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Exhibit
10.2
CHANGE IN CONTROL
EMPLOYMENT
AGREEMENT
(for current
executives)
AGREEMENT by and between PPG
Industries, Inc., a Pennsylvania corporation (the
“Company”), and
(the “Executive”), dated as of
,
.
The Board of Directors of the Company
(the “Board”), has determined that it is in the best
interests of the Company and its shareholders to assure that the
Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change
in Control (as defined below) of the Company. The Board believes it
is imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created
by a pending or threatened Change in Control and to encourage the
Executive’s full attention and dedication to the Company
currently and in the event of any threatened or pending Change in
Control, and to provide the Executive with compensation and
benefits arrangements upon a Change in Control which ensure that
the compensation and benefits expectations of the Executive will be
satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives,
the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS
FOLLOWS:
1. Certain Definitions.
(a) The “Effective Date” shall mean the first date
during the Change in Control Period (as defined in Section l(b))
while the Executive is an employee of the Company on which a Change
in Control (as defined in Section 2) occurs. 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 prior to the date on
which the Change in Control occurs, and if it is reasonably
demonstrated by the 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, then for all purposes of this Agreement the
“Effective Date” shall mean the date immediately prior
to the date of such termination of employment.
(b) The “Change in
Control Period” shall mean the period commencing on the date
hereof and ending on the earlier of (i) the Executive’s
date of Retirement, or (ii) the third anniversary of the date
hereof; provided, however, that commencing on the date one year
after the date hereof, and on each annual anniversary of such date
(such date and each annual anniversary thereof shall be hereinafter
referred to as the “Renewal Date”), unless previously
terminated, the Change in Control Period shall be automatically
extended so as to terminate the earlier of (i) the
Executive’s date of Retirement, or (ii) three years from
such Renewal Date, unless at least 60 days prior to the Renewal
Date the Company shall give notice to the Executive that the Change
in Control Period shall not be so extended.
(c) “Retirement”
shall mean termination of employment on or after (i) an
Executive’s “normal retirement date” as defined
in the PPG Industries, Inc. Retirement Income Plan, provided such
termination is voluntary, or (ii) with respect to any
Executive that the Company may subject to compulsory retirement
under the Age Discrimination in Employment Act (29 U.S.C.
Section 621 et. seq.) (ADEA) as a “bona fide executive
or a high policy maker”, such Executive’s “normal
retirement date”.
(d) “Code” shall
mean the Internal Revenue Code of 1986, as amended.
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(e) The “Compensation
Multiplier” shall mean: (i) if the Executive is subject
to compulsory retirement, then the number of years and fractions of
years remaining (such fractions to be expressed as the number of
whole months and any partial month, divided by 12) from the
Executive’s Date of Termination (as defined in
Section 5(e)) to his normal retirement date, not to exceed
three (unless such Executive’s termination of employment is a
Window Period Termination, as defined in Section 5(c), in
which case the multiplier shall not exceed two) or, (ii) if
the Executive is not subject to compulsory retirement, then the
multiplier shall be three, or if the Executive’s termination
of employment is a Window Period Termination, then two.
(f) “Specified
Employee” shall mean a key employee (as defined in
Section 416(i) of the Code without regard to
Section 416(i)(5) of the Code) of the Company, determined in
accordance with Section 409A of the Code and any regulations
or other guidance thereunder.
2. Change in Control. For the
purpose of this Agreement, a “Change in Control” shall
mean:
(a) 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”)) (a
“Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or
(ii) 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 for purposes of this
subsection (a), the following acquisitions shall not constitute a
Change in Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or
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any corporation controlled by the
Company or (iv) any acquisition by any corporation pursuant to
a transaction which complies with clauses (i), (ii) and
(iii) of subsection (c) of this Section 2;
or
(b) Individuals who, as of
the date hereof, 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 date hereof 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 an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(c) Approval by the
shareholders of the Company of a reorganization, merger or
consolidation or sale or other disposition of all or substantially
all of the assets of the Company (a “Business
Combination”), in each case, unless, following such Business
Combination, (i) 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 Business Combination
beneficially own, directly or indirectly, more than 60% 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 corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and
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Outstanding Company Voting Securities,
as the case may be, (ii) no Person (excluding any employee
benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting
from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business
Combination and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action of
the Board, providing for such Business Combination;
(d) Approval by the
shareholders of the Company of a complete liquidation or
dissolution of the Company; or
(e) A majority of the Board
otherwise determines that a Change in Control shall have
occurred.
3. Employment Period. The
Company hereby agrees to continue the Executive in its employ, and
the Executive hereby agrees to remain in the employ of the Company
subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the earlier
of (i) the Executive’s date of Retirement and
(ii) the third anniversary of the Effective Date, (the
“Employment Period”).
4. Terms of Employment.
(a) Position and Duties. (i) During the Employment
Period, (A) the Executive’s position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and
assigned at any time during the 120-day period immediately
preceding the Effective Date and (B) the Executive’s
services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date or any office or
location less than 35 miles from such location.
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(ii) During the Employment
Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote
reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder,
to use the Executive’s reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this Agreement for
the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the
Executive’s responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the
continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the
Company.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive
shall receive an annual base salary (“Annual Base
Salary”), which shall be paid at a monthly rate, at least
equal to twelve times the highest monthly base salary paid or
payable, including any base salary which has been earned but
deferred, to the Executive by the Company and its affiliated
companies in respect of the twelve-month period immediately
preceding the month in which the Effective Date occurs. During the
Employment Period, the Annual Base Salary shall be reviewed no more
than 12 months after the last salary increase awarded to the
Executive prior to the Effective Date and
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thereafter at least annually. Any
increase in Annual Base Salary shall not serve to limit or reduce
any other obligation to the Executive under this Agreement. Annual
Base Salary shall not be reduced after any such increase and the
term Annual Base Salary as utilized in this Agreement shall refer
to Annual Base Salary as so increased. As used in this Agreement,
the term “affiliated companies” shall include any
company controlled by, controlling or under common control with the
Company.
(ii) Annual Bonus. In
addition to Annual Base Salary during the Employment Period, the
Executive shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the “Annual Bonus”)
in cash at least equal to the Executive’s highest bonus under
the Company’s Incentive Compensation and Deferred Income Plan
for Key Employees, or any comparable bonus under any predecessor or
successor plan, for the last three full fiscal years prior to the
Effective Date (annualized in the event that the Executive was not
employed by the Company for the whole of such fiscal year) (the
“Recent Annual Bonus”). Each such Annual Bonus shall be
paid no later than the fifteenth day of the third month of the
fiscal year next following the fiscal year for which the Annual
Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
(iii) Incentive, Savings and
Retirement Plans. During the Employment Period, the Executive shall
be entitled to participate in all incentive, savings and retirement
plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), savings
opportunities and retirement benefit opportunities, in each case,
less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in
effect at any time during the 120-day period
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immediately preceding the Effective Date
or if more favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives of the
Company and its affiliated companies.
(iv) Welfare Benefit Plans.
During the Employment Period, the Executive and/or the
Executive’s family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the
Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices,
policies and programs provide the Executive with benefits which are
less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive
at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other
peer executives of the Company and its affiliated
companies.
(v) Expenses. During the
Employment Period, the Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the most favorable policies, practices
and procedures of the Company and its affiliated companies in
effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(vi) Fringe Benefits. During
the Employment Period, the Executive shall be entitled to fringe
benefits, including, without limitation, tax and financial planning
services, payment of club dues, and, if applicable, use of an
automobile and payment of
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related expenses, in accordance with the
most favorable plans, practices, programs and policies of the
Company and its affiliated companies in effect for the Executive at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(vii) Office and Support
Staff. During the Employment Period, the Executive shall be
entitled to an office or offices of a size and with furnishings and
other appointments, and to exclusive personal secretarial and other
assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated
companies at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(viii) Vacation. During the
Employment Period, the Executive shall be entitled to paid vacation
in accordance with the most favorable plans, policies, programs and
practices of the Company and its affiliated companies as in effect
for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
5. Termination of Employment.
(a) Death or Disability. The Executive’s employment
shall terminate automatically upon the Executive’s death
during the Employment Period. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set
forth below), it may give to the Executive written notice in
accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive’s employment. In such
event, the Executive’s employment with the Company shall
terminate effective
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on the 90th day after receipt of such
notice by the Executive (the “Disability Effective
Date”), provided that, within the 90 days after such receipt,
the Executive shall not have returned to full-time performance of
the Executive’s duties. For purposes of this Agreement,
“Disability” shall mean disability which, after the
expiration of more than 52 weeks after its commencement, is
determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to the Executive or the
Executive’s legal representative (such agreement to
acceptability not to be withheld unreasonably).
(b) Cause. The Company may
terminate the Executive’s employment during the Employment
Period for Cause. For purposes of this Agreement,
“Cause” shall mean:
(i) the willful and continued
failure of the Executive to perform substantially the
Executive’s duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief
Executive Officer of the Company which specifically identifies the
manner in which the Board or Chief Executive Officer believes that
the Executive has not substantially performed the Executive’s
duties, or
(ii) the willful engaging by
the Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company.
For purposes of this provision, no act
or failure to act, on the part of the Executive, shall be
considered “willful” unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief
that the Executive’s action or omission was in the best
interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board
or upon the instructions of the Chief Executive Officer or a senior
officer of the Company or based upon the advice of counsel for
the
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Company shall be conclusively presumed
to be done, or omitted to be done, by the Executive in good faith
and in the best interests of the Company. The cessation of
employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not
less than three-qua
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