowledges
that he has had, and will have, access to certain Confidential Information (as
hereinafter defined) of the Company and its Subsidiaries and Executive agrees
that he will not at any time, directly or indirectly, disclose orally or in
writing or use any Confidential Information, regardless of how it may have been
acquired, unless the disclosure or use of such Confidential Information is
expressly authorized in writing in advance by the Company, is necessary in the
ordinary conduct of Executive's duties under this Agreement or is required by
law. "Confidential Information" means all information pertaining or relating to
the Company's or its Subsidiaries' business, including, but not limited to,
products, pricing, drawings and bills of materials, manufacturing and
application engineering know-how, services, strategies, customers, customer
list, customer account records, financial information, employee compensation,
marketing plans, computer software (including all operating system and system
application software) and other proprietary business information. As used
herein, Confidential Information shall not include any information which (i) is
or becomes generally known to the public other than as a result of the
disclosure or use thereof by Executive in violation of the terms of this
Agreement or (ii) is obtained by Executive from a third party who is lawfully in
possession of such information and is not subject to any obligation to refrain
from disclosing such information. Executive acknowledges and agrees that all of
the Confidential Information is and shall continue to be the exclusive
proprietary property of the Company and its Subsidiaries whether or not prepared
in whole or in part by Executive and whether or not disclosed to or entrusted to
the custody of Executive.
SECTION 8. NON-COMPETITION.
(a) Executive agrees that while employed by the Company and
for the 12-month period immediately after Executive ceases to be employed by the
Company for any reason, Executive shall not, without the prior written consent
of the Company, either directly or indirectly, perform any services (whether
advisory, consulting, employment or otherwise) for, invest in or otherwise
become associated with in any capacity, any person, corporation, partnership or
other entity which engages in a Competitive Business (as defined in Section
8(b)); provided, however, that nothing herein contained shall prevent Executive
(1) from purchasing and holding for investment less than 2% of the shares of any
corporation, the shares of which are regularly traded either on a national
securities exchange or in the over-the-counter market or (2) from providing
services to any corporation, partnership, or other entity if the Competitive
Business represents less than
Exhibit No. 10.1 - 9
15% of the gross revenues of such corporation, partnership, or entity and
Executive's services are not rendered, directly or indirectly, to the division
or subsidiary which is engaged in the Competitive Business.
(b) For purposes of this Agreement, "Competitive Business"
means the design, engineering, manufacture, marketing, distribution, sale, or
servicing in the Prohibited Territory (as defined below) of (1) processing or
packaging equipment used in the pharmaceutical industry, (ii) wellhead,
drilling, recovery and transmission equipment used in the oil and gas industry,
or (iii) progressing cavity pumps, industrial mixers and agitators, or
glass-lined reactor and storage vessels used in any industry. "Prohibited
Territory" means the countries in which the Company or one of its Subsidiaries
had manufacturing, distribution facilities, or sales offices at any time that
Executive was employed by the Company. In addition, all records, files,
drawings, documents, models, equipment, and the like relating to the Company's
business or its Subsidiaries', which Executive has control over may not be
removed from the Company's premises without its written consent, unless removal
is in the furtherance of the Company's business or is in connection with
Executive's carrying out his duties under this Agreement and, if so removed,
shall be returned to the Company promptly after termination of Executive's
employment under this Agreement.
SECTION 9. NON-SOLICITATION OR HIRE. Executive agrees that
while employed by the Company and for the 12-month period immediately after
Executive ceases to be employed by the Company for any reason, Executive shall
not, without the prior written consent of the Company, either directly or
indirectly, solicit or attempt to solicit or induce, directly or indirectly, (i)
any person or entity who is or was a customer of the Company or its Subsidiaries
while Executive was employed by the Company for the purpose of marketing,
selling or providing to any such person or entity any services or products that
are of the same general type as those offered by or available from the Company
or its Subsidiaries or (ii) any person who was an employee of the Company or any
of its Subsidiaries on the Date of Termination to terminate such employee's
employment relationship with the Company or its Subsidiaries in order to enter
into a similar relationship with Executive, any business which then employs
Executive or to which Executive provides any services, or any Competitive
Business.
Exhibit No. 10.1 - 10
SECTION 10. EQUITABLE RELIEF; JUDICIAL MODIFICATION.
(a) Executive acknowledges that compliance with the covenants
and provisions in Sections 7 through 9 is necessary to protect the Company and
that a breach of these covenants will result in irreparable and continuing
damage for which there will be no adequate remedy at law. Accordingly, Executive
agrees that in the event of any breach of said covenants or provisions, the
Company and its successors and assigns shall be entitled to injunctive relief
(including specific performance) and to such other and further equitable relief
(in addition to money damages) as is proper in the circumstances. Executive
further agrees to waive the securing or purchasing of any bond in connection
with any such remedy.
(b) If any court determines that any of the covenants in
Sections 7 through 9, or any part of any of them, is invalid or unenforceable,
the remainder of such covenants and parts thereof shall not thereby be affected
and shall be given full effect, without regard to the invalid portion. If any
court determines that any of such covenants, or any part thereof, is invalid or
unenforceable because of the geographic or temporal scope of such provision,
such court shall reduce such scope to the minimum extent necessary to make such
covenants valid and enforceable.
SECTION 11. INDEMNIFICATION; AND INSURANCE.
(a) Indemnification. The Company represents and warrants that
it will continue to extend to Executive during the Term of Employment and for a
period of four years after the Date of Termination the same rights to
indemnification in his capacity as a director or officer of the Company that he
had on the Effective Date of this Agreement.
(b) Insurance. The Company represents and warrants that during
the Term of Employment and for a period of four years after the Date of
Termination: (i) Executive is and shall continue to be covered and insured up to
the maximum limits provided by all insurance which the Company maintains to
indemnify its directors and officers (and to indemnify the Company for any
obligations which it incurs as a result of its undertaking to indemnify its
officers and directors) and (ii) the Company will use reasonably commercial
efforts to maintain such insurance, in not less than its present limits, in
effect.
Exhibit No. 10.1 - 11
SECTION 12. AGREEMENT BINDING ON SUCCESSORS.
(a) Company's Successors. No rights or obligations of the
Company under this Agreement may be assigned or transferred except that the
Company shall require any successor (whether direct or indirect, by purchase,
merger, reorganization, sale, transfer of stock, 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
succession had taken place. As used in this Agreement, "Company" means the
Company as hereinbefore defined and any successor to its business and/or assets
(by merger, purchase or otherwise as provided in this Section 12(a)) which
executes and delivers the agreement provided for in this Section 12(a) or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) Executive's Successors. No rights or obligations of
Executive under this Agreement may be assigned or transferred by Executive other
than his rights to payments or benefits under this Agreement, which may be
transferred only by designation of a beneficiary in accordance with this Section
12(b) or by will or the laws of descent and distribution. Upon Executive's
death, this Agreement and all rights of Executive under this Agreement shall
inure to the benefit of and be enforceable by Executive's beneficiary or
beneficiaries, personal or legal representatives, or estate, to the extent any
such person succeeds to Executive's interests under this Agreement. Executive
shall be entitled to select and change a beneficiary or beneficiaries to receive
any benefit or compensation payable under this Agreement following Executive's
death by giving the Company written notice thereof in a form acceptable to the
Company. In the event of Executive's death or a judicial determination of his
incompetence, reference in this Agreement to Executive shall be deemed, where
appropriate, to refer to his beneficiary(ies), estate or other legal
representative(s). If Executive should die following his Date of Termination
while any amounts would still be payable to him under this Agreement if he had
continued to live, all such amounts unless otherwise provided shall be paid in
accordance with the terms of this Agreement to such person or persons so
appointed in writing by Executive, or otherwise to his legal representatives or
estate.
SECTION 13. WAIVER. Except as otherwise provided herein, the
failure of either party to insist, in any one or more instances, upon the
performance of any of the terms, covenants or conditions of this Agreement by
the other party hereto, shall not be construed as a waiver or as a
relinquishment of any right granted hereunder to the party failing to insist on
such performance, or as a waiver of the future performance of any such term,
covenant or condition, but the obligations hereunder of both parties hereto
shall remain unimpaired and shall continue in full force and effect.
SECTION 14. NOTICES. For the purposes of this Agreement,
notices, demands and all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
either personally or by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
Exhibit No. 10.1 - 12
If to Executive:
At his last known address evidenced on the
Company's payroll records.
If to the Company:
Xxxxxxx & Xxxxx, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Chairman of the Board; and
Corporate Secretary
or to such other address as any party may have furnished to the others in
writing in accordance with this Agreement, except that notices of change of
address shall be effective only upon receipt.
SECTION 15. ENTIRE AGREEMENT; AMENDMENT. This Agreement
contains the entire agreement between the parties hereto with respect to the
matters contemplated by this Agreement and supersedes all prior negotiations,
representations, warranties, commitments, offers, contracts and writings. No
modification or amendment of any provision of this Agreement shall be effective
unless made in writing and duly signed by the party to be bound thereby.
SECTION 16. SEVERABILITY. If any of the provisions of this
Agreement shall be held to be invalid, such holding shall not in any way
whatsoever affect the validity of the remainder of this Agreement.
SECTION 17. ARBITRATION; LEGAL FEES AND EXPENSES. The parties
agree that Executive's employment and this Agreement relate to interstate
commerce, and that any disputes, claims or controversies between Executive and
the Company which may arise out of or relate to Executive's employment
relationship or this Agreement shall be settled by arbitration. This agreement
to arbitrate shall survive the termination of this Agreement. Any arbitration
shall be in accordance with the Rules of the American Arbitration Association
and undertaken pursuant to the Federal Arbitration Act. Arbitration shall be
held in Dayton, Ohio unless the parties mutually agree on another location. The
decision of the arbitrator(s) shall be enforceable in any court of competent
jurisdiction. The parties agree that punitive, liquidated or indirect damages
shall not be awarded by the arbitrator(s) unless such damages would have been
awarded by a court of competent jurisdiction. Nothing in this Agreement to
arbitrate, however, shall preclude the Company from obtaining injunctive relief
from a court of competent jurisdiction prohibiting any on-going breaches by
Executive of this Agreement including, without limitation, violations of
Sections 7 through 9. If any contest or dispute arises between the Company and
Executive regarding any provision of this Agreement, the Company shall reimburse
Executive for all legal fees and expenses reasonably incurred by Executive in
connection with such contest or dispute, except that the Company shall not be
obligated to pay any legal fees or expenses incurred by Executive in any contest
in which the trier
Exhibit No. 10.1 - 13
of fact determines that the Executive's position was frivolous or maintained in
bad faith. Such reimbursement shall be made as soon as practicable following the
final, non-appealable resolution of such contest or dispute to the extent the
Company receives reasonable written evidence of such fees and expenses.
SECTION 18. GOVERNING LAW. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Ohio without regard to its conflicts of law principles.
SECTION 19. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(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 Executive shall be entitled to
receive an additional payment (the "Gross-Up Payment") in an amount such that,
after payment by 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, Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 19(c), all
determinations required to be made under this Section 19, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by such certified public accounting firm as may be designated by the Company
(the "Accounting Firm"), which shall provide detailed supporting calculations
both to the Company and Executive within 15 business days of the receipt of
notice from Executive that there has been a Payment, or such earlier time as is
requested by the Company. All fees and expenses of the Accounting Firm shall be
borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 19, shall be paid by the Company to Executive within five days of
the receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and Executive. As a result of
the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments that will not have been made by the Company that should have
been made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 19(c) and Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of Executive.
(c) Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. Executive shall
not pay such claim prior to the expiration of the 30-
Exhibit No. 10.1 - 14
day period following the date on which he gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim, Executive
shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company 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
Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 19(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and xxx for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of a Gross-Up Payment
or payment by the Company of an amount on Executive's behalf pursuant to Section
19(c), Executive becomes entitled to receive any refund with respect to the
Excise Tax to which
Exhibit No. 10.1 - 15
such Gross-Up Payment relates or with respect to such claim, Executive shall
(subject to the Company's complying with the requirements of Section 19(c), if
applicable) promptly pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable thereto). If, after
payment by the Company of an amount on Executive's behalf pursuant to Section
19(c), a determination is made that Executive shall not be entitled to any
refund with respect to such claim and the Company does not notify 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 19,
the Company may, in its sole discretion, withhold and pay over to the Internal
Revenue Service or any other applicable taxing authority, for the benefit of
Executive, all or any portion of any Gross-Up Payment, and Executive hereby
consents to such withholding.
(f) The following terms shall have the following meanings for
purposes of this Section 19.
(i) "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.
(ii) "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.
(iii) 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 Executive, whether paid or payable
pursuant to this Agreement or otherwise.
(iv) The "Safe Harbor Amount" means 2.99 times Executive's
"base amount," within the meaning of Section 280G(b)(3) of the Code.
(v) "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.
SECTION 20. SECTION 409A LIMITATIONS. To the extent
applicable, it is intended that this Agreement comply with the provisions of
Section 409A of the Code, so as to prevent the inclusion in gross income of any
amounts payable or benefits provided hereunder in a taxable year that is prior
to the taxable year or years in which such amounts or benefits would otherwise
actually be distributed, provided, or otherwise made available to Executive.
This
Exhibit No. 10.1 - 16
Agreement shall be construed, administered, and governed in a manner consistent
with this intent. Any provision that would cause any amount payable or benefit
provided under this Agreement to be includible in the gross income of Executive
under Section 409A(a)(1) of the Code shall have no force and effect. In
particular, to the extent Executive becomes entitled to receive a payment or a
benefit upon an event that does not constitute a permitted distribution event
under Section 409A(a)(2) of the Code, then notwithstanding anything to the
contrary in this Agreement, such payment or benefit shall be made or provided to
Executive on Executive's "separation from service" with the Company (within the
meaning of Section 409A of the Code); provided, however, that if Executive is a
"specified employee" (within the meaning of Section 409A of the Code), (a) any
amount payable pursuant to Sections 6(b)(3), 6(c)(2), 6(c)(3) and Section 17 of
this Agreement shall, to the extent necessary to implement this Section 20,
either (i) be revised so that the aggregate amount payable for the first six
months following Executive's separation from service shall be paid in the month
of separation from service and any balance shall be paid monthly commencing on
the first day of the seventh month following separation from service and on the
first day of each month thereafter until paid in full or (ii) if the approach
under clause (a)(i) of this Section 20 is not permitted by Section 409A of the
Code, then such payments shall commence on the date which is six months after
the date of Executive's separation from service with the Company and the amount
payable on such day shall be the aggregate of six months of the total amount
payable and any balance shall be payable on the first day of each month
thereafter until paid in full and (b) to the extent necessary to implement this
Section 20, any other amount payable pursuant to this Agreement shall be paid on
the date which is six months after the date of Executive's separation of service
with the Company. Any reference in this Plan to Section 409A of the Code shall
also include any proposed, temporary, or final regulations, or any other
guidance, promulgated with respect to such Section by the U.S. Department of the
Treasury or the Internal Revenue Service.
SECTION 21. CERTAIN DEFINITIONS.
(a) "Affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, a specified person.
(b) "Change of Control" means for the purpose of this
Agreement and shall be deemed to have occurred the date on which one of the
following events occurs with respect to the Company (for the purposes of this
Section 21, the term "Company" means only Xxxxxxx & Xxxxx, Inc.):
(1) The Company is provided a copy of a Schedule 13D, filed
pursuant to Section 13(d) of the Securities Exchange Act of 1934
indicating that a group or person, as defined in Rule 13d-3 under said
Act, has become the beneficial owner of 25% or more of the outstanding
Voting Shares of the Company or the date upon which the Company first
learns that a person or group has become the beneficial owner of 25% or
more of the outstanding Voting Shares of the Company if a Schedule 13D
is not filed provided, in each case, such group or person is not
controlled,
Exhibit No. 10.1 - 17
directly or indirectly, by persons or entities that were,
at any time this Agreement is in effect, partners, shareholders or
members of M.H.M. & Co. Ltd., an Ohio limited partnership, the Xxxxxxx
X. Xxxxx Co., Inc., or Xxxxxx Investments, Inc. or Affiliates of any of
them;
(2) A change in the composition of the Board such that
individuals who were members of the Board on the date two years prior
to such change (or who were subsequently elected to fill a vacancy in
the Board, or were subsequently nominated for election by the Company's
shareholders, by the affirmative vote of at least two-thirds of the
directors then still in office who were directors at the beginning of
such two year period) no longer constitute a majority of the Board;
(3) The consummation of a reorganization, merger, statutory
share exchange or consolidation involving the Company or any of its
Subsidiaries (each a "Business Combination") unless, following such
Business Combination, all or substantially all of the individuals and
entities that were the beneficial owners of the Voting Shares of the
Company immediately prior to the Business Combination beneficially own,
directly or indirectly, more than 60% of the then outstanding Voting
Shares of the corporation resulting from such Business Combination in
substantially the same proportions as their ownership immediately prior
to such Business Combination of the outstanding Voting Shares of the
Company; or
(4) Shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all, or substantially all, of the Company's assets.
(c) "Prorated Target Bonus" means the Target Bonus prorated
for the period beginning on the first day of the fiscal year in which occurs the
Date of Termination through the Date of Termination
(d) "Subsidiary" means an entity (whether or not a
corporation) of which 50% or more of the voting stock in the case of a
corporation, or other equity interest having voting power in the case of an
entity that is not a corporation, is owned or controlled, directly or
indirectly, by the Company.
(e) "Target Bonus" means an amount equal to the target bonus
Executive would have received for the fiscal year that ends on or immediately
after the Date of Termination, assuming the Company achieved the target levels
for which a bonus is paid under the Company's annual bonus plan then in effect.
(f) "Voting Shares" means any securities of a corporation that
vote generally in the election of directors of that corporation.
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Exhibit No. 10.1 - 18
IN WITNESS WHEREOF, the parties have signed this Agreement as
of the day and year first above written.
"Executive" "Company"
XXXXXXX & XXXXX, INC.
/s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxx
---------------------------- ------------------------------------
Xxxxx X. Xxxxxxx Xxxxxx X. Xxxxxx
Chairman of the Board; and
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx
Corporate Secretary
Exhibit No. 10.1 - 19
