Exhibit 10.18
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EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of July 27, 1998, by and between The
Limited Inc. and The Limited Service Corporation a Delaware corporation (the
"Company"), and Xxxxxx X. Xxxxxxxxx (the "Executive")(hereinafter collectively
referred to as "the parties").
WHEREAS, the Executive has heretofore been employed as Senior Vice
President, Brand and Business Planning of The Limited, Inc. and is experienced
in all phases of its business and possesses an intimate knowledge of the
business and affairs of the Company and its policies, procedures, methods and
personnel; and
WHEREAS, the Company has determined that it is essential and in its best
interests to retain the services of key management personnel and to ensure their
continued dedication and efforts; and
WHEREAS, the Compensation Committee of the Board of Directors of the
Company (the "Board") has determined that it is in the best interest of the
Company to secure the continued services and employment of the Executive and the
Executive is willing to render such services on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and the respective
agreements of the parties contained herein, the parties hereby agree as follows:
1. Term. The initial term of employment under this Agreement shall be
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for the period commencing on the date hereof (the "Commencement Date") and
ending on the sixth anniversary of the Commencement Date (the "Initial Term");
provided, however, that upon the expiration of the Initial Term, this Agreement
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shall be automatically extended for a period of one year, unless either the
Company or the Executive shall have given written notice to the other at least
ninety (90) days prior thereto that the term of this Agreement shall not be so
extended.
2. Employment.
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a. Position. The Executive shall be employed as the Senior Vice
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President, Brand and Business Planning of The Limited, Inc. or such other
position of reasonably comparable or greater status and responsibilities as may
be determined by the Board with any division, subsidiary or affiliate of the
Company. The Executive shall perform the duties, undertake the responsibilities
and exercise the authority customarily performed, undertaken and exercised by
persons employed in a similar executive capacity. The Executive shall report to
the Chairman and CEO of The Limited, Inc., or other designee as appointed by
the Chairman.
b. Obligations. The Executive agrees to devote his full business
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time and attention to the business and affairs of the Company. The foregoing,
however, shall not
preclude the Executive from serving on corporate, civil or charitable boards or
committees of managing personal investments, so long as such activities do not
interfere with the performance of the Executive's responsibilities hereunder.
3. Base Salary. The Company agrees to pay or cause to be paid to the
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Executive during the term of this Agreement a base salary at the rate of
$450,000. This base salary will be subject to annual review and may be increased
from time to time by the Board considering factors such as the executive's
responsibilities, compensation of similar executives within the company and in
other companies, performance of the executive and other pertinent factors
(hereinafter referred to as the "Base Salary"). Such Base Salary shall be
payable in accordance with the Company's customary practices applicable to its
executives.
4. Equity Compensation. The Company has granted to the Executive
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options to acquire 100,000 shares of the Company's common stock pursuant to the
terms of the agreement attached hereto as Exhibit A.
5. Employee Benefits. The Executive shall be entitled to participate in
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all employee benefit plans, practices and programs maintained by the Company and
made available to senior executives generally and as may be in effect from time
to time. The Executive's participation in such plans, practices and programs
shall be on the same basis and terms as are applicable to senior executives of
the Company generally.
6. Bonus. The Executive shall be entitled to participate in the
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Company's applicable incentive compensation plan on such terms and conditions as
may be determined from time to time by the Board.
7. Other Benefits.
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(a) Life Insurance.
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(1) During the term of the Agreement, the Company shall
maintain term life insurance coverage on the life of the Executive in the amount
of $2,000,000, the proceeds of which shall be payable to the beneficiary or
beneficiaries designated by the Executive. The Executive agrees to undergo any
reasonable physical examination and other procedures as may be necessary to
maintain such policy. If the Company is not able to obtain such policy due to
Executive's physical examination results, an AD&D (accidental death and
dismemberment) policy of an equivalent amount will be obtained in lieu of the
term life insurance coverage.
(2) During the term of this Agreement, the Company shall
be entitled to maintain a "key person" term life insurance policy on the life of
the Executive, the proceeds of which shall be payable to the Company or its
designees. The Executive agrees to undergo any reasonable physical examination
and other procedures as may be necessary to maintain such policy.
(b) Expenses. Subject to applicable Company policies, the
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Executive shall be entitled to receive prompt reimbursement of all expenses
reasonably incurred by him in connection with the performance of his duties
hereunder or for promoting, pursuing or otherwise furthering the business or
interests of the Company.
(c) Office and Facilities. The Executive shall be provided with an
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appropriate office and with such secretarial and other support facilities as
are commensurate with the Executive's status with the Company and adequate for
the performance of those duties hereunder.
8. Vacation. The Executive shall be entitled to annual vacation in
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accordance with the policies as periodically established by the Board for
similarly situated executives of the Company.
9. Termination. The Executive's employment hereunder may be terminated
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under the following circumstances:
(a) Disability. The Company shall be entitled to terminate the
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Executive's employment after having established the Executive's Disability. For
purposes of this Agreement, "Disability" means a physical or mental infirmity
which impairs the Executive's ability to substantially perform those duties
under this Agreement for a period of at least six (6) months in any 12 month
calendar period as determined in accordance with the The Limited, Inc. Long-Term
Disability Plan.
(b) Cause. The Company shall be entitled to terminate the
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Executive's employment for "Cause" without prior written notice. For purposes of
this Agreement, "Cause" shall mean that the Executive (1) willfully failed to
perform those duties with the Company (other than a failure resulting from the
Executive's incapacity due to physical or mental illness); or (2) has plead
"guilty" or "no contest" to or has been convicted of an act which is defined as
a felony under federal or state law; or (3) engaged in willful misconduct in bad
faith which could reasonably be expected to materially harm the Company's
business or its reputation.
The Executive shall be given written notice by the Board of
termination for Cause, such notice to state in detail the particular act or acts
or failure or failures to act that constitute the grounds on which the proposed
termination for Cause is based. The Executive shall be entitled to a hearing
before the Board or a committee thereof established for such purpose and to be
accompanied by legal counsel. Such hearing shall be held within 15 days of
notice to the Company by the Executive, provided the Executive requests such
hearing within 30 days of the written notice from the Board of the termination
for Cause.
(c) Termination by the Executive. The Executive may terminate
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employment hereunder for "Good Reason" by delivering to the Company (1) a
Preliminary Notice of Good Reason (as defined below), and (2) not earlier than
thirty (30) days from the delivery of such Preliminary Notice, a Notice of
Termination. For purposes of this Agreement, "Good Reason" means (i) the failure
to continue the Executive as Senior Vice President, Brand
and Business Planning of The Limited, Inc. or such other capacity as
contemplated by Section 2 hereof; (ii) the assignment to the Executive of any
duties materially inconsistent with the Executive's positions, duties,
authority, responsibilities and reporting requirements as set forth in Section 2
hereof; (iii) a reduction in or a material delay in payment of the Executive's
total cash compensation and benefits from those required to be provided in
accordance with the provisions of this Agreement; (iv) the Company, the Board or
any person controlling the Company requires the Executive to be based outside of
the United States, other than on travel reasonably required to carry out the
Executive's obligations under the Agreement or (v) the failure of the Company to
obtain the assumption in writing of its obligation to perform this Agreement by
any successor to all or substantially all of the assets of the Company within 15
days after a merger, consolidation, sale or similar transaction; provided,
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however, that "Good Reason" shall not include (A) acts not taken in bad faith
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which are cured by the Company in all respects not later than thirty (30) days
from the date of receipt by the Company of a written notice from the Executive
identifying in reasonable detail the act or acts constituting "Good Reason" (a
"Preliminary Notice of Good Reason") or (B) acts taken by the Company by reason
of the Executive's physical or mental infirmity which impairs the Executive's
ability to substantially perform the duties under this Agreement. A Preliminary
Notice of Good Reason shall not, by itself, constitute a Notice of Termination.
(d) Notice of Termination. Subject to SEction 9(b), any
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purported termination by the Company or by the Executive shall be communicated
by a written Notice of Termination to the other two weeks prior to the
Termination Date (as defined below). For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which indicates the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated. For purposes of this
Agreement, no such purported termination of employment shall be effective
without such Notice of Termination.
(e) Termination Date, Etc. "Termination Date" shall mean in the
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case of the Executive's death, the date of death, or in all other cases, the
date specified in the Notice of Termination; provided, however, that if the
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Executive's employment is terminated by the Company due to Disability, the date
specified in the Notice of Termination shall be at least thirty (30) days from
the date the Notice of Termination is given to the Executive.
10. Compensation Upon Termination.
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(a) If during the term of this Agreement (including any
extensions thereof), the Executive's employment is terminated by the Company for
Cause, by reason of the Executive's death or if the Executive gives written
notice not to extend the term of this Agreement, the Company's sole obligation
hereunder shall be to pay the Executive the following amounts earned hereunder
but not paid as of the Termination Date: (i) Base Salary, (ii) reimbursement for
any and all monies advanced or expenses incurred pursuant to Section 7(b)
through the Termination Date, and (iii) any earned compensation which the
Executive had previously deferred (including any interest earned or credited
thereon) (collectively, "Accrued
Compensation"), provided, however, that if the Executive gives such written
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notice not to extend, the Company shall continue to pay the premiums provided
for in Section 7(a)(1) through the end of the calendar year in which the
Executive's termination occurs. The Executive's entitlement to any other
benefits shall be determined in accordance with the Company's employee benefit
plans then in effect.
(b) If the Executive's employment is terminated by the Company other
than for Cause or by the Executive for Good Reason, the Company's sole
obligation hereunder shall be as follows:
(i) the Company shall pay the Executive the Accrued
Compensation;
(ii) the Company shall continue to pay the Executive the Base
Salary for a period of one (1) year following the Termination Date;
and
(iii) the Company shall continue to pay the premiums provided for
in Section 7(a)(1) hereof through the end of the calendar year in
which such termination occurs.
(c) If the Executive's employment is terminated by the Company by
reason of the Executive's Disability, the Company's sole obligation hereunder
shall be as follows:
(i) the Company shall pay the Executive the Accrued
Compensation;
(ii) the Company shall continue to pay the Executive 100% of the
Base Salary for the first twelve months following the Termination
Date, 80% of the Base Salary for the second twelve months following
the Termination Date, and 60% of the Base Salary for the third twelve
months following the Termination Date; provided, however, that such
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Base Salary shall be reduced by the amount of any benefits the
Executive receives by reason of his Disability under the Company's
relevant disability plan or plans; and
(iii) if the Executive is disabled beyond thirty-six (36) months,
the Company shall continue to pay the Executive 60% of Base Salary up
to a maximum of $250,000 per year for the period of the Executive's
Disability, as defined in the Company's relevant disability plans;
provided, however, that such payments shall be reduced by the amount
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of any benefits the Executive receives by reason of his Disability
under the Company's relevant disability plan or plans; and
(iv) the Company shall continue to pay the premiums provided for
in Section 7(a)(1) hereof through the end of the calendar year in
which such termination occurs.
(d) If the Executive's employment is terminated by reason of the Company's
written notice to the Executive of its decision not to extend the term of this
Agreement as contemplated in Section 1 hereof, the Company's sole obligation
hereunder shall be as follows:
(i) the Company shall pay the Executive the Accrued
Compensation;
(ii) the Company shall continue to pay the Executive the Base
Salary for a period of one (1) year following the expiration of such
term; and
(iii) the Company shall continue to pay the premiums provided for
in Section 7(a)(1) hereof through the end of the calendar year in
which the Executive's termination occurs.
(e) During the period the Executive is receiving salary continuation
pursuant to Section 10(b)(ii), 10(c)(ii) or 10(d)(ii) hereof, the Company
shall, at its expense, provide to the Executive and the Executive's
beneficiaries medical and dental benefits substantially similar in the aggregate
to those provided to the Executive immediately prior to the date of the
Executive's termination of employment; provided, however, that the Company's
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obligation with respect to the foregoing benefits shall be reduced to the extent
that the Executive or the Executive's beneficiaries obtains any such benefits
pursuant to a subsequent employer's benefit plans.
(f) The Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise
and no such payment shall be offset or reduced by the amount of any compensation
provided to the Executive in any subsequent employment.
11. Employee Covenants.
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(a) Unauthorized Disclosure. The Executive shall not, during the term of
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this Agreement and thereafter, make any Unauthorized Disclosure. For purposes of
this Ageement, "Unauthorized Disclosure" shall mean disclosure by the Executive
without the prior written consent of the Board to any person, other than an
employee of the Company or a person to whom disclosure is reasonably necessary
or appropriate in connection with the performance by the Executive of duties as
an executive of the Company or as may be legally required, of any information
relating to the business or prospects of the Company (including, but not limited
to, any confidential information with respect to any of the Company's customers,
products, methods of distribution, strategies, business and marketing plans and
business policies and practices); provided, however, that such term shall not
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include the use or
disclosure by the Executive, without consent, of any information known generally
to the public (other than as a result of disclosure by the Executive in
violation of this Section 11(a)). This confidentiality covenant has no temporal,
geographical or territorial restriction.
(b) Non-Competition. During the Non-Competition Period described below, the
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Executive shall not, directly or indirectly, without the prior written consent
of the Company, own, manage, operate, join, control, be employed by, consult
with or participate in the ownership, management, operation or control of, or be
connected with (as a stockholder, partner, or otherwise), any business,
individual, partner, firm, corporation, or other entity that competes, directly
or indirectly, with the Company or any division, subsidiary or affiliate of the
Company; provided, however, that the "beneficial ownership" by the Executive
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after termination of employment with the Company, either individually or as a
member of a "group," as such terms are used in Rule 13d of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), of not more than two percent (2%) of the voting stock of any publicly
held corporation shall not be a violation of Section 11 of this Agreement.
The "Non-Competition Period" means the period the Executive is employed by
the Company plus one (1) year from the Termination Date if the Executive's
employment is terminated (i) by the Company for any reason, (ii) by the
Executive for any reason, or (iii) by reason of either the Company's or the
Executive's decision not to extend the term of this Agreement as contemplated by
Section 1 hereof.
(c) Non-Solicitation. During the No-Raid Period described below, the
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Executive shall not, either directly or indirectly, alone or in conjunction with
another party, interfere with or harm, or attempt to interfere with or harm, the
relationship of the Company, its subsidiaries and/or affiliates, with any person
who at any time was an employee, customer or supplier of the Company, its
subsidiaries and/or affiliates or otherwise had a business relationship with the
Company, its subsidiaries and/or affiliates.
The "No-Raid Period" means the period the Executive is employed by the
Company plus one (1) year from the Termination Date if the Executive's
employment is terminated (i) by the Company for any reason except by reason of
the Executive's Disability, (ii) by the Executive for any reason, or (iii) by
reason of either the Company's or the Executive's decision not to extend the
term of this Agreement as contemplated by Section 1 hereof.
(d) Remedies. The Executive agrees that any breach of the terms of this
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Section 11 would result in irreparable injury and damage to the Company for
which the Company would have no adequate remedy at law; the Executive therefore
also agrees that in the event of said breach or any threat of breach, the
Company shall be entitled to an immediate injunction and restraining order to
prevent such breach and/or threatened breach and/or continued breach by the
Executive and/or any and all persons and/or entities acting for and/or with the
Executive, without having to prove damages, and to all costs and expenses,
including
reasonable attorneys' fees and costs, in addition to any other remedies to which
the Company may be entitled at law or in equity. The terms of this paragraph
shall not prevent the Company from pursuing any other available remedies for any
breach or threatened breach hereof, including but not limited to the recovery of
damages from the Executive. The Executive and the Company further agree that the
provisions of the covenants not to compete and solicit are reasonable and that
the Company would not have entered into this Agreement but for the inclusion of
such covenants herein. Should a court determine, however, that any provision of
the covenants is unreasonable, either in period of time, geographical area, or
otherwise, the parties hereto agree that the covenant should be interpreted and
enforced to the maximum extent which such court or arbitrator deems reasonable.
The provisions of this Section 11 shall survive any termination of this
Agreement, and the existence of any claim or cause of action by the Executive
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of the covenants and
agreements of this Section 11; provided, however, that this paragraph shall not,
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in and of itself, preclude the Executive from defending himself against the
enforceability of the covenants and agreements of this Section 11.
12. Limitation of Payments.
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(a) Gross-Up Payment. In the event it shall be determined that any payment
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or distribution of any type to or for the benefit of the Executive, by the
Company, any of its affiliates, any Person who acquires ownership or effective
control of the Company or ownership of a substantial portion of the Company's
assets (within the meaning of Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code"), and the regulations thereunder) or any affiliate of
such Person, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (the "Total Payments"), would be
subject to the excise tax imposed by Section 4999 of the Code or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties, are collectively referred to as the "Excise Tax"),
then the Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Total Payments (not including any Gross-Up Payment).
(b) All determinations as to whether any of the Total Payments are
"parachute payments" (within the meaning of Section 280G of the Code), whether a
Gross-Up Payment is required, the amount of such Gross-Up Payment and any
amounts relevant to the last sentence of Subsection 12(a), shall be made by an
independent accounting firm selected by the Company from among the largest six
accounting firms in the United States (the "Accounting Firm"). The Accounting
Firm shall provide its determination (the "Determination"), together with
detailed supporting calculations regarding the amount of any Gross-Up Payment
and any other relevant matter, both to the Company and the Executive
within five (5) days of the Termination Date, if applicable, or such earlier
time as is requested by the Company or the Executive (if the Executive
reasonably believes that any of the Total Payments may be subject to the Excise
Tax). Any determination by the Accounting Firm shall be binding upon the Company
and the Executive. As a result of uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that the Company should have made Gross-Up Payments
("Underpayment"), or that Gross-Up Payments will have been made by the Company
which should not have been made ("Overpayments"). In either such event, the
Accounting Firm shall determine the amount of the Underpayment or Overpayment
that has occurred. In the case of an Underpayment, the amount of such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive. In the case of an Overpayment, the Executive shall, at the direction
and expense of the Company, take such steps as are reasonably necessary
(including the filing of returns and claims for refund), follow reasonable
instructions from, and procedures established by, the Company, and otherwise
reasonably cooperate with the Company to correct such Overpayment.
13. Employee Representation. The Executive expressly represents and
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warrants to the Company that the Executive is not a party to any contract or
agreement and is not otherwise obligated in any way, and is not subject to any
rules or regulations, whether governmentally imposed or otherwise, which will or
may restrict in any way the Executive's ability to fully perform the Executive's
duties and responsibilities under this Agreement.
14. Successors and Assigns.
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(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and the Company shall require
any successor or assign to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place. The term "the
Company" as used herein shall include any such successors and assigns to the
Company's business and/or assets. The term "successors and assigns" as used
herein shall mean a corporation or other entity acquiring or otherwise
succeeding to, directly or indirectly, all or substantially all the assets and
business of the Company (including this Agreement) whether by operation of law
or otherwise.
(b) Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, the Executive's
beneficiaries or legal representatives, except by will or by the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
15. Arbitration. Except with respect to the remedies set forth in
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Section 11(d) hereof, if in the event of any controversy or claim between the
Company or any of its affiliates and the Executive arising out of or relating to
this Agreement, either party delivers to the other party a written demand for
arbitration of a controversy or claim then such claim or controversy
shall be submitted to binding arbitration. The binding arbitration shall be
administered by the American Arbitration Association under its Commercial
Arbitration Rules. The arbitration shall take place in Columbus, Ohio. Each of
the Company and the Executive shall appoint one person to act as an arbitrator,
and a third arbitrator shall be chosen by the first two arbitrators (such three
arbitrators, the "Panel"). The Panel shall have no authority to award punitive
damages against the Company or the Executive. The arbitrator shall have no
authority to add to, alter, amend or refuse to enforce any portion of the
disputed agreements. The Company and the Executive each waive any right to a
jury trial or to petition for stay in any action or proceeding of any kind
arising out of or relating to this Agreement.
16. Notice. For the purposes of this Agreement, notices and all other
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communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by registered or certified mail, return
receipt requested, postage prepaid, or upon receipt if overnight delivery
service or facsimile is used, addressed as follows:
To the Executive:
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Xxxxxx X. Xxxxxxxxx
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
To the Company:
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The Limited, Inc.
0 Xxxxxxx Xxxxxxx
Xxxxxxxx, Xxxx 00000
Attn: Secretary
17. Settlement of Claims. The Company's obligation to make the
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payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
18. Miscellaneous. No provision of this Agreement may be modified,
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waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
19. Governing Law. This Agreement shall be governed by and construed
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and enforced in accordance with the laws of the State of Ohio without giving
effect to the conflict of law principles thereof.
20. Severability. The provisions of this Agreement shall be deemed
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severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
21. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, if any, understandings and arrangements, oral
or written, between the parties hereto with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
THE LIMITED, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Chairman of the Board
/s/ X.X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx
