Exhibit 10 (l)
SALARY CONTINUATION AGREEMENT
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This AGREEMENT is entered into this 12th day of November, 2002 by
and between XXXXXXXX XXXXX, Inc. a Delaware corporation (the "Company") and Xxxx
X. Xxxxxx (the "Associate").
STATEMENT OF PURPOSE.
The purpose of this Salary Continuation Agreement (the
"Agreement") is to assist a key employee in the event of such employee's
involuntary termination in the transition to finding other employment and also
to retain such employee and to motivate such employee to enhance the value of
the Company.
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have
the meanings set forth below:
"Base Salary" shall mean the annual base salary paid to the
Associate by the Company and any Subsidiary immediately prior to his or her
termination of employment or, in the event of a termination for Good Reason
within the meaning of clause (b) of the definition of Good Reason, the annual
base salary paid to the Associate immediately prior to the existence of Good
Reason.
"Base Salary Continuation Amount" shall mean the amount described
in Section 2 hereof.
"Board" shall mean the Board of Directors of the Company.
"Cause" shall mean:
(a) The willful and continued failure by the Associate to perform
substantially his duties with the Company (other than any such failure resulting
from the Associate's incapacity due to physical or mental illness or any such
failure resulting from termination by the Associate for Good Reason) after a
written demand for substantial performance is delivered to the Associate by the
Board, which demand specifically identifies the manner in which the Board
believes that the Associate has not substantially performed his duties; or
(b) The willful engagement in conduct by the Associate which is
demonstrably and materially injurious to the Company, monetarily or otherwise;
or
(c) Conviction for a felony or other crime punishable by
imprisonment, or the entering of a plea of nolo contendere thereto.
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For purposes of this definition, no act, or failure to act, on
the Associate's part shall be considered "willful" unless done, or omitted to be
done, by him knowing and with the intent that such action or inaction would not
be in the best interests of the Company or otherwise was done or omitted to be
done in bad faith.
Notwithstanding any of the foregoing, the Associate shall not be
deemed to have been terminated for Cause pursuant to clause (a) and (b) above
unless and until there shall have been delivered to the Associate a resolution
duly adopted by the Board at a meeting called and held for such purpose (after
reasonable notice to the Associate and an opportunity for the Associate,
together with his or her counsel, to be heard before the Board), finding that
the Associate has engaged in (or failed to engage in, as the case may be) the
conduct set forth above and specifying the particulars thereof in detail.
"Change in Control" shall be deemed to have occurred upon any of
the following events:
(a) Any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
but excluding any employee benefit plan of the Company) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company's outstanding securities then
entitled ordinarily to vote for the election of directors; or
(b) During any period of two (2) consecutive years commencing on
or after the Emergence Date, the individuals who at the beginning of such period
constitute the Board or any individuals who would be Continuing Directors cease
for any reason to constitute at least a majority thereof; or
(c) The Board shall approve a sale of all or substantially all of
the assets of the Company; or
(d) The Board shall approve any merger, consolidation, or like
business combination or reorganization of the Company, the consummation of which
would result in the occurrence of any event described in clause (a) or (b),
above.
"Continuing Directors" shall mean the directors of the Company in
office on the Emergence Date and any successor to any such director and any
additional director who after the Emergence Date (i) was nominated or selected
by a majority of the Continuing Directors in office at the time of his or her
nomination or selection and (ii) who is not an "affiliate" or "associate" (as
defined in Regulation 12B under the Exchange Act) of any person who is the
beneficial owner, directly or indirectly, of securities representing ten percent
(10%) or more of the combined voting power of the Company's outstanding
securities then entitled ordinarily to vote for the election of directors.
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"Disability" with respect to an Associate shall exist if such
Associate is eligible to receive benefits under the applicable Group Long Term
Disability Income Plan for Executives or any successor plan thereto; provided,
however, that in the event that no such plan is in effect as of the applicable
date, "Disability" shall have the meaning ascribed to such term in any long term
disability benefit plan of the Company in effect as of the Emergence Date.
"Eligible Termination" shall mean the termination of an
Associate's employment with the Company or a Subsidiary, other than on account
of death, Disability or Retirement, (i) by him or her for Good Reason or (ii) by
the Company or a Subsidiary other than for Cause (or other than at a time when
Cause existed).
"Emergence Date" shall mean October 4, 2002.
"Good Reason" shall mean:
(a) The assignment by the Company or a Subsidiary to the
Associate of duties which result, without the Associate's express written
consent, in a significant reduction in the Associate's authority and
responsibility when compared to the level of authority and responsibility
assigned to the Associate as of the date of execution of this Agreement; or
(b) A reduction by the Company or a Subsidiary of the Associate's
Base Salary as the same may be increased from time to time hereinafter; or
(c) A change of the Associate's assigned site location as of the
Emergence Date ("Original Site") to another site location which is at least 50
miles from the Original Site without the Associate's consent, or in the event of
any such relocation of the Associate with his consent, the failure by the
Company to pay (or reimburse) the Associate for all reasonable moving expenses
incurred by the Associate and relating to a change of his principal residence,
and to indemnify the Associate against any loss realized by the Associate and/or
the Associate's spouse in the sale of the Associate's principal residence (with
any such loss measured as the difference between the amount realized on the sale
and the original cost of the home plus any improvements thereto) in connection
with any such change of residence, all to the effect that the Associate shall
incur no loss on any after-tax basis; or
(d) The failure by the Company to continue to provide the
Associate with substantially the same level of employee benefits under all
employee benefit plans, including, without limitation, (i) all pension plans, as
such term is defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), including the Profit-Sharing Plan, the
Company's 401(k) Plan and the Company's Excess Benefits Plan, (ii) all other
retirement plans, whether or not tax-qualified, (iii) all incentive and cash
bonus plans, (iv) all welfare plans, as such term is defined in section 3(1) of
ERISA, including, group life insurance plans, medical, dental, accident,
disability and other insurance plans, and (v) all perquisites, in each case, as
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were provided to the Associate immediately prior to the Emergence Date, or with
a package of employee benefits that, though one or more such benefits may vary
from those provided before the Emergence Date, is substantially comparable in
all material respects when taken as a whole to such employee benefits provided
prior the Emergence Date; or
(e) The failure by the Company to provide continued participation
in an annual cash bonus plan pursuant to which, if applicable Company and/or
individual performance criteria are satisfied, the Associate would receive an
annual bonus in an amount equal to the product of (x) his annual base salary and
(y) a bonus percentage, provided, however, that such performance criteria used
in calculating the amount of an annual bonus shall be selected and determined in
a manner substantially consistent with the method of establishing such targets
immediately prior to the Emergence Date and the bonus percentage shall be no
less than that percentage used in determining the amount of the Associate's
targeted bonus immediately prior to the Emergence Date; provided, however, that
Good Reason shall not exist in the event the Company changes the criteria for
receiving such amounts for valid business purposes not related to the Associate;
or
(f) The failure by the Company to perform its obligations under
any Company employee benefit plans and agreements entered into between the
Company and the Associate; or
(g) The failure by the Company to obtain the express written
assumption of and agreement to perform this Agreement by any Successor; or
(h) Any purported termination of the Associate's employment by
the Company which is not effected pursuant to a Notice of Termination.
"Notice of Termination" shall mean a notice given by the
Associate or by the Company or a Subsidiary, as the case may be, which shall
indicate the specific basis for termination and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for determination
of any payments under this Agreement; provided, however, that an Associate shall
not be entitled to give a Notice of Termination that he is terminating his
employment with the Company or a Subsidiary for Good Reason after the expiration
of six (6) months following the last to occur of the events alleged by him to
constitute Good Reason.
"Profit Sharing Plan" shall mean the Company's Salaried Associate
Retirement Profit Sharing Plan or any successor plan thereto
"Retirement" shall mean that the Associate shall have retired
after reaching the normal retirement date provided in the Profit Sharing Plan as
in effect on the Emergence Date.
"Subsidiary" shall mean a subsidiary of the Company.
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"Successor" shall mean any person, firm, corporation or other
business entity that, at any time, whether by merger, acquisition or otherwise,
acquires all or substantially all of the stock, assets or business of the
Company or a Subsidiary, as the case may be.
2. SALARY CONTINUATION AND OTHER POST-TERMINATION BENEFITS.
The Associate shall only be entitled to the Base Salary
Continuation Amount and the other payments and benefits described in this
Section 2 in the event of an Eligible Termination. Any purported termination by
the Company or a Subsidiary by reason of Disability or for Cause, or by the
Associate for Good Reason, shall be communicated by written Notice of
Termination to the other party hereto.
The Base Salary Continuation Amount payable to the Associate
under this Agreement shall be equal to two (2) years of Base Salary. All Base
Salary Continuation Amounts shall be payable by the Company in substantially
equal monthly installments commencing with the first day of the month following
the month in which the Eligible Termination occurs. In the event of an Eligible
Termination, the Associate shall be entitled to (i) continue to participate in
all of the welfare plans, including medical, dental and disability plans,
maintained by the Company or its Subsidiaries in which he participated
immediately prior to his termination of employment (or, in the event of a
termination for Good Reason within the meaning of clause (d) of the definition
of Good Reason, the welfare plans in which he participated immediately prior to
the existence of Good Reason), on the same terms as he participated immediately
prior to his termination of employment (or the existence of Good Reason, as the
case may be), from the date of such Eligible Termination to the expiration of a
period of time equal to the period of time used to compute his Base Salary
Continuation Amount herein and (ii) reimbursement from the Company for the cost
of outplacement services not in excess of $20,000. In the event of an Eligible
Termination within one year after the Emergence Date following a Change in
Control, the Associate shall also be entitled to receive a bonus equal to 60
percent (60%) of his Base Salary, and such bonus shall be paid out in a single
sum together with the first installment of the Base Salary Continuation Amount
payments. Payments and benefits under this Agreement shall not be reduced or
offset by any payments made to the Associate under any other plan, program,
agreement or arrangement of the Company or its Subsidiaries. Notwithstanding the
foregoing, however, payments under this Agreement are subject to and conditioned
upon the cancellation of any agreements or arrangements existing on the
Emergence Date with the Company or a Subsidiary providing for payments to the
Associate in the event of a "change of control", whether or not such change in
control is the same as defined herein. Benefits under the Agreement payable to
the Associate shall be reduced by all applicable federal, state and local
withholding.
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3. RELEASE.
The Associate's agreement hereto shall constitute full settlement
and release of any claim or cause of action, of whatever nature, which the
Associate might otherwise assert or claim against the Company or any of its
directors, stockholders, officers or associates on account of such termination;
provided, however, this Agreement is in addition to and not in lieu of any other
plan or arrangement providing for payments to or benefits for the Associate or
any agreement now existing or which hereafter may be entered into between the
Company and the Associate other than any such agreement or arrangement existing
on the Emergence Date providing benefits in the event of a "change in control"
described in Section 2 hereof.
4. FINANCING.
All amounts due and benefits provided under the Agreement shall
constitute general obligations of the Company in accordance with the terms of
the Agreement. The Associate shall have only an unsecured right to payment
thereof out of the general assets of the Company
5. GENERAL. (a) The Associate shall retain in confidence any
proprietary or other confidential information known to him concerning the
Company and its business (including any Subsidiary and its business) so long as
such information is not publicly disclosed and disclosure is not required by an
order of any governmental body or court. If requested, the Associate shall
return to the Company any memoranda, documents or other materials proprietary to
the Company or any Subsidiary.
(b) The Company shall use its best efforts to resolve disputes
under this Agreement expeditiously and without undue litigation expenses. If
litigation shall be brought to enforce or interpret any provision contained
herein, the Company shall indemnify the Associate for his attorneys' fees and
disbursements incurred in such litigation and pay prejudgment interest on any
money judgment obtained by the Associate calculated at the prime rate of
interest in effect from time to time at Wachovia Bank, National Association,
from the date that payment should have been made under this Agreement; provided,
however, that the Associate shall not have been found by the court to have had
no cause in bringing the action, or to have acted in bad faith, which finding
must be final with the time to appeal therefrom having expired and no appeal
having been taken.
(c) Subject to the terms hereof, the Company's obligation to pay
the Associate the compensation and to make the arrangements provided herein
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, any set off, counterclaim,
recoupment, defense or other right which the Company may have against the
Associate or anyone else. All amounts payable by the Company hereunder shall be
paid without notice or demand. Each and every payment made hereunder by the
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Company shall be final and the Company will not seek to recover for any reason
all or any part of such payment from the Associate or any person entitled
thereto.
(d) The Company shall 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 Company, by written
agreement to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement, the term
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which executes and delivers the
agreement required by this Section 5(d), or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law.
(e) This Agreement shall inure to the benefit of and be
enforceable by the Associate's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Associate should die while any amounts would still be payable to the Associate
hereunder if he had continued to live, all such amounts shall be paid in
accordance with the terms of this Agreement to the Associate's devisee, legatee
or other designor or, if there be no such designee, to the Associate's estate.
(f) For the purposes 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 by (i) United States registered
mail, return receipt requested, postage prepaid, (ii) overnight courier service
or (iii) facsimile, addressed as follows:
If to the Associate, to the address stated in the Company's
records for such Associate.
If to the Company:
Xxxxxxxx Xxxxx, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Law Department
Fax: (000) 000-0000
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.
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6. TERMINATION AND AMENDMENT OF THE AGREEMENT
This Agreement shall continue to be in effect unless and until
the Company terminates it by providing written notice to the Associate at least
six months prior to the date of termination, with such notice specifying the
termination date; provided, however, that the Company may not terminate this
Agreement and may not give such a notice of termination prior to the second
anniversary of this Agreement. Notwithstanding the foregoing, the Company shall
have no right to amend, modify or terminate this Agreement after the Associate
becomes entitled to any payments or benefits hereunder. The Company may amend or
modify this Agreement solely with the written consent of the Associate.
7. NON-ASSIGNABILITY
The Associate's rights under this Agreement shall be
non-transferable except as applicable law may otherwise require. Subject to the
foregoing, no right, benefit or interest hereunder shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation or set-off in respect of any claim, debt or obligation, 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,
to the full extent permitted by law, be null, void and of no effect.
8. EFFECT OF OTHER PROGRAMS; DUTY TO MITIGATE
Except as otherwise expressly provided herein, (a) nothing in the
Agreement shall affect the level of benefits provided to or received by the
Associate (or the Associate's estate or beneficiaries) as part of any employee
benefit plan or program of the Company, its parent or any affiliate and (b) the
Agreement shall not be construed to affect in any way the Associate's rights and
obligations under any other plan or program maintained by the Company, its
parent or any affiliate on behalf of employees or any other contract between the
Company or a subsidiary and the Associate.
With respect to the first half of Base Salary Continuation Amount
payments described in Section 2 hereof, the Associate shall not be required to
mitigate the amount of any such payment under the Agreement by seeking
employment or otherwise, and there shall be no right of setoff or counterclaim,
in respect of any claim, debt or obligation, against any payments to the
Associate, the Associate's dependents, beneficiaries or estate provided for in
the Agreement. With respect to the second half of such Base Salary Continuation
Amount payments, such payments shall be reduced, but not below zero, by any
amounts paid or payable by a successor employer and, with respect to such
payments, the Associate shall use reasonable efforts to seek comparable
employment to mitigate the amounts of such payments.
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9. TERMINATION OF EMPLOYMENT
Nothing in the Agreement shall be deemed to entitle the Associate
to continued employment with the Company or a Subsidiary, and the rights of the
Company or a Subsidiary to terminate the employment of the Associate in any
lawful manner shall continue as fully as though this Agreement were not in
effect.
10. SEVERABILITY
In the event that any provision or portion of the Agreement shall
be determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of the Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
11. GOVERNING LAW; ARBITRATION
All questions pertaining to the construction, regulation,
validity and effect of the provisions of the Agreement shall be determined in
accordance with the laws of the State of Delaware. Any dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively
by arbitration in accordance with the rules of the American Arbitration
Association then in effect. Unless otherwise agreed to by the Company, any such
arbitration shall take place in Guilford county, North Carolina. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that the Associate shall be entitled to seek specific performance of
his or her right to be paid as provided in this Agreement in the event of any
dispute.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the day and year first above written.
XXXXXXXX XXXXX, INC. ASSOCIATE
By: /s/ Xxxxxx X. Xxxxx, Xx. /s/ Xxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxx, Xx. Xxxx X. Xxxxxx
Title: General Counsel
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