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Exhibit 10.28
EMPLOYMENT AGREEMENT
FOR
XXXXXXX XXXXXX
This employment agreement ("Agreement") by and between X. X. Xxxxx Corporation
("Corporation"), an Ohio corporation, and Xxxxxxx Xxxxxx ("Executive"),
collectively, the "Parties," is effective February 19, 2001 ("Effective Date")
and describes the terms and conditions governing Executive's employment with
Corporation.
ARTICLE 1 TERM OF AGREEMENT
This Agreement:
[1] Will be effective only if:
[a] Executive assumes the duties described in Article 2 no later
than February 19, 2001; and
[b] Executive meets all generally applicable employment conditions,
including [i] passing Corporation's physical examination and
controlled substance test and [ii] positive verification of business
references.
[2] Will remain in effect for 36 full calendar months beginning after
the Effective Date, unless it terminates at an earlier date as
provided below ("Original Term") and will be extended automatically
for an additional 12 months beginning at the end of the Original
Term unless, no later than 180 days before the end of the Original
Term, either Corporation or Executive notifies the other, in
writing, that it/he does not want to extend the term of this
Agreement.
[3] The Original Term together with the extensions described in
subsection [2] is referred to in this Agreement as the "Term."
ARTICLE 2 EXECUTIVE'S DUTIES AND AUTHORITY
2.01 During the Term of this Agreement, Executive agrees:
[1] To serve as President and Chief Operating Officer of Corporation (or
more senior position to which he is appointed), a position that is based
in the Columbus, Ohio metropolitan area, and to perform the services that
are customarily performed by persons in such executive capacities;
[2] To discharge any other duties and responsibilities that the Chairman
("Chairman") of Corporation's Board of Directors ("Board") assigns to him
from time to time that are consistent with Executive's title and position;
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[3] To serve, if elected, as a director of Corporation during the Term
and, if appointed or elected, to serve as an officer and director of any
entity that is related through common ownership to Corporation (all
entities related through common ownership to Corporation are called
"Affiliates" and Corporation and all Affiliates are called "Group"). As
soon as practicable after the Effective Date, Corporation will take all
action necessary to cause Executive to be nominated to membership on the
Board;
[4] Except for periods of absence attributable to illness, vacations and
any leaves of absence authorized by the Board, to:
[a] Devote his full business time and attention to the Group's
business affairs and to discharge the duties assigned to Executive
under this Agreement; and
[b] Not to engage in any other business activity, whether or not for
gain, profit or other pecuniary advantage. However, Executive may
serve as a director of companies other than Group members if that
service is approved by the Board.
2.02 The restrictions described in Section 2.01[4][b] will not be construed to
prevent Executive from:
[1] Investing his personal assets in:
[a] Businesses that do not compete with or do business with any
Group member and do not require Executive to perform any services
connected with the operation or affairs of the businesses in which
the investment is made;
[b] Stocks or corporate securities described in Section 7.02; or
[c] Businesses that compete with or do business with any Group
member, but only if:
[i] That business's stock is publicly traded;
[ii] Executive does not acquire more than five percent of the
outstanding common shares issued by the business in which the
investment is made; and
[iii] Executive does not (and is not required to) perform any
services connected with the operation or affairs of the business
in which the investment is made.
[2] Participating in, or serving as a consultant, advisor, trustee or
director of, civic and charitable organizations or activities, but only if
this activity [a] does
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not interfere with the performance of his duties under this Agreement and
[b] is approved by the Board.
2.03 Executive will have a direct reporting relationship to the Chairman and
from:
[1] Value Brands Sales;
[2] Image Brands Sales;
[3] Supermarkets and Drug Chains Sales;
[4] Design/Product Development/Merchandising;
[5] Operations; and
[6] Other officers and employees designated by the Chairman.
Also, Executive will be entitled to receive periodic reports from Corporation's
International, Financial and Human Resources Departments and other information
he reasonably needs to discharge his duties under this Agreement.
2.04 Executive will have all power and authority reasonably required to
discharge the duties and responsibilities assigned to him under this Agreement.
ARTICLE 3 EXECUTIVE'S COMPENSATION
3.01 During the Term of this Agreement and subject to the terms of this section
and of Article 5, Corporation will pay the following amounts to Executive:
[1] Beginning on the Effective Date, a base salary at the rate of
$450,000 for each full calendar year of employment ("Base Salary"),
prorated to reflect partial calendar months and years of employment, and
to be paid in installments that correspond with Corporation's normal
payroll practices applicable to Corporation's senior executives. Base
Salary will not be reduced during the Term of this Agreement without
Executive's prior written consent and may be increased during the Term of
this Agreement at the discretion of the Board's Executive Compensation
Committee, which will review Executive's compensation annually at the
same time it reviews compensation paid to other senior executives of the
Corporation.
[2] An annual cash bonus under (and subject to the terms of) the X. X.
Xxxxx Annual Incentive Program (or any successor annual bonus plan,
provided that such plan provides Executive with an annual bonus potential
at target and maximum levels that are no less than those applied to
determine the Chairman's
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bonus), as in effect from time to time, ("Annual Incentive Program")
ranging between:
[a] 40 percent of Base Salary, if Annual Operating Plan targets are
met or exceeded; and
[b] 100 percent of Base Salary, if maximum profit targets are met or
exceeded.
For 2001, this bonus will be prorated on the basis of the number of
calendar days between the Effective Date and December 31, 2001.
[3] Participation, to the full extent of his eligibility, in all employee
benefit and other programs provided to Corporation's senior executives, a
description of which has been given to Executive, (other that the
supplemental retirement plan that is limited to executives who were
employees of Corporation before January 1, 1989) at a level commensurate
with Executive's title and position, as these programs may from time to
time be amended or modified by the Board or the Board's Executive
Compensation Committee. However, Executive will be allowed four weeks'
vacation for each calendar year and will be entitled to commercial air
travel and hotel accommodations in the same class as that allowed to
Chairman.
[4] The perquisites and fringe benefits that, on or after the Effective
Date, are made available to Corporation's senior executives (other than
the supplemental retirement plan that is limited to executives who were
employees of Corporation before January 1, 1989), at a level commensurate
with Executive's title and position and specifically including a monthly
automobile allowance of $1,000.
[5] Reimbursement of Executive's initiation fees (but only to the extent
of $25,000 during the Term) and recurring dues at a country club located
in the Columbus, Ohio metropolitan area.
3.02 Subject to the terms of this section and of Article 5 and as an
inducement to Executive to enter into this Agreement, Executive will receive the
following special payments and grants:
[1] A special one-time cash payment of $100,000 payable only if, within
12 calendar months beginning on or immediately after the Effective Date,
[a] Executive purchases a residence in the Columbus, Ohio metropolitan
area and [b] Executive and his spouse establish a permanent residence in
the Columbus, Ohio metropolitan area.
[2] Options to purchase:
[a] 190,000 of Corporation's common shares, par value $1.00 per
share, ("Shares"). These options will be granted on the Effective
Date ("Initial Options") under either the X. X. Xxxxx Corporation
1994 Stock
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Option Plan as in effect on the Effective Date ("1994 Option Plan")
or the X. X. Xxxxx Corporation 1997 Incentive Stock Plan as in
effect on the Effective Date ("1997 Option Plan"), or both. The
Initial Options will be granted under a stock option agreement
having terms and conditions consistent with this Agreement and the
stock option plan or plans under which they are granted.
[b] 150,000 Shares. These options will be granted on the third
business day after the closing price of the Shares averages at least
$5.00 per Share for 15 consecutive trading days ending during the
Original Term of this Agreement ("$5.00 Options"). Corporation will
monitor the Shares' closing price during the Original Term to
establish when, and if, the conditions described in the preceding
sentence are met. If the $5.00 Options cannot be granted under the
option plans described in Section 3.02[2][a], they will be granted
under a shareholder approved stock option plan that complies with
the requirements imposed on "performance based compensation"
programs under Section 162(m) of the Internal Revenue Code of 1986,
as amended ("Code") or, if no plan of this type is then in effect or
if the $5.00 Options cannot, for any reason, be granted under a plan
of this type that is then in effect, the $5.00 Options will be
granted under a stand-alone stock option agreement. The shareholder
approved stock option plan described in the preceding sentence and
the stand-alone agreement, also described in the preceding sentence,
will contain terms and conditions that are substantially the same as
those included in the 1997 Option Plan and will not be inconsistent
with this Agreement; and
[c] 150,000 Shares. These options will be granted on the third
business day after the closing price of the Shares averages at least
$10.00 per Share for 15 consecutive trading days ending during the
Original Term of this Agreement ("$10.00 Options"). Corporation will
monitor the Shares' closing price during the Original Term to
establish when, and if, the conditions described in the preceding
sentence are met. If the $10.00 Options cannot be granted under the
option plans described in Section 3.02[2][a], they will be granted
under a shareholder approved stock option plan that complies with
the requirements imposed on "performance based compensation"
programs under Code ss.162(m) or, if no plan of this type is then in
effect or if the $10.00 Options cannot, for any reason, be granted
under a plan of this type that is then in effect, the $10.00 Options
will be granted under a stand-alone stock option agreement. The
shareholder approved stock option plan described in the preceding
sentence and the stand-alone agreement, also described in the
preceding sentence, will contain terms and conditions that are
substantially the same as those included in the 1997 Option Plan and
will not be inconsistent with this Agreement.
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[3] All options described in Section 3.02[2] ("Options") will be subject
to the following rules:
[a] The Options will be incentive stock options [as defined in Code
ss.421], to the maximum extent possible and the balance will be
nonqualified (nonstatutory) stock options;
[b] The number of Options will be adjusted to reflect, as
appropriate, the effect of any stock splits, stock dividends and
similar events affecting the underlying Shares;
[c] Regardless of the obligation otherwise imposed under this
section, Corporation will not be obligated to issue the Options if
Executive is not a full-time employee of Group on the issue date
specified in Section 3.02[2]; or
[d] The exercise price for all Options will be the Shares' closing
price as reported on the New York Stock Exchange (or other sale
securities exchange on which the Shares are then listed or traded)
on the date the Options are granted;
[e] Except as provided in Article 5, the Options will be subject to
the following vesting schedule:
OPTION PERCENT VESTED
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Initial Option 20%, at the end of 12 full calendar months beginning after the Effective
Date;
40%, at the end of 24 full calendar months beginning after the Effective
Date;
60%, at the end of 36 full calendar months beginning after the Effective
Date;
80%, at the end of 48 full calendar months beginning after the Effective
Date; and
100%, at the end of 60 full calendar months beginning after the
Effective Date.
$5.00 Options 33-1/3%, at the end of 12 full calendar months beginning after the $5.00
Options are granted;
66-2/3%, at the end of 24 full calendar months beginning after the $5.00
Options are granted; and
100%, at the end of 36 full calendar months
beginning after the $5.00 Options are granted.
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OPTION PERCENT VESTED
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$10.00 Options 50%, at the end of 12 full calendar months beginning after the $10.00
Options are granted;
80%, at the end of 24 full calendar months beginning after the $10.00
Options are granted; and
100%, at the end of 36 full calendar months
beginning after the $10.00 Options are granted.
[f] The Initial Options will expire 10 years after they are granted,
unless they are terminated earlier under the terms of this Agreement
or under the terms of the option plan(s) under which they are
granted and which are applicable to all options granted under those
plans (such as, termination of employment or the sale of
Corporation);
[g] The $5.00 and $10.00 Options will expire 5 years after they are
granted, unless they are terminated earlier under the terms of this
Agreement or under the terms of the option plan(s) under which they
are granted and which are applicable to all options granted under
those plans (such as, termination of employment or the sale of
Corporation);
[h] All Options will vest upon a Change in Control (as defined in
Section 5.05[7] or upon a Special Change in Control (as defined in
Section 5.05[10];
[i] The terms and conditions of all Options will be described in a
written stock option agreement between Executive and Corporation
which will reflect the terms of this Agreement and the option
plan(s) under which the Options are issued;
[j] If any acquisition, merger or other business combination ("Sale
Transaction") occurs after which Corporation is not the surviving
entity (other than a transaction in which Corporation's shareholders
own all of the outstanding shares of the surviving corporation after
the Sale Transaction), then unless the surviving corporation will
assume Corporation's obligations under this Agreement with respect
to the $5.00 and $10.00 Options, with appropriate adjustments to
reflect differences in the relative stock prices of Corporation's
and the surviving corporation's stock (measured immediately before
the completion of the Sale Transaction), the $5.00 Options and
$10.00 Options will be issued to Executive 10 business days before
the completion of the Sale Transaction but only if the consideration
payable to Corporation's shareholders in connection with the Sale
Transaction ("Transaction Consideration") equals or exceeds the
amount specified in Sections 3.02[2][b] and [c],
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without regard to the averaging of prices described in those
sections ("Triggering Price"). If the Transaction Consideration is
less than either or both of the Triggering Prices, Executive's
rights to receive the $5.00 or $10.00 Options in respect of which
the Triggering Price is less than the Transaction Consideration will
terminate effective on the date the Sale Transaction is consummated.
[k] Corporation will make reasonable efforts to allow Executive to
exercise the Options in a cashless exercise transaction.
[4] The relocation benefits described in Exhibit A to this Agreement that
are generally made available to Corporation's newly hired senior
executives, a description of which has been given to Executive, plus [a]
an additional 30 days' temporary living expenses beyond the 60 days'
normally allowed under this program for this purpose and [b]
reimbursement for commercial air travel and other reasonable associated
travel expenses between Columbus, Ohio and Wilton, Connecticut twice each
calendar month for the three calendar months beginning on or after the
Effective Date for Executive or his spouse (the total number of round
trips reimbursed under this subsection will not be greater than six).
[5] Executive will be eligible to participate in all short-term benefit,
bonus, incentive equity, savings or similar plans or programs maintained
or provided by Corporation to its senior executives at a level
commensurate with Executive's title and position (other than the
supplemental retirement plan that is limited to executives who were
employees of Corporation before January 1, 1989) ("Bonus Plans").
However:
[a] Participation in the Bonus Plans will be conditioned upon the
terms and conditions included in the Bonus Plans which are
equivalent to those applicable to the Chairman (assuming Chairman is
eligible to participate in the Bonus Plans);
[b] During the Term of this Agreement, Executive will not
participate in any stock option plan except to the extent described
in this Agreement, unless the Board decides that he may participate
in stock option plans beyond the extent provided in this Agreement;
and
[c] Nothing in this Agreement will preclude Corporation from
amending or terminating any of the Bonus Plans (or adopting new
plans or programs) but without Executive's prior written consent, no
amendment or termination of any Bonus Plan will reduce any benefit
that Executive accrued to the date of that amendment or termination.
ARTICLE 4 EXPENSES
Corporation will pay or reimburse Executive for all reasonable, ordinary and
necessary expenses that he incurs to perform his duties under this Agreement.
Reimbursement will be made within 30 days after the date Executive submits
appropriate evidence of the
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expenditure to Corporation (and all other information required under
Corporation's business expense reimbursement policy).
ARTICLE 5 TERMINATION OF EMPLOYMENT DURING TERM OF AGREEMENT
5.01 TERMINATION OF EMPLOYMENT DUE TO DEATH OR DISABILITY. If Executive dies or
becomes Disabled during the Term of this Agreement:
[1] This Agreement will terminate as of the date Executive dies or
becomes Disabled and Corporation will pay or provide to Executive (or to
his beneficiary if Executive is dead) and, if appropriate, to his
dependents:
[a] Any unpaid installments of his Base Salary, calculated to the
end of the payroll period during which he terminates employment
because of death or Disability;
[b] The value of any accrued but unused vacation, calculated to the
end of the payroll period during which he terminates employment
because of death or Disability (this value will be calculated by
dividing the Base Salary by 365 and then multiplying this dollar
amount by the number of accrued but unused vacation days);
[c] Any amounts Executive is entitled to receive under the terms of
any employee benefit plan described in Section 3.01[3];
[d] The unpaid portion (if any) of the amounts described in Section
3.02[1] but only if all the conditions described in that Section
were met before Executive died or became Disabled;
[e] The unpaid portion of any bonus that has been earned and
declared under the Annual Incentive Program for the most recently
completed fiscal year;
[f] A prorated portion of the bonus that would have been paid to
Executive under the Annual Incentive Program for the fiscal year
during which he dies or becomes Disabled. This amount will be
calculated and paid after the end of the fiscal year in which
Executive dies or becomes Disabled and will be determined by
multiplying the amount of the bonus Executive would have received
under the Annual Incentive Program if he had continued active
employment until the end of the fiscal year during which he dies or
becomes Disabled by the number of full calendar months he was
actively employed during that fiscal year and then dividing this
dollar amount by 12 months;
[g] Continuation, for a period of six calendar months beginning on
or immediately after the date he dies or becomes Disabled, of the
medical, dental, prescription drug and hospitalization coverage and
benefits for
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which Executive and/or his dependents were eligible before his death
or Disability (the cost of these continued benefits will be
allocated between Executive and Corporation in the same manner it
was allocated before Executive's death or Disability); and
[h] If Executive's termination of employment is due to Disability,
continuation of his Base Salary for six full calendar months
beginning after the date his Disability arose.
[2] All unvested Options that were granted before Executive's employment
terminates because of his death or Disability will become fully vested as
of the date the Executive's employment terminates under this section and
all vested Options held by the Executive (or by his estate) will be
exercisable to the extent permitted under the terms of the option plan(s)
under which they were granted and the individual option agreement under
which the Options are issued. However, any Options that have not been
granted under Section 3.02[2] as of the date Executive terminates
employment because of death or Disability will not be granted.
[3] For purposes of this section, Executive will be deemed to have
terminated employment on the date of his death or the date he is
determined to have become Disabled.
[4] "Disability" has the same meaning given to the term under the 1997
Option Plan, whether or not that plan has expired before the condition
arises.
[5] All amounts payable under this section will be:
[a] Paid in accordance with Corporation's payroll procedures (in the
case of Base Salary) or on the date provided in the program on which
they are based, unless the Parties agree to accelerate one or more
of these payments. If this acceleration election is made, the amount
distributed will be discounted to reflect its then present value by
applying a discount rate equal to the rate paid on 90-day Treasury
Bills issued on or immediately before the date the calculation is
made or, in the case of distributions made from an employee benefit
plan maintained by Corporation, by applying any applicable early
distribution discount factor included in the benefit plan from which
the amount is paid; and
[b] If Executive dies before all payments due under this section
have been paid, the unpaid amount will be paid to Executive's
beneficiary under the procedures described in Section 10.07.
5.02 VOLUNTARY TERMINATION OF EMPLOYMENT. Executive may voluntarily terminate
his employment without Good Reason (as defined in Section 5.05[9]) at any time
during the Term of this Agreement by giving Corporation written notice of his
intention to do so. This notice will be effective 60 days after it is given
unless the Parties mutually agree to
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\accelerate this termination date ("Voluntary Termination Date"). If Executive
voluntarily terminates his employment:
[1] This Agreement will terminate as of the Voluntary Termination Date
and Corporation will pay or provide to Executive:
[a] Any unpaid installments of his Base Salary, calculated to the
end of the payroll period during which his Voluntary Termination
Date occurs;
[b] The value of any accrued but unused vacation, calculated to the
end of the payroll period during which his Voluntary Termination
Date occurs (this value will be calculated by dividing the Base
Salary by 365 and then multiplying this dollar amount by the number
of accrued but unused vacation days);
[c] Any amounts Executive is entitled to receive under the terms of
any employee benefit plan described in Section 3.01[3];
[d] The unpaid portion of any bonus that has been earned and
declared under the Annual Incentive Program for the most recently
completed fiscal year;
[e] The unpaid portion (if any) of the amounts described in Section
3.02[1] but only if all the conditions described in that Section
were met before Executive's Voluntary Termination Date.
[2] All [a] unvested Options will be forfeited as of Executive's
Voluntary Termination Date, [b] any vested Options that were granted
before Executive's Voluntary Termination Date will be exercisable to the
extent permitted under the terms of the option plan(s) under which they
were granted and the individual option agreement under which the Options
are issued and [c] any Options that have not been granted under Section
3.02[2] as of Executive's Voluntary Termination Date will not be granted.
[3] All amounts payable under this section will be:
[a] Paid in accordance with Corporation's payroll procedures (in the
case of Base Salary) or on the date provided in the program on which
they are based, unless the Parties agree to accelerate one or more
of these payments. If this acceleration election is made, the amount
distributed will be discounted to reflect its then present value by
applying a discount rate equal to the rate paid on 90-day Treasury
Bills issued on or immediately before the date the calculation is
made or, in the case of distributions made from an employee benefit
plan maintained by Corporation, by applying any applicable early
distribution discount factor included in the benefit plan from which
the amount is being paid; and
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[b] If Executive dies before all payments due under this section
have been paid, the unpaid amount will be paid to Executive's
beneficiary under the procedures described in Section 10.07.
5.03 TERMINATION OF EMPLOYMENT BY CORPORATION WITHOUT CAUSE OR BY EXECUTIVE FOR
GOOD REASON. Corporation may terminate Executive's employment without Cause (as
defined in Section 5.04[3]) at any time during the Term of this Agreement by
giving Executive written notice of its intention to do so and Executive may
terminate his employment for Good Reason (as defined in Section 5.05[9]) by
giving Corporation written notice of his intention to do so. Notice by
Corporation of the termination of Executive's employment without Cause will be
effective 30 business days after it is delivered to Executive, unless the
parties mutually agree to accelerate this termination date. Notice given by
Executive of his termination of employment for Good Reason must specify the Good
Reason upon which it is based and, unless the parties mutually agree to
accelerate this termination date, will be effective 30 business days after it is
given, unless, during this period, Corporation corrects or otherwise resolves
the Good Reason for which the notice was given. The effective date of a
termination of employment without Cause or for Good Reason is referred to in
this Agreement as Executive's "Involuntary Termination Date." If Corporation
terminates Executive's employment without Cause or if Executive terminates his
employment for Good Reason:
[1] This Agreement will terminate as of the Involuntary Termination Date
and Corporation will pay to Executive:
[a] Any unpaid installments of his Base Salary, calculated to the
end of the payroll period during which his Involuntary Termination
Date occurs;
[b] The value of any accrued but unused vacation, calculated to the
end of the payroll period during which his Involuntary Termination
Date occurs (this value will be calculated by dividing the Base
Salary by 365 and then multiplying this dollar amount by the number
of accrued but unused vacation days);
[c] The Base Salary for an additional 18 months beginning with the
first payroll period that begins after his Involuntary Termination
Date;
[d] Any amounts Executive is entitled to receive under the terms of
any employee benefit plan described in Section 3.01[3];
[e] The unpaid portion of any bonus that has been earned and
declared under the Annual Incentive Program for the most recently
completed fiscal year;
[f] The unpaid portion (if any) of the amounts described in Section
3.02[1] but only if all the conditions described in that Section
were met before Executive's Involuntary Termination Date;
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[g] A bonus under the Annual Incentive Program calculated as if
Executive had been actively employed throughout the 18 calendar
months beginning on his Involuntary Termination Date and had
terminated employment at the end of that 18-month period; provided,
however, that any requirement in the Annual Incentive Program that
requires Executive to be employed on the last day of the plan year
in order to be eligible for a bonus under such program shall be
disregarded for purposes of calculating the bonus payable to
Executive under this Section 5.03[1][g]; and
[h] Continuation, for a period of 18 calendar months beginning on or
immediately after Executive's Involuntary Termination Date, of the
medical, dental, prescription drug and hospitalization coverage and
benefits for which Executive and/or his dependents were eligible
before his Involuntary Termination Date (the cost of these continued
benefits will be allocated between Executive and Corporation in the
same manner it was allocated before Executive's Involuntary
Termination Date).
[2] Also, all [a] unvested Options will become fully vested as of
Executive's Involuntary Termination Date, [b] any vested Options that
were granted before Executive's Involuntary Termination Date and all
vested Options will be exercisable to the extent permitted under the
terms of the option plan(s) under which they were granted and the
individual option agreement under which the Options are issued and [c]
any Options that have not been granted under Section 3.02[2] as of
Executive's Involuntary Termination Date will not be granted.
[3] All amounts payable under this section will be:
[a] Paid in accordance with Corporation's payroll procedures (in the
case of Base Salary) or on the date provided in the program on which
they are based, unless the Parties agree to accelerate one or more
of these payments. If this acceleration election is made, the amount
distributed will be discounted to reflect its then present value by
applying a discount rate equal to the rate paid on 90-day Treasury
Bills issued on or immediately before the date the calculation is
made or, in the case of distributions made from an employee benefit
plan maintained by Corporation, by applying any applicable early
distribution discount factors included in the benefit plan from
which the amount is being paid; and
[b] If Executive dies before all payments due under this section
have been paid, the unpaid amounts will be paid to Executive's
beneficiary under the procedures described in Section 10.07.
[4] Regardless of other provisions of this section, if the Involuntary
Termination Date occurs within the six month period ending on the date of
a Change in Control, Executive will receive the amounts and benefits
described in Section 5.05 (reduced by any payments and benefits received
under this section
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before a Change in Control) in lieu of the amounts and benefits otherwise
provided in this section.
5.04 TERMINATION OF EMPLOYMENT BY CORPORATION FOR CAUSE. The Chairman may
terminate Executive's employment with Cause at any time during the Term of this
Agreement by giving Executive written notice of its intention to do so. This
notice must specify the reason for which it is given (including the Cause upon
which it is based) and will be effective 30 business days after the date it is
given (five calendar days if "Cause" arises because Executive is convicted of a
felony), unless Executive corrects, or otherwise remedies within such period,
the Cause for which it is given ("For Cause Termination Date"). If this notice
is given:
[1] This Agreement will terminate as of the For Cause Termination Date
and Corporation will pay to Executive:
[a] Any unpaid installments of his Base Salary, calculated to the
end of the payroll period during which his For Cause Termination
Date occurs;
[b] The value of any accrued but unused vacation, calculated to the
end of the payroll period during which his For Cause Termination
Date occurs (this value will be calculated by dividing the Base
Salary by 365 and then multiplying this dollar amount by the number
of accrued but unused vacation days);
[c] Any amounts Executive is entitled to receive under the terms of
any employee benefit plan described in Section 3.01[3];
[d] The unpaid portion of any bonus that has been earned and
declared under the Annual Incentive Program for the most recently
completed fiscal year;
[e] The unpaid portion (if any) of the amounts described in Section
3.02[1] but only if all the conditions described in that Section
were met before Executive's For Cause Termination Date.
[2] Also, [a] all unvested Options will be forfeited as of Executive's
For Cause Termination Date, [b] any vested Options that were granted
before Executive's For Cause Termination Date will be exercisable to the
extent permitted under the terms of the option plan(s) under which they
were granted and the individual option agreement under which the Options
are issued and [c] any Options that have not been granted under Section
3.02[2] as of Executive's For Cause Termination Date will not be granted.
[3]"Cause" means [a] gross negligence materially detrimental to
Corporation, [b] conviction of a felony, [c] willful, and continued
failure of Executive, after receipt of written notice from Corporation
setting forth the specifics of such failure, to perform the duties of his
offices with Corporation unless such failure is
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the result of ill health or physical or mental disability or [d]
intentional misconduct of Executive materially and demonstrably injurious
to Corporation.
[4] All amounts payable under this section will be:
[a]Paid in accordance with Corporation's payroll procedures (in the
case of Base Salary) or on the date provided in the program on which
they are based, unless the Parties agree to accelerate one or more
of these payments. If this acceleration election is made, the amount
distributed will be discounted to reflect its then present value by
applying a discount rate equal to the rate paid on 90-day Treasury
Bills issued on or immediately before the date the calculation is
made or, in the case of distributions made from an employee benefit
plan maintained by Corporation, by applying any applicable early
distribution discount factor included in the benefit plan from which
the amount is being paid; and
[b] If Executive dies before all payments due under this section
have been paid, the unpaid amount will be paid to Executive's
beneficiary under the procedures described in Section 10.07.
5.05 TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL. If a Change
in Control occurs during the Term of this Agreement, Executive will receive the
following amounts (under the conditions described below):
[1] If Executive dies or becomes Disabled during the Term of this
Agreement but after a Change in Control, he (or his beneficiary) will
receive the amounts described in Section 5.01, as if Executive had died
or become Disabled before the Change in Control occurred.
[2] If Executive terminates his employment without Good Reason (as
defined in Section 5.05[9]) during the Term of this Agreement but after a
Change in Control, he (or his beneficiary) will receive the amounts
described in Section 5.02, as if Executive had voluntarily terminated his
employment without Good Reason before the Change in Control occurred, but
only if he follows the procedures described in Section 5.02.
[3] If Corporation terminates Executive's employment for Cause (as
defined in Section 5.04[3]) during the Term of this Agreement but after a
Change in Control, he (or his beneficiary) will receive the amounts
described in Section 5.04 as if Executive had been terminated for Cause
before the Change in Control occurred.
[4] Subject to Section 5.03[4], if Executive notifies Corporation of his
intent to terminate his employment for Good Reason during the Term of
this Agreement and if that notice is given after a Change in Control
occurs or if Corporation notifies Executive of its intent to terminate
Executive without Cause (as defined in Section 5.04[3]) during the Term
of this Agreement and if that notice is given
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after a Change in Control has occurred, Executive will receive the
following amounts:
[a] Any unpaid installments of his Base Salary, calculated to the
end of the payroll period during which his termination occurs under
this section;
[b] The value of any accrued but unused vacation, calculated to the
end of the payroll period during which his termination occurs under
this section (this value will be calculated by dividing the Base
Salary by 365 and then multiplying this dollar amount by the number
of accrued but unused vacation days);
[c] The Base Salary for an additional 36 months beginning with the
first payroll period that begins after his termination occurs under
this section unless the Parties agree to accelerate these payments.
If this acceleration election is made, the amount distributed will
be discounted to reflect its then present value by applying a
discount rate equal to the rate paid on 90-day Treasury Bills issued
on or immediately before the date the calculation is made;
[d] Any amounts Executive is entitled to receive under the terms of
any employee benefit plan described in Section 3.01[3];
[e] The unpaid portion of any bonus that has been earned and
declared under the Annual Incentive Program for the most recently
completed fiscal year before Executive's termination occurs under
this section;
[f] The unpaid portion (if any) of the amounts described in Section
3.02[1] but only if all the conditions described in that Section
were met before Executive's termination occurs under this section;
[g] Three times the average of the annual bonuses, if any, Executive
received under the Annual Incentive Program during all fiscal years
ending before Executive's termination occurs under this section;
[h] All unvested Options that were granted before Executive's
employment terminates under this section will become vested and all
granted options will be exercisable to the extent permitted under
the terms of the option plan(s) under which they were granted and
the individual option agreement under which the Options are issued.
However, subject to Section 3.02[3][j], any Options that have not
been granted under Section 3.02[2] as of the date Executive
terminates employment under this section will not be granted; and
[i] Any other Change in Control benefit to which Executive is
entitled under the terms of any other plan, program or agreement
with any Group Member.
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Also, for a period of 18 calendar months beginning on or immediately
after the Executive's employment terminates under this section,
Corporation will continue to provide the medical, dental, prescription
drug and hospitalization coverage and benefits for which Executive
and/or his dependents were eligible before his employment terminated
under this section (the cost of these continued benefits will be
allocated between Executive and Corporation in the same manner it was
allocated before Executive's termination under this section);
[5] If the sum of the payments described in this section, any
other section of this Agreement and those provided under any other
plan, program or agreement between Executive and any Group member
constitute "excess parachute payments" as defined in Code
ss.280G(b)(1), Corporation will either:
[a] Reimburse Executive for the amount of any excise tax due under
Code ss.4999, if this procedure provides Executive with an after-tax
amount that is larger than the after-tax amount produced under
Section 5.05[5][b]; or
[b] Reduce the amounts paid to Executive under this Agreement so
that his total "parachute payment" as defined in Code
ss.280G(b)(2)(A) under this and all other agreements will be $1.00
less than the amount that would be an "excess parachute payment" if
this procedure provides Executive with an after-tax amount that is
larger than the after-tax amount produced under Section 5.05[5][a].
[6] Payment of the amounts described in this section are expressly
conditioned on compliance with the following conditions, in addition
to those specified elsewhere in this Agreement:
[a] Except as expressly provided in this Agreement, Executive's
right to receive the payments described in this section will not
decrease the amount of, or otherwise adversely affect, any other
benefits payable to Executive under the terms of any of the programs
described in Section 3.01[3]; and
[b] If any individual (other than Executive), firm, corporation,
partnership, joint venture or other entity or group (as described in
Section 5.05[7][a]) initiates a tender or exchange offer,
distributes proxy materials to Corporation or to Corporation's
shareholders or takes other steps to effect, or that may result in,
a Change in Control, Executive agrees that the only amounts he will
receive under this Agreement will be determined solely with
reference to Section 5.02 (and not with reference to this section)
if he [i] voluntarily terminates his employment with Corporation
during the pendency of that activity other than for death,
Disability, Good Reason or by reason of his retirement at or after
his Normal or Early Retirement Dates as defined in Corporation's
qualified retirement plan or [ii] is indefinitely absent from active
employment other than for an
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absence covered by the Family and Medical Leave Act before those
efforts are abandoned, that activity is terminated or until a Change
in Control has occurred.
[7] For purposes of this Agreement, a "Change of Control" will be deemed
to have occurred if:
[a] Any individual (other than Executive), firm, corporation,
partnership, joint venture or other entity or any group (as the term
"group" is defined in Section 13(d)(3) of the Securities Exchange
Act of 1934 (the "Exchange Act") and the rules thereunder on the
Effective Date), other than any such entity or group in respect of
which Executive is a participant, shall hereafter acquire (or
disclose the previous acquisition of) beneficial ownership (as that
term is defined in Section 13(d) of the Exchange Act and the rules
thereunder on the Effective Date) of shares of the outstanding stock
of any class or classes of Corporation which results in such person,
firm, corporation, partnership, joint venture, other entity or group
possessing more than a majority of the total voting power of
Corporation's outstanding voting securities ordinarily having the
right to vote for the election of directors of Corporation; or
[b] As the result of, or in connection with, any tender or exchange
offer, merger or other business combination, sale of assets or
contested election of directors, or any combination of the foregoing
transactions ("Transaction"), the persons who were directors of
Corporation immediately before the Transaction shall cease to
constitute a majority of the Board or the board of directors of any
successor to Corporation; or
[c] If the Board at any time declares that one or more events have
occurred or are likely to occur which, in their sole determination,
create or pose the threat of a Change of Control and which, for that
reason, make it desirable and in the best interests of Corporation
to invoke those provisions of this Agreement which become effective
on or after the occurrence of a Change of Control; provided,
however, that no director of Corporation who is a party to this
Agreement or an agreement with Corporation similar to this Agreement
may participate in considering or voting upon any such resolution;
or
[d] Any acquisition, merger, consolidation or other business
combination occurs in which the Corporation's shareholders
(determined immediately before the merger, consolidation or other
business combination) do not own at least 51 percent of the equity
interest of the surviving entity (measured immediately after the
transaction); or
[e] A complete liquidation of the Corporation or approval by the
Corporation's shareholders of a plan of liquidation or dissolution.
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[8] If Executive's employment terminates under circumstances entitling
him to a benefit under this Section 5.05, he will not be subject to
Article 6.
[9] The term "Good Reason" means, without Executive's express prior
written consent, the occurrence of any one or more of the following
events during the Term of this Agreement:
[a] A material reduction in Executive's duties, responsibilities or
status with respect to Corporation, as compared to those in effect
on the Effective Date (but will not include any changes in the
reporting relationships described in Section 2.03 [i] resulting
directly from implementation of a plan that restructures
Corporation's business organization and which Executive designed or
was materially involved in designing and [ii] to which Executive has
specifically agreed in writing);
[b] Deprivation of Executive of the title of President and Chief
Operating Officer of Corporation without a simultaneous grant of a
more senior title;
[c] The assignment to Executive of job duties materially
inconsistent with Executive's office on the Effective Date;
[d] A requirement that Executive relocate his principal office or
worksite (or the indefinite assignment of Executive) to a location
more than 50 miles distant from [i] the principal office or worksite
to which he was permanently assigned as of the Effective Date or
[ii] any location to which Executive is permanently assigned, with
his consent, after the Effective Date;
[e] The failure of Corporation to maintain Executive's relative
level of coverage under the employee benefit or retirement plans,
policies, practices or arrangements described in Section 3.01[3] and
3.01[4] as in effect on the Effective Date, both in terms of the
amount of benefits provided and the relative level of Executive's
participation. However, Good Reason will not arise under this
subsection if Corporation eliminates and/or modifies any of the
programs described in Section 3.01[3] and 3.01[4] if (except as
required by law or as needed to preserve the tax-character of the
plan, policy, practice or arrangement) Executive's level of coverage
under all the programs described in Section 3.01[3] and 3.01[4] is
at least as great as the coverage provided to other senior
executives of Corporation;
[f] Any material breach of this Agreement (including failure to make
any payment or grant provided under this Agreement when due or
failure to cause any successor to assume this Agreement as described
in Article 8 of this Agreement) by or on or in behalf of Corporation
that is not cured
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by Corporation within 30 days of its receipt of written notice
describing the nature of the alleged breach;
[g] Election or appointment of a Chairman or Chief Executive Officer
other than Xxxxxx Xxxxx or Executive; or
[h] Failure to nominate or renominate Executive to the Board.
[10] For purposes of this Agreement, "Special Change in Control"
means any person, firm, corporation, partnership, joint venture, other
entity or group in respect of which Executive is a participant (as the
term "group" is defined in Section 13(d)(3) of the Exchange Act and the
rules thereunder on the Effective Date), acquires after the Effective
Date (or discloses the previous acquisition of) beneficial ownership
(as that term is defined in Section 13(d) of the Exchange Act and the
rules thereunder on the Effective Date) of the shares of the
outstanding stock of any class or classes of Corporation that results
in such person, firm, corporation, partnership, joint venture, other
entity or group possessing more than a majority of the total voting
power of Corporation's outstanding voting securities ordinarily having
the right to vote for the election of directors.
5.06 Regardless of any other provision of this Agreement, all amounts paid
under this Article 5 will be reduced by any amounts payable to Executive from
any other broad based severance plan or program (other than any plan or
arrangement adopted in connection with a Change in Control) or disability
program in which Executive participates (other than a disability plan, program
or policy purchased directly by Executive from his personal funds).
5.07 All payments and benefits due to Executive under this Agreement will
be provided by Corporation to Executive in the time and manner specified in this
Agreement whether or not those benefits are payable after the Term of this
Agreement has expired.
ARTICLE 6 MITIGATION
The Executive is under no obligation to seek employment after a termination of
employment for which he is entitled to receive payments described in Section
5.03 ("Severance Period"). However, if Executive does secure full-time
employment with another employer in any capacity during the Severance Period,
Corporation's obligation to pay Executive the amounts described in Section
5.03[1][c] and [g], will be reduced by the compensation he receives from his new
employer (other than with respect to any benefits due under the terms of any
employee benefit plan described in Section 3.01[3]) as of the date he begins his
new employment. Also, any benefit plan described in Section 5.03[h] that
provides medical, dental, prescription and hospital coverage will be secondarily
liable (i.e., be the secondary payor) for any benefits that are provided to
Executive under his new employer's plans.
Corporation may suspend any payments under this Agreement that otherwise would
have been made during the pendency of any arbitration relating to amounts or
benefits in dispute under this Article 6 but only if Corporation deposits the
suspended amount in an
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escrow account held by an independent party. At the conclusion of the relevant
arbitration, the balance of the escrow account will be distributed to the
prevailing parties (or divided between them as directed by the arbitrator). That
distribution will fully discharge Corporation's obligation with respect to the
amount suspended except as otherwise provided in the arbitrator's award.
ARTICLE 7 NONCOMPETITION/NONSOLICITATION/CONFIDENTIALITY
7.01 For a period of 12 full calendar months (or any longer period, up to
18 months, for which Executive is receiving payments under this Agreement) after
Executive's employment terminates for any reason, he will not directly or
indirectly engage in, assist or have an active interest in (whether as
proprietor, partner, investor, shareholder, officer, director or any type of
principal whatsoever) or enter the employment of or act as agent for or adviser
or consultant to any person or entity engaged in (or is about to become engaged
in) the manufacturing and/or wholesaling of [1] slippers or [2] any other
product that then comprises more than ten percent of the Corporation's gross
revenues for the most recently completed fiscal year or the annualized gross
revenues for the fiscal year in which Executive's employment terminates.
However, the restrictions described in this section will not be applied to
prevent Executive from obtaining subsequent employment (of any kind) with a
diversified retailer (e.g., Macys, Sears Xxxxxxx and/or Nine West Group, etc.).
7.02 Section 7.01 does not prohibit Executive from purchasing, for
investment purposes only, any stock or other corporate security that is listed
on a national securities exchange or quoted in any national market system
(except as otherwise provided in this Agreement), so long as such stock or other
corporate security owned by Executive does not represent more than five percent
of the market value or voting power of the total stock or other corporate
securities of that class.
7.03 Executive is not obligated to comply with the prohibitions described
in this Article if Corporation defaults in the payment of any severance
compensation or benefits owed under Article 5 of this Agreement.
7.04 For a period of 12 full calendar months (or any longer period, up to
18 months, for which Executive is receiving payments under this Agreement),
after Executive's employment terminates for any reason, he will not, on his own
behalf or on behalf of any other person, partnership, association, corporation
or other entity, solicit or in any manner attempt to influence or induce any
employee of the Group to leave the Group's employment nor will he use or
disclose to any person, partnership, association, corporation or other entity
any information obtained while an employee of Corporation concerning the names
and addresses of the Group's employees.
7.05 Executive understands and agrees that due to his position with
Corporation, Executive will receive confidential and proprietary information
relating to Corporation's and Group's business affairs ("Trade Secrets"),
including technical information, product information and formulae, processes,
business and marketing plans, strategies, customer information and other
information concerning Corporation's and Group's products,
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promotions, development, financing, expansion plans, business policies and
practices, salaries and benefits and other forms of information considered by
Corporation to be proprietary and confidential and in the nature of trade
secrets. Except to the extent that the proper performance of Executives,
services and responsibilities under this Agreement may require disclosure and
except information that was known by Executive before the Effective Date or was
generally available to the public (other than as a result of a violation of the
terms of this section), Executive agrees that during his employment with
Corporation and at all times thereafter, he will keep Trade Secrets confidential
and will not disclose such information, either directly or indirectly, to any
third person or entity without Corporation's prior written consent or use such
information for his benefit or the benefit of any third person without
Corporation's prior written consent. This confidentiality restriction has no
temporal, geographical or territorial restrictions; provided, however, that if,
in the written opinion of counsel, Executive is legally compelled to disclose
Trade Secrets to any tribunal, disclosure of only those Trade Secrets that that
counsel advises in writing are legally required to be disclosed will not be
considered a violation of this section but only if Executive gives Corporation
reasonable advance notice that such disclosure will be required.
7.06 On the effective date of Executive's termination of employment with
Corporation, he will promptly return to Corporation all property other than
personal property, including keys, notes, memoranda, writings, lists, files,
reports, customer lists, correspondence, tapes, disks, cards, surveys, maps,
logs, machines, technical data, formulae or any other tangible property or
document and any and all copies, duplicates or reproductions thereof that have
been produced by, received by or otherwise been submitted to Executive in the
course of his employment with Corporation. For purposes of this section,
"personal property" includes Executive's Rolodex, which he is not required to
deliver to Corporation.
7.07 The Parties recognize that the Group will have no adequate remedy at
law for breach by Executive of the restrictions imposed by this article and that
the Group could suffer substantial and irreparable damage if Executive breaches
any of these restrictions. For this reason, Executive agrees that, if Executive
breaches any of the restrictions imposed under this article, the Group, in
addition to the right to seek monetary damages, may seek a temporary and/or
permanent injunction to restrain any breach or threatened breach of these
restrictions or a decree of specific performance, mandamus, or other appropriate
remedy to enforce compliance with the restrictions imposed under this article.
ARTICLE 8 ASSIGNMENT OF AGREEMENT
8.01 Except as specifically provided in this section, Corporation may not
assign this Agreement to any person or entity that is not a member of the Group.
However, this Agreement will be assigned or transferred to, and will be binding
upon and inure to the benefit of, any successor of Corporation, in which case
this Agreement will be interpreted and applied by substituting that successor
for the "Corporation" under the terms of this Agreement. For these purposes,
"successor" means any person, firm, corporation or
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business entity which at any time, whether by merger, purchase or otherwise,
acquires all or substantially all of the assets or the business of Corporation.
8.02 Because the services to be provided by Executive to Corporation under
this Agreement are personal to him, Executive may not assign the duties
allocated to him under this Agreement to any other person or entity. However,
this Agreement will inure to the benefit of and be enforceable by Executive's
personal or legal representatives, executors, and administrators, successors,
heirs, distributees, devisees, and legatees to the extent of any amounts payable
to Executive that are due to Executive upon his death.
ARTICLE 9 DISPUTE RESOLUTION
9.01 The Parties agree that arbitration will be the exclusive means of
resolving all disputes or questions arising out of or relating to this Agreement
(except that nothing included in this Article 9 prevents Corporation from
seeking injunctive or other equitable relief if there is a breach or threatened
breach of any of the restrictions described in Article 7). Any arbitration may
be initiated by either Party by written notice to the other Party specifying the
subject of the requested arbitration and appointing that Party's arbitrator.
9.02 The arbitration will take place in Columbus, Ohio (or another location
mutually agreed upon by Corporation and Executive) and will be conducted in
accordance with the rules of the American Arbitration Association in effect when
the arbitration begins. Any determination or award made or approved by the
arbitrator will be final and binding on the Parties. Judgment upon any award
made in any arbitration may be entered and enforced in any court having
competent jurisdiction.
9.03 The costs of arbitration (including legal and other professional fees
incurred) will be borne solely by the Party by which they are incurred
regardless of the result of the arbitration.
ARTICLE 10 MISCELLANEOUS
10.01 Any notices, consents, requests, demands, approvals or other
communications to be given under this Agreement must be given in writing and
must be sent by registered or certified mail, return receipt requested, to
Executive at the last address he has filed in writing with Corporation or, in
the case of Corporation, to the Chairman at Corporation's principal offices.
10.02 This Agreement supersedes any prior agreements or understandings, oral or
written, between the Parties, or between Executive and Corporation, with respect
to the
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subject matter described in this Agreement and constitutes the entire agreement
of the Parties with respect to any matter covered in this Agreement.
10.03 This Agreement may not be varied, altered, modified, canceled,
changed, or in any way amended except by written agreement of the Parties.
10.04 If any provision or portion of this Agreement is determined to be
invalid or unenforceable for any reason, the remaining provisions of this
Agreement will remain in full force and effect.
10.05 This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original, but all of which together will
constitute one and the same Agreement.
10.06 Corporation will withhold from any benefits payable under this
Agreement all federal, state, city or other taxes as required by any applicable
law or governmental regulation or ruling.
10.07 Executive may designate one or more persons or entities as the
primary and/or contingent beneficiaries of any amounts to be received under this
Agreement that are unpaid when Executive dies. This designation must be written
and presented in a form acceptable to the Board or the Board's designee, if
appropriate, or in the form required by any affected benefit plan or program.
Subject to any rules prescribed by the Board, its designee or the affected
benefit plan or program, Executive may make or change his designation at any
time.
10.08 Failure to insist upon strict compliance with any of the terms,
covenants or conditions described in this Agreement will not constitute a waiver
of that or any other term, covenant or condition nor will any such failure
constitute a waiver or relinquishment of the Party's right to insist
subsequently on strict compliance of the affected (and all other) terms,
covenants or conditions of this Agreement.
10.09 To the extent not preempted by federal law, the provisions of this
Agreement will be construed and enforced in accordance with the laws of the
state of Ohio.
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IN WITNESS WHEREOF, the Parties have executed this Agreement, as of 2/19,
2001.
X. X. XXXXX CORPORATION
By: /s/ Xxxxxx Xxxxx
-------------------------------------------------
Title: CEO
----------------------------------------------
XXXXXXX XXXXXX
/s/ Xxxxxxx Xxxxxx
----------------------------------------------------
Date: 2/19/01
-----------------------------------------------
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EXHIBIT A
XXXXXXX XXXXXX EMPLOYMENT AGREEMENT
RELOCATION ASSISTANCE
It is the intent of X.X. Xxxxx Corporation to provide uniform and equitable
treatment to current Associates who transfer at the company's request.
Eligible Associates -- This policy applies to all Associates who transfer at the
company's request to a location outside the same metropolitan area (usually 35
or more miles) to commence employment with the company.
Associate's Family -- The terms of this policy apply to those members of the
Associate's current household who will reside at the new location.
Travel Expenses
Travel expenses are defined as first class rail cars, coach class air fare or
mileage allowance at the current company approved rate. The company will
reimburse the Associate and family for the following travel expenses:
o One-way travel expenses for the Associate to report to work at the new
location.
o One-way travel expenses for the Associate to return home to accompany the
family on the final move to the new location.
o One-way travel expenses for the Associate and family from the old location
to the new location for the final move.
o Round trip travel, lodging, meals and rental car expenses for the one
pre-move house hunting trip of up to five days for the employee and spouse,
including reasonable baby-sitting/child care expenses.
o Round trip travel expenses (including commercial airfare and other
reasonable associated travel expenses) twice each calendar month for the
three calendar months beginning February 19, 2001 for Associate or spouse
(the total number of round trips reimbursed under this portion of this
Exhibit A will not be greater than six).
Company reimbursement for any additional trips beyond those stated above must be
approved by the Vice President of Human Resources and the Department Vice
President (Officer).
Temporary Living Expenses
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Temporary living expenses include reasonable charges for lodging, meals,
laundry, dry cleaning and long distance telephone calls. These expenses are
reimbursed at actual cost, per person, per day. Daily expenses for meals will
not be reimbursed if lodging has cooking facilities. Reimbursement is limited to
30 days for non-homeowners, 90 days for homeowners. During this time, the
Associate is expected to make every effort to obtain permanent housing.
Extensions of temporary living beyond the 30 or 90 day period must be approved
by the Vice President of Human Resources and department Vice President
(Officer). Travel expenses due to the performance of job duties are not covered
under temporary living. For details on policy limitations contact the Corporate
Human Resources department.
Household Moving and Storage
The Corporate Human Resources department is responsible for selection of the
moving company for shipment of household goods. X.X. Xxxxx pays the moving
company directly, for reasonable charges for packing, loading, transporting,
insuring (up to $50,000 Replacement Value Protection Coverage), unloading and
unpacking of normal household goods and personal effects of the Associate and
members of the household who will reside at the new location. Appliance
disconnection and reconnection charges are included.
Certain household goods and personal effects are not considered "normal" under
the provision of this policy. These include camping trailers, swimming pools,
explosives, perishable goods, pets, livestock and other large animals, lumber
and other building materials, firewood and boats which are too large to fit into
a moving van.
The following expenses are not covered by this policy:
o Exclusive use of moving van
o Expedited Service
o Secondary pick-up or delivery
o Transportation of indoor potted plants, flowers, shrubs, trees or other
plantings
Associates are encouraged to drive their second cars and are reimbursed at the
current company approved mileage rate. With Vice President approval, second
cars, when possible, would be loaded and transported in the moving van.
Should temporary storage of household goods and personal effects be necessary,
such temporary storage is reimbursed for a maximum of thirty days.
After Associate's household goods have been moved to the new location, the
Associate will receive $2,000 to help defray the incidental expenses typically
occurred in a relocation.
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Sale of Present Home
This policy applies to a single-family house, a two-family house (duplex), a
condominium, a town house owned and used by the associate as associate's
principal residence.
Excluded are other property, such as houses not occupied by Associate, farms,
summer homes, cooperatives, apartment buildings or mobile homes.
The company will reimburse transferred Associates for the following home
disposal expenses actually incurred:
o Realtor's commission not to exceed 6% of the sale price. Should the
sale of the home be accomplished without the service of realtor, an
amount equal to 3% of the sale price be paid to the Associate.
o Prepayment penalty on mortgage.
o Cost of appraisal of the house to obtain a home equity loan. Appraisal
costs for other purposes will not be reimbursed.
o Reasonable attorney's fees.
o Title insurance.
o Required statutory fees resulting from the transfer of property
including document fees, tax stamps and recording fees.
o Settlement, closing or escrow fees.
o Termite and gas line inspections, if required.
The following expenses are not reimbursable:
o Loan origination fee or loan discount commonly referred to as "points."
Points paid by the seller are a reduction in the true sale price and
the seller should adjust the selling price to reflect the impact of
anticipated points.
o The cost of repairs, cleaning or maintenance, which may be necessary to
sell the home.
If the Associate chooses to purchase a home at the new location prior to selling
the current home, the company will provide the following assistance in obtaining
an equity loan:
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o Contact a bank.
o Pay for one appraisal of the current home.
o Pay up to one point on the equity loan.
o Assist in the payment on the loan until the current home is sold (up to
a maximum of six months).
If the Associate fails to sell the home at the current location during the 30
day temporary living period, the company will provide payment of the monthly
mortgage for the current home up to a maximum of six (6) monthly mortgage
payments. It is the Associate's responsibility to sell his/her current home,
however, any additional financial assistance must be approved by the Vice
President of Human Resources and the Department Vice President (Officer).
Renters Assistance
If it becomes necessary to terminate a lease before its scheduled expiration
date because of a company initiated transfer, the company will reimburse the
transferred Associate for the forfeiture of security deposit and any rent
payments necessary to fulfill the terms of the lease. It is expected that the
Associate will make a reasonable effort to minimize the rent payment.
If the Associate chooses to rent at the new location, the application fee for
the rental units will be reimbursed by the company. The security deposit at the
new location is not reimbursable. The Associate should request that the new
lease include a transfer clause.
New Home Acquisition Assistance
Financial assistance in purchasing a home will be extended to transferred
Associates for a 12 month period from the date of transfer. The company will
reimburse transferred Associates, regardless of whether housing at the old
location was owned or rented, for all normal and reasonable home purchase
expenses including:
o Mortgage loan application fee
o Credit report
o Appraisal of the new home
o Mortgage origination fee
o Mortgage insurance application fee
o Title insurance
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o Recording fees
o Survey
o Pest inspection
o Tax revenue stamps
o Closing and attorney fees
The following home purchase expenses will not be reimbursed:
o Homeowners insurance premium
o Prepaid interest including mortgage loan discount points or mortgage rate
buy downs
o Prepaid reserves for real estate taxes, homeowners insurance premium or
annual assessments
Reimbursable relocation expenses must be reported on a company expense report.
Copies of the closing statements for the sale and purchase of a home should be
supplied when requesting home sale and acquisition assistance. Copies of the
lease and security deposit should be included with requests for renters
assistance. A nonpayroll check will be issued for the reimbursement, and no
withholding taxes will be deducted.
Federal income tax regulations require that all payments directly or indirectly
to an Associate for moving expenses must be shown as moving expenses. If the
company's reimbursement exceeds the deductible expenses allowed by the Internal
Revenue Service, the Associate will be taxed on the excess. At the end of the
year, the company will send all Associates who have received reimbursement for
moving expenses IRS form #4782 "Employee Moving Expense Information." This form
contains the type and amount of reimbursements made during the year and is
helpful in completing IRS form 3905, "Moving Expense Adjustment," which will
need to be filed with the Associate's 1040 Federal Tax Return. The Company will
reimburse you for the additional taxes incurred above the deduction allowed by
the IRS.
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