Exhibit 10.2(r) to
Form 8-K filed
May 29, 2007
May 26, 2007
Xx. Xxxxx X. Xxxxxx 00 Xxxxx Xxxx Xxxx Xxxxxxxx, XX 00000
Re: Retirement Agreement
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Dear Xx. Xxxxxx:
This letter agreement (the "Retirement Agreement") is to confirm our discussions
concerning your retirement effective June 30, 2007 ("Official Termination Date")
and the termination effective as of the date of this letter of your status as an
officer of Cytec Industries Inc. (the "Company") and as a member of the
Company's Executive Committee, Pension Administration Committee and Committee on
Investment of Pension Funds.
If you revoke this Retirement Agreement within the time period specified in
Section X below, then you will not be eligible to receive any compensation or
benefits under this Retirement Agreement or the Executive Income Continuity Plan
(the "Plan"). The benefits available to you under the Plan, and the additional
benefits we are offering to provide you in excess of those specified in the
Plan, are all set forth in this Retirement Agreement.
I. Executive Income Continuity Plan:
You have previously been elected a member of the Plan. A copy of the Plan as
amended to date is attached hereto. Because of the circumstances of your
retirement, you will receive the benefits specified in the Plan (as described
herein) applicable to a member of the Plan whose employment is terminated
without "Cause" provided you do not revoke this Retirement Agreement within the
time period specified in Section X below.
Under Section 5 of the Plan, you will be entitled to an income continuation
benefit of $635,500 (equivalent to one year's salary and target bonus) payable
in 12 equal monthly installments. Because we are required to administer the Plan
in accordance with the provisions of Section 409A of the Internal Revenue Code,
the first six monthly payments will be paid to you in a lump sum on the first
business day of the seventh month following your Official Termination Date,
i.e., January 2, 2008. The last six monthly payments will be paid to you in
arrears on or about the last business day of each month. These payments are
subject to federal, state and other local applicable taxes and withholdings. In
addition, the Company will deduct from these amounts any outstanding balances
due on Company credit cards issued to you; the value of any Company property
which you have not returned to the Company as of your Official Termination Date;
and any other amounts owed by you to the Company as of such date, including if
you elect benefits continuation, your share of the cost of Company provided
benefits determined consistently with charges to other Company employees, as in
effect from time to time.
Under Section 7 of the Plan, the Company, at its option, may discontinue any
payments being made pursuant to Section 5 of the Plan if you engage in any
competitive activity as defined in Section 7 of the Plan.
In accordance with Section 8 of the Plan, your excess personal liability
insurance benefits, group life insurance benefits, comprehensive Medical,
Dental, Vision, AD&D, benefits and home security benefits will be maintained for
two years following the date of your termination. The period of time during
which your benefits are continued under this provision is included in and is not
in addition to the 18 month continuation period provided for under "COBRA". At
the end of this period the appropriate conversion notices or other applications
with respect to employee benefits will be provided to you. Accrual of benefits
under the Retirement Plan, Savings and Profit Sharing Plan and related
supplemental plans, and Spending Accounts, as well as participation in
disability coverage, ends at your Official Termination Date. The Company agrees
that, at your option, the Company will provide you and your family medical
benefits equivalent to benefits available to employees under the Company's
medical benefits programs from time to time in effect in the area where you then
reside from July 1, 2009 through the date of your 65th birthday as if you were
still an employee of the Company provided that you reimburse the Company for the
COBRA cost of providing such coverage. If you fail to exercise this option in
any year, this option will not be available in any succeeding year.
II. Vacation Pay
You will also receive pay for your accrued and unused 2007 vacation days in
accordance with existing Company policy.
III. Stock Options and SARs
All of your currently exercisable options and SARs will now have an expiration
date of June 30, 2008. In addition, one-third of the options granted to you in
2005, two-thirds of the options granted to you in 2006 and all of the options
granted to you in 2007 will not be exercisable by your Official Termination Date
and will be forfeited on that date. The forfeited amounts represent options to
buy 14,000, 20,867 and 30,000 shares respectively.
IV. Performance Stock Awards and Performance Cash Awards.
You have outstanding one Performance Stock Award, two Performance Cash Awards
and one Restricted Stock Award. If you do not revoke this Retirement Agreement
during the time period specified in Section X below, a duly authorized special
committee of the Board of Directors will make the determination that the
termination of your employment is under circumstances "not contrary to the best
interests of the Company" and you will be entitled to retain all or part of
these awards as set forth below, subject to the terms and conditions of such
Awards, including, but not limited to, possible subsequent forfeiture, in whole
or in part, if the performance conditions applicable to the Awards are not met.
Unvested Award Amount Forfeited Amount Retained
-------------- ---------------- ---------------
5,884 Share Performance none 5,884
Stock Award dated
January 19, 2005
1,333 Units of Restricted none 1,333 Units
Stock Award dated
March 1, 2005
$300,000 Performance $100,000 $200,000
Cash Award dated
February 8, 2006
$300,000 Performance $200,000 $100,000.
Cash Award dated
January 31, 2007
V. Executive Supplemental Employees Retirement Plan
You are currently a "Grandfathered Participant" under the terms of the Executive
Supplemental Employees Retirement Plan ("ESERP"). If you do not revoke this
Retirement Agreement during the time period specified in Section X below, a duly
authorized special committee of the Board will elect you as a full Member of the
Executive Supplemental Retirement Plan on the date you are no longer entitled to
revoke this Retirement Agreement with one projected Year of Service for purposes
of calculating your benefits under section 3.1 of the ESERP and with no
reduction in benefits for commencing benefits prior to age 60. Under Section 2.1
of the ESERP, as a result of your election as a Member of the ESERP, you will
cease to be a Grandfathered Participant and shall no longer be entitled to the
benefit set forth on the Grandfathered Participant Schedule. Payment of your
ESERP benefits shall commence on the first day of the month following your 55th
birthday.
VI. Deferred Stock Awards
You currently have Deferred Stock Awards aggregating 49,499.303 shares of pre
2005 awards and 22,729.276 shares of post 2004 awards. In accordance with the
terms of the 1993 Stock Award and Incentive Plan and your previous elections,
these shares will be paid out to you over a period of 60 quarterly installments
and in a single lump sum, respectively. Because we are required to administer
this plan in accordance with the provisions of Section 409A of the Internal
Revenue Code, the first two quarterly installments of your pre 2005 awards and
the single lump sum of your post 2004 awards will be paid to you on the first
business day of the seventh month following your Official Termination Date,
i.e., January 2, 2008.
VII. Supplemental Savings and Profit Sharing Plan
You currently have a balance of approximately $1,350,000 in the Supplemental
Savings and Profit Sharing Plan. The portion of your plan balance allocable to
your contributions in 2005 and before will be paid to you in 5 annual
installments and the portion of your plan balance allocable to your
contributions after 2005 will be paid to you in a single lump sum. Because we
are required to administer this plan in accordance with the provisions of
Section 409A of the Internal Revenue Code, the first of five annual installment
payments and the lump sum will be paid to you on the first business day of the
seventh month following your Official Termination Date, i.e., January 2, 2008.
VIII. Release
In return for the payments and benefits described in this Retirement Agreement,
you do hereby waive and do hereby release, knowingly and willingly, the Company,
its subsidiaries, successors and predecessors, and its and their employees,
agents, directors and officers, past and present (collectively, the
"Releasees"), from any and all claims of any nature whatsoever you have arising
out of your employment and/or the termination of your employment with the
Company, known or unknown, including but not limited to any claims you may have
under federal, state or local employment, labor, or anti-discrimination laws,
statutes and case law and specifically claims arising under the federal Age
Discrimination in Employment Act, the Civil Rights Acts of 1866, 1964 and 1991,
as amended, the Americans with Disabilities Act, Executive Order 11246, the
Employee Retirement Income Security Act, the Family and Medical Leave Act, the
Rehabilitation Act of 1973, the Fair Labor Standards Act, the Labor-Management
Relations Act, the Equal Pay Act and the Worker Adjustment Retraining and
Notification Act, the Fair Credit Reporting Act, the Immigration Reform Control
Act, the Internal Revenue Code, the Occupational Safety and Health Act, the
Uniformed Services Employment and Reemployment Rights Act, the New Jersey Law
Against Discrimination and any other applicable federal, state, county or local
law, ordinance or statute including claims for attorneys' fees, provided,
however, that this release does not apply to claims for benefits under
Company-sponsored benefit plans covered under the Employee Retirement Income
Security Act; does not apply to claims arising out of obligations expressly
undertaken in this Retirement Agreement and does not apply to claims arising out
of any act or omission occurring after the date you sign this Retirement
Agreement. Any rights to benefits under Company-sponsored benefit plans are
governed exclusively by the written plan documents. You acknowledge and
understand that this paragraph is intended to prevent you from making any claims
against any Releasee (and individuals acting for any Releasee) regarding any
matter or incident up to the date you execute this Retirement Agreement. In
exchange for the payments and benefits described in this Retirement Agreement,
except as otherwise expressly set forth in this Retirement Agreement, you agree
and covenant not to sue and not to bring an action of any kind against any
Releasee, its past, present and future parent corporations, its past, present
and future divisions, subsidiaries, affiliates and related companies and their
successors and assigns and all past, present and future directors, officers,
employees and agents of these entities, personally and as directors, officers,
employees and agents, arising out of your employment and/or your retirement,
before any court or other forum.
If you breach the terms of the release and waiver contained in the preceding
paragraph, then as liquidated damages you agree to repay the Company all amounts
paid to you pursuant to the provisions of the Plan and Sections IV and V of this
Retirement Agreement within five days of bringing suit that are in excess of the
amounts that would have otherwise been paid to you as a Grandfathered
Participant under the terms of the ESERP and that any additional payments due
you under the terms of the Plan and Sections IV and V of this Retirement
Agreement are forfeited and the Company agrees that you will be restored to the
status of a Grandfathered Participant under the terms of the ESERP. You
acknowledge and agree that the liquidated damages are fair and reasonable, and
that the Company would not be able to quantify its damages absent this
liquidated damages provision. Moreover, if you breach the terms of the release
and waiver contained in the preceding paragraph by bringing suit, you agree to
pay the attorneys' fees each Releasee incurs in defending against such suit.
If you bring suit and fail to repay the amounts paid to you pursuant to the
provisions of the Plan, you hereby consent to the entry of judgment against you
and in favor of the Company in the gross amount of such payments.
If you do not revoke this Retirement Agreement within the revocation period
described below, you will obtain the benefits pursuant to the terms of the Plan.
If you subsequently revoke this Retirement Agreement within the revocation
period described below, you will forego the benefits provided pursuant to the
terms of the Plan and the additional benefits specified in Sections IV and V of
this Retirement Agreement, but you will obtain the other benefits provided under
applicable law, including the right to extend, for a charge, certain employee
benefits and any notice period pay to which you are entitled.
In the event of any claim regarding or dispute over the enforceability of this
Retirement Agreement or any part thereof, the parties agree to submit such
dispute or claim to binding arbitration. To be timely filed, any such claim must
be submitted by the party seeking arbitration to the other for binding
arbitration within the limitations period set by applicable federal or state
law. The arbitrator shall be chosen by mutual agreement between you and the
Company from among available arbitrators recommended by the American Arbitration
Association. The arbitration hearing will take place at a mutually acceptable
location in New Jersey with all due speed. The costs of arbitration shall be
split equally between you and the Company, unless the arbitrator determines that
some other allocation is appropriate. The arbitrator shall render an award
within 30 days of the arbitration hearing. The arbitrator shall have no power to
amend, add to or subtract from this Retirement Agreement. The award shall be
admissible in any court or agency action seeking to enforce or render
unenforceable this Retirement Agreement or any portion thereof.
IX. Miscellaneous
The Company agrees that you may continue to exercise any of your then
exercisable stock options and stock appreciation rights through Fidelity
Investments consistent with your past practices.
Should any of the provisions of this Retirement Agreement be invalidated by a
court of competent jurisdiction or arbitrator, the parties agree that this shall
not affect the enforceability of the other provisions of this Retirement
Agreement and the parties shall negotiate the provision or provisions in good
faith to effectuate its or their purpose and to conform the provision or
provisions to law. This Retirement Agreement may be amended or modified only by
an agreement in writing, signed by both parties.
This Retirement Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey.
X. Acknowledgement and Certification
You, the employee, acknowledge and certify that you:
(a) have read and understand all of the terms of this Retirement
Agreement and do not rely on any representation or statement,
written or oral, not set forth in this Retirement Agreement;
(b) have had a reasonable period of time to consider this
Retirement Agreement;
(c) are signing this Retirement Agreement knowingly and
voluntarily;
(d) have been advised to consult with an attorney before signing
this Retirement Agreement;
(e) have the right to consider the terms of this Retirement
Agreement for at least 21 days and if you take fewer than 21
days to review this Retirement Agreement, you hereby waive any
and all rights to the balance of the 21-day review period; and
(f) have the right to revoke this Retirement Agreement within
seven days after signing it, in which event this Retirement
Agreement becomes null and void in its entirety.
THIS IS A LEGALLY ENFORCEABLE DOCUMENT.
If this Retirement Agreement is acceptable to you, please indicate by signing
the enclosed copy of this Retirement Agreement and returning it to me as
outlined above. If you have any questions concerning the foregoing, please
contact me.
Sincerely,
/s/Xxx Xxxxx
Accepted and Agreed:
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx Date May 26, 2007
__X__ I elect to have my current benefits continue for the two year period
specified in Section I.
____ I decline benefit continuation during the two year period specified in
Section I.
Exhibit to Retirement
Agreement between the
Company and Xxxxx X. Xxxxxx
CYTEC INDUSTRIES INC.
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Executive Income Continuity Plan
--------------------------------
As Revised through February 28, 2007
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1. Purpose. The purpose of this Executive Income Continuity Plan (this
Plan) is to retain the services of executives in the senior management group of
Cytec Industries Inc. and its subsidiaries and to reinforce and encourage the
continuing attention, dedication and loyalty of these executives without the
distraction of concern over the possibility of involuntary or constructive
termination of employment resulting from unforeseen developments, by providing
income continuity for a limited period.
2. Definitions. Unless the context otherwise requires, the following
terms shall have the meanings respectively indicated:
(a) "Board of Directors" shall mean the board of directors of
Cytec Industries Inc.
(b) "Cause" shall mean (A) the willful and continued failure
by a Plan Member substantially to perform his duties with the Company
(other than any such failure resulting from his incapacity due to
physical or mental illness), after a demand for substantial performance
is delivered to him by the Company which specifically identifies the
manner in which the Company believes that he has not substantially
performed his duties, or (B) the willful engaging by him in conduct
demonstrably injurious to the Company. For purposes of this definition,
no act, or failure to act, on the part of a Plan Member shall be
considered "willful" unless done, or omitted to be done, by him without
reasonable belief that his action or omission was in the best interests
of the Company and was lawful.
(c) A "Change in Control" shall be deemed to have occurred if:
(i) any "person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any
company owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more (except as
specifically provided below) of the combined voting power of the
Company's then outstanding securities; or (ii) there occurs any
transaction or action which results in the individuals who at the
beginning of a period commencing 24 hours prior to the commencement of
the transaction were members of the Board of Directors, together with
individuals subsequently elected to the Board upon the recommendation
of a majority of the continuing directors, ceasing to constitute at
least a majority thereof; or (iii) the stockholders or the Board of
Directors of the Company approve a definitive agreement to merge or
consolidate the Company with or into another corporation (including any
such transaction in which the Company is the surviving corporation), or
to sell or otherwise dispose of all or substantially all of its assets,
or to adopt a plan of liquidation of the Company. Notwithstanding
clause (i) above, beneficial ownership by a financial institution of
securities of the Company representing 20% or more of the combined
voting power of the Company's then outstanding securities shall not
constitute a Change in Control if, at the first Board of Directors
meeting occurring five days or more after the Company receives written
notice of such event, and prior to the occurrence of an event described
in clause (ii) above, the Board of Directors adopts a resolution to the
effect that such ownership does not constitute a Change in Control;
provided that (x) such a resolution shall not remain in effect for any
further five percent (5%) increase in such financial institution's
beneficial ownership, unless the Board of Directors so determines in
accordance with a further resolution adopted by the Board of Directors
in accordance with the procedures set forth in this sentence, (y) such
resolution may be revoked by the Board of Directors at any time, and
(z) the Board of Directors may place any additional or more stringent
conditions on its determination that such event does not constitute a
Change in Control.
(d) "Company" shall mean Cytec Industries Inc. and, except for
the purposes of paragraph (c) of this Section, shall include any of its
subsidiaries which employs members of this Plan.
(e) "Compensation Committee" shall mean the Compensation
and Management Development Committee as constituted from time to time
of the Board of Directors, or such other body as shall have similar
authority and responsibility.
(f) "Date of Termination" shall mean (A) if the employment of
a Plan Member is terminated by his death, the date of his death, (B) if
such employment is terminated by his Retirement, the date of such
Retirement, (C) if such employment is terminated for Disability, upon
the expiration of his continuous service credits as determined by the
Company, (D) if his employment is terminated by him for Good Reason,
the date specified in the Notice of Termination, and (E) if his
employment is terminated for any other reason, the date on which Notice
of Termination is given; provided that if within 30 days after any
Notice of Termination is given the party receiving such notice notifies
the other party that a dispute exists concerning the termination, the
Date of Termination shall be the date on which the dispute is finally
resolved, either by mutual written agreement of the parties or by a
final judgment, order or decree of a court of competent jurisdiction
(the time for appeal therefrom having expired and no appeal having been
perfected).
(g) "Disability" shall mean inability of a Plan Member due to
sickness or injury to perform the duties pertaining to his occupation
with the Company, as determined in accordance with the Company's
Long-Term Disability Plan and personnel policies.
(h) "Good Reason" shall mean:
(A) a change in assignment resulting in the
assignment to a Plan Member of substantially reduced
responsibilities compared with those assigned to him prior to
such change, or any change in his status, authority or
position which represents a demotion (actual or de facto) from
his status, authority or position immediately prior to such
change, except in connection with the termination of his
employment because of death or Retirement, by the Company for
Disability or Cause, or by him other than for a Good Reason
enumerated in any of the following subparagraphs of this
Paragraph (h);
(B) the assignment to a Plan Member of duties
inconsistent with his responsibilities prior to such
assignment, unless such new duties are consistent with a
position of equal or greater status, authority, and position;
(C) a reduction in the base salary of a Plan Member
as the same may be increased from time to time;
(D) a failure to continue the I.C. Plan (or a plan
providing substantially similar benefits) as the same may be
modified from time to time but in a form not less favorable
than as of the date of adoption of this Plan, or a failure to
continue a Plan Member as a participant in the I.C. Plan on a
basis consistent with the basis on which the I.C. Plan is
administered as of such date;
(E) a failure to pay a Plan Member any portion of his
current or deferred compensation within seven (7) days of the
date such compensation is due;
(F) the relocation of the principal executive offices
of the Company to a location more than 50 miles from the
location of the present executive offices or outside of New
Jersey, or requiring a Plan Member to be based anywhere other
than the principal executive offices (or, if a Plan Member is
not based at such executive offices, requiring such Plan
Member to be based at another location not within 50 miles of
such location) except for required travel on business to an
extent substantially consistent with his duties and
responsibilities, or in the event of consent to any such
relocation of the base location of a Plan Member the failure
to pay (or provide reimbursement for) all expenses of such
Plan Member incurred relating to a change of principal
residence in accordance with the applicable personnel policies
of the Company in effect as of the date of adoption of this
Plan;
(G) the failure to continue in effect any benefit or
compensation plan (including but not limited to the Retirement
Plan, the Long-Term Disability Plan, the I.C. Plan, stock
option and performance stock/cash features of the 1993 Stock
Award and Incentive Plan (or of any subsequent and/or
substitute plan)), the Employees Savings and Profit Sharing
Plan (including the Supplemental Savings and Profit Sharing
Plan), pension plan (including but not limited to, the
Supplemental, Executive Supplemental, and Excess Retirement
Plans), life insurance plan, health and accident plan,
disability or vacation plan in which a Plan Member is
participating, or the taking of any action which would
adversely affect participation (including the Plan Member's
eligibility to participate, the amount of his benefits, and
the level of his participation relative to other participants)
in or materially reduce benefits under any of such plans, or
the failure to fund any "Rabbi Trust" created for the payment
of any of the foregoing benefits, when, and to the extent,
required by the terms of any such trust, unless such action is
required pursuant to law or unless substantially similar
benefits are continued in the aggregate under other plans,
programs or arrangements;
H) the failure to obtain the assumption of or an
agreement to carry out the terms of this Plan by any successor
as contemplated in Section 10; or
(I) any purported termination of a Plan Member's
employment which is not effected pursuant to a Notice of
Termination as herein defined.
(i) "I.C. Plan" means the existing system of annual cash
bonuses payable to Company employees (including Plan Members), pursuant
to which annual target bonuses are established based upon job levels
and payments of bonuses as a percentage of such targets are made based
upon Company, business group and individual performance.
(j) "Notice of Termination" shall mean a notice which
indicates the specific basis for termination of employment relied upon
and shall set forth in reasonable detail the facts and circumstances
claimed to provide such basis.
(k) "Plan Member" shall mean a person who is employed by
the Company on a full-time basis and for a regular fixed compensation
(other than on a retainer or compensation for temporary employment) and
who is included in the membership of this Plan as provided in Section
3.
(l) "Officers" shall mean the chairman, any vice chairman,
president, and any vice president of Cytec Industries Inc. chosen by
the Board of Directors.
(m) "Retirement" shall mean termination of employment
in accordance with the provisions of the Retirement Plan; provided,
however, that termination of employment by a Plan Member before his
Normal Retirement Date (as defined in such Plan) for Good Reason shall
not be deemed to be Retirement for purposes of this Plan even though
such Plan Member may be eligible for and elect to receive retirement
benefits thereunder.
(n) "Retirement Plan" means any qualified defined benefit pension
plan of the Company or its subsidiaries under which the Plan Member has
accrued a retirement benefit (whether or not vested).
(o) "Service", as used in Section 5 of this Plan, shall mean
service as a full time employee of the Company or one of its
subsidiaries and, in the case of any person who became such an employee
on January 1, 1994, shall include any period of service ending December
31, 1993 as a full time employee of American Cyanamid Company or one of
its subsidiaries.
(p) "Special Change in Control" shall have the same meaning as
"Change in Control" except that the reference to "20%" in clause (i) of
the definition of "Change in Control" shall be replaced with "50%".
The masculine pronoun wherever used herein shall include the feminine
except as the context specifically indicates.
3. Membership. All Officers shall be Plan Members. The Compensation
Committee may designate any other employee as a Plan Member. After an employee
becomes a Plan Member, his membership shall continue until his death or
Retirement, termination of his employment by the Company for Cause or
Disability, or termination of his employment by such Plan Member other than for
Good Reason.
4. Termination of Employment. Each Plan Member shall be entitled to
receive the income continuation payments provided for in Section 5 upon
termination of his employment, unless such termination is (a) because of his
death, Disability or Retirement, (b) by the Company for Cause, or (c) by such
Plan Member other than for Good Reason; provided that, if Notice of Termination
is given prior to a Change in Control, such Plan Member shall have signed and
delivered, in form and substance satisfactory to the General Counsel, a waiver,
effectively waiving all claims against the Company (including its directors,
officers, employees and agents) arising out of such Plan Member's termination of
employment, other than claims for payment post-termination of employment under
the terms of this Plan and employee benefit and compensation plans of the
Company, such waiver to be delivered no later than the later of thirty days
following (i) the date of termination of employment or (ii) written request
therefor by the Company.
5. Income Continuation. (a) Subject to the provisions of Section 7,
upon termination of the employment pursuant to Section 4 of a Plan Member who is
an Officer or who, on the Date of Termination, has at least one year of Service,
the Company shall pay to him the sum of his annual base salary at the rate in
effect at the time Notice of Termination is given plus his Annual Bonus
(excluding Performance Stock/Cash Awards) under the I.C. Plan based on such
rate, in equal monthly installments over a period of 12 months following the
Date of Termination; provided that in the case of Notice of Termination given
after a Change in Control, the payments shall consist of three times his annual
base salary plus three times his Annual Bonus, payable over a 36 month period;
and provided further that in the case of Notice of Termination given after a
Special Change in Control, the payments shall consist of three times his annual
base salary plus three times his Annual Bonus, payable in a single lump sum
payment at the time of the Notice of Termination. As used in this Section 5,
"Annual Bonus" means the greater of (i) the annual target bonus under the I.C.
Plan attributable to the Plan Member or (ii) said annual target bonus times a
fraction equivalent to the average percentage of said annual target bonus paid
to said Plan Member for each of the two preceding fiscal years of the Company
(or for such lesser period of time as such Plan Member participated in the I.C.
Plan).
(b) Subject to the provisions of Section 7, upon termination of the
employment pursuant to Section 4 of any other Plan Member, the Company shall pay
to him the sum of his annual base salary at the rate in effect at the time
Notice of Termination is given plus his Annual Bonus (excluding Performance
Stock/Cash Awards) under the I.C. Plan based on such rate, in equal monthly
installments over a period of 12 months following the Date of Termination;
provided that in the case of Notice of Termination given after a Special Change
in Control, the payments shall be payable in a single lump sum payment at the
time of the Notice of Termination.
(c) Except for the lump sum payments, which shall be paid immediately
as provided above, all payments under paragraphs (a) and (b) shall be made on
the first day of each month commencing with the first day of the first month
after the Date of Termination. Notwithstanding the foregoing, (i) no payment
shall be made with respect to any period beyond the date of a Plan Member's 65th
birthday, and (ii) there shall be deducted from any payments required hereunder
(x) any payments made with respect to any required notice period under any
employment agreement between a Plan Member and the Company or one of its
subsidiaries and (y) any payments received by the Plan Member under the
Company's Long Term Disability Plan or under any short term disability plan or
program of the Company during the period with respect to which income
continuation is computed hereunder.
6. Other Payments. Subject to the provisions of Section 7, upon
termination of the employment of a Plan Member pursuant to Section 4, the
Company shall, in addition to the payments provided for in Section 5, pay to
him:
(a) all relocation payments described in Section 2(h)(F)
and all legal fees and expenses incurred by him as a result of such
termination (including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or
enforce any right or benefit provided by this Plan or in connection
with any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Internal Revenue Code of 1986, as
amended, to any payment or benefit provided hereunder); and
(b) during the period of two years following the Date of
Termination, all reasonable expenses incurred by him in seeking
comparable employment with another employer to the extent not otherwise
reimbursed to him, including, without limitation, the fees and expenses
of a reputable out placement organization, and reasonable travel,
telephone and office expenses.
7. Competitive Employment. The Company, at its option, may discontinue
any payments being made to any Plan Member pursuant to Section 5 or Section 6 if
such Plan Member engages in the operation or management of any business anywhere
in the world, whether as owner, stockholder, partner, officer, consultant,
employee or otherwise, which at such time is in competition with any business of
the Company in any field with which such Plan Member was involved during the
last two years of his employment by the Company. Ownership by such Plan Member
of five percent or less of the shares of stock of any company listed on a
national securities exchange or having at least 100 stockholders shall not make
such Plan Member a "stockholder" within the meaning of that term as used in this
Section.
8. Maintenance of Other Benefit Plans. The Company shall maintain in
full force and effect, for the continued benefit of each Plan Member entitled to
receive payments pursuant to Section 5, for two years following his Date of
Termination, all employee benefit plans and programs or arrangements (including
Comprehensive Medical and Dental Insurance, Group Life Insurance, and Financial
Planning and Tax Preparation and Counseling Services, but not including
disability) in which he was entitled to participate at the time the Notice of
Termination was given, provided that if his continued participation is not
permitted under the general terms and provisions of such plans and programs, the
Company shall provide equivalent benefits.
9. No Mitigation. No Plan Member shall be required to mitigate the
amount of any payment provided for under this Plan by seeking other employment
or otherwise, nor shall the amount of any payment so provided for be reduced by
any compensation earned by any Plan Member as the result of employment by
another employer, by retirement benefits or by offset against any amount claimed
to be owed by him to the Company.
10. Successors. The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and assets of the Company, by a written
agreement, to expressly assume and agree to carry out the provisions of this
Plan in the same manner and to the same extent that the Company would be
required to carry them out if no such succession had occurred.
11. Notice. Any notice expressly provided for under this Plan shall be
in writing, shall be given either manually or by mail, telegram, telex, telefax
or cable, and shall be deemed sufficiently given, if and when received by the
Company at its offices at 0 Xxxxxx Xxxxxxxx Xxxxx, Xxxx Xxxxxxxx, Xxx Xxxxxx
00000 Attention: Secretary, or by any Plan Member at his address on the records
of the Company, or if an when mailed by registered mail, postage prepaid, return
receipt requested, addressed to the Company or the Plan Member to be notified at
such address. Either the Company or any Plan Member may, by notice to the other,
change its address for receiving notices.
12. Funding. All payments provided for under this Plan for Plan Members
(including those who have retired) shall not be funded or secured, and no trust
shall be created hereunder. Payments under the Plan shall become fully vested
and nonforfeitable upon the termination of a Plan Member's employment except for
termination where a Plan Member would not be entitled to income continuation
payments as provided in Section 4 and except as provided in Section 7.
13. Amendment and Termination. The Board of Directors may at any time
or from time to time amend or terminate this Plan; provided, however, that no
such amendment or termination may adversely affect any vested benefits
hereunder; and, provided further, that after a Change in Control, this Plan may
not be amended or terminated without the consent of all persons who were Plan
Members as of the date of such Change in Control (including those who have
retired).
In addition, no amendment or termination made within one year before a
Change in Control and made while a Prospective Change in Control is pending may
adversely affect any benefit that might at any time be or become owing hereunder
to a person who, immediately prior to the commencement of such Prospective
Change in Control, was a Plan Member, without the consent of such person (other
than a benefit to any such person who is the person, or part of the group,
making the offer, or negotiating to make the offer, which constitutes the
Prospective Change in Control).
As used herein, the term "Prospective Change in Control" means (i) any
offer presented, directly or indirectly, to the Board of Directors of the
Company which, if consummated, would constitute a Change in Control or (ii) any
negotiation with the Board of Directors or any committee or representative
thereof to make such an offer (including the unilateral announcement of the
terms on which such an offer would be made).
14. Governing Law. This Plan, and the rights and obligations of the
Company and the Plan Members hereunder, shall be construed and governed in
accordance with the law of the State of New Jersey.
15. Partial Invalidity. If any provision of this Plan is determined to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect the remaining provisions of this Plan, which shall remain in effect in
accordance with its terms.
