EXHIBIT 10 (n)
SALARY CONTINUATION AGREEMENT
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This AGREEMENT is entered into this 12th day of November, 2002 by and
between XXXXXXXX XXXXX, Inc. a Delaware corporation (the "Company") and Xxxxx X.
Xxxxxxxxxx (the "Associate").
STATEMENT OF PURPOSE.
The purpose of this Salary Continuation Agreement (the "Agreement")
is to assist a key employee in the event of such employee's involuntary
termination in the transition to finding other employment and also to retain
such employee and to motivate such employee to enhance the value of the Company.
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
"Base Salary" shall mean the annual base salary paid to the Associate
by the Company and any Subsidiary immediately prior to his or her termination of
employment or, in the event of a termination for Good Reason within the meaning
of clause (b) of the definition of Good Reason, the annual base salary paid to
the Associate immediately prior to the existence of Good Reason.
"Base Salary Continuation Amount" shall mean the amount described in
Section 2 hereof.
"Board" shall mean the Board of Directors of the Company.
"Cause" shall mean:
(a) The willful and continued failure by the Associate to perform
substantially his or her duties with the Company (other than any such failure
resulting from the Associate's incapacity due to physical or mental illness or
any such failure resulting from termination by the Associate for Good Reason)
after a written demand for substantial performance is delivered to the Associate
by the Company's chief executive officer, which demand specifically identifies
the manner in which the chief executive officer of the Company believes that the
Associate has not substantially performed his or her duties; or
(b) The willful engagement in conduct by the Associate which is
demonstrably and materially injurious to the Company, monetarily or otherwise;
or
(c) Conviction for a felony or other crime punishable by
imprisonment, or the entering of a plea of nolo contendere thereto
For purposes of this definition, no act, or failure to act, on the
Associate's part shall be considered "willful" unless done, or omitted to be
done, by him or her knowing and with the intent that such action or inaction
would not be in the best interests of the Company or otherwise was done or
omitted to be done in bad faith.
Notwithstanding any of the foregoing, the Associate shall not be
deemed to have been terminated for Cause pursuant to clause (a) and (b) above
unless and until there shall have been delivered to the Associate a resolution
duly adopted by the Board at a meeting called and held for such purpose (after
reasonable notice to the Associate and an opportunity for the Associate,
together with his or her counsel, to be heard before the Board), finding that
the Associate has engaged in (or failed to engage in, as the case may be) the
conduct set forth above and specifying the particulars thereof in detail.
"Change in Control" shall be deemed to have occurred upon any of the
following events:
(a) Any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") but
excluding any employee benefit plan of the Company) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company's outstanding securities then
entitled ordinarily to vote for the election of directors; or
(b) During any period of two (2) consecutive years commencing on or
after the Emergence Date, the individuals who at the beginning of such period
constitute the Board or any individuals who would be Continuing Directors cease
for any reason to constitute at least a majority thereof; or
(c) The Board shall approve a sale of all or substantially all of the
assets of the Company; or
(d) The Board shall approve any merger, consolidation, or like
business combination or reorganization of the Company, the consummation of which
would result in the occurrence of any event described in clause (a) or (b),
above.
"Continuing Directors" shall mean the directors of the Company in
office on the Emergence Date and any successor to any such director and any
additional director who after the Emergence Date (i) was nominated or selected
by a majority of the Continuing Directors in office at the time of his or her
nomination or selection and (ii) who is not an "affiliate" or "associate" (as
defined in Regulation 12B under the Exchange Act) of any person who is the
beneficial owner, directly or indirectly, of securities representing ten percent
(10%) or more of the combined voting power of the Company's outstanding
securities then entitled ordinarily to vote for the election of directors.
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"Disability" with respect to an Associate shall exist if such
Associate is eligible to receive benefits under the applicable Group Long Term
Disability Income Plan for Executives or any successor plan thereto; provided,
however, that in the event that no such plan is in effect as of the applicable
date, "Disability" shall have the meaning ascribed to such term in any long term
disability benefit plan of the Company in effect as of the Emergence Date.
"Eligible Termination" shall mean the termination of an Associate's
employment with the Company or a Subsidiary, other than on account of death,
Disability or Retirement, (i) by him or her for Good Reason or (ii) by the
Company or a Subsidiary other than for Cause (or other than at a time when Cause
existed).
"Emergence Date" shall mean October 4, 2002.
"Good Reason" shall mean:
(a) The assignment by the Company or a Subsidiary to the Associate of
duties which result, without the Associate's express written consent, in a
significant reduction in the Associate's authority and responsibility when
compared to the level of authority and responsibility assigned to the Associate
as of the date of execution of this Agreement; or
(b) A reduction by the Company or a Subsidiary of the Associate's
Base Salary as the same may be increased from time to time hereinafter; or
(c) A change of the Associate's assigned site location as of the
Emergence Date ("Original Site") to another site location which is at least 50
miles from the Original Site without the Associate's consent, or in the event of
any such relocation of the Associate with his or her consent, the failure by the
Company to pay (or reimburse) the Associate for all reasonable moving expenses
incurred by the Associate and relating to a change of his or her principal
residence, and to indemnify the Associate against any loss realized by the
Associate and/or the Associate's spouse in the sale of the Associate's principal
residence (with any such loss measured as the difference between the amount
realized on the sale and the original cost of the home plus any improvements
thereto) in connection with any such change of residence, all to the effect that
the Associate shall incur no loss on any after-tax basis; or
(d) The failure by the Company to continue to provide the Associate
with substantially the same level of employee benefits under all employee
benefit plans, including, without limitation, (i) all pension plans, as such
term is defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), including the Profit-Sharing Plan, the Company's
401(k) Plan and the Company's Excess Benefits Plan, (ii) all other retirement
plans, whether or not tax-qualified, (iii) all incentive and cash bonus plans,
(iv) all welfare plans, as such term is defined in section 3(1) of ERISA,
including, group life insurance plans, medical, dental, accident, disability and
other insurance plans, and (v) all perquisites, in each case, as were provided
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to the Associate immediately prior to the Emergence Date, or with a package of
employee benefits that, though one or more such benefits may vary from those
provided before the Emergence Date, is substantially comparable in all material
respects when taken as a whole to such employee benefits provided prior the
Emergence Date; or
(e) The failure by the Company to provide continued participation in
an annual cash bonus plan pursuant to which, if applicable Company and/or
individual performance criteria are satisfied, the Associate would receive an
annual bonus in an amount equal to the product of (x) his or her annual base
salary and (y) a bonus percentage, provided, however, that such performance
criteria used in calculating the amount of an annual bonus shall be selected and
determined in a manner substantially consistent with the method of establishing
such targets immediately prior to the Emergence Date and the bonus percentage
shall be no less than that percentage used in determining the amount of the
Associate's targeted bonus immediately prior to the Emergence Date; provided,
however, that Good Reason shall not exist in the event the Company changes the
criteria for receiving such amounts for valid business purposes not related to
the Associate; or
(f) The failure by the Company to perform its obligations under any
Company employee benefit plans and agreements entered into between the Company
and the Associate; or
(g) The failure by the Company to obtain the express written
assumption of and agreement to perform this Agreement by any Successor; or
(h) Any purported termination of the Associate's employment by the
Company which is not effected pursuant to a Notice of Termination.
"Notice of Termination" shall mean a notice given by the Associate or
by the Company or a Subsidiary, as the case may be, which shall indicate the
specific basis for termination and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for determination of any
payments under this Agreement; provided, however, that an Associate shall not be
entitled to give a Notice of Termination that he or she is terminating his or
her employment with the Company or a Subsidiary for Good Reason after the
expiration of six (6) months following the last to occur of the events alleged
by him or her to constitute Good Reason.
"Profit Sharing Plan" shall mean the Company's Salaried Associate
Retirement Profit Sharing Plan or any successor plan thereto
"Retirement" shall mean that the Associate shall have retired after
reaching the normal retirement date provided in the Profit Sharing Plan as in
effect on the Emergence Date.
"Subsidiary" shall mean a subsidiary of the Company.
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"Successor" shall mean any person, firm, corporation or other
business entity that, at any time, whether by merger, acquisition or otherwise,
acquires all or substantially all of the stock, assets or business of the
Company or a Subsidiary, as the case may be.
2. SALARY CONTINUATION AND OTHER POST-TERMINATION BENEFITS.
The Associate shall only be entitled to the Base Salary Continuation
Amount and the other payments and benefits described in this Section 2 in the
event of an Eligible Termination. Any purported termination by the Company or a
Subsidiary by reason of Disability or for Cause, or by the Associate for Good
Reason, shall be communicated by written Notice of Termination to the other
party hereto.
The Base Salary Continuation Amount payable to the Associate under
this Agreement shall be equal to one (1) year of Base Salary. All Base Salary
Continuation Amounts shall be payable by the Company in substantially equal
monthly installments commencing with the first day of the month following the
month in which the Eligible Termination occurs. In the event of an Eligible
Termination, the Associate shall be entitled to (i) continue to participate in
all of the welfare plans, including medical, dental and disability plans,
maintained by the Company or its Subsidiaries in which he or she participated
immediately prior to his or her termination of employment (or, in the event of a
termination for Good Reason within the meaning of clause (d) of the definition
of Good Reason, the welfare plans in which he or she participated immediately
prior to the existence of Good Reason), on the same terms as he or she
participated immediately prior to his or her termination of employment (or the
existence of Good Reason, as the case may be), from the date of such Eligible
Termination to the expiration of a period of time equal to the period of time
used to compute his or her Base Salary Continuation Amount herein and (ii)
reimbursement from the Company for the cost of outplacement services not in
excess of $10,000. In the event of an Eligible Termination within one year after
the Emergence Date following a Change in Control, the Associate shall also be
entitled to receive a bonus equal to 30 percent (30%) of his or her Base Salary,
and such bonus shall be paid out in a single sum together with the first
installment of the Base Salary Continuation Amount payments. Payments and
benefits under this Agreement shall not be reduced or offset by any payments
made to the Associate under any other plan, program, agreement or arrangement of
the Company or its Subsidiaries. Notwithstanding the foregoing, however,
payments under this Agreement are subject to and conditioned upon the
cancellation of any agreements or arrangements existing on the Emergence Date
with the Company or a Subsidiary providing for payments to the Associate in the
event of a "change of control", whether or not such change in control is the
same as defined herein. Benefits under the Agreement payable to the Associate
shall be reduced by all applicable federal, state and local withholding.
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3. RELEASE.
The Associate's agreement hereto shall constitute full settlement and
release of any claim or cause of action, of whatever nature, which the Associate
might otherwise assert or claim against the Company or any of its directors,
stockholders, officers or associates on account of such termination; provided,
however, this Agreement is in addition to and not in lieu of any other plan or
arrangement providing for payments to or benefits for the Associate or any
agreement now existing or which hereafter may be entered into between the
Company and the Associate other than any such agreement or arrangement existing
on the Emergence Date providing benefits in the event of a "change in control"
described in Section 2 hereof.
4. FINANCING.
All amounts due and benefits provided under the Agreement shall
constitute general obligations of the Company in accordance with the terms of
the Agreement. The Associate shall have only an unsecured right to payment
thereof out of the general assets of the Company
5. GENERAL.
(a) The Associate shall retain in confidence any proprietary or other
confidential information known to him concerning the Company and its business
(including any Subsidiary and its business) so long as such information is not
publicly disclosed and disclosure is not required by an order of any
governmental body or court. If requested, the Associate shall return to the
Company any memoranda, documents or other materials proprietary to the Company
or any Subsidiary.
(b) The Company shall use its best efforts to resolve disputes under
this Agreement expeditiously and without undue litigation expenses. If
litigation shall be brought to enforce or interpret any provision contained
herein, the Company shall indemnify the Associate for his attorneys' fees and
disbursements incurred in such litigation and pay prejudgment interest on any
money judgment obtained by the Associate calculated at the prime rate of
interest in effect from time to time at Wachovia Bank, National Association,
from the date that payment should have been made under this Agreement; provided,
however, that the Associate shall not have been found by the court to have had
no cause in bringing the action, or to have acted in bad faith, which finding
must be final with the time to appeal therefrom having expired and no appeal
having been taken.
(c) Subject to the terms hereof, the Company's obligation to pay the
Associate the compensation and to make the arrangements provided herein shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, any set off, counterclaim, recoupment, defense or
other right which the Company may have against the Associate or anyone else. All
amounts payable by the Company hereunder shall be paid without notice or demand.
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Each and every payment made hereunder by the Company shall be final and the
Company will not seek to recover for any reason all or any part of such payment
from the Associate or any person entitled thereto.
(d) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by written
agreement to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement, the term
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which executes and delivers the
agreement required by this Section 5(d), or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law.
(e) This Agreement shall inure to the benefit of and be enforceable
by the Associate's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Associate should
die while any amounts would still be payable to the Associate hereunder if he
had continued to live, all such amounts shall be paid in accordance with the
terms of this Agreement to the Associate's devisee, legatee or other designor
or, if there be no such designee, to the Associate's estate.
(f) For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered by (i) United States registered
mail, return receipt requested, postage prepaid, (ii) overnight courier service
or (iii) facsimile, addressed as follows:
If to the Associate, to the address stated in the Company's records
for such Associate.
If to the Company:
Xxxxxxxx Xxxxx, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Law Department
Fax: (000) 000-0000
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
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6. TERMINATION AND AMENDMENT OF THE AGREEMENT
This Agreement shall continue to be in effect unless and until the
Company terminates it by providing written notice to the Associate at least six
months prior to the date of termination, with such notice specifying the
termination date; provided, however, that the Company may not terminate this
Agreement and may not give such a notice of termination prior to the second
anniversary of this Agreement. Notwithstanding the foregoing, the Company shall
have no right to amend, modify or terminate this Agreement after the Associate
becomes entitled to any payments or benefits hereunder. The Company may amend or
modify this Agreement solely with the written consent of the Associate.
7. NON-ASSIGNABILITY
The Associate's rights under this Agreement shall be non-transferable
except as applicable law may otherwise require. Subject to the foregoing, no
right, benefit or interest hereunder shall be subject to anticipation,
alienation, sale, assignment, encumbrance, charge, pledge, hypothecation or
set-off in respect of any claim, debt or obligation, or to execution,
attachment, levy or similar process, or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall, to the full
extent permitted by law, be null, void and of no effect.
8. EFFECT OF OTHER PROGRAMS; DUTY TO MITIGATE
Except as otherwise expressly provided herein, (a) nothing in the
Agreement shall affect the level of benefits provided to or received by the
Associate (or the Associate's estate or beneficiaries) as part of any employee
benefit plan or program of the Company, its parent or any affiliate and (b) the
Agreement shall not be construed to affect in any way the Associate's rights and
obligations under any other plan or program maintained by the Company, its
parent or any affiliate on behalf of employees or any other contract between the
Company or a subsidiary and the Associate.
With respect to the first half of Base Salary Continuation Amount
payments described in Section 2 hereof, the Associate shall not be required to
mitigate the amount of any such payment under the Agreement by seeking
employment or otherwise, and there shall be no right of setoff or counterclaim,
in respect of any claim, debt or obligation, against any payments to the
Associate, the Associate's dependents, beneficiaries or estate provided for in
the Agreement. With respect to the second half of such Base Salary Continuation
Amount payments, such payments shall be reduced, but not below zero, by any
amounts paid or payable by a successor employer and, with respect to such
payments, the Associate shall use reasonable efforts to seek comparable
employment to mitigate the amounts of such payments.
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9. TERMINATION OF EMPLOYMENT
Nothing in the Agreement shall be deemed to entitle the Associate to
continued employment with the Company or a Subsidiary, and the rights of the
Company or a Subsidiary to terminate the employment of the Associate in any
lawful manner shall continue as fully as though this Agreement were not in
effect.
10. SEVERABILITY
In the event that any provision or portion of the Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of the Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
11. GOVERNING LAW; ARBITRATION
All questions pertaining to the construction, regulation, validity
and effect of the provisions of the Agreement shall be determined in accordance
with the laws of the State of Delaware. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by arbitration
in accordance with the rules of the American Arbitration Association then in
effect. Unless otherwise agreed to by the Company, any such arbitration shall
take place in Guilford county, North Carolina. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that the
Associate shall be entitled to seek specific performance of his or her right to
be paid as provided in this Agreement in the event of any dispute.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first above written.
XXXXXXXX XXXXX, INC. ASSOCIATE
By: /s/ Xxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxxxxxx
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Name: Xxxx X. Xxxxxx Xxxxx X. Xxxxxxxxxx
Title: President and Chief Executive Officer
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