1
EXHIBIT 10.1
RETIREMENT AGREEMENT
THIS RETIREMENT AGREEMENT is made and entered into as of the 1st day of
April, 1998, by and between XXXX X. XXXXX, an individual ("Retiree"), and
XXXXXXX CORPORATION, an Alabama corporation (the "Corporation").
W I T N E S S E T H:
WHEREAS, the Corporation is engaged in the design, manufacture and
marketing of athletic and leisure clothing and fabrics, with its principal place
of business located in Alexander City, Alabama; and
WHEREAS, Retiree has been employed by the Corporation for in excess of
20 years in various executive positions, most recently serving as its Chairman,
President and Chief Executive Officer; and
WHEREAS, the Corporation requested that Retiree retire, and Retiree
agreed to retire, from active employment by the Corporation upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the terms, conditions, covenants
and premises herein contained, it is mutually agreed by and between Retiree and
the Corporation as follows:
1. Retirement. Effective April 1, 1998, Retiree retired from active
employment by the Corporation.
2. Compensation and Benefits.
(a) Retirement Compensation.
(1) Commencing on the date of this Agreement and continuing through
December 31, 1998, Retiree shall be paid retirement compensation
of Fifty Thousand Dollars ($50,000) per calendar month (the "1998
Retirement Compensation"), to be paid at the times and in the
manner specified in the Corporation's general policies regarding
the payment of employment compensation as established from time to
time. For federal, state and local tax purposes, said compensation
shall be treated as "wages" and the Corporation shall withhold all
appropriate taxes therefrom and shall remit such taxes, together
with the taxes imposed by ss. 3111 of the Internal Revenue Code of
1986 on the Corporation, to the applicable taxing authorities;
provided that subject to the Corporation's obligation to withhold
and remit income tax on said compensation to the applicable taxing
authorities, Retiree shall be responsible for and pay any
additional income tax due and owing thereon. During this period,
Retiree shall, in the same manner and at the same cost to him as
was in effect for him at the time of his retirement, continue
participation and coverage for himself and, where applicable, his
spouse under the following employee and fringe benefit plans and
policies of the Corporation in which he participated at the time
of his retirement: i.e., the Corporation's (i) Group Health Plan,
(ii) Group Life Insurance Plan, (iii) Accidental Death and
Dismemberment Insurance Plan, (iv) Cancer Expense Protection Plan,
(v) Dental Insurance Plan, (vi) Section 125 Tax Saving Benefit
Plan, (vii) Revised Pension Plan, (viii) 401(k) Retirement Savings
Plan, (ix) Supplemental Retirement Benefit Plan, (x) 1993
Executive Long-Term Incentive Plan, and (xi) Executive Incentive
Program. If Retiree is prohibited from participating in any such
plan or policy, the Corporation shall provide Retiree comparable
benefits outside such plan or policy. The Corporation further
agrees that (i) Retiree's 1998 bonus under the Short-Term
Incentive Plan component of the Corporation's Executive Incentive
Program shall be computed and paid in accordance with the terms of
the Plan, provided that for purposes of said computation the
Corporation's "return on assets employed" shall not be reduced by
any compensation or other benefits paid or to be paid or provided
to Xxxx X. Xxxx, the Corporation's Chief Executive Officer, and
(ii) Retiree shall be entitled to receive the bonus,
-11-
2
if any is earned, paid pursuant to the Performance Unit Plan
component of the Corporation's Executive Incentive Program for the
3-year performance plan cycle ending December 31, 1998. Retiree
shall be responsible for and pay any income taxes due or owing by
Retiree as the result of the Corporation's providing (i)
participation and coverage for Retiree, and where applicable, his
spouse, under the above designated employee and fringe benefit
plans and policies, and (ii) comparable benefits outside such
plans and policies in the event Retiree is prohibited from
participating in any such plans or policies.
(2) Commencing January 1, 1999 and continuing through the last day
of the month in which Retiree's 65th birthday occurs, Retiree
shall be paid annual retirement compensation of Four Hundred
Thousand Dollars ($400,000) (the "Post-1998 Retirement
Compensation"), to be paid at the times and in the manner
specified in the Corporation's general policies regarding the
payment of employment compensation as established from time to
time. For federal, state and local tax purposes, said compensation
shall be treated as "wages" and the Corporation shall withhold all
appropriate taxes therefrom and shall remit such taxes, together
with the taxes imposed by ss. 3111 of the Internal Revenue Code of
1986 on the Corporation, to the applicable taxing authorities;
provided that (i) subject to the Corporation's obligation to
withhold and remit income tax on said compensation to the
applicable taxing authorities, Retiree shall be responsible for
and pay any additional income tax due and owing thereon, and (ii)
said compensation shall be treated by the parties as "payments on
account of retirement", not as "wages", for purposes of the Social
Security earnings test. During this period, Retiree shall, in the
same manner and at the same cost to him as was in effect for him
at the time of his retirement, continue participation and coverage
for himself and, where applicable, his spouse under the following
employee and fringe benefit plans and policies of the Corporation
in which he participated at the time of his retirement: i.e., the
Corporation's (i) Group Health Plan, (ii) Group Life Insurance
Plan, (iii) Accidental Death and Dismemberment Insurance Plan,
(iv) Cancer Expense Protection Plan, (v) Dental Insurance Plan and
(vi) Section 125 Tax Savings Benefit Plan. In addition, the
Corporation shall cause Retiree to accrue benefits under the
Corporation's Revised Pension Plan and Supplemental Retirement
Benefit Plan during the period commencing January 1, 1999 and
ending on the earlier of (x) the last day of the month in which
Retiree's 65th birthday occurs or (y) the last day of the month in
which Retiree dies, as if Retiree were employed by the Corporation
and received salary and bonus of Six Hundred Thousand Dollars
($600,000) per year during said period. If Retiree is prohibited
from participating in, or accruing such benefit under, any such
plan or policy, the Corporation shall provide Retiree comparable
benefits outside such plan or policy. Retiree shall be responsible
for and pay any income taxes due or owning by Retiree as the
result of the Corporation's providing (i) participation and
coverage for Retiree, and where applicable, his spouse, under the
above designated employee and fringe benefit plans and policies,
(ii) comparable benefits outside such plans and policies in the
event Retiree is prohibited from participating in any such plans
or policies and (iii) accrued benefits as set forth in the
sentence immediately preceding the immediately preceding sentence.
(3) Commencing on the first day of the month following the month in
which Retiree's 65th birthday occurs and continuing for his life,
Retiree shall be paid annual retirement compensation of Three
Hundred Thousand Dollars ($300,000), to be paid as specified in
the Corporation's general policies regarding the payment of
employment compensation as established from time to time, reduced
by the payments actually received by Retiree from the
Corporation's Revised Pension Plan and Supplemental Retirement
Benefit Plan during such pay periods pursuant to the form of
benefit payment then elected by Retiree under said Plans. For
federal, state and local tax purposes, said compensation shall be
treated as "wages" and the Corporation shall withhold all
appropriate taxes therefrom and shall remit such taxes, together
with the taxes imposed by ss. 3111 of the Internal Revenue Code of
1986 on the Corporation, to the applicable taxing authorities;
provided, that (i) subject to the Corporation's obligation to
withhold and remit income tax on said compensation to the
applicable taxing authorities, Retiree shall be responsible for
and pay any additional income tax due and owing thereon, and (ii)
said compensation shall be treated by the parties as "payments on
account of retirement", not as "wages", for purposes of the Social
Security earnings test.
-12-
3
(b) Continuation of Benefits upon Death of Retiree Prior to Age 65.
If Retiree dies on or before the last day of the month in which
his 65th birthday occurs, the Corporation shall continue to pay to
Retiree's spouse Xxxx X. Xxxxx, if she is living and was married
to Retiree at the time of Retiree's death, or if Retiree's spouse
Xxxx X. Xxxxx (i) is not living at the time of Retiree's death or
was not married to Retiree at the time of Retiree's death, or (ii)
Retiree's spouse Xxxx X. Xxxxx should subsequently die, to
Retiree's estate, amounts equal to the remaining unpaid 1998
Retirement Compensation and Post-1998 Retirement Compensation
(exclusive of benefits) to be paid or provided to Retiree under
subparagraphs (1) and (2) of Paragraph (a) of this Section 2,
respectively, which would have been paid to Retiree had he not
died, with said amounts to be paid as and when they would have
been paid to Retiree had he not died.
3. Pension Benefits. Retiree shall be entitled to receive, and this
Agreement shall not affect, Retiree's benefits payable under the
Corporation's Revised Pension Plan, 401(k) Retirement Savings Plan and
Supplemental Retirement Benefit Plan, which benefits shall be paid at
the times and in the manner as Retiree has or may hereafter elect under
the terms of said Plans.
4. Exercise of Stock Options. Effective upon Retiree's retirement
from the active employment by the Corporation, all options granted by
the Corporation to Retiree for the purchase of the Corporation's stock
pursuant to the Corporation's 1993 Executive Long-Term Incentive Plan
(the "1993 Plan"), or any predecessor stock option plan sponsored by
the Corporation, were immediately vested and non-cancellable, and may
be exercised by Retiree at any time on or before April 1, 2001 in the
manner specified in the 1993 Plan or predecessor stock option plan. The
Corporation acknowledges that Retiree possesses the following options
to purchase shares of the Corporation's common stock:
(1) Option dated July 24, 1991, to purchase 11,000 shares of
the Corporation's common stock at a price of $26.375 per
share.
(2) Option dated July 28, 1993, to purchase 14,300 shares of
the Corporation's common stock at a price of $27.50 per share.
(3) Option dated January 26, 1994, to purchase 16,900 shares
of the Corporation's common stock at a price of $27.4375 per
share.
(4) Option dated January 25, 1995, to purchase 18,000 shares
of the Corporation's common stock at a price of $30.00 per
share.
(5) Option dated January 24, 1996, to purchase 19,800 shares
of the Corporation's common stock at a price of $27.25 per
share.
(6) Option dated January 22, 1997, to purchase 19,400 shares
of the Corporation's common stock at a price of $30.875 per
share.
(7) Option dated January 28, 1998, to purchase 24,600 shares
of the Corporation's common stock at a price of $24.375 per
share.
5. Tax and Financial Planning. The Corporation shall pay the reasonable
attorneys' fees and expenses incurred by Retiree for the review of this
Agreement and the provision of advice to Retiree with respect thereto.
In addition, the Corporation shall pay the reasonable fees and expenses
of Retiree's attorneys, accountants and financial advisors incurred and
paid on or before December 31, 1998, with respect to Retiree's
financial and estate planning.
-13-
4
6. Covenant Not to Compete. Commencing upon the execution of this
Agreement and continuing for the period during which the Corporation
shall pay employment or retirement compensation to Retiree, Retiree
shall not, directly or indirectly, individually or as a partner,
corporate employee, member, stockholder (other than as a shareholder of
less than 1% of a corporation whose shares are listed on a national or
regional securities exchange or have been registered under Section
12(g) of the Securities Exchange Act of 1934), officer, director,
consultant or advisor, work for or lend assistance to a competitor of
the Corporation engaged in manufacturing, marketing, selling or
distributing activewear, athletic uniforms, better knit shirts or
licensed sports apparel, or solicit any business from any customer of
the Corporation for or on behalf of any such competitor of the
Corporation. It is further agreed that due to the irreparable injury
and damage to the Corporation resulting from Retiree's violation of
this covenant, the Corporation will be entitled to injunctive relief
against the violation by Retiree of this covenant in addition to all
other remedies otherwise available to the Corporation. If any court of
competent jurisdiction should hold that the restrictions contained in
this Section 6 are unreasonable, said restrictions shall be deemed to
be reduced, but only to the extent necessary, in the opinion of said
court, to make them reasonable.
7. Confidential Information. Retiree agrees that all confidential
information that comes into his possession by reason of his employment
by the Corporation is the property of the Corporation. Retiree shall
not, during the term of this Agreement or thereafter, disclose or
acknowledge the content of any confidential information to any person
other than an employee of the Corporation who is authorized to possess
such confidential information or Retiree's advisors, such as
accountants or attorneys. For the purposes of this Section 7,
"confidential information" shall include all information relating to
the operations of the Corporation which has not been specifically
designated for release to the public by an authorized representative of
the Corporation, including, without limitation, trade secrets, plans,
pricing information, customer lists and other information developed by
or originated by the Corporation for its own use.
8. Offers to Personnel. Retiree acknowledges that the employees of
the Corporation have been and will be trained at great expense by the
Corporation, and the Corporation has a compelling interest in
maintaining its contractual relationship and expectation of future
contractual relationship with its employees. In addition, if the
employees of the Corporation were to terminate their relationship with
the Corporation and render services to Retiree, Retiree would be
unfairly benefitted without adequate compensation to the Corporation,
by the investment of the Corporation. Accordingly, Retiree covenants
that he shall not from the date hereof through the last day of the
calendar month in which Retiree's 65th birthday occurs, directly or
indirectly, impair or initiate any attempt to impair the relationship
or expectancy of a continuing relationship which exists or will exist
between the Corporation and its employees or make offers or contracts
of employment or offers or contracts for services with such employees
or with any partnership, corporation or association through which such
employees may render services or employment to Retiree.
9. Resignation as Trustee. Retiree hereby resigns, effective
immediately, as a trustee under the Corporation's Revised Pension Plan
and under all other employee benefit plans or trusts, if any, of which
he serves as trustee or other fiduciary.
10. Release and Indemnification. The Corporation, on its own behalf
and on behalf of its subsidiaries, affiliates, successors and assigns,
(i) releases, acquits and forever discharges Retiree, his successors,
assigns and personal representatives, for any and all claims, actions,
causes of actions, demands, damages, costs and expenses whatsoever,
which the Corporation, or anyone acting by it or on its behalf, has,
may have or which may hereafter accrue, and (ii) agrees to defend and
indemnify Retiree, his successors, assigns and personal
representatives, against and hold them harmless from any and all
claims, actions, causes of action, demands, costs and expenses
whatsoever, which in any way arise out of or relate to Retiree's
service as a trustee of any employee benefit or retirement plan
sponsored by the Corporation.
-14-
5
11. Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and placed in the United States Certified
Mail, addressed to the party entitled to receive said notice, at the
following addresses:
(a) If to Retiree:
Xxxx X. Xxxxx
000 Xxxxxx Xxxx
Xxxxxxxxx Xxxx, Xxxxxxx 00000
(b) If to the Corporation:
Xxxxxxx Corporation
000 Xxx Xxxxxx
P. O. Xxx 000
Xxxxxxxxx Xxxx, Xxxxxxx 00000-0000
or at such other address as may be specified from time to time in notices given
in accordance with the provisions of this Section 11.
12. Assignment. Neither this Agreement, nor the rights or obligations
of any party hereunder, may be assigned without the prior written
consent of the other party; provided that in the event the Corporation
is merged into another corporation or all or substantially all of the
Corporation's assets are transferred to another corporation, such other
corporation shall assume all of the obligations of the Corporation
hereunder, and such transaction shall not require the consent of
Retiree for the rights of the Corporation hereunder to be assigned to
such other corporation.
13. Waiver of Breach. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by any party.
14. Section Headings. The headings of the sections of this Agreement
are solely for the purpose of convenience and are not a part hereof,
and shall not be used in the construction or interpretation of any
provision.
15. Modifications. This Agreement may not be changed or modified, nor
may any provision hereof be waived, except by an agreement in writing
executed by the party against whom enforcement of the change,
modification or waiver is asserted.
16. Succession. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their heirs, personal
representatives, successors and assigns.
17. Governing Law. This Agreement shall be construed and interpreted
under, and the rights and obligations of the parties hereunder shall be
controlled and governed by, the laws of the State of Alabama.
18. Severability. Should any court of competent jurisdiction decide,
hold, adjudge or decree that any provision, paragraph, clause or term
of this Agreement is void or unenforceable in whole or as applied in a
particular situation, such determination shall not effect any other
provision of this Agreement, and all other provisions of this Agreement
shall remain in full force and effect in such situation, and all
provisions of this Agreement shall remain in full force and effect in
any and all other situations.
-15-
6
IN WITNESS WHEREOF, Retiree and the Corporation have executed, or
caused to be executed, this Agreement as of the date herein first above written.
"RETIREE"
/s/ Xxxxx X. Xxxxxxxx /s/ Xxxx X. Xxxxx
--------------------------------------------------------------
Witness Xxxx X. Xxxxx
"EMPLOYER"
ATTEST: XXXXXXX CORPORATION, AN ALABAMA
CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxx
--------------------- ----------------
Its Secretary
Its Chairman, President and CEO
-------------------------------
-16-
