EMPLOYMENT AGREEMENT
AMENDED AND RESTATED
THIS AMENDED AND
RESTATED EMPLOYMENT AGREEMENT (this “Agreement”
) is made and entered into this 22 day of December, 2008,
between COOPER TIRE & RUBBER COMPANY, a Delaware corporation
(the “Company” ), and Roy V. Armes (the
“Executive” ).
WHEREAS, the
Executive and the Company entered into an Employment Agreement
dated as of December 19, 2006 (the “Original
Agreement”); and
WHEREAS, the
Executive and the Company agree that the substantive provisions of
the Original Agreement shall remain in full force and effect, but
also agree that it is desirable to modify the terms of the Original
Agreement in certain respects in order to satisfy the requirements
Section 409A of the Code imposes on those payments under the
Agreement which can be considered “deferred
compensation” for purposes of Section 409A;
WHEREAS, the
Company desires to continue to retain the services of the Executive
as its President and Chief Executive Officer and the Executive
desires to continue to be so employed by the Company;
and
WHEREAS, the
Company and the Executive desire to enter into this Agreement
setting forth the terms and conditions of such continued
employment.
NOW, THEREFORE, in
consideration of the premises and the mutual promises and
agreements contained herein and other good and valuable
consideration, the sufficiency and receipt of which are hereby
acknowledged, and intending to be legally bound hereby, the Company
and the Executive hereby amend and restate the Original Agreement
to read as follows:
1. Certain
Defined Terms. In addition to terms defined elsewhere herein,
the following terms have the following meanings when used in this
Agreement with initial capital letters:
(a)
“Affiliate” means any corporation, limited
liability company, joint venture, partnership, or other legal
entity in which the Company owns, directly or indirectly, or has
previously owned, at least fifty percent (50%) of the capital
stock, profits, interest or capital interest.
(b)
“Annual Incentive Compensation” means the amount
paid or (but for any deferral) payable to the Executive for a year
under any annual bonus compensation programs or arrangements.
Annual Incentive Compensation shall not include or take into
account long-term incentive compensation, stock option or other
equity awards (regardless of whether granted annually), pension or
other retirement benefit contributions or accruals, perquisites or
other fringe benefits. For the avoidance of doubt, “Annual
Incentive Compensation” may be zero.
(c)
“Average Annual Incentive Compensation”
means:
(i) the average of
the Annual Incentive Compensation earned and certified by the
Compensation Committee of the Board for the Executive for the three
(3) fiscal years preceding the year in which a Termination
Date occurs; (provided that, for purposes of this
Section 1(c), if a fiscal year is less than 12 complete
months, the bonus will be annualized by dividing the bonus amount
for such year by the fraction the numerator of which is the number
of days constituting such short fiscal year and the denominator of
which is 365);
(ii) if the
Executive has been employed by the Company and the Annual Incentive
Compensation that has been earned and certified by the Compensation
Committee of the Board for the Executive for fewer than three
(3) fiscal years, the average of the Annual Incentive
Compensation that has been earned and certified by the Compensation
Committee of the Board for the Executive for the number of fiscal
years through the Termination Date; or
(iii) if the
Termination Date occurs prior to the date Annual Incentive
Compensation is earned and certified by the Compensation Committee
of the Board for the Executive for the 2007 fiscal year, the target
Annual Incentive Compensation for fiscal year 2007.
(d)
“Base Pay” means the Executive’s rate of
annual base salary payable under this Agreement (which rate shall
not be deemed to be reduced for purposes of Sections 5 or
Section 6 hereof by reason of any elective deferrals of annual
base salary) at the
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time a
termination of employment occurs or, if applicable, immediately
before any reduction in such amount that serves as a basis for a
termination for Good Reason.
(e)
“Board” means the Board of Directors of the
Company.
(X) prior
to a Change in Control, termination of the Executive’s
employment with the Company by the Board because of:
(i) the willful
and continued failure by the Executive to perform substantially the
duties of the Executive’s position, and the failure of the
Executive to correct such failure of performance within thirty
(30) days after notification by the Board of any such failure
(other than by reason of the incapacity of the Executive due to
physical or mental illness); or
(ii) any other
willful act or omission which is materially injurious to the
financial condition or business reputation of, or is otherwise
materially injurious to, the Company or any Affiliate thereof, and
failure of the Executive to correct such act or omission within
thirty (30) days after notification by the Board of any such
act or omission (other than by reason of the incapacity of the
Executive due to physical or mental illness); or
(iii) the
Executive is found guilty of, or pleads guilty or nolo contendere
to, a felony or any criminal act involving fraud, embezzlement,
theft, or moral turpitude; or
(iv) the Executive
is found guilty of, or pleads guilty or nolo contendere to, any
criminal act committed in the course of the Executive’s
employment with the Company or against the Company or any
Affiliate, or the Executive is found liable in a civil action, in
which an allegation involves a dishonest act, fraud, embezzlement
or theft committed in the course of the Executive’s
employment with the Company or against the Company or any
Affiliate.
(Y) following a Change in Control,
termination of the Executive’s employment with the Company by
the Board because of:
(i) any act or
omission constituting a material breach by the Executive of any of
his significant obligations or agreements under this Agreement or
the continued willful failure or refusal of the Executive to
adequately perform the duties reasonably required hereunder which
is materially injurious to the financial condition or business
reputation of, or is otherwise materially injurious to, the Company
or any Affiliate thereof, after notification by the Board of such
breach, failure or refusal and the failure of the Executive to
correct such breach, failure or refusal within thirty
(30) days of such notification (other than by reason of the
incapacity of the Executive due to physical or mental illness);
or
(ii) any other
willful act or omission which is materially injurious to the
financial condition or business reputation of, or is otherwise
materially injurious to, the Company or any Affiliate thereof, and
failure of the Executive to correct such act or omission within
thirty (30) days after notification by the Board of any such
act or omission (other than by reason of the incapacity of the
Executive due to physical or mental illness); or
(iii) the
Executive is found guilty of, or pleads guilty or nolo contendere
to, a felony or any criminal act involving fraud, embezzlement,
theft, or moral turpitude; or
(iv) the Executive
is found guilty of, or pleads guilty or nolo contendere to, any
criminal act committed in the course of the Executive’s
employment with the Company or against the Company or any
Affiliate, or the Executive is found liable in a civil action, in
which an allegation involves a dishonest act, fraud, embezzlement
or theft committed in the course of the Executive’s
employment with the Company or against the Company or any
Affiliate.
For purposes of
this Agreement, no act, or failure to act, on the Executive’s
part shall be deemed “willful” if done, or
omitted to be done, by the Executive in good faith and with a
reasonable belief that the Executive’s action or omission was
in the best interest of the Company. Any notification to be given
by the Board in accordance with Section 1(f)(X)(i),
1(f)(X)(ii), 1(f)(Y)(i) or 1(f)(Y)(ii) shall be in writing and
shall specifically identify the breach, failure, refusal, act or
omission to which
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the
notification relates and, in the case of Section 1(f)(X)(ii),
1(f)(Y)(i) or 1(f)(Y)(ii), shall describe the injury to the
Company, and such notification must be given within twelve
(12) months of the Board becoming aware, or within twelve
(12) months of when the Board should have reasonably become
aware of the breach, failure, refusal, act, omission or injury
identified in the notification. Notwithstanding Section 23
hereto, failure to notify the Executive within any such twelve
(12) month period shall be deemed to be a waiver by the Board
of any such breach, failure, refusal, act or omission by the
Executive and any such breach, failure, refusal, act or omission by
the Executive shall not then be determined to be a breach of this
Agreement. For the avoidance of doubt and for the purpose of
determining Cause, the exercise of business judgment by the
Executive shall not be determined to be Cause, even if such
business judgment materially injures the financial condition or
business reputation of, or is otherwise materially injurious to the
Company or any Affiliate thereof, unless such business judgment by
the Executive was not made in good faith, or constitutes willful or
wanton misconduct, or was an intentional violation of state or
federal law.
(g)
“Change in Control” means the occurrence during
the Term of any of the following events:
(i) the Company
merges into itself, or is merged or consolidated with, another
entity and as a result of such merger or consolidation less than
51% of the voting power of the then-outstanding voting securities
of the surviving or resulting entity immediately after such
transaction are directly or indirectly beneficially owned in the
aggregate by the former stockholders of the Company immediately
prior to such transaction;
(ii) all or
substantially all the assets accounted for on the consolidated
balance sheet of the Company are sold or transferred to one or more
entities or persons, and as a result of such sale or transfer less
than 51% of the voting power of the then-outstanding voting
securities of such entity or person immediately after such sale or
transfer is directly or indirectly beneficially held in the
aggregate by the former stockholders of the Company immediately
prior to such transaction or series of transactions;
(iii) a person,
within the meaning of Section 3(a)(9) or 13(d)(3) (as in
effect on the date of this Agreement) of the Securities Exchange
Act of 1934, (the “Exchange Act”) becomes the
beneficial owner (as defined in Rule 13d-3 of the Securities
and Exchange Commission pursuant to the Exchange Act) of 35% or
more of the voting power of the then-outstanding voting securities
of the Company; provided, however, that the foregoing does not
apply to any such acquisition that is made by (w) any
Affiliate of the Company; (x) any employee benefit plan of the
Company or any Affiliate; or (y) any person or group of which
employees of the Company or of any Affiliate control a greater than
25% interest unless the Board determines that such person or group
is making a “hostile acquisition;” or (z) any
person or group that directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common
control with, the Executive; or
(iv) a majority of
the members of the Board are not Continuing Directors, where a
“Continuing Director” is any member of the Board who
(x) was a member of the Board on the date of this Agreement or
(y) was nominated for election or elected to such Board with
the affirmative vote of a majority of the Continuing Directors who
were members of such Board at the time of such nomination or
election, provided that any director appointed or elected to the
Board to avoid or settle a threatened or actual proxy contest shall
in no event be deemed to be a Continuing Director.
(h)
“Code” means the Internal Revenue Code of 1986,
as amended.
(i)
“Committee” means the Compensation Committee of
the Board.
(j)
“Common Stock” means the Company’s common
stock, par value $1.00 per share.
(k)
“Company” means the Company as hereinbefore
defined.
(l)
“Disability” or “Disabled”
means when the Executive has been totally disabled by bodily injury
or disease so as to prevent him from being physically able to
perform the job duties as required under this Agreement, and such
total disability shall have continued for five (5) consecutive
months, and, in the opinion of a qualified physician selected by
the Company (and reasonably acceptable to the Executive), such
disability will presumably be permanent and continuous during the
remainder of the Executive’s life. Notwithstanding the
preceding sentence, for any payment or benefit payable under this
Agreement which is considered “deferred compensation”
subject to Section 409A of the Code, the payment or benefit
shall not be payable to the Executive solely by reason of a
Disability unless such Disability is by reason of a medically
determinable physical or mental impairment that can be expected to
last for a continuous period of not less than twelve
(12) months or to result in death, and such Disability has
caused the Executive to be either (i) unable to engage in any
substantial, gainful activity, or (ii) eligible to receive
income replacement benefits under an accident and health plan of
the Company for a period of at last three
(3) months.
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(m)
“Good Reason” means the occurrence of any of the
following conditions, without the Executive’s express, prior
written consent in each case, provided that the Executive has
provided express written notice of the condition to the Company
within ninety (90) days of the initial existence of the
condition and the Company has failed to remedy such breach within
thirty (30) days after its receipt of such written notice from
the Executive:
(i) a material
(greater than 5%) reduction in the Executive’s Base Pay,
other than as part of a reduction applicable at the same time to
executive officers of the Company generally; provided, any such
reduction applicable to other executive officers shall not for the
Executive exceed the percentage of reduction applicable to such
other executive officers, and thereafter such reduction shall cease
to apply at the same time and to the same extent (on a like
percentage basis) as the reduction may cease to apply to such other
executive officers;
(ii) a material
breach by the Company of Section 2(a) or Section 4 of this
Agreement, including but not limited to, the assignment to the
Executive of any duties inconsistent with his status as President
and Chief Executive Officer of the Company, or his removal from
such position, or a substantial alteration in the nature or status
of his responsibilities from those described herein (except, in
each case, in connection with a promotion of the Executive), or a
change in Executive’s reporting relationship such that the
Executive no longer reports directly to the full Board, or the
failure of the Executive to be elected or reelected to the
Board;
(iii) the
relocation of the office of the Company where the Executive is
employed to a location at least fifty (50) miles from Findlay,
Ohio, except for required travel on the Company’s business to
an extent reasonably required to perform his duties
hereunder;
(iv) except as
required by law, the Company directly or indirectly materially
reducing the level of benefits or award opportunities provided to
the Executive under the Plans below the level required by
Section 4 of this Agreement, other than a reduction or change
in such benefits or opportunities applicable to executive officers
of the Company generally or the Company failing to provide the
Executive with the number of paid vacation days to which he is
entitled on the basis of years of service with the Company in
accordance with the Company’s then current normal vacation
policy for the Company’s senior executives;
(v) the failure of
the Company to obtain a satisfactory agreement from any successor
to assume and agree to perform this Agreement, as required in
Section 19 hereof or, if the business of the Company for which
the Executive’s services are principally performed is sold,
the failure of the purchaser of such business to assume this
Agreement or to provide the Executive with the same or a comparable
position, duties, benefits, base salary and incentive compensation
as provided in Sections 2 and 4 of this Agreement;
or
(vi) the failure
of the Board to elect the Executive to his existing position or an
equivalent position.
Any
notification to be given by the Executive in accordance with
Section 1(m) shall specifically identify the breach or failure to
which the notification relates, and such notification must be given
within ninety (90) days of the Executive becoming aware, or
within ninety (90) days of when the Executive should have
reasonably become aware of, the breach or failure identified in the
notification. Notwithstanding Section 23 hereto, failure to
notify the Company within any such ninety (90) day period
shall be deemed to be a waiver by the Executive of any such breach
or failure and any such breach or failure shall not then be
considered “Good Reason.”
(n)
“Incentive Compensation Plan” means the Cooper
Tire & Rubber Company 1998, 2001 and 2006 Incentive
Compensation Plans, as amended, and any successor to such
plans.
(o)
“Long-Term Performance-Based Incentive
Compensation” means any cash or equity-based compensation
program in which the amounts paid, earned or vested are based upon
achievement of specified performance goals over a period of more
than one year. For the avoidance of doubt, equity awards that are
earned, vest or become exercisable based solely upon continued
employment and/or the passage of time are not “Long-Term
Performance-Based Incentive Compensation.”
(p)
“Nonqualified Supplementary Benefit Plan” means
the Cooper Tire & Rubber Company Nonqualified Supplementary
Benefit Plan, effective November 8, 1984, as
amended.
(q)
“Retirement Plans” means the Spectrum Retirement
Plan and the Nonqualified Supplementary Benefit Plan or any
successor plans thereto which provide comparable
benefits.
(r)
“Spectrum Retirement Plan” means the Cooper Tire
& Rubber Company Spectrum Retirement Plan, effective
January 1, 2002, as amended.
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(i) the
involuntary termination of the Executive’s employment by the
Company at any time for any reason other than retirement, death,
disability, Cause or the reason set forth in subparagraph
(iii) of this Section 1(s), or
(ii) termination
of the Executive’s employment by the Executive for Good
Reason, or
(iii) termination
of the Executive’s employment at the end of the Term as a
result of the Company delivering a notice of non-extension pursuant
to Section 3 prior to the Executive’s 64th
birthday.
(t)
“Termination Date” means the date on which the
Executive’s employment with the Company is terminated by the
Company or the Executive for any reason or for no reason. If the
Executive’s employment is terminated by the Company, such
date shall be specified in a written notice of termination (which
date shall be no earlier than the date of furnishing such notice),
or if no such date is specified therein, the date of receipt by the
Executive of such written notice of termination. The Executive
shall specify such termination date in any written notice of his
resignation.
(u)
“1998 Option Plan” means the Cooper Tire &
Rubber Company 1998 Employee Stock Option Plan, as
amended.
2.
Employment and Duties.
(a) General.
The Company hereby employs the Executive and the Executive agrees
upon the terms and conditions herein set forth to serve as
President and Chief Executive Officer, said employment to commence
on January 1, 2007, and, in such capacity, shall perform such
duties as may be delineated in the Bylaws of the Company, and such
other duties, commensurate with the Executive’s title and
position of President and Chief Executive Officer, as may be
assigned to the Executive from time to time by the Board. The
Executive shall report directly to the full Board. The Board shall
appoint the Executive as a member of the Board effective
January 1, 2007.
(b) Exclusive
Services. Throughout the Term (as defined in Section 3), the
Executive shall, except as may from time to time be otherwise
agreed in writing by the Company and during reasonable vacations
and unless prevented by ill health, devote his full-time and
undivided attention during normal business hours to the business
and affairs of the Company consistent with his senior executive
position, shall in all respects conform to and comply with the
lawful and reasonable directions and instructions given to him by
the Board (provided that such directions and instructions are not
inconsistent with Section 2(a)), and shall use his best
efforts to promote and serve the interests of the
Company.
(c) Restrictions
on Other Employment. Throughout the Term and provided that such
activities do not contravene the provisions of Section 2(b) hereof
or Section 15 hereof:
(i) the Executive
may engage in charitable and community affairs;
(ii) the Executive
may perform inconsequential services without specific compensation
therefore in connection with the management of personal
investments; and
(iii) the
Executive may, directly or indirectly, render services to any other
person or organization (including service as a member of the Board
of Directors of any other unaffiliated company), for which he
receives compensation, that is not in competition with the Company,
subject in each case to the prior written approval of the Board
which approval will not be unreasonably withheld. The Executive may
retain all fees he receives for such services, and the Company
shall not reduce his compensation by the amount of such fees. For
purposes of this Section 2(c)(iii) competition shall have the
same meaning as intended for the purposes of
Section 15.
3. Term of
Employment . Subject to the provisions of Section 5
through Section 10 hereof, the Company shall retain the
Executive pursuant to this Agreement and the Executive shall serve
in the employ of the Company for a period (the
“Term” ) commencing on January 1, 2007 and
continuing in effect through December 31, 2009; provided,
however, that on each January 1 after the commencement of the Term
until the year in which the Executive’s 64
th birthday occurs, the Term shall automatically be
extended for one additional year unless, no later than
September 30 of the preceding year, the Company or the
Executive shall have given notice to the other that it does not
wish to extend this Agreement.
4.
Compensation and Other Benefits . Subject to the provisions
of this Agreement, the Company shall pay and provide the following
compensation and other benefits to the Executive during the Term as
compensation for services rendered hereunder:
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(a) Base
Pay. The Company shall pay to the Executive Base Pay at the
rate of $700,000 per annum, payable biweekly. The Base Pay will be
reviewed not less frequently than annually by the Board or by the
Committee.
(b)
Employee Benefit Plans . At all times during the Term, the
Executive shall be provided the opportunity to participate in the
Cooper Tire & Rubber Company Spectrum Retirement Plan as a
Spectrum Participant and the Cooper Tire & Rubber Company
Nonqualified Supplementary Benefit Plan, and such employee pension
and retirement benefit plans, whether or not qualified, and
employee welfare benefit or perquisite plans, programs and
arrangements (collectively, the “ Plans ”) as
are, from time to time hereafter, based on the Executive’s
date of hire, generally made available to executives of the
Company.
(c)
Annual Incentive Compensation . The Executive shall be
eligible to participate in such Annual Incentive Compensation
programs or arrangements established from time to time for
executives of the Company. The Executive shall be eligible for a
target award equal to 85% of Base Pay and a maximum award equal to
170% of Base Pay under such Annual Incentive Compensation programs
or arrangements pursuant to the terms and conditions established
therein, from time to time, for executives of the Company.
Notwithstanding the terms and conditions of the Annual Incentive
Compensation programs or arrangements established for the 2007
fiscal year, the Executive shall receive an award of not less than
85% of Base Pay for Annual Incentive Compensation attributable to
the 2007 fiscal year payable on or before March 15, 2008 or as
soon thereafter as practical (but in no event later than
December 31, 2008.
(d)
Long-Term Performance-Based Incentive Compensation . The
Executive shall be eligible to participate in such long-term
performance-based incentive compensation plans and programs as the
Company generally provides from time to time to its senior
executives.
(e)
Initial Restricted Stock Unit Award .
(i) Grant .
As of commencement of employment or as soon thereafter as may be
practicable, the Executive shall be awarded a grant of such number
of restricted stock units pursuant to the Company’s 2006
Incentive Compensation Plan ( “Plan” ) as equals
the quotient of (x) $4,000,000 divided by (y) the average
closing price of one (1) share of Common Stock for all trading
days during the month of December 2006, each such unit
representing a right to receive one (1) share of Common Stock
(the “ Initial RSU Award ” and each such
restricted stock unit a “Unit” ) in accordance
with such terms and conditions as may be determined by the Board,
consistent with the provisions of this
Section 4(e).
(ii) Vesting
and Deferral . The Initial RSU Award shall vest on
December 31, 2009 provided that, except as set forth in
Sections 5, 6, 8 and 9, the Executive is continuously employed
by the Company through such date for such Initial RSU Award to so
vest. The Initial RSU Award (including both Units initially awarded
under Section 4(e)(i) and dividend equivalent Units provided
under Section 4(e)(iii)) shall be payable in two
installments:
(X) the first such
installment of vested Units shall be paid in shares of Common Stock
on the date following the date on which the Initial RSU Award vests
(or as soon thereafter as may be practical) in such number of
shares as are equal to 75% of the sum of the number of Units
initially awarded under Section 4(e)(i) and dividend
equivalent Units provided under Section 4(e)(iii);
and
(Y) the second
such installment of vested Units shall be paid in such number of
shares of Common Stock on the Executive’s Termination Date
or, for any termination not resulting from the Executive’s
death or Disability, such delayed payout date six months and one
day later as may be required to comply with Section 409A of
the Code pursuant to Section 24 of this Agreement equal to the
Units attributable to the Initial RSU Award (including Units
attributable to dividend equivalents) that have not been settled in
accordance with clause (X) next above;
provided that,
to the extent that the Termination Date occurs prior to
December 31, 2009 and the Units become vested by reason of the
occurrence of a Termination, such vesting and distribution will be
subject to the applicable requirements of Section 5 or
Section 6, as applies, that the Executive sign a Release. For
the avoidance of doubt, it is recited here that, for purposes of
this Agreement, the Initial RSU Award shall be treated as an award
that vests in a single sum; provided that this sentence shall not
be construed to exclude other awards being treated as awards that
vest in a single sum.
(iii) Dividend
Equivalents . The Initial RSU Award shall provide for accrual
of dividend equivalents until the date of payment of such award, as
follows. As of each dividend date with respect to shares of Common
Stock, a dollar amount equal to the amount of the dividend that
would have been paid on the number of shares of Common Stock equal
to the number of Units awarded under the Initial RSU Award held by
the Executive as of the close of business on the record date for
such dividend shall be converted into a number of Units equal to
the number of whole and fractional shares of Common Stock that
could have been purchased at the closing price on the dividend
payment date with such dollar amount, which Units shall be subject
to all terms and conditions applicable to Units under the Initial
RSU Award. In the case of any
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dividend
declared on shares of Common Stock which is payable in shares of
Common Stock, the Executive shall be credited with an additional
number of Units equal to the product of (x) the number of his
Units then held on the related dividend record date multiplied by
the (y) the number of shares of Common Stock (including any
fraction thereof) distributable as a dividend on a share of Common
Stock; provided that in the event of a dividend of stock of a
subsidiary of the Company, or other similar event, the Initial RSU
Award shall be adjusted in the same manner and to the same extent
as the adjustment to other restricted stock or restricted stock
unit awards held by executives of the Company.
(f)
Vacation . The Executive shall be entitled to paid annual
vacation during the Term in accordance with the Company’s
then current vacation policy for the Company’s senior
executives.
5.
Termination Without Cause or for Good Reason or Non-Renewal of
Term Prior to a Change in Control .
(a)
Severance and Benefits . Upon a Termination prior to, or
more than two (2) years following, a Change in Control, the
Company shall pay the Executive the amount set forth in Section
5(a)(i) and, subject to and conditioned upon the provisions of
Section 24 and to the Executive’s delivering to the
Company the Release provided for in Section 16 with all
periods for revocation expired, the Company shall pay or provide to
the Executive the amounts and benefits set forth in
Section 5(a)(ii) through 5(a)(iv):
(ii) a single lump
sum cash payment within thirty (30) days following the
expiration of such revocation period equal to the Executive’s
then current Base Pay, to the extent unpaid, through the date of
the Executive’s Termination;
(iii) lump sum
cash payment within thirty (30) days following the expiration
of such revocation period equal to the pro-rated portion of the
benefit payable under each Long-Term Performance-Based Compensation
award or program in which Executive participates (including,
without limitation, any performance-based restricted stock unit
award); and
(iv) a single lump
sum in cash within thirty (30) days following the expiration
of such revocation period equal to the sum of (A) $75,000 plus
(B)(I) two (2) times (II) the sum of (x) the
Executive’s Base Pay plus (y) the Average Annual
Incentive Compensation; provided, if such Termination occurs at any
time on or prior to December 31, 2009 (other than a
Termination occurring at the end of the Term ending on
December 31, 2009 as a result of the Company delivering a
notice of non-extension pursuant to Section 3), the amount set
forth in clause (B)(I) shall be equal to three (3); provided that,
the portion (if any) of such lump sum payment which may be paid
immediately upon expiration of such revocation period shall be
limited to two (2) times the lesser of (i) the maximum
limit on the annual compensation that may be taken into account by
a qualified retirement under Section 401(a)(17) of the Code
for the year which includes the date of Termination or
(ii) the Executive’s annualized compensation from the
Company for the calendar year preceding the year of the
Termination, and the remainder of this lump sum payment shall not
be paid to the Executive until the delayed payment date prescribed
by Section 24 below; and
(v) for
twenty-four (24) months following the Termination Date, the
Company shall provide the Executive with life, accident and health
insurance benefits substantially similar to those to which the
Executive and the Executive’s family were entitled
immediately prior to the Termination, provided that, to the extent
such health benefits are determined to be taxable benefits by
reason of Section 105(h) of the Code or otherwise, such health
coverage shall be limited to eighteen (18) months following
the Termination Date. Thereafter the Company shall provide retiree
medical and life insurance coverage to the extent the Executive is
eligible for such benefits under the terms of the applicable Plans
in effect immediately prior to the Termination. Benefits otherwise
receivable by the Executive pursuant to this Section 5(a)(
iii iv) shall be reduced to the extent the Executive is
eligible to receive comparable benefits from other employment, and
any such benefits eligibility shall be reported to the
Company.
(b)
Time-Vested Restricted Stock Units . Subject to and
conditioned upon the Executive’s delivering to the Company
the Release provided for in Section 16 with all periods for
revocation expired, the Initial RSU Award (including dividend
equivalents credited thereon pursuant to Section 4(e)(iii)),
if then unvested, shall fully vest immediately upon Termination and
shall be payable in accordance with Section 4(e)(ii).
Notwithstanding any provision in any award agreement between the
Company and the Executive or this Section 5, subject to and
conditioned upon the Executive’s delivering to the Company
the Release provided for in Section 16 with all periods for
revocation expired, (i) all restricted stock units granted to
the Executive, other than the Initial RSU Award, that vest based
solely upon the Executive’s continued employment with the
Company and which have not otherwise vested shall vest and shall be
payable in accordance with the terms of the particular award under
which they were granted; provided, any outstanding restricted stock
unit award that vests in a single sum determined solely on the
basis of the Executive’s continuous employment through a
stated vesting date shall vest as to such number of restricted
stock units on the date of the Executive’s Termination as
equals the fraction the numerator of which is the number of full
months (based on the monthly “anniversary” date of the
award) so continuously employed from the first day of such vesting
period through the Termination Date and the denominator of which is
the total number of months comprising the vesting period of such
award; and (ii) for all such restricted stock units (other
than the Initial RSU Award), within five (5) days after the
Termination Date, the Company shall either (1) pay to the
Executive an amount equal to the fair market value
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(computed as
the average of the high and low trades reported on the New York
Stock Exchange) of the Common Stock represented by such vested
restricted stock units determined as of the Termination Date, or
(2) issue Common Stock under such vested awards to the
Executive. Any such cash payment shall be deemed to be in lieu of
and in substitution for any right the Executive may have to such
vested restricted stock units under the terms of any award
agreement between the Company and the Executive, and the Executive
agrees to surrender all such vested restricted stock units being
cashed out hereunder immediately prior to receiving the cash
payment described above. For purposes hereunder, the term
“restricted stock unit” should be read to include all
other similar equity instruments (other than the Initial RSU
Award), including, but not limited to, restricted stock.
(c) Stock
Options . Subject to and conditioned upon the Executive’s
delivering to the Company the Release provided for in
Section 16 with all periods for revocation expired and
notwithstanding any provision in the Incentive Compensation Plan,
the 1998 Option Plan, other relevant plan or program or this
Section 5:
(i) for a period
of ninety (90) days following the date of the
Executive’s Termination (or such longer period as may be set
forth in the applicable stock option plan or award agreement), but
not later than the expiration of the stated option term under the
award, all stock options granted to the Executive by the Company
that are both outstanding and vested immediately prior to
Termination (in accordance with their then existing terms and this
Section 5(c)) shall remain outstanding and exercisable, after
which all such stock options that have not been exercised shall
immediately terminate; and
(ii) all stock
options granted to the Executive by the Company which have not
otherwise vested shall be forfeited immediately upon Termination;
provided, any outstanding unvested stock option award that vests in
a single sum determined solely on the basis of the
Executive’s continuous employment through a stated vesting
period of more than one (1) year shall vest as to such number
of stock options stock on the date of the Executive’s
Termination as equals the fraction the numerator of which is the
number of full months (based on the monthly
“anniversary” date of the award) so continuously
employed from the first day of such vesting period through the
Termination Date and the denominator of which is the total number
of months comprising the vesting period of such award, and such
vested options shall remain outstanding and exercisable thereafter
for a period of ninety (90) days following the date of the
Executive’s Termination (or such longer period as may be set
forth in the applicable stock option plan or award agreement), but
not later than the expiration of the stated option term under the
award, after which all such stock options that have not been
exercised shall immediately terminate.
For purposes
hereunder, the term “stock option” also means all other
similar equity instruments, including, but not limited to, stock
appreciation rights.
(d)
Section 409A . Notwithstanding anything herein to the
contrary, in no event shall amounts in respect of any restricted
stock units or other stock rights that, as determined by the
Company, provides for the “deferral of compensation”
(as such term is defined under Section 409A of the Code and
the regulations and other Treasury Department guidance promulgated
thereunder (collectively, “Section 409A”
)), be distributed pursuant to Section 5(b) or Section 5(c) prior
to the occurrence of the earlier of either (i) the Termination
Date (or such later date required under Section 24),
(ii) the Executive’s death or “Disability”
(as such term is defined under Section 409A and in Section
1(l) above), (iii) a “change in the ownership or
effective control” of the Company or in the “ownership
of a substantial portion of the assets” of the Company (each
as defined under Section 409A), or (iv) the specified
time or fixed schedule as may be elected by the Executive in
accordance with the applicable plan or arrangement and
Section 409A. This Section 5(d) shall not apply to any stock
options which are not considered deferred compensation subject to
Section 409A pursuant to Treasury
Regulation Section 1.409A-1(b)(5).
6. Severance
and Other Benefits Upon or Following a Change in
Control.
(a)
Severance and Benefits . Upon a Termination that occurs at
any time during the period commencing on the occurrence of a Change
in Control and ends on the second anniversary of such Change in
Control, the Company shall pay the Executive the amount set forth
in Section 6(a)(i) and, subject to and conditioned upon the
provisions of Section 24 and to the Executive’s
delivering to the Company the Release provided for in
Section 16 with all periods for revocation expired, the
Company shall pay or provide to the Executive the amounts and
benefits set forth in Section 6(a)(ii), 6(a)(iii) and
6(a)(iv):
(i) a single lump
sum cash payment within five (5) days following the expiration
of such revocation period equal to the Executive’s then
current Base Pay, to the extent unpaid, through the date of the
Executive’s Termination, plus
(ii) a lump sum
cash payment within five (5) days following the expiration of
such revocation period equal to the pro-rated portion of the
benefit payable under each Long-Term Performance-Based Compensation
award or program in which Executive participates (including,
without limitation, any performance-based restricted stock unit
award); and
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(iii) a single
lump sum in cash within thirty (30) days following the
expiration of such revocation period equal to the sum of (A)
$75,000 plus (B)(I) two (2) times (II) the sum of
(x) the Executive’s Base Pay plus (y) the Average
Annual Incentive Compensation; provided, if such Termination occurs
at any time on or prior to December 31, 2009 (other than a
Termination occurring at the end of the Term ending on
December 31, 2009 as a result of the Company delivering a
notice of non-extension pursuant to Section 3), the amount set
forth in clause (B)(I) shall be equal to three (3); provided that,
the portion (if any) of such lump sum payment which may be paid
immediately upon the expiration of such revocation period shall be
limited to two times the lesser of (i) the maximum limit on
the annual compensation that may be taken into account by a
qualified retirement under Section 401(a)(17) of the Code for
the year which includes the date of Termination or (ii) the
Executive’s annualized compensation from the Company for the
calendar year preceding the year of the Termination, and the
remainder of this lump sum payment shall not be paid to the
Executive until the delayed payment date prescribed by
Section 24 below; and
(iv) for
twenty-four (24) months following the Termination Date, the
Company shall provide the Executive with life, accident and health
insurance benefits substantially similar to those to which the
Executive and the Executive’s family were entitled
immediately pr
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