SEVERANCE AGREEMENT (CHANGE IN CONTROL) AMENDMENT NO. 2
Exhibit 10.2
SEVERANCE AGREEMENT
(CHANGE IN CONTROL)
AMENDMENT NO. 2
WHEREAS __________ (the “Employer”) previously adopted the Severance Agreement (Change in Control) dated _______________ (as amended, the “Agreement”) that provides certain severance payments and benefits to specific executives, including ___________ (the “Executive”);
WHEREAS, the Employer and Executive desire to amend the Agreement to (i) clarify the provision of Health Benefits (as defined in the Agreement), (ii) further clarify that the Agreement is intended to comply with and be administered in a manner that complies with Code section 409A, and (iii) make certain other minor changes.
NOW THEREFORE, BE IT RESOLVED THAT, effective September 20, 2012, the Employer and the Executive amend the Agreement as follows:
1. | The definition of EIP is hereby deleted in its entirety and replaced with the following: |
“EIP” means the Company's 2006 Equity and Incentive Plan, 2012 Equity and Incentive Plan, or any successor plan, each as may be amended from time to time.
2. | The definition of Prorated Target Bonus Amount is hereby deleted in its entirety and replaced with the following: |
“Prorated Target Bonus Amount” means an amount equal to Executive's Target Bonus for the calendar year in which a Severance occurs.
3. | Subsection (1) in the definition of Severance Benefits is hereby amended to add the clause “for the Severance Period,” at the beginning thereof. |
4. | Subsection (2) in the definition of Severance Benefits is hereby deleted in its entirety and replaced with the following: |
(2) | Health Benefits substantially similar to those provided to Executive and Executive's dependents by or on behalf of the Executive's Employer immediately prior to the Severance or, if more favorable to the Executive, those provided immediately prior to the Change in Control, in accordance with the applicable benefit plan eligibility requirements and policies and the following: |
(a) if the Company, the Employer or a successor company maintains a retiree medical plan in which Executive and Executive's dependents are eligible to participate (with no preexisting condition limitations) and to receive the Health Benefits, then subject to subsection (6) of this definition of “Severance Benefits,” Employer or the successor company shall pay to Executive, in accordance with the provisions of Section 3.2, a lump sum payment equal to the aggregate premiums that Executive would be required to pay in order to obtain coverage for Executive and Executive's dependents under such plan for the Severance Period;
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(b) if the Company, the Employer or a successor company does not maintain a retiree medical plan in which Executive and Executive's dependents are eligible to participate (with no preexisting condition limitations) and to receive the Health Benefits, the Employer or successor company shall promptly purchase, at its own expense and at no cost to the Executive, an individual policy from an A-rated third party insurer under which Executive and Executive's dependents shall receive the benefits described above (with no preexisting condition limitations);
(c) If at any time during the Severance Period the Employer or the successor company ceases to make available any Health Benefits under the retiree medical plan described in (a) above under which Executive and Executive's dependents are obtaining coverage, or materially modifies the Health Benefits available under the retiree medical plan to the detriment of the Executive, then Employer or the successor company shall promptly purchase, at its own expense and at no cost to the Executive, a individual policy from an A-rated third party insurer under which Executive and Executive's dependents shall receive the Health Benefits (with no preexisting condition limitations) for the remainder of the Severance Period;
provided, however, that with respect to each of Executive and Executive's dependents who are provided Health Benefits by or on behalf of the Executive's Employer immediately prior to the Severance Date, the Health Benefits shall be provided from the Severance Date until the earliest to occur of (A) the expiration of the Severance Period, (B) the date on which Executive or Executive's dependent(s), as applicable, becomes eligible for coverage under another group health insurance plan with no pre-existing condition limitation or exclusion; provided, however, for avoidance of doubt, benefits made available to one or more of Executive and Executive's dependents by the employer of Executive's spouse shall not reduce the Health Benefits otherwise available, except to the extent the Executive's spouse elects to receive such benefits from his or her employer, and (C) the date on which Executive or the Executive's dependent(s), as applicable, becomes entitled to benefits under Medicare. The period during which Executive is being provided with health insurance under this Agreement shall be credited against Executive's period of COBRA coverage, if any.
Executive shall promptly notify Employer if, prior to the expiration of the maximum period of coverage, the Executive or any of the Executive's dependents becomes eligible for coverage under another group health plan with no pre-existing condition limitation or exclusion or becomes entitled to benefits under Medicare; provided, further, that
5. | Subsection (3) in the definition of Severance Benefits is hereby deleted in its entirety and replaced with the following: |
(3) | benefits otherwise receivable pursuant to (1) shall be reduced to the extent benefits of the same type are actually received by or are made available to Executive and Executive's dependents, as set forth below (and Executive shall promptly notify Employer or any successor company of any such benefits): |
(a) benefits otherwise receivable pursuant to (1) shall be reduced to the extent benefits of the same type are actually received by the Executive or the Executive's dependents following the Executive's termination of employment with the Employer; or
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(b) | benefits otherwise receivable pursuant to (1) shall be reduced to the extent benefits of the same type are made available to the Executive and Executive's dependents (whether or not Executive elects to actually receive such benefits) by a new employer of Executive following the Executive's termination of employment with the Employer; |
provided, however, for avoidance of doubt, benefits made available to one or more of Executive and Executive's dependents by the employer of Executive's spouse shall not reduce the benefits otherwise available pursuant to (1), except to the extent Executive's spouse elects to receive such benefits from his or her employer;
6. | Subsection (4) in the definition of Severance Benefits is hereby deleted in its entirety and replaced with the following: |
(4) the Employer may limit any reimbursement to the Executive to the excess, if any, of the cost to the Executive of benefits received or made available pursuant to (1) and (2) over such cost immediately prior to the Severance Date or, if more favorable to the Executive, immediately prior to the Change in Control;
7. | Section 2.1 is hereby amended to add the clause “and only to the extent permitted under Treasury regulation §1.409A-1(h)(1)” at the end thereof. |
8. | Section 3.2 is hereby deleted in its entirety and replaced with the following: |
3.2 Subject to Section 3.3, the Employer shall pay to the Executive the Severance Payment, the Prorated Target Bonus Amount and any Severance Benefits that are payable in cash, in each case less amounts withheld for Taxes as required under applicable law, within sixty days following the Severance Date; provided, however, that any amounts payable following (i) the occurrence of a Potential Change in Control or (ii) in the event that the Change in Control does not constitute a “change in control event” within the meaning of Code section 409A, shall to the extent such amounts constitute nonqualified deferred compensation within the meaning of Code section 409A, be paid at the same time and in the same form as required in the Severance Agreement (Non-Change in Control), the Non-Change in Control Severance Policy or similar agreement or policy applicable to the Executive to the extent such payments would be aggregated within the meaning of Section 409A of the Code with the payments and benefits under such other agreements or policies; provided, further, if the Executive is a Specified Employee as of the Severance Date, any payment of nonqualified deferred compensation that would have been paid prior to the six-month anniversary of the Severance Date shall be delayed until the earlier to occur of (i) the date that is six (6) months and one (1) day after the Severance Date and (ii) the date of the Executive's death. Notwithstanding anything herein to the contrary and except as otherwise expressly provided for in a written agreement between the Executive and the Company or Employer, as applicable, an Executive eligible to receive the Severance Payment, the Prorated Target Bonus Amount and other Severance Benefits under this Agreement shall not be eligible to receive any severance payments or benefits under another policy, plan, program, or agreement of the Company (including, without limitation, the Severance Agreement (Non-Change in Control) and the Non-Change in Control Severance Policy).
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9. | Section 3.3 is hereby amended to add the following clause at the end thereof: |
; provided, however, each such payment or benefit which constitutes nonqualified deferred compensation and which is conditioned upon Executive's execution of a release and which is to be paid or provided during a designated period that begins in a first taxable year and ends in a second taxable year shall be paid or provided in the second taxable year.
10. | In Section 3.4, the references to “Section 15 of the EIP” and “EIP” are hereby deleted and replaced with the following: |
Section A of the Administrative Appendix to the Con-way Inc. 2005 Deferred Compensation Plan for Executives and Key Employees, as amended and restated in December 2008 and as subsequently amended from time to time,
11. | In Section 3.5, the third paragraph is hereby deleted in its entirety and replaced with the following: |
Notwithstanding the foregoing, if at the time a dispute or controversy arises the Executive is working outside of the United States, and if at such time the Executive maintains a residence in the United States, the dispute or controversy will be resolved (i) by arbitration in the metropolitan area closest to the Executive's residence in the United States or (ii) by litigation in the United States District Court in the metropolitan area closest to the Executive's residence in the United States or, only if there is no basis for federal jurisdiction, in state court closest to the Executive's residence in the United States. If the Executive does not maintain a United States residence at such time, the dispute or controversy will be subject to arbitration in Ann Arbor, Michigan or to litigation in the United States District Court for the Eastern District of Michigan (or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in Michigan).
12. | In Section 6.5(3), the reference to “the United States District Court for the Northern District of California” is hereby deleted and replaced with “the United States District Court for the Eastern District of Michigan” and the reference to “California” is hereby deleted and replaced with “Michigan”. |
13. | Section 7.5 is hereby deleted in its entirety and replaced with the following: |
7.5 The Company, the Employer and the Executive intend for the Agreement to comply with the requirements of Code section 409A such that none of the payments hereunder will result in compensation to be includible in the Executive's income pursuant to Code section 409A(a)(1)(A). The Agreement shall be interpreted in a manner consistent with such intent.
The payments to Executive pursuant to this Agreement are also intended to be exempt from Code section 409A to the maximum extent possible, under either the separation pay exemption pursuant to Treasury regulation §1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4), and for such purpose, any installment paid to Executive under this Agreement shall be considered a separate payment.
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If any provision of the Agreement would cause compensation to be includible in the Executive's income pursuant to Code section 409A(a)(1)(A), such provision shall be void, and the Employer shall have the unilateral right to amend the Agreement retroactively for compliance with Code section 409A in such a way as to achieve substantially similar economic results without causing such inclusion. Any such amendment shall be binding on the Executive. In the event the Agreement does not comply with the requirements of Code section 409A, the Executive will be solely responsible for any adverse tax consequences to the Executive.
To the extent any amounts under this Agreement are payable by reference to Executive's Severance Date or “termination of employment,” such terms and similar terms shall be deemed to refer to Executive's “separation from service,” within the meaning of Code section 409A.
Any reimbursement payable to Executive pursuant to this Agreement shall be conditioned on the submission by Executive of all documentation reasonably required by Employer, and shall be paid to Executive within 30 days following receipt of such documentation, but in no event later than the last day of the calendar year following the calendar year in which Executive incurred the reimbursable expense. Any amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be provided, during any other calendar year. The right to any reimbursement or in-kind benefit pursuant to this Agreement shall not be subject to liquidation or exchange for any other benefit.
14. | In Section 7.9, the reference to “0000 Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, attention General Counsel” is hereby deleted and replaced with “0000 Xxx Xxxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxx, 00000, attention President and General Counsel”. |
15. | Employer and the Executive agree that, except as specifically amended hereby, all provisions of the Agreement remain in full force and effect. |
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This Amendment No. 2 is hereby executed by the undersigned authorized representative of the Employer and by the Executive.
[NAME OF EMPLOYER]
By: ___________________________
Name:
Title:
EXECUTIVE
By:____________________________
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