Exhibit 10.7
FORM OF
CHANGE IN CONTROL AGREEMENT
(Tier II Agreement)
[date]
Dear:
1. This letter agreement (the
“Agreement”) is an amendment and restatement of the
agreement previously entered into by you and Arch Chemicals, Inc.
(the “Company”) and shall be binding immediately upon
its execution and delivery, but it shall not be operative unless
and until there has been a Change in Control (as defined below) of
Arch Chemicals, Inc. (the “Company”). In the event that
this Agreement shall not have become operative during its Term (as
defined below), it shall not thereafter become operative or be of
any force or effect.
2. For purposes of this Agreement,
the following definitions apply:
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(a)
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“Change
in Control” means the first of the following events to
occur:
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(i)
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there
is consummated a merger or consolidation to which the Company or
any Subsidiary of the Company is a party if the merger or
consolidation would result in the voting securities of the Company
outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or
any parent thereof) less than 50% of the combined voting power of
the securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or
consolidation;
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(ii)
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direct
or indirect beneficial ownership (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) of securities of
the Company representing in the aggregate 20% or more of the total
combined voting power of the Company’s then issued and
outstanding securities is acquired by any person or entity, or
group of associated persons or entities acting in concert;
provided , however , that for purposes hereof, the
following acquisitions shall not constitute a Change of Control:
(A) any acquisition by the Company or any of its Subsidiaries,
(B) any acquisition by any employee benefit plan (or related
trust or fiduciary) sponsored or maintained by the Company or any
corporation controlled by the Company, (C) any acquisition by
an underwriter temporarily holding securities pursuant to an
offering of such securities, (D) any acquisition by a
corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their
ownership of stock of the Company and (E) any acquisition in
connection with a merger or consolidation which, pursuant to
subparagraph (i) above, does not constitute a Change of
Control;
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(iii)
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there
is consummated a transaction for the sale or disposition by the
Company of all or substantially all of the Company’s assets,
other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity, at
least 80% of the combined voting power of the voting securities of
which are owned by stockholders of the Company in substantially the
same proportions as their ownership of the Company immediately
prior to such sale;
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(iv)
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the
stockholders of the Company approve any plan or proposal for the
liquidation of the Company; or
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(v)
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the
occurrence within any 24-month or shorter period of a change in the
composition of the Board such that the “Continuity
Directors” cease for any reason to constitute at least a
majority of the Board. For purposes of this subparagraph,
“Continuity Directors” means (A) those members of
the Board who were directors on the date hereof and (B) those
members of the Board (other than a director whose initial
assumption of office was in connection with an actual or threatened
election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
who were elected or appointed by, or on the nomination or
recommendation of, at least a two-thirds majority of the
then-existing directors who either were directors on the date
hereof or were previously so elected or appointed.
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(b)
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“Cause”
means your willful and continued failure to substantially perform
your duties; your willful engaging in gross misconduct
significantly and demonstrably financially injurious to the
Company; or your willful misconduct in the course of your
employment which is a felony or fraud. No act or failure to act on
your part will be considered “willful” unless done or
omitted not in good faith and without reasonable belief that the
action or omission was in the interests of the Company or not
opposed to the interests of the Company.
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(c)
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“Code”
means the Internal Revenue Code of 1986, as amended.
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(d)
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“Company”
means Arch Chemicals, Inc. or a successor of Arch Chemicals, Inc.
(whether direct or indirect) by acquisition of all or substantially
all of its assets, merger or consolidation.
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(e)
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“Section
409A” means Section 409A of the Code, the Treasury
Regulations promulgated under Section 409A of the Code and
other guidance issued by the Internal Revenue Service in respect of
Section 409A of the Code, in each case as in effect from time
to time.
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(f)
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“Subsidiary”
means any entity in which the Company, directly or indirectly,
possesses fifty percent (50%) or more of the total combined
voting power of all classes of its stock.
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(g)
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“Term”
shall mean the period from the date hereof through
December 31, 2011; provided that, if a Change in
Control occurs during the Term of this Agreement, the Term shall
end on the later of (i) second anniversary of the date of such
Change in Control and (ii) December 31, 2011.
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(h)
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“Termination”
means if:
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(i)
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Within
18 months following a Change in Control, you are discharged by the
Company (or any of its subsidiaries) other than for Cause;
or
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(ii)
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You
terminate your employment within 24 months following a Change in
Control in the event that:
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(1)
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the
Company requires you to relocate your then office to an area that
increases by more than 30 miles your commuting distance, on a daily
basis, from your then residence, except the requirement to relocate
your office to the Company’s corporate headquarters wherever
located prior to the Change in Control, is not a basis for
Termination if (a) in the transfer, the Company reimburses you
fully for all your relocation costs consistent with its past
practice in effect prior to a Change in Control and (b) you
are not age 55 or older with at least ten years of creditable
service under a Company retirement plan either prior to the Change
in Control or at the time of the required relocation;
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(2)
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the
Company reduces your base salary as in effect immediately prior to
the Change in Control;
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(3)
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the
Company fails to continue in any material respect your
participation in its benefit plans (including incentive
compensation and stock options), both in terms of the amount of the
benefits provided (other than due to the Company’s or a
relevant operation’s financial or stock price performance
provided such performance is a relevant criterion under such plan)
and the level of your participation relative to other participants
as exists on the date hereof; provided that, with respect to annual
and long term incentive compensation plans, the basis with which
your amount of benefits and level of participation shall be
compared shall be the average benefit awarded to you under the
relevant plan during the three years immediately preceding the date
of Termination;
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(4)
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your
duties, position or reporting responsibilities are materially
diminished; or
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(5)
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A
willful material breach by the Company of this
Agreement.
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Notwithstanding anything to the
contrary contained herein, you will not be entitled to terminate
employment and receive the payments and benefits set forth in
paragraph 3 as the result of the occurrence of any event specified
in the foregoing clause (ii) (each such event, “a Good
Reason Event”) unless, within 90 days following the
occurrence of such event, you provide written notice to the Company
of the occurrence of such event, which notice sets forth the exact
nature of the event and the conduct required to cure such event.
The Company will have 30 days from the receipt of such notice
within which to cure (such period, the “Cure Period”)
the circumstances giving rise to the Good Reason Event. If, during
the Cure Period, such event is remedied, then you will not be
permitted to terminate employment and receive the payments and
benefits set forth in paragraph 3 as a result of such Good Reason
Event. If, at the end of the Cure Period, the Good Reason Event has
not been remedied, you will be entitled to terminate employment as
a result of such Good Reason Event during the 45 day period that
follows the end of the Cure Period. If you terminate employment
during such 45 day period, so long as you delivered the written
notice to the Company of the occurrence of the Good Reason Event at
any time prior to the expiration of this Agreement, for purposes of
the payments, benefits and other entitlements set forth in
paragraph 3 of this Agreement, the termination of your employment
pursuant thereto shall be deemed to be a termination before the
expiration of this Agreement. If you do not terminate employment
during such 45 day period, you will not be permitted to terminate
employment and receive the payments and benefits set forth in
paragraph 3 as a result of such Good Reason Event.
3. (a) In the event of a
Termination, the Company will pay you a cash amount (“Special
Severance”) equal to the sum of:
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(i)
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12
months salary at the higher of your base rate of salary in effect
at the Company (or any subsidiary thereof) immediately prior to the
Change in Control or on the date of Termination; plus
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(ii)
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an
amount equal to the greater of (a) the average of your bonus
awards actually paid under the Company’s annual cash
incentive compensation plans or programs for the three calendar
years immediately preceding the year in which Termination occurs
(including zero if you participated in such plans or programs for
the particular year but nothing was paid) or (b) your standard
annual cash incentive award for the year in which Termination
occurs.
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For the purposes of clause
3(a)(ii)(a), (A) any bonus amounts deferred to the Employee
Deferral Plan for a particular bonus year shall be deemed to have
been actually paid and not deferred, and (B) if you did not
participate for such three year period in such plans or programs,
the average shall be of the two full calendar years in which you
did participate or in the case of one calendar year of
participation, the amount for such one year.
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(b)
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During
the 12-month period following your Termination, you and your
dependents shall continue to
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