Exhibit 10.40
FOURTH AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Fourth Amended and Restated Employment Agreement
("Agreement") is entered into as of the 2nd day of February 1998,
by and between ▇▇▇▇▇▇▇▇'▇, Inc. ("Company"), and R. ▇▇▇▇ ▇▇▇▇▇▇
("Executive").
Company and Executive agree as follows:
1. Employment. Company hereby employs Executive as Chief
Executive Officer of Company or in such other capacity with
Company and its subsidiaries as Company's Board of
Directors shall designate. It is anticipated that Executive will
be elected Chairman of the Board.
2. Duties. During his employment, Executive shall devote
substantially all of his working time, energies, and skills to
the benefit of Company's business. Executive agrees to serve
Company diligently and to the best of his ability and to use his
best efforts to follow the policies and directions of Company's
Board of Directors.
3. Compensation. Executive's compensation and benefits
under this Agreement shall be as follows:
(a) Base Salary. Company shall pay Executive a base
salary ("Base Salary") at a rate of no less than $825,000 per
year. In addition, the Board of Directors of Company shall, in
good faith, consider granting increases in such Base Salary based
upon such factors as Executive's performance and the growth
and/or profitability of Company. Executive's Base Salary shall
be paid in installments in accordance with Company's normal
payment schedule for its senior management. All payments shall
be subject to the deduction of payroll taxes and similar
assessments as required by law.
(b) Bonus. In addition to the Base Salary, Executive
shall be eligible pursuant to the 1998 Senior Executive Bonus
Plan, as long as he holds the position stated in paragraph 1, for
a yearly cash bonus of up to 75% of Base Salary based upon his
performance in accordance with specific annual objectives, set in
advance, all as approved by the Board of Directors.
(c) End of Five-Years Service Stock Grants. In
accordance with Executive's prior employment agreements, Company
shall issue to Executive fifty thousand (50,000) shares of common
stock as soon as possible after July 1, 1998 provided Executive
has served the Company continuously for five years following July
1, 1993. Company shall also issue to Executive an additional
fifty thousand (50,000) shares of common stock to Executive as
soon as possible after October 11, 2001, provided Executive has
served the Company continuously for five years following October
11, 1996, the date of Executive's Second Amended and Restated
Employment Agreement. In the event of Executive's death prior to
July 1, 1998, or October 11, 2001, Executive's estate shall be
issued a pro rata potion of the shares, on the basis of 10,000
shares per year for each grant.
(d) Stock Grant. Pursuant to the 1998 Senior
Executive Bonus Plan, an amount up to twenty thousand (20,000)
shares of Company common stock may be issued to Executive as soon
as possible after the end of each fiscal year of Company, based
upon annual targeted growth in intrinsic value of the Company or
other factors, as determined by the Human Resources Committee of
the Board of Directors. The Human Resources
Committee, subject to approval from the Board of Directors, shall
have sole and exclusive discretion to grant or withhold any
portion of such yearly stock grant.
(e) Stock Bonus. Pursuant to the 1998 Senior
Executive Bonus Plan, Company shall award Executive a bonus of
20,000 shares of Company stock for each fiscal year in which
Company's earnings per share increase 20% or more over the prior
year's earnings. The Human Resources Committee of the Board of
Directors shall have sole and exclusive discretion to determine
whether that objective has been met, and the Committee may
consider matters such as non-recurring and extraordinary items.
(f) Incentive Compensation. Executive is hereby
granted a non-qualified option ("Option") to purchase one hundred
thousand (100,000) shares of Company common stock at an option
price equal to the closing price of the stock at the close of
business on February 2, 1998 (the "Grant Date"), as reported in
the Wall Street Journal. The Option is granted pursuant to the
Company's 1994 Long-Term Incentive Plan ("1994 LTIP"), and shall
be subject to the terms and conditions thereof. The Option shall
be exercisable on or after the "Grant Date" to the extent of 20%
of the shares covered thereby; exercisable to the extent of an
additional 20% of the shares covered thereby on and after the
first anniversary of the Grant Date; exercisable to the extent of
an additional 20% of the shares covered thereby on and after the
second anniversary of the Grant Date; exercisable to the extent
of an additional 20% of the shares covered thereby on an after
the third anniversary of the Grant Date; and exercisable to the
extent of any remaining shares on and after the fourth
anniversary of the Grant Date; provided, however, that no portion
of the Option shall be exercisable any earlier than six months
from the Grant Date. The Option may be exercised up to ten (10)
years from the Grant Date. Any portion of the Option not
exercised within said ten (10) year period shall expire.
(g) Effect of Change of Control on Options. In the
event of a Change of Control (as defined in the Company's 1994
LTIP), any Options granted to Executive prior to such Change of
Control shall immediately vest.
(h) Forgiveness of Loan. Company shall forgive the
$500,000 interest-free loan due January 31, 1999, in 1/5th
increments, at the end of each fiscal year; provided, however,
that Executive must continue to be employed by Company for any
portion of the loan to be forgiven, and provided further that
Executive must repay any outstanding balance if he terminates
employment.
(i) Company Aircraft. Company requires Executive to
use Company aircraft for personal use, whenever possible, up to
30 hours per year. Such use is important for the safety of
Executive and so that Executive may remain in communications with
other Company officials as necessary. Executive may use Company
aircraft for such uses -- up to 30 hours per year -- without
further reimbursement to Company.
4. Insurance and Benefits. Company shall allow Executive
to participate in each employee benefit plan and to receive each
executive benefit that Company provides for senior executives at
the level of Executive's position. In addition, Company shall
pay the reasonable costs for Executive's tax and financial
planning, and shall continue to buy split-dollar life insurance
for Executive.
5. Term. The term of this Agreement shall be for five (5)
years, provided, however, that Company may terminate this
Agreement at any time upon thirty (30) days' prior written notice
(at which time this Agreement shall terminate except for Section
9, which shall continue in effect as set forth in Section 9). In
the event of such termination by Company, Executive shall be
entitled to receive his Base Salary (at the rate in effect at the
time of termination) through the end of the term of this
Agreement. Such Base Salary shall be paid thereafter in regular
payroll installments.
In addition, this Agreement shall terminate upon the death
of Executive, except as to: (a) Executive's estate's right to
exercise any unexercised stock options pursuant to Company's
stock option plan then in effect, (b) other entitlements under
this contract that expressly survive death, and (c) any rights
which Executive's estate or dependents may have under COBRA or
any other federal or state law or which are derived independent
of this Agreement by reason of his participation in any plan
maintained by Company.
6. Termination by Company for Cause. (a) Company shall
have the right to terminate Executive's employment under this
Agreement for cause, in which event no salary or bonus shall be
paid after termination for cause. Termination for cause shall be
effective immediately upon notice sent or given to Executive.
For purposes of this Agreement, the term "cause" shall mean and
be strictly limited to: (i) conviction of Executive, after all
applicable rights of appeal have been exhausted or waived, for
any crime that materially discredits Company or is materially
detrimental to the reputation or goodwill of Company; (ii)
commission of any material act of fraud or dishonesty by
Executive against Company or commission of an immoral or
unethical act that materially reflects negatively on Company,
provided that Executive shall first be provided with written
notice of the claim and with an opportunity to contest said claim
before the Board of Directors; or (iii) Executive's material
breach of his obligations under paragraph 2 of the Agreement, as
so determined by the Board of Directors.
(b) In the event that Executive's employment is
terminated, Executive agrees to resign as an officer and/or
director of Company (or any of its subsidiaries or affiliates),
effective as of the date of such termination, and Executive
agrees to return to Company upon such termination any of the
following which contain confidential information: all documents,
instruments, papers, facsimiles, and computerized information
which are the property of Company or such subsidiary or
affiliate.
7. Change in Control. If Executive's employment is
terminated primarily as a result of a Change in Control of
Company or a Potential Change in Control of Company, as defined
below, Executive shall receive his Base Salary (at the rate in
effect at the time of termination) for a period of two years or
through the end of the term of this Agreement, whichever is
longer.
As used herein, the term "Change in Control" means the
happening of any of the following:
(a) Any person or entity, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended, other than Company, a subsidiary of Company, or
any employee benefit plan of Company or its subsidiaries, becomes
the beneficial owner of Company's securities having 25 percent or
more of the combined voting power of the then outstanding
securities of Company that may be cast for the election for
directors of Company (other than as a result of an issuance of
securities initiated by Company in the ordinary course of
business); or
(b) As the result of, or in connection with, any cash
tender or exchange offer, merger or other business combination,
sale of assets or contested election, or any combination of the
foregoing transactions, less than a majority of the combined
voting power of the then outstanding securities of Company or any
successor corporation or entity entitled to vote generally in the
election of directors of Company or such other corporation or
entity after such transaction, are held in the aggregate by
holders of Company's securities entitled to vote generally in the
election of directors of Company immediately prior to such
transactions; or
(c) During any period of two consecutive years,
individuals who at the beginning of any such period constitute
the Board of Directors of Company cease for any reason to
constitute at least a majority thereof, unless the election, or
the nomination for election by Company's stockholders, of each
director of Company first elected during such period was approved
by a vote of at least two-thirds of the directors of Company then
still in office who were directors of Company at the beginning of
any such period.
As used herein, the term "Potential Change in Control" means
the happening of any of the following:
(a) The approval by stockholders of an agreement by
Company, the consummation of which would result in a Change of
Control of Company; or
(b) The acquisition of beneficial ownership, directly
or indirectly, by any entity, person or group (other than
Company, a wholly-owned subsidiary thereof or any employee
benefit plan of Company or its subsidiaries (including any
trustee of such plan acting as trustee)) of securities of Company
representing 5 percent or more of the combined voting power of
Company's outstanding securities and the adoption by the Board of
Directors of Company of a resolution to the effect that a
Potential Change in Control of Company has occurred for purposes
of this Agreement.
8. Disability. If Executive becomes disabled at any time
during the term of this Agreement, he shall after he becomes
disabled continue to receive all payments and benefits provided
under the terms of this Agreement for a period of twelve
consecutive months, or for the remaining term of this Agreement,
whichever period is shorter. In the event that Executive is
disabled for more than twelve consecutive months during the term
of this Agreement, Executive shall, at the expiration of the
initial twelve consecutive month period, be entitled to receive
under this Agreement 50% of his Base Salary plus the insurance
and benefits described in Section 4 of this Agreement for the
remaining term of this Agreement. For
purposes of this Agreement, the term "disabled" shall mean the
inability of Executive (as the result of a physical or mental
condition) to perform the duties of his position under this
Agreement with reasonable accommodation and which inability is
reasonably expected to last at least one (1) full year.
9. Non-competition; Unauthorized Disclosure.
(a) Non-competition. During the period Executive
is employed under this Agreement, and for a period of three years
thereafter, Executive:
(i) shall not engage in any activities, whether
as employer, proprietor, partner, stockholder (other than the
holder of less than 5% of the stock of a corporation the
securities of which are traded on a national securities exchange
or in the over-the-counter market), director, officer, employee
or otherwise, in competition with (i) the businesses conducted at
the date hereof by Company or any subsidiary or affiliate, or
(ii) any business in which Company or any subsidiary or affiliate
is substantially engaged at any time during the
employment period;
(ii) shall not solicit, in competition with
Company, any person who is a customer of the businesses conducted
by Company at the date hereof or of any business in which Company
is substantially engaged at any time during the term of this
Agreement; and
(iii) shall not induce or attempt to persuade
any employee of Company or any of its divisions, subsidiaries or
then present affiliates to terminate his or her employment
relationship in order to enter into competitive employment.
(b) Unauthorized Disclosure. During the period
Executive is employed under this Agreement, and for a further
period of three years thereafter, Executive shall not, except as
required by any court or administrative agency, without the
written consent of the Board of Directors, or a person authorized
thereby, disclose to any person, other than an employee of
Company or a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by Executive of
his duties as an executive for Company, any confidential
information obtained by him while in the employ of Company;
provided, however, that confidential information shall not
include any information now known or which becomes known
generally to the public (other than as a result of unauthorized
disclosure by Executive).
(c) Scope of Covenants; Remedies. The following
provisions shall apply to the covenants of Executive contained in
this Section 9:
(i) the covenants contained in paragraph (i) and
(ii) of Section 9(a) shall apply within all the territories in
which Company is actively engaged in the conduct of business
while Executive is employed under this Agreement, including,
without limitation, the territories in which customers are then
being solicited;
(ii) without limiting the right of Company to
pursue all other legal and equitable remedies available for
violation by Executive of the covenants contained in this Section
9, it is expressly agreed by Executive and Company that such
other remedies cannot fully compensate Company for any such
violation and that Company shall be entitled to injunctive relief
to prevent any such violation or any continuing violation
thereof;
(iii) each party intends and agrees that if,
in any action before any court or agency legally empowered to
enforce the covenants contained in this Section 9, any term,
restriction, covenant or promise contained therein is found to be
unreasonable and accordingly unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the
extent necessary to make it enforceable by such court or agency;
and
(iv) the covenants contained in this Section 9
shall survive the conclusion of Executive's employment by
Company.
10. General Provisions.
(a) Notices. Any notice to be given hereunder by
either party to the other may be effected by personal delivery,
in writing or by mail, registered or certified, postage prepaid
with return receipt requested. Mailed notices shall be addressed
to the parties at the addresses set forth below, but each party
may change his or its address by written notice in accordance
with this Section 10 (a). Notices shall be deemed communicated
as of the actual receipt or refusal of receipt.
If to Executive: R. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Company: ▇▇▇▇▇▇▇▇'▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(b) Partial Invalidity. If any provision in this
Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions shall,
nevertheless, continue in full force and without being impaired
or invalidated in any way.
(c) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Tennessee.
(d) Entire Agreement. Except for any prior grants of
options, restricted stock, or other forms of incentive
compensation evidenced by a written instrument -- some of which
are attached hereto as Exhibit A -- or by an action of the Board
or Directors, this Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto
with respect to employment of Executive by Company and contains
all of the covenants and agreements between the parties with
respect to such employment. Each party to this Agreement
acknowledges that no representations, inducements or agreements,
oral or otherwise, that have not been embodied herein, and no
other agreement, statement or promise not contained in this
Agreement, shall be valid or binding. Any modification of this
Agreement will be effective only if it is in writing signed by
the party to be charged.
(e) No Conflicting Agreement. By signing this
Agreement, Executive warrants that he is not a party to any
restrictive covenant, agreement or contract which limits the
performance of his duties and responsibilities under this
Agreement or under which such performance would constitute a
breach.
(f) Headings. The Section, paragraph, and
subparagraph headings are for convenience or reference only and
shall not define or limit the provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
▇▇▇▇▇▇▇▇'▇, INC.
BY: _____________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
_____________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
General Counsel
__________________
R. ▇▇▇▇ ▇▇▇▇▇▇
Executive
