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EXHIBIT 10.29
EMPLOYMENT AGREEMENT
THIS AGREEMENT dated as of this 15th day of July, 1998 between Nishan
Teshoian (the "Executive") and Coltec Industries Inc, a Pennsylvania corporation
(the "Corporation").
WHEREAS, the Executive and the Corporation desire to set forth the terms
and conditions upon which the Executive shall be employed by the Corporation.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises herein contained, the parties agree as follows:
1. Employment Term
The Corporation agrees to employ the Executive and the Executive agrees
to be employed by the Corporation, upon the terms and conditions
contained in this Agreement until terminated in accordance with the
provisions set forth in Section 5 below (the "Contract Period").
2. Duties
2.1 The Executive shall serve, subject to the supervision and control of
the Corporation's Chairman and Chief Executive Officer as the President
and Chief Operating Officer of the Corporation with the responsibilities
and authority, and status and perquisites which have, consistent with
past practice, been delegated or granted by the Corporation to an
employee holding such position(s) or which are customarily delegated or
granted by similarly situated corporations to an employee holding
similar position(s). If Executive is appointed to additional offices by
the Corporation during the Contract Period, the Executive shall have the
responsibilities and authority, and status and perquisites consistent
with the past practices of the Corporation or which are customarily
delegated or granted by similarly situated corporations to an employee
holding such position(s). Executive shall also perform any additional
lawful services and assume any reasonable additional responsibilities,
not inconsistent with his then current position, as shall from time to
time be assigned to him by the Board of Directors of the Corporation
(the "Board") or by the Chairman and Chief Executive Officer of the
Corporation
2.2 Executive agrees that during the Contract Period, he shall devote
substantially all of his full working time and attention and give his
best effort, skill and abilities exclusively to the business and
interests of the Corporation; provided, however, that the foregoing
shall not be construed to prohibit Executive's service as a (i) director
or officer of any trade association, civic, educational or charitable
organization or governmental entity or, subject to approval by the Board
as (ii) a
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director of any corporation which is not a competitor of the
Corporation, provided that such service by Executive does not materially
interfere with the performance by Executive of the responsibilities
delegated under Section 2.1 above.
2.3 Executive shall carry out all responsibilities delegated in Section
2.1 above at the Corporation's headquarters, except for travel
reasonably required in the performance of Executive's responsibilities.
3. Compensation and Benefits
Throughout the contract period hereof, unless otherwise specifically
provided elsewhere herein:
3.1 Executive shall receive an annual base salary which is not less than
his annual base salary on the date of this Agreement and shall have the
opportunity for periodic increases in accordance with the Corporation's
regular practices.
3.2 Executive shall be entitled to participate, to the extent determined
by the Board, in all currently existing and future incentive
compensation plans of the Corporation including, but not limited to: the
Annual Incentive Plan for Certain Employees of Coltec Industries Inc and
Its Subsidiaries, the 1994 Long-Term Incentive Plan of Coltec Industries
Inc and the Coltec Industries Inc 1992 Stock Option and Incentive Plan
(the "Incentive Compensation Plans"), provided, however, that the
Executive's participation in all incentive compensation plans shall be
at a level not less than the level customarily approved by the Board for
an employee with Executive's responsibilities and shall not in any case
be less than Executive's level of participation in such plans on the
date of this Agreement. Any payment to Executive under an Incentive
Compensation Plan shall be calculated and made in accordance with the
provisions of the respective plan, except as elsewhere provided for in
this Agreement.
3.3 Executive shall be entitled to receive all employee benefits, fringe
benefits and perquisites (including but not limited to the use of
company cars, club memberships and financial planning services ("Company
Perquisites")) customarily made available to an employee with
Executive's responsibilities, and Executive shall be entitled to
participate in all applicable group, life, health, disability and
accident insurance plans and programs including, and not limited to, the
Retirement Savings Plan, the Retirement Program, the Benefits
Equalization Plan (collectively the "Retirement Plans") and the Family
Protection Plan as well as any other applicable Corporation benefit
plans and programs maintained currently upon terms and at levels no less
favorable than now exist or that shall be established or maintained in
the future for employees generally or for the Corporation's executives.
3.4 Executive shall be entitled to annual vacation and holidays in
accordance with the Corporation's established practice for its
employees.
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3.5 The Executive shall be entitled to receive reimbursement for all
reasonable out-of-pocket expenses incurred in performing his
responsibilities described in Section 2.1 above, provided that the
Executive properly accounts for such expenses in accordance with the
Corporation's established policies.
4. Indemnification
The Executive shall be entitled to indemnification by the Corporation to
the fullest extent permitted by law and the By- Laws of the Corporation
in respect of any actions or omissions which Executive has taken or has
failed to take as an employee, officer or director of the Corporation
while carrying out the responsibilities delegated under Section 2.1
above.
5. Termination of Employment
The Contract Period shall terminate prior to the completion of its term
on the Date of Termination as defined in Sections 5.2 or 5.3 below
following receipt by the Executive or the Corporation, as the case may
be, of a Notice of Termination as defined in Section 5.1 below.
5.1 "Notice of Termination" shall mean any purported termination of
Executive's employment by the Corporation or by Executive which shall be
communicated by written notice to the other party hereto in accordance
with Section 8 of this Agreement, and which shall (1) indicate the
specific termination provision in this Agreement relied upon, (2) set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the
provision so indicated, and (3) set forth the date on which the
Executive's employment with the Corporation shall terminate.
5.2 "Date of Termination" shall mean:
a. thirty (30) days after Notice of Termination is given by the
Corporation for termination of employment due to Disability;
provided that Executive shall not have returned to the full-time
performance of his duties during such thirty (30) day period;
b. the date of death in the event of Executive's death;
c. at least thirty days (30) but not more than sixty (60) days
after Notice of Termination is given by Executive for termination
of employment for Good Reason in respect of a termination covered
by Sections 6.6 or 6.7 below;
d. at least fifteen days (15) after Notice of Termination is
given by the Corporation for termination of employment for Cause;
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e. at least fifteen days (15) after Notice of Termination is
given by Executive for retirement after the age of 55 years but
before the age of 65 years to the extent such retirement is
permitted under the Retirement Savings Plan, the Retirement
Program or the BE Plan ("Early Retirement"); or
f. the date specified in the Notice of Termination for
termination of employment for any other reason.
5.3 This Agreement shall automatically terminate upon the earlier of
Executive's 65th birthday or the date set forth in the Notice of
Termination for Early Retirement as provided in Paragraph 5.2(e) above
("Retirement Termination")
6. Compensation Upon Termination or During Disability
6.1 For purposes of this Agreement, "Disability", "Cause", "Good Reason"
and "Change-in-Control" shall have the meanings set forth below:
a. Disability - If, as a result of Executive's incapacity due to
physical or mental illness, Executive shall have become eligible
for benefits under the applicable long-term disability plan or
policy of the Corporation, Executive's employment may be
terminated by the Corporation for "Disability".
b. Cause - Termination by the Corporation of Executive's
employment for "Cause" shall mean termination upon :
i. the prolonged or repeated absence from duty without the
consent of the Board for reasons other than the
Executive's incapacity due to physical or mental
illness;
ii. the acceptance by Executive of a position with another
employer which conflicts with his duties as an employee
of the Corporation without the consent of the Board;
iii. the willful engaging by Executive in conduct relating to
the Corporation which is demonstrably and materially
injurious to the Corporation after a written demand for
cessation of such conduct is delivered to Executive by
the Board, which demand specifically identifies the
manner in which the Board believes the Executive has
engaged in such conduct and the injury to the
Corporation;
iv. a willful material breach of an established written
policy or procedure of the Corporation which breach is
materially injurious to the Corporation;
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v. Executive's conviction for a crime involving moral
turpitude; or
vi. the breach of Executive's Agreement set forth in Section
10.1 below.
For purposes of this Paragraph, no act, or failure to act, on
Executive's part shall be deemed "willful" unless knowingly done,
or omitted to be done, by Executive not in good faith and without
reasonable belief that Executive's action or omission was in the
best interests of the Corporation.
c. Good Reason - Executive shall be entitled to terminate his
employment for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence, without Executive's express
written consent, of any of the following circumstances unless
such circumstances are fully corrected prior to the Date of
Termination (as defined in Section 5.2 above), specified in the
Notice of Termination :
i. the terms of this Agreement are materially adversely
altered by action of the Corporation or the Corporation
breaches in any material respect any of its agreements
set forth herein;
ii. the failure of the Corporation to obtain a satisfactory
agreement, required in Section 7 below, from any
successor to assume and perform this Agreement (a copy
of the agreement evidencing such assumption shall be
provided by the Corporation to Executive);
iii. any purported termination of Executive's employment
which is not effected pursuant to a Notice of
Termination satisfying the requirements set forth in
Section 5 above; for purposes of this Agreement, no such
purported termination shall be effective;
iv. Executive makes a determination in good faith that the
cumulative effect of actions by one or more of the
members of the Board, the Chairman and Chief Executive
Officer or their respective agents or associates
constitutes harassment or unreasonable interference with
the performance of Executive's day-to-day duties under
this Agreement (after a written demand for cessation of
such actions is delivered by Executive to the Chairman
and Chief Executive Officer or to the Board which demand
specifically identifies the manner in which Executive
believes that the Chairman and Chief Executive Officer
or Board members (or their agents or associates) have
harassed Executive or unreasonably interfered with
Executive's ability to perform his day-to-day duties);
provided, however, that appropriate involvement of the
Chairman and Chief Executive Officer or the Board
members in regular reviews of those items
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which have, consistent with the Corporation's past
practices, been normally within the purview of the
Chairman and Chief Executive Officer or the Board's
responsibilities as well as any bona fide business
disagreements between the Executive and the Corporation
shall not be taken into account by Executive in making
his determination under this Agreement;
v. the Corporation or any successor during the two year
period following a Change-in-Control delivers to the
Executive a Notice of Termination other than for Cause
or takes any other action or actions, including, but not
limited to, a material decrease in duties or authority
or change in reporting relationships, which may have an
adverse effect upon Executive's employment or which
purport to terminate Executive's employment other than
for Cause;
vi. relocation of the Executive's place of employment to a
location outside the continental United States or
relocation of the Executive's place of employment within
the continental United States without reimbursing
Executive his cost of relocation at a level at least as
favorable as that provided under the Corporation' s
policy and practice in effect on the date of this
Agreement; or
vii. after a Change-in-Control as hereafter defined, the
Corporation a) reduces Executive's annual salary, b)
impairs Executive's opportunity to earn incentive
compensation on a bases comparable to that before the
Change-in-Control, c) reduces the Company Perquisites
made available to Executive before the Change-in-Control
or d) eliminates or impairs Executive's ability to
participate in the Retirement Plans.
viii. the Executive chooses to terminate his employment with
the Corporation for any reason during the thirty (30)
day period immediately preceding either, at the option
of the Executive, the twelve (12) month anniversary or
the twenty-four (24) month anniversary of a
Change-in-Control as hereafter defined.
Executive's right to terminate his employment pursuant to this
Paragraph shall not be affected by his incapacity due to physical
illness. In addition, Executive's continued employment with the
Corporation shall not constitute a waiver of Executive's rights
under this Paragraph (c) nor constitute a consent to any act or
omission by the Corporation constituting Good Reason.
d. Change-in-Control - A Change-in-Control shall be deemed to
occur as of the date on which any of the following occur:
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i. the acquisition, other than from the Corporation, by any
individual, entity or group (within the meaning of
Section 13 (d) (3) or 14 (d) (2) of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act") of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20 percent or
more of either the then outstanding shares of common
stock of the Corporation or the combined voting power of
the then outstanding voting securities of the
Corporation entitled to vote generally in the election
of directors; or
ii. Individuals who, as of the date of this Agreement,
constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the
Board, provided that any individual becoming a director
subsequent to the date hereof whose election, or
nomination for election by the Corporation's
shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent
Board shall be considered as though such individual as a
member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened
election contest relating to the election of the
directors of the Corporation (as such terms are used in
Rule 14a-ll of Regulation 14A promulgated under the
Exchange Act); or
iii. Approval by the shareholders of the Corporation of (1) a
reorganization, merger or consolidation, in each case,
with respect to which the individuals and entities who
were the respective beneficial owners of the common
stock and voting securities of the Corporation
immediately prior to such reorganization, merger or
consolidation do not, following such reorganization,
merger or consolidation, beneficially own, directly or
indirectly, more than 50 percent of, respectively, the
then outstanding shares of common stock, and the
combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation
resulting from such reorganization, merger or
consolidation; (2) a complete liquidation or dissolution
of the Corporation; or of (3) the sale or other
disposition of all or substantially all of the assets of
the Corporation.
6.2 During any period of Disability and until the earlier of the end of
the Contract Period or Executive's death, Executive shall receive all
accrued but unpaid base salary plus all amounts or benefits payable or
due to him (including a pro rata share under Incentive Compensation
Plans targeted for the year in which the
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Disability occurs) under the Corporation ' s compensation and benefit
plans and programs in which Executive is participating at the
commencement of any such period, plus an additional payment from the
Corporation (if necessary) such that the aggregate amount received by
Executive in the nature of salary continuation from all sources equals
Executive's base salary at the rate in effect at the commencement of any
such period. Thereafter, Executive shall be entitled to participate in
all applicable group, life, Family Protection Plan, health, disability
and accident insurance plans and programs as well as any other
applicable Corporation benefit plans and programs (including, but not
limited to, the 1992 Stock Option and Incentive Plan) in accordance with
the terms of such plans and programs; provided that such terms shall not
be less advantageous to Executive than the terms in effect as of the
date hereof.
6.3 If Executive's employment shall be terminated by reason of
Executive's death, the Executive shall be entitled to the benefits
provided below:
a. The Corporation shall pay to Executive's estate as soon as
practicable after the date of Executive's death, Executive's
accrued but unpaid base salary through the date of Executive's
death, at the rate in effect at the time of Executive's death,
plus all other amounts to which Executive is entitled under any
benefit or compensation plan of the Corporation including, but
not limited to, a pro rata share under Incentive Compensation
Plans earned during the year in which Employee's death occurs.
b. After Executive's death, Executive's beneficiaries shall be
entitled to participate in all applicable group, life, health,
disability and accident insurance plans and programs as well as
any other applicable Corporation benefit plans and programs
including, but not limited to, the 1992 Stock Option and
Incentive Plan, in accordance with the terms of such plans and
programs.
6.4 If Executive's employment shall be terminated as a result of a
Retirement Termination or as a result of a voluntary resignation for
other than Good Reason ("Resignation"), then Executive shall receive all
accrued but unpaid base salary plus all amounts payable to him under the
Corporation's compensation (including, but not limited to, a pro rata
share under Incentive Compensation Plans targeted for the year the
Retirement Termination or Resignation occurs) and benefit plans and
programs in which Executive is participating at the time the Retirement
Termination or Resignation becomes effective. In the event of a
Retirement Termination, Executive shall be entitled to participate in
all retirement and other plans and programs effective on the Date of
Termination to which he is eligible in accordance with their terms .
6.5 If Executive's employment shall be terminated by the Corporation for
Cause, then Executive shall be entitled to the following benefits:
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a. The Corporation shall pay Executive's full base salary through
the Date of Termination at the rate in effect at the time Notice
of Termination is given plus all other amounts to which Executive
is entitled under any benefit or compensation plan of the
Corporation, excluding any bonus, other incentive compensation
and vacation pay, if any, otherwise payable to Executive pursuant
to the terms of the applicable plan or program of the
Corporation, at the time such payments are due.
b. Executive shall be entitled to participate in all applicable
group, life, health, disability and accident insurance plans and
programs, but only to the extent required by the terms of such
plans, or only to the extent specifically required by Federal or
state law.
6.6 If Executive's employment shall be terminated (1) by the Corporation
for other than Cause, (2) by Executive for Good Reason other than Good
Reason as specified in Section 6.7 below ("Section 6.7 Good Reason")
then Executive shall be entitled to the following benefits:
a. The Corporation shall pay Executive, as soon as practicable
following the Date of Termination a sum equal to Executive's
accrued but unpaid base salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given
plus all other amounts to which Executive is entitled under any
benefit or compensation plan of the Corporation (including but
not limited to a pro rata share under Incentive Compensation
Plans targeted for the year in which Executive's employment is
terminated).
b. The Corporation shall pay Executive as soon as practicable
following the Date of Termination an additional payment equal to
two times (2x) the sum of Executive's annual base salary plus the
Executive's highest incentive bogey established at any time
during the three year period prior to the Date of Termination
pursuant to the Coltec Annual Incentive Plan .
c. In accordance with a valid election on file with the
Corporation the Corporation shall pay the Executive a sum of
money equal to the value of Executive' s accrued balance of the
Benefits Equalization Plan (the "BE Plan").
d. For a period of two years from the Date of Termination (the
"Relevant Damage Period"), the Corporation shall continue to make
available to Executive all Company Perquisites, or, in the
alternative, the Corporation shall pay to Executive as soon as
practicable after the Date of Termination a sum of money
reasonably approximating the cash value of the Company
Perquisites. Additionally, for such period of time Executive
shall, subject to Section 6.9, be allowed to participate in all
applicable group, life, health, disability and accident insurance
plans and programs as well as any
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other applicable Corporation benefit plans and programs
(including, but not limited to, the 1992 Stock Option and
Incentive Plan) as if he were an active employee (limited, in
the case of coverage under life insurance plans, to the level of
coverage that the Corporation is able to obtain on Executive's
behalf based upon the annual premium cost of providing Executive
with life insurance during Executive's last twelve months of
employment with the Corporation), in which Executive was
participating 30 days prior to the time Notice of Termination is
given or comparable plans substituted therefor; provided,
however, that if Executive is ineligible (e.g., by operation of
law or the terms of the applicable plan) to continue to
participate in any such plan, the Corporation will provide
Executive with a comparable level of compensation or benefit.
e. For purposes of Section 6.6(d), Executive's participation in
respect to the Corporation's 1994 Long Term Incentive Plan (the
"LTIP") shall be as follows (the defined terms within this
section and not otherwise defined within this Agreement being the
same as defined in the LTIP as in effect on the date hereof):
i. all of the Executive's Restricted Shares previously issued
under the LTIP and not yet vested by the Date of
Termination shall become 100% vested, nonforfeitable and
fully transferable as of such date; and
ii.the Corporation will pay the Executive as soon as
practicable following the Date of Termination an amount in
cash equal to three times the product of (x) the number of
Performance Units previously granted under the LTIP to the
Executive and still outstanding, times (y) the Award Value
at the Threshold Target level.
f. For purposes of Section 6.6(d), Executive's benefits with
respect to the Corporation's Retirement Plan for Salaried
Employees and the BE Plan or any equivalent or superior plans or
arrangements in which the Executive participated prior to the
Date of Termination (any such Plan or arrangement, the "Pension
Plans") and the Corporation's welfare benefit plans in which the
Executive participates on the date hereof or any equivalent or
superior successor plans or arrangements in which the Executive
participates prior to the Date of Termination ("Welfare Benefit
Plans") the contemplated continued participation shall require
the Corporation to pay or provide the executive with the
benefits, earnings credits for benefits and service credits for
benefits, and where applicable, any increases in benefits as a
result of increasing age, which the Executive would have received
under the Pension Plans and Welfare Benefit Plans if (x) the
Executive's employment and his coverage under the Pension Plans
and the Welfare Benefit Plans had continued during the Relevant
Damage Period, and (y) the compensation described in Section 6.6
(b) which would
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have been credited under the Pension Plans and/or the Welfare
Plans were paid to the Executive ratably over the Relevant
Damage Period.
g. All restrictions, if any, on shares of restricted stock
previously granted to Executive which would have lapsed if
Executive had been employed throughout the Relevant Damage Period
shall immediately lapse as of the Date of Termination and
Executive shall be entitled to the possession of the shares of
such stock as of such date upon the payment of any applicable
withholding taxes.
6.7 If Executive's employment by the Corporation shall be terminated (1)
by the Corporation for other than Cause at any time during a period
commencing sixty (60) days prior to a the public announcement of a
Change-of-Control which does, in fact, later occur and ending on the
happening of such Change-of-Control ("Pending Change-of-Control
Period"),or (2) by Executive for Good Reason where Executive has given
Notice of Termination to the Corporation within two years from the
occurrence of an event constituting a Change-of-Control, then Executive
shall be entitled to the following benefits in lieu of the benefits
under Section 6.6:
a. The Corporation shall pay Executive his accrued but unpaid
base salary through the Date of Termination at the rate in effect
at the time Notice of Termination is given, plus all other
amounts to which Executive is entitled under any benefit or
compensation plan of the Corporation (including, but not limited
to, a pro rata share under Incentive Compensation Plans earned
during the year in which employment is terminated)
b. In lieu of any further base salary payments to Executive for
period subsequent to the Date of Termination, the Corporation
shall pay to Executive as severance pay a lump sum equal to three
times (3x) the sum of Executive's annual base salary at the rate
in effect immediately prior to the time Notice of Termination is
given plus the highest Annual Bonus received by the Executive
during any of the three preceding calendar years. If the
Executive has not received an Annual Bonus during the three (3)
year period preceding the Date of Termination, then the Annual
Bonus for purposes of this section shall be calculated by
multiplying Executive's full base salary for one calendar year
times .8 and by further multiplying the result by 2.27.
c. In lieu of any further participation by Executive in the
Family Protection Plan, the Corporation shall transfer to
Executive a fully paid up insurance policy or policies then
insuring the life of the Executive pursuant to the terms of the
Family Protection Plan, plus an amount of money (the "Tax
Adjustment") calculated to reimburse Executive for any local,
state or Federal income, employment or other taxes which he may
be liable as a result of receiving the insurance policy or
policies and the Tax Adjustment amount.
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d. At Executive's option and as soon, as practicable after his
request, the Corporation shall pay Executive a sum of money equal
to the value of Executive's accrued balance of the BE Plan.
e. For three years from the Date of Termination, the Corporation
shall continue to make available to Executive all Company
Perquisites, or, in the alternative, the Corporation shall pay to
Executive as soon as practicable after the Date of Termination a
sum of money reasonably approximating the cash value of the
Company Perquisites. Additionally, Executive shall, subject to
Section 6.9, be allowed to participate in all applicable group,
life, health, disability and accident insurance plans and
programs as well as any other applicable Corporation benefit
plans and programs (including, but not limited to the 1992 Stock
Option and Incentive Plan) as if he were an active employee
(limited, in the case of coverage under life insurance plans, to
the level of coverage that the Corporation is able to obtain on
Executive's behalf based upon the annual premium cost of
providing Executive with life insurance during Executive's last
twelve months of employment with the Corporation), in which
Executive was participating 30 days prior to the time Notice of
Termination is given or comparable plans substituted therefor;
provided, however, that if Executive is ineligible (e.g., by
operation of law or the terms of the applicable plan) to continue
to participate in any such plan, the Corporation will provide
Executive with a comparable level of compensation or benefit.
f. For purposes of Section 6.7(e), Executive's participation in
respect to the Corporation's 1994 Long Term Incentive Plan (the
"LTIP") shall be as follows (the defined terms within this
section and not otherwise defined within this Agreement being the
same as defined in the LTIP as in effect on the date hereof):
i. all of the Executive's Restricted Shares previously
issued under the LTIP and not yet vested by the Date of
Termination shall become 100% vested, nonforfeitable and
fully transferable as of such date; and
ii. the Corporation will pay the Executive as soon as
practicable following the Date of Termination an amount
in cash equal to three times the product of (x) the
number of Performance Units previously granted under the
LTIP to the Executive and still outstanding, times (y)
the Award Value at the Threshold Target level.
iii. in the event that the independent accountants of the
Corporation shall determine that if the payment of the
LTIP Payout is made entirely in cash it shall prevent
the Corporation from
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consummating any business combination approved by the
Board of Directors which combination is intended to be
accounted for under the pooling of interests method of
accounting ("Pooling"), then the LTIP Payout shall be
made 2/3 in cash and 1/3 in the Corporation's Common
Stock (the "Share Portion"). If a merger or acquisition
of the Corporation has taken place prior to the time
that the Executive has given Notice of Termination
setting forth his intent to terminate his employment for
Good Reason and the Common Stock of the Corporation is
no longer traded on a national securities exchange then
the Share Portion of the LTIP Payout shall be made in
the common stock of the Corporation's parent or
successor corporation (collectively, a "Successor"),
which stock is traded on a national securities exchange
or on an over the counter securities market. The number
of shares payable in respect to the Share Portion shall
be determined by dividing the dollar value of the Share
Portion by the price of a share of the Common Stock of
the Corporation, or a Successor, as the case may be, on
the last business day immediately preceding the date of
the Notice of Termination.
g. For purposes of Section 6.7(e), Executive's benefits with
respect to the Pension Plans and the Welfare Benefit Plans, the
contemplated continued participation shall require the
Corporation to pay or provide the Executive with the benefits,
earnings credits for benefits and service credits for benefits,
and where applicable, any increases in benefits as a result of
increasing age, which the Executive would have received under the
Pension Plans and Welfare Benefit Plans if (x) the Executive's
employment and his coverage under the Pension Plans and the
Welfare Benefit Plans had continued for an additional three year
period, and (y) the compensation described in Section 6.7 (b)
which would have been credited under the Pension Plans and/or the
Welfare Plans were paid to the Executive ratably over a three
year period.
h. All restrictions, if any, on shares of restricted stock
previously granted to Executive shall immediately lapse as of the
Date of Termination and Executive shall be entitled to the
possession of the shares of such stock as of such date upon the
payment of any applicable withholding taxes.
i. If Executive's employment by the Corporation shall have been
terminated by the Corporation for other than Cause at any time
during a Pending Change-of-Control Period and if Executive shall
have received any payments or benefits pursuant to Section 6.6,
then Executive shall be entitled to receive such additional
payments and benefits as he would have received if his employment
was terminated and he was entitled to receive payments or
benefits pursuant to this Section 6.7.
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j. If at any time within two years following a Change-of-Control,
Executive shall, at the request of the Corporation, relocate his
principal place of personal residence or employment and if
Executive shall become entitled to receive payments or benefits
pursuant to this Section 6.7, then Executive shall also be
entitled, at his option, to relocate his personal residence one
time during the four year period following the Date of
Termination to any location within the continental United States,
in which event the Corporation will reimburse the Executive for
all relocation and home purchase and sale assistance costs
associated with such move in accordance with the Corporation's
policy and practice for its Executive Officers in effect at the
time of the execution of this Agreement.
6.8 In addition to the benefits set forth in Sections 6.6 and 6.7, in
the event that Executive's employment shall be terminated (1) by the
Corporation for other than Cause, (2) by Executive for Good Reason other
than Section 6.7 Good Reason, or (3) by Executive for Section 6.7 Good
Reason then:
a. The Company shall also pay to Executive all reasonable legal
fees and expenses incurred by Executive as a result of such
termination (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination
(including cost associated with legal consultation even if no
actual contest or dispute results) or in seeking to obtain or
enforce any right or benefit provided by this Agreement or in
connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), to any payment or
benefit provided hereunder), except any such fees or expenses
incurred by Executive in seeking to enforce a claim which is
determined by an arbitrator, pursuant to Section 14 below, to
have been frivolous in nature or not brought or pursued in good
faith.
b. In addition to all other benefits provided hereunder, in the
event that Executive becomes entitled to any payments or benefits
from the Corporation (whether or not provided under this
Agreement) (the "Severance Payments") that will be subject to the
tax (the "Excise Tax") imposed by Section 4999 of the Code, the
Corporation shall pay to Executive at the time or times specified
in Paragraph (h) below, an additional amount (the "Gross-Up
Payment") such that the net amount retained by Executive, after
deduction of (I) any additional Excise Tax payable by Executive
as a result of Executive's receipt of the Severance Payments, and
(ii) any additional Federal, state and local income and
employment taxes and Excise tax payable by Executive as a result
of Executive's receipt of the Gross-Up Payments shall be equal to
the Severance Payments. For purposes of determining whether any
of the Severance Payments will be subject to the Excise Tax and
the amount of such Excise Tax, (i) the Severance Payments,
payments provided for in this paragraph and any other payments or
benefits received or to be received by Executive in connection
with a Change-of-Control of the
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Corporation (as defined in Section 280G of the Code) or
Executive's termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or
agreement with the Corporation, any person whose actions result
in a Change-of-Control or any person affiliated with the
Corporation or such person) shall be treated as "parachute
payments" within the meaning of Section 280G(b) (2) of the Code,
and all "excess parachute payments" within the meaning of Section
280G(b) (1) shall be treated as subject to the Excise Tax, unless
and to the extent that in the opinion of tax counsel selected by
the Corporation's independent auditors and acceptable to
Executive, such other payments or benefits (in whole or in part)
do not constitute parachute payments, or such excess parachute
payments (in whole or in part) and represent reasonable
compensation for services actually rendered within the meaning of
Section 280G(b) (4) of the Code in excess of the base amount
within the meaning of Section 280G(b) (3) of the Code, or are
otherwise not subject to the Excise Tax, (ii) the amount of the
Severance Payments which shall be treated as subject to the
Excise Tax shall be equal to the lesser of (x) the total amount
of the Severance Payments or (y) the amount of excess parachute
payments within the meaning of Section 280G(b) (1) (after
applying clause (i) above), (iii) any payment pursuant to this
Paragraph shall be treated as subject to the Excise Tax in its
entirety and (iv) the value of any non-cash benefits or any
deferred payment of benefit shall be determined by the
Corporation's independent auditors in accordance with the
principles of Sections 280G(d) (3)and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar
year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in
the state and locality of Executive residence on the Date of
Termination, not of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local
taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account
hereunder at the time of termination of Executive's employment,
Executive shall repay to the Corporation at the time that the
amount of such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction
(plus the portion of the Gross-Up Payment attributable to the
Excise Tax and Federal and state and local income tax imposed on
the Gross-Up Payment being repaid by Executive) plus interest
accrued from the date such Gross-Up Payment is made to Executive
to the date of such repayment 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 the termination of
Executive's employment (including by reason of any payment the
existence or amount of which cannot be determined at the time of
the Gross-Up Payment), the Corporation shall make an additional
gross-up payment in respect of such excess (plus any interest
payable with
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respect to such excess) at the time that the amount of such
excess is finally determined.
c. The payments provided for in Paragraph (b) above shall be made
at any time during the 90-day period preceding each due date for
making payment of such Excise Taxes to the appropriate taxing
authority; provided, however, that if the amounts of such
payments cannot be finally determined on or before each such
date, the Corporation shall pay to Executive on such date an
estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of
such payments then due as soon as the amount thereof can be
determined. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to
Executive on the fifth day after demand by the Corporation
(together with interest at the rate provided in Section 1274 (b)
(2) (B) of the Code).
6.9 Upon receipt of written notice from Executive that Executive has
been reemployed by another company or entity on a full-time basis,
benefits otherwise receivable by Executive pursuant to Subsections
6.6(d) or 6.7(e) related solely to life, health disability and accident
insurance plans and programs and other similar benefits (but not
Incentive Compensation, LTIP, Pension Plans or other similar plans and
programs) shall be reduced to the extent comparable benefits are made
available to Executive at his new employment and any such benefits
actually received by Executive shall be reported to the Corporation.
Nothing herein contained shall obligate Executive to accept employment
elsewhere.
6.10 Any stock of the Corporation, which is delivered to the Executive
pursuant to Subsections 6.6 or 6.7, shall be delivered to him fully
registered for immediate sale to the public under all applicable
securities laws.
7. Successors; Binding Agreement
The Corporation will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Corporation to expressly assume
and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such
assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle
Executive to terminate this Agreement for Good Reason. As used in this
Agreement, "Corporation" shall mean the Corporation and any successor to
its business and or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
8. Notice
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For the purpose of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to
have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to
the Executive's most recent home address on file with the Corporation,
and to the Corporation at 3 Coliseum Centre, 0000 Xxxx Xxxxxx Xxxx,
Xxxxxxxxx, XX 00000 to the attention of the Chairman of the Board of
Directors with a copy to the Secretary of the Corporation or to such
other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
9. Modification - Waiver
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing
and signed by Executive and such officer of the Corporation as may be
specifically designated by the Board. No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
In the event that the independent accountants of the Corporation shall
determine that anything contained herein shall prevent the Corporation
from consummating any business combination approved by the Board of
Directors which combination is intended to be accounted for as a
Pooling, then Executive agrees to negotiate in good faith concerning
amendments to such portions of this Agreement as may be requested by the
Corporation so as to allow such business combination to be accounted for
as a Pooling; provided, however, that any such amendment shall: (a) be
as limited in scope as is absolutely necessary in the opinion of the
Corporation's advisors to allow the business combination to be accounted
for as a Pooling, and (b) be designed to have as minimal an economic
detriment to the Executive as is possible while still allowing the
business combination to be accounted for as a Pooling.
10. Non-competition
10.1 Until the Date of Termination, Executive agrees not to enter into
competitive endeavors and not to undertake any commercial activity which
is contrary to the best interests of the Corporation or its affiliates,
including becoming an employee, owner (except for passive investments of
not more than three percent of the outstanding shares of, or any other
equity interest in, any company or entity listed or traded on a national
securities exchange or in an over-the-counter securities market),
officer, agent or director of (a) any firm or person engaged in the
operation of a business engaged in the acquisition of industrial
businesses or (b) any firm or person which either directly competes with
a line or lines of business of the Corporation accounting for five
percent (5%) or more of the Corporation's gross revenues or earnings
before taxes or derives five percent (5%) or more of such firm's or
person's gross revenues or earnings before taxes from a line or lines
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of business which directly compete with the Corporation. Notwithstanding
any provision of this Agreement to the contrary, Executive agrees that
his breach of the provisions of this Section 10.1 shall permit the
Corporation to terminate Executive's employment for Cause in accordance
with Section 6.l(b) hereof.
10.2 After the Date of Termination and for a period of time equal in
years to the multiple of annual salary received by Executive pursuant to
either Sections 6.6(b) or 6.7(b) (the "Non-Competition Period"),
Executive agrees not to become an employee, owner (except for passive
investments of not more than three percent of the outstanding shares of,
or any other equity interest in, any company or entity listed or traded
on a national securities exchange or in an over-the-counter securities
market), officer, agent or director of any firm or person which directly
and substantially competes with a business of the Corporation accounting
for five percent (5%) or more of the Corporation's gross revenues or
earnings before taxes. During the Non-Competition Period, Executive will
be available to answer questions and provide advice to the Corporation;
provided, however, that such requirement shall not unreasonably
interfere with any other of Executive's activities which Executive is
then pursuing and which are not otherwise prohibited by this Section 10.
Also, during the Non-Competition Period, Executive will retain in
confidence any and all confidential information known to him concerning
the Corporation and its business and shall not use or disclose such
information without the approval of the Corporation except to the extent
such information becomes public or as may be required by law.
10.3 Executive acknowledges and agrees that damages for breach of the
covenant not to compete in this Section 10 will be difficult to
determine and will not afford a full and adequate remedy, and therefore
Executive agrees that the Corporation, in addition to seeking actual
damages pursuant to the procedures set forth in Section 13 below, may
seek specific enforcement of the covenant not to compete in any court of
competent jurisdiction, including, without limitation, by the issuance
of a temporary or permanent injunction, without the necessity of a bond.
Executive and the Corporation agree that the provisions of this covenant
not to compete are reasonable. However, should any court or arbitrator
determine that any provision of this covenant not to compete is
unreasonable, either in period of time, geographical area, or otherwise,
the parties agree that this covenant not to compete should be
interpreted and enforced to the maximum extent which such court or
arbitrator deems reasonable.
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11. Validity
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
12. Counterparts
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together will
constitute one and the same instrument.
13. Arbitration
Except as contemplated by Section 10.3 of this Agreement, any dispute or
controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in Charlotte, NC or such other
location mutually agreed upon by the parties to the arbitration, in
accordance with rules of the American Arbitration Association, and
judgment upon such award rendered by the arbitrator may be entered in
any court having jurisdiction over such proceeding.
14. Governing Law
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of North Carolina.
15. Entire Agreement; Survival of Certain Provisions
15.1 This Agreement constitutes the whole agreement of the Corporation
and the Executive. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter of this Agreement
have been made by either party which are not expressly set forth in this
Agreement. This Agreement supercedes and replaces all prior Employment
Agreements between the Corporation and the Executive, each of which is
hereby expressly terminated.
15.2 The obligations of the Corporation under Section 6.8 above and the
Executive's obligations under Section 10 above shall survive the
expiration of the term of this Agreement.
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16. Withholding
Any payments made to Executive under this Agreement shall be paid net of
any applicable withholding required under Federal, state or local law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
COLTEC INDUSTRIES INC
By /s/ Xxxxxxxx X. Xxxxxx
--------------------------------
/s/ Nishan Teshoian
--------------------------------
EXECUTIVE
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