CHANGE IN CONTROL AGREEMENT
Exhibit 10.1
THIS AGREEMENT, dated as of , is made by and between Xxxxxxxxx World Industries,
Inc., a Pennsylvania corporation (the “Company”), and (the
“Executive”).
1. Defined Terms. The definitions of capitalized terms used in this Agreement are
provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the Effective Date and shall
continue in effect for a period of one (1) year thereafter. Commencing on the first anniversary of
the Effective Date and on each anniversary thereafter (“Anniversary Date”), this Agreement
shall automatically be renewed for one (1) additional year beyond the term otherwise established,
unless one party provides written notice to the other party, at least ninety (90) days in advance
of an Anniversary Date, of its intent not to renew this Agreement for an additional one year term.
Notwithstanding the foregoing, if a Change in Control shall have occurred after the Effective Date
and during the term of this Agreement, this Agreement shall continue in effect for a period of not
less than twenty-four (24) months beyond the month in which a Change in Control occurred.
3.1 Following a Change in Control and during the term of this Agreement, during any period
that the Executive fails to perform the Executive’s full-time duties with the Company as a result
of a “disability” (as defined in Treas. Reg. § 1.409A-3(i)(4)), the Company shall pay the
Executive’s current base salary to the Executive at the rate in effect at the commencement of any
such period, together with all compensation and benefits payable to the Executive under the terms
of any compensation or benefit plan, program or arrangement maintained by the Company during such
period, until the Executive’s employment is terminated by the Company.
3.2 If the Executive’s employment shall be terminated for any reason following a Change in
Control and during the term of this Agreement, the Company shall pay the Executive’s current base
salary through the Date of Termination, together with all compensation and benefits to which the
Executive is entitled in respect of all periods preceding the Date of Termination under the terms
of the Company’s compensation and benefit plans, programs or arrangements.
4.1 If a Change in Control shall occur and concurrently therewith or during a period of
twenty-four (24) months thereafter the Executive’s employment terminates, in addition to any
payments and benefits to which the Executive is entitled under Section 3 hereof, the Company shall
pay the Executive the payments described in this Section 4.1 (the “Severance Payments”),
unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability, or
(iii) by the Executive without Good Reason. The Executive shall also be entitled to the Severance
Payments (and any payments and benefits under Section 3) if the Executive is terminated by the
Company other than for Cause or Disability within the six (6) month period immediately preceding a
Change
in
Control and the Executive reasonably demonstrates that such termination is otherwise in
connection with or in anticipation of a Change in Control that actually occurs during the term of
the Agreement (a “Pre-Change in Control Termination”).
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date
of Termination and in lieu of any severance benefit otherwise payable to the Executive1,
the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two times
the sum of (i) the Executive’s annual base salary then in effect (or immediately prior to any
reduction resulting in a termination for Good Reason, if applicable) (the “Change in Control
Salary”), plus (ii) the Executive’s target annual bonus for the year of termination (the
“Change in Control Bonus”).
(B) Provided that the Company actually achieves the criteria requisite to make payments in
respect of awards for the plan year during which the Executive’s employment terminates under the
Management Achievement Plan (the “MAP”) or any other incentive compensation plan adopted by
the Company in which the Executive participates, the Executive shall be eligible to receive an
award for such plan year, which shall be prorated based on the Date of Termination. Under the MAP,
the Executive shall receive an amount equal to the product of the Executive’s eligible base salary
earnings for the time worked from the start of the performance period to the Date of Termination
multiplied by the target bonus award percentage and the Executive’s applicable business unit
achievement factor. Such amount shall be paid in the calendar year following the plan year to
which the payment relates, as soon as practicable following the certification of such plan year’s
performance by the Management Development and Compensation Committee, at the same time payments are
made to other applicable MAP participants.
(C) For the twenty-four month period immediately following the Date of Termination, the
Company shall arrange to provide the Executive (which includes the Executive’s eligible dependents
for purposes of this subsection (C)) with life, disability, accident and health insurance benefits
substantially similar to those which the Executive was receiving immediately prior to the Date of
Termination (or immediately prior to any reduction resulting in a termination for Good Reason, if
applicable); provided, however, that (i) the Executive’s and his qualified dependents’ COBRA
eligibility period shall include the period during which the Company is providing benefits under
this subsection (C); (ii) unless the Executive consents to a different method (or elects COBRA
coverage at applicable COBRA rates), such health insurance benefits shall be provided through a
third-party insurer; and (iii) the Executive shall be responsible for the payment of premiums for
such benefits in the same amount as active employees of the Company. Benefits otherwise receivable
by the Executive pursuant to this subsection (C) shall be reduced to the extent comparable benefits
(including continued coverage for any preexisting medical condition of any person covered by the
benefits provided to the Executive and his eligible dependents immediately prior to the Date of
Termination) are actually received by or made available to the Executive by a subsequent employer
during the twenty-four month period following the Executive’s Date of Termination (and any such
benefits actually received by or made available to the Executive shall be reported to the Company
by the Executive). Notwithstanding the foregoing, in the event of a Pre-Change in Control
Termination, on the sixtieth (60th) day following the Change in Control the Company shall pay or
reimburse the Executive for any amounts or benefits it would have been responsible to pay or
provide to the Executive under this Section 4.1(C) during the period prior to the Change in
Control, had the Change in Control occurred on the Date of Termination.
(D) If the Executive would have become entitled to benefits under the Company’s
post-retirement health care or life insurance plans (as in effect immediately prior to the Date of
Termination (or immediately prior to any reduction resulting in a termination for Good Reason, if
applicable)) had the Executive’s employment terminated at any time during the period of twenty-four
months after the Date of Termination, the Company shall provide such post-retirement health care or
life insurance benefits to the Executive (subject to any employee contributions required under the
terms of such plans in the same amounts as active employees of the Company) commencing on the later
of (i) the date that such coverage would have first become available or (ii) the date that benefits
described in subsection (C) of this Section 4.1 terminate.
| 1 | Section 409 analysis required on a case-by-case basis. |
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(E) The Company shall pay the Executive, at a daily salary rate calculated from the
Executive’s annual base salary in effect immediately prior to the Date of Termination (or
immediately prior to any reduction resulting in a termination for Good Reason, if applicable), a
lump sum amount equal to all earned but unused vacation days through the Date of Termination.
(F) The Company shall pay, no later than the last day of the calendar year in which they are
incurred, the reasonable fees and expenses of a full service nationally recognized executive
outplacement firm until the earlier of the date the Executive secures new employment or the date
which is twenty-four months following the Executive’s Date of Termination; provided that in no
event shall the aggregate amount of such payments exceed $30,000.
4.2 Benefit Limitation.
(A) Anything in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment (including any acceleration of vesting of stock based benefits) or
distribution by the Company 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) (a
“Payment”) would be subject to the excise tax imposed by Section 4999 of the Code (the
“Excise Tax”), the amounts and benefits payable under this Agreement shall be reduced by an
amount that would result in no Excise Tax being imposed; provided that the amounts and benefits
payable under this Agreement shall not be reduced unless the amounts and benefits the Executive
would receive after such reduction would be greater than the amounts and benefits the Executive
would receive if there were no reduction and the Excise Tax were paid by the Executive (such
reduction, the “Cut Back”). Unless the Executive shall have given prior written notice to
the Company specifying a different order of payments and benefits to be reduced to achieve the
Cut-Back, any payments and benefits to be reduced hereunder shall be determined in a manner that
has the least economic cost to the Executive, on an after-tax basis, and to the extent the economic
cost is equivalent, such payments and benefits shall be reduced in the inverse order of when the
payments and benefits would have been made or provided to the Executive until the reduction
specified herein is achieved. The Executive may specify the order of reduction of the payments and
benefits only to the extent that doing so does not directly or indirectly alter the time or method
of payment of any amount that is deferred compensation subject to (and not exempt from) Section
409A of the Code.
(B) All determinations required to be made under this Section 4.2 shall be made by a
nationally recognized accounting firm designated by the Company (the “Accounting Firm”)
which shall provide detailed supporting calculations both to the Company and the Executive within
fifteen (15) business days after there has been a Cut-Back, or such earlier time as 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, the Company shall appoint another
nationally recognized accounting firm to make the determinations required hereunder (which
accounting firm instead shall be the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive.
(A) Each payment provided for in Section 4.1 hereof is intended to constitute a separate
payment within the meaning of Section 409A of the Code. The payments provided for in subsections
(A) and (E) of Section 4.1 hereof shall be made on the sixtieth (60th) day following the Date of
Termination subject to Section 4.3(B) below; and in the event the Executive becomes entitled to
Severance Payments pursuant to the second sentence of Section 4.1, the payments provided for in
subsections (A) and (E) of Section 4.1 hereof shall be made on the sixtieth (60th) day following
the actual Change in Control that triggered the Severance Payments.
(B) If any payment, compensation or other benefit provided to the Executive in connection with
his employment termination is determined, in whole or in part, to constitute “nonqualified deferred
compensation” within the meaning of Section 409A of the Code and the Executive is a “specified
employee,” as such term is defined under Section 409A(a)(2)(B)(i) of the Code, all such payments
shall be suspended during the
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six-month period following the Executive’s “separation from service” within the meaning of
Treas. Reg. § 1.409A-1(h) or any successor thereto. The Company is entitled to determine whether
any amounts under this Agreement are to be suspended, and the Company shall have no liability to
the Executive for any such determination or any errors made by the Company in identifying the
Executive as a specified employee. If any amounts are suspended pursuant to the foregoing, such
amounts shall be paid on the earlier of (i) the first business day following the expiration of the
six-month period referred to in the first sentence of this subsection or (ii) the date of the
Executive’s death. Any amounts so suspended shall earn interest thereon, if applicable, calculated
based upon the then prevailing monthly short-term applicable federal rate. Notwithstanding the
foregoing, to the extent that the foregoing applies to the provision of any ongoing welfare
benefits to the Executive that would not be required to be delayed if the premiums therefor were
paid by the Executive, the Executive shall pay the full cost of premiums for such welfare benefits
during the six-month period and the Company shall pay the Executive an amount equal to the amount
of such premiums paid by the Executive during such six-month period on the first business day of
the month following the expiration of the six-month period referred to above.
(C) A termination of employment shall not be deemed to have occurred for purposes of any
provision of this Agreement providing for the payment of any amounts or benefits subject to Section
409A of the Code upon or following a termination of employment unless such termination is also a
“separation from service” as defined in Treas. Reg. § 1.409A-1(h) or any successor thereto,
including the default presumptions thereunder, and for purposes of any such provision of this
Agreement, references to a “resignation,” “termination,” “terminate,” “termination of employment”
or like terms shall mean separation from service.
(D) The parties hereto acknowledge and agree that the interpretation of Section 409A of the
Code and its application to the terms of this Agreement is uncertain and may be subject to change
as additional guidance and interpretations become available. Anything to the contrary herein
notwithstanding, all benefits or payments provided by the Company to the Executive that would be
deemed to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the
Code are intended to comply with Section 409A of the Code. If, however, any such benefit or payment
is deemed not to comply with Section 409A of the Code, the Company and the Executive agree to
renegotiate in good faith any such benefit or payment (including, without limitation, as to the
timing of any severance payments payable hereunder) so that either (i) Section 409A of the Code
will not apply or (ii) compliance with Section 409A of the Code will be achieved.
(E) Notwithstanding anything to the contrary contained in this Agreement, any reimbursement
for a cost or expense under this Agreement shall be paid in no event later than the end of the
taxable year following the taxable year in which the Executive incurs such cost or expense. With
regard to any provision herein that provides for reimbursement of costs and expenses or in-kind
benefits, except as permitted by Section 409A of the Code, (i) the right to reimbursement or
in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (ii) the
amount of expenses eligible for reimbursements or in-kind benefits provided during any taxable year
shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any
other taxable year; provided, however, that the foregoing clause (ii) shall not be violated with
regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely
because such expenses are subject to a limit related to the period the arrangement is in effect.
4.4 The Company shall reimburse the Executive for all reasonable legal fees and expenses
incurred by the Executive in attempting to obtain or enforce rights or benefits provided by this
Agreement, if, with respect to any such right or benefit, the Executive is successful in obtaining
or enforcing such right or benefit (including by negotiated settlement).
5.1 During the Executive’s employment with the Company and for a period of twelve (12) months
thereafter:
(A) the Executive shall not, directly for the Executive or any third party, become engaged in
any business or activity which is directly in competition with any services or products sold by, or
any
business or
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activity engaged in by, the Company or any of its affiliates; provided, however,
that this provision shall not restrict the Executive from owning or investing in publicly traded
securities, so long as the Executive’s aggregate holdings in any company do not exceed 2% of the
outstanding equity of such company and such investment is passive;
(B) the Executive shall not solicit any person who was a customer of the Company or any of its
affiliates during the period of the Executive’s employment hereunder, or solicit potential
customers who are or were identified through leads developed during the course of employment with
the Company, or otherwise divert or attempt to divert any existing business of the Company or any
of its affiliates; and
(C) the Executive shall not, directly for the Executive or any third party, solicit, induce,
recruit or cause another person in the employment of the Company or any of its affiliates to
terminate such employee’s employment for the purposes of joining, associating, or becoming employed
with any business or activity which is in competition with any services or products sold, or any
business or activity engaged in, by the Company or any of its affiliates.
5.2 The Executive agrees that he will not, while employed with the Company or at any time
thereafter for any reason, in any fashion, form or manner, either directly or indirectly, divulge,
disclose or communicate to any person, firm, corporation or other business entity, in any manner
whatsoever, any confidential information or trade secrets concerning the business of the Company,
including, without limiting the generality of the foregoing, any customer lists or other customer
identifying information, the techniques, methods or systems of the Company’s operation or
management, any information regarding its financial matters, or any other material information
concerning the business of the Company, its manner of operation, its plans or other material data.
The provisions of this Section 5.2 shall not apply to (i) information that is public knowledge
other than as a result of disclosure by the Executive in breach of this Section 5.2; (ii)
information disseminated by the Company to third parties in the ordinary course of business; (iii)
information lawfully received by the Executive from a third party who, based upon inquiry by the
Executive, is not bound by a confidential relationship to the Company, or (iv) information
disclosed under a requirement of law or as directed by applicable legal authority having
jurisdiction over the Executive.
5.3 The Executive agrees that he will not, while employed with the Company or at any time
thereafter for any reason, in any fashion, form or manner, either directly or indirectly, disparage
or criticize the Company, or otherwise speak of the Company, in any negative or unflattering way to
anyone with regard to any matters relating to the Executive’s employment by the Company or the
business or employment practices of the Company. The Company agrees that it will not, in any
fashion, form or manner, either directly or indirectly, disparage or criticize the Executive or
otherwise speak of the Executive in any negative or unflattering way to anyone with regard to any
matters relating to the Executive’s employment with the Company. This Section shall not operate as
a bar to (i) statements reasonably necessary to be made in any judicial, administrative or arbitral
proceeding, or (ii) internal communications between and among the employees of the Company with a
job-related need to know about this Agreement or matters related to the administration of this
Agreement.
5.4 The Executive understands that in the event of a violation of any provision of Section 5,
the Company shall have the right to (i) seek injunctive relief, in addition to any other existing
rights provided in this Agreement or by operation of law, without the requirement of posting bond
and (ii) stop making any future payments or providing benefits under this Agreement. The remedies
provided in this Section 5.4 shall be in addition to any legal or equitable remedies existing at
law or provided for in any other agreement between the Executive and the Company or any of its
affiliates, and shall not be construed as a limitation upon, or as an alternative or in lieu of,
any such remedies. If any provisions of Section 5 shall be determined by a court of competent
jurisdiction to be unenforceable in part by reason of it being too great a period of time or
covering too great a geographical area, it shall be in full force and effect as to that period of
time or geographical area determined to be reasonable by the court.
5.5 The Executive acknowledges that the provisions of Section 5 shall extend to any business
that becomes an affiliate of or successor to the Company or any of its affiliates on account of
such Change in Control.
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6. Requirement of Release. Notwithstanding anything in this Agreement to the
contrary, the Executive’s entitlement to any payments other than the Executive’s accrued but unpaid
base compensation and any accrued but unpaid or otherwise vested benefits under any benefit or
incentive plan determined at the time of the Executive’s termination of employment shall be
contingent upon the Executive having executed an effective release (i.e., no longer subject to
revocation) within sixty (60) days after the Date of Termination (or the date of the Change in
Control in the event of a Pre-Change in Control Termination) which shall completely release the
Company, its parent and affiliates and their respective officers, directors and employees
(collectively the “Released Parties” and individually a “Released Party”) and which
shall forever waive all claims of any nature that the Executive may have against any Released
Party, including without limitation all claims arising out of Executive’s employment within the
Company or the termination of that employment. If the Executive does not execute an effective
release within the time period prescribed above, the Company’s obligations to provide the benefits
described in Section 4.1(C) hereof shall cease immediately.
7.1 Notice of Termination. After a Change in Control and during the term of this
Agreement, any purported termination of the Executive’s employment (other than by reason of death)
shall be communicated by written Notice of Termination from one party hereto to the other party
hereto in accordance with Section 11 hereof. For purposes of this Agreement, a “Notice of
Termination” shall mean a notice which shall indicate whether the termination is for Cause,
without Cause, by reason of Disability, for Good Reason or otherwise and shall set forth in
reasonable detail the facts and circumstances claimed to provide the basis for termination of the
Executive’s employment; provided, that the failure of the Executive or the Company to set forth in
the Notice of Termination any particular facts or circumstances shall not waive any right of such
party or preclude such party from asserting such facts or circumstances in enforcing his or its
rights hereunder.
7.2 Date of Termination. “Date of Termination,” with respect to any purported
termination of the Executive’s employment after a Change in Control and during the term of this
Agreement, shall mean (i) if the Executive’s employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the Executive shall not have returned to
the full-time performance of the Executive’s duties during such thirty (30) day period), and (ii)
if the Executive’s employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a termination by the Company, shall not be less than thirty
(30) days (except in the case of a termination for Cause) and, in the case of a termination by the
Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given). “Date of Termination,” with respect to
any Pre-Change in Control Termination shall mean the date of such termination as reasonably
determined by the Company.
8.1 If a Change in Control shall occur and concurrently therewith or during a period of
twenty-four (24) months thereafter the Executive’s employment terminates, in addition to any
payments and benefits to which the Executive is entitled under Section 3 or any other section
hereof, the Company shall accelerate certain stock-based benefits described in this Section 8 (the
“Acceleration”), unless such termination is (i) by the Company for Cause, (ii) by reason of death
or Disability, or (iii) by the Executive without Good Reason. The Executive will also receive the
Acceleration of these stock-based benefits in the event a Change in Control occurs, and either (i)
the Executive’s employment is terminated as described in this Section 8 or ii) the acquiring
entity does not assume, convert, exchange or continue such stock-based awards or benefits. The
Executive shall also be entitled to the Acceleration (and any payments and benefits under this
Section 8) if the Executive is terminated by the Company other than for Cause or Disability within
the six (6) month period immediately preceding a Change in Control and the Executive reasonably
demonstrates that such termination is otherwise in connection with or in anticipation of a Change
in Control that actually occurs during the term of the Agreement (a “Pre-Change in Control
Termination”).
(A) To the extent the Board has the discretion to do so under the applicable option agreement
or plan pursuant to which such option was granted, upon the occurrence of a Change in Control and
either (i) the termination of the Executive’s employment within twenty-four(24) months thereafter
or (ii) the
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acquiring entity does not assume, convert, exchange or continue such stock-based awards
or benefits or (iii) a Pre-Change in Control Termination, all unvested options with respect to the
Company’s stock held by the Executive at the time of such termination, the Date of Termination,
shall vest and become immediately exercisable and will be exercisable for a period ending on the
later of (i) the fifth anniversary of the Date of Termination, or in the event of a Pre-Change in
Control Termination, the fifth anniversary of the Change in Control or (ii) the last date that such
option otherwise would be exercisable under the terms of the option agreement or the plan pursuant
to which such option was granted; provided, that in no event shall any option be exercisable after
the expiration of the original term of such option. Unless both (i) the Company accelerates the
vesting of the Executive’s unvested options, as aforesaid, and (ii) the Executive’s options are
adjusted or substituted following such Change in Control and termination of the Executive’s
employment, pursuant to the terms of the options and relevant plan under which the options were
issued, the Company shall, within thirty (30) days following the Executive’s Date of Termination,
or in the event of a Pre-Change in Control Termination or if the acquiring entity does not assume,
convert, exchange or continue such stock-based awards or benefits , the date of the Change in
Control, make a lump sum cash payment to the Executive equal to the aggregate positive option
“spread” as of the Date of Termination, or in the event of a Pre-Change in Control Termination, the
date of the Change in Control and the Executive’s options shall be cancelled upon such cash
payment.
(B) To the extent the Board has the discretion to do so under the applicable award agreement
or plan pursuant to which such award was granted, upon the occurrence of a Change in Control and
either (i) the termination of the Executive’s employment within twenty-four(24) months thereafter
or (ii) the acquiring entity does not assume, convert, exchange or continue such stock-based awards
or benefits or (iii) a Pre-Change in Control Termination;(i) all unearned performance restricted
shares held by the Executive under such agreement or plan on the Date of Termination shall be
deemed to have been earned at the target level set forth in such agreement or plan for any
performance period not then completed and all earned but unvested performance restricted shares,
including those deemed to be earned pursuant to this sentence, shall immediately vest and (ii) all
unvested restricted stock awards shall immediately vest and, in each case, the restrictions on all
such shares shall lapse. If the Company cannot deem the Executive’s unearned performance restricted
shares earned, or accelerate the vesting of the Executive’s performance restricted shares or shares
of restricted stock, as aforesaid, the Company shall, within thirty (30) days following the Date of
Termination, or on the event of a Pre-Change in Control Termination or if the acquiring entity does
not assume, convert, exchange or continue such stock-based awards or benefits, the date of the
Change in Control, make a lump sum cash payment to the Executive in respect of such Executive’s
performance restricted shares or shares of restricted stock that have not been earned and/or fully
vested upon the occurrence of such Executive’s termination of employment in an amount equal to the
aggregate fair market value of such shares as of the date of the Date of Termination, or in the
event of a Pre-Change in Control Termination or if the acquiring entity does not assume, convert,
exchange or continue such stock-based awards or benefits, the date of the Change in Control,
without taking into account any restrictions thereon, and such performance restricted shares or
shares of restricted stock shall be cancelled upon such cash payment.
(C) To the extent the Board has the discretion to do so under the applicable restricted stock
units agreement or plan pursuant to which such restricted stock units were granted, upon the
occurrence of a Change in Control and either (i) the termination of the Executive’s employment
within twenty-four(24) months thereafter or (ii) the acquiring entity does not assume, convert,
exchange or continue such stock-based awards or benefits or (iii) a Pre-Change in Control
Termination; (i) all unearned performance restricted stock units held by the Executive under such
agreement or plan on the Date of Termination shall be deemed to have been earned at the target
level set forth in such agreement or plan for any performance period not then completed and all
earned but unvested performance restricted stock units, including those deemed to be earned
pursuant to this sentence, shall immediately vest, and (ii) all unvested restricted stock units
held by the Executive under such agreement or plan at the time shall immediately vest. If the
Company cannot accelerate the vesting of such restricted stock units, as aforesaid, except to the
extent such restricted stock units constitute “non-qualified deferred compensation” within the
meaning of Section 409A of the Code, the Company shall, within thirty (30) days following the
Executive’s Date of Termination, or in the event of a Pre-Change in Control Termination or if the
acquiring entity does not assume, convert, exchange or continue such stock-based awards or
benefits, the date of the
Change in Control, make a lump sum cash payment to the Executive in respect of such
Executive’s restricted stock units that have not been fully vested upon the occurrence of such
termination date in an amount equal to the aggregate fair market value of the shares underlying
the restricted
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stock units as of the date of the Executive’s termination date and such restricted
stock units shall be cancelled upon such cash payment.
9. No Mitigation. The Company agrees that, if the Executive’s employment with the
Company terminates during the term of this Agreement, the Executive shall not be required to seek
other employment or to attempt in any way to reduce any amounts payable to the Executive by the
Company pursuant to Section 4 hereof. Further, the amount of any payment or benefit provided for in
this Agreement (other than Section 4.1 (C) hereof) shall not be reduced by any compensation earned
by the Executive as the result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the Company, or otherwise.
10.1 In addition to any obligations imposed by law upon any successor to the Company, the
Company shall require (i) 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
(on a consolidated basis) and (ii) in the case of a disposition of all or substantially all of the
business or assets of the Company (on a consolidated basis) to more than one entity in a single
transaction or series of related transactions, the entity that will employ the Executive
immediately after such disposition (such successor or other entity in clause (i) or (ii), a
“Successor”) to expressly assume 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 or
disposition had taken place prior to the effectiveness of any such succession or disposition. If
such assumption and agreement is obtained prior to the effectiveness of any such succession or
disposition and the Executive accepts employment with the Successor, the Executive’s employment
shall not be treated as a termination of the Executive’s employment with the Company (unless
otherwise required in order to comply with the definition of “separation from service” as set forth
in Treas. Reg. § 1.409A-1(h) or any successor regulation thereto).
10.2 This Agreement shall inure to the benefit of and be enforceable by the Executive’s
personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive shall die while any amount would still be payable to the
Executive hereunder (other than amounts which, by their terms, terminate upon the death of the
Executive) if the Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the executors, personal
representatives or administrators of the Executive’s estate.
11. Notices. For the purpose of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested, postage prepaid,
addressed, if to the Executive, to the address shown for the Executive in the personnel records of
the Company and, if to the Company, to the address set forth below, or to such other address as
either party may have furnished to the other in writing in accordance herewith, except that notice
of change of address shall be effective only upon actual receipt:
To the Company:
Xxxxxxxxx World Industries, Inc.
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
Xxxxxxxxx World Industries, Inc.
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
12. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by the
Executive and such officer as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or of any lack of compliance
with, any condition or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time. This Agreement supersedes any other agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof which have been made by
any party. The validity, interpretation, construction and performance of this Agreement shall be
governed by the laws of the Commonwealth of
8
Pennsylvania. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor provisions to such
sections. Any payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law and any additional withholding to which the Executive
has agreed. The obligations of the Company and the Executive under Sections 4 and 5 hereof shall
survive the expiration of the term of this Agreement. [The Executive agrees that to the extent the
Executive is entitled to severance benefits under this Agreement, the Executive shall be deemed to
waive any rights to any benefits under the Company’s Severance Pay Plan for salaried employees or
any other severance benefits plan or arrangement of the Company.]2 This Agreement is not
intended by the parties hereto to constitute an employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended.
13. Validity. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
14. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
instrument.
15. Settlement of Disputes; Arbitration. All claims by the Executive for benefits
under this Agreement shall be directed in writing to and determined by the Committee, which shall
give full consideration to the evidentiary standards set forth in this Agreement. Any denial by the
Committee of a claim for benefits under this Agreement shall be delivered to the Executive in
writing and shall set forth the specific reasons for the denial and the specific provisions of this
Agreement relied upon. The Committee shall afford a reasonable opportunity to the Executive for a
review of the decision denying a claim and shall further allow the Executive to appeal to the
Committee a decision of the Committee within sixty (60) days after notification by the Committee
that the Executive’s claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in Lancaster County,
Pennsylvania in accordance with the rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrator’s award in any court having jurisdiction.
16. Definitions. For purposes of this Agreement, the following terms shall have the
meanings indicated below:
(A) “Accounting Firm” shall have the meaning stated in Section 4.2(B) hereof.
(B) “Anniversary Date” shall have the meaning stated in Section 2 hereof.
(C) “Board” shall mean the Board of Directors of the Company.
(D) “Cause” for termination by the Company of the Executive’s employment shall mean
(i) the deliberate and continued failure by the Executive to devote substantially all the
Executive’s business time and best efforts to the performance of the Executive’s duties after a
demand for substantial performance is delivered to the Executive by the Board which specifically
identifies the manner in which the Executive has not substantially performed such duties; (ii) the
deliberate engaging by the Executive in gross misconduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise; or (iii) the Executive’s conviction of, or plea
of guilty or nolo contendere to, a felony or any criminal charge involving moral turpitude. For the
purposes of this Agreement, no act, or failure to act, on the part of the Executive shall be
considered “deliberate” unless done, or omitted to be done, by the Executive not in good faith and
without reasonable belief that such action or omission was in the best interests of the Company.
(E) A “Change in Control” shall be deemed to have occurred if any of the following
shall have occurred after the Effective Date:
| 2 | Section 409 analysis required on a case-by-case basis. |
9
(i) at any time (x) any Person (other than a Person that is, at such time, a Permitted
Holder) is or becomes the Beneficial Owner of 30% or more of the Voting Power of the Company and
(y) no Person that is, at such time, a Permitted Holder Beneficially Owns as of such time, without
giving effect to the existence of any group other than a group that is itself a Permitted Holder, a
greater percentage of the Voting Power of the Company than the percentage of the Voting Power of
the Company Beneficially Owned by the Person referred to under clause (x) at such time;
(ii) during any period of 12 consecutive months, the following individuals cease for any
reason (other than the occurrence of an emergency or other condition or event described in Section
1509(a) of the Pennsylvania Business Corporation Law) to constitute at least a majority of the
Board: (A) individuals who at the beginning of such period were members of the Board and (B) any
new director whose appointment or election by the Board or nomination for election by the Company’s
shareholders was (x) approved by a vote of at least a majority of those directors then in office
who were directors at the beginning of such 12-month period or whose election or nomination for
election was previously approved in accordance with this clause (B), or (y) approved in writing by
TPG, the Trust or TPG and the Trust, provided that, at the time of such approval, such approving
party or parties Beneficially Owns, without giving effect to the existence of any group, 30% or
more of the Voting Power of the Company), but excluding for purposes of both clause (x) and (y) any
such new director who is initially proposed for office in an actual or threatened election contest
or other actual or threatened solicitation of proxies or consents by or on behalf of any Person
other than the Board, TPG or the Trust;
(iii) the consummation of (A) a merger or consolidation involving the Company, (B) a sale or
other disposition of all or substantially all of the assets of the Company (on a consolidated
basis), including a sale or disposition of all or substantially all of the assets of the Company
(on a consolidated basis) pursuant to a spin-off or split-up, or (C) any other substantially
similar transaction or series of related transactions involving the Company (each of the
transactions in clauses (A), (B) and (C), a “Corporate Transaction”), but excluding a
Non-Control Acquisition or a Spin-Off; or
(iv) the shareholders of the Company approve a plan of complete liquidation or dissolution of
the Company.
Notwithstanding anything to the contrary in the foregoing, for purposes of clause (i) of
the definition of Change in Control, the following transactions shall not constitute a Change in
Control:
| (x) | any Person becomes the Beneficial Owner of 30% or more of the Voting Power of the Company as a result of a reduction in the number of shares of Common Stock pursuant to a transaction or series of transactions that is approved by a majority of the Board, unless such Person thereafter becomes the Beneficial Owner of additional shares of Common Stock representing 1% or more of the Voting Power of the Company; | ||
| (y) | if a majority of the Board determines in good faith that a Person has acquired Beneficial Ownership of 30% or more of the Voting Power of the Company inadvertently and, no later than the date set by the Board such Person divests a sufficient number of shares so that, after such divestiture, such Person no longer Beneficially Owns 30% or more of the Voting Power of the Company; or | ||
| (z) | any Person becomes the Beneficial Owner of 30% or more of the Voting Power of the Company as a result of an issuance or sale of securities by the Company or any of its Subsidiaries. |
Notwithstanding anything to the contrary herein, solely for the purpose of determining the timing
of payment or timing of distribution of any compensation or benefit that constitutes “non-qualified
deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as
amended, a Change in Control shall not be deemed to occur under this Agreement unless the events
that have occurred would also constitute a “Change in the
Ownership or Effective Control of a Corporation or in the Ownership of a Substantial Portion of the
Assets of a Corporation” under Treasury Department Final Regulation 1.409A-3(i)(5), or any
successor provision.
Other definitions used in the Change in Control definition
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(E1) “Affiliate” shall mean with respect to any person or entity, any other
person or entity that, at any time that a determination is made hereunder, directly or
indirectly, controls, is controlled by, or is under common control with such first person or
entity. For the purpose of this definition, “control” shall mean, as to any person or
entity, the possession, directly or indirectly, of the power to elect or appoint a majority
of directors (or other persons acting in similar capacities) of such person or entity or
otherwise to direct or cause the direction of the management and policies of such person or
entity, whether through the ownership of voting securities, by contract or otherwise.
(E2) “Beneficial Owner”, “Beneficially Own” and “Beneficial
Ownership” shall have the meaning as set forth in Rules 13d-3 and 13d-5 promulgated
under the Exchange Act or any successor provision.
(E3) “Common Stock” shall mean the common stock of the Company.
(E4) “Group” or “group” shall have the meaning ascribed thereto in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision.
(E5) “Non-Control Acquisition” shall mean a Corporate Transaction that is a
merger or consolidation involving the Company (or any other substantially similar
transaction or series of related transactions involving the Company) where:
(1) Persons who are the Beneficial Owners of the Voting Power of the Company
immediately prior to such Corporate Transaction will Beneficially Own, by reason of such
immediately prior Beneficial Ownership, immediately after such Corporate Transaction an
aggregate of more than 45% of the Voting Power of the surviving, resulting or acquiring
entity in such Corporate Transaction; and
(2) such Corporate Transaction shall not result in a Change in Control with respect to
the surviving, resulting or acquiring entity under clause (i) of the definition of “Change
in Control” (as if such definition and the definition of “Permitted Holder” referred to such
surviving, resulting or acquiring entity and taking into account the paragraph beginning
“Notwithstanding” immediately following clause (iv) of such definition); and
(3) individuals who were members of the Board immediately prior to such Corporate
Transaction constitute at least a majority of the members of the board of directors (or
similar governing body) of the Company or other surviving, resulting or acquiring entity in
such Corporate Transaction immediately after such Corporate Transaction.
(E6) “Permitted Holder” shall mean any of (a) the Trust, (b) TPG, (c) the
Company or any entity controlled by the Company, (d) any employee benefit plan (or related
trust) sponsored or maintained by the Company or by any entity controlled by the Company,
(e) any group of which any of the foregoing are members; provided, that, without giving
effect to the existence of such group or any other group, or giving effect to any agreements
between the Trust and/or TPG, on the one hand, and any other Person, on the other hand, the
Trust and TPG collectively Beneficially Own, a greater percentage of the Voting Power of the
Company than the percentage of such Voting Power collectively Beneficially Owned by all
other members of such group (together with their Affiliates), or (f) any member of any group
that is a Permitted Holder pursuant to clause (e) of this definition at the time of the
determination of whether such member is a Permitted Holder, and any of such member’s
Affiliates.
(E7) “Person” shall mean any individual, entity or group, including any
“person” or “group” within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act, or any successor
provision.
(E8) “Shareholders’ Agreement” shall mean the Shareholders’ Agreement by and
between TPG and the Trust dated as of August 28, 2009, as it may be amended from time to
time.
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(E9) “Spin-Off” shall mean a disposition of what the Board determines in good
faith, after consultation with its outside counsel, to be all or substantially all of the
assets of the Company (on a consolidated basis) pursuant to a spin-off, split-up or similar
transaction where Persons who are the Beneficial Owners of the Voting Power of the Company
immediately prior to such transaction will Beneficially Own, by reason of such immediately
prior Beneficial Ownership, an aggregate of more than 80% of the Voting Power of each of the
entities resulting from such transaction (including Xxxxxxxxx World Industries, Inc.)
immediately after such transaction; provided, that, if another Corporate Transaction
involving any entity resulting from such transaction (including Xxxxxxxxx World Industries,
Inc.) occurs in connection with a Spin-Off, such Corporate Transaction shall be analyzed
separately for purposes of determining whether a Change in Control has occurred with respect
to the entity resulting from such Spin-Off that employs the Executive immediately after such
Spin-Off (which may be Xxxxxxxxx World Industries, Inc.).
(E10) “TPG” shall mean Armor TPG Holdings LLC and its Affiliates as of the time
of the relevant determination hereunder.
(E11) “Trust” shall mean the Xxxxxxxxx World Industries, Inc. Asbestos Personal
Injury Settlement Trust and its Affiliates as of the time of the relevant determination
hereunder.
(E12) “Voting Power” shall mean, calculated at a particular point in time, the
aggregate votes represented by all the then outstanding securities of an entity then
entitled to vote generally in the election of directors of such entity (as applicable) but
excluding any votes which a Person shall have upon and by reason of the non-payment of
dividends on preferred shares in accordance with the terms of such preferred shares.
(F) “Change in Control Bonus” shall have the meaning stated in Section 4.1(A)(ii)
hereof.
(G) “Change in Control Salary” shall have the meaning stated in Section 4.1(A)(i)
hereof.
(H) “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended from time to time.
(I) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
(J) “Committee” shall mean (i) the individuals (not fewer than three in number) who,
on the date six (6) months before a Change in Control, constitute the Management Development and
Compensation Committee of the Board (or its successor), plus (ii) in the event that fewer than
three individuals are available from the group specified in clause (i) above for any reason, such
individuals otherwise constituting members of the Board as may be appointed by the individual or
individuals so available (including for this purpose any individual or individuals previously so
appointed under this clause (ii)); provided, that, if after such appointments fewer than three
individuals constitute the Committee, then the Board shall appoint additional members of the
Committee so that the Committee shall have no fewer than three members, a majority of which
additional appointees, if available, shall be “independent directors” (as determined by the rules
or regulations of the principal stock exchange or market on which the Company’s common stock is
traded or, if the Company’s common stock is not listed or traded on such exchange, as defined under
the rules of the Nasdaq Stock Market).
(K) “Company” shall mean Xxxxxxxxx World Industries, Inc., as hereinbefore defined, or
any Successor that has assumed this Agreement pursuant to Section 10.1 hereof.
(L) “Cut Back” shall have the meaning stated in Section 4.2(A) hereof.
(M) “Date of Termination” shall have the meaning stated in Section 7.2 hereof.
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(N) “Disability” shall be deemed the reason for the termination by the Company of the
Executive’s employment, if, as a result of the Executive’s incapacity due to physical or mental
illness, the Executive shall have been absent from the full-time performance of the Executive’s
duties with the Company for a period of six (6) consecutive months, the Company shall have given
the Executive a Notice of Termination for Disability, and, within thirty (30) days after such
Notice of Termination is given, the Executive shall not have returned to the full-time performance
of the Executive’s duties.
(O) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from
time to time.
(P) “Excise Tax” shall have the meaning stated in Section 4.2(A) hereof.
(Q) “Good Reason” for termination by the Executive of the Executive’s employment shall
mean the occurrence (without the Executive’s express written consent), during the term of this
Agreement, of any one of the following acts by the Company, or failures by the Company to act:
(i) a material diminution in the Executive’s authority, duties, or responsibilities or the
assignment to Executive of duties or responsibilities that are materially inconsistent from those
in effect immediately prior to the Change in Control;
(ii) a reduction of ten percent (10%) or more by the Company in the Executive’s annual base
salary as in effect on the date hereof or as the same may be increased from time to time, except
for across-the-board salary reductions similarly affecting all senior executive officers of the
Company;
(iii) the failure by the Company to continue in effect any compensation plan in which the
Executive participates immediately prior to the Change in Control which is material to the
Executive’s total compensation, unless an equitable arrangement (embodied in an ongoing substitute
or alternative plan) has been made with respect to such plan, or the failure by the Company to
continue the Executive’s participation therein (or in such substitute or alternative plan) on a
basis not materially less favorable in terms of compensation opportunity (“materially less
favorable” shall be a reduction of ten percent (10%) or more in the compensation opportunity), as
existed immediately prior to the Change in Control, except for across-the-board compensation plan
reductions similarly affecting all senior executive officers of the Company;
(iv) the failure by the Company to continue to provide the Executive with benefits
substantially similar to those enjoyed by the Executive under any of the Company’s retirement, life
insurance, medical, health and accident, or disability plans in which the Executive was
participating immediately prior to the Change in Control, the taking of any action by the Company
which would directly or indirectly materially reduce any of such benefits (a “material reduction”
shall be a reduction of ten percent (10%) or more in the value of the aggregate benefits), or
deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the
Change in Control except for (i) across-the-board benefit reductions similarly affecting all senior
executive officers of the Company or (ii) reduction or elimination of Executive’s annual
comprehensive “executive” physical examinations, financial planning or other perquisites;
(v) a material breach by the Company of its obligations under this Agreement; or
(vi) failure of the Company to obtain the assumption and agreement to perform this Agreement
by a Successor as provided in Section 10.1 hereof prior to the effectiveness of the succession or
disposition referred to in Section 10.1(i) or Section 10.1(ii), as applicable.
The Executive’s continued employment shall not constitute consent to, or a waiver of rights
with respect to, any act or failure to act constituting Good Reason hereunder.
The Executive’s right to terminate employment for Good Reason shall be subject to the
following conditions: (i) any amounts payable upon a Good Reason termination shall be paid only if
the Executive actually
13
terminates employment within one hundred and eighty (180) days following the
initial existence of the Good Reason condition and (ii) the amount, time and form of payment upon a
termination of employment for Good Reason shall be the same as the amount, time and form of payment
payable upon an involuntary termination without Cause. The Executive must also provide notice to
the Company of the Good Reason condition within ninety (90) days of the initial existence of such
condition and the Company must be given at least thirty (30) days to remedy such situation.
(R) “MAP” shall have the meaning stated in Section 4.1(B) hereof.
(S) “Notice of Termination” shall have the meaning stated in Section 7.1 hereof.
(T) “Payment” shall have the meaning stated in Section 4.2(A) hereof.
(U) “Person” shall have the meaning set forth in Section 16(E7).
(V) “Pre-Change in Control Termination” shall have the meaning stated in Section 4.1
hereof.
(W) “Released Parties” or “Released Party” shall have the meaning stated in
Section 6 hereof.
(X) “Severance Payments” shall mean those payments described in Section 4.1 hereof.
(Y) “Successor” shall have the meaning stated in Section 10.1 hereof.
| XXXXXXXXX WORLD INDUSTRIES, INC. |
||||
| /s/ | ||||
| EXECUTIVE |
||||
| /s/ | ||||
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