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Exhibit 10.1
AMENDED AND RESTATED
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EMPLOYMENT AGREEMENT
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This Amended and Restated Employment Agreement (this
"Agreement") is made as of the 1st day of June, 2000, between RPM, INC., an
Ohio corporation (the "Company"), and Thomas C. Sullivan ("Executive"). WHEREAS,
Executive is currently Chairman of the Board and Chief Executive Officer of the
Company; and WHEREAS, Executive and the Company entered into a certain
Employment Agreement, originally dated as of July 22, 1981, as amended (the
"Existing Agreement"), to ensure Executive's continued employment with the
Company; and
WHEREAS, the Board of Directors of the Company recognizes the
importance of Executive's continuing contribution to the future growth and
success of the Company and desires to assure the Company and its shareholders of
Executive's continued employment in an executive capacity and to compensate him
therefor; and
WHEREAS, Executive is desirous of committing himself to
continue to serve the Company on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein contained, the parties
hereto agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby agrees to continue
to employ Executive, and Executive hereby agrees to continue to serve the
Company, on the terms and conditions set forth herein for the period commencing
as of the date hereof and expiring on December 31, 2002 (the "Employment
Period"). In the event of a Change in Control, the Employment Period shall
automatically be extended for a period of three years beginning on the
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date of the Change in Control and ending on the third anniversary of the
date of such Change in Control. In any case, the Employment Period may be
terminated earlier under the terms and conditions set forth herein.
2. POSITION AND DUTIES. Executive shall serve as Chairman of
the Board and Chief Executive Officer reporting to the Board of Directors of the
Company and shall have responsibility for the general management and operation
of the Company and shall have such other powers and duties as may from time to
time be assigned by the Board of Directors of the Company; provided, however,
that such duties are consistent with his present duties and his position with
the Company. Executive shall devote substantially all his working time and
efforts to the continued success of the business and affairs of the Company.
3. PLACE OF EMPLOYMENT. In connection with his employment by
the Company, Executive shall not be required to relocate or move from his
existing principal residence in Bay Village, Ohio, and shall not be required to
perform services which would make the continuance of his principal residence in
Bay Village, Ohio, unreasonably difficult or inconvenient for him. The Company
shall give Executive at least six months' advance notice of any proposed
relocation of its Medina, Ohio offices to a location more than 50 miles from
Medina, Ohio and, if Executive in his sole discretion chooses to relocate his
principal residence, the Company shall promptly pay (or reimburse him for) all
reasonable relocation expenses (consistent with the Company's past practice for
similarly situated senior executive officers) incurred by him relating to a
change of his principal residence in connection with any such relocation of the
Company's offices from Medina, Ohio.
4. COMPENSATION.
(a) BASE SALARY. During the Employment Period, Executive shall
receive a base salary at the rate of not less than Eight Hundred Seventy
Thousand Dollars ($870,000) per annum
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("Base Salary"), payable in substantially equal monthly installments at the
end of each month during the Employment Period hereunder. It is contemplated
that annually in the first quarter of each fiscal year of the Company the
Compensation Committee of the Board of Directors (the "Compensation Committee")
will review Executive's Base Salary and other compensation during the Employment
Period and, at the discretion of the Compensation Committee, it may increase his
Base Salary and other compensation, effective as of June 1 of such fiscal year,
based upon his performance, then generally prevailing industry salary scales,
the Company's results of operations, and other relevant factors. Any increase in
Base Salary or other compensation shall in no way limit or reduce any other
obligation of the Company hereunder and, once established at an increased
specified rate, Executive's Base Salary hereunder shall not be reduced without
his written consent.
(b) INCENTIVE COMPENSATION. In addition to his Base Salary,
Executive shall be entitled to receive such annual cash incentive compensation
("Incentive Compensation") during the Employment Period as the Compensation
Committee may determine in its sole discretion based upon the Company's results
of operation and other relevant factors. At the election of Executive, such
annual Incentive Compensation may be received by Executive as soon as possible,
but no later than 90 days after the close of the Company's fiscal year for which
such Incentive Compensation is granted, or the payment may be deferred provided
Executive gives written notice no later than May 31 of the current fiscal year
to the Chairman of the Compensation Committee that he elects to defer payment,
which notice shall also state the date(s) on which he desires to be paid.
(c) EXPENSES. During the Employment Period, Executive shall be
entitled to receive prompt reimbursement for all reasonable business expenses
incurred by him (in accordance with his past practice) in performing services
hereunder, provided that Executive properly accounts
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therefor in accordance with either Company policies or guidelines
established by the Internal Revenue Service if such are less burdensome.
(d) PARTICIPATION IN BENEFIT PLANS. During the Employment
Period, Executive shall be entitled to continue to participate in or receive
benefits under the Benefit Plans, subject to and on a basis consistent with the
terms, conditions and overall administration of the Benefit Plans. Except with
respect to any benefits related to salary reductions authorized by Executive,
nothing paid or awarded to Executive under any Benefit Plan presently in effect
or made available in the future shall reduce or be deemed to be in lieu of
compensation to Executive pursuant to any other provision of this Section 4.
(e) VACATIONS. During the Employment Period, Executive shall
be entitled to the same number of paid vacation days in each fiscal year
determined by the Company from time to time for its other senior executive
officers, but not less than four weeks in any fiscal year, to be taken at such
time or times as is desired by Executive after consultation with the Board of
Directors (or its designee) to avoid scheduling conflicts (prorated in any
fiscal year during which Executive is employed hereunder for less than the
entire such year in accordance with the number of days in such fiscal year
during which he is so employed). Executive also shall be entitled to all paid
holidays given by the Company to its other salaried employees.
(f) OTHER BENEFITS. During the Employment Period, Executive
shall be entitled to continue to receive the fringe benefits appertaining to his
position with the Company in accordance with present practice, including the use
of the most recent model of a full-sized automobile. During the Employment
Period, Executive shall be entitled to the full-time use of his present office
and furniture at the Company's offices in Medina, Ohio, and shall be entitled to
the full-time use of a secretary paid by the Company.
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5. TERMINATION OUTSIDE OF PROTECTED PERIOD.
(a) EVENTS OF TERMINATION. At any time other than during the
Protected Period, the Employment Period shall terminate immediately upon the
occurrence of any of the following events: (i) expiration of the Employment
Period; (ii) the death of Executive; (iii) the expiration of 30 days after the
Company gives Executive written notice of its election to terminate the
Employment Period upon the Disability of Executive, if before the expiration of
such 30-day period Executive has not returned to the performance of his duties
hereunder on a full-time basis; (iv) the resignation of Executive; (v) the
Company's termination of the Employment Period for Cause; or (vi) the Company's
termination of the Employment Period at any time, without Cause, for any reason
or no reason.
(b) COMPENSATION UPON TERMINATION. This Subsection 5(b)
sets forth the payments and benefits to which Executive is entitled under
any termination of employment pursuant to Subsection 5(a).
(i) EXPIRATION OF EMPLOYMENT PERIOD. If Executive's
employment is terminated pursuant to Subsection 5(a)(i) upon expiration of
the Employment Period, Executive shall be entitled to no further payment of Base
Salary and shall no longer be entitled to participate in the Benefit Plans,
except as required by applicable law or as governed by the Benefit Plans in
which Executive participates immediately prior to such termination, but
Executive shall be entitled to receive any Incentive Compensation payable but
not yet paid under the terms of Section 4(b) for the period from June 1, 2002
through the Termination Date.
(ii) DEATH; DISABILITY. During any period in which
Executive fails to perform his duties hereunder as a result of incapacity
due to physical or mental illness, Executive shall continue to receive his full
Base Salary only until his employment is terminated pursuant to
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Subsection 5(a)(ii) or (iii). Upon termination of the Employment Period
under Subsection 5(a)(ii) or (iii), Executive shall no longer be entitled to
participate in the Benefit Plans, except as required by applicable law or as
governed by the Benefit Plans including the Group Long Term Disability Insurance
in which Executive participates immediately prior to such termination, but
Executive shall be entitled to receive his Earned Incentive Compensation, if
any, promptly after the Termination Date.
(iii) RESIGNATION OR CAUSE. If Executive's employment
is terminated pursuant to Subsection 5(a)(iv) or (v), the Company shall pay
Executive his full Base Salary through the Termination Date at the rate in
effect at such time. The Company shall then have no further obligations to
Executive under this Agreement and Executive shall no longer be entitled to
participate in the Benefit Plans, except as required by applicable law.
(iv) TERMINATION WITHOUT CAUSE. If Executive's
employment is terminated without Cause pursuant to Subsection 5(a)(vi),
then in lieu of any further salary payments to Executive for periods subsequent
to the Termination Date, the Company shall pay to Executive no later than 30
calendar days following such date, a lump sum amount equal to the sum of (A)
500% of Executive's Base Salary in effect as of such date and (B) the amount of
Executive's Earned Incentive Compensation. Executive also shall be entitled to
certain continuing benefits under the terms of Subsection 5(c). Notwithstanding
any other provision of this Subsection 5(b)(iv), Subsection 5(c) or this
Agreement, the Company shall have no obligation to make the lump-sum payment
referred to in this Subsection 5(b)(iv) or provide any continuing benefits or
payment referred to in Subsection 5(c) unless (X) Executive executes and
delivers to the Company a Release and Waiver of Claims and (Y) Executive
refrains from revoking, rescinding
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or otherwise repudiating such Release and Waiver of Claims for all
applicable periods during which Executive may revoke it.
(c) ADDITIONAL BENEFITS FOLLOWING TERMINATION UNDER SUBSECTION
5(a)(vi). This Subsection 5(c) sets forth the benefits to which Executive shall
be entitled, in addition to those set forth in Subsection 5(b)(iv), following a
termination of the Employment Period under Subsection 5(a)(vi). Executive shall
not be entitled to the benefit of any provision of this Subsection 5(c)
following a termination of the Employment Period under any other provision
hereof.
(i) CONTINUING BENEFIT PLANS. For a period of five years following such
a Termination Date, Executive shall also be entitled to continue to participate,
on the same terms and conditions as active employees, in the Continuing Benefit
Plans in which Executive participated immediately prior to the Termination Date,
except that (A) Executive shall be entitled to Estate/Financial Planning
Benefits for a period of only six months following the Termination Date and (B)
if Executive's continued participation is not possible and Executive does not
continue to participate under the terms of any such Continuing Benefit Plan, the
Company shall instead pay to Executive, promptly upon presentation to the
Company of an invoice or receipt for payment, the amount Executive spends to
receive comparable coverage under such a comparable plan for such five-year
period. Notwithstanding the foregoing sentence, the Company's obligations to
Executive with respect to continued benefits under the Continuing Benefit Plans
shall be deemed satisfied to the extent of any such comparable benefits which
are provided to Executive by another employer. During such continuation period,
Executive shall be responsible for paying the normal employee share of the
applicable premiums for coverage under the Continuing Benefit Plans. The Company
shall have the right to modify,
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amend or terminate the Continuing Benefit Plans (other than the
Estate/Financial Planning Benefits) following the Termination Date and
Executive's continued participation therein shall be subject to such
modification, amendment or termination if such modification, amendment or
termination applies generally to the then-current participants in such plan.
Upon completion of the five-year period following such a Termination Date, the
Company shall afford Executive the opportunity to continue Executive's coverage
under the Continuing Benefit Plans (other than the Estate/Financial Planning
Benefits), at Executive's expense, for an additional period under COBRA
Continuation Coverage, so long as Executive timely elects to receive COBRA
Continuation Coverage under the terms thereof and otherwise complies with the
conditions of continuation of benefits under COBRA Continuation Coverage.
(ii) LIMITED BENEFIT PLANS. After such a Termination Date,
Executive shall no longer be entitled to participate as an active employee
in, or receive any additional or new benefits under, the Limited Benefit Plans,
except as set forth in this Subsection 5(c)(ii) and except for such benefits, if
any, available under such plans to former employees. After such a Termination
Date, Executive shall be entitled to the following additional benefits:
(A) Continued coverage, for a period of five years
after the Termination Date, under the Split Dollar Life Insurance, with the
Company paying such expenses as it otherwise would have paid thereunder if
Executive had continued to be employed, all on the terms of the Split Dollar
Life Insurance;
(B) A lump-sum payment to be paid under the
Supplemental Executive Retirement Plan equal to the cash value of the
benefits Executive would have received had he continued to participate in and
receive annual awards under the Restricted Stock Plan on a basis consistent with
his past practice for a period of five years after the Termination Date,
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determined and payable in accordance with the terms of the Supplemental
Executive Retirement Plan and the Company's past practice; and
(C) The lapse of all restrictions on transfer and forfeiture
provisions to which Executive's awards under the Restricted Stock Plan are
subject, so that any restricted shares previously awarded to Executive under
such plan shall be nonforfeitable and freely transferable thereafter, all on the
terms of the Restricted Stock Plan or the agreements thereunder.
(d) NOTICE OF TERMINATION. Any termination by the Company
pursuant to Subsection 5(a)(iii), (v) or (vi) or by Executive pursuant to
Subsection 5(a)(iv) shall be communicated to the other party hereto by written
notice of termination, which shall state in reasonable detail the facts upon
which the termination has occurred.
6. TERMINATION DURING PROTECTED PERIOD.
(a) EVENTS OF TERMINATION. During the Protected Period, the
Employment Period shall terminate immediately upon the occurrence of any of the
following events: (i) the death of Executive; (ii) the expiration of 30 days
after the Company gives Executive written notice of its election to terminate
the Employment Period upon the Disability of Executive, if before the expiration
of such 30-day period Executive has not returned to the performance of his
duties hereunder on a full-time basis; (iii) the resignation of Executive
without delivering Notice of Termination for Good Reason; (iv) the Company's
termination of the Employment Period for Cause; (v) the Company's termination of
the Employment Period at any time, without Cause, for any reason or no reason;
or (vi) Executive's termination of the Employment Period for Good Reason by
delivery of Notice of Termination for Good Reason to the Company during the
Protected Period indicating that an event constituting Good Reason has occurred,
provided that
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Executive's failure to object in writing to an event alleged to constitute
Good Reason within six months of the date of occurrence of such event shall be
deemed a waiver of such event by Executive and Executive thereafter may not
terminate the Employment Period under this Subsection 6(a)(vi) based on such
event.
(b) COMPENSATION UPON TERMINATION. This Subsection 6(b) sets forth the
payments and benefits to which Executive is entitled under any termination
of employment pursuant to Subsection 6(a).
(i) DEATH; DISABILITY. During any period in which Executive fails
to perform his duties hereunder as a result of incapacity due to physical
or mental illness, Executive shall continue to receive his full Base Salary only
until his employment is terminated pursuant to Subsection 6(a)(i) or (ii). Upon
termination of the Employment Period under Subsection 6(a)(i) or (ii), Executive
shall no longer be entitled to participate in the Benefit Plans, except as
required by applicable law or as governed by the Benefit Plans including the
Group Long Term Disability Insurance in which Executive participates immediately
prior to such termination, but Executive shall be entitled to receive his Earned
Incentive Compensation, if any, promptly after the Termination Date.
(ii) RESIGNATION OR CAUSE. If Executive's employment is terminated
pursuant to Subsection 6(a)(iii) or (iv), the Company shall pay Executive
his full Base Salary through the Termination Date at the rate in effect at such
time. The Company shall then have no further obligations to Executive under this
Agreement and Executive shall no longer be entitled to participate in the
Benefit Plans, except as required by applicable law.
(iii) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If Executive's
employment is terminated by the Company without Cause pursuant to
Subsection 6(a)(v) or by
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Executive for Good Reason pursuant to Subsection 6(a)(vi), then in lieu of
any further salary payments to Executive for periods subsequent to the
Termination Date, the Company shall pay to Executive no later than 30 calendar
days following such date (subject to delay pursuant to Subsection 6(d)(ii)), a
lump sum amount (subject to reduction pursuant to Subsection 6(d)) equal to the
sum of (A) 500% of Executive's Base Salary in effect as of such date and (B) the
amount of Executive's Earned Incentive Compensation. Executive also shall be
entitled to certain continuing benefits under the terms of Subsection 6(c).
Notwithstanding any other provision of this Subsection 6(b)(iii), Subsection
6(c) or this Agreement, the Company shall have no obligation to make the
lump-sum payment referred to in this Subsection 6(b)(iii) or provide any
continuing benefits or payment referred to in Subsection 6(c) unless (X)
Executive executes and delivers to the Company a Release and Waiver of Claims
and (Y) Executive refrains from revoking, rescinding or otherwise repudiating
such Release and Waiver of Claims for all applicable periods during which
Executive may revoke it.
(c) ADDITIONAL BENEFITS FOLLOWING TERMINATION UNDER
SUBSECTIONS 6(a)(v) or (vi). This Subsection 6(c) sets forth the benefits to
which Executive shall be entitled, in addition to those set forth in Subsection
6(b)(iii), following a termination of the Employment Period under Subsection
6(a)(v) or (vi). Executive shall not be entitled to the benefit of any provision
of this Subsection 6(c) following a termination of the Employment Period under
any other provision hereof.
(i) CONTINUING BENEFIT PLANS. For a period of five years following
such a Termination Date, Executive shall also be entitled to continue to
participate, on the same terms and conditions as active employees, in the
Continuing Benefit Plans in which Executive participated immediately prior to
the Termination Date, except that (A) Executive shall be
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entitled to Estate/Financial Planning Benefits for a period of only one
year following the Termination Date and (B) if Executive's continued
participation is not possible and Executive does not continue to participate
under the terms of any such Continuing Benefit Plan, the Company shall instead
pay to Executive, promptly upon presentation to the Company of an invoice or
receipt for payment, the amount Executive spends to receive comparable coverage
under such a comparable plan for such five-year period. Notwithstanding the
foregoing sentence, the Company's obligations to Executive with respect to
continued benefits under the Continuing Benefit Plans shall be deemed satisfied
to the extent of any such comparable benefits which are provided to Executive by
another employer. During such continuation period, Executive shall be
responsible for paying the normal employee share of the applicable premiums for
coverage under the Continuing Benefit Plans. The Company shall have the right to
modify, amend or terminate the Continuing Benefit Plans (other than the
Estate/Financial Planning Benefits) following the Termination Date and
Executive's continued participation therein shall be subject to such
modification, amendment or termination if such modification, amendment or
termination applies generally to the then-current participants in such plan.
Upon completion of the five-year period following such a Termination Date, the
Company shall afford Executive the opportunity to continue Executive's coverage
under the Continuing Benefit Plans (other than the Estate/Financial Planning
Benefits), at Executive's expense, for an additional period under COBRA
Continuation Coverage, so long as Executive timely elects to receive COBRA
Continuation Coverage under the terms thereof and otherwise complies with the
conditions of continuation of benefits under COBRA Continuation Coverage.
(ii) LIMITED BENEFIT PLANS. After such a Termination Date,
Executive shall no longer be entitled to participate as an active employee
in, or receive any additional or
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new benefits under, the Limited Benefit Plans, except as set forth in this
Subsection 6(c)(ii) and except for such benefits, if any, available under such
plans to former employees. After such a Termination Date, Executive shall be
entitled to the following additional benefits:
(A) The Company shall make a lump sum five-year premium
payment to the carrier equal to the premiums that the Company would have
paid under the Split Dollar Life Insurance if Executive had continued to be
employed for five years following the Termination Date, all on the terms of the
Split Dollar Life Insurance. In addition, immediately following such premium
payment, the Company shall execute such documents as necessary to cause the full
ownership of the Split Dollar Life Insurance policy related to Executive and all
of its values to transfer to Executive. The Company shall be responsible for the
payment of all costs imposed by the carrier to carry out such transfer;
(B) A lump-sum payment to be paid under the Supplemental
Executive Retirement Plan equal to the cash value of the benefits Executive
would have received had he continued to participate in and receive annual awards
under the Restricted Stock Plan on a basis consistent with his past practice for
a period of five years after the Termination Date, determined and payable in
accordance with the terms of the Supplemental Executive Retirement Plan and the
Company's past practice but subject to reduction pursuant to Subsection 6(d);
and
(C) The lapse of all restrictions on transfer and forfeiture
provisions to which Executive's awards under the Restricted Stock Plan are
subject, so that any restricted shares previously awarded to Executive under
such plan shall be nonforfeitable and freely transferable thereafter, all on the
terms of the Restricted Stock Plan or the agreements thereunder.
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(d) REDUCTION OF PAYMENT.
(i) CONDITIONAL REDUCTION. Notwithstanding Subsections 6(b)(iii)
and 6(c)(ii)(B), if Executive is a Disqualified Individual and if any
portion of the Special Payment would be an Excess Parachute Payment but for the
application of this Subsection 6(d), then:
(A) if the After-Tax Payment Amount would be greater by
reducing the amount of the Lump-Sum Payment otherwise payable to Executive
to the minimum extent necessary (but in no event to less than zero) so that no
portion of the Special Payment, after such reduction, constitutes an Excess
Parachute Payment, then the Lump-Sum Payment shall be so reduced; and
(B) if the After-Tax Payment Amount would be greater without
the reduction referred to in Subsection 6(d)(i)(A), then there shall be no
reduction in the Lump-Sum Payment by application of this Subsection 6(d).
(ii) METHOD OF DETERMINATION. If requested by Executive or the
Company, an accounting firm selected by Executive and reasonably acceptable
to the Company (the "Accounting Firm") shall determine whether any reduction in
the amount of the Lump-Sum Payment is required pursuant to this Subsection 6(d).
Executive shall direct the Accounting Firm to submit its determination and
detailed supporting calculations to both the Company and Executive within 30
calendar days after the Termination Date. The Company and Executive shall each
provide the Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or Executive, as the case may be,
reasonably requested by the Accounting Firm, and otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the
determination and calculations. Any determination by the Accounting Firm as to
whether any reduction in the amount of the Lump-Sum Payment is required pursuant
to this Subsection 6(d) shall be binding upon the Company and Executive. The
fees and expenses of the Accounting Firm for its services in connection with the
determinations and calculations contemplated this Subsection 6(d) shall be borne
by the Company. The federal, state and local income or other tax returns filed
by Executive and the Company shall be prepared and filed on a basis consistent
with such determinations and calculations. The Company shall pay the Lump-
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Sum Payment, as reduced or not reduced pursuant to the final determination
of the Accounting Firm, to Executive no later than the later of (A) the time
otherwise required hereunder or (B) five business days after receipt of such
determination.
(e) NOTICE OF TERMINATION. Any termination by the Company
pursuant to Subsection 6(a)(ii), (iv) or (v) or by Executive pursuant to
Subsection 6(a)(iii) shall be communicated to the other party hereto by written
notice of termination, which shall state in reasonable detail the facts upon
which the termination has occurred. A termination pursuant to Subsection
6(a)(vi) shall be communicated by Notice of Termination for Good Reason.
(f) NOTICE OF CHANGE IN CONTROL. The Company shall give
Executive written notice of the occurrence of any event constituting a Change in
Control as promptly as practical, and in no case later than 10 calendar days,
after the occurrence of such event.
(g) DEEMED TERMINATION AFTER CHANGE IN CONTROL. Any
termination of the employment of Executive by the Company without Cause or the
removal of Executive as an elected officer or Director of the Company or a
Subsidiary following the commencement of any discussion with or communication
from a third party that ultimately results in a Change in Control shall be
deemed to be a termination or removal, respectively, of Executive after a Change
in Control for purposes of this Agreement. In the event Executive is entitled to
the benefits under this Agreement
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as contemplated by the preceding sentence, then for purposes of Subsections
6(b)(iii), 6(c) and 6(d), the Termination Date shall be deemed to be the date of
the Change in Control if the employment of Executive was terminated before such
date.
(h) SET-OFF. There shall be no right of set-off or
counterclaim against, or delay in, any payment by the Company to Executive of
the Lump-Sum Payment in respect of any claim against or debt or obligation of
Executive, whether arising hereunder or otherwise.
(i) INTEREST ON OVERDUE PAYMENTS. Without limiting the rights
of Executive at law or in equity, if the Company fails to make the Lump-Sum
Payment on a timely basis, the Company shall pay interest on the amount thereof
at an annualized rate equal to the rate in effect, at the time such payment
should have been made, under the 401(k) Plan for loans to participants in such
plan.
(j) OUTPLACEMENT ASSISTANCE. Promptly after a request in
writing from Executive following a termination of the Employment Period under
Subsection 6(a)(v) or (vi), the Company shall retain a professional outplacement
assistance service firm reasonably acceptable to Executive, at the Company's
expense, to provide outplacement assistance to Executive during the Protected
Period. Such services shall be appropriate to Executive's position with the
Company. Executive shall not be entitled to such services, however, following a
termination of the Employment Period under Subsection 6(a)(i), (ii), (iii) or
(iv).
7. BINDING AGREEMENT; SUCCESSORS. This Agreement shall inure
to the benefit of and be binding upon Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to
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Executive's devisee, legatee, or other designee or, if there be no
such designee, to Executive's estate. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of the Company, including,
without limitation, any person acquiring directly or indirectly all or
substantially all of the assets of the Company, whether by merger,
consolidation, sale or otherwise (and such successor shall thereafter be deemed
the "Company" for the purposes of this Agreement). The Company shall require any
such successor to assume and agree to perform this Agreement.
8. RESTRICTIVE COVENANTS.
(a) NON-COMPETITION. During the Employment Period and for a
period of two years following the Termination Date, Executive shall not,
directly or indirectly, own, manage, operate, control or participate in the
ownership, management, operation or control of, or be connected as an officer,
employee, partner or director with, or have any financial interest in, any
business which is in substantial competition with any business conducted by the
Company or by any group, division or Subsidiary of the Company, in any area
where such business is being conducted at the time of such termination.
Ownership of 5% or less of the voting stock of any corporation which is required
to file periodic reports with the Securities and Exchange Commission under the
Exchange Act shall not constitute a violation hereof.
(b) NON-SOLICITATION. Executive shall not directly or
indirectly, at any time during the Employment Period and for two years
thereafter, solicit or induce or attempt to solicit or induce any employee,
sales representative or other representative, agent or consultant of the Company
or any group, division or Subsidiary of the Company (collectively, the "RPM
Group") to terminate his, her or its employment, representation or other
relationship with the RPM Group or in any way directly or indirectly interfere
with such a relationship.
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(c) CONFIDENTIALITY.
(i) Executive shall keep in strict confidence, and shall not,
directly or indirectly, at any time during or after the Employment Period,
disclose, furnish, publish, disseminate, make available or, except in the course
of performing his duties of employment hereunder, use any Confidential
Information. Executive specifically acknowledges that all Confidential
Information, whether reduced to writing, maintained on any form of electronic
media, or maintained in the mind or memory of Executive and whether compiled by
the RPM Group, and/or Executive, derives independent economic value from not
being readily known to or ascertainable by proper means by others who can obtain
economic value from its disclosure or use, that reasonable efforts have been
made by the RPM Group to maintain the secrecy of such information, that such
information is the sole property of the RPM Group and that any disclosure or use
of such information by Executive during the Employment Period (except in the
course of performing his duties and obligations hereunder) or after the
termination of the Employment Period shall constitute a misappropriation of the
RPM Group's trade secrets.
(ii) Executive agrees that upon termination of the Employment
Period, for any reason, Executive shall return to the Company, in good
condition, all property of the RPM Group, including, without limitation, the
originals and all copies of any materials, whether in paper, electronic or other
media, that contain, reflect, summarize, describe, analyze or refer or relate to
any items of Confidential Information.
9. NOTICE. All notices, requests and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given (a) when hand delivered, (b) when dispatched by electronic facsimile
transmission (with receipt electronically confirmed), (c) one business day after
being sent by recognized overnight delivery service, or
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(d) three business days after being sent by registered or certified mail,
return receipt requested, postage prepaid, and in each case addressed as follows
(or addressed as otherwise specified by notice under this Section):
If to Executive:
Thomas C. Sullivan
30946 Lake Road
Bay Village, Ohio 44140
Facsimile: Not applicable
If to the Company:
RPM, Inc.
P.O. Box 777
2628 Pearl Road
Medina, Ohio 44256
Facsimile: 330-225-6574
Attn: Secretary
10. WITHHOLDING. The Company may withhold from any amounts payable
under or in connection with this Agreement all federal, state, local and
other taxes as may be required to be withheld by the Company under applicable
law or governmental regulation or ruling.
11. AMENDMENTS; WAIVERS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing, and is signed by Executive and by another
executive officer of the Company. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
12. JURISDICTION. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Ohio, without giving effect to the
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conflict of law principles of such State. Executive and the Company each
agree that the state and federal courts located in the State of Ohio shall have
jurisdiction in any action, suit or proceeding against Executive or the Company
based on or arising out of this Agreement and each of Executive and the Company
hereby (a) submits to the personal jurisdiction of such courts, (b) consents to
service of process in connection with any such action, suit or proceeding and
(c) waives any other requirement (whether imposed by statute, rule of court or
otherwise) with respect to personal jurisdiction, venue or service of process.
13. EQUITABLE RELIEF. Executive and the Company acknowledge
and agree that the covenants contained in Section 8 are of a special nature and
that any breach, violation or evasion by Executive of the terms of Section 8
will result in immediate and irreparable injury and harm to the Company, for
which there is no adequate remedy at law, and will cause damage to the Company
in amounts difficult to ascertain. Accordingly, the Company shall be entitled to
the remedy of injunction, as well as to all other legal or equitable remedies to
which the Company may be entitled (including, without limitation, the right to
seek monetary damages), for any breach, violation or evasion by Executive of the
terms of Section 8.
14. VALIDITY. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect. In the event that any provision of Section 8 is found by
a court of competent jurisdiction to be invalid or unenforceable as against
public policy, such court shall exercise its discretion in reforming such
provision to the end that Executive shall be subject to such restrictions and
obligations as are reasonable under the circumstances and enforceable by the
Company.
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15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
16. HEADINGS; DEFINITIONS. The headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement. Certain capitalized terms used in this
Agreement are defined on Schedule A attached hereto.
17. NO ASSIGNMENT. This Agreement may not be assigned by either party
without the prior written consent of the other party, except as provided in
Section 7.
18. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the employment of Executive and
supersedes any and all other agreements (including the Existing Agreement),
either oral or in writing, with respect to the employment of Executive.
19. ENFORCEMENT COSTS. The Company is aware that upon the
occurrence of a Change in Control the Board of Directors or a shareholder of the
Company may then cause or attempt to cause the Company to refuse to comply with
its obligations under this Agreement, or may cause or attempt to cause the
Company to institute, or may institute, litigation seeking to have this
Agreement declared unenforceable, or may take, or attempt to take, other action
to deny Executive the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement could be frustrated. It is the
intent of the Company that Executive not be required to incur the expenses
associated with the enforcement of his rights under this Agreement by litigation
or other legal action because the cost and expense thereof would substantially
detract from the benefits intended to be extended to Executive hereunder, nor be
bound to negotiate any settlement of his rights hereunder under threat of
incurring such expenses. Accordingly, if following a Change
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<PAGE> 22
in Control it should appear to Executive that the Company has failed to
comply with any of its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation or other legal action designed to
deny, diminish or recover from Executive the benefits intended to be provided to
Executive hereunder, and that Executive has complied with all of his obligations
under Section 8, the Company irrevocably authorizes Executive from time to time
to retain counsel of his choice at the expense of the Company as provided in
this Section 19 to represent Executive in connection with the initiation or
defense of any litigation or other legal action, whether by or against the
Company or any Director, officer, shareholder or other person affiliated with
the Company, in any jurisdiction. The Company's obligations under this Section
19 shall not be conditioned on Executive's success in the prosecution or defense
of any such litigation or other legal action. Notwithstanding any existing or
prior attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to Executive entering into an attorney-client
relationship with such counsel, and in that connection the Company and Executive
agree that a confidential relationship shall exist between Executive and such
counsel. The reasonable fees and expenses of counsel selected from time to time
by Executive as hereinabove provided shall be paid or reimbursed to Executive by
the Company on a regular, periodic basis upon presentation by Executive of a
statement or statements prepared by such counsel in accordance with its
customary practices, up to a maximum aggregate amount of $500,000.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
IN THE PRESENCE OF: RPM, INC.
By: /s/ James A. Karman
---------------------------- ---------------------------------
James A. Karman, Vice Chairman
And: /s/ P. Kelly Tompkins
---------------------------- ---------------------------------
P. Kelly Tompkins, Secertary
The "Company"
/s/ Thomas C. Sullivan
---------------------------- ---------------------------------
Thomas C. Sullivan
"Executive"
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SCHEDULE A
CERTAIN DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
"401(k) Plan" means the RPM, Inc. 401(k) Plan and any successor plan or
arrangement.
"Affiliate" of a specified entity means an entity that directly, or
indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with, the entity specified.
"After-Tax Payment Amount" means the difference of (a) the amount of the
Special Payment, less (b) the amount of the Excise Tax, if any, imposed
upon the Special Payment.
"Average Incentive Compensation" means an amount equal to the average
amount of the annual Incentive Compensation payable to Executive (without
regard to any reduction thereof elected by Executive pursuant to any
qualified or non-qualified salary reduction arrangement maintained by the
Company, including, without limitation, the Deferred Compensation Plan) for
the three most recent completed fiscal years (or for such shorter period
during which Executive has been employed by the Company) preceding the
Termination Date in which the Company paid Incentive Compensation to
executive officers of the Company or in which the Company considered and
declined to pay Incentive Compensation to executive officers of the
Company.
"Benefit Plans" means the Continuing Benefit Plans and the Limited Benefit
Plans.
"Cause" means a determination of the Board of Directors (without the
participation of Executive) of the Company pursuant to the exercise of
its business judgment, that either of the following events has
occurred: (a) Executive has engaged in willful and intentional acts of
dishonesty or gross neglect of duty or (b) Executive has breached
Section 8.
"Change in Control" shall mean the occurrence at any time of any of the
following events:
(a) The Company is merged or consolidated or
reorganized into or with another corporation or other legal person or
entity, and as a result of such merger, consolidation or reorganization
less than a majority of the combined voting power of the
then-outstanding securities of such corporation, person or entity
immediately after such transaction are held in the aggregate by the
holders of Voting Stock immediately prior to such transaction;
(b) The Company sells or otherwise transfers all or
substantially all of its assets to any other corporation or other legal
person or entity, and less than a majority
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of the combined voting power of the then-outstanding securities of such
corporation, person or entity immediately after such sale or transfer is
held in the aggregate by the holders of Voting Stock immediately prior to
such sale or transfer;
(c) There is a report filed on Schedule 13D or
Schedule TO (or any successor schedule, form or report), each as
promulgated pursuant to the Exchange Act, disclosing that any person
(as the term "person" is used in Section 13(d)(3) or Section 14(d)(2)
of the Exchange Act) has become the beneficial owner (as the term
"beneficial owner" is defined under Rule l3d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities
representing 15% or more of the Voting Power;
(d) The Company files a report or proxy statement
with the Securities and Exchange Commission pursuant to the Exchange
Act disclosing in response to Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) that a change in
control of the Company has or may have occurred or will or may occur in
the future pursuant to any then-existing contract or transaction; or
(e) If during any period of two consecutive years,
individuals, who at the beginning of any such period, constitute the
Directors cease for any reason to constitute at least a majority
thereof, unless the nomination for election by the Company's
shareholders of each new Director was approved by a vote of at least
two-thirds of the Directors then in office who were Directors at the
beginning of any such period.
Notwithstanding the foregoing provisions of
paragraphs (c) and (d) of this definition, a "Change in Control" shall
not be deemed to have occurred for purposes of this Agreement (i)
solely because (A) the Company, (B) a Subsidiary, or (C) any
Company-sponsored employee stock ownership plan or other employee
benefit plan of the Company or any Subsidiary, or any entity holding
shares of Voting Stock for or pursuant to the terms of any such plan,
either files or becomes obligated to file a report or proxy statement
under or in response to Schedule 13D, Schedule TO, Form 8-K or Schedule
14A (or any successor schedule, form or report or item therein) under
the Exchange Act, disclosing beneficial ownership by it of shares of
Voting Stock or because the Company reports that a change in control of
the Company has or may have occurred or will or may occur in the future
by reason of such beneficial ownership, (ii) solely because any other
person or entity either files or becomes obligated to file a report on
Schedule 13D or Schedule TO (or any successor schedule, form or report)
under the Exchange Act, disclosing beneficial ownership by it of shares
of Voting Stock, but only if both (A) the transaction giving rise to
such filing or obligation is approved in advance of consummation
thereof by the Company's Board of Directors and (B) at least a majority
of the Voting Power immediately after such transaction is held in the
aggregate by the holders of Voting Stock immediately prior to such
transaction, or (iii) solely because of a change in control of any
Subsidiary.
"COBRA Continuation Coverage" means the health care continuation
requirements under the federal Consolidated Omnibus Budget
Reconciliation Act, as amended, Part VI of
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Subtitle B of Title I of the Employee Retirement Income Security Act of
1974, as amended, and Code Section 4980B(f), or any successor provisions
thereto.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Confidential Information" means trade secrets and confidential
business and technical information of the RPM Group and its customers
and vendors, without limitation as to when or how Executive may have
acquired such information. Such Confidential Information shall include,
without limitation, the RPM Group's manufacturing, selling and
servicing methods and business techniques, training, service and
business manuals, promotional materials, vendor and product
information, product development plans, internal financial statements,
sales and distribution information, business plans, marketing
strategies, pricing policies, corporate alliances, business
opportunities, the lists of actual and potential customers as well as
other customer information, technology, know-how, processes, data,
ideas, techniques, inventions (whether patentable or not), formulas,
terms of compensation and performance levels of RPM Group employees,
and other information concerning the RPM Group's actual or anticipated
business, research or development, or which is received in confidence
by or for the RPM Group from any other person and all other
confidential information to the extent that such information is not
intended by the RPM Group for public dissemination.
"Continuing Benefit Plans" means only the following employee benefit
plans and arrangements of the Company in effect on the date hereof, or
any successor plan or arrangement in which Executive is eligible to
participate immediately before the Termination Date:
(a) The RPM, Inc. Health and Welfare Plan (including medical, dental
and prescription drug benefits); and
(b) Estate/Financial Planning Benefits.
"Deferred Compensation Plan" means the RPM, Inc. Deferred Compensation
Plan for Key Employees in which executive officers of the Company are
eligible to participate and any such successor plan or arrangement.
"Director" means a member of the Board of Directors of the Company.
"Disability," when determined at any time other than during the
Protected Period, means the inability of Executive for a continuous
period in excess of 150 days to perform the essential functions of his
position on an active full-time basis with or without reasonable
accommodations by reason of a disability condition; a certificate from
a physician acceptable to both the Company and Executive to the effect
that Executive is or has been disabled and incapable of performing the
essential functions of his position with or without reasonable
accommodations as previously performed shall be conclusive of the fact
that Executive is incapable of performing such services and is, or has
been, disabled for the purposes of this Agreement. "Disability," when
determined at any time during the
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Protected Period, means a "Total Disability" (as defined and determined
under the Group Long Term Disability Insurance) that entitles Executive to
receive the "Total Disability Benefit" under the Group Long Term Disability
Insurance. Whether determined during or outside of the Protected Period,
the Company and Executive acknowledge and agree that the essential
functions of Executive's position are unique and critical to the Company
and that a disability condition that causes Executive to be unable to
perform the essential functions of his position under the circumstances
described above will constitute an undue hardship on the Company.
"Disqualified Individual" has the meaning set forth in Section 280G(c)
of the Code (or any successor provision thereto).
"Earned Incentive Compensation" means the sum of:
(a) The amount of any Incentive Compensation payable
but not yet paid for the fiscal year preceding the fiscal year in
which the Termination Date occurs. If the Compensation Committee has
determined such amount prior to the Termination Date, then such amount
shall be the amount so determined by the Compensation Committee. If
the Compensation Committee has not determined such amount prior to the
Termination Date, then such amount shall equal the amount of the
Average Incentive Compensation; and
(b) An amount equal to the Average Incentive
Compensation multiplied by a fraction, the numerator of which is the
number of days in the current fiscal year of the Company that have
expired before the Termination Date and the denominator of which is
365.
"Estate/Financial Planning Benefits" means those estate and financial
planning services (a) in effect on the date hereof in which Executive
is eligible to participate or (b) that the Company makes available at
any time before the Termination Date to the executives and key
management employees of the Company and in which Executive is then
eligible to participate.
"Excess Parachute Payment" has the meaning set forth in Section
280G(b)(1) of the Code (or any successor provision thereto).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder, as such law, rules and
regulations may be amended from time to time.
"Excise Tax" means the excise tax imposed by Section 4999 of the Code
(or any successor provision thereto) on the Special Payment by reason
of such Special Payment being considered "contingent on a change in
ownership or control" of the Company within the meaning of Section
280G(b)(2) of the Code (or any successor provision thereto).
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"Good Reason" means a determination by Executive made in good faith
that, upon or after the occurrence of a Change in Control, any of the
following events has occurred without Executive's express written
consent: (a) a significant reduction in the nature or scope of the
title, authority or responsibilities of Executive from those held by
Executive immediately prior to the Change in Control; (b) a reduction
in Executive's Base Salary from the amount in effect on the date of the
Change in Control; (c) a reduction in Executive's Incentive
Compensation from the amount of Executive's Average Incentive
Compensation, unless such reduction results solely from the Company's
results of operations; (d) the failure by the Company to offer to
Executive an economic value of benefits reasonably comparable to the
economic value of benefits under the Benefit Plans in which Executive
participates at the time of the Change in Control; or (e) a material
breach by the Company of the terms of Section 3.
"Group Long Term Disability Insurance" means the Group Long Term
Disability Insurance sponsored by the Company and provided by the
Continental Casualty Company, Chicago, Illinois, as currently in effect
and as the same may be amended from time to time, and any successor
long-term disability insurance sponsored by the Company in which the
executives and key management employees of the Company are eligible to
participate.
"Limited Benefit Plans" means all the Company's employee benefit plans
and arrangements in effect at any time and in which the executives and
key management employees of the Company are eligible to participate,
excluding the Continuing Benefit Plans, but including, without
limitation, the following employee benefit plans and arrangements or
any successor or new plan or arrangement made available in the future
to the executives and key management employees of the Company and in
which Executive is eligible to participate before the Termination Date:
(a) The 401(k) Plan;
(b) The RPM, Inc. Retirement Plan;
(c) The Supplemental Executive Retirement Plan;
(d) Stock option plans and other equity-based incentive plans,
including the RPM, Inc. 1996 Stock Option Plan and the
Restricted Stock Plan;
(e) The Split Dollar Life Insurance;
(f) The RPM, Inc. Incentive Compensation Plan;
(g) The Deferred Compensation Plan;
(h) The RPM, Inc. Employee Stock Purchase Plan;
(i) The Group Long Term Disability Insurance;
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(j) RPM, Inc. Group Life Insurance;
(k) RPM, Inc. Group Accidental Death & Dismemberment Insurance;
(l) The RPM, Inc. Group Carve Out Plan (also known as GRIP);
(m) The RPM, Inc. Business Travel Insurance Plan;
(n) The fringe benefits appertaining to Executive's position with
the Company referred to in Subsection 4(f), including the use of
an automobile;
(o) Health Care Reimbursement Account; and
(p) Dependent Care Reimbursement Account.
"Lump-Sum Payment" means, collectively, the lump-sum payments that may
be payable to Executive pursuant to the first sentence of Subsection
6(b)(iii) and pursuant to Subsection 6(c)(ii)(B).
"Notice of Termination for Good Reason" means a written notice
delivered by Executive in good faith to the Company under Subsection
6(a)(vi) setting forth in reasonable detail the facts and circumstances
that have occurred and that Executive claims in good faith to be an
event constituting Good Reason.
"Protected Period" means that period of time commencing on the date of
a Change in Control and ending two years after such date.
"Release and Waiver of Claims" means a written release and waiver by
Executive, to the fullest extent allowable under applicable law and in
form reasonably acceptable to the Company, of all claims, demands,
suits, actions, causes of action, damages and rights against the
Company and its Affiliates whatsoever which he may have had on account
of the termination of his employment, including, without limitation,
claims of discrimination, including on the basis of sex, race, age,
national origin, religion, or handicapped status, and any and all
claims, demands and causes of action for severance or other termination
pay. Such Release and Waiver of Claims shall not, however, apply to the
obligations of the Company arising under this Agreement, any
indemnification agreement between Executive and the Company, any
retirement plans, any stock option agreements, COBRA Continuation
Coverage or rights of indemnification Executive may have under the
Company's Articles of Incorporation, Code of Regulations or by statute.
"Restricted Stock Plan" means the RPM, Inc. 1997 Restricted Stock Plan and
any successor plan or arrangement thereto.
"Special Payment" means, collectively, payments and distributions by
the Company to or for the benefit of Executive, whether paid under
Subsection 6(b)(iii), Subsection
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6(c)(ii)(B) or another provision hereof or paid or payable or distributed
or distributable pursuant to or by reason of any other agreement, policy,
plan, program or arrangement, including without limitation any stock
option, stock appreciation right, restricted stock or similar right, or the
lapse or termination of restrictions on any of the foregoing.
"Split Dollar Life Insurance" means the Company's Split Dollar Life
Insurance arrangements in effect on the date hereof or any successor
arrangement that the Company makes available at any time before the
Termination Date to the executives and key management employees of the
Company and in which Executive is then eligible to participate.
"Subsidiary" means a corporation, company or other entity (a) more than
50 percent of whose outstanding shares or securities (representing the
right to vote for the election of directors or other managing
authority) are, or (b) which does not have outstanding shares or
securities (as may be the case in a partnership, joint venture or
unincorporated association), but more than 50 percent of whose
ownership interest representing the right generally to make decisions
for such other entity is, now or hereafter, owned or controlled,
directly or indirectly, by the Company.
"Supplemental Executive Retirement Plan" means the RPM, Inc. Benefit
Restoration Plan in effect on the date hereof or any successor plan
that the Company makes available at any time before the Termination
Date to the executives and key management employees of the Company and
in which Executive is then eligible to participate.
"Termination Date" means the effective date of the termination of the
Employment Period.
"Voting Power" means, at any time, the total votes relating to the
then-outstanding securities entitled to vote generally in the election
of Directors.
"Voting Stock" means, at any time, the then-outstanding securities
entitled to vote generally in the election of Directors.
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