Exhibit 10.2
THE HERSHEY COMPANY
EXECUTIVE BENEFITS PROTECTION PLAN
(GROUP 3A)
Amended and Restated as of January 1,
2009
The Hershey Company Executive
Benefits Protection Plan (Group 3A), as set forth herein, is
intended to help attract and retain qualified management employees
and maintain a stable work environment by making provision for the
protection of covered employees in connection with a Change in
Control or termination of employment under certain circumstances as
set forth herein. The Plan is an amendment to and restatement (as
amended) of The Hershey Company Executive Benefits Protection Plan
(Group 3A), which was last amended and restated effective
October 2, 2007.
ARTICLE 1
DEFINITIONS
As hereinafter used, the following
words shall have the meanings set forth below.
1.1 Annual Base Salary means
with respect to an Executive the higher of:
1.1.1 his or her highest annual base
salary in effect during the one (1) year period preceding a
Change in Control; or
1.1.2 his or her highest annual base
salary in effect during the one (1) year period preceding his
or her Date of Termination.
For purposes of the foregoing,
salary reduction elections pursuant to Code sections 125 and 401(k)
shall not be taken into account.
1.2 Annual Incentive Pay
means with respect to an Executive the higher of:
1.2.1 the highest Incentive Pay paid
or payable, including any Incentive Pay or portion thereof which
has been earned but deferred, to him or her by the Company in any
of the three fiscal years (or such shorter period during which he
or she has been employed by the Company or eligible to receive any
Incentive Pay payment) immediately preceding the fiscal year in
which a Change in Control occurs (annualized for any fiscal year
during such period consisting of less than twelve full months or
with respect to which he or she has been employed by the Company or
eligible to receive Incentive Pay for less than twelve full
months); or
1.2.2 his or her 100% target
Incentive Pay award amount payable for the year in which his or her
Date of Termination occurs.
1.3 Base Amount shall have
the meaning ascribed to such term in Code section
280G(b)(3).
1.4 Board means the Board of
Directors of the Company.
1.5 Cause means with respect
to an Executive:
1.5.1 his or her willful and
continued failure to substantially perform his or her duties with
the Company (other than any such failure resulting from incapacity
due to physical or mental illness), after a written demand for
substantial performance is delivered to him or her by the Board or
the Chief Executive Officer of the Company which specifically
identifies the manner in which the Board or Chief Executive Officer
believes that the Executive has not substantially performed his or
her duties; or
1.5.2 his or her willfully engaging
in illegal conduct or gross misconduct which is materially and
demonstrably injurious to the Company.
For purposes of this
Section 1.5, no act or failure to act, on the part of an
Executive, shall be considered willful unless it is done, or
omitted to be done, by him or her in bad faith and without
reasonable belief that his or her action or omission was in the
best interests of the Company. Any act, or failure to act, based
upon prior approval given by the Board or upon the instruction or
with the approval of the Chief Executive Officer or an
Executive’s superior, or based upon the advice of counsel for
the Company (provided such approval, instruction, or advice of
counsel is made by or from someone other than the Executive), shall
be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
The cessation of employment of an Executive shall not be deemed to
be for Cause unless and until there shall have been delivered to
him or her a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters of the entire membership of
the Board at a meeting of the Board called and held for such
purpose (after the provision of reasonable notice to him or her and
after he or she has been heard before the Board, or has been given
a reasonable opportunity to be heard but declined to do so,
together with counsel (if he or she chooses)), finding that, in the
good faith opinion of the Board, he or she is guilty of the conduct
described in Section 1.5.1 or 1.5.2 above, and specifying the
particulars thereof in detail.
1.6 Change in Control
means:
1.6.1 individuals who, on
April 18, 2006, 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 April 18, 2006, 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 specific vote or
by approval of the proxy statement of the Company in which such
person is named as nominee for Director, without written objection
to such nomination) shall be an Incumbent Director; provided
, however , that no individual initially elected or
nominated as a Director of the Company as a result of an actual or
threatened election contest (as described in Rule 14a-12(c) under
the Securities Exchange Act of 1934 (the “Exchange
Act”))
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(“Election Contest”) or other actual
or threatened solicitation of proxies or consents by or on behalf
of any person (as such term is defined in Section 3(a)(9) of
the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of
the Exchange Act) (“Person”) other than the Board
(“Proxy Contest”), including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy Contest,
shall be deemed an Incumbent Director; and provided further
, however , that a Director who has been approved by the
Hershey Trust while it beneficially owns more than 50% of the
combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of Directors
(the “Outstanding Company Voting Power”) shall be
deemed to be an Incumbent Director;
1.6.2 the acquisition or holding by
any Person of beneficial ownership (within the meaning of
Section 13(d) under the Exchange Act and the rules and
regulations promulgated thereunder) of shares of the Common Stock
and/or the Class B Common Stock of the Company representing 25% or
more of either (i) the total number of then outstanding shares
of both Common Stock and Class B Common Stock of the Company (the
“Outstanding Company Stock”) or (ii) the
Outstanding Company Voting Power; provided that, at the time of
such acquisition or holding of beneficial ownership of any such
shares, the Hershey Trust does not beneficially own more than 50%
of the Outstanding Company Voting Power; and provided, further,
that any such acquisition or holding of beneficial ownership of
shares of either Common Stock or Class B Common Stock of the
Company by any of the following entities shall not by itself
constitute such a Change in Control hereunder: (i) the Hershey
Trust; (ii) any trust established by the Company or by any
Subsidiary for the benefit of the Company and/or its employees or
those of a Subsidiary; (iii) any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
Subsidiary; (iv) the Company or any Subsidiary or (v) any
underwriter temporarily holding securities pursuant to an offering
of such securities;
1.6.3 the approval by the
stockholders of the Company of any merger, reorganization,
recapitalization, consolidation or other form of business
combination (a “Business Combination”) if, following
consummation of such Business Combination, the Hershey Trust does
not beneficially own more than 50% of the total voting power of all
outstanding voting securities eligible to elect directors of
(x) the surviving entity or entities (the “Surviving
Corporation”) or (y) if applicable, the ultimate parent
corporation that directly or indirectly has beneficial ownership of
more than 50% of the combined voting power of the then outstanding
voting securities eligible to elect directors of the Surviving
Corporation; or
1.6.4 the approval by the
stockholders of the Company of (i) any sale or other
disposition of all or substantially all of the assets of the
Company, other than to a corporation (the “Acquiring
Corporation”) if, following consummation of such sale or
other disposition, the Hershey Trust beneficially owns more than
50% of the total voting power of all outstanding voting securities
eligible to elect directors (x) of the Acquiring Corporation
or (y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of more than 50% of
the combined voting power of the then outstanding voting securities
eligible to elect directors of the Acquiring Corporation, or
(ii) a liquidation or dissolution of the Company.
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1.7 Change in Control Event
means a Change in Control Event as defined under Code section 409A
and applicable guidance thereunder.
1.8 CLRP means The Hershey
Company Compensation Limit Replacement Plan and any successor or
replacement plan thereof.
1.9 Code means the Internal
Revenue Code of 1986, as amended from time to time.
1.10 Committee means the
Compensation and Executive Organization Committee of the Board or
any successor committee having similar authority.
1.11 Company means The
Hershey Company, a Delaware corporation.
1.12 Coverage Period means
the period commencing on the date on which a Change in Control
occurs and ending on the date which is the second anniversary
thereof.
1.13 Date of Termination has
the meaning assigned to such term in Section 4.2 or
4.3.
1.14 DB SERP means The
Hershey Company Amended and Restated (2007) Supplemental
Executive Retirement Plan and any successor or replacement plan
thereof.
1.15 DC SERP means the
Defined Contribution Supplemental Executive Retirement Plan benefit
of The Hershey Company Deferred Compensation Plan.
1.16 Deferred Compensation
Plan means The Hershey Company Deferred Compensation Plan and
any successor or replacement plan thereof.
1.17 Director means a member
of the Board.
1.18 Disability means the
long-term disability of the Executive determined in accordance with
the terms set forth in the Company’s long-term disability
plan (the “LTD Plan”) (regardless of whether the
Executive is covered by the LTD Plan; except that with respect to
an Executive who is covered by the LTD Plan, a determination that
the Executive does not meet the definition of disability under the
LTD Plan will mean that the Executive does not meet the definition
of disability under this Plan).
1.19 Effective Date means
January 1, 2009.
1.20 EICP means The Hershey
Company Equity and Incentive Compensation Plan (formerly known as
the Hershey Foods Corporation Key Employee Incentive Plan) and any
successor or replacement plan thereof.
1.21 Employee Benefits
Committee means the Employee Benefits Committee of the Company,
and any successor thereto.
1.22 Excise Tax means any
excise tax imposed under Code section 4999.
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1.23 Executive means an
individual designated by the Committee, in its sole discretion, as
eligible for coverage under the Plan.
1.24 Good Reason means with
respect to an Executive:
1.24.1 (i) the assignment to him or
her of any duties inconsistent in any respect with his or her
position, authority, duties or responsibilities immediately prior
to either the Potential Change in Control preceding the Change in
Control or the Change in Control, or (ii) any other action by
the Company, which assignment or other action results in a material
diminution in any respect in his or her position, authority, duties
or responsibilities;
1.24.2 a material diminution by the
Company in his or her annual base salary as in effect, as
applicable, on the Effective Date or as the same may be increased
from time to time, or on the date he or she first becomes an
Executive if he or she was not an Executive on the Effective Date
or as the same may be increased from time to time;
1.24.3 the failure by the Company,
without his or her consent, to pay to him or her any portion of his
or her current compensation (including, but not limited to, current
salary and employee benefits), or to pay to him or her any portion
of an installment of deferred compensation under any deferred
compensation program of the Company, provided that any such
failures, in the aggregate, result in a material negative change in
the Executive’s compensation;
1.24.4 the failure by the Company to
continue in effect any compensation plan in which he or she
participates immediately prior to either the Potential Change in
Control preceding the Change in Control or the Change in Control
which is material to his or her total compensation, including but
not limited to the EICP (other than with respect to any contingent
PSU grant that is outstanding as of the date of the Change in
Control), the CLRP, and the DB SERP, as applicable, or any
substitute or alternative plans adopted prior to either such
Potential Change in Control or Change in Control, (unless
(a) an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such
plan, or (b) the failure by the Company to continue the
Executive’s participation therein (or in such substitute or
alternative plan) is on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of his or
her participation relative to other participants, as existed at the
time of such Potential Change in Control or Change in Control), and
provided that any such failures, in the aggregate, result in a
material negative change in the Executive’s
compensation;
1.24.5 the failure by the Company to
continue to provide him or her with benefits substantially similar
to those enjoyed by him or her under any of the Company’s
pension, life insurance, medical, health and accident, disability,
vacation pay or other welfare or fringe benefit plans or
arrangements in which he or she was participating at the time of
either the Potential Change in Control preceding the Change in
Control or the Change in Control, provided that any such failures,
in the aggregate, result in a material negative change in the
Executive’s compensation;
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1.24.6 any material failure by the
Company to comply with and satisfy any of its obligations under
this Plan after a Potential Change in Control that is followed
within one (1) year by a Change in Control; or
1.24.7 any material failure by the
Company to comply with and satisfy any of its obligations under any
grantor trust established by the Company to provide itself with a
source of funds to assist itself in satisfying its liabilities
under this Plan after (a) a Change in Control described in one
of the following: Section 1.6.1, Section 1.6.4(ii), or
Section 1.6.4(i) other than a sale or other disposition to a
corporation; (b) a Change in Control described in
Section 1.6.2 if during the Coverage Period, Incumbent
Directors, as described in Section 1.6.1, cease for any reason
to constitute at least a majority of the Board; (c) a Change
in Control described in Section 1.6.3 if, at any time during
the Coverage Period, Incumbent Directors, as described in
Section 1.6.1, do not constitute at least a majority of the
board of directors of the Surviving Corporation; or (d) a
Change in Control described in clause (i) of
Section 1.6.4 involving a sale or other disposition to a
corporation if, at any time during the Coverage Period, Incumbent
Directors, as described in Section 1.6.1, do not constitute at
least a majority of the board of directors of such corporation;
provided further, that any such failures, in the aggregate, result
in a material negative change in the Executive’s
compensation.
To qualify as a Good Reason under
the Plan, any of the conditions listed above in this
Section 1.24 must be followed by a termination of employment
within two years of the initial existence of the Good Reason, and
the notice requirements of Section 4.1 must be satisfied. For
purposes of this Plan, any good faith determination of Good Reason
(including the corresponding determination of
“materiality”) made by the Executive shall be
conclusive; provided that such determination satisfies the
materiality requirement under Treasury Regulations
§1.409A-1(n)(2)(i), any successor thereto and other
applicable guidance.
1.25 Hershey Pension Plan
means The Hershey Company Retirement Plan and any successor or
replacement plan thereof.
1.26 Hershey Trust means
either or both of (a) the Hershey Trust Company, a
Pennsylvania corporation, as Trustee for the Milton Hershey School,
or any successor to the Hershey Trust Company as such trustee, and
(b) the Milton Hershey School, a Pennsylvania not-for-profit
corporation.
1.27 Incentive Pay means
incentive payments awarded under the EICP from the Company’s
Annual Incentive Program, Sales Incentive Program and any similar,
successor or replacement program under the EICP.
1.28 Incumbent Director has
the meaning assigned to such term in Section 1.6.1.
1.29 Key Employee means a
“specified employee” under Code section
409A(a)(2)(B)(i) (i.e., a key employee (as defined under Code
section 416(i) (without regard to paragraph (5) thereof)) of a
corporation any stock in which is publicly traded on an
established
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securities market or otherwise) and applicable
Treasury regulations and other guidance under Code section 409A.
Key Employees shall be determined in accordance with Code section
409A and pursuant to the methodology established by the Employee
Benefits Committee.
1.30 Mandatory Retirement Age
means age sixty-five (65) in the case of an Executive who has
served for a minimum of two (2) years at a high level
executive or high policy-making position and who is entitled to a
non-forfeitable, immediate, annual employer-provided retirement
benefit from any source, which is at least equal to a benefit,
computed as a life annuity, of at least $44,000 per year (or such
other amount as may be provided by future legislation). In the case
of all other Executives, there shall be no Mandatory Retirement
Age.
1.31 Notice of Intent to
Terminate shall have the meaning assigned to such term in
Section 4.1.
1.32 Plan means The Hershey
Company Executive Benefits Protection Plan (Group 3A), as set forth
herein, as amended from time to time.
1.33 Plan Administrator means
the Company’s Senior Vice President, Chief People Officer (or
other officer of the Company holding a successor position in the
Company having the same or substantially similar organizational
responsibilities).
1.34 Potential Change in
Control means the occurrence of any of the
following:
1.34.1 The Hershey Trust by action
of: (i) the Board of Directors of Hershey Trust Company;
(ii) the Board of Managers of Milton Hershey School;
(iii) the Investment Committee of the Hershey Trust; and/or
(iv) any officer or officers of Hershey Trust Company or
Milton Hershey School (acting with authority), undertakes
consideration of any action the taking of which would lead to a
Change in Control as defined herein, including, but not limited to
consideration of (1) an offer made to the Hershey Trust to
purchase any number of its shares in the Company such that if the
Hershey Trust accepted such offer and sold such number of shares in
the Company the Hershey Trust might no longer have more than 50% of
the Outstanding Company Voting Power, (2) an offering by the
Hershey Trust of any number of its shares in the Company for sale
such that if such sale were consummated the Hershey Trust might no
longer have more than 50% of the Outstanding Company Voting Power,
or (3) entering into any agreement or understanding with a
person or entity that would lead to a Change in Control;
or
1.34.2 The Board approves a
transaction described in Section 1.6.2, 1.6.3 or 1.6.4 of the
definition of a Change in Control contained herein.
1.35 Separation from Service
or Separates from Service means a “separation from
service” within the meaning of Code section 409A.
1.36 Severance Benefits has
the meaning assigned to such term in Section 3.2.
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1.37 Severance Period means
the period beginning on the Executive’s Date of Termination
and continuing for 24 months, or, if less, the number of months
until the Executive would reach his or her Mandatory Retirement
Age, if applicable, but not less than 12 months.
1.38 Subsidiary means any
corporation controlled by the Company, directly or
indirectly.
1.39 The 401(k) Plan means
The Hershey Company 401(k) Plan and any successor or replacement
plan thereof.
1.40 Vested Current Incentive Pay
Amount shall have the meaning assigned to such term in
Section 2.1.
1.41 Vested Current PSU
Amount shall have the meaning assigned to such term in
Section 2.2.
1.42 Vested DB SERP Benefit
shall have the meaning assigned to such term in
Section 2.3.
ARTICLE 2
VESTING OR PAYMENT OF CERTAIN
BENEFITS
IN THE EVENT OF A CHANGE IN CONTROL
2.1 Vesting of Incentive Pay
Benefits; Payment of Benefits . Upon the occurrence of a Change
in Control and Change in Control Event:
2.1.1 each Executive shall have a
vested and non-forfeitable right hereunder to receive a lump sum
cash payment (as specified in Section 2.1.2) with respect to
each Incentive Pay award for which the award’s performance
period has begun but not ended as of the date of the Change in
Control Event equal to the greater of (x) the amount of the
Executive’s 100% target Incentive Pay award, and (y) the
amount that would have been payable to him or her under the
Incentive Pay award calculated using his or her and the
Company’s annualized actual performance as of the date of the
Change in Control Event (the greater of (x) and (y) is
herein referred to as the “Vested Current Incentive Pay
Amount”); and
2.1.2 the Company shall, within
sixty (60) days following the Change in Control Event, pay to
each Executive a lump sum cash payment equal to his or her Vested
Current Incentive Pay Amount.
2.2 Vesting of PSU Benefits;
Payment of Benefits . Upon the occurrence of a Change in
Control and Change in Control Event:
2.2.1 each Executive shall have a
vested and non-forfeitable right hereunder to receive in cash (as
specified in Section 2.2.2) an amount equal to the target
Performance Stock
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Unit (“PSU”) grant, if any, made to
him or her under the EICP for the cycle ending in the year of the
Change in Control Event, determined as the greater of (x) the
amount of the Executive’s 100% target PSU grant and
(y) the PSU grant amount that would have been payable to him
or her at the end of such grant cycle based on the Company’s
actual performance through the date of the Change in Control Event
(as if the same level of Company performance continued throughout
the remainder of the cycle); plus, if applicable, the PSU grant
amounts from any other cycle that was completed prior to the Change
in Control Event for which (i) payment has not been made or
(ii) an election to defer such PSUs has been made, but such
amounts have not been credited to the Executive’s PSU Award
Sub-Account under the Deferred Compensation Plan, in each case
valued at the higher of (a) the highest closing price of the
Company’s Common Stock on the New York Stock Exchange during
the sixty (60) day period preceding and including the date of
the Change in Control Event, and (b) if the Change in Control
Event involves a transaction in which an offer is made to purchase
shares of Common Stock from the Company’s stockholders, the
price at which such offer is made (the higher of (a) and
(b) is herein referred to as the “Transaction
Value”) (the greater of (x) and (y) is herein
referred to as the “Vested Current PSU Amount”);
and
2.2.2 except to the extent that such
Vested Current PSU Amount would have otherwise been subject to an
effective deferral election under the Deferred Compensation Plan,
the Company shall, within sixty (60) days following the Change
in Control Event, pay to each Executive a lump sum cash payment
equal to his or her Vested Current PSU Amount, increased for any
dividends that would be otherwise payable on the PSUs following the
Change in Control Event but prior to the distribution date under
this Section 2.2.2. In the event of an effective deferral
election, the portion of the amount determined under
Section 2.2.1 equal to the amount which would have otherwise
been subject to such deferral election shall be credited to, and
paid in accordance with, the Deferred Compensation Plan.
2.3 Vested DB SERP Benefit .
Upon the occurrence of a Change in Control each Executive who
either is a participant in the DB SERP on the date of the Change in
Control or was a participant in the DB SERP on the date of the
Potential Change in Control preceding the Change in Control shall
be fully vested under the DB SERP (such vested benefit is
hereinafter referred to as “Vested DB SERP Benefit”).
If such an Executive has not attained age fifty-five (55) as
of his or her Date of Termination, the Executive shall be treated
as being eligible for the “Early Retirement Benefit” as
set forth in Section 4 of the DB SERP; provided, however, the
reduction factor prescribed in Section 4 of the DB SERP shall
still be given effect in calculating his or her Vested DB SERP
Benefit, provided that (i) for an Executive (other than the
Chief Executive Officer of the Company) who has not yet attained
age fifty (50) as of the Executive’s Date of
Termination, the reduction factor in Section 4 of the DB SERP
shall be based on the number of complete calendar months by which
the Date of Termination precedes the Executive’s fifty-second
(52nd) birthday, and (ii) for an Executive (other than
the Chief Executive Officer of the Company) who has attained age
fifty (50) as of the Executive’s Date of Termination,
the reduction factor in Section 4 of the DB SERP shall be zero
percent (0%).
An Executive’s Vested DB SERP
Benefit shall be payable in accordance with the DB SERP, but the
actuarial present value of such Executive’s Vested DB SERP
Benefit, taking
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into account the foregoing provisions, shall be
determined using: (i) the mortality table described in the DB
SERP; (ii) an interest rate equal to the “Lump Sum
Interest Rate,” as defined in the DB SERP, as of the
Executive’s Date of Termination; (iii) the
Executive’s Date of Termination as the date on which payment
of the Executive’s Vested DB SERP Benefit is to commence
being paid and as the date as on which the actuarial present value
of such Vested DB SERP Benefit is calculated; and (iv) the
actual age of the Executive and his or her spouse as of the
Executive’s Date of Termination.
2.4 Vested Deferred Compensation
Plan Benefit . Upon the occurrence of a Change in Control, each
Executive who either is a participant in the Deferred Compensation
Plan on the date of the Change in Control or was a participant in
the Deferred Compensation Plan on the date of the Potential Change
in Control preceding the Change in Control shall be fully vested in
all benefits payable under the Deferred Compensation
Plan.
2.5 Vested CLRP Benefit .
Upon the occurrence of a Change in Control, each Executive who
either is a participant in the CLRP on the date of the Change in
Control or was a participant in the CLRP on the date of the
Potential Change in Control preceding the Change in Control shall
be fully vested in his or her benefit, if any, under the
CLRP.
2.6 Vested 401(k) Plan
Accounts . Upon the occurrence of a Change in Control, each
Executive who either is a participant in The 401(k) Plan on the
date of the Change in Control or was a participant in The 401(k)
Plan on the date of the Potential Change in Control preceding the
Change in Control shall be fully vested in all of his or her
accounts under The 401(k) Plan.
2.7 DB SERP, CLRP, or Deferred
Compensation Plan Amendments . Notwithstanding any provision of
the DB SERP, CLRP, or Deferred Compensation Plan, none of the DB
SERP, CLRP, or Deferred Compensation Plan may be terminated or
amended in any manner that is adverse to the interests of any
Executive without his or her consent either: (i) after a
Potential Change in Control occurs and for one (1) year
following the cessation of the Potential Change in Control, or
(ii) after a Change in Control. In addition, any termination
or amendment of the DB SERP, CLRP, or Deferred Compensation Plan in
a manner adverse to the interests of an Executive within one
(1) year prior to a Potential Change in Control shall not be
given effect for purposes of determining benefits under this
Plan.
2.8 Other PSU Grants Outstanding
as of the Date of a Change in Control . An Executive shall have
a vested and non-forfeitable right hereunder to receive a lump sum
cash payment with respect to each PSU grant cycle that has begun
but not ended as of the occurrence of both a Change in Control and
Change in Control Event (and that is not otherwise paid out in
whole or in part in accordance with the terms of Section 2.2)
in an amount equal to the product of (x) and (y), where
(x) is an amount equal to the 100% target PSU grant for each
such cycle valued at the higher of (i) the Transaction Value
and (ii) the highest closing price of the Company’s
Common Stock on the New York Stock Exchange from the date of the
Change in Control until the earlier of the end of the applicable
grant cycle or the Executive’s Separation from Service, and
(y) is 100%, unless the Change in Control occurs within the
first year of the applicable grant cycle, in which case,
(y) is a fraction the numerator of which is the number
of
10
days from and
including the first day of the applicable grant cycle until (and
including) the date of the Change in Control or the Change in
Control Event (whichever is later) and the denominator of which is
the number of days in the applicable grant cycle; and such product
is increased for any dividends that would be otherwise payable on
the PSUs following the Change in Control but prior to the
distribution date under this Section 2.8. Except to the extent
that such PSU amounts would have otherwise been subject to an
effective deferral election under the Deferred Compensation Plan,
the payment provided for in this Section 2.8 with respect to
each such PSU grant cycle shall be made to an Executive in a lump
sum by the sixtieth (60 th ) day following the earlier
of: (a) the last day of the applicable grant cycle, and
(b) the Executive’s Separation from Service.
Notwithstanding the foregoing, distributions may not be made to a
Key Employee upon a Separation from Service before the date which
is six months after the date of the Key Employee’s Separation
from Service (or, if earlier, the date of death of the Key
Employee). Any payment upon a Key Employee’s Separation from
Service under this Section 2.8 shall be made in the seventh
month following the date of such Separation from Service (or, if
earlier, the month after the Key Employee’s death). In the
event of an effective deferral election, the portion of the amount
determined under this Section 2.8 equal to the amount which
would have otherwise been subject to such deferral election shall
be credited to, and paid in accordance with, the Deferred
Compensation Plan.
ARTICLE 3
EXECUTIVE BENEFITS AND RIGHTS
UPON TERMINATION OF EMPLOYMENT
3.1 General Termination Rights
and Benefits . If an Executive’s employment at the
Company is terminated at any time after a Change in Control for any
reason (whether by him or her or the Company), the Company shall
pay to him or her payments described in Sections 3.1.1 through
3.1.5 below.
3.1.1 Previously Earned
Salary . The Company shall pay his or her full salary to him or
her through his or her Date of Termination at the highest rate in
effect during the period between (a) the Potential Change in
Control (if any) preceding the Change in Control or the Change in
Control (if no Potential Change in Control occurs), and
(b) the date the Notice of Intent to Terminate is given,
together with all compensation and benefits payable to him or her
through the Date of Termination under the terms of any compensation
or benefit plan, program or arrangement maintained by the Company
during such period.
3.1.2 Previously Earned
Benefits . The Company shall pay his or her normal
post-termination compensation and benefits to him or her as such
payments become due. Such post-termination compensation and
benefits shall be determined under, and paid in accordance with,
the Company’s retirement, insurance, pension, welfare and
other compensation or benefit plans, programs and
arrangements.
3.1.3 Payment of Vested Current
Incentive Pay Amount . Except to the extent that the Company
has previously paid or concurrently pays to him or her all or a
portion of his or
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her Vested Current Incentive Pay Amount pursuant
to Section 2.1, Section 3.1.1 or Section 3.1.2, the
Company shall pay to him or her a lump sum cash payment equal to
his or her Vested Current Incentive Pay Amount.
3.1.4 Payment of Vested Current
PSU Amount . Except to the extent that the Vested Current PSU
Amount would have otherwise been subject to an effective deferral
election under the Deferred Compensation Plan or the Company has
previously paid or concurrently pays to him or her all or a portion
of his or her Vested Current PSU Amount pursuant to
Section 2.2, Section 3.1.1 or Section 3.1.2, the
Company shall pay to him or her a lump sum cash payment equal to
his or her Vested Current PSU Amount.
3.1.5 The 401(k) Plan . In
the event that any amount under The 401(k) Plan which vests
pursuant to Section 2.6 cannot be paid to the Executive under
the terms of The 401(k) Plan, the Company shall pay such amount to
the Executive under the terms of this Plan.
3.2 Severance Benefits . In
addition to the payments provided for by Section 3.1, the
Company shall pay or provide to an Executive the payments,
benefits, and services described in Sections 3.2.1 through 3.2.5
below (the “Severance Benefits”) in accordance with
such Sections upon termination of his or her employment with the
Company during the Coverage Period, unless such termination is
(a) by the Company for Cause, (b) by reason of his or her
death or Disability or after his or her Mandatory Retirement Age,
if applicable, or (c) by him or her without Good
Reason.
3.2.1 Lump-Sum Severance
Payment . In lieu of any further salary payments to him or her
for periods subsequent to the Date of Termination, the Company
shall pay to him or her a lump-sum severance payment, in cash,
equal to the number of years (including fractions) in the
Executive’s Severance Period times the sum of (a) and
(b), where (a) equals his or her Annual Base Salary, and
(b) equals his or her Annual Incentive Pay.
3.2.2 Continued Welfare
Benefits . During the Executive’s Severance Period, the
Company shall provide him or her with continued welfare benefits
(including group term life insurance, and health and other welfare
benefits, but excluding long-term and short-term disability
benefits) (the benefits to be provided hereunder referred to
collectively as “Welfare Benefits”) that are
substantially similar in all respects to those which he or she was
receiving immediately prior to the Notice of Intent to Terminate on
substantially the same terms and conditions, including
contributions required from him or her for such benefits (without
giving effect to any reduction in such benefits (e.g., increasing
the contributions required from the Executive) subsequent to the
Potential Change in Control preceding the Change in Control or the
Change in Control, which reduction constitutes or may constitute
Good Reason); provided that if he or she cannot continue to
participate in the Company plans providing Welfare Benefits, the
Company shall otherwise provide such benefits on the same after-tax
basis as if continued participation had been permitted. The
Executive shall be entitled to elect to change his or her level of
coverage and/or his or her choice of coverage options (such as
Executive only or family medical coverage) with respect to the
Welfare Benefits to be provided by the Company to him or her to the
same extent that actively employed executives of the Company are
permitted to make
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such changes; provided, however, that in the
event of any such changes he or she shall pay the amount of any
cost increase that would actually be paid by an actively employed
executive of the Company by reason of such actively employed
executive making the same change in level of coverage or coverage
options. Notwithstanding the foregoing, in the event that the
Executive becomes reemployed with another employer and becomes
eligible to receive welfare benefits from such employer, the
Welfare Benefits described herein shall be secondary to such
benefit
