MANAGEMENT CONTINUITY AGREEMENT
EXHIBIT 10.22
THIS AGREEMENT dated as of this 27th day of October 2009 between Xxxxxxx Xxxxxx
(the “Executive”) and EnPro Industries, Inc., a North Carolina corporation (the “Company”).
WHEREAS, the Company considers it essential to the best interests of its shareholders to
xxxxxx the continuous employment of key management personnel in the event there is, or is
threatened, a change in control of the Company; and
WHEREAS, the Company recognizes that the uncertainty and questions which may arise among key
management in connection with the possibility of a change in control may result in the departure or
distraction of key management personnel to the detriment of the Company and its shareholders; and
WHEREAS, the Company desires to provide certain protection to Executive in the event of a
change in control of the Company as set forth in this Agreement in order to induce Executive to
remain in the employ of the Company notwithstanding any risks and uncertainties created by the
possibility of a change in control of the Company;
WITNESSETH:
NOW, THEREFORE, in consideration of the foregoing and the mutual promises herein contained,
the parties agree as follows:
1. Term. The “Term” of this Agreement shall mean the period commencing on the date
hereof and ending eighteen (18) months after such date; 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”), the Term
shall be automatically extended so as to terminate eighteen (18) months from such Renewal Date,
unless at least sixty (60) days prior to the Renewal Date the Company shall give notice to the
Executive that the Term shall not be so extended.
2. Period of Employment. Executive’s “Period of Employment” shall commence on the
date on which a Change in Control occurs during the Term and shall end on the date that is eighteen
(18) months after the date on which such Change in Control occurs (subject to the provisions of
Section 20 below pursuant to which the Period of Employment may be deemed to have commenced prior
to the date of a Change in Control in certain circumstances).
3. Certain Definitions. For purposes of this Agreement:
“Board” shall mean the Board of Directors of the Company.
“Cause” shall mean Executive’s termination of employment with the Company due to (A)
the willful and continued failure by Executive to substantially perform Executive’s duties
with the Company, which failure causes material and demonstrable injury to the Company
(other than any such failure resulting from Executive’s incapacity due to physical or mental
illness), after a demand for substantial performance is delivered
to Executive by the Board which specifically identifies the manner in which the Board
believes that Executive has not substantially performed Executive’s duties, and after
Executive has been given a period (hereinafter known as the “Cure Period”) of at least
thirty (30) days to correct Executive’s performance, or (B) the willful engaging by
Executive in other gross misconduct materially and demonstrably injurious to the Company.
For purposes hereof, no act, or failure to act, on Executive’s part shall be considered
“willful” unless conclusively demonstrated to have been 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 Company. Notwithstanding the foregoing, Executive
shall not be deemed to have been terminated for Cause unless and until there shall have been
delivered to Executive a Notice of Termination which shall include a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held for the purpose (after
reasonable notice to Executive and an opportunity for Executive, together with Executive’s
counsel, to be heard before the Board), finding that in the good faith opinion of the Board
Executive was guilty of conduct set forth above in clause (A) (including the expiration of
the Cure Period without the correction of Executive’s performance) or clause (B) above and
specifying the particulars thereof in detail.
“Change in Control” shall mean:
(i) The acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities 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% or more of either (A) the then outstanding shares of common stock of
the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in the election
of directors (the “Outstanding Company Voting Securities”); provided, however, that the
following acquisitions shall not constitute a Change in Control: (A) any acquisition
directly from the Company (other than by exercise of a conversion privilege), (B) any
acquisition by the Company or any of its subsidiaries, (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any of its
subsidiaries or (D) any acquisition by any company with respect to which, following such
acquisition, more than 70% of, respectively, the then outstanding shares of common stock of
such company and the combined voting power of the then outstanding voting securities of such
company entitled to vote generally in the election of directors is then beneficially owned,
directly or indirectly, by 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 acquisition in substantially the same
proportions as their ownership, solely in their capacity as shareholders of the Company,
immediately prior to such acquisition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; or (ii) individuals who, as of
the Distribution Date (as such term is defined in the Distribution Agreement among Xxxxxxxx
Corporation, EnPro Industries, Inc. and Coltec Industries Inc.), constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the Distribution
Date whose election, or nomination for election by the Company’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
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individual were a member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result of either an actual or
threatened election contest; or (iii) consummation of a reorganization, merger or
consolidation, in each case, with respect to which 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, merger or consolidation, do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, solely in their capacity as
shareholders of the Company, more than 70% 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 company
resulting from such reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such reorganization, merger or
consolidation of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be; or (iv) consummation of (A) a complete liquidation or
dissolution of the Company or (B) a sale or other disposition of all or substantially all of
the assets of the Company, other than to a company, with respect to which following such
sale or other disposition, more than 70% of, respectively, the then outstanding shares of
common stock of such company and the combined voting power of the then outstanding voting
securities of such company entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the individuals
and entities, solely in their capacity as shareholders of the Company, who were the
beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such sale or
other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be.
“Date of Termination” is as defined in Section 8 below.
“Good Reason” shall mean:
(i) without Executive’s express written consent, (A) the assignment to Executive of any
new duties or responsibilities substantially inconsistent in character with Executive’s
duties and responsibilities within the Company immediately prior to a Change in Control, (B)
any substantial adverse change in Executive’s duties and responsibilities as in effect
immediately prior to a Change in Control, including, but not limited to, a reduction in
duties or responsibilities which occurs because the Company is no longer an independent
publicly-held entity, (C) any removal of Executive from or any failure to re-elect Executive
to any director position of the Company, (D) a change in the annual or long term incentive
plan in which Executive currently participates such that Executive’s opportunity to earn
incentive compensation is impaired, (E) a material reduction in the aggregate value of
Company perquisites made available to Executive, (F) an elimination or material impairment
of Executive’s ability to participate in retirement plans comparable to those in which
Executive currently participates, (G) any substantial increase in Executive’s obligation to
travel on the Company’s business over Executive’s present business travel obligations, or
(H) an elimination or material impairment of Executive’s ability to receive stock options
with values comparable to those Executive was granted within the one year period preceding
the commencement of the Period of Employment; (ii) the failure of the Company to comply
with any other of its obligations
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under Section 4 herein; (iii) the relocation of the offices of the Company at which
Executive was employed immediately prior to the Change in Control to a location which is
more than fifty (50) miles from such prior location, or the failure of the Company to (A)
pay or reimburse Executive, in accordance with the Company’s relocation policy for its
employees in existence immediately prior to a Change in Control, for all reasonable costs
and expenses; plus “gross ups” referred to in such policy incurred by Executive relating to
a change of Executive’s principal residence in connection with any relocation of the
Company’s offices to which Executive consents, and (B) indemnify Executive against any loss
(defined as the difference between the actual sale price of such residence and the higher of
(1) Executive’s aggregate investment in such residence or (2) the fair market value of such
residence as determined by the relocation management organization used by the Company
immediately prior to the Change in Control (or other real estate appraiser designated by
Executive and reasonably satisfactory to the Company)) realized in the sale of Executive’s
principal residence in connection with any such change of residence; (iv) the failure of
the Company to obtain the assumption of and the agreement to perform this Agreement by any
successor as contemplated in Section 11 hereof; or (v) any purported termination of
Executive’s employment during the Period of Employment which is not effected pursuant to a
Notice of Termination satisfying the requirements of Section 7 hereof.
“Incapacity Discharge” means Executive’s termination of employment with the Company if,
as a result of Executive’s incapacity due to physical or mental illness, Executive shall
have been absent from Executive’s duties with the Company on a full-time basis for
one-hundred twenty (120) consecutive business days, and within thirty (30) days after a
written Notice of Termination is given, Executive shall not have returned to the full-time
performance of Executive’s duties.
“Mandatory Retirement Date” shall mean the compulsory retirement date, if any,
established by the Company for those executives of the Company who, by reason of their
positions and the size of their nonforfeitable annual retirement benefits under the
Company’s pension, profit-sharing, and deferred compensation plans, are exempt from, the
provisions of the Age Discrimination in Employment Act, 29 U.S.C. Sections 621, et seq.,
which date shall not in any event be earlier for any executive than the last day of the
month in which such Executive reaches age 65.
“Notice of Termination” is as defined in Section 7 below.
“Payment Period” shall mean eighteen (18) months, provided that the Payment Period
shall not exceed the number of whole calendar months between the Executive’s Date of
Termination and Mandatory Retirement Date (if applicable).
4. Compensation During Period of Employment. For so long during Executive’s Period of
Employment as Executive is an employee of the Company, the Company shall be obligated to compensate
Executive as follows:
(a) Executive shall continue to receive Executive’s full base salary at the rate in
effect immediately prior to the Change in Control. Executive’s base salary shall be
increased annually, with each such increase due on the anniversary date of Executive’s most
recent previous increase. Each such increase shall be no less than an amount which
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at least equals on a percentage basis the mean of the annualized percentage increases
in base salary for all elected officers of the Company during the two full calendar years
immediately preceding the Change in Control.
(b) Executive shall continue to participate in all benefit and compensation plans
(including but not limited to the Equity Compensation Plan, Long-Term Incentive Program,
Performance Share Deferred Compensation Plan, Annual Performance Plan, Executive Life
Insurance Program, Deferred Compensation Plan, 401(K) plan, savings plan, flexible benefits
plan, life insurance plan, health and accident plan or disability plan) in which Executive
was participating immediately prior to the Change in Control, or in plans providing
substantially similar benefits, in either case upon terms and conditions and at levels at
least as favorable as those provided to Executive under the plans in which Executive was
participating immediately prior to the Change in Control;
(c) Executive shall continue to receive all fringe benefits, perquisites, and similar
arrangements which Executive was entitled to receive immediately prior to the Change in
Control; and
(d) Executive shall continue to receive annually the number of paid vacation days and
holidays Executive was entitled to receive immediately prior to the Change in Control.
5. Compensation Upon Termination of Employment. The following provisions set forth
the benefits that may become payable to Executive upon termination of employment with the Company
during the Period of Employment in accordance with, and subject to, the provisions of Section 6
below:
(a) By not later than the fifth business day following the Date of Termination, the
Company shall pay Executive in a lump sum an amount equal to the sum of the following:
(i) any base salary that is earned but unpaid as of the Date of Termination;
(ii) a pro rata portion of the “target incentive amount” under the Annual
Performance Plan for the calendar year in which the Date of Termination occurs
(based on the number of calendar days in such calendar year completed through the
Date of Termination); and
(iii) a pro rata portion of the “calculated market value” of the phantom
Performance Shares, if any, awarded to Executive under the Company’s Long-Term
Incentive Program (the “LTIP”) for each Plan Cycle under the LTIP that has not been
completed as of the Date of Termination, determined as follows:
(A) The performance for each such Plan Cycle under the applicable LTIP
award agreement shall be determined based on (x) for any completed calendar
year of the Plan Cycle as of the Date of Termination, actual performance for
the calendar year, (y) for the calendar year in which the Date of
Termination occurs if at least one calendar quarter has been completed
during such calendar year, the greater of target
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performance for the calendar year or actual performance for the
completed calendar quarter(s) for the calendar year annualized for the year,
and (z) for any other calendar years of the Plan Cycle, target performance
for the calendar year.
(B) The number of phantom Performance Shares for each such Plan Cycle
shall be adjusted in accordance with the formula set forth in the applicable
LTIP award agreement based on the performance for the Plan Cycle determined
under paragraph (A) above.
(C) The pro rata portion of the “calculated market value” of the
number of phantom Performance Shares adjusted in accordance with paragraph
(B) above shall be based on the number of calendar days in the Plan Cycle
completed through the Date of Termination.
Section 5(c) below sets for the method for determining the “target incentive amount” under
the Annual Performance Plan and the “calculated market value” of phantom Performance Shares
under the LTIP. Any amounts payable under Sections 5(a)(ii) or (iii) above shall be offset
dollar-for-dollar by any pro rata payments otherwise provided for under the Annual
Performance Plan or the LTIP.
(b) In lieu of any salary payments that Executive would have received if he had
continued in the employment of the Company during the Payment Period, the Company shall pay
to Executive in a lump sum, by not later than the fifth business day following the Date of
Termination, an amount equal to one-twelfth of Executive’s annualized base salary in effect
immediately prior to the Date of Termination, multiplied by the number of months in the
Payment Period.
(c) By not later than the fifth day following the Date of Termination, the Company
shall pay Executive in a lump sum an amount equal to the sum of:
(i) under the Annual Performance Plan (and in lieu of any further awards under
the Annual Performance Plan that Executive would have received if he had continued
in the employment of the Company during the Payment Period), the number of months in
the Payment Period multiplied by the greatest of one-twelfth of: (A) the amount most
recently paid to Executive for a full calendar year; (B) Executive’s “target
incentive amount” for the calendar year in which his Date of Termination occurs; or
(C) Executive’s “target incentive amount” in effect prior to the Change in Control
for the calendar year in which the Change in Control occurs; plus, if applicable,
(ii) under the LTIP (and in lieu of any further grants under the LTIP that
Executive would have received if he had continued in the employment of the Company
during the Payment Period), twelve (12) multiplied by the greatest of: (A) with
respect to the most recently completed Plan Cycle as of the Date of Termination,
one-twelfth of the “calculated market value” of the Performance Shares actually
awarded Executive (including the value of any Performance Shares Executive may have
elected to defer under the Performance Share Deferred Compensation Program); (B)
with respect to the most recently
6
commenced Plan Cycle under the LTIP (if Executive is a participant in such Plan
Cycle) prior to Executive’s Date of Termination, one-twelfth of the “calculated
market value” of the phantom Performance Shares, if any, awarded to Executive; or
(C) with respect to the most recently commenced Plan Cycle prior to the date of the
occurrence of the Change in Control, one-twelfth of the “calculated market value” of
the phantom Performance Shares, if any, awarded to Executive.
For purposes of this Section 5, Executive’s “target incentive amount” under the
Annual Performance Plan for a given calendar year (i.e., the calendar year in which
the Date of Termination occurs or the Change in Control occurs, as applicable) is
determined by multiplying (i) Executive’s annualized total gross base salary for the
calendar year by (ii) the incentive target percentage which is applicable to
Executive’s incentive category under the Annual Performance Plan for the calendar
year. For purposes of this Section 5, the “calculated market value” of each
Performance Share actually awarded upon completion of a Plan Cycle, Performance
Share deferred under the Performance Share Deferred Compensation Program or phantom
Performance Share granted under the LTIP shall be the mean of the high and low
prices of the Company’s common stock on the relevant date as reported on the New
York Stock Exchange Composite Transactions listing (or similar report), or, if no
sale was made on such date, then on the next preceding day on which a sale was made
multiplied by the number of shares involved in the calculation. The relevant date
for Section 5(a)(iii) and clauses 5(c)(ii)(B) and 5(c)(ii)(C) is the date upon which
the Compensation Committee (“Committee”) of the Board of Directors awarded the
phantom Performance Shares in question; for clause 5(c)(ii)(A) the relevant date is
the date on which the Committee made a determination of attainment of financial
objectives and awarded Performance Shares (including any Performance Shares
Executive may have elected to defer under the Performance Share Deferred
Compensation Program).
Any payments received pursuant to Sections 5(c)(i) or (ii) above shall be in
addition to, and not in lieu of, any payments required to be made to Executive as
the result of the happening of an event that would constitute a change in control
pursuant to the provisions of the Annual Performance Plan or LTIP, as applicable.
(d) By not later than the fifth day following the Date of Termination, the Company
shall pay Executive in a lump sum an amount equal to the sum of:
(i) If Executive is under age 55, or over the age of 55 but not eligible to
retire, at the Date of Termination the present value of all health and welfare
benefits the Executive would have been entitled to had the Executive continued as an
employee of the Company during the Payment Period and been entitled to or
participated in the same health and welfare benefits during the Payment Period as
immediately prior to the Date of Termination plus an amount in cash equal to the
amount necessary to cause the amount of the aggregate after-tax lump sum payment the
Executive receives pursuant to this provision to be equal to the aggregate after-tax
value of the benefits which Executive would have received if Executive continued to
receive such benefits as an employee; or
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(ii) If Executive is age 55 or over and eligible to retire on the Date of
Termination, the present value of the health and welfare benefits to which Executive
would have been entitled under the Company’s general retirement policies if
Executive retired on the Date of Termination with the Company paying that percentage
of the premium cost of the plans which it would have paid under the terms of the
plans in effect immediately prior to the Change of Control with respect to
individuals who retire at age 65, regardless of Executive’s actual age on the
Termination Date, provided such lump sum value would be at least equal to the lump
sum value of the benefits which would have been payable if Executive had been
eligible to retire and had retired immediately prior to the Change in Control.
(e) By not later than the fifth day following the Date of Termination, the Company
shall pay Executive in a lump sum an amount equal to the sum of the present value of the
fringe benefit programs, perquisites (if any), and similar arrangements the Executive would
have been entitled to receive had the Executive continued in employment with the Company for
the Payment Period and been entitled to or participated in the same such benefits during the
Payment Period as immediately prior to the Date of Termination. In addition and
notwithstanding any provision of the Company’s 2002 Equity Compensation Plan (or any
comparable equity award plan of the Company) or any applicable award agreement thereunder to
the contrary, Executive may exercise any of Executive’s stock options that are vested as of
Executive’s Date of Termination at any time during the Payment Period (but not exceeding the
original expiration date of the options).
(f) The Company shall, in addition to the benefits to which Executive is entitled under
the retirement plans or programs sponsored by the Company or its affiliates in which
Executive participates (including without limitation any Supplemental Executive Retirement
Plan in which Executive participates, if applicable), pay Executive in a lump sum in cash by
no later than the fifth day following the Date of Termination an amount equal to the
actuarial equivalent of the retirement pension to which Executive would have been entitled
under the terms of such retirement plans or programs had Executive accumulated additional
years of continuous service under such plans equal in length to Executive’s Payment Period.
The length of the Payment Period will be added to total years of continuous service for
determining vesting, the amount of benefit accrual, to the age which Executive will be
considered to be for the purposes of determining eligibility for normal or early retirement
calculations and the age used for determining the amount of any actuarial reduction. For the
purposes of calculating the additional benefit accrual under this paragraph, the amount of
compensation Executive will be deemed to have received during each month of Executive’s
Payment Period shall be equal to the sum of Executive’s annual base salary prorated on a
monthly basis as provided for under Section 4(a) immediately prior to the Date of
Termination (including salary increases), plus under the Company’s Annual Performance Plan
the greatest of one-twelfth of:
(i) the amount most recently paid to Executive for a full calendar year,
(ii) Executive’s “target incentive amount” for the calendar year in which
Executive’s Date of Termination occurs, or
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(iii) Executive’s “target incentive amount” in effect prior to the Change in
Control for the calendar year in which the Change in Control occurs. Attached as
Exhibit 1 is an illustration, not intending to be exhaustive, of examples of how
inclusion of the Payment Period may affect the calculation of Executive’s retirement
benefit.
(g) In no event shall any amount payable to Executive described in this Section 5 be
considered compensation or earnings under any pension, savings or other retirement plan of
the Company.
6. Termination.
(a) Termination Without Compensation. If Executive’s employment is terminated for any
of the following reasons, Executive shall not be entitled by virtue of this Agreement to any
of the benefits provided in the foregoing Section 5:
(i) If, prior to the commencement of the Period of Employment, Executive’s
employment with the Company is terminated at any time for any reason, including
without limitation due to (A) Executive’s death, (B) an Incapacity Discharge, (C) a
termination initiated by the Company with or without Cause or (D) resignation,
retirement or other termination initiated by Executive with or without Good Reason,
subject, however, to the provisions of Section 20 below.
(ii) If Executive’s employment with the Company is terminated during the
Period of Employment with Cause.
(iii) If Executive resigns, retires or otherwise voluntarily terminates
employment with the Company during the Period of Employment without Good Reason.
(b) Termination with Compensation. If Executive’s employment is terminated for any of
the following reasons, Executive shall be entitled by virtue of this Agreement to the
benefits provided in the foregoing Section 5 as follows:
(i) If, during the Period of Employment, the Company discharges Executive
other than for Cause, Executive shall receive all of the benefits and payments
provided in Section 5.
(ii) Executive may terminate his employment with the Company at any time
during the Period of Employment for Good Reason (“Good Reason Termination”) and
shall receive all of the benefits and payments provided in Section 5.
(iii) If, during the Period of Employment, Executive either (A) retires from
employment with the Company or (B) if the Company discharges Executive due to an
Incapacity Discharge, in either case while Executive has cause to terminate his
employment as a Good Reason Termination (whether or not Executive has provided
Notice of Termination to the Company pursuant to
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Section 7), Executive shall receive all of the benefits and payments provided
in Section 5.
(iv) If Executive dies while employed by the Company during the Period of
Employment while having cause to terminate his employment as a Good Reason
Termination (whether or not Executive has provided Notice of Termination to the
Company pursuant to Section 7), Executive’s beneficiary or beneficiaries named on
Exhibit 2 to this Agreement (or Executive’s estate if he has not named a
beneficiary) shall be entitled to receive those payments provided under Sections
5(a), 5(b) and 5(c) of this Agreement in addition to any benefits that such
beneficiaries would be entitled under any other plan, program or policy of the
Company as a result of Executive’s employment with the Company.
(v) Executive may become eligible for the benefits and payments under Section
5 for termination of employment prior to a Change in Control in accordance with, and
subject to, the provisions of Section 20 below.
7. Notice of Termination. Any termination of Executive’s employment by the Company or
any termination by Executive as a Good Reason Termination shall be communicated by written notice
to the other party hereto. For purposes of this Agreement, such notice shall be referred to as a
“Notice of Termination.” Such notice shall, to the extent applicable, set forth the specific reason
for termination, and shall 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.
8. Date of Termination. “Date of Termination” shall mean:
(a) If Executive terminates Executive’s employment as a Good Reason Termination, the
date specified in the Notice of Termination, but in no event more than sixty (60) days after
Notice of Termination is given.
(b) If Executive’s employment is terminated with Cause, the date on which a Notice of
Termination is given, except that the Date of Termination shall not be any date prior to the
date on which the Cure Period expires without the correction of Executive’s performance (if
applicable).
(c) If Executive’s employment pursuant to this Agreement is terminated following
absence due to physical incapacity as an Incapacity Discharge, then the Date of Termination
shall be thirty (30) days after Notice of Termination is given (provided that Executive
shall not have returned to the performance of Executive’s duties on a full-time basis during
such thirty (30) day period).
(d) A termination of employment by either the Company or by Executive shall not affect
any rights Executive or Executive’s surviving spouse or beneficiaries may have pursuant to
any other agreement or plan of the Company providing benefits to Executive, except as
provided in such agreement or plan.
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9. Adjustments to Payments.
(a) Anything in this Agreement to the contrary notwithstanding, in the event it shall
be determined that any payment or distribution by the Company to Executive or for
Executive’s benefit (whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise (the “Payments”) would be subject to the excise tax
imposed by Section 4999 (or any successor provisions) of the Internal Revenue Code of 1986,
as amended (the “Code”), or any interest or penalty is incurred by Executive with respect to
such excise tax (such excise tax, together with any such interest and penalties, is
hereinafter collectively referred to as the “Excise Tax”), then the Payments shall be
reduced (but not below zero) if and to the extent that such reduction would result in
Executive retaining a larger amount, on an after-tax basis (taking into account federal,
state and local income taxes and the imposition of the Excise Tax), than if Executive
received all of the Payments. The Company shall reduce or eliminate the Payments, by first
reducing or eliminating the portion of the Payments which are not payable in cash and then
by reducing or eliminating cash payments, in each case in reverse order beginning with
payments or benefits which are to be paid the farthest in time from the determination.
(b) All determinations required to be made under this Section 9, including whether and
when an adjustment to any Payments is required and, if applicable, which Payments are to be
so adjusted, shall be made by PricewaterhouseCoopers LLC (or their successors) (the
“Accounting Firm”) which shall provide detailed supporting calculations both to the Company
and to Executive within fifteen (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. If the Accounting Firm determines
that no Excise Tax is payable by Executive, it shall furnish Executive with a written
opinion that failure to report the Excise Tax on Executive’s applicable federal income tax
return would not result in the imposition of a negligence or similar penalty. Any
determination by the Accounting Firm shall be binding upon the Company and Executive.
10. No Obligation to Mitigate Damages, No Effect on Other Contractual Rights.
Executive shall not be required to refund the amount of any payment or employee benefit provided
for or otherwise mitigate damages under this Agreement by seeking or accepting other employment or
otherwise, nor shall the amount of any payment required to be made under this Agreement be reduced
by any compensation earned by Executive as the result of any employment by another employer after
the date of termination of Executive’s employment with the Company, or otherwise. Upon receipt of
written notice from Executive that Executive has been reemployed by another company or entity on a
full-time basis, benefits, fringe benefits and perquisites otherwise receivable by Executive
pursuant to Sections 5(d) or 5(e) related to life, health, disability and accident insurance plans
and programs and other similar benefits, company cars, financial planning, country club
memberships, and the like (but not incentive compensation, LTIP, pension plans or other similar
plans and programs) shall be reduced to the extent
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comparable benefits are made available to Executive at his new employment and any such
benefits actually received by Executive shall be reported to the Company by Executive.
The provisions of the Agreement, and any payment or benefit provided for hereunder shall not
reduce any amount otherwise payable, or in any way diminish Executive’s existing rights, or rights
which would occur solely as a result of the passage of time, under any other agreement, contract,
plan or arrangement with the Company.
11. Successors and Binding Agreement.
(a) The Company shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business or assets of
the Company, by agreement in form and substance satisfactory to Executive, to assume and
agree to perform this Agreement.
(b) This Agreement shall be binding upon the Company and any successor of or to the
Company, including, without limitation, any person acquiring directly or indirectly all or
substantially all of the assets of the Company whether by merger, consolidation, sale or
otherwise (and such successor shall thereafter be deemed the “Company” for the purposes of
this Agreement), but shall not otherwise be assignable by the Company.
(c) This Agreement shall inure to the benefit of and be enforceable by Executive and
Executive’s personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Executive should die while any amounts would still
be payable to Executive pursuant to Sections 5 and 6 hereunder if Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to Executive’s devisee, legatee, or other designee or, if there
be no such designee, to Executive’s estate.
12. Notices. For the purposes 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 respective addresses set forth on the first page of this Agreement, provided that
all notices to the Company shall be directed to the attention of the Chief Executive Officer of the
Company with a copy to the Secretary of the Company, or to such other address as either party may
have furnished to the other in writing, except that notices of change of address shall be effective
only upon receipt.
13. Governing Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of North Carolina, without giving effect to
the principles of conflict of laws of such State.
14. Miscellaneous. No provisions of this Agreement may be modified, waived or
discharged, and this Agreement may not be terminated before the end of the Term, unless such
waiver, modification, discharge or termination is agreed to in a writing signed by Executive and
the Company. No waiver by either party hereto at any time of any breach by the other party hereto
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
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or at any prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof, have been made by either party which
is not set forth expressly in this Agreement.
15. Validity. The invalidity or unenforceability of any provisions 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.
16. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together will constitute one and the same
agreement.
17. Withholding of Taxes. The Company may withhold from any amounts payable under
this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or
government regulation or ruling.
18. Nonassignability. This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or
obligations hereunder, except as provided in Section 11 above. Without limiting the foregoing,
Executive’s right to receive payments hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other than by a transfer by Executive’s will
or by the laws of descent and distribution and in the event of any attempted assignment or transfer
contrary to this Section 18 the Company shall have no liability to pay any amounts so attempted to
be assigned or transferred.
19. Legal Fees and Expenses. If a Change in Control shall have occurred, thereafter
the Company shall pay and be solely responsible for any and all attorneys’ and related fees and
expenses incurred by Executive to successfully (in whole or in part and whether by modification of
the Company’s position, agreement, compromise, settlement, or administrative or judicial
determination) enforce this Agreement or any provision hereof or as a result of the Company or any
Shareholder of the Company contesting the validity or enforceability of this Agreement or any
provision hereof. To secure the foregoing obligation, the Company shall, within 90 days after being
requested by Executive to do so, enter into a contract with an insurance company, open a letter of
credit or establish an escrow in a form satisfactory to Executive. Notwithstanding the provisions
of this Section 19 to the contrary, in no event shall any payments made to Executive under this
Section 19 be made for expenses incurred by Executive following the end of the second calendar year
following the calendar year in which Executive’s Date of Termination occurs, provided that the
period during which reimbursement for such expenses may be made may extend to the end of the third
calendar year in which Executive’s Date of Termination occurs.
20. Employment Rights. Nothing expressed or implied in this Agreement shall create
any right or duty on Executive’s part or on the part of the Company to have Executive remain in the
employment of the Company prior to the commencement of the Period of Employment; provided, however,
that any termination or purported termination of Executive’s employment by the Company without
Cause, or termination of Executive’s employment by Executive under circumstances that would
constitute Good Reason had a Change in Control occurred, in either case following the commencement
of any discussion with a third party, or the announcement by a third party of the commencement of,
or the intention to commence a tender
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offer, or other intention to acquire all or a portion of the equity securities of the Company
that ultimately results in a Change in Control shall be deemed to be a termination of Executive’s
employment after a Change in Control for purposes of (i) this Agreement and both the Period of
Employment and the Payment Period shall be deemed to have begun on the day prior to such
termination and (ii) the Company’s Equity Compensation Plan as if the Change in Control had
occurred on the day prior to such termination (resulting in the full vesting and extended
exercisability of the Executive’s outstanding stock options under, and in accordance with, the
provisions of the Equity Compensation Plan).
21. Right of Setoff. There shall be no right of setoff or counterclaim against, or
delay in, any payment by the Company to Executive or Executive’s designated beneficiary or
beneficiaries provided for in this Agreement in respect of any claim against Executive or any debt
or obligation owed by Executive, whether arising hereunder or otherwise.
22. Rights to Other Benefits. The existence of the Agreement and Executive’s rights
hereunder shall be in addition to, and not in lieu of, Executive’s rights under any other of the
Company’s compensation and benefit plans and programs, and under any other contract or agreement
between Executive and the Company.
23. Prior Agreements. This Agreement supersedes and replaces any and all prior
agreements and understandings between the Company and the Executive with respect to the subject
matter hereof. Any such prior agreements and understandings are no longer in force or effect.
24. Compliance with Section 409A of the Internal Revenue Code. Any payments under
this Agreement that are deemed to be deferred compensation subject to the requirements of Section
409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended, are intended to comply with
the requirements of Section 409A. To this end and notwithstanding any other provision of this
Agreement to the contrary, if at the time of Executive’s termination of employment with the
Company, (i) the Company’s securities are publicly traded on an established securities market; (ii)
Executive is a “specified employee” (as defined in Section 409A); and (iii) the deferral of the
commencement of any payments or benefits otherwise payable pursuant to this Agreement as a result
of such termination of employment is necessary in order to prevent any accelerated or additional
tax under Section 409A, then the Company will defer the commencement of such payments (without any
reduction in amount ultimately paid or provided to Executive) that are not paid within the
short-term deferral rule under Section 409A (and any regulations thereunder) or within the
“involuntary separation” exemption of Treasury Regulation § 1.409A-1(b)(9)(iii). Such deferral
shall last until the date that is six (6) months following Executive’s termination of employment
with the Company (or the earliest date as is permitted under Section 409A). Any amounts the
payment of which are so deferred shall be paid in a lump sum payment within ten (10) days after the
end of such deferral period. If Executive dies during the deferral period prior to the payment of
any deferred amount, then the unpaid deferred amount shall be paid to the personal representative
of Executive’s estate within sixty (60) days after the date of Executive’s death. For purposes of
Section 409A, the right to a series of installment payments under this Agreement shall be treated
as a right to a series of separate payments.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.
| ENPRO INDUSTRIES, INC. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | President and Chief Executive Officer | |||
| /s/ Xxxxxxx Xxxxxx | ||||
| Xxxxxxx Xxxxxx | ||||
15
EXHIBIT 1
A. If as of Executive’s Date of Termination Executive’s years of continuous service under the
applicable retirement plans for purposes of determining eligibility for normal or early retirement
plus the length of Executive’s Payment Period is at least 5, then
1. If as of Executive’s Date of Termination Executive’s age plus the length of
Executive’s Payment Period is at least 65, Executive’s retirement benefit under Section 5(f)
will be calculated as a “normal retirement” benefit to which Executive would have been
entitled under the terms of the retirement plan in which Executive participates had
Executive accumulated benefit service under the retirement plan that included the Payment
Period; and
2. If as of Executive’s Date of Termination Executive’s age plus the length of
Executive’s Payment Period is at least 55 but less than 65, Executive’s retirement benefit
under Section 5(f) will be calculated as an “early retirement” benefit to which Executive
would have been entitled under the terms of the retirement plan in which Executive
participates had Executive accumulated benefit service under the retirement plan that
included the Payment Period. The actuarial reduction used shall be the actuarial reduction
factor for early retirement, calculated to Executive’s actual age plus the length of
Executive’s Payment Period, at Executive’s Date of Termination.
B. If as of Executive’s Date of Termination the sum of Executive’s years of continuous service
under the applicable retirement plans for purposes of determining eligibility for normal or early
retirement plus the length of Executive’s Payment Period is less than 5, or Executive’s age plus
the length of Executive’s Payment Period is less than 55, Executive’s retirement benefit under
Section 5(f) will be calculated as a “deferred vested pension” to which Executive would have been
entitled under the terms of the retirement plans in which Executive participates had Executive
accumulated benefit service under the retirement plan that included the Payment Period. The
actuarial reduction used shall be the actuarial reduction factor for a deferred vested pension,
calculated to Executive’s actual age at Executive’s Date of Termination plus the length of
Executive’s Payment Period.
C. For purposes of Section 5(f), “actuarial equivalent” shall be determined using the same
methods and assumptions as those utilized under the Company’s retirement plans and programs
immediately prior to the Change in Control.
EXHIBIT 2
BENEFICIARY DESIGNATION
BENEFICIARY DESIGNATION
I hereby designate the following person(s) as a beneficiary for the purposes of Section
6(b)(iv) to the extent of the percentage interest listed next to their name:
| NAME | PERCENTAGE INTEREST | |
| TOTAL (CANNOT EXCEED 100%) | ||
