Exhibit 10.4
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AGREEMENT by and between Xxxxx River Corporation of Virginia,
a Virginia corporation (the "Company") and Xxxxxxx X. Xxxxxxx (the "Executive"),
dated as of the 26th day of June, 1997, amending and restating the agreement
between the parties dated as of the 4th day of May, 1997.
1. Employment Period. Subject to the consummation of the
transactions contemplated by the Agreement and Plan of Merger among the Company,
Xxxxx River Delaware, Inc. and Fort Xxxxxx Corporation ("Fort Xxxxxx") dated as
of May 4, 1997 (the "Merger Agreement"), the Company hereby agrees to employ the
Executive, and the Executive hereby agrees to remain in the employ of the
Company subject to the terms and conditions of this Agreement, for the period
commencing on the closing date of the merger contemplated by the Merger
Agreement (the "Commencement Date") and ending on the third anniversary of the
Commencement Date (the "Employment Period"); provided, however that the
Employment Period shall automatically be extended without action by either party
for an additional three year period unless, not later than six months prior to
the third anniversary of the Commencement Date, either party shall give notice
to the other in writing that such party does not intend to extend the Employment
Period. A notice delivered by the Company that it does not intend to extend the
term of this Agreement shall hereinafter be referred to as a "Nonrenewal
Notice."
2. Terms of Employment. (a) Position and Duties. (i) During
the Employment Period, the Executive shall serve as President and Chief
Operating Officer of the Company, reporting directly to the Chief Executive
Officer of the Company with duties and responsibilities consistent therewith.
Until the second anniversary of the Commencement Date, the Executive's services
shall be performed at Fort Xxxxxx'x current headquarters location, or at such
other place within a fifty-mile radius of such current location as the Board of
Directors of the Company (the "Board") may from time to time deem appropriate.
Following the second anniversary of the Commencement Date, the Executive's
services may be required to be performed in the Chicago, Illinois metropolitan
area or in such other location as shall be mutually agreed (in any such case, a
"Permitted Location"). Notwithstanding the foregoing, the Executive shall be
required to travel to the extent necessary to the performance of the Executive's
responsibilities under this Agreement. The Executive shall use Company owned or
leased aircraft for purposes of such travel whenever practicable, and the
Company recognizes that it may
from time to time be necessary, appropriate, desirable or convenient for the
Executive to be accompanied in such travel by persons who are not employees of
the Company, including the Executive's spouse and other members of the
Executive's family. During the Employment Period, the Executive shall serve on
the Board.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote full attention and time during normal business hours to the
business and affairs of the Company and to use the Executive's reasonable best
efforts to perform such responsibilities in a professional manner. It shall not
be a violation of this Agreement for the Executive to (A) serve on corporate,
civic or charitable boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and agreed that to
the extent that any such activities have been conducted by the Executive prior
to the Commencement Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
Commencement Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary ("Annual Base Salary")
in an amount of no less than $700,000, payable in cash. The Annual Base Salary
shall be paid no less frequently than in equal bi-weekly installments.
(ii) Annual Bonus; Special Bonus. The Executive's bonus under
Fort Xxxxxx'x Management Incentive Plan (the "MIP") for the fiscal year ending
December 31, 1997 shall be calculated based on the greater of (x) the
performance level of Fort Xxxxxx attained as of the Effective Time and (y)
actual 1997 performance, and for the fiscal year ending December 31, 1998, the
Executive's bonus under the MIP (or a successor bonus plan) shall be at a level
that is no less than 80% of the bonus paid to the Chief Executive Officer of the
Company for such year. In addition, in recognition of the extraordinary efforts
that shall be required on the Executive's part in assisting in the integration
of Fort Xxxxxx and the Company following the Merger, the Executive shall receive
a special service recognition bonus (the "Special Service Bonus") in the amount
of $1 million to be paid in a cash lump sum on the six-month anniversary of the
Commencement Date.
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(iii) Long-Term Incentives. Upon commencement of the
Employment Period, the Executive shall receive a grant of 100,000 shares of
restricted stock (the "Restricted Stock") and 50,000 performance shares (the
"Performance Shares") pursuant to the Company's 1996 Stock Incentive Plan. The
Restricted Stock shall vest as follows:
Date Vested Shares
---- -------------
First anniversary of Commencement Date 50,000
Second anniversary of Commencement Date 66,666
Third anniversary of Commencement Date 83,333
Fourth anniversary of Commencement Date 100,000
The Performance Shares shall vest in accordance with the Company's 1996 Stock
Incentive Plan in a manner consistent with performance share awards granted to
the Chief Executive Officer of the Company. On the Commencement Date, the
Company shall grant the Executive options to purchase 250,000 shares of common
stock of the Company (the "Options") which shall vest in equal installments on
the first two anniversaries of the Commencement Date. The Options shall have an
exercise price equal to the Fair Market Value of the stock subject thereto on
the date of grant. For purposes this Section 2(b)(iii), the "Fair Market Value"
of the Company's common stock shall be the average closing price of the
Company's common stock on the New York Stock Exchange for the five trading days
prior to the date of grant. The Restricted Stock, Performance Shares and Option
grants shall provide that if the Company shall terminate the Executive's
employment other than for Cause during the Employment Period, including by
reason of the Executive's death or Disability, or the Executive shall terminate
employment for Good Reason during the Employment Period, such stock awards shall
become immediately vested.
(iv) Savings and Retirement Plans. The Company shall provide
the Executive with a supplemental pension arrangement (the "Company Supplemental
Plan") that shall provide the Executive with an annual pension upon termination
of employment with the Company after attaining the age of 55 of not less than
$500,000 (or, at the Executive's election, the lump-sum equivalent, which shall
be payable at the time of termination), provided that, in the event of a
termination of the Executive's employment by the Company without Cause
(including by reason of the Executive's Disability or, if applicable, death) or
a resignation by the Executive for Good Reason prior to the attainment of age
55, the Executive shall receive an annual pension equal to not less than
$250,000 commencing at age 55 (or, at the Executive's election, the lump-sum
equivalent, which shall be payable at the time of termination). The other terms
and conditions of the Company
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Supplemental Plan shall be mutually agreed between the Executive and the
Company, but shall be no less favorable than those provided under the
supplemental pension arrangements maintained for the Chief Executive Officer of
the Company. During the Employment Period, the Executive shall be eligible to
participate in all other savings and retirement plans, practices, policies and
programs to the extent applicable generally to the Chief Executive Officer of
the Company, other than the Miles X. Xxxxx Supplemental Retirement Plan.
(v) Welfare and Other Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case may be, shall
be eligible for participation in and shall receive all benefits under welfare,
fringe, change of control protection, incentive, vacation and other similar
benefit plans, practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to the
Chief Executive Officer of the Company. For purposes of all such plans, the
Company shall credit the Executive with full credit for all service accrued or
deemed accrued with Fort Xxxxxx for purposes of eligibility to participate and
receive benefits, vesting and benefit accruals, except the Executive shall not
receive such credit for purposes of benefit accruals in a defined benefit
pension plan. With respect to the Company's welfare benefit plans, the Company
shall cause any such plan to waive any pre-existing condition exclusions and
actively-at-work requirements thereunder with respect to the Executive and the
Executive's eligible dependents and shall ensure that any covered expenses
incurred on or before the Commencement Date shall be taken into account for
purposes of satisfying applicable deductible, coinsurance and maximum
out-of-pocket provisions after the Commencement Date to the extent that such
expenses are taken into account for the benefit of the Chief Executive Officer
of the Company.
(vi) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable business
expenses incurred by the Executive, in accordance with the policies of the
Company.
(vii) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits on the same basis as the Chief
Executive Officer, including, without limitation, tax and financial planning
services, payment of club dues, and an automobile of his choice and payment of
related expenses.
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(viii) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the Vacation Policy as set
forth in the Company's Benefits and Policies Manual, but in no event less than
four weeks per year, as defined in the Benefits and Policies Manual.
(ix) Indemnity. The Executive shall be indemnified by the
Company against claims arising in connection with the Executive's status as an
employee, officer, director or agent of the Company in accordance with the
Company's indemnity policies for its senior executives, subject to applicable
law.
3. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 9(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Commencement
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall have the meaning set forth in the
Company's Long-Term Disability Plan.
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean:
(i) intentional gross misconduct by the Executive
damaging in a material way to the Company, or
(ii) a material breach of this Agreement, after the
Company has given the Executive notice thereof and a reasonable
opportunity to cure.
(c) Good Reason. The Executive's employment may be terminated
by the Executive for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean a material breach by the Company of this Agreement after the
Executive has given the Company notice of the breach and a reasonable
opportunity to cure.
(d) Special Termination Rights. Notwithstanding anything to
the contrary in this Agreement, for a period of
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24 months following the Commencement Date, the Executive shall have the right to
terminate his employment for any reason pursuant to a Notice of Termination
delivered prior to the end of such 24 month period (a "Special Termination").
(e) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 9(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, 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, (iii) if the Date
of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice), or (iv) provides 30 days notice from the
Executive in the event of a Special Termination. The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any right
of the Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such fact or circumstance
in enforcing the Executive's or the Company's rights hereunder.
(f) Date of Termination. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Commencement Date, as the
case may be.
4. Obligations of the Company upon Termination. (a) Good
Reason; Other Than for Cause. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for Cause, death or
Disability, or the Executive shall terminate employment for Good Reason or the
Company shall deliver a Nonrenewal Notice and the Executive thereafter
terminates the Executive's employment at the end of the Employment Period (a
"Nonrenewal Termination"):
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(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the aggregate of the
amounts set forth in clauses A, B and C below:
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore
paid, (2) the product of (x) the highest bonus paid to the
Executive with respect to the three years ending prior to the
year in which the Date of Termination occurs (the "Minimum
Bonus") and (y) a fraction, the numerator of which is the
number of days in the current calendar year through the Date
of Termination, and the denominator of which is 365 and (3)
any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and
any other nonqualified benefit plan balances to the extent not
theretofore paid (the sum of the amounts described in clauses
(1), (2), and (3) shall be hereinafter referred to as the
"Accrued Obligations"); and
B. the amount equal to the product of (1) three, two
in the case of a Nonrenewal Termination, and (2) the sum of
(x) the Executive's Annual Base Salary and (y) the Minimum
Bonus; and
C. an amount equal to the excess of (a) the actuarial
equivalent of the benefit under the Company's qualified
defined benefit retirement plan or such other qualified
defined benefit pension plan in which the Executive
participates, if any (the "Retirement Plan") (utilizing
actuarial assumptions no less favorable to the Executive than
those in effect under the Company's Retirement Plan
immediately prior to the Commencement Date), and any excess or
supplemental retirement plan in which the Executive
participates (together, the "SERP") which the Executive would
receive if the Executive's employment continued for three
years, two years in the case of a Nonrenewal Termination,
after the Date of Termination assuming for this purpose that
all accrued benefits are fully vested, and, assuming that the
Executive's compensation in each of the three or two years, as
the case may be, is the sum of the Annual Base Salary and
Minimum Bonus over (b) the actuarial equivalent of the
Executive's actual benefit (paid or payable), if any, under
the Retirement Plan and the SERP as of the Date of
Termination;
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(ii) the Restricted Stock, Performance Shares and
Options (collectively, the "Stock Awards") shall become immediately vested
and/or exercisable, as the case may be;
(iii) for three years, two years in the case of a
Nonrenewal Termination, after the Executive's Date of Termination, or such
longer period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue benefits to the Executive and/or
the Executive's family at least equal to those which would have been provided to
them in accordance with the welfare plans, programs, practices and policies
described in Section 2(b)(v) of this Agreement if the Executive's employment had
not been terminated or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to the Chief Executive Officer of
the Company and his family, provided, however, that if the Executive becomes
reemployed with another employer and is eligible to receive medical or other
welfare benefits under another employer provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility. For purposes of
determining eligibility (but not the time of commencement of benefits) of the
Executive for retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained employed until
three or two years, as the case may be, after the Date of Termination and to
have retired on the last day of such period;
(iv) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the
Executive is entitled to receive under any plan, program, policy or
practice or contract or agreement of the Company and its affiliated
companies, excluding any severance plan or policy except to the extent
that such plan or policy provides, in accordance with its terms,
benefits with a value in excess of the benefits payable to the
Executive under this Section 4 (such other amounts and benefits shall
be hereinafter referred to as the "Other Benefits");
(v) the Executive shall be provided with free and
clear title to the Company car; and
(vi) to the extent not previously paid, the
Executive shall be paid the Special Service Bonus.
(b) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause or the
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Executive terminates employment without Good Reason during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive (x) Accrued
Obligations less the amount determined under Section 4(a)(i)A(2) hereof, and (y)
Other Benefits, in each case to the extent theretofore unpaid.
(c) Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 4(c) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive death
benefits as in effect on the date of the Executive's death with respect to other
peer executives of the Company and its affiliated companies and their
beneficiaries. In addition, the Stock Awards shall vest immediately and/or
become exercisable, as the case may be.
(d) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of Accrued Obligations and the timely payment or provision of
Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination. With respect to the provision
of Other Benefits, the term Other Benefits as utilized in this Section 4(d)
shall include, and the Executive shall be entitled after the Disability
Commencement Date to receive, disability and other benefits as in effect
generally with respect to other peer executives of the Company and its
affiliated companies and their families. In addition, the Stock Awards shall
vest immediately and/or become exercisable, as the case may be.
(e) Special Termination. In the event of a Special
Termination, the Executive shall be entitled to payment of the amounts set forth
in Section 4(a)(i), Section 4(a)(iii) and Section 4(a)(iv).
5. Confidential Information; Noncompetition. (a) The Executive
shall hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of
its affiliated companies, and their respective businesses, which
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shall have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process
(provided the Company has been given notice of and opportunity to challenge or
limit the scope of disclosure purportedly so required), communicate or divulge
any such information, knowledge or data to anyone other than the Company and
those designated by it.
(b) In the event of a termination of the Executive's
employment by the Company for Cause or by the Executive without Good Reason,
until the second anniversary of the Executive's Date of Termination, the
Executive will not directly or indirectly, own, manage, operate, control or
participate in the ownership, management, operation or control of, or be
connected as an officer, employee, partner, director or otherwise with, or have
any financial interest in, any business which is in competition with the Company
or any of its affiliates in any geographic area where such business is being
conducted during such period. Ownership, for personal investment purposes only
of not in excess of 2% of the voting stock of any publicly held corporation
shall not constitute a violation hereof.
6. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any setoff, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").
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7. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company 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 Company 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, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary or any
termination of this Agreement notwithstanding, in the event it shall be
determined that any payment or distribution or benefit made or provided by the
Company or its affiliates, including Fort Xxxxxx, to or for the benefit of the
Executive (whether pursuant to this Agreement or otherwise, and determined
without regard to any additional payments required under this Section 8) (a
"Payment") would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties are incurred by the Executive 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 payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by
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Coopers & Xxxxxxx LLP (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
as determined pursuant to this Section 8, shall be paid by the Company to the
Executive within five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company 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 Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 8(c) 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 Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprise the Company 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
30-day period following the date on which it gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company 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 Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company 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
Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
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(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company 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 Section 8(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo 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 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 Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company 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 statute 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 Company'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.
(d) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 8(c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section 8(c))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 8(c), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to
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contest such denial of refund prior to the expiration of 30 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.
9. Miscellaneous. (a) This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Virginia,
without reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective successors
and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
--------------------
c/o Fort Xxxxxx Corporation
0000 Xxxxx Xxxxxxxx
Xxxxx Xxx, XX 00000
If to the Company:
------------------
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
(e) On and after the Commencement Date, this Agreement shall
supersede any other agreement between the parties or between Fort Xxxxxx and the
Executive with respect to the subject matter hereof and, subject to the closing
of
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the Merger, any such agreement shall be deemed terminated without any
remaining obligations of either party thereunder.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxx
XXXXX RIVER CORPORATION OF VIRGINIA
By /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
Senior Vice President,
Human Resources
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