Document:

EMPLOYMENT AGREEMENT

Exhibit

(10)(iii)(A)(13)

 

EMPLOYMENT AGREEMENT

 

 

                This Agreement is

made as of the Effective Date between Broadwing Inc. (“Employer”), and Thomas

L. Schilling (“Employee”).  For purposes

of this Agreement, the “Effective Date” is July 24, 2002.

 

Employer and Employee agree as follows:

 

1.             Employment.  By this Agreement, Employer and Employee set

forth the terms of Employer’s employment of Employee on and after the Effective

Date.  Any prior agreements or

understandings with respect to Employee’s employment by Employer are canceled

as of the Effective Date.

 

2.              Term of Agreement.   The term of this Agreement initially shall

be the two-year period commencing on the Effective Date.  On the first anniversary of the Effective

Date and on each subsequent anniversary of the Effective Date, the term of this

Agreement automatically shall be extended for a period of one additional

year.  Notwithstanding the foregoing,

the term of this Agreement is subject to termination as provided in Section 13.

 

3.             Duties.

 

                A.            Employee will serve as Chief

Financial Officer for Employer or in such other equivalent capacity as may be

designated by the Chief Executive Officer of Employer. Employee will report to

the Chief Executive Officer of Employer or to such other officer as the Chief

Executive Officer of Employer may direct.

 

                B.            Employee shall furnish such

managerial, executive, financial, technical, and other skills, advice, and

assistance in operating Employer and its Affiliates as Employer may reasonably

request.  For purposes of this

Agreement, “Affiliate” means each corporation that is a member of a controlled

group of corporations (within the meaning of section 1563(a) of the Internal

Revenue Code of 1986, as amended (the “Code”)) which includes Employer.

 

                C.            Employee shall also perform such

other duties, consistent with the provisions of Section 3.A., as are reasonably

assigned to Employee by the Chief Executive Officer of Employer.

 

                D.            Employee shall devote Employee’s

entire time, attention, and energies to the business of Employer and its

Affiliates.  The words “entire time,

attention, and energies” are intended to mean that Employee shall devote

Employee’s full effort during reasonable working hours to the business of

Employer and its Affiliates and shall devote at least 40 hours per week to the

business of Employer and its Affiliates. 

Employee shall travel to such places as are necessary in the performance

of Employee’s duties.

 

 

 

4.             Compensation.

 

                A.            Employee shall receive a base salary

(the “Base Salary”) of at least $325,000.00 per year, payable not less

frequently than monthly, for each year during the term of this Agreement,

subject to proration for any partial year. 

Such Base Salary, and all other amounts payable under this Agreement,

shall be subject to withholding as required by law.

 

                B.            In addition to the Base Salary,

Employee shall be entitled to receive an annual bonus (the “Bonus”) for each

calendar year for which services are performed under this Agreement.  Any Bonus for a calendar year shall be

payable after the conclusion of the calendar year in accordance with Employer’s

regular bonus payment policies.  Each

year beginning in 2002, Employee shall be given a Bonus target of not less than

$195,000.00.

 

                C.            On at least an annual basis,

Employee shall receive a formal performance review and be considered for Base

Salary and/or Bonus target increases.

 

5.             Expenses.  All reasonable and necessary expenses

incurred by Employee in the course of the performance of Employee’s duties to

Employer shall be reimbursable in accordance with Employer’s then current

travel and expense policies.

 

6.             Benefits.

 

                A.            While Employee remains in the employ

of Employer, Employee shall be entitled to participate in all of the various

employee benefit plans and programs, or equivalent plans and programs, which

are made available to similarly situated officers of Employer.

 

                B.            Notwithstanding anything contained

herein to the contrary, the Base Salary and Bonuses otherwise payable to

Employee shall be reduced by any benefits paid to Employee by Employer under

any disability plans made available to Employee by Employer.

 

                C.            In each year of this Agreement,

Employee will be granted stock options under Employer’s 1997 Long Term

Incentive Plan or any similar plan made available to employees of Employer at

the same time options are granted to all other officers of Employer.

 

                7.             Confidentiality.  Employer and its Affiliates are engaged in

the telecommunications industry within the U.S.  Employee acknowledges that in the course of employment with the

Employer, Employee will be entrusted with or obtain access to information

proprietary to the Employer and its Affiliates with respect to the following

(all of which information is referred to hereinafter collectively as the

“Information”); the organization and management of Employer and its Affiliates;

the names, addresses,

 

 

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buying habits, and other special information regarding past, present

and potential customers, employees and suppliers of Employer and its

Affiliates; customer and supplier contracts and transactions or price lists of

Employer, its Affiliates and their suppliers; products, services, programs and

processes sold, licensed or developed by the Employer or its Affiliates; technical

data, plans and specifications, present and/or future development projects of

Employer and its Affiliates; financial and/or marketing data respecting the

conduct of the present or future phases of business of Employer and its

Affiliates; computer programs, systems and/or software; ideas, inventions,

trademarks, business information, know-how, processes, improvements, designs,

redesigns, discoveries and developments of Employer and its Affiliates; and

other information considered confidential by any of the Employer, its

Affiliates or customers or suppliers of 

Employer, its Affiliates. 

Employee agrees to retain the Information in absolute confidence and not

to disclose the Information to any person or organization except as required in

the performance of Employee’s duties for Employer, without the express written

consent of Employer; provided that Employee’s obligation of confidentiality

shall not extend to any Information which becomes generally available to the

public other than as a result of disclosure by Employee.

 

8.             New

Developments.  All ideas,

inventions, discoveries, concepts, trademarks, or other developments or

improvements, whether patentable or not, conceived by the Employee, alone or

with others, at any time during the term of Employee’s employment, whether or

not during working hours or on Employer’s premises, which are within the scope

of or related to the business operations of Employer or its Affiliates (“New

Developments”), shall be and remain the exclusive property of Employer.  Employee shall do all things reasonably

necessary to ensure ownership of such New Developments by Employer, including

the execution of documents assigning and transferring to Employer, all of

Employee’s rights, title and interest in and to such New Developments, and the

execution of all documents required to enable Employer to file and obtain

patents, trademarks, and copyrights in the United States and foreign countries

on any of such New Developments.

 

9.             Surrender of

Material Upon Termination.  Employee

hereby agrees that upon cessation of Employee’s employment, for whatever reason

and whether voluntary or involuntary, Employee will immediately surrender to

Employer all of the property and other things of value in his possession or in

the possession of any person or entity under Employee’s control that are the

property of Employer or any of its Affiliates, including without any limitation

all personal notes, drawings, manuals, documents, photographs, or the like,

including copies and derivatives thereof, relating directly or indirectly to

any confidential information or materials or New Developments, or relating

directly or indirectly to the business of Employer or any of its Affiliates.

 

10.           Remedies.

 

                A.            Employer and Employee hereby

acknowledge and agree that the services rendered by Employee to Employer, the

information disclosed to Employee during and by virtue of Employee’s

employment, and Employee’s commitments and obligations to 

 

 

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Employer and its Affiliates herein are of a special, unique and

extraordinary character, and that the breach of any provision of this Agreement

by Employee will cause Employer irreparable injury and damage, and consequently

the Employer shall be entitled to, in addition to all other remedies available

to it, injunctive and equitable relief to prevent a breach of Sections 7, 8, 9,

11 and 12 of this Agreement and to secure the enforcement of this Agreement.

 

                B.            Except as provided in Section 10.A.,

the parties agree to submit to final and binding arbitration any dispute, claim

or controversy, whether for breach of this Agreement or for violation of any of

Employee’s statutorily created or protected rights, arising between the parties

that either party would have been otherwise entitled to file or pursue in court

or before any administrative agency (herein “claim”), and waives all right to

sue the other party.

 

                                (i)            This agreement to arbitrate and any

resulting arbitration award are enforceable under and subject to the Federal

Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”). 

If the FAA is held not to apply for any reason then Ohio Revised Code

Chapter 2711 regarding the enforceability of arbitration agreements and awards

will govern this Agreement and the arbitration award.

 

                                (ii)           (a)           All

of a party’s claims must be presented at a single arbitration hearing.  Any claim not raised at the arbitration

hearing is waived and released.  The

arbitration hearing will take place in Cincinnati, Ohio.

 

                                                (b)           The arbitration process will be governed

by the Employment Dispute Resolution Rules of the American Arbitration

Association (“AAA”) except to the extent they are modified by this Agreement.

 

                                                (c)           Employee has had an opportunity to

review the AAA rules and the requirements that Employee must pay a filing fee

for which the Employer has agreed to split on an equal basis.

 

                                                (d)           The arbitrator will be selected from

a panel of arbitrators chosen by the AAA in White Plains, New York.  After the filing of a Request for

Arbitration, the AAA will send simultaneously to Employer and Employee an

identical list of names of five persons chosen from the panel.  Each party will have 10 days from the

transmittal date in which to strike up to two names, number the remaining names

in order of preference and return the list to the AAA.

 

                                                (e)           Any pre-hearing disputes will be

presented to the arbitrator for expeditious, final and binding resolution.

 

                                                (f)            The award of the arbitrator will be

in writing and will set forth each issue considered and the arbitrator’s

finding of fact and conclusions of law as to each such issue.

 

 

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                                                (g)           The remedy and relief that may be

granted by the arbitrator to Employee are limited to lost wages, benefits,

cease and desist and affirmative relief, compensatory, liquidated and punitive

damages and reasonable attorney’s fees, and will not include reinstatement or

promotion.  If the arbitrator would have

awarded reinstatement or promotion, but for the prohibition in this Agreement,

the arbitrator may award front pay.  The

arbitrator may assess to either party, or split, the arbitrator’s fee and

expenses and the cost of the transcript, if any, in accordance with the

arbitrator’s determination of the merits of each party’s position, but each

party will bear any cost for its witnesses and proof.

 

                                                (h)           Employer and Employee recognize that

a primary benefit each derives from arbitration is avoiding the delay and costs

normally associated with litigation. 

Therefore, neither party will be entitled to conduct any discovery prior

to the arbitration hearing except that: 

(i) Employer will furnish Employee with copies of all non-privileged

documents in Employee’s personnel file; (ii) if the claim is for discharge,

Employee will furnish Employer with records of earnings and benefits relating

to Employee’s subsequent employment (including self-employment) and all

documents relating to Employee’s efforts to obtain subsequent employment; (iii)

the parties will exchange copies of all documents they intend to introduce as

evidence at the arbitration hearing at least 10 days prior to such hearing;

(iv) Employee will be allowed (at Employee’s expense) to take the depositions,

for a period not to exceed four hours each, of two representatives of Employer,

and Employer will be allowed (at its expense) to depose Employee for a period

not to exceed four hours; and (v) Employer or Employee may ask the arbitrator

to grant additional discovery to the extent permitted by AAA rules upon a

showing that such discovery is necessary.

 

                                                (i)            Nothing herein will prevent either

party from taking the deposition of any witness where the sole purpose for

taking the deposition is to use the deposition in lieu of the witness

testifying at the hearing and the witness is, in good faith, unavailable to

testify in person at the hearing due to poor health, residency and employment

more than 50 miles from the hearing site, conflicting travel plans or other

comparable reason.

                                                (j)            Arbitration must be requested in

writing no later than 6 months from the date of the party’s knowledge of the

matter disputed by the claim. A party’s failure to initiate arbitration within

the time limits herein will be considered a waiver and release by that party

with respect to any claim subject to arbitration under this Agreement.

 

                                                (k)           Employer and Employee consent that

judgment upon the arbitration award may be entered in any federal or state

court that has jurisdiction.

 

                                                (l)            Except as provided in Section 10.A.,

neither party will commence or pursue any litigation on any claim that is or

was subject to arbitration under this Agreement.

 

 

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                                                (m)          All aspects of any arbitration

procedure under this Agreement, including the hearing and the record of the

proceedings, are confidential and will not be open to the public, except to the

extent the parties agree otherwise in writing, or as may be appropriate in any

subsequent proceedings between the parties, or as may otherwise be appropriate

in response to a governmental agency or legal process.

 

11.           Covenant Not to

Compete.  For purposes of this

Section 11 only, the term “Employer” shall mean, collectively, Employer and

each of its Affiliates. During the two-year period following termination of

Employee’s employment with Employer for any reason (or if this period is

unenforceable by law, then for such period as shall be enforceable) Employee

will not engage in any business offering services related to the current

business of Employer, whether as a principal, partner, joint venture, agent,

employee, salesman, consultant, director or officer, where such position would

involve Employee in any business activity in competition with Employer.  This restriction will be limited to the

geographical area where Employer is then engaged in such competing business

activity or to such other geographical area as a court shall find reasonably

necessary to protect the goodwill and business of the Employer.

 

                During the

two-year period following termination of Employee’s employment with Employer

for any reason (or if this period is unenforceable by law, then for such period

as shall be enforceable) Employee will not interfere with or adversely affect,

either directly or indirectly, Employer’s relationships with any person, firm,

association, corporation or other entity which is known by Employee to be, or

is included on any listing to which Employee had access during the course of

employment as a customer, client, supplier, consultant or employee of Employer

and that Employee will not divert or change, or attempt to divert or change,

any such relationship to the detriment of Employer or to the benefit of any

other person, firm, association, corporation or other entity.

 

During the two-year period following termination of

Employee’s employment with Employer for any reason (or if this period is

unenforceable by law, then for such period as shall be enforceable) Employee

shall not, without the prior written consent of Employer, accept employment, as

an employee, consultant, or otherwise, with any company or entity which is a

customer or supplier of Employer at any time during the final year of

Employee’s employment with Employer.

 

                Employee will not,

during or at any time within three years after the termination of Employee’s

employment with Employer, induce or seek to induce, any other employee of

Employer to terminate his or her employment relationship with Employer.

 

 

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12.           Goodwill.  Employee will not disparage Employer or any

of its Affiliates in any way which could adversely affect the goodwill,

reputation and business relationships of Employer or any of its Affiliates with

the public generally, or with any of their customers, suppliers or employees.  Employer will not disparage Employee.

 

13.           Termination.

 

                A.            (i)            Employer

or Employee may terminate this Agreement upon Employee’s failure or inability

to perform the services required hereunder because of any physical or mental

infirmity for which Employee receives disability benefits under any disability

benefit plans made available to Employee by Employer (the “Disability Plans”),

over a period of one hundred twenty consecutive working days during any twelve

consecutive month period (a “Terminating Disability”).

 

                                (ii)           If Employer or Employee elects to

terminate this Agreement in the event of a Terminating Disability, such

termination shall be effective immediately upon the giving of written notice by

the terminating party to the other.

 

                                (iii)          Upon termination of this Agreement on

account of Terminating Disability, Employer shall pay Employee Employee’s

accrued compensation hereunder, whether Base Salary, Bonus or otherwise

(subject to offset for any amounts received pursuant to the Disability Plans),

to the date of termination.  For as long

as such Terminating Disability may exist, Employee shall continue to be an

employee of Employer for all other purposes and Employer shall provide Employee

with disability benefits and all other benefits according to the provisions of

the Disability Plans and any other Employer plans in which Employee is then

participating.

 

                                (iv)          If the parties elect not to terminate

this Agreement upon an event of a Terminating Disability and Employee returns

to active employment with Employer prior to such a termination, or if such

disability exists for less than one hundred twenty consecutive working days,

the provisions of this Agreement shall remain in full force and effect.

 

                B.            This Agreement terminates

immediately and automatically on the death of the Employee, provided, however,

that the Employee’s estate shall be paid Employee’s accrued compensation

hereunder, whether Base Salary, Bonus or otherwise, to the date of death.

 

                C.            Employer

may terminate this Agreement immediately, upon written notice to Employee, for

Cause.  For purposes of this Agreement,

Employer shall have “Cause” to terminate this Agreement only if Employer’s

Board of Directors determines that there has been fraud, misappropriation or

embezzlement on the part of Employee.

 

 

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                D.            Employer may terminate this

Agreement immediately, upon written notice to Employee, for any reason other

than those set forth in Sections 13.A., B. and C.; provided, however, that

Employer shall have no right to terminate under this Section 13.D. within one

year after a Change in Control.   In the

event of a termination by Employer under this Section 13.D., Employer shall,

within five days after the termination, pay Employee an amount equal to two

times the sum of the annual Base Salary rate in effect at the time of

termination plus the Bonus target in effect at the time of termination. For the

remainder of the Current Term, Employer shall continue to provide Employee with

medical, dental, vision and life insurance coverage comparable to the medical,

dental, vision and life insurance coverage in effect for Employee immediately

prior to the termination; and, to the extent that Employee would have been

eligible for any post-retirement medical, dental, vision or life insurance

benefits from Employer if Employee had continued in employment through the end

of the Current Term, Employer shall provide such post-retirement benefits to

Employee after the end of the Current Term. 

For purposes of any stock option or restricted stock grant outstanding

immediately prior to the termination, Employee’s employment with Employer shall

not be deemed to have terminated until the end of the Current Term.  In addition, Employee shall be entitled to

receive, as soon as practicable after termination, an amount equal to the sum

of (i) any forfeitable benefits under any qualified or nonqualified pension,

profit sharing, 401(k) or deferred compensation plan of Employer or any

Affiliate which would have vested prior to the end of the Current Term if

Employee’s employment had not terminated plus (ii) if Employee is participating

in a qualified or nonqualified defined benefit plan of Employer or any

Affiliate at the time of termination, an amount equal to the present value of

the additional vested benefits which would have accrued for Employee under such

plan if Employee’s employment had not terminated prior to the end of the

Current Term and if Employee’s annual Base Salary and Bonus target had neither

increased nor decreased after the termination. 

For purposes of this Section 13.D., “Current Term” means the two year

period beginning at the time of termination. 

For purposes of this Section 13.D. and Section 13.E.,  “Change in Control” means a change in

control as defined in Employer’s 1997 Long Term Incentive Plan, including all

relevant modifications.

 

E.             This Agreement shall terminate automatically in the

event that there is a Change in Control and either (i) Employee elects to

resign within 90 days after the change in Control or (ii) Employee’s employment

with Employer is actually or constructively terminated by Employer within one

year after the Change in Control for any reason other than those set forth in

Sections 13.A., B. and C.  For purposes

of the preceding sentence, a “constructive” termination of Employee’s

employment shall be deemed to have occurred if, without Employee’s consent,

there is a material reduction in Employee’s authority or responsibilities or if

there is a reduction in Employee’s Base Salary or Bonus target from the amount

in effect immediately prior to the Change in Control or if Employee is required

by Employer to relocate from the city where Employee is residing immediately

prior to the Change in Control.  In the

event of a termination under this Section 13.E., Employer shall pay Employee an

amount equal to two times the sum of the annual Base Salary rate in effect at

the time of termination plus the Bonus target in effect at the time of

termination, all stock options shall become 

 

 

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immediately exercisable (and Employee shall be

afforded the opportunity to exercise them). For the remainder of the Current

Term, Employer shall continue to provide Employee with medical, dental, vision

and life insurance coverage comparable to the medical, dental, vision and life

insurance coverage in effect for Employee immediately prior to the termination;

and, to the extent that Employee would have been eligible for any

post-retirement medical, dental, vision or life insurance benefits from

Employer if Employee had continued in employment through the end of the Current

Term,  Employer shall provide such

post-retirement benefits to Employee after the end of the Current Term.  Employee’s accrued benefit under any

nonqualified pension or deferred compensation plan maintained by Employer or

any Affiliate shall become immediately vested and nonforfeitable and Employee

also shall be entitled to receive a payment equal to the sum of (i) any

forfeitable benefits under any qualified pension or profit sharing or 401(k)

plan maintained by Employer or any Affiliate plus (ii) if Employee is

participating in a qualified or nonqualified defined benefit plan of Employer

or any Affiliate at the time of termination, an amount equal to the present

value of the additional benefits which would have accrued for Employee under

such plan if Employee’s employment had not terminated prior to the end of the

Current Term and if Employee’s annual Base Salary and Bonus target had neither

increased nor decreased after the termination. 

Finally, to the extent that Employee is deemed to have received an

excess parachute payment by reason of the Change in Control, Employer shall pay

Employee an additional sum sufficient to pay (i) any taxes imposed under

section 4999 of the Code plus (ii) any federal, state and local taxes

applicable to any taxes imposed under section 4999 of the Code.  For purposes of this Section 13.E., “Current

Term” means the two year period beginning at the time of termination.

 

F.             Employee may resign upon 60 days’

prior written notice to Employer.  In

the event of a resignation under this Section 13.F., this Agreement shall

terminate and Employee shall be entitled to receive Employee’s Base Salary

through the date of termination, any Bonus earned but not paid at the time of

termination and any other vested compensation or benefits called for under any

compensation plan or program of Employer.

 

 

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G.            Upon termination of this Agreement as a result of an

event of termination described in this Section 13 and except for Employer’s

payment of the required payments under this Section 13 (including any Base

Salary accrued through the date of termination, any Bonus earned for the year

preceding the year in which the termination occurs and any nonforfeitable

amounts payable under any employee plan), all further compensation under this

Agreement shall terminate.

 

                H.            The termination of this Agreement

shall not amend, alter or modify the rights and obligations of the parties

under Sections 7, 8, 9, 10, 11, and 12 hereof, the terms of which shall survive

the termination of this Agreement.

 

14.           Assignment.  As this is an agreement for personal

services involving a relation of confidence and a trust between Employer and

Employee, all rights and duties of Employee arising under this Agreement, and

the Agreement itself, are non-assignable by Employee.

 

15.           Notices.  Any notice required or permitted to be given

under this Agreement shall be sufficient, if in writing, and if delivered

personally or by certified mail to Employee at Employee’s place of residence as

then recorded on the books of Employer or to Employer at its principal office.

 

16.           Waiver.  No waiver or modification of this Agreement

or the terms contained herein shall be valid unless in writing and duly

executed by the party to be charged therewith. 

The waiver by any party hereto of a breach of any provision of this

Agreement by the other party shall not operate or be construed as a waiver of

any subsequent breach by such party.

 

17.           Governing Law.  This agreement shall be governed by the laws

of the State of Ohio.

 

18.           Entire Agreement.  This Agreement contains the entire agreement

of the parties with respect to Employee’s employment by Employer.  There are no other contracts, agreements or

understandings, whether oral or written, existing between them except as

contained or referred to in this Agreement.

 

19.           Severability.  In case any one or more of the provisions of

this Agreement is held to be invalid, illegal, or unenforceable in any respect,

such invalidity, illegality, or other enforceability shall not affect any other

provisions hereof, and this Agreement shall be construed as if such invalid,

illegal, or unenforceable provisions have never been contained herein.

 

20.           Successors and

Assigns.  Subject to the

requirements of Paragraph 14 above, this Agreement shall be binding upon

Employee, Employer and Employer’s successors and assigns.

 

 

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21.           Confidentiality

of Agreement Terms.  The terms of

this Agreement shall be held in strict confidence by Employee and shall not be

disclosed by Employee to anyone other than Employee’s spouse, Employee’s legal

counsel, and Employee’s other advisors, unless required by law.  Further, except as provided in the preceding

sentence, Employee shall not reveal the existence of this Agreement or discuss

its terms with any person (including but not limited to any employee of

Employer or its Affiliates) without the express authorization of the President

of Employer.  To the extent that the

terms of this Agreement have been disclosed by Employer, in a public filing or

otherwise, the confidentiality requirements of this Section 21 shall no longer

apply to such terms.

 

                IN WITNESS

WHEREOF, the parties hereto have caused this Agreement to be duly executed as

of the day and year first above written.

 

 

	

   

  	

  Broadwing Inc.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  EMPLOYEE

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Thomas L. Schilling

  

 

 

11Ex-10.1

 

TERMINATION AGREEMENT AND

GENERAL RELEASE

 

 

This is an agreement and general release (the “Agreement”), by and

between James O’Leary (“Executive”, “you” or “your”) and U.S. Industries, Inc.

(the “Company”), regarding the termination of the Executive’s employment by the

Company without Cause (as defined in Executive’s Restated Employment Agreement,

dated September 1, 1999, as amended thereafter (the “Employment Agreement”)),

following the closing of the lighting transaction.

 

1.          You acknowledge

that your employment with the Company and all related entities will terminate

effective May 3, 2002 (the “Termination Date”), and that after the Termination

Date you shall not represent yourself as being an employee, officer, director,

agent or representative of the Company for any purpose.  Effective on the Termination Date, you

hereby resign from your employment and from all other offices, directorships

and fiduciary capacities held with, or on behalf of, the Company and all

related entities.

 

You

acknowledge and agree that the Company Entities (defined below) shall have no

obligation to rehire you, or to consider you for employment, after the

Termination Date.  You further warrant

and represent that you will not seek employment with any of the Company Entities

at any time in the future.

 

2.          As a

result of the termination of your employment by the Company without Cause, you

are entitled to receive the payment(s) and other benefits provided under

Section 8(c) of the Employment Agreement (subject to withholdings and

deductions), as set forth on Exhibit A, attached hereto, which you acknowledge

is the full amount due you under such Section 8(c).

 

3.          Following the Effective Date of this Agreement and in

exchange for your waiver of claims against the Company Entities and compliance

with other terms and conditions of this Agreement, the Company agrees to pay or

make available to you the following additional payments and benefits:

 

                                                (a)           Accelerated vesting in 79,376 shares

of restricted stock of the Company, which equals the unvested shares of

restricted stock that remain unvested after giving effect to the accelerated

vesting pursuant to Section 8(c)(B) of the Employment Agreement, as set forth

on Exhibit A;

 

                                                (b)           Full vesting in your accrued benefit

(as of the Termination Date) under the U.S. Industries, Inc. Supplemental

Retirement Plan, which shall be paid in accordance with the terms of such plan;

 

                                                (c)           Full vesting of your account under

the U.S. Industries, Inc. Long-Term Incentive Plan, which shall be payable in a

lump sum as soon as practicable after the Effective Date ($101,778.25); and

 

                                                (d)           A cash payment equal to a pro-rata portion of the

annual bonus for fiscal year 2002, if any, based on the number of days you

actually worked during such fiscal year. Such pro-rata annual bonus, if any,

will be paid to you when bonuses are paid to the other

 

 

 

executives, which is expected to be the later of December 15, 2002 or

as soon as practicable after the Compensation Committee determines and approves

the payment of annual bonuses for fiscal year 2002.

 

4.             You acknowledge

that as a result of your termination of employment all stock options granted to

you that are not exercisable as of the Termination Date are hereby cancelled

and terminated and that your rights under the applicable plans with respect

thereto and the stock option agreements thereunder are terminated.  You shall have ninety (90) days after the

Termination Date to exercise 141,714 stock options, which represents your

vested stock options as of the Termination Date except the November 13, 1998

grant, and you shall have one (1) year after the Termination Date to exercise

56,250 stock options, which represents the vested stock options granted to you

on November 13, 1998.

 

5.             You acknowledge

and agree that the payment(s) and other benefits provided pursuant to this

Agreement: (i) are in full discharge of any and all liabilities and obligations

of the Company Entities to you, monetarily or with respect to employee benefits

or otherwise, including, but not limited to, any and all obligations arising

under the Employment Agreement, any alleged written or oral employment

arrangement or agreement, policy, plan or procedure of the Company and/or any

alleged understanding or arrangement between you and the Company; and (ii)

exceed(s) any payment, benefit, or other thing of value to which you might

otherwise be entitled under any policy, plan, arrangement or procedure of the

Company.

 

6.             (a)  In consideration for the payment and

benefits to be provided you pursuant to paragraph 3 above, you, for yourself

and for your heirs, executors, administrators, trustees, legal representatives

and assigns (hereinafter referred to collectively as “Releasors”), forever

release and discharge the Company and its past, present and future parent

entities, subsidiaries, divisions, affiliates and related business entities,

successors and assigns, assets, or funds, and any of its or their respective

past, present and/or future directors, officers, fiduciaries, agents, trustees,

administrators, employees and assigns, whether acting on behalf of the Company

or in their individual capacities (collectively the “Company Entities”) from

any and all claims, demands, causes of action, fees and liabilities of any kind

whatsoever, whether known or unknown, which you ever had, now have, or may have

against any of the Company Entities by reason of any act, omission,

transaction, practice, plan, policy, procedure, conduct, occurrence, or other

matter up to and including the date on which you sign this Agreement.

 

                (b)  Without limiting the generality of the

foregoing, this Agreement is intended to and shall release the Company Entities

from any and all claims, whether known or unknown, which Releasors ever had,

now have, or may have against the Companies Entities arising out of your

employment and/or your separation from that employment, including, but not

limited to:  (i) any claim under the Age

Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964,

the Americans with Disabilities Act, the Employee Retirement Income Security

Act of 1974 (excluding claims for accrued, vested benefits under any qualified

employee benefit or pension plan of the Company Entities subject to the terms

and conditions of such plan and applicable law), and the Family and Medical

Leave Act; (ii) any claim under the New Jersey Civil Rights Act, the New Jersey

Law Against Discrimination or the New Jersey Conscientious Employee Protection

Act (iii) any other claim (whether based on federal, state, or local law, statutory

or decisional) relating to or arising out of your employment, the terms and

conditions of

 

2

 

such employment, the termination of such

employment, and/or any of the events relating directly or indirectly to or

surrounding the termination of that employment, including but not limited to

breach of contract (express or implied), wrongful discharge, detrimental

reliance, defamation, emotional distress or compensatory or punitive damages;

and (iv) any claim for attorneys’ fees, costs, disbursements and/or the

like.  Nothing in this Agreement shall

be a waiver of claims that may arise after the date on which you sign this

Agreement or rights of indemnification to which you were entitled immediately

prior to the date on which you sign this Agreement under the Company’s

Certificate of Incorporation, By-laws or otherwise with regard to your service

with the Company, including any applicable coverage under any directors and

officers liability insurance policy maintained by the Company.

 

7.             You

further acknowledge and agree that by virtue of the foregoing, you have waived

all relief available to you (including without limitation, monetary damages,

equitable relief and reinstatement) under any of the claims and/or causes of

action waived in paragraph 6 above. 

Therefore you agree that you will not seek or accept any award or

settlement from any source or proceeding (including, but not limited to, any

proceeding brought by any other person or by any government agency) with

respect to any claim or right waived in this Agreement.  You further agree, to the maximum extent

permitted by law, that you will not sue or commence any proceeding (judicial or

administrative), or participate in any action, suit or proceeding (unless

compelled by legal process or court order), against any of the Company

Entities, with respect to any claim released by paragraph 6 above.  You also warrant and represent that as of

the date you sign this Agreement, you have not taken or engaged in any of the

acts described in the foregoing sentences. 

If, notwithstanding the foregoing promises, you violate this paragraph

7, you shall be required, to the maximum extent permitted by law, to indemnify

and hold harmless the Company Entities from and against any and all demands,

assessments, judgments, costs, damages, losses and liabilities, and attorneys’

fees and other expenses which result from, or are incident to, such violation.

 

8.             You

agree that you shall not disparage or encourage or induce others to disparage

the Company Entities.  For purposes of

this Section, the term “disparage” includes, without limitation, comments or

statements to the press, or the Company’s employees or any individual or entity

with whom the Company Entities has a business relationship which would

adversely affect in any manner: (i) the conduct of the business of any Company

Entity (including, without limitation, any business plans or prospects) or (ii)

the business reputation of any Company Entity. 

Further,

neither the Company formally, nor its directors or named executive officers,

shall disparage the Executive by any public statement or encourage or induce

others to publicly disparage the Executive.

 

9.             (a)  You agree that you will cooperate with the

Company and/or the Company Entities and its or their respective counsel in

connection with any investigation, administrative proceeding or litigation

relating to any matter that occurred during your employment in which you were

involved or of which you have knowledge. 

The Company shall reimburse you for any reasonable pre-approved

out-of-pocket travel, delivery or similar expenses incurred in providing such

service to the Company.

 

                (b)  You agree that, in the event you are

subpoenaed by any person or entity (including, but not limited to, any

government agency) to give testimony (in a deposition, court proceeding

 

3

 

or otherwise) which in any way relates to

your employment by the Company and/or the Company Entities, you will give prompt

notice of such request to the General Counsel of the Company at the principal

offices of the Company and will make no disclosure (except to the extent

legally required to do so) until the Company and/or the Company Entities have

had a reasonable opportunity to contest the right of the requesting person or

entity to such disclosure or to obtain an order of confidentiality on the

disclosure.

 

10.           The

terms and conditions of this Agreement are and shall be deemed to be

confidential, and shall not be disclosed by you to any person or entity without

the prior written consent of the Company, except if required by law, and to

your accountants, attorneys and/or spouse, provided that, to the maximum extent

permitted by applicable law, rule, code or regulation, they agree to maintain

the confidentiality of the Agreement. 

You further represent that you have not disclosed the terms and

conditions of the Agreement to anyone other than your attorneys, accountants

and/or spouse.

 

11.           You

represent that you have returned to the Company all property belonging to the

Company and/or the Company Entities, including but not limited to leased

vehicle, laptop, cell phone, keys, card access to the building and office

floors, any applicable Employee Handbook, phone cards, credit cards, rolodex

(if provided by the Company and/or the Company Entities), computer user name

and password, disks and/or voicemail code. 

You further acknowledge and agree that the Company shall have no

obligation to make the payment(s) and provide the benefits referred to in

paragraph 3 above unless and until you have satisfied all your obligations

pursuant to this paragraph.

 

12.           You

acknowledge that you understand that in the event of a willful or material

breach of this Agreement by you, you shall not be entitled to the benefits and

payments referenced in paragraph 3 hereof, and that you shall return to the

Company, on demand, all previous benefits and payments provided to you due to

your termination of employment pursuant to paragraph 3 hereof, including,

without limitation, any restricted stock that vested or the proceeds therefrom,

if such stock has been sold.

 

13.           (a)           This Agreement is not intended, and

shall not be construed, as an admission that any of the Company Entities has

violated any federal, state or local law (statutory or decisional), ordinance

or regulation, breached any contract or committed any wrong whatsoever against

you.

 

                (b)           Should any provision of this

Agreement require interpretation or construction, it is agreed by the parties

that the entity interpreting or constructing this Agreement shall not apply a

presumption against one party by reason of the rule of construction that a

document is to be construed more strictly against the party who prepared the

document.

 

14.           This

Agreement is binding upon, and shall inure to the benefit of, the parties and

their respective heirs, executors, administrators, successors and assigns.

 

15.           This

Agreement shall be construed and enforced in accordance with the laws of the

State of New Jersey without regard to the principles of conflicts of law.

 

16.           You

understand that this Agreement constitutes the complete understanding between

the

 

4

 

Company and you, and, supersedes the Employment Agreement and any and

all agreements, understandings, and discussions, whether written or oral,

between you and any of the Company Entities, except the escrow agreement

entered into between you and Manufacturers and Traders Trust Company, dated as

of July 18, 2001 (the “Escrow Agreement”) and Sections 11, 12, 13, 14(a),

14(d), 14(e), 14(f), 14(h) and 14(g) of the Employment Agreement, which were

intended to survive the Termination Date. 

No other promises or agreements shall be binding unless in writing and

signed by both the Company and you after the Effective Date of this Agreement.

 

17.           The

Company may withhold from any and all amounts payable hereunder such Federal,

state and local taxes as may be required to be withheld pursuant to any

applicable law or regulation.

 

18.           You

acknowledge that you: (a) have carefully read this Agreement in its entirety;

(b) have had an opportunity to consider the terms of this Agreement for  at least ten (10) days; (c) are hereby

advised by the Company in writing to consult with an attorney of your choice in

connection with this Agreement; (d) fully understand the significance of all of

the terms and conditions of this Agreement and have discussed them with your

independent legal counsel, or have had a reasonable opportunity to do so; (e) have

had answered to your satisfaction by your independent legal counsel any

questions you have asked with regard to the meaning and significance of any of

the provisions of this Agreement; and (f) are signing this Agreement

voluntarily and of your own free will and agree to abide by all the terms and

conditions contained herein.

 

19.           You

understand that you will have at least  ten

(10) days from the date of receipt of this Agreement to consider the terms and

conditions of this Agreement.  You may

accept this Agreement by signing it and returning it to Dorothy E. Sander at

U.S. Industries, Inc. on or before May 13, 2002.   The effective date

of this Agreement shall be the date, on or after the Termination Date, you sign

the Agreement (the “Effective Date”).

 

	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Signature: 

  	

  /s/ James O’Leary

  	

   

  	

  Date:

  	

  May 10, 2002

  
	

   

  	

       James O’Leary (“Executive”)

  	

   

  	

   

  	

   

  

 

 

 

U.S. INDUSTRIES, INC.

 

	

  By:

  	

  /s/ Dorothy E. Sander

  	

   

  
	

   

  	

  Dorothy E. Sander

  	

   

  
	

   

  	

  Senior Vice

  President-Administration

  	

   

  
	

   

  	

   

  	

   

  

 

 

5

 

EXHIBIT A

 

Pursuant to Section 8(c) of the Employment

Agreement (and certain amendments thereto) you are entitled to the following

payments and benefits as a result of the termination of your employment by the

Company without Cause:

 

1.               Lump sum payment

within five (5) days after the Termination Date equal to $416,923.06 which

represents the sum of (i) your annual base salary and the highest annual bonus

paid or payable to you for any of the previous two (2) completed fiscal years

($400,000); (ii) any earned but unpaid base salary through the Termination Date

($4,615.38), accrued and unused vacation pay (8 days equivalent to $12,307.68) or other deferred

compensation accrued or earned but not yet paid at the Termination Date (none)

and (iii) any unreimbursed business expenses submitted by you prior to the

Termination Date and payable pursuant to Section 6 of the Employment Agreement

(none; but any such expenses submitted within a reasonable time following the

Termination Date will be reimbursed to you in accordance with Company policy);

 

2.               Payment of

$400,000, which is your annual base salary, in twelve (12) equal monthly

installments commencing on May 3, 2003 (the “Installment Payments”); provided,

however, upon a Change in Control (as defined in the Employment Agreement), the

balance of the Installment Payments remaining unpaid (unless such Installment

Payments are forfeited on or after May 3, 2003 pursuant to the last paragraph

in this Exhibit A) shall be paid to you in a lump sum, less applicable withholdings,

within 5 days of such Change in Control;

 

3.               Accelerated

vesting in 20,105 shares of restricted stock of the Company;

 

4.               Payments of

$5,500 on each of December 31, 2003 and December 31, 2004, representing two (2)

years of the Company’s contribution had you continued to participate in the

U.S. Industries, Inc. Retirement and Savings Plan (the “Savings Plan”); and

 

5.               Two (2) years

of medical and dental coverage under the applicable Company plans, with no cost

to you, for you and your qualified dependents; and two (2) additional years of

pension service credit to be granted under the qualified and/or non-qualified

defined benefit pension plans in which you participated immediately prior to

the Termination Date.

 

6.               Your vested

accrued benefit under the Savings Plan and the USI Master Pension Plan, in

accordance with the terms of such plans.

 

Further, pursuant to the Escrow Agreement,

the Company shall direct the escrow agent to pay you $876,461 as soon as

practicable on or after the Termination Date, which represents the net amount

of your stay bonus pursuant to the Escrow Agreement.  Additionally, pursuant to the Escrow Agreement, the Company

hereby agrees to deposit the required tax withholdings of $496,227 with the

proper agencies.

 

There shall be no offset against any amounts

due you under this Exhibit A on account of any

 

6

 

remuneration that you receive during the one

(1) year period after the Termination Date (the “One-Year Period”), provided that

if any time after the One-Year Period, but prior to a Change in Control (as

defined in the Employment Agreement), you are employed on a substantially

full-time basis either as an employee or independent contractor (other than

self employed as an independent contractor doing special projects for unrelated

entities or unrelated consulting firms with no project scheduled to extend, or

extending on a substantially full-time basis for more than sixty (60) days

after the end of the One-Year Period) the Installment Payments payable to you

under paragraph 2 of this Exhibit A shall cease.

 

7

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