Exhibit 10.1
Form for Change of Control
Agreement
[Executive’s Name]
[Job Title]
[Company Address]
[City, State, Postal Code]
Dear
:
Precision Castparts Corp. (the
“Company”) considers it essential to the best interests
of its stockholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors of
the Company (the “Board”) recognizes that, as is the
case with many publicly held corporations, the possibility of a
change in control of the Company may exist and that such
possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its
stockholders.
The Board has determined that
appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of the
Company’s management, including yourself, to their assigned
duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control
of the Company.
In order to induce you to remain in
the employ of the Company, the Company agrees that you shall
receive the severance benefits set forth in this letter agreement
(the “Agreement”) in the event your employment with the
Company is terminated under the circumstances described below
subsequent to a “change in control of the Company” (as
defined in Section 2). The Company and you have entered into a
prior letter agreement regarding change in control severance
benefits dated
, 200 . Upon
your signature of this Agreement, the prior letter agreement shall
be amended and restated in its entirety in the form of this
Agreement.
1. Term of Agreement . This
Agreement shall commence on the date you agree to its terms (as
indicated on the signature page of this Agreement), and shall
continue in effect through December 31, 2009; provided,
however, that commencing on January 1, 2010, and each
January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not later
than September 30 of the preceding year, the Company shall
have given notice that it does not wish to extend this Agreement
(provided that no such notice may be given during the pendency of a
potential change in control of the Company, as defined in
Section 2); and provided, further, that if a change in control
of the Company, as defined in Section 2, shall have occurred
during the original or extended term of this Agreement, this
Agreement shall continue in effect for a period of twenty-four
(24) months beyond the month in which such change in control
occurred.
[Executive’s Name]
, 20
Page 2
2. Change in Control; Potential
Change in Control .
(i) No benefits shall be payable
hereunder unless there shall have been a change in control of the
Company, as set forth below. For purposes of this Agreement, a
“change in control of the Company” shall be deemed to
have occurred if:
(a) any “person,” as
such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)
(other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any
company owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company), is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing
20% or more of the combined voting power of the Company’s
then outstanding securities;
(b) during any period of two
consecutive years, individuals who at the beginning of such period
constituted a majority of the Board of Directors cease for any
reason to constitute a majority thereof unless the nomination or
election of such new directors was approved by a vote of at least
two-thirds of the directors then still in office who were directors
at the beginning of such period;
(c) the stockholders of the Company
approve a merger or consolidation of the Company with any other
company or statutory plan of exchange involving the Company
(“Merger”), other than (1) a Merger which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity) more than 50% of the combined voting power
of the voting securities of the Company or such surviving entity
outstanding immediately after the Merger or (2) a Merger
effected to implement a recapitalization of the Company (or similar
transaction) in which no “person” (as hereinabove
defined) acquires more than 20% of the combined voting power of the
Company’s then outstanding securities; or
(d) the stockholders of the Company
approve a plan of complete liquidation of the Company or an
agreement for the sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) or disposition by
the Company of all or substantially all of the Company’s
assets.
Notwithstanding the foregoing,
unless otherwise determined by the Board, no change in control of
the Company shall be deemed to have occurred if (i) you are a
member of a management group which first announces a proposal which
constitutes a potential change in control (as defined in this
Section 2) which proposal (including any modifications
thereof) is ultimately successful or (ii) you acquire an
equity interest in the entity which ultimately acquires the Company
pursuant to the transaction described in (i) of this
paragraph.
[Executive’s Name]
, 20
Page 3
(ii) For purposes of this Agreement,
a “potential change in control” of the Company shall be
deemed to have occurred if:
(a) the Company enters into an
agreement, the consummation of which would result in the occurrence
of a change in the control of the Company;
(b) any person (including the
Company) publicly announces an intention to take or to consider
taking actions which if consummated would constitute a change in
control of the Company;
(c) any person, other than a trustee
or other fiduciary holding securities under an employee benefit
plan of the Company (or a company owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), who is or
becomes the beneficial owner, directly or indirectly, of securities
of the Company representing 9.5% or more of the combined voting
power of the Company’s then outstanding securities, increases
his beneficial ownership of such securities by 3 percentage points
or more over the percentage so owned by such person on the date
hereof; or
(d) the Board adopts a resolution to
the effect that, for purposes of this Agreement, a potential change
in control of the Company has occurred.
(iii) You agree that, subject to the
terms and conditions of this Agreement, in the event of a potential
change in control of the Company, you will remain in the employ of
the Company until the earliest of (a) a date which is 270 days
from the occurrence of such potential change in control of the
Company, (b) the termination by you of your employment by
reason of Disability as defined in Section 3(ii), or
(c) the date on which you first become entitled under this
Agreement to receive the benefits provided in Section 4(iii)
below.
3. Termination Following Change
in Control .
(i) General . If any of the
events described in Section 2 constituting a change in control
of the Company shall have occurred, you shall be entitled to the
benefits provided in Section 4(iii) upon the subsequent
termination of your employment within 24 months following the
change in control, unless such termination is (a) because of
your death or Disability, (b) by the Company for Cause, or
(c) by you other than for Good Reason. In the event your
employment with the Company is terminated for any reason and
subsequently a change in control of the Company occurs, you shall
not be entitled to any benefits hereunder.
(ii) Disability . If, as a
result of your incapacity due to physical or mental illness, you
shall have been absent from the full-time performance of your
duties with the Company for six (6) consecutive months, and
within thirty (30) days after written notice of termination is
given you shall not have returned to the full-time performance of
your duties, your employment may be terminated for
“Disability.”
[Executive’s Name]
, 20
Page 4
(iii) Cause . Termination by
the Company of your employment for “Cause” shall mean
termination (a) upon the willful and continued failure by you
to substantially perform your duties with the Company (other than
any such failure resulting from your incapacity due to physical or
mental illness or any such actual or anticipated failure after the
issuance of a Notice of Termination (as defined in Subsection 3(v))
by you for Good Reason (as defined in Subsection 3(iv)), after a
written demand for substantial performance is delivered to you by
the Board, which demand specifically identifies the manner in which
the Board believes that you have not substantially performed your
duties, or (b) the willful engaging by you in conduct which is
demonstrably and materially injurious to the Company, monetarily or
otherwise. For purposes of this Subsection, no act, or failure to
act, on your part shall be deemed “willful” unless
done, or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in or not
opposed to the best interest of the Company. Notwithstanding the
foregoing, you shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to you a
copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters (3/4) of the entire membership of the
Board at a meeting of the Board (after reasonable notice to you and
an opportunity for you, together with your counsel, to be heard
before the Board), finding that in the good faith opinion of the
Board you were guilty of conduct set forth above in this Subsection
and specifying the particulars thereof in detail.
(iv) Good Reason . You shall
be entitled to terminate your employment for Good Reason provided
you give Notice of Termination (as defined in Section 3(v)) no
later than 90 days after notice to you of a circumstance
constituting Good Reason. For purposes of this Agreement,
“Good Reason” shall mean, without your express written
consent, the occurrence after a change in control of the Company of
any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination (as defined in
Section 3(vi)) specified in the Notice of Termination given in
respect thereof:
(a) the assignment to you of any
duties inconsistent (except in the nature of a promotion) with the
position in the Company that you held immediately prior to the
change in control of the Company, or an adverse alteration in the
nature or status of your position or responsibilities or the
conditions of your employment from those in effect immediately
prior to such change in control;
(b) a reduction by the Company in
your annual base salary as in effect on the date hereof or as the
same may be increased from time to time except for across-the-board
salary reductions similarly affecting all management personnel of
the Company and all management personnel of any person in control
of the Company;
[Executive’s Name]
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Page 5
(c) the Company’s requiring
you to be based more than 50 miles from the Company’s offices
at which you are principally employed immediately prior to the date
of the change in control except for required travel on the
Company’s business to an extent substantially consistent with
your present business travel obligations;
(d) the failure by the Company to
pay to you any portion of your current compensation or compensation
under any deferred compensation program of the Company;
(e) the failure by the Company to
continue in effect any material compensation or benefit plan in
which you participate immediately prior to the change in control of
the Company, unless an equitable and reasonably comparable
arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the
Company to continue your participation therein (or in such
substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the
level of your participation relative to other participants, than
existed at the time of the change in control of the
Company;
(f) the failure by the Company to
continue to provide you with benefits substantially similar to
those enjoyed by you under any of the Company’s life
insurance, medical, dental, accident, or disability plans in which
you were participating at the time of the change in control of the
Company, the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits, or
the failure by the Company to provide you with the number of paid
vacation days to which you are entitled on the basis of your years
of service with the Company in accordance with the Company’s
normal vacation policy in effect at the time of the change in
control of the Company;
(g) the failure of the Company to
obtain a satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in Section 5
hereof; or
(h) any purported termination of
your employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Subsection
(v) hereof (and, if applicable, the requirements of Subsection
(iii) hereof), which purported termination shall not be
effective for purposes of this Agreement.
For purposes of this Subsection
(iv), a good faith determination of “Good Reason” made
by you shall be conclusive. Your right to terminate your employment
pursuant to this Subsection shall not be affected by your
incapacity due to physical or mental illness until your employment
is terminated pursuant to Section 3(ii).
[Executive’s Name]
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Page 6
(v) Notice of Termination .
Any purported termination of your employment by the Company or by
you shall be communicated by written Notice of Termination to the
other party hereto in accordance with Section 6. “Notice
of Termination” shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of your employment under
the provision so indicated.
(vi) Date of Termination, Etc
. “Date of Termination” shall mean (a) if your
employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that you shall not
have returned to the full-time performance of your duties during
such thirty (30)-day period), and (b) if your employment is
terminated pursuant to Subsection (iii) or (iv) hereof or
for any other reason (other than Disability), the date specified in
the Notice of Termination (which, in the case of a termination for
Cause shall not be less than thirty (30) days from the date
such Notice of Termination is given, and in the case of a
termination for Good Reason shall not be less than thirty
(30) nor more than sixty (60) days from the date such
Notice of Termination is given); provided, however, that if within
fifteen (15) days after any Notice of Termination is given,
or, if later, prior to the Date of Termination (as determined
without regard to this proviso), the party receiving such Notice of
Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be
the date on which the dispute is finally determined, either by
mutual written agreement of the parties or by a binding arbitration
award; and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in
good faith and the party giving such notice pursues the resolution
of such dispute with reasonable diligence. Notwithstanding the
pendency of any dispute, the Company will continue to pay you your
full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, base salary) and
continue you as a participant in all compensation, benefit and
insurance plans in which you were participating when the notice
giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this Subsection. Amounts paid under
this Subsection are in addition to all other amounts due under this
Agreement, and shall not be offset against or reduce any other
amounts due under this Agreement and shall not be reduced by any
compensation earned by you as the result of employment by another
employer. You shall not be obligated to perform any services after
the Date of Termination that would prevent the termination of your
employment on such Date of Termination from qualifying as a
“separation from service” as defined in Treasury
Regulations §1.409A-1(h).
4. Compensation Upon Termination
or During Disability . Following a change in control of the
Company, you shall be entitled to the following benefits during a
period of disability, or upon termination of your employment, as
the case may be, provided that such period or termination occurs
during the term of this Agreement:
(i) During any period that you fail
to perform your full-time duties with the Company as a result of
incapacity due to physical or mental illness, you shall continue to
receive your base salary at the rate in effect at the commencement
of any such period, together with all compensation payable to you
under the Company’s disability plan or program or other
similar plan during such period, until this Agreement is terminated
pursuant to Section 3(ii) hereof.
[Executive’s Name]
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Page 7
Thereafter, or in the event your employment
shall be terminated by reason of your death, your benefits shall be
determined under the Company’s retirement, insurance and
other compensation programs then in effect in accordance with the
terms of such programs.
(ii) If your employment shall be
terminated by the Company for Cause or by you other than for Good
Reason, the Company shall pay you your full base salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are
entitled under any compensation plan of the Company at the time
such payments are due, and the Company shall have no further
obligations to you under this Agreement.
(iii) If your employment by the
Company should be terminated by the Company other than for Cause or
Disability or if you should terminate your employment for Good
Reason, you shall be entitled to the benefits provided
below:
(a) the Company shall
