EMPLOYMENT AND NON-SOLICITATION
AGREEMENT
THIS
EMPLOYMENT AND NON-SOLICITATION AGREEMENT
(“Agreement”), dated as of June 10, 2009, is by
and between DELTA APPAREL, INC., a Georgia corporation
(“Company”), and Robert W. Humphreys, a South Carolina
resident (“Executive”).
WHEREAS, Executive
and the Company want to enter into a written agreement providing
for the terms of Executive’s employment by the
Company.
NOW, THEREFORE, in
consideration of the mutual covenants set forth herein, and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as
follows:
1.
Employment . Executive agrees to continue Executive’s
employment with the Company, and the Company agrees to employ
Executive, on the terms and conditions set forth in this Agreement.
Executive agrees during the term of this Agreement to devote
substantially all of his business time, efforts, skills and
abilities to the performance of his duties to the Company and to
the furtherance of the Company’s business.
Executive’s
job title will be Chairman of the Board of Directors and Chief
Executive Officer and his duties will be those as are designated by
the Board of Directors of the Company.
(a)
Base Salary . During the term of Executive’s
employment with the Company pursuant to this Agreement, the Company
shall pay to Executive as compensation for his services an annual
base salary of not less than $690,000 (Base Salary).
Executive’s Base Salary will be payable in arrears in
accordance with the Company’s normal payroll procedures and
will be reviewed annually and subject to upward adjustment at the
discretion of the Compensation Committee of the Company’s
Board of Directors and confirmed by the full Board of
Directors.
(b)
Incentive Bonus . During the term of Executive’s
employment with the Company pursuant to this Agreement, Executive
shall be entitled to participate in the Company’s Short-Term
Incentive Compensation Plan as in effect from time to time. The
Executive’s Base Short-Term Incentive Compensation Base will
be $600,000 during fiscal year 2010, $625,000 during fiscal year
2011, and $650,000 during fiscal year 2012. Calculation of the
Executive’s Short-Term Incentive Compensation will be the
same as approved annually by the Board of Directors for the Delta
Apparel, Inc. Short-Term Incentive Compensation Participants. The
maximum payout to the Executive from the Short-Term Incentive
Compensation Plan is $1,500,000 for any single fiscal year. Any
cash compensation payable under this paragraph shall be referred to
as “Incentive Compensation” in this
Agreement.
(c)
Incentive Stock. During the term of the Executive’s
employment with the Company pursuant to this Agreement, Executive
will participate in the Delta Apparel, Inc. Incentive Stock Award
Plan (“Plan”). Under the service participation of the
Plan the Executive will receive a grant on June 29, 2009 that
provides a two year award of 30,000 shares per year of Delta
Apparel, Inc. Stock upon the filing with the Securities and
Exchange Commission of the Company’s Form 10K for each
of the fiscal years 2010 and 2011. Under the service participation
of the Plan the Executive will receive an annual grant on
June 27, 2011 that provides an annual award of 30,000 shares
of Delta Apparel, Inc. Stock upon the filing with the Securities
and Exchange Commission of the Company’s Form 10K for
fiscal year 2012. If shares are not available on the date of the
award, a cash award will be made to the Executive in the amount of
the value of the award as of the close of the market on the date of
the award. In addition, at or about such time the Company shall pay
the Executive in cash an amount which will be approximately
sufficient, after the payment of all applicable federal and state
income taxes attributable to such payment, to pay the federal and
state income taxes which the Participant will incur by virtue of
the vesting of such Award (or portion thereof) whether received in
the form of stock or cash. In the event the Executive’s
employment is terminated other than for Cause as defined in Section
4(b) of the Agreement, the full award will be made for the fiscal
year in which the Executive’s employment is
terminated.
(d)
Executive Fringe Benefits . During the term of
Executive’s employment with the Company pursuant to this
Agreement, Executive shall be entitled to receive such executive
fringe benefits as are provided to the executives in comparable
positions under any of the Company’s plans and/or programs in
effect from time to time for which Executive is eligible to
participate and to receive such other benefits as are customarily
available to executives of the Company, including, without
limitation, vacations and life, medical and disability
insurance.
(e)
Tax Withholding . The Company shall have the right to deduct
from any compensation payable to Executive under this Agreement
social security (FICA) taxes and all federal, state,
municipal, foreign or other taxes or charges as may now be in
effect or that may hereafter be enacted or required.
(f)
Expense Reimbursements . The Company shall pay or reimburse
Executive for all reasonable business expenses incurred or paid by
Executive in the course of performing his duties hereunder,
including, but not limited to, reasonable travel expenses for
Executive. As a condition to such payment or reimbursement,
however, Executive shall maintain and provide to the Company
reasonable documentation and receipts for such expenses.
3.
Term . Unless sooner terminated pursuant to Section 4
of this Agreement, and subject to the provisions of Section 5
and Section 6 hereof, the term of this Agreement (the
“Term”) shall commence as of the first day of fiscal
year 2010 and shall continue until the date of the filing with the
Securities and Exchange Commission of the Company’s
Form 10K for fiscal year 2012.
4.
Termination . Notwithstanding the provisions of
Section 3 hereof, but subject to the provisions of
Section 5 and Section 6 hereof, Executive’s
employment under this Agreement shall terminate as
follows:
(a)
Death . Executive’s employment shall terminate upon
the death of Executive; provided, however, that the Company shall
continue to pay (in accordance with its normal payroll procedures)
the Base Salary to Executive’s estate for a period of six
(6) months after the date of Executive’s death if
Executive is employed by the Company the on date of his
death.
(b)
Termination for Cause . The Company may terminate
Executive’s employment at any time for “Cause”
(as hereinafter defined) by delivering a written termination notice
to Executive. For purposes of this Agreement, “Cause”
shall mean the Executive is convicted of a felony.
(c)
Termination Without Cause . The Company may terminate
Executive’s employment at any time for any or no reason by
delivering a written termination notice to Executive.
(d)
Termination by Executive . Executive may terminate his
employment at any time by delivering one hundred eighty
(180) days prior written notice to the Board of Directors of
the Company; provided, however, that the terms, conditions and
benefits specified in Section 5 hereof shall apply or be
payable to Executive only if such termination occurs as a result of
a material breach by the Company of any provision of this Agreement
which breach is not cured within ten (10) days after the Board of
Directors of the Company receives from Executive a written notice
detailing such breach.
(e)
Termination Following Disability . In the event Executive
becomes “disabled” (as defined below), the Company may
terminate Executive’s employment by delivering a written
termination notice to Executive. Notwithstanding the foregoing,
Executive shall continue to receive his full Base Salary and
benefits to which he is entitled under this Agreement for a period
of six (6) months after the effective date of such
termination. For purposes of this section, the Executive shall be
considered disabled if the Executive (i) is unable to engage
in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period
of not less than 12 months, or (ii) is, by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three
(3) months under the Company’s disability insurance
policy and/or salary continuation policy as in effect on the date
of such disability.
(f)
Payments . Subject to any limitations under
Section 409A of the Internal Revenue Code of 1986, as amended
(“Code”), and related Treasury Regulations, following
any expiration or termination of this Agreement or
Executive’s employment hereunder, and in addition to (but not
in duplication of) any amounts owed pursuant to Section 5 or
Section 6 hereof, the Company shall pay to Executive all
amounts earned by Executive hereunder prior to the date of such
expiration or termination.
(g)
Non-Disparagement . Executive agrees that during and
following the termination of his employment he will not publicly
(or in a manner he reasonably should have expected to be made
public) disparage or otherwise make negative comments regarding the
Company, its employees or its affiliates, provided, however, that
the foregoing shall in no way restrict the Executive from in good
faith reporting any concerns that he may have to (i) any
authority within the Company designated to receive complaints or
concerns from employees, including, without limitation, the
Company’s Board of Directors or a committee thereof, or
(ii) any regulator or other governmental authority with
supervisory responsibility for the Company (including, without
limitation, the Securities and Exchange Commission) or the
Company’s independent auditors.
5.
Certain Termination Benefits . In the event that:
(i)
the provisions of Section 6 do not apply;
(ii)
either the Company terminates Executive’s employment without
Cause pursuant to Section 4(c) or Executive terminates his
employment pursuant to Section 4(d) as a result of an uncured
material breach by the Company of any provision of this Agreement;
and
(iii)
the Executive executes and delivers the release contemplated in
subsection (e) below, then in such case the Company will provide
Executive the benefits described in subsection (a) below and,
if and to the extent that Executive is eligible to participate in
such plans, subsections (b) through (c) below.
(a)
Base Salary and Incentive Compensation . The Company shall
pay to Executive (i) his Base Salary (as in effect as of the date
of his termination) and (ii) Incentive Compensation (in an
aggregate amount as follows:
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Years of Service
with
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Base
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Payout
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The Company
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Salary
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Incentive
Compensation
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Period
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3 months
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25% of the Short Term Incentive Plan
award for the most recent full fiscal year prior to
termination
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3 months
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6 months
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50% of the Short Term Incentive Plan
award for the most recent full fiscal year prior to
termination
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6 months
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9 months
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75% of the Short Term Incentive Plan
award for the most recent full fiscal year prior to
termination
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9 months
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12 months
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100% of the Short Term Incentive
Plan base award for the full fiscal year in which the termination
occurs
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12 months
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To the extent
permitted under Code Section 409A, the sum of applicable Base
Salary and Incentive Compensation shall be divided into equal
monthly payments and paid to the Executive over the applicable
Payout Period shown in the table above, depending on the
Executive’s years of service at the time of
termination.
(b)
Life and Group Disability Insurance . If and to the extent
that the Company’s plans in effect from time to time permit
such coverage and to the extent permitted under Code
Section 409A, the Company shall continue to provide Executive
with group life and disability insurance coverage for the
applicable Payout Period described above in (a) following
termination at coverage levels and rates equal to those applicable
to Executive immediately prior to such termination or, if
different, as provided to other executive level employees during
such applicable period.
(c)
Medical Insurance . Upon termination of employment, the
Executive shall be entitled to all COBRA continuation benefits
available under the Company’s group health plans to similarly
situated employees. To the extent permitted under Code
Section 409A, during the applicable Payout Period, the Company
shall provide such COBRA continuation benefits to the Executive at
the active employee rates similarly situated employees must pay for
such benefits. Upon the expiration of such Payout Period, the
Executive will be responsible for paying the full COBRA premiums
for the remaining COBRA continuation period.
(d)
Offset . To the extent permitted by COBRA and the Health
Insurance Portability and Accountability Act of 1996, as amended
(“HIPAA”), any fringe benefits received by Executive in
connection with any other employment accepted by Executive that are
reasonably comparable, even if not necessarily as beneficial to
Executive, to the fringe benefits then being provided by the
Company pursuant to paragraphs (b) and (c) of this
Section 5, shall be deemed to be the equivalent of such
benefits, and shall terminate the Company’s responsibility to
continue providing the fringe benefits package, taken as a whole,
then being provided by the Company pursuant to paragraphs (b) and
(c) of this Section 5. The Company agrees that if
Executive’s employment with the Company is terminated,
Executive shall have no duty to mitigate damages.
(e)
General Release . Acceptance by Executive of any amounts
pursuant to this Section 5 shall constitute a full and complete
release by Executive of any and all claims Executive may have
against the Company, its officers, directors and affiliates,
including, but not limited to, claims he might have relating to
Executive’s employment with the Company and cessation
thereof; provided, however, that there may properly be excluded
from the scope of such general release the following:
(i) claims that
Executive may have against the Company for reimbursement of
ordinary and necessary business expenses incurred by him during the
course of his employment;
(ii) claims that
may be made by the Executive for payment of Base Salary, bonuses,
fringe benefits, stock upon vesting of incentive stock awards,
stock upon exercise of stock options properly due to him, or other
amounts or benefits due to him under this Agreement;
(iii) claims
respecting any matters for which the Executive is entitled to be
indemnified under the Company’s Articles of Incorporation or
By-laws or applicable law, respecting third party claims asserted
or third party litigation pending or threatened against the
Executive; and
(iv) any claims
prohibited by applicable law from being included in the
release.
A condition to
Executive’s receipt of any amounts pursuant to this
Section 5 shall be Executive’s execution and delivery of
a general release as described above. In exchange for such release,
the Company shall, if Executive’s employment is terminated
without Cause, provide a release to Executive, but only with
respect to claims against Executive that Executive identifies in
writing to the Company at the time of such termination.
6. Effect
of Change of Control .
(a) If
within one (1) year following a “Change of
Control” (as hereinafter defined), Executive terminates his
employment with the Company for “Good Reason” (as
hereinafter defined) or the Company terminates Executive’s
employment for any reason other than Cause, death or disability (as
defined in Section 4(e)), the Company shall pay to Executive
in a lump sum within thirty
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