EXHIBIT 10.3
RESTATED
TBC CORPORATION
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT was originally entered into as of February 20, 1998,
between TBC CORPORATION, a Delaware corporation (the "Company"), and XXXXXXXX X.
DAY (the "Executive").
The Company and the Executive have agreed (i) to amend this Agreement in
certain respects, effective October 1, 1999; and (ii) for ease of reference, to
restate this Agreement to incorporate the new amendments and to reflect the text
of this Agreement as in effect on October 1, 1999.
NOW, THEREFORE, the Company and the Executive hereby agree that the
following provisions represent the text of the Executive Employment Agreement
between the Company and the Executive, as in effect on October 1, 1999:
Section 1. Term of Employment. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to continue in the employ of the
Company, for a period commencing April 1, 1998 and terminating on the later of
September 30, 2002 (the "Ordinary Course Termination Date"), or two (2) years
after the occurrence of a Change in Control of the Company in the event a Change
in Control of the Company shall have occurred on or prior to the Ordinary Course
Termination Date. The Ordinary Course Termination Date shall be automatically
extended for additional three (3) year periods unless either party shall give
written notice of nonextension to the other party at least 120 days prior to the
then current Ordinary Course Termination Date. Each such extension shall be
effective as of the day prior to the then current Ordinary Course Termination
Date.
Section 2. Position and Duties. A. From and after October 1, 1999, the
Company shall employ the Executive as, and the Executive shall serve as,
President and Chief Executive Officer of the Company or in such other executive
capacity as the Company and the Executive may hereafter mutually agree. Unless
otherwise agreed by the Executive and the Company, the Executive shall be based
at the Company's offices in Memphis, Tennessee.
B. The Executive shall devote his full-time efforts to the business and
affairs of the Company and shall perform his duties as an executive officer, or
in such other executive capacity as the Company and the Executive may hereafter
mutually agree, faithfully, diligently and to the best of his ability and in
conformity with the policies of the Company and under and subject to such
reasonable directions and instructions as the Board of Directors may issue from
time to time.
Section 3. Salary. Effective October 1, 1999, the Company shall pay the
Executive a salary of $400,000 per year in approximately equal installments in
accordance with the normal pay
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schedule for officers of the Company. In the event the Board of Directors of the
Company shall at any time or times thereafter increase the Executive's salary,
then the Executive's salary under this Agreement for any period after any such
increase shall be not less than the last amount to which the Board increased the
salary of the Executive.
Section 4. Deferred Compensation. Beginning October 1, 1999, the
Executive shall be entitled to participate in the TBC Corporation Executive
Deferred Compensation Plan, as the same may be amended from time to time
thereafter.
Section 5. Other Benefits. In addition to the salary and deferred
compensation payable pursuant to Sections 3 and 4, the Executive shall, during
the term of his employment, participate in the TBC Corporation Management
Incentive Compensation Plan, 1989 Stock Incentive Plan, and in any other stock
option or compensation plan or arrangement adopted by the Company in addition
to, or in lieu of, said plans. The Company shall also, during the term of the
Executive's employment, extend to Executive the fringe benefits (including, but
not limited to, medical, disability and life insurance, vacation, personal
leave, automobile and other similar personal benefits) which it establishes from
time to time for its most highly compensated executives. In furtherance and not
in limitation of the foregoing, the Executive shall receive an automobile
allowance of not less than $1,267 per month ($1,730 per month effective October
1, 1999) and membership in a Memphis, Tennessee country club (with initiation
fees and monthly dues paid by the Company). The Executive shall also be eligible
for a minimum of three weeks of paid vacation.
Section 6. Termination of Employment. A. The Executive's employment
shall terminate upon the death of the Executive, but the Company shall continue
to pay each month for twelve (12) months after the death of the Executive an
amount per month equal to the salary per month (inclusive of the amount of
deferred compensation) that was being paid to the Executive at the time of his
death to the person or entity that the Executive shall have last designated in
writing to the Company, or if the Executive shall fail to designate a person or
entity or if the person or entity so designated shall not be in existence at the
time of any payment pursuant to this Section 6.A., then to the Executive's
estate. Nothing in this Section 6.A. shall in any way limit or restrict any
rights or benefits to which the heirs, legatees or successors in interest of the
Executive are entitled under any plans, insurance or other arrangements referred
to in Section 5 hereof in the event of the Executive's death.
B. The Company shall have the right to terminate the Executive's
employment hereunder at any time upon not less than sixty (60) days' advance
written notice to the Executive in the event of such prolonged physical or
mental disability or other condition of the Executive as, in the reasonable
judgment of the Board of Directors, shall render him incapable of performing the
services required of him hereunder; provided, however, that (i) no disability or
condition shall be considered incapacitating unless it has prevented the
Executive from carrying on his duties for a consecutive period of at least three
(3) months; and (ii) the Executive's employment shall not terminate if such
disability is cured within the 60-day notice period provided herein. In addition
to any retirement benefits payable to the Executive under Section 8, in the
event Executive's employment is terminated as the result of disability pursuant
to this Section 6.B., the Company shall continue to pay to the Executive each
month for twelve (12) months after such termination
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an amount equal to his salary per month (inclusive of the amount of deferred
compensation) at the time of such termination.
C. The Company shall have the right to terminate the Executive's
employment hereunder at any time upon not less than sixty (60) days' advance
written notice to the Executive in the event that (i) the Executive engages in
an act or acts of dishonesty constituting a felony and resulting or intended to
result directly or indirectly in personal gain or enrichment at the expense of
the Company; or (ii) the Executive shall deliberately and intentionally refuse
in a material way to observe or comply with any of the material terms or
provisions hereof (except by reason of total or partial incapacity due to
physical or mental disability or otherwise), provided that the Executive's
employment shall not terminate if such refusal is cured or corrected within the
60-day notice period provided herein. In the event that the Company shall
terminate the Executive's employment pursuant to this Section 6.C., the Company
shall have no further obligation or liability under this Agreement, except that
the Company shall pay to the Executive the portion, if any, of the Executive's
salary which remains unpaid for the period up to the date of termination.
D. Provided that no Change in Control of the Company shall have then
occurred or be pending or contemplated, the Company shall have the right to
terminate the Executive's employment, without cause, at any time during the term
of the Executive's employment hereunder immediately upon the giving of written
notice thereof to the Executive. In the event of any such termination without
cause, the Company shall, during each month during the remainder of the period
specified in Section 1 hereof or during the period of eighteen (18) months after
such termination of employment, which ever is longer, pay the Executive (i) the
monthly salary (inclusive of the amount of deferred compensation) that was being
paid to the Executive prior to such termination of employment, plus (ii)
one-twelfth (1/12) of the sum of any benefits which the Executive may have been
awarded under any incentive compensation plans of the Company during the last
two fiscal years preceding the year in which such termination of employment
occurs, divided by two.
E. If a Change in Control of the Company shall occur on or prior to the
then current Ordinary Course Termination Date, and the employment of the
Executive shall terminate during the period of two (2) years following the
Change in Control of the Company, regardless of whether the Executive resigns or
is discharged or otherwise (except for termination pursuant to the provisions of
Sections 6.A., 6.B., or clause (i) of Section 6.C. above), the following shall
be applicable:
1. During the remainder of the period specified in Section 1
hereof or for a period of two (2) years after such termination of employment,
whichever is longer, the Company shall continue to pay to the Executive an
amount equal to his salary determined in accordance with the provisions of
Section 3 and shall credit him with an amount equal to the deferred compensation
determined in accordance with the provisions of Section 4.
2. Beginning on the first day of the month following such
termination of the Executive's employment and on the first day of every month
thereafter during the period of time specified in Section 6.E.1. above, the
Company shall pay to Executive one-twelfth (1/12) of the sum of any benefits
which the Executive may have been awarded under any incentive
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compensation plans of the Company during the last two fiscal years of the
Company preceding the year in which the termination of the Executive's
employment occurred, divided by two.
3. During the time period specified in Section 6.E.1. above,
the Company shall, at its expense, provide to or for the benefit of the
Executive fringe benefits comparable to those provided prior to the Change in
Control of the Company.
4. Any options or stock appreciation rights which the
Executive holds under the 1989 Stock Incentive Plan of the Company (or under any
other option plan of the Company) on the date of the termination of his
employment may be exercised by the Executive with respect to all shares subject
to any such options or rights at any time within ninety (90) days of the
Executive's termination of employment, regardless of whether such options or
rights were exercisable on the date of termination; or at any time within ninety
(90) days after the termination of the Executive's employment, the Executive
may, in lieu of exercising all or any portion of any such option or right, elect
to be paid by the Company in cash the excess of the fair market value of a
Company share (as defined in the 1989 Stock Incentive Plan of the Company) on
the date the election is made (or, if higher, the highest price per Company
share actually paid in connection with the Change in Control of the Company)
over the option price per share times the number of shares then subject to
unexercised options held by the Executive as to which this election is made,
whether or not such options were exercisable on the date of the termination of
the Executive's employment. Any payment required to be made to the Executive
pursuant to the preceding sentence shall be made within two (2) days of the
Executive's election to be paid in cash.
5. Within forty-five (45) days after the end of the fiscal
year in which termination of the Executive's employment occurs, the Company
shall make pro rata awards to the Executive under any incentive compensation
plans of the Company in which he participated which shall be calculated by
multiplying (i) the fraction of which the numerator is the number of full months
worked during such year and the denominator is twelve (12) and (ii) by the
awards which would have been earned (as determined by the Board of Directors of
the Company) if termination had not occurred during such year.
6. If the Executive dies during the period that he is
receiving compensation or fringe benefits pursuant to the provisions of Section
6.E.1., 2. or 3., the Company shall continue to make such payments to the person
or entity entitled thereto pursuant to Section 6.A. for the period of time
provided in Section 6.E.1., but in no event for a period of more than twelve
(12) months after the Executive's death. If the Executive dies prior to
receiving the payments specified in Section 6.E.5. or prior to exercising his
rights under Section 6.E.4., such payments shall be made at the time they are
required to be made hereunder to the person or entity entitled thereto pursuant
to Section 6.A., and such rights may be exercised during the time the Executive
could have exercised them but for his death by the person or entity entitled
thereto pursuant to Section 6.A.
7. A "Change in Control" of the Company shall, for purposes of
this Agreement, mean any change in control of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as the same is construed by the
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Securities and Exchange Commission on the date of execution of this Agreement or
in accordance with any change made with respect to said Item or construction
thereof deemed more favorable by the Executive; provided that, without
limitation, such a Change in Control shall be deemed to have occurred if (i) any
"person" (as such term is defined in Sections 13(d) and 14(d)(2) of the Exchange
Act), other than the Executive and/or any entity then controlled by the Company
or the Executive is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities; (ii) during any period of two (2)
consecutive years, individuals who at the beginning of such period constitute
the Board cease for any reason to constitute at least a majority thereof unless
the election, or the nomination for election by the Company's stockholders, of
each new director was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the beginning of the
period; (iii) the Company merges or consolidates with another corporation and
the Company or an entity controlled by the Company or the Executive immediately
prior to the merger or consolidation is not the surviving entity; or (iv) a
sale, lease, exchange or other disposition of all or substantially all of the
assets of the Company takes place.
Section 7. No Competition. So long as the Executive shall be receiving
payments under Section 6.D. or 6.E.1. above, the Executive shall not engage in
any Competitive Activity. For purpose of this Agreement, "Competitive Activity"
shall mean the Executive's participation, without the written consent of the
Company, in the management of any business operation of any enterprise if such
operation (a "Competitive Operation") engages in substantial and direct
competition with any business operation actively conducted by the Company or its
subsidiaries. "Competitive Activity" shall not include (i) the mere ownership of
securities in any enterprise or (ii) participation in the management of any
enterprise or any business operation thereof, other than in connection with a
Competitive Operation of such enterprise.
Section 8. Retirement Benefits. A. The Executive shall be entitled to
participate in the Company's 401(k) Savings Plan and in any other retirement
plan hereafter adopted by the Company for the benefit of its employees, subject
in each case to the terms of any such plan governing participation therein. In
addition, the Executive shall be entitled to supplemental retirement benefits in
accordance with the terms of the Company's Executive Retirement Plan and shall
be credited with two Years of Service thereunder on his Employment Start Date.
If he is then employed by the Company, the Executive shall, for purposes of the
Company's Executive Retirement Plan, be credited with 1.6 Years of Service for
the twelve month period ending March 31, 2003 and for each full twelve month
period thereafter that he is so employed; provided, however, that Years of
Service credited during the Executive's employment with the Company shall not
exceed 25 for purposes of calculating his benefits under the Executive
Retirement Plan.
B. The Company shall establish and maintain a trust fund to fund the
payment of all benefits to be paid to the Executive pursuant to Sections 6 and 8
under the circumstances described in, and in accordance with the terms of, a
trust agreement substantially in the form attached hereto as Exhibit A. The
Company may add to said trust fund the amounts of Deferred Compensation referred
to in Section 4 in order to fund the payments thereof as provided in said
Section.
Section 9. Compensation from Other Employment. Any compensation payable to
the Executive pursuant to the provisions of Section 6 shall be reduced by any
amounts of
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compensation earned or received by the Executive from any other employer for
services rendered during the period for which such payments by the Company are
to be made thereunder.
Section 10. Limitation on Payments. A. Sections 280G and 4999 of the
Internal Revenue Code (the "Code") impose a 20% excise tax on excessive
compensation received by, and deny a deduction to the Company for the amount of
excess compensation paid to, employees who are officers, shareholders or highly
compensated individuals as a result of a change in the ownership or effective
control of the Company or in the ownership of a substantial portion of the
Company's assets. In general, payments to an individual that are contingent on a
Change in Control will not be treated as excessive if such payments are less
than three (3) times the average annual compensation received by such individual
over the five (5) years preceding the Change in Control. The provisions that
follow are designed to maximize the amounts payable to the Executive under this
Agreement in the event of a Change in Control, taking into consideration the
possible application of the foregoing Code provisions.
B. Notwithstanding anything in this Agreement to the contrary, in the
event that it is determined that any payment by the Company to the Executive or
for the Executive's benefit, whether paid or payable pursuant to the terms of
this Agreement or otherwise, would be taxable because of Section 4999 of the
Code, then the aggregate present value of amounts payable to the Executive or
for the Executive's benefit pursuant to this Agreement shall be reduced to the
Reduced Amount unless C. below applies. For purposes of this subparagraph, the
"Reduced Amount" shall be defined as an amount expressed in present value which
maximizes the amounts payable pursuant to this Agreement without causing any
such payments to be taxable to the Executive because of Section 4999 of the
Code.
C. If the Net After Tax Benefit of all amounts payable to the Executive
pursuant to this Agreement exceeds the Net After Tax Benefit of the Reduced
Amount, then this Section 10 shall not apply to limit any amount payable to the
Executive. "Net After Tax Benefit" means the amount payable to the Executive or
for the Executive's benefit pursuant to this Agreement (whether the Reduced
Amount or the full amounts payable to the Executive under this Agreement), less
the sum of (i) the amount of federal income taxes payable with respect to such
amounts and (ii) the amount of excise taxes payable on such amounts pursuant to
Section 4999 of the Code, if any. For purposes of this clause C., federal income
taxes payable in respect of future payments shall be those prescribed by the
Code at the time the calculation is made for the periods in which the same shall
be payable.
D. An initial determination as to whether any reduction in payments and
benefits is necessary in order to comply with B. above and, if so, the
calculation of the Reduced Amount shall be made by the Company and furnished to
the Executive in writing within seven (7) days following the date of the Change
of Control of the Company. From time to time thereafter as necessary and, in any
event, upon termination of the Executive's employment, the Company shall
re-examine its determination and recalculate the Reduced Amount and promptly
furnish information with respect to the same to the Executive in writing. The
Company's determination and its calculation of the Reduced Amount following the
termination of the Executive's employment will be final and binding upon the
Executive unless the Executive notifies the Company within eight (8) days after
the Executive receives the Company's determination and
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calculation that the Executive disputes the same. Within ten (10) days after the
Executive so notifies the Company, the Executive shall deliver to the Company a
statement of the basis for the Executive's opinion as to whether any reduction
in payments and benefits is necessary, pursuant to B. above and, if so, the
Executive's calculation of the Reduced Amount. If, within ten (10) days after
the Company receives such statement, the Company and the Executive are unable to
agree as to whether any reduction is necessary or as to the calculation of any
amounts under this Section 10, then the Company and the Executive shall, within
three (3) days thereafter, choose a nationally recognized accounting firm to
resolve any such dispute. Such accounting firm's determination shall be made
promptly and delivered to the Company and the Executive within twenty (20) days
of its appointment and shall be final and binding on the parties. All costs
incurred in connection with the accounting firm's determination shall be borne
by the Company.
E. Within ten (10) days after the date a determination and calculation
of the Reduced Amount becomes final and binding in accordance with D. above, the
Executive may elect which portion of the payments due him under this Agreement
shall be eliminated or reduced to meet such Reduced Amount (including meeting
the Reduced Amount by reducing the present value of any payment and benefits
through deferral of the payment date). If the Executive does not notify the
Company of his election within such ten (10) day period, the Company shall have
the right to decide how the Reduced Amount will be met.
F. Pending a final and binding determination and calculation of the
Reduced Amount in accordance with this Section 10, the Executive shall have the
right to require the Company to pay to the Executive all or any undisputed
portion of the Reduced Amount, as determined and calculated by the Company, that
would be then due and payable to the Executive pursuant to this Agreement. Such
payment shall be made by the Company within two (2) days after the date of
receipt of notice from the Executive requesting such payment.
G. The Company shall pay to the Executive or for the Executive's
benefit that portion of the Reduced Amount which is then due and payable (less
any amount previously paid by the Company pursuant to F. above) within ten (10)
days after receipt of the election by the Executive described in E. above or, in
the absence of such an election, within fifteen (15) days after the date upon
which any determination and calculation of the Reduced Amount becomes final and
binding in accordance with D. above. The balance of the Reduced Amount shall be
paid promptly as the same becomes due and payable under this Agreement.
H. In the event that the Internal Revenue Service or a court of
competent jurisdiction makes a final determination that any payments to the
Executive under this Agreement are taxable to the Executive pursuant to Section
4999 of the Code, and such payments should not have been made under the terms of
Sections 10.B. and C. hereof (such taxable payments and benefits being referred
to hereinafter as an "Overpayment") or in the event that the Code shall be
amended or final regulations thereunder adopted and, as a result thereof,
payments or benefits previously made to the Executive under this Agreement
should not have been made under the terms of Sections 10.B. and C. and are thus
recharacterized as an Overpayment, the amount of such Overpayment shall be
treated for all purposes as a loan to the Executive which shall be repayable by
the Executive within thirty (30) days after demand by the Company, together with
interest at the applicable federal rate specified for a demand loan in Section
7872(f)(2) of the Code, compounded
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semiannually. The foregoing provision relating to Overpayments shall be
applicable notwithstanding previous compliance by the Company and the Executive
with the requirements of this Section 10; provided, however, that no such
Overpayment shall be repaid by the Executive to the Company if and to the extent
that, despite making such repayment, the amount which is subject to taxation
under Section 4999 of the Code would not be reduced.
Section 11. Amendment of Agreement. This Agreement may be amended from
time to time hereafter only with the mutual consent of the Executive and the
Board of Directors of the Company (or any committee thereof to which
responsibility for this Agreement has been delegated). All amendments shall be
in writing, shall reference this Agreement and state that an amendment to this
Agreement is being made in the respects set forth therein, and shall be executed
by the Executive and the Company.
Section 12. Waiver. The failure of either party to insist, in any one
or more instances, upon the performance of any of the terms, covenants or
conditions of this Agreement by the other party hereto, shall not be construed
as a waiver or as a relinquishment of any right granted hereunder to the party
failing to insist on such performance, or as a waiver of the future performance
of any such term, covenant or condition, but the obligations hereunder of both
parties hereto shall remain unimpaired and shall continue in full force and
effect.
Section 13. Successor; Binding Agreement. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company,
by agreement in form and substance reasonably satisfactory to the Executive,
expressly to assume 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. Failure of the Company to obtain such agreement
prior to the effectiveness of such succession shall be deemed to be a Change in
Control of the Company effective on the date of such succession. As used herein,
"Company" shall mean TBC Corporation and any successor to its business and/or
its assets as aforesaid which executes and delivers the agreement provided for
in this Section 13 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
Section 14. Notices. All notices required or permitted to be given
under this Agreement shall be in writing and shall be mailed (postage prepaid
via either registered or certified mail) or delivered, if to the Company,
addressed to:
TBC Corporation
0000 Xxxxxxx Xxxx Xxxxx
Post Office Box 18342
Memphis, Tennessee 38181-0342
Attention: Chairman of the Board
and if to the Executive, addressed to the Executive at his then current home
address as set forth in the Company's books and records. Either party may change
the address to which notices to it or him are to be directed by giving written
notice of such change to the other party in the manner specified in this
paragraph.
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Section 15. Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in Memphis, Tennessee, in accordance with the Rules of the American
Arbitration Association, and judgment upon the award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction thereof.
Section 16. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
day and year first above written.
TBC CORPORATION
By/s/ XXXXX X. XxXXXXXX
Xxxxx X. XxXxxxxx,
Vice Chairman and Chief Executive
Officer
/s/ XXXXXXXX X. DAY
XXXXXXXX X. DAY (Executive)
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