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EXHIBIT 10.9
TIER 2 - Senior Exec
CHANGE IN CONTROL AGREEMENT
This Change in
Control Agreement (the "Agreement") is made and entered into
as of _____________________ (date) by and
between Hillenbrand Industries, Inc.,
an Indiana corporation (the "Company"), and
_________________ (the "Executive").
WHEREAS, the
Company considers it essential to the best interests of its
shareholders to foster continuous
employment by the Company and its subsidiaries
of their key management personnel;
WHEREAS, the
Compensation and Management Development Committee (the
"Committee") of the Board of Directors (the
"Board") of the Company has
recommended, and the Board has approved,
that the Company enter into Change in
Control Agreements with key executives of
the Company and its subsidiaries who
are from time to time designated by the
management of the Company and approved
by the Committee;
WHEREAS, the
Committee and the Board believe that Executive has made
valuable contributions to the productivity
and profitability of the Company and
consider it essential to the best interests
of the Company and its shareholders
that Executive be encouraged to remain with
the Company; and
WHEREAS, the
Board believes it is in the best interests of the Company and
its shareholders that Executive continue in
employment with the Company in the
event of any proposed Change in Control (as
defined below) and be in a position
to provide assessment and advice to the
Board regarding any proposed Change in
Control without concern that Executive
might be unduly distracted by the
personal uncertainties and risks created by
any proposed Change in Control:
NOW, THEREFORE,
the Company and Executive agree as follows:
1. TERMINATION
FOLLOWING A CHANGE IN CONTROL. After the occurrence of a
Change in Control, the Company will provide
or cause to be provided to Executive
the rights and benefits described in
Section 2 hereof in the event that
Executive's employment with the Company and
its subsidiaries is terminated:
(a) by the Company for any reason other than on account of his
death,
permanent disability, retirement or for
Cause at any time prior to the third
anniversary of a Change in Control;
(b) by Executive for Good Reason at any time prior to the third
anniversary of a Change in Control; or
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(c) by Executive for any reason at any time prior to the 30th
day
following the first anniversary of the
Change in Control.
Anything in this
Agreement to the contrary notwithstanding, if a Change in
Control occurs and if the Executive's
employment with the Company is terminated
by the Company, without Cause, prior to the
date on which the Change in Control
occurs, and if it is reasonably
demonstrated by Executive that such termination
of employment (i) was at the request of a
third party who has taken steps
reasonably calculated to effect a Change in
Control or (ii) otherwise arose in
connection with or anticipation of a Change
in Control which subsequently occurs
within 3 months of such termination, then
for purposes of this Agreement
(including Section 3 hereof) a Change in
Control shall be deemed to have
occurred on the day immediately prior to
such termination of employment and all
references in Section 2 to payments within
a specified period as allowed by law
following "Termination" shall instead be
references to the specified period
following the Change in Control.
The rights and
benefits described in Section 2 and 3 hereof shall be in
lieu of any severance payments otherwise
payable to Executive under any
employment agreement or severance plan or
program of the Company or any of its
subsidiaries but shall not otherwise affect
Executive's rights to compensation
or benefits under the Company's
compensation and benefit programs except to the
extent expressly provided herein.
2. RIGHTS AND
BENEFITS UPON TERMINATION.
In the event of
the termination of Executive's employment under any of the
circumstances set forth in Section 1 hereof
("Termination"), the Company shall
provide or cause to be provided to
Executive the following rights and benefits
provided that Executive executes and
delivers to the Company within 30 days of
the Termination a Release in the form
attached hereto as Exhibit A:
(a) a lump sum payment in cash in the amount of two times
Executive's
Annual Base Salary (as defined below),
payable after (i) six (6) months
following Termination if the Executive is
covered by Code Section
409A(a)(2)(B)(i) of the Internal Revenue
Code ("Code") (Section 409A of the Code
is hereunder referred to as "Section 409A")
or (ii) if executive is not covered
by Code Section 409A(a)(2)(B)(i) (or
payments deemed exempt from Section 409A),
payment shall be made within 30 days of
Termination;
(b) for the 24 months following Termination, continued health
and
medical insurance coverage for Executive
and his dependents substantially
comparable (with regard to both benefits
and employee contributions) to the
coverage provided by the Company
immediately prior to the Change in Control for
active employees of equivalent rank. From
the end of such 36-month period until
Executive attains Social Security
Retirement Age, Executive shall have the right
to purchase (at COBRA rates applicable to
such coverage) continued coverage for
himself and his dependents under one or
more plans maintained by the Company for
its active employees, to the extent
Executive would have been eligible to
purchase continued coverage under the plan
in effect immediately prior to the
Change in Control had his employment
terminated 36 months following Termination;
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(c) continuation for Executive, for a period of two years
following
Termination, of the Executive Life
Insurance Bonus Plan (if any) provided for
Executive by the Company immediately prior
to the Change in Control and the
group term life insurance program provided
for executive immediately prior to
the Change in Control;
(d) a lump sum payment in cash, payable within 30 days or six
months,
if payment is subject to rules of Section
409A, of Termination, equal to all
accrued and unpaid vacation, reimbursable
business expenses, and similar
miscellaneous benefits as of the
Termination; and
(e) a monthly pension annuity benefit starting at age 62 or the
current age, if later (in the form of a
joint and 50% survivor annuity) equal to
the difference between (i) the monthly
Pension Plan annuity benefit, the monthly
Supplemental Pension Plan annuity benefit
if Executive is a participant in the
Supplemental Pension Plan, and any
additional pension benefit provided in an
offer letter (or other written document
signed by an authorized officer of the
Company other than Executive) if Executive
is subject to any such letter or
document, which Executive will receive
starting at age 62 or the current age, if
later (in the form of a joint and 50%
survivor annuity), and (ii) the monthly
pension annuity benefit he would have
received starting at age 62 or the current
age, if later under such plan(s) and/or
offer letter, as in effect on or after
the date hereof, (in the form of a joint
and 50% survivor annuity) calculated as
if Executive had earned two additional
years of service and pay at his Annual
Base Salary (and for purposes of
calculating Average Monthly Earnings as defined
in the Pension Plan, Executive Annual Base
Salary shall be annualized for any
portion of the imputed service period which
is less than a full calendar year
and such portion of the year shall be
eligible to be counted). The monthly
pension annuity benefit described in the
prior sentence shall be paid at the
same time(s) and in the same form as
Executive's benefit under the Pension Plan
(with the same actuarial adjustments as
used in calculating benefits under the
Pension Plan and subject to the payment
election rules of Section 409A). The
benefit provided for in this paragraph
shall be funded in a rabbi trust prior to
the Change in Control. For purposes of this
subparagraph (e), the benefit under
clause (ii) will be calculated as though
the Pension Plan and any applicable
Supplemental Pension Plan as in effect on
or after date hereof, remained the
same.
(f) a lump sum payment in cash for amounts accrued as of the
Termination and an additional amount equal
to the amounts accrued for the last
12 months times two (2) immediately prior
to the Termination Date in any of the
Defined Contribution, Matching Account
and/or Supplemental Contribution Account,
payable after (i) six (6) months following
Termination if the Executive is
covered by Code Section 409A(a)(2)(B)(i) of
the Internal Revenue Code or (ii) if
executive is not covered by Code Section
409A(a)(2)(B)(i) (or payments deemed
exempt from Section 409A), payment shall be
made within 30 days of Termination.
3. ADDITIONAL
BENEFITS UPON A CHANGE IN CONTROL.
Upon the
occurrence of a Change in Control, so long as Executive is an
employee of the Company at that time, the
Company will provide or cause to be
provided to Executive the following rights
and benefits whether or not
Executive's employment with the Company or
its subsidiaries is terminated:
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(a)
a lump sum payment in cash equal to the amount of Short-Term
Incentive Compensation which would be
payable to Executive if the company
performance targets (at 100%) with respect
to such incentive compensation in
effect for the entire year in which the
Change in Control occurred had been
achieved, payable within 30 days of the
Change in Control;
(b) the number of shares of common stock of the Company that would
be
payable to Executive under the Company's
Stock Incentive Plan provided, however,
that if the Change in Control involves a
merger, acquisition or other corporate
restructuring where the Company is not the
surviving entity (or survives as a
wholly-owned subsidiary of another entity),
then, in lieu of such shares of
common stock of the Company, Executive
shall be entitled to receive the
consideration he would have received in
such transaction in exchange for such
shares of common stock; and provided,
further, that the Company shall in any
case have the right to substitute cash for
such shares of common stock of the
Company or merger consideration in an
amount equal to the fair market value of
such shares or merger consideration as
determined by the Company including:
(i) immediate vesting
of all Bonus Stock Awards [as defined
Company's Stock Incentive Plan] held by Executive
(ii) immediate vesting of all outstanding Stock Options held by
Executive under the Hillenbrand Industries, Inc. 1996 Stock
Options Plan or
the Company's Stock Incentive Plan
(iii) immediate vesting of all awards of Restricted Stock held
by
Executive under any Stock Award Agreements (as defined in
the Company's Stock Incentive Plan) with Executive and
Hillenbrand Industries, Inc.
(iv) immediate vesting of all awards of Deferred Stock (as
defined in the Company's Stock Incentive Plan) (also known
as Restricted Stock Units) held by Executive under the
Company's Stock Incentive Plan and
(v) the exercise of
any Stock Appreciation Right [(as defined in
the Company's Stock Incentive Plan) within 60 days of a
Change in Control as provided by section 7.2 of the Stock
Incentive Plan
Any distribution to be made under this Section 3 shall be made
no
later than the 15th day of the third month
following the Company's first taxable
year in which the Change in Control
occurs.
4. GROSS-UP ON
EXCESS PARACHUTE PAYMENT.
(a) If any benefit or payment by the Company or its subsidiaries
to
Executive (whether paid or payable or
distributed or distributable pursuant to
the terms of this Agreement or otherwise,
including any acceleration of vesting
or payment) (a "Payment") is determined to
be subject to the excise tax imposed
by Section 4999 of the Code or any interest
or penalties are
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incurred by Executive with respect to such
excise tax (such excise tax, together
with any such interest and penalties, being
herein collectively referred to as
the "Excise Tax"), then Executive shall be
entitled to receive an additional
payment (the "Gross-Up Payment") in an
amount such that the net amount of such
additional payment retained by Executive,
after payment of all federal, state
and local income and employment taxes
(including, without limitation, any
federal, state, and local income and
employment taxes and Excise Tax imposed on
the Gross-Up Payment), shall be equal to
the Excise Tax imposed on the Payment.
Notwithstanding the foregoing provisions of
this Section 4(a), if it shall be
determined that Executive is entitled to a
Gross-Up Payment, but that the net
present value of the Payments (calculated
at the discount rate in effect under
Code Section 280G) do not exceed 120% of
the "Reduced Amount," then no Gross-Up
Payment shall be made to the Executive and
the Payments, in the aggregate, shall
be reduced to the Reduced Amount. For
purposes of this Section, the term
"Reduced Amount" shall mean the greatest
amount that could be paid to the
Executive such that the receipt of Payments
would not give rise to any Excise
Tax. The payment of any Gross-Up Payment
shall be made no later than the 15th
day of the third month following the
Company's first taxable year in which the
Change in Control occurs.
(b) Subject to the provisions of Section 4(c) hereto, all
determinations required to be made under
this Section 4, including whether and
when 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 an independent accounting firm of
nationally recognized standing selected by
the Company and which is not serving as
accountant or auditor for the Company or
the individual, entity or group effecting
the Change in Control (the "Accounting
Firm"), which shall provide detailed
supporting calculations both to the C
