Exhibit 10.7
October 27, 1997
Dear :
Severance Agreement
Xxxxxx Dodge Corporation (the "Corporation") realizes that
every employee has worried about the possible loss of his job. For a senior
executive, the limited number of comparable positions that are likely to be
available should the executive's employment be involuntarily terminated adds to
this concern. While the Corporation does not expect that you would be
involuntarily terminated, it wants to assure you that if, after one full year of
service, your employment is involuntarily terminated under the circumstances
described below you would receive a meaningful severance benefit. For that
reason, in consideration of your continued employment with the Corporation, the
Corporation agrees with you as follows:
1. Severance Payment. If, after you have completed one full
year of continuous service, the Corporation terminates your employment other
than for Cause or on account of Mandatory Retirement (as such terms are defined
below) or you voluntarily terminate your employment on account of Good Reason
(as defined below), the Corporation will pay you in a single lump sum within 10
business days following the date your employment terminates an amount equal to
the higher of your annual base salary in effect (i) on the date your employment
terminates or (ii) if applicable, immediately prior to the occurrence of an
action or event which results in your having Good Reason to terminate your
employment.
2. Outplacement Services. If you are entitled to receive the
basic benefit under this Agreement, the Corporation will pay an additional
amount up to a maximum of 15% of the amount payable under paragraph 1 to provide
you with outplacement services from any agency of your choice which is
reasonably acceptable to the Corporation.
3. Benefits Continuation. If you are entitled to receive the
basic benefit under this Agreement, the Corporation will pay the cost of any
continuation coverage available to you under the Corporation's group health
plans for the lesser of 12 months or the period during which you (and any of
your dependents) are eligible for such coverage pursuant to Section 601 et seq.
of the Employee Retirement Income Security Act of 1974, as amended (the
"Continued Coverage Period"). The Continued Coverage Period begins, generally,
on the day your employment terminates. If the Corporation has agreed to continue
your coverage pursuant to any other written agreement, however, the Continued
Coverage Period will not begin until your coverage terminates pursuant to that
agreement. During the period beginning on your termination of employment and
ending on the last day of the Continued Coverage Period, the Corporation shall
also reimburse you for any premiums you pay to continue any life or disability
insurance coverage that the Corporation maintained for your benefit prior to the
date your employment with the Corporation terminated.
4. Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
(a) "Cause" shall mean (i) any willful violation or any gross neglect
of your duties and responsibilities which results in a material detriment to the
Corporation and its subsidiaries, taken as a whole, or (ii) any repeated willful
violations or gross neglect of your duties and responsibilities, regardless of
whether such violations result in a material detriment to the Corporation and
its subsidiaries, taken as a whole, after the Corporation provides you with
notice of such violations.
(b) "Good Reason" shall mean the occurrence of any of the following
events, unless you shall have given your written consent to the occurrence of
such event:
(i) a material reduction in your base salary
unrelated to the financial results or financial position of
the Corporation; or
(ii) a material reduction in your position, duties
and responsibilities.
Notwithstanding the foregoing, no termination of employment will be
treated as being on account of Good Reason unless you provide the Corporation
with a written notice of your termination, setting forth the basis for asserting
a Good Reason termination, within 90 days of the occurrence of the event giving
rise to a Good Reason termination.
(c) "Mandatory Retirement" shall mean your retirement at age 65 or
later at the direction of the Company, provided that such involuntary retirement
shall not violate the Age Discrimination in Employment Act of 1967, as amended,
or any other applicable Federal or state law.
5. Cause and Voluntary Termination. No benefits shall be
payable under this Agreement in the event that the Corporation terminates your
employment for Cause or on account of Mandatory Retirement or you terminate your
employment without Good Reason (including your voluntary early or normal
retirement).
6. Other Severance Benefits. Except as otherwise specifically
provided in any other plan, policy or agreement primarily intended to provide
severance benefits, the Corporation's sole obligation to you on account of a
termination of your employment is for the benefits, if any, payable under this
Agreement. Without limiting the foregoing, nothing in this Agreement shall be
construed to limit, reduce or restrict any right or entitlement you may have
under the terms of any employee benefit plan, policy or arrangement which is not
primarily intended to provide severance benefits.
7. Employment at Will. This Agreement shall neither obligate
the Corporation or any subsidiary of the Corporation to continue you in its
employ (or to employ you in any particular office or to perform any specified
responsibility) nor obligate you to continue in the employ of the Corporation or
any subsidiary of the Corporation.
8. Successors. This Agreement shall be binding upon and inure
to the benefit of you, your estate and the Corporation and any successor of the
Corporation, but neither this Agreement nor any rights arising hereunder may be
assigned or pledged by you.
9. Governing Law. This Agreement shall be governed by the laws
of the State of New York.
10. No Duty to Mitigate. For purposes of receiving payments
under this Agreement, you are not under any duty to mitigate the damages
resulting from your termination of employment. As a result, you will receive the
payment and the benefits provided by Sections 1, 2 and 3 regardless of whether
you search for or obtain other work. Under the law, though, your Continued
Coverage Period for purposes of Section 3 may terminate when you become eligible
for certain other health care coverage.
If you are in agreement with the foregoing, please so indicate
by signing and returning to the Corporation the enclosed copy of this letter,
whereupon this letter shall constitute a binding agreement between you and the
Corporation.
Very truly yours,
XXXXXX DODGE CORPORATION
By________________________
Vice President
Agreed:
_________________________ _______________________
Date
