1
Exhibit 10.22
SEVERANCE AGREEMENT
June 13, 1996
THIS AGREEMENT between Xxxxxxx Fabrics, Inc., a Delaware corporation
(the "Corporation"), and Xxxxx X. Fair whose address is 0000 Xxxxxxxxxxx Xxxx,
Xxx Xxxxxx, XX 00000 (the "Executive"), dated as of June 13, 1996.
W I T N E S S E T H :
WHEREAS, the Corporation wishes to attract and retain well-qualified
executive and key personnel and, in the event of any Change of Control (as
defined in Section 2) of the Corporation, to assure both itself and the
Executive of continuity of management; and
WHEREAS, no benefits shall be payable under this Agreement unless the
Effective Date shall occur and thereafter the Executive's employment is
terminated; and
WHEREAS, the employment of the Executive is "at will" and may be
terminated by the Corporation without payment of any benefits hereunder until
the occurrence of a Change of Control;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Corporation and the
Executive as follows:
1. Operation of Agreement. No benefits shall be payable
hereunder unless a Change of Control (as defined in Section 2) occurs during
the Change of Control Period (as defined in Section 3). For the purposes of
this Agreement the date on which
-1-
2
such a Change of Control occurs is referred to herein as the "Effective Date."
2. Change of Control. For the purposes of this Agreement, a
"Change of Control" shall mean a change of control of a nature that would be
required to be reported by the Corporation in response to Item 1(a) of the
Current Report on Form 8-K (or its successor Item or Form, as the case may be),
as in effect on the date hereof (or from time to time thereafter), pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 0000 (xxx "Xxxxxxxx
Xxx"); provided that, without limitation, such a "Change of Control" shall be
deemed to have occurred if: (i) a third person, including a "group" as defined
in Section 13(d)(3) of the Exchange Act, becomes the beneficial owner, directly
or indirectly, of 20% or more of the combined voting power of the Corporation's
outstanding voting securities ordinarily having the right to vote for the
election of directors of the Corporation or (ii) individuals who constitute the
Board of Directors of the Corporation as of the date hereof (the "Incumbent
Board") cease for any reason to constitute at least two-thirds thereof,
provided that any person becoming a director subsequent to the date hereof
whose election, or nomination for election by the Corporation's stockholders,
was approved by a vote of at least three-quarters of (or if less, all but one
of) the directors comprising the Incumbent Board (other than an election or
nomination in connection with an actual or threatened election contest relating
to the election of directors of the Corporation, as such terms are used in Rule
14a-11 of the Regulation 00X
-0-
0
xxxxxxxxxxx xxxxx xxx Xxxxxxxx Xxx) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent Board.
3. Change of Control Period. The "Change of Control Period" is
the period commencing on the date of this Agreement and ending on the earlier
to occur of (i) May 4, 1999 or (ii) the first day of the month coinciding with
or next following the Executive's 65th birthday. The expiration of the Change
of Control Period shall not limit the Corporation's obligation to provide, or
the Executive's right to collect, payments and benefits pursuant to Section 5
and Section 10 hereof.
4. Certain Definitions.
(a) Death or Disability. The Executive's employment
shall terminate automatically upon the Executive's death ("Death"). The
Corporation will be considered to have terminated the Executive's employment
for Disability, if after having established the Executive's Disability (as
defined below), the Executive receives written notice given in accordance with
Section 9(b) of the Corporation's intention to terminate his employment. The
Executive's employment will terminate for Disability effective on the 90th day
after receipt of such notice if within such 90-day period after such receipt
the Executive shall fail to return to full-time performance of his duties (the
"Disability Effective Date"). For purposes of this Agreement, "Disability"
means a disability that, after the expiration of more than 180 days after its
commencement, is determined to be total and permanent by a physician selected
by the Corporation or
-3-
4
its insurers and acceptable to the Executive or his legal representative (such
agreement as to acceptability not to be withheld unreasonably).
Consistent with, and not in limitation of, the provisions of Section 6
of this Agreement, neither a termination for, nor a determination of,
Disability pursuant to this Section 4(a) shall be deemed in and of itself a
termination for or determination of disability with respect to the Executive's
eligibility to receive long-term disability benefits, continued medical,
dental, or life insurance coverage, retirement benefits, or benefits under any
other plan or program provided by the Corporation or one of its affiliated
companies and for which the Executive may qualify.
(b) Cause. The Executive's employment will be terminated
for Cause if the majority of the Incumbent Board determines that Cause (as
defined in this Agreement) exists. For purposes of this Agreement, "Cause"
means (i) an act or acts of fraud or misappropriation on the Executive's part
that result in or are intended to result in his personal enrichment at the
expense of the Corporation or one of its affiliated companies or (ii)
conviction of a felony.
(c) Good Reason. For purposes of this Agreement, "Good
Reason" means
(i) without the express written consent of the
Executive, (A) the assignment to the Executive of any duties inconsistent in
any substantial respect with the Executive's position, authority or
responsibilities as in effect during the 90-day period immediately preceding
the Effective Date, or
-4-
5
(B) any other substantial adverse change in such position (including titles and
reporting requirements), authority or responsibilities;
(ii) any failure by the Corporation to
furnish the Executive and/or, where applicable, his family with compensation
(including annual bonus) and benefits at a level equal to or exceeding those
received (on an annual basis) by the Executive from the Corporation during the
90-day period preceding the Effective Date, including a failure by the
Corporation to maintain the Corporation's extra compensation plan ("Extra
Compensation Plan") (including the right to defer the receipt of payments
thereunder) and the Corporation's supplemental retirement benefit plan
("SERP"), other than an insubstantial and inadvertent failure remedied by the
Corporation promptly after receipt of notice thereof given by the Executive;
(iii) the Corporation's requiring the
Executive to be based or to perform services at any office or location other
than that at which the Executive is primarily based during the 90-day period
preceding the Effective Date, except for travel reasonably required in the
performance of the Executive's responsibilities; or
(iv) any failure by the Corporation to
obtain the assumption and agreement to perform this Agreement by a successor as
contemplated by Section 8(b).
For the purposes of this Section 4(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
-5-
6
(d) [Reserved].
(e) Notice of Termination. Any termination by the
Corporation for Cause or by the Executive for Good Reason shall be communicated
by Notice of Termination to the other party hereto given in accordance with
Section 9(b). Any notice of termination by the Corporation for Disability
shall be given in accordance with Section 4(a). For purposes of this
Agreement, a "Notice of Termination" means a written notice that (i) indicates
the specific termination provision in this Agreement relied upon, (ii) sets
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 and (iii) if the termination date is other than the date of receipt
of such notice, specifies the termination date (which date shall not be more
than 15 days after the giving of such notice).
(f) Date of Termination. Date of Termination means the
date of receipt of the Notice of Termination or any later date specified
therein as the termination date, as the case may be, or if the Executive's
employment is terminated by the Corporation for any reason other than Cause,
Death or Disability, the date on which the Corporation notifies the Executive
of such termination. Notwithstanding any contrary provision in this Section
4(f), if the Executive's employment terminates due to Disability, the Date of
Termination shall be the Disability Effective Date.
(g) The term "Xxxxxxx Textile" shall mean Xxxxxxx
Textile Co., Inc., a Mississippi corporation.
-6-
7
(h) When the terms "the 90-day period preceding the
Effective Date," "within five fiscal years prior to the Effective Date," or
"the Plan Year prior to the Effective Date" are used herein they shall include
the Executive's period of employment with Xxxxxxx Textile immediately prior to
his employment with the Corporation.
5. Obligations of the Corporation Upon Termination.
(a) Good Reason Other Than For Cause, Death or
Disability. Regardless of whether the Change of Control Period has expired,
if, within three years of the Effective Date, (i) the Corporation shall
terminate the Executive's employment for any reason other than for Cause, Death
or Disability, or (ii) the Executive shall terminate his employment for Good
Reason:
(I) the Corporation shall pay to the Executive in
a lump sum in cash within 20 days after the Date of Termination the aggregate
of the amounts determined pursuant to the following clauses (A) and (B):
(A) if not theretofore paid, the
Executive's base salary through the Date of Termination at the rate in effect
at the time the Notice of Termination was given; and
(B) the sum of (x) the Executive's
annual base salary at the rate in effect at the time the Notice of Termination
was given, or if higher, at the highest rate in effect at any time within the
90-day period preceding the Effective Date and (y) an amount equal to the
highest bonus paid or payable to the Executive pursuant to the Extra
Compensation
-7-
8
Plan or any successor plan thereto (or any predecessor plan maintained by
Xxxxxxx Textile) within five fiscal years prior to the Effective Date,
provided, however, that in no event shall the Executive be entitled to receive
under this clause (B) more than the product obtained by multiplying the amount
determined as hereinabove provided in this clause (B) by a fraction whose
numerator shall be the number of months (including fractions of a month) that
at the Date of Termination remain until the first day of the month coinciding
with or next following the Executive's 65th birthday and whose denominator
shall equal twelve (12); and
(II) until the earlier to occur of (i) the date
one year following the Date of Termination, or (ii) the first day of the first
month coinciding with or next following the Executive's 65th birthday (the
period of time from the Date of Termination until the earlier of (i) or (ii) is
hereinafter referred to as the "Unexpired Period"), the Corporation shall
continue to provide all benefits that the Executive and/or his family is or
would have been entitled to receive under all medical, dental, vision,
disability, executive life, group life, accidental death and travel accident
insurance plans and programs of the Corporation and its affiliated companies,
in each case on a basis providing the Executive and/or his family with the
opportunity to receive benefits at least equal to those provided by the
Corporation and its affiliated companies for the Executive under such plans and
programs if and as in effect at any time during the 90-day period preceding the
Effective Date.
-8-
9
(III) Within 20 days after the Date of Termination
the Corporation shall pay to the Executive and/or his beneficiary, as the case
may be, a lump sum in cash in the amount of the present value of periodic
payments equal to the excess, if any, of the "Enhanced SERP Benefits" over the
amount of benefits, if any, the Executive and/or his beneficiary, as the case
may be, has actually received (or is then currently entitled to receive) from
the SERP. For purposes of this Section 5(a), the "Enhanced SERP Benefits"
shall equal the amount of benefits under the SERP the Executive and/or his
beneficiary would have received had the benefits under Section 4.1(i) of the
SERP been determined by considering the Executive (a) to have been employed for
an additional period of time equal to the Unexpired Period; (b) to have been a
member of the SERP for an additional period of time equal to the Unexpired
Period; (c) to have retired at the age he would have attained at the end of the
Unexpired Period; (d) to have had compensation for such additional Plan Years
(as such term is defined for purposes of the SERP) equal to the Executive's
earnings (including bonus under the Extra Compensation Plan or any predecessor
plan maintained by Xxxxxxx Textile) for the Plan Year prior to the Effective
Date; and (e) to be vested in a fraction (not to exceed 1) of his benefit under
the Xxxxxxx Fabrics, Inc. Consolidated Retirement Plan (the "Retirement Plan")
and the SERP equal to the quotient obtained by dividing (i) the years of
service for vesting purposes the Executive would have had under the Retirement
Plan if he had been employed for an additional period of time equal to the
Unexpired
-9-
10
Period by (ii) the number of years of service for vesting purposes that (as of
the Date of Termination) are required before a participant in the Retirement
Plan is considered to be fully vested under the Retirement Plan (the
determination and payment of the amount payable under this paragraph (III) to
be pursuant to Section 11); and
(IV) for purposes of any written agreement between
the Executive and the Corporation relating to the payment of compensation to
the Executive on a deferred basis, the Executive shall be deemed to have
remained in the employment of the Corporation on a full-time basis until the
Executive's 60th birthday.
6. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Corporation
or any of its affiliated companies and for which the Executive may qualify, nor
shall anything herein limit or otherwise affect such rights as the Executive
may have under any employment, stock option or other agreements with the
Corporation or any of its affiliated companies. Amounts that are vested
benefits or that the Executive is otherwise entitled to receive under any plan
or program of the Corporation or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with such
plan or program.
7. Full Settlement. The payments provided for in this Agreement
are in full settlement of any claims the Executive may
-10-
11
have against the Corporation arising out of his termination, including, but not
limited to, any claims for wrongful discharge. The Corporation's obligation to
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any setoff, counterclaim, recoupment, defense or other
right that the Corporation may have against the Executive or others; provided,
however, that the Corporation's failure to make any such setoff shall not
constitute a waiver of any claim of the Corporation against the Executive. In
no event shall the Executive be obligated to seek other employment by way of
mitigation of the amounts payable to the Executive under any of the provisions
of this Agreement. The Corporation agrees to pay, to the full extent permitted
by law, all legal fees and expenses the Executive may reasonably incur as a
result of any contest (regardless of the outcome thereof) by the Corporation or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof, in each case plus
interest, compounded monthly, on the total unpaid amount determined to be
payable under this Agreement, such interest to be calculated on the basis of
the prime commercial lending rate announced by Xxxxxx Guaranty Trust Company of
New York, in effect from time to time during the period of such non-payment.
8. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Corporation shall not be
-11-
12
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive's legal representatives, executors, heirs and legatees.
(b) This Agreement shall inure to the benefit of and be
binding upon the Corporation and its successors. The Corporation shall require
any successor to all or substantially all of the business and/or assets of the
Corporation, whether directly or indirectly, by purchase, merger,
consolidation, acquisition of stock, or otherwise, by an agreement in form and
substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent as the
Corporation would be required to perform if no such succession had taken place.
9. Miscellaneous.
(a) The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
At the address first hereinabove written.
-12-
13
If to the Corporation:
Xxxxxxx Fabrics, Inc.
0000 X. Xxxx Xxxxxx
P.O. Box 2400
Tupelo, Mississippi 38003-2400
Attn: Corporate Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Corporation may withhold from any amounts payable
under this Agreement such federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation, provided, however,
that such withholding shall be consistent with the calculations made by
Accounting Firm under Section 10 of the Agreement.
(e) This Agreement contains the entire understanding with
the Executive with respect to the subject matter hereof.
(f) Whenever used in this Agreement, the masculine gender
shall include the feminine or neuter wherever necessary or appropriate and vice
versa and the singular shall include the plural and vice versa.
(g) The Executive and the Corporation acknowledge that
the employment of the Executive by the Corporation is "at will" and may be
terminated by either the Executive or the Corporation at any time and for any
reason. Nothing contained in the
-13-
14
Agreement shall affect such rights to terminate, it being agreed, however, that
nothing in this Section 9(g) shall prevent the Executive from receiving any
amounts payable pursuant to Section 5(a), or 10 of this Agreement in the event
of a termination described in such Section 5(a), or 10 on or after the
Effective Date.
10. Penalty Taxes.
(a) Payment. In the event that the Accounting Firm
determines that any payment or other compensation or benefits made or provided
to or for the benefit of the Executive in any way connected with employment of
the Executive by the Corporation will be subject to tax pursuant to section
4999 of the Code or any successor provision or any counterpart provision of
state tax law (the "Penalty Taxes"), the Corporation shall pay to the Executive
within 20 days after receipt of a written demand therefor from the Executive an
amount which, after deduction of all additional Federal, state and local taxes
(including, without limitation, income taxes and additional Penalty Taxes)
required to be paid by the Executive in respect of receipt of such amount,
shall be equal to the Penalty Taxes. In calculating the income taxes required
to be paid by the Executive, the Accounting Firm shall assume that the
Executive will pay tax at the maximum marginal Federal, state and local rates
and that the Executive will have no deductions or credits available to reduce
such taxes. In consideration of the payment of such amounts, the Executive
shall report and pay such taxes and promptly provide the Corporation with a
written statement that such filing and payment have occur-
-14-
15
red executed by the person or firm that signed as income tax return preparer of
the Executive's federal income tax return, or if prepared by the Executive,
executed by the Executive.
(b) Indemnity. If the Executive shall be required to pay Penalty
Taxes in addition to those reimbursed pursuant to paragraph (a) above, or if
based upon failure to receive the opinion of Tax Counsel referred to in
paragraph (d) below the Executive reports and pays greater amounts of Penalty
Taxes than are reimbursed pursuant to paragraph (a) above (any such event
hereafter being referred to as a "Loss"), the Executive shall notify the
Corporation and the Corporation shall pay to the Executive as an indemnity an
amount which, after deduction of all income taxes and additional Federal, state
and local taxes (including, without limitation, income taxes and additional
Penalty Taxes) required to be paid by the Executive in respect of receipt of
such amount (assuming, for this purpose, that the Executive is subject to the
maximum marginal rates of taxation applicable to individuals at such time as
such amount becomes due and that the Executive will have no deductions or
credits available to reduce such taxes), shall be equal to the sum of (x) the
Penalty Taxes resulting in the Loss and (y) the net amount of any interest,
penalties or additions to tax payable to the United States Government or any
state or local government (after allowing for the deduction of such amounts, to
the extent properly deductible, for Federal, state or local income tax
purposes) as a result of such Loss. Each payment by the Corporation hereunder
shall be made within 30 days after receipt
-15-
16
of a written demand therefor from the Executive accompanied by a written
statement describing in reasonable detail the Loss in question, the amount of
additional tax, interest, penalties or additions to tax and the calculation of
the payment due in respect thereof; provided that, if a contest of the Loss is
being conducted pursuant to paragraph (c) below, payment shall not be required
by the Corporation until 30 days after the completion or termination of such
contest.
(c) Contest.
(1) The Executive shall notify the Corporation
within 30 days of receipt from the Internal Revenue Service of a revenue
agent's report, a 30-day letter or a notice of deficiency (as described in
Section 6212 of the Code or any successor provision) or of a similar written
claim from a state taxing authority, in which an adjustment is proposed to the
federal or state taxes of the Executive for which the Corporation would be
required to indemnify the Executive hereunder. If the Corporation (i) requests
the Executive to do so within 30 days after such notice, and (ii) furnishes the
Executive an opinion of recognized tax counsel selected by the Corporation and
approved by the Executive, which approval shall not unreasonably be withheld,
(hereinafter "Tax Counsel") to the effect that a reasonable basis exists for
contesting such proposed adjustment, the Executive shall contest the proposed
adjustment in good faith, shall keep the Corporation reasonably informed as to
the progress of such contest, and shall consider in good faith any suggestion
made by the Corporation as to the method of pursuing
-16-
17
such contest; provided, however, that the Executive shall not be obligated to
contest such adjustment unless (i) the Corporation acknowledges in writing its
liability under paragraph (b) above to indemnify the Executive in the event
that the Internal Revenue Service or a state taxing authority prevails in its
position regarding the proposed adjustment; (ii) the Corporation shall have
fully performed its prior obligations under this Agreement; and (iii) the
subject matter thereof shall not have been previously decided pursuant to the
contest provisions of this paragraph (c) with respect to any other executive of
the Corporation, unless the Corporation shall have furnished an opinion of Tax
Counsel to the Executive that more likely than not the Executive will prevail
in the contest; provided, further, that the Executive shall determine, in his
sole discretion, the nature of all action to be taken to contest such proposed
adjustment, including (x) whether any action to contest such proposed
adjustment initially shall be by way of judicial or administrative proceedings,
or both, (y) whether any such proposed adjustment shall be contested by
resisting payment thereof or by paying the same and seeking a refund thereof,
and (z) if the Executive shall undertake judicial action with respect to such
proposed adjustment, the court or other judicial body before which such action
shall be commenced. The Executive shall, if requested by the Corporation
within 30 days of an adverse determination by any court, and if Tax Counsel is
of the opinion that there is a reasonable basis for a successful appeal
-17-
18
of the matter in question, be obligated to appeal such adverse determination.
(2) The Executive shall not be required to take
any action pursuant to this paragraph (c) unless and until the Corporation
shall have agreed in writing to indemnify the Executive in a manner reasonably
satisfactory to the Executive for any fees, expenses, statutory or regulatory
penalties, interest, additions to tax, or other similar liabilities or losses
which the Executive may incur as a result of contesting the validity of any
proposed adjustment and shall have agreed to pay (or in the Executive's sole
discretion to prepay) to the Executive on demand all costs and expenses which
the Executive may incur in connection with contesting such proposed adjustment
(including without limitation fees and disbursements of counsel). If the
Executive determines to contest any adjustment by paying the additional tax and
suing for a refund, the Corporation shall timely advance to the Executive on an
interest free basis an amount equal to the sum of any tax, interest, penalties
and additions to tax which are required to be paid; provided, however, that, if
the Executive is required to include in income any amount with respect to such
loan or the imputation of interest thereon in any taxable year of the Executive
prior to final determination of the contest, then the Corporation, within 30
days of written notice thereof by the Executive, shall pay to the Executive an
amount which, after deduction of all additional Federal, state and local taxes
required to be paid by the Executive in respect of the receipt of such amount
(assuming, for
-18-
19
this purpose, that the Executive is subject to the maximum marginal rate of
taxation applicable to individuals at such times as such amount becomes due),
shall be equal to the aggregate additional federal and state income taxes
payable by the Executive with respect to such taxable year as a result of such
inclusion. Upon receipt by the Executive of a refund of any amounts paid by
the Executive based on any adjustment in respect of which amounts the Executive
shall have been paid or advanced an equivalent amount by the Corporation, the
Executive shall pay to the Corporation the amount of such refund (which, in the
case of any contest in which a loan has been advanced pursuant to this
paragraph, shall be deemed to be in repayment of the loan advanced by the
Corporation to the extent fairly attributable thereto), but not in excess of
the amount paid or advanced by the Corporation, together with any interest
received by the Executive on such refund plus any net additional Federal, state
or local tax benefits actually realized by the Executive as the result of such
payment, and reduced by the amount of any Federal, state or local tax actually
payable with respect to receipt of such refund; provided, however, that the
Executive may offset the amount of such refund and benefits against any amount
due and owing by the Corporation to the Executive pursuant to this Agreement.
Upon disallowance of any such refund, the Corporation shall forgive the amount
of the advance fairly attributable thereto and shall pay to the Executive the
amount of its indemnity obligation hereunder, including such amount as, after
deduction of all taxes required to be paid by the Executive in
-19-
20
respect of the receipt of such amount under the laws of any Federal, state or
local government or taxing authority of the United States, shall be equal to
the sum on an after-tax basis, of any tax, interest, penalties or additions to
tax payable with respect to the forgiveness of such advance.
(3) If any adjustment referred to in this
paragraph (c) shall be proposed and the Corporation shall have requested the
Executive to contest such adjustment as above provided and shall have duly
complied with the terms of this paragraph (c), the Corporation's liability with
respect to such adjustment shall become fixed upon final determination of such
adjustment; provided, however, that if the Corporation shall not deliver the
opinion of Tax Counsel provided in this paragraph (c) to the effect that there
is a reasonable basis for a contest or appeal, then the Corporation's
obligation to pay such indemnity shall become immediately fixed.
(d) No Inconsistent Action. The Executive agrees that he
will not take any action, directly or indirectly, or file any returns or other
documents inconsistent with the assumption that the payments to which the
indemnification of paragraph (b) applies do not result in imposition of the tax
under section 4999, and the Executive shall file such returns, take such
actions, maintain such records and execute such documents as may be reasonably
requested by the Corporation; provided, however, that the Executive's
obligations hereunder to file returns or other documents shall apply only if
the Executive receives an opinion of Tax Counsel at least 10 days prior to the
due date of
-20-
21
the return (without regard to extensions) required to be made with respect to
the payments to which the indemnification of paragraph (b) applies that the
Executive will not be subject to the penalties described in sections 6651, 6662
or 6663 of the Code, or successor provisions then in effect, as a result of
taking such position.
(e) Disbursements. Any payments required to be made by
the Corporation pursuant to this Section 10 shall be made directly by the
Corporation to the Executive. Payments made by the Corporation or the
Executive pursuant to this Agreement shall be made by wire transfer of
immediately available funds to such bank and/or account in the continental
United States as specified by the other party in written directions to such
payor party, and if no such direction shall have been given, by check payable
to the order of such other party and mailed to such other party by certified
mail, postage prepaid.
(f) No Setoff. No payment required to be made by the
Corporation pursuant to this Section 10 shall be subject to any right of
setoff, counterclaim, defense, abatement, suspension, deferment or reduction,
and, except in accordance with the express terms hereof, the Corporation shall
have no right to terminate the Agreement or to be released, relieved or
discharged from any obligation or liability thereunder for any reason
whatsoever.
(g) Late Payment, Interest. Any late payment by any
party hereto of any of its obligations under this Agreement shall bear interest
to the extent permitted by applicable law, at a
-21-
22
fluctuating rate per annum equal to the Prime Rate as announced publicly by
Citibank, N.A., in New York, New York from time to time plus two percentage
points, for the period such interest is payable.
(h) Accounting Firm. The Accounting Firm shall mean the
Memphis, Tennessee Main Office of Price Waterhouse & Co., or, at the election
of the Executive, the Memphis, Tennessee Main Office of such other national or
regional accounting firm as the Executive shall select subject to the approval
of the Corporation, which approval shall not unreasonably be withheld.
Compensation of the Accounting Firm with respect to its services hereunder
shall be the responsibility of the Executive.
11. Determination of Present Values Under Section 5. The
determination of present values for purposes of Paragraph (a)(III) of Section 5
of this Agreement shall be in accordance with the following:
(a) Present values shall be determined as of the last day
of the calendar quarter ending most recently prior to the Termination Date
("Valuation Date").
(b) The interest rate and other actuarial assumptions
used to determine present values shall be the same as those which would be
required to be used as of the Valuation Date to determine the amount of a lump
sum distribution under the Retirement Plan.
(c) The determination of present values shall be made by
Xxxxxx Associates, or such other actuarial firm as shall, at the time of the
determination, be the actuary for the Retirement
-22-
23
Plan ("Actuary Firm"). The Corporation shall provide to the Actuary Firm all
information in its possession reasonably requested by the Actuary Firm for the
purpose of making such present value determination.
(d) The payment of benefits under Paragraph (a)(III) of
Section 5 shall be made within the time limits set forth in such Paragraph
based upon the present value determinations made by the Actuarial Firm, and
such determinations shall be binding upon the Corporation and the Executive.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization of its Board of Directors, the Corporation has
caused these presents to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed, all as of the day and year first above
written.
/s/ Xxxxx X. Fair
----------------------------------
Executive
XXXXXXX FABRICS, INC.
By /s/ Xxxxx X. Xxxx
------------------------------
-23-
