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EXHIBIT 10.15
STATE OF NORTH CAROLINA EXECUTIVE
SEVERANCE AGREEMENT
COUNTY OF MECKLENBURG
THIS AGREEMENT, entered into this 7th day of November, 1997, by and
between Xxxxx, Inc., a North Carolina corporation, hereinafter referred to as
the "Company", and Xxxx X. Xxxxxx, III, hereinafter referred to as "Executive";
STATEMENT OF PURPOSE
On April 20, 1990, the Company and Executive entered into an Executive
Employment Agreement (the "Employment Agreement") pursuant to which the Company
continued Executive's employment as Executive Vice President of the Company and
provided Executive with certain benefits under the Xxxxx, Inc. Key Executive
Employee Benefit Plan. Executive currently holds the title of President and
Chief Executive Officer of the Company, is a member of the Company's Board of
Directors and holds various other positions with the Company and its Affiliates.
The Board of Directors of the Company has recently authorized a program
(the "New Severance Program") designed to provide certain executives of the
Company with severance benefits upon the termination of their employment with
the Company and its Affiliates under certain circumstances following a Change in
Control of the Company. Certain of the benefits provided Executive under the
Employment Agreement would be duplicative of the benefits offered under the New
Severance Program. Moreover, the benefits which would be provided Executive
under the Employment Agreement in the event of Executive's involuntary
termination of employment without Cause prior to a Change in Control are not
clear.
Therefore, the Company and Executive have decided that it is desirable
and in their respective best interests that the Employment Agreement be
terminated and in lieu thereof that Executive and the Company enter into (i) a
Compensation and Benefits Assurance Agreement pursuant to the New Severance
Program and (ii) this Agreement which provides Executive certain benefits in the
event of Executive's termination of employment under certain circumstances prior
to a Change in Control and in the event of Executive's Retirement.
NOW, THEREFORE, in consideration of the Statement of Purpose and the
terms and provisions of this Agreement, the parties hereto mutually agree as
follows:
1. DEFINITIONS. Capitalized terms used in this Agreement that (i) are
not expressly defined herein and (ii) are defined in the Compensation and
Benefits Assurance Agreement shall have the respective meanings given to those
terms in the Compensation and
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Benefits Assurance Agreement. In addition, as used herein, the following terms
shall have the following meanings:
(a) "Cause" means:
(i) Executive's failure to devote his best
efforts and substantially full time during
normal business hours to the discharge of
the duties and responsibilities of
Executive's position reasonably assigned to
him, other than during reasonable periods of
vacation and other reasonable leaves of
absence commensurate with Executive's
position and length of service; or
(ii) A material and willful breach of Executive's
fiduciary duties to the Company and its
stockholders; or
(iii) In connection with the discharge of
Executive's duties with the Company, one or
more material acts of fraud or dishonesty or
gross abuse of authority; or
(iv) Executive's commission of any willful act
involving moral turpitude which materially
and adversely affects (A) the name and good
will of the Company or (B) the Company's
relationship with its employees, customers
or suppliers; or
(v) Executive's habitual and intemperate use of
alcohol or drugs to the extent that the same
materially interferes with Executive's
ability to competently, diligently and
substantially perform the duties of his
employment.
(b) "Compensation and Benefits Assurance Agreement" means
that certain Compensation and Benefits Assurance
Agreement between Executive and the Company entered
into on the date hereof.
(c) "Current Annual Salary" means the amount of Base
Salary actually paid to Executive during the 52-week
year immediately prior to his Termination of
Employment.
(d) "Disability" means the inability, by reason of
physical or mental infirmity or both, of an
apparently permanent nature of Executive to perform
satisfactorily the duties then assigned to him or the
duties of any other executive position to which the
Board is willing to assign him; Disability must be
determined by the Board and shall be based
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upon certification of such Disability by an
independent qualified physician or other credible
medical evidence, if available.
(e) "Payment Period" means the time beginning with the
Period following the Period in which Executive's
Retirement occurs and ending upon the earlier of (i)
the end of the Period during which occurs the
fifteenth anniversary of the date of Executive's
Retirement or (ii) the last day of the Company's
fiscal year during which occurs the seventy-fifth
anniversary of Executive's birth.
(f) "Period" means the Company's accounting period as
hereinafter described. In accordance with the
provisions of ss.441(f) of the Internal Revenue Code
of 1986, as amended, the Company uses a fiscal year
varying from 52 to 53 weeks ending on the last
Saturday in December in each year, which fiscal year
consists of 13 accounting periods of 4 weeks each,
except that in a year consisting of 53 weeks, the
last accounting period consists of 5 weeks. In the
event that the Company changes its fiscal year for
income tax purposes, the Company shall have the right
to alter and adjust payment dates under Paragraph 3
of this Agreement to coincide with its then existing
accounting period, provided, however, that under no
circumstances shall the Company have the right to
adjust such payment dates hereunder to dates more
than 31 days apart.
(g) "Retire" and "Retirement" mean any Termination of
Employment (including on account of death or
Disability) on or after the Retirement Date.
(h) "Retirement Date" means the earlier of:
(i) the last day of the Company's fiscal year
during which Executive attains the age of
sixty (60) years (i.e., December 31, 2011);
(ii) the date of Executive's death while employed
by the Company; or
(iii) the date of Executive's Termination of
Employment by reason of Executive's
Disability.
(i) "Severance Multiple" means the lesser of (i) two and
one half (2 1/2) or (ii) the quotient obtained by
dividing (A) the number of full months between
Executive's Termination of Employment and the last
day of the Company's fiscal year during which
Executive will attain the age of sixty (60) years
(i.e., December 31, 2011) by (B) 12.
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(j) "Stock Options" means Executive's options to purchase
shares of the Company's common stock pursuant to
options granted to Executive by the Company prior to
Executive's Termination of Employment, which options
are otherwise vested in Executive on the date of his
Termination of Employment and remain unexercised upon
the expiration of such options in accordance with
their terms upon or subsequent to Executive's
Termination of Employment.
(k) "Termination Date" means the date of Executive's
Termination of Employment.
(l) "Value" with reference to Executive's Stock Options
means the estimated present value of the Stock
Options determined on the basis of a "Black-Scholes"
valuation calculation using the price of the shares
of the Company's common stock and comparable U.S.
Treasury Strip Rates with a term equivalent to the
remaining term of the respective Stock Options as
reported in the Wall Street Journal for the date of
Executive's Termination of Employment, using the
dividends paid during the twelve month period
immediately prior to the date of Executive's
Termination of Employment and using a stock price
volatility factor as reflected in the Company's most
recent proxy statement.
2. TERMINATION OF EMPLOYMENT AGREEMENT. The Employment Agreement is
hereby terminated and neither the Company nor Executive have any further
obligations thereunder.
3. RETIREMENT.
(a) RETIREMENT BENEFITS PAYMENT. Subject to Paragraph 3(d),
following Executive's Retirement the Company agrees to pay
Executive in each Period during the Payment Period retirement
benefits in an amount to be determined as hereinafter provided
in this Paragraph 3(a). The amount payable to Executive in
each Period during the Payment Period under this Paragraph
3(a) shall be determined as follows:
(i) determine the product obtained by
multiplying Executive's Current Annual
Salary by five (5), and
(ii) divide said product so obtained by the
number of full Periods during the Payment
Period.
Said retirement benefit payments shall be made at the end of
each Period. In the event that Executive dies after Retirement
and prior to the end of the Payment Period, retirement benefit
payments under this Paragraph 3(a) shall
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terminate with the payment for the Period in which death
occurs. Payments under this Paragraph 3(a) are on account of
Executive's retirement.
(b) DEATH BENEFIT PAYMENTS. In the event of Executive's
Retirement by reason of his death or in the event of
Executive's death after his Retirement but prior to the end of
the Payment Period, subject to Paragraph 3(d), the Company
agrees to pay to the beneficiary designated by Executive [or
to Executive's estate in the event (i) he has not designated a
beneficiary, or (ii) the beneficiary designated by Executive
fails to survive him] in each Period during the remainder of
the Payment Period, a death benefit in an amount equal to
seventy-five percent (75%) of the retirement benefit amount
otherwise payable in each Period to Executive under Paragraph
3(a) above. Said 75% of the amount otherwise payable in each
period under Paragraph 3(a) is the total amount payable by the
Company under this Agreement to such beneficiary. If
Executive's Retirement is by reason of his death, then the
"retirement benefit amount otherwise payable in each period to
Executive under Paragraph 3(a) above" shall be the retirement
benefit amount which Executive would have received if he had
otherwise Retired and commenced receiving retirement benefits
on his date of death. The payments under this Paragraph 3(b)
shall begin with the Period following the Period in which
death occurs and shall end with the expiration of the Payment
Period. Said death benefit payments shall be made at the end
of each Period.
(c) DESIGNATION OF BENEFICIARY. Executive may designate a
beneficiary to receive payments payable hereunder after his
death by filing with the Company a beneficiary designation on
a form approved by the Company, bearing the name, address and
relationship of the beneficiary, which beneficiary designation
form shall be acknowledged by Executive before a Notary Public
or other officer authorized to administer oaths, and shall be
in such other form and shall contain such other information as
shall be satisfactory to the Company. The beneficiary may be
changed by Executive at any time by filing a new beneficiary
designation form with the Company, said new beneficiary
designation form to comply with the provisions of this
Paragraph 3(c). If Executive shall not be survived by the
beneficiary designated in accordance with the provisions
herein set forth, then upon Executive's death, any and all
payments provided for herein shall be made to Executive's
estate. If Executive shall be survived by the beneficiary
designated as provided herein, and such beneficiary shall die
prior to receiving all amounts payable hereunder to such
deceased beneficiary if such beneficiary had lived, then all
remaining amounts that would have been paid to such deceased
beneficiary if living shall be paid to the estate of such
deceased beneficiary.
(d) LUMP SUM PAYMENTS. Notwithstanding the foregoing, in lieu
of the periodic payments provided for in Paragraphs 3(a) and
3(b) above, Executive or his beneficiary or estate, as the
case may be, may elect prior to the time
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such payments are to commence to have the present value of
such payments made in a single cash payment within thirty (30)
days of the date such payments would otherwise commence, said
present value to be determined using the interest rate equal
to the yield on the 10-year United States Treasury Bond on the
date payments would otherwise commence and, in the case of
payments under Paragraph 3(a), without any discount for
mortality. In any case where payments hereunder are to be made
to an estate (either the estate of Executive or the estate of
a deceased beneficiary), the Company may elect in lieu of
making the periodic payments provided in Paragraph 3(b) to
have the present value of such payments made in a single cash
payment within thirty (30) days of the date such payments
would otherwise commence, said present value to be determined
in the same manner as provided above.
4. TERMINATION OF EMPLOYMENT AFTER A CHANGE IN CONTROL AND PRIOR TO
RETIREMENT.
(a) COMPENSATION AND BENEFITS ASSURANCE AGREEMENT.
Contemporaneously herewith, the Company and Executive have
entered into the Compensation and Benefits Assurance
Agreement. In no event shall any payments or benefits be made
to or provided Executive under the terms of this Agreement
upon Executive's Termination of Employment after a Change in
Control and prior to Executive's Retirement Date except for
the benefit expressly provided for in Paragraph 4(b).
(b) PRE-RETIREMENT PAYMENT. In the event of Executive's
Termination of Employment, whether voluntary or involuntary,
with or without Cause, after a Change in Control but prior to
Executive's Retirement Date, the Company agrees to pay
Executive a single lump sum cash payment within thirty (30)
days after the Termination Date in an amount equal to the
"current value" [computed as hereinafter provided in this
Paragraph 4(b)] of the per period amount of the retirement
benefits to which Executive would have been entitled to under
Paragraph 3 of this Agreement determined as if Executive's
Retirement had occurred on the Termination Date. The "current
value" of such per period amount of such retirement benefits
shall be the present value on the Termination Date of such
retirement benefits based on the following assumptions:
(i) Payment of such per period amount of such
retirement benefits would commence with the
Period following the last day of the
Company's fiscal year during which the
Executive would attain the age of sixty (60)
years (i.e., December 31, 2011) and the
Payment Period would continue through the
end of the Period during which occurs
December 31, 2026;
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(ii) Such present value shall be determined by
using the interest rate equal to the yield
on the 10-year United States Treasury Bond
on the Termination Date; and
(iii) Such present value shall be determined
without any discount for mortality.
5. INVOLUNTARY TERMINATION OF EMPLOYMENT PRIOR TO A CHANGE IN CONTROL
OR EXECUTIVE'S RETIREMENT DATE. In the event of Executive's involuntary
Termination of Employment without Cause prior to the earlier of a Change in
Control or Executive's Retirement Date, the Company agrees to pay to or provide
Executive with the following:
(a) A single cash payment in an amount equal to the
Severance Multiple multiplied by the sum of (i) the
highest Base Salary paid to Executive during his
employment by the Company plus (ii) the Executive's
then-current target bonus opportunity (stated in
terms of a percentage of Base Salary) established
under the Company's Annual Corporate Performance
Incentive Plan for Officers (or any successor plan
thereto), if any, in effect on the Termination Date,
which payment shall be made within thirty (30) days
after the Termination Date.
(b) Payment of retirement benefits and death benefits,
computed in accordance with Paragraph 3 of this
Agreement as if Executive's Retirement had occurred
on the Termination Date, which such payments shall be
made in accordance with the provisions of Paragraph 3
as if Executive's Retirement had occurred on the
Termination Date.
(c) A single cash payment in an amount equal to
Executive's unpaid Base Salary, accrued vacation pay,
unreimbursed business expenses, and all other items
earned by and owed to Executive through the
Termination Date.
(d) A single cash payment in an amount equal to the
greater of (i) the Executive's then-current target
bonus opportunity (stated in terms of a percentage of
Base Salary) established under the Company's Annual
Corporate Performance Incentive Plan for Officers (or
any successor plan thereto), if any, for the
incentive plan year in which the Termination Date
occurs, adjusted on a pro-rata basis based on the
number of days Executive was actually employed during
such incentive plan year or (ii) the actual bonus
earned through the Termination Date under the
Company's Annual Corporate Performance Incentive Plan
for Officers (or any successor plan thereto), if any,
based on the then-current level of goal achievement;
which payment shall be made at the same time as the
payments are made to the Company's other employees
under the Company's
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Annual Corporate Performance Incentive Plan for
Officers (or any successor plan thereto), if any, for
the incentive plan year during which the Termination
Date occurs.
(e) Conveyance of possession and title to the
Company-owned automobile, if any, used by Executive
in connection with his employment immediately prior
to the Termination Date within thirty (30) days after
such Termination Date.
(f) A single cash payment of the Value of the Stock
Options, which payment shall be paid within ten (10)
days following the expiration of such Stock Options.
(g) Medical Insurance coverage for Executive until
Executive reaches the age of sixty (60) (July 12,
2011) or his earlier death under such terms and
conditions as are most closely comparable to the
"Plan B" or HMO coverage option provided Executive
under the Company's Group Medical Benefits Plan on
the Termination Date and as shall be thereafter
customarily provided by the Company to the Company's
executives from time to time during such period.
During this period, Executive shall be entitled to
obtain at Executive's expense such optional
coverages, such as dental coverage and
family/dependent medical coverage, under the
Company's Group Medical Benefits Plan as are
available for the Company's employees generally.
After age sixty (60) Executive may elect to obtain at
Executive's expense coverage as a "retiree" under
such Group Medical Benefits Plan, if any, as may be
then available to the Company's retired executives.
(h) Life Insurance, accidental death and dismemberment
insurance and disability insurance for Executive
until Executive reaches age sixty (60) (July 12,
2011) or his earlier death under such terms and
conditions that are reasonably comparable to the
coverages provided Executive under the Company's
plans for such insurance on the Termination Date and
as shall be thereafter customarily provided by the
Company to Company's executives from time to time
during such period.
(i) Indemnification of Executive from any claims asserted
against Executive arising out of the prior
performance of Executive's duties with the Company or
its Affiliates to the same extent as the Company
indemnifies retired officers or directors of the
Company.
(j) Payment of Executive's vested interest under the
Company sponsored qualified profit sharing and 401(k)
Plans when and as provided in, and otherwise subject
to, the terms, provisions and conditions of said
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Plans, and nothing in this Agreement shall modify or
override the terms, provisions and conditions of such
Plans.
(k) At no expense to Executive, standard outplacement
services for Executive from a nationally recognized
outplacement firm of Executive's selection, for a
period of up to two (2) years from the Termination
Date. However, such services shall be at the
Company's expense to a maximum amount not to exceed
twenty percent (20%) of the Executive's Base Salary
as of the Termination Date.
6. OTHER TERMINATION OF EMPLOYMENT. Except as otherwise expressly
provided to the contrary in the Compensation and Benefits Assurance Agreement
and in Paragraph 4 of this Agreement, Executive shall not be entitled to any
payments or benefits upon his Termination of Employment in the following events:
(a) Executive's voluntary Termination of Employment prior
to his Retirement Date, or
(b) Executive's involuntary Termination of Employment for
Cause prior to his Retirement Date, or
(c) Executive's Termination of Employment, whether
voluntary or involuntary, with or without Cause,
prior to his Retirement Date and following a Change
in Control.
7. MITIGATION. In no event shall Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to Executive under any of the provisions of this Agreement, nor shall the amount
of any payment hereunder be reduced by any compensation earned by Executive as a
result of employment by another employer.
8. ADEA WAIVER. Executive understands that the severance benefits
provided in Paragraph 5 will decline as Executive approaches the age of sixty
(60) years and will be eliminated at the end of the Company's fiscal year during
which Executive attains the age of sixty (60) years. Moreover, the Compensation
and Benefits Assurance Agreement may be terminated by the Company at the end of
the Company's fiscal year during which Executive attains the age of sixty (60)
years. If such reduction and/or elimination of benefits is construed to violate
the Age Discrimination in Employment Act of 1967, as amended, Executive does
hereby release and waive any claim he may have by reason of such violation.
Executive acknowledges that this Agreement and the Compensation and Benefits
Agreement provide new consideration which he was not previously entitled to
receive, that he has consulted an attorney before executing the agreements, and
that he has been given up to twenty-one (21) days within which to consider the
agreements. This Agreement will not become effective or enforceable until seven
(7) days following Executive's execution of this Agreement, and Executive may
revoke this Agreement at any time during such seven-day period by delivering (or
causing to be delivered) to the principal office of the Company a
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notice of his revocation of this Agreement. The execution of the Compensation
and Benefits Assurance Agreement is in part consideration for and an integral
part of this Agreement, and therefore, any such revocation of this Agreement
will also constitute a revocation and cancellation of the Compensation and
Benefits Assurance Agreement.
9. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees, costs
of litigation, prejudgment interest, and other expenses ("Legal Expenses") which
are incurred in good faith by Executive as a result of the Company's refusal to
provide the benefits to which Executive becomes entitled under this Agreement,
or as a result of the Company's (or any third party's) contesting the validity,
enforceability, or interpretation of this Agreement, or as a result of any
conflict between the parties pertaining to this Agreement; provided, however, in
no event shall the Company be required to pay any such expenses if it is finally
determined that Executive's Termination of Employment was for Cause.
10. APPLICABLE LAW. This Agreement is made and executed with the
intention that the construction, interpretation and validity hereof shall be
determined in accordance with and governed by the laws of the State of North
Carolina.
11. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the Company, its successors and assigns. This Agreement shall be
binding upon and inure to the benefit of Executive, his heirs, executors and
administrators.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes and
cancels all prior or contemporaneous oral or written agreements and
understandings between them with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed
by its duly authorized officers and its corporate seal to be hereunto affixed,
and Executive has hereunto set his hand and seal, all as of the day and year
first above written.
Xxxxx, Inc.
[CORPORATE SEAL]
ATTEST: By: /s/ Xxxx X. Xxxxx
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Vice President
/s/ Xxxxxx X. Xxxxxx
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Secretary
/s/ Xxxx X. Xxxxxx, III [SEAL]
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Xxxx X. Xxxxxx, III
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STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
I, Xxxxxxx X. Xxxxxx , a Notary Public for said County and State, do
hereby certify that Xxxx X. Xxxxxx, III personally appeared before me this day
and acknowledged the due execution of the foregoing instrument.
WITNESS my hand and notarial seal, this 7th day of November, 1997.
/s/ Xxxxxxx X. Xxxxxx
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Notary Public
[NOTARIAL SEAL]
My Commission Expires:
December 22, 2001
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STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
This 7th day of November, 1997, personally came before me Xxxx X.
Xxxxx, who, being by me duly sworn, says that he is a Vice President of Xxxxx,
Inc., that the seal affixed to the foregoing instrument in writing is the
corporate seal of said Corporation, and that said writing was signed and sealed
by him, in behalf of said Corporation, by its authority duly given. And the said
Xxxx X. Xxxxx acknowledged the said writing to be the act and deed of said
Corporation.
/s/ Xxxxx Xxxxxxxx
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Notary Public
[NOTARIAL SEAL]
My Commission Expires:
March 19, 1999
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