EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), made and
entered into on the 18th day of October, 1994, to be effective
as of the lst day of July, 1994, by and between MONK-AUSTIN
INTERNATIONAL, INC. (the "Company"), a corporation organized
and existing under the laws of the State of North Carolina and
having its principal office at Farmville, North Carolina, and
LARRY R. CORBETT (the "Executive"), an individual residing at
Kinston, North Carolina.
R E C I T A L S:
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The Company is engaged in the business of purchasing and
processing leaf tobacco and selling processed tobacco to
manufacturers of cigarettes and other consumer tobacco
products. The Executive is experienced in, and knowledgeable
concerning, all aspects of the business of the Company. The
Executive has heretofore been employed by the Company as its
Senior Vice-President and Director of Sales. The Company
desires to continue to employ the Executive as Senior Vice-
President and Director of Sales of the Company, and the
Executive desires to continue to be employed by the Company in
that capacity. Furthermore, the Company desires to provide
for the Executive certain disability, death, severance and
supplemental retirement benefits in addition to those provided
by the employee benefit plans of the Company. The Company and
the Executive desire to reduce to writing the terms of their
understanding and to provide for the Executive's continued
employment by the Company pursuant to the terms of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
and obligations herein and the compensation the Company agrees
herein to pay the Executive, and of other good and valuable
consideration, the receipt of which is hereby acknowledged,
the Company and the Executive agree as follows:
ARTICLE 1. EMPLOYMENT OF EXECUTIVE. Subject to the terms
and conditions set forth in this Agreement, the Company hereby
employs the Executive and the Executive hereby accepts such
employment for the period stated in ARTICLE 3 of this
Agreement.
ARTICLE 2. POSITION, RESPONSIBILITIES AND DUTIES.
2.1 Position and Responsibilities. During the Term (as
defined in Section 3.1 of ARTICLE 3), the Executive shall
serve as Senior Vice-President and Director of Sales of the
Company on the conditions herein provided. The Executive
shall provide such executive services in the management of the
Company's business not inconsistent with his position and the
provisions of Section 2.2 as shall be assigned to him from
time to time by the Board of Directors of the Company (the
"Board") or by such officers of the Company as may be senior
in authority to the Executive.
2.2 Duties. In addition to having the responsibilities
described in Section 2.1, during the Term, the Executive shall
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also serve, if elected, as an officer and director of
the Company or of any subsidiary or affiliate of the
Company. During the Term and except for illness, reasonable
vacation periods, and reasonable leaves of absence, the
Executive shall devote his full business time, attention,
skill, energies and efforts to the faithful performance of his
duties hereunder and to the business and affairs of the
Company and any subsidiary or affiliate of the Company and
shall not during the Term be employed in any other business
activity, whether or not such activity is pursued for gain,
profit or other pecuniary advantage; provided, however, that
(i) with the approval of the Board, the Executive may serve,
or continue to serve, on the boards of directors of, and hold
any other offices or positions in, companies or organizations,
which, in the Board's judgment, will not present any conflict
of interest with the Company or any of its subsidiaries or
affiliates or divisions, or materially affect the performance
of the Executive's duties pursuant to this Agreement and (ii)
the Executive shall not be prevented from investing his
personal assets in any business which does not compete with
the Company or with any subsidiary or affiliate of the
Company, where the form or manner of such investment will not
require substantial services on the part of the Executive in
the operation of the business in which such investment is
made. Notwithstanding the foregoing, the duties of the
Executive (i) shall not be expanded without the Executive's
prior approval and (ii) shall not require him to relocate his
residence from Kinston, North Carolina, and shall not make it
impractical for him to continue to reside there or cause him
to reside away from there for extended periods of time.
ARTICLE 3. TERM.
3.1 Term of Employment. The term of the Executive's
employment (the "Initial Term") under this Agreement shall be
effective as of July 1, 1994, and shall continue until the
earliest to occur of the following (the "Termination Date"):
(i) June 30, 1995 (except as otherwise provided in this
Section 3.1); (ii) the last day of the Employment Year (as
defined in this Section 3.1) in which the Executive attains
the age of sixty (60); (iii) the date of death of the
Executive; (iv) the date coinciding with the end of one
hundred eighty (180) days of continuous 'Total Disability" of
the Executive (as defined in ARTICLE 7); (v) the specified
date of termination under the Notice Exception (as defined in
Section 3.2); (vi) the date of termination under the Cause
Exception (as defined in Section 3.3); or (vii) the date the
Executive terminates his employment for Good Reason (as
defined in Section 3.4). In the event that the Initial Term
shall expire for the terminating event described in
subparagraph (i) of this Section 3.1, then, notwithstanding
the provisions of subparagraph (i) of this Section 3.1, the
Initial Term shall be extended automatically, without any
further action by the Company or the Executive, for successive
one-year periods (each, an "Extension Period") following the
expiration of the Initial Term (by reason of the terminating
event described in subparagraph (i) of this Section 3.1) or
any succeeding one-year Extension Period (except as otherwise
provided in this Section 3.1). If either party hereto desires
for the Term to expire at the end of the Initial Term or at
the end of any succeeding one-year Extension Period, such
party shall give written notice of such desire to the other
party no later than May 1 of the Employment Year (as defined
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in this Section 3.1) in which the Initial Term will expire or
May 1 of any succeeding one-year Extension Period. All
references herein to the term of the Executive's employment
(the "Term") shall refer to the Initial Term and shall include any
Extension Period. Each twelve-month period beginning July 1
during the Term is referred to herein as an "Employment Year."
3.2 Termination by Giving Notice. If either party hereto
desires to terminate the Executive's employment prior to the
expiration of the Term, such party shall give not less than
sky (60) days written notice of such desire to the other party
specifying the date of termination (the "Notice Exception").
Notwithstanding the foregoing, the Notice Exception shall not
be effected by the Company while the Executive is Totally
Disabled as provided in ARTICLE 7.
3.3 Termination for Cause, Automatic Termination. The
Company shall at all times have the right to discharge the
Executive for cause. For purposes of this Agreement, for
cause shall be limited to one or more of the following: (i)
habitual intoxication by the Executive while performing his
duties under this Agreement; (ii) theft or embezzlement; (iii)
alcoholism; (iv) drug addiction; (v) conviction of a felony;
or (vi) willful, flagrant, deliberate and repeated infractions
of material published policies and regulations of the Company
of which the Executive has actual knowledge (the "Cause
Exception"). If the Company desires to discharge the
Executive under the Cause Exception, it shall give notice to
the Executive as provided in Section 3.5 and the Executive
shall have thirty (30) days after notice has been given to him
in which to cure the reason for the Company's exercise of the
Cause Exception. If the reason for the Company's exercise of
the Cause Exception is timely cured by the Executive, the
Company's notice shall become null and void. For purposes of
this Agreement, for cause shall not include the Executive's
Total Disability (as defined in Section 7.4).
3.4 Good Reason. The Executive may terminate his
employment at any time for Good Reason (as defined in this
Section 3.4). If the Executive desires to terminate his
employment for Good Reason, he shall give notice to the
Company as provided in Section 3.5. For purposes of this
Section 3.4, "Good Reason" shall mean any of the following:
(a) The Executive's resignation from the Company's
employment on account of the failure by the Board
or any officer of the Company as may be senior in
authority to the Executive to reelect or reappoint
the Executive to a responsible executive position in
the Company and the Executive then elects to
leave the Company's employment within six (6) months
of such failure to so reelect or reappoint the
Executive;
(b) The Executive's resignation from the Company's
employment on account of a material modification by
the Board or any officer of the Company as may be
senior in authority to the Executive of theduties,
functions and responsibilities of the Executive as
Senior Vice-President and Director of Sales without
his consent within six (6) months of such modification;
or
(c) The Executive's resignation from the Company's
employment on account of any material breach of a
provision of this Agreement by the Company, which
breach is not cured within thirty (30) days after
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notice has been given to the Company by the Executive.
Without limiting the generality of the foregoing
sentence, the Company shall be in material breach of
its obligations hereunder if, for example, the Company
shall not permit the Executive to exercise such
responsibilities as are consistent with the Executive's
position and are of such a nature as are usually
associated with such offices of a corporation engaged in
substantially the same business as the Company, or the
Executive shall at any time be required to report to
anyone other than directly to the Board or any officer
of the Company as may be senior in authority to the
Executive, or the Company causes the Executive to
relocate his residence from Kinston, North Carolina or
makes it impractical for him to continue to reside there
or causes him to reside away from there for extended
periods of time, or the Company shall fail to make
a payment when due to the Executive.
3.5 Notice of Termination. Any termination by the
Company under the Cause Exception or by the Executive for Good
Reason shall be communicated by Notice of Termination to the
other party hereto. For purposes of Sections 3.3 and 3.4, a
"Notice of Termination" means a written notice which (i),
indicates the specific termination provision in this Agreement
relied upon, (ii) sets 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
and (iii) if the termination date is other than the date of
receipt of such notice, specifies the effective date of
termination (with respect to the events described in Sections
3.4(a) and (b), such date shall be not more than 15 days after
the giving of such notice).
3.6 Rights of Executive Upon Termination of Employment.
(a) Following the date the Term expires on account of
one of the terminating events described in subparagraphs
(i), (v) or (vii) of Section 3.1, the rights of the
Executive shall be as provided in ARTICLES 4, 5, 6, 9,
10, 12, 13, 14, 15, 16, 18, 26 and 31.
(b) Following the date the Term expires on account of
the Executive's attainment of age sixty (60) as
provided in subparagraph (ii) of Section 3.1, the
rights of the Executive shall be as provided in
ARTICLES 4, 5, 6, 9, 10, 12, 13, 14, 15, 16, 18 and 26.
(c) Following the date the Term expires on account of
the Executive's death as provided in subparagraph (iii)
of Section 3.1, the rights of the Executive's personal
representative and designated beneficiary (as determined
pursuant to ARTICLE 16) shall be as provided in ARTICLES
4, 5, 8, 10, 12, 14, 15, 16, 18 and 26.
(d) Following the date the Term expires on account of
the Executive's Total Disability as provided in
subparagraph (iv) of Section 3.1, the rights of the
Executive shall be as provided in ARTICLES 4, 5, 7, 9,
10, 12, 13, 14, 15, 16, 18 and 26.
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(e) Following the date the Executive is terminated
for cause as provided in subparagraph (vi) of Section 3.1,
the rights of the Executive shall be as provided in
ARTICLES 4, 5, 9, 10, 12, 13, 14, 15, 16, 18 and 26.
ARTICLE 4. COMPENSATION. For all services
rendered by the Executive during the Term, including without
limitation, services as an executive, officer, director (except
fees and reimbursements to which all members of the Board, or a
subsidiary or affiliate of the Company, are generally entitled)
or member of any committee of the Company or of any subsidiary,
affiliate, or division thereof, the Company shall pay the
Executive as compensation the following:
4.1 Base Salary. The Executive shall be paid for
his services during the Term a base annual salary of $200,000
"Base Salary"), payable in appropriate installments to conform
with regular payroll dates for salaried personnel of the Company.
The Executive's Base Salary shall be automatically increased on
July 1 of each Employment Year to reflect increases in the cost
of living (as hereinafter described). In no event, however,
shall the Executive's Base Salary under, this Agreement ever be
less than $200,000. In addition to any cost of living increase
in the Executive's Base Salary, the Board may, in its sole
discretion, increase the Executive's Base Salary based on his
performance. The amount of any annual automatic cost of living
increase in the Executive's Base Salary shall be determined by
multiplying the most recent Base Salary times a fraction
whose numerator shall be the Consumer Price Index (the
"CPI") [All Urban Consumers, South Region Average (1982-
84 = 100); All Items, Bureau of Labor Statistics of The
United States Department of Labor], for the month of May
next preceding the July 1 of the current Employment Year,
and whose denominator shall be the CPI for the month of
May next preceding the July 1 of the Employment Year
immediately prior to the current Employment Year. If the
quotient obtained in the foregoing fraction shall be a
number less than one (1), the Base Salary shall be equal
to the Base Salary of the Employment Year just completed.
In the event (i) the CPI ceases to use the 1982-84
average of 100 as the base of calculation, or (ii) a
substantial change is made in the quality or quantity of
the items utilized in determining the CPI, or (iii) the
publishing of the CPI shall be discontinued for any
reason, the United States Department of Labor shall be
requested to furnish a new index comparable to the CPI,
together with the information which will make possible
the conversion of such new index to replace the CPI for
the purposes of computing the Base Salary as provided for
herein. If for any reason the United States Department
of Labor does not furnish such an index and information,
the parties hereto shall thereafter accept and use, as
determined by the Board, such other index or comparable
statistics to measure the cost of living as shall be
computed and published by (i) an agency of the United
States Government, (ii) a reasonable financial periodical
or (iii) a recognized authority mutually selected by the
Company and the Executive.
4.2 Discretionary Bonus. In addition to the Base
Salary provided for in Section 4.1, the Executive shall be
entitled to such bonus or bonuses, if any, as may be
awarded to the Executive from time to time by the Board.
Any such bonus shall be payable in the manner specified by
the Board at the time any such bonus is awarded.
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ARTICLE 5. REIMBURSEMENT OF EXPENSES, OFFICE
AND SECRETARIAL ASSISTANCE. The Company recognizes that the
Executive will incur, from time to time, expenses for the
benefit of the Company and in furtherance of the Company's
business, including, but not limited to, expenses for
entertainment, travel and other business expenses consistent
with the Company's past practices. During the Term and any
Compensation Continuance Period (as defined in ARTICLE 12),
the Executive will be reimbursed for his reasonable expenses
incurred for the benefit of the Company in accordance with
the general policy of the Company as adopted from time to
time by the Board. To receive such reimbursement, the
Executive must present to the Company an itemized accounting,
in such detail as the Company may reasonably request, of
such expenditures. The Company further agrees to furnish
the Executive during the Term and any Compensation
Continuance Period (as defined in ARTICLE 12) with an
office and such secretarial assistance as shall be suitable
to the character of the Executive's position with the
Company and adequate for the performance of his duties
hereunder. In the event of the termination of the
Executive's employment for any reason, the Company shall
reimburse the Executive (or in the event of death, his
personal representative) for expenses incurred by the
Executive on behalf of the Company prior to the
Termination Date to the extent such expenses have not,
been previously reimbursed by the Company.
ARTICLE 6. SPECIAL SUPPLEMENTAL RETIREMENT
BENEFIT. Upon the expiration of the Term for any reason
(other than for one of the terminating events described
in subparagraphs (iii), (iv) or (vi) of Section 3.1),
whether voluntary or involuntary on the part of the
Executive, the Executive shall be entitled to receive a
special supplemental annual retirement benefit (the
"Deferred Benefit") equal to fifty percent (50%) of his
Average Base Salary (as defined in this ARTICLE 6). The
Deferred Benefit shall be payable for three (3) years in
approximately equal monthly installments commencing on the
first day of the month next following the later of
(i) the end of the Employment Year in which the Term
expires or (ii) the end of the Severance Period (as
defined in ARTICLE 12) in the event the Executive is
eligible to receive the Severance Benefit (as defined in
ARTICLE 12), and continuing for thirty-rive (35) consecutive
calendar months thereafter. The Deferred Benefit payments
shall be paid in accordance with the payroll schedule for
salaried personnel of the Company. For purposes of this
Agreement, the "Average Base Salary" of the Executive shall
mean the average of his annual Base Salary for the three
(3) consecutive calendar years of employment pursuant to
this Agreement (or, in the event the Executive does not
have three (3) consecutive calendar years of employment
pursuant to this Agreement, his annual salary for calendar
years of employment prior to the date of this Agreement)
ending coincident " with or next preceding the Termination
Date. If the Executive shall not have three (3)
consecutive calendar years of employment, his Average Base
Salary shall be equal to the Base Salary (or annual salary,
as the case may be) for the calendar year of employment
next preceding the Termination Date. Notwithstanding the
foregoing, for purposes of this ARTICLE 6, the Executive's
Average Base Salary shall in no event be less than $200,000.
ARTICLE 7. DISABILITY BENEFITS.
7.1 Commencement of Total Disability. If the Executive
suffers a "Total Disability" (as defined in Section 7.4),
he shall be deemed totally disabled ("Totally Disabled")
for purposes of this Agreement as of the date such Total
Disability commenced.
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7.2 Benefits Payable Upon Total Disability. In the event
of the Total Disability of the Executive, the Company shall
continue to pay the Executive his Base Salary during the
Disability Period (as defined in this Section 7.2); provided,
however, that if the Term shall otherwise expire during the
Disability Period pursuant to the provisions of ARTICLE 3, the
Company shall cease paying the Executive his Base Salary under
this Section 7.2 as of the Termination Date, and the remaining
provisions of this Agreement shall apply. In the event that
the Executive's Total Disability continues for a period of one
hundred eighty (180) days (measured from the date the
Executive became Totally Disabled), the Term shall
automatically expire, as provided in subparagraph (iv) of
Section 3.1, at the end of such one hundred eighty day period
(the "Disability Period"). If the Term shall expire on
account of the Executive's Total Disability, the Company shall
pay to the Executive an annual disability benefit (the
"Disability Benefit") equal to fifty percent (50%) of his
Average Base Salary (as defined in ARTICLE 6). The annual
disability benefit shall be payable to the Executive for three
(3) years in approximately equal monthly installments on the
first day of each calendar month commencing with the calendar
month next following the month in which the Term expires on
account of the Executive's Total Disability and continuing for
thirty-five (35) consecutive calendar months thereafter. The
Disability Benefit payments shall be paid in accordance with
the payroll schedule for salaried personnel of the Company.
7.3 Cessation of Disability. Notwithstanding the
provisions of Section 7.2, if prior to the end of the
Disability Period, the Executive's Total Disability shall have
ceased under the definition of Total Disability set forth in
Section 7.4 and he shall have commenced to perform his regular
duties hereunder, the following special provisions shall
apply: (i) this Agreement shall continue in full force and
effect (except as otherwise provided in ARTICLE 3); and (ii)
the Executive shall be entitled to resume his employment under
this Agreement and to receive thereafter compensation in
accordance with ARTICLE 4 as though he had not been Totally
Disabled; provided, however, that unless the Executive shall
perform his regular duties hereunder for a continuous period
of at least sixty (60) days following a period of Total
Disability before he again becomes Totally Disabled, he shall
not be entitled to start a new Disability Period, but instead
must continue under the remaining portion of the original
Disability Period. In this event, the resumption of the
original Disability Period shall commence on the date such
Total Disability resumed.
7.4 Definition of Total Disability. For purposes of this
Agreement, 'Total Disability" shall mean the permanent and
total inability, by reason of physical or mental infirmity, or
both, of the Executive to perform his regular and customary
duties with the Company in a satisfactory manner. The total
and irrevocable loss of the sight of both eyes, or of the use
of both hands, or of both feet, or of one hand and one foot,
or of speech or hearing shall be considered Total Disability.
The determination of the existence or nonexistence of Total
Disability shall be made by the Board, pursuant to a medical
examination by a medical doctor licensed to practice medicine
in the state of North Carolina selected or approved by the
Board.
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ARTICLE 8. DEATH BENEFIT. Upon the expiration
of the Term on account of the Executive's death (as provided
in subparagraph (iii) of Section 3.1), the Company shall pay
to the Executive's designated beneficiary (as determined
pursuant to ARTICLE 16) an annual death benefit (the "Death
Benefit") equal to twenty-five percent (25%) of the
Executive's Average Base Salary (as defined in ARTICLE 6).
The Death Benefit shall be payable to the Executive's
designated beneficiary for three (3) years in approximately
equal monthly installments on the first day of each calendar
month commencing with the calendar month next following the
month in which the Term expires on account of the Executive's
death and continuing for thirty-five (35) consecutive calendar
months thereafter.
ARTICLE 9. DEATH FOLLOWING COMMENCEMENT OF PAYMENTS.
Upon the expiration of the Term under circumstances entitling
the Executive to receive payments pursuant to ARTICLES 6, 7 or
12, and if he shall die prior to receiving any or all of the
monthly installments to which he is due hereunder, then such
remaining monthly installments shall be payable to his
designated beneficiary (as determined pursuant to ARTICLE 16).
ARTICLE 10. OTHER EMPLOYEE BENEFITS. The Executive
shall be entitled to participate in any and all retirement,
health, disability, life insurance, long-term disability
insurance, nonqualified deferred compensation and tax-
qualified retirement plans or any other plans or benefits
offered by the Company to its executives generally, if and to
the extent the Executive is eligible to participate in
accordance with the terms and provisions of any such plan or
benefit program. Nothing in this ARTICLE 10 is intended, or
shall be construed, to require the Company to institute any
particular plan, program or benefit. Benefits payable
pursuant to this Agreement shall be in addition to benefits
payable to the Executive under all other employee benefit
plans or programs of the Company.
ARTICLE 11. VACATION AND SICK LEAVE. The Executive
shall be entitled to reasonable periods of vacation and sick
leave during each Employment Year, commensurate with his
position and in accordance with established Company policy.
The Executive shall continue to receive his Base Salary during
the time of his vacation and sick leave. Vacation and sick
leave not taken during the applicable Employment Year cannot
be accumulated and taken during a subsequent Employment Year
nor will the Executive be paid for vacation and sick leave not
taken.
ARTICLE 12. TERMINATION COMPENSATION.
12.1 Monthly Compensation. Upon the expiration of the
Term for any reason, the Executive shall be entitled to
continue to receive his Base Salary through the last day of
the month in which the Termination Date occurs (the
"Termination Month").
12.2 Compensation Continuance. In addition to the
compensation provided for in Section 12.1, upon the
termination of the Executive's employment by the Company's
exercise of the Notice Exception or by the Executive for Good
Reason, the Executive (or in the event of his subsequent
death, his designated beneficiary) shall be entitled to
continue to receive during the remainder of the Term following
the last day of the Termination Month (the "Compensation
Continuance Period"), the Base Salary (as increased each year
to reflect
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increases in the cost of living) that he would have received
pursuant to Section 4.1 during the Compensation Continuance
Period if the Term had not expired. During the Compensation
Continuance Period, the Executive shall (i) continue to
participate in all employee benefit plans or programs of the
Company (as described in ARTICLE 10), and (ii) be available at
reasonable times to provide consulting services to the
Company.
12.3 Special Severance Benefit. In addition to the
compensation provided for in Sections 12.1 and 12.2, upon the
termination of the Executive's employment by the Company's
exercise of the Notice Exception, or by the Executive for Good
Reason, or by the Company's giving notice which would cause
the Term to expire at the end of the Initial Term or at the
end of any succeeding Extension Period, the Executive (or in
the event of his subsequent death, his designated beneficiary)
shall be entitled to a special severance benefit (the
"Severance Benefit") equal to his Base Salary for the
Employment Year just completed, which Severance Benefit shall
be payable for one (1) year in approximately equal monthly
installments commencing on the first day of the month next
following the expiration of the Compensation Continuance
Period (or the last day of the Termination Month, as the case
may be), and continuing for eleven (11) consecutive calendar
months thereafter (the "Severance Period"). The Severance
Benefit payments shall be paid in accordance with the payroll
schedule for salaried personnel of the Company.
See ARTICLE 6 for additional benefits the Executive may
be entitled to receive following receipt of the compensation
provided for in this ARTICLE 12.
ARTICLE 13. POST-TERMINATION OBLIGATIONS. All
payments and benefits to the Executive under this Agreement
shall be subject to the Executive's compliance with the
following provisions during the Term and following the
termination of the Executive's employment:
13.1 Assistance in Litigation. The Executive shall, upon
reasonable notice, furnish such information and assistance to
the Company as may reasonably be required by the Company in
connection with any litigation in which it is, or may become,
a party, and which arises out of facts and circumstances known
to the Executive. The Company shall promptly reimburse the
Executive for his out-of-pocket expenses incurred in
connection with the fulfillment of his obligations under this
Section 13.1.
13.2 Confidential Information. The Executive shall not
disclose or reveal to any unauthorized person any trade secret
or other confidential information relating to the Company, its
subsidiaries or affiliates, or to any businesses operated by
them, and the Executive confirms that such information
constitutes the exclusive property of the Company; provided,
however, that the foregoing shall not prohibit the Executive
from disclosing such information to the extent necessary or
desirable in connection with obtaining financing for the
Company (or furnishing such information under any agreements,
documents or instruments under which such financing may have
been obtained) or otherwise disclosing such information to
third parties or governmental agencies in furtherance of the
interests of the Company; or as may be required by law.
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13.3 Noncompetition. The Executive shall not: (i) during the
Term and for the one-year period following the expiration of
the Term, without the prior written consent of the Company,
engage directly or indirectly, as a licensee, owner, manager,
consultant, officer, employee, director, investor or
otherwise, in any business in competition with the Company,
within the state of North Carolina; or (ii) usurp for his own
benefit any corporate opportunity under consideration by the
Company during his employment, unless the Company shall have
finally decided not to take advantage of such corporate
opportunity. The restrictions of part (i) of this Section
13.3 shall not apply if the employment of the Executive is
terminated by the Company's exercise of the Notice Exception
or by the Executive for Good Reason, and shall further not
apply to a passive investment by the Executive constituting
ownership of less than five percent (5%) of the equity of any
entity engaged in any business described in part (i) of this
Section 13.3. The Executive acknowledges that the possible
restrictions on his activities which may occur as a result
of his performance of his obligations under this
Section 13.3 are required for the reasonable protection of
the Company.
13.4 Failure to Comply. In the event that the Executive
shall fail to comply with any provision of this ARTICLE 13,
and such failure shall continue for ten (10) days following
delivery of notice thereof by the Company to the Executive,
all rights hereunder of the Executive and any person claiming
under or through him shall thereupon terminate and no person
shall be entitled thereafter to receive any payments or
benefits hereunder (except for benefits under employee benefit
plans or programs as provided in ARTICLE 10 which have been
earned or otherwise fixed or determined to be payable prior to
such termination). In addition to the foregoing, in the event
of a breach or threatened breach by the Executive of the
provisions of this ARTICLE 13, the Company shall have and may
exercise any and all other rights and remedies available to
the Company at law or otherwise, including but not limited to
obtaining an injunction from a court of competent jurisdiction
enjoining and restraining the Executive from committing such
violation, and the Executive hereby consents to the issuance
of such injunction.
ARTICLE 14. ADDITIONAL PAYMENTS BY COMPANY. In the
event that any amount required to be paid or distributed to
the Executive pursuant to this Agreement shall constitute a
parachute payment within the meaning of Section 28OG of the
Internal Revenue Code of 1986, as amended (the "Code"), and
the aggregate of such parachute payments and any other amounts
otherwise required to be paid or distributed to the Executive
by the Company shall cause the Executive to be subject to the
excise tax on excess parachute payments under Section 4999 of
the Code (the "Excise Tax"), or any successor or similar
provision thereof, the Company shall pay to the Executive an
additional amount (the "Gross-Up Payment") such that the net
amount the Executive shall receive after the payment of any
Excise Tax, shall equal the amount which he would have
received if the Excise Tax had not been imposed. The Gross-Up
Payment shall be the sum of the following:
(a) The rate of the Excise Tax multiplied by the
amount of the excess parachute payments;
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(101)
(b) Any federal income tax, social security tax,
unemployment tax or Excise Tax imposed upon the
Executive as a result of the Gross-Up Payment required
to be made under this ARTICLE 14; and
(c) Any state income or other tax imposed upon the
Executive as a result of the Gross-Up Payment required
to be made under this ARTICLE 14.
For purposes of determining the amount of the Gross-Up
Payment, the Executive shall be deemed to pay federal income
taxes at the highest marginal rate of federal income taxation
for individuals in the calendar year in which the Excise Tax
is required to be paid. In addition, the Executive shall be
deemed to pay state income taxes at a rate determined in
accordance with the following formula:
( 1 - (highest marginal rate of federal income
taxation for individuals)) x (highest marginal rate of
North Carolina income taxes for individuals in the
calendar year in which the Excise Tax is required to
be paid).
In the event the Executive is subject to the provisions
of Section 68 of the Code, the combined federal and state
income tax rate determined above shall be adjusted to reflect
any loss in the federal deduction for state income taxes on
the Gross-Up Payment.
The Gross-Up Payment shall be made not later than the
fifth (5th) day, or as soon thereafter as the Company deems
practicable, following the date the Executive becomes subject
to payment of the Excise Tax; provided, however, that if the
amount of such payment cannot be finally determined on or
before such day, the Company shall pay to the Executive on
such day an estimate, as determined in good faith by the
Company, of the minimum amount of such payment and shall pay
the remainder of such payment (together with interest at the
rate provided under Section 1274(b)(2)(B) of the Code) as soon
as the amount can be determined but no later than the
thirtieth (30th) day after the date the Executive becomes
subject to the payment of the Excise Tax. In the event the
amount of the estimated payment exceeds the amount
subsequently determined to have been due, such excess shall
constitute a loan by the Company to the Executive, payable on
the fifth (5th) day after demand by the Company (together with
interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account
hereunder at the time the Gross-Up Payment is made, the
Executive shall repay to the Company at the time that the
amount of such reduction in Excise Tax is finally determined,
the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax, federal and state taxes
imposed on the Gross-Up Payment being repaid by the Executive,
if such repayment results in a reduction in Excise Tax and/or
a federal or state tax deduction) plus interest on the amount
of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. In the event that the Excise Tax
is determined to exceed the amount taken into account
hereunder at the time the Gross-Up Payment is made, (including
by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional Gross-Up Payment in respect
of such excess (plus any interest payable with respect to such
excess) at the time that the amount of such excess is finally
determined.
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(102)
ARTICLE 15. ATTORNEYS' FEES. In the event that the
Executive incurs any attorneys' fees in protecting or
enforcing his rights under this Agreement or under any
employee benefit plans or programs sponsored by the
Company in which the Executive is a participant, the
Company shall reimburse the Executive for such reasonable
attorneys' fees and for any other reasonable expenses
related thereto. Such reimbursement shall be made within
thirty (30) days following final resolution of the
dispute or occurrence giving rise to such fees and
expenses.
ARTICLE 16. BENEFICIARY. The Executive shall name one
or more primary beneficiaries and one or more contingent
beneficiaries, who shall be entitled to receive any death
benefit payable under ARTICLE 8 or any benefits payable under
ARTICLE 9 due to the Executive's death following commencement
of payments under ARTICLES 6, 7 or 12, which beneficiary or
beneficiaries shall be subject to change from time to time by
notice in writing to the Board. A beneficiary may be a trust,
an individual or the Executive's estate. If the Executive
fails to designate a beneficiary, primary or contingent, then
and in such event, such benefit shall be paid to the surviving
spouse of the Executive or, if he shall leave no surviving
spouse, then to the Executive's estate. If a named
beneficiary entitled to receive any death benefit is not
living or in existence at the death of the Executive or dies
prior to asserting a written claim for any such death benefit,
then and in any such event, such death benefit shall e paid to
the other primary beneficiary or beneficiaries named by the
Executive who shall then be living or in existence, if any,
otherwise to the contingent beneficiary or beneficiaries named
by the Executive who shall then be living or in existence, if
any; but if there are no primary or contingent beneficiaries
then living or in existence, such benefit shall be paid to the
surviving spouse of the Executive or, if he shall leave no
surviving spouse, then to the Executive's estate. If a named
beneficiary is receiving or is entitled to receive payments of
any such death benefit and dies before receiving all of the
payments due him, any remaining benefits shall be paid to the
other primary beneficiary or beneficiaries named by the
Executive who shall then be living or in existence, if any,
otherwise to the contingent beneficiary or beneficiaries named
by the Executive who shall then be living or in existence, if
any; but if there are no primary or contingent beneficiaries
then living or in existence, the balance shall be paid to the
estate of the beneficiary who was last receiving the payments.
ARTICLE 17. DECISIONS BY COMPANY-, FACILITY OF
PAYMENT. Any powers granted to the Board hereunder may be
exercised by a committee, appointed by the Board, and such
committee, if appointed, shall have general responsibility for
the administration and interpretation of this Agreement.
Subject to and to the extent not inconsistent with the
provisions of ARTICLE 16, if the Board or the committee shall
find that any person to whom any amount is or was payable
hereunder is unable to care for his affairs because of illness
or accident, or is a minor, or has died, then the Board or the
committee, if it so elects, may direct that any payment due
him or his estate (unless a prior claim therefore has been
made by a duly appointed legal representative) or any part
thereof be paid or applied for the benefit of such person or
to or for the benefit of his spouse, children or other
dependents, an institution maintaining or having custody of
such person, any other person deemed by the Board or committee
to be a proper recipient on behalf of such person otherwise
entitled to payment, or any of them, in such manner and
proportion as the Board or committee may deem proper. Any
such payment shall be in complete discharge of the liability
of the Company therefor.
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(103)
ARTICLE 18. INDEMNIFICATION. The Company shall
indemnify the Executive during his employment and
thereafter to the maximum extent permitted by applicable
law for any and all liability of the Executive arising
out of, or in connection with, his employment by the
Company or membership on the Board; provided, that in no
event shall such indemnity of the Executive at any time
during the period of his employment by the Company be
less than the maximum indemnity provided by the Company
at any time during such period to any other officer or
director under and indemnification insurance policy or
the bylaws or charter of the Company or by agreement.
ARTICLE 19. SOURCE OF PAYMENTS: NO TRUST. 'Me
obligations of the Company to make payments hereunder shall
constitute a liability of the Company to the Executive. Such
payments shall be from the general funds of the Company, and
the Company shall not be required to establish or maintain any
special or separate fund, or otherwise to segregate assets to
assure that such payments shall be made, and neither the
Executive nor his designated beneficiary shall have any
interest in any particular asset of the Company by reason of
its obligations hereunder. Nothing contained in this
Agreement shall create or be construed as creating a trust of
any kind or any other fiduciary relationship between the
Company and the Executive or any other person. To the extent
that any person acquires a right to receive payments from the
Company hereunder, such right shall be no greater than the
right of an unsecured creditor of the Company.
ARTICLE 20. SEVERABILITY. All agreements and covenants
contained herein are severable, and in the event any of them
shall be held to be invalid by any competent court, this
Agreement shall be interpreted as if such invalid agreements
or covenants were not contained herein.
ARTICLE 21. ASSIGNMENT PROHIBITED. This Agreement is
personal to each of the parties hereto, and neither party may
assign nor delegate any of his or its rights or obligations
hereunder without first obtaining the written consent of the
other party; provided, however, that nothing in this ARTICLE
21 shall preclude (i) the Executive from designating a
beneficiary to receive any benefit payable under this
Agreement upon his death or (ii) the executors,
administrators, or other legal representatives of the
Executive or his estate from assigning any rights under this
Agreement to the person or persons entitled thereto.
ARTICLE 22. NO ATTACHMENT. Except as otherwise provided
in this Agreement or required by applicable law, no right to
receive payments under this Agreement shall be subject to
anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge or hypothecation 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 be null, void and of no
effect.
ARTICLE 23. HEADINGS. The headings of articles,
paragraphs and sections herein are included solely for
convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
ARTICLE 24. GOVERNING LAW. The parties intend that this
Agreement and the performance hereunder and all suits and
special proceedings hereunder shall be construed
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(104)
in accordance with and under and pursuant to the laws of the
State of North Carolina and that in any action, special
proceeding or other proceeding that may be brought arising out
of, in connection with, or by reason of this Agreement, the
laws of the State of North Carolina shall be applicable and
shall govern to the exclusion of the law of any other forum,
without regard to the jurisdiction in which any action or
special proceeding may be instituted.
ARTICLE 25. BINDING EFFECT. This Agreement shall be
binding upon, and inure to the benefit of, the Executive and
his heirs, executors, administrators and legal representatives
and the Company and its permitted successors and assigns.
ARTICLE 26. MERGER OR CONSOLIDATION. The Company will
not consolidate or merge into or with another corporation, or
transfer all or substantially all of its assets to another
corporation (the "Successor Corporation") unless the Successor
Corporation shall assume this Agreement, and upon such
assumption, the Executive and the Successor Corporation shall
become obligated to perform the terms and conditions of this
Agreement.
ARTICLE 27. COUNTERPARTS. This Agreement may be
executed simultaneously in one or more counterparts, each of
which shall be deemed an original but all of which together
shall constitute one and the same instrument.
ARTICLE 28. ENTIRE AGREEMENT. This Agreement expresses
the whole and entire agreement between the parties with
reference to the employment of the Executive and, as of the
effective date hereof, supersedes and replaces any prior
employment agreement, understanding or arrangement (whether
written or oral) between the Company and the Executive. Each
of the parties hereto has relied on his or its own judgment in
entering into this Agreement.
ARTICLE 29. NOTICES. All notices, requests and other
communications to any party under this Agreement shall be in
writing (including telefacsimile transmission or similar
writing) and shall be given to such party at its address or
telefacsimile number set forth below or such other address or
telefacsimile number as such party may hereafter specify for
the purpose by notice to the other party:
(a) If to the Executive:
Larry R. Corbett
1904 Eleanor Drive
Kinston, North Carolina 28501
(b) If to the Company:
Monk-Austin International, Inc.
1200 West Marlboro Road
P.O. Box 166
Farmville, North Carolina 27828
Fax Number: (919) 753-8200
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(105)
Each such notice, request or other communication shall be
effective (i) if given by mail, 72 hours after such
communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (ii) if given
by any other means, when delivered at the address
specified in this ARTICLE 29.
ARTTCLE 30. MODIFICATION OF AGREEMENT. No waiver or
modification of this Agreement or of any covenant, condition,
or limitation herein contained shall be valid unless in
writing and duly executed by the party to be charged
therewith. No evidence of any waiver or modification shall be
offered or received in evidence at any proceeding,
arbitration, or litigation between the parties hereto arising
out of or affecting this Agreement, or the rights or
obligations of the parties hereunder, unless such waiver or
modification is in writing, duly executed as aforesaid. The
parties further agree that the provisions of this ARTICLE 30
may not be waived except as herein set forth.
ARTICLE 31. SPECIAL- PROVISIONS RELATING TO STOCK
OPTIONS.
The Executive has been granted options to purchase shares of
common stock of Monk-Austin, Inc. pursuant to the Long-Term
Stock Investment Plan for Key Employees of Monk-Austin, Inc.
(the "Stock Option Plan") and has entered into a stock option
agreement with the Company (the "Stock Option Agreement") to
further the purposes of the Stock Option Plan. The Executive
acknowledges that the Company intends to amend the Stock
Option Plan to eliminate the provision which would provide for
the expiration and immediate vesting of stock options in the
event of a dissolution, liquidation, merger, share exchange or
change in control involving the Company (the "Stock Option
Plan Amendment"). The Executive agrees to enter into an
amendment to his Stock Option Agreement that is consistent
with the Stock Option Plan Amendment. In consideration of the
Executive's agreement to amend his Stock Option Agreement as
described above, the Company agrees to use its best efforts to
cause Monk-Austin, Inc. to agree to enter into a further
amendment to the Executive's Stock Option Agreement (which
amendment may be embodied in the amendment described in the
preceding sentence) that provides, upon the termination of the
Executive's employment by the Company's exercise of the Notice
Exception, or by the Executive for Good Reason, or by the
Company's giving notice which would cause the Term to expire
at the end of the Initial Term or at the end of any succeeding
Extension Period, all outstanding grants of stock options
(whether incentive stock options, non-qualified stock options
or reload options) and stock appreciation rights granted to
the Executive under the Stock Option Plan (or any successor or
replacement stock option plan) shall fully vest and become
immediately exercisable as of the Termination Date without
regard to any installment exercise limitations set forth in
the Stock Option Agreement (or any successor or replacement
stock option agreement).
ARTICLE 32. TAXES. To the extent required by
applicable law, the Company shall deduct and withhold all
necessary Social Security taxes and all necessary federal and
state withholding taxes and any other similar sums required by
law to be withheld from any payments made pursuant to the
terms of this Agreement.
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(106)
ARTICLE 33. RECITALS. The Recitals to this Agreement
are incorporated herein and shall constitute an integral
part of this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the day and year first above written.
EXECUTIVE:
/s/ Larry R. Corbett
____________________ (SEAL)
Larry R. Corbett
WITNESS:
/s/ James H. Felth
__________________________________
MONK-AUSTIN INTERNATTONAI, INC:
/s/ Albert C. Monk III
By: __________________________________
Albert C. Monk III
President or Vice President
Attest:
/s/ Thomas A. Lewis
_______________________________
Thomas A. Lewis
Secretary/Asst. Secretary
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(107)