EMPLOYMENT AGREEMENT VICE CHANCELLOR AND ATHLETICS DIRECTOR THIS AGREEMENT is entered into by and between THE UNIVERSITY OF TENNESSEE, for and on behalf of The University of Tennessee, Knoxville and its Athletics Department, hereinafter referred to as the ?University,? and DAVE HART, JR., hereinafter referred to as ?Mr. Hart.? This Agreement replaces and supersedes any and all prior oral and written agreements between the University and Mr. Hart. WITNESSETH: In consideration of the covenants and agreements herein contained, the parties hereto agree as follows: ARTICLE I DEFINITIONS The following words, terms, or phrases, when used in this Agreement, shall have the following meanings: Section 1.1 ?Governing Athletic Rules? shall mean: (1) any and all present or future legislation, rules, regulations, directives, written policies, bylaws, and constitutions, and of?cial or authoritative interpretations thereof, and any and all amendments, supplements, or modi?cations thereto, promulgated by the National Collegiate Athletic Association or the Southeastern Conference and (2) any and all state or federal laws or regulations regulating college athletics, of?cials, student-athletes, or competition. Section 1.2 ?Major violation? shall mean a ?major violation? as de?ned by NCAA bylaws. Section 1.3 shall mean the National Collegiate Athletic Association and its successors. Section 1.4 "Signi?cant or repetitive violations" shall mean, for purposes of Governing Athletic Rules, any major violation of one or more Governing Athletic Rules or multiple secondary violations of one or more Governing Athletic Rules considered collectively to be a major violation. Section 1.5 ?Southeastern Conference? shall mean the Southeastern Conference and its successors or any other athletic conference of which the University may be a member. Section 1.6 ?University? shall mean The University of Tennessee and its campus located in Knoxville, Tennessee. Section 1.7 ?University Rules? shall mean any and all present or future policies, procedures, rules, regulations, and guidelines of the University. ARTICLE II AUTHORITIES DUTIES AND RESPONSIBILITIES Subject to the terms and conditions stated in this Agreement, the University agrees to employ Mr. Hart, and Mr. Hart agrees to serve, as the Vice Chancellor and Athletics Director (?Athletics Director?) for the University with authorities, duties, and responsibilities including but not limited to: Section 2.1 Reporting to the Chancellor of the University (?Chancellor?) and serving as a member of the Chancellor?s cabinet. Section 2.2 Becoming knowledgeable of, and complying with, any and all Governing Athletic Rules and University Rules and using efforts consistent with those exercised by a reasonably prudent intercollegiate athletics director at a Division I program similar to the University?s program to ensure that all coaches, staff, student-athletes, and other persons af?liated or associated with the University?s Athletics programs do the same. Section 2.3 reporting to the Chancellor and the associate athletics director with primary responsibility for compliance any actual knowledge of, or reasonable cause to believe, that a violation of Governing Athletic Rules has or may have taken place. Section 2.4 Supporting the University?s educational mission by using efforts consistent with those exercised by a reasonably prudent intercollegiate athletics director at a Division I program similar to the University?s program to maintain an environment in which the pursuit of higher education is a priority as re?ected by student-athletes? class attendance, academic progress rates, grade point averages, and graduation rates. Section 2.5 Organizing, managing and directing the administrative and related activities of the Athletics Department consistent with Governing Athletics Rules, University Rules, and the philosophy and mission of the University. Section 2.6 Developing and maintaining programs that will assure meaningful, enriching, and rewarding experiences for all student-athletes and students who participate in or are involved with intercollegiate athletics. Section 2.7 Representing and promoting the Athletics Department and its programs to the public, generating fan interest, and soliciting private gifts for athletics programs and facilities. Section 2.8 Envisioning and planning for the future direction and needs of the Athletics Department and making recommendations to responsible University administrators. Section 2.9 Presenting a complete, informative assessment of the athletics program at the University, in terms of its success and educational functions, to the Chancellor, faculty, staff, students, alumni, and community. Section 2.10 Developing effective internal communications with all members of the Athletics Department so an ef?cient and effective athletics program will be maintained. Section 2.11 Devising, organizing, and promoting a competitive schedule for all sports. Section 2.12 Serving as of?cial spokesperson of the Athletics Department in matters of athletics policy in accord with University procedures and organization. 2 Section 2.13 Preparing, reviewing, and managing the departmental budget and receiving appropriate administrative support for budget priorities as well as budget approval. Section 2.14 Reviewing and approving departmental operating expenditures. Section 2.15 Directing the management, maintenance and development of the Athletic Department?s physical plant and facilities. Section 2.16 Representing the Athletics Department at conference and national levels. Section 2.17 Reporting directly to the Chancellor, the Athletics Director will manage and provide leadership for the administrative unit and coaches within the Athletics Department. The comprehensive operation of the Athletics Department, and decisions associated with such, is delegated to Mr. Hart. Authority delegated by the Chancellor includes, but is not limited to, assessment of, and decision making concerning, Athletics Department policies, procedures, operating principles, and personnel, in accordance with University Rules.=This authority shall include hiring and ?ring of Athletics Department personnel in accordance with University Rules. The Athletics Director will have the authority to be engaged in all policy level decisions which affect the Athletics Department. Section 2.18 Performing other duties ordinarily associated with and performed by an intercollegiate athletics director at a Division I program similar to the University?s program. Section 2.19 Performing other reasonable duties as may be reasonably assigned by the Chancellor from time to time. ARTICLE - COMPENSATION AND BENEFITS Section 3.1 The University, as payment and consideration for the services to be performed by Mr. Hart, as set forth herein, agrees to pay Mr. Hart a base salary of $47,916.67 per month ($575,000 per year) (?Base Salary?). The Base Salary shall be increased each year by the greater of the following, if applicable: the amount of an across-the-board salary increase authorized or mandated for University employees by the State of Tennessee or the University, if Mr. Hart quali?es for the increase under the terms of the authorization or mandate; or (ii) three percent effective July 1 of each year. The University shall pay the Base Salary in accordance with the University?s customary payroll procedures. Section 3.2 In addition to Base Salary, the University agrees to pay Mr. Hart supplemental guaranteed annual gross compensation of $150,000 per year as compensation for such things as personal appearances, and radio, television, and other media services. The University shall pay the supplemental compensation to Mr. Hart in equal installments in accordance with the University?s customary payroll procedures. Section 3.3 In the event Mr. Hart serves as Athletics Director through August 31, 2012, the University shall make a lump sum payment of $50,000 ("First Retention Bonus") to Mr. Hart on or before September 30, 2012, as additional payment and consideration for the services to be performed by Mr. Hart. If Mr. Hart ceases active service as the Athletics Director for any reason, voluntary or involuntary, on or before August 31, 2012, Mr. Hart shall forfeit the Retention Bonus in its entirety. In the event Mr. Hart serves as Athletics Director through August 31, 2013, the University shall make a lump sum payment of $50,000 ("Second Retention Bonus") to Mr. Hart on or before September 30, 2013, as additional payment and consideration for the services to be performed by Mr. Hart. If Mr. Hart ceases active service as the Athletics Director for any reason, voluntary or involuntary, on or before August 31, 2013, Mr. Hart shall forfeit the Second Retention Bonus in its entirety. In the event Mr. Hart serves as Athletics Director through August 31, 2014, the University shall make a lump sum payment of $50,000 ("Third Retention Bonus") to Mr. Hart on or before September 30, 2014, as additional payment and consideration for the services to be performed by Mr. Hart. If Mr. Hart ceases active service as the Athletics Director for any reason, voluntary or involuntary, on or before August 31, 2014, Mr. Hart shall forfeit the Third Retention Bonus in its entirety. In the event Mr. Hart serves as Athletics Director through August 31, 2015, the University shall make a lump sum payment of $50,000 ("Fourth Retention Bonus") to Mr. Hart on or before September 30, 2015, as additional payment and consideration for the services to be performed by Mr. Hart. If Mr. Hart ceases active service as the Athletics Director for any reason, voluntary or involuntary, on or before August 31, 2015, Mr. Hart shall forfeit the Fourth Retention Bonus in its entirety. In the event Mr. Hart serves as Athletics Director through August 31, 2016, the University shall make a lump sum payment of $50,000 ("Fifth Retention Bonus") to Mr. Hart on or before September 30, 2016, as additional payment and consideration for the services to be performed by Mr. Hart. If Mr. Hart ceases active service as the Athletics Director for any reason, voluntary or involuntary, on or before August 31, 2016, Mr. Hart shall forfeit the Fifth Retention Bonus in its entirety. In the event Mr. Hart serves as Athletics Director through August 31, 2017, the University shall make a lump sum payment of $50,000 ("Sixth Retention Bonus") to Mr. Hart on or before September 30, 2017, as additional payment and consideration for the services to be performed by Mr. Hart. If Mr. Hart ceases active service as the Athletics Director for any reason, voluntary or involuntary, on or before August 31, 2017 Mr. Hart shall forfeit the Sixth Retention Bonus in its entirety. Section 3.4 In addition to the bene?ts set forth in this Agreement, as a regular full-time employee of the University, Mr. Hart is entitled to the same fringe bene?ts as other regular full-time employees, which may be amended by the University from time to time. As additional payment and consideration for the services to be performed by Mr. Hart, as set forth herein, the University agrees to pay and/or provide Mr. Hart with the fringe bene?ts and/or other payments as set forth on Schedule A attached hereto. The Base Salary shall be used to determine bene?ts that are based on salary, including but not limited to compensation for accrued and unused annual leave if Mr. Hart is entitled to such compensation. Section 3.5 The University shall directly pay Mr. Hart?s reasonable moving expenses associated with moving the remainder of Mr. Hart's furniture and household items ?om Tuscaloosa to Knoxville. Prior to the move, Mr. Hart shall obtain three (3) bids from moving companies for those expenses, provide copies of all bids to the University, and obtain the University?s approval of the lowest bid. The University?s obligation under this Section 3.5 shall be limited to the amount of the lowest bid. Section 3.6 The University will provide Mr. Hart with $2,000 per month as a non- accountable expense allowance to assist Mr. Hart with temporary housing, and other living expenses incurred during his transition to Knoxville. The non-accountable expense allowance will automatically terminate on October 31, 2012, or thirty (30) days after Mr. Hart's sale of his home in Tuscaloosa, whichever occurs ?rst. Section 3.7 Federal and state law limit the compensation on which the University may make retirement contributions. The University agrees to make the maximum annual amount of retirement contributions allowed by federal and state law for Mr. Hart. Retirement contributions shall be made periodically in accordance with the University?s business practices. Section 3.8 All compensation and bene?ts are subject to all applicable state and federal tax reporting and withholding requirements. ARTICLE IV - COMMERCIAL ENDORSEMENTS Mr. Hart shall not, by any statements or appearances on television, on radio, in newspapers, or in magazines or other published media or any promotional material, personally or of?cially endorse, promote, or advertise for commercial purposes any product, merchandise, or service unless prior written approval has been granted by the Chancellor in accordance with Article V, Section 5.1 of this Agreement, which approval shall not be unreasonably withheld. This requirement of prior written approval also applies to any use, directly or by implication, of the University's name or logo in the endorsement of commercial products or services. With the required prior written approvals, and subject to limitations arising out of any University contracts with third parties concerning media rights or the endorsement, promotion, or advertisement of commercial products, merchandise, or services, Mr. Hart may undertake commercial endorsements in which he identi?es himself as the University?s Athletics Director. Mr. Hart shall include all income and bene?ts derived from such commercial endorsement activities in the report of all athletically-related income and bene?ts he must ?le annually in accordance with Article V, Section 5.2 of this Agreement. At the termination of Mr. Hart?s employment as the University?s Athletics Director, Mr. Hart may continue to ful?ll commercial endorsement agreements entered into during his employment as the University?s Athletics Director as long as he does not directly or indirectly identify himself as the University?s current or former Athletics Director. ARTICLE OUTSIDE ATHLETICALLY-RELATED INCOME Section 5.1 Mr. Hart shall receive the prior written approval of the Chancellor for all athletically-related income and bene?ts from sources outside the University. Sources of such income and bene?ts shall include, but are not limited to, income from annuities; sports camps; housing bene?ts (including preferential housing arrangements); country club memberships; complimentary ticket sales; television, radio, and other media programs; and endorsement or consultation contracts with athletics shoe, apparel, or equipment manufacturers. The written approval of the Chancellor required under this Article shall not be unreasonably withheld. Section 5.2 Mr. Hart shall submit an annual written report of all athletically-related income and bene?ts from sources outside the University to the Chancellor on or before May 1 of each year. Section 5.3 In no event shall Mr. Hart usurp any corporate opportunities he knows or reasonably should know are corporate opportunities of the University or engage in an activity involving a con?ict of interests with his University duties. Outside income activities are independent of Mr. Hart?s employment with the University, and the University shall have no responsibility or liability for any claims arising from Mr. Hart?s outside income activities. ARTICLE VI - OUTSIDE SERVICES Section 6.1 Mr. Hart may serve on corporate boards of directors or enter into personal service contracts for motivational talks, ?lms, or other personal services provided: prior written approval of the Chancellor of the University is received annually in accordance with the reporting procedure provided in Article such activities do not interfere or con?ict with his duties at the University; and University facilities and resources are not used. Section 6.2 Mr. Hart may write for publications and speak before public gatherings, provided said writings and speeches are made in the same professional way and manner expected of any member of the administrative staff of the University. The University expressly agrees that any compensation received for such speeches and writings by Mr. Hart in the form of honoraria, royalties, and the like may be retained by him in addition to compensation set forth herein; provided, however, that if the University reimburses Mr. Hart or otherwise pays for travel or other expenses associated with the receipt of an honorarium, excluding the use of a loaned vehicle provided to Mr. Hart in accordance with the Athletics Department?s Courtesy Vehicle Program, the honorarium shall be remitted in full to the University. Section 6.3 To the extent that any outside activity authorized by this Article VI results in athletically-related income or bene?ts to Mr. Hart, it shall be subject to the prior written approval of the Chancellor, and the income and bene?ts shall be reported annually in accordance with Article V, Section 5.2 of this Agreement. Section 6.4 The University has no responsibility or liability for any claim arising out of Mr. Hart?s performance of the activities described in this Article VI or for any other activity outside the scope of his University employment. ARTICLE VII INTELLECTUAL PROPERTY Section 7.1 Mr. Hart grants the University the right during the term of this Agreement to use, and the right to grant to others use of, his name, nickname, initials, autograph, facsimile signature, voice, video or ?lm portrayals, photographs, likeness, image, or facsimile image in any manner in connection with any reasonable radio, television, or other media services or endorsement or consultation contracts the University enters into for the University's endorsement or Mr. Hart?s endorsement. Section 7.2 The University retains, owns, and controls all intellectual property and media rights relating to the Athletics Department, including but not limited to all television, radio, internet, and any other form of written or electronic media now known or developed in the future related to the Athletics Department, whether produced by the University or through a third-party. The University shall have the exclusive right to designate the media rights and intellectual property holder for all forms of media created during the term of this Agreement. Section 7.3 Upon termination of this Agreement, the University shall have the right to continue through completion any contracts, endorsement agreements, sponsorship agreements, or similar arrangements that were entered into during the term of this Agreement and which contain Mr. Hart?s name, nickname, initials, autograph, facsimile signature, voice, video or ?lm portrayals, photographs, likeness, image, facsimile image, biographical information, or endorsement. Mr. Hart shall have no further right to any compensation for any such continued use by the University unless expressly provided in this Agreement or other writing executed by the University. Section 7.4 Upon termination of this Agreement, the University shall have the right, but not the obligation, to continue to use, and to authorize, license, or grant any sponsor, manufacturer, media rights company, or vendor the right to use, any intellectual property or media rights relating to the Athletics Department or Mr. Hart?s employment that were created or produced during the term of this Agreement, notwithstanding the fact that such intellectual property or media rights may contain Mr. Hart?s name, nickname, initials, autograph, facsimile signature, voice, video or ?lm portrayals, photographs, likeness, image, facsimile image, biographical information, or endorsement. Mr. Hart shall have no further right to any compensation for any such continued use by the University unless expressly provided in this Agreement or other writing executed by the University. Section 7.5 Except as otherwise provided in this Agreement, Mr. Hart shall retain all rights in and to his name and endorsement. Upon termination of this Agreement, the University shall have no further right to the continued or future use Mr. Hart's name or endorsement, except as provided in this Article VII. Section 7.6 The rights and obligations described in this Article VII shall survive the termination of this Agreement and shall continue in full force and effect for all purposes notwithstanding the termination of this Agreement. ARTICLE ENFORCEMENT OF GOVERNING ATHLETIC RULES Section 8.1 Mr. Hart recognizes that the University, as a member of the NCAA and the SEC, is required to apply and enforce certain Governing Athletic Rules with respect to all institutional staff members through appropriate disciplinary or corrective action. If Mr. Hart is found in violation of Governing Athletic Rules, he shall be subject to disciplinary or corrective action as set forth in the provisions of the NCAA enforcement procedures, Article 4 of the SEC Constitution, and/or SEC Bylaw 19.8. Section 8.2 Mr. Hart agrees that a ?nding by the NCAA Committee on Infractions (or, if appealed by the University or Mr. Hart, by the NCAA Infractions Appeals Committee), or an agreed-on ?nding approved by the NCAA Committee on Infractions in the course of a summary disposition, that Mr. Hart has engaged in or condoned a major violation of one or more Governing Athletic Rules shall constitute a material breach of this Agreement that is not capable of being cured, and the University, in its sole discretion, may elect to terminate this Agreement, suspend Mr. Hart without pay, or take other disciplinary or corrective action against Mr. Hart as set forth in the provisions of the NCAA enforcement procedures upon written notice to Mr. Hart within sixty (60) days of the ?nding by the NCAA Committee on Infractions (or, if appealed by the University or Mr. Hart, by the NCAA Infractions Appeals Committee) or the NCAA Committee on Infractions? approval of the agreed-on ?nding. Section 8.3 Upon termination of this Agreement pursuant to this Article Mr. Hart shall not be entitled to further salary, compensation, bene?ts or perquisites from the University, other than salary, compensation, bene?ts, or perquisites that have accrued through the date of the termination of this Agreement. Section 8.4 In its sole discretion, the University may elect to terminate this Agreement for cause under this Article and offer Mr. Hart continued employment with or without a new employment agreement. Section 8.5 Prior to the effective date of termination of this Agreement or suspension without pay pursuant to this Article the University shall afford Mr. Hart notice and a reasonable opportunity to meet personally with the Chancellor. Mr. Hart voluntarily waives all rights to a post-termination or post-suspension opportunity to contest a termination or suspension without pay pursuant to this Article under University policies and the Tennessee Uniform Administrative Procedures Act, Tennessee Code 8 Annotated 4-5-301 et seq. Section 8.6 Mr. Hart agrees that nothing in this Article shall be construed to con?ict with or limit the University?s rights set forth in any other part of this Agreement, including but not limited to Article X. ARTICLE IX TERMINATION BY UNIVERSITY WITHOUT CAUSE Section 9.1 In its sole discretion and at any time during the term of this Agreement, the University may elect to terminate this Agreement without cause upon thirty (30) days written notice to Mr. Hart. If the University terminates this Agreement without cause, the University shall make a separation payment to Mr. Hart in an amount equal to seventy-?ve percent of the aggregate Base Salary Mr. Hart would have earned under the Agreement between the effective date of termination and September 20, 2017. Payment of the separation payment shall be made in forty-eight (48) equal installments, subject to all applicable state and federal withholding requirements, with the ?rst payment due on or before the last day of the month following the date of termination of this Agreement. Section 9.2 In no event shall the University?s liability in the event of a termination without cause include payment of fringe bene?ts, the amounts payable under Article Schedule A, or any other athletically related income or bene?ts derived by virtue of Mr. Hart?s position as Athletics Director. The University?s decision to terminate this Agreement without cause is not subject to any University Rules. Section 9.3 If terminated without cause during the ?rst three (3) years of the term of this Agreement, Mr. Hart is required to use his reasonable efforts to mitigate the University's obligation to provide a separation payment under this Article by making reasonable and diligent efforts as soon as practicable following termination to obtain other suitable employment in Division I collegiate athletics administration. The obligation to mitigate, and to offset earnings received, shall end on September 20, 2014. While the University's obligation to provide a separation payment is in effect, and for a period of six (6) months thereafter, Mr. Hart shall report to the University on a quarterly basis all income received or earned by him. Section 9.4 The parties have bargained for and agreed to the foregoing separation payment, giving consideration to the fact that termination of this Agreement without cause by the University prior to its expiration may cause Mr. Hart to lose certain bene?ts and incentives, supplemental compensation, or other athletically-related compensation associated with Mr. Hart?s employment with the University, which damages are extremely dif?cult to determine with certainty. The parties further agree that the payment of such separation payment by the University and the acceptance thereof by Mr. Hart shall constitute adequate and reasonable compensation to Mr. Hart for any damages and injuries suffered by Mr. Hart because of such termination by the University. The separation payment shall not be, nor be construed to be, a penalty. Section 9.5 The automatic termination of this Agreement upon the death or disability of Mr. Hart, as provided in Article XI of this Agreement, shall not give rise to a right to a separation payment pursuant to this Article IX. ARTICLE TERMINATION BY UNIVERSITY FOR CAUSE Section 10.1 In addition to the grounds for termination of this Agreement under any other Article of this Agreement, including but not limited to Article Mr. Hart agrees that the University has the right to terminate this Agreement for cause under this Article at any time prior to its expiration. Section 10.2 For purposes of this Article X, the term ?for cause? shall include, but not be limited to, any one or more of the following as determined in the reasonable and good faith judgment of the University: a determination by the University that Mr. Hart has failed to make efforts ordinarily exercised by an Athletic Director of a Division I program comparable to that of the University to promote and require compliance with Governing Athletic Rules or University Rules, thus resulting in a signi?cant or repetitive violation(s) of Governing Athletic Rules and/or University Rules; conduct or a pattern of conduct, including but not limited to multiple secondary violations of Governing Athletic Rules, by Mr. Hart which, in the reasonable determination of the University, constitutes a major violation of one or more Governing Athletic Rules; conduct or a pattern of conduct, including but not limited to multiple secondary violations of Governing Athletic Rules, by a coach or another person under his supervision or subject to Mr. Hart?s control or authority, which (1) in the reasonable determination of the University, constitutes a major violation of Governing Athletic Rules, and (2) Mr. Hart knew or should have known about through the exercise of reasonable diligence ordinarily exercised by an Athletic Director of a Division I program comparable to that of the University and failed to respond consistently with the standards ordinarily exercised by an Athletic Director of a Division I program comparable to that of the University; a determination by the University that Mr. Hart has failed to appropriately advise the Chancellor on the means and methods necessary to promote and maintain institutional control over the University's intercollegiate athletics program, as de?ned by Governing Athletic Rules, or has failed to implement the means and methods approved by the Chancellor to promote and maintain institutional control, as de?ned by Governing Athletic Rules; failure of Mr. Hart to report immediately to the Chancellor and the Associate Athletics Director for Compliance any actual knowledge of or reasonable 10 (1) cause to believe that violations of Governing Athletic Rules or University Rules have been committed or are being committed by himself or others; misrepresentation or withholding of material information, speci?cally including, but not limited to previous violations or potential violations of Governing Athletic Rules or institutional rules violations, during the University's process of interviewing and hiring Mr. Hart; an act by Mr. Hart constituting a prohibited con?ict of interest under the University?s con?ict of interest policy or applicable state law that is not cured by Mr. Hart within thirty (30) days after written notice by the University specifying the nature of the con?ict, unless, in the University?s reasonable and good faith judgment, the con?ict is not capable of being cured; fraud or dishonesty by Mr. Hart in the performance of his duties and responsibilities under this Agreement; the provision of false, misleading, or incomplete material information relevant to the conduct of University business if Mr. Hart knew the information was false, misleading, or incomplete; counseling or instructing by Mr. Hart of any coach, staff member, current or former student-athlete, student, or person to fail or refuse to respond accurately and fully within a reasonable time to any inquiry or request concerning a matter relevant to the athletics programs of the University or of another institution of higher education which shall be propounded by the NCAA, Southeastern Conference, the University, or other governing body having supervision over the athletics program of the University, or as required by law, Governing Athletic Rules, or University Rules, unless Mr. Hart believed in good faith that the person was not obligated by law, Governing Athletic Rules, or University Rules to respond to the inquiry or request; conviction of Mr. Hart of a criminal act that constitutes either a felony or (ii) a misdemeanor involving moral turpitude (excluding traf?c offenses); prolonged absence by Mr. Hart from his duties under this Agreement, without the consent of the Chancellor, other than because of a temporary, veri?able illness or because Mr. Hart becomes Disabled as de?ned in Article soliciting, placing, or accepting by Mr. Hart of a bet or wager on any intercollegiate or professional athletic contest whether through a bookmaker, a pool, or any other person, means, or method, or knowingly permitting, encouraging, or condoning such acts by any coach or other employee of the Athletics Department, or any person under Mr. Hart?s control or authority, 11 including without limitation a student-athlete; furnishing by Mr. Hart of information or data relating in any manner to any sport or student-athlete, to any individual known by Mr. Hart to be a gambler, bettor, or bookmaker, or an agent of any such person, or the consorting or associating by Mr. Hart with such person; (0) failure by Mr. Hart to fully cooperate in the enforcement and implementation of any drug testing program established by the University, the Southeastern Conference, the NCAA, or any other governing athletic body, for student- athletes; conduct of Mr. Hart of an inappropriate nature thereby bringing the University into disrepute; gross misconduct by Mr. Hart, as de?ned by University personnel policy now in effect or hereafter adopted by the University. ?Gross misconduct? is currently de?ned by University personnel policy to include the following: theft or dishonesty; gross insubordination; willful destruction of University property; falsi?cation of records; acts of moral turpitude; reporting for duty under the in?uence of intoxicants; illegal use, manufacture, possession, distribution, or dispensing of controlled substances or alcohol; disorderly conduct; provoking a ?ght; and other similar acts involving intolerable behavior by the employee; or any other material breach by Mr. Hart of his duties or responsibilities under this Agreement if in the University?s reasonable and good faith judgment, the breach is capable of being cured and Mr. Hart fails to take action to cure the material breach within thirty (30) days after written notice by the University specifying the nature of the breach; or (ii) in the University?s reasonable and good faith judgment, the breach is not capable of being cured. Section 10.3 The grounds for termination contained in Section 10.2 are separate and independent grounds for termination, and one ground for termination shall not be interpreted in any manner to modify, explain, or restrict any other ground for termination provided for anywhere in this Agreement. Section 10.4 In its sole discretion, the University may suspend Mr. Hart with pay pending an investigation or decision relating to termination for cause under this Article X. Section 10.5 Upon termination of this Agreement pursuant to this Article X, Mr. Hart shall not be entitled to further salary, compensation, bene?ts or perquisites from the University, other than salary, compensation, bene?ts, or perquisites that have accrued through the date of the termination of this Agreement. Section 10.6 For any one or more acts, omissions, or events that could be grounds for 12 termination for cause under this Article X, the University may take other disciplinary or corrective action against Mr. Hart short of terminating this Agreement. Other disciplinary or corrective action may include, but is not limited to, one or more of the following: written reprimand; suspension with pay; suspension without pay; or reassignment to a position that does not involve contact with prospective or enrolled student-athletes or representatives of the University?s athletics interests. No such disciplinary or corrective action shall be construed to con?ict with or limit the University?s right to terminate this Agreement during or subsequent to such disciplinary or corrective action. Section 10.7 Prior to the effective date of termination of Mr. Hart?s employment or suspension of Mr. Hart without pay under this Article X, the University shall afford Mr. Hart notice and a reasonable opportunity to meet personally and individually with the Chancellor to respond to the proposed termination or suspension. If the University terminates Mr. Hart?s employment or suspends him for a period of time without pay under this Article X, the University shall afford Mr. Hart a post-termination or post-suspension opportunity to contest the action in accordance with the Tennessee Uniform Administrative Procedures Act, Tennessee Code Annotated 4-5-301 et seq. Section 10.8 In its sole discretion, the University may elect to terminate this Agreement for cause under this Article but offer Mr. Hart continued employment with or without a new employment agreement. Section 10.9 Mr. Hart agrees that nothing in this Article shall be construed to con?ict with or limit the University?s rights set forth in any other Article of this Agreement. ARTICLE XI - AUTOMATIC TERMINATION UPON DEATH OR DISABILITY Section 11.1 This Agreement shall terminate automatically upon the death of Mr. Hart, and all salary, compensation, bene?ts, and perquisites shall terminate as of the calendar month in which death occurs, except that the executor or administrator of Mr. Hart?s estate or other bene?ciary speci?cally designated in writing shall be paid any death bene?ts due Mr. Hart under any University policy now in effect or hereafter adopted by the University. Section 11.2 This Agreement shall terminate automatically if Mr. Hart becomes disabled. ?Disabled? shall mean physical or mental incapacity of a nature that prevents Mr. Hart, in the sole judgment of the University, from performing his duties under this Agreement for a period of one hundred twenty (120) consecutive calendar days. If this Agreement is terminated because Mr. Hart becomes disabled, all salary, compensation, bene?ts, and perquisites shall terminate, except that Mr. Hart shall receive any disability bene?ts to which he is entitled under any disability program in which he is enrolled. ARTICLE XII TERMINATION BY MR. HART Section 12.1 Mr. Hart shall have the right to terminate this Agreement at any time and for any reason upon thirty (30) days? written notice to the University. The thirty (30) days? 13 notice may be waived by the University in writing signed by the Chancellor, and either the Chief Financial Of?cer or President of the University. Section 12.2 If Mr. Hart resigns his employment on or before August 31, 2017 and accepts a position as an athletic director at another NCAA Football Bowl Subdivision program prior to August 31, 2017, he agrees to pay a separation payment to the University in an amount equal to seventy-?ve percent of the aggregate Base Salary he would have earned under this Agreement between the date of acceptance of a position as athletics director at another NCAA Football Bowl Subdivision program and August 31, 2017. The separation payment shall be paid in forty-eight (48) equal installments, with the ?rst installment due within thirty (30) days of Mr. Hart?s acceptance of a position as athletics director at another NCAA Football Bowl Subdivision program. Section 12.3 The parties have bargained for and agreed to the foregoing separation payment, giving consideration to the fact that Mr. Hart?s promise to work for the University for the entire term of this Agreement is an essential consideration in the University?s decision to employ him as Athletics Director and the fact that the University will commit substantial ?nancial resources to the success of the Athletics Department and that if Mr. Hart terminates his employment with the University, the University will suffer damages the amount, nature, and extent of which are dif?cult to determine and which may include, but not be limited to, additional expenses to search for another athletics director, salary or other compensation to hire another athletics director, tangible and intangible detriment to the Athletics Department and support of its fans and donors. Accordingly, Mr. Hart acknowledges and agrees that the amount of the separation payment set forth in Section 12.2 is a reasonable and fair approximation of the harm that the University will incur in the event of such termination by Mr. Hart. The separation payment shall not be, nor be construed to be, a penalty. Section 12.4 Upon termination of this Agreement by Mr. Hart, Mr. Hart shall not be entitled to further salary, compensation, bene?ts, or perquisites from the University, and he waives any and all rights to receive compensation for his accrued and unused annual leave. ARTICLE - MISCELLANEOUS Section 13.1 Unless sooner terminated as provided in this Agreement, the term of this Agreement shall be from September 21, 2011 through September 20, 2017. The University may allow this Agreement to expire and elect not to renew his appointment as Athletics Director without complying with any University personnel policy or procedure applicable to staff-exempt employees who do not serve under a contract of employment with a de?nite term of years. Section 13.2 This Agreement, including Schedule A, contains the complete agreement between the parties concerning Mr. Hart?s employment as Athletics Director. Neither party has made any representation with respect to the subject matter of this Agreement not 14 speci?cally included in this Agreement, nor has either party relied on any such representation in entering into this Agreement. Section 13.3 This Agreement may only be modi?ed by a writing signed by the Athletics Director, the Chancellor, and the Chief Financial Of?cer of the University. Section 13.4 The invalidity of any portion of this Agreement shall not and shall not be deemed to affect the validity of any other provision. In the event any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision. Section 13.5 No policy or procedures manual, faculty or staff handbook, course of conduct, practice, award, commendation, promotion, transfer, or length of service creates any express or implied contract modifying any part of this Agreement. Section 13.6 This Agreement shall be interpreted in accordance with Tennessee law. Section 13.7 The captions of the various provisions contained in this Agreement are not a part of this Agreement and shall not be deemed in any manner to modify, explain, enlarge, or restrict any of the provisions of this Agreement. Section 13.8 Upon the expiration or earlier termination of this Agreement for any reason, Mr. Hart agrees that the University shall be entitled to withhold and deduct from any ?nal payment of any kind that is owed to Mr. Hart by the University the amount of any indebtedness owed to the University by Mr. Hart. Section 13.9 Any notice required or permitted to be given under this Agreement shall be suf?cient if given in writing and either delivered in person, sent by United States mail, with ?rst class postage prepaid, or sent by a nationally recognized delivery service. Notice shall be deemed given when the written notice is delivered in person, placed in the United States mail, or placed with a nationally recognized delivery service. Notice to Mr. Hart shall be sent to his campus office or to his University-provided e-mail account(s). Notice to the University shall be delivered to the Chancellor at his or her campus of?ce. Section 13.10 All documents, ?les, records, materials (in any format, including electronically stored information), equipment, or other property, including without limitation, personnel records, keys, credit cards, laptop computers, software programs, and electronic communication devices, furnished to Mr. Hart by the University or developed by Mr. Hart at the University?s direction or for the University?s use or otherwise in connection with Mr. Hart?s employment with the University are and shall remain the sole and con?dential property of the University. Within three (3) business days of the expiration or termination of this Agreement, Mr. Hart shall complete the University?s exit procedure, including returning all University property in his possession. The foregoing provisions shall not apply to Mr. Hart?s personal notes, memorabilia, diaries, and similar personal records 15 of Mr. Hart, which he is entitled to retain. Section 13.11 The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as subsequently waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no forbearance or waiver had occurred. Section 13.12 It is expressly agreed that nothing contained in this Agreement shall be construed to constitute a waiver or relinquishment by the University of any rights to claim such exemptions, privileges, and immunities as may be provided by law. Section 13.13 The Parties may not assign, pledge, or encumber their respective rights, interests, or obligations under this Agreement. Section 13.14 Each party hereto shall be viewed as an equal participant to the drafting of this Agreement, and each party agrees that there shall be no presumption against the drafting party. Section 13.15 Mr. Hart acknowledges that he has read and understands this Agreement and agrees that its provisions are reasonable and enforceable and that he will abide by them. Section 13.16 The parties agree that the effective date of this Agreement shall be September 21, 2011, even if the Agreement?s execution date is subsequent thereto. Section 13.17 This Agreement may be executed in multiple counterparts, each of which shall be regarded for all purposes as an original constituting but one and the same instrument. [The remainder of this page has been left blank intentionally - signature page follows] 16 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the dates shown below. THE UNIVERSITY OF TENNESSEE heek, Chancellor - sity of Tennessee, W174 ?aw/A Date at Charles M. Peccolo, Jr. Treasurer and Interim Chief Financial Of?cer 3/13/13;? Date 17 Schedule A FRINGE AND OTHER BENEFITS Payment and/or reimbursement of reasonable and necessary expenses incurred in connection with the performance of Mr. Hart's duties, including but not limited to travel, entertainment and the like, subject to the terms and limits of applicable University policies. Payment and/or reimbursement of of?cially required travel expenses for Mr. Hart's spouse, when it is appropriate that she accompany him while in the performance of his of?cial duties, subject to the terms and limits of applicable University policies. A guaranteed payment of $25,000 annually, payable in twelve (12) equal installments in accordance with the University?s customary payroll procedures, as a non-accountable expense allowance/reimbursement for other expenses incurred by Mr. Hart for which the University does not reimburse. Mr. Hart shall be included in the University's Athletic Play/Practice Insurance Coverage. Mr. Hart acknowledges that this insurance coverage is subject to an annual bid process and that the type and amount of coverage for all participants may change from year to year. Additionally, Mr. Hart shall be provided, at University's expense, a $2,000,000.00 term life insurance policy, the bene?ciaries of which shall be the University's Athletics Department (in an amount equal to 50% of the death bene?t), and such bene?ciaries as may be designated by Mr. Hart (in an amount equal to 50% of the death bene?t). To the extent that the University maintains a "courtesy car" program, Mr. Hart shall be provided with two automobiles pursuant to the terms of any such "courtesy car" program. The University will be solely responsible for maintaining liability insurance on the automobiles. Mr. Hart will be solely responsible for maintaining full comprehensive and collision insurance coverage on the automobiles, for fuel costs and for necessary maintenance. If the courtesy car program is revised to allow for automobile stipends, then the Chancellor will have the discretion to provide Mr. Hart with two automobile stipends in lieu of two automobiles. At Mr. Hart?s request, he will be provided with a mobile phone and service plan to be paid by the Athletics Department or a stipend to cover the cost of his own mobile phone service, in accordance with University Rules. At Mr. Hart's request, the University shall pay for and/or provide Mr. Hart with the following athletic event tickets 18 a. For football, one Neyland Stadium skybox, including the sixteen (16) admission tickets required in connection therewith; Up to eight (8) additional football season tickets; Up to eight (8) men's basketball season tickets; Up to eight (8) women's basketball season tickets season tickets; Up to four (4) baseball season tickets; Up to four (4) softball season tickets; Up to four (4) away game tickets for each of football, men's basketball, and women's basketball; Up to eight (8) post-season tickets for football, men's basketball, and women's basketball; and i. For post-season football, men's basketball, and women's basketball play, one (1) hotel room suite plus two additional regular hotel rooms. urea-mes? It is understood that Mr. Hart may use athletic event tickets for the purpose of University business, and, if so used, the value of the tickets wi? be excluded from Mr. Hart?s gross income if Mr. Hart provides the University with documentation substantiating such use. The bene?ts outlined on this Schedule A are subject to all applicable state and federal tax reporting and withholding requirements. 19