-5-
BADOCS1/0023388.01
Executive Employment Agreement
This Executive Employment Agreement (this Agreement) is
made and entered into on June 28, 1995, but shall be
effective for all purposes as of the Effective Date (as
hereafter defined) by Merry-Go-Round Enterprises, Inc. (the
Company) and Xxxxxxx X. Xxxxxxx (the Employee).
Recitals
A. The Company desires to employ and retain the
Employee, and the Employee desires to enter into such
employment, on the terms and conditions set forth in this
Agreement.
B. The Company is a debtor in a Chapter 11 bankruptcy
proceeding pending in the United States Bankruptcy Court for
the District of Maryland, Baltimore Division (the Court) as
Case No. 94-5-0161-SD, et al. (the Bankruptcy Case).
Agreement
Now, therefore, in consideration of the promises and
the covenants contained in this Agreement, and other good
and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Employee
hereby agree as follows:
1. Employment. During the term of this Agreement
(the Term), the Company shall employ the Employee, and the
Employee hereby agrees to be employed by the Company, as the
President and Chief Executive Officer of the Company, upon
the terms and conditions set forth in this Agreement. The
parties acknowledge and agree that this Agreement is entered
into subject to the approval of the Court (and if such
approval is not obtained by September 1, 1995, this
Agreement shall be null and void and neither the Company nor
the Employee shall have any rights or obligations
hereunder). Except as contemplated by Section 2 hereof, the
Employee shall commence the performance of his services for
the Company hereunder on the Effective Date.
2. Term. The Term shall commence on the later of
(a) the day following the end of Employee's current
employment, which employment shall end no later than
August 1, 1995, or (b) the date of the entry of an order by
the Court approving the terms of this Agreement (the
Effective Date) and, subject to the provisions of Section 9,
the Term shall end on the date that is three (3) full
calendar years after the Effective Date. To the extent that
the Employee commences the performance of his services under
this Agreement prior to the Effective Date, then within five
(5) business days following the entry of an order by the
Court approving the terms of this Agreement, the Company
shall pay the Employee for any Base Compensation (as
hereafter defined) which would have
been payable with respect to such period and, in such event,
the Effective Date shall be deemed to be the date upon which
the Employee commences such services.
3. Duties of the Employee.
(a) During the Term, the Employee shall serve as
the President and Chief Executive Officer of the Company.
In such position, the Employee shall have the customary
powers, responsibilities and authority of chief executive
officers of corporations of the size, type and nature of the
Company, including the primary executive and general
management responsibilities for the Company's business. The
Employee shall perform such duties and exercise such powers,
commensurate with his position, as may be determined from
time to time by the Company's Board of Directors to whom the
Employee shall report. During the Term, the Employee shall
be provided with an adequate office, staff and other working
facilities consistent with his position and adequate for the
performance of his duties. The Employee shall devote all of
his business time, attention, and energy to the Company and
shall not, during the Term, be engaged in any managerial or
employment capacity in any other business activity for gain,
profit, or other pecuniary advantage, without the express
prior consent of the Board of Directors; provided that the
foregoing shall not prohibit the Employee from making
investments that do not interfere with the performance of
his duties with the Company so long as such investments do
not violate the provisions of subparagraph 11(f) hereof.
(b) As soon as practicable on or after the
Effective Date and prior to the effective date of a Plan (as
hereinafter defined), the Company shall appoint the Employee
as a Director to serve on the Board of Directors.
(c) From and after the effective date of a Plan,
the Company shall nominate the Employee to serve as a
director on the Board of Directors and shall use the same
reasonable efforts as are expended for other management
nominees to cause the Employee to be elected to the Board
and thereafter to be re-elected as a director during the
Term.
(d) Commencing no later than the first
anniversary of the effective date of a Plan, and at each
election of officers of the Company by the Board held
thereafter during the Term, the Company shall nominate the
Employee to serve as Chairman of the Board of Directors and
shall use (in addition to the reasonable efforts required by
subparagraph 3(c) regarding the election of the Employee as
a director) such efforts as may be reasonable or appropriate
to cause the Employee to be elected, and thereafter re-
elected, as Chairman of the Board.
(e) So long as the Employee is not serving as the
Chairman of the Board of Directors (and whether or not the
Employee is entitled to be nominated therefor pursuant to
subparagraph 3(d)), the Chairman of the Board of Directors
shall not, without the Employee's express prior consent,
share any of the Employee's primary executive and
management responsibilities for the Company's business. In
addition, the Employee's title as President and Chief
Executive Officer shall not be changed, and the Employee's
responsibilities, duties and powers (as set forth in
subparagraph 3(a)) shall not be materially reduced, without
the Employee's express prior consent.
4. Compensation.
(a) Base Compensation. The Employee shall
receive, as compensation for his services hereunder, an
annual base salary (the Base Compensation) equal to:
(a) $650,000 during the period commencing on the Effective
Date and ending 366 days thereafter (the First Year);
(b) $650,000 during the period commencing on the first
anniversary of the Effective Date and ending 365 days
thereafter (the Second Year); and (c) $700,000 during the
period commencing on the second anniversary of the Effective
Date and ending 365 days thereafter (the Third Year), which
amounts shall be payable in equal installments in accordance
with the standard payroll practices of the Company.
Payments of Base Compensation for any partial pay period
during the Term of this Agreement shall be proportionately
adjusted.
(b) Signing Bonus. The Employee shall receive an
initial signing bonus in the amount of $350,000 in cash upon
the later of (i) the actual commencement of Employee's
services under this Agreement, or (ii) the Effective Date.
In addition, provided the Effective Date has occurred, the
Employee shall receive an additional signing bonus in the
amount of $200,000 in cash upon the Employee's permanent
relocation of his residence and family to the Baltimore,
Maryland metropolitan area.
(c) Incentive Cash Compensation. In lieu of any
other cash incentive compensation or bonus program provided
by the Company to any of its other employees, the Employee
shall be entitled to incentive cash compensation as follows:
(i) Upon the expiration of the First Year
(if the Employee is still then employed by the Company), the
Employee shall receive incentive cash compensation in the
amount of $250,000;
(ii) Upon the expiration of each of the
Company's fiscal years 1997, 1998 and 1999 (i.e., the twelve
month periods ending January 31, 1997, 1998 and 1999,
respectively), the Employee shall be eligible to receive
cash incentive compensation in an amount ranging from 25% to
100% of the Employee's then current Base Compensation, upon
the Company's achievement of certain financial performance
thresholds during the fiscal year of the Company then ended,
which thresholds shall be determined in the discretion of
the Compensation Committee of the Board of Directors of the
Company (based on performance thresholds which are utilized
by comparable companies in the Company's industry);
provided, however, that except as otherwise provided in
subparagraph 10(a), the Employee shall not be entitled to
any incentive cash compensation for the Company's fiscal
year 1997, 1998 and/or 1999 unless (in the case
of fiscal years 1997 and 1998) the Employee is still
employed by the Company on the last day of such fiscal
year(s) or unless (in the case of fiscal year 1999) the
Employee is still employed by the Company on the last day of
the Third Year. Notwithstanding the foregoing, if the
Employee is entitled to receive incentive compensation
pursuant to this subparagraph 4(c)(ii) upon the expiration
of either the Company's fiscal year 1997 or the Company's
fiscal year 1999, the amount of such incentive compensation
shall be proportionately adjusted by multiplying such
incentive compensation by a fraction. For the Company's
fiscal year 1997, the numerator of the fraction shall be the
number of days in fiscal year 1997 remaining after the
expiration of the First Year, and the denominator thereof
shall be 365. For the Company's fiscal year 1999, the
numerator of the fraction shall be the number of days during
fiscal year 1999 during which the Employee is employed by
the Company and the denominator thereof shall be 365; and
(iii) All incentive cash compensation
payments to the Employee pursuant to this subparagraph 4(c)
shall be paid at the same time the Company pays incentive
cash compensation to other executives but in no event later
than ninety (90) days after the end of the First Year or the
Company's applicable fiscal year, as the case may be.
5. Letter of Credit. In order to secure the payment
of the amounts set forth in subparagraphs 4(a), 4(c)(i),
10(b)(i) or 10(b)(ii) of this Agreement, the Company shall
arrange for a letter of credit to be issued for the benefit
of the Employee in the following amounts for the following
periods:
(a) During the First Year, the Company shall
maintain a letter of credit for the benefit of the Employee
in an amount equal to $2,250,000, which amount shall decline
on a monthly basis by an amount equal to $54,167. For
example, if the Effective Date of this Agreement is August
1, 1995, the amount of the letter of credit to be posted on
such date shall be equal to $2,250,000, with the amount of
such letter of credit declining on September 1, 1995 to
$2,195,833, and on October 1, 1995 to $2,141,666, and so
forth.
(b) During the Second Year, the Company shall
maintain a letter of credit for the benefit of the Employee
in an amount equal to $975,000.
(c) During the Third Year, the Company shall
maintain a letter of credit for the benefit of the Employee
in the amount of $1,050,000.
(d) Notwithstanding the provisions of
subparagraphs 5(a), 5(b) and 5(c), the Company shall not be
required to provide any letter of credit under this
Section 5 from and after the later of (i) the effective date
of a plan of reorganization (a Plan) confirmed in the
Bankruptcy Case, (ii) a termination of this Agreement and
the full payment of all sums, if any, owed the Employee
pursuant to subparagraphs 4(a), 4(c)(i), 10(b)(i) and
10(b)(ii) hereof, or (iii) January 31, 1997. If the Company
is no
longer required to provide a letter of credit pursuant to
this subparagraph 5(d), the Employee shall have no right to
make any draw, or any further draw, under any letter of
credit then outstanding pursuant to this Section 5 and shall
instead immediately surrender any such letter of credit for
cancellation as directed by the Company.
(e) The initial letter of credit (provided for in
subparagraph 5(a)) shall be issued no later than the
Effective Date and each subsequent letter of credit (or
renewal of an existing letter of credit) shall be issued at
least (30) days prior to the expiration date of the initial,
subsequent or renewal letter of credit in question (and if
an existing letter of credit is replaced, rather than
renewed, the Employee shall surrender the existing letter of
credit at the time the Employee receives the replacement
letter of credit). Each initial, subsequent or renewal
letter of credit shall remain in effect until at least the
45th day after the end of the First Year, Second Year or
Third Year, as the case may be, for which it is being
maintained.
(f) Each letter of credit to be issued to the
Employee pursuant to this Section 5 shall be irrevocable and
provide that if the Company fails to make any payment
required by subparagraphs 4(a) or 4(c)(i), which failure
continues uncured for a period of thirty (30) days after the
Employee has given the Company written notice thereof (which
notice may run concurrently with notice of default pursuant
to subparagraph 9(d)), the Employee may elect between the
following: (i) if the undrawn balance of the then-current
letter of credit equals or exceeds the amount of the payment
which is in default and which the Company has failed to
cure, the Employee may either (1) make a draw under the
letter of credit in an amount sufficient to make the payment
in default (in which event the default shall be deemed fully
cured and the Employee shall not be entitled to terminate
his employment for Good Reason (as hereinafter defined)
pursuant to subparagraph 9(d)), or (2) exercise the
Employee's rights to terminate his employment for Good
Reason pursuant to subparagraph 9(d); or (ii) if the undrawn
balance of the then-current letter of credit is less than
the amount of the payment in default and which the Company
has failed to cure, the Employee may draw the remaining
balance under the letter of credit (which shall be applied
in reduction of the sums owed the Employee by the Company)
and, at his option, exercise the Employee's rights to
terminate his employment for Good Reason pursuant to
subparagraph 9(d). If the Company fails to make any payment
required by subparagraph 10(b)(i) or 10(b)(ii) then, (A) if
such failure occurs on or after a termination of the
Employee's employment by the Company without Cause (as
hereinafter defined), or (B) if such failure occurs on or
after a termination of the Employee's employment by the
Employee for Good Reason (following a failure by the Company
to cure as provided in subpart (y) of the Provided clause
following subparagraph 9(d)(v)), the Employee may elect to
make a draw under the letter of credit in the amount of such
default. If the balance of the letter of credit is less
than the amount of the payment in default, the draw upon the
letter of credit pursuant to the preceding sentence or
clause (ii) of the next preceding sentence shall be applied
in reduction of sums owed the Employee by the Company but
shall not relieve the Company of its obligation with respect
to any remaining amounts owed to the Employee.
(g) Any draw upon any letter of credit by the
Employee shall be accompanied by his sight draft, an
affidavit executed by the Employee to the effect that
(i) the Company has failed to make a specified payment and
(ii) the Employee is entitled under this Agreement to submit
his sight draft for payment of a sum under the letter of
credit which is not less than the amount of such sight draft
and such other documentation (including the original of the
letter of credit) as may be required by the issuer of the
letter of credit pursuant to the terms thereof. The Company
hereby expressly waives any right to obtain injunctive
relief against the cashing of any letter of credit by the
Employee unless, as a condition to such relief, the issuer
of the letter of credit agrees, or is ordered, to extend the
term of the letter of credit in question for a period
expiring no less than fifteen (15) days after the respective
rights of the Company and the Employee in the underlying
dispute are agreed or finally determined.
(h) Each letter of credit shall be issued by an
issuer, and shall otherwise be in form and substance
reasonably satisfactory to the Company and the Employee
(provided, however, that the Company and the Employee each
agree that any letter of credit issued under, or pursuant
to, any debtor-in-possession financing arranged by the
Company shall be deemed to be issued by an acceptable
issuer).
6. Insurance.
(a) Life Insurance. During the Term, the Company
shall provide at its expense a term life insurance policy
for the Employee at a face amount equal to 200% of the
Employee's then-current Base Compensation (the Base Policy).
At the election of the Employee, the face amount of the Base
Policy may be increased to an amount equal to 300% of the
Employee's then-current Base Compensation, provided that the
Employee shall pay for any premiums for such life insurance
policy in excess of the amount of the premiums payable in
connection with the Base Policy.
(b) Disability Insurance. During the Term, the
Company shall provide at its expense disability insurance
for the benefit of the Employee in an amount equal to 65% of
the Employee's then current Base Compensation, provided that
such benefits shall in no event exceed $20,000 per month.
(c) Standard Rates. It is acknowledged and
agreed that the provisions of subparagraphs (a) and (b) of
this Section 6 are based on the assumption that the Employee
is insurable at standard rates (an assumption which, to the
best of the Employee's knowledge, information and belief, is
true and correct). Prior to the Effective Date, the
Employee shall cooperate with the issuer(s) of the proposed
life and disability insurance policies in providing such
information as either of them may reasonably request or
require (including taking a physical examination) in
connection with arranging for the life and disability
insurance coverage for the Employee provided for in
subparagraphs 6(a) and 6(b). If the Employee is insurable
at rates other than standard rates, then the Company shall
procure for the benefit of the Employee such insurance as
may be
procured by payment of such standard rates in full
satisfaction of its obligations under this Section 6.
7. Other Benefits.
(a) Automobile Allowance. During the Term, the
Employee shall be entitled to a $20,000 annual allowance for
the lease or purchase of a suitable automobile to be used by
the Employee in connection with the business of the Company.
(b) Legal Fee Reimbursement. The Employee shall
be entitled to reimbursement of his legal fees in connection
with the negotiation and documentation of this Agreement in
an amount not to exceed $10,000.
(c) Vacation. The Employee shall be entitled to
paid vacation of four (4) weeks during each full year of the
Term, each of which weeks may be taken separately or
together; provided, however, any allotted vacation time
which has not been used in any particular year of the Term
may not be carried over to the next ensuing year.
(d) Relocation Benefits. The Company shall
provide the Employee with the following relocation benefits,
at the Company's expense:
(i) For a period not to exceed one (1) year
after the Effective Date, or for a period terminating upon
the Employee's permanent relocation of his residence and
family to the Baltimore, Maryland, metropolitan area,
whichever is shorter, the Company shall arrange for an
apartment for the Employee in the Baltimore, Maryland
metropolitan area at a monthly cost not to exceed $4,000.00,
which apartment shall be mutually acceptable to the Company
and the Employee;
(ii) The Company shall pay for all reasonable
out-of-pocket expenses incurred by the Employee in
connection with his relocation and the relocation of his
family to the Baltimore, Maryland, metropolitan area,
including moving expenses, reasonable brokerage fees (not in
excess of 6%), and customary closing costs (not to exceed
$5,000), incurred in connection with the sale of the
Employee's current residence;
(iii) In the event that the Employee is
unable to sell his current residence within a nine-month
period following the Effective Date, the Company shall
retain a nationally recognized relocation service reasonably
acceptable to the Company and the Employee, and the Employee
and the Company shall proceed in accordance with such
relocation service's normal practices and procedures
regarding the valuation of the subject residence and the
Employee shall be paid in consideration for such residence
an amount equal to such valuation. The Company shall pay
the reasonable fees and expenses charged by such relocation
service;
(iv) The Company shall reimburse the Employee
for reasonable travel expense necessary for the Employee to
return to his current residence each weekend until his
relocation is complete; and
(v) The Company shall reimburse the Employee
for any income taxes actually paid by the Employee with
respect to any relocation expenses paid for or reimbursed to
the Employee pursuant to this subparagraph 7(d) (excluding
any taxes on the gain from a sale of the Employee's current
residence).
(e) Miscellaneous Benefits. The Company will
provide the Employee with medical, health and accident
benefits and other regular benefits in accordance with the
policies of the Company, including, without limitation,
access to Company credit cards, expense reimbursements or
any 401(k) plan or deferred compensation plan, on the same
terms and conditions as provided to other senior executives
of the Company, provided that such benefits shall not
include incentive cash compensation plans, stock options,
signing bonuses, relocation benefits, life or disability
insurance benefits, vacations or other benefits provided for
in this Section 7 or elsewhere in this Agreement except to
the extent expressly provided in this Agreement or as to
which the Compensation Committee of the Board may hereafter
elect to include the Employee.
8. Stock Options. As additional compensation for the
Employee's services under this Agreement, the Company shall
grant to the Employee options to purchase shares of common
stock of the reorganized Company issued pursuant to a Plan
(the New Common Stock), as follows:
(a) As of the Effective Date, the Company shall
grant to the Employee options to purchase shares of New
Common Stock in an amount equal to 2% of the number of
shares of New Common Stock issued and outstanding on the
date of issuance thereof, at a price per share equal to 50%
of the average of the trading price per share of such New
Common Stock over the ten day period commencing on the
twentieth (20th) day on which such New Common Stock is first
traded, which options shall vest in full on the later of
(i) the first anniversary of the Effective Date, or (ii) on
the effective date of the Plan.
(b) On each of the first anniversary and the
second anniversary of the Effective Date, the Company shall
grant to the Employee options to purchase shares of New
Common Stock in an amount equal to 1% of the number of
shares of New Common Stock then issued and outstanding
(assuming the exercise, conversion or exchange of all
options, warrants and other convertible or exchangeable
securities of the reorganized Company issued after the
effective date of the Plan other than the Plan Options (as
defined in subparagraph 8(g)), at a price per share equal to
the average of the trading price of such New Common Stock
over the first 20 days immediately preceding the date of the
grant of such options or if the effective date of a Plan has
not then occurred, the ten-day period commencing on the
twentieth (20th) day on which such New Common
Stock is first traded. The options subject to each such
grant shall vest in three equal annual increments on the
first, second and third anniversary of the date of grant.
(c) In the event of a termination of the
Employee's employment with the Company as a result of the
Employee's death or by the Company without Cause or by the
Employee for Good Reason, all of the options previously
granted to the Employee shall fully vest. In the event of
the termination of the Employee's employment with the
Company as a result of the Employee's disability (as
hereafter defined) the options previously granted to the
Employee will continue to vest in accordance with Sections
8(a) and 8(b). In the event of the termination of the
Employee's employment with the Company for any other reason
(such as for Cause or other than for Good Reason), the
options previously outstanding and vested shall be
exercisable, but all options not granted or vested shall be
cancelled.
(d) Except as otherwise provided in subparagraph
8(c), the options granted to the Employee pursuant to this
Section 8 shall expire and become unexercisable upon the
tenth anniversary of the date of grant to the Employee.
(e) If permitted by law at the time of exercise,
the options granted to the Employee pursuant to this Section
8 shall provide that, at the sole discretion of the
Employee, the exercise price of any option may be paid by
surrender to the Company of that number of currently
exercisable options, each valued at the difference between
the exercise price thereof and the market price of the New
Common Stock on the date of exercise, having an aggregate
value equal to the aggregate exercise price of the options
to be so exercised.
(f) Subject to the provisions of subparagraph
8(g):
(i) If the reorganized Company shall, after
the consummation of a Plan, issue any additional shares of
stock by way of a stock dividend on, or split-up,
subdivision, or reclassification of outstanding shares of
New Common Stock, the options granted pursuant to this
Section 8 shall provide that the number of shares of New
Common Stock subject to such options and the exercise prices
therefor shall be proportionately adjusted;
(ii) If, after the consummation of a Plan,
there shall be any capital reorganization, or consolidation,
recapitalization or merger of the reorganized Company with
any other corporation or corporations, or any sale of all or
substantially all of the reorganized Company's property and
assets to any other corporation or corporations, the options
granted pursuant to this Section 8 shall provide that (and
the reorganized Company shall take appropriate action to
enable) the Employee to receive upon any subsequent exercise
of such option, in lieu of any shares of New Common Stock,
the shares or other securities or other assets as were
issuable or payable upon such
reorganization, consolidation, recapitalization, merger or
sale in respect of or in exchange for such shares of New
Common Stock; and
(iii) Notwithstanding any adjustments to
be made pursuant to this subparagraph 8(f), no fractional
share shall be issued upon any exercise of any option, and
the aggregate price paid shall be appropriately reduced on
account of any fractional share not issued.
(g) It is expressly understood and agreed that a
Plan will, or may, provide for the issuance of warrants,
options or conversion, exchange or other similar rights with
respect to the New Common Stock (Plan Options). The options
granted pursuant to this Section 8 (and the shares of New
Common Stock subject thereto) shall not be protected against
dilution by (but shall instead be subject to dilution to the
extent of) the issuance (or exercise) of any or all such
Plan Options. Except for dilution resulting from the
issuance or exercise of Plan Options, the options granted
pursuant to this Section 8 shall be protected against
dilution. The number of shares of New Common Stock subject
to the options granted in this Section 8 shall be calculated
in accordance with the provisions of this subparagraph 8(g).
(h) It is further expressly understood and agreed
that a Plan will, or may, provide for a stock option plan
respecting options for shares of New Common Stock, which
options are to be available to employees of the reorganized
Company. The Employee agrees that (i) any provision in an
employee stock option plan contained in, or adopted pursuant
to, a Plan which supplements, or is not inconsistent with,
subparts (a) through (g) of this Section 8 shall apply to
the options to be granted pursuant to this Section 8 and
(ii) that if it is necessary to modify the provisions of
subparts (d), (e) and (f) of this Section 8 in order to make
such subparts consistent with an employee stock option plan
contained in, or adopted pursuant to, a Plan (which plan
shall not materially and adversely affect the value of the
Employee's options and in which the Employee shall
participate), the Employee shall not unreasonably withhold
his consent to such modifications.
9. Termination.
(a) Death. The Employee's employment hereunder
shall terminate upon the Employee's death.
(b) Disability. If the Employee becomes disabled
(as hereinafter defined), the Company may terminate the
Employee's employment hereunder upon not less than five (5)
days' notice. For all purposes of this Agreement, the
Employee shall be deemed to be "disabled" (or to be under a
"disability") if the Employee qualifies for total disability
benefits under the disability policy for the Employee
provided for in subparagraph 6(b) (or if, there is then no
such policy in force as to the Employee, the
Employee's condition would constitute total disability under
the disability policy then in force for the Company's
employees).
(c) Cause. The Company may terminate the
Employee's employment hereunder for Cause. "Cause" shall
mean any one or more of the following, to be determined in
the reasonable business judgment of the Board of Directors
of the Company:
(i) The Employee's conviction of, or plea of
nolo contendere to, any crime constituting a felony, or a
misdemeanor involving moral turpitude;
(ii) The Employee's willful misconduct
(including fraud, embezzlement or misappropriation) or
willful malfeasance by the Employee in connection with his
employment;
(iii) The Employee's breach of the
provisions of subparagraphs 11(a), 11(b), 11(d) or 11(e)
while still employed by the Company, or the Employee's
breach of his representations and warranties pursuant to
Section 13; or
(iv) Except for material breaches of this
Agreement already provided for in subparts (i) through (iv)
of this subparagraph 9(c), the Employee's material breach of
any provision of this Agreement which is not fully cured
within thirty (30) days after notice thereof from the Board
of Directors.
Termination of the Employee's employment pursuant to
this subparagraph 9(c) shall be made (and shall be effective
upon) delivery to the Employee of a copy of a resolution
duly adopted by the affirmative vote of not less than a
majority of the Board of Directors at a meeting called and
held (whether in person, by telephone or by any other means
permitted by applicable law or the Company's By-laws) for
that purpose finding that, in the reasonable business
judgment of the Board, one or more of the events specified
in subparts (i) through (iv) of this subparagraph 9(c) have
occurred and specifying the material particulars thereof (to
the extent then known to the members of the Board other than
the Employee).
(d) Good Reason. The Employee may terminate his
employment for Good Reason. For the purposes of this
Agreement, "Good Reason" shall mean the occurrence of any
one or more of the following:
(i) The conversion of the Bankruptcy Case to
a Chapter 7 bankruptcy proceeding or the appointment of a
trustee for the Company in the Bankruptcy Case (other than
for or on account of any malfeasance, misfeasance or other
misconduct by the Employee);
(ii) The relocation, without the Employee's
prior consent, of the Company's principal executive offices
from its present location to a location which is more than
twenty-five (25) miles away from its present location or
otherwise outside the Baltimore, Maryland/ Washington, D.C.,
metropolitan area;
(iii) Any failure to elect the Employee
as Chairman of the Board of Directors at any meeting of
directors at which the Employee is entitled to be nominated
for such chairmanship pursuant to subparagraph 3(d);
(iv) Any assumption of Control by a
Competitor without the Employee's prior consent. For the
purposes of this Agreement:
(1) a "Competitor" shall mean and
include any retailer with annual sales in excess of
$50,000,000 and any parent, subsidiary, affiliate, division,
director, officer, employee or agent of any such retailer;
and
(2) a Competitor's "assumption of
Control" shall mean and include any one or more of the
following: the acquisition of all or substantially all of
the Company's assets by any Competitor; or representatives
of any Competitor constituting a majority of the Company's
Board; or the Company's merger with, or consolidation into,
any other corporation or entity, other than a merger or
consolidation which results in a majority of the board of
directors (or other similar committee) of the surviving
entity being comprised of persons other than representatives
of a Competitor; or
(v) A material breach of this Agreement
(including, without limitation, any change in the Employee's
title, or any material reduction in the Employee's
responsibilities, duties and powers, without the Employee's
prior consent in violation of subparagraph 3(e) or any
reduction, or attempted reduction, without the Employee's
prior consent, of the Employee's Base Compensation, the
number of options or the exercise price or the other option
rights provided in Section 8 or the range of the Employee's
incentive cash compensation opportunity provided in
subparagraph 4(c) hereof) by the Company;
Provided, however, that (except as otherwise provided
in the immediately following subpart (z)) the foregoing
events shall not be deemed to constitute Good Reason unless
(y) in the case of each of the events specified in
subparagraphs 9(d)(i) through 9(d)(v) the Employee shall
have given notice to the Company of the occurrence of such
event and the Company shall have failed to cure such event
within thirty (30) days after the giving of such notice, or
(z) in the case of the Company's failure to make a payment
to the Employee required by subparagraphs 4(a) or 4(c)(i)
(which constitutes a material breach of this Agreement
within the meaning of subparagraph 9(d)(v)), the respective
rights and options of the Employee to treat such a failure
as Good Reason shall be as set forth in, and shall be
governed by, subparagraph 5(f).
(e) Resignation. Resignation shall govern
situations where the Employee chooses to voluntarily
terminate his employment relationship with the Company other
than for Good Reason.
10. Compensation Upon Termination.
(a) For Death or Disability. If the Employee's
employment terminates because of the Employee's death or
disability, the Company shall not thereafter be obligated to
make any further payments of any type or amount pursuant to
this Agreement other than (i) any benefits required by
Federal or State law; (ii) any accrued and unpaid Base
Compensation; (iii) any incentive compensation earned
pursuant to subparagraph 4(c)(i) with respect to the First
Year (if previously completed) or subparagraph 4(c)(ii) with
respect to any previously completed fiscal year which
remains unpaid as of such date of termination; and (iv) any
amounts to which the Employee may be entitled pursuant to
the plans, policies and practices of the Company then in
effect. In addition, if the Employee's employment
terminates due to his death or disability prior to the end
of the First Year or during a fiscal year, the Company shall
pay to the Employee (or his legal representative) at the
time incentive cash compensation is paid with respect to the
First Year or fiscal year in which such termination occurs a
pro rata amount of any cash incentive compensation due in
respect of the First Year or fiscal year in which such event
occurs calculated as if the Employee had been employed for
the duration of such First Year or fiscal year, provided,
however, that the amount of such incentive compensation
shall be proportionately adjusted by multiplying such
incentive compensation by a fraction, the numerator of which
is the number of days in such First Year or fiscal year
prior to the termination of the Employee's employment
hereunder and the denominator of which is 365 or 366, as
applicable.
(b) Without Cause or for Good Reason. If the
Company terminates the Employee's employment without Cause
(for purposes of this Agreement, termination "without Cause"
shall mean that the Company terminates the Employee's
employment for any reason other than for the Employee's
death, disability, or "Cause"), or if the Employee
terminates his employment hereunder for Good Reason, the
Employee shall receive the following:
(i) If such termination occurs prior to the
effective date of a Plan, (x) during the First Year, an
amount equal to $2,250,000, which amount shall be reduced on
a monthly basis by an amount equal to $54,167 per month; or
(y) during the Second Year, an amount equal to $975,000; or
(z) during the Third Year, an amount equal to $1,050,000.
(ii) If such termination occurs on or after
the effective date of a Plan, (x) during the First Year or
the Second Year, an amount equal to $975,000; or (y) during
the Third Year, an amount equal to $1,050,000.
(iii) In either case covered by subpart
(i) or (ii) of this subparagraph 10(b), together with (w)
any benefits required by Federal or State law; (x) any
accrued and unpaid Base Compensation; (y) any incentive
compensation earned pursuant to subparagraph 4(c)(i) with
respect to any previously completed First Year or
subparagraph 4(c)(ii) with respect to any previously
completed fiscal year which remains unpaid as of such date
of termination; and (z) any amounts to which the Employee
may be entitled pursuant to the plans, policies and
practices of the Company then in effect.
(iv) If such termination occurs (1) prior to
the effective date of a Plan, and (2) following an
assumption of Control by a Competitor (on the basis of which
the Employee timely elects to terminate this Agreement for
Good Reason pursuant to subparagraph 9(d) or is terminated
by the Company pursuant to subparagraph 14(a)(ii)), and (3),
as a result of such Competitor's assumption of Control,
either no New Common Stock is to be issued by the
reorganized Company or all or substantially all of such New
Common Stock is to be issued to the Competitor, then the
Company shall pay the Employee an Option Cancellation Fee,
which shall mean the sum obtained by multiplying the value
of the stockholders' equity in the Company (as determined by
the Court in the Bankruptcy Case in connection with the
Competitor's assumption of Control) by the Employee's
"Option Percentage" and by then reducing the product of each
multiplication by the Employee's "Imputed Exercise Price."
For the purposes of this Agreement:
(A) the Employee's "Option Percentage"
shall mean 2% (if a termination described in this
subparagraph 10(b)(iv) occurs during the First Year), or 3%
(if such a termination occurs during the Second Year), or 4%
(if such a termination occurs during the Third Year); and
(B) the Employee's "Imputed Exercise
Price" shall mean the aggregate price the Employee would
have had to pay to exercise options to purchase the
applicable Option Percentage of the Company's issued and
outstanding common stock as of the date on which a
termination described in this subparagraph 10(b)(iv) occurs,
using as an exercise price (for options granted on the
Effective Date) a price per share equal to 50% of the
average of the trading price per share of such stock over
the twenty (20) day period immediately preceding the public
announcement of such occurrence, or using as an exercise
price (for options granted on the first or second
anniversary of the Effective Date) a price per share equal
to the average of the trading price of such stock over the
twenty (20) day period immediately preceding the public
announcement of such occurrence.
(v) Any sums owed the Employee pursuant to
(1) subparts (i), (ii) and (iii) of this subparagraph 10(b)
shall be paid within thirty (30) days after termination and
(2) subpart (iv) of this subparagraph 10(b) shall be paid
within thirty (30) days after a termination described in
such subpart (iv) or within thirty (30) days after the
determination of the Option Cancellation Fee, whichever is
later.
(vi) If the Employee's employment is
terminated by the Company without Cause or by the Employee
for Good Reason, the Employee shall have no obligation to
seek other employment or otherwise to mitigate any payments
to be made to the Employee pursuant to this subparagraph
10(b) and any such payments to the Employee by the Company
shall not be reduced by any payments the Employee may
receive from any third party after the termination of his
employment by the Company; provided, however, that the
provisions of this subparagraph 10(b)(vi) shall not be
deemed or construed to limit, restrict, prejudice or
adversely affect in any manner any rights or remedies the
Company may have against the Employee under Section 11
hereof or any other provision of Agreement.
(c) For Cause or Resignation. If the Employee is
terminated for Cause, or if the Employee resigns his
employment other than for Good Reason, he shall not be
entitled to any further compensation whatsoever under this
Agreement other than (i) any benefits required by Federal or
State law; (ii) any accrued and unpaid Base Compensation;
(iii) any incentive compensation earned pursuant to
subparagraph 4(c)(i) with respect to the First Year (if
previously completed) or subparagraph 4(c)(ii) with respect
to any previously completed fiscal year which remains unpaid
as of such date of termination; and (iv) any amounts to
which the Employee may be entitled pursuant to the plans,
policies and practices of the Company then in effect. Any
payments made, or due, to the Employee pursuant to this
subparagraph 10(c) shall be without prejudice to the
Company's rights, claims and remedies for or on account of
the Employee's termination for Cause or resignation other
than for Good Reason and the Company shall be entitled to
pursue all such rights, claims and remedies against the
Employee as may be available at law, in equity or otherwise.
(d) Expiration Without Renewal. In the event the
Employee's employment is not terminated during the Term of
this Agreement, but is not renewed by the Company upon the
expiration of the Term, the Company shall pay the Employee
an amount equal to $700,000, together with (i) any benefits
required by Federal or State law; (ii) any accrued and
unpaid Base Compensation; (iii) any incentive compensation
earned for fiscal years 1997, 1998 and 1999 pursuant to
subparagraph 4(c)(ii) which remains unpaid as of such date
of termination; and (iv) any amounts to which the Employee
may be entitled pursuant to the plans, policies and
practices of the Company then in effect.
11. Non-Competition and Covenant Not to Compete. The
Employee acknowledges that his employment with the Company
will, of necessity, provide him with specialized, unique
knowledge and confidential information which, if used in
competition with the Company, could cause harm to the
Company which is engaged in a highly competitive business on
a national basis. In consideration of the Employee's
continued employment, and in further consideration of the
substantial obligations the Company must undertake pursuant
to this Agreement, the Employee agrees:
(a) While engaged as an Employee of the Company,
the Employee may only use confidential information of the
Company for purposes which are in furtherance of the
Company's interests and directly related to the carrying out
of the Employee's duties as an employee of the Company. The
Employee shall not make use of any confidential information
of the Company after he is no longer an employee of the
Company (and regardless of the reason for the termination of
the Employee's employment with the Company, i.e., whether or
not such termination is with or without Cause or Good
Reason). For the purpose of this Agreement, all
information, whether written or otherwise, regarding the
Company's customers, customer lists, prospective customers,
costs and pricing, supplier information, earnings,
contracts, employees, subcontractors, business plans,
marketing strategies, and other business arrangements shall
be considered to be confidential information of the Company;
provided, however, that "confidential information" shall not
include (i) information which is generally known to the
public or the industry other than as a result of the
Employee's breach of this Section 11 or any of the
Employee's other obligations hereunder; (ii) information
regarding the Company's business or industry properly
acquired by the Employee in the course of his career as an
executive in the Company's industry and prior to, and
independent of, the Employee's employment by the Company and
any discussions or negotiations concerning this Agreement
and the Employee's prospective employment by the Company; or
(iii) information which the Employee is obligated to
disclose pursuant to an order, or other compulsory process,
of any judicial or governmental authority (except that the
Employee shall immediately give notice to the Company of the
receipt or service of any such order or process and shall
fully cooperate with all efforts of the Company to seek a
protective order or any other restraint against disclosure
that may lawfully be available).
The Employee further agrees that he will, immediately
upon termination of his employment with the Company return
to the Company all books, records, customer and pricing
lists, correspondence, contracts (other than this Agreement
or other agreements to which he is a party) or orders,
advertising or promotional material, and other written,
typed or printed materials, whether furnished by the Company
or prepared by the Employee, which contain any information
relating to the Company's business (whether or not deemed
confidential hereunder), and the Employee agrees that he
will neither make nor retain any copies of such materials;
provided, however, that the foregoing provisions shall not
be deemed to apply to the Employee's purely personal records
and papers which contain no confidential information
respecting the Company.
(b) While employed by the Company, the Employee
agrees that he will not, directly or indirectly, be employed
by or work for any other person, firm or entity without the
express prior consent of the Board of Directors pursuant to
subparagraph 3(a).
(c) If the Employee's employment with the Company
is terminated with Cause or for other than Good Reason,
then, for a period of one (1) year after such
termination, the Employee shall not, directly or indirectly,
either as a proprietor, stockholder, partner, officer,
employee, consultant, advisor or otherwise work or render
services of any kind to or for any retailer with annual
sales in excess of $50,000,000 that specializes in and
derives 50% or more of its revenues from men's and/or
women's sportswear or fashion forward attire or any parent,
subsidiary, affiliate, division, director, officer, employee
or agent of any such retailer.
(d) While employed by the Company as well as for
a period of one (1) year thereafter (and regardless of the
reason for the termination of the Employee's employment with
the Company), the Employee shall not, directly or
indirectly, induce, entice or hire, or attempt to induce,
entice or hire any employee of the Company, or former
employee of the Company who had been an employee of the
Company at any time during the one (1) year period prior to
the Employee's actual or attempted inducement, enticing or
hiring of such individual, to leave the Company's employ or
otherwise to work or render services of any kind, as an
employee, consultant, representative or independent
contractor or otherwise, to or for any person or entity
other than the Company.
(e) The Employee represents and warrants that the
knowledge, skills and abilities he currently possesses
and/or possessed prior to employment hereunder are
sufficient to permit him, in the event of the termination of
his employment hereunder for any reason, to earn a
livelihood satisfactory to himself without violating any
provision of this Agreement, for example, by using such
knowledge, skills and abilities, or some of them, in the
service of a noncompetitor of the Company.
(f) Nothing in this Agreement shall be deemed to
prevent the Employee from owning securities of any publicly-
owned corporation engaged in a similar business, provided,
however, that the total amount of securities of each class
owned by the Employee in such publicly-owned corporation
does not exceed one percent (1%) of the outstanding
securities of such class.
(g) In the event of a breach or threatened breach
by the Employee of the provisions of subparagraphs 11(a),
11(b), 11(c), 11(d) or 11(e) of this Agreement, the Company
shall be authorized and entitled to obtain an injunction
restraining the Employee from such breach or threatened
breach; provided, however, the foregoing shall not be deemed
to prevent the Employee from contesting the issuance of any
such injunction on the ground that no such violation or
threatened violation has occurred. The Company and the
Employee agree that all actions or proceedings arising in
connection with any injunctive relief sought pursuant to
this subparagraph 11(g) or otherwise under this Agreement
shall be tried and litigated only in the Maryland State or
Federal courts located in the City or County of Baltimore,
State of Maryland. The Employee hereby irrevocably submits
to the exclusive jurisdiction and venue of the foregoing
State and Federal courts for the purpose of any such action
or proceeding and hereby further irrevocably agrees that
process in any such action or proceeding may be served upon
the
Employee, in addition to any other method provided by law,
in the same manner as a notice given to the Employee
pursuant to Section 17. Nothing in this Agreement shall be
construed as prohibiting the Company from pursuing any other
remedies available to it for a breach or threatened breach
of subparagraphs 11(a), 11(b), 11(c), 11(d) or 11(e).
(h) In the event any provision of subparagraphs
11(a), 11(b), 11(c), 11(d) or 11(e) above is held to be an
unreasonable restriction upon the Employee, the court so
holding may reduce the territory to which it pertains and/or
the period of time in which it operates, or order any other
change to the extent necessary to render such provision
enforceable.
(i) Without in any way limiting the rights of the
Company hereunder, it is expressly acknowledged and agreed
that the Employee's compliance with subparagraphs 11(a),
11(c), 11(d) and 11(e) is a condition precedent to the
Company's obligation to make any payments to the Employee
pursuant to subparagraphs 10(b)(i), 10(b)(ii) and 10(b)(iv)
hereof.
(j) In recognition of the respective rights of
the Company and the Employee to terminate the Employee's
employment with the Company at any time for any reason,
subject to the consequences of such termination as set forth
in this Agreement, the Employee agrees that nothing
contained herein shall be deemed to give the Employee a
continuing right to employment and that he is employed by
the Company on an at-will basis. Nothing contained in this
Agreement or elsewhere shall be construed as limiting the
effect of this subparagraph 11(j).
12. Arbitration. Except for actions or proceedings
for injunctive relief, any dispute or controversy arising
under or in connection with this Agreement or in any manner
associated with Employee's employment shall be settled
exclusively by arbitration in Maryland, in accordance with
the rules of the American Arbitration Association then in
effect. The parties agree to execute and be bound by the
mutual agreement to arbitrate claims attached hereto as
Attachment A.
13. Representation and Warranties.
(a) Employee represents and warrants to the
Company that:
(i) The Employee is under no contractual or
other restriction or obligation, compliance with which is
inconsistent with the execution of this Agreement, the
performance of the Employee's obligations hereunder, or the
other rights of the Company hereunder;
(ii) The Employee is under no physical or
mental disability that would hinder the performance of the
Employee's obligations under this Agreement; and
(iii) The Company has advised the
Employee to consult an attorney regarding the terms of this
Agreement and the Employee has done so.
(b) The Company represents and warrants to the
Employee that, subject to approval by the Court in the
Bankruptcy Case, the Company has all requisite corporate
power and authority to enter into this Agreement and this
Agreement has been duly authorized by all necessary
corporate actions.
14. Consolidation, Merger or Sale of Assets.
(a) In the event of a future disposition of all
or substantially all of the properties and businesses of the
Company by merger, acquisition, consolidation, or sale of
assets, then the Company may elect either:
(i) To assign this Agreement and all of its
rights and obligations hereunder to the acquiring or
surviving person or entity; provided that such corporation,
person or entity shall assume in writing all of the
obligations of the Company hereunder; or
(ii) In addition to the Company's other
rights of termination, to terminate this Agreement without
Cause, by giving the Employee at least five days' written
notice and by paying the Employee in accordance with
subparagraph 10(b) hereof.
(b) A change or changes in Company ownership due
to acquisition of Company stock or confirmation of a Plan
shall not be considered a consolidation, merger or sale of
assets for purposes of Section 14(a).
(c) The provisions of subparagraphs 14(a) and
14(b) shall not be deemed or construed as prejudicing or
adversely affecting the rights of the Employee pursuant to
subparagraphs 9(d)(iv), 10(b)(iv) and 10(b)(v) hereof.
15. Waiver of Breach. The waiver by either the
Company or the Employee of any breach of any provision of
this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach of any
provision of this Agreement. No waiver of any provision of
this Agreement shall be valid unless in writing and signed
by the party sought to be charged thereby.
16. Assignment. The Employee acknowledges that the
services to be rendered by him are unique and personal.
Accordingly, the Employee may not assign any of his rights
or delegate any of his duties or obligations under this
Agreement (except that the Employee may make an outright
assignment of any of his rights to receive payments or other
property hereunder by will or by operation of the laws of
intestate succession). The rights and obligations of the
Company under this Agreement shall inure to the benefit of
and shall be binding upon the successors and assigns of the
Company (either by merger, purchase or otherwise and
specifically including, without limitation, the reorganized
Company pursuant to the Plan), provided that any such
assignment may be made only in accordance with subparagraph
14(a)(i) above.
17. Notice. For purposes of this Agreement, notices
and all other communications provided for in the Agreement
shall be in writing and shall be deemed to have been duly
given when hand-delivered, sent by Federal Express or
similar commercial overnight delivery service, or mailed by
United States certified mail, return receipt requested,
postage prepaid, as follows:
If to the Company:
Xx. Xxxxxxx Xxxxxxxxxx
Merry-Go-Round Enterprises, Inc.
0000 Xxxxxxx Xxx
Xxxxx, Xxxxxxxx 00000
With a copy (which shall not constitute notice) to:
Xxxxx Xxxxxxx, Esquire
Xxxxxxx & Berlin, Chartered
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
If to the Employee:
Xx. Xxxxxxx X. Crystal
c/o Merry-Go-Round Enterprises, Inc.
0000 Xxxxxxx Xxx
Xxxxx, Xxxxxxxx 00000
With a copy (which shall not constitute notice
except in the case of the Employee's disability) to:
Xxxx X. Xxxxxxx, Esquire
Xxxxxx, Xxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
or such other addresses, or addressees, either party may
have furnished to the other in writing in accordance
herewith, except that notices of change of address, or
addressees, shall be effective only upon receipt.
18. Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
19. Binding Effect. This Agreement shall be binding
upon and shall inure to the benefit of the respective
permitted successors, assigns, legal representatives and
heirs to the parties hereto.
20. Applicable Law. This Agreement is made pursuant
to and shall be governed, construed and enforced in all
respects and for all purposes in accordance with the laws of
the State of Maryland, without regard to principles of
conflicts of law.
21. Entire Agreement Amendment. This Agreement
contains the entire understandings of the parties, and
supersedes all prior and contemporaneous agreements between
the parties with respect to the subject matter hereof. It
may not be changed orally but only by an agreement in
writing signed by the party against whom enforcement of any
waiver, change, modification, extension, or discharge is
sought.
22. COBRA Rights. The Company shall reimburse the
Employee for all payments made, or payable, by the Employee
to maintain the health coverage benefits for himself and his
family pursuant to COBRA during the period following the
expiration of the Employee's employment with his last
employer and ending with the date on which the Employee
became eligible for coverage by the Company's health
benefits plan.
In witness whereof the parties have executed this
Agreement as of the date first written above.
Merry-Go-Round Enterprises, Inc.
("Company")
/s/Xxxxxxx X. Crystal By:/s/Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxx ("Employee") Xxxxxx X. Xxxxx
Chairman and CEO
ATTACHMENT A
MUTUAL AGREEMENT
TO ARBITRATE CLAIMS
1. I, Xxxxxxx X. Xxxxxxx, recognize that differences
could arise between Merry-Go-Round (the "Company") and me
during or following my employment with the Company. I
understand and agree that by entering into this Agreement to
Arbitrate Claims ("Agreement"), I gain the benefits of a
speedy, impartial dispute-resolution procedure.
2. I understand that any reference in this Agreement
to the Company will be a reference also to all stockholders,
directors, officers, employees, parents, subsidiaries and
affiliated entities, all benefit plans, the benefit plans'
sponsors, fiduciaries, administrators, and all successors
and assigns of any of them.
Claims Covered by the Agreement
3. The Company and I mutually agree to the resolution
by arbitration of all claims or controversies ("claims"),
arising out of my employment (or its termination), that the
Company may have against me or that I may have against the
Company. The claims covered by this Agreement include, but
are not limited to, claims under my Employment Agreement
with the Company of even date, claims for wages or other
compensation due; claims for breach of any contract or
covenant (express or implied); tort claims; claims for
discrimination (including, but not limited to, race, sex,
color, religion, national origin, age, (state or federal Age
Discrimination in Employment Act), marital status, veterans
status, sexual preference, medical condition, handicap or
disability); claims for benefits, after exhaustion of any
review procedures (except where an employee benefit or
pension plan specifies that its claims review procedure
shall culminate in an arbitration procedure different from
this one); and claims for violation of any federal, state,
or other law, statute, regulation, or ordinance, except
claims excluded in the following paragraphs.
Claims Not Covered by the Agreement
4. Claims I may have for workers' compensation or
unemployment compensation benefits are not covered by this
Agreement.
5. Also not covered are claims for injunctive and/or
other equitable relief to the extent permitted by the
Employment Agreement.
Required Notice of All Claims
6. The Company and I agree that the aggrieved party
must give written notice of any claim to the other party
within the applicable state or federal statute of
limitations. The other party shall have 15 working days to
serve a written notice of its defenses.
Notice
7. For purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be
in writing and shall be deemed to have been duly given when
hand-delivered, sent by Federal Express or similar
commercial overnight delivery service, or mailed by United
States certified mail, return receipt requested, postage
prepaid, as follows:
If to the Company:
Xx. Xxxxxxx Xxxxxxxxxx
Merry-Go-Round Enterprises, Inc.
0000 Xxxxxxx Xxx
Xxxxx, Xxxxxxxx 00000
With a copy (which shall not constitute notice) to:
Xxxxx Xxxxxxx, Esquire
Xxxxxxx & Berlin, Chartered
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
If to the Employee:
Xx. Xxxxxxx X. Crystal
c/o Merry-Go-Round Enterprises, Inc.
0000 Xxxxxxx Xxx
Xxxxx, Xxxxxxxx 00000
With a copy (which shall not constitute notice
except in the case of the Employee's disability) to:
Xxxx X. Xxxxxxx, Esquire
Xxxxxx, Xxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
or such other addresses, or addressees, either party may
have furnished to the other in writing in accordance
herewith, except that notices of change of address, or
addressees, shall be effective only upon receipt.
8. The written notice shall identify and describe the
nature of all claims or defenses asserted and the material
facts upon which such claims or defenses are based.
9. In order to avoid delay, the Company will not
defend a claim of employment discrimination on the grounds
that I have not received a notice of right to xxx, if I am
not yet eligible to receive such a notice.
Representation
10. Any party may be represented by an attorney or
other representative selected by the party.
Discovery
11. Each party shall have the right to take the
deposition of at least one individual and any expert witness
designated by another party. Each party also shall have the
right to make requests for production of documents to any
party. Additional discovery may be had only where the
Arbitrators selected pursuant to this Agreement so order.
Arbitration Procedures
12. The Company and I agree that, except as provided
in this Agreement, any arbitration shall be in accordance
with the then-current Employment Arbitration Procedures of
the American Arbitration Association ("AAA").
13. The Dispute shall be heard and determined by three
arbitrators selected in accordance with the Employment
Arbitration Procedures of the AAA. All decisions of the
Arbitrators will be by a majority.
14. The Arbitrators shall apply the substantive law
(and the law of remedies, if applicable) of the state in
which the claim arose, or federal law, or both, as
applicable to the claim(s) asserted. The Arbitrators, and
not any federal, state, or local court or agency, shall have
exclusive authority to resolve any dispute relating to the
interpretation, applicability, enforceability or formation
of this Agreement, including but not limited to any claim
that all or any part of the Agreement is void or voidable.
15. The Arbitrators shall have jurisdiction to hear
and rule on pre-hearing disputes and are authorized to hold
pre-hearing conferences by telephone or in person as
the Arbitrators deem necessary. The Arbitrators shall have
the authority to entertain a motion to dismiss and/or a
motion for summary judgment by any party.
16. Either party, at its expense, may arrange for and
pay the cost of a court reporter to provide a stenographic
record of proceedings.
17. Either party, upon request at the close of hearing
shall be given leave to file one or more post-hearing
briefs. The time for filing such briefs shall be set by the
Arbitrators.
18. Either party may bring an action in any court of
the competent jurisdiction to compel arbitration under this
Agreement and to enforce an arbitration award.
Arbitration Fees and Costs
19. The Company and I shall equally share the fees and
costs of the Arbitrators.
20. Each party to the arbitration shall pay for its
own costs and attorneys' fees, if any. However, if a party
prevails on a claim, the Arbitrators may award reasonable
costs or attorneys' fees to such prevailing party.
Proceedings
21. The arbitration proceedings shall be held in
Maryland.
Requirements for Modification or Revocation
22. This Agreement to arbitrate shall survive the
termination of my employment. It can only be revoked or
modified by a writing signed by the parties which
specifically states a mutual intent to revoke or modify this
Agreement.
Sole and Entire Agreement
23. This is the complete agreement of the parties on
the subject of arbitration of disputes. This Agreement
supersedes any prior or contemporaneous oral or written
understanding on the subject.
24. No party is relying on any representations, oral
or written, on the subject of the effect, enforceability or
meaning of this Agreement, except as specifically set forth
in this Agreement.
Construction
25. If any provision of this Agreement is found to be
void or otherwise unenforceable, in whole or in part, such
adjudication shall not affect the validity of the remainder
of the Agreement.
Consideration
26. The promises by the Company and by me to arbitrate
differences, rather than litigate them before courts or
other bodies, provide consideration for each other. In
addition, I have entered into an Employment Agreement as
further consideration for entering into this Agreement.
Not an Employment Agreement
27. This Agreement is purely procedural. It does not
provide any substantive rights in addition to those provided
by applicable law or my Employment Agreement.
Voluntary Agreement
28. 1 acknowledge that I have carefully read this
Agreement, that I understand its terms, that all
understandings and agreements between the Company and me
relating to the subjects covered in the Agreement are
contained in it, and that I have entered into the Agreement
voluntarily and not in reliance on any promises or
representations by the Company other than those contained in
this Agreement itself.
29. The Age Discrimination in Employment Art protects
individuals over 40 years of age from age discrimination.
The ADEA contains some special requirements before an
employee can give up the right to file a lawsuit in court.
The following provisions are designed to comply with those
requirements.
a. I agree that this Agreement to arbitrate is
valuable to me, because it permits a faster resolution of
claims than I would receive in court.
b. I have been advised to consult an attorney
before signing this Agreement.
c. I have 21 days to consider this Agreement.
However, I may sign it sooner if I wish.
d. I have 7 days following my signing this
Agreement to revoke my signature, and the Agreement will not
be legally binding until the 7 day period has gone by.
30. I FURTHER ACKNOWLEDGE THAT I HAVE BEEN GIVEN THE
OPPORTUNITY TO DISCUSS THIS AGREEMENT WITH MY PRIVATE LEGAL
COUNSEL AND HAVE AVAILED MYSELF TO THAT OPPORTUNITY TO THE
EXTENT I WISH TO DO SO.
Merry-Go-Round Enterprises, Inc. Xxxxxxx X.
Xxxxxxx
__________________________________
______________________________
Signature of Authorized Company Signature of
Mr. Crystal
Representative
__________________________________
Title of Representative
__________________________________
______________________________
Date Date
