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EXHIBIT 10.2
EXECUTIVE DEFERRED COMPENSATION
AND BUYOUT PLAN
THIS AGREEMENT, made and to become effective this 31st day of
March, 1998 (the "Effective Date") by and between RUSSELL CORPORATION
("Russell"), an Alabama corporation with its principal office at Alexander City,
Alabama and JOHN F. WARD, (the "Executive").
RECITALS:
Russell and the Executive have executed an Employment
Agreement dated as of the date of this Agreement, incorporated herein and
attached hereto as Appendix A (the "Employment Agreement"). Pursuant to the
terms of the Employment Agreement, the Executive shall be employed by Russell
for a term of three (3) years. The Executive is currently under an agreement
with his previous employer, Sara Lee Corporation ("Sara Lee"). By accepting
employment with Russell, the Executive will lose certain benefits and
opportunities under his agreements with Sara Lee. It is the wish of both Russell
and the Executive that the Executive be compensated for such lost benefits and
opportunities or that they be replaced with comparable benefits and
opportunities. Capitalized terms not otherwise defined herein shall have the
meanings given to them in the Employment Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations herein and the compensation that Russell agrees herein to pay the
Executive, and of other good and valuable consideration, the receipt of which is
hereby acknowledged, Russell and the Executive agree as follows:
ARTICLE I. RABBI TRUST. A Rabbi Trust, entitled the "Russell
Corporation Non-Qualified deferred Compensation Trust," shall be maintained for
the benefit of the Executive (the "Trust"). The Trust shall be irrevocable and
contain the amounts contributed pursuant to this Agreement and any interest or
income generated by such amounts. The Trust shall earn interest at a variable
rate (adjusted annually on the anniversary of the Effective Date) equal to the
Merrill Lynch Corporate Bond Rate published in The Wall Street Journal. In the
event of a Default Termination, as defined in Article VI, the funds in the Trust
shall be distributed in accordance with Article VI. After April 1, 2001 the
funds in the Trust shall be distributed to the Executive in a lump sum upon the
termination of the Executive's employment. The Trust Agreement shall be
substantially in the form of Appendix B to this Agreement with no substantive
changes which are not acceptable to the Executive and his professional advisors.
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ARTICLE II. STOCK OPTIONS.
2.1 Vested Stock Options. The Executive currently owns
124,109 options to purchase Sara Lee stock. Of these options, 109,775
are currently fully vested. It is understood that the Executive will
exercise these vested options. It is agreed that the exercise of these
options, however, does not fully compensate the Executive for the
opportunity lost by exercising the options. To compensate the Executive
for the lost opportunities created by the exercise of the Sara Lee
options, the Executive shall be granted 249,489 options to purchase
Russell stock effective as of the Effective Date (computed by
multiplying the 109,775 Sara Lee options by 56.666 (the Average of the
High and Low price for Sara Lee common stock for January 1,1998 through
January 31, 1998 (the "Sara Lee January Average")) divided by 24.933
(the Average of the High and Low price for Russell Corporation common
stock for January 1, 1998 through January 31, 1998 (the "Russell
January Average") (the "Conversion Ratio")). Subject to the provisions
of Article VI hereof, these Russell stock options shall be immediately
vested and exercisable any time within 54 months from the Effective
Date at a price determined by taking the average of the high and low
price for Russell common stock on the Effective Date as reported in The
Wall Street Journal.
2.2 Options That Will Not Vest Before Effective Date. The
Executive currently holds 14,334 options to purchase Sara Lee stock
that will not vest before the Effective Date. To fully compensate the
Executive for these options which will be lost, the Executive shall
receive:
(a) An amount to be placed in the Trust on the
Effective Date equal to $418,925.48 (calculated by subtracting
$393,329.96, the aggregate option price from the aggregate
market value of Sara Lee stock, computed using the Sara Lee
January Average).
(b) In order to compensate the Executive for the
opportunities lost through the forfeiture of the Sara Lee
stock options described in this Section 2.2, such options will
be replaced with options to purchase shares of Russell common
stock. The number of shares of Russell stock subject to
options to be received under this Section 2.2(b) shall be
32,577 (computed by multiplying 14,334 by the Conversion
Ratio). Subject to the provisions of Article VI hereof, such
options shall be effective as of the Effective Date,
immediately vested and exercisable any time within 54 months
from the Effective Date at a price determined by taking the
average of the high and low price for Russell common stock on
the Effective Date as reported in The Wall Street Journal.
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2.3 Notwithstanding the foregoing , if the Russell
shareholders fail to approve an amendment increasing the number of
options which may be granted annually to any one employee so that the
provisions of this Article 2 cannot be given full effect, any options
previously granted under this Article 2 in excess of this amount shall
lapse and be forfeited and in lieu of any grant of stock options
required by this Article 2 that would exceed the maximum amount that
can be granted under the Russell Stock Option Plan (the "Russell
Plan"), the Executive shall receive $3,841,510, an amount equal to the
agreed value of the options that would otherwise be granted to the
Executive under this Article 2, as determined pursuant to Exhibit A.
ARTICLE III. RESTRICTED STOCK. The Executive currently has the
right to receive 35,260 shares of Sara Lee restricted stock which will be
forfeited upon the Executive's commencement of employment with Russell. Russell
shall compensate the Executive for the value of such stock in cash. The amount
of such compensation shall be $1,998,043.16 (calculated by multiplying 35,260 by
the Sara Lee January Average) to be placed in the Trust by Russell on the
Effective Date. The amount received under this Article 3, shall be increased to
compensate the Executive for any dividends Sara Lee pays to its retired
employees who hold restricted stock under the 1989 plan at the time the
restrictions lapse.
ARTICLE IV. COMPENSATION. The Executive shall lose $302,350
in the form of the remainder of his Sara Lee compensation for 1998 which he
would have received given only the passage of time if he had not accepted
employment with Russell. This amount shall be provided to the Executive in
12,127 shares of Russell common stock (valued by using the January Average for
Russell Stock and rounded up to the nearest whole share). Two-thirds (2/3) of
the shares of Russell Stock received under this Article IV shall be restricted
from resale and bear a restriction stating that sale of the shares may be only
in accordance with this Agreement. One-third of the stock shall become
unrestricted upon each of the next two anniversaries of the Effective Date.
ARTICLE V. RETIREMENT PLANS.
5.1 SERP. The Executive is a participant in Sara Lee's defined
benefit retirement plans for executives including qualified plans and a
Supplemental Executive Retirement Plan ("SERP"). A portion of the SERP
benefit has been funded using a grantor revocable trust ("Secular
Trust") at Northern Trust in Chicago with Northern Trust as Trustee and
the Executive as grantor. Russell shall compensate the Executive
$1,880,000 (the preliminary estimate of what would have been the
required SERP balance on January 1, 1999 less the current balance in
the account increased by the amount of all applicable income and other
payroll taxes (the "Preliminary Estimate")). As soon as practicable
after September 21, 1998, the final amount due to the Executive under
this Section 5.1 (the "Final Amount") shall be determined. Any amount
by which the Final Amount exceeds the Preliminary Estimate shall be
paid to the Executive by Russell. Any amount by which the Preliminary
Estimate shall exceed the Final Amount shall be paid to Russell by the
Executive.
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5.2 Estate Builder Program. The Executive currently
participates in the Sara Lee Estate Builder Program (the "Program").
The Program is a Sara Lee deferral program under which deferred amounts
earn interest at a rate well above market. The Executive will be
penalized under this Program for accepting employment with Russell. To
compensate the Executive for this lost benefit, Russell shall make a
cash payment to the Trust of $50,611.
5.3 ESOP. The Executive shall be compensated for the amount of
incremental credit he would have received under his Employee Stock
Ownership Plan at Sara Lee as if he had not accepted employment with
Russell. The value of the addition that would have been made to the
Sara Lee ESOP between the Effective Date and January 1, 1999 shall be
paid into the Trust. This value, not to exceed $50,000 unless approved
by the Russell Compensation Committee, shall be determined no later
than September 30, 1999 and deposited in the Trust as soon as the final
amounts are calculated.
ARTICLE VI. TERMINATION. The Executive shall receive all
compensation and benefits provided for under this agreement unless his
employment is terminated before April 1, 2001 in a Default Termination. A
Default Termination shall mean a termination either by Russell For Cause (as
defined in the Employment Agreement) or by the Executive for any reason other
than: Good Reason, Death or Total Disability, as those terms are defined in the
Employment Agreement. In the event of a Default Termination, certain
compensation and benefits provided for under this Agreement shall be forfeited
as follows:
(a) Upon the event of a Default Termination, the Executive
shall receive a lump sum payment from the Trust. The amount of this
payment shall be calculated by multiplying the total amount in the
Trust on the day of the Default Termination (the "Default Date") by a
fraction, the numerator of which shall be the number of days from the
Effective Date to the Default Date (including both the Effective Date
and the Default Date) and the denominator of which shall be 1,095. The
Executive shall also receive in the same proportion provided for above
any amount to be placed in the Trust under this Agreement that has not
been placed in the Trust as of the Default Date.
(b) Any stock received under Article 4 that is still
restricted on the date of the Default Termination shall be forfeited by
the Executive.
(c) Upon a Default Termination the Executive shall forfeit and
surrender to Russell a number of the options granted to him under
Article 2 hereof equal to the total number of options granted to him
under Article 2 hereof multiplied by a fraction, the numerator of which
shall be the number of days between the Default Date and March 31, 2001
(including both the Default Date and March 31) and the denominator of
which shall be 1,095. If the number of options required to be forfeited
by the Executive under the immediately preceding sentence exceeds the
number of options granted to the Executive under Article 2 hereof that
have not been exercised by the Executive (such excess being hereinafter
referred to as the "Excess Options"), then the Executive shall pay to
Russell within ten (10) days of the Default Date an amount of cash
equal to the Spread. The "Spread" means an amount equal to (x) the
average of the high and low price on the date of acquisition of each
share of Russell stock acquired by the Executive pursuant to the
exercise of any Options granted to the Executive under Article 2
hereof, (y) minus the amount paid by the Executive for such share of
Russell stock pursuant to the exercise of such options, (z) multiplied
by a fraction, the numerator of which shall be the number of Russell
shares that have been acquired upon the exercise of the Excess Options,
and the denominator of which shall be the total number of
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Russell shares previously acquired by the Executive pursuant to the
exercise of options granted to him under Article 2 hereof. For purposes
hereof, the Executive shall be deemed to have been granted a number of
options under Article 2 hereof equal to the total number of shares of
Russell stock that can be acquired pursuant to the exercise of such
options.
ARTICLE VII. REDUCTION OF BENEFITS. The Executive and Russell
acknowledge and agree that the amounts required to be paid to or for the benefit
of the Executive hereunder, including the stock options provided for in Section
2.2 hereof received in exchange for the Sara Lee stock options that will not
have vested before the Effective Date (the "Stock Options"), are being paid in
the belief that the Executive will forfeit certain benefits and opportunities
under his agreements with Sara Lee by reason of his accepting employment with
Russell. If, contrary to such belief, any such benefit or opportunity for which
the Executive is being compensated or which are being replaced hereunder is not
lost or forfeited as a result of his accepting employment with Russell, and such
benefit is actually received by the Executive from Sara Lee then appropriate
adjustments shall be made to the amounts previously paid, or to the amounts
required to be paid, to the Executive hereunder, including any appropriate
adjustment to the Stock Options, and, if so required as a result of any such
adjustment, the Executive shall reimburse Russell for any excess amounts
previously paid to him.
ARTICLE VIII. GENERAL PROVISIONS.
8.1 Governing Law. This Agreement shall be interpreted
under the laws of the State of North Carolina.
8.2 Nonassignability. Benefits under this Agreement shall
not be subject to anticipation or assignment by any person entitled
thereto.
8.3 Binding Agreement. This Agreement shall be binding
and inured to the benefit of the Executive, his executors,
administrators, heirs and next of kin, and Russell, its successors and
assigns.
8.4 Merger or Consolidation. Russell shall not
consolidate or merge into or with another corporation or entity, or
transfer all or substantially all of its assets to another corporation,
partnership, trust or other entity unless such entity shall assume the
rights, obligations and liabilities of Russell under the agreement and
upon such assumption, shall become obligated to perform the terms and
conditions of the agreement.
8.5 Waiver. No term or condition of this Agreement shall
be deemed to have been waived, nor shall there be any estoppel against
the enforcement of any provision of this Agreement, except by written
instrument of the party charged with such waiver, and any such waiver
shall operate only as to the specific term or condition waived and
shall not constitute a waiver of such term or condition for the future
or as to any act other than that specifically waived.
8.6 Amendment; Termination. This Agreement may not be
amended or terminated except by an instrument in writing signed by the
parties hereto.
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8.7 Recitals. The recitals to this Agreement shall become
part of this Agreement.
8.8 Funding. This Agreement is intended to be an unfunded
plan of deferred compensation maintained for a highly compensated
management employee. The obligations of Russell to make payments
hereunder shall constitute a general unsecured obligation of Russell to
the Executive. To the extent that any person acquires a right to
receive payments from the Trust or Russell hereunder, such right shall
be no greater than the right of an unsecured creditor of Russell.
IN WITNESS WHEREOF, this Agreement has been executed by and in
behalf of the parties hereto on the day and year first above written.
RUSSELL CORPORATION
By:/s/ John C. Adams
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John C. Adams
Chairman of the Board, President and
Chief Executive Officer
/s/ John F. Ward
----------------------------------------
JOHN F. WARD
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APPENDIX A
EMPLOYMENT AGREEMENT (SEE EXHIBIT 10.1)
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APPENDIX B
RUSSELL CORPORATION
NON-QUALIFIED DEFERRED COMPENSATION TRUST
THIS TRUST AGREEMENT, made as of the___ day of ____, 1998, by
and between Russell Corporation (the "Company") and ________________
("Trustee").
RECITALS:
WHEREAS, the Company has entered into an Executive Deferred
Compensation and Buyout Plan (the "Plan") with John F. Ward (the "Executive"),
that creates a nonqualified deferred compensation plan; and
WHEREAS, the Company wishes to establish a Rabbi Trust in
accordance with Revenue Procedures 92-64 and 92-65 (hereinafter called the
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of the Company's creditors in the event of the Company's
insolvency, as herein defined, until paid to the Executive and/or his
beneficiaries in such manner and at such times as specified in the Plan; and
WHEREAS, it is the intention of the parties that this Trust
shall constitute an unfunded arrangement and shall not affect the status of the
Plan as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
and
WHEREAS, it is the intention of the Company to make
contributions to the Trust as required by the Plan to provide itself with a
source of funds to assist it in meeting its liabilities under the Plan;
NOW, THEREFORE, the parties do hereby establish the Trust and
agree that the Trust shall be comprised, held and disposed of as follows:
Section 1. Establishment of Trust.
(a) The Company hereby establishes the Trust with the
Trustee, consisting of such assets as may be contributed to the Trust
from time to time. The Trustee hereby agrees and consents to serve as
Trustee of the Trust and accepts the Trust on the terms and subject to
the provisions set forth herein and agrees to discharge and perform
fully and faithfully all of the duties and obligations imposed upon it
under the Trust. Upon the execution of this Trust Agreement, the
Company hereby deposits with the Trustee in trust $_________, which
amount shall become the principal of the Trust to be held, administered
and disposed of by Trustee as provided in this Trust Agreement.
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(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which
the Company is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter 1A of the Internal Revenue Code of 1986, as
amended, and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon
shall be held separate and apart from other funds of the Company and
shall be used exclusively for the uses and purposes of the Executive
and general creditors as herein set forth. The Executive and his
beneficiaries shall have no preferred claim on, or any beneficial
interest in, any asset of the Trust. Any rights created under the Plan
and this Trust Agreement shall be mere unsecured contractual rights of
the Executive and his beneficiaries against the Company. Any assets
held by the Trust will be subject to the claims of the Company's
general creditors under federal and state law in the event of
insolvency, as defined in Section 3(a) herein.
Section 2. Payments to the Executive and his Beneficiaries.
(a) Except as otherwise provided herein, Trustee shall
make payments to the Executive and his beneficiaries in accordance with
the provisions of the Plan and Section 2(b) of this Trust Agreement.
The Trustee shall make provision for the reporting and withholding of
any federal, state or local taxes that may be required to be withheld
with respect to the payment of benefits pursuant to the terms of the
Plan and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported, withheld
and paid by the Company.
(b) Except for a claim for benefits under the Plan
involving a question of whether a termination of the Executive's
employment by the Company prior to April 1, 2001 was a Default
Termination (defined in the Plan, such a claim herein a "Termination
Claim"), all other claims by the Executive or his beneficiaries for
benefits under the Plan shall be directed and determined by the
Trustee's designee selected from among Jean G. Ward, Murray C. Greason,
Jr., Donald R. Saunders or Franklin R. Ward. All claims shall be in
writing. A Termination Claim shall be decided by a majority of the
Trustee, Murray C. Greason, Jr. (or if he is not available to serve,
another senior partner of Womble Carlyle Sandridge & Rice, PLLC) and
Herschel M. Bloom (or if he is not available to serve, the Chairman of
the Compensation Committee of the Board of Directors of the Company),
herein the "Termination Panel". Any denial by the Trustee's designee or
the Termination Panel of a claim for benefits under the Plan shall be
delivered to the claimant in writing and shall set forth the specific
reasons for the denial, the specific provisions of the Plan relied
upon, a description of any additional materials or information
necessary to perfect the claim and an explanation of why such material
or information is necessary, and appropriate information
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as to the steps to be taken if the claimant wishes to submit the claim
for review. The Trustee's designee or the Termination Panel shall
further allow the claimant to request a review of a denied claim upon
written application to the Trustee's designee or the Termination Panel
within sixty (60) days after notification by the Trustee's designee or
the Termination Panel that the claim has been denied. In connection
with such a review, the claimant (or his or her duly authorized
representative) may review pertinent documents and submit issues and
comments in writing. Within sixty (60) days after receipt of a written
request for review, the Trustee's designee or the Termination Panel
shall provide the claimant a written decision on review, which shall be
written in a manner calculated to be understood by the claimant and
shall set forth specific reasons for the decision and specific
references to pertinent plan provisions on which the decision is based.
(c) The Company may make payment of benefits directly to
the Executive or his beneficiaries as they become due under the terms
of the Plan. The Company shall notify Trustee of its decision to make
payment of benefits directly prior to the time amounts are payable to
the Executive or his beneficiaries and provide evidence to the Trustee
that such benefits have been paid. In addition, if the principal of the
Trust, and any earnings thereon, are not sufficient to make payments of
benefits in accordance with the terms of the Plan, the Company shall
make the balance of each such payment as it falls due. The Trustee
shall notify the Company if principal and earnings are not sufficient.
Section 3. Trustee Responsibility Regarding Payments to Trust
Beneficiaries when Company is Insolvent.
(a) The Trustee shall cease payment of benefits to the
Executive and his beneficiaries if the Company is insolvent. The
Company shall be considered "insolvent" for purposes of this Trust
Agreement if (i) the Company is unable to pay its debts as they become
due, or (ii) the Company is subject to a pending proceeding as a debtor
under the United States Bankruptcy Code.
(b) At all times during the continuation of this Trust,
as provided in Section 1(d) hereof, the principal and income of the
Trust shall be subject to the claims of general creditors of the
Company under federal and state law as set forth below.
(1) The Board of Directors and the Chief
Executive Officer of the Company shall have the duty to inform
the Trustee in writing of the Company's insolvency. If the
person claiming to be a creditor of the Company alleges in
writing to the Trustee that the Company has become insolvent,
the Trustee shall determine whether the Company is insolvent
and, pending such determination, the Trustee shall discontinue
payment of benefits to the Executive or his beneficiaries.
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(2) Unless the Trustee has actual knowledge of
the Company's insolvency, or has received notice from the
Company or a person claiming to be a creditor alleging that
the Company is insolvent, the Trustee shall have no duty to
inquire whether the Company is insolvent. The Trustee may in
all events rely on such evidence concerning the Company's
insolvency as may be furnished to the Trustee and that
provides the Trustee with a reasonable basis for making a
determination concerning the Company's insolvency.
(3) If at any time the Trustee determines that
the Company is insolvent, the Trustee shall discontinue
payments to the Executive or his beneficiaries and shall hold
the assets of the Trust for the benefit of the Company's
general creditors. Nothing in this Trust Agreement shall in
any way diminish any rights of the Executive or his
beneficiaries to pursue his rights (or their rights) as
general creditors of the Company with respect to benefits due
under the Plan or otherwise.
(4) The Trustee shall resume the payment of
benefits to the Executive or his beneficiaries in accordance
with Section 2 of this Trust Agreement only after the Trustee
has determined that the Company is not insolvent (or is no
longer insolvent).
(c) Provided that there are sufficient assets, if the
Trustee discontinues the payment of benefits from the Trust pursuant to
Section 3(a) hereof and subsequently resumes such payments, the first
payment following such discontinuance shall include the aggregate
amount of all payments due to the Executive or his beneficiaries under
the terms of the Plan for the period of such discontinuance, less the
aggregate amount of any payments made to the Executive or his
beneficiaries by the Company in lieu of payments provided for hereunder
during any such period of discontinuance.
Section 4. Investment Authority. The Trustee shall be
responsible for investing and reinvesting the assets of the Trust. In no event
may the Trustee invest in securities (including stock or rights to acquire
stock) or obligations issued by the Company, other than a deminimus amount held
in common investment vehicles in which the Trustee invests. All rights
associated with assets of the Trust shall be exercised by the Trustee or the
person designated by the Trustee, and shall in no event be exercisable by or
rest with the Executive.
Section 5. Disposition of Income.
(a) During the term of this Trust, all income received by
the Trust, net of expenses and taxes, shall be accumulated and
reinvested.
(b) If, at the end of each fiscal year of the Trust (as
defined in Section 11(d)) or at the date the Trust terminates, as the
case may be, the Trust has not earned interest at a rate at least equal
to the Merrill Lynch Corporate Bond Rate ("Index Rate") published in
the Wall Street Journal, and adjusted annually calculated on a
cumulative and aggregate basis for the period from the Effective Date
(defined in the Plan) or such later date as a particular contribution
to the Trust shall be required to be made by the Plan (with respect to
the amount
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of that particular contribution) through the end of such fiscal year of
the Trust (or the termination date, as the case may be), the Company
shall make an irrevocable contribution to the Trust for the amount by
which the interest earned by the Trust for that trust year falls below
what would have been earned by the Trust under the Index Rate.
Section 6. Resignation and Removal of Trustee.
(a) The Trustee may resign at any time by written notice
to the Company, which shall be effective ten days after receipt of such
notice unless the Company and Trustee agree otherwise.
(b) The Trustee may be removed at any time by the Company
by providing 30 days written notice to the Trustee, or upon shorter
notice if agreed to by Trustee.
(c) Upon resignation or removal of the Trustee and
appointment of a successor Trustee, all assets shall subsequently be
transferred to the successor Trustee. The transfer shall be completed
within thirty (30) days after receipt of notice of resignation, removal
or transfer, unless the Company extends the time limit.
(d) If the Trustee resigns or is removed, a successor
shall be appointed, in accordance with Section 7 hereof, by the
effective date of resignation or removal under paragraph(s) (a) or (b)
of this section. If no such appointment has been made, the Trustee may
apply to a court of competent jurisdiction for appointment of a
successor or for instructions. All expenses of the Trustee in
connection with the proceeding shall be allowed as administrative
expenses of the Trust.
Section 7. Appointment of Successor. If the Trustee resigns
(or is removed) in accordance with Section 6(a) or (b) hereof, the Company may
appoint any third party approved by the Executive (which approval shall not be
unreasonably withheld), such as a bank, trust department or other party that may
be granted corporate trustee powers under state law, as a successor to replace
the Trustee upon resignation or removal. The appointment shall be effective when
accepted in writing by the new Trustee, who shall have all of the rights and
powers of the former Trustee, including ownership rights in the Trust assets.
The former Trustee shall execute any instrument necessary or reasonably
requested by the Company or the successor Trustee to evidence the transfer.
Section 8. Accounting by Trustee. The Trustee shall keep
accurate and detailed records of all investments, receipts, disbursements and
all other transactions required to be made, including such specific records as
shall be agreed upon in writing between the Company, the Executive and the
Trustee. Within sixty (60) days following the close of each calendar year and
within sixty (60) days after the removal or resignation of the Trustee, the
Trustee shall deliver to the Company and the Executive a written account of its
administration of the Trust during such year or during the period from the close
of the last preceding year to the date of such removal or resignation, setting
forth all investments, receipts, disbursements and other transactions effected
by it, including
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a description of all securities and investments purchased and sold with the cost
or net proceeds of such purchases or sales (accrued interest paid or receivable
being separately), and showing all cash, securities and other property held in
the Trust at the end of such year or as of the date of such removal or
resignation, as the case may be.
Section 9. Responsibility of Trustee.
(a) The Trustee shall act with the care, skill, prudence
and diligence under the circumstances then prevailing that a prudent
person acting in like capacity and familiar with such matters would use
in the conduct of an enterprise of a like character and with like aims,
provided, however, that the Trustee shall incur no liability to any
person for any action taken pursuant to a direction, request or
approval given by the Company which is contemplated by, and in
conformity with, the terms of the Plan(s) or this Trust and is given in
writing by the Company and approved in writing by the Executive (which
approval shall not be unreasonably withheld). In the event of a dispute
between the Company and a party, the Trustee may apply to a court of
competent jurisdiction to resolve the dispute.
(b) The Trustee shall have, without exclusion, all powers
conferred on the Trustee by applicable law, unless expressly provided
otherwise herein, provided, however, that if an insurance policy is
held as an asset of the Trust, the Trustee shall have no power to name
a beneficiary of the policy other than the Trust, to assign the policy
(as distinct from conversion of the policy to a different form) other
than to a successor Trustee, or to loan to any person the proceeds of
any borrowing against such policy.
Section 10. Amendment or Termination.
(a) This Trust Agreement may be amended only by a written
instrument executed by Trustee and the Company.
(b) The Trust shall not terminate until the date on which
the Executive and his beneficiaries are no longer entitled to benefits
pursuant to the terms of the Plan. Upon termination of the Trust any
assets remaining in the Trust shall be returned to the Company.
Section 11. Miscellaneous.
(a) Any provision of this Agreement prohibited by law
shall be ineffective to the extent of any such prohibition, without
invalidating the remaining provisions hereof.
(b) Benefits payable to the Executive and his
beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged, encumbered
or subjected to attachment, garnishment, levy, execution or other legal
or equitable process.
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(c) This Trust Agreement shall be governed by and
construed in accordance with the laws of North Carolina.
(d) The fiscal year of the Trust shall be the twelve
month period ending on December 31 of each year.
(e) The Trust Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original.
(f) The recitals to this Trust Agreement shall become
part of this Trust Agreement.
IN WITNESS WHEREOF, the Trust has been duly executed by the
parties hereto on the day and year first above written.
RUSSELL CORPORATION
By:
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K. Roger Holliday, Treasurer
ATTEST:
- -------------------------
Secretary
[Corporate Seal]
WACHOVIA BANK, N.A., TRUSTEE
By:
---------------------------------------
Joe O. Long, Senior Vice President
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EXHIBIT A
ARTICLE 2.3 - EXECUTIVE DEFERRED COMPENSATION AND BUYOUT PLAN
LET A = 124.109 OPTIONS TO PURCHASE SARA LEE COMMON STOCK
B = PRICE/SHARE OF SARA LEE COMMON STOCK
FV = FUTURE VALUE, ASSUMING 13% GROWTH (COMPOUNDED
ANNUALLY) FOR 4.5 YEARS; FACTOR = 1.733217
PV = PRESENT VALUE, ASSUMING A DISCOUNT RATE OF 6.9005%
(EQUIVALENT TO A PRE-TAX RATE OF 13%, GIVEN
A MARGINAL TAX RATE OF 46.919%) FOR 4.5
YEARS; FACTOR = .740613.
ASSUME A MARGINAL TAX RATE OF 46.919% FOR ALL YEARS (37.719% FEDERAL, 7.75%
STATE, 1.45% MEDICARE).
FORMULA:
PV[FV(A x B) - (A x B)]
EXAMPLE (SARA LEE PRICE = $57/SHARE):
.740613 [ 1.733217(124,109 x 57.00) - (124,109 x 57.00) ] =
.740613 [ 12,261,146 - 7,074,213 ] =
$3,841,510
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