AMENDATORY AGREEMENT
THIS AMENDATORY AGREEMENT (this "Agreement") is made and entered
into as of July 2, 2002 between Garan, Incorporated (the "Company"), and
Xxxxxxx X. Xxxxxx ("Executive").
WHEREAS, the Company and Executive have entered into an amended
and restated employment agreement dated as of May 1, 2001 (the "Employment
Agreement");
WHEREAS, the Company has entered into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), by and among
Berkshire Hathaway Inc., BG Merger Sub Inc. (the "Merger Sub") and the
Company, pursuant to which the Merger Sub will merge with and into the
Company, with the Company being the surviving corporation (the "Merger"); and
WHEREAS, in contemplation of the Merger, the Company and
Executive wish to amend the Employment Agreement to provide for certain
payments and other continuing employment matters after the Effective Time (as
defined in the Merger Agreement) of the Merger.
NOW THEREFORE, in consideration of the foregoing premises, and
the covenants and promises and representations set forth herein, and for
other good and valuable consideration; the receipt and sufficiency of which
is hereby acknowledged and accepted, the parties hereto agree as follows:
Section 1. Effectiveness. This Agreement shall constitute a
binding obligation of the parties and be effective only upon the occurrence
of the Effective Time (as defined in the Merger Agreement). In the event the
Merger Agreement is terminated for any reason without the Effective Time
having occurred, this Agreement shall terminate without further obligation or
liability of any party hereunder.
Section 2. Retention Payment. Promptly following the Effective
Time, the Company shall pay Executive a cash retention payment of $2,033,200
(the "Cash Payment"), in lieu of Executive's rights to receive payments
pursuant to Section 3.1.a of the Employment Agreement. (For the avoidance of
doubt, the bonus described in the penultimate sentence of Section 3.1.a shall
not be paid pursuant to such Section.) If any payment to Executive, whether
made hereunder or under any other agreement with or plan of the Company,
subjects Executive to the excise tax described under Section 4999 of the
Internal Revenue Code of 1986, as amended ("Excise Tax"), the Company shall
pay to Executive an additional "Gross-Up Payment" in an amount equal to
Executive's Excise Tax liability (including Excise Tax liability with respect
to the Gross-Up Payment), plus an additional amount to cover Executive's
after-tax Federal, state and local income and employment taxes on the Gross-
Up Payment. If the Internal Revenue Service ("IRS") subsequently determines
that Executive's Excise Tax liability is greater than the amount of Excise
Tax used by the Company in computing Executive's Gross-Up Payment, the
Company shall promptly make an additional payment to Executive equal to the
amount necessary to make Executive whole on an after-tax basis, including the
total amount of any underpaid Excise Tax, any related income or employment
taxes, and any related interest and/or penalties due to the IRS or other
taxing authority.
Section 3. Termination of Employment Agreement. The Company and
Executive agree that, upon payment of the Cash Payment following the
Effective Time, the Employment Agreement shall be terminated and of no
further force and effect. Notwithstanding the termination of the Employment
Agreement, it is the intention of the Company and Executive that:
(a) From and after the Effective Time, Executive shall continue
employment with the Company as an at-will employee in the same position at
the Company as on the date hereof, and that, for so long as employed by the
Company, Executive shall be entitled for his service to cash base
compensation and cash bonuses consistent with the Company's past practice for
Executive and to employee benefits consistent with the Company's past
practice for senior officers, except that (a) in recognition of having
received the Cash Payment, Executive shall not be entitled to any severance
payment upon, or (except as may be required by law) medical health insurance
coverage after, termination of employment notwithstanding that the Company
has a severance policy generally applicable to other officers and other
employees or provides retiree medical health insurance coverage to other
officers, and (b) the Company shall maintain a life insurance policy on
Executive's life payable to Executive's designated beneficiary or
beneficiaries in a principal amount consistent with the Company's past
practice for Executive notwithstanding that such principal amount may exceed
life insurance that the Company provides generally for other officers or
employees; and
(b) Following Executive's termination of employment with the
Company for any reason other than for Cause (as defined below), if the
Company pays a bonus to any senior executive with respect to the fiscal year
during which Executive's employment terminates, the Company will pay
Executive or Executive's designated beneficiary or beneficiaries (or if no
beneficiary is designated, to Executive's estate), at the same time as such
bonus is paid to the other senior executive, a fractional part of Executive's
last annual bonus determined by the Board of Directors equal to the number of
months in the fiscal year in which Executive's termination occurred to and
including the month of the date of termination, divided by 12; provided,
however, that in no event will Executive be paid the bonus described in the
penultimate sentence of Section 3.1.a of the Employment Agreement nor will
Executive be paid more than one such fractional bonus following termination
of employment. For purposes of this Agreement, "Cause" shall mean willful
and gross misconduct on Executive's part that is materially and demonstrably
detrimental to the Company or the commission by Executive of one or more acts
which constitute an indictable crime under Federal, state, or local law, as
determined in good faith by a written resolution duly adopted by the
affirmative vote of a majority of all of the directors then serving on the
Company's Board of Directors at a meeting duly called and held for that
purpose after reasonable notice to Executive and opportunity for Executive
and Executive's counsel to be heard.
Section 4. Miscellaneous.
(a) Executive acknowledges that Executive understands the terms
and effect of this Agreement and that Executive has been advised to and given
the opportunity to consult with an attorney prior to executing this
Agreement.
(b) The Company shall have the right to deduct from any payment
or benefit or any kind otherwise due to Executive under this Agreement, any
Federal, state or local taxes of any kind required to be withheld by law.
(c) The Arbitration, Jurisdiction and Notice provisions of the
Employment Agreement shall apply, mutatis mutandis, to this Agreement.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(e) This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, it being
understood that all parties need not sign the same counterpart.
GARAN, INCORPORATED
By: /s/ Xxxxxxx Xxxxxxxxxxxx
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Name:
Title:
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
