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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), made and entered
into and to become effective on the 31st day of March, 1998 (the "Effective
Date"), by and between XXXXXXX CORPORATION, an Alabama Corporation (the
"Company"), and XXXX X. XXXX (the "Executive").
RECITALS:
The Company and its affiliates are engaged in the knit
products industry. The Executive is experienced in, and knowledgeable
concerning, the knit products industry. The Company desires to employ the
Executive as President, Chief Executive Officer and Chairman of the Board, and
the Executive desires to be employed by the Company in that capacity.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations herein and the compensation the Company agrees herein to pay the
Executive, and of other good and valuable consideration, the receipt of which is
hereby acknowledged, the Company and the Executive agree as follows:
ARTICLE 1. EMPLOYMENT OF EXECUTIVE. Subject to the terms and
conditions set forth in this Agreement, the Company hereby employs the Executive
and the Executive hereby accepts such employment for the period stated in
ARTICLE 3 of this Agreement.
ARTICLE 2. POSITION, RESPONSIBILITIES AND DUTIES.
2.1 Position and Responsibilities. During the Term (as defined
in Section 3.1), the Executive shall serve as President, Chief
Executive Officer and Chairman of the Board of Directors (pursuant to
Section 2.3) of the Company on the conditions herein provided. The
Executive shall provide such executive services in the management of
the Company's business not inconsistent with his position and the
provisions of Section 2.2 as shall be assigned to him from time to time
by the Board of Directors of the Company (the "Board").
2.2 Duties. During the Term and except for illness, reasonable
vacation periods, and reasonable leaves of absence, the Executive shall
devote his full business time, attention, skill, energies and efforts
to the faithful performance of his duties hereunder and to the business
and affairs of the Company and any subsidiary or affiliate of the
Company, such duties being those customary to executives at the same
level in companies of similar size. The Executive shall work to
maximize shareholder value while being sensitive to the impact on
employees and communities. To maximize shareholder value, significant
changes will need to be made, potentially including but not limited to
relocation or closing of manufacturing facilities or other operations,
restructuring, closing or selling poor return
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businesses, establishment of nationally competitive compensation plans
and replacement of management, contractors and consultants as
necessary. Notwithstanding the foregoing, the duties of the Executive
shall not be expanded or diminished without the Executive's prior
approval.
2.3 Title.
(a) As soon as possible following the execution of this
Agreement, the Board shall appoint the Executive to the Board of
Directors of Xxxxxxx and elect the Executive to the position of
Chairman of the Board of Directors to take effect no later than June 1,
1998. The Board's intention to elect the Executive to the position of
Chairman as of such date will be announced simultaneously with the
announcement of his employment as President and Chief Executive
Officer.
(b) The Executive shall hold the office of President for such
time after the Effective Date that he feels necessary. At any time
after the Effective Date, the Executive may, in his best judgment,
relinquish the title of President for the purpose of hiring a new
President and Chief Operating Officer of the Company.
ARTICLE 3. TERM.
3.1 Term of Employment. The term of the Executive's employment
under this Agreement shall commence on the Effective Date and shall
continue until the earliest to occur of the following dates (the
"Termination Date"): (i) March 31, 2001; (ii) the date of death of the
Executive; (iii) the date coinciding with the end of one hundred eighty
(180) days of continuous "Total Disability" of the Executive (as
defined in Section 7.4); (iv) the date of termination For Cause (as
defined in Section 3.2); or (v) the date the Executive terminates his
employment for Good Reason (as defined in Section 3.3) determined
pursuant to Section 3.5.
3.2 Termination for Cause; Automatic Termination. The Company
shall at all times have the right to discharge the Executive For Cause.
For purposes of this Agreement, "For Cause" shall be limited to: (i)
conviction of a felony other than those felonies involving the use of
an automobile in violation of any vehicle statute; (ii) a material
breach of a provision of this Agreement by the Executive, which breach
is not cured within thirty (30) days after notice has been given by the
Company to the Executive, as provided in Section 3.5; or (iii) the
Final Determination of any action the effect of which is to permanently
enjoin the Executive from fulfilling his duties under this Agreement.
"Final Determination" as used herein shall mean the exhaustion of all
available remedies and appeals by the Executive or the Executive's
refusal to pursue such remedies and appeals.
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3.3 Good Reason. Subject to the requirements of
Section 3.5 of this Agreement, the Executive may terminate his
employment at any time for Good Reason (as defined in this
Section 3.3). If the Executive desires to terminate his
employment for Good Reason, he shall give notice to the Company
as provided in Section 3.5. For purposes of this Section 3.3,
"Good Reason" shall mean the Executive's resignation from the
Company's employment for any of the following reasons:
(a) Failure by the Board to reelect or
reappoint the Executive as President (subject to Section
2.3), Chief Executive Officer and Chairman of the Board
of the Company and the Executive then elects to leave
the Company's employment within six (6) months of such
failure to so reelect or reappoint the Executive;
(b) A material modification by the Board of
the duties, functions and responsibilities of the
Executive as President (subject to 2.3) or Chief
Executive Officer without his consent given within six
(6) months prior to such modification;
(c) The failure of the Board to approve the
Designated Metro Area within thirty (30) days of when
the Executive makes his recommendation as to such
Designated Metro Area to the Board, as provided for in
Section 12.2;
(d) If the Company shall experience a Change
of Control (defined in this Section 3.3(d)) the
Executive shall have a period of two (2) years from the
date the Change of Control becomes effective in which to
terminate this Employment Agreement. Change in Control
of the Company shall be deemed to have occurred as of
the first day that any one or more of the following
conditions shall have been satisfied:
(i) Any person (other than those Persons in
control of the Company as of the
Effective Date, or other than a trustee
or other fiduciary holding securities
under an employee benefit plan of the
Company, or a corporation owned directly
or indirectly by the stockholders of the
Company in substantially the same
proportions as their ownership of stock
of the Company), becomes the Beneficial
Owner, directly or indirectly, of
securities of the Company representing
thirty percent (30%) or more of the
combined voting power of the Company's
then outstanding securities; or
(ii) During any period of two (2) consecutive
years (not including any period prior to
the Effective Date), individuals who at
the beginning of such period constitute
the Board (and any new Director, whose
election by the Company's stockholders
was approved by a vote of at least
two-thirds (2/3) of the Directors then
still in office who either were
Directors at the beginning of the period
or whose election or nomination for
election was so approved (a "Continuing
Director")), cease for any reason to
constitute a majority thereof; or
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(iii) The stockholders of the Company approve:
(A) a plan of complete liquidation of
the Company; or (B) an agreement for the
sale or disposition of all or
substantially all of the Company's
assets; or (C) a merger, consolidation,
or reorganization of the Company with or
involving any other corporation other
than a merger, consolidation, or
reorganization that would result in the
voting securities of the Company
outstanding immediately prior thereto
continuing to represent (either by
remaining outstanding or by being
converted into voting securities of the
surviving entity), at least fifty
percent (50%) of the combined voting
power of the voting securities of the
Company (or such surviving entity)
outstanding immediately after such
merger, consolidation, or
reorganization.
However, in no event shall a "Change in
Control" be deemed to have occurred,
with respect to a Participant, if the
Participant is part of a purchasing
group which consummates the
Change-in-Control transaction. A
Participant shall be deemed "part of a
purchasing group" for purposes of the
preceding sentence if the Participant is
an equity participant in the purchasing
company or group (except for: (i)
passive ownership of less than three
percent (3%) of the stock of the
purchasing company; or (ii) ownership of
equity participation in the purchasing
company or group which is otherwise not
significant, as determined prior to the
Change in Control by a majority of the
nonemployed continuing Directors).
(e) The Executive's resignation from the
Company's employment on account of any material breach of a
provision of this Agreement by the Company, which breach is
not cured within thirty (30) days after notice has been
given to the Company by the Executive as provided in Section
3.5. Without limiting the generality of the foregoing
sentence, the Company shall be in material breach of its
obligations hereunder if, for example, the Company shall not
permit the Executive to exercise such responsibilities as
are consistent with the Executive's position as described in
Section 2.2 herein and are of such a nature as are usually
associated with such officers of other public corporations
of approximately equal size, or the Executive shall at any
time be required to report to anyone other than directly to
the Board, or the Company causes the Executive to locate his
residence in conflict with ARTICLE 12 herein, or the Company
shall fail to make a payment when due to the Executive.
Notwithstanding the foregoing, if the Executive desires to
terminate his employment for Good Reason as defined in this
Section 3.3(e), he shall give notice to the Company as
provided in Section 3.5 and the Company shall have thirty
(30)
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days after notice has been given to it in which to cure the
reason for the Executive's desire to terminate his employment
for Good Reason. If the reason for the Executive's desire to
terminate his employment for Good Reason as defined in this
Section 3.3(e) is timely cured by the Company, the Executive's
notice shall become null and void.
3.4 Retirement. Any termination of employment by either
the Company or the Executive, after April 1, 2001, shall be treated as
retirement of the Executive for the purpose of all Xxxxxxx plans and
benefits.
3.5 Notice of Termination. Any termination by the
Executive for Good Reason or by the Company For Cause shall be
communicated by Notice of Termination to the Company. For purposes
hereof, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision relied upon in this
Agreement, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) sets
forth the Termination Date. If the Executive's employment is terminated
by reason of one of the events described in Section 3.2 (other than
3.2(i)), 3.3(c), 3.3(d) or 3.3(e), the Termination Date shall be not
less than thirty (30) days nor more than forty-five (45) days after the
receipt of the Notice of Termination by the Company. If the Executive's
employment is terminated by reason of one of the events described in
subparagraphs (a) or (b) of Section 3.3, the Termination Date shall be
not more than fifteen (15) days after the receipt of the Notice of
Termination by the Company.
ARTICLE 4. COMPENSATION.
4.1 Base Salary. For all services rendered by the
Executive during the Term, the Company shall pay the Executive as
compensation a base annual salary (the "Base Salary"), payable in
appropriate installments to conform with regular payroll dates for
salaried personnel of the Company. On the Effective Date, the annual
rate of the Executive's Base Salary shall be $650,000 (the "Annual Base
Salary Rate"). The Executive's Annual Base Salary Rate shall be
increased annually in the sole discretion of the Board. The timing of
the annual increase shall coincide with increases of other top
executives, in accordance with Company policy.
4.2 Bonus. In addition to the Base Salary provided for in
Section 4.1 and the other benefits provided for in this Agreement, the
Executive shall be eligible, upon the achievement of certain goals
established by the Board, to receive an annual bonus of at least 100%
of his base salary for the year for which the bonus is to be paid,
provided that the bonus for the 9 month period in 1998 beginning on the
Effective Date shall be at least $350,000, to be paid within 60 days
after the end of the year.
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ARTICLE 5. STOCK OPTIONS. In addition to the Base Salary and
bonus provided to the Executive pursuant to Article 4, the Executive shall
receive a minimum of 75,000 options for the purchase of Xxxxxxx Corporation
common stock annually, which amount may be increased at the Board's discretion
based on the Executive's performance. The exercise price for these options shall
equal the average of the high and low of the stock price on the day the grant is
made. Such options shall have a term of ten years and one-third of the total
options given in any year shall vest in each of the three years following the
grant of the options. Provided, however, that in 1998 the Executive shall be
granted 125,000 options on the Effective Date for the purchase of Xxxxxxx
Corporation common stock (the "1998 Options"). The exercise price for the 1998
Options shall be the average price of the stock on the Effective Date. If the
Executive's employment is terminated for any reason other than For Cause, all
options granted under this Article 5 shall immediately become vested and shall
be exercisable at the Executive's option for a period of three (3) years from
the date of termination; if the Executive's employment is terminated For Cause,
all options granted under this Article 5 that are not vested as of the
Termination Date shall lapse and be forfeited to the Company.
Provided, however, that if the Xxxxxxx shareholders do not approve the
necessary amendment to the Xxxxxxx Stock Option Plan at their April, 1998
meeting allowing an increase in the number of options that may be granted
annually to any one employee any options previously granted hereunder in excess
of the limit shall lapse and be forfeited to the Company and the Executive shall
receive: (i) 50,000 shares of restricted stock of Xxxxxxx and cash in the amount
of $1,282,727 for the value of 50,000 options (determined pursuant to Exhibit
A), in lieu of his 1998 Options; and (ii) 50,000 shares of restricted stock in
lieu of the 75,000 stock options to be granted in all subsequent years under
this Article 5.
ARTICLE 6. SUPPLEMENTAL BENEFITS
6.1 Special Health Care Benefit. In addition to the other
benefits provided for in this Agreement (including participation by the
Executive and his spouse during the term of employment in the Company
Plan (defined herein)) and thereafter following the expiration of the
term for any reason, the Executive (or his spouse if the Executive
predeceases his spouse before he attains the age of 65) shall be
entitled for the period commencing on the Termination Date and ending
on the earlier of (i) the date of death for the survivor of the
Executive and his spouse or (ii) the Executive and his spouse attaining
the age of 65 (the "Coverage Period") to participate in any group
health plan or program (whether insured or self-insured, or any
combination thereof) provided by the Company for the benefit of its
active employees (the "Company Plan"). The Company, consistent with
sound business practices, shall use its best efforts to provide the
Executive with coverage for the Executive and his spouse under the
Company Plan during the Coverage Period (and any period thereafter to
the extent required by applicable state and federal law), including, if
necessary, amending the applicable provisions of the Company Plan and
negotiating the addition of any necessary riders to any group health
insurance contract. In the event the Company is unable for whatever
reason to provide the Executive and his spouse with coverage under the
Company Plan, the Company shall provide the Executive with an
individual policy of health insurance providing coverage for the
Executive and his spouse (the "Individual Policy")
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during the Coverage Period. The coverage to be provided to the
Executive pursuant to this ARTICLE 6 (whether under the Company Plan or
the Individual Policy) shall consist of coverage which, as of the time
the coverage is being provided, is identical (or, with respect to an
Individual Policy, substantially identical) to the coverage provided
under the Company Plan to active employees and their dependents.
Notwithstanding the foregoing, the Company shall coordinate coverage
for the Executive under this ARTICLE 6 with any applicable federal or
state government programs (e.g., Medicare or Medicaid) when the
Executive is eligible to begin receiving benefits under such program.
Any premiums required to be paid for coverage of the Executive under
such government programs shall be paid by the Executive.
6.2 Life Insurance. The Company shall maintain the
Metropolitan Universal Life Insurance Policy on the life of the
Executive currently maintained by his prior employer. The Company shall
fund the life insurance policy to provide for a benefit equal to
$1,209,000 until January 1, 1999. Thereafter, the policy shall be
maintained to provide a benefit equal to $1,209,000. The premium for
1997 was $13,724.
6.3 Corporate Automobile. An automobile of appropriate
value shall be provided by the Company. All operating expenses of the
automobile shall be paid by the Company.
6.4 Corporate Aircraft. The Executive shall have the use
of corporate aircraft for his business and personal transportation at
his discretion and at no cost to him, including reasonable access for
his spouse. Applicable income taxes attributable to the Executive's
personal use of the aircraft shall be paid by the Executive.
6.5 Club Memberships. The Company shall make available
country club access for the Executive and his family near each
corporate headquarters of the Company.
6.6 Office Closing. The Executive currently conducts
business in an office located in Winston-Salem, North Carolina. As of
the Effective Date, the Company shall assume responsibility for, and
all expenses of, closing the Executive's Winston-Salem office, at a
cost not to exceed $25,000.
6.7 Immediate Eligibility. Any delay in eligibility and
any waiting period normally associated with the receipt of any of the
benefits provided for by this Agreement shall be waived and the
Executive (and his spouse where applicable) shall be eligible to
receive benefits as of the Effective Date as if such delays and waiting
periods have been satisfied. Notwithstanding the foregoing, this
Section 6.7 shall not apply to the any qualified retirement plans of
Xxxxxxx if waiving the eligibility requirements or any associated
waiting periods would cause a violation under ERISA.
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ARTICLE 7. DISABILITY BENEFITS.
7.1 Commencement of Total Disability. If the Executive
suffers a "Total Disability" (as defined in Section 7.4), he shall be
deemed totally disabled ("Totally Disabled") for purposes of this
Agreement as of the date such Total Disability commenced.
7.2 Benefits Payable Upon Total Disability. In the event
of the Total Disability of the Executive, the Company shall continue to
pay the Executive his Base Salary during the Disability Period (as
defined in this Section 7.2); provided, however, that if the Term shall
otherwise expire during the Disability Period pursuant to the
provisions of ARTICLE 3, the Company shall cease paying the Executive
his Base Salary under this Section 7.2 as of the Termination Date, and
the remaining provisions of this Agreement shall apply. In the event
that the Executive's Total Disability continues for a period of one
hundred eighty (180) days (measured from the date the Executive became
Totally Disabled), the Term shall automatically expire, as provided in
subparagraph (iii) of Section 3.1, at the end of such one hundred
eighty day period (the "Disability Period").
7.3 Cessation of Disability. Notwithstanding the
provisions of Section 7.2, if prior to the end of the Disability
Period, the Executive's Total Disability shall have ceased under the
definition of Total Disability set forth in Section 7.4 and he shall
have commenced to perform his regular duties hereunder, the following
special provisions shall apply: (i) this Agreement shall continue in
full force and effect (except as otherwise provided in ARTICLE 3); and
(ii) the Executive shall be entitled to resume his employment under
this Agreement and to receive thereafter compensation in accordance
with ARTICLE 4 as though he had not been Totally Disabled; provided,
however, that unless the Executive shall perform his regular duties
hereunder for a continuous period of at least sixty (60) days following
a period of Total Disability before he again becomes Totally Disabled,
he shall not be entitled to start a new Disability Period, but instead
must continue under the remaining portion of the original Disability
Period. In this event, the resumption of the original Disability Period
shall commence on the date such Total Disability resumed.
7.4 Definition of Total Disability. For purposes of this
Agreement, "Total Disability" shall mean the permanent and total
inability, by reason of physical or mental infirmity, or both, of the
Executive to perform his regular and customary duties with the Company
in a satisfactory manner shall be considered Total Disability. The
determination of the existence or nonexistence of Total Disability
shall be made by the Board, pursuant to a medical examination by a
medical doctor licensed to practice medicine in the state of the
Executive's principal residence approved by the Board.
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ARTICLE 8. REIMBURSEMENT OF EXPENSES, OFFICE AND SECRETARIAL
ASSISTANCE. The Company recognizes that the Executive will incur, from time to
time, expenses for the benefit of the Company and in furtherance of the
Company's business, including, but not limited to, expenses for entertainment,
travel and other business expenses. In the event of the termination of the
Executive's employment for any reason, the Company shall reimburse the Executive
(or in the event of death, his personal representative) for expenses incurred by
the Executive on behalf of the Company prior to the Termination Date to the
extent such expenses have not been previously reimbursed by the Company.
ARTICLE 9. OTHER EMPLOYEE BENEFITS. The Executive shall be
entitled to participate in any and all retirement, health, disability, life
insurance, long-term disability insurance, long-term incentive plans,
nonqualified deferred compensation and tax-qualified retirement plans or any
other plans or benefits offered by the Company to its executives generally, if
and to the extent the Executive is eligible to participate in accordance with
the terms and provisions of any such plan or benefit program. Notwithstanding
the foregoing, all vesting periods under all Xxxxxxx benefit plans shall be
waived (except where waiving such period would violate ERISA) and the Executive,
upon termination of employment for any reason before the age of retirement under
those plans, shall be considered to have attained the minimum retirement age
provided in those plans. Nothing in this ARTICLE 9 is intended, or shall be
construed, to require the Company to institute any particular plan, program or
benefit.
ARTICLE 10. VACATION. The Executive shall be entitled to a
minimum four (4) weeks of paid vacation during each Employment Year.
ARTICLE 11. TERMINATION COMPENSATION.
11.1 Monthly Compensation. Upon the expiration of the Term for
any reason, the Executive shall be entitled to continue to receive his
Base Salary through the last day of the month in which the Termination
Date occurs (the "Termination Month").
11.2 Compensation Continuance. In addition to the compensation
provided for in Section 11.1, upon the termination of the Executive's
employment by the Executive for Good Reason or by the Company in
violation of the terms of this Agreement, the Executive (or in the
event of his subsequent death, his designated beneficiary) shall
receive 100% of the maximum bonus for which he was eligible in the year
of termination and he shall continue to receive from the last day of
the Termination Month through March 31, 2001 (the "Compensation
Continuance Period") the Base Salary (as increased each year) that he
would have received pursuant to Section 4.1 during the Compensation
Continuance Period as if the Term had not expired. During the
Compensation Continuance Period, the Executive shall continue to
participate in all employee benefit plans or programs of the Company
(as described in ARTICLE 9), except where doing so would violate ERISA.
ARTICLE 12. RELOCATION.
12.1 Housing in Alexander City. The Company shall provide
first class housing for the Executive, fully furnished, in or near
Alexander City, Alabama for approximately one year from the Effective
Date.
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12.2 Corporate Headquarters. Upon approval of the board, the
Company shall as soon as possible following the effective date, provide
for dual headquarters in Alexander City, Alabama and a southeastern
city designated by the executive (the "Designated Metro Area"). It is
acknowledged that resolving and establishing this dual headquarters in
the Designated Metro Area is critical for the hiring and retainment of
"world class" employees; and that hiring these employees and
implementing many other steps necessary for the improvement of the
company's performance will most likely be delayed until the resolution
of the Designated Metro Area. Resolving the Designated Metro Area will
be of the highest priority for the Executive and the Board of
Directors. A special board of directors meeting will be called by phone
or in person to resolve this issue if there is not a regularly
scheduled board of directors meeting within two weeks of when the
executive is ready to make his recommendation. It is contemplated that
the Executive Headquarters of the Company shall be moved to the
Designated Metro Area within one year of the Effective Date unless
mutually agreed otherwise. Determination will be made by the Executive
when and how many other persons or departments of the Company will
relocate to the Designated Metro Area. Executive Headquarters, for the
purposes of this Section 12.2, shall mean the location of the primary
offices of the Executive and other employees or groups of employees as
the Executive shall deem necessary along with the appropriate support
staff, but shall not necessarily mean the Executive Headquarters for
legal purposes.
12.3 Relocation Expenses. The Company shall pay all relocation
expenses, including any necessary tax gross up, for any relocation to
either of the corporate headquarters of the Company made by the
Executive within two years from the date of employment. It is
understood by the Company, that the Executive plans to maintain a
residence in Winston-Salem, North Carolina and the decision as to where
to locate his other residence shall be left to the Executive's sole
discretion, provided it is near one of the corporate headquarters
described in Section 12.2.
ARTICLE 13. POST-TERMINATION OBLIGATIONS. All payments and
benefits to the Executive under this Agreement shall be subject to the
Executive's compliance with the following provisions during the Term and
following the termination of the Executive's employment:
13.1 Assistance in Litigation. The Executive shall, upon
reasonable notice, furnish such information and assistance to the
Company as may reasonably be required by the Company in connection with
any litigation in which it is, or may become, a party, and which arises
out of facts and circumstances known to the Executive. The Company
shall promptly reimburse the Executive for his out-of-pocket expenses
incurred in connection with the fulfillment of his obligations under
this Section 13.1.
13.2 Confidential Information. The Executive shall not
disclose or reveal to any unauthorized person any trade secret or other
confidential information relating to the Company, its subsidiaries or
affiliates, or to any businesses operated by them, and the Executive
confirms that such information constitutes the exclusive property of
the Company;
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provided, however, that the foregoing shall not prohibit the Executive
from disclosing such information to the extent necessary or desirable
in connection with obtaining financing for the Company (or furnishing
such information under any agreements, documents or instruments under
which such financing may have been obtained) or otherwise disclosing
such information to third parties or governmental agencies in
furtherance of the interests of the Company; or as may be required by
law.
13.3 Noncompetition. The Executive shall not: (i) during the
Compensation Continuation Period, without the prior written consent of
the Company, engage directly or indirectly, as a licensee, owner,
manager, consultant, officer, employee, director, investor or
otherwise, in any business in material competition with the Company; or
(ii) usurp for his own benefit any corporate opportunity under
consideration by the Company during his employment, unless the Company
shall have finally decided not to take advantage of such corporate
opportunity. The restrictions of part (i) of this Section 13.3 shall
not apply to a passive investment by the Executive constituting
ownership of less than five percent (5%) of the equity of any entity
engaged in any business described in part (i) of this Section 13.3. The
Executive acknowledges that the possible restrictions on his activities
which may occur as a result of his performance of his obligations under
this Section 13.3 are required for the reasonable protection of the
Company.
13.4 Failure to Comply. In the event that the Executive shall
fail to comply with any provision of this ARTICLE 13, and such failure
shall continue for thirty (30) days following delivery of notice
thereof by the Company to the Executive, all rights hereunder of the
Executive and any person claiming under or through him shall thereupon
terminate and no person shall be entitled thereafter to receive any
payments or benefits hereunder (except for benefits under employee
benefit plans or programs as provided in ARTICLES 6 and 9 which have
been earned or otherwise fixed or determined to be payable prior to
such termination).
ARTICLE 14. ADDITIONAL PAYMENTS BY COMPANY. In the event that
any amount required to be paid or distributed to the Executive pursuant to this
Agreement shall constitute a parachute payment within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"), and the
aggregate of such parachute payments and any other amounts otherwise required to
be paid or distributed to the Executive by the Company shall cause the Executive
to be subject to the excise tax on excess parachute payments under Section 4999
of the Code (the "Excise Tax"), or any successor or similar provision thereof,
the Company shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount the Executive shall receive after the payment
of any Excise Tax, shall equal the amount which he would have received if the
Excise Tax had not been imposed.
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ARTICLE 15. PROFESSIONAL FEES. The Company shall be
responsible for paying all professional fees incurred by the Executive in
connection with his employment with the Company in an amount not to exceed
$100,000 (not including fees charged by Xxxxxx Associates LLC), without approval
of Xxxxxxx. Additionally, in the event that the Executive incurs any
professional fees in protecting or enforcing his rights under this Agreement or
under any employee benefit plans or programs sponsored by the Company in which
the Executive is a participant, the Company shall reimburse the Executive for
such reasonable professional fees and for any other reasonable expenses related
thereto. Such reimbursement shall be made within thirty (30) days following
final resolution of the dispute or occurrence giving rise to such fees and
expenses.
ARTICLE 16. BENEFICIARY. The Executive shall name one or more
primary beneficiaries and one or more contingent beneficiaries, who shall be
entitled to receive any amounts payable following the death of the Executive
under ARTICLE 11, which beneficiary or beneficiaries shall be subject to change
from time to time by notice in writing to the Board. A beneficiary may be a
trust, an individual or the Executive's estate. If the Executive fails to
designate a beneficiary, primary or contingent, then and in such event, such
benefit shall be paid to the surviving spouse of the Executive or, if he shall
leave no surviving spouse, then to the Executive's estate. If a named
beneficiary entitled to receive any death benefit is not living or in existence
at the death of the Executive or dies prior to asserting a written claim for any
such death benefit, then and in any such event, such death benefit shall be paid
to the other primary beneficiary or beneficiaries named by the Executive who
shall then be living or in existence, if any, otherwise to the contingent
beneficiary or beneficiaries named by the Executive who shall then be living or
in existence, if any; but if there are no primary or contingent beneficiaries
then living or in existence, such benefit shall be paid to the surviving spouse
of the Executive or, if he shall leave no surviving spouse, then to the
Executive's estate. If a named beneficiary is receiving or is entitled to
receive payments of any such death benefit and dies before receiving all of the
payments due him, any remaining benefits shall be paid to the other primary
beneficiary or beneficiaries named by the Executive who shall then be living or
in existence, if any, otherwise to the contingent beneficiary or beneficiaries
named by the Executive who shall then be living or in existence, if any; but if
there are no primary or contingent beneficiaries then living or in existence,
the balance shall be paid to the estate of the beneficiary who was last
receiving the payments.
ARTICLE 17. INDEMNIFICATION. The Company shall indemnify the
Executive during his employment and thereafter to the maximum extent permitted
by applicable law for any and all liability of the Executive arising out of, or
in connection with, his employment by the Company or membership on the Board;
provided, that in no event shall such indemnity of the Executive at any time
during the period of his employment by the Company be less than the maximum
indemnity provided by the Company at any time during such period to any other
officer or director under an indemnification insurance policy or the bylaws or
charter of the Company or by agreement.
ARTICLE 18. SOURCE OF PAYMENTS; NO TRUST. The obligations of
the Company to make payments hereunder shall constitute a liability of the
Company to the Executive. Such payments shall be from the general funds of the
Company, and the Company shall not be required to establish or maintain any
special or separate fund, except as specifically provided for in this Agreement,
or otherwise to segregate assets to assure that such payments shall be made, and
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neither the Executive nor his designated beneficiary shall have any interest in
any particular asset of the Company by reason of its obligations hereunder.
Nothing contained in this Agreement shall create or be construed as creating a
trust of any kind or any other fiduciary relationship between the Company and
the Executive or any other person. To the extent that any person acquires a
right to receive payments from the Company hereunder, such right shall be no
greater than the right of an unsecured creditor of the Company.
ARTICLE 19. SEVERABILITY. All agreements and covenants
contained herein are severable, and in the event any of them shall be held to be
invalid by any competent court, this Agreement shall be interpreted as if such
invalid agreements or covenants were not contained herein.
ARTICLE 20. ASSIGNMENT PROHIBITED. This Agreement is personal
to each of the parties hereto, and neither party may assign nor delegate any of
his or its rights or obligations hereunder without first obtaining the written
consent of the other party; provided, however, that nothing in this ARTICLE 20
shall preclude (i) the Executive from designating a beneficiary to receive any
benefit payable under this Agreement upon his death or (ii) the executors,
administrators, or other legal representatives of the Executive or his estate
from assigning any rights under this Agreement to the person or persons entitled
thereto.
ARTICLE 21. NO ATTACHMENT. Except as otherwise provided in
this Agreement or required by applicable law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
ARTICLE 22. HEADINGS. The headings of articles, paragraphs
and sections herein are included solely for convenience of reference and shall
not control the meaning or interpretation of any of the provisions of this
Agreement.
ARTICLE 23. GOVERNING LAW. The parties intend that this
Agreement and the performance hereunder and all suits and special proceedings
hereunder shall be construed in accordance with and under and pursuant to the
laws of the State of Alabama and that in any action, special proceeding or other
proceeding that may be brought arising out of, in connection with, or by reason
of this Agreement, the laws of the State of Alabama shall be applicable and
shall govern to the exclusion of the law of any other forum, without regard to
the jurisdiction in which any action or special proceeding may be instituted.
ARTICLE 24. BINDING EFFECT. This Agreement shall be binding
upon, and inure to the benefit of, the Executive and his heirs, executors,
administrators and legal representatives and the Company and its permitted
successors and assigns.
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ARTICLE 25. COUNTERPARTS. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
ARTICLE 26. NOTICES. All notices, requests and other
communications to any party under this Agreement shall be in writing (including
telefacsimile transmission or similar writing) and shall be given to such party
at its address or telefacsimile number set forth below or such other address or
telefacsimile number as such party may hereafter specify for the purpose by
notice to the other party:
(a) If to the Executive:
Xxxx X. Xxxx
Xxxxxxx Corporation
000 Xxx Xxxxxx
Xxxx Xxxxxx Xxx 000
Xxxxxxxxx Xxxx, Xxxxxxx 00000
(b) If to the Company:
Xxxxxxx Corporation
000 Xxx Xxxxxx
Post Xxxxxx Xxx 000
Xxxxxxxxx Xxxx, Xxxxxxx 00000
Each such notice, request or other communication shall be effective (i) if given
by mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid or (ii) if given by any other
means, when delivered at the address specified in this ARTICLE 26.
ARTICLE 27. MODIFICATION OF AGREEMENT. No waiver or
modification of this Agreement or of any covenant, condition, or limitation
herein contained shall be valid unless in writing and duly executed by the party
to be charged therewith. No evidence of any waiver or modification shall be
offered or received in evidence at any proceeding, arbitration, or litigation
between the parties hereto arising out of or affecting this Agreement, or the
rights or obligations of the parties hereunder, unless such waiver or
modification is in writing, duly executed as aforesaid. The parties further
agree that the provisions of this ARTICLE 27 may not be waived except as herein
set forth.
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ARTICLE 28. TAXES. To the extent required by applicable law,
the Company shall deduct and withhold all necessary Social Security taxes and
all necessary federal and state withholding taxes and any other similar sums
required by law to be withheld from any payments made pursuant to the terms of
this Agreement.
ARTICLE 29. RECITALS. The Recitals to this Agreement are
incorporated herein and shall constitute an integral part of this Agreement.
ARTICLE 30. EFFECT OF PRIOR AGREEMENTS. This Agreement
supersedes and replaces any prior employment agreement, understanding or
arrangement (whether written or oral) between the Company and the Executive.
Each of the parties hereto has relied on his or its own judgment in entering
into this Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first above written.
EXECUTIVE
/s/ Xxxx X. Xxxx (SEAL)
------------------------------------------
Xxxx X. Xxxx
WITNESS:
/s/ Xxxx X. Xxxxxxxx
---------------------------
XXXXXXX CORPORATION
By:/s/ Xxxx X. Xxxxx
---------------------------------------
Xxxx X. Xxxxx
Chairman of the Board, President and
Chief Executive Officer
Attest:
---------------------------
Secretary/Asst. Secretary
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EXHIBIT A (EXAMPLE)
ARTICLE 5 - EMPLOYMENT AGREEMENT
LET A = 50,000 OPTIONS TO PURCHASE XXXXXXX COMMON STOCK
B = PRICE/SHARE OF XXXXXXX COMMON STOCK
FV = FUTURE VALUE, ASSUMING 10% GROWTH (COMPOUNDED
ANNUALLY) FOR 10 YEARS; FACTORS = 2.593742
PV = PRESENT VALUE, ASSUMING A DISCOUNT RATE OF 5.3081%
(EQUIVALENT TO A PRE-TAX RATE OF 10%, GIVEN
A MARGINAL TAX RATE OF 46.919%) FOR 10 YEARS;
FACTOR = .596187.
ASSUME A MARGINAL TAX RATE OF 46.919% FOR ALL YEARS (37.719% FEDERAL,
7.75% STATE, 1.45% MEDICARE).
FORMULA:
PV [FV(A x B) - (A x B)]
EXAMPLES (XXXXXXX XXXXX = $27/SHARE):
.596187 [2.593742 (50,000 X 27.00) - (50,000 X 27.00)] =
.596187 [3,501,552 - 1,350,000] =
$1,282,727
==========
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