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Exhibit 10.24
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the 8th day of May 2001 (this
"Agreement"), by and between Hercules Incorporated, a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxxx (the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders/stockholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined herein). The Board believes it is
imperative to diminish the inevitable distraction of the Executive by virtue of
the personal uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive's full attention and dedication to the
current Company in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control that ensure that the compensation and benefits expectations of
the Executive will be satisfied and that are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
SECTION 1. CERTAIN DEFINITIONS.
(a) "Effective Date" means the first date during the Change of
Control Period (as defined herein) on which a Change of Control occurs.
Notwithstanding anything in this Agreement to the contrary, if a Change of
Control occurs and if the Executive's employment with the Company is terminated
prior to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment (1) was at the
request of a third party that has taken steps reasonably calculated to effect a
Change of Control or (2) otherwise arose in connection with or anticipation of a
Change of Control, then "Effective Date" means the date immediately prior to the
date of such termination of employment.
(b) "Change of Control Period" means the period commencing on
the date hereof and ending on the third anniversary of the date hereof;
provided, however, that, commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof, the "Renewal Date"), unless previously terminated, the
Change of Control Period shall be automatically extended so as to terminate
three years from such Renewal Date, unless, at least 60 days prior to the
Renewal Date, the Company shall give notice to the Executive that the Change of
Control Period shall not be so extended.
(c) "Affiliated Company" means any company controlled by,
controlling or under common control with the Company.
(d) "Change of Control" means:
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(1) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (A) the then-outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (B) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that, for purposes of this Section l(d), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Affiliated Company or (iv) any acquisition by
any corporation pursuant to a transaction that complies with Sections
l(d)(3)(A), l(d)(3)(B) and 1(d)(3)(C).
(2) The individuals listed below (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board. The following individuals constitute the Incumbent
Board as of the date hereof: Xxxx X. Xxxxxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxx X.
Xxxxxxx, Xxxx X. Xxxxxx, Xxxxx X. Holiday, Xxxxxxx X. Xxxxx, Xxxxxx X. Xxxxxx,
Xxxxxx XxxXxxxxx, Xxxxx X. XxxXxxxxx, Xx., H. Xxxxxx XxXxxxxx, Xxxxx XxXxxxxxxx,
Xxxx X. X. Xxxxxx and Xxxxx X. Xxxxx.
(3) Approval by the shareholders of the Company of a
reorganization, merger, consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business Combination"), in
each case, unless, following such Business Combination, (A) all or substantially
all of the individuals and entities that were the beneficial owners of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, 60% or more of the then-outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation that, as a result of such transaction, owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then-outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then-outstanding voting securities of such
corporation, except to the extent that such
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ownership existed prior to the Business Combination, and (C) at least a majority
of the members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement or of the action of the Board providing for
such Business Combination; or
(4) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(e) "Alternative Change of Control" means a Change of Control
as defined above, except that the phrase "Approval by the shareholders of the
Company" in clause (3) of Section 1(d) shall be deemed to read "Consummation."
SECTION 2. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Executive in its employ, subject to the terms and conditions of this Agreement,
for the period commencing on the Effective Date and ending on the third
anniversary of the Effective Date (the "Employment Period"). The Employment
Period shall terminate upon the Executive's termination of employment for any
reason.
SECTION 3. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(1) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the 120-day period immediately preceding the Effective Date and (B)
the Executive's services shall be performed at the office where the Executive
was employed immediately preceding the Effective Date or at any other location
less than 30 miles from such office.
(2) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period, it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that, to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
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(b) COMPENSATION.
(1) BASE SALARY. During the Employment Period, the Executive
shall receive an annual base salary (the "Annual Base Salary") at an annual rate
at least equal to 12 times the highest monthly base salary paid or payable,
including any base salary that has been earned but deferred, to the Executive by
the Company and the Affiliated Companies in respect of the 12-month period
immediately preceding the month in which the Effective Date occurs. The Annual
Base Salary shall be paid at such intervals as the Company pays executive
salaries generally. During the Employment Period, the Annual Base Salary shall
be reviewed at least annually, beginning no more than 12 months after the last
salary increase awarded to the Executive prior to the Effective Date. Any
increase in the Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. The Annual Base Salary shall
not be reduced after any such increase and the term "Annual Base Salary" shall
refer to the Annual Base Salary as so increased.
(2) ANNUAL BONUS. In addition to the Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the "Annual Bonus") in cash at least equal to the
Executive's Recent Target Bonus, as defined in the next sentence. The "Recent
Target Bonus" means the Annual Base Salary times a percentage equal to the
percentage of base salary most recently established, before the Effective Date,
for purposes of determining the Executive's target bonus under the Company's
Management Incentive Compensation Plan or any predecessor or successor plan (the
"MICP"). Each such Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the Annual
Bonus is awarded, unless the Executive shall elect to defer the receipt of such
Annual Bonus. Any bonus paid to the Executive under the MICP as a result of the
Change of Control (a "Change of Control Bonus") shall be taken into account in
determining whether the requirements of this Section 3(b)(2) have been met with
respect to the fiscal year in which the Change of Control occurs.
(3) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the
Employment Period, the Executive shall be entitled to participate in all cash
incentive, equity incentive, savings and retirement plans, practices, policies,
and programs applicable generally to other peer executives of the Company and
the Affiliated Companies, but in no event shall such plans, practices, policies
and programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the extent, if
any, that such distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than the
most favorable of those provided by the Company and the Affiliated Companies for
the Executive under such plans, practices, policies and programs as in effect at
any time during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company and the Affiliated
Companies. The Executive shall also continue to be entitled to any supplemental
pension benefits to which he may be entitled pursuant to any individual
agreement with the company or any Affiliated Companies (collectively, "Enhanced
Pension Benefits").
(4) WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in
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and shall receive all benefits under welfare benefit plans, practices, policies
and programs provided by the Company and the Affiliated Companies (including,
without limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and programs)
to the extent applicable generally to other peer executives of the Company and
the Affiliated Companies, but in no event shall such plans, practices, policies
and programs provide the Executive with benefits that are less favorable, in the
aggregate, than the most favorable of such plans, practices, policies and
programs in effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
those provided generally at any time after the Effective Date to other peer
executives of the Company and the Affiliated Companies.
(5) EXPENSES. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
procedures of the Company and the Affiliated Companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and the
Affiliated Companies.
(6) FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, if
applicable, tax and financial planning services, payment of club dues, and use
of an automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and the
Affiliated Companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and the Affiliated Companies.
(7) OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and the Affiliated Companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and the Affiliated Companies.
(8) VACATION. During the Employment Period, the Executive shall
be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and the Affiliated Companies as
in effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and the Affiliated Companies.
(9) SPECIAL PAYMENT. If a Change of Control occurs on or before
April 30, 2002, and in connection therewith, all or substantially all of the
common stock of the Company (the Common Stock) is purchased for cash and all or
substantially all then-outstanding employee stock options granted by the Company
are cancelled in exchange for cash or no
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consideration and without being replaced by comparable new stock options, then
the Company shall pay the Executive, within five business days after the Change
of Control, a cash payment equal to $3,000,000 less the product of (1) the
excess, if any, of the per-share amount of the cash paid for the Common Stock,
over $12.00 times (2) 1,250,000; provided, that if there is no such excess
described in clause (1), then such cash payment shall equal $3,000,000.
SECTION 4. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall
terminate automatically if the Executive dies during the Employment Period. If
the Company determines in good faith that the Disability (as defined herein) of
the Executive has occurred during the Employment Period (pursuant to the
definition of "Disability"), it may give to the Executive written notice in
accordance with Section 11(b) of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. "Disability" means the absence of the
Executive from the Executive's duties with the Company on a full-time basis for
180 consecutive business days as a result of incapacity due to mental or
physical illness that is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the
Executive's legal representative.
(b) CAUSE. The Company may terminate the Executive's
employment during the Employment Period for Cause. "Cause" means:
(1) the willful and continued failure of the Executive to
perform substantially the Executive's duties (as contemplated by Section
3(a)(1)(A)) with the Company or any Affiliated Company (other than any such
failure resulting from incapacity due to physical or mental illness or following
the Executive's delivery of a Notice of Termination for Good Reason), after a
written demand for substantial performance is delivered to the Executive by the
Board or the Chief Executive Officer of the Company that specifically identifies
the manner in which the Board or the Chief Executive Officer of the Company
believes that the Executive has not substantially performed the Executive's
duties, or
(2) the willful engaging by the Executive in illegal conduct
or gross misconduct that is materially and demonstrably injurious to the
Company.
For purposes of this Section 4(b), no act, or failure to act, on the part of the
Executive shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer of
the Company or a senior officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire
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membership of the Board (excluding the Executive, if the Executive is a member
of the Board) at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel for the Executive, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in Section 4(b)(1) or 4(b)(2), and specifying
the particulars thereof in detail.
(c) GOOD REASON. The Executive's employment may be terminated
by the Executive for Good Reason or by the Executive voluntarily without Good
Reason. "Good Reason" means:
(1) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as
contemplated by Section 3(a), or any other diminution in such position,
authority, duties or responsibilities (whether or not occurring solely as a
result of the Company's ceasing to be a publicly traded entity), excluding for
this purpose an isolated, insubstantial and inadvertent action not taken in bad
faith and that is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(2) any failure by the Company to comply with any of the
provisions of Section 3(b), other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and that is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(3) the Company's requiring the Executive (i) to be based at
any office or location other than as provided in Section 3(a)(1)(B), (ii) to be
based at a location other than the principal executive offices of the Company if
the Executive was employed at such location immediately preceding the Effective
Date, or (iii) to travel on Company business to a substantially greater extent
than required immediately prior to the Effective Date;
(4) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this Agreement;
or
(5) any failure by the Company to comply with and satisfy
Section 10(c).
For purposes of this Section 4(c), any good faith determination of Good Reason
made by the Executive shall be conclusive. The Executive's mental or physical
incapacity following the occurrence of an event described above in clauses (1)
through (5) shall not affect the Executive's ability to terminate employment for
Good Reason. In addition, anything in this Agreement to the contrary
notwithstanding, a termination by the Executive for any reason pursuant to a
Notice of Termination given after an Alternative Change of Control, with a Date
of Termination that is during the Employment Period but not less that 180 days
after the date such Notice of Termination is given, shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
(d) NOTICE OF TERMINATION. Any termination by the Company for
Cause or other than for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of
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Termination to the other party hereto given in accordance with Section 11(b).
"Notice of Termination" means a written notice that (1) indicates the specific
termination provision in this Agreement relied upon, (2) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated, and (3) if the Date of Termination (as defined herein)
is other than the date of receipt of such notice, specifies the Date of
Termination (which Date of Termination shall be not more than 30 days after the
giving of such notice unless such notice is given pursuant to the last sentence
of Section 4(c)). The failure by the Executive or the Company to set forth in
the Notice of Termination any fact or circumstance that contributes to a showing
of Good Reason or Cause shall not waive any right of the Executive or the
Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Executive's or the Company's respective rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (1) if
the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified in the Notice of Termination, (which date shall not be
more than 30 days after the giving of such notice unless such notice is given
pursuant to the last sentence of Section 4(c)), as the case may be, (2) if the
Executive's employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination, and (3) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
SECTION 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) GOOD REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY.
If, during the Employment Period, the Company terminates the Executive's
employment other than for Cause or Disability or the Executive terminates
employment for Good Reason:
(1) the Company shall pay to the Executive, in a lump sum in
cash within 30 days after the Date of Termination, the aggregate of the
following amounts:
(A) the sum of: (i) the Executive's Annual
Base Salary through the Date of Termination to the extent not
theretofore paid; (ii) the product of (x) the higher of (I)
the Recent Target Bonus and (II) the Annual Bonus paid or
payable, including any bonus or portion thereof that has been
earned but deferred (and annualized for any fiscal year
consisting of less than 12 full months or during which the
Executive was employed for less than 12 full months), for the
most recently completed fiscal year during the Employment
Period, if any (such higher amount, the "Highest Annual
Bonus") and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of
Termination and the denominator of which is 365; provided,
that if the Date of Termination occurs in the same fiscal year
as the Change of Control, then such product shall be reduced
(but not below zero) by the amount of any Change of Control
Bonus payable to the Executive; and (iii) any accrued vacation
pay, in each case, to the
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extent not theretofore paid (the sum of the amounts described
in subclauses (i), (ii) and (iii), the "Accrued Obligations");
and
(B) the amount equal to the product of (i)
three and (ii) the sum of (x) the Executive's Annual Base
Salary and (y) the Highest Annual Bonus;
(2) for three years after the Executive's Date of Termination,
or such longer period as may be provided by the terms of the appropriate plan,
program, practice or policy, the Company shall continue welfare and fringe
benefits to the Executive and/or the Executive's family at least equal to those
that would have been provided to them in accordance with the plans, programs,
practices and policies described in Section 3(b)(4) and (6) if the Executive's
employment had not been terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and the Affiliated Companies and their families, provided, however,
that, if the Executive becomes reemployed with another employer and is eligible
to receive medical or other welfare benefits under another employer provided
plan, the medical and other welfare benefits described herein shall be secondary
to those provided under such other plan during such applicable period of
eligibility; and for purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree benefits pursuant to such
plans, practices, programs and policies, the Executive shall be considered to
have remained employed until the expiration of three years after the Date of
Termination and to have retired on the last day of such period;
(3) the Company shall, at its sole expense as incurred,
provide the Executive with outplacement services the scope and provider of which
shall be selected by the Executive in the Executive's sole discretion provided,
that the cost of such outplacement shall not exceed $50,000;
(4) all stock options and restricted stock held by the
Executive immediately before the Date of Termination shall vest in full, and
such stock options shall remain exercisable until the first to occur of the
first anniversary of the Date of Termination and the expiration of their
original terms (unless the option by its terms provides for a longer period of
continued exercisability); and
(5) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or that the Executive is eligible to
receive under any plan, program, policy or practice or contract or agreement of
the Company and the Affiliated Companies (such other amounts and benefits, the
"Other Benefits").
(b) DEATH. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period but after the
Executive has given a Notice of Termination for Good Reason or the Company has
given a Notice of Termination other than for Cause, such termination shall be
treated as a termination by the Executive for Good Reason and the Executive's
estate and/or beneficiaries shall be entitled to the benefits provided for in
Section 5(a) above, other than Section 5(a)(3). If the Executive's employment is
terminated by reason of the Executive's death during the Employment Period other
than as described in the preceding sentence, the Company shall provide the
Executive's estate or beneficiaries with the Accrued
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Obligations and the timely payment or delivery of the Other Benefits, and shall
have no other severance obligations under this Agreement. The Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of the Other Benefits, the term "Other Benefits"
as utilized in this Section 5(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive, benefits
at least equal to the most favorable benefits provided by the Company and the
Affiliated Companies to the estates and beneficiaries of peer executives of the
Company and the Affiliated Companies under such plans, programs, practices and
policies relating to death benefits, if any, as in effect with respect to other
peer executives and their beneficiaries at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive's estate and/or the Executive's beneficiaries, as in effect on the
date of the Executive's death with respect to other peer executives of the
Company and the Affiliated Companies and their beneficiaries.
(c) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period but after the
Executive has given a Notice of Termination for Good Reason or the Company has
given a Notice of Termination other than for Cause, such termination shall be
treated as a termination by the Executive for Good Reason and the Executive
shall be entitled to the benefits provided for in Section 5(a) above, other than
Section 5(a)(3). If the Executive's employment is terminated by reason of the
Executive's Disability during the Employment Period other than as described in
the preceding sentence, the Company shall provide the Executive with the Accrued
Obligations and the timely payment or delivery of the Other Benefits, and shall
have no other severance obligations under this Agreement. The Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination. With respect to the provision of the Other Benefits,
the term "Other Benefits" as utilized in this Section 6(c) shall include, and
the Executive shall be entitled after the Disability Effective Date to receive,
disability and other benefits at least equal to the most favorable of those
generally provided by the Company and the Affiliated Companies to disabled
executives and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect generally
with respect to other peer executives and their families at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive and/or the Executive's family, as in effect at any time thereafter
generally with respect to other peer executives of the Company and the
Affiliated Companies and their families.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment is terminated for Cause during the Employment Period, the Company
shall provide to the Executive (1) the Executive's Annual Base Salary through
the Date of Termination, (2) the amount of any compensation previously deferred
by the Executive, and (3) the Other Benefits, in each case, to the extent
theretofore unpaid, and shall have no other severance obligations under this
Agreement. If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, the Company shall
provide to the Executive the Accrued Obligations and the timely payment or
delivery of the Other Benefits, and shall have no other severance obligations
under this Agreement. In such case, all the Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of Termination.
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SECTION 6. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or the Affiliated Companies
and for which the Executive may qualify, nor, subject to Section 11(f), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any other contract or agreement with the Company or the Affiliated
Companies. Amounts that are vested benefits or that the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or the Affiliated Companies at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement, except as explicitly
modified by this Agreement. Notwithstanding the foregoing, if the Executive
receives payments and benefits pursuant to Section 5(a) of this Agreement, the
Executive shall not be entitled to any severance pay or benefits under any
severance plan, program or policy of the Company and the Affiliated Companies,
including without limitation the Executive Severance Plan, unless otherwise
specifically provided therein in a specific reference to this Agreement.
SECTION 7. FULL SETTLEMENT; CONTESTS.
(a) The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense, or other claim,
right or action that the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement, and such amounts shall not be reduced
whether or not the Executive obtains other employment.
(b) The Company agrees to pay as incurred (within 10 days
following the Company's receipt of an invoice from the Executive), to the full
extent permitted by law, all legal fees and expenses that the Executive may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus, in each case, interest on any
delayed payment at the applicable federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
Notwithstanding the foregoing, the Company shall have no obligation to pay the
Executive's legal fees and expenses in connection with any action initiated by
the Executive as to which the trier of fact finds that the Executive's claim was
frivolous or brought in bad faith.
SECTION 8. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution in the nature of compensation (within the meaning of Section
280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or
payable pursuant to this Agreement or otherwise (a "Payment"), would be subject
to the excise tax imposed by Section 4999 of the Code, together with any
interest or penalties imposed with respect to such excise tax (the "Excise
Tax"), then the Executive shall be entitled to receive
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an additional payment (the "Gross-Up Payment") in an amount such that, after
payment by the Executive of all taxes (and any interest or penalties imposed
with respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, including whether and
when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
PriceWaterhouseCoopers (the "Accounting Firm"). The Accounting Firm shall
provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that there
has been a Payment or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control, the Executive may
appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 8, shall be paid by the Company to the Executive within 5 days of
the receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments that will not have been made by the Company should have been
made (the "Underpayment"), consistent with the calculations required to be made
hereunder. In the event the Company exhausts its remedies pursuant to Section
8(c) and the Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable, but no later than 10 business days after the Executive
is informed in writing of such claim. The Executive shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that the Company desires to
contest such claim, the Executive shall:
(1) give the Company any information reasonably requested by
the Company relating to such claim,
(2) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
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(3) cooperate with the Company in good faith in order
effectively to contest such claim, and
(4) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section 8(c),
the Company shall control all proceedings taken in connection with such contest,
and, at its sole discretion, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the applicable taxing
authority in respect of such claim and may, at its sole discretion, either
direct the Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that, if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties) imposed with respect to such
advance or with respect to any imputed income in connection with such advance;
and provided, further, that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which the Gross-Up Payment would be payable hereunder,
and the Executive shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 8(c), the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 8(c)) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 8(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) Notwithstanding any other provision of this Section 8, the
Company may, in its sole discretion, withhold and pay over to the Internal
Revenue Service or any other applicable taxing authority, for the benefit of the
Executive, all or any portion of the Gross-Up Payment, and the Executive hereby
consents to such withholding.
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SECTION 9. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or the Affiliated Companies, and their
respective businesses, which information, knowledge or data shall have been
obtained by the Executive during the Executive's employment by the Company or
the Affiliated Companies and which information, knowledge or data shall not be
or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive shall
not, without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those persons designated
by the Company. In no event shall an asserted violation of the provisions of
this Section 9 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
SECTION 10. SUCCESSORS.
(a) This Agreement is personal to the Executive, and, without
the prior written consent of the Company, shall not be assignable by the
Executive other than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. Except as provided in
Section 10(c), without the prior written consent of the Executive this Agreement
shall not be assignable by the Company.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. "Company" means the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid that assumes and agrees to
perform this Agreement by operation of law or otherwise.
SECTION 11. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified other than by a written agreement executed by the parties
hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
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if to the Executive:
Xxxxxxx X. Xxxxx
Xxxxxxxx Incorporated
Hercules Plaza
Wilmington, Delaware 19894-0001
if to the Company:
Hercules Incorporated
Hercules Plaza
Wilmington, Delaware 19894-0001
Attn:
------------------------------------------------
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such United States federal, state or local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Sections 4(c)(1) through 4(c)(5), shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except as
may otherwise be provided under the Agreement dated May 8, 2001 between the
Executive and the Company (the "Prior Agreement") any other written agreement
between the Executive and the Company, the employment of the Executive by the
Company is "at will" and, subject to Section 1(a), prior to the Effective Date,
the Executive's employment may be terminated by either the Executive or the
Company at any time prior to the Effective Date, in which case the Executive
shall have no further rights under this Agreement.
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IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from the Board, the Company
has caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.
/s/ Xxxxxxx X. Xxxxx
-------------------------
Xxxxxxx X. Xxxxx
XXXXXXXX INCORPORATED
By /s/ Xxxxxx X. Xxxxxxxxxx
-----------------------
[name]
[title] Office of Chairman
Attest:
Xxxxxx X. Xxxxx
-----------------------
[name] Xxxxxx X. Xxxxx
[title] Secretary
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