EXHIBIT 10(a)
AGREEMENT
THIS AGREEMENT made this day of ,2001 (the "Agreement")
by and between ________________ (the "Executive") and VF CORPORATION, a
Pennsylvania corporation (the "Corporation"). This Agreement amends, restates
and supersedes the prior agreement dated _____________ and any amendments to and
restatements thereof between the Executive and the Corporation.
BACKGROUND
The Board of Directors of the Corporation (the "Board") considers the
establishment and maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of the Corporation and its
shareholders. In this connection, the Corporation recognizes that, as is the
case with many publicly held corporations, the possibility of a change in
control may exist and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of management personnel to the detriment of the Corporation and its
shareholders. The Corporation further recognizes that its own financial position
tends to exacerbate the uncertainty among management that a change of control
might create. Accordingly, the Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of certain members of the Corporation's management, including the
Executive, to their assigned duties without distraction in the face of the
potentially disturbing circumstances arising from the possibility of a change in
control of the Corporation.
In order to induce the Executive to remain in the employ of the
Corporation, the Corporation wishes to provide the Executive with certain
severance benefits in the event his employment with the Corporation terminates
subsequent to a change in control of the Corporation under the circumstances
described herein.
NOW THEREFORE, the parties hereto, intending to be legally bound, agree
as follows:
1. TERM. The term of this Agreement commences as of the date and
year first above written and shall continue until the second anniversary of the
date set forth above. The prior sentence notwithstanding, commencing on first
day after the second anniversary of the date set forth above and on the first
day of each subsequent twelve month period thereafter the term of this Agreement
shall automatically be extended for one additional year beyond the then existing
term. This Agreement shall terminate (except as set forth in the next sentence)
if (a) the Corporation gives the Executive notice that it wishes to terminate
this Agreement in which case this Agreement shall terminate as of the date set
forth in such notice or (b) the Executive's employment with the Corporation is
terminated for any reason, including transfer to a subsidiary company of the
Corporation, in which case this Agreement shall terminate on the last day of the
Executive's employment with the Corporation; provided, however, if the Executive
is transferred to a subsidiary company of the Corporation, the Corporation may
waive the termination of this Agreement, by a written amendment of this
Agreement, executed by both the Corporation and the Executive, which shall refer
to this clause and shall be limited to the Executive's transfer to the
subsidiary company of the Corporation named in the amendment, unless another
amendment is executed upon the Executive's subsequent transfer to another
subsidiary company of the Corporation. The Corporation may not give such notice
and this Agreement shall not automatically terminate in the event the
Executive's employment with the Corporation terminates for any reason, including
a transfer to a subsidiary company of the Corporation, (x) at any time while the
Corporation has knowledge that any third person has taken steps or announced an
intention to take steps reasonably calculated to effect a " Change in Control"
(as hereinafter defined) of the Corporation, unless or until such third party
has, in the reasonable opinion of the Corporation, abandoned its efforts or
intention to effect a Change in Control of the Corporation or (y) within
thirty-six months after the date a Change in Control occurs. It is understood
that the Corporation may terminate the Executive's employment at any time,
subject to providing, if
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required to do so in accordance with the terms hereof, the severance benefits
hereinafter specified.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless
there shall have been a Change in Control of the Corporation and the Executive's
employment by the Corporation shall thereafter have been terminated by the
Corporation or by the Executive under the circumstances described in paragraph
3(iii) hereof.
(i) Definition. For purposes of this Agreement , "CHANGE OF
CONTROL" shall mean the first to occur of:
(A) an individual, corporation, partnership, group,
associate or other entity or "person", as such term is defined in Section 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act"), other than (i) the
Corporation, (ii) those certain trustees under Deeds of Trust dated August 21,
1951 and under the Will of Xxxx X. Xxxxxx, deceased (a "Trust" or the "Trusts"),
and (iii) any employee benefit plan of the Corporation or any subsidiary company
of the Corporation, or any entity holding voting securities of the Corporation
for or pursuant to the terms of any such plan (a "Benefit Plan" or the "Benefit
Plans"), or any employee benefit plan(s) sponsored by the Corporation, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 20% or more of the combined voting power of the
Corporation's outstanding securities ordinarily having the right to vote at
elections of directors;
(B) individuals who constitute the Board of Directors
of the Corporation on the effective date of this Agreement (the "Incumbent
Board") cease for any reason to constitute at least a majority thereof, provided
that any Approved Director, as
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hereinafter defined, shall be, for purposes of this subsection (B), considered
as though such person were a member of the Incumbent Board. An "Approved
Director", for purposes of this subsection (b), shall mean any person becoming a
director subsequent to the effective date of this Agreement whose election, or
nomination for election by the Corporation's shareholders, was approved by a
vote of at least three-quarters of the directors comprising the Incumbent Board
(either by a specific vote or by approval of the proxy statement of the
Corporation in which such person is named as a nominee of the Corporation for
director), but shall not include any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of an individual, corporation, partnership, group, associate or
other entity or "person" other than the Board of Directors; or
(C) the approval by the shareholders of the Corporation
of a plan or agreement providing for a merger or consolidation of the
Corporation other than with a wholly-owned subsidiary and other than a merger or
consolidation that would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 65% of the combined voting power of the voting
securities of the Corporation or such surviving entity outstanding immediately
after such merger or consolidation, or for a sale, exchange or other disposition
of all or substantially all of the assets of the Corporation. If any of the
events enumerated in this subsection (C) occurs, the Board of Directors shall
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determine the effective date of the Change of Control resulting therefrom for
purposes of this Agreement.
(ii) Exceptions. (A) Notwithstanding the foregoing, a
"Change in Control" shall not be deemed to have occurred for purposes of this
Agreement (I) in the event of a sale, exchange, transfer or other disposition of
substantially all of the assets of the Corporation to, or a merger,
consolidation or other reorganization involving the Corporation and, the
Executive, alone or with other officers of the Corporation, or any entity in
which the Executive (alone or with other officers) has, directly or indirectly,
at least a 5% equity or ownership interest or (II) in a transaction otherwise
commonly referred to as a "management leveraged buy-out."
(B) Clause 2(i)(A) above to the contrary notwithstanding, a
Change in Control shall not be deemed to have occurred if a Person becomes the
beneficial owner, directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the Corporation's then
outstanding securities solely as the result of an acquisition by the Corporation
or any subsidiary company of the Corporation of voting securities of the
Corporation which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20% or more
of the combined voting power of the Corporation's then outstanding securities;
provided, however, that if a Person becomes the beneficial owner of 20% or more
of the combined voting power of the Corporation's then outstanding securities by
reason of share purchases by the Corporation or any subsidiary company of the
Corporation and shall, after such share purchases by the Corporation or a
subsidiary company of the Corporation, become the beneficial owner, directly or
indirectly, of any additional voting securities of the Corporation, then a
Change in Control of the Corporation shall be deemed to have occurred with
respect to such Person under clause 2(i)(A)above. Notwithstanding the foregoing,
in no event shall a change in control of the Corporation be
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deemed to occur under clause 2(i)(A) above if the person acquiring such shares
is the Trusts or Benefit Plans.
(C) Clauses 2(i)(A) and 2(i)(B) to the contrary
notwithstanding, the Board may, by resolution adopted by at least two-thirds of
the directors comprising the Incumbent Board, declare that a Change in Control
described in clauses 2(i)(A)(a) or 2(i)(B) has become ineffective for purposes
of this Agreement if all of the following conditions then exist: (I) the
declaration is made prior to the death, disability or termination of employment
of the Executive and within 120 days of the Change in Control; and (II) no
Person, except for (x) the Trusts, and (y) the Benefit Plans, either is the
beneficial owner, directly or indirectly, of securities of the Corporation
representing 10% or more of the combined voting power of the Corporation's
outstanding securities or has the ability or power to vote securities
representing 10% or more of the combined voting power of the Corporation's then
outstanding securities. If such a declaration shall be properly made, no
benefits shall be payable hereunder as a result of such prior but now
ineffective Change in Control, but benefits shall remain payable and this
Agreement shall remain enforceable as a result of any other Change in Control
unless it is similarly declared to be ineffective.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. The Executive shall be
entitled to the severance benefits provided in Section 4 hereof if his
employment is terminated within the 36 month period following a Change in
Control of the Corporation (even if such 36 month period shall extend beyond the
term of this Agreement or any extension thereof) unless his termination is (i)
because of his death or disability, (ii) by the Corporation for Cause or
Disability or (iii) by the Executive other than for Good Reason.
(i) Disability. If, as a result of the Executive's incapacity
due to physical or mental illness, he shall have been absent from his duties
with the Corporation on a full-time basis for 26 consecutive weeks, and within
30 days after written notice of termination is given he shall not have returned
to the full-time performance of his duties, the Corporation may terminate this
Agreement for "Disability."
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(ii) Cause. The Corporation may terminate the
Executive's employment for Cause. For the purpose of this Agreement, the
Corporation shall have "Cause" to terminate the Executive's employment hereunder
upon (A) the willful and continued refusal by the Executive substantially to
perform his duties with the Corporation (other than any such refusal resulting
from his incapacity due to physical or mental illness), after a demand for
substantial performance is delivered to the Executive by the Board which
specifically identifies the manner in which the Board believes that the
Executive has refused substantially to perform his duties or (B) the willful
engaging by the Executive in gross misconduct materially and demonstrably
injurious to the Corporation. For purposes of this paragraph, no act or failure
to act on the Executive's part shall be considered "willful" unless done, or
omitted to be done, by the Executive not in good faith and without reasonable
belief that his action or omission was in the best interest of the Corporation.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire members of the Board, at a meeting of the
Board called and held for that purpose (after reasonable notice to the Executive
and an opportunity for the Executive, together with his counsel, to be heard
before the Board), finding that in the good faith opinion of the Board the
Executive was guilty of conduct set forth above in clauses (A) or (B) of the
second sentence of this paragraph and specifying the particulars thereof in
detail.
(iii) Good Reason. The Executive shall be entitled to terminate
his employment, and receive benefits hereunder, for Good Reason at any time
within 36 months after the date of a Change in Control of the Corporation. For
purposes of this Agreement, "Good Reason" shall mean, unless the Executive shall
have consented in writing thereto, any of the following:
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(A) a reduction in the Executive's title, duties,
responsibilities or status, as compared to such title, duties, responsibilities
or status immediately prior to the Change in Control or as the same may be
increased after the Change in Control;
(B) the assignment to the Executive of duties
inconsistent with the Executive's office on the date of the Change in Control or
as the same may be increased after the Change in Control;
(C) a reduction by the Corporation in the Executive's
base salary as in effect immediately prior to the Change in Control or as the
same may be increased after the Change in Control; or a failure by the
Corporation following a Change in Control to increase, within twelve months of
the Executive's last increase in annual base salary, his base salary by an
amount not less than the greater of (1) 6% or (2) the average percentage
increase in base salary for all officers of the Corporation during the twelve
month period immediately following his last increase in base salary, provided,
however, that the Corporation's failure to increase his base salary more than
15% annually shall not constitute Good Reason under this paragraph under any
circumstances;
(D) a requirement that the Executive relocate anywhere
not mutually acceptable to the Executive and the Corporation if the relocation
is to other than the greater Greensboro, North Carolina area or the imposition
on the Executive of business travel obligations substantially greater than his
business travel obligations during the year prior to the Change in Control;
(E) the relocation of the Corporation's principal
executive offices to a location outside the greater Greensboro, North Carolina
area;
(F) the failure by the Corporation to continue in
effect any material fringe benefit or compensation plan, retirement plan, life
insurance plan, health and accident plan or disability plan, including but not
limited to the Corporation's Executive Incentive Compensation Plan ("EICP"),
Annual Discretionary Management Incentive Compensation Program ("ADMICP") or
other applicable bonus program, the Amended and Restated
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Supplemental Executive Retirement Plan, the Executive Deferred Savings Plan, the
Deferred Compensation Plan and the 1996 Stock Compensation Plan, as amended, in
which the Executive is participating at the time of a Change in Control of the
Corporation (or plans providing the Executive with substantially similar
benefits), the taking of any action by the Corporation which would adversely
affect the Executive's participation in or materially reduce his benefits under
any of such plans or deprive him of any material fringe benefit enjoyed by him
at the time of the Change in Control, or the failure by the Corporation to
provide him with the number of paid vacation days to which he is then entitled
under (1) the Corporation's normal vacation policy in effect immediately prior
to the Change in Control or (2) any agreement regarding vacation entitlement
which the Executive had with the Corporation immediately prior to the Change in
Control, whichever is greater;
(G) the adoption or pursuit by the Corporation or its
management of one or more policies or practices which, in the sole opinion of
the Executive, are contrary to the ethics, traditions, policies or practices of
the Corporation as in effect immediately prior to the Change in Control; or
(H) any breach of this Agreement of any nature
whatsoever on the part of the Corporation.
(iv) Notice of Termination. Any termination by the Corporation
pursuant to paragraph 3(i) or 3(ii) hereof, or otherwise, or by the Executive
pursuant to paragraph 3(iii) hereof, which, in any case, occurs within 36 months
after a Change in Control of the Corporation, shall be communicated by written
Notice of Termination (as hereinafter defined) to the other party hereto;
provided that, in the case of a termination for Cause, there shall also have
been delivered to the Executive the resolution required to be delivered pursuant
to paragraph 3(ii) hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set 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.
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(v) Date of Termination. "Date of Termination" shall mean (A)
if this Agreement is terminated for Disability, 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), (B)
if the Executive's employment is terminated pursuant to paragraph 3(ii) above,
the date specified in the Notice of Termination, and (C) if the Executive's
employment is terminated for any other reason, the date on which a Notice of
Termination is given, or, if the Corporation terminates the Executive's
employment without giving a Notice of Termination, the date on which such
termination is effective.
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(i) During any period that the Executive fails to perform his
duties as a result of incapacity due to physical or mental illness, he shall
continue to receive his full base salary at the rate then in effect until his
employment is terminated pursuant to paragraph 3(i) hereof. Thereafter, his
benefits, if any, shall be determined in accordance with whatever disability
income insurance plan or plans the Corporation may then have in effect;
provided, however, if at the time Disability of the Executive is established the
disability benefits then available are less advantageous to the Executive than
the Disability benefits which were available upon the Change in Control, then
his termination of employment shall be deemed to have occurred as a voluntary
termination for Good Reason under paragraph 3(iii) hereof and not by reason of
his disability, and the benefits payable to the Executive under paragraph 4(iii)
hereof shall apply in lieu of this paragraph 4(i).
(ii) If the Executive's employment shall be terminated for
Cause, the Corporation shall pay him his full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given and
the Corporation shall have no further obligations to the Executive under this
Agreement.
(iii) If the Corporation shall terminate the Executive's
employment other than pursuant to paragraph 3(i) or 3(ii) hereof within 36
months after a Change in Control of the
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Corporation, or if the Executive shall terminate his employment for Good Reason
pursuant to paragraph 3(iii) hereof within 36 months after a Change in Control,
then:
(A) The Corporation shall pay to the Executive, no
later than 30 days following the Date of Termination, the Executive's accrued
but unpaid base salary through the Date of Termination plus compensation for
current and carried-over unused vacation and compensation days in accordance
with the Corporation's personnel policy.
(B) In lieu of any further payments of salary to the
Executive after the Date of Termination, the Corporation shall pay to the
Executive, not later than thirty (30) days following the Date of Termination and
notwithstanding any dispute between the Executive and the Corporation as to the
payment to the Executive of any other amounts under this Agreement or otherwise,
a lump sum severance payment (the "Severance Payment") equal to 2.99 times the
greater of (1) the average annual compensation which was payable to the
Executive by the Corporation (or any corporation (an "Affiliate") affiliated
with the Corporation within the meaning of Section 1504 of the Internal Revenue
Code of 1986, as amended (the "Code")) and includible in the Executive's gross
income for federal income tax purposes for the five taxable years ending prior
to the date on which a Change in Control of the Corporation occurred (or such
portion of such period during which the Executive performed personal services
for the Corporation) or (2) an amount equal to the sum of (I) the greater of the
Executive's highest annual base salary in effect at any time within the twelve
month period preceding a Change in Control or the Date of Termination, and (II)
the greater of (i) the Target Incentive Award or Target Amount to which the
Executive would have been entitled under the EICP or ADMICP, as applicable, and
the base or target amount to which the Executive would have been entitled under
any other bonus program of the Corporation, had he been employed by the
Corporation at the end of the fiscal year in which the Date of Termination
occurs, or (ii) the highest amount awarded to the Executive under the EICP or
ADMICP and under any other bonus program of the Corporation during the five
fiscal years preceding the Date of Termination. The Executive's average annual
compensation in clause (1) above shall be determined in accordance with any
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regulations promulgated under Section 280G of the Code. Compensation payable to
the Executive by the Corporation (or an Affiliate) shall include every type and
form of compensation includible in the Executive's gross income in respect of
the Executive's employment by the Corporation (or an Affiliate).
(C) In addition to the foregoing amounts payable under
paragraph 4(iii)(A) and (B) above, the Executive will be entitled to the
following:
(1) any stock option rights held by the
Executive which were not fully exercisable on the Date of Termination
shall immediately become fully exercisable by the Executive;
(2) the Corporation shall maintain in full force
and effect, for the Executive's continued benefit, until the earlier of
(I) 36 months after the Date of Termination or (II) the Executive's 65th
birthday, all life, medical and dental insurance programs in which the
Executive was entitled to participate immediately prior to the Date of
Termination provided that his continued participation is possible under
the general terms and provisions of such programs; provided that, in the
event the Executive's participation in any such program is barred, the
Corporation shall arrange to provide the Executive with benefits
substantially similar to those which he was entitled to receive under
such programs;
(3) in addition to the benefits to which the
Executive is entitled under the Corporation's retirement plans in which
he participates or any successor plans or programs in effect on the Date
of Termination, the Corporation shall pay the Executive in one lump sum
in cash, at the Executive's normal retirement age, as defined in such
plan or programs (or earlier retirement age should the Executive so
elect pursuant to such plan or programs), an amount equal to the
actuarial equivalent of the retirement pension to which the Executive
would have been entitled under the terms of such retirement plan or
programs had he accumulated 36 additional months of continuous service
after the Date of Termination (or, if less, the number of months between
the Date of Termination
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and the date on which the Executive attains normal retirement age under
the plan) at his base salary rate in effect on the Date of Termination
under such retirement plan or program reduced by the single sum
actuarial equivalent of any amounts to which the Executive is entitled
pursuant to the provisions of said retirement plans and programs;
provided that, at the option of the Executive, instead of paying such
amount at the Executive's normal retirement age, such amount, discounted
to reflect its then present value, shall be paid to the Executive at the
same time as the Severance Payment; and further provided that, for
purposes of this subparagraph (3), the actuarial equivalents shall be
determined, and all other calculations shall be made, using the same
methods and assumptions utilized under the Corporation's retirement plan
or programs; and
(4) the Executive shall become fully vested and
have a nonforfeitable interest in any benefit which he has accrued under
the Corporation's Amended and Restated Supplemental Executive Retirement
Plan ("SERP"), including any Supplemental Annual Benefit Determinations
or similar determinations or benefit grants under the SERP adopted at
any time prior to termination of the Executive's employment.
(D) (1) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Corporation to or for the benefit of the Executive,
whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise (a "PAYMENT"), would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "CODE") or similar section or any interest or
penalties with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively
referred to as the "EXCISE TAX"), then the Executive shall be entitled
to receive an additional payment (a "GROSS-UP PAYMENT ") in an amount
such that after
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payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax,
imposed upon the Gross-Up Payment the Executive retains an amount of the
Gross-Up Payment equal to all such taxes imposed upon the Payments.
(2) Subject to the provisions of subsection (4)
hereof, all determinations required to be made under this subsection,
including whether a Gross-Up Payment is required and the amount of such
Gross-Up Payment, shall be made by the firm of independent auditors
acting as such for the Corporation immediately prior to the Change in
Control (the "ACCOUNTING FIRM") provided, however, if the Accounting
Firm has performed services for the person, entity or group who caused
the Change in Control, or an affiliate thereof, the Executive may select
an alternative accounting firm from any nationally recognized firm of
certified public accountants, which shall be treated as the Accounting
Firm for purposes hereof, The Accounting Firm shall provide detailed
supporting calculations both to the Corporation and the Executive within
30 days of termination of employment under this Agreement, if
applicable, or such earlier time as is requested by the Executive or the
Corporation. When calculating the amount of the Gross-Up Payment, the
Executive shall be deemed to pay:
(I) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar
year in which the Gross-Up Payment is to be made, and
(II) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the
calendar year in which the Gross-up Payment is to be made,
net of the maximum reduction in Federal income
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taxes which could be obtained from deduction of such state
and local taxes if paid in such year.
(3) If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with an
opinion that he or she has substantial authority not to report any Excise Tax on
his or her federal income tax return. Any determination by the Accounting Firm
shall be binding upon the Corporation and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Corporation should have
been made ("UNDERPAYMENT"), consistent with the calculations required to be made
hereunder. In the event that the Corporation exhausts its remedies pursuant to
subsection (4) hereof, and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Corporation to or for the benefit of the Executive.
(4) The Executive shall notify the Corporation in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Corporation of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than ten
business days after the Executive knows of such claim and shall apprise the
Corporation of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the thirty day period following the date on which it gives such
notice to the Corporation (or such shorter period ending on the date that any
payment of taxes with
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respect to such claim is due). If the Corporation notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(I) give the Corporation any information reasonably
requested by the Corporation relating to such claim,
(II) take such action in connection with contesting such
claim as the Corporation shall reasonably request in
writing from time to time including, without limitation,
accepting legal representation with respect to such claim
by an attorney reasonably selected by the Corporation,
(III) cooperate with the Corporation in good faith in
order effectively to contest such claim, and
(IV) permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this subsection, the Corporation shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and xxx for a
refund or contest the claim in any permissible manner, and the
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Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Corporation shall determine; provided, however, that if
the Corporation directs the Executive to pay such claim and xxx for a refund,
the Corporation shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statue of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Corporation's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(5) If after the receipt by the Executive of an amount
advanced by the Corporation pursuant to this subsection the Executive
becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Corporation's complying with the
requirements of subsection (4)) promptly pay to the Corporation the amount
of such refund (together with any interest paid or credited thereon by the
taxing authority after deducting any taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Corporation
pursuant to subsection (4) a determination is made that the Executive shall
not be entitled to any refund with respect
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to such claim and the Corporation does not notify the Executive in writing
of its intent to contest such denial of refund prior to the expiration of
thirty days after such determination, then such advance shall be forgiven
and shall not be required to be repaid and the amount of such advance shall
offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid under subsection (4). The forgiveness of such advance shall be
considered part of the Gross-Up Payment and subject to gross-up for any
taxes (including interest or penalties) associated therewith.
(iv) The Executive's right to receive payments under this
Agreement shall not decrease the amount of, or otherwise adversely affect, any
other benefits payable to the Executive under any plan, agreement or arrangement
relating to employee benefits provided by the Corporation.
(v) The Executive shall not be required to mitigate the amount
of any payment provided for in this paragraph 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
paragraph 4 be reduced by any compensation earned by the Executive as the result
of employment by another employer or by reason of the Executive's receipt of or
right to receive any retirement or other benefits after the date of termination
of employment or otherwise.
(vi) The Corporation may, but shall not be obligated to,
provide security for payment of the amounts set forth in this Agreement in a
form that will cause such amounts to be includible in the Executive's gross
income only for the taxable year or years in which such amounts are paid to the
Executive under the terms of this Agreement. The form of security may include a
funded irrevocable grantor trust established so as to satisfy any published
Internal Revenue Service guidelines.
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5. FEES AND EXPENSES. The Corporation shall pay all reasonable legal
fees and related expenses (including the costs of experts, evidence and counsel
and other such expenses included in connection with any litigation or appeal)
incurred by the Executive as a result of (i) his termination of employment
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination of employment) or (ii) his seeking to obtain or
enforce any right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Corporation under which he is or may be entitled
to receive benefits. The Corporation further agrees to pay prejudgment interest
on any money judgment against the Corporation obtained by the Executive in any
arbitration or litigation against it to enforce such rights calculated at the
prime interest rate of Wachovia Bank, N.A., or its successor, in effect from
time to time from the date it is determined that payment(s) to him should have
been made under this Agreement.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation, by agreement
in form and substance satisfactory to the Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Corporation would be required to perform it if no succession had taken
place. Failure of the Corporation to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation in the same amount and on the same
terms as he would be entitled hereunder if he terminated his employment for Good
Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As
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used in this Agreement, "Corporation" shall mean the Corporation as defined
above and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this paragraph 6 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(ii) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts would still be payable to him hereunder
if he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his devisee,
legatee or other designee or, if there be no such designee, to his estate.
7. NOTICES. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed in the
case of the Executive, to
and in the case of the Corporation, to its principal executive offices, provided
that all notices to the Corporation shall be directed to the attention of its
Chief Executive Officer with copies to the Secretary of the Corporation and to
the Board, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
8. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the
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Executive and a duly authorized officer of the Corporation. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. This Agreement shall not be assigned in whole or in
part without the prior written consent of the non-assigning party; provided,
however, this sentence shall not be construed to relieve the Corporation or any
successor (whether direct or indirect) from liability hereunder as provided in
paragraph 6. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws (but not the law of conflicts of laws)
of the Commonwealth of Pennsylvania.
9. VALIDITY. The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
EXECUTIVE
Witness:
(SEAL)
------------------------------ -----------------------------
VF CORPORATION
Attest: By:
--------------------------------
Xxxxxx X. XxXxxxxx
------------------------------ Chairman, President and Chief
Xxxxxxx X. Xxxxxxxx Executive Officer
Secretary
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