AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
Amendment and Restatement Effective
Date: January 1, 2006
or Date of Execution if Other than January 1, 2006
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TERMINATION OF PRIOR AGREEMENT
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POSITION, DUTIES, AND
RESPONSIBILITIES
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SALARY, BONUS AND BENEFITS
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TERMINATION OF EMPLOYMENT
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NON-COMPETITION, CONFIDENTIAL INFORMATION AND
NON-INTERFERENCE
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ASSIGNMENT; BINDING EFFECT
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ALTERNATIVE SATISFACTION OF COMPANY’S
OBLIGATIONS
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ENTIRE AGREEMENT, MODIFICATION
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NON-EXCLUSIVITY OF RIGHTS
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SUBSIDIARIES AND AFFILIATES
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AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
THIS AMENDED AND
RESTATED EMPLOYMENT AGREEMENT is entered into as of the 23 day
of December, 2005, by and between AGILYSYS, INC., formerly known as
PIONEER-STANDARD ELECTRONICS, INC., an Ohio corporation (the
“Company”), and ARTHUR RHEIN
(“Rhein”).
WHEREAS, the
Company and Rhein (collectively “the Parties”) desire
to enter into this Amended and Restated Employment Agreement (the
“Agreement”) as hereinafter set forth;
NOW, THEREFORE,
the Company and Rhein agree as follows:
1.
DEFINITIONS . For purposes of this Agreement, the following
terms shall have the meanings set forth in this Section 1 when
used in this Agreement. Certain other terms are defined in the body
of this Agreement.
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(a)
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Agreement . The term “Agreement”
shall mean this Amended and Restated Employment Agreement, as it
may be amended from time to time.
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(b)
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Annual Incentive Plan
. The term “Annual
Incentive Plan” shall mean the Agilysys, Inc. Executive
Officer Annual Incentive Plan or individual annual incentive
arrangement which is approved by the Compensation
Committee.
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(c)
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Base Salary . The term “Base Salary”
shall mean the salary provided for in Section 5 or any
increased salary granted to Rhein in accordance with
Section 5.
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(d)
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Board . The term “Board” shall
mean the Board of Directors of the Company.
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(e)
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Cause . The term “Cause” shall
mean:
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(i)
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Commission by Rhein (evidenced by a
conviction or written, voluntary and freely given confession) of a
criminal act constituting a felony involving fraud or moral
turpitude;
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(ii)
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Commission by Rhein of a material
breach or material default of any of Rhein’s agreements or
obligations under any provision of this Agreement, including,
without limitation, Rhein’s agreements and obligations under
Subsections 4(a) through 4(e) or Section 11 of this Agreement,
which is not substantially cured within ninety (90) days after
the Board gives written notice thereof to Rhein;
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(iii)
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Commission by Rhein, when carrying
out Rhein’s duties under this Agreement, of acts or the
omission of any act, which constitutes willful misconduct or which
constitutes gross negligence and results in material
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(2)
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economic harm to the Company or has
a materially adverse effect on the Company’s operations,
properties or business relationships; or
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(iv)
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A
substantial and continued failure or refusal by Rhein to perform
under this Agreement which Rhein shall have failed to remedy within
ninety (90) days after his receipt of written notice from the
Board.
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(f)
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Change in Control.
The term “Change
in Control” shall mean a change in control of the Company of
a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under
the Securities Exchange Act of 1934 as in effect on the date of
this Agreement, regardless of whether the Company is then subject
to such reporting requirement; provided that, without limitation,
such a Change in Control shall be deemed to have occurred if and
when (a) any “person” (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934), excluding any employee benefit plan of the Company, any
trust established under any employee benefit plan of the Company,
or any trustee of any trust established under any employee benefit
plan of the Company, becomes a beneficial owner, directly or
indirectly, of securities of the Company representing twenty
percent (20%) or more of the combined voting power of the
Company’s then outstanding securities, or (b) during any
period of twelve (12) consecutive months, commencing before or
after the date of this Agreement, individuals who, at the beginning
of such twelve (12) month period were directors of the Company
for whom Rhein, as a shareholder, shall have voted, cease for any
reason to constitute at least a majority of the Board; provided,
however, that in no event shall a Change in
Control be deemed to have occurred for purposes of this Agreement
if such Change in Control occurs as a part of the Company’s
strategic plan unless the Change in Control occurs as a part of a
change to the Company’s strategic plan initiated by the Board
of Directors. A Change in Control resulting from an unsolicited
offer by a third party shall not be considered to be part of the
Company’s strategic plan and, therefore, would be considered
a Change in Control for purposes of this Agreement. A Change in
Control resulting from an offer by a third party solicited by the
Company would not be considered a Change in Control for purposes of
this Agreement unless the solicitation is authorized in advance by
the Board of Directors.
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(g)
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Company . The term “Company”
shall mean Agilysys, Inc., formerly known as Pioneer-Standard
Electronics, Inc., an Ohio corporation, and its successors and
assigns to the extent permitted under this Agreement.
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(h)
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Compensation Committee
. The term
“Compensation Committee” shall mean the Compensation
Committee of the Board or its successor.
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(i)
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Disability . The term “Disability”
shall mean a condition resulting from illness or accident which has
prevented Rhein from performing his duties under this Agreement for
a period of six (6) consecutive months. The Employment Term
shall be deemed to have ended as of the close of business on a day
designated by the Company, which shall not be earlier than
(x) the last day of such period
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(3)
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of
six (6) consecutive months and (y) the day on which the
Company provides written notice pursuant to Subsection 6(b) of this
Agreement.
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(j)
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Effective Date
. The term
“Effective Date” shall mean the effective date of this
amended and restated Agreement, which shall be January 1,
2006, or, if other, the date of execution hereof.
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(k)
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Employment Term
. The term
“Employment Term” shall have the meaning set forth in
Subsection 3(b) of this Agreement.
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(l)
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Good Reason . The term “Good Reason”
shall mean the occurrence of any of the following:
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(i)
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there is any reduction in
Rhein’s title or position or change in his reporting
relationship;
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(ii)
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there is a material reduction in
Rhein’s duties or responsibilities;
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(iii)
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Rhein’s compensation is
reduced or his participation in any benefit plan, program or
arrangement is eliminated, or benefits payable to Rhein under any
such plan, program or arrangement or Rhein’s perquisites are
materially reduced or restricted, except where either
(A) such reduction, restriction, elimination or other change
is both generally applicable to all members of senior management
and does not reduce either Rhein’s annual salary or Target
Annual Bonus, or (B) such reduction, restriction, elimination
or other change is merely the result of application of a formula
measuring individual or corporate performance or both, or
(C) such reduction, restriction, elimination or other change
is merely the result of carrying out the terms of this Agreement
(e.g., it is intended that Rhein’s grants in Fiscal Year 2007
under the Company’s long term incentive plan will be his last
grants thereunder, and it is expected that his Base Salary will
remain at the level set forth herein from April 1, 2006,
through the end of the Employment Term, neither of which
circumstances shall constitute a Good Reason);
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(iv)
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there is a material breach or
material default by the Company or its successor of any of its
agreements or obligations under any provision of this Agreement,
unless such breach or default is substantially cured within a
reasonable period of time (hereby defined as ten (10) days for
simple non-payment of an agreed amount without any related issues
and ninety (90) days in all other cases) after written notice
advising the Company or its successor of the acts or omissions
constituting such breach or default has been received by the
Company; or
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(v)
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the
failure of the Company to obtain an agreement from any successor to
the Company to assume this Agreement as contemplated by
Section 14 of this Agreement.
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(m)
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Parties . The term “Parties”
shall mean the Company and Rhein.
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(4)
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(n)
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Pro Rata . The term “Pro Rata”
shall mean, when used with respect to the Company’s Annual
Incentive Plan, a fraction, the numerator of which is the number of
days that Rhein was employed by the Company in the applicable
performance period (typically one fiscal year of the Company) and
the denominator of which shall be the number of days in the
applicable performance period.
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(o)
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Retirement . The term “Retirement”
shall have the definition ascribed to such term in the
Company’s Supplemental Executive Retirement Plan as in effect
on April 1, 2003.
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(p)
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Severance Benefit Plan
. The term
“Severance Benefit Plan” shall mean any plan, policy or
arrangement providing severance benefits for executive officers
(and any other employees) of the Company.
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(q)
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Target Annual Bonus
. The term “Target
Annual Bonus” shall mean Rhein’s target annual
incentive opportunity under the Annual Incentive Plan.
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2.
AMENDMENT AND RESTATEMENT OF PRIOR AGREEMENT . This
Agreement amends and restates the employment agreement between the
Parties effective as of April 1, 2003, and shall be deemed
effective as of 12:00 a.m. on the Effective Date. Amendment
and restatement of the employment agreement does not revoke any
right that either party to the agreement had with respect to
periods prior to the Effective Date.
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(a)
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During the Employment Term, the
Company shall employ Rhein, and Rhein shall serve the Company, as
President and Chief Executive Officer, based on the terms and
subject to the conditions set forth herein.
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(b)
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The
Employment Term shall commence on the Effective Date and shall end
on March 31, 2009, provided that the Employment Term may
terminate prior to the date specified above in this Subsection 3(b)
as provided in Section 6 hereof.
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(c)
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This Agreement will terminate
March 31, 2009, unless the Parties shall agree otherwise in
accordance with Section 17 hereof. If this Agreement
terminates without a new employment agreement having been executed
by the Company and Rhein by the date of such termination,
Rhein’s employment with the Company thereafter shall be at
will.
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4.
POSITION, DUTIES, AND RESPONSIBILITIES . At all times during
the Employment Term, Rhein shall:
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(a)
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Hold the position of President and
Chief Executive Officer of the Company reporting to the
Board;
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(b)
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Have those duties and
responsibilities, and the authority, customarily possessed by the
Chief Executive Officer of a major corporation and such additional
duties
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(5)
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as
may be assigned to Rhein from time to time by the Board which are
consistent with the position of Chief Executive Officer of a major
corporation;
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(c)
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For
so long as Rhein shall serve as Chief Executive Officer of the
Company, be nominated by the Board for election as a Director at
such time as the nominees for the class of Directors of which Rhein
is a member (as of the Effective Date, Class C) are being
proposed for election at the annual meeting of shareholders of the
Company;
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(d)
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Adhere to such reasonable written
policies and directives as may be promulgated from time to time by
the Board and which are applicable to executive officers of the
Company; and
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(e)
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Devote Rhein’s entire business
time, energy, and talent (subject to vacation time in accordance
with the Company’s policy applicable to executive officers,
illness or injury) to the business, and to the furtherance of the
purposes and objectives, of the Company, and neither directly nor
indirectly act as an employee of or render any business,
commercial, or professional services to any other person, firm or
organization for compensation, without the prior written approval
of the Board.
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Nothing in this
Agreement shall preclude Rhein from devoting reasonable periods of
time to charitable and community activities or the management of
Rhein’s investment assets, provided such activities do not
interfere with the performance by Rhein of Rhein’s duties
hereunder. Furthermore, service by Rhein on the boards of directors
of up to two (2) noncompeting companies (in addition to
affiliates of the Company) shall not be deemed to be a violation of
this Agreement, provided such service does not interfere with the
performance of Rhein’s duties hereunder.
5.
SALARY, BONUS AND BENEFITS . For services rendered by Rhein
on behalf of the Company during the Employment Term, the following
salary, bonus and benefits shall be provided to Rhein by the
Company during such Employment Term:
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(a)
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The
Company shall pay to Rhein, in equal installments, according to the
Company’s then current practice for paying its executive
officers in effect from time to time during the Employment Term, an
annual Base Salary at the rate of:
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(i)
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The
rate then in effect from the Effective Date through March 31,
2006; and
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(ii)
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The
rate of Seven Hundred Twenty-Five Thousand Dollars ($725,000.00)
effective April 1, 2006. This salary shall be subject to
annual review, at the beginning of each fiscal year of the Company
commencing with Fiscal Year 2008, by the Compensation Committee or
the Board and may be increased, but not decreased, to the extent,
if any, that the Compensation Committee, or the Board, may
determine. It is not anticipated that this amount will be increased
during the Employment Term.
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(6)
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(b)
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Rhein shall participate in the
Annual Incentive Plan. Rhein’s Target Annual Bonus will be
one hundred percent (100%) of his annual Base Salary, with a range
of zero percent (0%) to two hundred fifty percent (250%) of his
annual Base Salary.
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(c)
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Rhein shall be eligible for
participation in such other benefit plans, including, but not
limited to, the Company’s Retirement Plan, Severance Benefit
Plan, 2000 Stock Incentive Plan, Supplemental Executive Retirement
Plan, Benefit Equalization Plan, Short-Term and Long Term
Disability Plans, Group Term Life Insurance Plan, Medical Plan, and
Dental Plan, as the Company may adopt from time to time and in
which the Company’s executive officers, or employees in
general, are eligible to participate. This Subsection 5(c) shall
not be deemed to prevent participation in any special plan or
arrangement providing special benefits to Rhein which are not
available to other employees. Such participation shall be subject
to the terms and conditions set forth in the applicable plan
documents. As is more fully set forth in Section 9 hereof,
Rhein shall not be entitled to duplicative payments under this
Agreement and any Severance Benefit Plan.
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(d)
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Without limiting the generality of
Subsection 5(c) above, as soon as reasonably possible following the
Effective Date, and thereafter throughout the Employment Term,
Rhein shall be provided with life insurance protection, at the
Company’s expense, in an aggregate amount of not less than
two hundred percent (200%) of his earnings from the Company as
reported on IRS Form W-2 for the preceding calendar
year.
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(e)
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Without limiting the generality of
Subsection 5(c) above, Rhein shall be entitled to an automobile
allowance in accordance with the Company’s automobile policy
for its executive officers (but not less than Twelve Thousand
Dollars ($12,000.00) per year), an allowance for estate, financial
and tax planning of Ten Thousand Dollars ($10,000.00) per year, and
reimbursement for reasonable club dues and membership fees
consistent with the Company’s past practice.
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(f)
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Without limiting the generality of
Subsection 5(c) above, Rhein shall be entitled to director’s
and officer’s liability insurance coverage with respect to
claims against Rhein arising in connection with his activities
performed on behalf of or in connection with his service as an
officer or Director of the Company or any affiliate.
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6.
TERMINATION OF EMPLOYMENT . As indicated in Subsection 3(b),
the Employment Term may terminate prior to the date specified
therein as follows:
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(a)
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Death . Rhein’s employment hereunder
will terminate without further notice upon the death of
Rhein.
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(b)
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Disability . The Company may terminate
Rhein’s employment hereunder effective immediately upon
giving written notice of such termination for
“Disability.”
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(7)
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(c)
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Termination for Cause
. The Company may
terminate Rhein’s employment hereunder effective immediately
upon giving written notice of such termination for
“Cause.” In order for Rhein’s termination to be
deemed to be for Cause, the Company shall, within sixty
(60) days following the later of the event constituting Cause
or the Company’s actual knowledge thereof, give written
notice to Rhein on or before the date of termination of employment
for Cause stating that the Company is terminating Rhein’s
employment with the Company and specifying in detail the reasons
for such termination. If Rhein does not object to such notice by
notifying the Company in writing within ten (10) business days
following the date of Rhein’s receipt of the Company’s
notice of termination, Rhein shall be deemed to have agreed that
such termination was for Cause. If the Company fails to give such
timely notice of termination for Cause, its right to terminate
Rhein’s employment for Cause with respect to such event shall
be permanently waived. Non-notification by the Company with respect
to a specific event constituting Cause does not preclude the
Company from filing a notice with respect to a subsequent event
constituting Cause.
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(d)
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Termination Not for Cause
. The Company may
terminate Rhein’s employment hereunder without Cause at any
time upon thirty (30) days written notice.
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(e)
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Resignation for Good
Reason .
Rhein may terminate his employment hereunder effective immediately
upon giving written notice of such termination for “Good
Reason.” In order for Rhein’s termination to be deemed
to be for Good Reason, Rhein shall, within sixty (60) days
following the later of the event constituting Good Reason or his
actual knowledge thereof, give written notice to the Company on or
before the date of termination of employment for Good Reason
stating that Rhein is terminating employment with the Company and
specifying in detail the reasons for such termination. If the
Company does not object to such notice by notifying Rhein in
writing within ten (10) business days following the date of
the Company’s receipt of Rhein’s notice of termination,
the Company shall be deemed to have agreed that such termination
was for Good Reason. If Rhein fails to give such timely notice of
termination for Good Reason, his right to resign for Good Reason
with respect to such event shall be permanently waived.
Non-notification by Rhein with respect to a specific event
constituting Good Reason does not preclude Rhein from filing a
notice with respect to a subsequent event constituting Good
Reason.
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(f)
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Resignation Not for Good
Reason .
Rhein may terminate his employment hereunder without Good Reason at
any time upon thirty (30) days written notice.
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(g)
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Retirement . Rhein may terminate his employment
due to his Retirement.
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7.
SEVERANCE COMPENSATION . If Rhein’s employment
terminates, the following severance provisions will
apply:
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(a)
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Death . If Rhein’s employment is
terminated by his death, his estate or his beneficiaries, as the
case may be, shall be entitled to the following:
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(8)
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(i)
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Base Salary through the end of the
month of his death;
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(ii)
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Pro
Rata award under the Annual Incentive Plan for the year of his
death, payable when such awards are payable to other
officers;
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(iii)
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All
of Rhein’s then outstanding stock options, whether or not
then exercisable, shall become exercisable in full, and then
outstanding stock options which were granted to Rhein after
April 1, 2003, shall not terminate prior to the end of their
respective terms;
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(iv)
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Restrictions on Rhein’s
restricted stock shall lapse;
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(v)
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Director’s and officer’s
liability insurance coverage as described in Subsection 5(f) for
the two (2) year period following the date of his death;
and
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(vi)
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Such other benefits shall be payable
as shall be provided under the relevant plans and arrangements of
the Company.
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(b)
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Disability . If Rhein’s employment is
terminated due to his Disability, he shall be entitled to the
following:
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(i)
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Base Salary through the end of the
month of the termination of his employment;
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(ii)
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Pro
Rata award under the Annual Incentive Plan for the year of his
termination of employment, payable when such awards are payable to
other officers;
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(iii)
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All
of Rhein’s then outstanding stock options, whether or not
then exercisable, shall become exercisable in full, and then
outstanding stock options which were granted to Rhein after
April 1, 2003, shall not terminate prior to the end of their
respective terms;
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(iv)
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Restrictions on Rhein’s
restricted stock shall lapse;
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(v)
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Director’s and officer’s
liability insurance coverage as described in Subsection 5(f) until
the later of the date on which Rhein attains age sixty-five
(65) or the date which is two (2) years from the date of such
termination of employment;
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(vi)
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Such other benefits shall be payable
as shall be provided under the relevant plans and arrangements of
the Company; and
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(vii)
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Rhein’s life insurance
provided under Subsection 5(d) and medical insurance coverage
substantially equivalent to the coverage to Rhein, his spouse and
dependents provided under the Company’s Medical Plan at the
time of such termination due to Rhein’s Disability shall
continue in effect until Rhein attains age sixty-five
(65).
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(9)
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(c)
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Retirement . If Rhein’s employment is
terminated due to his Retirement, he shall be entitled to the
following:
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(i)
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Base Salary through the end of the
month of the termination of his employment;
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(ii)
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Pro
Rata award under the Annual Incentive Plan for the year of his
termination of employment, payable when such awards are payable to
other officers;
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(iii)
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All
of Rhein’s then outstanding stock options, whether or not
then exercisable, shall become exercisable in full, except for
options granted on or after the Effective Date of this Agreement
(which options shall not become exercisable to any greater
extent after such termination even in the event of his death or
disability following such termination of employment) but then
outstanding stock options which were granted to Rhein after
April 1, 2003, shall not terminate prior to the end of their
respective terms;
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(iv)
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Director’s and officer’s
liability insurance coverage as described in Subsection 5(f) until
the later of the date on which Rhein attains age sixty-five
(65) or the date which is two (2) years from the
date
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