EXHIBIT 10(b)
AGREEMENT
THIS AGREEMENT made this day of ,2001 (the "Agreement") by
and between ________________ (the "Executive") and VF CORPORATION, a
Pennsylvania corporation (the "Corporation"). This Agreement amends, restates
and supersedes the prior agreement dated _____________ and any amendments to and
restatements thereof between the Executive and the Corporation.
BACKGROUND
The Board of Directors of the Corporation (the "Board") considers the
establishment and maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of the Corporation and its
shareholders. In this connection, the Corporation recognizes that, as is the
case with many publicly held corporations, the possibility of a change in
control may exist and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of management personnel to the detriment of the Corporation and its
shareholders. The Corporation further recognizes that its own financial position
tends to exacerbate the uncertainty among management that a change of control
might create. Accordingly, the Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of certain members of the Corporation's management, including the
Executive, to their assigned duties without distraction in the face of the
potentially disturbing circumstances arising from the possibility of a change in
control of the Corporation.
In order to induce the Executive to remain in the employ of
_____________, a subsidiary of the Corporation ("Subsidiary"), the Corporation
wishes to provide the Executive with certain severance benefits in the event his
employment with the Subsidiary terminates subsequent to a change in control of
the Corporation under the circumstances described herein.
NOW THEREFORE, the parties hereto, intending to be legally bound, agree
as follows:
1. TERM. The term of this Agreement commences as of the date and
year first above written and shall continue until the second anniversary of the
date set forth above. The prior sentence notwithstanding, commencing on first
day after the second anniversary of the date set forth above and on the first
day of each subsequent twelve month period thereafter the term of this Agreement
shall automatically be extended for one additional year beyond the then existing
term. This Agreement shall terminate (except as set forth in the next sentence)
if (a) the Corporation gives the Executive notice that it wishes to terminate
this Agreement in which case this Agreement shall terminate as of the date set
forth in such notice or (b) the Executive's employment with the Subsidiary is
terminated for any reason (other than a transfer to the Corporation), including
transfer to another subsidiary company of the Corporation, in which case this
Agreement shall terminate on the last day of the Executive's employment with the
Subsidiary; provided, however, if the Executive is transferred to another
subsidiary company of the Corporation, the Corporation may waive the termination
of this Agreement, by a written amendment of this Agreement, executed by both
the Corporation and the Executive, which shall refer to this clause and shall be
limited to the Executive's transfer to the subsidiary company of the Corporation
named in the amendment, unless another amendment is executed upon the
Executive's subsequent transfer to another subsidiary company of the
Corporation. The Corporation may not give such notice and this Agreement shall
not automatically terminate in the event the Executive's employment with the
Subsidiary terminates for any reason, including a transfer to another subsidiary
company of the Corporation, (x) at any time while the Corporation has knowledge
that any third person has taken steps or announced an intention to take steps
reasonably calculated to effect a " Change in Control" (as hereinafter defined)
of the Corporation, unless or until such third party has, in the reasonable
opinion of the Corporation, abandoned its efforts or intention to effect a
Change in Control of the Corporation or (y) within twenty-four months after the
date a Change in Control occurs. It is understood that the Corporation may
terminate the Executive's employment at any time, subject to providing, if
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required to do so in accordance with the terms hereof, the severance benefits
hereinafter specified.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless
there shall have been a Change in Control of the Corporation and the Executive's
employment by the Subsidiary shall thereafter have been terminated by the
Subsidiary or by the Executive under the circumstances described in paragraph
3(iii) hereof.
(i) Definition. For purposes of this Agreement , "CHANGE OF
CONTROL" shall mean the first to occur of:
(A) an individual, corporation, partnership, group,
associate or other entity or "person", as such term is defined in Section 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act"), other than (i) the
Corporation, (ii) those certain trustees under Deeds of Trust dated August 21,
1951 and under the Will of Xxxx X. Xxxxxx, deceased (a "Trust" or the "Trusts"),
and (iii) any employee benefit plan of the Corporation or any subsidiary company
of the Corporation, or any entity holding voting securities of the Corporation
for or pursuant to the terms of any such plan (a "Benefit Plan" or the "Benefit
Plans"), or any employee benefit plan(s) sponsored by the Corporation, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 20% or more of the combined voting power of the
Corporation's outstanding securities ordinarily having the right to vote at
elections of directors;
(B) individuals who constitute the Board of Directors
of the Corporation on the effective date of this Agreement (the "Incumbent
Board") cease for any reason to constitute at least a majority thereof, provided
that any Approved Director, as
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hereinafter defined, shall be, for purposes of this subsection (B), considered
as though such person were a member of the Incumbent Board. An "Approved
Director", for purposes of this subsection (b), shall mean any person becoming a
director subsequent to the effective date of this Agreement whose election, or
nomination for election by the Corporation's shareholders, was approved by a
vote of at least three-quarters of the directors comprising the Incumbent Board
(either by a specific vote or by approval of the proxy statement of the
Corporation in which such person is named as a nominee of the Corporation for
director), but shall not include 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 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of an individual, corporation, partnership, group, associate or
other entity or "person" other than the Board of Directors; or
(C) the approval by the shareholders of the Corporation
of a plan or agreement providing for a merger or consolidation of the
Corporation other than with a wholly-owned subsidiary and other than a merger or
consolidation that would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 65% of the combined voting power of the voting
securities of the Corporation or such surviving entity outstanding immediately
after such merger or consolidation, or for a sale, exchange or other disposition
of all or substantially all of the assets of the Corporation. If any of the
events enumerated in this subsection (C) occurs, the Board of Directors shall
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determine the effective date of the Change of Control resulting therefrom for
purposes of this Agreement.
(ii) Exceptions. (A) Notwithstanding the foregoing, a
"Change in Control" shall not be deemed to have occurred for purposes of this
Agreement (I) in the event of a sale, exchange, transfer or other disposition of
substantially all of the assets of the Corporation to, or a merger,
consolidation or other reorganization involving the Corporation and, the
Executive, alone or with other officers of the Corporation, or any entity in
which the Executive (alone or with other officers) has, directly or indirectly,
at least a 5% equity or ownership interest or (II) in a transaction otherwise
commonly referred to as a "management leveraged buy-out."
(B) Clause 2(i)(A) above to the contrary notwithstanding, a
Change in Control shall not be deemed to have occurred if a Person becomes the
beneficial owner, directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the Corporation's then
outstanding securities solely as the result of an acquisition by the Corporation
or any subsidiary company of the Corporation of voting securities of the
Corporation which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20% or more
of the combined voting power of the Corporation's then outstanding securities;
provided, however, that if a Person becomes the beneficial owner of 20% or more
of the combined voting power of the Corporation's then outstanding securities by
reason of share purchases by the Corporation or any subsidiary company of the
Corporation and shall, after such share purchases by the Corporation or a
subsidiary company of the Corporation, become the beneficial owner, directly or
indirectly, of any additional voting securities of the Corporation, then a
Change in Control of the Corporation shall be deemed to have occurred with
respect to such Person under clause 2(i)(A)above. Notwithstanding the foregoing,
in no event shall a change in control of the Corporation be
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deemed to occur under clause 2(i)(A) above if the person acquiring such shares
is the Trusts or Benefit Plans.
(C) Clauses 2(i)(A) and 2(i)(B) to the contrary notwithstanding,
the Board may, by resolution adopted by at least two-thirds of the directors
comprising the Incumbent Board, declare that a Change in Control described in
clauses 2(i)(A)(a) or 2(i)(B) has become ineffective for purposes of this
Agreement if all of the following conditions then exist: (I) the declaration is
made prior to the death, disability or termination of employment of the
Executive and within 120 days of the Change in Control; and (II) no Person,
except for (x) the Trusts, and (y) the Benefit Plans, either is the beneficial
owner, directly or indirectly, of securities of the Corporation representing 10%
or more of the combined voting power of the Corporation's outstanding securities
or has the ability or power to vote securities representing 10% or more of the
combined voting power of the Corporation's then outstanding securities. If such
a declaration shall be properly made, no benefits shall be payable hereunder as
a result of such prior but now ineffective Change in Control, but benefits shall
remain payable and this Agreement shall remain enforceable as a result of any
other Change in Control unless it is similarly declared to be ineffective.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. The Executive shall be
entitled to the severance benefits provided in Section 4 hereof if his
employment is terminated within the 24 month period following a Change in
Control of the Corporation (even if such 24 month period shall extend beyond the
term of this Agreement or any extension thereof) unless his termination is (i)
because of his death or disability, (ii) by the Subsidiary for Cause or
Disability or (iii) by the Executive other than for Good Reason.
(i) Disability. If, as a result of the Executive's incapacity due
to physical or mental illness, he shall have been absent from his duties with
the Subsidiary on a full-time basis for 26 consecutive weeks, and within 30 days
after written notice of termination is given he shall not have returned to the
full-time performance of his duties, the Subsidiary may terminate this Agreement
for "Disability."
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(ii) Cause. The Subsidiary may terminate
the Executive's employment for Cause. For the purpose of this Agreement, the
Subsidiary shall have "Cause" to terminate the Executive's employment hereunder
upon (A) the willful and continued refusal by the Executive substantially to
perform his duties with the Subsidiary (other than any such refusal resulting
from his incapacity due to physical or mental illness), after a demand for
substantial performance is delivered to the Executive by the Subsidiary's Board
of Directors which specifically identifies the manner in which such Board
believes that the Executive has refused substantially to perform his duties or
(B) the willful engaging by the Executive in gross misconduct materially and
demonstrably injurious to the Corporation or the Subsidiary. For purposes of
this paragraph, no act or failure to act on the Executive's part shall be
considered "willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that his action or omission was in the
best interest of the Subsidiary or the Corporation. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire members of the Subsidiary's Board of Directors, at a meeting of
such Board called and held for that purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with his counsel, to be
heard before the Board), finding that in the good faith opinion of the Board the
Executive was guilty of conduct set forth above in clauses (A) or (B) of the
second sentence of this paragraph and specifying the particulars thereof in
detail.
(iii) Good Reason. The Executive shall be entitled to terminate
his employment, and receive benefits hereunder, for Good Reason at any time
within 24 months after the date of a Change in Control of the Corporation. For
purposes of this Agreement, "Good Reason" shall mean, unless the Executive shall
have consented in writing thereto, any of the following:
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(A) a reduction in the Executive's title, duties,
responsibilities or status, as compared to such title, duties, responsibilities
or status immediately prior to the Change in Control or as the same may be
increased after the Change in Control;
(B) the assignment to the Executive of duties
inconsistent with the Executive's office on the date of the Change in Control or
as the same may be increased after the Change in Control;
(C) a reduction by the Subsidiary in the Executive's
base salary as in effect immediately prior to the Change in Control or as the
same may be increased after the Change in Control; or a failure by the
Subsidiary following a Change in Control to increase, within twelve months of
the Executive's last increase in annual base salary, his base salary by an
amount not less than the greater of (1) 6% or (2) the average percentage
increase in base salary for all officers of the Corporation during the twelve
month period immediately following his last increase in base salary, provided,
however, that the Subsidiary's failure to increase his base salary more than 15%
annually shall not constitute Good Reason under this paragraph under any
circumstances;
(D) a requirement that the Executive relocate anywhere
not mutually acceptable to the Executive and the Subsidiary if the relocation is
to other than the greater Greensboro, North Carolina or ___________areas or the
imposition on the Executive of business travel obligations substantially greater
than his business travel obligations during the year prior to the Change in
Control;
(E) the relocation of the Corporation's principal
executive offices to a location outside the greater Greensboro, North Carolina
area;
(F) the failure by the Corporation or the Subsidiary
to continue in effect any material fringe benefit or compensation plan,
retirement plan, life insurance plan, health and accident plan or disability
plan, including but not limited to the Corporation's Executive Incentive
Compensation Plan ("EICP"), Annual Discretionary Management Incentive
Compensation Program ("ADMICP") or other applicable bonus program, the Amended
and
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Restated Supplemental Executive Retirement Plan, the Executive Deferred Savings
Plan, the Deferred Compensation Plan and the 1996 Stock Compensation Plan, as
amended, in which the Executive is participating at the time of a Change in
Control of the Corporation (or plans providing the Executive with substantially
similar benefits), the taking of any action by the Subsidiary or the Corporation
which would adversely affect the Executive's participation in or materially
reduce his benefits under any of such plans or deprive him of any material
fringe benefit enjoyed by him at the time of the Change in Control, or the
failure by the Subsidiary to provide him with the number of paid vacation days
to which he is then entitled under (1) the Subsidiary's normal vacation policy
in effect immediately prior to the Change in Control or (2) any agreement
regarding vacation entitlement which the Executive had with the Subsidiary
immediately prior to the Change in Control, whichever is greater;
(G) the adoption or pursuit by the Subsidiary or the
Corporation or its management of one or more policies or practices which, in the
sole opinion of the Executive, are contrary to the ethics, traditions, policies
or practices of the Subsidiary or the Corporation as in effect immediately prior
to the Change in Control; or
(H) any breach of this Agreement of any nature
whatsoever on the part of the Subsidiary or the Corporation.
(iv) Notice of Termination. Any termination by the Subsidiary
pursuant to paragraph 3(i) or 3(ii) hereof, or otherwise, or by the Executive
pursuant to paragraph 3(iii) hereof, which, in any case, occurs within 24 months
after a Change in Control of the Corporation, shall be communicated by written
Notice of Termination (as hereinafter defined) to the other party hereto;
provided that, in the case of a termination for Cause, there shall also have
been delivered to the Executive the resolution required to be delivered pursuant
to paragraph 3(ii) hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
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(v) Date of Termination. "Date of Termination" shall mean (A) if
this Agreement is terminated for Disability, 30 days after Notice of Termination
is given (provided that the Executive shall not have returned to the performance
of his duties on a full-time basis during such 30-day period), (B) if the
Executive's employment is terminated pursuant to paragraph 3(ii) above, the date
specified in the Notice of Termination, and (C) if the Executive's employment is
terminated for any other reason, the date on which a Notice of Termination is
given, or, if the Subsidiary terminates the Executive's employment without
giving a Notice of Termination, the date on which such termination is effective.
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(i) During any period that the Executive fails to perform his
duties as a result of incapacity due to physical or mental illness, he shall
continue to receive his full base salary at the rate then in effect until his
employment is terminated pursuant to paragraph 3(i) hereof. Thereafter, his
benefits, if any, shall be determined in accordance with whatever disability
income insurance plan or plans the Subsidiary may then have in effect; provided,
however, if at the time Disability of the Executive is established the
disability benefits then available are less advantageous to the Executive than
the Disability benefits which were available upon the Change in Control, then
his termination of employment shall be deemed to have occurred as a voluntary
termination for Good Reason under paragraph 3(iii) hereof and not by reason of
his disability, and the benefits payable to the Executive under paragraph 4(iii)
hereof shall apply in lieu of this paragraph 4(i).
(ii) If the Executive's employment shall be terminated for
Cause, the Subsidiary or the Corporation shall pay him his full base salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given and the Subsidiary and the Corporation shall have no
further obligations to the Executive under this Agreement.
(iii) If the Subsidiary shall terminate the Executive's
employment other than pursuant to paragraph 3(i) or 3(ii) hereof within 24
months after a Change in Control of the
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Corporation, or if the Executive shall terminate his employment for Good Reason
pursuant to paragraph 3(iii) hereof within 24 months after a Change in Control,
then:
(A) The Corporation or the Subsidiary shall pay to the
Executive, no later than 30 days following the Date of Termination, the
Executive's accrued but unpaid base salary through the Date of Termination plus
compensation for current and carried-over unused vacation and compensation days
in accordance with the Subsidiary's personnel policy.
(B) In lieu of any further payments of salary to the
Executive after the Date of Termination, the Corporation or the Subsidiary shall
pay to the Executive, not later than thirty (30) days following the Date of
Termination and notwithstanding any dispute between the Executive and the
Subsidiary or the Corporation as to the payment to the Executive of any other
amounts under this Agreement or otherwise, a lump sum severance payment (the
"Severance Payment") equal to 1.99 times the greater of (1) the average annual
compensation which was payable to the Executive by the Corporation (or any
corporation (an "Affiliate") affiliated with the Corporation within the meaning
of Section 1504 of the Internal Revenue Code of 1986, as amended (the "Code"))
and includible in the Executive's gross income for federal income tax purposes
for the five taxable years ending prior to the date on which a Change in Control
of the Corporation occurred (or such portion of such period during which the
Executive performed personal services for the Corporation) or (2) an amount
equal to the sum of (I) the greater of the Executive's highest annual base
salary in effect at any time within the twelve month period preceding a Change
in Control or the Date of Termination, and (II) the greater of (i) the Target
Incentive Award or Target Amount to which the Executive would have been entitled
under the EICP or ADMICP, as applicable, and the base or target amount to which
the Executive would have been entitled under any other bonus program of the
Corporation, had he been employed by the Corporation at the end of the fiscal
year in which the Date of Termination occurs, or (ii) the highest amount awarded
to the Executive under the EICP or ADMICP and under any other bonus program of
the Corporation during the five fiscal years preceding the Date of Termination.
The Executive's average annual compensation in clause (1) above shall be
determined in
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accordance with any regulations promulgated under Section 280G of the Code.
Compensation payable to the Executive by the Corporation (or an Affiliate) shall
include every type and form of compensation includible in the Executive's gross
income in respect of the Executive's employment by the Corporation (or an
Affiliate).
(C) In addition to the foregoing amounts payable under
paragraph 4(iii)(A) and (B) above, the Executive will be entitled to the
following:
(1) any stock option rights held by the
Executive which were not fully exercisable on the Date of Termination
shall immediately become fully exercisable by the Executive;
(2) the Corporation (or an Affiliate) shall
maintain in full force and effect, for the Executive's continued
benefit, until the earlier of (I) 24 months after the Date of
Termination or (II) the Executive's 65th birthday, all life, medical and
dental insurance programs in which the Executive was entitled to
participate immediately prior to the Date of Termination provided that
his continued participation is possible under the general terms and
provisions of such programs; provided that, in the event the Executive's
participation in any such program is barred, the Corporation (or an
Affiliate) shall arrange to provide the Executive with benefits
substantially similar to those which he was entitled to receive under
such programs;
(3) in addition to the benefits to which the
Executive is entitled under the Corporation's (or an Affiliate's)
retirement plans in which he participates or any successor plans or
programs in effect on the Date of Termination, the Corporation (or an
Affiliate) shall pay the Executive in one lump sum in cash, at the
Executive's normal retirement age, as defined in such plan or programs
(or earlier retirement age should the Executive so elect pursuant to
such plan or programs), an amount equal to the actuarial equivalent of
the retirement pension to which the Executive would have been entitled
under the terms of such retirement plan or programs had he accumulated
24 additional months of continuous service after the Date of Termination
(or, if less, the number of
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months between the Date of Termination and the date on which the
Executive attains normal retirement age under the plan) at his base
salary rate in effect on the Date of Termination under such retirement
plan or program reduced by the single sum actuarial equivalent of any
amounts to which the Executive is entitled pursuant to the provisions of
said retirement plans and programs; provided that, at the option of the
Executive, instead of paying such amount at the Executive's normal
retirement age, such amount, discounted to reflect its then present
value, shall be paid to the Executive at the same time as the Severance
Payment; and further provided that, for purposes of this subparagraph
(3), the actuarial equivalents shall be determined, and all other
calculations shall be made, using the same methods and assumptions
utilized under the Corporation's (or an Affiliate's) retirement plan or
programs; and
(4) the Executive shall become fully vested and
have a nonforfeitable interest in any benefit which he has accrued under
the Corporation's Amended and Restated Supplemental Executive Retirement
Plan ("SERP"), including any Supplemental Annual Benefit Determinations
or similar determinations or benefit grants under the SERP adopted at
any time prior to termination of the Executive's employment.
(D) (1) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Corporation or the Subsidiary to or for the benefit
of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (a
"PAYMENT"), would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the "CODE") or similar
section or any interest or penalties with respect to such excise tax
(such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "EXCISE TAX"), then the
Executive shall be
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entitled to receive an additional payment (a "GROSS-UP PAYMENT ") in an
amount such that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including
any Excise Tax, imposed upon the Gross-Up Payment the Executive retains
an amount of the Gross-Up Payment equal to all such taxes imposed upon
the Payments.
(2) Subject to the provisions of subsection (4)
hereof, all determinations required to be made under this subsection,
including whether a Gross-Up Payment is required and the amount of such
Gross-Up Payment, shall be made by the firm of independent auditors
acting as such for the Corporation or the Subsidiary immediately prior
to the Change in Control (the "ACCOUNTING FIRM") provided, however, if
the Accounting Firm has performed services for the person, entity or
group who caused the Change in Control, or an affiliate thereof, the
Executive may select an alternative accounting firm from any nationally
recognized firm of certified public accountants, which shall be treated
as the Accounting Firm for purposes hereof, The Accounting Firm shall
provide detailed supporting calculations both to the Corporation (and
the Subsidiary) and the Executive within 30 days of termination of
employment under this Agreement, if applicable, or such earlier time as
is requested by the Executive or the Corporation. When calculating the
amount of the Gross-Up Payment, the Executive shall be deemed to pay:
(I) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar
year in which the Gross-Up Payment is to be made, and
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(II) any applicable state and local income taxes at the
highest applicable 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.
(3) If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive
with an opinion that he or she has substantial authority not to report
any Excise Tax on his or her federal income tax return. Any
determination by the Accounting Firm shall be binding upon the
Corporation (and the Subsidiary) and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time
of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the
Corporation or the Subsidiary should have been made ("UNDERPAYMENT"),
consistent with the calculations required to be made hereunder. In the
event that the Corporation (and the Subsidiary) exhausts their remedies
pursuant to subsection (4) hereof, and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Corporation or the Subsidiary
to or for the benefit of the Executive.
(4) The Executive shall notify the Corporation (and
the Subsidiary) in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Corporation or the
Subsidiary of the Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than ten business days after
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the Executive knows of such claim and shall apprise the Corporation (and
the Subsidiary) of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the thirty day period following the date on
which it gives such notice to the Corporation (and the Subsidiary) (or
such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Corporation or the Subsidiary
notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
(I) give the Corporation (and the Subsidiary) any
information reasonably requested by the Corporation (and
the Subsidiary) relating to such claim,
(II) take such action in connection with contesting such
claim as the Corporation or the Subsidiary shall
reasonably request in writing from time to time including,
without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected
by the Corporation,
(III) cooperate with the Corporation (and the Subsidiary)
in good faith in order effectively to contest such claim,
and
(IV) permit the Corporation (and the Subsidiary) to
participate in any proceedings relating to such claim;
provided, however, that the Corporation or the Subsidiary shall bear and
pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify
and hold the Executive harmless, on an after-tax basis, for any Excise
Tax or income tax, including interest and penalties with respect
thereto, imposed
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as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this subsection, the
Corporation shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed and xxx for a refund
or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Corporation shall determine; provided, however,
that if the Corporation directs the Executive to pay such claim and xxx
for a refund, the Corporation or the Subsidiary shall advance the amount
of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax, including interest or penalties with
respect thereto, imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and further provided
that any extension of the statue of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Corporation's control of the contest
shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(5) If after the receipt by the Executive of an amount
advanced by the Corporation or the Subsidiary pursuant to this
subsection the Executive becomes entitled
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to receive any refund with respect to such claim, the Executive shall
(subject to the Corporation's complying with the requirements of
subsection (4)) promptly pay to the Corporation or the Subsidiary the
amount of such refund (together with any interest paid or credited
thereon by the taxing authority after deducting any taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced
by the Corporation or the Subsidiary pursuant to subsection (4) a
determination is made that the Executive shall not be entitled to any
refund with respect to such claim and the Corporation does not notify
the Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty days after such determination, then
such advance shall be forgiven and shall not be required to be repaid
and the amount of such advance shall offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid under subsection (4). The
forgiveness of such advance shall be considered part of the Gross-Up
Payment and subject to gross-up for any taxes (including interest or
penalties) associated therewith.
(iv) The Executive's right to receive payments under this
Agreement shall not decrease the amount of, or otherwise adversely affect, any
other benefits payable to the Executive under any plan, agreement or arrangement
relating to employee benefits provided by the Corporation or the Subsidiary.
(v) The Executive shall not be required to mitigate the amount
of any payment provided for in this paragraph 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
paragraph 4 be reduced by any compensation earned by the Executive as the result
of employment by another employer or by reason of the Executive's receipt of or
right to receive any retirement or other benefits after the date of termination
of employment or otherwise.
(vi) The Corporation may, but shall not be obligated to,
provide security for payment of the amounts set forth in this Agreement in a
form that will
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cause such amounts to be includible in the Executive's
gross income only for the taxable year or years in which
such amounts are paid to the Executive under the terms of
this Agreement. The form of security may include a funded
irrevocable grantor trust established so as to satisfy any
published Internal Revenue Service guidelines.
5. FEES AND EXPENSES. The Corporation or the Subsidiary shall pay
all reasonable legal fees and related expenses (including the costs of experts,
evidence and counsel and other such expenses included in connection with any
litigation or appeal) incurred by the Executive as a result of (i) his
termination of employment (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination of employment) or (ii)
his seeking to obtain or enforce any right or benefit provided by this Agreement
or by any other plan or arrangement maintained by the Corporation or the
Subsidiary under which he is or may be entitled to receive benefits. The
Corporation further agrees to pay prejudgment interest on any money judgment
against the Corporation obtained by the Executive in any arbitration or
litigation against it to enforce such rights calculated at the prime interest
rate of Wachovia Bank, N.A., or its successor, in effect from time to time from
the date it is determined that payment(s) to him should have been made under
this Agreement.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation, by agreement
in form and substance satisfactory to the Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Corporation would be required to perform it if no succession had taken
place. Failure of the Corporation to obtain such agreement prior to the
effectiveness of any such
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succession shall be a breach of this Agreement and shall entitle the Executive
to compensation in the same amount and on the same terms as he would be entitled
hereunder if he terminated his employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, "Corporation" shall mean the Corporation as defined above and any
successor to its business and/or assets as aforesaid which executes and delivers
the agreement provided for in this paragraph 6 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of law. As used
in this Agreement, "Subsidiary" shall mean Subsidiary as defined above and any
successor to its business or assets.
(ii) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts would still be payable to him hereunder
if he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his devisee,
legatee or other designee or, if there be no such designee, to his estate.
7. NOTICES. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed in the
case of the Executive, to
and in the case of the Corporation and the Subsidiary , to the principal
executive offices or the Corporation , provided that all notices to the
Corporation and the Subsidiary shall be directed to
20
the attention of its Chief Executive Officer with copies to the Secretary of the
Corporation and to the Board of Directors of the Subsidiary and the Board of
Directors of the Corporation, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
8. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and a duly authorized officer of the
Corporation. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. This Agreement shall
not be assigned in whole or in part without the prior written consent of the
non-assigning party; provided, however, this sentence shall not be construed to
relieve the Corporation or any successor (whether direct or indirect) from
liability hereunder as provided in paragraph 6. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws
(but not the law of conflicts of laws) of the Commonwealth of Pennsylvania.
9. VALIDITY. The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
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EXECUTIVE
Witness:
(SEAL)
------------------------------ -----------------------------
VF CORPORATION
Attest: By:
--------------------------------
Xxxxxx X. XxXxxxxx
------------------------------ Chairman, President and Chief
Xxxxxxx X. Xxxxxxxx Executive Officer
Secretary
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