CHANGE IN CONTROL AGREEMENT (For Vice Presidents [1x])
EXHIBIT 10.28
(For Vice Presidents [1x])
AGREEMENT dated as of January 1, 2009, between XXXXXXX FABRICS, INC., a Delaware corporation
(“Corporation”), and (“Executive”), whose address is .
WHEREAS:
A. Corporation wishes to attract and retain well qualified executive and key personnel and,
in the event of any Change in Control (as defined in Section 2) of Corporation, to assure both
itself and Executive of continuity of management; and
B. Corporation, wishes to enter into this Agreement until March 31, 2010 (“the Expiration
Date”), though this Agreement may be renewed for additional one year periods as of the Expiration
Date and each subsequent expiration, by mutual written consent of the parties hereto; and
C. No benefits shall be payable under this Agreement unless the Effective Date shall occur
and thereafter Executive’s employment is terminated; and
D. The employment of Executive is “at will” and may be terminated by Corporation without
payment of any benefits hereunder until the occurrence of a Change in Control;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is
hereby agreed by and between Corporation and Executive as follows:
1. Operation of Agreement. No benefits shall be payable hereunder unless a Change in
Control (as defined in Section 2) occurs during the Change in Control Period (as defined in Section
3). For the purposes of this Agreement the date on which such a Change in Control occurs is
referred to herein as the “Effective Date.”
2. Change in Control. For the purposes of this Agreement, the term “Change in
Control” means the happening of any of the following: (i) any person or entity, including a
“group” as defined in Section
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13(d)(3) of the 1934 Act, other than the Company, a subsidiary of the Company, or any employee
benefit plan of the Company or its subsidiaries, becomes the beneficial owner of the Company’s
securities having 51 percent or more of the combined voting power of the then outstanding
securities of the Company that may be cast for the election for directors of the Company (other
than as a result of an issuance of securities initiated by the Company in the ordinary course of
business); or (ii) as the result of, or in connection with, any cash tender or exchange offer,
merger or other business combination, sale of assets or contested election, or any combination of
the foregoing transactions, less than a majority of the combined voting power of the then
outstanding securities of the Company or any successor corporation or entity entitled to vote
generally in the election of directors of the Company or such other corporation or entity after
such transaction, are held in the aggregate by holders of the Company’s securities entitled to vote
generally in the election of directors of the Company immediately prior to such transactions.
3. Change in Control Period. The “Change in Control Period” is the period commencing
on the date of this Agreement and ending on the earlier to occur of (i) the Expiration Date, or
(ii) the first day of the month coinciding with or next following Executive’s 65th birthday. The
expiration of the Change in Control Period shall not limit Corporation’s obligation to provide, or
Executive’s right to collect, payments and benefits pursuant to Section 5 and Section 10 hereof.
4. Certain Definitions.
(a) Death or Disability. Executive’s employment shall terminate automatically upon
Executive’s death (“Death”). Corporation will be considered to have terminated Executive’s
employment for Disability, if after having established Executive’s Disability (as defined below),
Executive receives written notice given in accordance with Section 9(b) of Corporation’s intention
to terminate his employment. Executive’s employment will terminate for Disability effective on the
90th day after receipt of such notice (the “Disability Effective Date”) if within such 90-day
period after such receipt Executive shall fail to return to full-time performance of his duties.
For purposes of this Agreement, “Disability” means a disability
that, after the expiration of more than 180 days after its commencement, is determined to be total
and permanent by a
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physician selected by Corporation or its insurers and acceptable to Executive or his legal
representative (such agreement as to acceptability not to be withheld unreasonably).
Consistent with, and not in limitation of, the provisions of Section 6 of this Agreement,
neither a termination for, nor a determination of, Disability pursuant to this Section 4(a) shall
be deemed in and of itself a termination for or determination of disability with respect to
Executive’s eligibility to receive long-term disability benefits, continued medical, dental, or
life insurance coverage, retirement benefits, or benefits under any other plan or program provided
by Corporation or one of its affiliated companies and for which Executive may qualify.
(b) Cause. Executive’s employment will be terminated for Cause if the majority of the
Incumbent Board determines that Cause (as defined in this Agreement) exists. For purposes of this
Agreement, “Cause” means (i) an act or acts of fraud or misappropriation on Executive’s part that
result in or are intended to result in his personal enrichment or the enrichment of a competitor of
Corporation at the expense of Corporation or one of its affiliated companies, (ii) moral turpitude,
or (iii) conviction of a felony or misdemeanor. For purposes of this Agreement, “moral turpitude”
is defined for the purposes of this Severance Agreement as the following:
| (1) | That element and personal misconduct in the private and social duties which a person owes to his fellow human beings or to society in general, which characterizes the act done as an act of baseness, vileness or depravity, and contrary to the accepted and customary rule of right and duty between two human beings. | ||
| (2) | Conduct done knowingly contrary to justice, honesty or good morals. | ||
| (3) | Intentional, knowing or reckless conduct causing bodily injury to another or intentional, knowing or reckless conduct which, by physical menace, put another in fear of imminent serious bodily injury. |
(c) Good Reason. For purposes of this Agreement, “Good Reason” means
(i) without the express written consent of Executive, (A) the assignment to Executive of any
duties inconsistent in any substantial respect with Executive’s position, authority or
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responsibilities as in effect during the 90-day period immediately preceding the Effective Date, or
(B) any other substantial adverse change in such position (including titles and reporting
requirements), authority or responsibilities;
(ii) any failure by Corporation to furnish Executive and/or, where applicable, his family with
compensation (including annual bonus) and benefits at a level equal to or exceeding those received
(on an annual basis) by Executive from Corporation during the 90-day period preceding the Effective
Date, including a failure by Corporation to maintain Corporation’s incentive compensation plans or
any subsequent plans (including the right to defer the receipt of payments thereunder), other than
an insubstantial and inadvertent failure remedied by Corporation promptly after receipt of notice
thereof given by Executive;
(iii) Corporation’s requiring Executive to be based or to perform services at any office or
location other than that at which Executive is primarily based during the 90-day period preceding
the Effective Date, except for travel reasonably required in the performance of Executive’s
responsibilities; or
(iv) any failure by Corporation to obtain the assumption and agreement to perform this
Agreement by a successor as contemplated by Section 8(b).
For the purposes of this Section 4(c), any good faith determination of “Good Reason” made by
Executive shall be conclusive.
(d) Notice of Termination. Any termination by Corporation for Cause or by Executive
for Good Reason shall be communicated by Notice of Termination to the other party hereto given in
accordance with Section 9(b). Any notice of termination by Corporation for Disability shall be
given in accordance with Section 4(a). For purposes of this Agreement, a “Notice of Termination”
means a written notice that (i) indicates the specific termination provision in this Agreement
relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive’s employment under the provision so indicated and (iii) if the
termination date is other than the date of receipt
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of such notice, specifies the termination date (which date shall not be more than 15 days after the
giving of such notice).
(e) Date of Termination. Date of Termination means the date of receipt of the Notice
of Termination or any later date specified therein as the termination date, as the case may be, or
if Executive’s employment is terminated by Corporation for any reason other than Cause, Death or
Disability, the date on which Corporation notifies Executive of such termination. Notwithstanding
any contrary provision in this Section 4(e), if Executive’s employment terminates due to
Disability, the Date of Termination shall be the Disability Effective Date. Notwithstanding any
contrary provision in this Agreement, Executive’s Date of Termination will be the date on which
Executive has a “separation from service” (within the meaning of such term under Section 409A of
the Code) with Corporation and all other companies that would be aggregated with Corporation under
Sections 414(b) or 414(c) of the Code.
5. Obligations of Corporation Upon Termination.
(a) Good Reason Other Than For Cause, Death or Disability. Regardless of whether the
Change in Control Period has expired, if, within one year after the Effective Date, (i) Corporation
shall terminate Executive’s employment for any reason other than for Cause, Death or Disability, or
(ii) Executive shall terminate his employment for Good Reason:
(I) Corporation shall pay to Executive in a lump sum in cash within 20 days after the 6-month
anniversary of the Date of Termination the aggregate of the amounts determined pursuant to the
following clauses (A) and (B):
(A) if not theretofore paid, Executive’s base salary through the Date of Termination at the
rate in effect at the time the Notice of Termination was given; and
(B) the sum of (x) Executive’s annual base salary at the rate in effect at the time the Notice
of Termination was given, or if higher, at the highest rate in effect at any time within the 90-day
period preceding the Effective Date and (y) an amount equal to the bonus (if any) paid or
payable to Executive pursuant to the applicable cash incentive compensations plan(s) with respect
to the last full fiscal
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year completed prior to the Date of Termination; provided, however, if Executive’s Date of
Termination occurs after Executive’s 64th birthday, the amount provided in clause (B) above shall
be prorated by multiplying such amount by a fraction, the numerator of which shall be the number of
months (including fractions of a month) that at the Date of Termination remain until the first day
of the month coinciding with or next following Executive’s 65th birthday and denominator of which
shall be twelve (12); and
(II) until the earlier to occur of (i) the date one year following the Date of Termination, or
(ii) the first day of the first month coinciding with or next following Executive’s 65th birthday
(the period of time from the Date of Termination until the earlier of (i) or (ii) is hereinafter
referred to as the “Unexpired Period”), Corporation shall continue to provide all benefits that
Executive and/or his family is or would have been entitled to receive under all medical, dental,
vision, disability, executive life, group life, accidental death and travel accident insurance
plans and programs of Corporation and its affiliated companies, in each case on a basis providing
Executive and/or his family with the opportunity to receive benefits at least equal to those
provided by Corporation and its affiliated companies for Executive under such plans and programs if
and as in effect at any time during the 90-day period preceding the Effective Date.
Notwithstanding anything in this Agreement to the contrary, Corporation shall not provide medical,
dental or vision benefits to Executive pursuant to this paragraph (II) for longer than the period
of time during which Executive would be entitled (or would, but for such benefits, be entitled) to
continuation coverage under a group health plan of Corporation or one of its affiliated companies
under Section 4980B of the Code (“COBRA”) if Executive elected such coverage and paid the
applicable premiums.
6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit
Executive’s continuing or future participation in any benefit, bonus, incentive or other plan or
program provided by Corporation or any of its affiliated companies and for which Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as Executive may have
under any employment, stock option or other agreements with Corporation or any of its affiliated companies.
Amounts that are vested benefits or that Executive is otherwise entitled to receive under any plan or program of
Corporation or any of its affiliated
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companies at or subsequent to the Date of Termination shall be payable in accordance with such plan
or program.
7. Full Settlement. The payments provided for in this Agreement are in full
settlement of any claims Executive may have against Corporation arising out of his termination,
including, but not limited to, any claims for wrongful discharge. Corporation’s obligation to make
the payments provided for in this Agreement and otherwise to perform its obligations hereunder
shall not be affected by any circumstances, including, without limitation, any setoff,
counterclaim, recoupment, defense or other right that Corporation may have against Executive or
others; provided, however, that Corporation’s failure to make any such setoff shall not constitute
a waiver of any claim of Corporation against Executive. In no event shall Executive be obligated
to seek other employment by way of mitigation of the amounts payable to Executive under any of the
provisions of this Agreement. Corporation agrees to pay, to the full extent permitted by law, all
legal fees and expenses Executive may reasonably incur as a result of any contest (regardless of
the outcome thereof) by Corporation or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance thereof, in each case plus
interest, compounded monthly, on the total unpaid amount determined to be payable under this
Agreement, such interest to be calculated on the basis of the prime commercial lending rate
announced by First Tennessee Bank, N.A. in effect from time to time during the period of such
non-payment, provided that any such payment shall be made on or before the last day of Executive’s
taxable year following the taxable year in which the expense was incurred and no payment shall be
made pursuant to this Section 7 more than 10 years after Executive’s Date of Termination.
Notwithstanding anything in this Agreement to the contrary, if any payment under this Section 7 or
any other Section of this Agreement constitutes deferred compensation under Section 409A of the
Code and is payable on account of Executive’s separation from service (within the meaning of such
term under Section 409A of the Code), such payment shall be made no earlier than the 6-month
anniversary of Executive’s Date of Termination.
8. Successors.
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(a) This Agreement is personal to Executive and without the prior written consent of
Corporation shall not be assignable by Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal
representatives, executors, heirs and legatees.
(b) This Agreement shall inure to the benefit of and be binding upon Corporation and its
successors. Corporation shall require any successor to all or substantially all of the business
and/or assets of Corporation, whether directly or indirectly, by purchase, merger, consolidation,
acquisition of stock, or otherwise, by an agreement in form and substance satisfactory to
Executive, expressly to assume and agree to perform this Agreement in the same manner and to the
same extent as Corporation would be required to perform if no such succession had taken place.
9. Miscellaneous.
(a) The captions of this Agreement are not part of the provisions hereof and shall have no
force or effect. This Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to Executive:
At the address first herein above written.
If to Corporation:
Xxxxxxx Fabrics, Inc.
Xxx Xxxxxxx Xxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attn: Corporate Secretary
Xxx Xxxxxxx Xxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attn: Corporate Secretary
or to such other address as either party shall have furnished to the other in writing in accordance
herewith.
Notice and communications shall be effective when actually received by the addressee.
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(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.
(d) Corporation may withhold from any amounts payable under this Agreement such federal, state
or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.
(e) This Agreement contains the entire understanding with Executive with respect to the
subject matter hereof.
(f) Whenever used in this Agreement, the masculine gender shall include the feminine or neuter
wherever necessary or appropriate and vice versa and the singular shall include the plural and vice versa.
(g) Executive and Corporation acknowledge that the employment of Executive by Corporation is
“at will” and may be terminated by either Executive or Corporation at any time and for any reason.
Nothing contained in the Agreement shall affect such rights to terminate, it being agreed, however,
that nothing in this Section 9(g) shall prevent Executive from receiving any amounts payable
pursuant to Section 5(a), or 10 of this Agreement in the event of a termination described in such
Section 5(a), or 10 on or after the Effective Date.
(h) Executive agrees that Executive, during employment by Corporation, has learned valuable
information concerning the business, operations, employees, vendors and customers of Corporation,
and has established valuable relationships with such vendors and customers of Corporation, and that
use of such information and relationships other than for the benefit of Corporation would
materially damage Corporation. Therefore, Executive covenants and agrees that Executive shall not,
directly or indirectly, for one year from and after Executive’s Date of Termination, reveal any
such information to any person (except as required by law) or solicit any vendor, customer or
employee to cease being same as to Corporation or to change its relationship to Corporation in any
material respect.
10. Penalty Taxes. In the event that any payment or other compensation or benefits
made or provided to or for the benefit of Executive in any way connected with employment of
Executive by
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Corporation becomes subject to tax pursuant to section 4999 of the Code or any successor provision
or any counterpart provision of state or local tax law (the “Penalty Taxes”), Corporation shall
reimburse Executive for any Penalty Taxes and any additional Federal, state and local taxes
(including, without limitation, income taxes and additional Penalty Taxes) required to be paid by
Executive in respect of receipt of such reimbursement, provided any such reimbursement will be made
by the end of Executive’s taxable year next following Executive’s taxable year in which Executive
remits the related taxes. In addition, Corporation shall reimburse Executive for any expenses
incurred by Executive due to a tax audit or litigation addressing the existence or amount of a tax
liability, whether Federal, state, local, or foreign, relating to any Penalty Taxes, provided any
such reimbursement will be made by the end of Executive’s taxable year following Executive’s
taxable year in which the taxes that are the subject of the audit or litigation are remitted to the
taxing authority, or where as a result of such audit or litigation no taxes are remitted, the end
of Executive’s taxable year following Executive’s taxable year in which the audit is completed or
there is a final and non-appealable settlement or other resolution of the litigation.
11. Loss of Executive Officer Status. In the event that Executive ceases to be an
executive officer of Corporation for any reason and at any time, other than during either (i) one
year immediately preceding the Effective Date or (ii) one year immediately following the Effective
Date, this Agreement shall immediately be terminated such that Executive shall be entitled to no
payments hereunder and Corporation shall have no additional obligations hereunder.
12. Revocation of Contingent Payments Agreement. Executive and Corporation previously
entered into an Agreement to Secure Certain Contingent Payments (the “Contingent Payments
Agreement”) to provide for certain benefits in connection with this Agreement, including an
obligation of Corporation to fund benefits under certain conditions. Executive and Corporation
hereby agree that the Contingent Payments Agreement be and hereby is revoked and terminated in its
entirety, effective as of September 30, 2008, such that (i) no benefits shall be payable under the
Contingent Payments Agreement after such date and (ii) neither
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Corporation nor Executive shall have any obligations under the Contingent Payments Agreement after
such date
IN WITNESS WHEREOF, Executive has executed this Agreement and, pursuant to the authorization
of its Board of Directors, Corporation has caused this Agreement to be executed in its name on its
behalf, all as of the day and year first above written.
| Executive | XXXXXXX FABRICS, INC. | |||||||
| By | ||||||||
| Name: | ||||||||
| Title: | ||||||||
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