1
EX-10.(L)
FRUIT OF THE LOOM, INC.
--------------------------------------------------------------------------------
Employment Agreement for Xxxxx X. Xxxxxxx
----------------------
--------------------------------------------------------------------------------
2
FRUIT OF THE LOOM, INC.
--------------------------------------------------------------------------------
Employment Agreement for Xxxxx X. Xxxxxxx
----------------------
--------------------------------------------------------------------------------
1. Employment.......................................................................1
2. Term.............................................................................1
3. Offices and Duties...............................................................2
4. Salary and Annual Incentive Compensation.........................................2
5. Long-Term Compensation, Including Stock Options, and Benefits,
Deferred Compensation, and Expense Reimbursement.................................3
6. Termination Due to Normal Retirement, Approved Early Retirement,
Death, or Disability. ...........................................................6
7. Termination of Employment For Reasons Other Than Normal Retirement,
Approved Early Retirement, Death or Disability. .................................8
8. Definitions Relating to Termination Events......................................12
9. Excise Tax Gross-Up.............................................................14
10. Non-Competition and Non-Disclosure; Executive Cooperation;
Non-Disparagement...............................................................17
11. Governing Law; Disputes; Arbitration............................................18
12. Miscellaneous...................................................................19
13. Indemnification and Release.....................................................21
3
FRUIT OF THE LOOM, INC.
--------------------------------------------------------------------------------
Employment Agreement for Xxxxx X. Xxxxxxx
----------------------
--------------------------------------------------------------------------------
THIS EMPLOYMENT AGREEMENT, by and between FRUIT OF THE LOOM,
INC., a Delaware corporation (the "Company"), and Xxxxx X. Xxxxxxx
("Executive"), is hereby entered into on this 6th day of January, 1999 (the
"Effective Date").
W I T N E S S E T H
WHEREAS, Executive has been an employee of the Company since
June 18, 1984; and
WHEREAS, the Company desires to continue to employ Executive
in his capacity as Vice President-Treasurer in connection with the conduct of
its businesses, and Executive desires to accept such employment on the terms and
conditions herein set forth; and
WHEREAS, the Company and Executive desire to set forth the
terms upon which Executive shall be so employed.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants contained herein, and other good and valuable consideration the
receipt and adequacy of which the Company and Executive each hereby acknowledge,
the Company and Executive hereby agree as follows:
1. EMPLOYMENT.
The Company hereby agrees to employ Executive as its Vice
President-Treasurer, and Executive hereby agrees to accept such employment and
serve in such capacity, during the Term as defined in Section 2 and upon the
terms and conditions set forth in this Employment Agreement, as amended and
restated (this "Agreement").
2. TERM.
The term of employment of Executive under this Agreement (the
"Term") shall be the period commencing on the Effective Date and terminating
January 5, 2002 and any period of extension thereof in accordance with this
Section 2, subject to earlier termination in accordance with Section 6 or 7. The
Term shall be extended automatically without further action by either party by
one additional year (added to the end of the Term) first on January 6, 2002
(extending the Term to January 5, 2003) and on each succeeding January 6
thereafter, unless either party shall have served written notice in accordance
with the provisions of Section 12(d) upon the other party prior
-1-
4
to the July 6 preceding the date upon which such extension would become
effective electing not to extend the Term further as of the January 6 next
succeeding the date such notice is served (and successive January 6 during the
remainder of the Term), in which case employment shall terminate at the end of
the Term as extended, subject to earlier termination in accordance with Section
6 or 7.
3. OFFICES AND DUTIES.
The provisions of this Section 3 will apply during the Term:
(a) Generally. Executive shall serve as the Vice
President-Treasurer of the Company. Executive shall have and perform such
duties, responsibilities, and authorities as are customary for the Vice
President-Treasurer of a publicly held corporation of the size, type, and nature
of the Company as they may exist from time to time and consistent with such
position and status, but in no event shall such duties, responsibilities, and
authorities be reduced from those of Executive prior to the Effective Date as
described in Executive's job description provided to the Executive as of the
date hereof. Executive shall devote substantial business time and attention, and
his best efforts, abilities, experience, and talent to the position of Vice
President-Treasurer and for the businesses of the Company; provided, however,
that nothing in this Agreement shall preclude or prohibit Executive from
engaging in other activities, including as assigned by the Company, the
provision of services to Xxxxxxx Xxxxxx, Xxxxxx Industries, Inc. or a successor
("FII"), or Xxxxxx, Inc. ("FI") or a successor, to the extent that such other
activities do not preclude or render unlawful Executive's employment or service
to the Company hereunder or otherwise materially inhibit the performance of
Executive's duties under this Agreement or conflict with the business of the
Company or its subsidiaries.
(b) Place of Employment. Executive's principal place of
employment shall be the Corporate Offices of the Company in Chicago, Illinois.
In no event shall the Executive's principal place of employment be relocated to
any location other than Chicago, Illinois, without his prior written consent.
4. SALARY AND ANNUAL INCENTIVE COMPENSATION.
As partial compensation for the services to be rendered
hereunder by Executive, the Company agrees to pay to Executive during the Term
the compensation set forth in this Section 4.
(a) Base Salary. Subject to Section 5(b), the Company will pay
to Executive during the Term a base salary at the initial annual rate of
$180,000 payable in cash in substantially equal bi-weekly installments during
each calendar year, or portion thereof, of the Term and otherwise in accordance
with the Company's usual payroll practices with respect to senior executives
(except to the extent deferred under Section 5(d)). Executive's annual base
salary shall be reviewed by the Compensation Committee of the Board of Directors
of the Company (the "Committee") at least once in each calendar year and may be
increased above, but may not be reduced below, the then-current rate of such
base salary.
-2-
5
(b) Annual Incentive Compensation. The Company will pay to
Executive during the Term annual incentive compensation, through participation
in the Company's 1995 Executive Incentive Compensation Plan (the "1995 EICP"),
and any successor thereto, which shall offer to Executive an opportunity to earn
additional compensation in amounts determined by the Committee in accordance
with the applicable plan and consistent with past practices of the Company;
provided, however, that the Company will use its best efforts to maintain in
effect, for each year during the Term, the 1995 EICP or an equivalent plan under
which the Executive shall be eligible for an award not less than the award
opportunity assigned to the Executive under the 1995 EICP in 1998. Any such
annual incentive compensation payable to Executive shall be paid in accordance
with the Company's usual practices with respect to payment of incentive
compensation to senior executives (except to the extent deferred under Section
5(d)).
5. LONG-TERM COMPENSATION, INCLUDING STOCK OPTIONS, AND
BENEFITS, DEFERRED COMPENSATION, AND EXPENSE REIMBURSEMENT
(a) Executive Compensation Plans. Executive shall be entitled
during the Term to participate, without discrimination or duplication, in all
executive compensation plans and programs intended for general participation by
senior executives of the Company (other than the Chief Executive of the
Company), as presently in effect or as they may be modified or added to by the
Company from time to time, subject to the eligibility and other requirements of
such plans and programs, including without limitation the long-term incentive
features of the 1995 EICP, any successor to such plan, and other stock option
plans, performance share plans, management incentive plans, deferred
compensation plans, and supplemental retirement plans; provided, however, that
such plans and programs, in the aggregate, shall provide Executive with benefits
and compensation and incentive award opportunities substantially no less
favorable than those provided by the Company to Executive under such plans and
programs as in effect on the Effective Date, except that the Company shall have
no obligation to include the Executive in the "Pars" program or in the Fruit of
the Loom, Inc. Supplemental Executive Retirement Plan ("SERP"). For purposes of
this Agreement, all references to long-term incentive features refer to any
performance shares, performance units, stock grants, or other long-term
incentive arrangements under the 1995 EICP or other plans of the Company and any
successor or replacement to the 1995 EICP or other plans of the Company.
(b) Employee and Executive Benefit Plans. Executive shall be
entitled during the Term to participate, without discrimination or duplication,
in all employee and executive benefit plans and programs of the Company, as
presently in effect or as they may be modified or added to by the Company from
time to time, to the extent such plans are available to other senior executives
or employees of the Company, subject to the eligibility and other requirements
of such plans and programs, including without limitation plans providing
pensions, other retirement benefits, medical insurance, life insurance,
disability insurance, and accidental death or dismemberment insurance, and
participation in savings, profit-sharing, and stock ownership plans; provided,
however, that, except as provided in the first sentence of Section 5(c)(iv)
below, such benefit plans and programs, in the aggregate, shall provide
Executive with benefits and compensation and incentive award opportunities
substantially no less favorable than those provided by the Company to Executive
under such plans and programs as in effect on the Effective Date, except that
the Company shall have no obligation to include the Executive in the "Pars"
program or in the SERP.
-3-
6
In furtherance of and not in limitation of the foregoing,
during the Term:
(i) Executive will participate as Vice President-Treasurer in all
executive and employee vacation and time-off programs;
(ii) The Company will provide Executive with coverage as Vice
President-Treasurer in group and executive long-term
disability insurance and benefits substantially no less
favorable (including any required contributions by Executive)
than such insurance and benefits in effect on the Effective
Date;
(iii) Executive will be covered by life insurance substantially no
less favorable (including any required contributions by
Executive) than life insurance coverage in effect on the
Effective Date; and
(iv) Executive will be entitled to retirement benefits
substantially no less favorable than those under the qualified
and nonqualified defined benefit pension plans of the Company
as in effect on the Effective Date.
(c) Deferral of Compensation. The Company shall implement
deferral arrangements permitting Executive to elect to irrevocably defer
receipt, pursuant to written deferral election terms and forms (the "Deferral
Election Forms"), of all or a specified portion of (i) his annual base salary
and annual incentive compensation under Section 4, (ii) long-term incentive
compensation under Section 5(a), and (iii) shares acquired upon exercise of
options granted in accordance with Sections 5(a) and (b) that are acquired in an
exercise in which Executive pays the exercise price by the surrender of
previously acquired shares, to the extent of the net additional shares acquired
by Executive in such exercise; provided, however, that such deferrals shall not
reduce Executive's total cash compensation in any calendar year below the sum of
(i) the FICA maximum taxable wage base plus (ii) 1.45% of Executive's annual
salary, annual incentive compensation and long-term incentive compensation in
excess of such FICA maximum.
In accordance with such duly executed Deferral Election Forms
or the terms of any such mandatory deferral, the Company shall credit to one or
more bookkeeping accounts maintained for Executive on the respective payment
date or dates, amounts equal to the compensation subject to deferral, such
credits to be denominated in cash if the compensation would have been paid in
cash but for the deferral or in shares if the compensation would have been paid
in shares but for the deferral. An amount of cash equal in value to all
cash-denominated amounts credited to Executive's account and a number of shares
of Common Stock equal to the number of shares credited to Executive's account
pursuant to this Section 5(c) shall be transferred as soon as practicable
following such crediting by the Company to, and shall be held and invested by,
an independent trustee selected by the Company and reasonably acceptable to
Executive (a "Trustee") pursuant to a "rabbi trust" established by the Company
in connection with such deferral arrangement and as to which the Trustee shall
make investments based on Executive's investment objectives (including possible
investment in publicly traded stocks and bonds, mutual funds, real estate, and
insurance vehicles) (the "Deferred Compensation Accounts"). Thereafter,
Executive's deferral accounts will be valued by reference to the value of the
assets of the Deferred Compensation Accounts. The Company shall pay all costs of
administration of the deferral
-4-
7
arrangement, without deduction or reimbursement from the assets of the "rabbi
trust," or reduction in the Deferred Compensation Accounts.
Except as otherwise provided under Section 7 in the event of
Executive's termination of employment with the Company or as otherwise
determined by the Committee in the event of hardship on the part of Executive,
upon such date(s) or event(s) set forth in the Deferral Election Forms
(including forms filed after deferral but before settlement in which Executive
may elect to further defer settlement) or under the terms of any mandatory
deferral, the Company shall promptly pay to Executive cash equal to the cash
then credited to Executive's deferral accounts and cash equal in value to any
shares of Common Stock then credited to Executive's deferral accounts, less
applicable withholding taxes, and such distribution shall be deemed to fully
settle such accounts; provided, however, that the Company may instead settle
such accounts by directing the Trustee to distribute the assets of the "rabbi
trust." The Company and Executive agree that compensation deferred pursuant to
this Section 5(c) shall be fully vested and nonforfeitable; provided, however,
Executive acknowledges that his rights to the deferred compensation provided for
in this Section 5(c) shall be no greater than those of a general unsecured
creditor of the Company, and that such rights may not be pledged,
collateralized, encumbered, hypothecated, or liable for or subject to any lien,
obligation, or liability of Executive, or be assignable or transferable by
Executive, otherwise than by will or the laws of descent and distribution,
provided that Executive may designate one or more beneficiaries to receive any
payment of such amounts in the event of his death.
(d) Reimbursement of Expenses. The Company will promptly
reimburse Executive for all reasonable business expenses and disbursements
incurred by Executive in the performance of Executive's duties during the Term
in accordance with the Company's reimbursement policies as in effect from time
to time.
(e) Company Registration Obligations. The Company will file
with the Securities and Exchange Commission, and will thereafter maintain the
effectiveness of, one or more registration statements registering under the
Securities Act of 1933, as amended, the offer and sale of shares by the Company
pursuant to stock options granted to Executive under the 1995 EICP and successor
plans, which registration statements shall include a resale prospectus covering
the reoffer and resale (or other disposition) of all shares acquired by
Executive upon exercise of such stock options, and the Company will maintain as
current all offering materials under such registration statement(s) at all times
that offers and sales of such shares could be made by the Company or Executive.
(f) Accelerated Funding of Rabbi Trust. Not later than 30 days
following a Change in Control that occurs during the term of this Agreement, the
Company shall contribute to the "rabbi trust" referred to in Section 5(c) an
amount equal to the amount that would be payable to the Executive upon a
termination of employment described in Section 7(b), where such amount consists
of the lump-sum payment provided for in Section (7)(b)(i). In the event of
Executive's termination of employment, for any reason, following a Change in
Control, the trustee of the rabbi trust shall pay such amounts (plus earnings
thereon) to the Executive if the amounts due to the Executive hereunder are not
otherwise paid to the Executive by the Company.
-5-
8
6. TERMINATION DUE TO NORMAL RETIREMENT, APPROVED EARLY
RETIREMENT, DEATH, OR DISABILITY.
Executive may terminate employment as Vice President-Treasurer
upon Executive's retirement at or after age 65 ("Normal Retirement") or, if
approved in advance by the Committee, upon Executive's early retirement prior to
age 65 ("Approved Early Retirement"). The Company may terminate the employment
of Executive as Vice President-Treasurer due to the Disability (as defined in
Section 8(c)) of Executive.
At the time Executive's employment terminates due to Normal
Retirement, Approved Early Retirement, or death, the Term will terminate. In the
event Executive's employment terminates due to Disability, the Term will
terminate at the expiration of the 30-day period referred to in the definition
of Disability (set forth in Section 8(c)) absent the actions referred to therein
being taken by Executive to return to service and present to the Company a
certificate of good health.
Upon a termination of Executive's employment due to Normal
Retirement, Approved Early Retirement, death, or Disability, all obligations of
the Company and Executive under Sections 1 through 5 of this Agreement will
immediately cease, provided, however, that subject to the provisions of Section
12(i), the Company will pay Executive (or his beneficiaries or estate), and
Executive (or his beneficiaries or estate) will be entitled to receive, the
following:
(i) The unpaid portion of annual base salary at the rate payable,
in accordance with Section 4(a) hereof, at the date of
termination of employment, pro rated through such date of
termination, will be paid;
(ii) All vested, nonforfeitable amounts owing or accrued at the
date of termination of employment under any compensation and
benefit plans, programs, and arrangements set forth or
referred to in Sections 4(b) and 5(a) and (b) hereof
(including any earned annual incentive compensation and long
term incentive award) in which Executive theretofore
participated will be paid under the terms and conditions of
the plans, programs, and arrangements (and agreements and
documents thereunder) pursuant to which such compensation and
benefits were granted;
(iii) In lieu of any annual incentive compensation under Section
4(b) for the year in which Executive's employment terminated
(unless otherwise payable under (ii) above), Executive will be
paid an amount equal to the average annual incentive
compensation paid to Executive in the three years immediately
preceding the year of termination (or, if Executive was not
eligible to receive or did not receive such incentive
compensation for any year in such three-year period, the
Executive's target annual incentive compensation for such
year(s) shall be used to calculate average annual incentive
compensation) multiplied by a fraction the numerator of which
is the number of days Executive was employed in the year of
termination and the denominator of which is the total number
of days in the year of termination;
(iv) In lieu of any payment in respect of any long term incentive
award granted in accordance with Section 5(a) for any
performance and vesting periods not
-6-
9
completed at the date Executive's employment terminated
(unless otherwise payable under (ii) above), Executive will be
paid, for each tranche of such long term incentive awards, in
cash an amount equal to any cash amount plus the value of any
shares of Common Stock or other property (valued at the date
of termination) (A) payable for that part of the long term
incentive award that is no longer subject to a risk of
forfeiture tied to performance conditions, without proration,
and (B) payable in respect of that part of the long term
incentive award that is subject to a risk of forfeiture tied
to performance conditions, assuming achievement of the maximum
performance in the case of death or Disability or achievement
of target performance in the case of Normal Retirement or
Early Retirement, multiplied (in case (B) only) by a fraction
the numerator of which is the number of days Executive was
employed during the performance period over which such
performance was to be measured and the denominator of which is
the total number of days in such performance period;
(v) Stock options then held by Executive will be exercisable to
the extent and for such periods, and otherwise governed, by
the plans and programs and the agreements and other documents
thereunder pursuant to which such stock options were granted;
(vi) All deferral arrangements under Section 5(c) will be settled
in accordance with Executive's duly executed Deferral Election
Forms or the terms of any mandatory deferral;
(vii) Reasonable business expenses and disbursements incurred by
Executive prior to such termination of employment will be
reimbursed, as authorized under Section 5(d); and
(viii) If Executive's employment terminates due to Disability, for
the period extending from such termination until Executive
reaches age 65, Executive shall continue to participate in all
employee benefit plans, programs, and arrangements under
Section 5(b) providing health, medical, and life insurance and
pension benefits in which Executive was participating
immediately prior to termination, the terms of which allow
Executive's continued participation, as if Executive had
continued in employment with the Company during such period
(except that additional years of service creditable under
Section 5(b)(iv) shall not be credited as a result of such
deemed continued participation following termination) or, if
such plans, programs, or arrangements do not allow Executive's
continued participation, a cash payment equivalent on an
after-tax basis to the value of the additional benefits
Executive would have received under such employee benefit
plans, programs, and arrangements in which Executive was
participating immediately prior to termination, as if
Executive had received credit under such plans, programs, and
arrangements for service and age with the Company during such
period following Executive's termination as provided in this
Section 6(viii), with such benefits payable by the Company at
the same times and in the same manner as such benefits would
have been received by Executive under such plans (it being
understood that the value of any insurance-provided benefits
will be based on the premium cost to Executive,
-7-
10
which shall not exceed the highest risk premium charged by a
carrier having an investment grade or better credit rating);
provided further, that in the case of termination of Executive's employment due
to Disability, Executive must continue to satisfy the conditions set forth in
Section 10 in order to continue receiving the compensation and benefits under
(viii), above; and provided further, that Executive will be entitled to the
benefit of any terms of plans or agreements applicable to Executive which are
more favorable than those specified in this Section 6. Amounts payable under
(i), (ii), (iii), (iv), and (vii) above will be paid as promptly as practicable
after termination of Executive's employment; provided, however, that, to the
extent that the Company would not be entitled to deduct any such payments under
Internal Revenue Code Section 162(m), such payments shall be made at the
earliest time that the payments would be deductible by the Company without
limitation under Section 162(m) (unless this provision is waived by the
Company).
7. TERMINATION OF EMPLOYMENT FOR REASONS OTHER THAN NORMAL
RETIREMENT, APPROVED EARLY RETIREMENT, DEATH OR DISABILITY.
(a) Termination by the Company for Cause and Termination by
Executive Other Than For Good Reason. In accordance with the provisions of this
Section 7(a), the Company may terminate the employment of Executive as Vice
President-Treasurer for Cause (as defined in Section 8(a)) at any time prior to
a Change in Control (as defined in Section 8(b)), and Executive may terminate
his employment as Vice President-Treasurer voluntarily for reasons other than
Good Reason (as defined in Section 8(d)) at any time. An election by Executive
not to extend the Term pursuant to Section 2 hereof shall be deemed to be a
termination of this Agreement by Executive for reasons other than Good Reason at
the date of expiration of the Term, unless there occurs a Change in Control
prior to such date of expiration.
Upon a termination of Executive's employment by the Company
for Cause at any time prior to a Change in Control or by the Executive for
reasons other than Good Reason, the Term will immediately terminate, and all
obligations of the Company and Executive under Sections 1 through 5 of this
Agreement will immediately cease, provided, however, that, subject to the
provisions of Section 12(i), the Company shall pay Executive, and Executive
shall be entitled to receive, the following:
(i) The unpaid portion of annual base salary at the rate payable,
in accordance with Section 4(a) hereof, at the date of
termination of employment, pro rated through such date of
termination, will be paid;
(ii) All vested, nonforfeitable amounts owing or accrued at the
date of termination of employment under any compensation and
benefit plans, programs, and arrangements set forth or
referred to in Sections 4(b) and 5(a) and 5(b) hereof
(including any earned and vested annual and long-term
incentive compensation) in which Executive theretofore
participated will be paid under the terms and conditions of
the plans, programs, and arrangements (and agreements and
documents thereunder) pursuant to which such compensation and
benefits were granted;
-8-
11
(iii) A cash amount equal to the amount credited to Executive's
deferral accounts under deferral arrangements authorized under
Section 5(c) hereof at the date of termination of employment
(including cash equal in value at that date to any shares of
Common Stock credited to Executive's deferral accounts), less
applicable withholding taxes under Section 12(i); provided,
however, that the Company may instead settle such accounts by
directing the Trustee to distribute the assets of the "rabbi
trust." Such amounts shall be paid or distributed as promptly
as practicable following such date of termination, without
regard to any stated period of deferral otherwise remaining in
respect of such amounts, and the payment of such amounts shall
be deemed to fully settle such accounts; and
(iv) Reasonable business expenses and disbursements incurred by
Executive prior to such termination of employment will be
reimbursed, as authorized under Section 5(d).
Amounts payable under (i), (ii), (iii), and (iv) above will be paid as promptly
as practicable after termination of Executive's employment; provided, however,
that, to the extent that the Company would not be entitled to deduct any such
payments under Internal Revenue Code Section 162(m), such payments shall be made
at the earliest time that the payments would be deductible by the Company
without limitation under Section 162(m) (unless this provision is waived by the
Company).
(b) Termination by the Company Without Cause and Termination
by Executive for Good Reason. In accordance with the provisions of this Section
7(b), the Company may terminate the employment of Executive without Cause (as
defined in Section 8(a)), including after a Change in Control (as defined in
Section 8(b)), upon 90 days' written notice to Executive, and Executive may
terminate his employment with the Company for Good Reason (as defined in Section
8(d)) upon written notice to the Company; provided, however, that, (1) in the
case of a termination for Good Reason prior to a Change in Control, the
Executive must provide 90 days' written notice to the Company and if the basis
for such Good Reason is correctable, the Company must not have corrected the
basis for such Good Reason within 30 days after receipt of such notice, and (2)
in the case of a termination for Good Reason after a Change in Control, the
Executive may provide written notice to the Company at any time during the Term,
regardless of when the circumstances giving rise to such Good Reason did occur.
The foregoing notwithstanding, the Company may, in lieu of providing 90 days'
written notice to Executive, pay Executive his then-current annual base salary
under Section 4(a) and credit Executive with service for 90 days for all
purposes hereunder. An election by the Company not to extend the Term pursuant
to Section 2 hereof shall be deemed to be a termination of this Agreement by the
Company without Cause at the date of expiration of the Term.
Upon a termination of Executive's employment by the Company
without Cause, or termination of Executive's employment by the Executive for
Good Reason, the Term will immediately terminate and all obligations of the
parties under Sections 1 through 5 of this Agreement will immediately cease,
except that subject to the provisions of Section 12(i) the Company shall pay
Executive, and Executive shall be entitled to receive, the following:
(i) A lump sum cash payment in an amount equal to the sum of
Executive's then-current annual base salary at the rate
payable under Section 4(a) immediately prior
-9-
12
to termination plus the Severance Annual Incentive Amount (as
defined below) multiplied by 3 (2 in the case of a termination
of employment prior to a Change in Control), which payment
shall be reduced pro rata to the extent the number of full
months remaining until Executive attains age 65 is less than
36 months (24 months in the case of a termination of
employment prior to a Change in Control). For purposes of this
Section 7(b)(i) and Section 7(b)(iv), the "Severance Annual
Incentive Amount" shall be 50% of the current annual base
salary referred to above;
(ii) The unpaid portion of annual base salary at the rate payable,
in accordance with Section 4(a) hereof, at the date of
termination of employment, pro rated through such date of
termination, will be paid;
(iii) All vested, nonforfeitable amounts owing or accrued at the
date of termination of employment under any compensation and
benefit plans, programs, and arrangements set forth or
referred to in Sections 4(b) and 5(a) and (b) hereof
(including any earned annual incentive compensation and long
term incentive award) in which Executive theretofore
participated, and all amounts not vested and nonforfeitable,
but owing and accrued at the date of termination of
employment, under such benefit plans, programs, and
arrangements, shall become vested and nonforfeitable and will
be paid under the terms and conditions of the plans, programs,
and arrangements (and agreements and documents thereunder)
pursuant to which such compensation and benefits were granted;
(iv) In lieu of any annual incentive compensation under Section
4(b) for the year in which Executive's employment terminated
(unless otherwise payable under (iii) above), Executive will
be paid an amount equal to the Severance Annual Incentive
Amount as defined in Section 7(b)(i) which shall be multiplied
by a fraction the numerator of which is the number of days
Executive was employed in the year of termination and the
denominator of which is the total number of days in the year
of termination;
(v) In lieu of any payment in respect of any long term incentive
award granted in accordance with Section 5(a) for any
performance and vesting periods not completed at the date
Executive's employment terminated (unless otherwise payable
under (iii) above), an amount equal to any cash amount plus
the value of any shares of Common Stock or other property
(valued at the date of termination) assuming achievement of
the maximum performance for the performance period;
(vi) Stock options then held by Executive will be exercisable to
the extent and for such periods, and otherwise governed, by
the plans and programs and the agreements and other documents
thereunder pursuant to which such stock options were granted,
provided, however, that for all such purposes Executive shall
be deemed to be an Employee for a period of 3 years following
the termination of Executive's employment (2 years in the case
of a termination of employment prior to a Change in Control);
-10-
13
(vii) All deferral arrangements under Section 5(c) will be settled
in accordance with Executive's duly executed Deferral Election
Forms or the terms of any mandatory deferral;
(viii) Reasonable business expenses and disbursements incurred by
Executive prior to such termination of employment will be
reimbursed, as authorized under Section 5(d);
(ix) A lump-sum cash payment will be paid equal to the present
value of Executive's accrued benefit, if any, which shall be
fully vested at date of termination of employment, under all
supplemental (non-qualified) defined benefit pension plans of
the Company, unless such benefits are fully funded based on
assets held in trust for the benefit of Executive which cannot
be reached by creditors of the Company, or such benefits are
otherwise funded and secured in an equivalent manner; and
(x) For a period of 3 years after such termination (2 years in the
case of a termination prior to a Change in Control), Executive
shall continue to participate in all employee, executive, and
special individual benefit plans, programs, and arrangements
under Section 5(b) (and, in the case of a termination
following a Change in Control, the Company's restricted stock
grant plan (with all stock issued under such plan being fully
vested)), including but not limited to health, medical,
disability, life insurance, and pension benefits in which
Executive was participating immediately prior to termination
(but not including any plan, program or arrangement under
which the Executive was entitled to the use of a
Company-provided automobile), the terms of which allow
Executive's continued participation, as if Executive had
continued in employment with the Company during such period
(additional years of service creditable under Section 5(b)(iv)
shall be credited as a result of such deemed continued
participation following termination) or, if such plans,
programs, or arrangements do not allow Executive's continued
participation, a cash payment equivalent on an after-tax basis
to the value of the additional benefits Executive would have
received under such employee benefit plans, programs, and
arrangements in which Executive was participating immediately
prior to termination, as if Executive had received credit
under such plans, programs, and arrangements for service and
age with the Company during such period following Executive's
termination, with such benefits payable by the Company at the
same times and in the same manner as such benefits would have
been received by Executive under such plans (it being
understood that the value of any insurance-provided benefits
will be based on the premium cost to Executive, which shall
not exceed the highest risk premium charged by a carrier
having an investment grade or better credit rating);
provided, however, that Executive will be entitled to the benefit of any terms
of plans or agreements applicable to Executive which are more favorable than
those specified in this Section 7(b). Amounts payable under (i), (ii), (iii),
(iv), (v), (vii), (viii), (ix), and (x) above will be paid as promptly as
practicable after termination of Executive's employment, and in no event more
than 45 days after such termination; provided, however, that, if such
termination is a termination by the Company without Cause and prior to a Change
in Control, to the extent that the Company would not be
-11-
14
entitled to deduct any such payments under Internal Revenue Code Section 162(m),
such payments shall be made at the earliest time that the payments would be
deductible by the Company without limitation under Section 162(m) (unless this
provision is waived by the Company), but in no event later than 12 months
subsequent to the date of termination.
8. DEFINITIONS RELATING TO TERMINATION EVENTS.
(a) "Cause." For purposes of this Agreement, "Cause" shall
mean Executive's gross misconduct (as defined herein) or willful and material
breach of Section 10 of this Agreement. For purposes of this definition, "gross
misconduct" shall mean (A) a felony conviction in a court of law under
applicable federal or state laws which results in material damage to the Company
and its subsidiaries or materially impairs the value of the Executive's services
to the Company, or (B) willfully engaging in one or more acts, or willfully
omitting to act in accordance with duties hereunder, which is demonstrably and
materially damaging to the Company and its subsidiaries, including acts and
omissions that constitute gross negligence in the performance of Executive's
duties under this Agreement. For purposes of this Agreement, an act or failure
to act on Executive's part shall be considered "willful" if it was done or
omitted to be done by him not in good faith, and shall not include any act or
failure to act resulting from any incapacity of Executive. Notwithstanding the
foregoing, Executive may not be terminated for Cause unless and until there
shall have been delivered to him, within 6 months after the Board of Directors
of the Company (the "Board") (A) had knowledge of conduct or an event allegedly
constituting Cause and (B) had reason to believe that such conduct or event
could be grounds for Cause, a copy of a resolution duly adopted by a majority
affirmative vote of the membership of the Board (excluding Executive) at a
meeting of the Board called and held for such purpose (after giving Executive
reasonable notice specifying the nature of the grounds for such termination and
not less than 30 days to correct the acts or omissions complained of, if
correctable, and affording Executive the opportunity, together with his counsel,
to be heard before the Board) finding that, in the good faith opinion of the
Board, Executive was guilty of conduct set forth above in this Section 8(a), or,
in any case, after a Change in Control.
(b) "Change in Control." A "Change in Control" shall be deemed
to have occurred if:
(i) An acquisition by any Person of Beneficial Ownership of the
shares of Common Stock of the Company then outstanding (the
"Company Common Stock Outstanding") or the voting securities
of the Company then outstanding entitled to vote generally in
the election of directors (the "Company Voting Securities
Outstanding"); provided, however, that such acquisition of
Beneficial Ownership would result in the Person's Beneficially
Owning twenty-five percent (25%) or more of the Company Common
Stock Outstanding or twenty-five percent (25%) or more of the
combined voting power of the Company Voting Securities
Outstanding; and provided further, that immediately prior to
such acquisition such Person was not a direct or indirect
Beneficial Owner of twenty-five percent (25%) or more of the
Company Common Stock Outstanding or twenty-five percent (25%)
or more of the combined voting power of Company Voting
Securities Outstanding, as the case may be; or
-12-
15
(ii) The approval by the stockholders of the Company of a
reorganization, merger, consolidation, complete liquidation or
dissolution of the Company, the sale or disposition of all or
substantially all of the assets of the Company or similar
corporate transaction (in each case referred to in this
Section 8(b) as a "Corporate Transaction") or, if consummation
of such Corporate Transaction is subject, at the time of such
approval by stockholders, to the consent of any government or
governmental agency, the obtaining of such consent (either
explicitly or implicitly); or
(iii) A change in the composition of the Board such that the
individuals who, as of the Effective Date, constitute the
Board (such Board shall be hereinafter referred to as the
"Incumbent Board") cease for any reason to constitute at least
a majority of the Board; provided, however, for purposes of
this Section 8(b), that any individual who becomes a member of
the Board subsequent to the Effective Date whose election, or
nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of those individuals
who are members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this
proviso) shall be considered as though such individual were a
member of the Incumbent Board; but, provided, further, that
any such individual whose initial assumption of office occurs
as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A under
the Exchange Act, including any successor to such Rule) or
other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board shall not be
so considered as a member of the Incumbent Board.
Notwithstanding the provisions set forth in subparagraphs (i) and (ii) of this
Section 8(b), the following shall not constitute a Change in Control for
purposes of this Plan: (1) any acquisition by or consummation of a Corporate
Transaction with any Subsidiary or an employee benefit plan (or related trust)
sponsored or maintained by the Company or an affiliate; or (2) any acquisition
or consummation of a Corporate Transaction following which more than fifty
percent (50%) of, respectively, the shares then outstanding of common stock of
the corporation resulting from such acquisition or Corporate Transaction and the
combined voting power of the voting securities then outstanding of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were Beneficial Owners, respectively, of the
Company Common Stock Outstanding and Company Voting Securities Outstanding
immediately prior to such acquisition or Corporate Transaction in substantially
the same proportions as their ownership, immediately prior to such acquisition
or Corporate Transaction, of the Company Common Stock Outstanding and Company
Voting Securities Outstanding, as the case may be; or (3) any transaction
initiated or controlled, directly or indirectly, by Executive, in a capacity
other than as an officer or a director of the Company.
For purposes of this definition:
(A) The terms "Beneficial Owner," "Beneficially Owning,"
and "Beneficial Ownership" shall have the meanings
ascribed to such terms in Rule 13d-3 under the
Exchange Act (including any successor to such Rule).
-13-
16
(B) The term "Exchange Act" means the Securities Exchange
Act of 1934, as amended from time to time, or any
successor act thereto.
(C) The term "Person" shall have the meaning ascribed to
such term in Section 3(a)(9) of the Exchange Act and
used in Sections 13(d) and 14(d) thereof, including
"group" as defined in Section 13(d) thereof.
(D) The term "Board" means the Board of Directors of the
Company or any parent of the Company.
(c) "Disability." "Disability" means the failure of Executive
to render and perform the services required of him under this Agreement, for a
total of 180 days of more during any consecutive 12 month period, because of any
physical or mental incapacity or disability as determined by a physician or
physicians selected by the Company and reasonably acceptable to Executive,
unless, within 30 days after Executive has received written notice from the
Company of a proposed termination due to such absence, Executive shall have
returned to the full performance of his duties hereunder and shall have
presented to the Company a written certificate of Executive's good health
prepared by a physician selected by the Company and reasonably acceptable to
Executive.
(d) "Good Reason." For purposes of this Agreement, "Good
Reason" shall mean, without Executive's prior written consent, (A) a material
change, adverse to Executive, in Executive's positions, titles, or offices as
set forth in Section 3(a), status, rank, nature of responsibilities, or
authority within the Company, except in connection with the termination of
Executive's employment for Cause, Disability, Normal Retirement or Approved
Early Retirement, as a result of Executive's death, or as a result of action by
Executive, (B) an assignment of any duties to Executive which are inconsistent
with Executive's status, duties, responsibilities, and authorities under Section
3(a), (C) a decrease in annual base salary or other compensation opportunities
and maximums or benefits provided under this Agreement, (D) any other failure by
the Company to perform any material obligation under, or breach by the Company
of any material provision of, this Agreement, (E) a relocation of the Corporate
Offices of the Company more than 35 miles from the latest location of such
offices prior to the date of a Change in Control, (F) any failure to secure the
agreement of any successor corporation or other entity to the Company to fully
assume the Company's obligations under this Agreement in a form reasonably
acceptable to Executive, and (G) any attempt by the Company to terminate
Executive for Cause which does not result in a valid termination for Cause,
except in the case that valid grounds for termination for Cause exist but are
corrected as permitted under Section 8(a).
9. EXCISE TAX GROSS-UP.
In the event that there shall occur a Change in Control of the Company,
if Executive becomes entitled to one or more payments (with a "payment"
including, without limitation, the vesting of an option or other non-cash
benefit or property), whether pursuant to the terms of this Agreement or any
other plan, arrangement, or agreement with the Company or any affiliated company
(the "Total Payments"), which are or become subject to the tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") (or
any similar tax that may hereafter be imposed) (the "Excise Tax"), the Company
shall pay to Executive at the time specified
-14-
17
below an additional amount (the "Gross-up Payment") (which shall include,
without limitation, reimbursement for any penalties and interest that may accrue
in respect of such Excise Tax) such that the net amount retained by Executive,
after reduction for any Excise Tax (including any penalties or interest thereon)
on the Total Payments and any federal, state and local income or employment tax
and Excise Tax on the Gross-up Payment provided for by this Section 9, but
before reduction for any federal, state, or local income or employment tax on
the Total Payments, shall be equal to the sum of (a) the Total Payments, and (b)
an amount equal to the product of any deductions disallowed for federal, state,
or local income tax purposes because of the inclusion of the Gross-up Payment in
Executive's adjusted gross income multiplied by the highest applicable marginal
rate of federal, state, or local income taxation, respectively, for the calendar
year in which the Gross-up Payment is to be made.
For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax:
(i) The Total Payments shall be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Code, and all
"excess parachute payments" within the meaning of Section
280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless, and except to the extent that, in the
written opinion of independent compensation consultants or
auditors of nationally recognized standing ("Independent
Advisors") selected by the Company and reasonably acceptable
to Executive, the Total Payments (in whole or in part) do not
constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning
of Section 280G(b)(4) of the Code in excess of the base amount
within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise Tax;
(ii) The amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (A)
the total amount of the Total Payments or (B) the total amount
of excess parachute payments within the meaning of section
280G(b)(1) of the Code (after applying clause (i) above); and
(iii) The value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Independent Advisors in
accordance with the principles of Sections 280G(d)(3) and (4)
of the Code.
For purposes of determining the amount of the Gross-up
Payment, Executive shall be deemed (A) to pay federal income taxes at the
highest marginal rate of federal income taxation for the calendar year in which
the Gross-up Payment is to be made (including, for this purpose, any additional
tax associated with the alternative minimum tax, if applicable); (B) to pay any
applicable state and local income taxes at the highest marginal rate of taxation
for the calendar year in which the Gross-up Payment is to be made, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes if paid in such year (determined without regard to
limitations on deductions based upon the amount of Executive's adjusted gross
income); and (C) to have otherwise allowable deductions for federal, state, and
local income tax purposes at least equal to those disallowed because of the
inclusion of the Gross-up Payment in Executive's adjusted gross income. In the
event that the Excise Tax is subsequently determined
-15-
18
to be less than the amount taken into account hereunder at the time the Gross-up
Payment is made, Executive shall repay to the Company at the time that the
amount of such reduction in Excise Tax is finally determined (but, if previously
paid to the taxing authorities, not prior to the time the amount of such
reduction is refunded to Executive or otherwise realized as a benefit by
Executive) the portion of the Gross-up Payment that would not have been paid if
such Excise Tax had been applied in initially calculating the Gross-up Payment,
plus interest on the amount of such repayment. In the event that the Excise Tax
is determined by the Internal Revenue Service (at any time, including subsequent
to the expiration of this Agreement) to exceed the amount taken into account
hereunder at the time the Gross-up Payment is made (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-up Payment), the Company shall make an additional Gross-up Payment in
respect of such excess (plus any interest and penalties payable with respect to
such excess) at the time that the amount of such excess is assessed.
The Gross-up Payment provided for above shall be paid on the
30th day (or such earlier date as the Excise Tax becomes due and payable to the
taxing authorities) after it has been determined that the Total Payments (or any
portion thereof) are subject to the Excise Tax; provided, however, that if the
amount of such Gross-up Payment or portion thereof cannot be finally determined
on or before such day, the Company shall pay to Executive on such day an
estimate, as determined by the Independent Advisors, of the minimum amount of
such payments and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code), as soon as
the amount thereof can be determined. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to Executive, payable on the
fifth day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code). If more than one Gross-up
Payment is made, the amount of each Gross-up Payment shall be computed so as not
to duplicate any prior Gross-up Payment. The Company shall have the right to
control all proceedings with the Internal Revenue Service that may arise in
connection with the determination and assessment of any Excise Tax and, at its
sole option, the Company may pursue or forego any and all administrative
appeals, proceedings, hearings, and conferences with any taxing authority in
respect of such Excise Tax (including any interest or penalties thereon);
provided, however, that the Company's control over any such proceedings shall be
limited to issues with respect to which a Gross-up Payment would be payable
hereunder, and Executive shall be entitled to settle or contest any other issue
raised by the Internal Revenue Service or any other taxing authority. Executive
shall cooperate with the Company in any proceedings relating to the
determination and assessment of any Excise Tax and shall not take any position
or action that would materially increase the amount of any Gross-Up Payment
hereunder. Notwithstanding anything herein to the contrary, the Company shall
make an additional Gross-up Payment in respect of any failure of the Company to
pay the Excise Tax, in a timely manner, including, but not limited to, interest
and penalties, and in respect to the fees of any accountants, attorneys, and
other tax advisors engaged by Executive in connection with any dispute regarding
the amount of any Excise Tax due.
-16-
19
10. NON-COMPETITION AND NON-DISCLOSURE; EXECUTIVE COOPERATION;
NON-DISPARAGEMENT.
(a) Non-Competition. Without the consent in writing of the
Board, upon termination of Executive's employment for any reason, Executive will
not, for a period of 3 years thereafter, acting alone or in conjunction with
others, directly or indirectly (i) engage (either as owner, investor, partner,
stockholder, employer, employee, consultant, advisor, or director) in any
business in the continental United States in which he has been directly engaged
on behalf of the Company or any subsidiary, or has supervised as an executive
thereof, during the last two years prior to such termination and which is
directly in competition with a business then conducted by the Company or any of
its subsidiaries, other than engaging in the businesses owned or controlled by
FII (excluding those of the Company and its subsidiaries) or FI (excluding those
of the Company and its subsidiaries) at the date of termination, or providing
services through FII to businesses for which FII provided services at the date
of termination; (ii) induce any customers of the Company or any of its
subsidiaries with whom Executive has had contacts or relationships, directly or
indirectly, during and within the scope of his or her employment with the
Company or any of its subsidiaries, to curtail or cancel their business with
such companies or any of them; or (iii) induce, or attempt to influence, any
employee of the Company or any of its subsidiaries to terminate employment;
provided, however, that the limitation contained in clause (i) above shall not
apply if Executive's employment is terminated as a result of a termination by
the Company following a Change in Control, a termination by Executive for Good
Reason, a termination due to Disability, Normal Retirement, or Approved Early
Retirement. The provisions of subparagraphs (i), (ii), and (iii) above are
separate and distinct commitments independent of each of the other
subparagraphs. It is agreed that the ownership of not more than one percent of
the equity securities of any company having securities listed on an exchange or
regularly traded in the over-the-counter market shall not, of itself, be deemed
inconsistent with clause (i) of this paragraph (a).
(b) Non-Disclosure. Executive shall not, at any time during
the Term and thereafter (including following Executive's termination of
employment for any reason), disclose, use, transfer, or sell, except in the
course of employment with or other service to the Company, any confidential or
proprietary information of the Company and its subsidiaries so long as such
information has not otherwise been disclosed or is not otherwise in the public
domain, except as required by law or pursuant to legal process.
(c) Cooperation With Regard to Litigation. Executive agrees to
cooperate with the Company, during the Term and thereafter (including following
Executive's termination of employment for any reason), by making himself
available to testify on behalf of the Company or any subsidiary or affiliate of
the Company, in any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, and to assist the Company, or any subsidiary
or affiliate of the Company, in any such action, suit, or proceeding, by
providing information and meeting and consulting with the Board or its
representatives or counsel, or representatives or counsel to the Company, or any
subsidiary or affiliate of the Company, as requested. The Company agrees to
reimburse the Executive, on an after-tax basis, for all expenses actually
incurred in connection with his provision of testimony or assistance.
(d) Non-Disparagement. Executive shall not, at any time during
the Term and thereafter, make statements or representations, or otherwise
communicate, directly or indirectly,
-17-
20
in writing, orally, or otherwise, or take any action which may, directly or
indirectly, disparage or be damaging to the Company or any of its subsidiaries
or affiliates or their respective officers, directors, employees, advisors,
businesses or reputations. Notwithstanding the foregoing, nothing in this
Agreement shall preclude Executive from making truthful statements or
disclosures that are required by applicable law, regulation or legal process.
(e) Survival. The provisions of this Section 10 shall survive
the termination or expiration of this Agreement in accordance with the terms
hereof.
11. GOVERNING LAW; DISPUTES; ARBITRATION.
(a) Governing Law. This Agreement is governed by and is to be
construed, administered, and enforced in accordance with the laws of the State
of Illinois, without regard to Illinois conflicts of law principles, except
insofar as the Delaware General Corporation Law and federal laws and regulations
may be applicable. If under the governing law, any portion of this Agreement is
at any time deemed to be in conflict with any applicable statute, rule,
regulation, ordinance, or other principle of law, such portion shall be deemed
to be modified or altered to the extent necessary to conform thereto or, if that
is not possible, to be omitted from this Agreement. The invalidity of any such
portion shall not affect the force, effect, and validity of the remaining
portion hereof. If any court determines that any provision of Section 10 is
unenforceable because of the duration or geographic scope of such provision, it
is the parties' intent that such court shall have the power to modify the
duration or geographic scope of such provision, as the case may be, to the
extent necessary to render the provision enforceable and, in its modified form,
such provision shall be enforced.
(b) Reimbursement of Expenses in Enforcing Rights. All
reasonable costs and expenses (including fees and disbursements of counsel)
incurred by Executive in seeking to interpret this Agreement or enforce rights
pursuant to this Agreement shall be paid on behalf of or reimbursed to Executive
promptly by the Company, whether or not Executive is successful in asserting
such rights; provided, however, that no reimbursement shall be made of such
expenses relating to any unsuccessful assertion of rights if and to the extent
that Executive's assertion of such rights was in bad faith or frivolous, as
determined by independent counsel mutually acceptable to the Executive and the
Company.
(c) Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration in
Chicago, Illinois by three arbitrators in accordance with the rules of the
American Arbitration Association in effect at the time of submission to
arbitration. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. For purposes of entering any judgment upon an award
rendered by the arbitrators, the Company and Executive hereby consent to the
jurisdiction of any or all of the following courts: (i) the United States
District Court for the Northern District of Illinois, (ii) any of the courts of
the State of Illinois, or (iii) any other court having jurisdiction. The Company
and Executive further agree that any service of process or notice requirements
in any such proceeding shall be satisfied if the rules of such court relating
thereto have been substantially satisfied. The Company and Executive hereby
waive, to the fullest extent permitted by applicable law, any objection which it
may now or hereafter have to such jurisdiction and any defense of inconvenient
forum. The Company and Executive hereby agree that a judgment upon an award
rendered by the arbitrators may be enforced in other
-18-
21
jurisdictions by suit on the judgment or in any other manner provided by law.
Subject to Section 11(b), the Company shall bear all costs and expenses arising
in connection with any arbitration proceeding pursuant to this Section 11.
Notwithstanding any provision in this Section 11, Executive shall be entitled to
seek specific performance of Executive's right to be paid during the pendency of
any dispute or controversy arising under or in connection with this Agreement.
The arbitrator shall have the right to order immediate payment of any amounts
not in dispute, and to advance the payment of the fees of Executive under
Section 11(b).
(d) Interest on Unpaid Amounts. Any amounts that have become
payable pursuant to the terms of this Agreement or any decision by arbitrators
or judgment by a court of law pursuant to this Section 11 but which are not
timely paid shall bear interest at the prime rate in effect at the time such
payment first becomes payable, as quoted by the Bankers Trust Company.
12. MISCELLANEOUS.
(a) Integration. This Agreement cancels and supersedes any and
all prior agreements and understandings between the parties hereto with respect
to the employment of Executive by the Company and its subsidiaries, except for
contracts relating to compensation under executive compensation and employee
benefit plans of the Company and its subsidiaries. This Agreement (together with
the Option Agreement) constitutes the entire agreement among the parties with
respect to the matters herein provided, and no modification or waiver of any
provision hereof shall be effective unless in writing and signed by the parties
hereto. Executive shall not be entitled to any payment or benefit under this
Agreement which duplicates a payment or benefit received or receivable by
Executive under such prior agreements and understandings or under any benefit or
compensation plan of the Company.
(b) Non-Transferability. Neither this Agreement nor the rights
or obligations hereunder of the parties hereto shall be transferable or
assignable by Executive, except in accordance with the laws of descent and
distribution or as specified in Section 12(c). The Company may assign this
Agreement and the Company's rights and obligations hereunder, and shall assign
this Agreement, to any Successor (as hereinafter defined) which, by operation of
law or otherwise, continues to carry on substantially the business of the
Company prior to the event of succession, and the Company shall, as a condition
of the succession, require such Successor to agree to assume the Company's
obligations and be bound by this Agreement. For purposes of this Agreement,
"Successor" shall mean any person that succeeds to, or has the practical ability
to control (either immediately or with the passage of time), the Company's
business directly, by merger or consolidation, or indirectly, by purchase of the
Company's voting securities or all or substantially all of its assets, or
otherwise.
(c) Beneficiaries. Executive shall be entitled to designate
(and change, to the extent permitted under applicable law) a beneficiary or
beneficiaries to receive any compensation or benefits payable hereunder
following Executive's death.
(d) Notices. Whenever under this Agreement it becomes
necessary to give notice, such notice shall be in writing, signed by the party
or parties giving or making the same, and shall be served on the person or
persons for whom it is intended or who should be advised or notified, by Federal
Express or other similar overnight service or by certified or registered mail,
-19-
22
return receipt requested, postage prepaid and addressed to such party at the
address set forth below or at such other address as may be designated by such
party by like notice:
If to the Company:
Fruit of the Loom, Inc.
5000 Sears Tower
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Secretary
With copies to:
Fruit of the Loom, Inc.
5000 Sears Tower
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
If to Executive:
Xxxxx Xxxxxxx
0000 Xxxx 000xx Xxxxx
Xxx Xxxx, Xxxxxxxx 00000
If the parties by mutual agreement supply each other with telecopier numbers for
the purposes of providing notice by facsimile, such notice shall also be proper
notice under this Agreement. In the case of Federal Express or other similar
overnight service, such notice or advice shall be effective when sent, and, in
the cases of certified or registered mail, shall be effective 2 days after
deposit into the mails by delivery to the U.S. Post Office.
(e) Reformation. The invalidity of any portion of this
Agreement shall not deemed to render the remainder of this Agreement invalid.
(f) Headings. The headings of this Agreement are for
convenience of reference only and do not constitute a part hereof.
(g) No General Waivers. The failure of any party at any time
to require performance by any other party of any provision hereof or to resort
to any remedy provided herein or at law or in equity shall in no way affect the
right of such party to require such performance or to resort to such remedy at
any time thereafter, nor shall the waiver by any party of a breach of any of the
provisions hereof be deemed to be a waiver of any subsequent breach of such
provisions. No such waiver shall be effective unless in writing and signed by
the party against whom such waiver is sought to be enforced.
(h) No Obligation To Mitigate. Executive shall not be required
to seek other employment or otherwise to mitigate Executive's damages upon any
termination of employment;
-20-
23
provided, however, that, to the extent Executive receives from a subsequent
employer health or other insurance benefits that are substantially similar to
the benefits referred to in Section 5(b) hereof, any such benefits to be
provided by the Company to Executive following the Term shall be correspondingly
reduced.
(i) Offsets and Withholding. The amounts required to be paid
by the Company to Executive pursuant to this Agreement shall not be subject to
offset. The foregoing and other provisions of this Agreement notwithstanding,
all payments to be made to Executive under this Agreement, including under
Sections 6 and 7, or otherwise by the Company will be subject to required
withholding taxes and other required deductions.
(j) Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of Executive, his heirs, executors,
administrators and beneficiaries, and shall be binding upon and inure to the
benefit of the Company (and its parent, if any, and affiliates) and its
successors and assigns. Upon the effective time of the Company's reorganization
pursuant to which Fruit of the Loom, Ltd. shall become the parent company of the
Company, this agreement shall become a binding obligation of Fruit of the Loom,
Ltd. and all references to the Company shall be deemed to be a reference to
Fruit of the Loom, Ltd.
13. INDEMNIFICATION AND RELEASE.
(a) Indemnification of Executive by the Company. All rights to
indemnification by the Company now existing in favor of the Executive as
provided in the Company's Certificate of Incorporation or By-Laws or pursuant to
other agreements in effect on or immediately prior to the Effective Date shall
continue in full force and effect from the Effective Date (including all periods
after the expiration of the Term), and the Company shall also advance expenses
for which indemnification may be ultimately claimed as such expenses are
incurred to the fullest extent permitted under applicable law, subject to any
requirement that the Executive provide an undertaking to repay such advances if
it is ultimately determined that the Executive is not entitled to
indemnification; provided, however, that any determination required to be made
with respect to whether the Executive's conduct complies with the standards
required to be met as a condition of indemnification or advancement of expenses
under applicable law and the Company's Certificate of Incorporation, By-Laws, or
other agreement shall be made by independent counsel mutually acceptable to the
Executive and the Company (except to the extent otherwise required by law).
After the date hereof, the Company shall not amend its Certificate of
Incorporation or By-Laws or any agreement in any manner which adversely affects
the rights of the Executive to indemnification thereunder. Any provision
contained herein notwithstanding, this Agreement shall not limit or reduce any
rights of the Executive to indemnification pursuant to applicable law. In
addition, the Company will maintain directors' and officers' liability insurance
in effect and covering acts and omissions of Executive during the Term and for a
period of six years thereafter on terms substantially no less favorable than
those in effect on the Effective Date.
(b) Release by Executive. Except for the Company's obligations
under this Agreement including, without limitation, Executive's rights of
indemnification, and except as hereinafter expressly provided, Executive
irrevocably and unconditionally releases and discharges the Company, its
officers, directors, shareholders, agents, employees, affiliates, related
companies and entities, successors and assigns (separately and collectively, the
"Company's Released Parties"), jointly and individually, from any and all
claims, obligations, demands, damages, and causes of action of any nature or
kind whatsoever, known or unknown, which Executive, his heirs, successors or
assigns, has or may have, now or in the future, against the Company or the
-21-
24
Company's Released Parties, based upon, relating to, or arising from the
creation, existence or termination of Executive's employment, including but not
limited to, claims arising under or relating to the Fair Labor Standards Act of
1938 and claims of employment discrimination arising under Title VII of the
Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, the
Americans with Disabilities Act of 1990, the Family and Medical Leave Act of
1993, the Age Discrimination in Employment Act of 1967, as amended by the Older
Workers Benefit Protection Act, the Employee Retirement Income Security Act, the
National Labor Relations Act, and/or claims arising under the State Statute or
Local Statute or Ordinance covering age discrimination, wrongful termination or
any claim arising under express or implied contracts, tort, public policy,
common law or any other Federal, state or local statute (including state and
local anti-discrimination statutes), ordinance, regulation or constitutional
provision.
(c) Release by Company. Except for the Executive's obligations
under this Agreement, (including the repayment of any advancements made before
or after the Effective Date, which the Executive is required to repay if it is
ultimately determined that the Executive is not entitled to indemnification) and
as hereinafter provided, the Company and the Company's Released Parties
irrevocably and unconditionally release and discharge Executive, his successors
and assigns, from any and all claims, obligations, demands, damages and causes
of action of any kind whatsoever, known or unknown, which the Company and the
Company's Released Parties may have, now or in the future, against the Executive
based upon, relating to, or arising from the creation, existence or termination
of Executive's employment; and such release shall extend to the full extent (and
only to the extent) of any indemnification authorized under Section 13(a) of
this Agreement and under Article XIII of the Company's Certificate of
Incorporation.
-22-
