CHANGE IN CONTROL AGREEMENT BETWEEN AND EASTMAN CHEMICAL COMPANY
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XXXXXXX
CHEMICAL COMPANY - EMN
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December
6, 2005
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_________________________________
BETWEEN
_________________
AND
XXXXXXX
CHEMICAL COMPANY
_________________________________________________________________
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XXXXXXX
CHEMICAL COMPANY - EMN
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December
6, 2005
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1.
Certain
Definitions
2.
Change
in Control
3.
Employment Period
4.
Terms
of Employment
(a)Position
and Duties
(b)Compensation
5.
Termination of Employment
(a)Death,
Retirement or Disability
(b)Cause
(c)Good
Reason
(d)Notice
of
Termination
(e)Date
of
Termination
6.
Obligations of the Company upon Termination
(a)Termination
by Executive for Good Reason; Termination by the Company other than for Cause
or
Disability
(b)Death,
Disability or Retirement
(c)Cause;
Other than for Good Reason
7.
Non-exclusivity of Rights
8.
Full
Settlement; No Mitigation
9.
Costs
of Enforcement
10.
Certain
Additional Payments by the Company
11.
Confidential Information
12.
Arbitration
13.
Successors
14.
Miscellaneous
(a)Governing
Law
(b)Captions
(c)Amendments
(d)Notices
(e)Severability
(f)Withholding
(g)Waivers
(h)Status
Before and After Effective Date
(i)Indemnification
(j)Related
Agreements
(k)Action
by
the Company or the Board
(l)Counterparts
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XXXXXXX
CHEMICAL COMPANY - EMN
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December
6, 2005
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AGREEMENT
by and between Xxxxxxx Chemical Company, a Delaware corporation (the “Company”)
and ________________(“Executive”), dated as of the 1st day of December,
2005.
The
Board
of Directors of the Company (the “Board”), has determined that it is in the best
interests of the Company and its stockholders to assure that the Company will
have the continued dedication of Executive, notwithstanding the possibility,
threat or occurrence of a Change in Control (as defined below) of the Company.
The Board believes it is imperative to diminish the inevitable distraction
of
Executive by virtue of the personal uncertainties and risks created by a
threatened or pending Change in Control and to encourage Executive’s full
attention and dedication to the Company currently and in the event of any
threatened or pending Change in Control, and to provide Executive with
compensation and benefits arrangements upon a Change in Control. Therefore,
in
order to accomplish these objectives, the Board has caused the Company to enter
into this Agreement.
NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain
Definitions.
(a) The
“Effective Date” shall mean the first date during the Change in Control Period
(as defined in Section l(b)) on which a Change in Control (as defined in Section
2) occurs. Anything in this Agreement to the contrary notwithstanding, if a
Change in Control occurs and if Executive’s employment with the Company is
terminated (either by the Company without Cause or by Executive for Good Reason,
as provided later in this Agreement) within six (6) months prior to the date
on
which the Change in Control occurs, and if it is reasonably demonstrated by
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change in Control
or
(ii) otherwise arose in connection with or anticipation of a Change in Control,
then for all purposes of this Agreement the “Effective Date” shall mean the date
immediately prior to the date of such termination of employment.
(b) The
“Change in Control Period” shall mean the period commencing on the date hereof
and ending on the third anniversary of the date hereof; provided, however,
that
commencing on the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary thereof shall
be
hereinafter referred to as the “Renewal Date”), unless previously terminated,
the Change in Control Period shall be automatically extended so as to terminate
three years from such Renewal Date, unless at least 60 days prior to the Renewal
Date the Company shall give notice to Executive that the Change in Control
Period shall not be so extended.
(c) “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to
time,
and
includes a reference to the underlying proposed or final regulations, as
applicable.
2. Change
in Control.
For the
purposes of this Agreement, a “Change in Control” shall mean the occurrence of
any of the following events:
(a) individuals
who, as of December 1, 2005, constitute the Board of Directors of the Company
(the “Incumbent Directors”) cease for any reason to constitute at least a
majority of such Board, provided that any person becoming a director after
December 1, 2005 and whose election or nomination for election was approved
by a
vote of at least a majority of the Incumbent Directors then on the Board shall
be an Incumbent Director; provided,
however,
that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to the election
or removal of directors (“Election Contest”) or other actual or threatened
solicitation of proxies or consents by or on behalf of any “person” (such term
for purposes of this definition being as defined in Section 3(a)(9) of the
Exchange Act of 1934, as amended (“Exchange Act”), and as used in Section
13(d)(3) and 14(d)(2) of the Exchange Act) other than the Board (“Proxy
Contest”), including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest, shall be deemed an Incumbent Director;
or
(b) any
person is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of either (A) 35% or more of the
then-outstanding shares of common stock of the Company (“Company Common Stock”)
or (B) securities of the Company representing 35% or more of the combined voting
power of the Company’s then outstanding securities eligible to vote for the
election of directors (the “Company Voting Securities”); provided,
however,
that
for purposes of this subsection (b), the following acquisitions shall not
constitute a Change in Control: (i) an acquisition directly from the Company,
(ii) an acquisition by the Company or a subsidiary of the Company, or (iii)
an
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any subsidiary of the Company; or
(c) the
consummation of a reorganization, merger, consolidation, statutory share
exchange or similar form of corporate transaction involving the Company or
a
subsidiary (a “Reorganization”), or the sale or other disposition of all or
substantially all of the Company’s assets (a “Sale”) or the acquisition of
assets or stock of another corporation (an “Acquisition”), unless immediately
following such Reorganization, Sale or Acquisition: (A) all or substantially
all
of the individuals and entities who were the beneficial owners, respectively,
of
the outstanding Company Common Stock and outstanding Company Voting Securities
immediately prior to such Reorganization, Sale or Acquisition beneficially
own,
directly or indirectly, more than 50% 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, Sale
or
Acquisition (including, without limitation, a corporation which as a result
of
such transaction owns the Company or all or substantially all of the Company’s
assets or stock either directly or through one or more subsidiaries, the
“Surviving Corporation”) in substantially the same proportions as their
ownership, immediately prior to such Reorganization, Sale or Acquisition, of
the
outstanding Company Common Stock and the outstanding Company Voting Securities,
as the case may be, and (B) no person (other than (i) the Company or any
subsidiary of the Company, (ii) the Surviving Corporation or its ultimate parent
corporation, or (iii) any employee benefit plan or related trust sponsored
or
maintained by any of the foregoing) is the beneficial owner, directly or
indirectly, of 35% or more of the total common stock or 35% or more of the
total
voting power of the outstanding voting securities eligible to elect directors
of
the Surviving Corporation, and (C) at least a majority of the members of the
board of directors of the Surviving Corporation were Incumbent Directors at
the
time of the Board’s approval of the execution of the initial agreement providing
for such Reorganization, Sale or Acquisition (any Reorganization, Sale or
Acquisition which satisfies all of the criteria specified in (A), (B) and (C)
above shall be deemed to be a “Non-Qualifying Transaction”); or
(d) approval
by the shareowners of the Company of a complete liquidation or dissolution
of
the Company.
3. Employment
Period.
The
Company hereby agrees to continue Executive in its employ, and Executive hereby
agrees to remain in the employ of the Company subject to the terms and
conditions of this Agreement, for the period commencing on the Effective Date
and ending on the second anniversary of such date (the “Employment
Period”).
4. Terms
of Employment.
(a) Position
and Duties.
(i)
During the Employment Period, (A) Executive’s position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the 120-day period immediately preceding the Effective Date, and (B) Executive’s
services shall be performed at the location where Executive was employed
immediately preceding the Effective Date or any office or location less than
50
miles from such location.
(ii)
During the Employment Period, and excluding any periods of vacation and sick
leave to which Executive is entitled, Executive agrees to devote reasonable
attention and time during normal business hours to the business and affairs
of
the Company and, to the extent necessary to discharge the responsibilities
assigned to Executive hereunder, to use Executive’s reasonable best efforts to
perform faithfully and efficiently such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for Executive to (A) serve
on corporate, civic or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly interfere
with the performance of Executive’s responsibilities as an employee of the
Company in accordance with this Agreement. It is expressly understood and agreed
that to the extent that any such activities have been conducted by Executive
prior to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the performance
of Executive’s responsibilities to the Company.
(b) Compensation.
(i)
Base
Salary.
During
the Employment Period, Executive shall receive an annual base salary (“Annual
Base Salary”) at a rate at least equal to the rate of base salary in effect on
the date of this Agreement or, if greater, on the Effective Date, paid or
payable (including any base salary which has been earned but deferred) to
Executive by the Company and its affiliated companies. During the Employment
Period, the Annual Base Salary shall be reviewed no more than 12 months after
the last salary increase awarded to Executive prior to the Effective Date and
thereafter at least annually. Any increase in Annual Base Salary shall not
serve
to limit or reduce any other obligation to Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase and the term
Annual Base Salary as used in this Agreement shall refer to Annual Base Salary
as so increased. As used in this Agreement, the term “affiliated companies”
shall include any company controlled by, controlling or under common control
with the Company.
(ii)
Annual
Bonus.
In
addition to Annual Base Salary, Executive shall be awarded for each fiscal
year
ending during the Employment Period an annual target bonus opportunity in cash
at least equal to Executive’s target bonus opportunity for the last full fiscal
year prior to the Effective Date (annualized in the event that Executive was
not
employed by the Company for the whole of such fiscal year) (the “Target Annual
Bonus”).
(iii)
Incentive,
Savings and Retirement Plans.
During
the Employment Period, Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide Executive with incentive opportunities, savings opportunities and
retirement benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company and its
affiliated companies for Executive under such plans, practices, policies and
programs as in effect at any time during the 120-day period immediately
preceding the Effective Date or if more favorable to Executive, those provided
generally at any time after the Effective Date to other peer executives of
the
Company and its affiliated companies.
(iv)
Welfare
Benefit Plans.
During
the Employment Period, Executive and/or Executive’s eligible dependents, as the
case may be, shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and programs provided
by the Company and its affiliated companies to the extent applicable generally
to other peer executives of the Company and its affiliated companies, but in
no
event shall such plans, practices, policies and programs provide Executive
with
benefits which are less favorable, in the aggregate, than the most favorable
of
such plans, practices, policies and programs in effect for Executive at any
time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to Executive, those provided generally at any time after the Effective
Date to other peer executives of the Company and its affiliated
companies.
(v)
Expenses,
Fringe Benefits and Paid Time Off.
During
the Employment Period, Executive shall be entitled to expense reimbursement,
fringe benefits and paid time off in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated companies
in
effect for Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to Executive, as in effect generally
at
any time thereafter with respect to other peer executives of the Company and
its
affiliated companies.
5. Termination
of Employment.
(a) Death,
Retirement or Disability.
Executive’s employment shall terminate automatically upon Executive’s death or
Retirement during the Employment Period. For purposes of this Agreement,
“Retirement” shall mean retirement that would entitle Executive to normal
retirement benefits under the Company’s then-current retirement plans. If the
Company determines in good faith that the Disability of Executive has occurred
during the Employment Period (pursuant to the definition of Disability set
forth
below), it may give to Executive written notice of its intention to terminate
Executive’s employment. In such event, Executive’s employment with the Company
shall terminate effective on the 30th day after receipt of such written notice
by Executive (the “Disability Effective Date”), provided that, within the 30
days after such receipt, Executive shall not have returned to full-time
performance of Executive’s duties. For purposes of this Agreement, “Disability”
has the meaning assigned such term in the Company's long-term disability plan,
from time to time in effect. At the request of Executive or his personal
representative, the Company’s determination that the Disability of Executive has
occurred shall be certified by two physicians mutually agreed upon by Executive,
or his personal representative, and the Company. Failing such independent
certification (if so requested by Executive), Executive’s termination shall be
deemed a termination by the Company without Cause and not a termination by
reason of his Disability.
(b) Cause.
The
Company may terminate Executive’s employment during the Employment Period for
Cause. For purposes of this Agreement, “Cause” shall mean:
(i)
a
material breach by Executive of any provision of this Agreement;
(ii)
the
conviction of Executive of any criminal act that the Board shall, in its sole
and absolute discretion, deem to constitute Cause for purposes of this
Agreement;
(iii)
material breach by Executive of published Company code of conduct or code of
ethics; or
(iv)
conduct by Executive in his office with the Company that is grossly
inappropriate and demonstrably likely to lead to material injury to the Company,
as determined by the Board acting reasonably and in good faith;
provided,
however, that in the case of clauses (i), (iii) and (iv) above, such conduct
shall not constitute Cause unless the Company shall have delivered to Executive
notice setting forth with specificity (x) the conduct deemed to qualify as
Cause, (y) reasonable action, if any, that would remedy such objection, and
(z)
if such conduct is of a nature that may be remedied, a reasonable time (not
less
than thirty (30) days) within which Executive may take such remedial action,
and
Executive shall not have taken such specified remedial action to the
satisfaction of the Compensation and Management Development Committee of the
Board of Directors of the Company within such specified reasonable
time.
(c) Good
Reason.
Executive’s employment may be terminated by Executive for Good Reason. For
purposes of this Agreement, “Good Reason” shall mean,
without
the written consent of Executive:
(i)
the
assignment to Executive of any duties materially inconsistent with Executive’s
position (including status, offices, titles and reporting requirements),
authority, duties or responsibilities as in effect immediately
prior to the
Effective Date, or any other action by the Company which results in a material
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken
in
bad faith and which is remedied by the Company promptly after receipt of notice
thereof given by Executive;
(ii)
a
reduction by the Company in Executive’s Base Salary or Target Annual Bonus, as
in effect immediately
prior to the
Effective Date, as the same may be increased from time to time;
(iii)
any
failure by the Company to comply with any of the other provisions of Section
4(b) of this Agreement, other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by Executive;
(iv)
the
Company’s requiring Executive to be based at any office or location other than
as provided in Section 4(a)(i)(B) hereof;
(v)
any
failure by the Company to comply with and satisfy Section 13(c) of this
Agreement; or
(vi)
the
material breach by the Company of any other provision of this
Agreement;
Good
Reason shall not include Executive’s death, Disability or Retirement.
Executive’s continued employment shall not constitute consent to, or a waiver of
rights with respect to, any circumstance constituting Good Reason hereunder.
A
termination by Executive shall not constitute termination for Good Reason unless
Executive shall first have delivered to the Company, within 90 days of the
occurrence of the event giving rise to Good Reason, written notice setting
forth
with specificity the occurrence deemed to give rise to a right to terminate
for
Good Reason, and there shall have passed a reasonable time (not less than 60
days) within which the Company may take action to correct, rescind or otherwise
substantially reverse the occurrence supporting termination for Good Reason
as
identified by Executive.
(d) Notice
of Termination.
Any
termination by the Company or Executive shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 14(d)
of
this Agreement. For purposes of this Agreement, a “Notice of Termination” means
a written notice which (i) indicates the specific termination provision in
this
Agreement relied upon, (ii) to the extent applicable, sets 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 (iii) if the Date
of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date. The failure by Executive or the Company
to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right
of
Executive or the Company, respectively, hereunder or preclude Executive or
the
Company, respectively, from asserting such fact or circumstance in enforcing
Executive’s or the Company’s rights hereunder.
(e) Date
of Termination.
“Date
of Termination” means (i) if the Executive’s employment is terminated by the
Executive for Good Reason, the date specified in the Notice of Termination,
which may not be less than 60 days after the date of delivery of the Notice
of
Termination; provided that the Company may specify any earlier Date of
Termination, (ii) if the Executive’s employment is terminated by the Company for
Cause, the date specified in the Notice of Termination, which in the case of
a
termination for Cause as defined in Section 5(b) may not be less than 30 days
after the date of delivery of the Notice of Termination, (iii) if the
Executive’s employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination or any later date specified in such
notice, and (iv) if the Executive’s employment is terminated by reason of death,
Disability or Retirement, the Date of Termination shall be the date of death
or
Retirement of the Executive or the Disability Effective Date, as the case may
be.
6. Obligations
of the Company upon Termination.
To the
extent required to comply with Section 409A of the Code, as determined by the
Company’s outside counsel, one or more payments under this Section 6 shall be
delayed to the six month anniversary of the date of Executive’s "separation from
service", within the meaning of Code Section 409A.
(a)
Termination
by Executive for Good Reason; Termination by the Company other than for Cause
or
Disability.
If,
during the Employment Period the Company shall terminate Executive’s employment
other than for Cause or Disability, or Executive shall terminate employment
for
Good Reason, then:
(i)
the
Company shall pay to Executive in a single lump sum cash payment within 30
days
after the Date of Termination, the aggregate of the following
amounts:
A. the
sum of
(1) Executive’s Annual Base Salary through the Date of Termination to the extent
not theretofore paid, (2) the product of (x) the Executive’s Target Annual Bonus
for the year in which the Date of Termination occurs, and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through
the
Date of Termination, and the denominator of which is 365, and (3) any accrued
vacation pay to the extent not theretofore paid (the sum of the amounts
described in clauses (1), (2) and (3) shall be hereinafter referred to as the
“Accrued Obligations”); and
B. a
severance payment (the “Severance Payment”) equal to three times the sum of
Executive’s Annual Base Salary and Target Annual Bonus for the year in which the
Date of Termination occurs; and
(ii)
the
Company shall continue to provide, for 36 months after the Date of Termination
(the “Welfare Benefits Continuation Period”), or such longer period as may be
provided by the terms of the appropriate plan, program, practice or policy,
any
group health benefits to which Executive and/or Executive’s eligible dependents
would otherwise be entitled to continue under COBRA, or benefits substantially
equivalent to those group health benefits which would have been provided to
them
in accordance with the welfare plans described in Section 4(b)(iv) of this
Agreement if Executive’s employment had not been terminated, provided,
however,
that
(A) if Executive becomes employed with another employer (including
self-employment) and receives group health benefits under another employer
provided plan, the Company’s obligation to provide group health benefits
described herein shall cease, except as otherwise provided by law; (B) the
Welfare Benefits Continuation Period shall run concurrently with any period
for
which Executive is eligible to elect health coverage under COBRA; and (C) if
and
to the extent required to prevent a violation of Section 409A of the Code,
Executive will pay the entire cost of such coverage for the first six months
after the Date of Termination and the Company will reimburse Executive for
the
Company’s share of such costs on the six-month anniversary of Executive’s
“separation from service” as defined in Section 409A of the Code; and
(iii)
Executive
shall be fully vested as of the Date of Termination in any benefits under
the
Company’s Xxxxxxx Retirement Assistance Plan ("ERAP"), the Company's Unfunded
Retirement Income Plan, and the Company’s Excess Retirement Income Plan
(hereinafter referred to collectively as the “Retirement Plan”). Any Retirement
Plan benefits that are exempt from Section 409A of the Code due to having been
fully vested as of December 31, 2004, and any Retirement Plan benefits that
became vested between December 31, 2004 and the day before the Date of
Termination, shall be distributed to Executive in accordance with the terms
of
the applicable Retirement Plan. The Company shall pay to Executive, within
30
days after the Date of Termination any Retirement Plan benefits that became
vested as of the Date of Termination pursuant to this Section 6(a)(iii) plus
an
additional Retirement Plan benefit equal to the actuarial equivalent of the
excess of (A) minus (B) where (A) equals the amount of the retirement benefits
(determined as a straight life annuity payable to Executive on his normal
retirement date) to which Executive would have been entitled under the terms
of
the Retirement Plan as if Executive had accumulated three additional years
of
total service as defined in ERAP and Executive’s age was increased by three
years, and where (B) equals the amount of the retirement benefits (determined
as
a straight life annuity payable to Executive on Executive’s normal retirement
date), to which Executive actually is entitled pursuant to the provisions of
the
Retirement Plan. For purposes of this subparagraph (iii), “actuarial equivalent”
shall be determined using the same methods and assumptions used under the
Retirement Plan for computing a lump sum payment as of the date of distribution
to Executive under this Agreement; and
(iv)
the
terms and conditions of the Company's long-term incentive plans and any
applicable award agreements thereunder shall control with respect to the vesting
of any options or other awards thereunder then held by Executive;
and
(v)
To
the extent not theretofore paid or provided, the Company shall timely pay or
provide to Executive any other amounts or benefits required to be paid or
provided or which Executive is eligible to receive under any plan, program,
policy or practice or contract or agreement of the Company and its affiliated
companies (such other amounts and benefits shall be hereinafter referred to
as
the “Other Benefits”).
(b) Death,
Disability or Retirement.
If
Executive’s employment is terminated by reason of Executive’s death, Disability
or Retirement during the Employment Period, this Agreement shall terminate
without further obligations to Executive or Executive’s legal representatives
under this Agreement, other than the obligation to pay Executive’s Annual Base
Salary through the Date of Termination and any accrued vacation pay
to the
extent then unpaid. Executive
or Executive’s estate and/or beneficiaries shall be entitled to receive benefits
under such plans, programs, practices and policies relating to death, disability
or retirement benefits, if any, and any Other Benefits (as defined in Section
6(a)(v) hereof) as are applicable to Executive on the Date of Termination,
in
each case to the extent then unpaid.
(c) Cause;
Other than for Good Reason.
If
Executive’s employment shall be terminated for Cause during the Employment
Period, or if Executive voluntarily terminates employment during the Employment
Period other than for Good Reason, this Agreement shall terminate without
further obligations to Executive under this Agreement other than the obligation
to pay Executive’s Annual Base Salary through the Date of Termination and any
accrued vacation pay
to the
extent then unpaid. Executive
shall be entitled to receive any Other Benefits (as defined in Section 6(a)(v)
hereof) as are applicable to Executive on the Date of Termination, to the extent
then unpaid.
7. Non-exclusivity
of Rights.
Nothing
in this Agreement shall prevent or limit Executive’s continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which Executive may qualify, nor,
subject to Section 14(j), shall anything herein limit or otherwise affect such
rights as Executive may have under any contract or agreement with the Company
or
any of its affiliated companies. Amounts which are vested benefits or which
Executive is otherwise entitled to receive under any plan, policy, practice
or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract
or
agreement except as explicitly modified by this Agreement.
8. Full
Settlement; No Mitigation.
The
Company’s obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action
which
the Company may have against Executive or others. In no event shall Executive
be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not Executive obtains
other employment.
9. Costs
of Enforcement.
The
Company shall reimburse Executive, on a current basis, for all reasonable legal
fees and related expenses incurred by Executive in connection with this
Agreement, including without limitation, (i) all such fees and expenses, if
any,
incurred by Executive in contesting or disputing any termination of Executive’s
employment after the Effective Date, or (ii) Executive’s seeking to obtain or
enforce any right or benefit provided by this Agreement, in each case,
regardless of whether or not Executive’s claim is upheld by an arbitral panel or
a court of competent jurisdiction; provided, however, Executive shall be
required to repay to the Company any such amounts to the extent that an arbitral
panel or a court issues a final and non-appealable order, judgment, decree
or
award setting forth the determination that the position taken by Executive
was
frivolous or advanced by Executive in bad faith. In addition, Executive shall
be
entitled to be paid all reasonable legal fees and expenses, if any, incurred
in
connection with any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Code to any payment or benefit hereunder.
All
such payments shall be made within five (5) business days after delivery of
Executive’s respective written requests for payment accompanied with such
evidence of fees and expenses incurred as the Company reasonably may
require.
10. Certain
Additional Payments by the Company.
(a) Anything
in this Agreement to the contrary notwithstanding and except as set forth below,
in the event it shall be determined that any payment or distribution by the
Company to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 10) (a “Payment”) would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then Executive shall be entitled to receive an additional payment
(a “Gross-Up Payment”) in an amount such that after payment by Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
Notwithstanding
the foregoing provisions of this Section 10(a), if
it
shall be determined that Executive would be entitled to a Gross-Up Payment
under
Section 10(a), but that Executive, after taking into account the Payments and
the Gross-Up Payment, would not receive a net after-tax benefit of at least
$75,000 (taking into account both income and employment taxes and any Excise
Tax) as compared to the net after-tax proceeds to Executive if he had received
only the Safe Harbor Amount (as defined below), then
the
Company shall not pay Executive a Gross-Up Payment, and the Payments due under
this Agreement shall be reduced so that the Parachute Value of all Payments,
in
the aggregate, equals the Safe Harbor Amount; provided, that if even after
all
Payments due under this Agreement are reduced to zero, the Parachute Value
of
all Payments would still exceed the Safe Harbor Amount, then no reduction of
any
Payments shall be made and the Gross-Up Payment shall be made. The reduction
of
the Payments due hereunder, if applicable, shall be made by first reducing
the
Severance Payment under Section 6(a)(i), unless an alternative method of
reduction is elected by Executive, and in any event shall be made in such a
manner as to maximize the economic present value of all Payments actually made
to Executive, determined by the Accounting Firm (as defined in Section 10(b)
below) as of the date of the Change in Control for purposes of Section 280G
of
the Code using the discount rate required by Section 280G(d)(4) of the Code.
For
purposes of this Section 10, the “Parachute Value” of a Payment means the
present value as of the date of the Change in Control for purposes of Section
280G of the Code of the portion of such Payment that constitutes a “parachute
payment” under Section 280G(b)(2) of the Code, as determined by the Accounting
Firm for purposes of determining whether and to what extent the Excise Tax
will
apply to such Payment. For purposes of this Section 10, Executive’s “Safe Harbor
Amount” means one dollar less than three times Executive’s “base amount” within
the meaning of Section 280G(b)(3) of the Code.
(b) Subject
to the provisions of Section 10(c), all determinations required to be made
under
this Section 10, including whether and when a Gross-Up Payment is required
and
the amount of such Gross-Up Payment and the assumptions to be used in arriving
at such determination, shall be made by the firm serving as independent auditors
of the Company immediately prior to the Effective Date (the “Accounting Firm”)
which shall provide detailed supporting calculations both to the Company and
Executive within 15 business days of the receipt of notice from Executive that
there has been a Payment, or such earlier time as is requested by the Company.
In the event that the Accounting Firm is serving as accountant or auditor for
the individual, entity or group effecting the Change in Control, Executive
shall
appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant
to
this Section 10, shall be paid by the Company to Executive within five days
of
the receipt of the Accounting Firm’s determination. Any determination by the
Accounting Firm shall be binding upon the Company and Executive. As a result
of
the uncertainty in the application of Section 4999 of the Code at the time
of
the initial determination by the Accounting Firm hereunder, it is possible
that
Gross-Up Payments which will not have been made by the Company should have
been
made (“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 10(c) and Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of Executive.
(c) Executive
shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as practicable but no later
than ten business days after Executive is informed in writing of such claim
and
shall apprise the Company of the nature of such claim and the date on which
such
claim is requested to be paid. Executive shall not pay such claim prior to
the
expiration of the 30-day period following the date on which it gives such notice
to the Company (or such shorter period ending on the date that any payment
of
taxes with respect to such claim is due). If the Company notifies Executive
in
writing prior to the expiration of such period that it desires to contest such
claim, Executive shall:
(i)
give
the Company any information reasonably requested by the Company relating to
such
claim,
(ii)
take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii)
cooperate with the Company in good faith in order effectively to contest such
claim, and
(iv)
permit the Company to participate in any proceedings relating to such
claim;
provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold Executive harmless, on an after-tax basis,
for any Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses. Without limitation of the foregoing provisions of this Section 10(c),
the Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of
such claim and may, at its sole option, either direct Executive to pay the
tax
claimed and sue for a refund or contest the claim in any permissible manner,
and
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if
the
Company directs Executive to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to Executive, on an interest-free
basis
and shall indemnify and hold Executive harmless, on an after-tax basis, from
any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income
with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company’s control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service
or
any other taxing authority.
(d) If,
after
the receipt by Executive of an amount advanced by the Company pursuant to
Section 10(c), Executive becomes entitled to receive any refund with respect
to
such claim, Executive shall (subject to the Company’s complying with the
requirements of Section 10(c)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by Executive of an amount advanced
by
the Company pursuant to Section 10(c), a determination is made that Executive
shall not be entitled to any refund with respect to such claim and the Company
does not notify Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
11. Confidential
Information.
Executive shall hold in a fiduciary capacity for the benefit of the Company
all
secret or confidential information, knowledge or data relating to the Company
or
any of its affiliated companies, and their respective businesses, which shall
have been obtained by Executive during Executive’s employment by the Company or
any of its affiliated companies. After termination of Executive’s employment
with the Company, Executive shall not, without the prior written consent of
the
Company or as may otherwise be required by law or legal process, communicate
or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. It is understood, however, that the obligations
of
this Section 11 shall not apply to the extent that the aforesaid matters (i)
are
disclosed in circumstances where Executive is legally required to do so or
(ii)
become generally known to and available for use by the public other than by
acts
by Executive or representatives of Executive in violation of this
Agreement.
12. Arbitration.
Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration in the State of Tennessee by three
arbitrators in accordance with the rules of the Employment Dispute Rules of
the
American Arbitration Association and the Federal Arbitration Act, 9 U.S.C.
§1,
et.
seq.
Judgment may be entered on the arbitrators’ award in any court having
jurisdiction. Except as provided in Section 9, the Company shall bear all costs
and expenses arising in connection with any arbitration proceeding pursuant
to
this Section 12.
13. Successors.
(a) This
Agreement is personal to Executive and without the prior written consent of
the
Company shall not be assignable by Executive otherwise than by will or the
laws
of descent and distribution. This Agreement shall inure to the benefit of and
be
enforceable by Executive’s legal representatives.
(b) This
Agreement shall inure to the benefit of and be binding upon the Company and
its
successors and assigns.
(c) The
Company 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 Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be
required to perform it if no such succession had taken place. As used in this
Agreement, “Company” shall mean the Company as hereinbefore defined 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.
14. Miscellaneous.
(a) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware, without reference to principles of conflict of
laws.
(b) Captions.
The
captions of this Agreement are not part of the provisions hereof and shall
have
no force or effect.
(c) Amendments.
This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(d) Notices.
All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If
to
Executive: the
address set forth below
under
Executive’s signature
If
to
the Company: Xxxxxxx
Chemical Company
000
Xxxxx
Xxxxxx Xxxxx
Kingsport,
Tennessee 37660-5280
Attention:
Chairman of the Board
Copy
to:
Corporate Secretary
or
to
such other address as either party shall have furnished to the other in writing
in accordance herewith. Notice and communications shall be effective when
actually received by the addressee.
(e) Severability.
The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
and the Agreement shall be construed in all respects as if the invalid or
unenforceable provision were omitted.
(f) Withholding.
The
Company may withhold from any amounts payable under this Agreement such federal,
state, local or foreign taxes as shall be required to be withheld pursuant
to
any applicable law or regulation.
(g) Waivers.
Executive’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right Executive or
the
Company may have hereunder, shall not be deemed to be a waiver of such provision
or right or any other provision or right of this Agreement.
(h) Status
Before and After Effective Date.
Executive and the Company acknowledge that, except as may otherwise be provided
under any other written agreement between Executive and the Company, the
employment of Executive by the Company is “at will” and, subject to Section 1(a)
hereof, Executive’s employment and/or this Agreement may be terminated by either
Executive or the Company at any time prior to the Effective Date, in which
case
Executive shall have no further rights under this Agreement. From and after
the
Effective Date this Agreement shall supersede any other agreement between the
parties with respect to the subject matter hereof.
(i) Indemnification.
Executive shall be entitled to the benefits of the indemnity provided by the
Company’s certificate of incorporation and bylaws, by agreement, or otherwise
immediately prior to Effective Date, or any greater rights to indemnification
thereafter provided to executive officers of the Company, and any subsequent
changes to the certificate of incorporation, bylaws, agreement, or otherwise
reducing the indemnity granted to such Executive shall not affect the rights
granted hereunder. The Company may not reduce these indemnity benefits confirmed
to Executive hereunder without the written consent of Executive.
(j) Related
Agreements.
To the
extent that any provision of any other agreement between the Company and
Executive shall limit, qualify or be inconsistent with any provision of this
Agreement, then for purposes of this Agreement, while the same shall remain
in
force, the provisions of this Agreement shall control and such provision of
such
other agreement shall be deemed to have been superseded, and to be of no force
and effect, as if such other agreement had been formally amended to the extent
necessary to accomplish such purpose. Without limiting the foregoing, this
Agreement hereby supersedes that certain Severance Agreement between Executive
and the Company, in the form referenced in the Exhibit Index to the Company’s
2004 Annual Report on Form 10-K, which prior agreement is hereby terminated
and
of no further force or effect.
(k) Action
by the Company or the Board.
Whenever this Agreement calls for action to be taken by the Company, such action
may be taken by the Board or by the Compensation and Management Development
Committee of the Board. Whenever this Agreement calls for action to be taken
by
the Board, or if the Board takes action on behalf of the Company for purposes
of
this Agreement, such action shall be taken by a majority vote of the members
of
the Board, excluding Executive if Executive is then a member of the
Board.
(l) 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.
(signatures
on following page)
-
-
|
XXXXXXX
CHEMICAL COMPANY - EMN
|
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December
6, 2005
|
IN
WITNESS WHEREOF, Executive has hereunto set Executive’s hand and, pursuant to
the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.
_____________________________
[Executive]
Address:
_________________________
_________________________
XXXXXXX
CHEMICAL COMPANY
By:
__________________________
