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EXHIBIT 10 (a)
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of June
14, 1999 (the "Effective Date"), is made and entered into by and between M.A.
XXXXX COMPANY, a Delaware corporation (the "Company") and Xxxxxxx X. Xxxxxxxxx
("Executive").
WHEREAS, the Company desires to obtain Executive's management
and executive services by directly engaging Executive as its President and Chief
Executive Officer;
WHEREAS, in order to induce Executive to serve in such
positions, the Company desires to provide Executive with compensation and other
benefits on the terms and conditions set forth in this Agreement; and
WHEREAS, Executive is willing to accept such employment and
perform services for the Company, on the terms and conditions hereinafter set
forth;
NOW THEREFORE, in consideration of the promises and of the
mutual covenants herein contained, it is agreed as follows:
1. EMPLOYMENT, POSITIONS AND DUTIES.
1.1 The Company hereby agrees to employ Executive and the Executive
hereby agrees to undertake employment with the Company upon the terms and
considerations herein set forth.
1.2 During the Term (as hereafter defined), the Executive will serve in
the positions of President and Chief Executive Officer of the Company.
Throughout the Term, the Company will use its best efforts to cause the
Executive to be elected as a member of the Board of Directors of the Company
(the "Board") and will use its best efforts to cause him to be included in the
management slate for election as a director at every stockholders' meeting at
which his term as a director would otherwise expire. The Company confirms that
the Board adopted a resolution on May 14, 1999 expressing its intent, if the
Executive continues in the positions of President and Chief Executive Officer,
to elect the Executive Chairman of the Board no later than December 31, 2000.
1.3 During the Term, the Executive will be the Company's full-time
employee and, except as may otherwise be approved in advance in writing by the
Board, and except during vacation periods and reasonable periods of absence due
to sickness, personal injury or other disability, the Executive will devote
substantially all of his working time and efforts, to the best of his ability,
experience and talent, to the performance of services, duties and
responsibilities in accordance with this Agreement. The Executive will have such
duties, functions, responsibilities and authority as are
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(i) consistent with the positions set forth in Section 1.2, (ii) assigned to his
positions by the By-Laws of the Company or (iii) reasonably assigned to him by
the Board. Executive will report directly to the Board.
1.4 Notwithstanding the foregoing, Executive may, (i) subject to the
approval of the Board, serve as the director of a noncompeting company, (ii)
serve as an officer, director, trustee or otherwise participate in purely
educational, welfare, social, charitable, religious and civic organizations, and
(iii) manage personal and family investments.
1.5 In connection with his employment during the Term, unless otherwise
agreed by the Executive, the Executive will be based at the Company's principal
executive offices in Cleveland, Ohio. As promptly as practicable following the
Effective Date, Executive will relocate to the Cleveland, Ohio area. The
Executive will undertake normal business travel on behalf of the Company, the
reasonable expenses of which will be paid by the Company pursuant to Section 5.
2. TERM OF EMPLOYMENT. Executive's term of employment under this Agreement
will commence on the Effective Date and, subject to the provisions of this
Agreement, will terminate on the earlier of (i) the third anniversary of the
Effective Date or (ii) termination of the Executive's employment pursuant to
Section 7; provided, however, that this Agreement will be automatically renewed
and the term extended for additional one-year periods commencing on the first
anniversary of the Effective Date, and on each anniversary date thereafter,
unless the Company or the Executive provides 90 days' prior written notice in
accordance with Section 12.5 before the end of the initial term or any renewal
term (any reference to the "Term" of this Agreement will include the initial
term and any renewal thereof).
3. COMPENSATION.
3.1 SALARY. The Company will pay Executive an annual base salary ("Base
Salary") of not less than $650,000 until adjusted in the Fall of 2000, as
provided below. Base Salary will be payable at the times and in the manner
consistent with the Company's general policies regarding compensation of
executive officers. Base Salary will be reviewed annually beginning in the Fall
of 2000. At such time, Base Salary will be adjusted in accordance with the
Company's administrative practice for its executive officers, subject to this
Section 3.1, and, as so adjusted, will thereafter constitute "Base Salary"
hereunder; provided, however, that Base Salary may not be decreased except as a
part of a decrease in annual base salary applicable to executive officers of the
Company generally. Any increase in Base Salary will not limit or reduce any
other obligation of the Company to the Executive.
3.2 ANNUAL INCENTIVE COMPENSATION. For 1999, Executive will receive
annual incentive compensation of not less than $410,000 and up to a maximum of
$812,500, based on the Company's performance measured against the preestablished
1999 performance objectives for the Company, as determined by the Compensation
and Organization Committee of the Board (the "Compensation Committee"), subject
to
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Executive remaining employed by the Company for the balance of 1999. For 2000
and thereafter, if the Compensation Committee authorizes any annual cash
incentive program or approves any other annual management incentive program or
arrangement, Executive will be eligible to participate in such plan, program or
arrangement (the "IC Plan") on terms commensurate with Executive's position and
level of responsibility; provided, however, that Executive's annual target
incentive compensation will be not less than 85% of Base Salary, with a
potential pay-out range from zero to 200% of such target based on Executive's
performance and contributions to the success of the Company as determined by the
Compensation Committee. Except as set forth in the preceding two sentences,
nothing in this Section 3.2 will guarantee to the Executive any specific amount
of incentive compensation.
3.3 LONG-TERM INCENTIVE COMPENSATION.
3.3.1 In general, subject to this Section 3.3, Executive will be
eligible to participate in the Company's 1988 Long-Term Incentive Plan, as
amended, or any successor thereto (the "LTIP").
3.3.2 Executive's LTIP award for the 1999-2001 Performance Period
will consist of (i) the grant on the Effective Date of a nonqualified stock
option to purchase 100,000 shares of the Company's common stock with an exercise
price per share equal to the closing price of the Company's common stock on the
New York Stock Exchange on the Effective Date, and (ii) the grant of Performance
Shares with an aggregate Award Value determined below, subject to the same
Management Objectives that are generally applicable to Performance Shares
granted for the 1999-2001 Performance Period, except that the Company will
guarantee payment of not less than 50% of the Award Value. The aggregate Award
Value of the Executive's 1999-2001 Performance Shares will be equal to (a) 95%
of the sum of Base Salary plus Executive's 1999 annual target incentive
compensation, (b) reduced by the lesser of the Black-Scholes value of the stock
option grant described in Section 3.2.2(i) or the Black-Scholes value of an
identical stock option grant with an exercise price equal to $15.00. The
Black-Scholes valuation method will be applied in a manner consistent with the
Company's historic practices. The number of Executive's 1999-2001 Performance
Shares will be equal to the aggregate Award Value obtained in the second
preceding sentence, divided by the closing price of the Company's common stock
on the New York Stock Exchange on the Effective Date, rounded up to the nearest
whole number. The Management Objectives applicable to the Executive's 1999-2001
Performance Shares will not be prorated to reflect the actual period of
Executive's service during the 1999-2001 Performance Period.
3.3.3 The Executive will receive LTIP awards for the 2000-2002 and
2001-2003 Performance Periods on the same basis as awards to other executives
receiving awards and commensurate with the Executive's position and level of
responsibility.
3.3.4 The terms "Performance Period", "Award Value" and "Management
Objectives" will have the same meanings in this Agreement as set forth
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in the LTIP. The term "Performance Share" will have the meaning in this
Agreement set forth in the Company's most recent form of Performance Share
Agreement.
3.3.5 Except as expressly set forth in this Section 3.3, (i)
Executive's participation in the LTIP will be subject to the terms of the LTIP,
and (ii) Executive will not be guaranteed any specific level or amount of
long-term incentive compensation.
3.4 OTHER COMPENSATION. Nothing in this Section 3 will preclude the
Compensation Committee from authorizing such additional compensation to the
Executive, in cash or in property, as the Compensation Committee may determine
in its sole discretion to be appropriate.
4. EMPLOYEE BENEFITS.
4.1 EMPLOYEE BENEFIT PROGRAMS, PLANS AND PRACTICES. (i) During the
Term, subject to Section 3 and this Section 4, the Company will provide
Executive and his eligible dependents, subject to the terms and conditions of
the applicable plans as they may be amended from time to time, participation in
all Company-sponsored employee benefit plans, including all employee retirement
income and welfare benefit policies, plans, programs or arrangements in which
senior executives of the Company participate, including the Company's health and
disability plans, in a manner commensurate with his position and level of
responsibility in the Company. Executive will not participate in the M.A. Xxxxx
Company life insurance plan sponsored through the Company's Flexible Benefits
Plan or in the M.A. Xxxxx Company retiree medical plan.
(ii) During the Term, Executive will participate in the same manner as
other senior executives of the Company in the M.A. Xxxxx Company 401(k) and
Retirement Plan and Trust. Executive will not participate in the M.A. Xxxxx
Company Supplemental Retirement Benefit Plan or the M.A. Xxxxx Company Excess
Benefit Plan.
(iii) Executive will be eligible to commence participation in the
Company's health plan on August 1, 1999. The Company will reimburse Executive
for his COBRA premiums for health plan coverage to August 1, 1999.
(iv) Executive will be eligible to participate in the M.A. Xxxxx
Company Voluntary Non-Qualified Deferred Compensation Plan. Under the terms of
such Plan, participation elections are made annually, except that a
participation election for 1999 must be made within the first 30 days of
employment with the Company.
4.2 VACATION AND FRINGE BENEFITS. Executive will be entitled to five
(5) weeks' vacation per year. In addition, Executive will be entitled to the
perquisites and other fringe benefits made available to senior executives of the
Company, commensurate with his position and level of responsibility with the
Company, including, without limitation, (i) a monthly automobile allowance of
$810.00,
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(ii) payment by the Company of (a) dues at one country club of the Executive's
choosing and initiation fees, assessments and dues at one Cleveland area country
club of the Executive's choosing, and (b) initiation fees and dues at the Union
Club and one other luncheon/athletic club of Executive's choosing in Cleveland,
Ohio, (iii) payment by the Company of the cost of personal financial counseling
up to $10,000 annually and (iv) participation in the Company's Executive
Physical Program. For this purpose, "personal financial counseling" will include
tax return preparation and tax, estate and personal financial planning services.
5. EXPENSES.
5.1 The Company will promptly reimburse the Executive for all travel
and other business expenses that the Executive incurs in the course of the
performance of his duties to the Company under this Agreement in a manner
commensurate with the Executive's position and level of responsibility with the
Company and in accordance with the Company's policies and rules relating to the
reimbursement of such expenses.
5.2 The Company will reimburse the Executive for his reasonable
relocation costs to the Cleveland, Ohio area in accordance with applicable
Company policy at Level 1; provided, however, that the Executive will not be
required to repay the Company for any relocation benefits in the event of a
voluntary termination of Executive's employment for Good Reason (as defined
below).
6. SPECIAL COMPENSATION.
6.1 MAKE-WHOLE PAYMENTS.
6.1.1 Executive will be entitled to receive $1,500,000 in February
of each of 2000 and 2001 (the "Make-whole Payments"), each one payable one half
in cash and one half in common stock of the Company (valued for this purpose at
the closing price on February 1 of the year of payment). Executive's rights to
receive the Make-whole Payments will vest and become nonforfeitable (i) on
February 1, 2000 and February 1, 2001, respectively, unless Executive
voluntarily terminates his employment with the Company other than for Good
Reason (as defined below) or the employment of the Executive is terminated for
Cause (as defined below), in either case, prior to such dates, or, if earlier
(ii) in the event of a Change in Control (as such term is defined in Executive's
Change in Control Agreement described in Section 9.1).
6.1.2 The Executive and the Company acknowledge that it is in the
best interests of the Company that the Company not be precluded by Section
162(m) of the Internal Revenue Code of 1986, as amended ("Section 162(m)") from
claiming a deduction for the Make-whole Payments. Accordingly, the Executive and
the Company agree to use their best efforts to structure the Make-whole Payments
in a manner intended to preserve the Company's tax deductions for such Payments.
Such efforts will include, but not necessarily be limited to, (i) the
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implementation of a deferral arrangement whereby the Executive would agree to
defer his right to receive the Make-whole Payments for such period as may be
necessary to avoid the application of Section 162(m), and (ii) with such
deferral arrangement being secured by a trust, the assets of which are subject
to the claims of the general creditors of the Company and pursuant to which the
Executive will have the right to direct the investment of the portion of the
trust assets attributable to the cash payments described in Section 6.1.1.
6.2 SIGN-ON STOCK OPTION.
6.2.1 The Company will grant to Executive, effective on the
Effective Date, under the LTIP a nonqualified stock option (the "Sign-on
Option") to purchase 500,000 shares, subject to adjustment as provided in the
next sentence, of the Company's common stock with an exercise price per share
equal to the closing price of the Company's common stock on the New York Stock
Exchange on the Effective Date. In the event that the exercise price of the
Sign-on Option exceeds $15.00 per share, the number of shares subject to the
Option will be equal to 500,000, multiplied by the ratio of the exercise price
to $15.00, rounded up to the nearest whole number. The Option will vest and
become exercisable to the extent of one-third of the shares subject to the
Option on each of the first three anniversaries of the Effective Date. The
Option will expire 10 years after the date of grant. The Option will be subject
to the LTIP and, except as expressly provided in this Section 6.2 and elsewhere
in the Agreement, will be evidenced by the standard form of stock option
agreement approved by the Compensation Committee for all participants in the
LTIP.
6.2.2 Notwithstanding Section 6.2.1, the grant of the Sign-on
Option will be subject to stockholder approval of the LTIP, including any
stockholder approval necessary to exempt the Option from Section 162(m). The
Company hereby agrees to request such approval not later than the year 2000
annual meeting of stockholders.
6.3 SPLIT-DOLLAR INSURANCE. The Company will provide Executive with a
benefit equivalent to the split-dollar insurance benefit to which Executive was
entitled as of the termination of his employment with his prior employer,
subject to the terms and conditions of any split-dollar agreement and Section 7.
6.4 SERP. The Company and the Executive will enter into a supplemental
retirement agreement in substantially the form attached hereto as Exhibit A.
7. TERMINATION OF EMPLOYMENT. Notwithstanding the Term specified in
Section 2, the termination of the Executive's employment hereunder will be
governed by the following provisions:
7.1 DEATH. The Executive's employment will terminate upon his death
during the Term. In the event of the Executive's death during the Term, the
Company
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will pay to the Executive's beneficiaries or estate, as appropriate, as
soon as practicable after the Executive's death, (i) the unpaid Base Salary to
which the Executive is entitled, pursuant to Section 3.1, and any other
compensation earned but not yet paid through the date of the Executive's
termination (collectively, the "Compensation Payments"), (ii) for any accrued
but unused vacation days (the "Vacation Payment"), (iii) the target incentive
compensation under the IC Plan in respect of the fiscal year in which the
Executive's termination occurs, prorated for the number of days until
Executive's termination during such fiscal year (the "Prorated IC"), (iv) any
remaining unpaid amount due to Executive under Section 6.1, (iv) the annual
payments that would be due under Section 6.4 and (vi) any death benefits under
the employee benefit programs, plans and practices referred to in Sections 4.1
and 6.3, in accordance with their terms. This Section 7.1 will not limit the
entitlement of the Executive's estate or beneficiaries to any death or other
benefits then available to the Executive under any life insurance, stock
ownership, stock options, or other benefit plan or policy that is maintained by
the Company for the Executive's benefit.
7.2 PERMANENT DISABILITY. If the Executive becomes totally and
permanently disabled (as defined by the Company's long-term disability benefit
sponsored through its Flexible Benefits Plan in effect at the time Executive's
disability is incurred) ("Permanent Disability") during the Term, the Company or
the Executive may terminate Executive's employment on written notice thereof in
accordance with Section 12.5 and the Company will provide to the Executive as
soon as practicable: (i) amounts payable pursuant to the terms of any applicable
disability insurance policy or similar arrangement that the Company maintains
during the Term, (ii) the Prorated IC, (iii) any remaining unpaid amount due to
Executive under Section 6.1, (iv) the annual payments that would be due under
the supplemental retirement agreement described by Section 6.4, (v) the Vacation
Payment, (vi) the Compensation Payments, (vii) the Company will continue to
provide the split-dollar benefit described in Section 6.3 and (viii) such
payments under applicable plans or programs, including but not limited to those
referred to in Section 4.1, to which the Executive is entitled pursuant to the
terms of such plans or programs.
7.3 VOLUNTARY TERMINATION BY EXECUTIVE; DISCHARGE FOR CAUSE. (i) During
the Term, the Company may terminate the Executive's employment hereunder for
Cause (as defined below). In the event that during the Term the Executive's
employment is terminated by the Company for Cause or by the Executive other than
for Good Reason (as defined below) or other than as a result of the Executive's
Permanent Disability, retirement or death, the Company will pay as soon as
practicable to the Executive (or his representative) (a) the Compensation
Payments and (b) the Vacation Payment, and the Executive will be entitled to no
other compensation, except as otherwise due to him under applicable law or the
terms of any applicable plan or program. Executive will not be entitled, among
other things, to the payment of (x) any annual incentive compensation in respect
of all or any portion of the fiscal year in which such termination occurs, (y)
any remaining unvested amount due to Executive under Section 6.1.1, or (z) any
amount under Section 6.4.
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(ii) For purposes of this Agreement, the Company will have "Cause" to
terminate the Executive's employment hereunder upon a finding by the Board that
(a) the Executive has been convicted by a court of competent jurisdiction of the
commission of a felony, (b) the Executive has willfully and continuously failed
to perform assigned duties after written notice from the Board of such failure,
(c) the Executive engaged in willful misconduct that is materially injurious to
the Company, or (d) the Executive materially breached the Company's intellectual
property rights agreement described in Section 9.2. Such finding must be made by
a resolution duly adopted by the affirmative vote of a majority of the full
number of directors constituting the Board at a meeting of the Board.
7.4 TERMINATION.
7.4.1 Involuntary Termination. During the Term, the Executive's
employment hereunder may be terminated by the Company for any reason other than
Cause by delivery in accordance with Section 12.5 to the Executive of a notice
of termination and a copy of a resolution duly adopted by the affirmative vote
of a majority of the full number of directors constituting the Board at a
meeting of the Board. The Executive will be treated for purposes of this
Agreement as having been involuntarily terminated other than for Cause if during
the Term the Executive terminates his employment with the Company prior to
termination for Cause for any of the following reasons (each, a "Good Reason"):
without the Executive's written consent, (i) the Company has breached any
material provision of this Agreement and within 30 days after notice thereof
from the Executive, the Company fails to cure such breach; (ii) a successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company fails to assume liability under the Agreement; (iii) the failure to
elect or reelect or otherwise to maintain the Executive as a director of the
Company or as Chairman of the Board in accordance with the intent of Section
1.2; (iv) the nullification of the Sign-on Option due to the failure to obtain
the requisite stockholder approvals described in Section 6.2.2; (v) at any time
after the Company has notified the Executive pursuant to Section 2 that the
Company does not intend to renew the Agreement and the Executive's employment at
the end of the Term (including any renewals) (rather than allowing the Agreement
automatically to renew); or (vi) there is a material reduction in the
Executive's duties and responsibilities.
7.4.2 Voluntary Termination. During the Term, the Executive may
voluntarily terminate the Agreement at any time upon 90 days' prior notice to
the Company as provided in Section 12.5. The Executive's death, retirement or
Permanent Disability during the Term will be deemed to constitute a voluntary
termination of employment for purposes of eligibility for termination payments
and benefits as provided in Section 7.5, but for no other purpose.
7.5 TERMINATION PAYMENTS AND BENEFITS.
7.5.1 Form and Amount. Upon the Executive's involuntary termination
other than for Cause pursuant to Section 7.4.1, (i) the Company will pay or
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provide as soon as practicable to the Executive (a) the Prorated IC, (b) the
Vacation Payment, (c) the Compensation Payments, and (d) such payments under
applicable plans or programs to which the Executive is entitled pursuant to the
terms of such plans or programs; (ii) the Company will pay or provide the
Executive for the balance of the Term (the "Continuation Period"), (a) Base
Salary at the rate in effect immediately prior to termination of employment,
paid in the same manner as if Executive had remained employed for the balance of
the Term, (b) the Executive's target annual incentive compensation pursuant to
the IC Plan for each year and a prorated portion thereof (based on the number of
days elapsed in the relevant period) for each partial year in the Continuation
Period, paid at the same time as other executive officers, and (c) the
continuation of employee welfare benefits set forth in Section 4.1 except as
offset by benefits paid or provided by other sources as set forth in Section 8,
or as prohibited by law; and (iii) notwithstanding any provision to the contrary
in the applicable award agreement or in any plan, (a) all stock options will
become fully vested and exercisable, (b) a prorated portion (based on the number
of days elapsed in the relevant Performance Period) of all outstanding
Performance Shares will be paid in accordance with the terms of the grant and
the achievement of the applicable Management Objectives at the same time as
other participants, (c) the Company will provide the annual payments that would
be due under the supplemental retirement agreement described in Section 6.4, and
(d) the Company will continue to provide the split-dollar benefit described in
Section 6.3. For purposes of determining the period of continuation coverage to
which the Executive or any of his dependents is entitled under Section 4980B of
the Internal Revenue Code of 1986, as amended (or any successor provision
thereto), under any group health plan maintained by the Company or its
affiliates, the Executive will be deemed to have remained employed until the end
of the Continuation Period.
7.5.2 Maintenance of Benefits. During the Continuation Period, the
Company will use its best efforts to maintain in full force and effect for the
continued benefit of the Executive all benefits referenced in Section
7.5.1(ii)(c) or will arrange to make available to the Executive benefits
substantially similar to those that the Executive would otherwise have been
entitled to receive if his employment had not been terminated. Such benefits
will be provided to the Executive on the same terms and conditions (including
employee contributions toward the premium payments) under which the Executive
was entitled to participate immediately prior to his termination at no
additional cost (including, without limitation, additional taxes thereon) to the
Executive.
7.5.3 Forfeiture. Notwithstanding the foregoing provisions of
Section 7.5, any right of the Executive to receive termination payments and
benefits under Section 7.5 will be forfeited to the extent of any amounts
payable or benefits to be provided after a material breach of the covenants set
forth in Section 10.1 or in the Company's intellectual property rights agreement
described in Section 9.2.
7.6 NONDUPLICATION OF BENEFITS. To the extent, and only to the extent,
a payment or benefit that is paid or provided under this Section 7 would also be
paid or
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provided under the terms of the applicable plan, program, agreement or
arrangement, including, without limitation, the Executive's Change-in-Control
Agreement described in Section 9.1, such applicable plan, program, agreement or
arrangement will be deemed to have been satisfied by the payment made or benefit
provided under this Agreement.
7.7 RESIGNATIONS. Except to the extent requested by the Board, upon any
termination of Executive's employment with the Company, Executive will
immediately resign all positions and directorships with the Company and each of
its subsidiaries and affiliates.
8. OFFSET. In the event that the Executive obtains full-time employment
with a third party while receiving benefits under Section 7, the Company will be
relieved of its obligations under Section 7 to the extent of the Executive's
compensation from his new employer; provided, however, that the Executive's
coverage under the Company's welfare benefits as provided in Section
7.5.1(ii)(c) will terminate as soon as the Executive becomes covered under any
comparable employee benefit plan made available by another employer and covering
the same type of benefits. The Executive will report to the Company any such
compensation and benefits actually received by him.
9. OTHER EXECUTIVE AGREEMENTS.
9.1 The Executive will be offered an opportunity to enter into the
Company's change-in-control Employment Agreement (the "Change-in-Control
Agreement") and the Company's Indemnification Agreement, in the forms approved
by the Board for all executive officers of the Company, to be effective in each
case as of the Effective Date.
9.2 Executive agrees that, effective on the Effective Date, he will
enter into the Company's standard intellectual property rights agreement
executed by all exempt associates. Executive further agrees that if he breaches
such agreement and the breach results in a material detriment to the Company,
the Company may terminate any benefits under this Agreement and may pursue any
other remedies available, including, without limitation, obtaining an
injunction.
10. COVENANTS.
10.1 COMPETITIVE ACTIVITY. During any period in which the Executive is
receiving compensation from the Company other than retirement or disability
payments, the Executive will not, without the prior written consent of the
Company, which consent may be withheld for any reason or no reason, directly or
indirectly engage in any Competitive Activity. For this purpose, "Competitive
Activity" means the Executive's participation in the management of any business
enterprise if such enterprise engages in substantial and direct competition with
the Company and such enterprise's sales of any product or service competitive
with any product or service of the Company amounted to 10% of such enterprise's
net sales for its most recently completed fiscal year and if the Company's net
sales of said product or service
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amounted to 10% of the Company's net sales for its most recently completed
fiscal year. "Competitive Activity" will not include (i) the mere ownership of
securities in any such enterprise, provided, however, in the case of
publicly-traded enterprises, such ownership does not exceed 5% of the
outstanding voting securities or units of such enterprise, and the exercise of
rights appurtenant thereto or (ii) participation in the management of any such
enterprise other than in connection with the competitive operations of such
enterprise.
10.2 ENFORCEMENT. Executive and the Company agree that the covenants
contained in Section 10.1 are reasonable under the circumstances, and further
agree that if in the opinion of any court of competent jurisdiction any such
covenant is not reasonable in any respect, such court will have the right, power
and authority to excise or modify any provision or provisions of such covenants
as to the court will appear not reasonable and to enforce the remainder of the
covenants as so amended. Executive acknowledges and agrees that the remedy at
law available to the Company for breach of any of his obligations under Section
10.1 would be inadequate and that damages flowing from such a breach may not
readily be susceptible to being measured in monetary terms. Accordingly,
Executive acknowledges, consents and agrees that, in addition to any other
rights or remedies that the Company may have at law, in equity or under this
Agreement, upon adequate proof of his violation of any such provision of this
Agreement, the Company will be entitled to immediate injunctive relief and may
obtain a temporary order restraining any threatened or further breach, without
the necessity of proof of actual damage.
10.3 POST-TERMINATION ASSISTANCE. The Executive agrees that after his
employment with the Company has terminated he will provide, upon reasonable
notice, such information and assistance to the Company as may reasonably be
requested by the Company in connection with any litigation in which it or any of
its affiliates is or may become a party; provided, however, that the Company
agrees to reimburse the Executive on an after-tax basis for any related
out-of-pocket expenses, including travel expenses.
11. SURVIVAL. The expiration or termination of the Term will not impair
the rights or obligations of any party hereto that accrue hereunder prior to
such expiration or termination, except to the extent specifically stated herein.
In addition to the foregoing, the Executive's covenants contained in Sections
10.1 and 10.3 and the Company's obligations under Sections 7 and 12.1 will
survive the expiration or termination of Executive's employment.
12. MISCELLANEOUS PROVISIONS.
12.1 DISPUTE RESOLUTION. Any dispute arising out of or relating to this
Agreement or the breach, termination or validity thereof, shall be settled by
arbitration in accordance with the then-current Center for Public Resources
Rules for Non-administered Arbitration of Business Disputes by a single
arbitrator, who shall be appointed by such Center. The arbitration shall be
governed by the United States Arbitration Act, U.S.C. ss. 1-16, and judgment on
the award rendered by the arbitrator
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may be entered in any court having jurisdiction thereof. The arbitration shall
be held in Cleveland, Ohio. The arbitrator is not empowered to award damages in
excess of compensatory damages and each party hereby waives any right to recover
such damages with respect to any dispute resolved by arbitration. The parties
shall equally share the fees and costs of the arbitrator. Notwithstanding the
foregoing, the Company will not be required to seek or participate in
arbitration regarding any breach of the Executive's covenants contained in
Section 10.1 or 10.3, or in the Company's intellectual property rights
agreement, but may pursue its remedies for such breach in a court of competent
jurisdiction in the city in which the Company's principal executive offices are
based.
12.2 BINDING ON SUCCESSORS; ASSIGNMENT. This Agreement will be binding
upon and inure to the benefit of the Company, the Executive and each of their
respective successors, assigns, personal and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable;
provided, however, that neither this Agreement nor any rights or obligations
hereunder will be assignable or otherwise subject to hypothecation by Executive
(except by will or by operation of the laws of intestate succession) or by the
Company, except that the Company may assign this Agreement to any successor
(whether by merger, purchase or otherwise) to all or substantially all of the
stock, assets or businesses of the Company, if such successor expressly agrees
to assume the obligations of the Company hereunder.
12.3 GOVERNING LAW. This Agreement will be governed, construed,
interpreted and enforced in accordance with the substantive laws of the State of
Ohio, without regard to conflicts of law principles.
12.4 SEVERABILITY. Any provision of this Agreement that is deemed
invalid, illegal or unenforceable in any jurisdiction will, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provisions of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction. If any covenant
should be deemed invalid, illegal or unenforceable because its scope is
considered excessive, such covenant will be modified so that the scope of the
covenant is reduced only to the minimum extent necessary to render the modified
covenant valid, legal and enforceable.
12.5 NOTICES. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof confirmed), or five business days after
having been mailed by United States registered or certified mail, return receipt
requested, postage prepaid, or three business days after having been sent by a
nationally recognized overnight courier service such as Federal Express or UPS,
addressed to the Company (to the attention of the Secretary of the Company) at
its principal executive office and to the Executive at his principal residence,
or to such other address as any party may have furnished to
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the other in writing and in accordance herewith, except that notices of changes
of address will be effective only upon receipt.
12.6 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same Agreement.
12.7 ENTIRE AGREEMENT. Except as provided in Section 9 and as
contemplated by Sections 6.1, 6.3 and 6.4, the terms of this Agreement are
intended by the parties to be the final expression of their agreement with
respect to the Executive's employment by the Company and may not be contradicted
by evidence of any prior or contemporaneous agreement. The parties further
intend that this Agreement will constitute the complete and exclusive statement
of its terms and that no extrinsic evidence whatsoever may be introduced in any
judicial, administrative or other legal proceeding to vary the terms of this
Agreement.
12.8 AMENDMENTS; WAIVERS. This Agreement may not be modified, amended,
or terminated except by an instrument in writing, approved by the Company and
signed by the Executive and the Company. Failure on the part of either party to
complain of any action or omission, breach or default on the part of the other
party, no matter how long the same may continue, will never be deemed to be a
waiver of any rights or remedies hereunder, at law or in equity. The Executive
or the Company may waive compliance by the other party with any provision of
this Agreement that such other party was or is obligated to comply with or
perform only through an executed writing; provided, however, that such waiver
will not operate as a waiver of, or estoppel with respect to, any other or
subsequent failure.
12.9 NO INCONSISTENT ACTIONS. The parties will not voluntarily
undertake or fail to undertake any action or course of action that is
inconsistent with the provisions or essential intent of this Agreement.
Furthermore, it is the intent of the parties hereto to act in a fair and
reasonable manner with respect to the interpretation and application of the
provisions of this Agreement.
12.10 HEADINGS AND SECTION REFERENCES. The headings used in this
Agreement are intended for convenience or reference only and will not in any
manner amplify, limit, modify or otherwise be used in the construction or
interpretation of any provision of this Agreement. All section references are to
sections of this Agreement, unless otherwise noted.
12.11 BENEFICIARIES. Executive will be entitled to select (and change,
to the extent permitted under any applicable law) a beneficiary or beneficiaries
to receive any compensation or benefit payable hereunder following Executive's
death, and may change such election, in either case by giving the Company
written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to "Executive"
will be deemed, where appropriate, to his beneficiary, estate or other legal
representative.
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12.12 WITHHOLDING. The Company will be entitled to withhold from
payment any amount of withholding required by law.
12.13 LEGAL FEES AND EXPENSES. The Company will reimburse the Executive
for all legal fees and expenses incurred by the Executive in connection with the
review and negotiation of this Agreement and the separate documents expressly
contemplated by this Agreement, but not in excess, in the aggregate, of $50,000.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
/s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxxxx
M.A. XXXXX COMPANY
/s/ Xxxxxx X. Xxxxxx
By:-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman
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