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EXHIBIT 10.11
AMENDMENT AND TERMINATION AGREEMENT
THIS
AMENDMENT AND TERMINATION AGREEMENT (this "AMENDMENT") to that
certain Change in Control Agreement by and
between Corrpro Companies, Inc., an
Ohio corporation (the "COMPANY") and Joseph
W. Rog (the "EXECUTIVE") dated
___________ (the "AGREEMENT") is made and
entered into this ____ day of
___________, 2003 by and between the
Company and the Executive.
WHEREAS,
Wingate Partners III, L.P., a Delaware limited partnership
(together with its assigns, "WINGATE") is a
party to this Amendment for the
limited purpose of providing assurance that
it will vote all of its equity
ownership in the Company after the Closing
to carry out the terms of Section
1(c) hereof;
WHEREAS,
Wingate and the Company executed a term sheet dated September
11,
2003 to enter into an agreement whereby
Wingate proposes to purchase $13.0
million in redeemable preferred stock of
the Company (the "PREFERRED STOCK"),
and Wingate would hold detachable warrants
to purchase 40% of the fully diluted
common stock at a nominal cost, all the
Preferred Stock would represent 51% of
the fully diluted voting power of the
common stock of the Company (including
authorized but unissued options) and the
holders of Preferred Stock would have
the right to elect the number of directors
constituting a majority of the Board
of Directors of the Company (the "BOARD")
authorized by the Company's
certificate of incorporation or bylaws (the
"TRANSACTIONS"); and
WHEREAS,
Wingate has made it a condition to consummation of the
Transactions that the Executive terminate
the Agreement; and
WHEREAS,
the Executive believes that it is in the best interest of the
Executive to terminate the Agreement in
conjunction with the Transactions; and
WHEREAS,
the Company and the Executive have entered into the Agreement
and
desire to amend its terms in accordance
with Section 5.5 of the Agreement; and
WHEREAS the
Board or a designated committee thereof has approved this
Amendment in accordance with Section 5.5 of
the Agreement.
NOW,
THEREFORE, in consideration of the mutual promises, conditions
and
covenants contained herein and in the
Agreement, and other good and valuable
consideration, the adequacy of which is
hereby acknowledged, the parties agree
as follows:
1.
Effective
immediately prior to the earlier to occur of (i) a Change
in Control (as defined in the Agreement)
involving Wingate and its affiliates
and (ii) the Closing (as defined below),
all of the terms and conditions of the
Agreement shall be terminated in their
entirety, null and void and shall no
longer be of any force or effect and the
Executive releases any right to receive
any and all payments under the Agreement
whether or not then due; provided that
if the Company fails to fulfill all of the
Conditions (as defined below), then
the Agreement shall not be deemed to be
terminated and shall be deemed to have
continued in full force and effect and the
Executive shall have the right to
receive payments as provided in the
Agreement. For purposes of this Amendment,
the "CONDITIONS" shall mean:
(a) The
consummation of the issuance and sale of the Preferred
Stock to Wingate
(the "CLOSING") will have occurred on or prior to October
31,
2004.
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(b) Prior to the
Closing, the Company shall execute and deliver to
the
Executive a new employment agreement (in the form of Exhibit A
attached
hereto)(the "AMENDED EMPLOYMENT AGREEMENT")
(c) On or before
the 180th day after the Closing, the Company
will,
whether by increasing the number of existing stock options that
may
be granted
under the current stock option plan, by establishing a new
equity
incentive plan or plans or by some combination thereof, have a
total
option pool (consisting of shares of common stock of the
Company
issuable
upon exercise of options granted and options available for
grant
to
directors, officers and employees) equal to 15% of the fully
diluted
common
stock of the Company (to be calculated immediately after the
Closing).
(d) Within 180
days after the Closing, if the Executive is
employed
by the Company on the date of grant (which shall be after the
Determination Date, but on or before the 180th day after the
Closing) or
he has
either been terminated by the Company without "Good Cause" (as
defined in
the Amended Employment Agreement) or resigned for a reason
permitted
by Section 7 or the last sentence of Section 1.3 of the Amended
Employment
Agreement prior to the date of grant, the Company will issue to
the Executive an
option to purchase a minimum of 100,000 shares of common
stock of
the Company with an exercise price equal to the fair market
value
of the
stock on the Determination Date and an option to purchase a
minimum
of 100,000
shares of common stock of the Company with an exercise price
equal to
200% of the fair market value of the stock on the Determination
Date; for
purposes of this Amendment, "Determination Date" shall mean the
90th day
after the Closing and "fair market value of the stock on the
Determination Date" shall mean that value of one share of the
common stock
of the
Company calculated on the 90th day after the Closing using the
volume
weighted average prices on the American Stock Exchange of such
stock for
the 30 day period prior to the 90th day after the Closing, or,
if such
average is not available, using the average of the closing sale
prices for
such stock for the 30 day period prior to the 90th day after
the Closing.
(e) At the
Executive's written request received by the Company
within 30
days after the Determination Date, any or all of the options
held by
the Executive under the existing plan with an exercise price
greater
than the fair market value of the stock on the Determination
Date
shall be
modified by a written document executed by the Company and
delivered
to the Executive within 180 days after the Closing (the
"elected
options"),
which document shall modify said elected options as follows:
(i) the
exercise price of 50% of such elected options shall equal 100%
of
the fair
market value of the stock on the Determination Date, and (ii)
the
exercise
price of 50% of such elected options shall equal 200% of the
fair
market
value of the stock on the Determination Date; such modification
may
include
either a repricing of such elected options or, subject to
review
by the
Company's accountant for adverse accounting treatment, a
cancellation of such elected options and issuance of new options
under the
existing
option plan or a new option plan. The date of grant of each
elected
option shall be after the Determination Date, but on or before
the
180th day
after the Closing.
(f) Within 180
days after the Closing, the Company and the
Executive
agree to amend the option agreements relating to any options
held by
the Executive as of the Closing under the existing plan which
are
not modified in
accordance with Section 1(e) above (the "non-elected
options"),
to extend the exercise period for each such non-elected option
to the
lesser of (i) the remaining term of such non-elected option
according
to its stated maximum term (without reduction or termination
relating
to employment status) or (ii) the greater of the time period
the
Executive
serves the Company (either as an employee of the Company or as
a
member of
the Board) or four (4) years after the Closing. Each
non-elected
option
shall be vested on the Closing
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at the
percentage it was vested on the day before the Closing according
to
the terms
of the applicable option agreement, and will continue to vest
(or be
forfeited, if applicable) after the Closing pursuant to the
terms
of the
applicable option agreement as it existed immediately prior to
the
Closing,
but without reduction or termination of such option relating to
employment
status if the Executive's employment is terminated by reason of
one of the
events set forth in Section 1(g)(2)(iii) below.
(g) Any options
granted in accordance with Section 1(d) hereof or
elected
options which are modified (or re-granted) in accordance with
Section
1(e) hereof shall include the following terms:
(1) vesting of
such options shall begin on the date of
Closing and shall be in 5 equal installments over 5 years,
which
shall continue as if the Executive was still employed or on the
Board even after the Executive's termination of all service to
the
Company (including termination of employment and resignation
from,
removal from or failure to be reelected to the Board);
provided,
however, that (i) in the event of a "change of control" (as
defined
in the applicable plan), such options shall become 100% vested;
(ii)
if the Executive's employment is terminated for Good Cause or
he
resigns for a reason other than as permitted by Section 7 or
the
last sentence of Section 1.3 of the Amended Employment
Agreement,
the Executive immediately shall forfeit any unvested options;
and
(iii) if the Executive violates any of the provisions of Section
4
of the Amended Employment Agreement, vesting of all such
options
shall end immediately; and (iv) if, after his employment
terminates
other than as provided in item (ii) above, the Executive
resigns
from the Board on or before the fifth anniversary of the
Closing
without the consent of a majority of the other members of the
Board,
vesting of
all such options shall end immediately;
(2) a 10 year
option term; provided, however, that if (i)
the Executive's employment is terminated for Good Cause, the
Executive is removed from the Board for Good Cause after his
employment terminates in accordance with item (iii) below, or
the
Executive resigns for a reason other than as permitted by Section
7
or the last sentence of Section 1.3 of the Amended Employment
Agreement, the option term shall end ninety (90) days following
such
termination of employment; (ii) the Executive terminates
employment
due to his death or Disability (as defined by Section 6 of the
Amended Employment Agreement), the option term shall end twelve
(12)
months after the date of his death or Disability; (iii) the
Executive retires as permitted by the Amended Employment
Agreement,
resigns his employment for a reason permitted by Section 7 or
the
last sentence of Section 1.3 of the Amended Employment Agreement,
or
his employment is terminated by the Company without Good Cause,
then
the option term shall end on the earlier of ten (10) years after
the
date of grant or five (5) years after termination of service to
the
Company, subject to reduction of such term pursuant to items
(iv)
and (v) below; (iv) the Executive violates any of the provisions
of
Section 4 of the Amended Employment Agreement, the option term
shall
end ninety (90) days following such violation; (v) after his
employment terminates in accordance with item (iii) above, the
Executive resigns from the Board on or before the fifth
anniversary
of the Closing without the consent of a majority of the other
members of the Board, the option term shall end ninety (90)
days
following such resignation; or (vi) after the Executive's
employment
terminates in accordance with item (iii) above, the Executive
resigns from the Board with the consent of a majority of the
other
members of the Board, or he resigns from the Board after the
fifth
anniversary of the Closing, or he is removed from or is not
reelected to the Board after the fifth anniversary of the
Closing,
then the option term shall
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end
on the earlier of ten (10) years after the date of grant or
five
(5) years after termination of service to the Company, subject
to
reduction of such term pursuant to items (iv) and (v) above.
(h) If the
Executive is employed by the Company on the date which
is 6
months after the Closing, or he has either been terminated by
the
Company
without Good Cause or resigned for a reason permitted by Section
7
or the
last sentence of Section 1.3 of the Amended Employment
Agreement
prior to
such date, the Executive shall be entitled to receive a $50,000
bonus on
such date.
2.
Effective
as of the Closing, Executive shall resign from his
position as Chairman of the Board, but
shall remain on the Board.
3.
This
Amendment shall be governed in all respects by the laws of the
State of Ohio, without giving effect to the
conflicts of laws principles
thereof.
4.
Except as
otherwise provided herein, the provisions hereof shall
inure to the benefit of, and be binding
upon, the successors, assigns, heirs,
executors, and administrators of the
parties hereto, provided, however, that the
rights of any party hereto shall not be
assignable without the written consent
of all the other parties to this
Amendment.
5.
This
Amendment and the Agreement constitute the full and entire
understanding and agreement between the
parties with regard to the subjects
hereof and thereof and shall supersede and
cancel all other prior agreements
between the parties hereto with regard to
the subject matter hereof. Neither
this Amendment nor any term hereof may be
amended, waived, discharged, or
terminated other than by a written
instrument signed by all the parties to this
Amendment (including Wingate).
6.
In the
event that any provision of this Amendment becomes or is
declared by a court of competent
jurisdiction to be illegal, unenforceable or
void, this Amendment shall continue in full
force and effect without said
provision; provided that no such
severability shall be effective if it
materially changes the economic benefit of
this Amendment to any party.
7.
This
Amendment may be executed in one or more counterparts, each of
which will be deemed to be an original copy
of this Amendment, and all of which,
when taken together, shall be deemed to
constitute one and the same Amendment.
The exchange of copies of this Amendment
and of signature pages by facsimile
transmission shall constitute effective
execution and delivery of this Amendment
as to the parties and may be used in lieu
of the original Amendment for all
purposes. Signatures of the parties
transmitted by facsimile shall be deemed to
be their original signatures for any
purpose whatsoever.
8.
The
Executive acknowledges and agrees to each of the following
items:
(a) I am
executing this Amendment voluntarily and without any
duress or
undue influence by the Company, Wingate or anyone else; and
(b) I have
carefully read this Amendment and I have asked any
questions
needed for me to understand the terms, consequences and binding
effect of
this Amendment and fully understand them; and
(c) I have been
advised by the Company to obtain the advice of an
attorney
of my choice prior to signing this Amendment.
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9.
Wingate is
a party to this Amendment for the limited purpose of
providing assurance that it will vote all
of its equity ownership in the Company
after the Closing to carry out the terms of
Section 1(c) hereof. Wingate
represents that it has taken all necessary
action for the applicable provisions
of this Agreement to be duly authorized and
approved, and that this Agreement is
binding on Wingate for the limited purpose
of providing assurance that it will
vote its equity ownership after the Closing
to carry out the terms of Section
1(c) hereof.
10.
The Company
represents that it has taken all necessary action for
this Agreement to be duly authorized and
approved, and that this Agreement is
binding on the Company.
***************
IN WITNESS
WHEREOF, the parties have executed this Amendment effective as
of the day and year first set forth
above.
THE EXECUTIVE:
/s/ Joseph W. Rog
__________________________________
Name: Joseph W. Rog
____________________________
THE COMPANY:
Corrpro Companies, Inc.
By: /s/ Neal R. Restivo
______________________________
Name: Neal R. Restivo
________________________
Title: Director
________________________
WINGATE PARTNERS III, L.P.
By: /s/ Jason H. Reed
______________________________
Name: Jason H. Reed
________________________
Title: Director
________________________
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EXHIBIT A
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this
"AGREEMENT") is made in Medina, Ohio and entered
into by and between Corrpro Companies,
Inc., an Ohio corporation (the "COMPANY")
and Joseph W. Rog ("EXECUTIVE") effective
as of date of the consummation of the
issuance and sale of the redeemable
preferred stock of the Company to Wingate
Partners III, L.P., a Delaware limited
partnership (together with its assigns,
"WINGATE")(the "CLOSING").
WHEREAS,
Wingate and the Company executed a term sheet dated September
11,
2003 to enter into an agreement whereby
Wingate proposes to purchase $13.0
million of the Preferred Stock, and Wingate
would hold detachable warrants to
purchase 40% of the fully diluted common
stock at a nominal cost, all the
Preferred Stock would represent 51% of the
fully diluted voting power of the
common stock of the Company (including
authorized but unissued options) and the
holders of Preferred Stock would have the
right to elect the number of directors
constituting a majority of the Board of
Directors of the Company (the "BOARD")
authorized by the Company's certificate of
incorporation or bylaws (the
"TRANSACTIONS"); and
WHEREAS,
Wingate has made it a condition to consummation of the
Transactions that Executive terminate that
certain Employment Agreement by and
between the Company and Executive dated
November 2, 2000 (the "EMPLOYMENT
AGREEMENT") and enter into this Agreement;
and
WHEREAS,
Executive believes that it is in the best interest of Executive
to terminate the Employment Agreement and
to enter into this Agreement in
conjunction with the Transactions; and
WHEREAS,
the Company and Executive have entered into the Employment
Agreement and desire to amend its terms in
accordance with Section 17 of the
Employment Agreement.
NOW,
THEREFORE, in consideration of the mutual promises, conditions
and
covenants contained herein and in the
Employment Agreement, and other good and
valuable consideration, effective as of the
Closing, the parties agree as
follows:
SECTION 1 - TERM AND DUTIES
1.1
TERM. The
Company shall employ Executive, subject to the provisions
of this Agreement, effective as of the
Closing and ending on March 31, 2005.
This Agreement at all times may otherwise
be terminated in accordance with the
provisions of this Agreement.
1.2
SUBSEQUENT TERM.
Beginning on December 31, 2004, this Agreement
shall be automatically renewed for
successive one-year periods unless prior to
the December 31 immediately preceding the
expiration of this Agreement or
renewal thereof, the Company or Executive
notifies the other in writing that
such party does not wish to renew this
Agreement.
1.3
DUTIES. During
Executive's employment pursuant to this Agreement,
Executive shall serve as Chief Executive
Officer ("CEO") and President of the
Company until he dies, retires, or is
removed or fails to be reelected as CEO by
the Board. So long as Executive serves as
CEO, (i) the Company shall nominate
Executive to serve as a director on the
Board of Directors of the Company and
shall use its best efforts to facilitate
Executive's election, and (ii)
Executive shall have the right to serve on
the board of directors of any newly
formed holding company and subsidiary of
the Company. In his capacity as CEO,
Executive will retain the right to approve,
select and/or hire employees of the
Company
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plus have the authority to determine and
implement programs and establish
direction for the Company and shall serve
at the direction of the Board of
Directors of the Company and shall be
subject to the policies and procedures
adopted by the Company from time to time.
Executive agrees to serve as an
officer or director of such of the
Company's subsidiaries or affiliates as the
Company may reasonably request. Executive
agrees to resign as CEO upon the
election of a new CEO by the Board, which
shall be treated as a termination of
Executive's employment without Good Cause
(as defined in Section 8.1)
1.4
CHANGES IN
STATUS. The Company agrees that it will not, without
Executive's consent, (i) assign to
Executive duties materially inconsistent with
or which materially diminish Executive's
current positions, authority, duties,
responsibilities and status with the
Company; (ii) materially change Executive's
title as currently in effect; or (iii)
transfer Executive's job location to a
site more than fifty (50) miles away from
his place of employment as of the date
hereof. Except as so limited, the powers
and duties of Executive are to be more
specifically determined and set by the
Company from time to time.
SECTION 2 - COMPENSATION AND BENEFITS
2.1
BASE SALARY.
During Executive's employment pursuant to this
Agreement, Executive shall receive an
annual base salary of two hundred eighty
five thousand U.S. Dollars (U.S. $285,000)
as compensation for Executive's
services to the Company (the "Base
Compensation"), such compensation to be
payable in regular installments in
accordance with the Company's policy for
salaried employees.
2.2
SALARY
ADJUSTMENTS. Effective as of the first day of each fiscal
year of the Company during Executive's
employment pursuant to this Agreement,
the Base Compensation shall be set by the
Board of Directors (or its designated
committee). In the event the Base
Compensation is adjusted, such adjusted Base
Compensation shall be payable to Executive
under this Agreement for that fiscal
year, provided that no downward adjustment
shall be made without Executive's
consent.
2.3
VACATION.
Executive shall be entitled to four (4) weeks of paid
vacation each year of this Agreement to be
taken in accordance with the
Company's policy then in effect.
2.4
ANNUAL BONUS
PLAN. Executive shall be a participant in the Company's
annual bonus plan, subject to the
attainment of perf
