Exhibit 10.19
2003 MANAGEMENT & DIRECTORS INCENTIVE PLAN
FOR GENTEK INC.
PERFORMANCE CASH AWARD AGREEMENT
THIS AGREEMENT is made by and between GenTek Inc., hereinafter referred
to as the "Company," and _________________________________________, hereinafter
referred to as "Executive", effective as of the date signed by the Executive.
WHEREAS, the Company has established the 2003 Management and Directors
Incentive Plan for GenTek Inc. (the "Plan");
WHEREAS, the Plan provides for the grant of performance awards that may
be paid out in cash, subject to certain conditions stated herein (a "Performance
Cash Award");
WHEREAS, the Compensation Committee of the Board of Directors of the
Company (the "Committee") has determined that it would be to the advantage and
best interests of the Company and its shareholders to grant the performance cash
awards provided for herein to the Executive in partial consideration of services
rendered, or to be rendered, to the Company and as an incentive for increased
efforts during such service; and
WHEREAS, all capitalized terms used herein without definition shall
have the meanings ascribed to such terms in the Plan.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto do hereby agree as follows:
1. Definitions. Capitalized terms used in this Agreement, which are not
defined herein or on Exhibit C, shall have the meaning given such terms
in the Plan.
a. "Average Return on Assets" shall mean the arithmetic average,
as of December 31, 2006, Operating Income/ (Net PP&E = A/R +
Inventory - A/P) for the annual periods between January 1,
2004 through December 31, 2006.
b. "Average Return on Assets Target" for a given period shall be
set forth on Exhibit B to this Agreement, subject to Section 8
and shall equal the sum of the Return on Assets Target for
2004, 2005 and 2006 calendar years.
c. "Cumulative EBITDA" shall mean, as of December 31, 2006, the
total EBITDA for the period between January 1, 2004 through
December 31, 2006.
d. "Cumulative EBITDA Target" for a given period shall be set
forth on Exhibit B to this Agreement, subject to Section 8,
and shall equal the arithmetic average of the EBITDA Targets
for the 2004, 2005 and 2006 calendar years.
e. "EBITDA" means for any applicable period the sum of (i) the
net income of the Company and its consolidated Subsidiaries
for such period plus (in each case to the extent included in
the calculation of such net income) the sum of (x) all income
taxes (whether paid or deferred), (y) interest expense (net of
any interest income), and (z) amortization and depreciation
expense. This figure shall be exclusive of material, one-time,
nonrecurring charges.
f. "EBITDA Target" for a given period shall be as set forth on
Exhibit B.
g. "Operating Working Capital" as of any date shall mean the
consolidated current assets of the Company and its
consolidated Subsidiaries (other than cash and cash
equivalents) identified as net trade accounts receivable and
net inventory minus trade accounts payable of the Company and
its consolidated Subsidiaries (other than the current portion
of any indebtedness).
h. "Return on Assets" for any applicable period shall mean
operating income divided by the sum of (i) property, plant and
equipment costs (as reflected on the Company's audited
financial statements for such period and (ii) Operating
Working Capital.
i. "Return on Assets Target" for a given period shall be as set
forth on Exhibit B.
2. Performance Cash Awards. The Executive is eligible for a Performance
Cash Award with a target value of _____________________ (the "Target
Award"). The actual amount of the Performance Cash Award will be
determined by the level of achievement of the Cumulative EBITDA Target
and the Average Return on Assets Target (the "Performance Cash Award
Amount") for the period beginning on January 1, 2004 and ending on
December 31, 2006 (the "Performance Period"). Each of the two metrics
shall be equally weighted. If the Company achieves greater or lesser
than 100% of the Cumulative EBITDA Target or the Average Return on
Assets Target, the Performance Cash Award Amount will increase or
decrease as set forth in the attached Exhibit A.
3. Payment of Performance Cash Award Amount. The Performance Cash Award
Amount is calculated once (a) the Performance Period ends, (b) the
Company receives its year-end financial audit and (c) performance
reviews are completed. The Company shall determine the amount of
performance cash earned by the Executive and shall pay to the Executive
the Performance Cash Award Amount within 30 days of calculating such
amount provided that the Executive's is employed by the Company on the
date of the Performance Cash Award Amount is paid. Notwithstanding the
foregoing, if the Executive formally retires, terminates employment by
reason of death or Disability or is terminated for other than Cause,
then a pro-rated amount based on the period of time the Executive was
employed will be paid at the time performance cash awards are paid to
other executives. In the event that the Company terminates the
Executive's employment for Cause or the Executive voluntarily
terminates employment other than for retirement, death or Disability,
all rights to any Performance Cash Award shall be forfeited as of the
date of termination of employment.
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4. Certain Corporate Events. In the event of a Change in Control, all
targets set forth under this agreement shall be deemed to have been
achieved and the Executive shall be entitled to receive a pro-rata
portion of his or her Target Award where payment shall be equal to the
Target Award multiplied by a fraction, the denominator of which shall
be the number of calendar days that comprises the Performance Period
and the numerator of which shall be the number of calendar days that
has elapsed from the Effective Date through the date of the
consummation of such Change in Control.
5. Other Compensation. The performance cash awards under this Agreement
shall be in addition to any other compensation that may be due to the
Executive, including, without limitation, severance or accelerated
vesting of stock options; provided, however, that such performance cash
awards shall be excluded from the calculation of (i) any severance
payments or other benefits under any employment agreement between the
Executive and the Company and (ii) any payments or benefits under any
employee welfare or pension benefit plans or programs or any other
plans or programs, including, but not limited to any plans that the
Committee may at such time determine.
6. Form of Payment/Taxes. The performance cash awards payable hereunder
shall be payable in cash and shall be subject to applicable federal,
state and local tax withholding. It is expressly understood and agreed
by and between the Company and the Executive that the Executive shall
be responsible for taxes on any payment he receives under this
Agreement.
7. No Rights of Continued Employment. Nothing in this Agreement shall
confer on the Executive the right to continued employment with either
the Company or the purchaser of, or successor to, the Company, or
affect in any way the right of the Company to terminate the Executive's
employment at any time, with or without cause, or change the
Executive's responsibilities or, except as expressly set forth herein,
affect in any way the rights of the Executive under any plan or
agreement with the Company.
8. Adjustments to Targets. The EBITDA Targets, Cumulative EBITDA Targets,
Return on Assets Targets and the Cumulative Return on Investment
Targets specified in Exhibit B are based upon certain revenue and
expense assumptions about the future business of the Company as of the
date the performance cash award is granted. Accordingly, in the event
that, after such date, the Committee determines, in its sole
discretion, that any acquisition or any disposition of any business by
the Company or any dividend or other distribution (whether in the form
of cash, Common Stock, other securities, or other property),
recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Common Stock or other securities of the
Company, issuance of warrants or other rights to purchase Common Stock
or other securities of the Company, any unusual or nonrecurring
transactions or events affecting the Company, or the financial
statements of the Company, or change in applicable laws, regulations,
or accounting principles occurs such that an adjustment is determined
by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available under the Plan or with respect to the Performance Cash Award,
then the Committee may, in its sole discretion, in good faith and in
such manner as it may deem equitable, adjust the financial targets set
forth on Appendix B to reflect the projected effect of such
transaction(s) or event(s) on EBITDA Targets, Cumulative EBITDA
Targets, Return on Assets Targets and Average Return on Asset
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Targets. In determining the Performance Cash Award Amount, in no event
may the Committee increase the amount payable at a given level of
performance as set forth herein.
9. Plan Document. This Performance Cash Award is granted under the Plan
and remains subject to the terms and conditions of the Plan which are
hereby incorporated by reference. Capitalized terms not defined herein
shall have the meanings ascribed to them in the Plan.
10. Governing Law. This Agreement shall be construed and interpreted, and
the rights of the parties shall be determined, in accordance with the
laws of the State of Delaware, without regard to conflicts of law
provisions thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth below.
GenTek Inc.
a Delaware corporation
By:
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Name: Xxxxxx X. Novo
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Title: Vice President, Human Resources
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PARTICIPANT
Name:
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Date:
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Exhibit A
Percentage of
Percentage of Percentage of Average Return on Percentage of
Cumulative EBITDA Target Award Assets Target Target Award
95% 95% 95% 95%
96% 96% 96% 96%
97% 97% 97% 97%
98% 98% 98% 98%
99% 99% 99% 99%
100% 100% 100% 100%
105% 110% 105% 110%
110% 120% 110% 120%
115% 130% 115% 130%
120% 140% 120% 120%
125% 150% 125% 150%
Note: EBITDA and ROA Targets weighted equally.
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Exhibit B
Target 2004 2005 2006
EBITDA
Cumulative EBITDA
Return on Assets
Average Return on Assets
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Exhibit C
Additional Definitions
Operating Profit: income statement profitability measure for a proscribed time
period defined as pre-tax profit plus: (i) interest expense (net of interest
income); and (ii) non-operating expense/income. Stated in the reporting currency
of GenTek, this figure is to be prepared in accordance with Generally Accepted
Accounting Principals ("GAAP"), consistently applied for the period(s) under
evaluation. This figure shall be exclusive of material, one-time, non-recurring
charges.
Property, Plant & Equipment, Net ("Net PP&E"): balance sheet measure of the
company's investment in land, land improvements, buildings, building
improvements, construction-in-progress, and capital equipment, net of
accumulated depreciation. Stated in the reporting currency of GenTek, this
figure is to be prepared in accordance with GAAP consistently applied for the
period(s) under evaluation.
Accounts Receivable, Trade, Net ("Net A/R"): balance sheet measure of amounts
owed to the company through the sale of products and in the normal-course
operating activities of the company, net of reserves for bad debts. Stated in
the reporting currency of GenTek, this figure is to be prepared in accordance
with GAAP consistently applied for the period(s) under evaluation. This figure
shall be exclusive of: (i) non-trade accounts and notes receivable; and (ii)
intercompany items.
Inventory, Net: balance sheet measure of the value of raw materials, stores and
supplies, work-in-process, and finished goods for sale, net of reserves. Stated
in the reporting currency of GenTek, this figure is to be prepared in accordance
with GAAP consistently applied for the period(s) under evaluation.
Accounts Payable, Trade ("A/P"): balance sheet measure of amounts owed to
creditors in the normal-course operating activities of the company. Stated in
the reporting currency of GenTek, this figure is to be prepared in accordance
with GAAP consistently applied for the period(s) under evaluation. This figure
shall be exclusive of: (i) non-trade accounts and notes payable; and (ii)
intercompany items.
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