CHANGE IN CONTROL AGREEMENT
EXHIBIT
10.30
AGREEMENT
dated as of May 5, 2009, between XXXXXXX FABRICS, INC., a Delaware corporation
("Corporation"), and Xxxxx X. Xxxxxxx ("Executive"), whose address is 0000
Xxxxxx Xx., Xxxxxx, XX 00000.
WHEREAS:
A. Corporation
wishes to attract and retain well qualified executive and key personnel
and, in the event of any Change in Control (as defined in Section 2) of
Corporation, to assure both itself and Executive of continuity of management;
and
B. Corporation,
wishes to enter into this Agreement until March 31, 2010 (“the Expiration
Date”), though This Agreement may be renewed for additional one year periods as
of the Expiration Date and each subsequent expiration, by mutual written consent
of the parties hereto; and
C. No
benefits shall be payable under this Agreement unless the Effective Date shall
occur and thereafter Executive's employment is terminated; and
D. The
employment of Executive is "at will" and may be terminated by Corporation
without payment of any benefits hereunder until the occurrence of a Change in
Control;
NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is hereby agreed by and between Corporation and Executive as
follows:
1. Operation of
Agreement. No benefits shall be payable hereunder unless a
Change in Control (as defined in Section 2) occurs during the Change in
Control Period (as defined in Section 3). For the purposes of
this Agreement the date on which such a Change in Control occurs is referred to
herein as the "Effective Date."
2. Change in
Control. For the purposes of this Agreement, the term "Change
in Control" means the happening of any of the following: (i) any
person or entity, including a "group" as defined in Section 13(d)(3) of the 1934
Act, other than the Company, a subsidiary of the Company, or any employee
benefit plan of the Company or its subsidiaries, becomes the beneficial owner of
the Company's securities having 51 percent or more of the combined voting power
of the then outstanding securities of the Company that may be cast for the
election for directors of the Company (other than as a result of an issuance of
securities initiated by the Company in the ordinary course of business); or (ii)
as the result of, or in connection with, any cash tender or exchange offer,
merger or other business combination, sale of assets or contested election, or
any combination of the foregoing transactions, less than a majority of the
combined voting power of the then outstanding securities of the Company or any
successor corporation or entity entitled to vote generally in the election of
directors of the Company or such other corporation or entity after such
transaction, are held in the aggregate by holders of the Company's securities
entitled to vote generally in the election of directors of the Company
immediately prior to such transactions.
1
3. Change in Control
Period. The "Change in Control Period" is the period
commencing on the date of this Agreement and ending on the earlier to occur of
(i) the Expiration Date, or (ii) the first day of the month coinciding
with or next following Executive's 65th birthday. The expiration of
the Change in Control Period shall not limit Corporation's obligation to
provide, or Executive's right to collect, payments and benefits pursuant to
Section 5 and Section 10 hereof.
4. Certain
Definitions.
(a) Death or
Disability. Executive's employment shall terminate
automatically upon Executive's death ("Death"). Corporation will be
considered to have terminated Executive's employment for Disability, if after
having established Executive's Disability (as defined below), Executive receives
written notice given in accordance with Section 9(b) of Corporation's
intention to terminate his employment. Executive's employment will
terminate for Disability effective on the 90th day after receipt of such notice
(the "Disability Effective Date") if within such 90-day period after such
receipt Executive shall fail to return to full-time performance of his
duties. 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
Corporation or its insurers and acceptable to Executive or his legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
2
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 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 Corporation or one of its affiliated companies and
for which Executive may qualify.
(b)
Cause. 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 Executive's part that result in or are intended to result in
his personal enrichment or the enrichment of a competitor of Corporation at the
expense of Corporation or one of its affiliated companies, (ii) moral turpitude,
or (iii) conviction of a felony or misdemeanor. For purposes of this
Agreement, “moral turpitude” is defined for the purposes of this Severance
Agreement as the following:
|
(1)
|
That
element and personal misconduct in the private and social duties which a
person owes to his fellow human beings or to society in general, which
characterizes the act done as an act of baseness, vileness or depravity,
and contrary to the accepted and customary rule of right and duty between
two human beings.
|
|
(2)
|
Conduct
done knowingly contrary to justice, honesty or good
morals.
|
3
|
(3)
|
Intentional,
knowing or reckless conduct causing bodily injury to another or
intentional, knowing or reckless conduct which, by physical menace, put
another in fear of imminent serious bodily
injury.
|
(c) Good
Reason. For purposes of this Agreement, "Good Reason"
means
(i) without
the express written consent of Executive, (A) the assignment to Executive
of any duties inconsistent in any substantial respect with Executive's position,
authority or responsibilities as in effect during the 90-day period
immediately preceding the Effective Date, or (B) any other substantial
adverse change in such position (including titles and reporting requirements),
authority or responsibilities;
(ii) any
failure by Corporation to furnish 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 Executive from Corporation
during the 90-day period preceding the Effective Date, including a failure by
Corporation to maintain Corporation's incentive compensation plans or any
subsequent plans (including the right to defer the receipt of payments
thereunder), other than an insubstantial and inadvertent failure remedied by
Corporation promptly after receipt of notice thereof given by
Executive;
(iii) Corporation's
requiring Executive to be based or to perform services at any office or location
other than that at which Executive is primarily based during the 90-day period
preceding the Effective Date, except for travel reasonably required in the
performance of Executive's responsibilities; or
(iv) any
failure by 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 Executive shall be conclusive.
(d) Notice of
Termination. Any termination by Corporation for Cause or by
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 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 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).
4
(e) 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 Executive's employment is terminated by
Corporation for any reason other than Cause, Death or Disability, the date on
which Corporation notifies Executive of such
termination. Notwithstanding any contrary provision in this
Section 4(e), if Executive's employment terminates due to Disability, the
Date of Termination shall be the Disability Effective
Date. Notwithstanding any contrary provision in this Agreement,
Executive’s Date of Termination will be the date on which Executive has a
“separation from service” (within the meaning of such term under Section 409A of
the Code) with Corporation and all other companies that would be aggregated with
Corporation under Sections 414(b) or 414(c) of the Code.
5.
Obligations of
Corporation Upon Termination.
(a) Good Reason Other Than For
Cause, Death or Disability. Regardless of whether the Change
in Control Period has expired, if, within one year after the Effective Date,
(i) Corporation shall terminate Executive's employment for any reason other
than for Cause, Death or Disability, or (ii) Executive shall terminate his
employment for Good Reason:
(I) Corporation
shall pay to Executive in a lump sum in cash within 20 days after the 6-month
anniversary of the Date of Termination the aggregate of the amounts determined
pursuant to the following clauses (A) and (B):
5
(A) if
not theretofore paid, 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
product of the sum of (x) 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 bonus(if any) paid or payable
to Executive pursuant to the applicable cash incentive compensations plan(s)
with respect to the last full fiscal year completed prior to the Date of
Termination, multiplied by 1.5; provided, however, if Executive’s Date of
Termination occurs after Executive’s 64th birthday, the amount provided in
clause (B) above shall be prorated by multiplying such amount by a fraction, the
numerator of which 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 Executive's 65th birthday and denominator of
which shall be twelve (12); and
(II) until
the earlier to occur of (i) the date eighteen (18) months following the
Date of Termination, or (ii) the first day of the first month coinciding
with or next following 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"), Corporation shall continue to provide
all benefits that 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
Corporation and its affiliated companies, in each case on a basis providing
Executive and/or his family with the opportunity to receive benefits at least
equal to those provided by Corporation and its affiliated companies for
Executive under such plans and programs if and as in effect at any time during
the 90-day period preceding the Effective Date. Notwithstanding
anything in this Agreement to the contrary, Corporation shall not provide
medical, dental or vision benefits to Executive pursuant to this paragraph (II)
for longer than the period of time during which Executive would be entitled (or
would, but for such benefits, be entitled) to continuation coverage under a
group health plan of Corporation or one of its affiliated companies under
Section 4980B of the Code (“COBRA”) if Executive elected such coverage and paid
the applicable premiums.
6
6. Non-exclusivity of
Rights. Nothing in this Agreement shall prevent or limit
Executive's continuing or future participation in any benefit, bonus, incentive
or other plan or program provided by Corporation or any of its affiliated
companies and for which Executive may qualify, nor shall anything herein limit
or otherwise affect such rights as Executive may have under any employment,
stock option or other agreements with Corporation or any of its affiliated
companies. Amounts that are vested benefits or that Executive is
otherwise entitled to receive under any plan or program of 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 Executive may have against Corporation arising out
of his termination, including, but not limited to, any claims for wrongful
discharge. 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 Corporation may have
against Executive or others; provided, however, that Corporation's failure to
make any such setoff shall not constitute a waiver of any claim of Corporation
against Executive. In no event shall Executive be obligated to seek
other employment by way of mitigation of the amounts payable to Executive under
any of the provisions of this Agreement. Corporation agrees to pay,
to the full extent permitted by law, all legal fees and expenses Executive may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by 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 First Tennessee
Bank, N.A. in effect from time to time during the period of such non-payment,
provided that any such payment shall be made on or before the last day of
Executive’s taxable year following the taxable year in which the expense was
incurred and no payment shall be made pursuant to this Section 7 more than 10
years after Executive’s Date of Termination. Notwithstanding anything
in this Agreement to the contrary, if any payment under this Section 7 or any
other Section of this Agreement constitutes deferred compensation under Section
409A of the Code and is payable on account of Executive’s separation from
service (within the meaning of such term under Section 409A of the Code), such
payment shall be made no earlier than the 6-month anniversary of Executive’s
Date of Termination.
7
8. Successors.
(a) This
Agreement is personal to Executive and without the prior written consent of
Corporation shall not be assignable by Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by Executive's legal representatives, executors,
heirs and legatees.
(b) This
Agreement shall inure to the benefit of and be binding upon Corporation and its
successors. Corporation shall require any successor to all or
substantially all of the business and/or assets of Corporation, whether directly
or indirectly, by purchase, merger, consolidation, acquisition of stock, or
otherwise, by an agreement in form and substance satisfactory to Executive,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent as 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.
8
(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
Executive:
At the
address first herein above written.
If to
Corporation:
Xxxxxxx
Fabrics, Inc.
Xxx
Xxxxxxx Xxx
Xxxxxxx,
Xxxxxxxxxxx 00000
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) 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.
(e) This
Agreement contains the entire understanding with 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) Executive
and Corporation acknowledge that the employment of Executive by Corporation is
"at will" and may be terminated by either Executive or Corporation at any time
and for any reason. Nothing contained in the Agreement shall affect
such rights to terminate, it being agreed, however, that nothing in this
Section 9(g) shall prevent 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.
9
(h) Executive
agrees that Executive, during employment by Corporation, has learned valuable
information concerning the business, operations, employees, vendors and
customers of Corporation, and has established valuable relationships with such
vendors and customers of Corporation, and that use of such information and
relationships other than for the benefit of Corporation would materially damage
Corporation. Therefore, Executive covenants and agrees that Executive
shall not, directly or indirectly, for eighteen (18) months from and after
Executive’s Date of Termination, reveal any such information to any
person (except as required by law) or solicit any vendor, customer or employee
to cease being same as to Corporation or to change its relationship to
Corporation in any material respect.
10. Penalty
Taxes. In the event that any payment or other compensation or
benefits made or provided to or for the benefit of Executive in any way
connected with employment of Executive by Corporation becomes subject to tax
pursuant to section 4999 of the Code or any successor provision or any
counterpart provision of state or local tax law (the “Penalty
Taxes”), Corporation shall reimburse Executive for any Penalty Taxes and any
additional Federal, state and local taxes (including, without limitation, income
taxes and additional Penalty Taxes) required to be paid by Executive in respect
of receipt of such reimbursement, provided any such reimbursement will be made
by the end of Executive’s taxable year next following Executive’s taxable year
in which Executive remits the related taxes. In addition, Corporation
shall reimburse Executive for any expenses incurred by Executive due to a tax
audit or litigation addressing the existence or amount of a tax liability,
whether Federal, state, local, or foreign, relating to any Penalty Taxes,
provided any such reimbursement will be made by the end of Executive’s taxable
year following Executive’s taxable year in which the taxes that are the subject
of the audit or litigation are remitted to the taxing authority, or where as a
result of such audit or litigation no taxes are remitted, the end of Executive’s
taxable year following Executive’s taxable year in which the audit is completed
or there is a final and non-appealable settlement or other resolution of the
litigation.
10
11. Loss of Executive Officer
Status. In the event that Executive ceases to be an executive
officer of Corporation for any reason and at any time, other than during either
(i) one year immediately preceding the Effective Date or (ii) one year
immediately following the Effective Date, this Agreement shall immediately be
terminated such that Executive shall be entitled to no payments hereunder and
Corporation shall have no additional obligations hereunder.
12. Revocation of Contingent
Payments Agreement. Executive and Corporation previously
entered into an Agreement to Secure Certain Contingent Payments (the “Contingent
Payments Agreement”) to provide for certain benefits in connection with this
Agreement, including an obligation of Corporation to fund benefits under certain
conditions. Executive and Corporation hereby agree that the
Contingent Payments Agreement be and hereby is revoked and terminated in its
entirety, effective as of September 30, 2008, such that (i) no benefits
shall be payable under the Contingent Payments Agreement after such date and
(ii) neither Corporation nor Executive shall have any obligations under the
Contingent Payments Agreement after such date
IN
WITNESS WHEREOF, Executive has executed this Agreement and, pursuant to the
authorization of its Board of Directors, Corporation has caused this Agreement
to be executed in its name on its behalf, all as of the day and year first above
written.
| Executive | XXXXXXX FABRICS, INC. | |||
|
/s/
Xxxxx X. Xxxxxxx
|
By
|
/s/ Xxxxx X. Xxxxx | ||
| Name: Xxxxx X. Xxxxx | ||||
| Title: V-P Human Resources | ||||
11
