EXHIBIT 10(c)
AGREEMENT
THIS AGREEMENT made this ____ day of ___________,2004 (the "Agreement")
by and between ________________ (the "Executive") and VF CORPORATION, a
Pennsylvania corporation (the "Corporation"). This Agreement amends, restates
and supersedes the prior agreement dated November 9, 2001, and any amendments
to and restatements thereof between the Executive and the Corporation.
BACKGROUND
The Board of Directors of the Corporation (the "Board") considers the
establishment and maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of the Corporation and its
shareholders. In this connection, the Corporation recognizes that, as is the
case with many publicly held corporations, the possibility of a change in
control may exist and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of management personnel to the detriment of the Corporation and its
shareholders. The Corporation further recognizes that its own financial position
tends to exacerbate the uncertainty among management that a change of control
might create. Accordingly, the Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of certain members of the Corporation's management, including the
Executive, to their assigned duties without distraction in the face of the
potentially disturbing circumstances arising from the possibility of a change in
control of the Corporation.
In order to induce the Executive to remain in the employ of the
Corporation, the Corporation wishes to provide the Executive with certain
severance benefits in the event his employment with the Corporation terminates
subsequent to a change in control of the Corporation under the circumstances
described herein.
NOW THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
1. TERM. The term of this Agreement commences as of the date and year
first above written and shall continue until the second anniversary of the date
set forth above. The prior sentence notwithstanding, commencing on first day
after the second anniversary of the date set forth above and on the first day of
each subsequent twelve month period thereafter the term of this Agreement shall
automatically be extended for one additional year beyond the then existing term.
This Agreement shall terminate (except as set forth in the next sentence) if (a)
the Corporation gives the Executive notice that it wishes to terminate this
Agreement in which case this Agreement shall terminate as of the date set forth
in such notice or (b) the Executive's employment with the Corporation is
terminated for any reason, including transfer to a subsidiary company of the
Corporation, in which case this Agreement shall terminate on the last day of the
Executive's employment with the Corporation; provided, however, if the Executive
is transferred to a subsidiary company of the Corporation, the Corporation may
waive the termination of this Agreement, by a written amendment of this
Agreement, executed by both the Corporation and the Executive, which shall refer
to this clause and shall be limited to the Executive's transfer to the
subsidiary company of the Corporation named in the amendment, unless another
amendment is executed upon the Executive's subsequent transfer to another
subsidiary company of the Corporation. The Corporation may not give such notice
and this Agreement shall not automatically terminate in the event the
Executive's employment with the Corporation terminates for any reason, including
a transfer to a subsidiary company of the Corporation, (x) at any time while the
Corporation has knowledge that any third person has taken steps or announced an
intention to take steps reasonably calculated to effect a " Change in Control"
(as hereinafter defined) of the Corporation, unless or until such third party
has, in the reasonable opinion of the Corporation, abandoned its efforts or
intention to effect a Change in Control of the Corporation or (y) within
thirty-six months after the date a Change in Control occurs. It is understood
that the Corporation may terminate the Executive's employment at any time,
subject to providing, if
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required to do so in accordance with the terms hereof, the severance benefits
hereinafter specified.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there
shall have been a Change in Control of the Corporation and the Executive's
employment by the Corporation shall thereafter have been terminated by the
Corporation or by the Executive under the circumstances described in paragraph
3(iii) hereof.
(i) Definition. For purposes of this Agreement , "CHANGE OF CONTROL"
shall mean the first to occur of:
(A) an individual, corporation, partnership, group, associate
or other entity or "person", as such term is defined in Section 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"), other than (i) the
Corporation, (ii) those certain trustees under Deeds of Trust dated August 21,
1951 and under the Will of John E. Barbey, deceased (a "Trust" or the "Trusts"),
and (iii) any employee benefit plan of the Corporation or any subsidiary company
of the Corporation, or any entity holding voting securities of the Corporation
for or pursuant to the terms of any such plan (a "Benefit Plan" or the "Benefit
Plans"), or any employee benefit plan(s) sponsored by the Corporation, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 20% or more of the combined voting power of the
Corporation's outstanding securities ordinarily having the right to vote at
elections of directors;
(B) individuals who constitute the Board of Directors of the
Corporation on the effective date of this Agreement (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided that
any Approved Director, as
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hereinafter defined, shall be, for purposes of this subsection (B), considered
as though such person were a member of the Incumbent Board. An "Approved
Director", for purposes of this subsection (b), shall mean any person becoming a
director subsequent to the effective date of this Agreement whose election, or
nomination for election by the Corporation's shareholders, was approved by a
vote of at least three-quarters of the directors comprising the Incumbent Board
(either by a specific vote or by approval of the proxy statement of the
Corporation in which such person is named as a nominee of the Corporation for
director), but shall not include 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 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of an individual, corporation, partnership, group, associate or
other entity or "person" other than the Board of Directors; or
(C) the approval by the shareholders of the Corporation of a
plan or agreement providing for a merger or consolidation of the Corporation
other than with a wholly-owned subsidiary and other than a merger or
consolidation that would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 65% of the combined voting power of the voting
securities of the Corporation or such surviving entity outstanding immediately
after such merger or consolidation, or for a sale, exchange or other disposition
of all or substantially all of the assets of the Corporation. If any of the
events enumerated in this subsection (C) occurs, the Board of Directors shall
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determine the effective date of the Change of Control resulting therefrom for
purposes of this Agreement.
(ii) Exceptions. (A) Notwithstanding the foregoing, a "Change
in Control" shall not be deemed to have occurred for purposes of this Agreement
(I) in the event of a sale, exchange, transfer or other disposition of
substantially all of the assets of the Corporation to, or a merger,
consolidation or other reorganization involving the Corporation and, the
Executive, alone or with other officers of the Corporation, or any entity in
which the Executive (alone or with other officers) has, directly or indirectly,
at least a 5% equity or ownership interest or (II) in a transaction otherwise
commonly referred to as a "management leveraged buy-out."
(B) Clause 2(i)(A) above to the contrary notwithstanding, a Change
in Control shall not be deemed to have occurred if a Person becomes the
beneficial owner, directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the Corporation's then
outstanding securities solely as the result of an acquisition by the Corporation
or any subsidiary company of the Corporation of voting securities of the
Corporation which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20% or more
of the combined voting power of the Corporation's then outstanding securities;
provided, however, that if a Person becomes the beneficial owner of 20% or more
of the combined voting power of the Corporation's then outstanding securities by
reason of share purchases by the Corporation or any subsidiary company of the
Corporation and shall, after such share purchases by the Corporation or a
subsidiary company of the Corporation, become the beneficial owner, directly or
indirectly, of any additional voting securities of the Corporation, then a
Change in Control of the Corporation shall be deemed to have occurred with
respect to such Person under clause 2(i)(A)above. Notwithstanding the foregoing,
in no event shall a change in control of the Corporation be
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deemed to occur under clause 2(i)(A) above if the person acquiring such shares
is the Trusts or Benefit Plans.
(C) Clauses 2(i)(A) and 2(i)(B) to the contrary notwithstanding, the
Board may, by resolution adopted by at least two-thirds of the directors
comprising the Incumbent Board, declare that a Change in Control described in
clauses 2(i)(A)(a) or 2(i)(B) has become ineffective for purposes of this
Agreement if all of the following conditions then exist: (I) the declaration is
made prior to the death, disability or termination of employment of the
Executive and within 120 days of the Change in Control; and (II) no Person,
except for (x) the Trusts, and (y) the Benefit Plans, either is the beneficial
owner, directly or indirectly, of securities of the Corporation representing 10%
or more of the combined voting power of the Corporation's outstanding securities
or has the ability or power to vote securities representing 10% or more of the
combined voting power of the Corporation's then outstanding securities. If such
a declaration shall be properly made, no benefits shall be payable hereunder as
a result of such prior but now ineffective Change in Control, but benefits shall
remain payable and this Agreement shall remain enforceable as a result of any
other Change in Control unless it is similarly declared to be ineffective.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. The Executive shall be
entitled to the severance benefits provided in Section 4 hereof if his
employment is terminated within the 36 month period following a Change in
Control of the Corporation (even if such 36 month period shall extend beyond the
term of this Agreement or any extension thereof) unless his termination is (i)
because of his death or disability, (ii) by the Corporation for Cause or
Disability or (iii) by the Executive other than for Good Reason.
(i) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, he shall have been absent from his duties with the
Corporation on a full-time basis for 26 consecutive weeks, and within 30 days
after written notice of termination is given he shall not have returned to the
full-time performance of his duties, the Corporation may terminate this
Agreement for "Disability."
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(ii) Cause. The Corporation may terminate the
Executive's employment for Cause. For the purpose of this Agreement, the
Corporation shall have "Cause" to terminate the Executive's employment hereunder
upon (A) the willful and continued refusal by the Executive substantially to
perform his duties with the Corporation (other than any such refusal resulting
from his incapacity due to physical or mental illness), after a demand for
substantial performance is delivered to the Executive by the Board which
specifically identifies the manner in which the Board believes that the
Executive has refused substantially to perform his duties or (B) the willful
engaging by the Executive in gross misconduct materially and demonstrably
injurious to the Corporation. For purposes of this paragraph, no act or failure
to act on the Executive's part shall be considered "willful" unless done, or
omitted to be done, by the Executive not in good faith and without reasonable
belief that his action or omission was in the best interest of the Corporation.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire members of the Board, at a meeting of the
Board called and held for that purpose (after reasonable notice to the Executive
and an opportunity for the Executive, together with his counsel, to be heard
before the Board), finding that in the good faith opinion of the Board the
Executive was guilty of conduct set forth above in clauses (A) or (B) of the
second sentence of this paragraph and specifying the particulars thereof in
detail.
(iii) Good Reason. The Executive shall be entitled to terminate his
employment, and receive benefits hereunder, for Good Reason at any time within
36 months after the date of a Change in Control of the Corporation. For purposes
of this Agreement, "Good Reason" shall mean, unless the Executive shall have
consented in writing thereto, any of the following:
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(A) a reduction in the Executive's title, duties,
responsibilities or status, as compared to such title, duties, responsibilities
or status immediately prior to the Change in Control or as the same may be
increased after the Change in Control;
(B) the assignment to the Executive of duties inconsistent
with the Executive's office on the date of the Change in Control or as the same
may be increased after the Change in Control;
(C) a reduction by the Corporation in the Executive's base
salary as in effect immediately prior to the Change in Control or as the same
may be increased after the Change in Control; or a failure by the Corporation
following a Change in Control to increase, within twelve months of the
Executive's last increase in annual base salary, his base salary by an amount
not less than the greater of (1) 6% or (2) the average percentage increase in
base salary for all officers of the Corporation during the twelve month period
immediately following his last increase in base salary, provided, however, that
the Corporation's failure to increase his base salary more than 15% annually
shall not constitute Good Reason under this paragraph under any circumstances;
(D) a requirement that the Executive relocate anywhere not
mutually acceptable to the Executive and the Corporation if the relocation is to
other than the greater Greensboro, North Carolina area or the imposition on the
Executive of business travel obligations substantially greater than his business
travel obligations during the year prior to the Change in Control;
(E) the relocation of the Corporation's principal executive
offices to a location outside the greater Greensboro, North Carolina area;
(F) the failure by the Corporation to continue in effect any
material fringe benefit or compensation plan, retirement plan, life insurance
plan, health and accident plan or disability plan, including but not limited to
the Corporation's Executive Incentive Compensation Plan ("EICP"), Annual
Discretionary Management Incentive Compensation Program ("ADMICP") or other
applicable bonus program, the Amended and Restated
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Supplemental Executive Retirement Plan, the Executive Deferred Savings Plan, the
Deferred Compensation Plan and the 1996 Stock Compensation Plan, as amended, in
which the Executive is participating at the time of a Change in Control of the
Corporation (or plans providing the Executive with substantially similar
benefits), the taking of any action by the Corporation which would adversely
affect the Executive's participation in or materially reduce his benefits under
any of such plans or deprive him of any material fringe benefit enjoyed by him
at the time of the Change in Control, or the failure by the Corporation to
provide him with the number of paid vacation days to which he is then entitled
under (1) the Corporation's normal vacation policy in effect immediately prior
to the Change in Control or (2) any agreement regarding vacation entitlement
which the Executive had with the Corporation immediately prior to the Change in
Control, whichever is greater;
(G) the adoption or pursuit by the Corporation or its
management of one or more policies or practices which, in the sole opinion of
the Executive, are contrary to the ethics, traditions, policies or practices of
the Corporation as in effect immediately prior to the Change in Control; or
(H) any breach of this Agreement of any nature whatsoever on
the part of the Corporation.
(iv) Notice of Termination. Any termination by the Corporation
pursuant to paragraph 3(i) or 3(ii) hereof, or otherwise, or by the Executive
pursuant to paragraph 3(iii) hereof, which, in any case, occurs within 36 months
after a Change in Control of the Corporation, shall be communicated by written
Notice of Termination (as hereinafter defined) to the other party hereto;
provided that, in the case of a termination for Cause, there shall also have
been delivered to the Executive the resolution required to be delivered pursuant
to paragraph 3(ii) hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
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(v) Date of Termination. "Date of Termination" shall mean (A) if
this Agreement is terminated for Disability, 30 days after Notice of Termination
is given (provided that the Executive shall not have returned to the performance
of his duties on a full-time basis during such 30-day period), (B) if the
Executive's employment is terminated pursuant to paragraph 3(ii) above, the date
specified in the Notice of Termination, and (C) if the Executive's employment is
terminated for any other reason, the date on which a Notice of Termination is
given, or, if the Corporation terminates the Executive's employment without
giving a Notice of Termination, the date on which such termination is effective.
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(i) During any period that the Executive fails to perform his duties
as a result of incapacity due to physical or mental illness, he shall continue
to receive his full base salary at the rate then in effect until his employment
is terminated pursuant to paragraph 3(i) hereof. Thereafter, his benefits, if
any, shall be determined in accordance with whatever disability income insurance
plan or plans the Corporation may then have in effect; provided, however, if at
the time Disability of the Executive is established the disability benefits then
available are less advantageous to the Executive than the Disability benefits
which were available upon the Change in Control, then his termination of
employment shall be deemed to have occurred as a voluntary termination for Good
Reason under paragraph 3(iii) hereof and not by reason of his disability, and
the benefits payable to the Executive under paragraph 4(iii) hereof shall apply
in lieu of this paragraph 4(i).
(ii) If the Executive's employment shall be terminated for Cause,
the Corporation shall pay him his full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given and
the Corporation shall have no further obligations to the Executive under this
Agreement.
(iii) If the Corporation shall terminate the Executive's employment
other than pursuant to paragraph 3(i) or 3(ii) hereof within 36 months after a
Change in Control of the
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Corporation, or if the Executive shall terminate his employment for Good Reason
pursuant to paragraph 3(iii) hereof within 36 months after a Change in Control,
then:
(A) The Corporation shall pay to the Executive, no later than
30 days following the Date of Termination, the Executive's accrued but unpaid
base salary through the Date of Termination plus compensation for current and
carried-over unused vacation and compensation days in accordance with the
Corporation's personnel policy.
(B) In lieu of any further payments of salary to the Executive
after the Date of Termination, the Corporation shall pay to the Executive, not
later than thirty (30) days following the Date of Termination and
notwithstanding any dispute between the Executive and the Corporation as to the
payment to the Executive of any other amounts under this Agreement or otherwise,
a lump sum severance payment (the "Severance Payment") equal to 2.99 times an
amount equal to the sum of (1) the greater of the Executive's highest annual
base salary in effect at any time within the twelve month period preceding a
Change in Control or the Date of Termination, and (2) the greater of (I) the
Target Incentive Award or Target Amount to which the Executive would have been
entitled under the EICP or ADMICP, as applicable, and the base or target amount
to which the Executive would have been entitled under any other bonus program of
the Corporation, had he been employed by the Corporation at the end of the
fiscal year in which the Date of Termination occurs, or (II) the highest amount
awarded to the Executive under the EICP or ADMICP and under any other bonus
program of the Corporation during the five fiscal years preceding the Date of
Termination.
(C) In addition to the foregoing amounts payable under
paragraph 4(iii)(A) and (B) above, the Executive will be entitled to the
following:
(1) any stock option rights held by the Executive which
were not fully exercisable on the Date of Termination shall immediately become
fully exercisable by the Executive;
(2) the Corporation shall maintain in full force and
effect, for the Executive's continued benefit, until the earlier of (I) 36
months after the Date of
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Termination or (II) the Executive's 65th birthday, all life, medical and dental
insurance programs in which the Executive was entitled to participate
immediately prior to the Date of Termination provided that his continued
participation is possible under the general terms and provisions of such
programs; provided that, in the event the Executive's participation in any such
program is barred, the Corporation shall arrange to provide the Executive with
benefits substantially similar to those which he was entitled to receive under
such programs;
(3) in addition to the benefits to which the Executive is
entitled under the Corporation's retirement plans in which he participates or
any successor plans or programs in effect on the Date of Termination, the
Corporation shall pay the Executive in one lump sum in cash, at the Executive's
normal retirement age, as defined in such plan or programs (or earlier
retirement age should the Executive so elect pursuant to such plan or programs),
an amount equal to the actuarial equivalent of the retirement pension to which
the Executive would have been entitled under the terms of such retirement plan
or programs had he accumulated 36 additional months of continuous service after
the Date of Termination (or, if less, the number of months between the Date of
Termination and the date on which the Executive attains normal retirement age
under the plan) at his base salary rate in effect on the Date of Termination
under such retirement plan or program reduced by the single sum actuarial
equivalent of any amounts to which the Executive is entitled pursuant to the
provisions of said retirement plans and programs; provided that, at the option
of the Executive, instead of paying such amount at the Executive's normal
retirement age, such amount, discounted to reflect its then present value, shall
be paid to the Executive at the same time as the Severance Payment; and further
provided that, for purposes of this subparagraph (3), the actuarial equivalents
shall be determined, and all other calculations shall be made, using the same
methods and assumptions utilized under the Corporation's retirement plan or
programs; and
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(4) the Executive shall become fully vested and have a
nonforfeitable interest in any benefit which he has accrued under the
Corporation's Amended and Restated Supplemental Executive Retirement Plan
("SERP"), including any Supplemental Annual Benefit Determinations or similar
determinations or benefit grants under the SERP adopted at any time prior to
termination of the Executive's employment.
(D) (1) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment or distribution by the
Corporation to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "PAYMENT"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "CODE") or similar
section or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "EXCISE TAX"), then the Executive shall be
entitled to receive an additional payment (a "GROSS-UP PAYMENT ") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax, imposed
upon the Gross-Up Payment the Executive retains an amount of the Gross-Up
Payment equal to all such taxes imposed upon the Payments.
(2) Subject to the provisions of subsection (4) hereof, all
determinations required to be made under this subsection, including whether a
Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be
made by the firm of independent auditors acting as such for the Corporation
immediately prior to the
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Change in Control (the "ACCOUNTING FIRM") provided, however, if the Accounting
Firm has performed services for the person, entity or group who caused the
Change in Control, or an affiliate thereof, the Executive may select an
alternative accounting firm from any nationally recognized firm of certified
public accountants, which shall be treated as the Accounting Firm for purposes
hereof, The Accounting Firm shall provide detailed supporting calculations both
to the Corporation and the Executive within 30 days of termination of employment
under this Agreement, if applicable, or such earlier time as is requested by the
Executive or the Corporation. When calculating the amount of the Gross-Up
Payment, the Executive shall be deemed to pay:
(I) Federal income taxes at the highest applicable marginal rate of
Federal income taxation for the calendar year in which the Gross-Up
Payment is to be made, and
(II) any applicable state and local income taxes at the highest
applicable 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.
(3) If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall furnish the Executive with an opinion that he
or she has substantial authority not to report any Excise Tax on his or her
federal income tax return. Any determination by the Accounting Firm shall be
binding upon the Corporation and the Executive. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
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Gross-Up Payments which will not have been made by the Corporation should have
been made ("UNDERPAYMENT"), consistent with the calculations required to be made
hereunder. In the event that the Corporation exhausts its remedies pursuant to
subsection (4) hereof, and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Corporation to or for the benefit of the Executive.
(4) The Executive shall notify the Corporation in writing of
any claim by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after the
Executive knows of such claim and shall apprise the Corporation of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty day
period following the date on which it gives such notice to the Corporation (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Corporation notifies the Executive in writing prior
to the expiration of such period that it desires to contest such claim, the
Executive shall:
(I) give the Corporation any information reasonably requested by the
Corporation relating to such claim,
(II) take such action in connection with contesting such claim as
the Corporation shall reasonably request in writing from time to
time including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Corporation,
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(III) cooperate with the Corporation in good faith in order
effectively to contest such claim, and
(IV) permit the Corporation to participate in any proceedings
relating to such claim;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this subsection, the Corporation shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Corporation shall determine; provided, however, that if the Corporation directs
the Executive to pay such claim and sue for a refund, the Corporation shall
advance the amount of such payment to the Executive, on an interest-free basis
and shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax, including interest or penalties with respect
thereto, imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any
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extension of the statue of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Corporation's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(5) If after the receipt by the Executive of an amount advanced by the
Corporation pursuant to this subsection the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Corporation's complying with the requirements of subsection (4)) promptly
pay to the Corporation the amount of such refund (together with any interest
paid or credited thereon by the taxing authority after deducting any taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Corporation pursuant to subsection (4) a determination is made
that the Executive shall not be entitled to any refund with respect to such
claim and the Corporation does not notify the Executive in writing of its intent
to contest such denial of refund prior to the expiration of thirty days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid under subsection
(4). The forgiveness of such advance shall be considered part of the Gross-Up
Payment and subject to gross-up for any taxes (including interest or penalties)
associated therewith.
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(iv) The Executive's right to receive payments under this Agreement
shall not decrease the amount of, or otherwise adversely affect, any other
benefits payable to the Executive under any plan, agreement or arrangement
relating to employee benefits provided by the Corporation.
(v) The Executive shall not be required to mitigate the amount of
any payment provided for in this paragraph 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
paragraph 4 be reduced by any compensation earned by the Executive as the result
of employment by another employer or by reason of the Executive's receipt of or
right to receive any retirement or other benefits after the date of termination
of employment or otherwise.
(vi) The Corporation may, but shall not be obligated to, provide
security for payment of the amounts set forth in this
Agreement in a form that will cause such amounts to be
includible in the Executive's gross income only for the
taxable year or years in which such amounts are paid to the
Executive under the terms of this Agreement. The form of
security may include a funded irrevocable grantor trust
established so as to satisfy any published Internal Revenue
Service guidelines.
5. FEES AND EXPENSES. The Corporation shall pay all reasonable legal fees
and related expenses (including the costs of experts, evidence and counsel and
other such expenses included in connection with any litigation or appeal)
incurred by the Executive as a result of (i) his termination of employment
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination of employment) or (ii) his seeking to obtain or
enforce any right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Corporation under which he is or may be entitled
to receive benefits. The Corporation further agrees to pay prejudgment interest
on any money judgment against the Corporation obtained by the Executive in any
arbitration or litigation against it to enforce such rights calculated at the
prime interest rate of Wachovia Bank, N.A., or its successor, in effect
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from time to time from the date it is determined that payment(s) to him should
have been made under this Agreement.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation will 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 Corporation, by agreement
in form and substance satisfactory to the Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Corporation would be required to perform it if no succession had taken
place. Failure of the Corporation to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation in the same amount and on the same
terms as he would be entitled hereunder if he terminated his employment for Good
Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Corporation" shall mean the Corporation
as defined above and any successor to its business and/or assets as aforesaid
which executes and delivers the agreement provided for in this paragraph 6 or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(ii) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise
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provided herein, shall be paid in accordance with the terms of this Agreement to
his devisee, legatee or other designee or, if there be no such designee, to his
estate.
7. NOTICES. For the purpose 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 or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed in the
case of the Executive, to
and in the case of the Corporation, to its principal executive offices, provided
that all notices to the Corporation shall be directed to the attention of its
Chief Executive Officer with copies to the Secretary of the Corporation and to
the Board, 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.
8. MISCELLANEOUS. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and a duly authorized officer of the
Corporation. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. This Agreement shall
not be assigned in whole or in part without the prior written consent of the
non-assigning party; provided, however, this sentence shall not be construed to
relieve the Corporation or any successor (whether direct or indirect) from
liability hereunder as provided in paragraph 6. The validity, interpretation,
construction and performance of this
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Agreement shall be governed by the laws (but not the law of conflicts of laws)
of the Commonwealth of Pennsylvania.
9. VALIDITY. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
EXECUTIVE
Witness:
_____________________________ _____________________________(SEAL)
VF CORPORATION
Attest: By: ________________________________
Mackey J. McDonald
______________________________ Chairman, President and Chief
Candace S. Cummings Executive Officer
Secretary
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