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 William Farley.
Exhibit Table of Contents
68
CONFORMED COPY
FRUIT OF THE LOOM, INC.
Employment Agreement for William Farley
69
FRUIT OF THE LOOM, INC.
Employment Agreement for William Farley
Page
1. Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
2. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
3. Offices and Duties . . . . . . . . . . . . . . . . . . . . . . . . . 70
4. Salary and Annual Incentive Compensation . . . . . . . . . . . . . . 71
5. Long Term Compensation, Including Stock Options, and Benefits,
Deferred Compensation, and Expense Reimbursement . . . . . . . . . . 72
6. Termination Due to Normal Retirement, Approved Early Retirement,
Death, or Disability . . . . . . . . . . . . . . . . . . . . . . . . 75
7. Termination of Employment For Reasons Other Than Normal Retirement,
Approved Early Retirement, Death or Disability . . . . . . . . . . . 78
8. Definitions Relating to Termination Events . . . . . . . . . . . . . 81
9. Excise Tax Gross-Up . . . . . . . . . . . . . . . . . . . . . . . . 84
10. Non-Competition and Non-Disclosure; Executive Cooperation . . . . . 87
11. Governing Law; Disputes; Arbitration . . . . . . . . . . . . . . . . 88
12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
13. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 91
70
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 William Farley ("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 the Company in the position of
Chairman of the Board and Chief Executive Officer since May 1985; and
WHEREAS, the Company desires to continue to employ Executive in
his capacity as Chairman of the Board and Chief Executive Officer in
connection with the conduct of its businesses, and Executive desires to accept
such employment 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.
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 its Chairman of
the Board and Chief Executive Officer, and Executive hereby agrees to accept
such employment and serve in such capacities, 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 an additional one year on December 18, 1995 and on 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 prior
to the June 30 preceding the 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 employment shall
terminate at the end of the Term as extended, 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:
71
(a) Generally. Executive shall serve as the Chief Executive
Officer of the Company and, if elected, to serve as a member of the Board of
Directors of the Company (the "Board") and for so long as he is serving on the
Board, Executive agrees to serve as Chairman of the Board, as a member of the
Executive Committee, and as a member of any other Board Committee if the Board
shall elect Executive to such positions. In any and all such capacities,
Executive shall report only to the Board of Directors of the Company.
Executive shall have and perform such duties, responsibilities, and
authorities as are customary for the chief executive officer of a publicly
held corporation of the size, type, and nature of the Company as they may
exist from time to time and consistent with such position and status, but in
no event shall such duties, responsibilities, and authorities be reduced from
those of Executive prior to the Effective Date. Executive shall devote
substantial business time and attention, and his best efforts, abilities,
experience, and talent to the position of Chief Executive Officer and for the
businesses of the Company; provided, however, that nothing in this Agreement
shall preclude or prohibit Executive from engaging in other activities,
including but not limited to (i) continuing employment as Chairman and Chief
Executive Officer and in other capacities by Farley Industries, Inc. or a
successor ("FII") or Farley Inc. or a successor ("FI"), (ii) employment in any
capacity by other entities in which Executive, FII, or FI may have a direct or
indirect equity investment, for which FII may perform management services,
and/or which may be otherwise affiliated with Executive, FII, or FI, (iii)
service as a director of any other entity, (iv) service to any educational,
charitable, community, civic, religious, or similar type of organization, and
public speaking engagements, and (v) management of personal and family
investments and financial and legal affairs, to the extent that such other
activities (including those indicated in (i) through (v) above) do not
preclude or render unlawful Executive's employment or service to the Company
hereunder or otherwise materially inhibit the performance of Executive's
duties under this Agreement or materially impair the business of the Company
or its subsidiaries.
(b) Place of Employment. Executive's principal place of
employment shall be the Corporate Offices of the Company in Chicago, Illinois.
In no event shall the Executive's principal place of employment be relocated
outside of Chicago, Illinois without his prior written consent.
(c) Rank of Executive Within Company. As Chairman of the Board
and Chief Executive Officer of the Company, Executive shall be the highest-
ranking executive of 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 initial annual rate of $850,000, 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
72
deferred under Section 5(d)). Executive's annual base salary shall be
reviewed by the Compensation Committee of the Board (the "Committee") 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 Company's 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
the Company's 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 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, or an equivalent plan under which the Chief
Executive Officer of the Company shall be eligible for an award not less than
the award opportunity assigned to him under the 1995 EICP or the EICP during
1995 if the 1995 EICP is not approved by the Company's stockholders. 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
compensation to 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 the Company's 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 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 to Executive under such plans and programs as in
effect on January 1, 1995. 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 750,000
shares of the Company's Class A Common Stock (the "1995 Option"), under the
73
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 other
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 and compensation and
incentive award opportunities substantially no less favorable than those
provided by the Company to Executive under such plans and programs as in
effect on January 1, 1995.
In furtherance of and not in limitation of the foregoing, during
the Term:
(i) Executive will participate as Chief Executive Officer in all
executive and employee vacation and time-off programs;
(ii) The Company will provide Executive with coverage as Chief
Executive Officer in long-term disability insurance and benefits
substantially no less favorable (including any required
contributions by Executive) than such insurance and benefits in
effect on 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 ten
times Executive's annual base salary payable in accordance with
Section 4(a); provided, however, that such insurance may be
combined with a supplementary retirement funding vehicle;
(iv) Executive will be entitled to retirement benefits substantially no
less favorable than those under the pension plans and programs of
the Company as in effect on January 1, 1995. For purposes of
74
calculating such benefits, Executive's compensation 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 be
fully vested upon such crediting; and 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 by deposits to an
irrevocable "rabbi trust"; and
(v) The Company will provide Executive with health and medical
benefits consistent with its policies for other senior executives,
provided, however, that supplemental health and medical benefits
shall provide for reimbursement of Executive to the extent that
the $750,000 limitation on maximum lifetime health and medical
benefits and reimbursements under other Company policies and
programs is exceeded.
Any provision to the contrary contained in this Agreement
notwithstanding, unless Executive is terminated by the Company for "Cause" (as
defined in Section 8(a) hereof), Executive may elect continued participation
after termination in the Company's health and medical coverage for himself and
his spouse and dependent children after such coverage would otherwise end
until such time as Executive becomes eligible for Medicare; provided, however,
that in the event of such election, Executive shall pay the Company each year
an amount equal to the current annual COBRA premium being paid by other former
employees of the Company, unless otherwise provided under Section 6 or 7.
(d) Deferral of Compensation. The Company shall implement
deferral arrangements, reasonably acceptable to Executive and the Company,
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 (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 Executive'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 annual 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 such mandatory deferral, the Company shall credit to one or
more bookkeeping accounts maintained for Executive on the respective payment
date or dates, amounts equal to the compensation subject to deferral, such
credits to be denominated in cash if the compensation would have been paid in
75
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 and reasonably
acceptable to Executive (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, real estate, 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 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 under 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
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
76
Executive may terminate employment as Chief Executive Officer 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 as Chief Executive Officer 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(i), 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
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 or other
compensatory long term incentive award granted in accordance with
77
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
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)
78
above will be paid as promptly as practicable after termination of Executive's
employment; provided, however, that, 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).
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 Other Than For Good Reason. In accordance with the provisions of
this Section 7(a), the Company may terminate the employment of Executive as
Chief Executive Officer 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 as Chief Executive Officer voluntarily for reasons
other than Good Reason (as defined in Section 8(d)) at any time. An election
by Executive not to extend the Term pursuant to Section 2 hereof shall be
deemed to be a termination of this Agreement by Executive for reasons other
than Good Reason 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 by the Executive for reasons other than Good Reason, the Term will
immediately terminate, and 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(i) the Company, shall
pay Executive, and Executive shall 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
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
79
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, that, 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 Executive as Chief Executive
Officer 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 as Chief Executive
Officer for Good Reason (as defined in Section 8(d)) 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 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 deemed to be a termination of this Agreement 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 or termination of Executive's employment by the Executive for
Good Reason, the Term will immediately terminate and all obligations of the
parties under Sections 1 through 5 of this Agreement will immediately cease,
except that subject to the provisions of Section 12(i) the Company shall pay
Executive, and Executive shall be entitled to receive, the following:
(i) In the event such termination is a termination by the Company
without Cause or a termination by Executive for Good Reason, a
lump sum cash payment in 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 lesser of (A) 3.0, which payment shall be reduced pro rata to
the extent the number of full months remaining until Executive
attains age 65 is less than 36 months or (B) the number of years
80
remaining in the Term without regard to such termination
(including any fraction determined based on the number of days
remaining in the year of termination), which payment shall be
reduced pro rata to the extent the number of full months remaining
until Executive attains age 65 is less than the number of months
remaining in the Term without regard to such termination; or
(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) In lieu of any payment in respect of performance shares or other
compensatory long term incentive award granted in accordance with
Section 5(a) for any performance period not completed at the date
Executive's employment terminated (unless otherwise payable under
(iii) 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 the maximum performance in respect of
each tranche of such performance shares or other award without
pro-ration;
(vi) 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;
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(vii) 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;
(viii) Reasonable business expenses and disbursements incurred by
Executive prior to such termination of employment will be
reimbursed, as authorized under Section 5(e);
(ix) 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
(x) In the event such termination takes place after a Change in
Control, for a period of three 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).
Amounts payable under (i), (ii), (iii), (iv), (v), (vii), (viii), and (ix)
above will be paid as promptly as practicable after termination of Executive's
employment, and in no event more than 45 days after such termination;
provided, however, that, if such termination is a termination by the Company
without Cause and 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.
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(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 and its subsidiaries or materially impairs the value of the
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 and 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, within six
months after the Board (A) had knowledge of conduct or an event allegedly
constituting Cause and (B) had reason to believe that such conduct or event
could be grounds for Cause, a copy of a resolution duly adopted by a majority
affirmative vote of the membership of the Board (excluding Executive) 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 set forth above 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%) 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
83
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 Chairman of the Board, Chief Executive Officer, or a
director of the Company.
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).
84
(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 the Company and reasonably acceptable to
Executive.
(d) "Good Reason." For purposes of this Agreement, "Good
Reason" shall mean, without Executive's prior written consent, (A) a material
change, adverse to Executive, in Executive's positions, titles, or offices as
set forth in Section 3(a), status, rank, nature of responsibilities, or
authority within the Company, or a removal of Executive from or any failure to
elect or re-elect or, as the case may be, nominate Executive to any such
positions or offices, including as Chairman of the Board or as a member of any
committee of the Board of Directors upon which Executive has served under
Section 3(a), 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 status as Chairman of the Board and Chief Executive Officer of the
Company and other positions held under Section 3(a), (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) a relocation of the Corporate Offices of the
Company more than 35 miles from the latest location of such offices prior to
the date of a Change in Control, (F) 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 (G) 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
non-cash benefit or property), whether pursuant to the terms of this Agreement
85
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.
For purposes of determining the amount of the Gross-up Payment,
Executive shall be deemed (A) to pay federal income taxes at the highest
86
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
taxing authority. Executive shall cooperate with the Company in any
proceedings relating to the determination and assessment of any Excise Tax and
87
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 on behalf of the Company or any subsidiary, or has supervised as an
executive thereof, 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, other than engaging in the businesses owned or
controlled by FII (excluding those of the Company and its subsidiaries) or FI
(excluding those of the Company and its subsidiaries) at the date of
termination, or providing services through FII to businesses for which FII
provided services at the date of termination; (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 or
her 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. 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 and 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 or
its representatives or counsel, or representatives or counsel to the Company,
or any subsidiary or affiliate of the Company, as requested. The Company
88
agrees to reimburse the Executive, on an after-tax basis, for all expenses
actually incurred in connection with his provision of testimony or assistance.
(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 interpret this Agreement or 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 the
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
89
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
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 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 cancels 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 and its subsidiaries. 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 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
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beneficiaries to receive any compensation or benefits payable hereunder
following Executive's death.
(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:
William Farley
209 East Lake Shore Drive
Chicago, Illinois 60611
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
91
writing and signed by the party against whom such waiver is sought to be
enforced.
(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 the 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 the Executive provide an
undertaking to repay such advances if it is ultimately determined that the
Executive is not entitled to indemnification; provided, however, that any
determination required to be made with respect to whether the 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 the 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 the
Executive to indemnification thereunder. Any provision contained herein
notwithstanding, this Agreement shall not limit or reduce any rights of the
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.
92
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/ Burgess D. Ridge
Name: Burgess D. Ridge
Title: Vice President - Administration
EXECUTIVE
/S/ William Farley
William Farley
Dates Referenced Herein
| Referenced-On Page |
|---|
| This ‘10-K’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 12/17/97 | | 3 | | | | | None on these Dates |
| | 12/18/95 | | 3 |
| Filed on: | | 3/29/95 |
| | 1/1/95 | | 5 | | 7 |
| For Period End: | | 12/31/94 |
| | 12/18/94 | | 3 | | 5 |
| List all Filings |
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