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Exhibit 10(P)
XXXXXX INDUSTRIES, INC.
and
FRUIT OF THE LOOM, INC.
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Employment Agreement for Xxxxxxx D. Ridge
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1. Employment and Assignment; Obligations of FOL and Company................................ 1
2. Term..................................................................................... 2
3. Offices and Duties....................................................................... 2
4. Salary and Annual Incentive Compensation................................................. 2
5. Long-Term Compensation, Including Stock Options, and Benefits, Deferred
Compensation, and Expense Reimbursement.................................................. 3
6. Termination Due to Normal Retirement, Approved Early Retirement,...Death, or Disability.. 7
7. Termination For Reasons Other Than Normal Retirement, Approved Early Retirement,
Death or Disability...................................................................... 9
8. Definitions Relating to Termination Events............................................... 13
9. Excise Tax Gross-Up...................................................................... 16
10. Non-Competition and Non-Disclosure; Executive Cooperation................................ 18
11. Governing Law; Disputes; Arbitration..................................................... 19
12. Miscellaneous............................................................................ 20
13. Indemnification.......................................................................... 22
Exhibit
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A Option Agreement for 25,000 Shares under 1995 EICP (1995 Option)
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is dated as of the ____ th day of March, 1995, by
and among XXXXXX INDUSTRIES, INC., an Illinois corporation (the "Company"),
FRUIT OF THE LOOM, INC., a Delaware corporation ("FOL"), and Xxxxxxx D. Ridge
("Executive"), and shall become effective as of December 18, 1994 (the
"Effective Date").
WITNESSETH
WHEREAS, Executive has served and is serving as a senior executive of the
Company and, under Service Agreements between the Company and FOL (any such
agreement as may be in effect from time to time being the "Service Agreement"),
as a senior executive of FOL; and
WHEREAS, FOL desires that Executive continue to serve FOL in a senior
executive capacity in connection with the conduct of its businesses, the
Company desires to continue to employ Executive as a senior executive so that
he may continue serve FOL, under the Service Agreement, in such a senior
executive capacity, and Executive desires to accept such employment by the
Company and assignment with FOL on the terms and conditions herein set forth;
and
WHEREAS, the Company, FOL, and Executive desire to set forth the terms
upon which Executive shall be so employed by the Company and assigned to FOL.
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, FOL, and Executive each hereby acknowledge, the
Company, FOL, and Executive hereby agree as follows:
1. Employment and Assignment; Obligations of FOL and Company.
(a) Employment by the Company and Assignment to FOL. The Company hereby
agrees to employ Executive as a senior executive of the Company and as a senior
executive assigned to serve as a senior executive of FOL, FOL hereby agrees to
the assignment of Executive as a senior executive of FOL, and Executive hereby
agrees to accept such employment and assignment 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").
(b) Obligations of FOL and Company, and Effect on Service Agreement. FOL
guarantees to Executive payment of all obligations hereunder of the Company to
Executive, including obligations under Sections 6 and 7. FOL and the Company
acknowledge and agree that, to the extent that this Agreement specifies matters
relating to the assignment of Executive to FOL and imposes obligations between
FOL and the Company relating thereto, this Agreement may modify and amend the
terms of any Service Agreement. If FOL makes any payment of cash or property
to Executive hereunder, including any payment under a guarantee by FOL of a
direct obligation of the Company to Executive hereunder, that duplicates a
payment made or owing by FOL to the Company under the Service Agreement, FOL
shall have a right of reimbursement or setoff against the Company in respect of
such payment. If Section 6 or 7 specify a payment, action or other obligation
to Executive following termination of Executive's employment by the Company and
service to FOL without specifying the primary obligor therefor, the obligor
therefor shall be FOL in respect of any obligation that replaces, settles, or
otherwise relates to an obligation of FOL under Sections 4 and 5 and shall be
the Company in respect of any obligation
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that replaces, settles, or otherwise relates to an obligation of the Company
under Sections 4 and 5, subject to FOL's guarantee of the obligations of the
Company.
2. Term.
The term of employment of Executive and assignment to FOL 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 any party for the one-year period beginning on December 18, 1997 and
each succeeding December 18 thereafter, unless the Company or FOL shall have
served written notice upon Executive (and on the one of the Company or FOL not
serving such notice, if the two are not acting jointly), or Executive shall
have served written notice on the Company and FOL, in either case in accordance
with the provisions of Section 12(d), 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 a senior executive assigned,
pursuant to the Service Agreement, to serve as a senior executive of FOL and
shall perform such duties and responsibilities, as are substantially consistent
with his duties, responsibilities, rank and status with the Company and FOL as
of the Effective Date. Executive shall devote substantial business time and
attention, and his best efforts, abilities, experience, and talent, to the
position of senior executive of the Company and of FOL and for the businesses
of the Company and FOL; provided, however, that nothing in this Agreement shall
preclude or prohibit Executive from engaging in other activities, including as
assigned by the Company, to the extent that such other activities do not
preclude Executive's employment and assignment to serve FOL or otherwise
inhibit the performance of Executive's duties under this Agreement or impair
the businesses of the FOL, the Company and their subsidiaries and affiliates.
(b) Place of Employment. Executive's principal place of employment shall
be the Corporate Offices of FOL in Chicago, Illinois or such other headquarters
location as may be assigned by FOL, subject to the consent of the Company which
shall not be reasonably withheld.
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, and FOL agrees to guarantee the
payment of such compensation to Executive.
(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 persons assigned to serve as senior
executives of FOL (except to the extent deferred under Section 5(d)).
Executive's annual base salary shall be reviewed by FOL and the Company at
least once in each calendar
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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, determined through Executive's
participation in the FOL 1995 Executive Incentive Compensation Plan (subject to
approval thereof by FOL's stockholders) (the "1995 EICP"), the FOL Executive
Incentive Compensation Plan (the "EICP") if the 1995 EICP is not approved by
FOL 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
Board of Directors of FOL (the "Committee"), in accordance with the applicable
plan and consistent with past practices of the Company; provided, however, that
FOL and the Company will use their 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 FOL stockholders), or an equivalent plan under which Executive will be
eligible for an award not less than the opportunity level available under the
1995 EICP or the EICP during 1995 (if the 1995 EICP is not approved by FOL
stockholders) to senior executives of FOL in similar capacities. Any such
annual incentive compensation payable to Executive shall be paid by FOL to the
Company and by the Company (without varying the amount or timing of payment or
otherwise exercising discretion) to Executive in accordance with FOL's
incentive compensation payment practices with respect 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
As partial compensation for the services to be rendered hereunder by
Executive, the Company agrees to provide the compensation and benefits to the
extent specified in this Xxxxxxx 0, xxxxxxxxx Xxxxxxxx 0(x), (x), (x), and (e),
FOL agrees to guarantee the payment of all such compensation and benefits to be
provided by the Company under this Section 5, and FOL agrees to provide the
compensation and benefits to the extent specified in this Section 5, including
Sections 5(a), (b),(d) and (e).
(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, including those assigned to FOL and by senior
executives of FOL, as presently in effect or as they may be modified or added
to from time to time, subject to the eligibility and other requirements of
stockholders), any successor to such plans, and other stock option plans,
performance share plans, management incentive plans, and deferred compensation
plans of FOL, and supplemental retirement plans of the Company; 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 and FOL 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 1994
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, FOL has granted to
Executive, as of December 18, 1994 and conditioned upon Executive's execution
of this Agreement, a non-
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qualified stock option to purchase 25,000 shares of FOL's Class A Common Stock
(the "1995 Option"), under the 1995 EICP, subject to stockholder approval of the
1995 EICP at FOL'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, FOL 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 FOL
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 FOL 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 FOL 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 situated senior
executives or employees of the Company, including those assigned to serve as
senior executives of FOL, 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 and any benefit plans and programs of FOL in
which Executive may from time to time participate shall, in the aggregate,
provide Executive with benefits substantially no less favorable than those
provided by the Company and FOL 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 three 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 salary paid under Section 4(a) and
no less than 50% of annual incentive compensation paid under Section
4(b), and Executive shall be credited, for each full calendar year
of the Term that is completed up to
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five years, with one additional year of service up to five additional
years under such plans, which shall be fully vested upon 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 by the purchase of an insured annuity, the ownership of
which shall be transferred to Executive, providing a benefit equivalent
to such accrued benefit on an after-tax basis, and the Company will pay
to Executive an additional amount (or apply such additional amount to
the purchase of an increased insured annuity if so elected by Executive)
equal to the total of Executive's federal, state, and local income and
employment taxes on the insured annuity and such additional amount; and
(v) The Company will provide Executive with health and medical
benefits consistent with its policies for other senior executives,
including those assigned to serve as senior executives of FOL,
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.
(d) Deferral of Compensation. The Company and FOL shall implement
deferral arrangements, as obligations of FOL, 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 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 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 5(b), which deferrals will
otherwise be in accordance with this Section 5(d), and the Company hereby
delegates to such Committee full authority to require such mandatory
deferral of annual incentive compensation.
In accordance with such duly executed Deferral Election Forms or the terms
of any mandatory deferral, FOL shall, in lieu of payment by FOL to the Company
(under the Service Agreement in respect of Executive's services) and in lieu of
any direct payment by FOL or the Company to Executive, credit to one or more
bookkeeping accounts maintained by FOL 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 FOL to, and
shall be held and invested by, an independent trustee selected by FOL (a
"Trustee") pursuant to a "rabbi trust" established by FOL in connection with
such deferral arrangement and as to which the Trustee shall make investments
based on Executive's investment objectives (including
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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 FOL
for its reasonable cost of funds resulting from payment of taxes by FOL relating
to such rabbi trust assets during the period of deferral and prior to the
settlement of Executive's deferral accounts. FOL 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 termination of service to FOL 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, FOL 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 FOL may instead settle such accounts by
directing the Trustee to distribute the assets of the "rabbi trust." FOL, 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 FOL, 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 and cease to serve as
a senior executive of FOL upon Executive's retirement at or after age 65
("Normal Retirement") or, if approved in advance by the Company and the
Committee, upon Executive's early retirement prior to age 65 ("Approved Early
Retirement"). FOL may terminate the service of Executive due to the Disability
(as defined in Section 8(c)) of Executive, in which case Executive's employment
by the Company and service to FOL will terminate due to Disability.
At the time Executive's employment by the Company and service to FOL
terminates due to Normal Retirement, Approved Early Retirement, or death, the
Term will terminate. In the event Executive's employment by the Company and
service to FOL 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 and FOL a certificate
of good health.
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Upon a termination of Executive's employment by the Company and service to
FOL due to Normal Retirement, Approved Early Retirement, death, or Disability,
all obligations of the Company, FOL, 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 and FOL will pay Executive (or his
beneficiaries or estate) (in accordance with Section 1(b)), 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,
pro rated through such date of termination, will be paid;
(ii) All vested, nonforfeitable amounts owing or accrued at the
date of termination 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 of Executive's termination (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 and served 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 of Executive's termination (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) at 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 and served 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;
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(vii) Reasonable business expenses and disbursements incurred by
Executive prior to such termination will be reimbursed, as
authorized under Section 5(e); and
(viii) If Executive's employment and service 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 and service to FOL 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 and FOL during such
period following Executive's termination, with such benefits payable by
the Company and/or FOL 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
and service 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; provided, however, to the extent that FOL 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 FOL without limitation under Section 162(m) (unless this
provision is waived by FOL).
7. Termination For Reasons Other Than Normal Retirement, Approved Early
Retirement, Death or Disability
(a) Termination for Cause and Termination by Executive. In accordance
with the provisions of this Section 7(a), FOL may terminate the service of
Executive as a senior executive of FOL for Cause (as defined in Section 8(a))
at any time prior to a Change in Control (as defined in Section 8(b)), in which
case Executive's employment by the Company and service to FOL will terminate,
the Company may terminate the employment of Executive 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 and service
with FOL 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 voluntary termination of such
employment and such service 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 service with FOL for Cause, termination
of Executive's employment by the Company for Cause or voluntarily termination
by the Executive, the Term will immediately terminate, and all obligations of
the Company and FOL under Sections
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1 through 5 of this Agreement will immediately cease; provided, however, that
subject to the provisions of Section 12(c), the Company and FOL 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,
pro rated through such date of termination, will be paid;
(ii) All vested, nonforfeitable amounts owing or accrued at the date of
termination 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 (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 FOL 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 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 Executive's termination; provided, however, to the extent
that FOL 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 FOL without limitation under Section
162(m) (unless this provision is waived by FOL).
(b) Termination Without Cause and Termination by Executive for Good
Reason. In accordance with the provisions of this Section 7(b), FOL may
terminate the service by Executive as a senior executive of FOL 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, in which case
Executive's employment by the Company will terminate, the Company may terminate
Executive's employment 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 by the Company
and service with FOL for Good Reason (as defined in Section 8(d)) following a
Change in Control upon 90 days' written notice to the Company and FOL;
provided, however, that, if the basis for such Good Reason is correctable, the
Company and/or FOL have not corrected the basis for such Good Reason within 30
days after both have received such notice. The foregoing notwithstanding, in
lieu of the Company or FOL providing 90 days' written notice to Executive, the
Company and FOL may 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 or FOL not to
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extend the Term pursuant to Section 2 hereof shall be deemed to be a
termination of service with FOL and termination of employment by the Company
without Cause at the date of expiration of the Term.
Upon a termination of Executive's service with FOL without Cause or
termination of Executive's employment by the Company without Cause prior to or
following a Change in Control or termination of Executive's service with FOL
and employment with the Company by Executive for Good Reason following a Change
in Control, the Term will immediately terminate and all obligations of the
Company, FOL, 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 and FOL 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
FOL or the Company without Cause following a Change in Control
or a termination by Executive for Good Reason following a
Change in Control, an amount paid by FOL 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
FOL or 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 1.0, which payment shall be
reduced pro rata to the extent the number of full months
remaining until Executive attains age 65 is less than 12
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), 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
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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 and served 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,
pro rated through such date of termination, will be paid;
(iii) All vested, nonforfeitable amounts owing or accrued at the
date of termination 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 and service
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 and
served 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 FOL or 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
termination (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 FOL 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;
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(vii) Reasonable business expenses and disbursements incurred by
Executive prior to such termination will be reimbursed, as
authorized under Section 5(e);
(viii) In the event such termination is a termination by FOL or the
Company without Cause following a Change in Control or a termination
by Executive for Good Reason following a Change in Control, a
lump-sum cash payment will be paid by FOL equal to the present value
of Executive's accrued benefit, if any, which shall be fully vested
at the date of termination, 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 FOL, or such
benefits are otherwise funded and secured in an equivalent manner;
and
(ix) In the event such termination is a termination by FOL without
cause or a termination by Executive for Good Reason, 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 and service to FOL 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 and/or FOL 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), (vi), (vii), and (viii) above
will be paid as promptly as practicable after Executive's termination, and in
no event more than 45 days after such termination, provided, however, that, in
the case of a termination by FOL without Cause prior to a Change in Control,
to the extent that FOL 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 FOL without limitation
under Section 162(m) (unless this provision is waived by FOL), 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, FOL, or any of their subsidiaries or affiliates or materially impairs
the
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value of the Executive's services to the Company or FOL, 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,
FOL, or any of their subsidiaries or affiliates, 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 FOL or the
Company (excluding Executive, if he is then a member) at a meeting of such
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 such Board) finding that, in the good faith opinion of the Board,
Executive was guilty of conduct affecting the Board's corporation or a
subsidiary which conduct 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 FOL then outstanding ("FOL Common Stock Outstanding") or
the voting securities of FOL then outstanding entitled to vote generally
in the election of directors ("FOL 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 FOL Common Stock Outstanding or twenty-five percent (25%) or more
of the combined voting power of FOL 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 FOL Common Stock Outstanding or twenty-five percent (25%)
or more of the combined voting power of FOL Voting Securities Outstanding,
as the case may be; or
(ii) The approval by the stockholders of FOL of a reorganization, merger,
consolidation, complete liquidation or dissolution of FOL, the sale or
disposition of all or substantially all of the assets of FOL 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 of Directors of FOL
(the "FOL Board") such that the individuals who, as of the Effective
Date, constitute the FOL Board (such FOL Board shall be hereinafter
referred to as the "Incumbent Board") cease for any reason to constitute
at least a majority of the FOL Board; provided, however, for purposes of
this Section 8(b), that any individual who becomes a member of the FOL
Board subsequent to the Effective Date whose election, or nomination for
election by FOL'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 FOL Board (or deemed to be such pursuant to
this proviso) shall be considered as though such individual were a member
of the
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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 FOL 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 FOL
Common Stock Outstanding and FOL Voting Securities Outstanding immediately
prior to such acquisition or Corporate Transaction in substantially the same
proportions as their ownership, immediately prior to such acquisition or
Corporate Transaction, of FOL Common Stock Outstanding and FOL 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 FOL or senior executive or 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).
(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 FOL and reasonably acceptable to Executive, unless,
within 30 days after Executive has received written notice from FOL 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 FOL a
written certificate of Executive's good health prepared by a physician selected
FOL and reasonably acceptable to the Executive.
(d) "Good Reason." For purposes of this Agreement, "Good Reason"
shall mean the occurrence of a Change in Control 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 authority within FOL in effect prior to a Change in
Control, except in connection with the termination of Executive's service to
FOL for
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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 with FOL which are inconsistent with his
status, duties, 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 FOL or the Company to perform any material obligation under,
or breach by FOL or the Company of any material provision of, this Agreement,
(E) any failure to secure the agreement of any successor corporation or other
entity to FOL or to the Company to fully assume the obligations of FOL or the
Company, respectively, under this Agreement in a form reasonably acceptable to
Executive, and (F) any attempt by FOL or 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 FOL, 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 or any other plan,
arrangement, or agreement with the Company, FOL, 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"), FOL 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 FOL 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;
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(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 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 FOL 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),
FOL 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, FOL 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 FOL to Executive, payable on the fifth day
after demand by FOL (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. FOL 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, FOL 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 FOL's control over
any such proceedings shall be limited to issues with
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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
FOL 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 of
Directors of FOL, upon termination of Executive's employment and cessation of
service to FOL for any reason, Executive will not, for a period of one year
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 FOL or any of
its subsidiaries; 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 FOL or any of its subsidiaries; (ii) induce any
customers of FOL or any of its subsidiaries with whom Executive has had
contacts or relationships, directly or indirectly, during and within the scope
of his assignment and service to FOL 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 FOL 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 FOL 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 with the
Company or service with FOL for any reason), disclose, use, transfer, or sell,
except in the course of employment with or other service to the Company, FOL,
any company or business other than FOL for which the Company provides
management services, and any subsidiary or affiliate thereof, any confidential
or proprietary information of the Company, FOL, any company or business other
than FOL for which the Company provides management services, and any subsidiary
or affiliate thereof 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 and FOL, during the Term and thereafter (including following
Executive's termination of employment with the Company or service with FOL for
any reason), by making himself available to testify on behalf of the Company,
FOL, any company or business other than FOL for which the Company provides
management services, or any subsidiary or affiliate thereof, in any action,
suit, or proceeding, whether civil, criminal, administrative, or investigative,
and to assist the Company, FOL, any company or business other than FOL for
which the Company provides management services, or any subsidiary or affiliate
thereof, in any such action, suit, or proceeding, by providing information and
meeting and consulting with the Board of Directors of the Company and the Board
of Directors of FOL, and their representatives or counsel, or representatives
or counsel of the Company, FOL, any company or business other than FOL for
which the Company provides management services, or any subsidiary or affiliate
thereof, as
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requested. The Company and FOL agree to reimburse 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 and FOL, releasing any and all claims arising out of Executive's
employment by the Company and service by FOL (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 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, FOL, 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, FOL, 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, FOL,
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, FOL, and Executive hereby agree
that a judgment upon an award rendered by the arbitrators may be enforced in
other jurisdictions by suit
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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 party owing such amounts, 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 among the parties hereto with respect to the
employment of Executive by the Company (and any affiliate) and assignment as a
senior executive of FOL (and any subsidiary), except for contracts relating to
compensation under executive compensation and employee benefit plans of the
Company and FOL and subject to the provisions of Section 1(b). 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 and/or FOL or under any benefit or compensation plan of the Company
and/or FOL.
(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 and FOL may assign this Agreement
and the Company's and FOL'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 or FOL prior to the event of succession, and the Company and FOL, if
involved in any such event, shall, as a condition of the succession, require
such Successor to agree to assume the obligations of the predecessor 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 business of the Company
or FOL directly, by merger or consolidation, or indirectly, by purchase of the
Company's or FOL's voting securities or all or substantially all of the Company
or FOL's 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.
(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:
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If to the Company:
Xxxxxx Industries, Inc.
5000 Sears Tower
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Secretary
If to FOL:
Fruit of the Loom, Inc.
5000 Sears Tower
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Secretary
With copies to:
Fruit of the Loom, Inc.
5000 Sears Tower
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
If to Executive:
Xxxxxxx X. Xxxxx
43 Ramsgate
Xxxxx Xxxx, Xxxxxxxx 00000
If the parties by mutual agreement supply all other parties 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.
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(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.
(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 or service to FOL; 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 or FOL to
Executive following the Term shall be correspondingly reduced.
(i) Offsets; Withholding. The amounts required to be paid by the Company
and/or FOL 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 or
FOL 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 or FOL 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 and of FOL and its successors and
assigns.
13. Indemnification.
All rights to indemnification by the Company or FOL now existing in favor
of the Executive as provided in the Certificate of Incorporation or By-Laws of
the Company or FOL 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 and FOL 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 or FOL's Certificate of Incorporation, By-Laws, or other agreement
shall be made by independent counsel mutually acceptable to the Executive and
the indemnifying party (except to the extent otherwise required by law). After
the date hereof, the Company and FOL shall not amend its respective
Certificate of Incorporation or By-Laws or any agreement in any manner which
adversely affects
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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 and FOL will maintain directors' and officers' liability
insurance in effect and covering acts and omissions of Executive (including
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 (if
any).
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IN WITNESS WHEREOF, Executive has hereunto set his hand and the Company
and FOL have each caused this instrument to be duly executed as of the day and
year first above written.
XXXXXX INDUSTRIES, INC.
By: /S/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
FRUIT OF THE LOOM, INC.
By: /S/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President and Controller
EXECUTIVE
/S/ Xxxxxxx X. Xxxxx
--------------------------------------------
Xxxxxxx D. Ridge
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Exhibit A
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