Exhibit (10)
KEY MANAGEMENT SEVERANCE AGREEMENT
This Severance Agreement (the "Agreement") is made as of November 24,
1998 by and between XXXXX CORNING, a Delaware corporation (the "company"), and
Xxxxxxx X. Xxxxxx, an officer of the Company ("Executive").
WHEREAS the Company and Executive have previously entered into a
Severance Agreement dated as of April 4, 1997 (the "Prior Agreement")
providing for certain benefits to be conferred upon Executive under
specified circumstances in the event that Executive's employment is
terminated by the Company on the terms and conditions set forth
therein, and:
WHEREAS the Compensation committee of the Board of Directors of the
Company (the "Committee") has approved a new severance agreement to provide
Executive with certain additional protections and to conform the terms of such
agreement to the current policy of the Company regarding an officer's
entitlement to pay, benefits and privileges on the termination of his
employment;
NOW THEREFORE, the parties hereto agree as follows:
1. Termination Absent a Change of Control.
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a) If, prior to a Change of Control (as defined in Paragraph 7(c) below), (i)
the Company terminates Executive's employment for any reason other than
Permanent Total Disability or Cause (as defined in paragraphs 7(e) and 7(b)
(1)&(2), respectively, below), or (ii) Executive voluntarily terminates his
employment under circumstances involving a Constructive Termination (as
defined in paragraph 7(d), below), Executive will be entitled to the
following compensation, provided that Executive executes a Release and
Non-Competition Agreement satisfactory to the Company:
1) Base salary earned and as yet unpaid through the effective date of
termination; and
2) Two years' Base Pay (as defined in paragraph 7(a) below); and
3) Two times Executive's Separation Incentive payment (as defined in
paragraph 7(f) below); and
4) Incentive pay as yet unpaid from the prior fiscal year and Incentive
Pay for the fiscal year of termination, prorated for the period of
Executive's actual employment prior to termination; and
5) The greater of (i) Executive's vested Cash Balance Pension Benefit or
(ii) an amount equal to Executive's vested Pension Benefit under the
Company's Salaried Employees' (Final Average) Retirement Plan plus a
pension supplement calculated as though Executive had been credited
with three additional years of service under the Plan and had Executive
been three years older at the date of termination.
b) If, prior to a Change of control, the Company terminates Executive's
employment for Cause (as defined in paragraph 7(b)(3), below), Executive
will only be entitled to base salary earned and as yet unpaid through the
effective date of termination and Executive's vested Cash Balance Pension
Benefit or vested Final Average Plan Pension Benefit, whichever is greater,
UNLESS, (i) the Company exercises its discretion to award Executive (in
addition to the aforementioned base salary and vested pension amounts) some
portion of the following compensation, based on effort expended and results
obtained to date and (ii) Executive executes a Release and Non-Competition
Agreement satisfactory to the Company:
1) Up to but no more than Twelve months' Base pay (as defined in paragraph
7(a) below); and
2) Up to but no more than one times Executive's Separation Incentive
Payment (as defined in paragraph 7(f) below); and
3) Up to but no more than the amount of Incentive Pay as yet unpaid from
the prior fiscal year.
c) The compensation payable under paragraph 1(a) or 1(b), above, shall be paid
as soon as practicable after Executive signs, returns and does not revoke
the requisite Release and Non-Competition Agreement.
d) In the event of a termination of Executive's employment under the
circumstances described in paragraph 1(a) above:
1) All stock options previously awarded to Executive shall, to the
extent not already vested, immediately vest, and shall be
exercisable (subject to applicable blackout restrictions) for up
to six months following the date of termination or the original
expiration date, whichever is sooner.
2) All shares of restricted stock previously awarded to Executive
shall, to the extent not already vested, immediately vest and be
payable.
3) All outstanding but unearned performance shares shall be
forfeited.
4) All of Executive's non-qualified deferred compensation or
retirement benefits, if any, accrued through the date of
termination under any non-qualified deferred compensation plan or
arrangement shall immediately vest and be payable, to the extent
permissible under the terms of such plan or arrangement.
e) In the event of a termination of Executive's employment under the
circumstances described in paragraph 1(b) above:
1) All stock options previously awarded to Executive which are
exercisable on the date of termination shall be exercisable
(subject to applicable blackout restrictions) for up to six months
following the date of termination or the original expiration date,
whichever is sooner.
2) All unvested shares of restricted stock and all outstanding but
unearned performance shares previously awarded to Executive shall
be forfeited.
3) All of Executive's non-qualified deferred compensation or
retirement benefits, if any, accrued and vested through the date
of termination under any non-qualified deferred compensation plan
or arrangement shall be payable, to the extent permissible under
the terms of such plan or arrangement.
f) If Executive's employment ends under circumstances described in paragraph
1(a) above as a result of the sale by the Company of a business unit,
division or facility, payments will be made under this paragraph 1 only if
Executive is not offered a substantially equivalent position with the
Company or with the new owner of the business (without regard to whether
Executive accepts such a position). If Executive receives and accepts a
suitable offer from the new owner of the business and is subsequently
terminated within one year of the closing date of the sale under
circumstances that would result in payment of benefits under this paragraph
1(a), Executive will
be treated as though he had been terminated by the Company and receive the
payments provided for in this Agreement, less any amounts or benefits
provided by the new owner in connection with Executive's termination.
2. Termination On or After a Change of Control.
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a) If, within a two-year period after a Change of Control, (i) the Company (or
any successor) terminates Executive's employment for any reason other than
Permanent Total Disability or Cause (as defined in paragraphs 7(e) and
7(b)(1)&(2), respectively, below), or (ii) Executive voluntarily terminates
his employment under circumstances involving a Constructive Termination,
Executive will be entitled to the following compensation, provided that
Executive executes a Release and Non-Competition Agreement satisfactory to
the Company:
1) Base salary earned and as yet unpaid through the effective date
of termination; and
2) Two year's Base Pay; and
3) Two times Executive's Separation Incentive Payment; and
4) Incentive Pay as yet unpaid from the prior fiscal year and Target
Level Incentive Pay (as defined in paragraph 7(h) below) for the
fiscal year of termination, prorated for the period of Executive's
actual employment prior to termination; and
5) The greater of (i) Executive's vested Cash Balance Pension Benefit
or (ii) an amount equal to Executive's vested Pension Benefit
under the Company's Salaried Employees' (Final Average) Retirement
Plan plus a pension supplement calculated as though Executive had
been credited with three additional years of service under that
Plan and had Executive been three years older at the date of
termination.
b) If, within a two-year period after a Change of Control, the
Company (or any successor) terminates Executive's employment for Cause
(as defined in paragraph 7(b)(3), below), Executive will only be entitled
to base salary earned and as yet unpaid through the effective date of
termination and Executive's vested Cash Balance Pension Benefit or
vested Final Average Plan Pension Benefit, whichever is greater, UNLESS,
(i) the Company exercises its discretion to award Executive (in
addition to the aforementioned base salary and vested pension amounts)
some portion of the following compensation, based on effort expended
and results obtained to date and (ii) Executive executes a Release and
Non-Competition Agreement satisfactory to the Company:
1) Up to but no more than Twelve months' Base Pay (as defined in
paragraph 7(a) below); and
2) Up to but no more than one times Executive's Separation
Incentive Payment (as defined in paragraph 7(f) below); and
3) Up to but no more than the amount of Incentive pay as yet unpaid
from the prior fiscal year.
c) The compensation payable under paragraphs 2(a) or 2(b), above, will be paid
as soon as practicable after Executive signs, returns and does not revoke
the requisite Release and Non-Competition Agreement.
d) In the event of a termination of Executive's employment under the
circumstances described in paragraph 2(a) above:
1) All stock options previously awarded to Executive shall, to the
extent not already vested, immediately vest, and shall be
exercisable (subject to applicable blackout restrictions) for up
to six months following the date of termination or the original
expiration date, whichever is sooner.
2) All shares of restricted stock previously awarded to Executive
shall, to the extent not already vested, immediately vest and be
payable.
3) All outstanding but unearned performance shares shall be
forfeited.
4) All of Executive's non-qualified deferred compensation or
retirement benefits, if any, accrued through the date of
termination under any non-qualified deferred compensation plan or
arrangement shall immediately vest and be payable, to the extent
permissible under the terms of such plan or arrangement.
e) In the event of a termination on Executive's employment under the
circumstances described in paragraph 2(b) above:
1) All stock options previously awarded to Executive which are
exercisable on the date of termination shall be exercisable
(subject to applicable blackout restrictions) for up to six months
following the date of termination or the original expiration date,
whichever is sooner.
2) All unvested shares of restricted stock and all outstanding but
unearned performance shares previously awarded to Executive shall
be forfeited.
3) All of Executive's non-qualified deferred compensation or
retirement benefits, if any, accrued and vested through the date
of termination under any non-qualified deferred compensation plan
or arrangement shall be payable, to the extent permissible under
the terms of such plan or arrangement.
f) The Compensation Committee of the Board of Directors, in its sole
discretion, may determine that no Change of Control or Potential Change of
Control shall be deemed to have occurred with respect to any Executive who,
in connection with a Change of Control or Potential Change of Control, acts
in a capacity other than in their capacity as an employee of the
Corporation, its subsidiaries or affiliates or otherwise fails to act in
the Company's best interests with respect to said Change of Control.
3. Termination For Other Reasons. If Executive voluntarily terminates his
employment (including by reason of retirement) other than as provided in
paragraph 1(a) or 2(a) above, or if Executive's employment is terminated
due to death or Permanent Total Disability, Executive shall not be entitled
to any benefits under this Agreement, but shall be entitled to any other
benefits to which he is otherwise entitled under the terms of any employee
benefit plans or arrangements of the Company.
4. Continuation of Insurance Benefits. In the event Executive's employment
terminates under the circumstances described in paragraph 1(a) or 2(a) of
this Agreement, the Company will continue Executive's participation
and coverage for a period of two years (the "Severance Period") from
Executive's last day of employment with the Company under all the
Company's life, medical and dental plans ("Insurance Benefits"),
in which Executive is participating immediately prior to such employment
termination, subject to the Company's right to modify the terms of the
plans or arrangements providing these benefits. If Executive is
employed by another entity during the Severance Period, the Company
will be a secondary obligor only with respect to medical and dental
Insurance Benefits and life insurance coverage shall immediately cease.
5. Non-Duplication of Benefits. Any compensation or benefits payable under the
terms of this Agreement will be offset and not augmented by other
compensation or benefits of the same or similar type payable under any
existing plan or agreement of the Company or any other arrangement between
Executive and the Company covering the Executive (including, but not
limited to, any Company severance policy and the Company's Annual Incentive
Plan). It is intended that this Agreement not duplicate benefits Executive
is entitled to under the company's regular severance policy, any related
policies, or any other contracts, agreements or arrangements between
Executive and the Company.
6) Term. This Agreement shall be effective from the date hereof throughout
Executive's term of employment as an officer of the Company, but shall
expire and be of no effect immediately after the second anniversary of a
Change of Control.
7) Certain Defined Terms. As used herein, the following terms shall have the
following meanings:
a) "Base Pay" shall mean the greater of the annual salary paid to Executive as
of the date of termination of his employment or the date of the Change of
Control, as the case may be, notwithstanding any pay reduction that may be
related to a Constructive Termination.
b) "Cause" shall mean:
1) conviction of any felony or failure to contest prosecution for a
felony; or
2) willful misconduct or dishonesty which is directly and
materially harmful to the business or reputation of the Company;
or
3) willful or continued failure to substantially perform his duties
as an executive of the Company, other than as a result of total or
partial incapacity due to physical or mental illness (abuse of
alcohol, drugs or controlled substances not being considered a
physical or mental illness for purposes of this paragraph), unless
within three to six months after written notice has been provided
to Executive by the Company, Executive cures such willful or
continued failure to perform.
c) "Change of Control" shall mean:
1) the holders of the voting securities of the Company shall have
approved a merger or consolidation of the Company with any other
entity, unless the proposed merger or consolidation would result
in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by converted into voting securities of the
surviving entity) more than 50% of the total voting power
represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, where such merger or consolidation is, in fact,
consummated;
2) a plan of complete liquidation of the Company shall have been
adopted or the holders of voting securities of the Company shall
have approved an agreement for the sale or disposition by the
Company (in one transaction or a series of transactions) of all or
substantially all of the Company's assets;
3) any "person" (as such term is used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934 (the "1934 Act") shall become
the "beneficial owner" (as defined in Rule 13d-3 under the 1934
Act), directly or indirectly, of 15% or more of the combined
voting power of the Company's then outstanding shares;
4) during any period of two consecutive years, members who at the
beginning of such period constituted the Board shall have ceased
for any reason to constitute a majority thereof, unless the
election, or nomination for election by the Company's
stockholders, of each director shall have been approved by the
vote of at least two-thirds of the directors then still in office
and who were directors at the beginning of such period (so long as
such director was not nominated by a person who has expressed an
intent to effect a Change of Control or engage in a proxy or other
control contest); or
5) the occurrence of any other change of control of a nature that
would be required to be reported in accordance with Form 8-K
pursuant to Sections 13 or 15(d) of the 1934 Act or in the
Company's proxy statement in accordance with Schedule 14A of
Regulation 14A promulgated under the 1934 Act, or in any successor
forms or regulations to the same effect.
d) A "Constructive Termination" shall be deemed to have occurred only if:
1) prior to a Change of Control: Executive's Base Pay is reduced
without his written consent; or
2) on or within a two-year period after a Change of Control: (A)
Executive's Base Pay or annual incentive pay opportunity is
reduced without his written consent; (B) Executive is required by
the Company without his written consent to relocate to a new place
of business that is more than fifty miles from Executive's place
of business prior to the Change of Control (or the Company
mandates a substantial increase in the amount of required business
travel); or (C) there is a material adverse change in Executive's
duties or responsibilities in comparison to the duties or
responsibilities which Executive had prior to the Change of
Control.
e) "Permanent Total Disability" shall be deemed to have occurred if, at the
end of any month Executive then is, and has been, for eighteen (18)
consecutive calendar months then ending, unable to perform his duties in
the normal and regular manner due to mental or physical illness or injury.
Any determination of such inability to perform shall be made by the Company
in good faith.
f) "Separation Incentive Payment" shall be the greater of (i) Executive's
average payments under the Company's normal, annual Corporate Incentive
Plan (CIP) for the three years immediately preceding the year of
termination (or annualized for such shorter period as Executive may have
been employed by the Company), or (ii) one-half of Executive's average
participating salary under such Plan for the three years immediately
preceding the year of termination (or annualized for such shorter period as
Executive may have been employed by the Company).
g) "Participation Salary" is the product of Executive's total base salary paid
during any given incentive year, multiplied by Executive's incentive pay
percentage, at maximum funding.
h) "Target Level Incentive" shall be the greater of (i) one-half of
Executive's participating salary under the Company's Annual Incentive Plan
for the year of termination, or (ii) the payment Executive would have
received under such Plan for the year of termination based on projected
corporate performance for such year as determined by the Committee in its
sole discretion at the time of the Change of Control.
8. Outplacement Assistance. The Company will arrange outplacement
assistance for Executive, to be provided by a mutually agreed-upon firm
engaged in said business. Such assistance shall continue for up to
one year following Executive's termination or until such time as
suitable employment is attained whichever is sooner. Outplacement
costs incurred in this connection will be borne by the Company, but
will not include costs of travel to/from the outplacement firm or in
connection with job interviews, etc. For up to six months following
Executive's termination, the Company will also make available reasonable
office space and administrative and communication services for
Executive's use in seeking suitable employment. In no event will the
Company pay Executive in lieu of outplacement assistance.
9. Confidentiality. Consistent with Executive's preexisting legal and
contractual obligations and in exchange for the consideration provided by
the Company in this Agreement and for Executive's continued employment and
exposure to confidential information at the Company, Executive agrees to
hold in strict confidence and not disclose to any other person any
confidential or proprietary information of the Company, including,
without limitation, trade secrets, formulas for Company product,
production techniques or processes or methods and apparatus for
producing any products of the Company, or other non-public
information relating to the business, research and development,
employees and/or customers of the Company and its subsidiaries and
affiliates, except to the extent required by law, or with the written
consent of the Company. Executive will, immediately on termination,
deliver to the Company all files containing data, correspondence, books,
notes, and other written, graphic or computer records under Executive's
control relating to the Company or its subsidiaries or affiliates,
regardless of the media in which they are embodied or contained.
10. Agreement Not to Compete. In exchange for the consideration provided by the
Company in this Agreement as well as Executive's continued employment and
exposure to confidential information at the Company, Executive agrees not
to, directly or indirectly, for a period of two years following Executive's
termination of employment, engage or participate in any business that is
involved in research or development activities or in the manufacturing of
any product which competes with any of the Company's products, except with
the written consent of the Company. On termination, Executive agrees to
execute a separate Release and Non-Competition Agreement in a form
acceptable to the Company to memorialize this agreement and understands
that the failure to do so will render Executive ineligible for any
severance pay, benefits or privileges whatsoever.
11. Mutual Release and Indemnity. In the event of Executive's termination under
circumstances described in paragraphs 1(a), 1(b), 2(a) or 2(b), the Company
agrees to release and discharge executive from any claim it may then or
thereafter have against Executive with respect to employment with the
Company or any of its subsidiaries or affiliates (other than with regard to
Executive's obligations under this Agreement), and agrees to indemnify
Executive in accordance with its then current policies or practices for
active employees for any claims made against Executive by third parties
arising out of the proper performance of Executive's duties as an employee
of the Company or any of its subsidiaries or affiliates. In exchange for
the consideration provided by the Company in this Agreement, together with
the Company's release and indemnity, Executive agrees to release and
discharge the Company, and its subsidiaries, affiliates, officers,
directors, employees and agents (the "Released Persons") from any claim
that Executive may then or thereafter have against the Company or such
Released Persons (excluding any claim for the compensation, benefits and
privileges described herein) arising out of or in connection with
Executive's employment or termination of employment by the Company or any
of its subsidiaries or affiliates. On termination, Executive agrees to
execute a separate Release and Non-Competition Agreement in a form
acceptable to the Company to memorialize this agreement and understands
that the failure to do so will render Executive ineligible for any
severance pay, benefits or privileges whatsoever.
12. Severability. Whenever possible each provision and term of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision or term of this Agreement shall be
held to be prohibited by or invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating or affecting in any manner
whatsoever the remainder of such provision or term, or the remaining
provisions or terms of this Agreement.
13. Modification and Waiver of Breach. No waiver or modification of
this Agreement shall be binding unless it is in writing, signed by the
parties hereto. No waiver of a breach hereof shall be deemed to
constitute a waiver of a further breach, whether of a similar or dissimilar
nature.
14. Assignment. This Agreement shall be binding upon and inure to the benefit
of any successors of the Company. As used herein, "successors" shall
include any person, firm, corporation or other business entity which at any
time, whether by merger, purchase or otherwise, acquires all or
substantially all of the assets or business of the Company.
15. Notice. Any written notice to be given hereunder to Executive may be
delivered to him personally or shall be deemed to have been given upon
deposit thereof in the U.S. mail, certified mail, postage prepaid,
addressed to Executive at the address as it shall appear on the records of
the Company.
16. Construction of Agreement. This Agreement is made and entered into
in the State of Ohio and shall be construed under the laws of Ohio.
17. Entire Agreement. This Agreement constitutes the entire understanding
between the parties with respect to Executive's severance pay, benefits and
privileges in the event of a termination of Executive's employment with the
Company, superseding all negotiations, prior discussions and agreements,
written or oral, concerning said severance arrangements. This Agreement may
not be amended except in writing by the parties hereof.
IN WITNESS WHEROF, the parties hereto have executed this Agreement as
of the day and year first above written.
XXXXX CORNING,
/s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
Chairman and CEO
Agreed to and accepted:
/s/ Xxxxxxx X. Xxxxxx
Date: 6 December 1998
