Document/Exhibit Description Pages Size
1: 10-K Annual Report Ftl 1994 67 293K
6: EX-10 Employment Agreement Between Farley Industries, 27 114K
Inc., Fruit of the Loom, Inc. and Earl
C. Shanks.
7: EX-10 Employment Agreement Between Farley Industries, 27 112K
Inc., Fruit of the Loom, Inc. and Larry
K. Switzer.
4: EX-10 Employment Agreement Between Farley Industries, 27 116K
Inc., Fruit of the Loom, Inc. and
Richard C. Lappin.
5: EX-10 Employment Agreement Between Farley Industries, 27 115K
Inc., Fruit of the Loom, Inc. and
Richard M. Cion.
3: EX-10 Employment Agreement Between Fruit of the Loom, 25 109K
Inc. and John B. Holland.
2: EX-10 Employment Agreement Between Fruit of the Loom, 25 110K
Inc. and William Farley.
8: EX-11 Computation of Earnings Per Common Share 2 11K
9: EX-22 List of Subsidiaries of the Company 3 17K
10: EX-24 Consent of Independent Auditors 1 8K
11: EX-27 Financial Data Schedule 1 9K
EX-10 — Employment Agreement Between Fruit of the Loom, Inc. and John B. Holland.
Exhibit Table of Contents
93
CONFORMED COPY
FRUIT OF THE LOOM, INC.
Employment Agreement for John B. Holland
94
FRUIT OF THE LOOM, INC.
Employment Agreement for John B. Holland
1. Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
2. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
3. Offices and Duties . . . . . . . . . . . . . . . . . . . . . . . . . 95
4. Salary and Annual Incentive Compensation . . . . . . . . . . . . . . 96
5. Long-Term Compensation, Including Stock Options, and Benefits,
Deferred Compensation, and Expense Reimbursement . . . . . . . . . . 97
6. Termination Due to Normal Retirement, Approved Early Retirement,
Death, or Disability . . . . . . . . . . . . . . . . . . . . . . . . 100
7. Termination of Employment For Reasons Other Than Normal Retirement,
Approved Early Retirement, Death or Disability . . . . . . . . . . . 102
8. Definitions Relating to Termination Events. . . . . . . . . . . . . 107
9. Excise Tax Gross-Up . . . . . . . . . . . . . . . . . . . . . . . . 109
10. Non-Competition and Non-Disclosure; Executive Cooperation . . . . . 112
11. Governing Law; Disputes; Arbitration . . . . . . . . . . . . . . . . 113
12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
13. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . 116
95
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is dated as of the 28th day of March,
1995, by and between FRUIT OF THE LOOM, INC., a Delaware corporation (the
"Company") and John B. Holland ("Executive"), and shall become effective as
of December 18, 1994 (the "Effective Date").
W I T N E S S E T H
WHEREAS, Executive has served as a senior executive of the
Company; and
WHEREAS, the Company desires to continue to employ Executive in a
senior executive capacity in connection with the conduct of its businesses,
and Executive desires to accept such employment by the Company on the terms
and conditions herein set forth; and
WHEREAS, the Company and Executive desire to set forth the terms
upon which Executive shall be so employed by the Company.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants contained herein, and other good and valuable consideration the
receipt and adequacy of which the Company and Executive each hereby
acknowledge, the Company and Executive hereby agree as follows:
1. Employment
The Company hereby agrees to employ Executive as a senior
executive and Executive hereby agrees to accept such employment and serve in
such capacity, during the Term as defined in Section 2 and upon the terms and
conditions set forth in this Employment Agreement (this "Agreement").
2. Term.
The term of employment of Executive under this Agreement (the
"Term") shall be the period commencing on the Effective Date and terminating
on December 17, 1997 and any period of extension thereof in accordance with
this Section 2, subject to earlier termination in accordance with Section 6 or
7. The Term shall be extended automatically without further action by either
party for the one-year period beginning on December 18, 1997 and each
succeeding December 18 thereafter, unless either party shall have served
written notice in accordance with the provisions of Section 12(d) upon the
other party on or prior to the June 30 preceding a date upon which such
extension would become effective electing not to extend the Term further as of
the December 18 next succeeding the date such notice is served, in which case
the Term shall terminate at the next December 17 (subject to earlier
termination in accordance with Section 6 or 7).
3. Offices and Duties.
The provisions of this Section 3 will apply during the Term:
(a) Generally. Executive shall serve as President and Chief
Operating Officer of the Company, and, if elected, to serve as a member of the
96
Board of Directors of the Company (the "Board") and for so long as he is
serving on the Board, Executive agrees to serve as a member of any Board
Committee if the Board shall elect Executive to such position. Executive
shall perform such duties and responsibilities and authorities as are
substantially consistent with his duties, responsibilities, authorities, rank
and status as of the Effective Date. Executive shall devote full business
time and attention, and his best efforts, abilities, experience, and talent to
the performance of such duties and responsibilities for the businesses of the
Company and its subsidiaries; provided, however, that nothing in this
Agreement shall preclude or prohibit Executive from engaging in other
activities to the extent that such other activities do not preclude
Executive's employment or otherwise inhibit the performance of Executive's
duties and responsibilities under this Agreement or conflict with the
businesses of the Company or its subsidiaries.
(b) Place of Employment. Executive's principal place of
employment shall be his present headquarters location or such other
headquarters location as may be assigned by the Company.
4. Salary and Annual Incentive Compensation.
As partial compensation for the services to be rendered hereunder
by Executive, the Company agrees to pay to Executive during the Term the
compensation set forth in this Section 4.
(a) Base Salary. The Company will pay to Executive during the
Term a base salary at the annual rate in effect at the Effective Date, payable
in cash in substantially equal monthly installments during each calendar year,
or portion thereof, of the Term and otherwise in accordance with the Company's
usual payroll practices with respect to senior executives (except to the
extent deferred under Section 5(d)). Executive's annual base salary shall be
reviewed by the Company at least once in each calendar year and may be
increased above, but may not be reduced below, the then-current rate of such
base salary.
(b) Annual Incentive Compensation. The Company will pay to
Executive during the Term annual incentive compensation, through participation
in the Fruit of the Loom 1995 Executive Incentive Compensation Plan (subject
to stockholder approval thereof) (the "1995 EICP"), the Company's Executive
Incentive Compensation Plan (the "EICP") if the 1995 EICP is not approved by
stockholders, and any successor to the 1995 EICP or the EICP, which shall
offer to Executive an opportunity to earn additional compensation in amounts
determined by and in the sole discretion of the Compensation Committee of the
Company's Board of Directors (the "Committee"), in accordance with the
applicable plan and consistent with past practices of the Company; provided,
however, that the Company will use its best efforts to maintain in effect, for
each year during the Term, the 1995 EICP, the EICP (if the 1995 EICP is not
approved by stockholders), or an equivalent plan under which Executive will be
eligible for an award not less than the opportunity level assigned to him
under the 1995 EICP or the EICP during 1995 (if the 1995 EICP is not approved
by stockholders) to senior executives in similar capacities. Any such annual
incentive compensation payable to Executive shall be paid in accordance with
the Company's usual practices with respect to payment of incentive
97
compensation of senior executives (except to the extent deferred under Section
5(d)).
5. Long-Term Compensation, Including Stock Options, and Benefits,
Deferred Compensation, and Expense Reimbursement
(a) Executive Compensation Plans. Executive shall be entitled
during the Term to participate, without discrimination or duplication, in all
executive compensation plans and programs intended for general participation
by senior executives of the Company, as presently in effect or as they may be
modified or added to by the Company from time to time, subject to the
eligibility and other requirements of such plans and programs, including
without limitation the long-term incentive features of the 1995 EICP, the EICP
(if the 1995 EICP is not approved by stockholders), any successor to such
plans, and other stock option plans, performance share plans, management
incentive plans, deferred compensation plans, and supplemental retirement
plans; provided, however, that such compensation plans and programs, in the
aggregate, shall provide Executive with benefits and compensation and
incentive award opportunities substantially no less favorable than those
provided by the Company under such plans and programs to senior executives in
similar capacities. For purposes of this Agreement, all references to
"performance share plans" and "performance shares" refer to such arrangements
under the 1995 EICP or the EICP and to any performance shares, performance
units, stock grants, or other long-term incentive arrangements adopted as a
successor or replacement to performance shares under such plans or other plans
of the Company.
(b) Stock Option Grant Upon Signing Agreement. In addition to
the compensation otherwise specified under Sections 4 and 5, the Company has
granted to Executive, as of December 18, 1994 and conditioned upon Executive's
execution of this Agreement, a non-qualified stock option to purchase 150,000
shares of the Company's Class A Common Stock (the "1995 Option"), under the
1995 EICP, subject to stockholder approval of the 1995 EICP at the Company's
1995 Annual Meeting of Stockholders. The 1995 Option shall be evidenced by,
and have the terms set forth in, the option agreement attached as Exhibit A
hereto (the "Option Agreement"), which has been authorized and approved by the
Committee under the 1995 EICP.
Not later than such time as the 1995 Option, becomes exercisable,
the Company will have filed with the Securities and Exchange Commission, and
will thereafter maintain the effectiveness of, a registration statement
registering under the Securities Act of 1933, as amended, the offer and sale
of shares by the Company pursuant to the 1995 Option, which registration
statement shall include a resale prospectus covering the reoffer and resale
(or other disposition) of all shares acquired by Executive upon exercise of
the 1995 Option, and the Company will maintain as current all offering
materials under such registration statement at all times that offers and sales
of such shares could be made by the Company or Executive.
(c) Employee and Executive Benefit Plans. Executive shall be
entitled during the Term to participate, without discrimination or
duplication, in all employee and executive benefit plans and programs of the
Company, as presently in effect or as they may be modified or added to by the
Company from time to time, to the extent such plans are available to similarly
98
situated senior executives or employees of the Company, subject to the
eligibility and other requirements of such plans and programs, including
without limitation plans providing pensions, other retirement benefits,
medical insurance, life insurance, disability insurance, and accidental death
or dismemberment insurance, and participation in savings, profit-sharing, and
stock ownership plans; provided, however, that such benefit plans and
programs, in the aggregate, shall provide Executive with benefits
substantially no less favorable than those provided by the Company to senior
executives in similar capacities.
In furtherance of and not in limitation of the foregoing, during
the Term:
(i) Executive will participate in all executive and employee vacation
and time-off programs;
(ii) The Company will provide Executive with coverage by long-term
disability insurance and benefits substantially no less favorable
(including any required contributions by Executive) than such
insurance and benefits provided to Executive at January 1, 1995;
(iii) Executive will be covered by Company-paid group and individual
term life insurance providing a death benefit of not less than
four times Executive's annual base salary under Section 4(a);
provided, however, that such insurance may be combined with a
supplementary retirement funding vehicle;
(iv) Under the Company's pension plans (including supplemental plans):
(A) Executive will be entitled to benefits substantially no less
favorable than those under such plans and programs of the Company
as in effect at January 1, 1995; (B) for purposes of calculating
such benefits Executive's compensation covered by such plans will
include 100% of annual base salary paid under Section 4(a) and no
less than 50% of annual incentive compensation paid under Section
4(b), and Executive will be retroactively credited as of January
1, 1995 with 12 years of service under such plans, which shall all
be fully vested upon such crediting, and shall be credited for
each full calendar year of the Term that is completed up to five
years, with one additional year of service up to five additional
years under such plans, which shall be fully vested upon such
crediting; and (C) amounts equal to the present value of
Executive's accrued benefit vested at any time during the Term,
under all supplemental (non-qualified) pension plans of the
Company, will be fully funded by the Company in an irrevocable
"rabbi trust"; and
(v) The Company will provide Executive with health and medical
benefits consistent with its policies for other senior executives,
subject to a lifetime maximum amount of supplemental
reimbursements of $750,000; provided, however, that supplemental
health and medical benefits shall provide for reimbursement of
Executive to the extent that any limitation on maximum lifetime
health and medical benefits and reimbursements under other Company
policies and programs is exceeded.
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(d) Deferral of Compensation. The Company shall implement
deferral arrangements permitting Executive to elect to irrevocably defer
receipt, pursuant to written deferral election terms and forms (the "Deferral
Election Forms"), of all or a specified portion of (i) his annual base salary
and annual incentive compensation under Section 4, (ii) long-term incentive
compensation under Sections 5(a) and 5(b) (including payouts relating to
performance shares), and (iii) shares acquired upon exercise of options
granted under Sections 5(a) and (b) that are acquired in an exercise in which
Executive pays the exercise price by the surrender of previously acquired
shares, to the extent of the net additional shares acquired by Executive in
such exercise; provided, however, that such deferrals shall not reduce Execu-
tive's total cash compensation in any calendar year below the sum of (i) the
FICA maximum taxable wage base plus (ii) 1.45% of Executive's salary, annual
incentive compensation and long-term incentive compensation in excess of such
FICA maximum. In addition, the Committee may require mandatory deferral of
amounts payable as annual incentive compensation under Section 4(b) or
long-term incentive compensation under Sections 5(a) and (b), which deferrals
will otherwise be in accordance with this Section 5(d).
In accordance with such duly executed Deferral Election Forms or
the terms of any mandatory deferral, the Company shall , in lieu of payment by
the Company to Executive, credit to one or more bookkeeping accounts
maintained for Executive, on the respective date or dates payments would
otherwise be due to Executive, amounts equal to the compensation subject to
deferral, such credits to be denominated in cash if the compensation would
have been paid in cash but for the deferral or in shares if the compensation
would have been paid in shares but for the deferral. An amount of cash equal
in value to all cash-denominated amounts credited to Executive's account and a
number of shares of Common Stock equal to the number of shares credited to
Executive's account pursuant to this Section 5(d) shall be transferred as soon
as practicable following such crediting by the Company to, and shall be held
and invested by, an independent trustee selected by the Company (a "Trustee")
pursuant to a "rabbi trust" established by the Company in connection with such
deferral arrangement and as to which the Trustee shall make investments based
on Executive's investment objectives (including possible investment in
publicly traded stocks and bonds, mutual funds, and insurance vehicles).
Thereafter, Executive's deferral accounts will be valued by reference to the
value of the assets of the "rabbi trust"; provided, however, that a portion of
the assets of the "rabbi trust" may be used to reimburse the Company for its
reasonable cost of funds resulting from payment of taxes by the Company
relating to such rabbi trust assets during the period of deferral and prior to
the settlement of Executive's deferral accounts. The Company shall pay all
other costs of administration of the deferral arrangement, without deduction
or reimbursement from the assets of the "rabbi trust."
Except as otherwise provided under Section 7 in the event of
Executive's termination of employment with the Company or as otherwise
determined by the Committee in the event of hardship on the part of Executive,
upon such date(s) or event(s) set forth in the Deferral Election Forms
(including forms filed after deferral but before settlement in which Executive
may elect to further defer settlement) or the terms of any mandatory deferral,
the Company shall promptly pay to Executive cash equal to the cash then
credited to Executive's deferral accounts and cash equal in value to any
shares of Common Stock then credited to Executive's deferral accounts, less
100
applicable withholding taxes, and such distribution shall be deemed to fully
settle such accounts; provided, however, that the Company may instead settle
such accounts by directing the Trustee to distribute the assets of the "rabbi
trust." The Company and Executive agree that compensation deferred pursuant
to this Section 5(d) shall be fully vested and nonforfeitable; provided,
however, Executive acknowledges that his rights to the deferred compensation
provided for in this Section 5(d) shall be no greater than those of a general
unsecured creditor of the Company, and that such rights may not be pledged,
collateralized, encumbered, hypothecated, or liable for or subject to any
lien, obligation, or liability of Executive, or be assignable or transferable
by Executive, otherwise than by will or the laws of descent and distribution,
provided that Executive may designate one or more beneficiaries to receive any
payment of such amounts in the event of his death.
(e) Reimbursement of Expenses. The Company will promptly
reimburse Executive for all reasonable business expenses and disbursements
incurred by Executive in the performance of Executive's duties during the Term
in accordance with the Company's reimbursement policies as in effect from time
to time.
6. Termination Due to Normal Retirement, Approved Early Retirement,
Death, or Disability
Executive may terminate employment with the Company upon
Executive's retirement at or after age 65 ("Normal Retirement") or, if
approved in advance by the Committee, upon Executive's early retirement prior
to age 65 ("Approved Early Retirement"). The Company may terminate the
employment of Executive due to the Disability (as defined in Section 8(c)) of
Executive.
At the time Executive's employment terminates due to Normal
Retirement, Approved Early Retirement, or death, the Term will terminate. In
the event Executive's employment terminates due to Disability, the Term will
terminate at the expiration of the 30-day period referred to in the definition
of Disability (set forth in Section 8(c)) absent the actions referred to
therein being taken by Executive to return to service and present to the
Company a certificate of good health.
Upon a termination of Executive's employment due to Normal
Retirement, Approved Early Retirement, death, or Disability, all obligations
of the Company and Executive under Sections 1 through 5 of this Agreement will
immediately cease; provided, however, that subject to the provisions of
Section 12(c), the Company will pay Executive (or his beneficiaries or
estate), and Executive (or his beneficiaries or estate) will be entitled to
receive, the following:
(i) The unpaid portion of annual base salary at the rate payable, in
accordance with Section 4(a) hereof, at the date of termination of
employment, pro rated through such date of termination, will be
paid;
(ii) All vested, nonforfeitable amounts owing or accrued at the date of
termination of employment under any compensation and benefit
plans, programs, and arrangements set forth or referred to in
101
Sections 4(b) and 5(a) and (c) hereof (including any earned annual
incentive compensation and performance shares) in which Executive
theretofore participated will be paid under the terms and
conditions of the plans, programs, and arrangements (and
agreements and documents thereunder) pursuant to which such
compensation and benefits were granted;
(iii) In lieu of any annual incentive compensation under Section 4(b)
for the year in which Executive's employment terminated (unless
otherwise payable under (ii) above), Executive will be paid an
amount equal to the average annual incentive compensation paid to
Executive in the three years immediately preceding the year of
termination (or, if Executive was not eligible to receive or did
not receive such incentive compensation for any year in such three
year period, the Executive's target annual incentive compensation
for such year(s) shall be used to calculate average annual
incentive compensation) multiplied by a fraction the numerator of
which is the number of days Executive was employed in the year of
termination and the denominator of which is the total number of
days in the year of termination;
(iv) In lieu of any payment in respect of performance shares granted in
accordance with Section 5(a) for any performance period not
completed at the date Executive's employment terminated (unless
otherwise payable under (ii) above), Executive will be paid in
cash an amount equal to the cash amount payable plus the value of
any shares of Common Stock or other property (valued at the date
of termination) payable upon achievement of (A) the maximum
performance, in the case of death or Disability, or (B) target
performance, in the case of Normal Retirement or Early Retirement,
in respect of each tranche of performance shares, multiplied by a
fraction the numerator of which is the number of days Executive
was employed during the respective performance period and the
denominator of which is the total number of days in such
performance period;
(v) Stock options then held by Executive will be exercisable to the
extent and for such periods, and otherwise governed, by the plans
and programs and the agreements and other documents thereunder
pursuant to which such stock options were granted;
(vi) All deferral arrangements under Section 5(d) will be settled in
accordance with Executive's duly executed Deferral Election Forms
or the terms of any mandatory deferral;
(vii) Reasonable business expenses and disbursements incurred by
Executive prior to such termination of employment will be
reimbursed, as authorized under Section 5(e); and
(viii) If Executive's employment terminates due to Disability, for the
period extending from such termination until Executive reaches age
65, Executive shall continue to participate in all employee
benefit plans, programs, and arrangements under Section 5(c)
providing health, medical, and life insurance and pension benefits
102
in which Executive was participating immediately prior to
termination, the terms of which allow Executive's continued
participation, as if Executive had continued in employment with
the Company during such period or, if such plans, programs, or
arrangements do not allow Executive's continued participation, a
cash payment equivalent on an after-tax basis to the value of the
additional benefits Executive would have received under such
employee benefit plans, programs, and arrangements in which
Executive was participating immediately prior to termination, as
if Executive had received credit under such plans, programs, and
arrangements for service and age with the Company during such
period following Executive's termination, with such benefits
payable by the Company at the same times and in the same manner as
such benefits would have been received by Executive under such
plans (it being understood that the value of any
insurance-provided benefits will be based on the premium cost to
Executive, which shall not exceed the highest risk premium charged
by a carrier having an investment grade or better credit rating);
provided further, that, in the case of termination of Executive's employment
due to Disability, Executive must continue to satisfy the conditions set forth
in Section 10 in order to continue receiving the compensation and benefits
under (viii), above. Amounts payable under (i), (ii), (iii), (iv), and (vii)
above will be paid as promptly as practicable after Executive's termination of
employment; provided, however, to the extent that or the Company would not be
entitled to deduct any such payments under Internal Revenue Code Section
162(m), such payments shall be made at the earliest time that the payments
would be deductible by the Company without limitation under Section 162(m)
(unless this provision is waived by the Company).
7. Termination of Employment For Reasons Other Than Normal
Retirement, Approved Early Retirement, Death or Disability
(a) Termination by the Company for Cause and Termination by
Executive. In accordance with the provisions of this Section 7(a), the
Company may terminate the employment of Executive with the Company for Cause
(as defined in Section 8(a)) at any time prior to a Change in Control (as
defined in Section 8(b)), and Executive may terminate his employment with the
Company voluntarily at any time (for reasons other than Good Reason following
a Change in Control as defined in Sections 8(b) and (d)). An election by
Executive not to extend the Term pursuant to Section 2 hereof shall be deemed
to be a voluntary termination of such employment by Executive at the date of
expiration of the Term, unless there occurs a Change in Control prior to the
date of expiration.
Upon a termination of Executive's employment by the Company for
Cause or voluntarily termination by Executive for reasons other than Good
Reason following a Change in Control, the Term will immediately terminate, and
all obligations of the Company under Sections 1 through 5 of this Agreement
will immediately cease; provided, however, that subject to the provisions of
Section 12(c), the Company shall pay Executive, and Executive shall be
entitled to receive, the following:
103
(i) The unpaid portion of annual base salary at the rate payable, in
accordance with Section 4(a) hereof, at the date of termination of
employment, pro rated through such date of termination, will be
paid;
(ii) All vested, nonforfeitable amounts owing or accrued at the date of
termination of employment under any compensation and benefit
plans, programs, and arrangements set forth or referred to in
Sections 4(b) and 5(a) and 5(c) hereof (including any earned
annual incentive compensation and performance shares) in which
Executive theretofore participated will be paid under the terms
and conditions of the plans, programs, and arrangements (and
agreements and documents thereunder) pursuant to which such
compensation and benefits were granted;
(iii) A cash amount equal to the amount credited to Executive's deferral
accounts under deferral arrangements authorized under Section 5(d)
hereof at the date of termination of employment (including cash
equal in value at that date to any shares of Common Stock credited
to Executive's deferral accounts), less applicable withholding
taxes under Section 12(i); provided, however, that the Company may
instead settle such accounts by directing the Trustee to
distribute the assets of the "rabbi trust." Such amounts shall be
paid or distributed as promptly as practicable following such date
of termination, without regard to any stated period of deferral
otherwise remaining in respect of such amounts, and the payment of
such amounts shall be deemed to fully settle such accounts; and
(iv) Reasonable business expenses and disbursements incurred by
Executive prior to such termination of employment will be
reimbursed, as authorized under Section 5(e).
Amounts payable under (i), (ii), (iii), and (iv) above will be paid as
promptly as practicable after termination of Executive's employment; provided,
however, to the extent that the Company would not be entitled to deduct any
such payments under Internal Revenue Code Section 162(m), such payments shall
be made at the earliest time that the payments would be deductible by the
Company without limitation under Section 162(m) (unless this provision is
waived by the Company).
(b) Termination by the Company Without Cause and Termination by
Executive for Good Reason. In accordance with the provisions of this Section
7(b), the Company may terminate the employment of the Executive without Cause
(as defined in Section 8(a)), including after a Change in Control (as defined
in Section 8(b)), upon 90 days' written notice to Executive, and Executive may
terminate his employment for Good Reason (as defined in Section 8(d))
following a Change in Control upon 90 days' written notice to the Company;
provided, however, that, if the basis for such Good Reason is correctable, the
Company has not corrected the basis for such Good Reason within 30 days after
receipt of such notice. The foregoing notwithstanding, the Company may, in
lieu of providing 90 days' written notice to Executive, pay Executive his
then-current annual base salary payable under Section 4(a) and credit
Executive with service for 90 days for all purposes hereunder. An election by
the Company not to extend the Term pursuant to Section 2 hereof shall be
104
deemed to be a termination of employment by the Company without Cause at the
date of expiration of the Term.
Upon a termination of Executive's employment by the Company
without Cause prior to or following a Change in Control or termination of
Executive's employment by Executive for Good Reason following a Change in
Control, the Term will immediately terminate and all obligations of the
Company and Executive under Sections 1 through 5 of this Agreement will
immediately cease, except that subject to the provisions of Section 12(c) the
Company shall pay Executive, and Executive shall be entitled to receive, the
following:
(i) A lump-sum cash payment will be paid as follows:
(A) In the event such termination is a termination by the
Company without Cause following a Change in Control or a
termination by Executive for Good Reason following a Change
in Control, an amount equal to the sum of Executive's
annual base salary payable under Section 4(a) immediately
prior to termination plus the average annual incentive
compensation paid to Executive in the three years
immediately preceding the year of termination (or, if
Executive was not eligible to receive or did not receive
such incentive compensation for any year in such three year
period, the Executive's target annual incentive
compensation for such year(s) shall be used to calculate
average annual incentive compensation) (such sum being the
"total cash" for purposes of this Section 7(b)(i))
multiplied by a number which is the greater of the number
of years (including any fraction determined based on the
number of days remaining in the year of termination)
remaining in the term without regard to such termination or
2.0, which payment shall be reduced pro rata to the extent
the number of full months remaining until Executive attains
age 65 is less than 24 months, plus, in lieu of any payment
in respect of performance shares or other long term
incentive awards granted in accordance with Section 5(a)
for any performance period not completed at the date of
Executive's termination (unless otherwise payable under
(iii) below), an amount equal to the cash amount payable
plus the value of any shares of Common Stock or other
property (valued at the date of termination) payable upon
the achievement of maximum performance in respect of each
tranche of performance shares without proration; or
(B) In the event such termination is a termination by the
Company without Cause prior to a Change in Control, an
amount equal to then-current annual base salary payable
under Section 4(a) multiplied by 2.0, which payment shall
be reduced pro rata to the extent the number of full months
remaining until Executive attains age 65 is less than 24
months, plus, in lieu of any payment in respect of
performance shares or other long term incentive awards
granted in accordance with Section 5(a) for any performance
105
period not completed at the date of Executive's termination
(unless otherwise payable under (iii) below), Executive
will be paid in cash an amount equal to the cash amount
payable plus the value of any shares of Common Stock or
other property (valued at the date of termination) payable
upon achievement of the greater of target performance or
actual performance achieved at the date of termination in
respect of each tranche of performance shares, multiplied
by a fraction the numerator of which is the number of days
Executive was employed during the respective performance
period and the denominator of which is the total number of
days in such performance period;
(ii) The unpaid portion of annual base salary at the rate payable, in
accordance with Section 4(a) hereof, at the date of termination of
employment, pro rated through such date of termination, will be
paid;
(iii) All vested, nonforfeitable amounts owing or accrued at the date of
termination of employment under any compensation and benefit
plans, programs, and arrangements set forth or referred to in
Sections 4(b) and 5(a) and (c) hereof (including any earned annual
incentive compensation and performance shares) in which Executive
theretofore participated will be paid under the terms and
conditions of the plans, programs, and arrangements (and
agreements and documents thereunder) pursuant to which such
compensation and benefits were granted;
(iv) In lieu of any annual incentive compensation under Section 4(b)
for the year in which Executive's employment terminated (unless
otherwise payable under (iii) above), Executive will be paid an
amount equal to the average annual incentive compensation paid to
Executive in the three years immediately preceding the year of
termination (or, if Executive was not eligible to receive or did
not receive such incentive compensation for any year in such three
year period, the Executive's target annual incentive compensation
for such year(s) shall be used to calculate average annual
incentive compensation) multiplied by a fraction the numerator of
which is the number of days Executive was employed in the year of
termination and the denominator of which is the total number of
days in the year of termination;
(v) Stock options then held by Executive will be exercisable to the
extent and for such periods, and otherwise governed, by the plans
and programs (and the agreements and other documents thereunder)
pursuant to which such stock options were granted;
(vi) All deferral arrangements under Section 5(d) will be settled in
accordance with Executive's duly executed Deferral Election Forms
or the terms of any mandatory deferral; provided, however, in the
event of a termination by the Company without Cause prior to a
Change in Control, a cash amount will be paid equal to the amount
credited to Executive's deferral accounts under deferral
arrangements authorized under Section 5(d) hereof at the date of
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termination of employment (including cash equal in value at that
date to any shares of Common Stock credited to Executive's
deferral accounts), less applicable withholding taxes under
Section 12(i); provided, however, that the Company may instead
settle such accounts by directing the Trustee to distribute the
assets of the "rabbi trust." Such amounts shall be paid or
distributed as promptly as practicable following such date of
termination, without regard to any stated period of deferral
otherwise remaining in respect of such amounts, and the payment of
such amounts shall be deemed to fully settle such accounts;
(vii) Reasonable business expenses and disbursements incurred by
Executive prior to such termination of employment will be
reimbursed, as authorized under Section 5(e);
(viii) In the event such termination is a termination by or the Company
without Cause or a termination by Executive for Good Reason, a
lump-sum cash payment will be paid equal to the present value of
Executive's accrued benefit, if any, which shall be fully vested
at date of termination of employment, under all supplemental
(non-qualified) pension plans of the Company, unless such benefits
are fully funded based on assets held in trust for the benefit of
Executive which cannot be reached by creditors of the Company, or
such benefits are otherwise funded and secured in an equivalent
manner; and
(ix) In the event such termination is a termination by the Company
without cause following a Change in Control or a termination by
Executive for Good Reason following a Change in Control, for a
period of two years after such termination, Executive shall
continue to participate in all employee, executive, and special
individual benefit plans, programs, and arrangements under Section
5(c) including but not limited to health, medical, disability,
life insurance, and pension benefits in which Executive was
participating immediately prior to termination, the terms of which
allow Executive's continued participation, as if Executive had
continued in employment with the Company during such period or, if
such plans, programs, or arrangements do not allow Executive's
continued participation, a cash payment equivalent on an after-tax
basis to the value of the additional benefits Executive would have
received under such employee benefit plans, programs, and
arrangements in which Executive was participating immediately
prior to termination, as if Executive had received credit under
such plans, programs, and arrangements for service and age with
the Company during such period following Executive's termination,
with such benefits payable by the Company at the same times and in
the same manner as such benefits would have been received by
Executive under such plans (it being understood that the value of
any insurance-provided benefits will be based on the premium cost
to Executive, which shall not exceed the highest risk premium
charged by a carrier having an investment grade or better credit
rating).
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Amounts payable under (i), (ii), (iii), (iv), (vi), (vii), and (viii) above
will be paid as promptly as practicable after Executive's termination of
employment, and in no event more than 45 days after such termination,
provided, however, that, in the case of a termination by the Company without
Cause prior to a Change in Control, to the extent that the Company would not
be entitled to deduct any such payments under Internal Revenue Code Section
162(m), such payments shall be made at the earliest time that the payments
would be deductible by the Company without limitation under Section 162(m)
(unless this provision is waived by the Company), but in no event later than
twelve months subsequent to the date of termination.
8. Definitions Relating to Termination Events.
(a) "Cause." For purposes of this Agreement, "Cause" shall
mean Executive's gross misconduct (as defined herein) or willful and material
breach of Section 10 of this Agreement. For purposes of this definition,
"gross misconduct" shall mean (A) a felony conviction in a court of law under
applicable federal or state laws which results in material damage to the
Company or any of its subsidiaries or materially impairs the value of
Executive's services to the Company, or (B) willfully engaging in one or more
acts, or willfully omitting to act in accordance with duties hereunder, which
is demonstrably and materially damaging to the Company or any of its
subsidiaries, including acts and omissions that constitute gross negligence in
the performance of Executive's duties under this Agreement. For purposes of
this Agreement, an act or failure to act on Executive's part shall be
considered "willful" if it was done or omitted to be done by him not in good
faith, and shall not include any act or failure to act resulting from any
incapacity of Executive. Notwithstanding the foregoing, Executive may not be
terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by a majority affirmative vote of the
membership of the Board of Directors of the Company (the "Board") (excluding
Executive, if he is then a member) at a meeting of the Board called and held
for such purpose (after giving Executive reasonable notice specifying the
nature of the grounds for such termination and not less than 30 days to
correct the acts or omissions complained of, if correctable, and affording
Executive the opportunity, together with his counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, Executive was
guilty of conduct which constitutes Cause as set forth in this Section 8(a).
(b) "Change in Control." A "Change in Control" shall be deemed
to have occurred if:
(i) An acquisition by any Person of Beneficial Ownership of the shares
of Common Stock of the Company then outstanding (the "Company
Common Stock Outstanding") or the voting securities of the Company
then outstanding entitled to vote generally in the election of
directors (the "Company Voting Securities Outstanding"); provided,
however, that such acquisition of Beneficial Ownership would
result in the Person's Beneficially Owning twenty-five percent
(25%) or more of the Company Common Stock Outstanding or
twenty-five percent (25%) or more of the combined voting power of
the Company Voting Securities Outstanding; and provided further,
that immediately prior to such acquisition such Person was not a
direct or indirect Beneficial Owner of twenty-five percent (25%)
108
or more of the Company Common Stock Outstanding or twenty-five
percent (25%) or more of the combined voting power of Company
Voting Securities Outstanding, as the case may be; or
(ii) The approval by the stockholders of the Company of a
reorganization, merger, consolidation, complete liquidation or
dissolution of the Company, the sale or disposition of all or
substantially all of the assets of the Company or similar
corporate transaction (in each case referred to in this Section
8(b) as a "Corporate Transaction") or, if consummation of such
Corporate Transaction is subject, at the time of such approval by
stockholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or
implicitly); or
(iii) A change in the composition of the Board such that the individuals
who, as of the Effective Date, constitute the Board (such Board
shall be hereinafter referred to as the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board;
provided, however, for purposes of this Section 8(b), that any
individual who becomes a member of the Board subsequent to the
Effective Date whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a
majority of those individuals who are members of the Board and who
were also members of the Incumbent Board (or deemed to be such
pursuant to this proviso) shall be considered as though such
individual were a member of the Incumbent Board; but, provided,
further, that any such individual whose initial assumption of
office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A under the Exchange Act, including any successor to
such Rule) or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board shall
not be so considered as a member of the Incumbent Board.
Notwithstanding the provisions set forth in subparagraphs (i) and (ii) of this
Section 8(b), the following shall not constitute a Change in Control for
purposes of this Plan: (1) any acquisition by or consummation of a Corporate
Transaction with any Subsidiary or an employee benefit plan (or related trust)
sponsored or maintained by the Company or an affiliate; or (2) any acquisition
or consummation of a Corporate Transaction following which more than fifty
percent (50%) of, respectively, the shares then outstanding of common stock of
the corporation resulting from such acquisition or Corporate Transaction and
the combined voting power of the voting securities then outstanding of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were Beneficial Owners, respectively, of the
Company Common Stock Outstanding and Company Voting Securities Outstanding
immediately prior to such acquisition or Corporate Transaction in substan-
tially the same proportions as their ownership, immediately prior to such
acquisition or Corporate Transaction, of the Company Common Stock Outstanding
and Company Voting Securities Outstanding, as the case may be; or (3) any
transaction initiated or controlled, directly or indirectly, by Executive, in
a capacity other than as a senior executive or director of the Company.
109
For purposes of this definition:
(A) The terms "Beneficial Owner," "Beneficially Owning," and
"Beneficial Ownership" shall have the meanings ascribed to such
terms in Rule 13d-3 under the Exchange Act (including any
successor to such Rule).
(B) The term "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, or any successor act thereto.
(C) The term "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and
14(d) thereof, including "group" as defined in Section 13(d)
thereof.
(c) "Disability." "Disability" means the failure of Executive
to render and perform the services required of him under this Agreement, for a
total of 180 days of more during any consecutive 12 month period, because of
any physical or mental incapacity or disability as determined by a physician
or physicians selected by the Company and reasonably acceptable to Executive,
unless, within 30 days after Executive has received written notice from the
Company of a proposed termination due to such absence, Executive shall have
returned to the full performance of his duties hereunder and shall have
presented to the Company a written certificate of Executive's good health
prepared by a physician selected by Company and reasonably acceptable to
Executive.
(d) "Good Reason." For purposes of this Agreement, "Good
Reason" shall mean the occurrence of a Change in Control and following which
there occurs, without Executive's prior written consent: (A) a material
change, adverse to Executive, in Executive's positions, titles, or offices,
status, rank, nature of responsibilities, or authorities within the Company in
effect prior to a Change in Control, except in connection with the termination
of Executive's employment for Cause, Disability, Normal Retirement or Approved
Early Retirement, as a result of Executive's death, or as a result of action
by Executive, (B) an assignment of any duties to Executive which are
inconsistent with his duties, status, rank, responsibilities, and authorities
in effect prior to a Change in Control, (C) a decrease in annual base salary
or other compensation opportunities and maximums or benefits provided under
this Agreement, (D) any other failure by the Company to perform any material
obligation under, or breach by the Company of any material provision of, this
Agreement, (E) any failure to secure the agreement of any successor
corporation or other entity to the Company to fully assume the Company's
obligations under this Agreement in a form reasonably acceptable to Executive,
and (F) any attempt by the Company to terminate Executive for Cause which does
not result in a valid termination for Cause, except in the case that valid
grounds for termination for Cause exist but are corrected as permitted under
Section 8(a).
9. Excise Tax Gross-Up.
In the event that there shall occur a Change in Control of the
Company, if Executive becomes entitled to one or more payments (with a
"payment" including, without limitation, the vesting of an option or other
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non-cash benefit or property), whether pursuant to the terms of this Agreement
or any other plan, arrangement, or agreement with the Company or any
affiliated company (the "Total Payments"), which are or become subject to the
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code") (or any similar tax that may hereafter be imposed) (the "Excise
Tax"), the Company shall pay to Executive at the time specified below an
additional amount (the "Gross-up Payment") (which shall include, without
limitation, reimbursement for any penalties and interest that may accrue in
respect of such Excise Tax) such that the net amount retained by Executive,
after reduction for any Excise Tax (including any penalties or interest
thereon) on the Total Payments and any federal, state and local income or
employment tax and Excise Tax on the Gross-up Payment provided for by this
Section 9, but before reduction for any federal, state, or local income or
employment tax on the Total Payments, shall be equal to the sum of (a) the
Total Payments, and (b) an amount equal to the product of any deductions
disallowed for federal, state, or local income tax purposes because of the
inclusion of the Gross-up Payment in Executive's adjusted gross income
multiplied by the highest applicable marginal rate of federal, state, or local
income taxation, respectively, for the calendar year in which the Gross-up
Payment is to be made.
For purposes of determining whether any of the Total Payments will
be subject to the Excise Tax and the amount of such Excise Tax:
(i) The Total Payments shall be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Code, and
all "excess parachute payments" within the meaning of
Section 280G(b)(1) of the Code shall be treated as subject
to the Excise Tax, unless, and except to the extent that,
in the written opinion of independent compensation
consultants or auditors of nationally recognized standing
("Independent Advisors") selected by the Company and
reasonably acceptable to Executive, the Total Payments (in
whole or in part) do not constitute parachute payments, or
such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the
Code in excess of the base amount within the meaning of
Section 280G(b)(3) of the Code or are otherwise not subject
to the Excise Tax;
(ii) The amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of
(A) the total amount of the Total Payments or (B) the total
amount of excess parachute payments within the meaning of
section 280G(b)(1) of the Code (after applying clause (i)
above); and
(iii) The value of any non-cash benefits or any deferred payment
or benefit shall be determined by the Independent Advisors
in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code.
111
For purposes of determining the amount of the Gross-up Payment,
Executive shall be deemed (A) to pay federal income taxes at the highest
marginal rate of federal income taxation for the calendar year in which the
Gross-up Payment is to be made; (B) to pay any applicable state and local
income taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of Executive's adjusted gross income); and
(C) to have otherwise allowable deductions for federal, state, and local
income tax purposes at least equal to those disallowed because of the
inclusion of the Gross-up Payment in Executive's adjusted gross income. In
the event that the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder at the time the Gross-up Payment is made,
Executive shall repay to the Company at the time that the amount of such
reduction in Excise Tax is finally determined (but, if previously paid to the
taxing authorities, not prior to the time the amount of such reduction is
refunded to Executive or otherwise realized as a benefit by Executive) the
portion of the Gross-up Payment that would not have been paid if such Excise
Tax had been applied in initially calculating the Gross-up Payment, plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder at the time the Gross-up
Payment is made (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-up Payment), the Company
shall make an additional Gross-up Payment in respect of such excess (plus any
interest and penalties payable with respect to such excess) at the time that
the amount of such excess is finally determined.
The Gross-up Payment provided for above shall be paid on the 30th
day (or such earlier date as the Excise Tax becomes due and payable to the
taxing authorities) after it has been determined that the Total Payments (or
any portion thereof) are subject to the Excise Tax; provided, however, that if
the amount of such Gross-up Payment or portion thereof cannot be finally
determined on or before such day, the Company shall pay to Executive on such
day an estimate, as determined by the Independent Advisors, of the minimum
amount of such payments and shall pay the remainder of such payments (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Code), as
soon as the amount thereof can be determined. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to Executive, payable
on the fifth day after demand by the Company (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Code). If more than one
Gross-up Payment is made, the amount of each Gross-up Payment shall be
computed so as not to duplicate any prior Gross-up Payment. The Company shall
have the right to control all proceedings with the Internal Revenue Service
that may arise in connection with the determination and assessment of any
Excise Tax and, at its sole option, the Company may pursue or forego any and
all administrative appeals, proceedings, hearings, and conferences with any
taxing authority in respect of such Excise Tax (including any interest or
penalties thereon); provided, however, that the Company's control over any
such proceedings shall be limited to issues with respect to which a Gross-up
Payment would be payable hereunder, and Executive shall be entitled to settle
or contest any other issue raised by the Internal Revenue Service or any other
112
taxing authority. Executive shall cooperate with the Company in any
proceedings relating to the determination and assessment of any Excise Tax and
shall not take any position or action that would materially increase the
amount of any Gross-Up Payment hereunder.
10. Non-Competition and Non-Disclosure; Executive Cooperation.
(a) Non-Competition. Without the consent in writing of the
Board, upon termination of Executive's employment for any reason, Executive
will not, for a period of two years thereafter, acting alone or in conjunction
with others, directly or indirectly (i) engage (either as owner, investor,
partner, stockholder, employer, employee, consultant, advisor or Director) in
any business in the continental United States in which he has been directly
engaged, or has supervised as an executive, during the last two years prior to
such termination and which is directly in competition with a business then
conducted by the Company or any of its subsidiaries; (ii) induce any customers
of the Company or any of its subsidiaries with whom Executive has had contacts
or relationships, directly or indirectly, during and within the scope of his
employment with the Company or any of its subsidiaries, to curtail or cancel
their business with such companies or any of them; or (iii) induce, or attempt
to influence, any employee of the Company or any of its subsidiaries to
terminate employment; provided, however, that the limitation contained in
clause (i) above shall not apply if Executive's employment is terminated as a
result of a termination by the Company without Cause following a Change in
Control or a termination by Executive for Good Reason following a Change in
Control. The provisions of subparagraphs (i), (ii), and (iii) above are
separate and distinct commitments independent of each of the other
subparagraphs. It is agreed that the ownership of not more than one percent
of the equity securities of any company having securities listed on an
exchange or regularly traded in the over-the-counter market shall not, of
itself, be deemed inconsistent with clause (i) of this paragraph (a).
(b) Non-Disclosure. Executive shall not, at any time during
the Term and thereafter (including following Executive's termination of
employment for any reason), disclose, use, transfer, or sell, except in the
course of employment with or other service to the Company, any confidential or
proprietary information of the Company or any of its subsidiaries so long as
such information has not otherwise been disclosed or is not otherwise in the
public domain, except as required by law or pursuant to legal process.
(c) Cooperation With Regard to Litigation. Executive agrees to
cooperate with the Company, during the Term and thereafter (including
following Executive's termination of employment for any reason), by making
himself available to testify on behalf of the Company or any subsidiary or
affiliate of the Company, in any action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, and to assist the Company, or any
subsidiary or affiliate of the Company, in any such action, suit, or pro-
ceeding, by providing information and meeting and consulting with the Board
and its representatives or counsel, or representatives or counsel of or to the
Company, or any subsidiary or affiliate of the Company, as requested. The
Company agrees to reimburse Executive, on an after-tax basis, for all expenses
actually incurred in connection with his provision of testimony or assistance.
113
(d) Release of Employment Claims. Executive agrees, as a
condition to receipt of the termination payments and benefits provided for in
Sections 6 and 7 herein, that he will execute a release agreement, in a form
satisfactory to the Company, releasing any and all claims arising out of
Executive's employment (other than enforcement of this Agreement).
(e) Survival. The provisions of this Section 10 shall survive
the termination or expiration of this Agreement in accordance with the terms
hereof.
11. Governing Law; Disputes; Arbitration.
(a) Governing Law. This Agreement is governed by and is to be
construed, administered, and enforced in accordance with the laws of the State
of Illinois, without regard to Illinois conflicts of law principles, except
insofar as the Delaware General Corporation Law and federal laws and
regulations may be applicable. If under the governing law, any portion of
this Agreement is at any time deemed to be in conflict with any applicable
statute, rule, regulation, ordinance, or other principle of law, such portion
shall be deemed to be modified or altered to the extent necessary to conform
thereto or, if that is not possible, to be omitted from this Agreement. The
invalidity of any such portion shall not affect the force, effect, and
validity of the remaining portion hereof. If any court determines that any
provision of Section 10 is unenforceable because of the duration or geographic
scope of such provision, it is the parties' intent that such court shall have
the power to modify the duration or geographic scope of such provision, as the
case may be, to the extent necessary to render the provision enforceable and,
in its modified form, such provision shall be enforced.
(b) Reimbursement of Expenses in Enforcing Rights. All
reasonable costs and expenses (including fees and disbursements of counsel)
incurred by Executive in seeking to enforce rights pursuant to this Agreement
shall be paid on behalf of or reimbursed to Executive promptly by the Company,
whether or not Executive is successful in asserting such rights; provided,
however, that no reimbursement shall be made of such expenses relating to any
unsuccessful assertion of rights if and to the extent that Executive's
assertion of such rights was in bad faith or frivolous, as determined by
independent counsel mutually acceptable to Executive and the Company.
(c) Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration
in Chicago, Illinois by three arbitrators in accordance with the rules of the
American Arbitration Association in effect at the time of submission to
arbitration. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. For purposes of entering any judgment upon an award
rendered by the arbitrators, the Company and Executive hereby consent to the
jurisdiction of any or all of the following courts: (i) the United States
District Court for the Northern District of Illinois, (ii) any of the courts
of the State of Illinois, or (iii) any other court having jurisdiction. The
Company and Executive further agree that any service of process or notice
requirements in any such proceeding shall be satisfied if the rules of such
court relating thereto have been substantially satisfied. The Company and
Executive hereby waive, to the fullest extent permitted by applicable law, any
objection which it may now or hereafter have to such jurisdiction and any
114
defense of inconvenient forum. The Company and Executive hereby agree that a
judgment upon an award rendered by the arbitrators may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Subject to Section 11(b), the Company shall bear all costs and expenses
arising in connection with any arbitration proceeding pursuant to this Section
11. Notwithstanding any provision in this Section 11, Executive shall be
entitled to seek specific performance of Executive's right to be paid during
the pendency of any dispute or controversy arising under or in connection with
this Agreement.
(d) Interest on Unpaid Amounts. Any amounts that have become
payable pursuant to the terms of this Agreement or any decision by arbitrators
or judgment by a court of law pursuant to this Section 11 but which are not
timely paid shall bear interest, payable by the Company, at the prime rate in
effect at the time such payment first becomes payable, as quoted by the
Bankers Trust Company.
12. Miscellaneous.
(a) Integration. This Agreement modifies and supersedes any
and all prior agreements and understandings between the parties hereto with
respect to the employment of Executive by the Company and its subsidiaries,
except for contracts relating to compensation under executive compensation and
employee benefit plans of the Company. This Agreement (together with the
Option Agreement ) constitutes the entire agreement among the parties with
respect to the matters herein provided, and no modification or waiver of any
provision hereof shall be effective unless in writing and signed by the
parties hereto. Executive shall not be entitled to any payment or benefit
under this Agreement which duplicates a payment or benefit received or
receivable by Executive under such prior agreements and understandings with
the Company or under any benefit or compensation plan of the Company.
(b) Non-Transferability. Neither this Agreement nor the rights
or obligations hereunder of the parties hereto shall be transferable or
assignable by Executive, except in accordance with the laws of descent and
distribution or as specified in Section 12(c). The Company may assign this
Agreement and the Company's rights and obligations hereunder, and shall assign
this Agreement, to any Successor (as hereinafter defined) which, by operation
of law or otherwise, continues to carry on substantially the business of the
Company prior to the event of succession, and the Company shall, as a
condition of the succession, require such Successor to agree to assume the
Company's obligations and be bound by this Agreement. For purposes of this
Agreement, "Successor" shall mean any person that succeeds to, or has the
practical ability to control (either immediately or with the passage of time),
the Company's business directly, by merger or consolidation, or indirectly, by
purchase of the Company's voting securities or all or substantially all of its
assets, or otherwise.
(c) Beneficiaries. Executive shall be entitled to designate
(and change, to the extent permitted under applicable law) a beneficiary or
beneficiaries to receive any compensation or benefits payable hereunder
following Executive's death.
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(d) Notices. Whenever under this Agreement it becomes
necessary to give notice, such notice shall be in writing, signed by the party
or parties giving or making the same, and shall be served on the person or
persons for whom it is intended or who should be advised or notified, by
Federal Express or other similar overnight service or by certified or
registered mail, return receipt requested, postage prepaid and addressed to
such party at the address set forth below or at such other address as may be
designated by such party by like notice:
If to the Company:
Fruit of the Loom, Inc.
5000 Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
Attention: Secretary
With copies to:
Fruit of the Loom, Inc.
5000 Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
Attention: General Counsel
If to Executive:
John B. Holland
199 Tony Avenue
Bowling Green, Kentucky 42103
If the parties by mutual agreement supply each other with telecopier numbers
for the purposes of providing notice by facsimile, such notice shall also be
proper notice under this Agreement. In the case of Federal Express or other
similar overnight service, such notice or advice shall be effective when sent,
and, in the cases of certified or registered mail, shall be effective 2 days
after deposit into the mails by delivery to the U.S. Post Office.
(e) Reformation. The invalidity of any portion of this
Agreement shall not deemed to render the remainder of this Agreement invalid.
(f) Headings. The headings of this Agreement are for
convenience of reference only and do not constitute a part hereof.
(g) No General Waivers. The failure of any party at any time
to require performance by any other party of any provision hereof or to resort
to any remedy provided herein or at law or in equity shall in no way affect
the right of such party to require such performance or to resort to such
remedy at any time thereafter, nor shall the waiver by any party of a breach
of any of the provisions hereof be deemed to be a waiver of any subsequent
breach of such provisions. No such waiver shall be effective unless in
writing and signed by the party against whom such waiver is sought to be
enforced.
116
(h) No Obligation To Mitigate. Executive shall not be required
to seek other employment or otherwise to mitigate Executive's damages upon any
termination of employment; provided, however, that, to the extent Executive
receives from a subsequent employer health or other insurance benefits that
are substantially similar to the benefits referred to in Section 5(c) hereof,
any such benefits to be provided by the Company to Executive following the
Term shall be correspondingly reduced.
(i) Offsets; Withholding. The amounts required to be paid by
the Company to Executive pursuant to this Agreement shall not be subject to
offset other than with respect to any amounts that are owed to the Company by
Executive due to his receipt of funds as a result of his fraudulent activity.
The foregoing and other provisions of this Agreement notwithstanding, all
payments to be made to Executive under this Agreement, including under
Sections 6 and 7, or otherwise by the Company will be subject to required
withholding taxes and other required deductions.
(j) Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of Executive, his heirs, executors,
administrators and beneficiaries, and shall be binding upon and inure to the
benefit of the Company and its successors and assigns.
13. Indemnification.
All rights to indemnification by the Company now existing in favor
of Executive as provided in the Company's Certificate of Incorporation or
By-Laws or pursuant to other agreements in effect on or immediately prior to
the Effective Date shall continue in full force and effect from the Effective
Date (including all periods after the expiration of the Term), and the Company
shall also advance expenses for which indemnification may be ultimately
claimed as such expenses are incurred to the fullest extent permitted under
applicable law, subject to any requirement that Executive provide an
undertaking to repay such advances if it is ultimately determined that
Executive is not entitled to indemnification; provided, however, that any
determination required to be made with respect to whether Executive's conduct
complies with the standards required to be met as a condition of
indemnification or advancement of expenses under applicable law and the
Company's Certificate of Incorporation, By-Laws, or other agreement shall be
made by independent counsel mutually acceptable to Executive and the Company
(except to the extent otherwise required by law). After the date hereof, the
Company shall not amend its Certificate of Incorporation or By-Laws or any
agreement in any manner which adversely affects the rights of Executive to
indemnification thereunder. Any provision contained herein notwithstanding,
this Agreement shall not limit or reduce any rights of Executive to
indemnification pursuant to applicable law. In addition, the Company will
maintain directors' and officers' liability insurance in effect and covering
acts and omissions of Executive, during the Term and for a period of six years
thereafter, on terms substantially no less favorable as those in effect on the
Effective Date.
117
IN WITNESS WHEREOF, Executive has hereunto set his hand and the
Company has caused this instrument to be duly executed as of the day and year
first above written.
FRUIT OF THE LOOM, INC.
By: /S/ William Farley
Name: William Farley
Title: Chairman and
Chief Executive Officer
EXECUTIVE
/S/ John B. Holland
John B. Holland
Dates Referenced Herein
| Referenced-On Page |
---|
This ‘10-K’ Filing | | Date | | First | | Last | | | Other Filings |
---|
| | |
| | 12/18/97 | | 3 | | | | | None on these Dates |
| | 12/17/97 | | 3 |
Filed on: | | 3/29/95 |
| | 1/1/95 | | 6 |
For Period End: | | 12/31/94 |
| | 12/18/94 | | 3 | | 5 |
| List all Filings |
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