EXHIBIT 10.1
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
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This Agreement, made and entered into as of January 4, 1999, by and between
BRUNSWICK CORPORATION, a Delaware corporation (the "Company"), and Xxxxx X.
Xxxxxx (the "Executive");
WITNESSETH THAT:
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WHEREAS, the Executive has been employed by the Company as its Chief
Executive, immediately prior to the Effective Date, pursuant to an employment
agreement dated April 1, 1995 (the "Prior Agreement");
WHEREAS, the Executive and the Company entered into an Amended and Restated
Employment Agreement dated February 3, 1997 (the "Effective Date"), a First
Amendment thereto dated April 1, 1998, and a Second Amendment thereto dated
December 1, 1998; and
WHEREAS, the parties hereto desire to enter into this Agreement pertaining
to the continued employment of the Executive by the Company;
NOW, THEREFORE, in consideration of the mutual covenants set forth below,
it is hereby covenanted and agreed by the Executive and the Company as follows:
1. Performance of Services. The Executive's employment with the Company
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shall be subject to the following:
(a) Subject to the terms of this Agreement, the Company hereby agrees to employ
the Executive as its Chief Executive during the Agreement Term (as defined
below), and the Executive hereby agrees to remain in the employ of the
Company during the Agreement Term. During the Agreement Term, the
Executive shall be a member and Chairman of the Board of Directors of the
Company (the "Board").
(b) During the Agreement Term, while the Executive is employed by the Company,
the Executive shall devote his best efforts and full business time
exclusively to the business affairs of the Company and the Affiliates (as
defined below) and shall perform his duties faithfully and efficiently,
subject to the direction of the Board. The Executive, however, may engage
in charitable, civic or other similar pursuits and, subject to Board
approval, may become a director of other corporations, to the extent that
such activities do not interfere with his devoting his best efforts to his
duties to the Company. For
purposes of the preceding sentence, Board approval is deemed to be granted
to the Executive to serve on the board of directors of Compaq Computer
Corp.
(c) The Executive's performance shall be reviewed annually by the Board, taking
into account such financial and non-financial factors as the Board
determines to be pertinent, with the results of such review to be discussed
with the Executive. Approximately six months through each annual
performance review cycle, the Board shall review the Executive's
performance on an interim basis, with the interim review focusing primarily
on non-financial factors, and the results of such interim review to be
discussed with the Executive.
(d) For purposes of this Agreement, the term "Affiliate" means (i) any
corporation, partnership, joint venture or other entity during any period
in which it owns, directly or indirectly, at least fifty percent of the
voting power of all classes of stock of the Company (or successor to the
Company) entitled to vote; and (ii) any corporation, partnership, joint
venture or other entity during any period in which at least a thirty
percent voting or profits interest is owned, directly or indirectly, by the
Company, by any entity that is a successor to the Company, or by any entity
that is an Affiliate by reason of clause (i) next above.
(e) The "Agreement Term" shall be the period, the first day of which shall be
the Effective Date and the last day of which shall be April 1, 2002. The
Agreement Term shall be automatically extended for an additional one-year
period on each April 1, beginning with April 1, 2002, unless either party
gives six month prior written notice to the other party of a decision not
to extend the term.
2. Compensation. In consideration of the services rendered by the
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Executive to the Company, in consideration of the Executive's agreement to
remain in the employ of the Company during the Agreement Term, and subject to
the terms of this Agreement, the Company shall compensate the Executive during
the Agreement Term, while the Executive is employed by the Company, as follows:
(a) One-Time Payment. To compensate the Executive for the forfeiture of
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compensation and other employment benefits resulting from his resignation
from his prior employer, the Company has provided to the Executive the
following one-time payments:
(i) The Executive has previously received an award of 149,079 share units
of common stock of the Company ("Company Stock"), with such share
units to be settled in shares of Common Stock in accordance with the
provisions of
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paragraph 2(p) of this Agreement. The Executive shall be fully vested
in the share units, and their resulting settlement in shares,
described in this paragraph (i).
(ii) The Executive has previously received a non-qualified stock option
award to purchase of 500,000 shares of Company Stock, which is subject
to terms comparable to those included in stock options granted under
the Brunswick Corporation 1991 Stock Plan (the "1991 Plan") to other
officers of the Company. The purchase price under such option is
$20.125, the option exercise period expires ten years after grant (or
such earlier time following termination of employment as provided in
stock options granted to officers under the 1991 Plan). On April 1,
1996, the option became exercisable with respect to 60,000 shares of
Company Stock. The remaining portion of the option shall become
exercisable in accordance with the following schedule:
The option shall become exercisable with
If the Executive is employed respect to the following number of shares
through the following date: shares on and after that date:
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April 1, 1997 60,000
April 1, 1998 80,000
The first date on which the
Stock Price attains $25.00 or,
if earlier, the first day of
the quarter of the Company
following the occurrence of
four consecutive quarters
during which aggregate net
earnings for such four quarters
exceeds $2.00 per share 90,000
The first date on which the
Stock Price attains $30.00 or,
if earlier, the first day of
the quarter of the Company
following the occurrence of
four consecutive quarters
during which aggregate net
earnings for such four quarters
exceeds $2.35 per share 90,000
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The first date on which the
Stock Price attains $35.00 or,
if earlier, the first day of
the quarter of the Company
following the occurrence of
four consecutive quarters
during which aggregate net
earnings for such four quarters
exceeds $2.70 per share 120,000
As of the effective date of this Agreement, the foregoing schedule shall
supersede the schedule set forth in paragraph 2(a)(ii) of the Prior
Agreement. The net earnings per share shall be such amount as determined
for purposes of the Company's public financial reporting obligations. The
Compensation Committee of the Board, in consultation with the Executive,
shall adjust the net earnings per share requirement and the Stock Price
requirement applicable to Company Stock under this paragraph 2(a)(ii) as
appropriate from time to time to reflect material mergers, consolidations,
recapitalizations, reclassifications, stock dividends, stock splits,
combinations of shares, other capital adjustments and other unusual and
extraordinary events. If the Executive's employment by the Company
continues through April 1, 1998, then any portion of the option described
in this paragraph 2(a)(ii) not previously exercisable shall become
exercisable on April 1, 1998. For purposes of this paragraph 2(a)(ii), the
"Stock Price" for any date shall be the closing market composite price for
the Company Stock (as reported for the New York Stock Exchange - Composite
Transactions). The stock option award described in this paragraph 2(a)(ii)
shall be subject to terms substantially comparable to the terms set forth
in the stock option agreement included in Supplement A, which is attached
to and forms a part of this Agreement. As soon as practicable after the
Effective Date, the terms of the option agreement set forth in paragraph 5
of Supplement A (relating to transferability of the option) shall be
modified to permit transfer to the Executive's family members (as set forth
in Supplement A). To the extent that the express terms of this Agreement
are inconsistent with the terms of the 1991 Plan or awards granted
thereunder, the terms of this paragraph (ii) and other applicable terms of
this Agreement shall govern the awards made under this paragraph.
(b) One-Time Awards.
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(i) One Time Stock Option Award. The Company shall provide to the
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Executive the following one-time stock option award, which shall be a
non-qualified stock option award to purchase of 100,000 shares of
Company Stock, subject
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to terms comparable to those included in stock options granted under
the 1991 Plan to other officers of the Company; provided that the
purchase price shall equal the fair market value of the stock as of
the date this Agreement is fully executed by the Executive (but not
earlier than the date the option is approved by the Compensation
Committee), with the option exercise period expiring on the tenth
anniversary of such date (or such earlier time following termination
of employment as provided in stock options granted to officers under
the 1991 Plan), and the option shall be exercisable in accordance with
the following schedule:
The option shall become
exercisable with respect to
If the Executive is employed the following number of shares
through the following date: shares on and after that date:
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April 1, 1997 30,000
April 1, 1998 30,000
April 1, 1999 40,000
The stock option award described in this paragraph 2(b)(i) shall be
subject to terms substantially comparable to the terms set forth in
the stock option agreement included in Supplement B, which is attached
to and forms a part of this Agreement. To the extent that the express
terms of this Agreement are inconsistent with the terms of the 1991
Plan or awards granted thereunder, the terms of this paragraph (b) and
other applicable terms of this Agreement shall govern the awards made
under this paragraph. If the stock options granted under this
paragraph 2(b)(i) are granted under the 1991 Plan (or any successor
plan providing for administration by a committee of the Board), or if
any other awards are made pursuant to this Agreement under the 1991
Plan (or any such successor plan), then any action with respect to
such awards that is required of the Board may instead by taken by the
committee administering the applicable plan.
(ii) One-Time Share Award. The Executive is entitled to a grant of 200,000
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shares of Company Stock under this paragraph (ii), subject to the
following:
(A) The Executive has received an award of 50,000 shares of Company
Stock pursuant to a grant made as of April 1, 1998. The Executive
shall be entitled to three additional grants of 50,000 shares of
Company Stock, to be made as of the first business day of each of
the following calendar years: 1999, 2000, and 2001. The delivery
of the shares granted under this
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paragraph (A) shall be deferred in accordance with paragraph 2(p).
(B) Except as otherwise provided in paragraph 5, the Executive's
vesting of benefits described in paragraph (b)(ii)(A) shall be
subject to the following:
(1) The Executive's rights in shares of Company Stock granted
under paragraph (b)(ii)(A) as of a date in any calendar year
shall become non-forfeitable on the last day of the calendar
year if the Executive's Date of Termination did not occur
prior to the last day of such year; provided, however, that
the Executive shall obtain a non-forfeitable right to such
shares at an earlier date to the extent provided in paragraphs
(b)(ii)(B)(2) below.
(2) If the Executive's Date of Termination occurs under
circumstances described in paragraph 3(a) (relating to the
death of the Executive), paragraph 3(b) (relating to the
Executive's disability), paragraph 3(e) (relating to
termination by the Executive for Good Reason), paragraph 3(f)
(relating to termination following a Change in Control), or
paragraph 3(g) (relating to termination by the Company for
reasons other than Cause), or if the Executive's Date of
Termination occurs on December 31, the Executive shall become
vested on his Date of Termination in the shares granted under
paragraph (b)(ii)(A) during the calendar year in which occurs
his Date of Termination.
(3) If the Executive's Date of Termination occurs under
circumstances other than those described in paragraph 3(a)
(relating to the death of the Executive), paragraph 3(b)
(relating to the Executive's disability), paragraph 3(e)
(relating to termination by the Executive for Good Reason),
paragraph 3(f) (relating to termination following a Change in
Control), or paragraph 3(g) (relating to termination by the
Company for reasons other than Cause), and the Executive's
Date of Termination does not occur on December 31, then as of
his Date of Termination, the Executive shall forfeit the
shares granted under paragraph (b)(II)(A) during the calendar
year in which occurs his Date of Termination.
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The Executive, at all times, shall be fully vested in any
dividends on shares of Company Stock granted under paragraph
(b)(ii)(A), to the extent that such dividends are payable with
respect to either: (i) Company Stock granted under paragraph
(b)(ii)(A) for record dates occurring on or after the date of
grant and prior to any forfeiture of the shares of Stock, or
(ii) Company Stock deemed to be earned by reason of crediting
of dividends in accordance with paragraph 2(p)(iii).
(c) Salary. Effective December 1, 1998 the Executive's annual base salary rate
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shall not be less than $900,000. For periods prior to December 1, 1998 the
Executive's annual base salary was $800,000. The salary shall be payable
monthly or more frequently in accordance with Company practice and shall be
subject to all normal deductions and withholdings.
(d) Bonus. The Executive shall participate in an annual bonus program. The
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bonus program shall provide for a maximum bonus amount of 200% of the
Executive's annual salary. The performance goals shall be established by
the Board in consultation with the Executive. Half of the value for each
bonus award will be distributed in fully-vested shares of Company Stock,
with the remainder distributed in cash; provided, however, that if the
Executive has satisfied the Company's applicable stock ownership guidelines
on the date such award is determined, the Executive may elect (on or before
the date such award is determined) to receive the entire award in cash.
The value of Company Stock distributed as a bonus in accordance with this
paragraph (d) shall be determined as of the last business day prior to the
date on which the amount of the bonus is determined by the Board. For the
fiscal year ending December 31, 1995, the Executive has received an award
under the annual bonus program of share units to be settled in Company
Stock in accordance with the provisions of paragraph 2(p) of this
Agreement, with such share units representing Company Stock having a value
of $960,000, determined as of the last business day prior to the date on
which the amount of the bonus was determined by the Board. The Executive
shall be fully vested in the share units, and their resulting settlement in
shares, described in this paragraph (d).
(e) Long-Term Incentive Share Award. The Executive was entitled to a Long-Term
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Incentive Share Award of Company Stock for the fiscal year ending December
31, 1995, and shall be entitled to a Long-Term Incentive Share Award of
Company Stock for the fiscal year ending December 31, 1996, subject to the
following:
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(i) The Executive has previously received a Long-Term Incentive Share
Award of Company Stock for the fiscal year ending December 31, 1995,
based on Company performance for that year. The award was made in
share units of Company Stock, with such share units to be settled in
shares of Company Stock in accordance with the provisions of
paragraph 2(p). The share units had a market value of $720,000 as
of the last business day prior to the date on which the amount of
the award was determined by the Board. To the extent that the
express terms of this Agreement are inconsistent with the terms of
the 1991 Plan or awards granted thereunder, the terms of this
paragraph (e)(i) and other applicable terms of this Agreement shall
govern the awards made under this paragraph.
(ii) The Executive shall be entitled to a Long-Term Incentive Share Award
of Company Stock for the fiscal year ending December 31, 1996, based
on Company performance for that year, and subject to the
requirements set forth in Supplement C, which is attached to, and
forms a part of this Agreement. The market value of the Company
Stock granted pursuant to such award shall be determined as of the
last business day prior to the date on which the amount of the award
is determined by the Board.
(iii) Except as otherwise provided in paragraph 5, the Executive's vesting
of benefits described in paragraph (e)(i) shall be subject to the
following:
(A) The Executive shall forfeit the shares granted under paragraph
(e)(i) as of his Date of Termination, if such Date of
Termination occurs prior to April 1, 1998 under circumstances
other than those described in paragraph 3(a) (relating to the
death of the Executive), paragraph 3(b) (relating to the
Executive's disability), paragraph 3(e) (relating to termination
by the Executive for Good Reason), paragraph 3(f) (relating to
termination following a Change in Control), or paragraph 3(g)
(relating to termination by the Company for reasons other than
Cause).
(B) The Executive shall become vested on his Date of Termination in
the shares granted under paragraph (e)(i) if such Date of
Termination occurs prior to April 1, 1998 under circumstances
described in paragraph 3(a) (relating to the death of the
Executive), paragraph 3(b) (relating to the
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Executive's disability), paragraph 3(e) (relating to termination
by the Executive for Good Reason), paragraph 3(f) (relating to
termination following a Change in Control), or paragraph 3(g)
(relating to termination by the Company for reasons other than
Cause).
(C) The Executive shall become vested on April 1, 1998 in the shares
granted under paragraph (e)(i)7 if the Executive remains
employed by the Company through such date.
(iv) Except as otherwise provided in paragraph 5, the Executive's vesting
of benefits described in paragraph (e)(ii) shall be subject to the
following:
(A) The Executive shall forfeit the shares granted under paragraph
(e)(ii) as of his Date of Termination, if such Date of
Termination occurs prior to February 15, 1998 under
circumstances other than those described in paragraph 3(a)
(relating to the death of the Executive), paragraph 3(b)
(relating to the Executive's disability), paragraph 3(e)
(relating to termination by the Executive for Good Reason),
paragraph 3(f) (relating to termination following a Change in
Control), or paragraph 3(g) (relating to termination by the
Company for reasons other than Cause).
(B) The Executive shall become vested on his Date of Termination in
the shares granted under paragraph (e)(ii) if such Date of
Termination occurs prior to February 15, 1998 under
circumstances described in paragraph 3(a) (relating to the death
of the Executive), paragraph 3(b) (relating to the Executive's
disability), paragraph 3(e) (relating to termination by the
Executive for Good Reason), paragraph 3(f) (relating to
termination following a Change in Control), or paragraph 3(g)
(relating to termination by the Company for reasons other than
Cause).
(C) The Executive shall become vested on February 15, 1998 in the
shares granted under paragraph (e)(ii) if the Executive remains
employed by the Company through such date.
The Executive shall be entitled to dividends for dividend record dates on
or after the date of grant with respect to shares of Company Stock granted
under this paragraph (e), to
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the extent that the dividends are payable with respect to dates prior to
termination of employment, regardless of the reason for such termination.
(f) SIP. For periods after December 31, 1996, the Executive shall not be
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entitled to any Long-Term Incentive Share Awards, but shall be entitled to
participate in the Strategic Incentive Plan (the "SIP") in accordance with
its terms as in effect from time to time; subject to the following:
(i) The amount of the maximum award opportunity for the Executive under
the SIP for each SIP performance period shall be not less than 100%
of the Executive's salary for the period of the entire performance
period, with the minimum value of the award for the period not less
than 75% of the Executive's salary for the performance period if the
target goals established by the Board for the performance period are
achieved.
(ii) Notwithstanding the provisions of the SIP to the contrary, the
Executive's rights to benefits under the SIP on termination of
employment shall be determined in accordance with the provisions of
paragraph 4 of this Agreement.
(g) Stock Options.
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(i) Yearly Grant. In each calendar year, beginning with the 1996
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calendar year, and ending with the 2001 calendar year, inclusive,
the Executive shall be entitled to a grant of a non-qualified stock
option. The option granted for each calendar year under this
paragraph (g)(i) shall have a grant-date value (determined using the
Black-Scholes methodology, but excluding any discount for deferred
vesting, or other contingencies) of $750,000 (determined as of the
date of grant). Stock options to be granted in any calendar year
under this paragraph (g)(i) shall be granted at the time stock
options are granted to other officers of the Company during the
calendar year, provided that if the Company makes more than one
option grant to officers during any calendar year, the Company shall
not be required to grant stock options under this paragraph (g)(i)
(but determined without regard to the grant under paragraph (g)(ii))
having an aggregate value of more than $750,000 per calendar year.
Subject to paragraph 4, the Executive shall not be entitled to a
stock option award under this paragraph (g)(i) during any calendar
year if he is not employed by the Company on the date that such
award would otherwise be granted under this paragraph
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(g)(i). In January, 1996 (prior to the Effective Date of this
revised Agreement), an option to purchase 72,255 shares of Company
Stock was granted to the Executive, which was in satisfaction of the
requirement under this paragraph (g)(i) to grant a stock option to
the Executive in calendar year 1996 (and was also in satisfaction of
the obligation under paragraph 2(e) of the Prior Agreement to grant
a stock option for the fiscal year ending December 31, 1995).
(ii) July 1996 Grant. In July, 1996, the Executive was granted a non-
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qualified stock option to purchase 90,000 shares of Company Stock
(which was in addition to the other options granted under this
Agreement). The July, 1996 option award described in this paragraph
(ii) shall be in lieu of the award for the calendar year beginning
January 1, 2002, and the Executive shall not be entitled to a stock
option award under this paragraph (g) for the 2002 calendar year.
(iii) General Option Terms. Stock options granted under paragraph (g)(i)
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or paragraph (g)(ii) shall be subject to the following:
(A) Each option granted under this paragraph (g) shall be subject to
terms comparable to those included in stock options granted
under the 1991 Plan (or any successor or substitute plan) to
other officers of the Company; provided that the option shall
permit purchase of shares of Company Stock at a price equal to
the fair market value of such stock as of the date of grant, and
the exercise period shall expire ten years after grant, or such
earlier time following termination of employment as provided in
stock options granted to officers under the 1991 Plan, or
successor to the 1991 Plan.
(B) Each option granted under this paragraph (g) shall be
exercisable in accordance with the following schedule:
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The option shall become
exercisable with respect to
If the Executive is employed the following number of shares
through the following date: shares on and after that date:
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1st anniversary of grant date 30% of grant
2nd anniversary of grant date 30% of grant
3rd anniversary of grant date 40% of grant
(C) To the extent that the express terms of this Agreement are
inconsistent with the terms of the 1991 Plan or awards granted
thereunder, the terms of this paragraph (g) and other applicable
terms of this Agreement shall govern the awards made under this
paragraph.
(iv) Exercisability on Termination. Options shall be subject to the
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following:
(A) Effective as of April 1, 1998, all options that were granted
to the Executive pursuant to paragraph (g)(i) prior to January
1, 1998, and the option granted to the Executive pursuant to
paragraph (g)(ii), shall become (or remain) exercisable until
the earlier of (A) the expiration date of the option or (B) five
years following termination of the Executive's employment.
(B) If the Executive's employment with the Company continues
through April 1, 1999, all options that were granted to the
Executive pursuant to paragraph (g)(i) after December 31, 1997
and prior to January 1, 1999 shall become (or remain)
exercisable until the earlier of (i) the expiration date of the
option or (ii) five years following termination of the
Executive's employment.
(C) If the Executive's employment with the Company continues
through April 1, 2002, all options that were granted to the
Executive pursuant to paragraph (g)(i) after December 31, 1998
shall become (or remain) exercisable until the earlier of (i)
the expiration date of the option or (ii) five years following
termination of the Executive's employment.
(h) Life Insurance. The Company shall provide aggregate life insurance death
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benefit coverage to the Executive of at least 3- 1/2 times the Executive's
base salary rate, reduced by the
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face value of any life insurance policy rolled out to the Executive under
the Company's Split Dollar Life Insurance Plan. At any time after the
Effective Date, the Executive may reduce the amount of coverage required to
be provided under this paragraph (h), in which case the Executive will be
entitled to receive the net amount of any life insurance premium reduction
provided to the Company as a result of such reduction in coverage, with
such amount to be paid by the Company to the Executive in cash from time to
time.
(i) Supplemental Pension. The Executive shall be entitled to receive benefits
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under the Brunswick Supplemental Pension Plan (the "Supplemental Plan") or,
in the discretion of the Company, under another non-qualified plan
maintained by the Company, in an amount which, when added to the benefits
otherwise payable to or on behalf of the Executive under the Supplemental
Plan and the Brunswick Pension Plan for Salaried Employees, will provide
the Executive with the benefits that would have been payable to or on
behalf of the Executive under the Supplemental Plan and the Brunswick
Pension Plan for Salaried Employees if he had, in addition to his actual
Years of Service, completed an additional 15 Years of Service with the
Company. The monthly benefit payable under this paragraph (i) in the form
of a single life annuity for the life of the Executive commencing at his
age 65 shall be reduced (but not below zero) by the following:
(i) the monthly amount of the total Social Security benefit payable to the
Executive as a single life annuity for the life of the Executive
commencing at his age 65; and
(ii) $15,369.10, which is the monthly amount of the benefit payable to the
Executive under the Retirement Plan of Xxxxxxx & Xxxxxxx and
Affiliated Companies and the Excess Benefit Plan of Xxxxxxx & Xxxxxxx
and Affiliated Companies (collectively, the "Predecessor Employer
Plan"), based on its being paid in the form of a single life annuity
for the life of the Executive commencing at his age 65).
If the pension benefits are payable to the Executive pursuant to this
paragraph (i) are paid in a form other than a single life annuity for the
life of the Executive commencing at his age 65, then such benefits shall be
actuarially equivalent to the value of the benefit determined in accordance
with the foregoing provisions of this paragraph (i), with the actuarial
equivalency determined using the actuarial assumptions in effect under the
Brunswick Pension Plan for Salaried Employees as of the date of
commencement of such benefit payments. The Executive, by filing a written
election with the Company not later than thirty days after the Executive's
Date of
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Termination, may elect to receive the benefits otherwise payable to him
under the Supplemental Plan and this paragraph (i) in the form of an
actuarially equivalent lump sum. Payments under this paragraph (i) shall be
made (or shall commence if not in the form of a lump sum) on the 60th day
after the Date of Termination (or the first business day occurring after
such 60th day); provided that no such payment shall be made prior to such
60th day.
(j) Retiree Medical Benefits. The Executive shall be entitled to retiree
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medical benefit coverage to the same extent as other executives leaving the
employ of the Company at the time of the Executive's Date of Termination,
determined as though the Executive had then satisfied any applicable
service requirements for such coverage. However, to the extent that, as of
the Executive's Date of Termination, the amount of required employee
contributions under the retiree medical benefit plan is based on an
employee's service with the Company, the Executive shall be deemed to have
service with the Company equal to his actual service with the Company plus
15 years.
(k) Security Protection. The Company shall make security protection available
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to the Executive and his family on a reasonable basis for business and
personal use.
(l) Vacation. The Executive shall be entitled to paid vacations in accordance
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with the applicable policy of the Company as in effect from time to time,
but in no event shall the Executive be entitled to less than four weeks
paid vacation per year.
(m) Benefits. The Executive shall be a participant in any and all plans
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maintained by the Company from time to time to provide benefits for its
senior executives, or for its salaried employees generally, including,
without limitation, any pension, profit sharing, employee stock ownership
or retirement plan, any life, accident, medical, hospital or similar group
insurance program, and any plans or arrangements providing tax planning or
financial planning. However, the Company shall not be required to provide
a benefit under this paragraph (m) if such benefit would duplicate (or
otherwise be of the same type as) a benefit specifically required to be
provided under another provision of this Agreement.
(n) Perquisites. The Executive shall be entitled to all perquisites generally
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provided by the Company to its senior executives. However, the Company
shall not be required to provide perquisites under this paragraph (n) if
such perquisites would duplicate (or otherwise be of the same type as) a
perquisite specifically required to be provided under another provision of
this Agreement.
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(o) Expenses. The Executive has been reimbursed for all reasonable expenses
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incurred in performing his obligations under this Agreement.
(p) Elective Deferral. The Executive shall be entitled, by agreement with the
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Company under terms established by the Board and acceptable to the
Executive, to defer receipt of any part of the salary, cash bonus, or other
cash incentive compensation payments, and to defer the receipt of any part
of the Company Stock otherwise due to him from the Company subject to the
following:
(i) Electively deferred cash payments under this paragraph (p) shall be
credited to a deferred compensation account (the Executive's
"Elective Deferral Account", which was referred to in the Prior
Agreement as the "Account") maintained by the Company in his name.
The opening balance of such Elective Deferral Account on the
Effective Date shall be the amount credited to the Participant's
Account in accordance with paragraph 2(n) of the Prior Agreement
immediately prior to the Effective Date of this Agreement (with the
adjustment for investment returns and interest to take into account
such returns and interest both before and after this Agreement
becomes effective). The portion of the Executive's Elective
Deferral Account that is not invested in accordance with paragraph
2(p)(ii) shall be credited as of the last day of each calendar month
with interest for that month at the prime rate in effect at The
First National Bank of Chicago on the first day of the month or, if
greater, the Company's short-term borrowing rate.
(ii) The Company, after consultation with the Executive, may invest
amounts credited to his Elective Deferral Account in securities and
other assets as the Company may determine. The Company and its
agents shall not incur any liability by reason of purchasing, or
failing to purchase, any security or other asset in good faith. The
Executive's Elective Deferral Account shall be charged or credited
as of the last day of each fiscal year of the Company, and at such
other times as the balance in the Elective Deferral Account shall be
determined, to reflect (A) dividends, interest or other earnings on
any such investments, reduced by the cost of funds (for the period
of deferral) for the amount of any taxes incurred by the Company
with respect thereto; (B) any gains or losses (whether or not
realized) on such investment; (C) the cost of funds (for the period
of deferral) for the
15
amount of any taxes incurred with respect to net gains realized on
any such investments, taking into account any applicable capital
loss carryovers and carrybacks, provided that in computing such
taxes, capital gains and losses on assets of the Company other than
such investments shall be disregarded; and (D) any direct expenses
incurred by the Company in such fiscal year or other applicable
period which would not have been incurred but for the investment of
amounts pursuant to the provisions of this paragraph (ii) (provided
that this clause (D) shall not be construed to permit a reduction
for the cost of taxes).
(iii) The Executive shall be entitled to any dividends payable with
respect to shares of Company Stock during the period in which
receipt of those shares is electively deferred by the Executive.
Such dividends shall be treated as being reinvested in additional
shares of Company Stock (based on the value of the stock at the time
of the dividend), which shares shall be delivered to the Executive
at the same time as delivery of other shares electively deferred by
the Executive.
(iv) By providing reasonable advance notice to the Company, the Executive
may elect to receive interest and dividends earned with respect
deferred cash and stock distributions as such interest and dividends
are earned.
(v) The Brunswick Corporation Supplemental Pension Plan (the
"Supplemental Plan") provides that certain amounts deferred under a
"Deferred Compensation Agreement" shall be taken into account for
purposes of determining a Participant's plan benefits. For purposes
of the Supplemental Plan, salary and bonus amounts that are
electively deferred by the Executive in accordance with this
paragraph (p) shall be treated as deferred under a Deferred
Compensation Agreement, and shall be taken into account under the
Supplemental Plan to the extent provided in that plan.
(vi) The Company will distribute the shares of Company Stock described
below in this paragraph (vi) as soon as practicable (but not more
than ten business days) after the Executive's Date of Termination.
Subject to paragraph 2(p)(iv), during the period of deferral, any
dividends will be deemed reinvested in accordance with paragraph
2(p)(iii) above. The deferral under this paragraph (vi) shall apply
to:
16
(A) The one-time stock award described in paragraph 2(a)(i) of the
Prior Agreement, with the period of deferral to begin as of the
Effective Date.
(B) The Long-Term Incentive Stock Award for the 1995 fiscal year, as
described in paragraph 2(d)(i) of the Prior Agreement, with the
period of deferral to begin as of January 1, 1996.
(C) The portion of the bonus for the 1995 fiscal year payable in
Company Stock, as described in paragraph 2(c) of the Prior
Agreement with the period of deferral to begin as of the date on
which stock bonuses are distributable to other officers for the
1995 year or, if no such awards are distributable, as of
February 15, 1996.
(D) The stock award described in paragraph 2(b)(ii), with the period
of deferral to begin as of the applicable date of grant in
accordance with paragraph 2(b)(ii)(A).
(vii) The Executive's entitlement to distributions under this paragraph
(p) shall include the right to receive amounts deferred under
paragraph (n) of the Prior Agreement, to the extent such deferred
amounts were not distributed prior to the Effective Date of this
Agreement.
(q) Automatic deferral. The Executive and the Company shall enter into an
------------------
agreement in the form set forth in Supplement D (relating to automatic
deferral), which is attached to and forms a part of this Agreement.
(r) Change in Control. It is recited here, for the avoidance of doubt, that,
-----------------
for purposes of applying the provisions of this paragraph 2 with respect to
compensation and benefits due on or after the Executive's Date of
Termination, the determination of the circumstances of the termination
under the provisions of paragraphs 3(a) through 3(g) (excluding paragraph
3(f), and except as otherwise provided in paragraph 3(c)) shall be applied
without regard to whether such Date of Termination occurs before, after or
at the time of a Change in Control.
3. Termination. The Executive's employment with the Company may be
-----------
terminated by the Company or the Executive only under the circumstances
described in paragraphs 3(a) through 3(g):
(a) Death. The Executive's employment hereunder will terminate upon his death.
-----
17
(b) Disability. If the Executive is Disabled, the Company may terminate the
----------
Executive's employment with the Company. For purposes of the Agreement,
the Executive shall be deemed to be "Disabled" if he has a physical or
mental disability that renders him incapable, after reasonable
accommodation, of performing his duties under this Agreement.
(c) Cause. The Company may terminate the Executive's employment hereunder at
-----
any time for Cause. For purposes of this Agreement, the term "Cause" shall
mean:
(i) the willful and continued failure by the Executive to substantially
perform his duties with the Company (other than any such failure
resulting from the Executive's being Disabled), within a reasonable
period of time after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically
identifies the manner in which the Board believes that the Executive
has not substantially performed his duties;
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company, monetarily or
otherwise; or
(iii) the engaging by the Executive in egregious misconduct involving
serious moral turpitude to the extent that, in the reasonable
judgment of the Company's Board, the Executive's credibility and
reputation no longer conform to the standard of the Company's
executives [; provided, however, that Cause shall exist under this
paragraph (c) only if the misconduct involves a violation of
applicable laws].
For purposes of this Agreement, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the Executive's action or omission was in the best interest of the Company.
Notwithstanding the foregoing, if the Executive's Date of Termination
occurs on or after the date of a Change in Control, the Executive's
employment shall not be deemed to have been terminated for "Cause" unless
and until there shall have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters (3/4)
of the entire membership of the Board (excluding the Executive) at a
meeting of the Board called and held for such purpose, finding that in the
good faith opinion of the Board, the Executive was guilty of conduct
constituting "Cause" and specifying the particulars thereof in detail;
provided,
18
however, that no such determination shall be made by the Board unless the
Executive is provided with reasonable advance notice of the Board meeting,
indicating that the purpose of such meeting is the determination of whether
such "Cause" exists, and unless the Executive, together with his counsel,
is provided with an opportunity to be heard before the Board at such
meeting prior to such determination being made.
(d) Termination by Executive. The Executive may terminate his employment
------------------------
hereunder as of the end of the Agreement Term. The delivery of a notice by
the Executive to the Company in accordance with paragraph 1(e) indicating
that the Executive will not extend the Agreement Term shall be treated as
the delivery of Notice of Termination by the Executive, with the
Executive's employment treated as being terminated immediately following
the end of the Agreement Term under this paragraph (d) (except to the
extent that the notice indicates that the failure to renew is for Good
Reason, and the circumstances conform to the requirements of paragraph
3(e)).
(e) Termination by Executive for Good Reason. The Executive may resign for
----------------------------------------
Good Reason (as defined in this paragraph (e)). For purposes of this
Agreement, "Good Reason" shall mean, without the Executive's express
written consent, the occurrence of any of the following circumstances
unless, in the case of paragraphs (i), (iii), (iv), (v), (vi) or (vii)
below, such circumstances are fully corrected within a reasonable period
(not to exceed 10 business days) following delivery of the Notice of
Termination given in respect thereof:
(i) The assignment to the Executive of any duties materially
inconsistent with the Executive's position as Chief Executive and
Chairman of the Board, or a substantial adverse alteration in the
nature of the Executive's responsibilities from those in effect on
the Effective Date.
(ii) Relocation of the Executive's office to a location that is greater
than fifty miles from the Executive's office as of the Effective
Date.
(iii) A reduction in the Executive's annual base salary or bonus
opportunities as of the Effective Date, except for across-the-board
uniform bonus reductions affecting all senior executives of the
Company, or a reduction in any benefit required to be provided to
the Executive under this Agreement to a level below the level
required under this Agreement.
19
(iv) The failure of the Company, without the Executive's consent, to pay
to the Executive any portion of the Executive's compensation due
under this Agreement, within 10 business days of the date such
payment is due.
(v) The failure of the Company to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement.
(vi) Any purported termination of the Executive's employment that is not
effected pursuant to a Notice of Termination satisfying the
requirements of paragraph (h) below (and for purposes of this
Agreement, no such purported termination shall be effective).
(vii) A reasonable determination by the Executive that, as a result of a
change in circumstances regarding his duties, he is unable to
exercise the authorities, powers, functions or duties attached to
his position and contemplated by paragraph 1(a).
(viii) The failure of the Executive to be retained as a member and Chairman
of the Board.
Except as otherwise expressly provided in this paragraph 3(e) or paragraph
3(f), nothing in this Agreement shall be construed to authorize or permit
the resignation of the Executive during the Agreement Term.
(f) Termination following Change in Control. The Executive may elect to
---------------------------------------
terminate his employment with the Company during the first 60 days
following a Change in Control for any reason.
(g) Termination by Company. The Company may terminate the Executive's
----------------------
employment hereunder at any time for any reason, and the Company shall not
be required to specify a reason for the termination unless termination
occurs under paragraph 3(a), 3(b), or 3(c). Termination of the Executive's
employment by the Company shall be deemed to have occurred under this
paragraph 3(g) only if it is not for reasons described in paragraph 3(a),
3(b) or 3(c). The delivery of a notice by the Company to the Executive in
accordance with paragraph 1(e) indicating that the Company will not extend
the Agreement Term shall be treated as the delivery of Notice of
Termination by the Company, with the Executive's employment treated as
being terminated immediately following the end of the Agreement Term under
this paragraph (g) (except to the extent that the notice indicates that the
failure to renew is for Cause, or because of the Executive's death or the
20
Executive's being Disabled, and the circumstances conform to the
requirements of paragraph 3(c), paragraph 3(a) or paragraph 3(b),
respectively).
(h) Notice of Termination. Any termination of the Executive's employment by
---------------------
the Company or the Executive must be communicated by a written Notice of
Termination to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" means a dated notice which indicates the specific
termination provision in this Agreement relied on and which sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated (except to the extent that such facts and circumstances are not
required under paragraph 3(d), 3(f), or 3(g)).
(i) Date of Termination. "Date of Termination" means the last day the
-------------------
Executive is employed by the Company, provided that the Executive's
employment is terminated in accordance with the foregoing provisions of
this paragraph 3.
4. Rights Upon Termination. The Executive's right to payment and benefits
-----------------------
under this Agreement for periods after his Date of Termination shall be
determined in accordance with the following provisions of this paragraph 4:
(a) Death or Disability. If the Executive's Date of Termination occurs under
-------------------
circumstances described in paragraph 3(a) (relating to the Executive's
death) or paragraph 3(b) (relating to the Executive's being Disabled),
then, except as otherwise provided in paragraph 2(e), paragraph 4(e) or
otherwise agreed in writing between the Executive and the Company, the
Executive shall be entitled to:
(i) Any unpaid salary for days worked prior to the Date of Termination,
and payment for unused vacation (determined in accordance with the
policies of the Company as in effect from time to time for Company
officers) earned prior to the Date of Termination.
(ii) A pro-rata payment with respect to the bonus described in paragraph
2(d) for the performance period in which the Date of Termination
occurs (including the portion of such performance period, if any,
occurring under the Prior Agreement). In determining the amount of
the bonus payable under this paragraph (ii), the performance through
the end of the performance period shall be extrapolated based on the
performance through the Date of Termination.
21
(iii) A pro-rata distribution of the Long-Term Incentive Share Award
shares described in paragraph 2(e) with respect to the performance
period in which the Date of Termination occurs (including the
portion of such performance period, if any, occurring under the
Prior Agreement). In determining the amount of the Long-Term
Incentive Share Award payable under this paragraph (iii), the
performance through the end of the performance period shall be
extrapolated based on the performance through the Date of
Termination.
(iv) A pro-rata payment with respect to the SIP award described in
paragraph 2(f) for the performance period in which the Date of
Termination occurs (including the portion of such performance
period, if any, occurring under the Prior Agreement). In
determining the amount of the SIP award payable under this paragraph
(iv), the performance through the end of the performance period
shall be extrapolated based on the performance through the Date of
Termination.
(v) Lapse of exercise restrictions with respect to stock options;
provided, however, that with respect to stock options granted
pursuant to paragraph 2(a)(ii), the lapse of restrictions shall
apply only to non-performance exercise restrictions. For purposes
of this Agreement, exercise restrictions with respect to options
shall be considered to be "non-performance" if it is substantially
certain, at the Date of Termination, that the restrictions would
have lapsed if the Executive had continued in the employ of the
Company for two years after that date.
(vi) The performance-related exercise restrictions with respect to stock
options granted pursuant to paragraph 2(a)(ii) shall lapse to the
extent that the Board, in its discretion, determines that the lapse
is appropriate. The determination by the Board shall be based on
such factors as the Board determines to be appropriate, including
the progress toward the performance goals that have been achieved as
of the Date of Termination.
(vii) The portion of any stock option granted to the Executive that is
exercisable immediately prior to the Date of Termination, as well as
the portion of any stock option that becomes exercisable by reason
of this paragraph (a), shall remain exercisable for five years after
the Date of Termination, but in no event later than the date fixed
for expiration of the option
22
(determined without regard to Executive's termination of
employment).
(b) Termination by Company without Cause. If the Executive's Date of
------------------------------------
Termination occurs prior to a Change in Control under circumstances
described in paragraph 3(g) (relating to termination by the Company without
Cause), or if the Executive resigns for Good Reason prior to a Change in
Control, then, subject to paragraph 2(e), paragraph 4(e), and except as
otherwise agreed in writing between the Executive and the Company, the
Executive shall be entitled to benefits in accordance with paragraphs (i)
through (viii) below, determined as though he had continued to be employed
by the Company for the period continuing through the second anniversary of
the Date of Termination:
(i) The Executive shall be entitled to the salary amount described in
paragraph 2(c), as in effect on his Date of Termination, determined
as though he had continued to be employed by the Company for the
period continuing through the second anniversary of the Date of
Termination.
(ii) The Executive shall be entitled to the bonus payments described in
paragraph 2(d), determined as though he had continued to be employed
by the Company for the period continuing through the second
anniversary of the Date of Termination; provided that the Executive
will be entitled to a pro-rata payment for the performance period
that includes the two-year anniversary of the Date of Termination.
In determining the amount of the bonus payable under this paragraph
(ii), the performance through the end of the performance period
shall be extrapolated based on the performance through the Date of
Termination.
(iii) The Executive shall be entitled to the Long-Term Incentive Share
Award described in paragraph 2(e) based on the actual performance
for the applicable period(s), determined as though he had continued
to be employed by the Company for the period continuing through the
second anniversary of the Date of Termination; provided that the
Executive will be entitled to a pro-rata payment for the performance
period that includes the two-year anniversary of the Date of
Termination. In determining the amount of the Long-Term Incentive
Share Award payable under this paragraph (iii), the performance
through the end of the performance period shall be extrapolated
based on the performance through the Date of Termination.
23
(iv) The Executive shall be entitled to the SIP award described in
paragraph 2(f) based on the actual performance for the applicable
period(s), determined as though he had continued to be employed by
the Company for the period continuing through the second anniversary
of the Date of Termination; provided that the Executive will be
entitled to a pro-rata payment for the performance period that
includes the two-year anniversary of the Date of Termination. In
determining the amount of the SIP award payable under this paragraph
(iv), the performance through the end of the performance period
shall be extrapolated based on the performance through the Date of
Termination.
(v) The Executive shall be entitled to the life insurance coverage
described in paragraph 2(h), determined as though he had continued
to be employed by the Company for the period continuing through the
second anniversary of the Date of Termination.
(vi) The exercise restrictions with respect to stock options shall lapse
as of the Date of Termination; provided, however, that with respect
to stock options granted pursuant to paragraph 2(a)(ii), the lapse
of restrictions shall apply only to non-performance exercise
restrictions. The performance-related exercise restrictions with
respect to stock options granted pursuant to paragraph 2(a)(ii)
shall lapse to the extent that the Board, in its discretion,
determines that the lapse is appropriate; provided that such
determination by the Board shall be based on such factors as the
Board determines to be appropriate, including the progress toward
the performance goals that have been achieved as of the Date of
Termination.
(vii) The portion of any stock option granted to the Executive that is
exercisable immediately prior to the Date of Termination, as well as
the portion of any stock option that becomes exercisable by reason
of this paragraph (b), shall remain exercisable for five years after
the Date of Termination, but in no event later than the date fixed
for expiration of the option (determined without regard to
Executive's termination of employment).
(viii) The pension benefits described in paragraph 2(i) shall be vested as
of the Date of Termination, provided that the Executive shall not
accrue additional pension benefits for periods after the Date of
Termination, and the retiree medical benefit described in the final
24
sentence of paragraph 2(j) (relating to employee contributions)
shall be determined as though the Executive had continued in the
employ of the Company for the period continuing through the second
anniversary of the Date of Termination.
(ix) The Executive shall be entitled to any additional benefits that
would have been provided to him pursuant to paragraph 2(m),
determined as though he had continued to be employed by the Company
for the period continuing through the second anniversary of the Date
of Termination; provided that this paragraph (ix) shall not apply to
stock options, security protection, vacation, perquisites, expense
reimbursement, or any benefits that are subject to the foregoing
provisions of paragraphs 4(b)(i) through 4(b)(viii).
Payments and benefits due under this paragraph 4(b) shall be subject to the
following:
(I) Subject to the following provisions of this paragraph 4(b)(I),
benefits to be provided under the foregoing provisions of this
paragraph 4(b) shall be provided at the time they would have been
provided if the Executive continued to be employed by the Company;
provided, however, that the amounts payable in accordance with
paragraphs 4(b)(i), (ii) and (iii) shall be distributed to the
Executive, within 10 business days following the Date of Termination,
in a lump sum payment, with no actuarial or present value reduction
for accelerated payment.
(II) To the extent that benefits distributable under this paragraph 4(b)
would be distributable in Company Stock, or the amount of such benefit
would be based on the value of Company stock, the Company may satisfy
its obligation under this paragraph 4(b) by providing a cash payment
equal to the value of the benefit. Except as otherwise provided in
this paragraph (II), to the extent that the Company determines that
the Executive cannot participate in any benefit plan because he is not
actively performing services for the Company, the Company may satisfy
its obligation under this paragraph 4(b) by distributing cash to the
Executive equal to the cost that would be incurred by the Executive to
replace the benefit.
(c) Indemnification. For a period of six years after his Date of Termination,
---------------
the Executive shall be entitled to coverage under any directors and
officers liability insurance policy, indemnification by-law and
indemnification agreement maintained or offered by the Company or any
successor to the
25
Company during that period to directors and officers. This paragraph (c)
shall not apply if the Executive's Date of Termination occurs during the
Agreement Term under circumstances described in paragraph 3(c) (relating to
the Executive's termination for Cause).
(d) Other Obligations. In addition to the foregoing payments and benefits, the
-----------------
Executive shall be entitled to any other payments or benefits due to be
provided to the Executive pursuant to any employee compensation or benefit
plans or arrangements, to the extent such payments and benefits are earned
as of the Date of Termination. Except as otherwise specifically provided
in this paragraph 4, the Company shall have no obligation to make any other
payments or provide any other benefits under the Agreement for periods
after the Executive's Date of Termination.
(e) No Participation in Severance Plans. Except as may be otherwise
-----------------------------------
specifically provided in an amendment of this paragraph (e) adopted in
accordance with paragraph 11, payments under this paragraph 4 shall be in
lieu of any compensation or benefits that may be otherwise payable to or on
behalf of the Executive pursuant to the terms of any severance pay
arrangement of the Company or any Affiliate or any other, similar
arrangement of the Company or any Affiliate providing benefits upon
involuntary termination of employment.
(f) Termination after Change in Control. Subject to the provisions of
-----------------------------------
paragraphs 4(c), 4(d) and 4(e), if the Executive's Date of Termination
occurs on or after the date of a Change in Control, his right to payment
and benefits under this Agreement for periods after his Date of Termination
shall be determined in accordance with the provisions of Supplement E.
5. Change in Control Rules. The following shall apply with respect to a
-----------------------
change in control of the Company:
(a) The terms of stock options, restricted stock, and other stock-based
compensation awarded to the Executive under this Agreement shall include
change in control protections (described below). For purposes of this
paragraph (a), "change in control protections" means the protections
relating to a change in control (as defined in the 1991 Plan, or a
successor plan) that are provided for comparable awards to officers under
the 1991 Plan (or successor plan) at the time such awards are made pursuant
to this Agreement (or, if no comparable awards are then made under the
plan, at the next previous time such awards are made under the plan).
26
(b) Upon the request of the Executive made at any time after there has been a
Change in Control of the Company, the Company shall do any one or more of
the following as requested:
(i) Pay to the Executive any cash and stock deferred in accordance with
paragraph 2(p) of this Agreement.
(ii) Pay to the Executive (or his beneficiary after his death, if the
Executive so provides by a writing filed with the Secretary of the
Company and the beneficiary so requests), the actuarial equivalence
of the Executive's accrued benefit under the Company's supplemental
pension plan. Actuarial equivalence shall be determined on the
basis of the rates, tables, and factors then in effect for purposes
of determining the actuarial equivalence of optional forms of
payment under the Brunswick Pension Plan for Salaried Employees, or
any successor plans (the "Pension Plans"); provided, however, that
the interest rate or rates which would be used as of the date of
Change in Control of the Company by the Pension Benefit Guaranty
Corporation (the "PBGC") for purposes of determining the present
value of the Executive's benefits under the Pension Plans if the
Pension Plans had terminated on the date of Change in Control with
insufficient assets to provide benefits guaranteed by the PBGC on
that date shall be substituted for the interest assumptions used
under the Pension Plans.
(c) "Change in Control" means a change in the beneficial ownership of the
Company's voting stock or a change in the composition of the Board which
occurs as follows: (A) any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934), other than a trustee
or other fiduciary of securities held under an employee benefit plan of the
Company or its subsidiaries, is or becomes beneficial owner, directly or
indirectly, of stock of the Company representing 30% or more of the total
voting power of the Company's then outstanding stock, (B) a tender offer
(for which a filing has been made with the SEC which purports to comply
with the requirements of Section 14(d) of the Securities Exchange Act of
1934 and the corresponding SEC rules) is made for the stock of the Company,
which has not been negotiated and approved by the Board, then the first to
occur of (i) any time during the offer when the person (using the
definition in (A) above) making the offer owns or has accepted for payment
stock of the Company with 25% or more of the total voting power of the
Company's stock or (ii) three business days before the offer is to
terminate unless the offer is withdrawn first if the person making the
offer could own, by the terms of the offer plus any shares owned by that
27
person, shares with 50% or more of the total voting power of the Company's
shares when the offer terminates; or (C) individuals who were the Board's
nominees for election as directors of the Company immediately prior to a
meeting of the stockholders of the Company involving a contest for the
election of directors shall not constitutes a majority of the Board
following the election.
6. Noncompetition. For the period beginning on the Effective Date and
--------------
ending two years after the Executive's Date of Termination (regardless of the
reason for the termination of employment), (a) the Executive shall not directly
or indirectly be employed or retained by, or render any services for, or be
financially interested in any manner, in any person, firm or corporation engaged
in any business which is then materially competitive in any way with any
business in which the Company or any of its Affiliates was engaged (including
any program of development or research) during the Executive's employment, (b)
the Executive shall not divert or attempt to divert any business from the
Company or any Affiliate, and (c) the Executive shall not disturb or attempt to
disturb any business or employment relationships of the Company or any
Affiliate.
7. Confidential Information. The Executive agrees that:
------------------------
(a) Except as may be required by the lawful order of a court or agency of
competent jurisdiction, or except to the extent that the Executive has
express written authorization from the Company, he agrees to keep secret
and confidential all Confidential Information (as defined below), and not
disclose the same, either directly or indirectly, to any other person,
firm, or business entity, or to use it in any way. The Executive agrees
that, to the extent that any court or agency seeks to have the Executive
disclose Confidential Information, he shall promptly inform the Company,
and he shall take such reasonable steps to prevent disclosure of
Confidential Information until the Company (or, if applicable, the
Affiliate) has been informed of such requested disclosure, and the Company
has an opportunity to respond to such court or agency. To the extent that
the Executive obtains information on behalf of the Company or an Affiliate
that may be subject to attorney-client privilege as to the Company's or an
Affiliate's attorneys, the Executive shall take reasonable steps to
maintain the confidentiality of such information and to preserve such
privilege.
(b) For purposes of this Agreement, the term "Confidential Information" means
all non-public information concerning the Company and any Affiliate that
was acquired by or disclosed to the Executive during the course of his
employment with the Company, or during discussions between the Executive
and the
28
Company or any Affiliate following his termination of employment arising
out of his employment or this Agreement, including, without limitation:
(i) all "trade secrets" as that term is used in the Illinois Trade
Secrets Act (or, if that Act is repealed, the Uniform Trade Secrets
Act upon which the Illinois Trade Secrets Act is based) of the
Company or any Affiliate;
(ii) any non-public information regarding the Company's or the
Affiliates' directors, officers, employees, customers, equipment,
processes, costs, operations and methods, whether past, current or
planned, as well as knowledge and data relating to business plans,
marketing and sales information originated, owned, controlled or
possessed by the Company or an Affiliate; and
(iii) information regarding litigation and threatened litigation involving
or affecting the Company or an Affiliate.
(c) This paragraph 7 shall not be construed to unreasonably restrict the
Executive's ability to disclose confidential information in an arbitration
proceeding or a court proceeding in connection with the assertion of, or
defense against any claim of breach of this Agreement in accordance with
paragraph 9 or paragraph 19. If there is a dispute between the Company and
the Executive as to whether information may be disclosed in accordance with
this paragraph (c), the matter shall be submitted to the arbitrators or the
court (whichever is applicable) for decision.
8. Defense of Claims. The Executive agrees that, for the period beginning
-----------------
on the Effective Date, and continuing for a reasonable period after the
Executive's Date of Termination, the Executive will cooperate with the Company
and the Affiliates in defense of any claims that may be made against the Company
or an Affiliate, and will cooperate with the Company and the Affiliates in the
prosecution of any claims that may be made by the Company or an Affiliate, to
the extent that such claims may relate to services performed by the Executive
for the Company or the Affiliates. The Executive agrees to promptly inform the
Company if he becomes aware of any lawsuits involving such claims that may be
filed against the Company or any Affiliate. The Company agrees to reimburse the
Executive for all of the Executive's reasonable out-of-pocket expenses
associated with such cooperation, including travel expenses. For periods after
the Executive's Date of Termination, the Company agrees to provide reasonable
compensation to the Executive for such cooperation. The Executive also agrees
to
29
promptly inform the Company if he is asked to assist in any investigation of the
Company or an Affiliate (or their actions) that may relate to services performed
by the Executive for the Company or an Affiliate, regardless of whether a
lawsuit has then been filed against the Company or an Affiliate with respect to
such investigation.
9. Equitable Remedies. The Executive acknowledges that the Company would
------------------
be irreparably injured by a violation of paragraph 6 or 7, and he agrees that
the Company, in addition to any other remedies available to it for such breach
or threatened breach, shall be entitled to a preliminary injunction, temporary
restraining order, or other equivalent relief, restraining the Executive from
any actual or threatened breach of paragraph 6 or 7.
10. Nonalienation. The interests of the Executive under this Agreement
-------------
are not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Executive or the Executive's beneficiary.
11. Amendment. This Agreement may be amended or canceled only by mutual
---------
agreement of the parties in writing without the consent of any other person. So
long as the Executive lives, no person, other than the parties hereto, shall
have any rights under or interest in this Agreement or the subject matter
hereof.
12. Applicable Law. The provisions of this Agreement shall be construed
--------------
in accordance with the laws of the State of Illinois, without regard to the
conflict of law provisions of any state.
13. Severability. The invalidity or unenforceability of any provision of
------------
this Agreement will not affect the validity or enforceability of any other
provision of this Agreement, and this Agreement will be construed as if such
invalid or unenforceable provision were omitted (but only to the extent that
such provision cannot be appropriately reformed or modified).
14. Waiver of Breach. No waiver by any party hereto of a breach of any
----------------
provision of this Agreement by any other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
will operate or be construed as a waiver of any subsequent breach by such other
party or any similar or dissimilar provisions and conditions at the same or any
prior or subsequent time. The failure of any party hereto to take any action by
reason of such breach will not deprive such party of the right to take action at
any time while such breach continues.
15. Successors. This Agreement shall be binding upon, and inure to the
----------
benefit of, the Company and its successors and assigns and upon any person
acquiring, whether by merger, consolidation,
30
purchase of assets or otherwise, all or substantially all of the Company's
assets and business.
16. Notices. Notices and all other communications provided for in this
-------
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or sent
by facsimile or prepaid overnight courier to the parties at the addresses set
forth below (or such other addresses as shall be specified by the parties by
like notice). Such notices, demands, claims and other communications shall be
deemed given:
(a) in the case of delivery by overnight service with guaranteed next day
delivery, the next day or the day designated for delivery;
(b) in the case of certified or registered U.S. mail, five days after deposit
in the U.S. mail; or
(c) in the case of facsimile, the date upon which the transmitting party
received confirmation of receipt by facsimile, telephone or otherwise;
provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received. Communications that
are to be delivered by the U.S. mail or by overnight service are to be delivered
to the addresses set forth below:
to the Company:
Brunswick Corporation
0 Xxxxx Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
or to the Executive:
Xxxxx X. Xxxxxx
000 Xxxxxxx, Xxxx 0X
Xxxx Xxxxxx, Xxxxxxxx 00000
All notices to the Company shall be directed to the attention of Secretary of
the Company, with a copy to the Chairman of the Compensation Committee of the
Board. Each party, by written notice furnished to the other party, may modify
the applicable delivery address, except that notice of change of address shall
be effective only upon receipt.
17. Survival of Agreement. Except as otherwise expressly provided in this
---------------------
Agreement, the rights and obligations of the
31
parties to this Agreement shall survive the termination of the Executive's
employment with the Company and all Affiliates.
18. Entire Agreement. Except as otherwise noted herein, this Agreement
----------------
constitutes the entire agreement between the parties concerning the subject
matter hereof and supersedes all prior and contemporaneous agreements, if any,
between the parties relating to the subject matter hereof. However, except as
otherwise provided in this Agreement, the obligations of the Company and the
Executive with respect to compensation and benefits that were paid or
distributed prior to the Effective Date, and with respect to services performed
prior to the Effective Date, shall be governed by the Prior Agreement.
19. Resolution of Disputes. Any controversy or claim arising out of or
----------------------
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in the City of Chicago in accordance with the laws of the State of
Illinois by three arbitrators, one of whom shall be appointed by the Company,
one by the Executive, and the third by the other two. If the other two
arbitrators cannot agree on the appointment of a third arbitrator, or if either
party fails to appoint an arbitrator, then such arbitrator shall be appointed by
the Chief Judge of the United States Court of Appeals for the Seventh Circuit.
The arbitration shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of arbitrators
which shall be as provided in this paragraph 19. Judgement upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. In the event that it shall be necessary or desirable for the Executive
to retain legal counsel or incur other costs and expenses in connection with the
enforcement of any or all of his rights under this Agreement, he shall be
entitled to recover from the Company reasonable attorney's fees and costs and
expenses incurred by him in connection with the enforcement of those rights.
Payments shall be made to the Executive by the Company at the time these
attorney's fees and costs and expenses are incurred by the Executive. If,
however, the arbitrators should later determine that under the circumstances it
was unjust for the Company to have made any of these payments or attorney's fees
and costs and expenses to the Executive, he shall repay them to the Company in
accordance with the order of the arbitrators. Any award of the arbitrators
shall include interest at a rate or rates considered just under the
circumstances by the arbitrators. This paragraph 19 shall not be construed to
limit the Company's right to obtain relief under paragraph 9 with respect to any
matter or controversy subject to paragraph 9, and, pending a final determination
by the arbitrator with respect to any such matter or controversy, the Company
shall be entitled to obtain any such relief by direct application to a court of
law, without being required to first arbitrate such matter or controversy.
32
IN WITNESS THEREOF, the Executive has hereunto set his hand, and the
Company has caused these presents to be executed in its name and on its behalf,
and its corporate seal to be hereunto affixed, all as of the date first above
written.
_______________________
XXXXX X. XXXXXX
BRUNSWICK CORPORATION
By: ________________________
Xxxxxxx X. Xxxxxxx
Vice President and Chief
Human Resources Officer
ATTEST:
_____________________
(Seal)
33
Supplement A
Stock Option Agreement
----------------------
THIS AGREEMENT, dated as of February 3, 1997 (the "Effective Date"), by and
between BRUNSWICK CORPORATION, a Delaware corporation, having its principal
executive offices at 0 X. Xxxxx Xxxxx, Xxxx Xxxxxx, Xxxxxxxx 00000 (hereinafter
called "Company") and Xxxxx X. Xxxxxx, an employee of the Company (hereinafter
called the "Option Holder").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the "Board") has adopted
the 1991 Stock Plan (the "Plan") and the Company's stockholders have approved
the Plan; and
WHEREAS, the Company has entered into an employment agreement with the
Option Holder dated April 1, 1995 (the "Prior Employment Agreement"), and the
option reflected by this Agreement is intended to satisfy the requirements of
paragraph 2(a)(ii) of the Prior Employment Agreement;
WHEREAS, the Company has entered into a revised employment agreement with
the Option Holder dated February 3, 1997 (the "Employment Agreement"), which
amends the option intended to satisfy the requirements of paragraph 2(a)(ii) of
the Prior Employment Agreement, and this Agreement reflects such amendment;
NOW, THEREFORE, in consideration of the mutual promises and representations
herein contained and other good and valuable consideration, it is agreed by and
between the parties hereto as follows:
GRANT OF OPTION
---------------
1. On April 1, 1995, the Company granted to the Option Holder the right
and option to purchase on the terms and conditions hereinafter set forth, and
subject to the provisions of the Plan, all or any part of an aggregate of
500,000 shares of the Common Stock ($.75 par value) of the Company at the
purchase price of $20.125 per share. The option is exercisable by the Option
Holder in accordance with the following schedule:
34
The option shall become
exercisable with
respect to the following
If the Executive is employed number of shares
through the following date: shares on and after that date:
--------------------------- ------------------------------
1st anniversary of April 1, 1995 60,000
2nd anniversary of April 1, 1995 60,000
3rd anniversary of April 1, 1995 80,000
The first date on which the Stock
Price attains $25.00 or, if earlier,
the first day of the quarter of the
Company following the occurrence
of four consecutive quarters during
which aggregate net earnings for such
four quarters exceeds $2.00 per share 90,000
The first date on which the Stock
Price attains $30.00 or, if earlier,
the first day of the quarter of the
Company following the occurrence
of four consecutive quarters during
which aggregate net earnings for such
four quarters exceeds $2.35 per share 90,000
The first date on which the Stock
Price attains $35.00 or, if earlier,
the first day of the quarter of the
Company following the occurrence
of four consecutive quarters during
which aggregate net earnings for such
four quarters exceeds $2.70 per share 120,000
provided, however, that all options herein granted, to the extent not previously
exercised, shall terminate at 4:00 p.m. CST on the tenth anniversary of April 1,
1995, upon the termination of employment of the Option Holder as specified in
paragraph 4 of this Agreement or at such other time as is hereinafter provided.
If the Option Holder's employment by the Company continues through the three-
year anniversary of April 1, 1995, then any portion of the option herein granted
and not previously exercisable shall become exercisable on such three-year
anniversary. In addition, notwithstanding any provisions herein to the
contrary, in the event a Change in Control (as defined in the Plan) of the
Company occurs, the Option Holder may exercise all unexercised options in whole
or in part upon the later of six-month anniversary of April 1, 1995 or such
Change in Control and until the earlier of the stated expiration of the options
or two years following termination of
35
employment. For purposes of this paragraph 1, the "Stock Price" for any date
shall be the closing market composite price for the Common Stock (as reported
for the New York Stock Exchange - Composite Transactions).
2. The Compensation Committee of the Board (the "Committee"), in
consultation with the Option Holder, shall adjust the net earnings per share
requirement and the Stock Price requirement applicable to Common Stock under
paragraph 1 above as appropriate from time to time to reflect material mergers,
consolidations, recapitalizations, reclassifications, stock dividends, stock
splits, combinations of shares, other capital adjustments and other unusual and
extraordinary events.
NOTICE
------
3. This option or any part thereof may be exercised by giving a written
notice of exercise to the Secretary of the Company, specifying the number of
shares to be purchased and the method of payment of the aggregate option price
of the number of shares purchased. Such exercise shall be effective upon the
actual receipt of such written notice and payment to the Secretary of the
Company. The aggregate option price of all shares purchased pursuant to an
exercise of the option shall be paid (A) in cash (including check, bank draft,
or money order), (B) in Common Stock of the Company (valued at the fair market
value thereof on the date of exercise), (C) by a combination of cash and Common
Stock or (D) in accordance with a cashless exercise program under which, if so
instructed by the Option Holder, shares of Common Stock may be issued directly
to the Option Holder's broker or dealer upon receipt of the option price in cash
from the broker or dealer. No rights or privileges of a stockholder of the
Company in respect of any of the shares issuable upon the exercise of any part
of this option shall inure to the Option Holder, or any other person entitled to
exercise this option as herein provided unless and until certificates
representing such shares shall have been issued and delivered.
TERMINATION OF EMPLOYMENT
-------------------------
4. This option may not be exercised after the termination of employment of
the Option Holder with the Company or any of its subsidiaries, subject to the
following:
(a) The portion of the option that becomes exercisable in accordance paragraph
1 of this Agreement based on the Option Holder's completion of one, two and
three years of service after April 1, 1995 shall become (or remain)
exercisable on termination of the Option Holder's employment, if the
termination occurs under circumstances described in paragraphs 4(a)(i),
4(a)(ii), or 4(a)(iii) below.
36
(i) Termination occurs upon retirement at or after age 65.
(ii) Termination occurs due to disability.
(iii) Termination occurs by reason of the Option Holder's death (in which
case such exercise shall be by the person or persons to whom the
Option Holder's rights under such option are transferred by will or
the laws of descent and distribution).
(iv) Termination is by the Company for reasons other than Cause under
circumstances described in paragraph 3(g) of the Employment
Agreement, or termination occurs for Good Reason under circumstances
that satisfy the requirements of paragraph 3(e) of the Employment
Agreement.
The portion of the option that becomes exercisable in accordance paragraph
1 of this Agreement based on the Option Holder's completion of one, two and
three years of service after April 1, 1995 and which is exercisable
immediately prior to the date of the Option Holder's termination of
employment, as well as the portion of the option that becomes exercisable
by reason of this paragraph (a), shall remain exercisable for five years
after such termination, but in no event subsequent to the date fixed herein
for expiration of the option.
(b) The portion of the option that becomes exercisable in accordance paragraph
1 of this Agreement based on the Stock Price or earnings per share of the
Company, and which is not exercisable on the date of the Option Holder's
termination of employment, shall become exercisable on termination of the
Option Holder's employment, to the extent that the Committee, in its
discretion, determines to be appropriate. The determination by the
Committee shall be based on such factors as the Committee determines to be
appropriate, including the progress toward the performance goals that have
been achieved as of the date of the Option Holder's termination of
employment. This paragraph (b) shall apply to the Option Holder if his
termination of employment occurs under circumstances described in
paragraphs 4(b)(i), 4(b)(ii), or 4(b)(iii) below.
(i) Termination occurs upon retirement at or after age 65.
(ii) Termination occurs due to disability.
(iii) Termination occurs by reason of the Option Holder's death (in which
case such exercise shall be by the person or persons to whom the
Option Holder's rights
37
under such option are transferred by will or the laws of descent and
distribution).
(iv) Termination is by the Company, for reasons other than Cause under
circumstances described in paragraph 3(g) of the Employment
Agreement, or termination occurs for Good Reason under circumstances
that satisfy the requirements of paragraph 3(e) of the Employment
Agreement.
The portion of the option that becomes exercisable in accordance paragraph
1 of this Agreement based on the Stock Price or earnings per share of the
Company, and which is exercisable immediately prior to the date of the
Option Holder's termination of employment, as well as the portion of the
option that becomes exercisable by reason of this paragraph (b), shall
remain exercisable for five years after such termination, but in no event
subsequent to the date fixed herein for expiration of the option.
(c) During any authorized leave of absence from employment, the option may not
be exercised. After return to active employment the Option Holder may
exercise the option, to the extent it is exercisable under paragraph 1 of
this Agreement, up to the date fixed herein for expiration of the option.
NON-TRANSFERABILITY OF THE OPTION
---------------------------------
5. Except as otherwise herein provided, the option and the rights and
privileges conferred by this Agreement shall not be transferred, assigned,
pledged or hypothecated in any way, whether by operation of law or otherwise,
and the option shall be exercised during the lifetime of the Option Holder only
by the Option Holder. Upon any attempt so to transfer, assign, pledge,
hypothecate or otherwise dispose of said option or any right or privilege
conferred hereby contrary to the provisions hereof, this option and the rights
and privileges conferred hereby shall immediately become null and void.
Notwithstanding the foregoing provisions of this paragraph 5, the Option may be
transferred by the Option Holder for no consideration to or for the benefit of
the Option Holder's Immediate Family (including, without limitation, to a trust
for the benefit of the Option Holder's Immediate Family or to a partnership for
members of the Option Holder's Immediate Family), subject to such limits as the
Committee may establish, and the transferee shall remain subject to all the
terms and conditions applicable to the Option prior to such transfer. The
foregoing right to transfer the Option shall also apply to the right to consent
to amendments to the Option agreement. The Option Holder's "Immediate Family"
shall mean the Option Holder's spouse, children, stepchildren, adoptive
relationships, sisters, brothers and grandchildren (and, for this purpose, shall
also include the Option Holder).
38
TAX WITHHOLDING
---------------
6. When an option is exercised, the Company will withhold from the Option
Holder the amount required to meet federal, state and local withholding tax
requirements. The Option Holder will have the option of paying the required
amount to the Company in cash, delivering previously acquired shares of Common
Stock, or requesting that the Company withhold a number of shares of Common
Stock equal in value to the withholding tax amount.
SHARE ADJUSTMENTS
-----------------
7. The number or kinds of shares or securities subject to this option and
the purchase price therefor are subject to adjustment as provided in paragraph
5(c) of the Plan.
ADDRESSES FOR NOTICES
---------------------
8. Any notice to be given to the Company shall be addressed to the
Secretary of the Company at the principal executive offices of the Company, and
any notice to be given to the Option Holder shall be addressed to the address
then appearing in the personnel records of the Company for such Option Holder,
or at such other address as either party may hereafter designate in writing to
the other. Any such notice shall be effective upon receipt by the party to
which it is addressed.
MISCELLANEOUS
-------------
9. Subject to the terms of any existing contractual agreement to the
contrary, nothing herein contained shall affect the right of the Company or its
subsidiaries to terminate at any time the Option Holder's employment, services,
responsibilities, duties or authority to represent the Company or confer any
rights to continued employment by the Company or its subsidiaries.
10. All decisions or interpretations made by the Committee with regard to
any question arising hereunder or under the Plan shall be binding and conclusive
to the Company and the Option Holder.
11. This Agreement shall bind and inure to the benefit of the parties
hereto and the successors and assigns of the Company and, to the extent provided
in paragraph 4 of this Agreement, the executors, administrators, legatees and
heirs of the Option Holder.
39
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the year and date above written.
BRUNSWICK CORPORATION
By:________________________
___________________________
Option Holder
___________________________
Home Address
___________________________
___________________________
Social Security Number
40
Supplement B
Stock Option Agreement
----------------------
THIS AGREEMENT, dated as of February 3, 1997 (the "Effective Date"), by and
between BRUNSWICK CORPORATION, a Delaware corporation, having its principal
executive offices at 0 X. Xxxxx Xxxxx, Xxxx Xxxxxx, Xxxxxxxx 00000 (hereinafter
called "Company") and Xxxxx X. Xxxxxx, an employee of the Company (hereinafter
called the "Option Holder").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the "Board") has adopted
the 1991 Stock Plan (the "Plan") and the Company's stockholders have approved
the Plan; and
WHEREAS, the Company has entered into an employment agreement with the
Option Holder dated February 3, 1997 (the "Employment Agreement"), and the
option reflected by this Agreement is intended to satisfy the requirements of
paragraph 2(b) of the Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises and representations
herein contained and other good and valuable consideration, it is agreed by and
between the parties hereto as follows:
GRANT OF OPTION
---------------
1. The Company hereby grants to the Option Holder the right and option to
purchase on the terms and conditions hereinafter set forth, and subject to the
provisions of the Plan, all or any part of an aggregate of 100,000 shares of the
Common Stock ($.75 par value) of the Company at the purchase price of $25.50 per
share. The option shall be exercisable by the Option Holder in accordance with
the following schedule:
The option shall become
exercisable with respect to
If the Executive is employed the following number of shares
through the following date: shares on and after that date:
--------------------------- ------------------------------
April 1, 1997 30,000
April 1, 1998 30,000
April 1, 1999 40,000
provided, however, that all options herein granted, to the extent not previously
exercised, shall terminate at 4:00 p.m. CST on the tenth anniversary of the
Effective Date, upon the termination of employment of the Option Holder as
specified in paragraph 3 of this
41
Agreement or at such other time as is hereinafter provided. If the Option
Holder's employment by the Company continues through April 1, 1999, then any
portion of the option herein granted and not previously exercisable shall become
exercisable on April 1, 1999. In addition, notwithstanding any provisions herein
to the contrary, in the event a Change in Control (as defined in the Plan) of
the Company occurs, the Option Holder may exercise all unexercised options in
whole or in part upon the later of six-month anniversary of the Effective Date
or such Change in Control and until the earlier of the stated expiration of the
options or two years following termination of employment. For purposes of this
paragraph 1, the "Stock Price" for any date shall be the closing market
composite price for the Common Stock (as reported for the New York Stock
Exchange - Composite Transactions).
NOTICE
------
2. This option or any part thereof may be exercised by giving a written
notice of exercise to the Secretary of the Company, specifying the number of
shares to be purchased and the method of payment of the aggregate option price
of the number of shares purchased. Such exercise shall be effective upon the
actual receipt of such written notice and payment to the Secretary of the
Company. The aggregate option price of all shares purchased pursuant to an
exercise of the option shall be paid (A) in cash (including check, bank draft,
or money order), (B) in Common Stock of the Company (valued at the fair market
value thereof on the date of exercise), (C) by a combination of cash and Common
Stock or (D) in accordance with a cashless exercise program under which, if so
instructed by the Option Holder, shares of Common Stock may be issued directly
to the Option Holder's broker or dealer upon receipt of the option price in cash
from the broker or dealer. No rights or privileges of a stockholder of the
Company in respect of any of the shares issuable upon the exercise of any part
of this option shall inure to the Option Holder, or any other person entitled to
exercise this option as herein provided unless and until certificates
representing such shares shall have been issued and delivered.
TERMINATION OF EMPLOYMENT
-------------------------
3. This option may not be exercised after the termination of employment of
the Option Holder with the Company or any of its subsidiaries, subject to the
following:
(a) The option shall become (or remain) exercisable on termination of the
Option Holder's employment, if the termination occurs under circumstances
described in paragraphs 3(a)(i), 3(a)(ii), 3(a)(iii) or 3(a)(iv) below.
(i) Termination occurs upon retirement at or after age 65.
42
(ii) Termination occurs due to disability.
(iii) Termination occurs by reason of the Option Holder's death (in which
case such exercise shall be by the person or persons to whom the
Option Holder's rights under such option are transferred by will or
the laws of descent and distribution).
(iv) Termination is by the Company for reasons other than Cause under
circumstances described in paragraph 3(g) of the Employment
Agreement, or termination occurs for Good Reason under circumstances
that satisfy the requirements of paragraph 3(e) of the Employment
Agreement.
The portion of the option which is exercisable immediately prior to the
date of the Option Holder's termination of employment, as well as the
portion of the option that becomes exercisable by reason of this paragraph
(a), shall remain exercisable for five years after such termination, but in
no event subsequent to the date fixed herein for expiration of the option.
(b) During any authorized leave of absence from employment, the option may not
be exercised. After return to active employment the Option Holder may
exercise the option, to the extent it is exercisable under paragraph 1 of
this Agreement, up to the date fixed herein for expiration of the option.
43
NON-TRANSFERABILITY OF THE OPTION
---------------------------------
4. Except as otherwise herein provided, the option and the rights and
privileges conferred by this Agreement shall not be transferred, assigned,
pledged or hypothecated in any way, whether by operation of law or otherwise,
and the option shall be exercised during the lifetime of the Option Holder only
by the Option Holder. Upon any attempt so to transfer, assign, pledge,
hypothecate or otherwise dispose of said option or any right or privilege
conferred hereby contrary to the provisions hereof, this option and the rights
and privileges conferred hereby shall immediately become null and void.
Notwithstanding the foregoing provisions of this paragraph 5, the Option may be
transferred by the Option Holder for no consideration to or for the benefit of
the Option Holder's Immediate Family (including, without limitation, to a trust
for the benefit of the Option Holder's Immediate Family or to a partnership for
members of the Option Holder's Immediate Family), subject to such limits as the
Committee may establish, and the transferee shall remain subject to all the
terms and conditions applicable to the Option prior to such transfer. The
foregoing right to transfer the Option shall also apply to the right to consent
to amendments to the Option agreement. The Option Holder's "Immediate Family"
shall mean the Option Holder's spouse, children, stepchildren, adoptive
relationships, sisters, brothers and grandchildren (and, for this purpose, shall
also include the Option Holder).
TAX WITHHOLDING
---------------
5. When an option is exercised, the Company will withhold from the Option
Holder the amount required to meet federal, state and local withholding tax
requirements. The Option Holder will have the option of paying the required
amount to the Company in cash, delivering previously acquired shares of Common
Stock, or requesting that the Company withhold a number of shares of Common
Stock equal in value to the withholding tax amount.
SHARE ADJUSTMENTS
-----------------
6. The number or kinds of shares or securities subject to this option and
the purchase price therefor are subject to adjustment as provided in paragraph
5(c) of the Plan.
44
ADDRESSES FOR NOTICES
---------------------
7. Any notice to be given to the Company shall be addressed to the
Secretary of the Company at the principal executive offices of the Company, and
any notice to be given to the Option Holder shall be addressed to the address
then appearing in the personnel records of the Company for such Option Holder,
or at such other address as either party may hereafter designate in writing to
the other. Any such notice shall be effective upon receipt by the party to
which it is addressed.
MISCELLANEOUS
-------------
8. Subject to the terms of any existing contractual agreement to the
contrary, nothing herein contained shall affect the right of the Company or its
subsidiaries to terminate at any time the Option Holder's employment, services,
responsibilities, duties or authority to represent the Company or confer any
rights to continued employment by the Company or its subsidiaries.
9. All decisions or interpretations made by the Compensation Committee of
the Board with regard to any question arising hereunder or under the Plan shall
be binding and conclusive to the Company and the Option Holder.
10. This Agreement shall bind and inure to the benefit of the parties
hereto and the successors and assigns of the Company and, to the extent provided
in paragraph 3 of this Agreement, the executors, administrators, legatees and
heirs of the Option Holder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the year and date above written.
BRUNSWICK CORPORATION
By:________________________
___________________________
Option Holder
___________________________
Home Address
___________________________
___________________________
Social Security Number
45
Supplement C
1996 Long-Term Incentive Share Award
------------------------------------
This Supplement C sets forth the terms that shall be applicable to the
Long-Term Incentive Share Award to be granted to Xxxxx X. Xxxxxx (the
"Executive") in accordance with paragraph 2(e)(ii) of the employment agreement
to which this Supplement C is attached.
The Executive shall be eligible to receive a Long Term Incentive Share
Award for 1996 in accordance with the following performance measurements:
1. (40%) To achieve net sales growth versus 1995 (base):
Payout Level 25% 50% 75% 100%*
--------------------- ---- ---- ---- -----
0000-00 0000 3500 3600 3800
% Chg +5% +7.5% +10% +12%
1996 % Chg +4% +5% +6% +8.6%
2. (40%) To achieve operating profit improvement over 1995 as a
percentage of net sales:
Payout Level 25% 50% 75% 100%*
--------------------- ---- ---- ---- -----
1996-97 +0.5% +1.0% +1.5% +2.0%
Proposed '96 +0.2 +0.4 +0.8 +1.1
* Board approved target levels.
1 and 2 above will be treated on an "as reported" basis reflecting the
stockholders/market view; i.e., without adjustments for divestitures
or acquisitions; this approach was used to compute both levels above.
3. (20%) Progress on the effective management of investor relations.
The maximum award for 1996 shall be $800,000 (100% of his salary) in
cash or stock at Xx. Xxxxxx'x discretion; this amount is half of the
potential maximum award he is eligible to receive for the two year
1996-1997 Strategic Incentive Plan cycle.
46
Supplement D
AUTOMATIC DEFERRAL AGREEMENT
----------------------------
THIS AGREEMENT, made and entered into as of February 3, 1997 (the
"Effective Date"), by and between Xxxxx X. Xxxxxx (the "Executive") and
BRUNSWICK CORPORATION (the "Company");
WITNESSETH THAT:
---------------
WHEREAS, the parties desire to enter into this Agreement to provide for
deferral of compensation payable to the Executive by the Company and the Related
Companies (as defined below) that would otherwise be non-deductible by reason of
section 162(m) of the Code (as defined below), and thereby avoid the loss of
such deduction, and to compensate the Executive for his consent to such
deferral;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below, it is hereby covenanted and agreed by the Executive and the Company
as follows:
1. Effective Date. This Agreement shall be effective with respect to
--------------
compensation amounts payable on or after the Effective Date.
2. Deferred Amount. If any compensation otherwise payable to the
---------------
Executive by the Company or any Related Company would be non-deductible by
reason of Code section 162(m), such amount shall not be paid to the Executive
when otherwise due, but an amount equal to the foregone payment shall instead be
credited to the Executive's Automatic Cash Deferral Account or Automatic Stock
Deferral Account in accordance with this paragraph 2 and paragraphs 3 and 4. In
determining the amounts subject to deferral under this paragraph 2, the
following shall apply:
(a) To the extent that the compensation is otherwise payable in cash to the
Executive, that cash shall be deferred under the Automatic Cash Deferral
Account, in accordance with this paragraph 2.
(b) To the extent that the compensation is otherwise payable in common stock of
the Company ("Company Stock"), delivery of those shares shall be deferred
under the Automatic Stock Deferral Account, in accordance with this
paragraph 2.
(c) To the extent necessary in determining whether amounts payable to the
Executive would be non-deductible for any year, the Committee (as defined
below) shall make the determinations required under this paragraph 2 based
on an estimate of the total compensation to be paid to the Executive for
the year (including both cash and non-cash compensation and benefits
47
that would be taken into account in determining whether the limitations of
Code section 162(m) are exceeded).
(d) In estimating the Executive's total compensation for any year, the
Committee may request that the Executive forecast whether, for the year, he
will be receiving any compensation the timing of which is in the
Executive's discretion; provided, however, that such forecast shall not
preclude the Executive from taking action that would change the time of
receipt of such compensation.
3. Automatic Cash Deferral Account. The Automatic Cash Deferral Account
-------------------------------
balance shall be credited with the amount determined in accordance with
paragraph 2(a), as of the date on which such amount would otherwise have been
paid to the Executive were it not for deferral under this Agreement. The
Automatic Cash Deferral Account shall be adjusted from time to time in
accordance with the following:
(a) Unless the Executive makes an advance election to have paragraph (b) next
below apply, the Automatic Cash Deferral Account shall be credited as of
the last day of each calendar month with interest for that month at a rate
equal to the greater of: (a) the prime rate in effect at The First National
Bank of Chicago on the first day of the month plus four percentage points,
or (b) the Company's short-term borrowing rate.
(b) If the Executive elects application of this paragraph (b), the Company,
after consultation with the Executive, may invest amounts credited to his
Automatic Cash Deferral Account in securities and other assets as the
Company may determine. The Company and its agents shall not incur any
liability by reason of purchasing, or failing to purchase, any security or
other asset in good faith. The Executive's Automatic Cash Deferral Account
shall be charged or credited as of the last day of each fiscal year of the
Company, and at such other times as the balance in the Automatic Cash
Deferral Account shall be determined, to reflect (i) dividends, interest or
other earnings on any such investments, reduced by the cost of funds (for
the period of deferral) for the amount of any taxes incurred by the Company
with respect thereto; (ii) any gains or losses (whether or not realized) on
such investment; (iii) the cost of funds (for the period of deferral) for
the amount of any taxes incurred with respect to net gains realized on any
such investments, taking into account any applicable capital loss
carryovers and carrybacks, provided that in computing such taxes, capital
gains and losses on assets of the Company other than such investments shall
be disregarded; and (iv) any direct expenses incurred by the Company in
such fiscal year or other applicable period which would not have
48
been incurred but for the investment of amounts pursuant to the provisions
of this paragraph (b) (provided that this clause (iv) shall not be
construed to permit a reduction for the cost of taxes).
4. Automatic Stock Deferral Account. The Automatic Stock Deferral Account
--------------------------------
balance shall be credited with the number of share units equal to number of
shares of Company Stock as of the date on which such shares would otherwise have
been paid to the Executive were it not for deferral under this Agreement. The
Automatic Stock Deferral Account shall be adjusted from time to time to reflect
the deemed reinvestment of dividends in accordance with the terms of the
Company's dividend reinvestment program, as in effect from time to time.
5. Time of Payment of Deferred Amount. Amounts credited to the
----------------------------------
Executive's Automatic Cash Deferral Account and Automatic Stock Deferral Account
shall be paid or distributed upon the earliest of the following:
(a) As soon as practicable after the Committee determines that such amounts
will be deductible when paid (provided that the Committee reasonably
determines that payment of such amounts will not cause other amounts
(whether cash or non-cash) to become non-deductible by reason of Code
section 162(m)).
(b) As soon as practicable after the Committee determines that such amounts
will not be deductible by the Company when paid, and that further deferral
will not result in such amounts becoming deductible.
(c) As soon as practicable (but not more than 15 days) following the occurrence
of a Change in Control.
(d) As soon as practicable after the January 15 (but not later than January 30)
of the first calendar year following the first anniversary of the date the
Executive ceases to be employed by the Company and all Related Companies.
Payment shall be made under this paragraph 5 not later than the date determined
under paragraph (d), regardless of whether such payments are deductible by the
Company.
6. Form of Payment of Deferred Amount. To the extent that an amount is
----------------------------------
payable to or on behalf of the Executive with respect to the Automatic Cash
Deferral Account in accordance with paragraph 5, it shall be paid by the Company
in a cash lump sum. To the extent that an amount is payable to or on behalf of
the Executive with respect to the Automatic Stock Deferral Account in accordance
with paragraph 5, it shall be distributed by the Company in shares of Company
Stock in a lump sum.
49
7. Other Costs and Benefits. This Agreement is intended to defer, but not
------------------------
to eliminate, payment of compensation to the Executive. Accordingly, if any
compensation or benefits that would otherwise be provided to the Executive in
the absence of this Agreement are reduced or eliminated by reason of deferral
under this Agreement, the Company shall equitably compensate the Executive for
such reduction or elimination, and the Company shall reimburse the Executive for
any increased or additional penalty taxes which he may incur by reason of
deferral under this Agreement which would not have been incurred in the absence
of such deferral, except that no reimbursement will be made for taxes resulting
from an increase or decrease in individual income tax rates, or resulting from
an increase in the amount of compensation payable to the Executive by reason of
the accrual of earnings or any other provision of this Agreement.
8. Benefit May Not be Assigned or Alienated. Neither the Executive nor
----------------------------------------
any other person shall have any voluntary or involuntary right to commute, sell,
assign, pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate or convey in advance of actual receipt the amounts, if any, payable
hereunder, or any part hereof, which are expressly declared to be unassignable
and non-transferable. No part of the amounts payable shall be, prior to actual
payment, subject to seizure or sequestration for payment of any debts,
judgements, alimony or separate maintenance owned by the Executive or any other
person, or be transferred by operation of law in the event of the Executive's or
any other person's bankruptcy or insolvency. Payments to or on behalf of the
Executive under this Agreement are not subject to reduction or offset for
amounts due or alleged to be due from the Company or any Related Company.
9. Disability. If, in the Committee's opinion, the Executive or a
----------
beneficiary is under a legal disability or is in any way incapacitated so as to
be unable to manage his financial affairs, the Committee may direct that payment
be made to a relative or friend of such person for his benefit until claim is
made by a conservator or other person legally charged with the care of his
person or his estate, and such payment shall be in lieu of any such payment to
the Executive or the beneficiary. Thereafter, any benefits under this Agreement
to which the Executive or the beneficiary is entitled shall be paid to such
conservator or other person legally charged with the care of his person or his
estate.
10. Beneficiary. Subject to the terms of this Agreement, any benefits
-----------
payable to the Executive under this Agreement that have not been paid at the
time of the Executive's death shall be paid at the time and in the form
determined in accordance with the foregoing provisions of this Agreement, to the
beneficiary designated by the Executive in writing filed with the Committee in
50
such form and at such time as the Committee shall require. If the Executive
fails to designate a beneficiary, or if the designated beneficiary of the
deceased Executive dies before the Executive or before complete payment of the
amounts distributable under this Agreement, the Committee shall, in its
discretion, direct that amounts to be paid under this Agreement be paid to:
(a) one or more of the Executive's relatives by blood, adoption or marriage and
in such proportion as the Committee decides; or
(b) the legal representative or representatives of the estate of the last to
die of the Executive and his beneficiary.
11. Change in Control. "Change in Control" means a change in the
-----------------
beneficial ownership of the Company's voting stock or a change in the
composition of the Board which occurs as follows: (A) any "person" (as such term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934),
other than a trustee or other fiduciary of securities held under an employee
benefit plan of the Company or its subsidiaries, is or becomes beneficial owner,
directly or indirectly, of stock of the Company representing 30% or more of the
total voting power of the Company's then outstanding stock, (B) a tender offer
(for which a filing has been made with the SEC which purports to comply with the
requirements of Section 14(d) of the Securities Exchange Act of 1934 and the
corresponding SEC rules) is made for the stock of the Company, which has not
been negotiated and approved by the Board, then the first to occur of (i) any
time during the offer when the person (using the definition in (A) above) making
the offer owns or has accepted for payment stock of the Company with 25% or more
of the total voting power of the Company's stock or (ii) three business days
before the offer is to terminate unless the offer is withdrawn first if the
person making the offer could own, by the terms of the offer plus any shares
owned by that person, shares with 50% or more of the total voting power of the
Company's shares when the offer terminates; or (C) individuals who were the
Board's nominees for election as directors of the Company immediately prior to a
meeting of the stockholders of the Company involving a contest for the election
of directors shall not constitutes a majority of the Board following the
election.
12. Related Companies. The term "Related Company" means any company
-----------------
during any period in which compensation paid to the Executive by such company
would be required to be aggregated with compensation paid to the Executive by
the Company, in accordance with the affiliated group rules applicable to Code
section 162(m). The Company shall enter into such arrangements with the Related
Companies as it shall deem appropriate to implement the terms of this Agreement,
and shall inform the Executive of any material failure to provide for such
implementation.
51
13. Committee. This Agreement shall be administered by a committee (the
---------
"Committee"), which shall be the Compensation Committee of the Board, or such
other person or persons as may be designated by the Board from time to time. The
amount to be deferred under paragraph 2 and the amount that is payable under
paragraph 5(a) and paragraph 5(b) shall be based on such estimates as the
Committee determines in good faith to be appropriate.
14. Statements. On a quarterly basis (or more frequent basis if requested
----------
by the Executive), the Committee shall provide the Executive with statements of
the Executive's Automatic Cash Deferral Account and Automatic Stock Deferral
Account. Upon request of the Executive, the Committee shall provide the
computations of amounts under paragraph 2 and paragraph 5.
15. Notices. Any notices required to be given by the Company to the
-------
Executive shall be provided in writing, and either personally delivered to the
Executive, or mailed by registered mail, postage prepaid, to the Executive at
the last mailing address provided by the Executive to the Company.
16. Source of Benefit Payments. The amount of any benefit payable under
--------------------------
this Agreement shall be paid from the general assets of the Company. Neither
the Executive nor any other person shall acquire by reason of this Agreement any
right in or title to any assets, funds or property of the Company whatsoever,
including, without limiting the generality of the foregoing, any specific funds,
assets, or other property which the Company, in its sole discretion, may set
aside in anticipation of a liability under this Agreement. The Executive shall
have only a contractual right to the amounts, if any, payable under this
Agreement, unsecured by any assets of the Company. Nothing contained in this
Agreement shall constitute a guarantee by the Company that the assets of the
Company shall be sufficient to pay any benefits to any person.
17. Code. For purposes of this Agreement, the term "Code" means the
----
Internal Revenue Code of 1986, as amended. References to sections of the Code
also refer to any successor provisions thereof. References in this Agreement to
an amount being "deductible" refer to its being deductible by the Company or a
Related Company for Federal income tax purposes; provided, however, that if
deductibility would not be precluded by reason of Code section 162(m), then it
shall be deemed to be "deductible" for purposes of this Agreement, regardless of
whether it is non-deductible for any other reason. If, after the Effective
Date, there is a change in the provisions or interpretation of Code section
162(m) which would have a material effect on the benefits to the Executive or
the Company, the parties shall negotiate in good faith to preserve the benefit
of this Agreement for both parties; provided, however, that nothing in this
Agreement shall be
52
construed to require the Executive to consent to any change in the Agreement
without reasonable compensation therefore.
18. Amendment. This Agreement may be amended or canceled only by mutual
---------
agreement of the parties in writing without the consent of any other person. So
long as the Executive lives, no person, other than the parties hereto, shall
have any rights under or interest in this Agreement or the subject matter
hereof.
19. Applicable Law. This Agreement shall be construed and administered in
--------------
accordance with the laws of the State of Illinois to the extent that such laws
are not preempted by the laws of the United States of America.
IN WITNESS THEREOF, the Executive has hereunto set his hand, and the
Company has caused these presents to be executed in its name and on its behalf,
and its corporate seal to be hereunto affixed, all as of the Effective Date.
________________________
XXXXX X. XXXXXX
BRUNSWICK CORPORATION
By:________________________
Its_______________________
ATTEST:
_______________________
(Seal)
53
Supplement E
CHANGE IN CONTROL
-----------------
This Supplement E sets forth the terms that shall be applicable to Xxxxx X.
Xxxxxx (the "Executive") with respect to a Change in Control of the Company as
provided in paragraph 5 of the employment agreement to which this Supplement E
is attached (the "Employment Agreement").
1. Change in Control. "Change in Control" of the Company means the
-----------------
occurrence of any of the following events:
(a) any Person other than a trustee or other fiduciary of securities held under
an employee benefit plan of the Company or any of its subsidiaries, is or
becomes a Beneficial Owner, directly or indirectly, of stock of the Company
representing 30% or more of the total voting power of the Company's then
outstanding stock and securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in Clause (A)
of paragraph (d), below;
(b) a tender offer (for which a filing has been made with the Securities and
Exchange Commission ("SEC") which purports to comply with the requirements
of Section 14(d) of the Securities Exchange Act of 1934 and the
corresponding SEC rules) is made for the stock of the Company, which has
not been negotiated and approved by the Board of Directors of the Company,
then the first to occur of:
(i) any time during the offer when the Person making the offer owns or has
accepted for payment stock of the Company with 25% or more of the
total voting power of the Company's stock; or
(ii) three business days before the offer is to terminate unless the offer
is withdrawn first if the Person making the offer could own, by the
terms of the offer plus any shares owned by this Person, stock with
50% or more of the total voting power of the Company's stock when the
offer terminates;
(c) individuals who, as of September 1, 1998, constitute the Board of Directors
(the "Incumbent Board") of the Company, cease for any reason to constitute
a majority thereof; provided, however, that any individual becoming a
-------- -------
director whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least 75% of the directors then
comprising the Incumbent Board shall be considered as though such
individual was a
54
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board of Directors
of the Company;
(d) there is consummated a merger or consolidation of the Company (or any
direct or indirect subsidiary of the Company) with any other corporation,
other than (A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof) at least 75% of the combined voting power of the stock and
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (B) a merger
or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or becomes the Beneficial
Owner, directly or indirectly, of stock and securities of the Company
representing more than 25% of the combined voting power of the Company's
then outstanding stock and securities; or
(e) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the
sale or disposition by the Company of all or substantially all of the
Company's assets other then a sale or disposition by the Company of all or
substantially all of the assets to an entity at least 75% of the combined
voting power of the stock and securities which is owned by Persons in
substantially the same proportions as their ownership of the Company's
voting stock immediately prior to such sale.
"Person" shall mean any person (as defined in Section 3(a)(9) of the
Securities Exchange Act (the "Exchange Act"), as such term is modified in
Section 13(d) and 14(d) of the Exchange Act) other than (1) any employee
plan established by the Company, (2) the Company or any of its affiliates
(as defined in Rule 12b-2 promulgated under the Exchange Act), (3) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (4) a corporation owned, directly or indirectly, by
stockholders of the Company in substantially the same proportions as their
ownership of
55
the Company. "Beneficial Owner" shall mean beneficial owner as defined in
Rule 13d-3 under the Exchange Act.
2. Severance Payments for Termination. If, during the Agreement Term (I)
----------------------------------
the Executive's Date of Termination occurs on the date of a Change in Control or
during the 60 days following a Change in Control by reason of the Executive's
resignation for any reason, as provided in paragraph 3(f) of the Employment
Agreement; (II) if the Executive's Date of Termination occurs on or at any time
after the date of a Change in Control and prior to the end of the Agreement Term
under circumstances described in paragraph 3(g) of the Employment Agreement
(relating to termination by the Company without Cause); or (III) if the
Executive's Date of Termination occurs on or at any time after the date of a
Change in Control and prior to the end of the Agreement Term by reason of the
Executive's resignation for Good Reason; then the Executive shall be entitled to
the following:
(a) The Executive shall be paid a lump sum cash severance allowance no later
than 10 days after the date of such Date of Termination in an amount which
is equal to 3 times the sum of:
(i) the annual salary as of the Date of Termination (or if greater, as
of the date of the Change in Control) to which the Executive
otherwise would have been entitled in accordance with paragraph 2(c)
of the Employment Agreement; and
(ii) a bonus equal to 200% of the Executive's annual salary as of the
Date of Termination (or if greater, as of the date of the Change in
Control), which is in place of the bonus payable under paragraph
2(d) of the Employment Agreement for the performance period in which
the Date of Termination occurs.
(b) The Executive shall be entitled to the following:
(i) a lump sum distribution of (A) the actuarial equivalence of the
Executive's accrued benefit, if any, under the Company's
supplemental pension plan, and (B) the balance, if any, credited to
the account of the Executive under any other deferred compensation
arrangement maintained by the Company or any of its subsidiaries,
other than a plan which is qualified under section 401(a) of the
Code;
(ii) the pension benefits described in paragraph 2(i) of the Employment
Agreement shall be vested as of the Date of Termination, and the
Executive's benefit otherwise determined in accordance with
paragraph 2(i)
56
shall be adjusted to the amount that the Executive would have
accrued under that paragraph if, on the Date of Termination, he had
three additional Years of Service at his annual salary as of the
Date of Termination (or if greater as of the date of the Change in
Control) and with an annual bonus for each year equal to 200% of
this salary and had been three years older than his actual age on
such date (which adjustment shall be in addition to the deemed
additional Years of Service and the other adjustments provided in
accordance with paragraph 2(i) of the Employment Agreement,
determined as though the Executive's Date of Termination occurred
under circumstances described in paragraph 3(g) of the Employment
Agreement, relating to termination by the Company without Cause);
(iii) other incentive compensation (including stock options and stock
appreciation rights the value of which shall be determined in
accordance with the Black-Scholes valuation method or such other
reasonable valuation method selected by the Company and agreed to by
the Executive) to which the Executive would have been entitled had
he remained in the employ of the Company for 36 calendar months
after his Date of Termination and continued his participation
therein on the same basis as set forth in paragraph 2(f) and 2(g) of
the Employment Agreement;
(iv) the employee benefits (in addition to pension benefits in clause
(ii) of this paragraph (b) and the split dollar life insurance
benefits in clause (vi) below) to which he would have been entitled
under all employee benefit plans, programs or arrangements
maintained by the Company as of the Date of Termination (including,
but not limited to, coverage under any medical, dental, and life
insurance arrangements or programs) if he had remained in the employ
of the Company for 36 calendar months after his Date of Termination;
(v) a lump sum distribution of all amounts held for the Executive under
any deferred compensation program, including any stock or cash
deferred in accordance with paragraph 2(p) of the Employment
Agreement; and
(vi) continued participation in any applicable split dollar arrangement
on the same basis as prior to such Date of Termination; it being
understood that the Executive shall immediately vest in the benefits
provided under such arrangement and that the Company shall continue
57
to fund all insurance premiums (on the same basis as prior to the
Date of Termination) until the expected release date of such
arrangement.
The actuarial equivalence of the benefits described in clause (i)
and (ii) of this paragraph (b) shall be determined on the basis of
the rates, tables, and factors then in effect for purposes of
determining the actuarial equivalence of optional forms of payment
under the Brunswick Pension Plan for Salaried Employees (the
"Pension Plan"); provided, however, that the interest rate or rates
which would be used as of the Date of Termination by the Pension
Benefit Guaranty Corporation ("PBGC") for purposes of determining
the present value of the Executive's benefits under the Pension Plan
if the Pension Plan had terminated on the Date of Termination with
insufficient assets to provide benefits guaranteed by the PBGC on
that date shall be substituted for the interest assumption used
under the Pension Plan. Instead of providing the benefits described
in clauses (iii) and (iv) of this paragraph (b), the Company may pay
the Executive the value of such benefits by periodic payments or in
a lump sum.
(c) The Executive shall be immediately and fully vested in all outstanding
Equity Awards. Notwithstanding any other provision to the contrary in any
other agreement, the Executive shall be entitled to exercise all
outstanding options and stock appreciation rights during the period that
ends on the earlier of (i) the five-year anniversary of his Date of
Termination or (ii) the expiration of the original 10-year term of such
option or right. For this purpose, "Equity Awards" means all options,
stock appreciation rights, grants of restricted stock and all other grants
or awards made in, or with reference to, shares of the Company's common
stock.
(d) Notwithstanding any provisions of this paragraph 2 to the contrary, if the
Executive has attained age 62 on or before his Date of Termination but has
not then attained age 65, then the provisions of paragraph 2(b)(ii), (iii)
and (iv) of this Supplement shall be subject to the following adjustments:
(i) The pension benefits described in paragraph 2(i) of the Employment
Agreement shall be vested as of the Date of Termination. In lieu of
the three additional years of age, Years of Service, and years of
compensation that would otherwise be provided in accordance with
paragraph 2(b)(ii) of this Supplement, the Executive's deemed age as
of the Date of Termination shall be age 65; his deemed
58
additional Years of Service as of the Date of Termination shall be the
additional Years of Service he would have completed if he had remained
in the employ of the Company until his 65th birthday (which adjustment
shall be in addition to the deemed additional Years of Service and the
other adjustments provided in accordance with paragraph 2(i) of the
Employment Agreement, determined as though the Executive's Date of
Termination occurred under circumstances described in paragraph 3(g)
of the Employment Agreement, relating to termination by the Company
without Cause); and his deemed compensation for the period after the
Date of Termination through his 65th birthday shall be at the
respective rates set forth in paragraph 2(b)(ii) of this Supplement.
(ii) In lieu of the incentive compensation and benefits the Executive would
have been entitled to received, based upon his deemed employment for
the 36-month period after his Date of Termination, in accordance with
paragraphs 2(b)(iii) and (iv) of this Supplement, the Executive shall
be entitled to such incentive compensation and benefits, but the
determination of the amount shall be based on his employment with the
Company being deemed to have continued until his 65th birthday (rather
than for 36 months after his Date of Termination).
If the Executive has attained age 65 on or before his Date of
Termination, no adjustment shall be made pursuant to paragraph
2(b)(ii), (iii), and (iv), and the provisions of those paragraphs
shall be disregarded (except that the Executive shall be entitled to
the adjustments provided in accordance with paragraph 2(i) of the
Employment Agreement, determined as though the Executive's Date of
Termination occurred under circumstances described in paragraph 3(g)
of the Employment Agreement, relating to termination by the Company
without Cause).
3. Tax Penalties. The Company's independent accountants (the
-------------
"Accountants") shall advise the Executive as to the extent to which the
Executive's compensation under the Employment Agreement (including, without
limitation, this Supplement E) and all other compensation agreements, plans and
programs of the Company and its subsidiaries may constitute parachute payments
or excess parachute payments under section 280G of the Code. In the event that
any such compensation constitutes an excess parachute payment which is subject
to tax under section 4999 of the Code or any successor provision thereto (the
"Excise Tax"), the Company shall pay to the Executive an additional amount (the
"Gross-Up Amount") which, after payment of all federal and state income taxes
thereon (assuming the Executive is at the highest marginal federal and
applicable state
59
income tax rate in effect on the date of payment of the Gross-Up Amount) and
payment of the Excise Tax on the Gross-Up Amount, is equal to the Excise Tax
payable by the Executive on such excess parachute payment. The Gross-Up Amount
payable with respect to each excess parachute payment shall be paid by the
Company coincident with payment of such excess parachute payment; provided,
however, that if the Gross-Up Amount cannot be finally determined on or before
the payment date, the Company shall pay to the Executive on such date an
estimate, as determined in good faith by the Accountants, of the minimum amount
of such payments and shall pay the remainder of such payment (together with
interest at the rate provided under section 1274(b)(2)(B) of the Code) as soon
as the amount can be determined but no later than the 30th day after the date
Executive becomes subject to the payment of Excise Tax. In the event that the
Excise Tax is subsequently determined to be less than the amount taken into
account hereunder at the time of payment by the Company, the Executive shall
repay to the Company at the time that the amount of such reduction in Excise Tax
is finally determined the portion of the Gross-Up Amount attributable to such
reduction (plus the portion of the Gross-Up Amount attributable to the Excise
Tax and federal and state income taxes imposed on the Gross-Up Amount being
repaid by Executive if such repayment results in a reduction in Excise Tax
and/or a federal tax deduction) plus interest on the amount of such repayment at
the rate provided in section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into account hereunder at
the time of payment by the Company, the Company shall pay an additional Gross-Up
Amount which, after payment of all federal and state income taxes and Excise Tax
thereon, is equal to such excess play any interest, penalties, fines and costs
incurred by the Executive with respect thereto."
60
