AMENDED AND RESTATED EXECUTIVE
CHANGE-IN-CONTROL AGREEMENT
This AMENDED AND
RESTATED EXECUTIVE CHANGE-IN-CONTROL AGREEMENT
(“Agreement”), dated as of March 16, 2007, by and
between The Lamson & Sessions Co., an Ohio corporation (the
“Company”), and Michael J. Merriman, Jr. (the
“Executive”);
WHEREAS, the
Executive is a senior executive of the Company and has made and is
expected to continue to make major contributions to the
profitability, growth and financial strength of the
Company;
WHEREAS, the
Company recognizes that, as is the case for most publicly held
companies, the possibility of a Change in Control (as that term is
hereafter defined) exists;
WHEREAS, the
Company desires to assure itself of both present and future
continuity of management in the event of a Change in Control and
desires to establish certain minimum compensation rights of its key
senior executive officers, including the Executive, applicable in
the event of a Change in Control;
WHEREAS, the
Company wishes to ensure that its senior executives are not
practically disabled from discharging their duties upon a Change in
Control;
WHEREAS, this
Agreement is not intended to alter materially the compensation and
benefits which the Executive could reasonably expect to receive
from the Company absent a Change in Control and, accordingly,
although effective and binding as of the date hereof, this
Agreement shall become operative only upon the occurrence of a
Change in Control;
WHEREAS, the
Executive is willing to render services to the Company on the terms
and subject to the conditions set forth in this Agreement;
and
WHEREAS, this
Agreement amends and restates the Executive Change-in-Control
Agreement dated as of October 26, 2006 (the “Prior
Agreement”) between the Company and Executive, which Prior
Agreement will, without further action, be superseded as of the
date first above written.
NOW, THEREFORE,
the Company and the Executive agree as follows:
1.
Operation of Agreement :
(a) This
Agreement shall be effective and binding immediately upon its
execution, but, anything in this Agreement to the contrary
notwithstanding, this Agreement shall not become operative unless
and until there shall have occurred a Change in Control. For
purposes of this Agreement, a “Change in Control” shall
have occurred if at any time during the Term (as that term is
hereafter defined) any of the following events shall
occur:
(i)
The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities and
Exchange Act of 1934, as amended (the “Exchange Act”)
(a “Person”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either: (A) the then-outstanding shares of
common stock of the Company (the “Company Common
Stock”) or (B) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote
generally in the election of directors (“Voting
Stock”); provided , however , that for purposes
of this subsection (i), the following acquisitions shall not
constitute a Change in Control: (1) any acquisition directly
from the Company, (2) any acquisition by the Company,
(3) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Subsidiary of
the Company, or (4) any acquisition by any Person pursuant to
a transaction which complies with clauses (A), (B) and
(C) of subsection (iii) of this Section 1(a);
or
(ii)
Individuals who, as of the date hereof, constitute the Board of
Directors of the Company, (the “Incumbent Board”) cease
for any reason (other than death or disability) to constitute at
least a majority of the Board of Directors of the Company;
provided , however , that any individual becoming a
director subsequent to the date hereof whose election, or
nomination for election by the Company’s shareholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person
is named as a nominee for director, without objection to such
nomination) shall be considered as though such individual were a
member of the Incumbent Board, but excluding for this purpose, any
such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest (within the
meaning of Rule 14a-11 of the Exchange Act) with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board of Directors of the Company; or
(iii)
Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of
the Company (a “Business Combination”), in each case,
unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Company Common Stock and
Voting Stock immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of,
respectively, the then-outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the entity resulting from such Business Combination
(including, without limitation, an entity which as a result of such
transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions relative to
each other as their ownership, immediately prior to such Business
Combination, of the Company Common Stock and Voting Stock of the
Company, as the case may be, (B) no Person (excluding any
entity resulting from such Business Combination or any employee
benefit plan (or related trust) sponsored or maintained by the
Company or such entity resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock of the
entity resulting from such Business Combination, or the combined
voting power of the then-outstanding voting securities of such
corporation except to the extent that such ownership existed prior
to the Business Combination and (C) at least a majority of the
members of the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board of Directors of the Company, providing for such
Business Combination; or
(iv)
Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(b) Upon
the occurrence of a Change in Control at any time during the Term,
this Agreement shall become immediately operative.
(c) The
period during which this Agreement shall be in effect (the
“Term”) shall commence as of the date hereof and shall
expire as of the later of (i) the close of business on
December 31, 2009 or (ii) the expiration of the Period of
Employment (as that term is hereafter defined); provided ,
however , that (A) commencing on January 1, 2007
and each January 1 thereafter prior to the occurrence of a Change
in Control, the term of this Agreement shall automatically be
extended for an additional year unless, not later than
December 30 of the immediately preceding year, the Company or
the Executive shall have given notice that it or he, as the case
may be, does not wish to have the Term extended, and
(B) subject to Section 8 hereof, if, prior to a Change in
Control, the Executive ceases for any reason to be an officer of
the Company, thereupon the Term shall be deemed to have expired and
this Agreement shall immediately terminate and be of no further
effect.
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2.
Employment: Period of Employment :
(a) Subject
to the terms and conditions of this Agreement, upon the occurrence
of a Change in Control, the Company shall continue the Executive in
its employ and the Executive shall remain in the employ of the
Company for the period set forth in Section 2(b) hereof (the
“Period of Employment”), in the position and with
substantially the same duties and responsibilities that he had
immediately prior to the Change in Control, or to which the Company
and the Executive may hereafter mutually agree in writing.
Throughout the Period of Employment, the Executive shall devote
substantially all of his time during normal business hours (subject
to vacations, sick leave and other absences in accordance with the
policies of the Company as in effect for senior executives
immediately prior to the Change in Control) to the business and
affairs of the Company, but nothing in this Agreement shall
preclude the Executive from devoting reasonable periods of time
during normal business hours to (i) serving as a director,
trustee or member of or participant in any organization or
business, (ii) engaging in charitable and community
activities, or (iii) managing his personal investments.
(b) The
Period of Employment shall commence on the date of an occurrence of
a Change in Control and, subject only to the provisions of
Section 4 hereof, shall continue until the earlier of
(i) the expiration of the third anniversary of the occurrence
of the Change in Control, (ii) the Executive’s death;
provided , however , that commencing on each
anniversary of the Change of Control, the expiration of the Period
of Employment provided for under clause (i) of this Section 2(b)
shall automatically be extended for an additional year unless, not
later than 90 calendar days prior to such anniversary date, either
the Company or the Executive shall have given written notice to the
other that the Period of Employment shall not be so
extended.
3.
Compensation During Period of Employment :
(a) Upon
the occurrence of a Change in Control, the Executive shall receive
during the Period of Employment (i) annual base salary at a
rate not less than the Executive’s annual fixed or base
compensation (payable monthly or otherwise as in effect for senior
executives of the Company immediately prior to the occurrence of a
Change in Control) or such higher rate as may be determined from
time to time by the Board of Directors of the Company (the
“Board”) or the Compensation Committee thereof (the
“Committee”) (which base salary at such rate is herein
referred to as “Base Pay”) and (ii) an annual
amount equal to not less than the average of the aggregate annual
bonus, incentive or other payments of cash compensation in addition
to the amounts referred to in clause (i) above made or to be
made in regard to services rendered in any calendar year during the
period of two calendar years immediately preceding the year in
which the Change in Control occurred pursuant to any bonus,
incentive, profit sharing, performance, discretionary pay or
similar policy, plan, program or arrangement of the Company or any
successor thereto providing benefits at least as great as the
benefits payable thereunder prior to a Change in Control (or, if
the Change in Control occurs before the Executive shall have
received annual bonuses for two complete calendar years of
employment with the Company, the annual bonus that would have been
payable to the Executive pursuant to any bonus, incentive, profit
sharing, performance, discretionary pay or similar policy, plan,
program or arrangement of the Company or any successor thereto for
the calendar year in which the Change in Control occurs had all
relevant levels of performance for that calendar year been exactly
at the Executive’s target level, if greater)
(“Incentive Pay”); provided , however ,
that with the prior written consent of the Executive, nothing
herein shall preclude a change in the mix between Base Pay and
Incentive Pay so long as the aggregate cash compensation received
by the Executive in any one calendar year is not reduced in
connection therewith or as a result thereof; and provided
further , however , that in no event shall any
increase in the Executive’s aggregate cash compensation or
any portion thereof in any way diminish any other obligation of the
Company under this Agreement.
(b) For
his service pursuant to Section 2(a) hereof, during the Period of
Employment the Executive shall be a full participant in, and shall
be entitled to the perquisites, benefits and service credit for
benefits as provided under, any and all employee retirement income
and welfare benefit and other fringe benefit policies, plans,
programs or arrangements in which senior executives of the Company
participate, including without limitation any stock option, stock
purchase, stock appreciation, savings, pension, supplemental
executive retirement or/ other retirement income or welfare benefit
(within the meaning of Section 3(1) of the Employee Retirement
Income Act of 1974, as amended), deferred compensation, incentive
compensation, group and/or executive life, health, medical/hospital
or other insurance (whether funded by actual insurance or
self-insured by the Company), disability, salary continuation,
expense reimbursement (including automobile allowances and
reimbursement of club dues and financial planning fees) and other
employee benefit policies, plans, programs or arrangements that may
now exist or
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any equivalent
successor policies, plans, programs or arrangements that may be
adopted hereafter by the Company providing perquisites, benefits
and service credit for benefits at least as great as are payable
thereunder prior to a Change in Control (collectively,
“Employee Benefits”); provided , however
, that the Executive’s rights thereunder shall be governed by
the terms thereof and shall not be enlarged hereunder or otherwise
affected hereby. Subject to the proviso in the immediately
preceding sentence, if and to the extent that the Company
determines, in the exercise of its reasonable judgment after
consultation with nationally recognized legal counsel, that any
perquisite, benefit or service credit for benefits is not or cannot
be paid or provided under any such policy, plan, program or
arrangement as a result of the amendment or termination thereof,
then the Company shall itself pay or provide therefor. Nothing in
this Agreement shall preclude improvement or enhancement of any
such Employee Benefits, provided that no such improvement shall in
any way diminish any other obligation of the Company under this
Agreement.
(c) The
Company has determined that the amounts payable pursuant to this
Section 3 constitute reasonable compensation for services to
be rendered during the Period of Employment.
4.
Termination Following a Change in Control :
(a) In
the event of the occurrence of a Change in Control, the
Executive’s employment may be terminated by the Company
during the Period of Employment and the Executive shall not be
entitled to the benefits provided by Section 5 hereof only
upon the occurrence of one or more of the following
events:
(i)
The Executive’s death;
(ii)
If the Executive shall become permanently disabled within the
meaning of, and begins actually to receive disability benefits
pursuant to, the long-term disability plan in effect for senior
executives of the Company immediately prior to the Change in
Control; or
(iii)
For “Cause,” which for purposes of this Agreement shall
mean that, prior to any termination pursuant to Section 4(b)
hereof, the Executive shall have committed:
(A)
an intentional act of fraud, embezzlement or theft in connection
with his duties or in the course of his employment with the
Company;
(B)
intentional wrongful damage to property of the Company;
or
(C)
intentional wrongful disclosure of secret processes or confidential
information of the Company;
and any such
act shall have been materially harmful to the Company. For purposes
of this Agreement, no act, or failure to act, on the part of the
Executive shall be deemed “intentional” if it was due
primarily to an error in judgment or negligence, but shall be
deemed “intentional” only if done, or omitted to be
done, by the Executive not in good faith and without reasonable
belief that his action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for “Cause” hereunder
unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the Board then in office at a meeting
of the Board called and held for such purpose (after reasonable
notice to the Executive and an opportunity for the Executive,
together with his counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive had
committed an act set forth above in this Section 4(a)(iii) and
specifying the particulars thereof in detail. Nothing herein shall
limit the right of the Executive or his beneficiaries to contest
the validity or propriety of any such determination.
(b) In
the event of the occurrence of a Change in Control, during the
Period of Employment, the Executive shall be entitled to the
benefits as provided in Section 5 hereof upon the occurrence
of one or more of the following events:
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(i)
Any termination by the Company of the employment of the Executive
which termination shall be for any reason other than for Cause or
as a result of the death of the Executive or by reason of the
Executive’s disability and the actual receipt of disability
benefits in accordance with Section 4(a)(ii) hereof;
or
(ii)
Termination by the Executive of his employment with the Company
upon the occurrence of any of the following events:
(A)
Failure to elect, re-elect or otherwise maintain the Executive in
the office or position in the Company which the Executive held
immediately prior to a Change in Control, or the removal of the
Executive as a Director of the Company (or any successor thereto)
if the Executive shall have been a Director of the Company
immediately prior to the Change in Control;
(B)
A significant adverse change in the nature or scope of the
authorities, powers, functions, responsibilities or duties attached
to the position with the Company which the Executive held
immediately prior to the Change in Control, any reduction in the
aggregate of the Executive’s Base Pay and Incentive Pay
received from the Company, or the termination of the
Executive’s rights to any Employee Benefits to which he was
entitled immediately prior to the Change in Control or a reduction
in scope or value thereof without the prior written consent of the
Executive, any of which is not remedied within ten
(10) calendar days after receipt by the Company of written
notice from the Executive of such change, reduction or termination,
as the case may be;
(C)
A determination by the Executive made in good faith that as a
result of a Change in Control and a change in circumstances
thereafter significantly affecting his position, including without
limitation a change in the scope of the business or other
activities for which he was responsible immediately prior to the
Change in Control, he has been rendered substantially unable to
carry out, has been substantially hindered in the performance of,
or has suffered a substantial reduction in, any of the authorities,
powers, functions, responsibilities or duties attached to the
position held by the Executive immediately prior to the Change in
Control, which situation is not remedied within ten
(10) calendar days after written notice to the Company from
the Executive of such determination;
(D)
The liquidation, dissolution, merger, consolidation or
reorganization of the Company or transfer of all or a significant
portion of its business and/or assets, unless the successor or
successors (by liquidation, merger, consolidation, reorganization
or otherwise) to which all or a significant portion of its business
and/or assets have been transferred (directly or by operation of
law) shall have assumed all duties and obligations of the Company
under this Agreement pursuant to Section 11 hereof;
(E)
The Company shall relocate its principal executive offices, or
require the Executive to have his principal location of work
changed, to any location which is in excess of fifty
(50) miles from the location thereof immediately prior to the
Change of Control or the Company shall require the Executive to
travel away from his office in the course of discharging his
responsibilities or duties hereunder significantly more (in terms
of either consecutive days or aggregate days in any calendar year)
than was required of him prior to the Change of Control without, in
either case, his prior written consent; or
(F)
Without limiting the generality or effect of the foregoing, any
material breach of this Agreement by the Company or any successor
thereto.
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(c) A
termination by the Company pursuant to Section 4(a) hereof or by
the Executive pursuant to Section 4(b) hereof shall not affect any
rights which the Executive may have pursuant to any agreement,
policy, pla
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