EXHIBIT 10(Z)
FORM OF MANAGEMENT CONTINUITY AGREEMENT
Xxxxxxxx Corporation ("Xxxxxxxx") entered into a Management Continuity Agreement
identical to the form attached hereto with each of the following Xxxxxxxx
executive officers on the dates indicated. Each of the agreements with the
executive officers provides for a "Payment Period" (as defined in Section 3(c)
of the Management Continuity Agreement) of thirty-six (36) months.
Date Name
---- ----
10/18/99 Xxxxxxxx X. Xxxxxx
10/18/99 Xxxxxxxx X. Xxxxxxx
10/01/00 Xxxxxx Xxxxxxx
10/18/99 Xxxxxxx X. Xxxxxxx
08/01/00 Xxxxx X. Xxx
03/27/00 Xxxx X. Xxxxxxx
05/01/02 Xxxxxxx X. Xxxxxxxxxx
03/01/02 Xxxx X. Xxxxxx
10/18/99 Xxxxxx X. Xxxxx, Xx.
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MANAGEMENT CONTINUITY AGREEMENT
THIS AGREEMENT dated as of this [ ] day of [ ], 199[ ] between
[ ](the "Executive") and The X.X. Xxxxxxxx Company, a New York
corporation (the "Company").
WHEREAS, the Executive and the Company desire to set forth certain
compensation and benefits that the Executive shall receive upon the happening of
certain events affecting the Executive and the Company, and
WITNESSETH:
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises herein contained, the parties agree as follows:
1. TERM. This Agreement shall commence on the date hereof and shall
continue until the Date of Termination as set forth in Section 8 hereof.
2. PERIOD OF EMPLOYMENT. Executive's "Period of Employment" shall
commence on the date on which a Change in Control occurs and shall end on the
date that is 24 months after the date on which such Change in Control occurs.
Notwithstanding the foregoing, however, Executive's Period of Employment shall
not extend beyond any Mandatory Retirement Date (as hereinafter defined in
Section 3) applicable to Executive.
3. CERTAIN DEFINITIONS. For purposes of this Agreement:
(a) A "Change in Control" shall mean:
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding Shares of common stock of the
Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control: (A) any
acquisition directly from the Company (other than by exercise
of a conversion privilege), (B) any acquisition by the Company
or any of its subsidiaries, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or (D)
any acquisition by any company with respect to which,
following such acquisition, more than 70% of, respectively,
the then outstanding Shares of
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common stock of such company and the combined voting power of
the then outstanding voting securities of such company
entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such acquisition in substantially the
same proportions as their ownership, solely in their capacity
as Shareholders of the Company, immediately prior to such
acquisition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; or
(ii) Individuals who, as of the beginning of such
period, constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the beginning of such period whose election, or
nomination for election by the Company's Shareholders, was
approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms is used
in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
(iii) Consummation of a reorganization, merger or
consolidation, in each case, with respect to which all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger or
consolidation, do not, following such reorganization, merger
or consolidation, beneficially own, directly or indirectly,
solely in their capacity as Shareholders of the Company, more
than 70% of, respectively, the then outstanding Shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the company
resulting from such reorganization, merger or consolidation in
substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or
consolidation of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; or
(iv) Consummation of (A) a complete liquidation or
dissolution of the Company or (B) a sale or other disposition
of all or substantially all of the assets of the Company,
other than to a company, with respect to which following such
sale or other disposition, more than 70% of, respectively, the
then outstanding Shares of common stock of such company and
the combined voting power of the then outstanding voting
securities of such company entitled to vote generally in the
election of directors is then
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beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities, solely in
their capacity as Shareholders of the Company, who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the
Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be.
(b) The term "Mandatory Retirement Date" shall mean the
compulsory retirement date, if any, established by the Company for those
executives of the Company who, by reason of their positions and the size of
their nonforfeitable annual retirement benefits under the Company's pension,
profit-sharing, and deferred compensation plans, are exempt from the provisions
of the Age Discrimination in Employment Act, 29 U.S.C. Sections 621, et seq,
which date shall not in any event be earlier for any executive than the last day
of the month in which such Executive reaches age 65.
(c) The term "Payment Period" shall mean [twenty-four (24)]
[thirty-six (36)] months.
4. COMPENSATION DURING PERIOD OF EMPLOYMENT. For so long during
Executive's period of Employment as Executive is an employee of the Company, the
Company shall be obligated to compensate Executive as follows:
(a) Executive shall continue to receive Executive's full base
salary at the rate in effect immediately prior to the Change in Control.
Executive's base salary shall be increased annually, with each such increase due
on the anniversary date of Executive's most recent previous increase. Each such
increase shall be no less than an amount which at least equals on a percentage
basis the mean of the annualized percentage increases in base salary for all
elected officers of the Company during the two full calendar years immediately
preceding the Change in Control.
(b) Executive shall continue to participate in all benefit and
compensation plans (including but not limited to the Stock Option Plan,
Long-Term Incentive Plan, Management Incentive Program, Non-Qualified Benefit
Security Plan, Executive Life Insurance Program, Savings Benefit Restoration
Plan, Performance Share Deferred Compensation Plan, pension plan, savings plan,
flexible benefits plan, life insurance plan, health and accident plan or
disability plan) in which Executive was participating immediately prior to the
Change in Control, or in plans providing substantially similar benefits, in
either case upon terms and conditions and at levels at least as favorable as
those provided to Executive under the plans in which Executive was participating
immediately prior to the Change in Control;
(c) Executive shall continue to receive all fringe benefits,
perquisites, and similar arrangements which Executive was entitled to receive
immediately prior to the Change in Control; and
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(d) Executive shall continue to receive annually the number of
paid vacation days and holidays Executive was entitled to receive immediately
prior to the Change in Control.
5. COMPENSATION UPON TERMINATION OF EMPLOYMENT. If, during the Period
of Employment, the Company shall terminate Executive's employment for any reason
(other than for a reason and as expressly provided in Section 6 hereof), or if
Executive shall terminate Executive's employment for "Good Reason" (as
hereinafter defined in Section 6(b)) then the Company shall be obligated to
compensate Executive as follows and no payments or benefits received pursuant to
this Section 5 shall be reduced or terminated as a result of Executive reaching
the Mandatory Retirement Date:
(a) In lieu of any salary payments that the Executive would
have received if he had continued in the employment of the Company during the
Payment Period, the Company shall pay to Executive in a lump sum, by not later
than the fifth business day following the Date of Termination (as hereinafter
defined in Section 8), an amount equal to one-twelfth of Executive's annualized
base salary in effect immediately prior to the Date of Termination, multiplied
by the number of months in the Payment Period.
(b) By not later than the fifth day following the Date of
Termination, the Company shall pay Executive in a lump sum an amount equal to
the product of (x) the number of months in the Payment Period and (y) the sum of
(i) under the Company's Management Incentive Program
(the "MIP"), and in lieu of any further grants under
the MIP that the Executive would have received if he
had continued in the employment of the Company during
the Payment Period, the greatest of one-twelfth of :
(A) the amount most recently paid to Executive for a
full calendar year; (B) Executive's "target incentive
amount" for the calendar year in which his Date of
Termination occurs; or (C) Executive's "target
incentive amount" in effect prior to the Change in
Control for the calendar year in which the Change in
Control occurs; plus, if applicable,
(ii) under the Company's Long-Term Incentive Plan
(the "LTIP"), and in lieu of any further grants under
the LTIP that the Executive would have received if he
had continued in the employment of the Company during
the Payment Period, the greatest of (A) with respect
to the most recently completed Plan Cycle commencing
with the 1998-2000 Plan Cycle (if completed),
one-twelfth of the "calculated market value" of the
Performance Shares actually awarded to Executive
(including the value of any Performance Shares
Executive may have elected to defer under the
Performance Share Deferred Compensation Plan); (B)
with respect to the most recently commenced Plan
Cycle under the Long-Term Incentive Plan (if
Executive is a participant in such Plan Cycle) prior
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to your Date of Termination, one-twelfth of the
"calculated market value" of the phantom Performance
Shares, if any, awarded to Executive; or (C) with
respect to the most recently commenced Plan Cycle
prior to the date of the occurrence of the Change in
Control, one-twelfth of the "calculated market value"
of the phantom Performance shares, if any, awarded to
Executive. Any payment received pursuant to this
Section 5 (b)(ii) shall be in addition to and not in
lieu of any payments required to be made to Executive
as the result of the happening of an event that would
constitute a change in control pursuant to the
provisions of the LTIP
Executive's "target incentive amount" under the
Management Incentive Program is determined by multiplying Executive's salary
range midpoint by the incentive target percentage, which is applicable to
Executive's incentive category under such Program. For purposes of this Section
5, the "calculated market value" of Performance Shares, shares deferred under
the Performance Share Deferred Compensation Plan, phantom Performance Shares
under the LTIP or stock options under the Stock Option Plan shall be the mean of
the high and low prices of the Company's common stock on the relevant date as
reported on the New York Stock Exchange Composites Transactions listing (or
similar report), or, if no sale was made on such date, then on the next
preceding day on which a sale was made multiplied by the number of shares
involved in the calculation. The relevant date for clauses 5(b)(ii)(B) and
5(b)(ii)(C) is the date upon which the Compensation Committee ("Committee") of
the Board of Directors awarded the shares of stock in question; for clause
5(b)(ii)(A) is the date on which the Committee made a determination of
attainment of financial objectives and awarded Performance Shares (including any
Performance Shares Executive may have elected to defer under the Performance
Share Deferred Compensation Plan).
Any payment received pursuant to Section 5 (b)(i)
shall be in addition to and not in lieu of any payments required to be made to
Executive as the result of the happening of an event that would constitute a
change in control pursuant to the provisions of the MIP.
(c) If Executive is under age 55, or over the age of 55 but
not eligible to retire, at the Date of Termination the Company shall maintain in
full force and effect, for Executive's continued benefit, for the Payment
Period, all health and welfare benefit plans and programs or arrangements in
which Executive was entitled to participate immediately prior to the Date of
Termination (or such other comparable plans, programs or arrangements that
provide, in the aggregate, benefits which have an economic value at least as
favorable to the Executive as those plans, programs and arrangements in which
Executive participated prior to the Date of Termination, as long as Executive's
continued participation is possible under the general terms and provisions of
such plans and programs. In the event that Executive's participation in any such
plan or program is barred [or modified], the Company shall provide Executive
with benefits substantially similar to those to which Executive would have been
entitled to receive under such plans and programs, had Executive continued to
participate in them as an Executive of the
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Company plus an amount in cash equal to the amount necessary to cause the amount
of the aggregate after-tax compensation and employee benefits Executive receive
pursuant to this provision to be equal to the aggregate after-tax value of the
benefits which Executive would have received if Executive continued to receive
such benefits as an employee. If Executive is age 55 or over and eligible to
retire on the Date of Termination, the Company shall provide Executive with
those health and welfare benefits to which Executive would be entitled under the
Company's general retirement policies if Executive retired on the Termination
Date with the Company paying that percentage of the premium cost of the plans
which it would have paid under the terms of the plans in effect immediately
prior to the Change of Control with respect to individuals who retire at age 65,
regardless of Executive's actual age on the Termination Date, provided such
benefits would be at least equal to those which would have been payable if
Executive had been eligible to retire and had retired immediately prior to the
Change in Control;
(d) The Company shall for the Payment Period continue, and
Executive shall be entitled to receive fringe benefit programs, perquisites, and
similar arrangements (which, by way of illustration and not limitation, shall
include: company car, health, dining and country club memberships, financial
planning services, telecommunications services, home security systems and the
like) which in the aggregate have an economic value at least as favorable to the
Executive as those the Executive was entitled to receive or participate in
immediately prior to the Date of Termination; and
(e) In lieu of further grants of stock options that would have
been received by the Executive if he had remained employed by the Company during
the Payment Period, the Company shall pay to the Executive a sum equal to one
twelfth of the number of stock options in the last annual grant of stock options
made by the Company to the Executive ("stock option grant"), multiplied by the
number of months in the Payment Period, multiplied by the calculated market
value of the Common Stock of the Company on the date of the stock option grant,
multiplied by a factor used by the Company in valuing fully vested options with
a 10 year life in the Company's most recent Annual Report on Form 10-K for
options held by senior executives pursuant to the Black-Scholes method of
valuing stock options, or, if such valuation was not made in the Form 10-K, then
under the Black-Scholes method assuming options would be outstanding for 10
years.
The Company shall, in addition to the benefits to which Executive is entitled
under the retirement plans or programs in which Executive participates, pay
Executive in a lump sum in cash at Executive's normal retirement date (or
earlier retirement date should Executive so elect), as such date is defined in
the retirement plans or programs in which Executive participates, an amount
equal to the actuarial equivalent of the retirement pension to which Executive
would have been entitled under the terms of such retirement plans or programs
had Executive accumulated additional years of continuous service under such
plans equal in length to Executive's Payment Period. The length of the Payment
Period will be added to total years of continuous service for determining
vesting, the amount of benefit accrual, to the age which Executive will be
considered to be for the purposes of determining eligibility for normal or early
retirement calculations and the age used for determining the amount of any
actuarial reduction. For the purposes
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of calculating benefit accrual, the amount of compensation Executive will be
deemed to have received during each month of Executive's Payment Period shall be
equal to the sum of Executive's annual base salary prorated on a monthly basis
as provided for under subsection 4(a) immediately prior to the Date of
Termination (including salary increases), plus under the Company's Management
Incentive Program the greatest of one-twelfth of (which amount shall reduced by
the actuarial equivalent of any amounts to which Executive is actually entitled
pursuant to the provisions of said retirement plans and programs):
(i) the amount most recently paid to Executive for a full
calendar year,
(ii) Executive's "target incentive amount" for the
calendar year in which Executive's Date of
Termination occurs, or
(iii) Executive's "target incentive amount" in effect prior
to the Change in Control for the calendar year in
which the Change in Control occurs
Attached as Exhibit 1 is an illustration, not intending to be exhaustive, of
examples of how inclusion of the Payment Period may affect the calculation of
Executive's retirement benefit.
6. TERMINATION.
(a) TERMINATION WITHOUT COMPENSATION. If Executive's
employment or the term of this Agreement is terminated for any of the following
reasons and in accordance with the provisions of this Section 6, Executive shall
not be entitled by virtue of this Agreement to any of the benefits provided in
the foregoing Section 5:
(i) If prior to the Commencement of the Period of
Employment, as a result of Executive's incapacity due
to physical or mental illness, Executive shall have
been absent from Executive's duties with the Company
on a full-time basis for 120 consecutive business
days, and within thirty (30) days after a written
Notice of Termination (as hereinafter defined in
Section 7) is given, Executive shall not have
returned to the full-time performance of Executive's
duties ("Incapacity Discharge");
(ii) If prior to the Commencement of the Period of
Employment, the Company shall desire to terminate
this Agreement without reason ("Convenience
Termination").
(iii) If the Company shall have Cause. For the
purposes of this Agreement, the Company shall have
"Cause" to terminate Executive's employment hereunder
upon (A) the willful and continued failure by
Executive to substantially perform Executive's
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duties with the Company, which failure causes
material and demonstrable injury to the Company
(other than any such failure resulting from
Executive's incapacity due to physical or mental
illness), after a demand for substantial performance
is delivered to Executive by the Board which
specifically identifies the manner in which the Board
believes that Executive has not substantially
performed Executive's duties, and after Executive has
been given a period (hereinafter known as the "Cure
Period") of at least thirty (30) days to correct
Executive's performance, or (B) the willful engaging
by Executive in other gross misconduct materially and
demonstrably injurious to the Company. For purposes
of this section, no act, or failure to act, on
Executive's part shall be considered "willful" unless
conclusively demonstrated to have been done, or
omitted to be done, by Executive not in good faith
and without reasonable belief that Executive's action
or omission was in the best interests of the Company.
Notwithstanding the foregoing, Executive shall not be
deemed to have been terminated for Cause unless and
until there shall have been delivered to Executive a
Notice of Termination which shall include a copy of a
resolution duly adopted by the affirmative vote of
not less than three-quarters of the entire membership
of the Board at a meeting of the Board called and
held for the purpose (after reasonable notice to
Executive and an opportunity for Executive, together
with Executive's counsel, to be heard before the
Board), finding that in the good faith opinion of the
Board Executive was guilty of conduct set forth above
in clauses (i), including the expiration of the Cure
Period without the correction of Executive's
performance, or (ii) of the preceding subsection and
specifying the particulars thereof in detail.
(iv) This Agreement shall terminate upon the death,
retirement or voluntary resignation of the Executive
prior to the commencement of the Period of
Employment.
(b) TERMINATION WITH COMPENSATION. If Executive terminates his
employment or his employment terminates for any of the following reasons and in
accordance with the provisions of this Section 6, Executive shall be entitled by
virtue of this Agreement to the benefits provided in the foregoing Section 5 as
described below:
(i) The Executive may terminate his employment with
the Company at any time during the Period of
Employment for Good Reason ("Good Reason
Termination") and shall receive all of the benefits
and payments provided in Section 5. For purposes of
this Agreement, the term "Good Reason" shall mean:
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(A) without Executive's express written consent,
(1) any involuntary termination of the
Executive's employment, except pursuant to
Section 6 hereof, during the Employment
Period, (2) the assignment to Executive of
any new duties or responsibilities
inconsistent in character with Executive's
positions, duties, responsibilities, and
reporting relationships and status within
the Company immediately prior to a Change in
Control, (3) any change in Executive's
duties, responsibilities, reporting
relationships, titles or offices as in
effect immediately prior to a Change in
Control, including, but not limited to, a
reduction in duties or responsibilities
which occurs because the Company is no
longer an independent publicly-held entity
(4) any removal of Executive from or any
failure to re-elect Executive to any officer
or director position of the Company, (5) a
change in the annual or long term incentive
plan in which Executive currently
participates such that Executive's
opportunity to earn incentive compensation
is impaired, (6) a material reduction in the
aggregate value of Company perquisites made
available to Executive, (7) an elimination
or material impairment of Executive's
ability to participate in retirement plans
comparable to those in which Executive
currently participates, (8) any increase in
Executive's obligation to travel on the
Company's business over Executive's present
business travel obligations, (9) an
elimination or material impairment of
Executive's ability to receive stock options
with values comparable to those Executive
was granted within the one year period
preceding the commencement of the Employment
Period;
(B) the failure of the Company to comply with
any other of its obligations under Section 4
herein;
(C) the relocation of the offices of the Company
at which Executive were employed immediately
prior to the Change in Control to a location
which is more than fifty (50) miles from
such prior location, or the failure of the
Company to (A) pay or reimburse Executive,
in accordance with the Company's relocation
policy for its employees in existence
immediately prior to a Change in Control,
for all reasonable costs and expenses, plus
"gross-ups" referred to in such policy
incurred by Executive relating to a change
of Executive's principal residence in
connection with any relocation of the
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Company's offices to which Executive
consents, and (B) indemnify Executive
against any loss (defined as the difference
between the actual sale price of such
residence and the higher of (1) Executive's
aggregate investment in such residence of
(2) the fair market value of such residence
as determined by the relocation management
organization used by the Company immediately
prior to the Change in Control (or other
real estate appraiser designated by
Executive and reasonably satisfactory to the
Company)) realized in the sale of
Executive's principal residence in
connection with any such change of
residence;
(D) the failure of the Company to obtain the
assumption of and the agreement to perform
this Agreement by any successor as
contemplated in Section 11 hereof; or
(E) any purported termination of Executive's
employment which is not effected pursuant to
a Notice of Termination satisfying the
requirements of Section 7 hereof.
(F) Convenience Termination after Commencement
of the Period of Employment
(ii) If Executive dies while employed by the Company
during the Period of Employment while having cause to
terminate his employment as a Good Reason Termination
(whether or not Executive has provided Notice of
Termination to the Company pursuant to Section 7),
Executive's beneficiary or beneficiaries named on
Exhibit 2 to this Agreement (or Executive's estate if
he has not named a beneficiary) shall be entitled to
receive those payments provided under Sections 5(a)
and 5(b) of this Agreement in addition to any
benefits that such beneficiaries would be entitled
under any other plan, program or policy of the
Company as a result of Executive's employment with
the Company.
(iii) If, during the Period of Employment, Executive
either (A) retires from employment with the Company
or (B) if the Company discharges the Executive due to
an Incapacity Discharge, in either case while having
cause to terminate his employment as a Good Reason
Termination (whether or not Executive has provided
Notice of Termination to the Company pursuant to
Section 7) the Executive shall receive all of the
benefits and payments provided in Section 5.
7. NOTICE OF TERMINATION. Any termination of Executive's employment by
the Company or any termination by Executive as a Good Reason Termination shall
be
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communicated by written notice to the other party hereto. For purposes of this
Agreement, such notice shall be referred to as a "Notice of Termination." Such
notice shall, to the extent applicable, set forth the specific reason for
termination, and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
8. DATE OF TERMINATION. "Date of Termination" shall mean:
(a) If Executive terminates Executive's employment as a Good
Reason Termination, the date specified in the Notice of Termination, but in no
event more than sixty (60) days after Notice of Termination is given.
(b) If Executive's employment is terminated for Cause under
subsection 6(a)(iii), the date on which a Notice of Termination is given, except
that the Date of Termination shall not be any date prior to the date on which
the Cure Period expires without the correction of Executive's performance.
(c) If Executive's employment pursuant to this Agreement is
terminated following absence due to physical incapacity, under subsection
6(a)(i), then the Date of Termination shall be thirty (30) days after Notice of
Termination is given (provided that Executive shall not have returned to the
performance of Executive's duties on a full-time basis during such thirty (30)
day period).
(d) If the Company desires to terminate this Agreement as a
Convenience Termination, then the date specified in the Notice of Termination,
shall be at least [twelve (12)] [thirty-six (36)] months after Notice of
Termination is given.
(e) A termination of employment by either the Company or by
Executive shall not affect any rights Executive or Executive's surviving spouse
or beneficiaries may have pursuant to any other agreement or plan of the Company
providing benefits to Executive, except as provided in such agreement or plan.
9. CERTAIN ADDITIONAL PAYMENTS.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to Executive or for Executive's benefit (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this section 9) (a "Payment") would be subject to the excise tax
imposed by Section 4999 (or any successor provisions) of the Internal Revenue
Code of 1986, as amended (the "Code"), or any interest or penalty is incurred by
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, is hereinafter collectively referred to as the
"Excise Tax"), then Executive shall be entitled to receive an additional payment
(a "Gross-Up Payment") in an amount such that after payment by Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and
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Excise Tax imposed on the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of subsection 9(c), all
determinations required to be made under this section 9, including whether and
when such a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by Ernst & Young (or their successors) (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and to Executive
within fifteen (15) business days of the receipt of notice from Executive that
there has been a Payment, or such earlier time as is requested by the Company.
In the event that the Accounting Firm is serving as accountant or auditor for
the individual, entity or group effecting the Change in Control, Executive shall
appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment as determined pursuant to
this section 9, shall be paid by the Company to Executive within five (5) days
of the receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by Executive, it shall furnish
Executive with a written opinion that failure to report the Excise Tax on
Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and Executive. As a result of
the uncertainty of the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"). In the event that the Company exhausts its remedies
pursuant to Section 9(c) and Executive thereafter is required to make a payment
of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to Executive or for Executive's benefit.
(c) Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten (10) business days after Executive or his
representative is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. Executive shall not pay such claim prior to the expiration
of the thirty (30) day period following the date on which Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in
writing from time to time,
13
including, without limitation, accepting legal
representation with respect to such claim by an
attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this subsection 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of any such claim and may, at its sole option,
either direct Executive to pay the tax claimed and xxx for a refund or contest
the claim in any permissible manner, and Executive agree to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and xxx for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for Executive's taxable year with respect to which such contested amount
is claimed to be due is limited solely to such contested amount. Furthermore,
the Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount advanced
by the Company pursuant to subsection 9(c), Executive become entitled to receive
any refund with respect to such claim, Executive shall (subject to the Company's
complying with the requirements of subsection 9(c) promptly pay to the Company
the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by Executive of an amount
advanced by the Company pursuant to subsection 9(c), a determination is made
that Executive shall not be entitled to any refund with respect to such claim
and the Company does not notify Executive in writing of its intent to contest
such denial of refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
14
10. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL
RIGHTS. Executive shall not be required to refund the amount of any payment or
employee benefit provided for or otherwise mitigate damages under this Agreement
by seeking or accepting other employment or otherwise, nor shall the amount of
any payment required to be made under this Agreement be reduced by any
compensation earned by Executive as the result of any employment by another
employer after the date of termination of Executive's employment with the
Company, or otherwise. Upon receipt of written notice from Executive that
Executive has been reemployed by another company or entity on a full-time basis,
benefits, fringe benefits and perquisites otherwise receivable by Executive
pursuant to Sections 5(c) or 5(d) related to life, health, disability and
accident insurance plans and programs and other similar benefits, company cars,
financial planning, country club memberships, and the like (but not Incentive
Compensation, LTIP, Pension Plans or other similar plans and programs) shall be
reduced to the extent comparable benefits are made available to Executive at his
new employment and any such benefits actually received by Executive shall be
reported to the Company by the Executive.
The provisions of the Agreement, and any payment or benefit
provided for hereunder, shall not reduce any amount otherwise payable, or in any
way diminish Executive's existing rights, or rights which would occur solely as
a result of the passage of time, under any other agreement, contract, plan or
arrangement with the Company.
11. SUCCESSORS AND BINDING AGREEMENT
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in form
and substance satisfactory to Executive, to assume and agree to perform this
Agreement.
(b) This Agreement shall be binding upon the Company and any
successor of or to the Company, including, without limitation, any person
acquiring directly or indirectly all or substantially all of the assets of the
Company whether by merger, consolidation, sale or otherwise (and such successor
shall thereafter be deemed "the Company" for the purposes of this Agreement),
but shall not otherwise be assignable by the Company.
(c) This Agreement shall inure to the benefit of and be
enforceable by Executive and Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Executive should die while any amounts would still be payable to
Executive pursuant to Section 5 hereunder if Executive had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to Executive's devisee, legatee, or other
designee or, if there be no such designee, to Executive's estate.
15
12. NOTICES. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Chief
Executive Officer of the Company with a copy to the Secretary of the Company, or
to such other address as either party may have furnished to the other in
writing, except that notices of change of address shall be effective only upon
receipt.
13. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
North Carolina, without giving effect to the principles of conflict of laws of
such State.
14. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in a writing signed by Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with,
any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof, have been made by either party which is not set forth expressly in this
Agreement.
15. VALIDITY. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same agreement.
17. WITHHOLDING OF TAXES. The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or government regulation or ruling.
18. NONASSIGNABILITY. This Agreement is personal in nature and neither
of the parties hereto shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder, except as
provided in Section 11 above. Without limiting the foregoing, Executive's right
to receive payments hereunder shall not be assignable or transferable, whether
by pledge, creation of a security interest or otherwise, other than by a
transfer by Executive's will or by the laws of descent and distribution and in
the event of any attempted assignment or transfer contrary to this Section the
Company shall have no liability to pay any amounts so attempted to be assigned
or transferred.
19. LEGAL FEES AND EXPENSES. If a Change in Control shall have
occurred, thereafter the Company shall pay and be solely responsible for any and
all attorneys' and related fees and expenses incurred by Executive to
successfully (in whole or in part and
16
whether by modification of the Company's position, agreement, compromise,
settlement, or administrative or judicial determination) enforce this Agreement
or any provision hereof or as a result of the Company or any Shareholder of the
Company contesting the validity or enforceability of this Agreement or any
provision hereof. To secure the foregoing obligation, the Company shall, within
90 days after being requested by Executive to do so, enter into a contract with
an insurance company, open a letter of credit or establish an escrow in a form
satisfactory to Executive.
20. EMPLOYMENT RIGHTS. Nothing expressed or implied in this Agreement
shall create any right or duty on Executive's part or on the part of the Company
to have Executive remain in the employment of the Company prior to the
commencement of the Period of Employment; provided, however, that any
termination or purported termination of Executive's employment or of this
Agreement, for any reason other than those set forth in Sections 6(a)(i),
6(a)(iii) or 6(a)(iv), following the commencement of any discussion with a third
party, or the announcement by a third party of the commencement of, or the
intention to commence a tender offer, or other intention to acquire all or a
portion of the equity securities of the Company that ultimately results in a
Change in Control shall (unless such termination is conclusively demonstrated to
have been wholly unrelated to any such activity relating to a Change in Control)
be deemed to be a termination of Executive's employment after a Change in
Control for purposes of this Agreement and both the Period of Employment and the
Payment Period shall be deemed to have begun on the day prior to such
termination.
21. RIGHT OF SETOFF. There shall be no right of setoff or counterclaim
against, or delay in, any payment by the Company to Executive or Executive's
designated beneficiary or beneficiaries provided for in this Agreement in
respect of any claim against Executive or any debt or obligation owed by
Executive, whether arising hereunder or otherwise.
22. RIGHTS TO OTHER BENEFITS. The existence of the Agreement and
Executive's rights hereunder shall be in addition to, and not in lieu of,
Executive's rights under any other of the Company's compensation and benefit
plans and programs, and under any other contract or agreement between Executive
and the Company.
23. POOLING OF INTERESTS. In the event that the independent accountants
of the Company shall determine that this Agreement or anything contained herein
shall prevent the Company from consummating any business combination approved by
the Board of Directors which combination is intended to be accounted for under
the pooling of interests method of accounting ("Pooling"), then Participant
agrees that this Agreement may at any time and in the sole discretion of the
Board of Directors either be: a) amended in such fashion as may be requested by
the Company so as to allow such business combination to be accounted for as a
Pooling, or, if this Agreement cannot be so amended, or (b) terminated.
Provided, however, that any such amendment shall: (x) be as limited in scope as
is absolutely necessary in the opinion of the Company's advisors to allow the
business combination to be accounted for as a Pooling; and (y) be designed to
have as minimal an economic detriment to the Participant as is possible while
still allowing the business combination to be accounted for as a Pooling.
17
[24. SUPERCEDED EMPLOYEE PROTECTION PLAN. If this Agreement is either
(a) amended pursuant to Section 23, and if such amendment reduces the benefits
to be received by the Executive or his Beneficiaries pursuant to any section of
this Agreement in any way deemed material by the Executive, or (b) terminated
pursuant to Section 23, the Executive shall receive, in place of and not in
addition to, the benefits under the Company's Employee Protection Plan ("EPP")
or Employee Termination Protection Plan ("ETPP"), in effect at the time of such
amendment or termination, not withstanding any provision of the EPP or ETPP
which would make the Executive ineligible to receive benefits under the EPP or
ETPP.]
[The following Section 24 is included in the form of Management Continuity
Agreement provided to those executives who had Management Continuity Agreements
in place prior to October 1999:
24. SUPERCEDED AGREEMENT. Except as provided herein, the agreement
between Executive and the Company originally dated ____________________, and
thereafter amended from time to time, relating to the same subject matter as
this Agreement (the "Original Agreement"), is hereby superceded in its entirety
by this Agreement, shall be of no further force or effect as of the date of this
Agreement and any rights that Executive may have under the Original Agreement
which have accrued prior to the date hereof, to the extent not previously waived
by the Executive, are hereby waived. If, however, this Agreement is either (a)
amended pursuant to Section 23 above, and if such amendment reduces the benefits
to be received by the Executive or his Beneficiaries pursuant to any section of
this Agreement in any way deemed material by the Executive, or (b) terminated
pursuant to Section 23 above, then the Original Agreement shall continue in full
force and effect as if unmodified and not superceded and the Executive shall
receive all the benefits of the Original Agreement accruing after the date
hereof in accordance with its terms. ]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.
THE BFGOODRICH COMPANY
By
---------------------------------
------------------------------------
EXECUTIVE
18
EXHIBIT 1
A. If as of Executive's Date of Termination Executive's actual years of
service plus the length of Executive's Payment Period is at least 10, then
1. If as of Executive's Date of termination Executive's age
plus the length of Executive's Payment Period is at least 65,
Executive's retirement benefit under section 5(e) will be calculated as
a "normal retirement" benefit to which Executive would have been
entitled under the terms of the retirement plan in which Executive
participate had Executive accumulated continuous service equal to such
sum; and
2. If as of Executive's Date of Termination Executive's age
plus the length of Executive's Payment Period is at least 55 but less
than 65, Executive's retirement benefit under section 5(e) will be
calculated as an "early retirement" benefit to which Executive would
have been entitled under the terms of the retirement plan in which
Executive participate had Executive accumulated continuous service
equal to such sum. The actuarial reduction used shall be the actuarial
reduction factor for early retirement, calculated to Executive's actual
age plus the length of Executive's Payment Period at Executive's Date
of Termination.
Furthermore, if Executive were on the active rolls of the
Company as of December 31, 1989 and if the sum of Executive's actual
years of service plus the length of Executive's Payment Period is at
least 10 but less than 24, then for purposes of section 5(e) Executive
will also receive an Additional Credit for up to 4 years. The
Additional Credit Executive will receive will depend upon the sum of
the years of Executive's actual service plus the length of Executive's
Payment Period and be equal to the lesser of:
(x) 4 years of Additional Credit; or
(y) The amount of Additional Credit needed such that, when
added to the sum of Executive's actual years of service plus
the length of Executive's Payment Period, it will create a
total of exactly 24.
No Additional Credit will be applied if the sum of Executive's
actual years of service plus the length of Executive's Payment Period
if 24 or greater. Executive will not receive any Additional Credit if
Executive commenced employment with the Company on or after January 1,
1990.
B. If as of Executive's Date of Termination the sum of Executive's
actual years of service plus the length of Executive's Payment Period is less
than 10, or Executive's age plus the length of Executive's Payment Period is
less than 55, Executive's retirement benefit under section 5(e) will be
calculated as a "deferred vested pension" to which Executive would have been
entitled under the terms of the retirement
19
plan in which Executive participate had Executive accumulated continuous service
equal to such sum. The actuarial reduction used shall be the actuarial reduction
factor for a deferred vested pension, calculated to Executive's actual age at
Executive's Date of Termination plus the length of Executive's Payment Period.
For purposes of section 5(e), "actuarial equivalent" shall be determined using
the same methods and assumptions as those utilized under the Company's
retirement plans and programs immediately prior to the Change in Control.
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EXHIBIT 2
BENEFICIARY DESIGNATION
I hereby designate the following person(s) as a beneficiary for the purposes of
Section 6(e) to the extent of the percentage interest listed next to their name:
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NAME | PERCENTAGE INTEREST
|
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|
|
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|
|
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|
|
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|
|
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|
|
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|
|
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|
TOTAL (cannot exceed 100%) |
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21
