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Exhibit (10)(zz)
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT ("Agreement") made and entered into as of the 1st
day of May, 1999, by and between THE XXXXXXXX AND XXXXXXXX COMPANY, a
corporation existing under the laws of the State of Ohio ("Xxxxxxxx"), and XXXXX
X. XXXXXXXXXX ("Employee").
W I T N E S S E T H:
WHEREAS, Xxxxxxxx and Employee desire to enter into this Agreement on
the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing premises and of the
mutual promises set forth below, Xxxxxxxx and Employee hereby agree as follows:
1. DEFINITIONS.
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For purposes of this Agreement, the terms set forth below shall have
the following meanings:
(a) "Annual Compensation Value" shall mean Employee's then-current
Base Compensation plus an amount equal to the average of all Bonuses
(excluding any compensation attributable to stock options of any type granted
by Xxxxxxxx) earned by Employee during the three (3) calendar years preceding
the date upon which the valuation is made.
(b) "Base Compensation" shall mean the then-current annual base salary
(exclusive of Bonuses) of Employee.
(c) "Bonuses" shall mean bonus payments earned by Employee under
Xxxxxxxx' Incentive Compensation Plans and under any future bonus or incentive
compensation plans of Xxxxxxxx for its executive officers. Currently Xxxxxxxx
has in effect the following Incentive Compensation Plans: the Annual Bonus Plan,
the Intermediate Bonus Plan and the Personal Performance Plan, true and
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correct copies of which have been delivered to Employee.
(d) "Change in Control" shall mean the occurrence of any of the
following:
(i) Any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than Xxxxxxx X. Xxxxx, Xx., his children or his grandchildren, Xxxxxxxx,
any trustee or other fiduciary holding securities under an employee benefit plan
of Xxxxxxxx, or any company owned, directly or indirectly, by the shareholders
of Xxxxxxxx in substantially the same proportions as their ownership of stock of
Xxxxxxxx), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of Xxxxxxxx
representing fifty percent (50%) or more of the combined voting power of
Xxxxxxxx' then outstanding securities;
(ii) during any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with Xxxxxxxx to effect a transaction described in clause (i), (iii) or (iv) of
this Section whose election by the Board or nomination for election by Xxxxxxxx'
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election was previously so approved) cease for any reason to
constitute at least a majority thereof;
(iii) the shareholders of Xxxxxxxx approve a merger or
consolidation of Xxxxxxxx with any other company, other than (1) a merger or
consolidation which would result in the voting securities of Xxxxxxxx
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than
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fifty percent (50%) of the combined voting power of the voting security of
Xxxxxxxx or such surviving entity outstanding immediately after such merger or
consolidation or (2) a merger or consolidation effected to implement a
recapitalization of Xxxxxxxx (or similar transaction) in which no "person" (as
hereinabove defined) acquires more than fifty percent (50%) of the combined
voting power of Xxxxxxxx' then outstanding securities; or
(iv) the shareholders of Xxxxxxxx approve a plan of
liquidation, dissolution or winding up of Xxxxxxxx or an agreement for the sale
or disposition by Xxxxxxxx of all or substantially all of Xxxxxxxx' assets.
(e) "Discharge For Cause" shall be construed to have occurred whenever
occasioned by reason of felonious acts on the part of Employee, actions by
Employee involving serious moral turpitude or his misconduct in such manner as
to bring substantial and material discredit upon Xxxxxxxx, following the giving
of thirty (30) days' written notice to Employee specifying the respect in which
Xxxxxxxx claims Employee has violated this provision and the failure, inability
or unwillingness of Employee to remedy the situation to the satisfaction of
Xxxxxxxx within said thirty-day period. In establishing whether a Discharge For
Cause shall have occurred, the standard for judgment shall be the level of
conduct by Employee and by other comparably situated executive officers prior to
the alleged improper activity of Employee for which the Discharge For Cause has
been made.
(f) "Escrow Agreement" shall mean the agreement dated May 1, 1999
entered into between Xxxxxxxx and Bank One, NA, a copy of which is attached
hereto and made a part hereof as Exhibit A.
(g) "Escrow Agent" shall mean Bank One, NA.
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(h) "Escrow Amount" shall mean the amounts placed in escrow by Xxxxxxxx
pursuant to subsection (e)(iii) of Section 7 of this Agreement.
(i) "Escrow Funding Event" shall mean the occurrence of any of the
following events:
(i) Class A Common Shares of Xxxxxxxx have been acquired other
than directly from Xxxxxxxx in exchange for cash or property by any person
(other than Xxxxxxx X. Xxxxx, Xx., his children or his grandchildren, Xxxxxxxx,
any trustee or other fiduciary holding securities under an employee benefit plan
of Xxxxxxxx, or any company owned directly or indirectly by the shareholders of
Xxxxxxxx in substantially the same proportions as their ownership of the stock
of Xxxxxxxx) who either thereby becomes the owner of more than nine and one half
percent (9.5%) of Xxxxxxxx' outstanding Class A Common Shares, or having
directly or indirectly become the owner of more than five percent (5%) of
Xxxxxxxx' Class A Common Shares either alone or in conjunction with another
person has expressed an intent to continue acquiring Xxxxxxxx' outstanding Class
A Common Shares so as to become thereby the owner of more than nine and one-half
percent (9.5%) of such stock either directly or indirectly;
(ii) Any person (other than Xxxxxxx X. Xxxxx, Xx., his
children or grandchildren, Xxxxxxxx, any trustee or other fiduciary holding
securities under an employee benefit plan of Xxxxxxxx, or any company owned
directly or indirectly by the shareholders of Xxxxxxxx in substantially the same
proportions as their ownership of stock of Xxxxxxxx) has made a tender offer
for, or a request for invitations for tenders of, Class A Common Shares of
Xxxxxxxx.
(iii) Any person forwards or causes to be forwarded to
shareholders of Xxxxxxxx proxy statement(s) in any period of twenty-four (24)
consecutive months, soliciting proxies, to elect to the Board of Xxxxxxxx two
(2) or more candidates who were not nominated as candidates in proxy
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statements forwarded to shareholders during such period by the Board; or
(iv) The Board adopts a resolution to the effect that, for
purposes of this Agreement, an Escrow Funding Event has occurred.
(j) "Final Annual Compensation" shall mean Employee's Base Compensation
at the time of termination of employment plus an amount equal to the average of
all Bonuses (excluding any compensation attributable to stock options of any
type granted by Xxxxxxxx) earned by Employee during the three (3) calendar years
preceding his termination of employment.
(k) "Final Average Annual Compensation" shall mean the average of
Employee's Base Compensation and Bonuses (excluding any compensation
attributable to stock options of any type granted by Xxxxxxxx) as determined for
the five (5) consecutive calendar years of the last ten (10) calendar years
preceding and including the calendar year in which Employee's employment
terminates which yields the highest sum.
(l) "Pension Plan" shall mean the existing Xxxxxxxx and Xxxxxxxx
Company Non-Union Pension Plan, as the same may be amended from time to time.
(m) "Retirement Benefits" shall mean payments to Employee based upon
his lifetime in an annual amount equal to a designated percentage of Employee's
Final Average Annual Compensation or, in the case of Section 7(d) below, Final
Annual Compensation, which shall be comprised of the sum of (i) Employee's
primary Social Security retirement benefits when he is entitled to receive such
benefit (age sixty-two (62)) [until that time an amount equal to the primary
Social Security retirement benefit shall be paid to Employee from Xxxxxxxx'
Supplemental Plan], (ii) Employee's pension benefits determined as a life
annuity (without regard to actual payment form) under the Pension Plan and
deferred compensation payments under the Non-Qualified Deferred
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Compensation and Disability Benefit Agreement dated May 1, 1999 between Employee
and Xxxxxxxx, or such other non-contributory deferred compensation agreement(s)
then existing between Xxxxxxxx and Employee, and (iii) such amount of
supplemental retirement benefits under the Supplemental Plan as shall be
necessary to achieve the designated percentage of Employee's Final Average
Annual Compensation or, in the case of Section 7(d) below, Final Annual
Compensation. In addition to said annual amount, Retirement Benefits shall
include a continuation of coverage for the remainder of Employee's life under
Xxxxxxxx-sponsored medical benefits and life insurance programs, but only to the
extent applicable to participants in Xxxxxxxx' Qualified Retiree Medical Plans.
For purposes of determining the amount of supplemental retirement benefits to be
made by Xxxxxxxx pursuant to the Supplemental Plan, the method of payment of
retirement benefits to Employee pursuant to the Pension Plan shall determine the
amount and method of payment of the supplemental retirement payments pursuant to
the Supplemental Plan. These supplemental retirement payments by Xxxxxxxx
pursuant to the Supplemental Plan shall continue so long as pension benefits are
payable under the Pension Plan and shall be in addition to the pension benefit
payments under the Pension Plan.
(n) "Supplemental Plan" shall mean Xxxxxxxx' existing Supplemental
Retirement Plan, as the same may be amended from time to time.
2. TERMS AND DUTIES.
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(a) The term of this Agreement shall continue from the date hereof and
end on May 1, 2004. Employee shall be employed by Xxxxxxxx as President and
Chief Operating Officer or such other reasonably equivalent position designated
by the Board, consistent with the provisions of this Agreement. In addition,
Employee agrees to perform such other duties as may be specifically
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designated for him from time to time by the Board, consistent with the
provisions of this Agreement. Xxxxxxxx shall recommend to the Board that
Employee be appointed as a Director. Subject to Employee's willingness to so
extend his employment, Xxxxxxxx may extend the term of this Agreement for
additional renewal periods of not less than one (1) year each by giving written
notice thereof not less than twelve (12) months prior to May 1, 2004, initially
and not less than twelve (12) months prior to each succeeding renewal term
termination date thereafter.
(b) At all times Employee will, to the best of his ability, energy and
skill, faithfully perform all of the duties that may be required of him from
time to time by the Board and diligently devote his entire working time,
attention and efforts to the business affairs and best interests of Xxxxxxxx,
except for absences for sickness and vacations. If the Board determines that any
outside activity engaged in by him is detrimental to the best interests of
Xxxxxxxx, he will discontinue such outside activity within thirty (30) days
after written notice from the Board.
(c) For a period of two (2) years from and after Employee's employment
with Xxxxxxxx shall have terminated (provided, however, in the event of
termination of Employee's employment due to Xxxxxxxx' decision not to renew this
Agreement the period shall be one (1) year if the renewal period ending is also
one (1) year) and after he shall have ceased receiving retirement (provided that
such retirement benefits have then begun to be paid during the two (2) year (or
one (1) year) period mentioned in this Section 2(c)), severance or disability
benefits under this Agreement, whichever shall last occur, and during the period
of his employment by Xxxxxxxx, he will not, directly or indirectly, further the
affairs of any other corporation, partnership, or any business enterprise by
employment of any kind, investment therein (except as otherwise permitted under
Section 8(d) below), counseling or otherwise, if the same is in competition with
Xxxxxxxx, without the written
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consent of the Board. This provision, however, shall not be construed to prevent
him from pursuing personal investments in any business or enterprise which is
not in competition with Xxxxxxxx and which do not interfere with his employment
and the performance of his duties to Xxxxxxxx hereunder.
3. COMPENSATION AND FRINGE BENEFITS.
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(a) The Base Compensation of Employee during the term of this Agreement
shall be $500,000, which may be increased from time to time by the Board or, in
the case of any proposed decrease, such other amount as mutually may be agreed
upon by Employee and Xxxxxxxx; provided, however, that such Base Compensation
may not be reduced below said rate of $500,000 without Employee's consent,
unless necessitated by general business conditions adversely affecting Xxxxxxxx'
operations; but, in the event of a reduction, his Base Compensation shall be
fair and reasonable, and any disagreement concerning the same shall be resolved
by arbitration in the manner provided in Section 9 below. Employee's Base
Compensation shall be reviewed at least annually to determine whether in view of
Xxxxxxxx' performance during the year any increase is warranted. Responsibility
for this determination rests within the sole discretion of the Board, and this
provision shall not be construed as requiring any such increase for any given
year.
(b) Employee shall participate in the non-qualified deferred plan
referred to in Section 1(m) above and the bonus plan arrangements under the
Incentive Compensation Plans (or their equivalent) for executive officers of
Xxxxxxxx and shall be entitled to such awards under any future bonus, incentive,
or similar compensation plans of Xxxxxxxx, as shall, in the determination of the
Board, be appropriate and consistent with the purposes of such plans and with
the awards granted to other executive officers of Xxxxxxxx.
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(c) Employee shall be eligible to participate in the Stock Option Plan
-1995 of Xxxxxxxx and shall be entitled to the grant of such options to purchase
shares of Class A Common Stock ("Common Stock") of Xxxxxxxx under any other
future stock option plans for employees and to participate in such other
executive compensation incentive plans awarding stock as shall, in the
determination of the Board, be appropriate and consistent with the purposes of
the plans and with the grants of such options to the executive officers of
Xxxxxxxx. Effective the date hereof, Xxxxxxxx hereby awards Employee
non-qualified stock options covering 300,000 shares of Common Stock on the terms
and conditions of the Stock Option Agreements entered into between the parties
simultaneously herewith and attached hereto as Exhibits B and C and made a part
hereof.
(d) Xxxxxxxx hereby agrees to grant to Employee additional
non-qualified stock options covering 200,000 shares of Common Stock at the
option price of one cent ($.01) per share. The Stock Option Agreement to be used
for this option is attached hereto as Exhibit D and made a part hereof.
(e) In addition to the specific benefits provided for Employee under
the terms of this Agreement, Xxxxxxxx shall provide him with other fringe
benefits (including bonuses, vacations, health and disability insurance, pension
plan participation and others) at least equivalent to those of the other
executive officers of Xxxxxxxx and as set forth on Exhibit E attached hereto and
made a part hereof. Notwithstanding anything contained herein or in any
Incentive Compensation Plans in which Employee participates, Xxxxxxxx shall pay
to Employee a bonus of at least $350,000 for the period ended September 30,
1999, payable not later than November 30, 1999; provided, however, Employee
shall be continuously employed by Xxxxxxxx from the date hereof at least through
September 30, 1999.
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4. EXPENSES
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Employee shall be reimbursed for his reasonable business-related
expenses incurred for the benefit of Xxxxxxxx in accordance with Xxxxxxxx'
policies governing such reimbursement in effect from time to time. Such expenses
shall include, but shall not be limited to, travel, lodging away from home,
entertainment, and meals. With respect to any expenses which are reimbursed by
Xxxxxxxx to Employee, Employee shall account to Xxxxxxxx in sufficient detail to
entitle Xxxxxxxx to a federal income tax deduction for such reimbursed item if
such item is deductible.
5. RETIREMENT AND EARLY RETIREMENT BENEFITS.
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(a) If Employee continues his employment with Xxxxxxxx until he attains
age sixty-two (62), he shall be entitled to receive at the time of his
retirement, Retirement Benefits at a level equal to sixty percent (60%) of his
Final Average Annual Compensation. If Employee continues his employment with
Xxxxxxxx beyond age sixty-two (62), the level of his retirement benefits as a
percentage of his Final Average Annual Compensation shall be increased by one
percent (1%) for each additional twelve (12) month period over age sixty-two
(62) with a maximum Retirement Benefit of sixty-three percent (63%) of Final
Average Annual Compensation.
(b) For each year prior to age sixty-two (62) Employee is employed by
Xxxxxxxx, his Retirement Benefits as a percentage of his Final Average Annual
Compensation shall accrue at the rate of four percent (4%) per year, payable
beginning at age sixty-two (62). As an example, if Employee terminates
employment due to death, disability, resignation or otherwise after ten (10)
years of employment with Xxxxxxxx, he shall be entitled to a Retirement Benefit
equal to forty percent (40%) of his Final Average Annual Compensation payable
beginning at age sixty-two (62). For purposes of this paragraph, a "year of
employment" shall mean each twelve (12) month period
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or part thereof from the date hereof in which Employee works at least 1,000
hours.
(c) In the event Employee remains continuously employed with Xxxxxxxx
at least until May 1, 2009, he shall be entitled to an early retirement benefit
payable commencing on the date of termination of employment which shall be
actuarially reduced to reflect the fact that payments shall commence prior to
age sixty-two (62).
(d) To the extent Employee receives any similar benefits under the
Pension Plan, Supplemental Plan or other Xxxxxxxx benefit plan for any of its
employees, such benefits shall be included in calculating the amount to which
Employee shall be entitled under Sections 5(a) and 5(b) above; provided,
however, that in no event shall the benefits described in Sections 5(a) and 5(b)
above be reduced by the provisions of this Section 5(d).
6. DISABILITY AND DEATH BENEFITS.
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(a) If Employee becomes disabled prior to his retirement he shall be
entitled to an annual disability benefit equal to fifty percent (50%) of his
Annual Compensation Value; provided, however, that such annual benefit under
this Agreement shall not exceed $500,000. The disability benefit shall be
provided through the then existing Xxxxxxxx sponsored disability plan with
Xxxxxxxx making any additional contributions as may be necessary to pay Employee
the required amount, and said benefit shall also be offset by any Retirement
Benefits which Employee may then be receiving. The disability benefit, including
any Xxxxxxxx required contribution, shall be paid so long as and on the same
terms and conditions as the payments being made under the Xxxxxxxx sponsored
disability plan. See Section 7(c) below.
(b) In the event of Employee's death while still employed by Xxxxxxxx
pursuant to this Agreement, Employee shall be entitled to Retirement Benefits
calculated as if he had elected
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retirement as of the day before his actual death. Xxxxxxxx shall also pay to
such beneficiary or beneficiaries as he shall have designated by written notice
delivered to Xxxxxxxx prior to his death, or failing such written notice, to his
estate, an amount equal to the Base Compensation plus the Bonuses, if any, which
Employee would have received or which would have been accrued for his benefit
during the period of six (6) months immediately following his death if he had
lived and had been employed by Xxxxxxxx during that period. Such payment shall
be made in one lump sum or in six (6) equal monthly installments as Xxxxxxxx
shall elect and shall be in addition to the proceeds of any insurance policies
carried on Employee's life with respect to which he has the right to designate
beneficiaries. Also, Xxxxxxxx shall pay to Employee's spouse an amount,
periodically as such payments are required to be made by said spouse, to enable
her to continue medical coverage for her and her dependents in the same manner
as immediately prior to Employee's death for a period expiring at the earlier
of: (i) her death; (ii) forty-two (42) months after Employee's death; or (iii)
eligibility for regular Medicare and Medicaid or any successor programs
furnished by the government. Thereafter, Xxxxxxxx shall make available to
Employee's spouse (including her dependents), at her cost, such medical coverage
as shall be available to a person of her then age under the then-existing
Xxxxxxxx-sponsored medical benefits program, but only to the extent coverage is
available under such program.
7. TERMINATION; DISCHARGE.
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(a) TERMINATION OR DISCHARGE WITHOUT CAUSE. Xxxxxxxx reserves the right
to discharge Employee at any time and for any reason; but such discharge, unless
a Discharge For Cause, shall not extinguish the obligation of Xxxxxxxx to
provide Employee (and, in the event of his prior death, his designated
beneficiary or beneficiaries or his estate) with the following severance
benefits:
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(i) If Xxxxxxxx does not renew this Agreement, Employee shall
be entitled to receive for a period expiring one (1) year from May 1, 2004 (or
any renewal termination date thereof if the renewal term then ending is also one
(1) year) payments from Xxxxxxxx in an amount equal to his Annual Compensation
Value, which shall be reduced by seventy percent (70%) of the amount of
compensation received by Employee from any subsequent employment obtained by him
during said payment period.
(ii) If such discharge occurs prior to May 1, 2004 (or
thereafter if the renewal term then ending is greater than one (1) year),
Employee shall be entitled to receive for a period expiring two (2) years from
the date of discharge, payments from Xxxxxxxx in an amount equal to his Annual
Compensation Value, which shall be reduced by seventy percent (70%) of the
amount of compensation received by Employee from any subsequent employment
obtained by him during said payment period.
(iii) Employee shall be entitled, during the period expiring
on the earlier of Employee's securing other employment or two (2) years from the
date of discharge (or such longer period as required by law), to continuing
coverage under the then-existing Xxxxxxxx-sponsored medical benefits program,
which, at the option of Xxxxxxxx, may be provided outside of such program
through the purchase of insurance or otherwise.
(iv) For purposes of determining Employee's benefits under the
Supplemental Plan, Employee shall receive credit toward his Years of Service
under the Supplemental Plan for the time period that he receives or is entitled
to receive payments under subsections (i) or (ii) of this Section 7(a). In
addition, during the time period that he receives or is entitled to receive
payments under said subsections (i) or (ii) of this Section 7(a), Employee's
Base Compensation shall be
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deemed to be increased by the annual economic range adjustment for Xxxxxxxx'
salaried employees announced in October of each year (or, if there is no such
announced economic range adjustment in a given year, by an assumed five (5%)
increase for that year) in order to calculate his highest earnings during five
(5) consecutive years out of the last ten (10) years prior to retirement under
the Supplemental Plan, and his Final Annual Compensation (see Section 7(d)
below) and Final Average Annual Compensation shall be deemed to increase in the
same manner for purposes of determining the amount of his Retirement Benefits
under this Agreement.
(v) Employee shall be reimbursed for up to $20,000 for
out-placement fees if he chooses to seek other employment following his
discharge by Xxxxxxxx. Employee shall not be obligated to seek other employment
in order to mitigate his damages resulting from his discharge.
(vi) In addition to all of the foregoing, Employee shall be
entitled to receive the payments required of Xxxxxxxx under the non-qualified
deferred agreement referred to in Section 1(m) above in accordance with the
terms of such agreement(s).
Employee acknowledges that he shall remain subject to and
bound by the restrictive provisions of Section 8 below.
(b) DISCHARGE FOR CAUSE. If Employee's employment with Xxxxxxxx is
terminated by a Discharge For Cause, regardless of whether such Discharge For
Cause occurs after the occurrence of any of the events set forth in Sections
7(d) or 7(e) below, he shall be entitled to receive only his Base Compensation
up to the date of his discharge and no further payments hereunder shall be
required from Xxxxxxxx; provided, however, that Employee shall be entitled to
receive his benefits, if any, under the Pension Plan and the payments required
of Xxxxxxxx under his then-existing deferred compensation agreement(s) with
Xxxxxxxx in accordance with the terms of such
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agreement(s). Employee shall remain subject to the restrictive provisions of
Section 8 below for a period for two (2) years from the date of discharge.
Should Employee disagree that his discharge was a Discharge For Cause the
question shall be submitted to arbitration in accordance with Section 9 below.
(c) TERMINATION DUE TO DISABILITY. If, by reason of illness,
disability, or other incapacity certified by two (2) physicians competent to do
so in the opinion of Xxxxxxxx' Board of Directors, Employee is unable to perform
the duties required of him under this Agreement for a period of six (6)
consecutive months, Xxxxxxxx, following the giving of thirty (30) days' written
notice to Employee and the failure of Employee by reason of illness, disability,
or other incapacity to resume his duties within such thirty (30) days and
thereafter perform the same for a period of two (2) consecutive months, may
terminate Employee's employment by giving him written notice thereof; and in
that event all obligations of Xxxxxxxx hereunder shall cease on the date such
notice of termination is given except for payment of the disability benefits
under Section 6 above and except that Employee's Retirement Benefits shall
continue to accrue at the rate of four percent (4%) per year for each year he
continues to receive disability payments under said Section 6.
(d) BENEFITS UPON TERMINATION UNDER CERTAIN CIRCUMSTANCES. If Employee
voluntarily terminates his employment or Employee is discharged by Xxxxxxxx and
such discharge is not a Discharge For Cause, and if such voluntary termination
or involuntary discharge takes place within eighteen (18) months after the
occurrence of any of the following events:
(i) Employee is required by Xxxxxxxx, prior to a Change in
Control, to perform duties or services which differ significantly from those
performed by him on the effective date hereof or which are not ordinarily and
generally performed by a President and Chief Operating Officer (or
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either one of the foregoing positions) of a corporation similar in size and
scope to Xxxxxxxx; or
(ii) The nature of the duties or services which Xxxxxxxx,
prior to a Change in Control, requires him to perform necessitates absence
overnight from his place of residence on the effective date hereof, because of
travel involving the business or affairs of Xxxxxxxx, for more than ninety (90)
days during any period of twelve (12) consecutive months; Employee shall be
entitled to receive from Xxxxxxxx all of the severance benefits set forth in
Section 7(a) above, except that Employee's right to receive his Retirement
Benefits shall be based upon his Final Annual Compensation, as the same may be
adjusted pursuant to Section 7(a)(iv) above. Employee shall remain subject to
and bound by the restrictive provisions of Section 8 below.
(e) BENEFITS UPON A CHANGE IN CONTROL. Xxxxxxxx recognizes that the
threat of a Change in Control would be of significant concern to Employee. The
following provisions provide termination protection for Employee in the event of
a Change in Control. These provisions, among other purposes, are intended to
xxxxxx and encourage Employee's continued attention and dedication to his duties
in the event of such potentially disturbing and disruptive circumstances.
Xxxxxxxx, therefore, agrees to do the following:
(i) If Xxxxxxxx terminates Employee's employment for any
reason other than a Discharge for Cause, or if Employee terminates his
employment with Xxxxxxxx voluntarily for any reason other than disability or
retirement within the twenty-four (24) month period following a Change in
Control, Employee shall be entitled to receive from Xxxxxxxx the following
benefits:
(A) A lump sum severance payment (the "Severance
Payment"), in cash, equal to three (3) times the sum of (i) the higher of
Employee's annual Base Compensation in effect immediately prior to the
occurrence of the event or circumstance upon which such termination of
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employment is based or in effect immediately prior to the Change in Control, and
(ii) the average of Employee's Bonuses during the three (3) calendar years
immediately preceding the year in which the date of termination occurs.
(B) Employee shall be entitled, during the period
expiring on the earlier of his securing other employment or twenty-four (24)
months from the date of such termination of employment (or such longer period as
required by law), to continued coverage under the Xxxxxxxx sponsored medical
benefits program in existence on such date of termination or, if such continued
coverage is barred, Xxxxxxxx shall provide equivalent medical benefit coverage
through the purchase of insurance or otherwise.
(C) For purposes of determining Employee's benefits
under the Supplemental Plan, Employee shall receive credit toward his Years of
Service under the Supplemental Plan for the two (2) year period following such
termination of employment. In addition, with respect to the two (2) year period
following such termination of employment, Employee's Base Compensation shall be
deemed to be increased by the annual economic range adjustment for Xxxxxxxx'
salaried employees announced in October of each year (or, if there is no such
announced economic range adjustment in a given year, by an assumed five percent
(5%) increase for that year) in order to calculate his highest earnings during
five (5) consecutive years out of the last ten (10) years prior to retirement
under the Supplemental Plan.
(D) Employee shall be reimbursed for up to $20,000
for outplacement fees if he chooses to seek other employment following his
discharge by Xxxxxxxx. Employee shall not be obligated to seek other employment
in order to mitigate his damages resulting from his discharge.
(E) In addition to all of the foregoing, Employee
shall be entitled to
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receive the payments required of Xxxxxxxx under his then-existing deferred
compensation agreement(s) with Xxxxxxxx in accordance with the terms of such
agreement(s), and the retirement benefit provided for in Section 5 of this
Agreement.
The benefits provided in this Section 7(e) shall be in lieu of
any benefits provided under Section 7(d) of this Agreement.
(ii) Notwithstanding any other provisions of this Agreement,
in the event that any payment or benefit received or to be received by Employee
in connection with a Change in Control or the termination of Employee's
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with Xxxxxxxx, any person whose actions result in a
Change in Control or any person affiliated with Xxxxxxxx or such person) (all
such payments and benefits, including the Severance Payment, being hereinafter
called "Total Payments") would be subject (in whole or part), to an excise tax
pursuant to Sections 280G and 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (such tax hereinafter referred to as the "Excise Tax"),
then the Severance Payment shall be reduced to the extent necessary so that no
portion of the Total Payments is subject to Excise Tax (after taking into
account any reduction in the Total Payments provided by reason of Section 280G
of the Code in such other plan, arrangement or agreement) if (A) the net amount
of such Total Payments, as so reduced, (and after deduction of the net amount of
federal, state and local income tax on such Total Payments), is greater than (B)
the excess of (i) the net amount of such Total Payments, without reduction (but
after deduction of the net amount of federal, state and local income tax on such
Total Payments), over (ii) the amount of Excise Tax to which Employee would be
subject in respect of such Total Payments. For purposes of determining whether
and the extent to which the Total Payments will be subject to the Excise Tax,
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(i) no portion of the Total Payments the receipt or enjoyment of which Employee
shall have effectively waived in writing prior to the date of this termination
of employment shall be taken into account, (ii) no portion of the Total Payments
shall be taken into account which in the opinion of tax counsel selected by
Xxxxxxxx does not constitute a "parachute payment" within the meaning of Section
280G(b)(2) of the Code, (including by reason of Section 280G(b)(4)(A) of the
Code) and, in calculating the Excise Tax, no portion of such Total Payment shall
be taken into account which constitutes reasonable compensation for services
actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in
excess of the base amount as defined in Section 280G(b)(3) of the Code allowable
to such reasonable compensation, and (iii) the value of any non-cash benefit or
any deferred payment or benefit included in the Total Payments shall be
determined by Xxxxxxxx in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code. Prior to the fifth day following the date of Employee's
termination of employment, Xxxxxxxx shall provide Employee with its calculation
of the amounts referred to in this Section and such supporting materials as are
reasonably necessary for Employee to evaluate Xxxxxxxx' calculations. If
Employee objects to Xxxxxxxx' calculations, he shall notify Xxxxxxxx of his
objections prior to the initial payment date set forth in Section 7(e)(vi)
hereof, and Xxxxxxxx shall pay to Employee such portion of the Severance Payment
(up to one hundred percent (100%) thereof) as Employee determines is necessary
to result in Employee's receiving the greater of clauses (A) and (B) of this
Section.
(iii) Upon the occurrence of an Escrow Funding Event, Xxxxxxxx
shall pay into an escrow account at the Escrow Agent an amount equal to three
(3) times the sum of (i) Employee's Base Compensation in effect immediately
prior to the Escrow Funding Event and (ii) the average of Employee's Bonuses
during the three (3) calendar years immediately preceding the year in which
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the Escrow Funding Event occurs. Subsequent to the delivery to the Escrow Agent
of the Escrow Amount, Xxxxxxxx shall, in the event that either Employee's Base
Compensation is increased (or decreased) or he receives a Bonus that affects the
amount described in Section 7(e)(i)(A), unless the Escrow Amount shall
theretofore have been released pursuant to this subsection, recalculate the
Escrow Amount as of the date such change in Base Compensation or receipt of
Bonus occurs, treating the Escrow Funding Event as having occurred on such date.
If the amount so calculated exceeds the fair market value of the Escrow Amount,
Xxxxxxxx shall promptly (and in no event later than seven (7) days from such
date) pay to the Escrow Agent an amount in cash (or marketable securities or any
combination thereof) equal to such excess. If the Escrow Amount so calculated is
less than the fair market value of the Escrow Amount then held in the escrow
account, the Escrow Agent, upon receipt of a written request from Xxxxxxxx,
shall distribute to Xxxxxxxx such difference in cash; provided, however, that
this sentence shall not apply after the occurrence of a Change in Control.
(iv) Unless the parties otherwise agree, Xxxxxxxx may withdraw
the Escrow Amount when and only when two (2) years have expired from the date of
deposit and no proper demand pursuant to Section 7(e)(vi) below has been made
during the time, or when the conditions requiring the deposit have ceased to
exist for a period of ninety (90) days without a demand right having been
created, or when Employee's right to a payment under this Section 7(e) has been
forfeited, whichever occurs first. If, before the expiration of such period or
forfeiture, there shall occur another Escrow Funding Event, Xxxxxxxx will not be
required to make an additional deposit, but the two (2) year period shall then
be measured from the date of the last such event. Notwithstanding a deposit with
the Escrow Agent pursuant to subsection (iii) of this Section 7(e),
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Employee shall continue to be entitled to receive all of the benefits from
Xxxxxxxx under this Agreement until a termination of employment shall occur.
(v) Xxxxxxxx shall pay the charges of the Escrow Agent for its
services under the Escrow Agreement, and Xxxxxxxx will be entitled to any
interest or other income arising from the date of the deposit of the Escrow
Amount until all payments have been made under the Escrow Agreement to Employee.
All interest or other income arising from the Escrow Amount deposited with the
Escrow Agent shall be paid monthly to Xxxxxxxx.
(vi) If Xxxxxxxx terminates Employee's employment for any
reason but a Discharge for Cause, or if Employee terminates his employment with
Xxxxxxxx voluntarily for any reason other than disability or retirement within
the twenty-four (24) month period following the date of a Change in Control, the
Escrow Agent, upon written demand made on or after the tenth (10th) day
following such termination of employment, shall pay the Escrow Amount in
accordance with this Section and Employee shall no longer be subject to the
restrictive provisions of Section 8 below, except for Section 8(e). Employee
shall notify the Escrow Agent prior to the tenth (10th) day following his
termination of employment as to whether he has accepted the determination of
Xxxxxxxx of the amount of the Severance Payments pursuant to Section 7(e) (iii).
If he has accepted such determination, Xxxxxxxx shall provide the Escrow Agent
with Xxxxxxxx' written determination as set forth in Section 7(e) (iii) and the
Escrow Agent shall pay to Employee all or a portion of the Escrow Amount as
provided in such determination, and any remaining amount shall be paid to
Xxxxxxxx. If Employee does not accept Xxxxxxxx' determination, Employee shall
provide to the Escrow Agent his determination of the Severance Payment, and the
Escrow Agent shall pay to Employee all or a portion of the Escrow Amount as
provided in Employee's determination and any
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remaining amount shall be paid to Xxxxxxxx.
(vii) In the event that, following the creation of a demand
right pursuant to Section 7(e)(vi) above, Employee incurs any costs or expenses,
including attorneys' fees, in the enforcement of rights under this Section 7(e)
or under any plan for the benefit of employees of Xxxxxxxx, including without
limitation the stock option plan, pension plans, payroll-based stock ownership
plan, tax deferred savings and protection plan, bonus arrangements, supplemental
pension plan, deferred compensation agreements, incentive compensation plans,
and life insurance and compensation program, then, unless Xxxxxxxx or the
consolidated, surviving or transferee entity in the event of a consolidation,
merger or sale of assets, is wholly successful in defending against the
enforcement of such rights, Xxxxxxxx, or such consolidated, surviving or
transferee entity, shall promptly pay to Employee all such costs and expenses.
8. NON-COMPETITION; CONFIDENTIALITY.
---------------------------------
(a) In order to protect Xxxxxxxx, it is understood that a covenant not
to compete is a necessary and appropriate adjunct to the other provisions of
this Agreement. Therefore, should Employee at any time determine prior to the
expiration of this Agreement that he does not desire to remain an employee of
Xxxxxxxx and shall terminate his employment for any reason other than the
grounds specified in Section 7(e) above, or should he be Discharged For Cause by
Xxxxxxxx, Employee shall remain subject to the restrictive provisions
hereinafter set forth. In addition, these restrictive provisions shall remain in
full force and effect at any other time (subject to the limitations set forth in
Sections 8(b) and 8(c) below) during which payments are required to be made by
Xxxxxxxx pursuant to the retirement (Section 5), severance (Section 7, except
for Section 7(e)(vi)) or disability (Section 6) provisions of this Agreement.
These restrictive provisions are as follows:
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(b) For a period of two (2) years from and after Employee's employment
with Xxxxxxxx shall have terminated (provided, however, in the event of
termination of Employee's employment due to Xxxxxxxx' decision not to renew this
Agreement the period shall be one (1) year if the renewal period ending is also
one (1) year) and after he shall have ceased receiving retirement (provided that
such retirement benefits have then begun to be paid during the two (2) year (or
one (1) year) period mentioned in this Section 8(b)), severance or disability
benefits under this Agreement, whichever shall last occur, he shall not,
directly or indirectly, compete with Xxxxxxxx or any of its related or
affiliated companies. For purposes of this Agreement, competition with Xxxxxxxx
or any of its related or affiliated companies shall include the manufacture,
distribution, and sale of business forms and computer hardware and software and
the furnishing of EDP services which are similar in nature or function to the
products and/or services then being furnished by Xxxxxxxx for sale in the same
vertical markets in which Xxxxxxxx' products and/or services are then being
marketed at the time of Employee's termination of employment or upon the
cessation of any retirement, severance or disability benefits under this
Agreement.
(c) From and after the execution of this Agreement and for a period of
two (2) years after termination (provided, however, in the event of termination
of Employee's employment due to Xxxxxxxx' decision not to renew this Agreement
the period shall be one (1) year if the renewal period ending is also one (1)
year) of his employment with Xxxxxxxx and after he shall have ceased receiving
retirement (provided that such retirement benefits have then begun to be paid
during the two (2) year (or one (1) year) period mentioned in this Section
8(c)), severance or disability benefits under this Agreement, whichever shall
last occur, Employee shall not, directly or indirectly, by direct participation,
by purchase of stocks or bonds or other evidences of indebtedness, by loaning of
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money, by guarantee of loans of others, by gift to establish or assist others,
or in any other manner or fashion, engage in any such restricted activity in
competition with Xxxxxxxx or any of its related or affiliated companies, nor
shall he assist any present employees of Xxxxxxxx or any other person similarly
to engage in such competing business for the full two-year prohibition period
set forth in this Agreement.
(d) The restrictive provisions of this Section 8, however, are in no
way intended to prohibit Employee from acquiring in open market transactions
investments in equity stock or evidences of indebtedness of a corporation if the
said stock or if the said evidence of indebtedness is traded on a national or
regional securities exchange or in the over-the-counter market and the
investment therein represents no more than five percent (5%) of the outstanding
securities of the issue being acquired. Moreover, it is not the intention of
this Section 8 to limit in any way Employee's ability to invest in businesses
not competitive with Xxxxxxxx.
(e) Employee shall keep secret and inviolate all knowledge or
information of a confidential nature (which is not then nor later, through no
breach of this Agreement, in the public domain), including all unpublished
matters related to, without limitation thereof, the business, properties,
accounts, books and records, research and development information, processes,
procedures, products, know-how, trade secrets, memoranda, devices, suppliers,
and customers of Xxxxxxxx which he may now know or hereafter come to know as a
result of his affiliation in business with Xxxxxxxx.
(f) All copyrights, improvements, discoveries and inventions and all
claims, interest and rights thereto relating to any part of the business of
Xxxxxxxx conceived, developed or made by Employee, either alone or with others,
during the period of his employment, and whether conceived,
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developed or made during his regular working hours or at any other time during
such period, shall be and are the sole property of Xxxxxxxx and Employee hereby
assigns to Xxxxxxxx all right, title and interest in and to such copyrights,
improvements, discoveries and inventions. Further, Employee will, at any time in
the future upon Xxxxxxxx' request, execute specific assignments of any said
copyrights, improvements, discoveries and inventions as well as execute all
documents and perform all lawful acts which Xxxxxxxx deems necessary or
advisable to vest full ownership thereof in Xxxxxxxx, to register same in the
name of Xxxxxxxx or its designee or otherwise to provide legal protection for
Xxxxxxxx' ownership interests therein.
(g) This Agreement shall be without geographical limitation in
continental North America and, in addition, in any other areas of the world in
which Xxxxxxxx or any of its related or affiliated companies shall be doing
business at the time of the proposed competing entry into business by Employee,
it being agreed that the contacts of Employee and the potential scope of
operation of Xxxxxxxx is without any limitation within the area of prohibition.
Any violation of this covenant may be enforced by specific performance in any
court of competent jurisdiction within the area of limitation imposed by this
provision. If any court of competent jurisdiction shall determine that either
the period or the territory covered by this provision against competition in
unreasonable, said provision shall not be determined to be null, void, and of no
effect but shall be reformed by said court to impose a reasonable period or a
reasonable geographical limitation, as the case may be.
9. RESOLUTION OF DISPUTES; ARBITRATION.
------------------------------------
(a) Except for the breach or threatened breach by Employee of the
noncompetition provisions of this Agreement which may be enforced by appropriate
injunctive relief at the option of Xxxxxxxx, any dispute or controversy arising
out of or relating to this Agreement, including, but
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not limited to, whether Employee has been Discharged for Cause, shall be
submitted to and settled by arbitration in Dayton, Ohio in accordance with the
rules then pertaining of the American Arbitration Association.
(b) Should Employee disagree that his termination was due to a
Discharge for Cause, the question shall, within thirty (30) days after the
termination, be submitted to arbitration by three (3) arbitrators, one of whom
shall be selected by Xxxxxxxx, another of whom shall be selected by Employee,
and the third of whom shall be selected by the two arbitrators so appointed. The
decision of these arbitrators on the question shall be final and conclusive upon
Xxxxxxxx and upon Employee and his wife or widow, personal representatives,
designated beneficiaries and heirs, and shall be enforceable in any court having
competent jurisdiction thereof. A discharge which is eventually determined under
arbitration to have been a Discharge for Cause, or no arbitration having been
requested and the discharge being one which Xxxxxxxx had determined was for a
Discharge for Cause, shall extinguish any and all liability of Xxxxxxxx under
this Agreement from and after the date of termination.
(c) The arbitrators for all other disputes or controversies under this
Agreement shall be selected as set forth above and the parties shall select the
arbitrators within thirty (30) days after demand from Employee or Xxxxxxxx to
the other to settle matters by arbitration. As stated above, the decision of the
arbitrators shall be final and conclusive.
10. NONASSIGNABLE RIGHTS.
---------------------
Employee, his wife, or his widow after his death, or his personal
representatives, designated beneficiaries and heirs, shall not have the right to
anticipate or commute, or to sell, assign, transfer, or otherwise alienate or
convey the right to receive any payments hereunder, whether by his, her or
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their voluntary or involuntary act, or by operation of law and, in particular,
that any payments due hereunder shall not be subject to attachment or
garnishment or any other legal proceedings by any creditor, or be in any way
responsible for the debts or liabilities of Employee or his wife or his widow
after his death or his personal representatives, designated beneficiaries and
heirs. Should Employee or his wife or his widow after his death or his personal
representatives, designated beneficiaries and heirs, voluntarily attempt to
breach this Section of this Agreement, Xxxxxxxx' liability to make payments
hereunder from and after the date of said attempt shall be extinguished; and
should any attempt be made to reach the payments by other than Employee or his
wife or his widow after his death or his personal representatives, designated
beneficiaries and heirs, Xxxxxxxx shall make each payment as it becomes due to
such person or persons for the sole benefit of Employee or his wife or his widow
or his personal representatives, designated beneficiaries and heirs, as the case
may be, as Xxxxxxxx may deem expedient.
11. UNFUNDED AGREEMENT.
-------------------
(a) Xxxxxxxx' obligation under this Agreement shall be unfunded, but
Xxxxxxxx reserves the right to provide for its liability under this Agreement in
any manner it deems advisable, including the purchasing of such assets
(including an insurance policy or policies on Employee's life) as it may deem
necessary or proper; provided, however, that Employee's insurability or
non-insurability shall in no way affect Xxxxxxxx' obligations pursuant to this
Agreement. Any asset so purchased by Xxxxxxxx shall be the sole property of
Xxxxxxxx and shall not be deemed to provide funding of Xxxxxxxx' obligations
under this Agreement.
(b) In the event Xxxxxxxx determines to purchase any insurance policy
or policies on Employee's life, Employee agrees to submit to such examination
and to supply information as may
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be required by the insurer.
(c) Any policy so purchased by Xxxxxxxx shall be issued so that
Xxxxxxxx is the sole, full, and complete owner of the policy or policies, with
the right and power to exercise any and all privileges and options thereof or
available under the rules of the issuing insurer without the consent of any
other persons.
(d) Employee, his wife, or his widow after his death, or his designated
beneficiaries, personal representatives, heirs, successors and assigns shall
have no claim or rights with respect to, and shall have no property or equitable
interests whatsoever in, any specific funds or assets of Xxxxxxxx and shall have
only the status of a general creditor with respect to Xxxxxxxx hereunder.
12. FACILITY OF PAYMENT.
--------------------
In the event of a physical or mental illness or disability of Employee
or of his widow after his death or of his designated beneficiaries at a time
when he or she (or they) is (are) entitled to payments hereunder, such payments
as may be due shall be paid to such person or persons for the benefit of
Employee or his widow or his designated beneficiaries, as the case may be, as
Xxxxxxxx or, if applicable, the Escrow Agent may deem proper. In the event of
Employee's death after he has made demand pursuant to Section 7(e)(v) above, the
Escrow Agent shall pay such amounts as thereafter are due to such beneficiary or
beneficiaries as Employee shall have designated in writing, or failing such
writing, to his estate. No liability shall accrue to Xxxxxxxx or Escrow Agent
for any alleged payment to an improper person or representative if so made after
such reasonable investigation and Xxxxxxxx and Escrow Agent shall have no
responsibility to see to the proper application of such payments.
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13. MISCELLANEOUS PROVISIONS.
-------------------------
(a) All notices required or permitted to be given under this Agreement
shall be in writing and shall be mailed, postage prepaid, by registered or
certified mail or personally delivered, if to Xxxxxxxx, addressed to:
The Xxxxxxxx and Xxxxxxxx Company
Attention: Vice President, Corporate Finance
and Chief Financial Officer
000 Xxxxx Xxxxxx Xx.
Xxxxxx, Xxxx 00000
and, if to Employee, addressed to:
Xxxxx X. Xxxxxxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Either party may change the address to which notices to such party are to be
sent by giving written notice of such change to the other party in the manner
specified in this provision.
(b) (i) This Agreement shall be binding upon Employee, his wife, and
upon his or her heirs, executors, administrators, designated beneficiaries and
upon anyone claiming under him or his wife or widow, and upon Xxxxxxxx and its
successor or assigns.
(ii) Xxxxxxxx shall not merge or consolidate with any other
entity unless and until such other entity shall expressly assume Xxxxxxxx'
obligations under this Agreement or Xxxxxxxx has provided an appropriate
alternative arrangement covering its contingent liabilities under this
Agreement, and Xxxxxxxx shall not voluntarily dissolve without first providing
an appropriate arrangement covering its contingent liabilities under this
Agreement.
(c) This Agreement may be amended, but only with the consent of
Employee during his lifetime and, after his death only with the consent of his
widow during her lifetime or his other
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designated beneficiaries during their lifetime, as the case may be. Any
agreement of amendment shall be executed with the same formality as this
Agreement.
(d) This Agreement supersedes any prior agreements or understandings
covering the subject matter hereof, either written or oral, between the parties.
(e) This Agreement shall be construed under the laws of the State of
Ohio.
(f) The paragraph headings used in this Agreement are for
convenience of reference only and shall not be considered in construing this
Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
respective hands the year and date first above written.
THE XXXXXXXX AND XXXXXXXX COMPANY
By /s/ Xxxxx X. Xxxxxx
------------------------------
XXXXX X. XXXXXXXXXX
/s/ Xxxxx X. Xxxxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxxxx
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EXHIBIT A
ESCROW AGREEMENT
This Escrow Agreement made and entered into as of this 1st day of May,
1999, by and between THE XXXXXXXX AND XXXXXXXX COMPANY, an Ohio corporation
(hereinafter referred to as "XXXXXXXX") and BANK ONE, N.A. (hereinafter referred
to as the "ESCROW AGENT"),
WITNESSETH:
WHEREAS, XXXXXXXX, has agreed to provide termination pay protection for
XXXXX X. XXXXXXXXXX ("Employee") under conditions set forth in an Employment
Agreement with Employee dated May 1, 1999 (hereinafter referred to as the
"Agreement"); and
WHEREAS, the required protective payments under the Agreement are to
be paid to an escrow account at the Escrow Agent;
NOW, THEREFORE, in consideration of the covenants and agreements
contained in this ESCROW AGREEMENT, the parties hereby do agree as follows:
1. ACCEPTANCE OF ESCROW. The ESCROW AGENT shall serve as ESCROW AGENT
in accordance with the provisions of this ESCROW AGREEMENT, and the duties of
the ESCROW AGENT shall be solely those imposed by this ESCROW AGREEMENT.
2. TERMS. The ESCROW AGENT shall receive, hold and disburse funds as
ESCROW AGENT in accordance with the Agreement, in the form attached hereto as
Exhibit A and made a part hereof. The ESCROW AGENT acknowledges that it has
reviewed and is familiar with the Agreement and shall be bound by the
obligations, terms and conditions therein relating to the ESCROW AGENT and its
duties.
32
However, the ESCROW AGENT is not a party to or bound by the Agreement,
except as specifically provided for therein and as provided in Sections 2, 4, 6,
7 and 8 of this ESCROW AGREEMENT. The ESCROW AGENT shall be liable for only such
funds and items as are actually deposited and received by it for the purposes of
said escrow.
3. INDEMNIFICATION. So long as the ESCROW AGENT shall follow the terms
of this ESCROW AGREEMENT and any instructions issued hereunder in good faith,
relying upon documents which it believes to be genuine and properly signed and
executed, it shall be held free, clear and harmless and shall incur no liability
hereunder. XXXXXXXX shall indemnify and hold the ESCROW AGENT harmless from any
loss, liability, cost, or expense, including reasonable legal fees, which may
arise or be incurred by reason of this ESCROW AGREEMENT or the ESCROW AGENT's
performance in good faith of any duty or obligation hereunder.
The ESCROW AGENT shall not be liable for any error of judgment or for
any act done or omitted by it in good faith, or for anything which it may in
good faith do or refrain from doing in connection with said escrow; nor will any
liability be incurred by the ESCROW AGENT if, in the event of any dispute or
question as to the construction of, this ESCROW AGREEMENT or any demand or
notice hereunder, the ESCROW AGENT acts in accordance with the opinion of its
legal counsel.
4. INVESTMENTS BY ESCROW AGENT; INCOME. The ESCROW AGENT shall invest
escrow funds in federally-insured interest bearing accounts selected by the
ESCROW AGENT or in any one or more of the following investments, selected by the
ESCROW AGENT:
(a) Certificates of Deposit of United States commercial
banks holding membership in the Federal Reserve
System. Such U.S. banks shall have minimum total
assets of $1,000,000,000 and shall not be currently
listed on
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any publicly-disclosed report of U.S. banks having
financial problems warranting close monitoring by
the Federal Reserve Board.
(b) Euro-dollar Certificates of Deposit issued by the
twenty-five (25) largest United States commercial
banks, which banks shall have minimum total assets of
$1,000,000,000 and shall not be currently listed on
any publicly-disclosed report of U. S. banks having
financial problems warranting close monitoring by the
Federal Reserve Board.
(c) Bankers Acceptances of United States commercial banks
holding membership in the Federal Reserve System.
Such U.S. banks shall have minimum total assets of
$1,000,000,000 and shall not be currently listed on
any publicly disclosed report of U.S. banks having
financial problems warranting close monitoring by the
Federal Reserve Board.
(d) United States Treasury Bills.
(e) United States Treasury Notes.
(f) United States Government Guaranteed "Project Notes"
and/or Tax-Exempt Notes rated MIG I by Xxxxx'x rating
agency.
(g) Debt instruments issued by the following five United
States Government agencies:
Federal Intermediate Credit Banks
Banks for Cooperatives
Federal Land Banks
Federal Home Loan Banks
Federal National Mortgage Association
(h) Commercial Paper rated Prime- I by Xxxxx'x rating
agency or rated A- I by Standard & Poors rating
agency. In addition, with respect to any
corporation's commercial paper being purchased, such
corporation's long-term debt, if any, must be rated
either A by Xxxxx'x rating agency or A by Standard &
Poors rating agency.
The total investments in the above-described approved Certificates of Deposit,
Bankers Acceptances, Commercial Paper, and/or Tax-Exempt Notes shall be limited
to a maximum of $1,000,000 at any one time in any one single bank, corporation,
state and/or municipality.
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With respect to funds deposited in escrow by XXXXXXXX pursuant to the
terms of the Agreement, principal shall be used only for the payments to the
Employee. Any and all income on invested funds shall be paid to XXXXXXXX in
accordance with subsection (e)(v) of Section 7 of the Agreement. Fees of the
Escrow Agent shall be paid by XXXXXXXX in accordance with subsection (e)(v) of
Section 7 of the Agreement.
With respect to funds deposited pursuant to the Agreement, the ESCROW
AGENT shall be authorized to invest such funds. The ESCROW AGENT will maintain
such liquidity in the investments as will permit them to be cashed when
necessary to fund the required distributions to Employee.
5. TERMINATION. This ESCROW AGREEMENT and all obligations of the ESCROW
AGENT shall terminate upon satisfaction by the ESCROW AGENT of all of its
obligations under this ESCROW AGREEMENT and the Agreement.
6. ADVERSE CLAIMS. ESCROW AGENT shall make delivery or disbursement of
the funds deposited hereunder in accordance with the terms of the ESCROW
AGREEMENT and the Agreement, regardless of any disagreement or the presentation
of any adverse claims or demands of any person, unless such person shall have
obtained an injunction from a court having proper jurisdiction, enjoining ESCROW
AGENT from making such delivery or disbursement. ESCROW AGENT shall not become
liable to XXXXXXXX or to any other person, for or because of such delivery or
disbursement of such funds, even with knowledge of a disagreement or adverse
claim or demand.
7. DEMANDS. Except in cases where demand or notice by a single party is
specifically provided for in this ESCROW AGREEMENT or in the Agreement, the
ESCROW AGENT shall not be bound to recognize any notice, demand or change of
instructions as having any effect on this
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escrow unless given in writing and signed by all parties considered by the
ESCROW AGENT to be affected thereby.
8. NOTICES. Any notice required or permitted to be given hereunder
shall be given in writing and shall be sufficiently delivered if sent by
registered or certified mail, return receipt requested, prepaid, addressed as
follows:
________________________, Trust Officer
Trust Division
Bank One, NA
Kettering Tower
Xxxxxx, Xxxx 00000
The Xxxxxxxx and Xxxxxxxx Company
000 X. Xxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
Attn: Chief Financial Officer
Should the address of any party identified above change for the purposes herein,
such party shall give written notice of the new address to the other parties
identified above.
All notice hereunder to the ESCROW AGENT shall be given in writing to
an officer of the ESCROW AGENT. Unless written notice shall so be given, the
ESCROW AGENT shall not be required to take or be bound by said notice or to take
action concerning such notice. If written notice be properly given and the
ESCROW AGENT is required upon receipt thereof to take any action hereunder and
such action involves any expense or liability, the ESCROW AGENT shall not be
required to take any such action unless it is indemnified against such expense
or liability in a manner reasonably satisfactory to the ESCROW AGENT. At the
time of depositing funds into escrow on behalf of Employee, XXXXXXXX shall
deliver to the ESCROW AGENT a written notice setting forth such person's name
and address, and social security number identifying the amounts being
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deposited on such person's behalf, and the conditions of the Agreement, which
have been met and which, therefore, require that such deposit be made.
9. RECORD KEEPING. The ESCROW AGENT shall maintain records
showing the amount and date of all deposits made by XXXXXXXX for the benefit of
Employee and the amount and date of all disbursements made to Employee, his
heirs, successors and assigns. XXXXXXXX shall be given access to said records at
reasonable times upon request.
10. ESCROW FEE. XXXXXXXX shall pay to the ESCROW AGENT for its
services hereunder an escrow fee based upon the then-current schedule of charges
for such services promulgated by the ESCROW AGENT and shall pay additional
reasonable compensation for any further or extraordinary service which the
ESCROW AGENT may be required to render pursuant to the terms of this ESCROW
AGREEMENT.
11. BINDING EFFECT. This ESCROW AGREEMENT shall be binding
upon and inure to the heirs, executors, administrators, personnel
representatives, successors and assigns of all parties hereto.
12. MISCELLANEOUS. Employee is acknowledged to be third party
beneficiary upon the deposit of any amounts under this ESCROW AGREEMENT for his
benefit. This ESCROW AGREEMENT may be modified or amended only by a writing
signed (i) by all parties hereto, (ii) by the third party beneficiary and (iii)
by any other person the ESCROW AGENT considers to be affected by said
modification or amendment. This ESCROW AGREEMENT shall be construed and enforced
in accordance with the laws of the State of Ohio.
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IN WITNESS WHEREOF, the parties hereto have set their
respective hands the year and date first hereinabove written.
THE XXXXXXXX AND XXXXXXXX COMPANY
By ____________________________________
"XXXXXXXX"
BANK ONE, NA
By _____________________________________
"ESCROW AGENT"
7
38
EXHIBIT B
Xxxxx X. Xxxxxxxxxx
President and COO
STOCK OPTION AGREEMENT
GRANTED UNDER THE XXXXXXXX AND XXXXXXXX
COMPANY
STOCK OPTION PLAN -- 1995
NONQUALIFIED STOCK OPTION - GRANT NUMBER
----------------------------------------
A Nonqualified Stock Option is hereby granted this 1st day of May, 1999
(the "GRANT DATE") by The Xxxxxxxx and Xxxxxxxx Company (the "COMPANY") to Xxxxx
X. Xxxxxxxxxx (the "EMPLOYEE") in accordance with the provisions of the
Company's Stock Option Plan -- 1995 (the "PLAN").
On May 1, 1999 the Employee and the Company entered into an Employment
Agreement (the "EMPLOYMENT AGREEMENT").
In order to give the Employee additional incentive to contribute to the
success of the Company, to induce the Employee to remain in the employ of the
Company and to encourage the Employee to secure or increase on reasonable terms
stock ownership in the Company, the Company hereby grants to the Employee a
Nonqualified Stock Option (the "OPTION") to purchase all or any part of a total
of 200,000 of the Company's Class A Common Shares, no par value per share (the
"OPTION SHARES" or "SHARES"), at a price of $_________ (FMV ON THE GRANT DATE)
per Option Share, subject to and upon the following terms and conditions:
1. The term of the Option shall be ten (10) years from the Grant Date and
shall expire on May 1, 2009 (the "EXPIRATION DATE"), unless earlier
terminated in accordance with the provisions of the Plan.
2. The Option Shares shall be exercisable fifty percent (50%) in whole or
in part at any time beginning May 1, 2002 and fifty percent (50%) in
whole or in part at any time beginning May 1, 2004. In the event of a
Change in Control (as defined in the Plan), all options outstanding on
the date of such Change in Control (including this Option) shall become
immediately and fully exercisable. To the extent the Option is then
exercisable, it may be exercised in whole or in part at any time or
from time to time within the exercise period, subject to the provisions
of the Plan. The exercise of the Option shall be effectuated by
submitting to the Secretary of the Company at its office in Dayton,
Ohio: (a) written notice of intent to exercise the Option with respect
to a specified number of Option Shares; (b) payment, in cash, or by
check payable to the Company, or with already-owned shares of the
Company, or a combination of such already-owned shares and cash, of the
full amount
39
of the purchase price for the number of Option Shares with respect to
which the Option is then being exercised; and (c) payment in cash or by
check of the full amount of all federal, state, and local taxes, if
any, that the Company is required by law to withhold with respect to
such exercise. The Option may not be exercised for a fraction of an
Option Share.
3. The Option is not transferable other than by will or by laws of descent
and distribution and may be exercised during the lifetime of the
Employee only by the Employee.
4. If Employee's employment is terminated by the Company due to a
Termination Without Cause (as described in the Employment Agreement),
or if Employee terminates his employment due to a change in
circumstances as described in Section 7(d) of the Employment Agreement,
Employee shall be deemed to have elected retirement for purposes of the
Plan, and the Option, subject to the Expiration Date, shall become
exercisable by the Employee, as if he had remained continuously
employed by the Company. If Employee's employment is terminated by
death, the Option, to the extent not theretofore exercised on the date
of death, may be exercised within one year after the date of death,
subject to the Expiration Date, by the person to whom the Option is
transferred by will or the applicable laws of descent and distribution.
If Employee's termination is a Termination for Cause (as defined in the
Employment Agreement), all options (including this Option) not
previously exercised shall immediately terminate. If the Employee
voluntarily terminates his employment, or if his employment terminates
due to disability (as defined in the Employment Agreement), the Option,
subject to the Expiration Date, shall be exercisable by the Employee in
the manner and to the extent the Employee was entitled to exercise the
Option as of the date of such termination. Other than as set forth in
the Employment Agreement, nothing contained herein shall give the
Employee any right with respect to continuance of employment with the
Company or any subsidiary nor restrict in any way the right of the
Company or any subsidiary to terminate his or her employment at any
time.
5. In the event of any change in the Option Shares by reason of a merger,
consolidation, reorganization, recapitalization, stock dividend, stock
split-up, combination or exchange of shares, or other change in the
corporate structure (provided that the Company remains as the surviving
entity upon the completion of any of the foregoing transactions) the
number and class of Option Shares and the option price per Option Share
shall be appropriately adjusted by the Committee, whose determination
in each case shall be conclusive.
6. Anything to the contrary notwithstanding, if the Company is the subject
of a merger, acquisition, or other reorganization in which the Company
is not to be the surviving entity, the Company shall, in its discretion
(exercisable by the affirmative vote of 75% of the Directors of the
Company in office immediately prior to the proposed transaction), have
the right to cancel the Option immediately prior to the effective date
of such merger, acquisition, or reorganization, by giving written
notice to the Employee or his or her
2
40
personal representative of its intention to do so and by permitting the
purchase during the thirty (30) day period next preceding such
effective date of all Option Shares.
7. Neither the Employee nor his or her legal representative shall
be or have any of the rights or privileges of a shareholder of the
Company in respect to any of the Option Shares unless and until
certificates representing such Option Shares have been issued.
8. (a) This Option is subject to all laws and regulations of any
governmental authority which may be applicable hereto; notwithstanding
any provisions hereof, the holder of this Option shall not be entitled
to exercise such Option nor shall the Company be obligated to issue any
Option Shares hereunder to the holder if such exercise or issuance
shall constitute a violation by the Employee or the Company of any
provisions of any such law or regulation.
(b) The Company, in its discretion, may postpone the issuance
and delivery of Option Shares upon any exercise of this Option until
completion of any stock exchange listing or registration or other
qualification of such Shares under any state or federal law, rule, or
regulation as the Company may consider appropriate and may require any
person exercising this Option to make such representations and furnish
such information as it may consider appropriate in connection with the
issuance of the Option Shares in compliance with applicable law. Under
such circumstances, the Company shall proceed with reasonable
promptness to complete any such listing, registration, or other
qualification.
(c) Option Shares issued and delivered upon exercise of this
Option may be subject to such restrictions on trading, including
appropriate legending of certificates to that effect, as the Company,
in its discretion, shall determine necessary to satisfy applicable
legal requirements and obligations.
(d) The Employee, for himself or herself and his or her
transferees by will or the laws of descent and distribution, by
accepting this Option: (i) represents that acquisition of the Option
Shares shall be for investment purposes only; (ii) agrees that he or
she will not sell, pledge, hypothecate, or otherwise distribute such
Option Shares or any interest therein unless a registration statement
covering such Option Shares is in effect under the Securities Act of
1933, as now or hereafter amended (the "ACT"), or unless counsel for
the Company shall have rendered to the Company an opinion that such
sale, pledge, hypothecation, or other such distribution may be carried
out without registration of such Option Shares under the Act; and (iii)
agrees that an appropriate legend may be placed on the stock
certificate or certificates evidencing ownership of Option Shares
acquired hereunder, which legend shall reflect the restrictions on
disposition contained herein; provided, however, that the foregoing
representations and agreements in this Paragraph (d) of Section 8 with
respect to the Option Shares shall be inoperative and shall expire
3
41
in the event that either: (A) the Option Shares shall be registered
under the Act; or (B) in the opinion of counsel for the Company, such
representations and agreements are not necessary under the Act or any
rule or regulation promulgated pursuant thereto.
9. The terms of this Agreement specifically incorporate and are subject to
the terms and conditions of the Plan, a copy of which has been
furnished to the Employee, as the same may be amended from time to time
in the future; provided, however, that this Option cannot be altered to
the detriment of the Employee, without his consent.
10. Inability of the Company to obtain from any regulatory body having
jurisdiction, the authority deemed by the Company's counsel to be
necessary to the lawful issuance of any Option Shares hereunder shall
relieve the Company of any liability in respect of the non-issuance of
such Option Shares as to which such requisite authority shall not have
been obtained.
11. The interpretation, performance, and enforcement of this option shall
be governed by the laws of the State of Ohio.
THE XXXXXXXX AND XXXXXXXX COMPANY
By:
---------------------------------
Xxxx X. Xxxxxxx
Vice President, Corporate Finance and
Chief Financial Officer
ATTEST:
---------------------------------
Xxxx X. Xxxxxxxx
General Counsel & Secretary
May 1, 1999 Nonqualified Stock Option Agreement
4
42
ACCEPTANCE OF
MAY 1, 1999
NONQUALIFIED STOCK OPTION
I have reviewed a copy of The Xxxxxxxx and Xxxxxxxx Company Stock Option Plan
--- 1995, and agree to be bound by all of the terms and conditions thereof and
of this Agreement.
-----------------------------
Signature
XXXXX X. XXXXXXXXXX
-----------------------------
Printed Name
-----------------------------
Social Security Number
Dated: _________, 1999
DO NOT RETURN THIS COPY
THIS COPY SHOULD REMAIN WITH YOUR AGREEMENT
5
43
EXHIBIT C
Xxxxx X. Xxxxxxxxxx
President and COO
STOCK OPTION AGREEMENT
GRANTED UNDER THE XXXXXXXX AND XXXXXXXX
COMPANY
STOCK OPTION PLAN -- 1995
NONQUALIFIED STOCK OPTION - GRANT NUMBER
A Nonqualified Stock Option is hereby granted this 1st day of May, 2000
(the "GRANT DATE") by The Xxxxxxxx and Xxxxxxxx Company (the "COMPANY") to Xxxxx
X. Xxxxxxxxxx (the "EMPLOYEE") in accordance with the provisions of the
Company's Stock Option Plan -- 1995 (the "PLAN").
On May 1, 1999 the Employee and the Company entered into an Employment
Agreement (the "EMPLOYMENT AGREEMENT").
In order to give the Employee additional incentive to contribute to the
success of the Company, to induce the Employee to remain in the employ of the
Company and to encourage the Employee to secure or increase on reasonable terms
stock ownership in the Company, the Company hereby grants to the Employee a
Nonqualified Stock Option (the "OPTION") to purchase all or any part of a total
of 100,000 of the Company's Class A Common Shares, no par value per share (the
"OPTION SHARES" or "SHARES"), at a price of $_________ (FMV ON THE GRANT DATE)
per Option Share, subject to and upon the following terms and conditions:
1. The term of the Option shall be ten (10) years from the Grant Date and shall
expire on May 1, 2010 (the "EXPIRATION DATE"), unless earlier terminated in
accordance with the provisions of the Plan.
2. The Option Shares shall be exercisable fifty percent (50%) in whole or in
part at any time beginning May 1, 2003 and fifty percent (50%) in whole or in
part at any time beginning May 1, 2005. In the event of a Change in Control (as
defined in the Plan), all options outstanding on the date of such Change in
Control (including this Option) shall become immediately and fully exercisable.
To the extent the Option is then exercisable, it may be exercised in whole or in
part at any time or from time to time within the exercise period, subject to the
provisions of the Plan. The exercise of the Option shall be effectuated by
submitting to the Secretary of the Company at its office in Dayton, Ohio: (a)
written notice of intent to exercise the Option with respect to a specified
number of Option Shares; (b) payment, in cash, or by check payable to the
Company, or with already-owned shares of the Company, or a combination of such
already-owned shares and cash, of the full amount of the purchase price for the
number of Option Shares with respect to
44
which the Option is then being exercised; and (c) payment in cash or by check of
the full amount of all federal, state, and local taxes, if any, that the Company
is required by law to withhold with respect to such exercise. The Option may not
be exercised for a fraction of an Option Share.
3. The Option is not transferable other than by will or by laws of descent and
distribution and may be exercised during the lifetime of the Employee only by
the Employee.
4. If Employee's employment is terminated by the Company due to a Termination
Without Cause (as described in the Employment Agreement), or if Employee
terminates his employment due to a change in circumstances as described in
Section 7(d) of the Employment Agreement, Employee shall be deemed to have
elected retirement for purposes of the Plan, and the Option, subject to the
Expiration Date, shall become exercisable by the Employee, as if he had remained
continuously employed by the Company. If Employee's employment is terminated by
death, the Option, to the extent not theretofore exercised on the date of death,
may be exercised within one year after the date of death, subject to the
Expiration Date, by the person to whom the Option is transferred by will or the
applicable laws of descent and distribution. If Employee's termination is a
Termination for Cause (as defined in the Employment Agreement), all options
(including this Option) not previously exercised shall immediately terminate. If
the Employee voluntarily terminates his employment, or if his employment
terminates due to disability (as defined in the Employment Agreement), the
Option, subject to the Expiration Date, shall be exercisable by the Employee in
the manner and to the extent the Employee was entitled to exercise the Option as
of the date of such termination. Other than as set forth in the Employment
Agreement, nothing contained herein shall give the Employee any right with
respect to continuance of employment with the Company or any subsidiary nor
restrict in any way the right of the Company or any subsidiary to terminate his
or her employment at any time.
5. In the event of any change in the Option Shares by reason of a merger,
consolidation, reorganization, recapitalization, stock dividend, stock split-up,
combination or exchange of shares, or other change in the corporate structure
(provided that the Company remains as the surviving entity upon the completion
of any of the foregoing transactions) the number and class of Option Shares and
the option price per Option Share shall be appropriately adjusted by the
Committee, whose determination in each case shall be conclusive.
6. Anything to the contrary notwithstanding, if the Company is the subject of a
merger, acquisition, or other reorganization in which the Company is not to be
the surviving entity, the Company shall, in its discretion (exercisable by the
affirmative vote of 75% of the Directors of the Company in office immediately
prior to the proposed transaction), have the right to cancel the Option
immediately prior to the effective date of such merger, acquisition, or
reorganization, by giving written notice to the Employee or his or her personal
representative of its intention to do so and by permitting the purchase during
the thirty (30) day period next preceding such effective date of all Option
Shares.
2
45
7. Neither the Employee nor his or her legal representative shall be or have any
of the rights or privileges of a shareholder of the Company in respect to any of
the Option Shares unless and until certificates representing such Option Shares
have been issued.
8. (a) This Option is subject to all laws and regulations of any
governmental authority which may be applicable hereto; notwithstanding any
provisions hereof, the holder of this Option shall not be entitled to exercise
such Option nor shall the Company be obligated to issue any Option Shares
hereunder to the holder if such exercise or issuance shall constitute a
violation by the Employee or the Company of any provisions of any such law or
regulation.
(b) The Company, in its discretion, may postpone the issuance
and delivery of Option Shares upon any exercise of this Option until completion
of any stock exchange listing or registration or other qualification of such
Shares under any state or federal law, rule, or regulation as the Company may
consider appropriate and may require any person exercising this Option to make
such representations and furnish such information as it may consider appropriate
in connection with the issuance of the Option Shares in compliance with
applicable law. Under such circumstances, the Company shall proceed with
reasonable promptness to complete any such listing, registration, or other
qualification.
(c) Option Shares issued and delivered upon exercise of this
Option may be subject to such restrictions on trading, including appropriate
legending of certificates to that effect, as the Company, in its discretion,
shall determine necessary to satisfy applicable legal requirements and
obligations.
(d) The Employee, for himself or herself and his or her
transferees by will or the laws of descent and distribution, by accepting this
Option: (i) represents that acquisition of the Option Shares shall be for
investment purposes only; (ii) agrees that he or she will not sell, pledge,
hypothecate, or otherwise distribute such Option Shares or any interest therein
unless a registration statement covering such Option Shares is in effect under
the Securities Act of 1933, as now or hereafter amended (the "ACT"), or unless
counsel for the Company shall have rendered to the Company an opinion that such
sale, pledge, hypothecation, or other such distribution may be carried out
without registration of such Option Shares under the Act; and (iii) agrees that
an appropriate legend may be placed on the stock certificate or certificates
evidencing ownership of Option Shares acquired hereunder, which legend shall
reflect the restrictions on disposition contained herein; provided, however,
that the foregoing representations and agreements in this Paragraph (d) of
Section 8 with respect to the Option Shares shall be inoperative and shall
expire in the event that either: (A) the Option Shares shall be registered under
the Act; or (B) in the opinion of counsel for the Company, such representations
and agreements are not necessary under the Act or any rule or regulation
promulgated pursuant thereto.
3
46
9. The terms of this Agreement specifically incorporate and are subject to the
terms and conditions of the Plan, a copy of which has been furnished to the
Employee, as the same may be amended from time to time in the future; provided,
however, that this Option cannot be altered to the detriment of the Employee,
without his consent.
10. Inability of the Company to obtain from any regulatory body having
jurisdiction, the authority deemed by the Company's counsel to be necessary to
the lawful issuance of any Option Shares hereunder shall relieve the Company of
any liability in respect of the non-issuance of such Option Shares as to which
such requisite authority shall not have been obtained.
11. The interpretation, performance, and enforcement of this option shall be
governed by the laws of the State of Ohio.
THE XXXXXXXX AND XXXXXXXX COMPANY
By:
---------------------------------
Xxxx X. Xxxxxxx
Vice President, Corporate Finance and
Chief Financial Officer
ATTEST:
-------------------------------------
Xxxx X. Xxxxxxxx
General Counsel & Secretary
May 1, 2000 Nonqualified Stock Option Agreement
4
47
ACCEPTANCE OF
MAY 1, 2000
NONQUALIFIED STOCK OPTION
I have reviewed a copy of The Xxxxxxxx and Xxxxxxxx Company Stock Option Plan
--- 1995, and agree to be bound by all of the terms and conditions thereof and
of this Agreement.
-----------------------------------
Signature
XXXXX X. XXXXXXXXXX
-----------------------------------
Printed Name
-----------------------------------
Social Security Number
Dated: ____________, 2000
DO NOT RETURN THIS COPY
THIS COPY SHOULD REMAIN WITH YOUR AGREEMENT
5
48
EXHIBIT D
Xxxxx X. Xxxxxxxxxx
President and COO
STOCK OPTION AGREEMENT
GRANTED UNDER THE XXXXXXXX AND XXXXXXXX
COMPANY
STOCK OPTION PLAN -- 1995
NONQUALIFIED STOCK OPTION - GRANT NUMBER
----------------------------------------
A Nonqualified Stock Option is hereby granted this 1st day of May, 1999
(the "GRANT DATE") by The Xxxxxxxx and Xxxxxxxx Company (the "COMPANY") to Xxxxx
X. Xxxxxxxxxx (the "EMPLOYEE") in accordance with the provisions of the
Company's Stock Option Plan -- 1995 (the "PLAN").
On May 1, 1999 the Employee and the Company entered into an Employment
Agreement (the "EMPLOYMENT AGREEMENT").
In order to give the Employee additional incentive to contribute to the
success of the Company, to induce the Employee to remain in the employ of the
Company and to encourage the Employee to secure or increase on reasonable terms
stock ownership in the Company, the Company hereby grants to the Employee a
Nonqualified Stock Option (the "OPTION") to purchase all or any part of a total
of 200,000 of the Company's Class A Common Shares, no par value per share (the
"OPTION SHARES" or "SHARES"), at a price of $.01 per Option Share, subject to
and upon the following terms and conditions:
1. The term of the Option shall be ten (10) years from the Grant
Date and shall expire on May 1, 2009 (the "EXPIRATION DATE"), unless
earlier terminated in accordance with the provisions of the Plan.
2. The Option Shares shall be exercisable in whole or in part at
any time beginning as follows: twenty-five percent (25%) May 1, 2000;
an additional twenty-five percent (25%) May 1, 2001; an additional
twenty-five percent (25%) May 1, 2002; and an additional twenty-five
percent (25%) May 1, 2003. In the event of a Change in Control (as
defined in the Plan), all options outstanding on the date of such
Change in Control (including this Option) shall become immediately and
fully exercisable. To the extent the Option is then exercisable, it may
be exercised in whole or in part at any time or from time to time
within the exercise period, subject to the provisions of the Plan. The
exercise of the Option shall be effectuated by submitting to the
Secretary of the Company at its office in Dayton, Ohio: (a) written
notice of intent to exercise the Option with respect to a specified
number of Option Shares; (b) payment, in cash, or by check payable to
the Company, or with already-
2
49
owned shares of the Company, or a combination of such already-owned
shares and cash, of the full amount of the purchase price for the
number of Option Shares with respect to which the Option is then being
exercised; and (c) payment in cash or by check of the full amount of
all federal, state, and local taxes, if any, that the Company is
required by law to withhold with respect to such exercise. The Option
may not be exercised for a fraction of an Option Share.
3. The Option is not transferable other than by will or by laws of
descent and distribution and may be exercised during the lifetime of
the Employee only by the Employee.
4. If Employee's employment is terminated by the Company due to a
Termination Without Cause (as described in the Employment Agreement),
or if Employee terminates his employment due to a change in
circumstances as described in Section 7(d) of the Employment Agreement,
Employee shall be deemed to have elected retirement for purposes of the
Plan, and the Option, subject to the Expiration Date, shall become
exercisable by the Employee, as if he had remained continuously
employed by the Company. If Employee's employment is terminated by
death, the Option shall vest in full immediately, and to the extent not
theretofore exercised on the date of death, may be exercised within one
year after the date of death, subject to the Expiration Date, by the
person to whom the Option is transferred by will or the applicable laws
of descent and distribution. If Employee's termination is a Termination
for Cause (as defined in the Employment Agreement), all options
(including this Option) not previously exercised shall immediately
terminate. If the Employee voluntarily terminates his employment, the
Option, subject to the Expiration Date, shall be exercisable by the
Employee in the manner and to the extent the Employee was entitled to
exercise the Option as of the date of such termination. If the
Employee's employment terminates due to disability (as defined in the
Employment Agreement), the Option shall vest in full immediately, and
to the extent not theretofore exercised on the date of disability, may
be exercised within sixty (60) days after the date of disability,
subject to the Expiration Date. Other than as set forth in the
Employment Agreement, nothing contained herein shall give the Employee
any right with respect to continuance of employment with the Company or
any subsidiary nor restrict in any way the right of the Company or any
subsidiary to terminate his or her employment at any time.
5. In the event of any change in the Option Shares by reason of a
merger, consolidation, reorganization, recapitalization, stock
dividend, stock split-up, combination or exchange of shares, or other
change in the corporate structure (provided that the Company remains as
the surviving entity upon the completion of any of the foregoing
transactions) the number and class of Option Shares and the option
price per Option Share shall be appropriately adjusted by the
Committee, whose determination in each case shall be conclusive.
2
50
6. Anything to the contrary notwithstanding, if the Company is
the subject of a merger, acquisition, or other reorganization in which
the Company is not to be the surviving entity, the Company shall, in
its discretion (exercisable by the affirmative vote of 75% of the
Directors of the Company in office immediately prior to the proposed
transaction), have the right to cancel the Option immediately prior to
the effective date of such merger, acquisition, or reorganization, by
giving written notice to the Employee or his or her personal
representative of its intention to do so and by permitting the purchase
during the thirty (30) day period next preceding such effective date of
all Option Shares.
7. Neither the Employee nor his or her legal representative shall
be or have any of the rights or privileges of a shareholder of the
Company in respect to any of the Option Shares unless and until
certificates representing such Option Shares have been issued.
8. (a) This Option is subject to all laws and regulations of any
governmental authority which may be applicable hereto; notwithstanding
any provisions hereof, the holder of this Option shall not be entitled
to exercise such Option nor shall the Company be obligated to issue any
Option Shares hereunder to the holder if such exercise or issuance
shall constitute a violation by the Employee or the Company of any
provisions of any such law or regulation.
(b) The Company, in its discretion, may postpone the issuance
and delivery of Option Shares upon any exercise of this Option until
completion of any stock exchange listing or registration or other
qualification of such Shares under any state or federal law, rule, or
regulation as the Company may consider appropriate and may require any
person exercising this Option to make such representations and furnish
such information as it may consider appropriate in connection with the
issuance of the Option Shares in compliance with applicable law. Under
such circumstances, the Company shall proceed with reasonable
promptness to complete any such listing, registration, or other
qualification.
(c) Option Shares issued and delivered upon exercise of this
Option may be subject to such restrictions on trading, including
appropriate legending of certificates to that effect, as the Company,
in its discretion, shall determine necessary to satisfy applicable
legal requirements and obligations.
(d) The Employee, for himself or herself and his or her
transferees by will or the laws of descent and distribution, by
accepting this Option: (i) represents that acquisition of the Option
Shares shall be for investment purposes only; (ii) agrees that he or
she will not sell, pledge, hypothecate, or otherwise distribute such
Option Shares or any interest therein unless a registration statement
covering such Option Shares is in effect under the Securities Act of
1933, as now or hereafter amended (the "ACT"), or unless counsel for
the Company shall have rendered to the Company an opinion that such
sale, pledge, hypothecation, or other such distribution may be carried
out without registration of
3
51
such Option Shares under the Act; and (iii) agrees that an appropriate
legend may be placed on the stock certificate or certificates
evidencing ownership of Option Shares acquired hereunder, which legend
shall reflect the restrictions on disposition contained herein;
provided, however, that the foregoing representations and agreements in
this Paragraph (d) of Section 8 with respect to the Option Shares shall
be inoperative and shall expire in the event that either: (A) the
Option Shares shall be registered under the Act; or (B) in the opinion
of counsel for the Company, such representations and agreements are not
necessary under the Act or any rule or regulation promulgated pursuant
thereto.
9. The terms of this Agreement specifically incorporate and are
subject to the terms and conditions of the Plan, a copy of which has
been furnished to the Employee, as the same may be amended from time to
time in the future; provided, however, that this Option cannot be
altered to the detriment of the Employee, without his consent.
10. Inability of the Company to obtain from any regulatory body
having jurisdiction, the authority deemed by the Company's counsel to
be necessary to the lawful issuance of any Option Shares hereunder
shall relieve the Company of any liability in respect of the
non-issuance of such Option Shares as to which such requisite authority
shall not have been obtained.
11. The interpretation, performance, and enforcement of this option
shall be governed by the laws of the State of Ohio.
THE XXXXXXXX AND XXXXXXXX COMPANY
By:
------------------------------------------
Xxxx X. Xxxxxxx
Vice President, Corporate Finance and
Chief Financial Officer
ATTEST:
-----------------------------------
Xxxx X. Xxxxxxxx
General Counsel & Secretary
May 1, 1999 Nonqualified Stock Option Agreement
4
52
ACCEPTANCE OF
MAY 1, 1999
NONQUALIFIED STOCK OPTION
I have reviewed a copy of The Xxxxxxxx and Xxxxxxxx Company Stock Option Plan
--- 1995, and agree to be bound by all of the terms and conditions thereof and
of this Agreement.
-------------------------------------
Signature
XXXXX X. XXXXXXXXXX
-------------------------------------
Printed Name
-------------------------------------
Social Security Number
Dated: _________, 1999
DO NOT RETURN THIS COPY
THIS COPY SHOULD REMAIN WITH YOUR AGREEMENT
5
53
EXHIBIT E
SCHEDULE OF FRINGE BENEFITS
PURSUANT TO SECTION 3(d)
------------------------
Benefit Amount
------- ------
Annual Physical Exam Local Clinic, maximum of $800
Auto/Gas Allowance $916 monthly
Charitable Allowance $1,000 annually to charities of his choice
Income Tax Planning and $1,000 annually
Preparation
Estate Planning and
Will Preparation
Initial Service $900
Updates $300 annually
Country Club Dues 50% annually, including initiation fee up to $3,500
Luncheon Club Dues 100% annually
Corporate aircraft (personal use) Yes; in connection with company business use Employee may
include personal passengers, subject to seat availability.
Employee shall receive W-2 for personal use value per IRS
regulations
Vacation Five (5) weeks annually at mutually agreed times.
