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EX-10.(K)
FRUIT OF THE LOOM, INC.
Employment Agreement for Xxxxxxx Xxxxxx,
As Amended and Restated January 6, 1999
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FRUIT OF THE LOOM, INC.
Employment Agreement for Xxxxxxx Xxxxxx,
As Amended and Restated January 6, 1999
1. Employment...........................................................................1
2. Term.................................................................................1
3. Offices and Duties...................................................................2
4. Salary and Annual Incentive Compensation.............................................3
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.................................................................8
7. Termination of Employment For Reasons Other Than Normal Retirement,
Approved Early Retirement, Death or Disability......................................11
8. Definitions Relating to Termination Events..........................................15
9. Excise Tax Gross-Up.................................................................18
10. Non-Competition and Non-Disclosure; Executive Cooperation;
Non-Disparagement...................................................................20
11. Governing Law; Disputes; Arbitration................................................21
12. Miscellaneous.......................................................................23
13. Indemnification and Release.........................................................25
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FRUIT OF THE LOOM, INC.
Employment Agreement for Xxxxxxx Xxxxxx,
As Amended and Restated January 6, 1999
THIS EMPLOYMENT AGREEMENT, by and between FRUIT OF THE LOOM,
INC., a Delaware corporation (the "Company"), and Xxxxxxx Xxxxxx ("Executive"),
constitutes an amendment and restatement of the current Employment Agreement
between the Company and the Executive, and 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 served the Company in the position of
Chairman of the Board and Chief Executive Officer since May 1985; and
WHEREAS, the Company desires to continue to employ Executive
in his capacity as Chairman of the Board and Chief Executive Officer (and in
such additional positions as are set forth below) 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 Chairman
of the Board, Chief Executive Officer, Chief Operating Officer and President and
Executive hereby agrees to accept such employment and serve in such capacities,
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 in
5 years 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
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party by one additional year (added to the end of the Term) first on January 6,
2000 (extending the Term to January 6, 2005) and on each succeeding January 6th
thereafter, unless either party shall have served written notice in accordance
with the provisions of Section 12(d) upon the other party prior to 6 months
preceding the date upon which such extension would become effective electing not
to extend the Term further as of the January 6th next succeeding the date such
notice is served, 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 Chief Executive
Officer, Chief Operating Officer and President of the Company and, if elected,
shall serve as a member of the Board of Directors of the Company (the "Board")
and, for so long as he is serving on the Board, Executive agrees to serve as
Chairman of the Board, as a member of the Executive Committee, and as a member
of any other Board Committee if the Board shall elect Executive to such
positions. In any and all such capacities, Executive shall report only to the
Board of Directors of the Company. Executive shall have and perform such duties,
responsibilities, and authorities as are customary for the chief executive
officer 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. Executive shall
devote substantial business time and attention, and his best efforts, abilities,
experience, and talent to the position of Chief Executive Officer 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 but not limited to (i) continuing employment as Chairman and Chief
Executive Officer and in other capacities by Xxxxxx Industries, Inc. or a
successor ("FII") or Xxxxxx Inc. or a successor ("FI"), (ii) employment in any
capacity by other entities in which Executive, FII, or FI may have a direct or
indirect equity investment, for which FII may perform management services,
and/or which may be otherwise affiliated with Executive, FII, or FI, (iii)
service as a director of any other entity, (iv) service to any educational,
charitable, community, civic, religious, or similar type of organization, and
public speaking engagements, and (v) management of personal and family
investments and financial and legal affairs, to the extent that such other
activities (including those indicated in (i) through (v) above) 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 materially impair 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.
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(c) Rank of Executive Within Company. As Chairman of the Board
and Chief Executive Officer of the Company, Executive shall be the
highest-ranking executive of the Company.
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
$2,000,000 payable in cash in substantially equal monthly 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 (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.
(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 Chief Executive Officer of the Company shall be eligible for an award
not less than the award opportunity assigned to the Executive under the 1995
EICP in 1998 (an amount equal to 2 times the Executive's annual rate of base
salary (without regard to any election to forego or defer salary as described in
Section 4(a) above)). 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 (specifically including the "Pars" plan), 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
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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.
The foregoing notwithstanding, Executive's eligibility for grants of stock
options thereunder are subject to Section 5(b). 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) Participation in Equity Investment Program. Executive
shall be eligible to participate in the Company's Equity Investment Program (the
"Program"), and Executive has previously agreed to participate in the Program,
in accordance with the terms and conditions set forth in this Section 5(b) and
as specified under the Program. Accordingly, the provisions of Section 4(a) and
5(a) notwithstanding, pursuant to the prior agreement of Executive, Executive
has foregone, and agrees to forego, during the period commencing January 1, 1997
and ending December 31, 1999, all base salary up to the $950,000 per year base
salary in effect for 1996 otherwise payable under Section 4(a). After December
31, 1999, Executive will be paid base salary in accordance with Section 4(a).
Notwithstanding any other provision of this Agreement to the contrary, the
$950,000 portion of the Executive's base salary foregone by Executive hereunder
shall be imputed and credited as base salary for all purposes under this
Agreement and the plans and programs of the Company.
(c) 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.
In furtherance of and not in limitation of the foregoing
(except as provided in the first sentence of Section 5(c)(iv) below), during the
Term:
(i) Executive will participate as Chief Executive Officer in all
executive and employee vacation and time-off programs;
(ii) The Company will provide Executive, as Chief Executive
Officer, with insurance (including group and executive
long-term disability insurance) and other benefits
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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 Company-paid group and individual
term life insurance providing a death benefit of not less than
10 times Executive's annual base salary payable in accordance
with Section 4(a) (including salary that would have been paid
but for Executive's participation in the program under Section
5(b)); provided, however, that such insurance may be combined
with a supplementary retirement funding vehicle;
(iv) Executive will be entitled to retirement benefits
substantially no less favorable than those under the defined
benefit pension plans and programs of the Company as in effect
on the Effective Date; provided, however, that the maximum
annual retirement benefit under such plans and programs shall
be limited to 50% of final average compensation. For purposes
of calculating such benefits, Executive's compensation for the
ten years ending on December 31, 1998, shall include 100% of
annual base salary and 100% of annual incentive compensation,
as well as compensation for services to FII. As of December
31, 1998, Executive has accrued 20 years of service for
purposes of calculating these benefits. For periods commencing
on or after January 1, 1999, Executive's compensation will
include 100% of annual base salary and 100% of annual
incentive compensation paid to Executive for services to the
Company and its subsidiaries (i.e., excluding portions of any
such compensation for services performed for the ultimate
benefit of an entity other than the Company and its
subsidiaries, excluding any payments to Executive under
Section 6 or 7, but including any salary that would have been
paid but for participation in the Program under Section 5(b)).
Service of the Executive which is considered in determining
such benefits shall include the post-termination periods
specified under Section 6(viii) and 7(b)(x), and final average
compensation shall be based on the average of the highest five
consecutive years of such compensation in the ten calendar
year period which includes, as the last year, the calendar
year immediately prior to the calendar year in which the
ending date of Executive's service occurs (for this purpose,
annual incentive compensation shall exclude any payment made
as a result of termination). Further, (A) Executive shall be
credited, for each full year of the Term that is completed
beginning January 1, 1999 (including, for this purpose,
service credited under the post-termination periods specified
under Section 6(viii) and 7(b)(x)), with one additional year
of service under such plans and programs, up to a maximum of
six (6) additional years crediting by operation of this
Section 5(c)(iv)(A), which additional years of service shall
be vested upon such crediting; and (B) amounts equal to the
present value of Executive's accrued benefit vested at any
time during the Term under the Fruit of the Loom, Inc.
Supplemental Executive Retirement Plan (the "SERP") will be
fully funded by the Company by deposits to an irrevocable
"rabbi trust" pursuant to Section 2.2 of the SERP; and
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(v) The Company will provide Executive with health and medical
benefits consistent with its policies for other senior
executives (which currently provide for no co-pays and no
deductibles), provided, however, that supplemental health and
medical benefits shall provide for reimbursement of Executive
to the extent that the $1,000,000 limitation on maximum
lifetime health and medical benefits and reimbursements under
other Company policies and programs is exceeded.
Any provision to the contrary contained in this Agreement
notwithstanding, unless Executive is terminated by the Company for "Cause" (as
defined in Section 8(a) hereof) prior to a Change in Control, Executive may
elect continued participation after termination in the Company's health and
medical coverage for himself and his spouse and dependent children after such
coverage would otherwise end until such time as Executive becomes eligible for
Medicare; provided, however, that in the event of such election, Executive shall
pay the Company each year an amount equal to the current annual COBRA premium
being paid by other former employees of the Company, unless otherwise provided
under Section 6 or 7.
(d) 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(d) 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,
private equity and limited partnerships, and insurance vehicles) (the "Deferred
Compensation Accounts"). Thereafter, Executive's deferral accounts will be
valued by reference to the value of the
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Deferred Compensation Accounts. The Company shall pay all costs of
administration of the deferral 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), 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(d) shall be fully vested and
nonforfeitable; provided, however, Executive acknowledges that his rights to the
deferred compensation provided for in this Section 5(d) 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.
(e) 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.
(f) 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.
(g) 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(d) 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:
(i) the lump-sum payment provided for in Section 7(b)(i); and
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(ii) a lump-sum payment representing the present value of
Executive's accrued vested benefit in all supplemental
(non-qualified) defined benefit plans and programs of the
Company, including, for this purpose, all such benefits which
Executive would accrue under Sections 7(b)(ix) and (b)(x)
(taking into account all supplemental defined benefit pension
service credits provided for in Section 5(c)(iv)(A) by reason
thereof) in the event of a termination of employment described
in Section 7(b) immediately following a Change in Control,
reduced by any amounts in the rabbi trust immediately prior to
such Change in Control which were placed in trust for the
benefit of the Executive (or by such amounts as are,
immediately following a Change in Control, placed in the rabbi
trust for the benefit of the Executive) under such plans.
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.
6. TERMINATION DUE TO NORMAL RETIREMENT, APPROVED EARLY
RETIREMENT, DEATH, OR DISABILITY.
Executive may terminate employment as Chief Executive Officer
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 Chief Executive Officer 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;
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(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 (c) 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 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,
including in and under Section 5(b);
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(vi) All deferral arrangements under Section 5(d) 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(e); 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(c) 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(c)(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, 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).
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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 Chief
Executive Officer 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 Chief Executive Officer 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(c) 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;
(iii) A cash amount equal to the amount credited to Executive's
deferral accounts under deferral arrangements authorized under
Section 5(d) 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
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(iv) Reasonable business expenses and disbursements incurred by
Executive prior to such termination of employment will be
reimbursed, as authorized under Section 5(e).
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 as Chief Executive
Officer 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 as Chief Executive Officer for Good
Reason (as defined in Section 8(d)) upon written notice to the Company;
provided, however, that 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. 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) (subject to Section 5(b)) 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) (without regard to the election to
forego salary pursuant to Section 5(b)) immediately prior to
termination plus the Severance Annual Incentive Amount (as
defined below) multiplied by 5, which payment shall be reduced
pro rata to the extent the number of full months remaining
until Executive attains age 65 is less than 60 months. For
purposes of this Section 7(b)(i) and Section 7(b)(iv), the
"Severance Annual Incentive Amount" shall be (A), in the case
of a termination prior to a Change in Control, 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 compensa-
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tion 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), or
(B), in the case of a termination after a Change in Control,
the greater of the average of the highest three years out of
the last ten calendar years or the annual incentive
compensation payable to Executive upon achievement of the
maximum level of performance for the year of termination,
provided, however, that in either case the Severance Annual
Incentive Amount shall not be less than 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 (and subject to Section
5(b)), 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 (c) 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, in the case of
termination prior to a Change in Control, 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, and which, in the case of termination after a
Change in Control, shall be subject to no proration;
(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;
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(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 5 years following
the termination of Executive's employment;
(vii) All deferral arrangements under Section 5(d) 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(e);
(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 5 years after such termination, Executive
shall continue to participate in all employee, executive, and
special individual benefit plans, programs, and arrangements
under Section 5(c) (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 the executive benefits in effect as of the
Effective Date (as indicated in the benefits statement which
has been provided to Executive for 1999), and further
including but not limited to health, medical, disability, 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 (additional years of service creditable under
Section 5(c)(iv)(A) 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
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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 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 (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:
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(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
(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
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(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 Chairman of the Board, Chief Executive 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).
(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, or a removal of Executive from or any failure to
elect or re-elect or, as the case may be, nominate Executive to any such
positions or offices, including as Chairman of the Board or as a member of any
committee of the Board of Directors upon which Executive has served under
Section 3(a), except in connection with the termination
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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 his status as Chairman of the Board and Chief Executive Officer of the
Company and other positions held 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 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
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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 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
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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 by the Company to pay the Excise Tax in a timely manner,
including, but not limited to, interest and penalties, and 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.
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
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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, 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
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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 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.
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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,
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
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With copies to:
Fruit of the Loom, Inc.
5000 Sears Tower
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
If to Executive:
Xxxxxxx Xxxxxx
000 Xxxx Xxxx Xxxxx Xxxxx
Xxxxxxx, 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; 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(c) 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.
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(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
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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.
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