FORM OF VULCAN MATERIALS COMPANY CHANGE OF CONTROL EMPLOYMENT AGREEMENT (Double Trigger) EMPLOYMENT AGREEMENT
Exhibit 10.1
EMPLOYMENT AGREEMENT
AGREEMENT by and between Vulcan Materials Company, a New Jersey corporation (the “Company”)
and
(the “Executive”), dated as of the ___ day of
, 2008.
The Board of Directors of the Company (the “Board”), has determined that it is in the best
interests of the Company and its shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of
Control (as defined below) of the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal uncertainties and risks created
by a pending or threatened Change of Control and to encourage the Executive’s full attention and
dedication to the Company currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with compensation and benefits arrangements upon a Change of
Control which ensure that the compensation and benefits expectations of the Executive will be
satisfied and which are competitive with those of other corporations. 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 of Control Period (as defined in Section 1(b)) on which a Change of Control (as defined in
Section 2) occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of
Control occurs and if the Executive’s employment with the Company is terminated prior to the date
on which the Change of Control occurs, and if it is reasonably demonstrated by the 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 of Control or (ii) otherwise arose in connection with or
anticipation of a Change of 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 of 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 of 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 the Executive that the Change of Control Period shall not be so
extended.
2. Change of Control. For the purpose of this Agreement, a “Change of Control”
shall mean:
(a) 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”)) (a
“Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) 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 for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or
Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) 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 for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, 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 date hereof 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 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 an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company (a “Business Combination”), in each case,
unless, following such Business Combination, (i) 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 Business Combination beneficially
own, directly or indirectly, more than 60% 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
Business Combination (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 either directly or
through one or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or the combined voting power of
the then outstanding voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of
the Company.
3. Employment Period. The Company hereby agrees to continue the Executive in its
employ, and the 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) the 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) the Executive’s services
shall be performed at the location where the Executive was employed immediately preceding the
Effective Date or any office or location less than 35 miles from such location.
(ii) During the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the 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 the Executive hereunder, to use the
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 the 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 the 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 the
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 the Executive’s responsibilities to the
Company.
(b) Compensation. (i) Base Salary. During the Employment Period, the
Executive
shall receive an annual base salary (“Annual Base Salary”), which shall be paid at a monthly rate,
at least equal to twelve times the highest monthly base salary paid or payable, including any base
salary which has been earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual Base Salary shall be reviewed no
more than 12 months after the last salary increase awarded to the 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 the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized 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, the Executive shall be awarded,
for each fiscal year ending during the Employment Period, an annual bonus (the “Annual Bonus”) in
cash at least equal to the greater of (A) the average of the Executive’s bonuses under the
Company’s Management Incentive Plan, or any comparable bonus under any predecessor or successor
plan (the “Bonus Plan”) for the last three full fiscal years prior to the Effective Date and (B)
the Executive’s annual bonus under the Bonus Plan, determined based on the target annual bonus
percentage and the Annual Base Salary in effect with respect to the Executive immediately prior to
the Effective Date for the fiscal year in which the Effective Date occurs (and, in all cases,
annualized in the event that the Executive was not employed by the Company for the whole of any
such fiscal year) (the “Recent Annual Bonus”). Each such Annual Bonus shall be paid between January
1 and March 15 (inclusive) of the year following the end of the fiscal year for which the Annual
Bonus is awarded.
(iii) Long-Term Incentives. During the Employment Period, the Executive shall be
entitled to participate in all long-term incentive 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 the Executive with incentive
opportunities (measured with respect to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), less favorable, in the aggregate, than the
most favorable of those provided by the Company and its affiliated companies for the 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 the Executive, those
provided generally at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.
(iv) Savings and Retirement Plans. During the Employment Period, the Executive shall
be entitled to participate in all 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 the Executive with 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 the
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 the Executive,
those provided generally at any time after the Effective Date to other peer executives of the
Company and its affiliated companies.
(v) Welfare Benefit Plans. During the Employment Period, the Executive and/or the
Executive’s family, 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 (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident insurance plans and
programs) 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
the Executive with benefits which are less favorable, in the aggregate, than the most favorable of
such plans, practices, policies and programs in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to the Executive,
those provided generally at any time after the Effective Date to other peer executives of the
Company and its affiliated companies.
(vi) Expenses. During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance
with the most favorable policies, practices and procedures of the Company and its affiliated
companies in effect for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its affiliated companies. Any
reimbursement includable in the Executive’s gross income for federal income tax purposes shall be
paid, if at all, by the last day of the Executive’s taxable year next following the Executive’s
taxable year in which the related expense is incurred.
(vii) Fringe Benefits. During the Employment Period, the Executive shall be
entitled to fringe benefits, including, without limitation, tax and financial planning services,
payment of club dues, and, if applicable, use of an automobile and payment of related expenses, in
accordance with the most favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company and its affiliated companies.
(viii) Office and Support Staff. During the Employment Period, the Executive shall
be entitled to an office or offices of a size and with furnishings and other appointments, and to
personal secretarial and other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at any time during the 120-
day period immediately preceding the Effective Date or, if more favorable to the Executive, as
provided generally at any time thereafter with respect to other peer executives of the Company
and its affiliated companies.
(ix) Vacation. During the Employment Period, the Executive shall be entitled to paid
vacation in accordance with the most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect for the Executive at any time during the 120- day
period immediately preceding the Effective Date or, if more favorable to the 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 or Disability. The Executive’s
employment shall terminate automatically upon the Executive’s death during the Employment Period.
If the Company determines in good faith that the Disability of the Executive has occurred during
the Employment Period (pursuant to the definition of Disability set forth below), it may give to
the Executive written notice in accordance with Section 12(b) of this Agreement of its intention to
terminate the Executive’s employment. In such event, the Executive’s employment with the Company
shall terminate effective on the 30th day after receipt of such notice by the Executive (the
“Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive’s duties. For purposes of this
Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties with
the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to
mental or physical illness or injury which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal
representative.
(b) Cause. The Company may terminate the Executive’s employment during the Employment
Period for Cause. For purposes of this Agreement, “Cause” shall mean:
(i) the willful and continued failure of the Executive to perform substantially
the Executive’s duties with the Company or one of its affiliates (other than any such
failure resulting from incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to the Executive by the Board or the
Chief Executive Officer of the Company which specifically identifies the manner in
which the Board or Chief Executive Officer believes that the Executive has not
substantially performed the Executive’s duties, or
(ii) the willful engaging by the Executive in illegal conduct which is
materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of the Executive, shall
be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer
of the Company or based upon the advice of counsel for the Company shall be conclusively presumed
to be done, or omitted to be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless
and until there shall have been delivered to the Executive 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 such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.
(c) Good Reason. The Executive’s employment may be terminated by the Executive for
Good Reason. For purposes of this Agreement, “Good Reason” shall mean:
(i) A material diminution in the Executive’s Annual Base Salary;
(ii) A material diminution in the Executive’s authority, duties, or
responsibilities or a material diminution in the authority, duties, or
responsibilities of the supervisor to whom the Executive is required to report;
(iii) A material change in the geographic location at which the Executive must perform
services, provided that a change in office or location permitted under Section 4(a)(i)(B)
shall not be considered material for this purpose;
(iv) A material diminution in the budget over which the Executive retains authority;
or
(v) Any other action or inaction that constitutes a material breach by the
Company of this Agreement.
(d) Notice of Termination. Any termination by the Company for Cause, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(b) 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 the Executive’s employment
under the provision so indicated (including, in the case of a termination for Good Reason, the
condition constituting Good Reason) and (iii) if the date on which the termination will become
effective is other than the date of receipt of such notice, specifies the termination date (which
date shall be not more than thirty days after the giving of such notice, except in the case of a
termination for Good Reason, notice shall be not more than 90 days before the termination date).
The Executive’s employment shall be terminated for Good Reason only if the Executive provides a
Notice of Termination to the Company within 90 days of the initial existence of the condition
constituting Good Reason and the Company fails to remedy the condition within 30 days of receipt of
the Notice of Termination. Except as provided in the preceding sentence with respect to termination
for Good Reason, the failure by the 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 the Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights hereunder.
(e) Date of Termination. “Date of Termination” means the date on which the Executive
incurs a separation from service with the Company within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”).
6. Obligations of the Company upon Termination. (a) Good Reason; Other Than for
Cause, Death or Disability. If, during the Employment Period, the Company shall terminate
the Executive’s employment other than for Cause or Disability or the Executive shall terminate
employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date
of Termination the aggregate of the following amounts:
A. the sum of (1) the Executive’s Annual Base Salary through the Date of Termination to
the extent not theretofore paid, (2) the product of (x) the higher of (I) the Annual Bonus
for the full fiscal year in which the Date of Termination occurs, determined based on actual
individual and corporate performance through the Date of Termination, and (II) the Recent
Annual Bonus (provided that this clause (II) shall not apply if a Change in Control does not
occur before the payment date for the lump sum payment described in this Section 6(a)(i))
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, to the extent not
theretofore paid and (3) any accrued vacation pay, in each case 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. the amount equal to the product of (1) three and (2) the sum of (x) the Executive’s
Annual Base Salary, (y) the higher of (I) the Annual Bonus for the full fiscal year in
which the Date of Termination occurs, determined based on actual individual and corporate
performance through the Date of Termination and (II) the Recent Annual Bonus and (z) the
aggregate dollar value of the annual long-term incentive awards granted to the Executive as
determined in accordance with the Company’s policies and procedures for determining annual
long-term incentive awards as in effect immediately prior to the Effective Date based on
the Executive’s Annual Base Salary and the Executive’s annual long-term incentive award
percentage in effect immediately prior to the Effective Date for the fiscal year in which
the Effective Date occurs; and
C. an amount equal to the excess of (a) the actuarial equivalent of the benefit under
the Company’s qualified defined benefit retirement plan (the “Retirement Plan”) (utilizing
actuarial
assumptions no less favorable to the Executive than those in effect under the Company’s
Retirement Plan immediately prior to the Effective Date), and the Unfunded Supplemental
Benefit Plan for Salaried Employees or its successor plan or any other excess or
supplemental retirement plan in which the Executive participates (together, the “SERP”)
which the Executive would receive if the Executive’s employment continued for three years
after the Date of Termination assuming for this purpose that all accrued benefits are fully
vested, and, assuming that the Executive’s compensation in each of the three years is that
required by Section 4(b)(i) and Section 4(b)(ii), over (b) the actuarial equivalent of the
Executive’s actual benefit (paid or payable), if any, under the Retirement Plan and the SERP
as of the Date of Termination; and
D. an amount equal to the additional Company matching contributions that would have
been made on the Executive’s behalf in the Company’s Thrift Plan for Salaried Employees or
any successor plan (the “Thrift Plan”) (assuming continued participation on the same basis
as immediately prior to the Effective Date), plus the additional amount of any benefit the
Executive would have accrued under the SERP as a result of contribution limitations in the
Thrift Plan, which the Executive would receive if the Executive’s employment continued for
three years after the Date of Termination, assuming for this purpose that the Executive’s
compensation in each of the three years is that required by Section 4(b)(i) and Section
4(b)(ii) and that the Company’s matching contributions are determined pursuant to the
applicable provisions of the Thrift Plan and the SERP, as in effect during the 12-month
period immediately prior to the Effective Date; and
(ii) for three years after the Executive’s Date of Termination, or such longer period as
may be provided by the terms of the appropriate plan, program, practice or policy, the Company
shall continue benefits to the Executive and/or the Executive’s family at least equal to those
which would have been provided to them in accordance with the plans, programs, practices and
policies described in Section 4(b)(v) of this Agreement if the Executive’s employment had not
been terminated or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its affiliated companies and
their families, subject to the payment requirements of paragraph (viii), below; provided,
however, that if the Executive becomes reemployed with another employer and is eligible to
receive medical or other welfare benefits under another employer pr6vided plan, the medical and
other welfare benefits described herein shall be secondary to those provided under such other
plan during such applicable period of eligibility. For purposes of determining eligibility (but
not the time of commencement of benefits) of the Executive for retiree benefits pursuant to such
plans, practices, programs and policies, the Executive shall be considered to have remained
employed until three years after the Date of Termination and to have retired on the last day of
such period; and
(iii) for three years after the Executive’s Date of Termination, or such longer period as
may be provided by the terms of the appropriate plan, program, practice or policy, the Company
shall continue to provide to the Executive and/or the Executive’s family fringe benefits at
least equal to those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(vii) of this Agreement if the
Executive’s employment had not been terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of the Company and
its affiliated companies and their families, subject to the payment requirements of paragraph
(viii), below; and
(iv) upon the Date of Termination, the Executive shall have the right and option to
purchase the automobile which the Company was providing to the Executive immediately prior
to the Date of Termination in accordance with the Company’s practice for retiring employees
as in effect immediately prior to the Effective Date (provided that, to the extent such option
results in a benefit that is includable in the Executive’s gross income for federal income tax
purposes, such purchase must occur no later than the 15th day of the third month following the
end of the Executive’s taxable year in which the Date of Termination occurs.); and
(v) the Company shall, at its sole expense as incurred, provide the Executive with
outplacement services the scope and provider of which shall be selected by the Executive in his
sole discretion, provided that the aggregate cost of such services shall not exceed $50,000,
and provided that (A) such expense shall not be incurred later than the last day of the second
taxable year of the Executive following the Date of Termination, (B) any reimbursement for such
expenses shall not be paid to the Executive later than the last day of the third taxable year
of the Executive following the Date of Termination, and (C) the amount of such expenses shall
not exceed the amount of “reasonable outplacement expenses,” as determined under Treas. Reg. §
1.409A-1(b)(9)(v)(A); and
(vi) amounts credited to the Executive’s account under the Executive Deferred
Compensation Plan shall be paid in the manner and at the time specified under that plan; and
(vii) to the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any other amounts or benefits required to be paid or provided or
which the 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”), subject to the payment
requirements of paragraph (viii), below; and
(viii) to the extent that any coverage, payments, reimbursements or in-kind benefits
provided under paragraph (ii), (iii), or (vii) this Section 6(a) would be includable in the
Executive’s gross income for federal income tax purposes (such benefits, together, shall be
hereinafter referred to as “Specified Benefits”), the following rules shall apply:
A. any Specified Benefit that would otherwise be paid in the first six months following
the Date of Termination shall instead be paid in the seventh month following the Date of
Termination, except as provided below;
B. the six-month delay in A., above, shall not apply to any Specified Benefit that is
required to be paid no later than the 15th day of the third month following the end of
the Executive’s taxable year in which the Date of Termination occurs, and, for purposes
of Section 409A of the Code, any Specified Benefits required to be paid no later than the
15th day of the third month following the end of the Executive’s taxable year in which
the Date of Termination occurs are considered to be separate payments from all other
Specified Benefits;
C. the six-month delay in A., above, shall not apply to any Specified Benefits that are
(1) reimbursements or in-kind benefits that the Executive could otherwise deduct as
business expenses under Sections 162 or 167 of the Code (disregarding limitations based
on adjusted gross income) or (2) reimbursements of medical expenses that meet the
following requirements: (x) the expenses are incurred and paid by the Executive (or
incurred by the Executive and paid by the Company directly to the service provider on the
Executive’s behalf); (y) the expenses would be allowable as a deduction to the Executive
under Section 213 of the Code (disregarding the requirement that the deduction under that
section apply only to expenses that exceed 7.5% of adjusted gross income); and (z) the
expenses are not reimbursed from a source other than the
Company; and
D. the six-month delay in A. above, shall not apply to the extent that any Specified
Benefit that (1) is due only upon an involuntary termination (as defined in Treas. Reg. §
1.409A-1(n)), that (2) would otherwise be subject to the delay (after taking into account
B and C, above), and that (3) when combined with all other such payments, falls below the
amount specified in Treas. Reg. § 1.409A1(b)(9)(iii)(A) (generally the lesser of two
times the Executive’s average pay or two times the compensation limit in Section
401(a)(17) of the Code).
(b) Death. If the Executive’s employment is terminated by reason of the Executive’s
death during the Employment Period, this Agreement shall terminate without further obligations to
the Executive’s legal representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be
paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days
of the Date of Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 6(b) shall include, without limitation, and the Executive’s
estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies under such plans,
programs, practices and policies relating to death benefits, if any, as in effect with respect to
other peer executives and their beneficiaries at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive’s estate and/or the
Executive’s beneficiaries, as in effect on the date of the Executive’s death with respect to other
peer executives of the Company and its affiliated companies and their beneficiaries.
(c) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, this Agreement shall terminate without further
obligations to the Executive under this Agreement, other than for payment of Accrued Obligations
and the timely payment or provision of Other Benefits (subject to the six-month delay as described
in subsection 6(a)(viii)). Accrued Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the
term Other Benefits as utilized in this Section 6(c) shall include, and the Executive shall be
entitled after the Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and its affiliated companies
to disabled executives and/or their families in accordance with such plans, programs, practices and
policies relating to disability, if any, as in effect generally with respect to other peer
executives and their families at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive’s family, as in effect
at any time thereafter generally with respect to other peer executives of the Company and its
affiliated companies and their families.
(d) Cause, Other than for Good Reason. If the Executive’s employment shall be
terminated for Cause during the Employment Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to the Executive (x) his Annual
Base Salary through the Date of Termination, (y) any amount of any compensation previously
deferred by the Executive under the EDCP (which shall be paid in accordance with the terms of the
EDCP), and (z) Other Benefits (subject to the six-month delay as described in subsection
6(a)(viii)), in each case to the extent theretofore unpaid. If the Executive voluntarily
terminates employment during the Employment Period, excluding a termination for Good Reason,
this Agreement shall terminate without further obligations to the Executive under this Agreement,
other than for Accrued Obligations and the timely payment or provision of Other Benefits. In such
case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the
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 the Executive may qualify, nor,
subject to Section 12(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the 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. 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 the Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and such amounts shall not be reduced whether or not
the Executive obtains other employment. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the
validity or enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code. Any
reimbursement of legal fees paid to the Executive pursuant to this Section 8 shall be paid no
later than the end of the Executive’s taxable year next following the Executive’s taxable year of
the Executive in which the related expense is incurred, and, if paid on account of a separation
from service, no earlier than the seventh month following the Executive’s separation from service.
9. 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 or
its affiliates to or for the benefit of the 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 9) (a “Payment”) would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the
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 the Executive shall
be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after
payment by the 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, the 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 9(a), if it shall be determined that the
Executive is entitled to a Gross-Up Payment, but that the Executive, after taking into account the
Payments and the Gross-Up Payment, would not receive a net after-tax benefit of at least $50,000
(taking into account both income taxes and any Excise Tax) as compared to the net after-tax
proceeds to the Executive resulting from an elimination of the Gross-Up Payment and a reduction of
the Payment, in the aggregate, to an amount (the “Reduced Amount”) such that the receipt of the
Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to the
Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount. The Gross-Up
Payment, if any, will be paid no later than the end of the Executive’s taxable year next following
the Executive’s taxable year in which the Excise Tax is paid and no earlier than the seventh month
following the Date of Termination.
(b) Subject to the provisions of Section 9(c), all determinations required to be made under
this Section 9, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by Deloitte & Touche LLP or such other certified public accounting firm as may be designated
by the Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both
to the Company and the Executive within 15 business days of the receipt of notice from the
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 of Control, the 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 9,
shall be paid by the Company to the 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 the 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 9(c) and the 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 the Executive.
(c) The 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 the
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. The 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 the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the 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 the 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 on the foregoing provisions of this Section 9(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 the Executive to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the 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 the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify and hold the 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 the 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 the 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 the Executive of an amount advanced by the Company pursuant to
Section 9(c), the Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of Section 9(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 the Executive of an amount advanced by
the Company pursuant to Section 9(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not notify the 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.
10. Confidential Information. The 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 the Executive during the Executive’s employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After termination of the
Executive’s employment with the Company, the 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. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
11. Successors. (a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the 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.
12. Miscellaneous. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and shall have no force
or effect. 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.
(b) 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 the Executive:
The most recent address on file at the Company
If to the Company:
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.
(c) The invalidity or unenforceability of any provision of this Agreement shall not affect
the validity or enforceability of any other provision of this Agreement.
(d) 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.
(e) The 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 the Executive or the Company may
have hereunder, including, without limitation, the right of the Executive to terminate employment
for Good Reason pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except as may otherwise be provided
under any other written agreement between the Executive and the Company, the employment of the
Executive by the Company is “at will” and, subject to Section 1(a) hereof, prior to the Effective
Date, the Executive’s employment and/or this Agreement may be terminated by either the Executive
or the Company at any time prior to the Effective Date, in which case the Executive shall have no
further rights under this Agreement; provided, that this Agreement may not be terminated by the
Company if it is reasonably demonstrated by the Executive that such termination (i) was at the
request of a third party who has taken steps reasonably calculated to effect a Change of Control
or (ii) otherwise arose in connection with or anticipation of a Change of Control. From and after
the Effective Date this Agreement shall supersede any other agreement between the parties with
respect to the subject matter hereof.
IN WITNESS WHEREOF, the Executive has hereunto set the 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.
VULCAN MATERIALS COMPANY |
||||
| By: | ||||
| Name: | Xxxxxx X. Xxxxx | |||
| Title: | Chairman and Chief Executive Officer | |||
