EXHIBIT 10.2
AGREEMENT
THIS AGREEMENT is being executed effective as of the 18th day of September,
2005, by and between TBC CORPORATION (the "Company") and XXXXXXX X. XXXX (the
"Executive"), under the following circumstances:
A. The Company and the Executive are parties to an Executive
Employment Agreement, dated as of October 31, 2000 (the "Employment
Agreement"). Among other things, the Employment Agreement provides certain
benefits to the Executive in the event that his employment is terminated
following a Change in Control of the Company (as defined therein).
B. As required by the Employment Agreement, the Company established a
trust for the benefit of the Executive with First Tennessee Bank National
Association (the "Trustee") pursuant to the terms of an Amended and
Restated Trust Agreement, dated as of October 31, 2000 (the "Rabbi Trust").
Under the Rabbi Trust, the Company is obligated to deposit with the
Trustee, upon the earlier of the occurrence of a Change of Control or a
Potential Change of Control, as defined in the Rabbi Trust, amounts which
would become payable to the Executive upon his termination of employment
following a Change of Control of the Company.
C. The Company expects to enter into a Merger Agreement (the "Merger
Agreement") with Sumitomo Corporation of America ("Parent") and its
wholly-owned subsidiary. For purposes of the Rabbi Trust, the execution of
the Merger Agreement will constitute a Potential Change of Control, and for
purposes of the Employment Agreement and the Rabbi Trust, a Change in
Control will occur upon consummation of the transactions contemplated by
the Merger Agreement.
D. The Parent has requested that the Executive agree, upon the terms
and conditions hereinafter set forth, (i) to waive the requirement that the
Company fund the Rabbi Trust upon either the Potential Change of Control
which will occur when the Merger Agreement is executed or the Change in
Control which will occur upon consummation of the transactions contemplated
by the Merger Agreement; and (ii) effective only upon the Effective Time
(as defined in the Merger Agreement), to waive certain of the Executive's
rights and benefits under the Employment Agreement and make certain other
changes to the Employment Agreement.
E. Parent has advised the Executive and the Company that Parent will
not execute the Merger Agreement without the execution of this Agreement by
the Executive and the Company, and it is contemplated that this Agreement
will be executed immediately prior to the execution of the Merger
Agreement.
NOW, THEREFORE, in consideration of and reliance upon the mutual promises
hereinafter set forth and the Guarantee appended to the end of this Agreement,
the parties hereby agree as follows:
1. Notwithstanding the provisions of the Rabbi Trust, (a) the execution of
the Merger Agreement and the consummation of the transactions contemplated
thereby shall not constitute a Potential Change of Control or a Change of
Control, as such terms are used in the Rabbi Trust; and (b) the Company shall
not be obligated to make, and shall not make, any contribution to the Trust
pursuant to Section 5.2 or 5.3 thereof as a result of the execution of the
Merger Agreement or the consummation of the transactions contemplated thereby.
The Company shall take all necessary steps to cause the Trustee to provide its
agreement to the foregoing waiver of the provisions of the Rabbi Trust.
2. Contemporaneously with the Effective Time, the first paragraph of
Section 6.E. of the Employment Agreement shall be revised to read as follows:
"If during the period of fifteen (15) months following the Effective
Time (as defined in the Merger Agreement relating to the Company, dated
September 18, 2005), the Executive resigns for Good Reason or is discharged
by the Company (except for termination pursuant to the provisions of clause
(i) of Section 6.C. above), the following shall be applicable, subject to
the limitations of Section 17:"
In addition, contemporaneously with the Effective Time, Section 6.E.1 of the
Employment Agreement shall be revised to read as follows:
"1. During the remainder of the period specified in Section 1 hereof
or for a period of fifteen (15) months after such termination of
employment, whichever is longer, the Company shall continue to pay to the
Executive an amount equal to his salary determined in accordance with the
provisions of Section 3, including any compensation deferred in accordance
with the provisions of Section 4."
In addition, contemporaneously with the Effective Time, the words "one (1) year"
in the first sentence of Section 1 of the Employment Agreement shall be changed
to "fifteen (15) months".
3. Contemporaneously with the Effective Time, the following provision shall
be added to the Employment Agreement as Section 6.E.8:
"8. As used herein, "Good Reason" means that (i) the Company reduces
the annual base salary or bonus opportunities (exclusive of stock options
or restricted shares) of the Executive, or significantly reduces the job
responsibilities of the Executive, in either case for reasons other than
for those described in clause (i) of Section 6.C. above, provided that the
Executive gives the Company notice of the circumstances constituting any
such reduction within 120 days after its occurrence and the Company fails
to cure the same within 45 days after its receipt of such notice; (ii) the
Company requires the Executive to relocate his place of business from its
current location to another city which is more than 50 miles from the
current location, provided that the Executive, within
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45 days after being advised of the relocation, gives the Company notice
that he declines to relocate, and the Company fails to rescind the
relocation within 45 days after its receipt of such notice; or (iii) the
Company otherwise breaches or fails to perform its respective obligations
under this Agreement, provided that the Executive gives the Company notice
of the circumstances constituting such breach or failure within 45 days
after its occurrence and the Company fails to remedy the same within 45
days after its receipt of such notice."
4. Contemporaneously with the Effective Time, the following provision shall
be added as Section 17 to the Employment Agreement:
"Section 17. Section 409A Limitations. To the extent applicable, it is
intended that this Agreement comply with the provisions of Section 409A of
the Code, so as to prevent the inclusion in gross income of any amounts
payable or benefits provided hereunder in a taxable year that is prior to
the taxable year or years in which such amounts or benefits would otherwise
actually be distributed, provided, or otherwise made available to the
Executive. This Agreement shall be construed, administered, and governed in
a manner consistent with this intent. Any provision that would cause any
amount payable or benefit provided under this Agreement to be includible in
the gross income of the Executive under Section 409A(a)(1) of the Code
shall have no force and effect. In particular, to the extent the Executive
becomes entitled to receive a payment or a benefit upon an event that does
not constitute a permitted distribution event under Section 409A(a)(2) of
the Code, then notwithstanding anything to the contrary in this Agreement,
such payment or benefit will be made or provided to the Executive on the
Executive's "separation from service" with the Company (within the meaning
of Section 409A of the Code); provided, however, that if the Executive is a
"specified employee" (within the meaning of Section 409A of the Code), the
amount payable pursuant to Sections 6.D. and 6.E. of this Agreement shall
either (i) be revised so that the aggregate amount payable for the first
six months following the Executive's separation from service shall be paid
in the month of separation from service and any balance shall be paid
monthly commencing on the first day of the seventh month following
separation from service and on the first day of each month thereafter until
paid in full or (ii) if the approach under clause (i) of this Section 17 is
not permitted by Section 409A of the Code, then such payments shall
commence on the date which is six months after the date of the Executive's
separation from service with the Company and the amount payable on such day
shall be the aggregate of six months of the total amount payable and any
balance shall be payable on the first day of each month thereafter until
paid in full. Any reference in this Plan to Section 409A of the Code shall
also include any proposed, temporary, or final regulations, or any other
guidance, promulgated with respect to such Section by the U.S. Department
of the Treasury or the Internal Revenue Service."
5. In the event that the Effective Time fails to occur for any reason
whatsoever, Paragraphs 2, 3, and 4 of this Agreement shall be null and void and
of no force and effect.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
TBC CORPORATION
By /S/ XXXXXXXX X. DAY /S/ XXXXXXX X. XXXX
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Xxxxxxxx X. Day, XXXXXXX X. XXXX
President and Chief Executive Officer
ACKNOWLEDGMENT AND AGREEMENT
As the Trustee of the Rabbi Trust referred to in the foregoing Agreement
and in accordance with the provisions of Paragraph 1 thereof, the undersigned
hereby (i) acknowledges the agreements made by the Executive and the Company in
Paragraph 1 of the foregoing Agreement, and (ii) agrees to the waiver of the
funding of the Rabbi Trust upon and subject to the provisions of Paragraph 1 of
the foregoing Agreement.
IN WITNESS WHEREOF, the undersigned, in its capacity as Trustee, has
executed this Acknowledgment and Agreement effective as of the 18th day of
September, 2005.
FIRST TENNESSEE BANK
NATIONAL ASSOCIATION
By
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Title:
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GUARANTEE
IN CONSIDERATION OF the Executive's execution of the foregoing Agreement,
the undersigned agree as follows: (i) contemporaneously with the Effective Time,
the undersigned shall cause the Surviving Corporation (as defined in the Merger
Agreement) to assume and agree to perform the Employment Agreement in the same
manner and to the same extent as the Company would be required to perform it if
the transactions contemplated by the Merger Agreement had not taken place; and
(ii) contemporaneously with the Effective Time, the undersigned shall be deemed
to have jointly and severally guaranteed to the Executive the full and complete
performance by the Surviving Corporation of its obligations to the Executive
under the Employment Agreement.
THE UNDERSIGNED FURTHER AGREE that the provisions set forth in the
preceding paragraph shall be effective automatically at the Effective Time and
shall not require the execution of any further guarantee or other agreement by
the Surviving Corporation or either of the undersigned.
IN WITNESS WHEREOF, the undersigned have executed this Guarantee as of the
18th day of September, 2005.
SUMITOMO CORPORATION OF AMERICA
By /S/ XXXXXXXX XXXXX
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Name: Xxxxxxxx Xxxxx
Title: Senior Vice President
SUMITOMO CORPORATION
By
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Name:
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Title:
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