Exhibit 10.11
FORM OF CORN PRODUCTS INTERNATIONAL
EXECUTIVE SEVERANCE AGREEMENT
Agreement, made this ___ day of ____________, 19__, by
and between CORN PRODUCTS INTERNATIONAL, INC., a Delaware
corporation (the "Company"), and ______________________ (the
"Executive").
WHEREAS, the Executive is a key employee of the Company
or a subsidiary of the Company as defined in Section 1(ii) hereof
("Subsidiary"), and
WHEREAS, the Board of Directors of the Company (the
"Board") considers the maintenance of a sound management to be
essential to protecting and enhancing the best interests of the
Company and its stockholders and recognizes that the possibility
of a change in control raises uncertainty and questions among key
employees and may result in the departure or distraction of such
key employees to the detriment of the Company and its
stockholders; and
WHEREAS, the Board wishes to assure that it will have
the continued dedication of the Executive and the availability of
the Executive's advice and counsel notwithstanding the
possibility, threat or occurrence of a bid to take over control
of the Company, and to induce the Executive to remain in the
employ of the Company or a Subsidiary; and
WHEREAS, the Executive is willing to continue to serve
the Company and its Subsidiaries taking into account the
provisions of this Agreement;
NOW, THEREFORE, in consideration of the foregoing, and
the respective covenants and agreements of the parties herein
contained, the parties agree as follows:
1. Change in Control. Benefits shall be provided under
Section 3 hereof only in the event there shall have occurred a
"Change in Control", as such term is defined below, and the
Executive's employment by the Company and its Subsidiaries shall
thereafter have terminated in accordance with Section 2 below
within the period beginning on the date of the "Change in
Control" and ending on the second anniversary of the date of the
"Change in Control" (the "Protection Period"). If any Protection
Period terminates without the Executive's employment having
terminated, any subsequent "Change in Control" shall give rise to
a new Protection Period. No benefits shall be paid under Section
3 of this Agreement if the Executive's employment terminates
outside of a Protection Period.
(i) For purposes of this Agreement, a "Change in
Control" shall mean the occurrence of any of the following
events:
(A) any person (within the meaning of Sections
13(d) and 14(d) of the Securities Exchange Act of
1934, as amended) ("Person") (but excluding the
Company, a Subsidiary, or a trustee or other fiduciary
holding securities under any
-2-
employee benefit plan or employee stock plan of the
Company or a Subsidiary) becomes, directly or indirectly,
the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of 15% or
more of the combined voting power of the then outstanding
voting securities entitled to vote generally in the
election of directors ("Voting Securities") of the
Company, provided, however, that there shall be
excluded, for this purpose, any acquisition of Voting
Securities either from the Company or pursuant to a
Stock Combination (as defined hereinafter); or
(B) any Person commences a tender offer or
exchange offer which, if successful, would result in
such Person becoming the "beneficial owner" of at
least 15% of the outstanding Voting Securities of the
Company; provided, however, that the Board shall have
the right to delay the date on which a Change in
Control shall be deemed to occur pursuant to this
clause (B), but in no event beyond the earlier of (a)
the date of the public announcement that the Board has
determined to recommend, or remain neutral toward,
such offer, or (b) the earliest date on which there is
a purchase of any Voting Securities of the Company
pursuant to such offer; or
(C) during any period of two consecutive years
individuals who at the beginning of such period
constitute the Board (including for this purpose any
new director whose election by the Board or nomination
for election by the Company's
-3-
stockholders was approved by a vote of at least two-
thirds of the directors then still in office who either
were directors at the beginning of the period or whose
election or nomination for election was previously so
approved (such individuals and such new directors
being "Continuing Directors")) cease for any reason to
constitute a majority of the Board; or
(D) the stockholders of the Company approve a
merger, consolidation, reorganization or sale of
substantially all of the assets of the Company
("Combination") with any other corporation or legal
person, other than a Combination which (a) is approved
by a majority of the directors of the Company who are
Continuing Directors at the time of such approval, and
(b) would result in the Common Stock of the Company
outstanding immediately prior thereto remaining
outstanding or being converted into voting common
stock, or its equivalent, of either the surviving
entity or the Person owning directly or indirectly
all the common stock, or its equivalent, of the
surviving entity which voting common stock, or its
equivalent, is listed on a registered United States
national securities exchange or is approved for
quotation and trading on the National Association of
Securities Dealers Automated Quotation National Market
System ("Stock Combination"); or
(E) the stockholders of the Company approve a
plan of complete liquidation of the Company, but only
if a substantial portion of the assets of the
-4-
Company continue to be used in a business after such
liquidation, or an agreement for the sale or
disposition by the Company of all or substantially all
the Company's assets.
(ii) For purposes of this Agreement, the term
"Subsidiary" shall mean any corporation in which the
Company possesses directly or indirectly fifty percent
(50%) or more of the total combined voting power of all
classes of stock.
2. Termination Following Change in Control. The
Executive shall be entitled to the benefits provided in Section 3
hereof upon any termination of his or her employment with the
Company and its Subsidiaries within a Protection Period, except a
termination of employment (a) because of his or her death, (b)
because of a "Disability", (c) by the Company for "Cause", or (d)
by the Executive other than for "Good Reason".
(i) Disability. The Executive's employment shall be
deemed to have terminated because of a "Disability" on the
date on which the Executive becomes eligible to receive
long-term disability benefits under the Company's Master
Welfare and Cafeteria Plan (the "Cafeteria Plan") (or any
other plan), or a similar long-term disability plan of a
Subsidiary, or a successor to the Cafeteria Plan or to any
such similar plan which is applicable to the Executive. If
the Executive is not covered for long-term disability benefits
by the Cafeteria Plan or a similar or successor long-term
disability plan, the Executive shall be deemed to have
terminated because of a "Disability" on the date on
-5-
which he or she would have become eligible to receive long-term
disability benefits if he or she were covered for long-term
disability benefits by the Company's Cafeteria Plan.
(ii) Cause. Termination of the Executive's employment
by the Company or a Subsidiary for "Cause" shall mean
termination by reason of (A) the Executive's willful
engagement in conduct which involves dishonesty or moral
turpitude which either (1) results in substantial personal
enrichment of the Executive at the expense of the Company
or any of its Subsidiaries, or (2) is demonstrably and
materially injurious to the financial condition or
reputation of the Company or any of its Subsidiaries, (B)
the Executive's willful violation of the provisions of the
confidentiality or non-competition agreement entered into
between the Company or any of its Subsidiaries and the
Executive or (C) the commission by the Executive of a
felony. An act or omission shall be deemed "willful" only
if done, or omitted to be done, in bad faith and without
reasonable belief that it was in the best interest of the
Company and its Subsidiaries. Notwithstanding the
foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been
delivered to the Executive a written notice of termination
from the Compensation and Nominating Committee of the Board
or any successor thereto (the "Committee") after reasonable
notice to the Executive and an opportunity for the
Executive, together with his or her counsel, to be heard
before the Committee, finding that, in the good faith
opinion of such Committee, the Executive was guilty of
conduct set forth above in clause (A) or (B) of the first
sentence of this subsection (ii) and specifying the
particulars in detail.
-6-
(iii) Without Cause. The Company or a Subsidiary may
terminate the employment of the Executive without Cause
during a Protection Period only by giving the Executive
written notice of termination to that effect. In that
event, the Executive's employment shall terminate on the
last day of the month in which such notice is given (or
such later date as may be specified in such notice).
(iv) Good Reason. Termination of employment by the
Executive for "Good Reason" shall mean termination within
a Protection Period:
(A) if there has occurred a reduction by the
Company or a Subsidiary in the Executive's base salary
in effect immediately before the beginning of the
Protection Period or as increased from time to time
thereafter;
(B) if the Company or a Subsidiary, without the
Executive's written consent, has required the
Executive to be relocated anywhere in excess of
thirty-five (35) miles from his or her office location
immediately before the beginning of the Protection
Period, except for required travel on the business of
the Company or a Subsidiary to an extent substantially
consistent with the Executive's business travel
obligations immediately before the beginning of the
Protection Period;
(C) if there has occurred a failure by the
Company or a Subsidiary to maintain plans providing
benefits substantially the same as those provided by any
-7-
benefit or compensation plan, retirement or pension
plan, stock option plan, life insurance plan,
health and accident plan or disability plan in which
the Executive is participating immediately before the
beginning of the Protection Period, or if the Company
or a Subsidiary has taken any action which would
adversely affect the Executive's participation in or
materially reduce the Executive's benefits under
any of such plans or deprive the Executive of any
material fringe benefit enjoyed by the Executive
immediately before the beginning of the Protection
Period, or if the Company or a Subsidiary has failed
to provide the Executive with the number of paid
vacation days to which he or she would be entitled in
accordance with the applicable vacation policy of the
Company or Subsidiary as in effect immediately before
the beginning of the Protection Period;
(D) if the Company or a Subsidiary has reduced in
any manner which the Executive reasonably considers
important the Executive's title, job authorities or
responsibilities immediately before the beginning of
the Protection Period;
(E) if the Company has failed to obtain the
assumption of the obligations contained in this
Agreement by any successor as contemplated in Section
7(ii) hereof; or
(F) if there occurs any purported termination of
the Executive's employment by the Company or a
Subsidiary which is not effected pursuant to a
-8-
written notice of termination as described in subsection
(ii) or (iii) above; and for purposes of this Agreement,
no such purported termination shall be effective.
The Executive shall exercise his or her right to
terminate his or her employment for Good Reason by giving
the Company a written notice of termination specifying in
reasonable detail the circumstances constituting such Good
Reason. However, the Company shall have 30 days to "cure"
such that the circumstances constituting such Good Reason
are eliminated. The Executive's employment shall terminate
at the end of such 30-day period only if the Company has
failed to cure such circumstances constituting the Good
Reason.
A termination of employment by the Executive within a
Protection Period shall be for Good Reason if one of the
occurrences specified in this subsection (iv) shall have
occurred (and subject to the cure provision of the
immediately preceding paragraph), notwithstanding that the
Executive may have other reasons for terminating
employment, including employment by another employer which
the Executive desires to accept.
(v) Transfers; Sale of Subsidiary. A transfer of
employment from the Company to a Subsidiary, from a
Subsidiary to the Company, or between Subsidiaries shall
not be considered a termination of employment for purposes
of this Agreement. If the Company's ownership of a
corporation is reduced so as to cause such corporation to
cease to be a "Subsidiary" as defined in Section 1(ii) of
this Agreement and the Executive
-9-
continues in employment with such corporation, the Executive
shall not be considered to have terminated employment for
purposes of this Agreement and the Executive shall have no right
to any benefits pursuant to this Section 3 unless (a) a Change
in Control occurred prior to such reduction in ownership and
(b) the Executive's employment terminates within the
Protection Period beginning on the date of such Change in
Control under circumstances that would have entitled the
Executive to benefits if such corporation were still a
Subsidiary.
3. Benefits Upon Termination Within Protection Period.
If, within a Protection Period, the Executive's employment by the
Company or a Subsidiary shall terminate other than (a) because of
his or her death, (b) because of a Disability, (c) by the Company
for Cause, or (d) by the Executive other than for Good Reason,
the Executive shall be entitled to the benefits provided for
below:
(i) The Company or a Subsidiary shall pay to the
Executive through the date of the Executive's termination
of employment salary at the rate then in effect, together
with salary in lieu of vacation accrued to the date on
which his or her employment terminates, in accordance with
the standard payroll practices of the Company or
Subsidiary. The Company or Subsidiary shall also pay to the
Executive any bonus relating to the year or portion thereof
ending on the date of his or her termination, calculated
based on the assumption that the highest possible target
was achieved, prorated for such year or portion thereof.
-10-
(ii) The Company shall pay the Executive as a
severance payment an amount equal to three times the sum of
(A) his or her highest annual salary in effect during any
period of 12 consecutive months within the 36 months
immediately preceding his or her date of termination of
employment, and (B) the highest annual bonus awarded to the
Executive under the Company's Annual Incentive Program or a
similar bonus plan of a Subsidiary (or a successor to any
such bonus plan) in respect of any of 3 calendar years
immediately preceding the calendar year in which his or her
date of termination of employment falls. Such severance
payment shall be paid in a lump sum within 10 business days
after the date of such termination of employment.
(iii) During the period of 36 months beginning on the
date of the Executive's termination of employment (the
"Benefit Period"), the Executive shall be deemed to remain
an employee of the Company or the applicable Subsidiary for
purposes of the applicable medical and insurance plans of
the Company (including any life insurance plan) and its
Subsidiaries (but excluding any disability, business
travel, or spending account plans), and shall be entitled
to receive the benefits available to employees thereunder,
provided that continued participation is possible under
applicable law and the terms of such plan or program, and
provided, further, that if the Executive would qualify for
retiree benefits during the Benefit Period under the
applicable medical or insurance plan without regard to this
Agreement, the Executive shall instead be entitled to receive
the benefits available to retirees in accordance with the terms
of such plan. In the event that the Executive's participation
in any such benefit plan or program is barred, the Company shall
-11-
arrange to provide the Executive with substantially similar
benefits or the after-tax cash equivalent. However, to the
extent the Executive receives substantially the same
benefit as one or more of the benefits described above in
this subsection (iii) pursuant to other employment, the
Company's obligation to provide such benefit (or after-tax
cash equivalent) shall cease during the time that the
Executive is receiving such benefit from other employment.
(iv) The Company shall supplement the benefits payable
under the Company's Cash Balance Plan for Salaried
Employees or any successor plan and the Company's
Supplemental Executive Retirement Plan or any successor
plan (each determined without regard to this Section 3) by
providing to the Executive the additional benefits that the
Executive would have been entitled to receive if he or she
had remained in the employment of the Company during the
Benefit Period earning compensation at the rate in effect
on the date his or her employment terminates. The
supplemental benefits pursuant to this subsection (iv)
shall be paid in a lump sum within 10 business days after
the date of such termination of employment.
(v) Any restricted stock or other stock-based awards
granted to the Executive pursuant to the Company's 1998
Stock Incentive Plan (the "Incentive Plan") that are not
vested shall vest on the date of his or her termination.
The Executive's beneficiary with respect to such benefits
shall be the same person or persons as determined under the
respective plan.
-12-
(vi) During the period of one year beginning on the
date of the Executive's termination of employment, the
Company shall provide the Executive with executive-level
out placement services.
(vii) During the period of three months beginning on
the date of the Executive's termination of employment, the
Company shall pay the Executive the same level of personal
allowances (such as club dues and automobile expenses) as
the Executive received immediately prior to his or her
termination of employment.
(viii) The Executive shall be entitled to all payments
and benefits provided for by or pursuant to this Section 3
whether or not he or she seeks or obtains other employment,
except as provided in subsection (iii).
4. Parachute Payments.
If any payment or benefit received by or in respect of
the Executive under this Agreement or any other plan, arrangement
or agreement with the Company or any of its Subsidiaries,
including without limitation any payment or benefit under the
Incentive Plan and any predecessor or successor thereto
(determined without regard to any additional payments required
under this Section 4 and Appendix A) (a "Payment") would be
subject to the tax (the "Excise Tax") imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") (or
any similar tax that may hereafter be imposed), the Company shall
pay to the Executive with
-13-
respect to such Payment at the time specified in Appendix A an
additional amount (the "Gross-up Payment") such that the net
amount retained by the Executive from the Payment and the
Gross-up Payment, after reduction for any Excise Tax upon the
Payment and any Federal, state and local income tax and Excise
Tax upon the Gross-up Payment, shall be equal to the Payment. The
calculation and payment of the Gross-up Payment shall be subject
to the provisions of Appendix A. The Executive shall be entitled
to Gross-up Payments pursuant to this Section 4 irrespective of
whether the Executive has satisfied the conditions for receiving
benefits pursuant to Section 3 of this Agreement.
5. No Other Severance Benefits;
Right to Other Plan Benefits
In the event of termination of the Executive's
employment within a Protection Period under circumstances
entitling the Executive to benefits hereunder, the Executive
shall not be entitled to any other severance benefits except
those provided by or pursuant to this Agreement, and the
Executive hereby waives any claim against the Company or any of
its Subsidiaries or affiliates for any additional severance
benefits to which he or she might otherwise be entitled. Except
as provided in the preceding sentence, nothing in this Agreement
shall be construed as limiting in any way any rights or benefits
that the Executive may have pursuant to the terms of any other
plan, program or arrangement maintained by the Company or any of
its Subsidiaries or affiliates.
6. Termination of Employment Agreements.
-14-
Any and all Employment Agreements entered into between
the Company or any of its Subsidiaries and the Executive prior to
the date of this Agreement are hereby terminated.
7. Termination and Amendment; Successors;
Binding Agreement.
(i) This Agreement shall terminate on the close of
business on the date preceding the third anniversary of the
date of this Agreement; provided, however, that commencing
on the third anniversary of the date of this Agreement and
each anniversary of the date of this Agreement thereafter,
the term of this Agreement shall automatically be
extended for one additional year unless at least 60 days
prior to such anniversary date, the Company or the
Executive shall have given notice to the other party, in
accordance with Section 8, that this Agreement shall not be
extended. This Agreement may be amended only by an
instrument in writing signed by the Company and the
Executive. The Company expressly acknowledges that, during
the term of this Agreement, the Executive shall have a
binding and irrevocable right to the benefits set forth
hereunder in the event of his or her termination of
employment during a Protection Period to the extent
provided in Section 2. Any purported amendment or
termination of this Agreement by the Company, other than
pursuant to the terms of this Section 7(i), shall be
ineffective, and the Executive shall not lose any right
hereunder by failing to contest such a purported amendment
or termination.
(ii) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
-15-
and/or assets of the Company, to expressly assume and agree
to honor this Agreement in the same manner and to the same
extent that the Company would be required to so honor if no
such succession had taken place. Failure of the Company to
obtain such agreement prior to the effectiveness of any such
succession shall be a violation of this Agreement and shall
entitle the Executive to benefits from the Company or such
successor in the same amount and on the same terms as the
Executive would be entitled hereunder if he or she
terminated his or her employment for Good Reason, except
that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed
the date of termination of employment. As used in this
subsection (ii), "Company" shall mean the Company
hereinbefore defined and any successor to its business
and/or assets as aforesaid which executes and delivers the
agreement provided for in this subsection (ii) or which
otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law. The Company shall
promptly notify the Executive of any succession by purchase,
merger, consolidation or otherwise to all or substantially
all the business and/or assets of the Company and shall
state whether or not the successor has executed the
agreement required by this subsection (ii) and, if so, shall
make a copy of such agreement available to the Executive.
(iii) This Agreement and all rights of the Executive
hereunder shall inure to the benefit of, and shall be
enforceable by, the Executive and the Executive's legal
representatives. If the Executive should die while any
amounts remain payable to him or her
-16-
hereunder, all such amounts shall be paid to his or her
designated beneficiary or, if there be no such beneficiary,
to his or her estate.
(iv) The Company expressly acknowledges and agrees
that the Executive shall have a contractual right to the
benefits provided hereunder, and the Company expressly
waives any ability, if possible, to deny liability for any
breach of its contractual commitment hereunder upon the
grounds of lack of consideration, accord and satisfaction
or any other defense. If any dispute arises after a Change
in Control as to whether the Executive is entitled to
benefits under this Agreement, there shall be a presumption
that the Executive is entitled to such benefits and the
burden of proving otherwise shall be on the Company.
(v) The Company's obligation to provide the benefits
set forth in this Agreement shall be absolute and
unconditional and shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, or other right which the Company
or any Subsidiary may have against the Executive or anyone
else. All amounts payable by the Company hereunder shall be
paid without notice or demand. Each and every payment made
hereunder by the Company or any Subsidiary shall be final,
and neither the Company nor any Subsidiary will seek to
recover all or any portion of such payment from the
Executive or from whomsoever may be entitled thereto, for
any reason whatsoever.
-17-
8. Notice. All notices of termination and other
communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered by
hand or mailed by United States registered mail, return receipt
requested, addressed as follows:
If to the Executive:
_________________________
_________________________
_________________________
If to the Company:
Corn Products International, Inc.
Xxxxxxx Technical Center
0000 Xxxxxx Xxxx/ Xxx 000
Xxxxxx-Xxxx, Xxxxxxxx 00000-0000
Attention: Vice President - Human Resources
or to such other address as either party may have furnished to
the other in writing in accordance herewith.
9. Miscellaneous. No provision of this Agreement may
be waived or modified unless such waiver or modification is in
writing and signed by the Executive and the Company's Chief
Executive Officer or such other officer as may be designated by
the Board. No waiver by either party of any breach by the other
party of, or compliance with, any provision of this Agreement
shall be deemed a waiver of similar or dissimilar provisions at
the same or any prior or subsequent time. The validity,
interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Illinois, without
regard to its principles of conflict of laws, and by applicable
laws of the United States.
-18-
10. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision, which shall remain in full
force and effect.
11. Legal Expenses; Dispute Resolution; Arbitration;
Pre-Judgment Interest.
(i) The Company shall promptly pay all legal fees and
related expenses incurred by the Executive in seeking to
obtain or enforce any right or benefit under this Agreement
(including all fees and expenses, if any, incurred in
seeking advice in connection therewith).
(ii) If any dispute or controversy arises under or in
connection with this Agreement, including without
limitation any claim under any Federal, state or local law,
rule, decision or order relating to employment or the fact
or manner of its termination, the Company and the Executive
shall attempt to resolve such dispute or controversy
through good faith negotiations.
(iii) If such parties fail to resolve such dispute or
controversy within ninety days, such dispute or controversy
shall, if the Executive so elects, be settled by
arbitration, conducted before a panel of three arbitrators
in Chicago, Illinois in accordance with the applicable
rules and procedures of the Center for Public Resources
then in effect. Judgment upon the award rendered by the
arbitrators may be entered in any court having
-19-
jurisdiction. Such arbitration shall be final and binding
on the parties. Costs of any arbitration, including,
without limitation, reasonable attorneys' fees of both
parties, shall be borne by the Company.
(iv) If such parties fail to resolve such dispute or
controversy within ninety days and the Executive does not
elect arbitration, legal proceedings may be instituted, in
which event the Company shall be required to pay the
Executive's legal fees and related expenses to the extent
set forth in subsection (i) above.
(v) Pending the resolution of any arbitration or court
proceeding, the Company shall continue payment of all
amounts due the Executive under this Agreement and all
benefits to which the Executive is entitled, including
medical and life insurance benefits, other than those
specifically at issue in the arbitration or court
proceeding and excluding long term disability benefits.
(vi) If the Executive is awarded amounts pursuant to
arbitration or court proceeding, the Company shall also pay
pre-judgment interest on such amounts calculated at the
Prime Rate (as defined below) in effect on the date of such
payment. For purposes of this Agreement, the term "Prime
Rate" shall mean the prime rate as published in the Wall
Street Journal Midwest edition showing such rate in effect
as of the first business day of each calendar quarter.
-20-
* * * * *
IN WITNESS WHEREOF, the parties have executed this
Agreement on the day and year first above written.
CORN PRODUCTS INTERNATIONAL, INC.
By:____________________________
EXECUTIVE
_______________________________
-21-
Appendix A
Gross-up Payments
The following provisions shall be applicable with
respect to the Gross-up Payments described in Section 4:
(a) For purposes of determining whether any of the
Payments will be subject to the Excise Tax and the amount
of such Excise Tax, (a) all of the Payments received or to
be received shall be treated as "parachute payments" within
the meaning of Section 280G(b)(2) of the Code, and all
"excess parachute payments" within the meaning of Section
280G(b)(1) of the Code shall be treated as subject to the
Excise Tax unless, in the opinion of tax counsel selected
by the Executive and reasonably acceptable to the Company,
the Payments (in whole or in part) do not constitute
parachute payments, including by reason of Section
280G(b)(4)(A) of the Code, or excess parachute payments (as
determined after application of Section 280G(b)(4)(B) of
the Code), and (b) the value of any non-cash benefits or
any deferred payment or benefit shall be determined by
independent auditors selected by the Executive and
reasonably acceptable to the Company in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-up Payment
the Executive shall be deemed to pay Federal income taxes
at the highest marginal rate of Federal income taxation in
the calendar year in which the Gross-up Payment is to be
made and state and local income taxes at the highest
marginal rate of taxation to which such payment could be
subject based upon the state and locality of the Executive's
residence or employment, net of the maximum reduction
in Federal income taxes which could be obtained from
deduction of such state and local taxes. In the event that
the Excise Tax is subsequently determined to be less than
the amount taken into account hereunder at the time the
Gross-up Payment is made, the Executive shall repay to
Company, at the time that the amount of such reduction in
Excise Tax is finally determined, the portion of the
Gross-up Payment attributable to such reduction (plus the
portion of the Gross-up Payment attributable to the Excise
Tax and Federal and state and local income tax imposed on
the portion of the Gross-up Payment being repaid by the
Executive if such repayment results in a reduction in Excise
Tax and/or a Federal and state and local income tax
deduction), plus interest on the amount of such repayment at
the Federal short-term rate as defined in Section
1274(d)(1)(C)(i) of the Code. In the event that the Excise
Tax is determined to exceed the amount taken into account
hereunder at the time the Gross-up Payment is made
(including by reason of any payments the existence or amount
of which cannot be determined at the time of the Gross-up
Payment), the Company shall make an additional gross-up
payment in respect of such excess (plus any interest,
penalties or additions payable with respect to such excess)
at the time that the amount of such excess is finally
determined. Notwithstanding the foregoing, the Company shall
withhold from any payment due to the Executive the amount
required by law to be so withheld under Federal, state or
local wage withholding requirements or otherwise, and shall
pay over to the appropriate government authorities the
amount so withheld.
(b) The Gross-up Payment with respect to a Payment
shall be paid not later than the thirtieth day following
the date of the Payment; provided, however, that if the
amount of such Gross-up Payment or portion thereof cannot
be finally determined on or
before such day, the Company shall pay to the Executive on
such date an estimate, as determined in good faith by the
Company, of the amount of such payments and shall pay the
remainder of such payments (together with interest at the
Federal short-term rate provided in Section 1274(d)(1)(C)(i)
of the Code) as soon as the amount thereof can be
determined. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company
to the Executive, payable on the fifth day after demand by
the Company (together with interest at the Federal
short-term rate provided in Section 1274(d)(1)(C)(i) of the
Code). At the time that payments are made under Section 4
and this Appendix A, the Company shall provide the Executive
with a written statement setting forth the manner in which
such payments were calculated and the basis for such
calculations, including, without limitation, any opinions or
other advice the Company has received from outside counsel,
auditors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement).
(c) The Company shall promptly pay the fees and related
expenses of any tax counsel and auditors selected by the
Executive to provide services in connection with this
Appendix A.
