EXHIBIT 10.4
2002 CHANGE IN CONTROL, SEVERANCE
AND NON-COMPETITION AGREEMENT
AGREEMENT, dated as of July 12, 2002 and effective as of July 12, 2002
by and between Wolverine Tube, Inc., a Delaware corporation ("Wolverine" or
"Company"), and Xxxxx X. Xxxxxx, an individual residing at Huntsville, Alabama
(the "Executive").
W I T N E S S E T H:
WHEREAS, Wolverine recognizes the Executive's expertise in connection
with his employment by Wolverine or its subsidiaries or affiliates
(collectively, the "Company"); and
WHEREAS, the Company desires to provide the Executive with severance
benefits or the opportunity for continued employment in a different position if
the Executive's employment in his current position is terminated for the reasons
set forth herein and the Executive refrains from engaging in certain activities
in the event his employment is terminated, upon the terms and conditions
hereinafter set forth; and
WHEREAS, the Company and the Executive have heretofore in 1999 entered
into a Change in Control, Severance and Non-Competition Agreement containing
substantially the same terms and conditions as this Agreement (the "Prior
Agreement"); and
WHEREAS, the Company and the Executive believe that the Prior Agreement
should be amended and restated in its entirety in order to include a lump sum
payment election, to conform the provisions regarding bonuses, and to resolve
certain ambiguities contained therein; and
WHEREAS, the Company and the Executive have therefore agreed to enter
into this Agreement, which shall replace and supersede the Prior Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. Termination of Employment
(a) Termination for Cause; Resignation without Good Reason.
(i) If the Executive's employment is terminated by the
Company for Cause, as defined in Section 1(a)(ii) hereof, or if the Executive
resigns from his employment hereunder, other than for Good Reason, as defined in
Section 1(a)(iii) hereof, unless said resignation comes within two (2) years of
a Change in Control, as discussed in Section 1(b)(i) below, the Executive shall
be entitled to only (A) severance benefits as provided by the Company's general
procedures and practices, if any, (B) payment of the pro rata portion of the
Executive's salary through and
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including the date of termination or resignation, and (C) such employee benefits
as may be due to the Executive pursuant to the provisions of the benefit plans
which govern such issues.
(ii) For purposes of this Agreement, termination for "Cause"
shall mean termination of the Executive's employment by the Company because of
(A) the Executive's conviction for, or guilty plea to, a felony or a crime
involving moral turpitude, (B) the Executive's commission of an act of personal
dishonesty in connection with his employment by the Company, (C) a breach of
fiduciary duty in connection with his employment with the Company which shall
include, but not be limited to, (1) investment in any person or organization
with the knowledge that such person or organization has or proposes to have
dealings with the Company, such person or organization competes with the
Company, or the Company is considering an investment in such person or
organization (the reference to "organization" excludes federal credit unions,
publicly owned insurance companies and corporations the stock of which is listed
on a national securities exchange or quoted on NASDAQ if the direct and
beneficial stock ownership of the Executive, including members of his immediate
family, is not more than one percent (1%) of the total outstanding stock of such
corporation); (2) a loan (including a guaranty of a loan) from or to any person
or organization having or proposing any dealings with the Company or in
competition with the Company; (3) participation directly or indirectly in any
transaction involving the Company other than as a director or as an officer or
employee of the Company; (4) acceptance from any person or organization having
or proposing any dealings with the Company or in competition with the Company of
any gratuity, gift, entertainment or favor which exceeds either nominal value or
common courtesies which are generally accepted business practice; or (5) service
as an officer, director, partner or employee of, or consultant to, any person or
organization having or proposing dealings with the Company or in competition
with the Company; (D) the Executive's failure to execute or follow the written
policies of the Company, including, but not limited to, the Company's policy
against discrimination or harassment, or (E) the Executive's refusal to perform
the essential functions of the job, following written notice thereof.
Termination of the Executive's employment as a result of his death or disability
(if such Executive is eligible for benefits under the Company's long-term
disability plan or would be eligible for such benefits were the Executive a
participant in said plan) shall constitute a termination by the Company with
Cause for purposes of this Agreement.
(iii) For purposes of this Agreement, resignation for "Good
Reason" shall mean the resignation of the Executive within a period of six (6)
months after (A) a reduction in the Executive's benefits or pay in an amount in
the aggregate in excess of five percent (5%) thereof, unless all individuals at
the same managerial level as the Executive experience a similar reduction in
benefits or pay or (B) a substantial adverse alteration occurs in the nature or
status of the Executive's responsibilities from those in effect on the date
hereof, disregarding change in title only.
(iv) The date of termination for Cause shall be the date of
receipt by the Executive of written notice of such termination, or such later
date as may be contained in said
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notice. The date of resignation without Good Reason shall be the date of receipt
by the Company of a written notice of such resignation.
(b) Termination without Cause; Resignation for Good Reason or
after a Change in Control.
(i) If the Executive's employment is terminated by the
Company without Cause, or if the Executive resigns from his employment for any
reason within two (2) years following a Change in Control, the Executive shall
be entitled to receive the benefits described in subparagraphs (A), (B), (C) and
(D) below. If the Executive resigns for Good Reason (unless said resignation is
within two (2) years following a Change in Control, in which event his benefits
are described in the preceding sentence), he shall be entitled to those benefits
described in (A) and (B) below only. In either case, said benefits will only be
paid if the Executive executes an Agreement and General Release, which shall be
drafted by the Company, and if the Executive complies with Section 2 of this
Agreement.
(A) The Company shall pay to the Executive
either (x) during the two years immediately following a Change in Control, in
the event of (i) termination by the Company without Cause, or (ii) resignation
by the Executive for any reason, an amount equal to three (3) years' salary; or
(y) at any other time, in the event of (i) termination by the Company without
Cause or (ii) resignation by the Executive for Good Reason, an amount equal to
two (2) year(s) salary; in either case to be paid at the rate in effect
immediately prior to the Severance Date (as defined in Section 1(b)(iv)) plus
pay at the same rate for all vacation time accrued during the calendar year in
which the Severance Date occurs, with such payment to be made at the Executive's
option either:
(X) as a lump sum within 30 days after
the Severance Date, or
(Y) as a series of payments in
accordance with the Company's normal payroll procedures following the Severance
Date;
An election as to the form of payment under this paragraph (b)(i)(A)
shall be made at a time and in a manner prescribed by the Company. An election
of either form of payment may be revoked or modified, in accordance with rules
prescribed by the Company, at any time that is at least twelve (12) months
before the Executive's Severance Date. A change in the payment form that occurs
within twelve (12) months of the Executive's Severance Date shall be null and
void. If the Executive does not elect a form of payment, the amount due to the
Executive under this paragraph (b)(i)(A) shall be paid as a lump sum within
thirty (30) days of the Severance Date.
The amount payable to the Executive by the Company under this paragraph
(b)(i)(A) shall be offset by the non-compete and non-solicitation fee as defined
in Section 2(d)(i)of this Agreement.
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(B)(I) For a period equivalent to a three (3) year
or two (2) year time period, controlled by the reason for separation, following
the Executive's Severance Date (the "Continuation Period"), the Company will
arrange to provide the Executive with medical and disability benefits (the
"Employee Benefits") substantially similar to those that the Executive was
receiving or entitled to receive immediately prior to the Severance Date at no
cost to the Executive. Without otherwise limiting the purposes or effect of
Section 1(b), Employee Benefits otherwise receivable by the Executive pursuant
to this Section 1(b)(i)(B)(I) will be reduced or eliminated to the extent
comparable Employee Benefits at substantially similar cost are actually received
by the Executive from another employer during the Continuation Period following
the Executive's Termination Date, and any such benefits actually received by the
Executive shall be reported by the Executive to the Company. If and to the
extent that any benefit described in this Section 1(b)(i)(B)(I) is not or cannot
be paid or provided under any policy, plan, program or arrangement of the
Company or any Subsidiary, as the case may be, then the Company will reimburse
the Executive for the costs incurred in obtaining comparable Employee Benefits
coverage.
(B)(II) Following the Continuation Period, the
Company will provide the Executive access to Employee Benefits coverage on a
group basis equal to that generally available to the majority of the company's
employees or retirees, as the case may be, who receive said benefits, at the
Executive's own expense based upon the amount charged active employees for such
coverage until the Executive attains the age of sixty-five (65). Without
otherwise limiting the purposes of effect of Section 1(b), Employee Benefits to
which access is otherwise provided to the Executive pursuant to this Section
1(b)(i)(B)(II) will not be required to be made available to the extent
comparable Employee Benefits at substantially similar cost are actually received
by the Executive from another employer during the period following the
Continuation Period until attainment of age sixty-five (65). If and to the
extent that any benefit described in this Section 1(b)(i)(B)(II) is not or
cannot be provided under any policy, plan, program or arrangement of the Company
or any Subsidiary, as the case may be, then the Company will reimburse the
Executive for the difference in costs incurred in obtaining comparable Employee
Benefits coverage on an individual basis and the cost that would have been
incurred by the Executive for group coverage under this Section 1(b)(i)(B)(II).
(B)(III) The Company shall reimburse the Executive
for any costs incurred by the Executive in maintaining life insurance coverage
comparable to that maintained for him by the Company under its group life
insurance program for the period from the Severance Date until the earlier to
occur of:
(X) the date which follows the Severance
Date by the equivalent time period of three (3) years or two (2) years,
controlled by the reason for separation, or
(Y) the date on which the Executive is
covered under any other group life insurance plan;
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(C) in lieu of any benefit otherwise due to him
under the Company's annual bonus plan, the Company shall pay the Executive in a
lump sum an amount equal to (i) the maximum percentage of annual base salary
then payable to the Executive under the Company's bonus plan but in no event
less than sixty percent (60%) of his annual base salary multiplied by (ii) the
number of years for which the Executive is entitled to pay under paragraph
(b)(i)(A) above; provided, however, that in the event that the Severance Date
occurs after the first six (6) full months of the Company's then current fiscal
year, the Company shall pay the Executive an additional amount equal to the
actual bonus which would have been paid to the Executive for said year had he
remained employed throughout said year less the amount of the above-described
lump sum paid to him pursuant to this subparagraph (C) for the first of the
years for which he is entitled to be paid under paragraph (b)(i)(A). The amount
payable to the Executive under this paragraph (b)(i)(C) shall be offset by the
non-compete and non-solicitation fee as defined in Section 2(d)(i) of this
Agreement.
(D) the Company shall reimburse the Executive
for any reasonable costs actually incurred by the Executive for outplacement
services provided by an outplacement consultant mutually agreeable to the
Executive and the Company for a period not to exceed twelve (12) months.
(ii) In the event the Executive refuses to execute or
breaches the Agreement and General Release tendered to the Executive on or about
the Severance Date, or in the event the Executive breaches any of the covenants
contained in Section 2, the Executive acknowledges and agrees that the Company
will cease any payments remaining under Section 2(b)(i) of this Agreement and
that the Executive shall be entitled to no further payments or benefits under
this Agreement.
(iii) The Executive shall have no further right under this
Agreement or otherwise to receive any bonus or other compensation with respect
to the year in which the Severance Date occurs and later years.
(iv) The date of termination of employment without Cause
shall be the date specified in a written notice of termination to the Executive
and the date of resignation for Good Reason shall be the date of receipt by the
Company of written notice of resignation (both such dates hereinafter referred
to as the "Severance Date").
(v) For purposes of this Agreement, "Change in Control"
shall mean:
(A) The Company is merged, consolidated or
reorganized into or with another corporation or other legal person, and as a
result of such merger, consolidation or reorganization less than a majority of
the combined voting power of the then-outstanding securities of such corporation
or person immediately after such transaction are held in the
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aggregate by the holders of Voting Stock (as that term is hereafter defined) of
the Company immediately prior to such transaction;
(B) The Company sells or otherwise transfers all
or substantially all of its assets to another corporation or other legal person,
and as a result of such sale or transfer less than a majority of the combined
voting power of the then-outstanding securities of such corporation or person
immediately after such sale or transfer is held in the aggregate by the holders
of Voting Stock of the Company immediately prior to such sale or transfer;
(C) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report), each as promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), disclosing that (x) any person (as the term "person" is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the beneficial
owner (as the term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange Act) of securities
representing 15% or more of the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors of the
Company ("Voting Stock"), or (y) any person has, during any period, increased
the number of shares of Voting Stock beneficially owned by such person by an
amount equal to or greater than 15% of the outstanding shares of Voting Stock;
provided, however, that transfers of shares of Voting Stock between a person and
the affiliates or associates (as such terms are defined under Rule 12b-2 or any
successor rule or regulation promulgated under the Exchange Act) of such person
shall not be considered in determining any increase in the number of shares of
Voting Stock beneficially owned by such person;
(D) The Company files a report or proxy
statement with the Securities and Exchange Commission pursuant to the Exchange
Act disclosing in response to Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) that a Change in Control of the
Company has occurred or will occur in the future pursuant to any then-existing
contract or transaction; or
(E) If, during any period of two consecutive
years, individuals who at the beginning of any such period constitute the
Directors of the Company cease for any reason to constitute at least a majority
thereof; provided, however, that for purposes of this clause (v) each Director
who is first elected, or first nominated for election by the Company's
stockholders, by a vote of at least two-thirds of the Directors of the Company
(or a committee thereof) then still in office who were Directors of the Company
at the beginning of any such period will be deemed to have been a Director of
the Company at the beginning of such period.
Notwithstanding the foregoing provisions of Sections (C) or (D) unless
otherwise determined in a specific case by majority vote of the Board, a "Change
in Control" shall not be deemed to have occurred for purposes of Sections (C) or
(D) solely because (1) the Company, (2) an entity in which the Company directly
or indirectly beneficially owns 50% or more of the voting securities (a
"Subsidiary"), or (3) any employee stock ownership plan or any other
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employee benefit plan of the Company or any Subsidiary either files or becomes
obligated to file a report or a proxy statement under or in response to Schedule
13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form
or report or item therein) under the Exchange Act disclosing beneficial
ownership by it of shares of Voting Stock, whether in excess of 15% or
otherwise, or because the Company reports that a Change in Control of the
Company has occurred or will occur in the future by reason of such beneficial
ownership.
(c) Certain Additional Payments by the Company. In the event that
this Agreement shall become operative and it shall be determined (as hereafter
provided) that any Payment would be subject to the provisions of Section 4999 of
the Internal Revenue Code of 1986, as amended ("Code") or to any similar tax
imposed by federal, state or local law, or any other revenue system to which the
executive may be subject, or any interest or penalties with respect to that tax
(that tax or those taxes, together with any interest and penalties, may be
hereafter referred to as the "Excise Tax"), then, if the Executive complies in
all substantial respects with the requirements of the Gross-Up Procedure, the
Executive will be entitled to receive an additional payment or payments
(collectively, a "Gross-Up Payment"), as described in the Gross-Up Procedure.
For purposes of this subparagraph (c), "Payment" means any payment made
to the Executive (other than the Gross-Up payments provided for in the Gross-Up
Procedure) or distribution by the Company or any of its affiliates to or for the
benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise pursuant to
or by reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, performance share, performance
unit, stock appreciation right or similar right, supplemental retirement plan
benefits, split dollar insurance agreements, or the lapse or termination of any
restriction on, or the vesting or exercisability of, any of the foregoing.
For purposes of this subparagraph (c), "Gross-Up Procedure" means the
Gross-Up Procedure attached hereto as Appendix A.
2. Secrecy, Non-Solicitation and Non-Competition.
---------------------------------------------
(a) Secrecy. During the Executive's employment with the Company
and for a period of three (3) years after his termination from the Company for
any reason, the Executive covenants and agrees that he will not, except in
performance of the Executive's obligations to the Company, or with the prior
written consent of the Company pursuant to the authority granted by a resolution
of the Board, directly or indirectly, disclose any secret or confidential
information that he may learn or has learned by reason of his association with
the Company or use any such information. The term "secret or confidential
information" includes, without limitation, information not previously disclosed
to the public or to the trade by the Company's management with respect to the
Company's products, facilities and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, products price
lists,
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customer lists, financial information (including the revenues, costs or profits
associated with any of the Company's products), business plans, prospects,
employee or employees, compensation, or opportunities but shall exclude any
information already in the public domain which has been disclosed to the public
during the normal course of the Company's business.
(b) Customer Protection. During the Executive's employment with
the Company and for a period of two (2) years following the termination of the
Executive's employment for any reason, the Executive covenants and agrees that
he will not solicit or attempt to solicit any business from the Company's
customers, including actively sought prospective customers, with whom the
Executive had Material Contact during his employment, for the purpose of
providing products or services competitive with those provided by the Company.
Material Contacts exist between the Executive and each customer or prospective
customers with whom the Company were coordinated or supervised by the Executive,
or about whom the Executive obtained trade secrets or confidential information
as a result of the Executive's association with the Company.
(c) Non-solicitation of Employees. During the Executive's
employment and for a period of one (1) year following the termination of the
Executive's employment for any reason, the Executive covenants and agrees that
he shall not directly or indirectly, on his behalf or on behalf of any person or
other entity; solicit or induce, or attempt to solicit or induce, any person
who, on the date hereof or at anytime during the term of this Agreement, is an
employee of the Company, to terminate his or her employment with the Company,
whether expressed in a written or oral agreement or understanding or is
otherwise an "at-will" employee.
(d) Noncompetition. During the Executive's employment and for a
period of two (2) years following the termination of the Executive's employment
for any reason, the Executive covenants and agrees that he will not, directly or
indirectly, compete against the Company within the United States in the
managerial or executive capacity for another company or entity that designs,
produces, sells, or distributes copper tubing, including, but not limited to,
those companies listed on Appendix B.
(i) In consideration of the promises of Executive
contained in this Agreement, including without limitation in this Paragraph
2(d), the Company shall pay to the Executive a non-compete and non-solicitation
fee equal to two (2) year's salary and bonus as determined in accordance with
Section 1(b)(i)(C), payable in the manner determined by the Company under
Sections 1(b)(i)(A) and 1(b)(i)(C) of the Agreement. The amount otherwise
payable to the Executive under Sections 1(b)(i)(A)and 1(b)(i)(C) of this
Agreement shall be offset by this non-compete and non-solicitation fee.
(e) Equitable Relief. The Executive acknowledges and agrees that
the services performed by him are special, unique and extraordinary in that, by
reason of the Executive's employment, the Executive may acquire confidential
information and trade secrets concerning the operation of the Company, or that
the Executive may have contact with or obtain knowledge of the Company's
customers or prospects, the use or disclosure of which could cause the
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Company substantial loss and damages, which could not be readily calculated and
for which no remedy at law would be adequate. Accordingly, the Executive
acknowledges and agrees that the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining the
Executive from engaging in activities prohibited by this Section 2 or such other
relief as may be required to specifically enforce any of the covenants in this
Section 2. The Executive acknowledges and agrees that the Company shall be
entitled to its attorneys' fees and court costs should the Company pursue legal
action to enforce its rights under this section.
3. Amendment; Waiver. This Agreement may not be modified, amended or
waived in any manner except by an instrument in writing signed by both parties
hereto, provided, however, that any such modification, amendment or waiver on
the part of the Company shall have been previously approved by the Board. The
waiver by either party of compliance with any provision of this Agreement by the
other party shall not operate or be construed as a waiver of any other provision
of this Agreement, or of any subsequent breach by such party of a provision of
this Agreement.
4. Withholding. Payments to the Executive of all compensation
contemplated under this Agreement shall be subject to all applicable legal
requirements with respect to the withholding of taxes and similar deductions.
5. Governing Law. All matters affecting this Agreement, including the
validity thereof, are to be governed by, and interpreted and construed in
accordance with, the laws of the State of Alabama applicable to contracts
executed in and to be performed in that State. Nothing in this agreement shall
affect the rights of either party under state or federal laws affecting
employment.
6. Notices. Any notice hereunder by either party to the other shall be
given in writing by personal delivery or certified mail, return receipt
requested. If addressed to the Executive, the notice shall be delivered or
mailed to the Executive at the address first set forth below, or if addressed to
the Company, the notice shall be delivered or mailed to 000 Xxxxxxx Xxxxxx Xxxx,
Xxxxx 0000, Xxxxxxxxxx, Xxxxxxx 00000, or such address as the Company or the
Executive may designate by written notice at any time or from time to time to
the other party. A notice shall be deemed given, if by personal delivery, on
the date of such delivery or, if by certified mail, on the date shown on the
applicable return receipt.
7. Supersedes Previous Agreements. This Agreement supersedes all prior or
contemporaneous negotiations, commitments, agreements and writings with respect
to the subject matter hereof, all such other negotiations, commitments,
agreements and writings will have no further force or effect, and the parties to
any such other negotiation, commitment, agreement or writing will have no
further rights or obligations thereunder.
8. Severability. The parties agree that if any part of this Agreement is
found to be illegal or unenforceable, including, but not limited to, the
geographic, temporal, or activity restrictions
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contained in Section 2, the court should delete or modify the illegal or
unenforceable provision(s) hereby leaving the remaining or modified provision(s)
fully enforceable.
9. Counterparts. This Agreement may be executed by either of the parties
hereto in counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument.
10. Headings. The headings of sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
IN WITNESS WHEREOF, the Company has caused the Agreement to be signed
by its officer pursuant to the authority of its Board, and the Executive has
executed this Agreement, as of the day and year first written above.
WOLVERINE TUBE, INC.
By:_________________________________________
Name: Xxxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
EXECUTIVE
____________________________________________
Name: Xxxxx X. Xxxxxx
Executive's Address:
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
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APPENDIX A
GROSS-UP PROCEDURE
(a) If a Change in Control of the Company occurs, or a termination
of employment occurs without Cause (as defined in the Agreement), any payment or
benefit provided by the Company or any of its affiliates to or for the benefit
of the Executive, whether paid or payable or provided or to be provided pursuant
to the terms of the Agreement or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, (including without limitation
any stock option, performance share, performance unit, stock appreciation right
or similar right, supplemental retirement plan benefits, split dollar insurance
agreements, or the lapse of termination of any restriction on, or the vesting or
exercisability of, any of the foregoing) (a "Payment"), would be subject to:
(i) the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code") (or any successor provision) by
reason of being considered "contingent on a change in ownership or
control" of the Company, within the meaning of Section 280G of the Code
(or any successor provision);
(ii) any similar tax or any future tax imposed upon Payments
resulting from a termination without Cause whether or not a Change in
Control has occurred, imposed by federal, state or local law, or any
other revenue system to which the Executive may be subject, or
(iii) any interest or penalties with respect to (i) or (ii) ((I),
(ii) or those taxes, together with any interest and penalties, may be
hereafter referred to as the "Excise Tax"),
then, if the Executive complies with the requirements of this Appendix A, the
Executive will be entitled to receive an additional payment or payments
(collectively, a "Gross-Up Payment"); provided, however, that no Gross-Up
Payment will be made with respect to the Excise Tax, if any, attributable to (i)
any incentive stock option, as defined by Section 422 of the Code ("ISO")
granted prior to _________________________, 2002, or (ii) any stock appreciation
or similar right, whether or not limited, granted in tandem with any ISO
described in clause (i). The Gross-Up Payment will be in an amount such that the
Executive will be in the same position as if there was no Excise Tax imposed
upon the Payment. The Gross-Up Payment shall only reimburse the Executive for
income taxes that result from the Gross-Up Payment itself but not for income
taxes that would be normally incurred if the Excise Tax was not triggered.
(b) Subject to the provisions of subparagraph (f) below, all
determinations required to be made under this Appendix A, including whether an
Excise Tax is payable by the Executive, the amount of that Excise Tax, whether a
Gross-Up Payment is required to be paid by the Company to the Executive and the
amount of that Gross-Up Payment, if any, will be made by a
nationally recognized accounting firm (the "Accounting Firm") selected by the
Executive in the Executive's sole discretion. The Executive will direct the
Accounting Firm to submit its determination and detailed supporting calculations
to both the Company and the Executive within thirty (30) calendar days after the
Executive's date of termination, if practicable, upon or following the
triggering of the Change in Control. If the Accounting Firm determines that any
Excise Tax is payable by the Executive, the Company will pay the required
Gross-Up Payment to the Executive within five (5) business days after receipt of
the determination and calculations with respect to any Payment to the Executive.
If the Accounting Firm determines that no Excise Tax is payable by the
Executive, it will, at the same time as it makes that determination, furnish the
Company and the Executive in opinion that the Executive has substantial
authority not to report any Excise Tax on his federal, state or local income or
other tax return. As a result of the uncertainty in the application of Section
4999 of the Code (or any successor provision) and the possibility of similar
uncertainty regarding applicable state or local tax law at the time of any
determination by the Accounting Firm, it is possible that Gross-Up Payments
which will not have been made by the Company should have been made (an
"Underpayment"), consistent with the calculations required to be made under this
Appendix A. If the Company exhausts or fails to pursue its remedies pursuant to
subparagraph (f) and the Executive subsequently is required to make a payment of
any Excise Tax, the Executive will direct the Accounting Firm to determine the
amount of the Under payment that has occurred and to submit its determination
and detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment will be promptly paid by the Company
to, or for the benefit of, the Executive within five (5) business days after
receipt of the determination and calculations.
(c) The Company and the Executive will each provide the Accounting
Firm access to and copies of any books, records and documents in the possession
of the Company or the Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by subparagraph (b). Any determination by the Accounting Firm as to
the amount of the Gross-Up Payment will be binding upon the Company and the
Executive.
(d) The federal, state and local income or other tax returns filed
by the Executive will be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive will make proper payment of the amount of any
Excise Payment, and at the request of the Company, provide to the Company just
verification evidencing that payment. If prior to the filing of the Executive's
federal income tax return, or corresponding state or local return, if relevant,
the Accounting Firm determines that the amount of the Gross-Up payment should be
reduced, the Executive shall within five (5) business days pay to the Company
the amount of that reduction.
(e) The fees and expenses of the Accounting Firm for its services
in connection with the determinations and calculations contemplated by
subparagraph (b) will be borne by the Company. If those fees and expenses are
initially paid by the Executive, the Company will
reimburse the Executive the full amount of those fees and expenses within five
(5) business days after receipt from the Executive of a statement for them and
reasonable evidence of his payment of them.
(f) The Executive will notify the Company in writing of any claim
by the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by the Company of a Gross-Up Payment. That
notification will be given as promptly as practicable but not later than thirty
(30) business days after the Executive actually receives notice of that claim
and the Executive will further apprise the Company of the nature of that claim
and the date on which that claim is requested to be paid (in each case, to the
extent known by the Executive). The Executive will not pay that claim prior to
the earlier of (i) the expiration of the thirty (30) calendar-day period
following the date on which they give notice to the Company or (ii) the date
that any with respect to that claim is due. If the Company notifies the
Executive in writing prior to the expiration of that period that is desires to
contest the claim, the Executive will:
(A) provide the Company with any written records or
documents in his possession relating to that claim reasonably requested by the
Company;
(B) take that action in connection with contesting the
claim as the Company reasonably requests in writing from time to time,
including, without limitation accepting legal representation with respect to
that claim by an attorney competent in respect to the subject matter and
reasonably selected by the Company and mutually agreeable to the Executive;
(C) cooperate with the Company in good faith in order
effectively to contest that claim; and
(D) permit the Company to participate in any proceedings
relating to that claim; provided, however, that the Company will bear and pay
directly all attorney fees, costs and expenses (including, but not limited to,
interest and penalties) incurred in connection with that contest and will
indemnify and hold harmless the Executive, on an after-tax basis, for and
against any Excise Tax or income tax, including interest and penalties with
respect to the Excise Tax, imposed as a result of that representation and
payment of attorney fees, costs and expenses. Without limiting the foregoing
provisions of this subparagraph (f), the Company will control all proceedings
taken in connection with the contest of any claim contemplated by this
subparagraph (f) and, after consultation with Executive and exercising
reasonable and prudent business practices, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of that claim (provided, however, that the Executive may
participate in them at his own cost and expense) and may, at its option, 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 will prosecute that contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the company will determine;
provided, however, that if the Company directs the Executive to pay the tax
claimed and xxx for a refund, the Company will advance the amount of that
payment to the
Executive on an interest-free basis and will indemnify and hold harmless the
Executive, on an after-tax basis, from any Excise Tax or income or other tax or
imputed income from the interest-free advance, including, but not limited to,
interest or penalties with respect to the Excise Tax, imposed with respect to
that advance; and provided further, however, that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which the contested amount is claimed to be due is
limited solely to that contested amount. Furthermore, the Company's control of
any contested claim will be limited to issues with respect to which a Gross-Up
Payment would be payable pursuant to this Appendix A and the Executive will 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.
(g) The Company agrees that it will maintain any information
provided to it by the Executive or his agents, including but not limited to that
described in paragraph (f) above, in strict confidence, and will disclose same
only in accordance with this Agreement and/or as required by applicable law.
APPENDIX B
1. Cerro Copper Products Company, Inc.
2. Outokumpu American Brass Company
3. Industrias Nacobre S.A. de C.V.
4. Xxxx Corporation
5. Xxxxxxx Industries, Inc.
6. Kobe Copper Products, Inc.
7. National Copper
8. Xxxxxxx
9. Hitachi, Ltd.
10. Trefimetaux
11. Reading Tube Corporation
12. Amcast
13. NIBCO
14. High Performance Tube
15. Commercial Metals Company
Reference to the above companies shall incorporate any related companies
thereto, including, but not limited to, all parent companies, subsidiary
companies, majority-owned companies and joint ventures.
