Exhibit 10.02
Praxair, Inc.
Severance Compensation
Agreement
[date]
NAME
ADDRESS
Dear
Mr. :
The Board of Directors (the
“Board”) of Praxair, Inc. (“Praxair”)
recognizes that the possibility of a Change in Control of Praxair
exists, 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 Praxair or its majority-owned
subsidiaries (hereinafter to be referred to collectively as the
“Company”).
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 a possible Change in Control of
Praxair.
In order to induce you to remain in
the employ of the Company and in consideration of both your
continued service to the Company and your execution of a
Nondisclosure, Nonsolicitation and Noncompetition agreement in the
form provide to you by Praxair, Praxair agrees that you shall
receive the severance benefits set forth in this Severance
Compensation Agreement (“Agreement”) in the event your
employment with the Company is terminated subsequent to a Change in
Control under the circumstances described below in Subsection 2a.
This Agreement amends and supersedes in all respects, all prior
Severance Compensation Agreements previously entered into between
you and the Company.
1. Definitions .
a. “ Change in Control
” means the occurrence of any one of the following events
with respect to Praxair:
|
|
(i)
|
individuals who, on
January 1, 2009, constitute the Board (the “Incumbent
Directors”) cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director
subsequent to January 1, 2009, whose election or nomination
for election was approved
|
|
|
by a vote of at least two-thirds
of the Incumbent Directors then on the Board (either by a specific
vote or by approval of the Praxair proxy statement in which such
person is named as a nominee for director, without objection to
such nomination) shall be an Incumbent Director; provided ,
however , that no individual elected or nominated as a
director of Praxair initially as a result of an actual or
threatened election contest with respect to directors or any other
actual or threatened solicitation of proxies or consents by or on
behalf of any person other than the Board shall be deemed an
Incumbent Director;
|
|
|
(ii)
|
any
“person” (as such term is defined in
Section 3(a)(9) of the Securities Exchange Act of 1934 (the
“Exchange Act”) and as used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act) is or becomes a “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of Praxair representing 20%
or more of the combined voting power of Praxair’s then
outstanding securities eligible to vote for the election of the
Board (the “Praxair Voting Securities”);
provided , however , that the event described in this
Subsection 1a(ii) shall not be deemed to be a Change in Control by
virtue of any of the following acquisitions: (A) by Praxair or
any of its subsidiaries, (B) by any employee benefit plan
sponsored or maintained by Praxair or any of its subsidiaries,
(C) by any underwriter temporarily holding securities pursuant
to an offering of such securities, or (D) pursuant to a
Non-Qualifying Transaction (as defined in Subsection
1a(iii));
|
|
|
(iii)
|
the consummation of a merger,
consolidation, statutory share exchange or similar form of
corporate transaction involving Praxair or any of its subsidiaries
that requires the approval of Praxair’s stockholders, whether
for such transaction or the issuance of securities in the
transaction (a “Business Combination”), unless
immediately following such Business Combination: (A) more than
50% of the total voting power of (x) the corporation resulting
from such Business Combination (the “Surviving
Corporation”), or (y) if applicable, the ultimate parent
corporation that directly or indirectly has beneficial ownership of
100% of the voting securities eligible to elect directors of the
Surviving Corporation (the “Parent Corporation”), is
represented by Praxair Voting Securities that were outstanding
immediately prior to such Business Combination (or, if applicable,
shares into which such Praxair Voting Securities were converted
pursuant to such Business Combination), and such voting power among
the holders thereof is in substantially the same proportion as the
voting power of such Praxair Voting Securities among the holders
thereof immediately prior to the Business Combination, (B) no
person (other than any employee benefit plan sponsored or
maintained by the Surviving Corporation or the Parent Corporation),
is or becomes the beneficial owner, directly or indirectly, of 20%
or more of the total voting power of the outstanding voting
securities eligible to elect directors of the Parent Corporation
(or, if there is no Parent Corporation, the Surviving
|
2
|
|
Corporation) and (C) at
least a majority of the members of the board of directors of the
Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) were Incumbent Directors at the time of the
Board’s approval of the execution of the initial agreement
providing for such Business Combination (any Business Combination
which satisfies all of the criteria specified in (A), (B) and
(C) above shall be deemed to be a “Non-Qualifying
Transaction”); or
|
|
|
(iv)
|
the
stockholders of Praxair approve a plan of complete liquidation or
dissolution of Praxair or a sale or disposition of all or
substantially all of Praxair’s assets.
|
Notwithstanding the foregoing, a
Change in Control shall not be deemed to occur solely because any
person acquires beneficial ownership of more than 20% of the
Praxair Voting Securities as a result of the acquisition of Praxair
Voting Securities by Praxair which reduces the number of Praxair
Voting Securities outstanding; provided , that if
after such acquisition by Praxair such person becomes the
beneficial owner of additional Praxair Voting Securities that
increases the percentage of outstanding Praxair Voting Securities
beneficially owned by such person, a Change in Control shall then
occur.
b. “ Code ” shall
mean the Internal Revenue Code of 1986, as amended.
c. “ Date of
Termination ” shall mean
|
|
(i)
|
in case your
employment is terminated for Total 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),
|
|
|
(ii)
|
in case your
employment is terminated due to your death, your date of
death;
|
|
|
(iii)
|
in case your
employment is Terminated for Cause, the date on which the Board
adopts the resolution described in Subsection l of Section 1
of this Agreement
|
|
|
(iv)
|
in all other
cases, the date specified in the Notice of Termination (which shall
not be less than thirty (30) nor more than forty-five
(45) days, respectively, from the date such Notice of
Termination is given).
|
d. “ Good Reason for
Resignation ” shall mean, without your express written
consent, any of the following:
|
|
(i)
|
a change in your status or
position with the Company which in your reasonable judgment does
not represent a promotion from your status or position immediately
prior to the Change in Control, or the assignment to you of any
duties or responsibilities or diminution of duties or
responsibilities which in your reasonable judgment are inconsistent
with
|
3
|
|
your status or position with the
Company in effect immediately prior to the Change in Control, it
being understood that any of the foregoing in connection with
termination of your employment due to your death or Total
Disability or your Termination for Cause shall not constitute Good
Reason for Resignation;
|
|
|
(ii)
|
a reduction by
the Company in the annual rate of your base salary as in effect
immediately prior to the date of the Change in Control or as the
same may be increased from time to time thereafter, unless such
reduction is part of a policy, program or arrangement that is
applicable on a nondiscriminatory basis to you and other similarly
situated executives employed by the Company or its
successors;
|
|
|
(iii)
|
the Company
relocates your principal office to a location where the distance
between your primary residence and your new principal office is
more than 50 miles greater than the distance between your primary
residence and your principal office location as of the date
immediately prior to the Change in Control;
|
|
|
(iv)
|
the failure by
the Company to continue in effect compensation or benefit plans in
which you participate, which in the aggregate provide you
compensation opportunities and benefits at least substantially
equivalent to those prior to the Change in Control, but excluding
any reduction in compensation opportunities and/or benefits that is
part of a policy, program or arrangement that is applicable on a
nondiscriminatory basis to you and other similarly situated
executives employed by the Company or its successors;
|
|
|
(v)
|
the failure of
the Company to obtain a satisfactory agreement from any Successor
(as defined in Subsection 4a hereof) to assume and agree to perform
this Agreement, as contemplated in Subsection 4a hereof;
|
|
|
(vi)
|
any purported
termination of your employment which is not effected pursuant to a
Notice of Termination satisfying the requirements hereof; for
purposes of this Agreement, no such purported termination shall be
effective for any purpose except to constitute a Good Reason for
Resignation.
|
Notwithstanding the foregoing, Good
Reason for Resignation shall not exist unless you provide the
Company with a Notice of Termination not later than 60 days after
the occurrence of the event giving rise to your Good Reason for
Resignation and the Company fails to remedy such condition to your
reasonable satisfaction within 30 days of such notice.
e. “ Incentive
Compensation ” means any compensation, variable
compensation, incentive compensation, bonus or award paid or
payable under an Incentive Compensation Plan.
4
f. “ Incentive Compensation
Plan ” shall mean any plan, program or arrangement for
the payment of variable compensation, bonus, benefits or awards
maintained by the Company, in which awards are paid in cash
including, but not limited to, the 2002 Praxair, Inc. Variable
Compensation Plan, or any successor plan thereto, in which you are
eligible to participate.
g. “ Notice of
Termination ” shall mean a written notice as provided in
Section 9 hereof.
h. “ Pension Plan
” shall mean the Praxair Pension Plan, as it may be amended
prior to a Change in Control.
i. “ Pension Program
” shall mean the Pension Plan plus any excess or supplemental
pension plans maintained by the Company.
j. “ Account-Based
Participant ” shall mean a participant in the Pension
Plan accruing an Account-Based benefit under the Pension
Plan.
k. “ Traditional-Design
Participant ” shall mean a participant in the Pension
Plan accruing a benefit under the Pension Plan other than an
Account-Based benefit.
l. “ Termination for
Cause ” shall mean termination of your employment upon
your willfully engaging in conduct demonstrably and materially
injurious to the Company, monetarily or otherwise, provided that
there shall have been delivered to you a copy of a resolution duly
adopted by the unanimous affirmative vote of the entire membership
of the Board at a meeting of the Board called and held for such
purpose (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 the
conduct set forth and specifying the particulars thereof in
detail.
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 the best interest of the Company. Any act or
failure to act based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the advice of counsel for
the Company shall be conclusively presumed to be done or omitted to
be done by you in good faith and in the best interests of the
Company.
m. “ Total Disability
” shall mean that based on objective medical evidence, as the
result of an illness or injury, you cannot perform the essential
functions of your regular job for a period of six months or more,
with or without an accommodation; and you are under the
“regular and appropriate care” of a physician.
“Regular and Appropriate Care” means that you are being
treated by a physician as often as is medically required, and are
receiving care that conforms to generally accepted medical
standards for treating the sickness or injury; is consistent with
the stated severity of the medical condition to effectively treat
this illness or injury; and is provided by a physician whose
specialty or experience is the most appropriate for the disability
according to generally accepted medical practices.
5
n. “ Variable Compensation
Year ” means a calendar or fiscal plan year of any
Incentive Compensation Plan.
2. Compensation Upon
Termination . Following a Change in Control, you shall be
entitled to the following benefits:
a. Termination Benefits . If,
during the term of this Agreement (as defined in Section 3),
your employment by the Company is terminated subsequent to a Change
in Control and under circumstances that would qualify as a
“separation from service” under Code Section 409A,
(a) by the Company other than a Termination for Cause, or
(b) by you with Good Reason for Resignation, then you shall be
entitled to the benefits provided below, without regard to any
contrary provision of any plan:
|
|
(i)
|
Accrued
Salary . The Company
shall pay you within the timeframe required under applicable law,
your full base salary and vacation pay accrued through your Date of
Termination at the rate in effect at the time the Notice of
Termination is given (or at the rate in effect immediately prior to
the Change in Control, if such amounts was higher).
|
|
|
(ii)
|
Accrued
Incentive Compensation .
The Company shall pay you, not later than thirty (30) days
following your Date of Termination, the amount of your accrued
Incentive Compensation, determined as the sum of:
|
(a) if your Date of Termination is
after the end of a Variable Compensation Year, but before Incentive
Compensation for said Variable Compensation Year has been paid, the
Company shall pay you as Incentive Compensation for that Variable
Compensation Year an amount equal to your actual Incentive
Compensation payment for such Variable Compensation Year,
determined using both your and the Company’s actual
performance for such Variable Compensation Year, but in no event
shall your individual performance factor for purposes of such
determination be less than 1.0; plus
(b) if your Date of Termination is
other than the first day of a Variable Compensation Year, the
Company shall pay you, as Incentive Compensation for the Variable
Compensation Year in which your Date of Termination occurs, an
amount equal to your target Incentive Compensation payment for such
Variable Compensation Year (or if higher, your target Incentive
Compensation payment for the year in which the Change in Control
occurred), multiplied by a fraction, the numerator of which is the
total number of days which have elapsed in the current Variable
Compensation Year to your Date of Termination, and the denominator
of which is three hundred sixty-five (365).
If there is more than one Incentive
Compensation Plan, your accrued Incentive Compensation under each
Plan shall be determined individually.
6
|
|
(iii)
|
Insurance
Coverage . The Company
shall arrange to provide you (and your dependents, if applicable)
with life, accident and health insurance benefits substantially
equivalent to those which you are receiving or entitled to receive
immediately prior to the Change in Control. Such insurance benefits
shall be provided to you for the longer of (x) twenty four
(24) months after your Date of Termination, or (y) the
period during which such insurance benefits would have been
provided to you, as a terminated employee, under the applicable
life insurance, medical, health and accident plans of the Company
in effect immediately prior to the Change in Control. Benefits
provided pursuant to this Subsection for the first twenty four
(24) months after your Date of Termination shall be provided
at no cost to you and any benefits provided after such twenty four
(24) month period shall be provided to you on the same
financial terms and conditions as provided for under the respective
plans.
|
Should it be determined that any of
the medical benefits to be provided to you under this Subsection
2a(iii) could be included in your gross income for federal, state
or local tax purposes, then the following shall apply:
(a) If you are at least age 48 with
at least eight (8) years of service with the Company on your
Date of Termination, then you shall participate in the
Company’s retiree medical benefit plans as if you retired
from the Company on your Date of Termination with eligibility for
such plans, except that the Company shall provide such medical
coverage at no cost to you for two (2) years following your
Date of Termination and thereafter, you shall participate therein
on the same terms as other retired employees (to the extent these
benefits are provided by the Company’s self-insured plan, any
reimbursements for claims incurred shall be made as soon as
practicable, but in no event can they be made later than the end of
the calendar year following the calendar year in which the claim
was incurred);
(b) If you are not at least age 48
or do not have at least eight (8) years of service upon your
Date of Termination, you will no longer continue to participate in
the Company’s medical benefit plans, except for COBRA, and
(i) if you elect to receive COBRA benefits, the Company shall
provide you with such benefits at no cost to you for the first
eighteen (18) months following your loss of medical coverage,
and thereafter, (ii) the Company shall, for the subsequent six
(6) months, purchase for you, at its cost, a policy of medical
insurance providing benefits substantially similar to the benefits
you would have received under the Company’s medical benefit
plans.
|
|
(iv)
|
Retirement
Benefits .
|
|
|
A.
|
If you are a
Traditional-Design Participant, the provisions of this Subsection
2a(iv)A shall apply to you.
|
7
The Company shall pay you, at the
time you are entitled to be paid a retirement pension under the
Pension Program, a retirement pension equal to the greater of
(x) an amount computed in accordance with the terms of the
Pension Program in effect immediately prior to the Change in
Control and as if those terms were in effect on your Date of
Termination, or (y) an amount computed in accordance with the
terms of the Pension Program in effect immediately prior to your
Date of Termination, in either case less the amount of retirement
pension actually to be paid to you under the Pension Program. In
computing the amounts of your retirement pension under clauses
(x) and (y) of this Subsection, three (3) years
shall be added to your actual age and to your actual Company
service credit under the Pension Program so that your retirement
pension under clauses (x) and (y) will be the amount it
would have been if you had been three (3) years older than you
actually were, and had three (3) years more Company service
credit than you actually had, on your Date of
Termination.
If for any reason, the benefits
under this Subsection cannot be paid under the tax-qualified
portion of the Pension Program, the Company shall pay such benefits
to you in a lump sum, not later than thirty (30) days after
your Date of Termination, calculated under such one of the
following options as would produce the highest lump sum payment:
(a) calculated under the same factors (interest rate and
mortality) as lump sum payments were made under
