1
EXHIBIT 10.3
May 7, 1996
Xx. Xxxxxx X. Xxxxxxx
0000 Xxxxxxxx Xxx
Xxxxxx, XX 00000
Dear Xxx:
This letter confirms that you ceased to be President, Chief Executive Officer
and a Director of The Monarch Machine Tool Company (the "Company") effective at
the beginning of business on May 13, 1996.
This letter also constitutes the entire agreement (the "Agreement") between you
and the Company concerning your change in status with the Company. In
consideration of your agreements stated herein and for so long as you adhere to
your commitments in this Agreement, the Company will provide the following:
A. SALARY THROUGH MAY 22, 1998
---------------------------
(1) SALARY. You will continue as a employee of the Company
until the close of business on Friday, May 22, 1998 ("Termination
Date"). Your salary will be continued at a rate of $16,670 per month,
payable monthly, until April 30, 1997; for the period from May 1, 1997
until your last day of employment on May 22, 1998, your salary will be
at a rate of $6,335 per month, payable monthly.
B. BENEFITS
--------
(1) GROUP HEALTH INSURANCE. Until your Termination Date, the
Company will, at its expense, continue your and your spouse's
participation in The Monarch Machine Tool Company Medical Benefits Plan
(the "Health Plan"). After your Termination Date, the Company will
continue coverage under the Health Plan in accordance with the
provisions of the Health Plan relating to retired officers.
(2) BASIC LIFE INSURANCE. The Company will continue to provide
you a life insurance benefit under the Company's plan for officers
until your Termination Date. After your Termination Date, you will be
treated as a retired officer under the plan.
(3) QUALIFIED PENSION PLAN FOR SALARIED EMPLOYEES. As an
employee of the Company, you will continue to accrue service under the
Qualified Pension Plan until your Termination Date. After your
Termination Date and when you commence pay status under the Pension
Plan, the Company will pay you for a ten-year period certain an
additional monthly amount so that your monthly retirement benefit
during such ten-year period is not actuarially reduced because you went
into pay status under the Pension Plan prior to reaching age 65.
2
Xx. Xxxxxx X. Xxxxxxx
May 7, 1996
Page -2-
C. FURTHER AGREEMENTS
------------------
In consideration of the foregoing, you agree to the following:
(1) Your employment with the Company shall cease at the close
of business on May 22, 1998. This Agreement evidences your resignation,
effective May 13, 1996, as an officer and director of the Company and
as of an officer or director of any of its subsidiaries. You further
agree that unless Xxxxx X. Xxxxxxx otherwise agrees, (a) you shall
immediately cease using any Company property, including Company
offices, computer equipment and software, credit cards and secretarial
services and you will not seek access to any Company facilities and (b)
you shall promptly return to the possession of the Company all property
of the Company in your control or possession, including but not limited
to, security passes, keys, computer equipment and software, accounting
records, customer and supplier information, business plans, drawings,
designs, and any other documents relating to the Company and its
business which you obtained as a result of employment with the Company
and any copies of any of the foregoing.
(2) You agree that until your Termination Date, you will
consult and advise the Company on any matters related to the Company's
business, including product development and customer relations, that
the President of the Company or the Board of Directors of the Company
deems appropriate and beneficial to the Company. It is understood that
these consulting and advisory services are "on call" services and will
only be requested of you at reasonable times and will not interfere
with you devoting yourself to other matters on a full time basis. The
forgoing services shall constitute the sole services that are expected
of you between now and your Termination Date.
(3) For purposes of this Agreement, you agree that the
following words shall have the following meanings:
(a) "Confidential Information" means and includes,
but is not limited to, matters of a technical nature such as
scientific, trade and engineering secrets, know-how, designs,
plans, formulae, processes, inventions, and research and
development projects relating to the designing, engineering
and manufacturing of the products and planned products of the
Company, and matters of a business nature, such as cost and
pricing data, purchasing, marketing and sales policies and
procedures, market analysis, customer lists and strategies and
plans for future growth and development, all of which are of a
confidential and proprietary nature to the Company, except for
any such information which is or becomes known in the public
domain.
3
Xx. Xxxxxx X. Xxxxxxx
May 7, 1996
Page -3-
(b) "Competition with the Company" means and includes
competition with the Company, any subsidiary or affiliate of
the Company, or any of their successors or assigns, or the
business of any of them and a business or enterprise shall be
in "Competition with the Company" if it is engaged, in any
state of the United States or in any foreign country in which
the Company's products are then marketed in developing,
designing, engineering, manufacturing, assembling,
distributing, selling or servicing manual or computer
numerically controlled (CNC) turning machines, vertical
machining centers, custom metal processing equipment, paper
converting machinery, or robotic workpiece handling equipment
or replacement parts for any of the foregoing.
(3) You agree that you shall not at any time disclose any
Confidential Information unless you are required by law to do so. You
agree that until May 22, 1998, you will not, without the prior written
consent of the Company, directly or indirectly, individually or as an
agent, officer, director, employee or consultant, shareholder or
partner, engage in any business or enterprise which is in Competition
with the Company. In the event you knowingly violate the provisions of
this section or any other section of this Agreement, the Company may
terminate all payments and benefits that are to be made or provided to
you under this Agreement and seek such other and further relief as the
Company may be entitled to under law. This paragraph shall not prevent
you from (i) being employed by or serving as an officer of, or
consultant to any subsidiary or division of a business or enterprise in
Competition with the Company if that subsidiary or division is not
itself in Competition with the Company; or (ii) purchasing and holding
for investment less than 2% of the shares of any corporation whose
shares are regularly traded either on a national securities exchange or
in the over-the-counter market.
(4) For and in consideration of the payments and benefits
provided by this Agreement, you, on behalf of yourself, your heirs,
administrators, assigns, and agents, fully settle, release and forever
discharge the Company, its subsidiaries and its and their present and
former officers, directors, agents, and employees of and from any and
all claims, demands, liabilities, costs, damages, actions and causes of
action arising out of or related to your employment, or your
termination from employment with the Company, including, but not
limited to, any claims which may be or may have been brought for age
discrimination under the federal Age Discrimination in Employment Act,
or any state or local law relating to age discrimination, or any other
type of employment discrimination, breach of express or implied
contract, promissory estoppel, intentional tort, or personal injury.
(5) This Agreement does not constitute an admission by the
Company that it has violated any contract, law or regulation or in any
way infringed your rights or privileges.
4
Xx. Xxxxxx X. Xxxxxxx
May 7, 1996
Page -4-
(6) You also agree that the benefits and payments provided by
this Agreement are in lieu of, and replace, any severance benefits for
which you might have claimed eligibility, or entitlement, under Company
policy or practice.
D. GENERAL
-------
(1) You agree that the Company's remedy at law for any breach
of your obligations under Paragraph (C)(3) of this Agreement would be
inadequate and you agree and consent that temporary and permanent
injunctive relief may be granted in any proceeding brought to enforce
Paragraph (C)(3) of this Agreement without the necessity of proof of
actual damage.
(2) This Agreement shall be binding upon, shall be assignable
by, and shall inure to the benefit of the Company, its legal
representatives, successors and assigns. This Agreement is personal to
you and may not be assigned by you except to your estate.
(3) The provisions of this Agreement are divisible. If any
provision shall be deemed invalid or unenforceable, it shall not affect
the applicability or validity of any other provision of this Agreement,
but rather such provision shall be amended to the extent necessary to
render it valid and enforceable.
(4) This Agreement shall be construed according to, and the
legal relations between the parties shall be governed by, the laws of
the State of Ohio as applicable to agreements executed and fully
performed in the State of Ohio.
E. ACKNOWLEDGMENT
--------------
In connection with your execution of this Agreement, you
acknowledge the following:
(1) that you are waiving all rights or claims that you have or
may have under the Federal Age Discrimination in Employment Act, and
any rights or claims that you have or may have under other federal,
state or local laws with regard to age and employment discrimination;
(2) that you have been advised by the Company to consult with
an attorney prior to executing this Agreement;
(3) that you have a period of 21 days after receiving a copy
of this Agreement in which to consider this Agreement; and
(4) that for a period of seven days following your execution
of this Agreement, you may revoke this Agreement, and that this
Agreement shall not
5
Xx. Xxxxxx X. Xxxxxxx
May 7, 1996
Page -5-
become effective and enforceable until that seven-day revocation period
has expired.
An additional signed copy of this Agreement is enclosed. If you
understand, accept and agree to the terms and provisions set forth herein,
please date and sign this Agreement below and return the signed Agreement to the
Company. The additional copy is for your records. If the Company does not
receive this Agreement signed by you before June 28, 1996, this letter is of no
force and effect.
Sincerely,
The Monarch Machine Tool Company
By:/s/Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx
Pursuant to Authority Granted
by Resolution of the Board of
Directors adopted May 7, 1996
Understood, Accepted and Agreed to:
/s/Xxxxxx X. Xxxxxxx 5/96
----------------------- ----
Xxxxxx X. Xxxxxxx Date
