SEVERANCE BENEFIT AGREEMENT
Exhibit
10.13
THIS
SEVERANCE BENEFIT AGREEMENT (“Agreement”) made and entered into as of the _____
day of _______________________ (the “Effective Date”) by and between Ball
Corporation (the “Corporation”) having its corporate headquarters located at
00 Xxxxx Xxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx, and ____________________________
(the “Executive”).
WHEREAS,
the Corporation and Executive desire that the Executive continue as an employee
of the Corporation;
WHEREAS,
the American Jobs Creation Act of 2004 added Section 409A to the Internal
Revenue Code of 1986, as amended, including the regulations and guidance
promulgated thereunder (the “Code”); and
WHEREAS,
Section 409A of the Code generally provides that deferred compensation may
be subject to adverse tax consequences unless certain requirements are met;
and
WHEREAS,
the Internal Revenue Service has issued regulations implementing the statutory
requirements of Section 409A of the Code; and
WHEREAS,
the parties are parties to an Amended and Restated Severance Benefit Agreement
entered into as of _______________________ (the “Prior Severance Benefit
Agreement”), and desire to enter into this amended and restated Agreement as of
the Effective Date in order that the Agreement comply with the requirements of
Section 409A of the Code; and
WHEREAS,
this Agreement shall entirely supersede the Prior Severance Benefit Agreement
and sets forth certain terms should the employment relationship of the Executive
with the Corporation terminate during the term (as hereinafter defined);
and
WHEREAS,
in order to receive the lump sum amounts payable under subsection 3(a)(iii)
of this Agreement, the Executive must execute the Release (attached hereto as
Exhibit 3(a)(iii)) provided for in this Agreement and allow the Release to
become effective.
NOW,
THEREFORE, IN CONSIDERATION of the mutual premises, covenants and agreements set
forth below, it is hereby agreed as follows:
1. Term of
Agreement. The term of this Agreement shall commence as of the
Effective Date, and shall continue until ___________________ (the “Term”); provided, however, that
commencing on ____________________, and on __________ thereafter, the Term of
this Agreement shall be extended automatically for one (1)
Page 1 of 11
Exhibit 10.13
(continued)
additional
year unless the Corporation shall have given notice to the Executive no later
than sixty (60) days prior to __________ of its intent to terminate this
Agreement at the end of two (2) years following __________.
2. Termination of
Employment.
(a) Death or
Disability. For purposes of this Agreement, the Executive’s
employment shall terminate automatically upon the Executive’s death or
“Disability” during the Term; provided, however, this
provision shall have no effect on whether the Executive’s employment has
terminated for purposes of the Corporation’s long-term disability plan or
program then in effect. For purposes of this Agreement, the
Executive’s employment may be terminated by reason of “Disability” 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 his duties
with the Corporation for six (6) consecutive months and within thirty (30) days
after written “Notice of Termination” (as defined in subsection 2(d)
hereof) is given, the Executive shall not have returned to the full-time
performance of his duties.
(b) By the Corporation for
Cause. The Corporation may terminate the Executive’s
employment during the Term for “Cause” or for reasons other than for
Cause. For purposes of this Agreement, “Cause” shall mean termination
(i) upon the willful and continued failure of the Executive to
substantially perform his duties with the Corporation (other than any such
failure resulting from his incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice of Termination
by the Executive or on account of “Constructive Termination” (as defined in
subsection 2(c) hereof),
after a written demand for substantial performance is delivered to the Executive
by the Corporation, which demand specifically identifies the manner in which the
Board of Directors of the Corporation (the “Board”) believes that the Executive
has not substantially performed his duties, or (ii) the willful engaging by
the Executive in conduct that is demonstrably and materially injurious to the
Corporation, monetarily or otherwise. For purposes of this
subsection, no act, or failure to act, on the Executive’s part shall be deemed
“willful” 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
interest of the Corporation.
(c) By the Executive for
Constructive Termination. The Executive may terminate his
employment during the Term for “Constructive Termination.” For
purposes of this Agreement, “Constructive Termination” shall mean, without the
Executive’s express written consent, the occurrence of any one or more of the
following circumstances, unless such circumstances are corrected prior to the
“Date of Termination” (as defined in subsection 2(e) hereof) specified in
the Notice of Termination given in respect thereof:
Page 2 of 11
Exhibit 10.13
(continued)
(i) A
reduction in the Executive’s annual base salary (“Annual Base Salary”) or the failure of the Corporation to pay
to the Executive any portion or installment of deferred compensation under any
deferred compensation program of the Corporation within fourteen (14) days of
the date such compensation is due;
(ii) The
failure by the Corporation to continue in effect any compensation or benefit
plan in which the Executive participates as of the Effective Date that 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 Corporation to continue the
Executive’s participation therein (or in such substitute or alternative plan) on
a basis not materially less favorable, both in terms of the amount of benefits
provided and the level of the Executive’s participation relative to other
participants, as existed as of the Effective Date, except for across-the-board
benefit reductions similarly affecting comparably situated executives of the
Corporation;
(iii) The
failure by the Corporation to continue to provide the Executive with benefits
substantially similar to those enjoyed by comparably situated executives under
any of the Corporation’s life insurance, medical, health and accident or
disability plans in which the Executive was participating as of the Effective
Date, or the failure by the Corporation to provide the Executive with the number
of paid vacation days to which the Executive is entitled on the basis of years
of service with the Corporation in accordance with the Corporation’s normal
vacation policy in effect as of the Effective Date;
(iv) The
failure of the Corporation to obtain satisfactory agreement from any successor
of the Corporation to assume and agree to perform this Agreement, as
contemplated by subsection 6(b) hereof; or
(v) Any
material breach by the Corporation of any other material provision of this
Agreement.
No
circumstances other than those set forth in subsection 2(c)(i) through
2(c)(v) above shall constitute Constructive Termination. In the event
the Executive believes such Constructive Termination exists, he shall, in
advance of delivery of any Notice of Termination, specify to the Corporation in
writing the circumstances alleged to constitute Constructive Termination, and
provide the Corporation with a reasonable period of time within which to cure
such circumstances.
Notwithstanding
the foregoing, in the event that the Executive terminates his employment during
the Term for Constructive Termination following the occurrence of a “Change in
Control,” as defined in Section 2 of the
Page 3 of 11
Exhibit 10.13
(continued)
letter
agreement effective as of _____________________ (the “Change in Control
Severance Agreement”), between the Corporation and the Executive, then in lieu
of the definition set forth in this subsection 2(c) above, “Constructive
Termination” shall have the meaning ascribed to it in subsection 4(iv) of
the Change in Control Severance Agreement.
(d) Notice of
Termination. Any termination by the Corporation for Cause, or
by the Executive for Constructive Termination, shall be communicated by Notice
of Termination to the other party hereto given in accordance with this
Agreement. For purposes of this Agreement, a “Notice of Termination,”
means a written notice that (i) indicates the specific termination
provision in this Agreement relied upon and (ii) to the extent applicable,
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated. The failure by the Executive or the Corporation to set
forth in the Notice of Termination any fact or circumstance that contributes to
a showing of Constructive Termination or Cause shall not waive any right of the
Executive or the Corporation hereunder or preclude the Executive or the
Corporation from asserting such fact or circumstance in enforcing the
Executive’s or the Corporation’s rights hereunder.
(e) Date of
Termination. “Date of Termination” means (i) if the
Executive’s employment is terminated by the Corporation for Cause, or by the
Executive for Constructive Termination, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be,
(ii) if the Executive’s employment is terminated by the Corporation other
than for Cause, the Date of Termination shall be the date on which the
Corporation notifies the Executive of such termination, and (iii) if the
Executive’s employment is terminated by reason of death or Disability, the Date
of Termination shall be the date of death or Disability (as the case may
be).
Notwithstanding
anything to the contrary contained in this
Agreement, the Executive shall not be considered to have terminated employment
with the Corporation
for purposes of this Agreement unless the Executive would be considered to have
incurred a “separation from service” from the Corporation within
the meaning of Section 409A of the Code.
(f) Termination Following Change
in Control. Notwithstanding subsection 3(a)(ii) and (iii)
hereof, in the case of termination, during the Term, by the Corporation other
than for Cause or by the Executive for Constructive Termination, following the
occurrence of a “Change in Control,” as defined in Section 2 of the Change
in Control Severance Agreement, the Executive shall be entitled to (i) a
benefit (the “Change in Control Benefit”) equal to the greater of each of the
benefits otherwise provided in Section 3(a)
hereof, and each of the benefits provided under Section 5(iii)
of the Change in Control Severance Agreement (without regard to the “Gross-Up
Payment” provided pursuant to subsection 5(vi) of the Change in Control
Severance Agreement), plus (ii) an
Page 4 of 11
Exhibit 10.13
(continued)
additional
amount (the “Severance Gross-Up Payment”) such that the net amount retained by
the Executive, after deduction of any Excise Tax (as defined
in subsection 5(vi)(a) of the Change in Control Severance
Agreement) on the Change in Control Benefit, and any federal, state and local
income and employment taxes and Excise Tax on the Severance Gross-Up Payment,
shall be equal to the Change in Control Benefit. Such Severance
Gross-Up Payment shall be calculated pursuant to the procedures set out in
subsection 5(vi) of the Change in Control Severance
Agreement. Any gross-up payments will be made five (5) days following the
date that is six (6) months following the date after the Executive’s separation
from service but in any event not later than the end of the taxable year
following the year in which the Excise Tax is
incurred. Notwithstanding the foregoing, in the event that the
Executive receives the Change in Control Benefit pursuant to this
subsection 2(f) and the Severance Gross-Up Payment pursuant to this
subsection 2(f), the Executive shall not be entitled to receive any
additional benefits under the Change in Control Severance
Agreement.
Payment
of the lump sum and other amounts payable following the occurrence of a Change
in Control (as defined in Section 2 of the Change in Control Severance
Agreement) as
provided under this Section 2 shall be made without any requirement
for the execution of the Release set forth in subsection 3(a)(iii)
or any other similar release.
3. Obligations of the
Corporation upon Termination.
(a) Certain
Terminations. During the Term, if the Corporation shall
terminate the Executive’s employment other than for Cause or if the Executive
shall terminate his employment for Constructive Termination, or if the
Executive’s employment shall terminate by reason of death or Disability
(termination in any such case referred to as “Termination”), then even though
such Termination may result in the Executive taking retirement:
(i) The
Corporation shall pay to the Executive (or, if applicable, the
Executive’s beneficiary or estate) the Executive’s Annual Base Salary through
the Date of Termination to the extent not theretofore paid, paid in the form of
a lump sum within thirty days (30) days of after the Date of
Termination.
In
addition, the Corporation shall pay to the Executive an amount equal to the
Executive’s annual incentive compensation (“Annual Incentive Compensation”),
calculated in accordance with the provisions of the Corporation’s Economic Value
Added Incentive Compensation Plan (“Annual Incentive Compensation Plan”) or
successor or other similar plan or plans in effect from time to time; provided
however, to the extent that the Executive would not be otherwise entitled to the
Annual Incentive Compensation thereunder by reason of failing to remain employed
with the Corporation until the date specified
Page 5 of 11
Exhibit 10.13
(continued)
under the
Annual Incentive Compensation Plan or failing to satisfy a specified attained
age, service or similar requirement, then such requirement shall not provide a
basis for forfeiture of payment for such fiscal year in which termination
occurs. This amount will be paid at such time as amounts are
regularly paid under the applicable plans but in no event later than
March 15 of the year following the year that includes the Date of
Termination, unless otherwise provided pursuant to the terms of applicable
effective deferral elections; and
(ii) In
the event of Termination by the Corporation other than for Cause or by the
Executive for Constructive Termination, excluding
Termination due to death or disability, then the Corporation shall
continue for a period of ____________ (_) months from the Date of
Termination life, accident and health insurance benefits to the
Executive and/or the Executive’s family at least equal to those that would have
been provided if the Executive’s employment had not been terminated, such
benefits to be in accordance with the health and welfare benefit plans, practices,
programs or policies (the “H&W Plans”) of the Corporation as in effect and
applicable generally to other executives of the Corporation and their families
immediately preceding the Date of Termination, which health
benefits shall be provided through an arrangement that satisfies the
requirements of Section 105 or 106 of the Code; provided, however, that if
the Executive becomes employed with another employer and is eligible to receive,
health or other similar welfare benefits under another
employer-provided plan, the benefits under the H&W Plans shall be reduced to
the extent comparable benefits are actually received by or made available to the
Executive without cost during the ____________ (_) month period following the
Executive’s Date of Termination (and any such benefits actually received by the
Executive shall be reported to the Corporation by the Executive);
and
(iii) In
the event of Termination by the Corporation other than for Cause or by the
Executive for Constructive Termination, excluding
Termination due to death or disability, then the Corporation shall tender
to Executive the Release set forth in Exhibit 3(a)(iii) as soon as possible, but in no
event later than three (3) days after Termination, with only such amendments as
are required by law to carry out the provisions of the Release. The
Corporation shall give the Executive the time required by law to
consider the Release. Executive understands and agrees that, in order
to receive the lump sum amounts provided in this subsection 3(a)(iii),
the Executive must execute the Release and
allow the Release to become effective in its entirety, including but not limited
to, claims under the Age Discrimination in Employment Act
(“ADEA”).
Upon
receipt of the executed Release and the Release becoming fully effective with
respect to the claims intended to be released thereby, including but not limited
to claims under the ADEA, the Corporation shall five (5) days following the date
that is six (6) months following the date after the Executive’s separation from
service: (A) pay to the Executive a lump sum amount, in
cash, equal to ________ (_) times the sum of (x) the Executive’s Annual Base
Salary in
Page 6 of 11
Exhibit 10.13
(continued)
effect immediately prior to the Date of Termination, and (y) the
Executive’s Annual Incentive Compensation, calculated based on the Target
Incentive Percent, as defined in the Incentive Compensation Plan, established
for the Executive, for the fiscal year in which the Date of Termination
occurs; (B) also pay to the Executive the present value (discounted at an
interest rate equal to the prime rate promulgated by XX Xxxxxx Xxxxx Bank, N.A.
or its successor and in effect as of the date of payment, plus one percent (1%)
(the “Prime Rate”)) of all benefits under the Corporation’s Pension Plan for
Salaried Employees, or any successor plan thereto and any supplemental executive
retirement plans to which the Executive would have been entitled had he remained
in employment with the Corporation for an additional _________________________
(___) months, each, where applicable, at the rate of Annual Base Salary, and
using the same assumptions and factors, in effect at the time Notice of
Termination is given, minus the present value (discounted at the Prime Rate) of
the benefits to which he is actually entitled under the abovementioned
plans.
(iv) Subject
to subsection 2(f) hereof, the Corporation shall pay or otherwise perform
its obligations to the Executive under any benefit or other then-existing plan,
policy, practice or program of the Corporation, including those related to, but
not limited to, individual outplacement services in accordance with the general
custom and practice generally accorded to comparably situated executives,
severance compensation, vacation payments, stock options and deferred
compensation, as well as under any contract or agreement entered into before or
after the date hereof with the Corporation other than the Prior Severance Benefit
Agreement.
(b) Termination of the Executive
for Cause or by the Executive Other than for Constructive
Termination. If the Executive’s employment shall be terminated
for Cause during the Term, or if the Executive terminates employment during the
Term other than a termination for Constructive Termination, which he shall not
be prohibited from doing, the Corporation shall have no further obligations to
the Executive under this Agreement.
(c) Legal
Expenses. The Corporation shall pay
to the Executive such reasonable legal fees and expenses incurred by the
Executive in enforcing the Executive’s rights hereunder as a direct result of a Termination pursuant to
subsection 3(a)(ii) and (iii) hereof, but only with respect to such claim
or claims upon which the Executive substantially prevails. Such
payments shall be made within fourteen (14) business days after delivery of the
Executive’s written request for payment accompanied with such evidence of fees
and expenses incurred as the Corporation reasonably may require; provided however,
that the reimbursement of legal fees will not be made later than the end
of the calendar year following the calendar year in which the expenses were
incurred.
4. Mitigation. Except
as provided in subsection 3(a)(ii)(A) hereof, in no event shall the
Executive be obligated to seek other employment or take any
Page 7 of 11
Exhibit 10.13
(continued)
other
action by way of mitigation of the amounts (including amounts for damages for
breach) 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.
5. Confidential Information and
Nondisparagement. The Executive shall hold in a fiduciary
capacity for the benefit of the Corporation all secret, confidential or
proprietary information, knowledge or data relating to the Corporation or any of
their affiliated companies, and their respective businesses, that shall have
been obtained by the Executive during the Executive’s employment by the
Corporation or any of their affiliated companies and that shall not have been or
now or hereafter have become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this
Agreement). During the Term, and at all times thereafter, regardless
of the reason for termination of the Executive’s employment, the Executive shall
not, without prior written consent of the Corporation 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 Corporation and those designated by
it. The Executive understands that during the Term, the Corporation
may be required from time to time to make public disclosure of the terms or
existence of this Agreement in order to comply with various laws and legal
requirements.
During
the Term and at all times thereafter, the Executive shall not disparage or
negatively criticize, orally or in writing, the performance of the Corporation,
the Board, any director of the Corporation, any specific former or current
officer of the Corporation or any operating company, or the Corporation’s
management group to any person; provided, however, that the
Executive may divulge, discuss or provide the information described in the
preceding paragraph to the extent that he is compelled by law to do so, and, in
such event, the Executive shall notify the Corporation immediately upon any
request or demand for information so that the Corporation may seek a protective
order or other appropriate remedy.
6. Successors.
(a) This
Agreement is personal to the Executive and without the prior written consent of
the Corporation shall not be assignable by the Executive, except that this
Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.
(b) The
Corporation shall 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 Corporation to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Corporation would be required to perform this Agreement if no such succession
had taken place.
Page 8 of 11
Exhibit 10.13
(continued)
7. Arbitration. Any
controversy or claim arising out of or relating to this Agreement or the breach
of this Agreement shall be settled exclusively by arbitration conducted before
one arbitrator in Broomfield, Colorado, in accordance with the rules of the
American Arbitration Association then in effect relating to employment
disputes. The Corporation shall pay the fees of the
arbitrator. The arbitrator shall be officed within the
Denver-Boulder-Greeley, Colorado Consolidated Metropolitan Statistical Area as
defined by the Office of Management and Budget. The determination of
the arbitrator shall be conclusive and binding on the Corporation and the
Executive, and judgment may be entered on the arbitrator’s award in any court
having appropriate jurisdiction; provided, however, that the
Corporation shall be entitled to seek a restraining order or injunction in any
court of competent jurisdiction to prevent any continuation of any violation of
Section 5 of this Agreement.
8. Miscellaneous.
(a) This
Agreement shall be governed by and construed in accordance with the laws of the
State of Colorado, without reference to principles of conflict of
laws.
(b) The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect.
(c) This
Agreement may not be amended, modified, repealed, waived, extended or discharged
except by an agreement in writing signed by the party against whom enforcement
of such amendment, modification, repeal, waiver, extension or discharge is
sought. No person, other than pursuant to a resolution of the Board
or a committee thereof, shall have authority on behalf of the Corporation to
agree to amend, modify, repeal, waive, extend or discharge any provision of this
Agreement or anything in reference thereto.
(d) The
parties hereto acknowledge and agree that the Executive’s employment
relationship is employment at will, except for the Corporation’s obligations
under this Agreement.
(e) All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
| If to the Executive: |
______________________
|
|
______________________
|
|
|
______________________
|
Page 9 of 11
Exhibit 10.13
(continued)
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.
(f) The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.
(g) The
Corporation may withhold from any amounts payable under this Agreement such
federal, state or local taxes as shall be required to be withheld pursuant to
any applicable law or regulation or group benefit plan in which Executive
participates.
(h) The
Executive’s or the Corporation’s failure to insist upon strict compliance with
any provision hereof or any other provision of this Agreement or the failure to
assert any right the Executive or the Corporation may have hereunder, including
without limitation the right of the Executive to terminate employment for
Constructive Termination pursuant to subsection 2(c) of this Agreement, or
the right of the Corporation to terminate the Executive’s employment for Cause
pursuant to subsection 2(b) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(i) This
Agreement may be executed in counterparts, each of which shall be deemed to be
an original but all of which together will constitute one and the same
instrument.
(j) Notwithstanding
anything to the contrary in this Agreement, the payment of consideration,
compensation, and benefits pursuant to this Agreement shall be interpreted and
administered in a manner intended to avoid the imposition of additional taxes
under Section 409A of the Code.
Page 10 of 11
Exhibit 10.13
(continued)
IN
WITNESS WHEREOF, the Executive and, pursuant to due authorization from its Board
of Directors, the Corporation has caused this Agreement to be executed as of the
day and year first above written.
BALL
CORPORATION
_________________________________
_________________________________
_________________________________
EXECUTIVE
_________________________________
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