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Exhibit 10(h)
INCOME PROTECTION AGREEMENT
THIS INCOME PROTECTION AGREEMENT (this "Agreement") is made as of the
_____ day of December, 1996, by and between INSILCO CORPORATION, a Delaware
corporation (together with any and all "Successors" (as defined herein) of
Insilco Corporation, collectively, the "Company"), and (the "Executive").
WHEREAS, the Executive is currently employed by the Company; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it would be in the best interests of the Company and its
shareholders to entertain and consider a proposal or proposals regarding a
possible sale of all or a majority of the stock or assets of the Company; and
WHEREAS, the Board has determined that it would be in the best
interests of the Company to maintain continuity in the management of the
Company's business in contemplation of such a sale; and
WHEREAS, the Board desires to provide the Executive with an incentive
to remain in the employ of the Company pending such a possible sale of the
Company;
NOW, THEREFORE,for and in consideration of the premises and the mutual
covenants contained herein, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
(a) An "Affiliate" of any specified Person means any
Subsidiary of such Person and any other Person controlled by, controlling, or
under common control with such specified Person. For purposes of this
definition, "control," when used with respect to any specified Person, means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract, or
otherwise.
(b) The "Annual Target Bonus" of the Executive means the
annual target bonus established for the Executive for a particular year under
the Management Incentive Bonus Plan maintained by the Company.
(c) The "Base Salary" of the Executive means the
Executive's annual base salary payable in accordance with the regular payroll
practices of the Company.
(d) "Benefits" means any pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plan, all medical, vision,
dental, or other health plans, all life insurance plans, and all other
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employee benefit plans or fringe benefit plans, including "employee benefit
plans," as that term is defined in Section 3(3) of ERISA, and any and all other
written or unwritten employee plans, policies, practices, programs,
arrangements, or agreements, adopted, maintained, or sponsored in whole or in
part by, or contributed to by the Company or any of its Subsidiaries for the
benefit of the directors, officers, employees, agents, or retirees of the
Company or any of its Subsidiaries, or any of their respective spouses or
dependents, or any other beneficiaries.
(e) "Cause" means: (i) the conviction of the Executive
of any felony; (ii) any act of fraud, embezzlement, or willful dishonesty by
the Executive in relation to the business or affairs of the Company; (iii) any
other illegal conduct on the part of the Executive that is detrimental to the
best interests of the Company; (iv) the deliberate and gross misconduct by the
Executive in the performance of, or the deliberate and gross neglect by the
Executive of, his duties and responsibilities as an officer or employee of the
Company; or (v) a material breach by the Executive of his obligations under
this Agreement or under any other agreement between the Executive and the
Company relating to his Employment, including, but not limited to, any
employment, confidentiality, or noncompetition agreement; provided, however,
that no action or failure to act by the Executive will constitute "Cause"
hereunder if (A) the Executive believed in good faith that such action or
failure to act was in the best interest of the Company or its shareholders, or
(B) such action or failure to act occurred at any time after the occurrence of
any event that constitutes Good Reason.
(f) A "Change in Control" means any of the following:
(i) the acquisition, directly or indirectly, by
any Person or group of Persons acting in concert within any
twelve-month period of securities of the Company representing an
aggregate of 25 percent or more of the combined voting power of the
Company's then outstanding securities, provided that, upon the
consummation of such acquisition, such Person or group of Persons
holds a greater percentage of the combined voting power of the
Company's then outstanding securities than any other Person; or
(ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board
cease for any reason to constitute at least a majority thereof before
the end of such period, unless the election of each director who was
not a director at the beginning of such period was approved in advance
by directors representing at least two-thirds of the directors then in
office who were directors at the beginning of such period; or
(iii) consummation of (A) a merger, consolidation,
or other business combination of the Company with any other Person,
other than a merger, consolidation, or business combination which
would result in the common stock of the Company outstanding
immediately prior thereto continuing to represent, or being converted
into common stock of
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the surviving entity or a parent or Affiliate thereof representing, at
least 60 percent of the common stock of the Company or such surviving
entity or parent or Affiliate thereof outstanding immediately after
such merger, consolidation, or business combination, or (B) a plan of
complete liquidation of the Company, or (C) an agreement for the sale
or disposition by the Company of a majority (in value) of the
Company's assets; or
(iv) the occurrence of any other event or
circumstance which is not covered by (i) through (iii) above which the
Board determines affects control of the Company and, in order to
implement the purposes of this Agreement as set forth above, adopts a
resolution that such event or circumstance constitutes a Change in
Control for the purposes of this Agreement;
provided, however, that for purposes of determining whether a Change in Control
has occurred on any given date, a partner in Water Street Corporate Recovery
Fund I, Ltd. will be deemed to own that number of voting shares of the Company
determined by multiplying such partner's percentage partnership interest in
such partnership as of such date by the number of voting shares of the Company
owned by such partnership as of such date.
(g) "COBRA" means the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
(h) The "Code" means the Internal Revenue Code of 1986,
as amended.
(i) "Disability" means the Executive's probable and
expected inability, as a result of physical or mental incapacity, to
substantially perform his duties for the Company on a full-time basis for a
period of six months. The determination of whether the Executive suffers a
Disability shall be made by a physician acceptable to both the Executive (or
his personal representative) and the Company.
(j) The "Employment" of the Executive means the regular
salaried employment of the Executive with the Company, but does not include the
engagement of the Executive as an independent consultant or other independent
contractor.
(k) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
(l) An "Excess Severance Payment" means an "excess
parachute payment" as defined in Section 280g(b)(1) of the Code.
(m) "Good Reason" means the occurrence of any of the
following events at any time prior to the Termination Date: (i) a material
reduction in the Executive's Base Salary; (ii) the elimination of, or a
material reduction in, any Benefits provided to the Executive, unless a
substitute
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Benefit that is economically equivalent to the eliminated or reduced Benefit is
provided to the Executive; (ii) a material change in the Executive's position
(including status, office, title, reporting relationships, or working
conditions), responsibilities, authority, or duties; (iii) the relocation of
the Executive's office location as assigned to the Executive by the Company to
a location more than 50 miles from the Executive's office location as of the
date of this Agreement; or (iv) the failure of any Successor to assume, either
by an enforceable agreement or by operation of law, all of the Company's
liabilities and obligations to the Executive under this Agreement.
(n) A "Person" means any individual, corporation,
partnership, limited liability company, joint venture, association, joint-stock
company, group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended), trust, unincorporated
organization, or government or any agency or political subdivision thereof.
(o) "Reasonable Compensation" shall have the same meaning
as provided in Section 280g(b)(4) of the Code.
(p) A "Severance Payment" means a "parachute payment" as
that term is defined in Section 280g(b)(2) of the Code.
(q) The "Severance Period" means the period commencing on
the Termination Date and ending on the last day of the month in which the first
anniversary of the Termination Date occurs.
(r) A "Subsidiary" of a Person means (i) a corporation,
50 percent or more of the equity ownership and outstanding voting stock of
which is owned, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person or by such Person and one or more other
Subsidiaries of such Person, or (ii) if such Person is not a corporation, an
unincorporated operating division of such Person.
(s) A "Successor" means any successor in interest to the
Company by virtue of a Change in Control, a Sale, or any other merger,
consolidation, or other business combination involving the Company.
(t) The "Termination Date" means the date of a termination
of the Executive's Employment.
2. TERM. The term of this Agreement shall be for an initial
three-year period commencing on the date hereof, and shall be automatically
renewed at the end of the first year of such initial three-year period and
annually thereafter, in each such instance for an additional one-year period
following the expiration of such initial three-year period or prior extensions
thereof, as applicable, unless either party shall give the other party written
notice of its desire not to renew this Agreement for an additional one-year
period at any time prior to the end of such first year or applicable subsequent
year.
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3. BENEFITS TO BE PROVIDED ON A TERMINATION OF EMPLOYMENT. If,
at any time during the term of this Agreement, (i) the Executive's Employment
is terminated by the Company other than for Cause or by reason of the
Executive's death or Disability, (ii) the Executive's Employment is terminated
by the Executive with Good Reason, or (iii) the Executive's Employment is
terminated by the Executive, whether with or without Good Reason, if such
termination occurs at any time within the period commencing on the date that is
six months after the occurrence of a Change in Control and ending on the date
that is one year after the occurrence of such Change in Control, then, and in
any such event, the Company shall pay or provide to the Executive the following
compensation and other benefits, which shall be in addition to any accrued
vacation pay and any and all compensation otherwise payable to the Executive,
including, but not limited to, a prorated portion of any and all bonuses
payable for or attributable to any period (or part of a period) prior to the
Termination Date:
(a) Salary. The Company shall pay to the Executive an
amount equal to the amount of the Executive's Base Salary in effect immediately
prior to the Termination Date, which shall be payable, at the Executive's
option, (i) in a lump sum on the Termination Date, or (ii) in twelve equal
monthly installments, on the first day of each month, commencing with the month
immediately following the Termination Date.
(b) Bonuses. The Company shall pay to the Executive an
amount equal to the Annual Target Bonus for the Executive for the year in which
the Termination Date occurs (or for the prior year if such Annual Target Bonus
for the Executive has not been established for such year), but in any event not
less than the amount of the Executive's Annual Target Bonus for 1996, which
shall be payable, at the Executive's option, (i) in a lump sum on the
Termination Date, or (ii) in six equal monthly installments, on the first day
of each month, commencing with the thirteenth month immediately following the
Termination Date. The payment of such bonus amount shall be considered to be
"performance based" for purposes of Section 280g of the Code.
(c) Benefit Plans. All Benefits provided to the
Executive prior to the Termination Date shall be continued by the Company for
and during the Severance Period. Without in any way limiting the generality of
the foregoing, the following specific provisions shall apply:
(i) Health and Life Insurance Coverage. The
health and life insurance benefits coverage provided to the Executive
immediately prior to the Termination Date shall be continued during
the Severance Period at the same levels and in the same manner as if
the Executive's Employment had not terminated until the end of the
Severance Period. Any additional coverages that the Executive had in
effect immediately prior to the Termination Date, including dependent
coverage, will also be continued for such period at the same levels
and on the same terms as provided to the Executive immediately prior
to the Termination Date, to the extent permitted by the applicable
policies or contracts. If the Executive was required to pay any
portions of premiums or other costs for any such coverages prior to
the Termination Date, the Executive shall be required to continue to
pay such amounts, at the same
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levels, in order to continue such coverages after the Termination
Date. If the terms of any benefit plan referred to in this Section do
not permit continued participation by the Executive, then the Company
will arrange for other coverage at its expense providing substantially
similar benefits as it can find for other officers in similar
positions. Benefits under COBRA shall be made available to the
Executive following the end of the Severance Period as though the
Executive had terminated his Employment on the last day of the
Severance Period.
(ii) Employee Retirement Plans. To the extent
permitted by the applicable plan, the Executive will be fully vested
and will be entitled to continue to participate, consistent with past
practices, in all employee retirement plans maintained by the Company
in effect as of the date of the termination of his Employment. The
Executive's participation in such retirement plans shall continue for
and during the Severance Period (at the end of which period the
Executive will be considered to have terminated his employment within
the meaning of such plans) and the compensation payable to the
Executive under subsections (a) and (b) above shall be treated (unless
otherwise excluded) as compensation under the plan. If full vesting
and continued participation in any plan is not permitted, the Company
shall pay to the Executive and, if applicable, his beneficiary, a
supplemental benefit equal to the excess of (A) the benefit the
Executive would have been paid under such plan if he had been fully
vested and had continued to be covered for the Severance Period as if
the Executive had earned compensation described under subsections (a)
and (b) above and had made contributions sufficient to earn the
maximum matching contribution, if any, under such plan (less any
amounts he would have been required to contribute), over (B) the
benefit actually payable to or on behalf of the Executive under such
plan. For purposes of determining the benefit under item (A) in the
preceding sentence, contributions deemed to be made under a defined
contribution plan will be deemed to be invested in the same manner as
the Executive's account under such plan at the Termination Date. The
Company shall pay such supplemental benefits (if any) in a lump sum
within 30 days after the Termination Date or as soon thereafter as any
required calculations or other determinations can be made.
(d) Effect of Lump Sum Payment. Any lump sum payment
made under subsection (a) or (b) above shall not alter the amounts the
Executive is entitled to receive under the Benefits described in subsection (c)
above. Benefits under such plans shall be determined as if the Executive had
remained employed and received such payments for and during the Severance
Period, unless the terms of the particular plans or applicable law specifically
prohibit such treatment of such payments.
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(e) Stock Options. Any and all stock options or stock
appreciation rights granted to the Executive prior to the Termination Date
shall become immediately and fully vested on the Termination Date.
(f) Indemnity. The Executive shall be entitled to the
benefits of the indemnity currently applicable to the Executive, if any, as
provided by the Company's articles of incorporation or bylaws or otherwise.
Any changes to the articles of incorporation or bylaws reducing the indemnity
granted to officers shall not affect the rights granted hereunder. The Company
may not reduce these indemnity benefits provided to the Executive hereunder
without the written consent of the Executive.
(g) Outplacement Services. The Company shall provide
to the Executive outplacement assistance consistent with past practices, with a
value of not less than $10,000, provided, however, that the Company shall not
be required to pay to the Executive any amount of cash in lieu of actual
outplacement services if such services are not provided for any reason.
(h) Effect of Death or Disability. The benefits
payable or to be provided under this Agreement shall continue in the event of
the Executive's death and shall be payable to his estate or named beneficiary.
In the case of the Disability of the Executive, any payments received from a
disability benefit will not be reduced by any payments paid or payable under
the terms of this Agreement.
(i) Limitation on Amount. Notwithstanding anything in
this Agreement to the contrary, any benefits payable or to be provided to the
Executive by the Company or its Affiliates, whether pursuant to this Agreement
or otherwise, which are treated as Severance Payments shall be modified or
reduced in the manner provided in subsection (j) below to the extent necessary
so that the benefits payable or to be provided to the Executive under this
Agreement that are treated as Severance Payments, as well as any payments or
benefits provided outside of this Agreement that are so treated, shall not
cause the Company to have paid an Excess Severance Payment. In computing such
amount, the parties shall take into account all provisions of Section 280g of
the Code, including making appropriate adjustments to such calculation for
amounts established to be Reasonable Compensation.
(j) Modification of Amount. In the event that the
amount of any Severance Payments that would be payable to or for the benefit of
the Executive under this Agreement must be modified or reduced to comply with
this Section 3, the Executive shall direct which Severance Payments are to be
modified or reduced.
(k) Avoidance of Penalty Taxes. This Section 3 shall
be interpreted so as to avoid the imposition of excise taxes on the Executive
under Section 4999 of the Code or the disallowance of a deduction to the
Company pursuant to Section 280g(a) of the Code with respect to amounts payable
under this Agreement or otherwise.
(l) Additional Limitation. In addition to the limits
otherwise provided in this Section 3, to the extent permitted by law, the
Executive may in his sole discretion elect to reduce any
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payments he may be eligible to receive under this Agreement to prevent the
imposition of excise taxes on the Executive under Section 4999 of the Code.
(m) No Obligation to Fund. The agreement of the
Company to make payments to the Executive hereunder shall represent solely the
unsecured obligation of the Company, except to the extent the Company, in its
sole discretion, elects in whole or in part to fund its obligations under this
Agreement pursuant to a trust arrangement or otherwise.
4. TAX WITHHOLDING. The Company may withhold or cause to be
withheld from any benefits payable under this Agreement all federal, state,
city, or other taxes that are required to be withheld pursuant to any law or
governmental regulation.
5. ASSIGNABILITY; BINDING EFFECT.
(a) This Agreement is personal to the Executive and,
without the prior written consent of the Company, shall not be assignable by
the Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be binding on and enforceable
by the Executive's legal representatives and permitted successors and assigns.
(b) The rights of the Company under this Agreement may be
assigned or transferred by the Company, provided that the assignee or
transferee assumes all the liabilities, obligations, and duties of the
assignor, as contained in this Agreement, either contractually or as a matter
of law. This Agreement shall inure to the benefit of and be binding on and
enforceable by any Successors.
6. NOTICES. Any and all notices and other communications
hereunder shall be in writing and shall be given, if by the Executive, by
facsimile transmission to the facsimile number for the Company set forth below
and if by either party, by personal delivery or by certified mail, return
receipt requested, postage prepaid, addressed as follows:
(a) If to the Company, to:
Insilco Corporation
000 Xxxxx Xxxxx Xxxxx
Xxxxx Xxxxx
Xxxxxx, Xxxx 00000
Facsimile Number: (000) 000-0000
(b) If to the Executive, to:
Xxxxx X. Xxxxxx
0000 Xxx Xxxx Xxxxxxx Xx.
Xxxxxxxx, Xxxx 00000
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Either party may change its address or facsimile number for delivery of such
notice from time to time by giving written notice thereof to the other party in
accordance with the terms of this Section.
7. AMENDMENTS. This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto.
8. SEVERABILITY. If any provision of this Agreement shall be
held invalid in whole or in part, such invalidity shall in no way affect the
rest of such provision not held so invalid, and the rest of such provision,
together with all provisions of this Agreement, shall to the full extent
consistent with law continue in full force and effect.
9. WAIVER. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted in this Agreement or of the future performance of any such
term or condition or of any other term or condition of this Agreement, unless
such waiver is contained in a writing signed by the party making the waiver.
10. APPLICABLE LAW. This Agreement has been executed and
delivered in the State of Ohio and its validity, interpretation, performance,
and enforcement shall be governed by the laws of Ohio, without regard to
principles of conflicts of laws.
11. ENTIRE AGREEMENT. This Agreement represents the final
agreement between the parties relative to the subject matter hereof and may not
be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no unwritten agreements between the
parties relative to the subject matter of this Agreement.
12. TITLE; REFERENCES. The titles of the Sections and
subsections of this Agreement are for reference only and are not to be
considered in construing this Agreement. References herein to Sections or
subsections are to Sections or subsections of this Agreement unless otherwise
specified.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
INSILCO CORPORATION
By: ______________________________
Xxxxxx X. Xxxxxxx, President
__________________________________
Xxxxx X. Xxxxxx
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