Exhibit (10)
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KEY MANAGEMENT SEVERANCE AGREEMENT
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This Severance Agreement (the "Agreement") is made as of
November 24, 1998 by and between XXXXX CORNING, a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxx, an officer of
the Company ("Executive").
WHEREAS the Company and Executive have previously entered into
a Severance Agreement dated as of September 11, 1995 (the "Prior
Agreement") providing for certain benefits to be conferred upon
Executive under specified circumstances in the event that
Executive's employment is terminated by the Company on the terms
and conditions set forth therein, and:
WHEREAS the Compensation Committee of the Board of Directors of
the Company (the "Committee") has approved a new severance
agreement to provide Executive with certain additional
protections and to conform the terms of such agreement to the
current policy of the Company regarding an officer's entitlement
to pay, benefits and privileges on the termination of his
employment;
NOW THEREFORE, the parties hereto agree as follows:
1. Termination Absent a Change of Control.
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a) If, prior to a Change of Control (as defined in paragraph
7(c) below), (i) the Company terminates Executive's employment
for any reason other than Permanent Total Disability or Cause (as
defined in paragraphs 7(e) and 7(b)(1)&(2), respectively, below),
or (ii) Executive voluntarily terminates his employment under
circumstances involving a Constructive Termination (as defined in
paragraph 7(d), below), Executive will be entitled to the
following compensation, provided that Executive executes a
Release and Non-Competition Agreement satisfactory to the
Company:
1) Base salary earned and as yet unpaid through the effective
date of termination; and
2) Two years' Base Pay (as defined in paragraph 7(a) below); and
3) Two times Executive's Separation Incentive Payment (as
defined in paragraph 7(f) below); and
4) Incentive Pay as yet unpaid from the prior fiscal year and
Incentive Pay for the fiscal year of termination, prorated
for the period of Executive's actual employment prior to
termination; and
5) The greater of (i) Executive's vested Cash Balance Pension
Benefit or (ii) an amount equal to Executive's vested Pension
Benefit under the Company's Salaried Employees' (Final Average)
Retirement Plan plus a pension supplement calculated as though
Executive had been credited with three additional years of
service under that Plan and had Executive been three years older
at the date of termination.
b) If, prior to a Change of Control, the Company terminates
Executive's employment for Cause (as defined in paragraph
7(b)(3), below), Executive will only be entitled to base salary
earned and as yet unpaid through the effective date of
termination and Executive's vested Cash Balance Pension Benefit
or vested Final Average Plan Pension Benefit, whichever is
greater, UNLESS, (i) the Company exercises its discretion to
award Executive (in addition to the aforementioned base salary
and vested pension amounts) some portion of the following
compensation, based on effort expended and results obtained to
date and (ii) Executive executes a Release and Non-Competition
Agreement satisfactory to the Company:
1) Up to but no more than Twelve months' Base Pay (as defined in
paragraph 7(a) below); and
2) Up to but no more than one times Executive's Separation
Incentive Payment (as defined in paragraph 7(f) below); and
3) Up to but no more than the amount of Incentive Pay as yet
unpaid from the prior fiscal year.
c) The compensation payable under paragraph 1(a) or 1(b), above,
shall be paid as soon as practicable after Executive signs,
returns and does not revoke the requisite Release and Non-
Competition Agreement.
d) In the event of a termination of Executive's employment under
the circumstances described in paragraph 1(a) above:
1) All stock options previously awarded to Executive shall, to
the extent not already vested, immediately vest, and shall be
exercisable (subject to applicable blackout restrictions) for up
to six months following the date of termination or the original
expiration date, whichever is sooner.
2) All shares of restricted stock previously awarded to
Executive shall, to the extent not already vested, immediately
vest and be payable.
3) All outstanding but unearned performance shares shall be
forfeited.
4) All of Executive's non-qualified deferred compensation or
retirement benefits, if any, accrued through the date of
termination under any non-qualified deferred compensation plan or
arrangement shall immediately vest and be payable, to the extent
permissible under the terms of such plan or arrangement.
e) In the event of a termination of Executive's employment under
the circumstances described in paragraph 1(b) above:
1) All stock options previously awarded to Executive which are
exercisable on the date of termination shall be exercisable
(subject to applicable blackout restrictions) for up to six
months following the date of termination or the original
expiration date, whichever is sooner.
2) All unvested shares of restricted stock and all outstanding
but unearned performance shares previously awarded to Executive
shall be forfeited.
3) All of Executive's non-qualified deferred compensation or
retirement benefits, if any, accrued and vested through the date
of termination under any non-qualified deferred compensation plan
or arrangement shall be payable, to the extent permissible under
the terms of such plan or arrangement.
f) If Executive's employment ends under circumstances described
in paragraph 1(a) above as a result of the sale by the Company of
a business unit, division or facility, payments will be made
under this paragraph 1 only if Executive is not offered a
substantially equivalent position with the Company or with the
new owner of the business (without regard to whether Executive
accepts such a position). If Executive receives and accepts a
suitable offer from the new owner of the business and is
subsequently terminated within one year of the closing date of
the sale under circumstances that would result in payment of
benefits under this paragraph 1(a), Executive will be treated as
though he had been terminated by the Company and receive the
payments provided for in this Agreement, less any amounts or
benefits provided by the new owner in connection with Executive's
termination.
2. Termination On or After a Change of Control.
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a) If, within a two-year period after a Change of Control, (i)
the Company (or any successor) terminates Executive's employment
for any reason other than Permanent Total Disability or Cause (as
defined in paragraphs 7(e) and 7(b)(1)&(2), respectively, below),
or (ii) Executive voluntarily terminates his employment under
circumstances involving a Constructive Termination, Executive
will be entitled to the following compensation, provided that
Executive executes a Release and Non-Competition Agreement
satisfactory to the Company:
1) Base salary earned and as yet unpaid through the effective
date of termination; and
2) Two years' Base Pay; and
3) Two times Executive's Separation Incentive Payment; and
4) Incentive Pay as yet unpaid from the prior fiscal year and
Target Level Incentive Pay (as defined in paragraph 7(h) below)
for the fiscal year of termination, prorated for the period of
Executive's actual employment prior to termination; and
5) The greater of (i) Executive's vested Cash Balance Pension
Benefit or (ii) an amount equal to Executive's vested Pension
Benefit under the Company's Salaried Employees' (Final Average)
Retirement Plan plus a pension supplement calculated as though
Executive had been credited with three additional years of
service under that Plan and had Executive been three years older
at the date of termination.
b) If, within a two-year period after a Change of Control, the
Company (or any successor) terminates Executive's employment for
Cause (as defined in paragraph 7(b)(3), below), Executive will
only be entitled to base salary earned and as yet unpaid through
the effective date of termination and Executive's vested Cash
Balance Pension Benefit or vested Final Average Plan Pension
Benefit, whichever is greater, UNLESS, (i) the Company exercises
its discretion to award Executive (in addition to the
aforementioned base salary and vested pension amounts) some
portion of the following compensation, based on effort expended
and results obtained to date and (ii) Executive executes a
Release and Non-Competition Agreement satisfactory to the
Company:
1) Up to but no more than Twelve months' Base Pay (as defined in
paragraph 7(a) below); and
2) Up to but no more than one times Executive's Separation
Incentive Payment (as defined in paragraph 7(f) below); and
3) Up to but no more than the amount of Incentive Pay as yet
unpaid from the prior fiscal year.
c) The compensation payable under paragraphs 2(a) or 2(b),
above, will be paid as soon as practicable after Executive signs,
returns and does not revoke the requisite Release and Non-
Competition Agreement.
d) In the event of a termination of Executive's employment under
the circumstances described in paragraph 2(a) above:
1) All stock options previously awarded to Executive shall, to
the extent not already vested, immediately vest, and shall be
exercisable (subject to applicable blackout restrictions) for up
to six months following the date of termination or the original
expiration date, whichever is sooner.
2) All shares of restricted stock previously awarded to
Executive shall, to the extent not already vested, immediately
vest and be payable.
3) All outstanding but unearned performance shares shall be
forfeited.
4) All of Executive's non-qualified deferred compensation or
retirement benefits, if any, accrued through the date of
termination under any non-qualified deferred compensation plan or
arrangement shall immediately vest and be payable, to the extent
permissible under the terms of such plan or arrangement.
e) In the event of a termination of Executive's employment under
the circumstances described in paragraph 2(b) above:
1) All stock options previously awarded to Executive which are
exercisable on the date of termination shall be exercisable
(subject to applicable blackout restrictions) for up to six
months following the date of termination or the original
expiration date, whichever is sooner.
2) All unvested shares of restricted stock and all outstanding
but unearned performance shares previously awarded to Executive
shall be forfeited.
3) All of Executive's non-qualified deferred compensation or
retirement benefits, if any, accrued and vested through the date
of termination under any non-qualified deferred compensation plan
or arrangement shall be payable, to the extent permissible under
the terms of such plan or arrangement.
f) The Compensation Committee of the Board of Directors, in its
sole discretion, may determine that no Change of Control or
Potential Change of Control shall be deemed to have occurred with
respect to any Executive who, in connection with a Change of
Control or Potential Change of Control, acts in a capacity other
than in their capacity as an employee of the Corporation, its
subsidiaries or affiliates or otherwise fails to act in the
Company's best interests with respect to said Change of Control.
3. Termination For Other Reasons.
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If Executive voluntarily terminates his employment (including by
reason of retirement) other than as provided in paragraph 1(a) or
2(a) above, or if Executive's employment is terminated due to
death or Permanent Total Disability, Executive shall not be
entitled to any benefits under this Agreement, but shall be
entitled to any other benefits to which he is otherwise entitled
under the terms of any employee benefit plans or arrangements of
the Company.
4. Continuation of Insurance Benefits.
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In the event Executive's employment terminates under the
circumstances described in paragraph 1(a) or 2(a) of this
Agreement, the Company will continue Executive's participation
and coverage for a period of two years (the "Severance Period")
from Executive's last day of employment with the Company under
all the Company's life, medical and dental plans ("Insurance
Benefits"), in which Executive is participating immediately prior
to such employment termination, subject to the Company's right to
modify the terms of the plans or arrangements providing these
benefits. If Executive is employed by another entity during the
Severance Period, the Company will be a secondary obligor only
with respect to medical and dental Insurance Benefits and life
insurance coverage shall immediately cease.
5. Non-Duplication of Benefits.
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Any compensation or benefits payable under the terms of this
Agreement will be offset and not augmented by other compensation
or benefits of the same or similar type payable under any
existing plan or agreement of the Company or any other
arrangement between Executive and the Company covering the
Executive (including, but not limited to, any Company severance
policy and the Company's Annual Incentive Plan). It is intended
that this Agreement NOT duplicate benefits Executive is entitled
to under the Company's regular severance policy, any related
policies, or any other contracts, agreements or arrangements
between Executive and the Company.
6. Term.
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This Agreement shall be effective from the date hereof throughout
Executive's term of employment as an officer of the Company, but
shall expire and be of no effect immediately after the second
anniversary of a Change of Control.
7. Certain Defined Terms.
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As used herein, the following terms shall have the following
meanings:
a) "Base Pay" shall mean the greater of the annual salary paid
to Executive as of the date of termination of his employment or
the date of the Change of Control, as the case may be,
notwithstanding any pay reduction that may be related to a
Constructive Termination.
b) "Cause" shall mean:
1) conviction of any felony or failure to contest prosecution
for a felony; or
2) willful misconduct or dishonesty which is directly and
materially harmful to the business or reputation of the Company;
or
3) willful or continued failure to substantially perform his
duties as an executive of the Company, other than as a result of
total or partial incapacity due to physical or mental illness
(abuse of alcohol, drugs or controlled substances not being
considered a physical or mental illness for purposes of this
paragraph), unless within three to six months after written
notice has been provided to Executive by the Company, Executive
cures such willful or continued failure to perform.
c) "Change of Control" shall mean:
1) the holders of the voting securities of the Company shall
have approved a merger or consolidation of the Company with any
other entity, unless the proposed merger or consolidation would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the total
voting power represented by the voting securities of the Company
or such surviving entity outstanding immediately after such
merger or consolidation, where such merger or consolidation is,
in fact, consummated;
2) a plan of complete liquidation of the Company shall have been
adopted or the holders of voting securities of the Company shall
have approved an agreement for the sale or disposition by the
Company (in one transaction or a series of transactions) of all
or substantially all of the Company's assets;
3) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "1934 Act")
shall become the "beneficial owner" (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, of 15% or more of
the combined voting power of the Company's then outstanding
shares;
4) during any period of two consecutive years, members who at
the beginning of such period constituted the Board shall have
ceased for any reason to constitute a majority thereof, unless
the election, or nomination for election by the Company's
stockholders, of each director shall have been approved by the
vote of at least two-thirds of the directors then still in office
and who were directors at the beginning of such period (so long
as such director was not nominated by a person who has expressed
an intent to effect a Change of Control or engage in a proxy or
other control contest); or
5) the occurrence of any other change of control of a nature
that would be required to be reported in accordance with Form 8-K
pursuant to Sections 13 or 15(d) of the 1934 Act or in the
Company's proxy statement in accordance with Schedule 14A of
Regulation 14A promulgated under the 1934 Act, or in any
successor forms or regulations to the same effect.
d) A "Constructive Termination" shall be deemed to have occurred
only if:
1) prior to a Change of Control: Executive's Base Pay is
reduced without his written consent; or
2) on or within a two-year period after a Change of Control: (A)
Executive's Base Pay or annual incentive pay opportunity is
reduced without his written consent; (B) Executive is required by
the Company without his written consent to relocate to a new
place of business that is more than fifty miles from Executive's
place of business prior to the Change of Control (or the Company
mandates a substantial increase in the amount of required
business travel); or (C) there is a material adverse change in
Executive's duties or responsibilities in comparison to the
duties or responsibilities which Executive had prior to the
Change of Control.
e) "Permanent Total Disability" shall be deemed to have occurred
if, at the end of any month Executive then is, and has been, for
eighteen (18) consecutive calendar months then ending, unable to
perform his duties in the normal and regular manner due to mental
or physical illness or injury. Any determination of such
inability to perform shall be made by the Company in good faith.
f) "Separation Incentive Payment" shall be the greater of (i)
Executive's average payments under the Company's normal, annual
Corporate Incentive Plan (CIP) for the three years immediately
preceding the year of termination (or annualized for such shorter
period as Executive may have been employed by the Company), or
(ii) one-half of Executive's average participating salary under
such Plan for the three years immediately preceding the year of
termination (or annualized for such shorter period as Executive
may have been employed by the Company).
g) "Participating Salary" is the product of Executive's total
base salary paid during any given incentive year, multiplied by
Executive's incentive pay percentage, at maximum funding.
h) "Target Level Incentive" shall be the greater of (i) one-half
of Executive's participating salary under the Company's Annual
Incentive Plan for the year of termination, or (ii) the payment
Executive would have received under such Plan for the year of
termination based on projected corporate performance for such
year as determined by the Committee in its sole discretion at the
time of the Change of Control.
8. Outplacement Assistance.
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The Company will arrange outplacement assistance for Executive,
to be provided by a mutually agreed-upon firm engaged in said
business. Such assistance shall continue for up to one year
following Executive's termination or until such time as suitable
employment is attained, whichever is sooner. Outplacement costs
incurred in this connection will be borne by the Company, but
will not include costs of travel to/from the outplacement firm or
in connection with job interviews, etc. For up to six months
following Executive's termination, the Company will also make
available reasonable office space and administrative and
communication services for Executive's use in seeking suitable
employment. In no event will the Company pay Executive in lieu
of outplacement assistance.
9. Confidentiality.
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Consistent with Executive's preexisting legal and contractual
obligations and in exchange for the consideration provided by the
Company in this Agreement and for Executive's continued
employment and exposure to confidential information at the
Company, Executive agrees to hold in strict confidence and not
disclose to any other person any confidential or proprietary
information of the Company, including, without limitation, trade
secrets, formulas for Company products, production techniques or
processes or methods and apparatus for producing any products of
the Company, or other non-public information relating to the
business, research and development, employees and/or customers of
the Company and its subsidiaries and affiliates, except to the
extent required by law, or with the written consent of the
Company. Executive will, immediately on termination, deliver to
the Company all files containing data, correspondence, books,
notes, and other written, graphic or computer records under
Executive's control relating to the Company or its subsidiaries
or affiliates, regardless of the media in which they are embodied
or contained.
10. Agreement Not To Compete.
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In exchange for the consideration provided by the Company in this
Agreement as well as Executive's continued employment and
exposure to confidential information at the Company, Executive
agrees not to, directly or indirectly, for a period of two years
following Executive's termination of employment, engage or
participate in any business that is involved in research or
development activities or in the manufacturing of any product
which competes with any of the Company's products, except with
the written consent of the Company. On termination, Executive
agrees to execute a separate Release and Non-Competition
Agreement in a form acceptable to the Company to memorialize this
agreement and understands that the failure to do so will render
Executive ineligible for any severance pay, benefits or
privileges whatsoever.
11. Mutual Release and Indemnity.
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In the event of Executive's termination under circumstances
described in paragraphs 1(a), 1(b), 2(a) or 2(b), the Company
agrees to release and discharge Executive from any claim it may
then or thereafter have against Executive with respect to
employment with the Company or any of its subsidiaries or
affiliates (other than with regard to Executive's obligations
under this Agreement), and agrees to indemnify Executive in
accordance with its then current policies or practices for active
employees for any claims made against Executive by third parties
arising out of the proper performance of Executive's duties as an
employee of the Company or any of its subsidiaries or affiliates.
In exchange for the consideration provided by the Company in this
Agreement, together with the Company's release and indemnity,
Executive agrees to release and discharge the Company, and its
subsidiaries, affiliates, officers, directors, employees and
agents (the "Released Persons") from any claim that Executive may
then or thereafter have against the Company or such Released
Persons (excluding any claim for the compensation, benefits and
privileges described herein) arising out of or in connection with
Executive's employment or termination of employment by the
Company or any of its subsidiaries or affiliates. On
termination, Executive agrees to execute a separate Release and
Non-Competition Agreement in a form acceptable to the Company to
memorialize this agreement and understands that the failure to do
so will render Executive ineligible for any severance pay,
benefits or privileges whatsoever.
12. Severability.
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Whenever possible each provision and term of this Agreement shall
be interpreted in such manner as to be effective and valid under
applicable law, but if any provision or term of this Agreement
shall be held to be prohibited by or invalid under such
applicable law, then such provision or term shall be ineffective
only to the extent of such prohibition or invalidity, without
invalidating or affecting in any manner whatsoever the remainder
of such provision or term, or the remaining provisions or terms
of this Agreement.
13. Modification and Waiver of Breach.
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No waiver or modification of this Agreement shall be binding
unless it is in writing, signed by the parties hereto. No waiver
of a breach hereof shall be deemed to constitute a waiver of a
further breach, whether of a similar or dissimilar nature.
14. Assignment.
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This Agreement shall be binding upon and inure to the benefit of
any successors of the Company. As used herein, "successors"
shall include any person, firm, corporation or other business
entity which at any time, whether by merger, purchase or
otherwise, acquires all or substantially all of the assets or
business of the Company.
15. Notice.
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Any written notice to be given hereunder to Executive may be
delivered to him personally or shall be deemed to have been given
upon deposit thereof in the U.S. mail, certified mail, postage
prepaid, addressed to Executive at the address as it shall appear
on the records of the Company.
16. Construction of Agreement.
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This Agreement is made and entered into in the State of Ohio and
shall be construed under the laws of Ohio.
17. Entire Agreement.
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This Agreement constitutes the entire understanding between the
parties with respect to Executive's severance pay, benefits and
privileges in the event of a termination of Executive's
employment with the Company, superseding all negotiations, prior
discussions and agreements, written or oral, concerning said
severance arrangements. This Agreement may not be amended except
in writing by the parties hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
XXXXX CORNING,
/s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
Chairman and CEO
Agreed to and accepted:
___________________________
Date: ____________________
