EXHIBIT 10.1
FORM OF
EXECUTIVE
AGREEMENT
Agreement between Arch Chemicals,
Inc., a Virginia corporation (“Arch Chemicals”), and
(the “Executive”), dated as of
,
.
Arch Chemicals and the Executive
agree as follows:
1. Definitions.
As used in this
Agreement:
(a) “Cause” means the
willful and continued failure of the Executive to substantially
perform his or her duties; the willful engaging by the Executive in
gross misconduct significantly and demonstrably financially
injurious to Arch Chemicals; or willful misconduct by the Executive
in the course of his or her employment which is a felony or fraud.
No act or failure to act on the part of the Executive will be
considered “willful” unless done or omitted not in good
faith and without reasonable belief that the action or omission was
in the interests of Arch Chemicals or not opposed to the interests
of Arch Chemicals.
(b) “Change in Control”
means:
(i) Arch Chemicals ceases to be,
directly or indirectly, owned of record by at least 1,000
shareholders;
(ii) A person, partnership, joint
venture, corporation or other entity, or two or more of any of the
foregoing acting as a “person” within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the “Act”), other than Arch Chemicals, a
majority-owned subsidiary of Arch Chemicals or an employee benefit
plan (or the plan’s related trust) of Arch Chemicals or such
subsidiary, become(s) the “beneficial owner” (as
defined in Rule 13d-3 under such Act) of 20% or more of the then
outstanding voting stock of Arch Chemicals;
(iii) During any period of two
consecutive years, individuals who at the beginning of such period
constitute Arch Chemicals’ Board of Directors (together with
any new Director whose election by Arch Chemicals’ Board of
Directors or whose nomination for election by Arch Chemicals’
shareholders was approved by a vote of at least two-thirds of the
Directors then still in office who either were directors at the
beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of the directors then in office;
(iv) All or substantially all of the
business of Arch Chemicals is disposed of pursuant to a merger,
consolidation or other transaction in which Arch
Chemicals
is not the surviving corporation or Arch
Chemicals combines with another company and is the surviving
corporation (unless the shareholders of Arch Chemicals immediately
following such merger, consolidation, combination, or other
transaction beneficially own, directly or indirectly, more than 50%
of the aggregate voting stock or other ownership interests of (x)
the entity or entities, if any, that succeed to the business of
Arch Chemicals or (y) the combined company) or
(v) Approval by Arch
Chemicals’ shareholders of (i) a sale of all or substantially
all the assets of Arch Chemicals or (ii) a liquidation or
dissolution of Arch Chemicals.
(c) “Disability” means
that the Executive has suffered an incapacity due to physical or
mental illness which meets the criteria for disability established
at the time under Arch Chemicals’ short-term disability
plan.
(d) “Executive
Severance” means:
(i) twelve months of the
Executive’s then current monthly salary (without taking into
account any reductions which may have occurred at or after the date
of a Change in Control); plus
(ii) an amount equal to the greater
of (A) the Executive’s average annual award actually paid
under Arch Chemicals’ short-term annual cash incentive
compensation plans or programs (“ICP”) (including zero
if nothing was paid or deferred but including any portion thereof
the Executive has elected to defer) for the three completed fiscal
years immediately preceding the date of Termination (or if the
Executive has not participated in ICP for such three completed
fiscal years, the average of any such awards for the shorter period
of years in which the Executive was a participant) and (B) the
Executive’s then current ICP standard annual
award.
(e) “Potential Change in
Control” means:
(i) Arch Chemicals has entered into
an agreement the consummation of which would result in a Change in
Control;
(ii) any person (including Arch
Chemicals) publicly announces an intention to take or to consider
taking actions which if consummated would constitute a Change in
Control;
(iii) Arch Chemicals learns that any
person (other than an employee benefit plan of Arch Chemicals or a
subsidiary of Arch Chemicals (or the plan’s related trust))
has become the beneficial owner directly or indirectly of
securities of Arch Chemicals representing 9.5% or more of the
combined voting power of Arch Chemicals’ then outstanding
securities ordinarily entitled to vote in elections of directors;
or
(iv) the Board of Directors of Arch
Chemicals adopts a resolution to the effect that, for purposes of
this Agreement, a Potential Change in Control of Arch Chemicals has
occurred;
2
provided, if an event specified in clause (iii)
above has occurred by or on the date hereof, such event shall not
be deemed a Potential Change in Control unless such person acquires
another 1% of such securities subsequent to the date
hereof.
(f) “Termination”
means:
(i) The Executive is discharged by
Arch Chemicals other than for Cause;
(ii) The Executive terminates his or
her employment in the event that:
(1) Arch Chemicals requires the
Executive to relocate the Executive’s then office to an area
which is not within reasonable commuting distance, on a daily
basis, from the Executive’s then residence, except that prior
to a Change in Control a requirement to relocate the
Executive’s office to Arch Chemicals’ corporate
headquarters is not a basis for Termination;
(2) Arch Chemicals reduces the
Executive’s base salary or fails to increase the
Executive’s base salary on a basis consistent (as to
frequency and amount) with Arch Chemicals’ exempt salary
system as then in effect or, in the event of a Change in Control,
as in effect immediately prior to the Change in Control;
(3) Arch Chemicals fails to continue
the Executive’s participation in its benefit plans (including
incentive compensation and stock options) on substantially the same
basis, both in terms of the amount of the benefits provided (other
than due to Arch Chemicals’ or a relevant operation’s
financial or stock price performance provided such performance is a
relevant criterion under such plan) and the level of the
Executive’s participation relative to other participants as
exists on the date hereof; provided that, with respect to annual
and long term incentive compensation plans, the basis with which
the amount of benefits and level of participation of the Executive
shall be compared shall be the average benefit awarded to the
Executive under the relevant plan during the three completed fiscal
years immediately preceding the date of Termination;
(4) The Executive suffers a
Disability which prevents the Executive from performing the
Executive’s duties with Arch Chemicals for a period of at
least 180 consecutive days;
(5) Following a Change in Control,
Arch Chemicals fails to substantially maintain its benefit plans as
in effect at the time of the Change in Control, unless reasonably
equivalent arrangements (embodied in an on-going substitute or
alternative plan) have been made with respect to such plans;
or
(6) Following a Change in Control,
the Executive’s duties, position or reporting
responsibilities are diminished.
3
For purposes solely of
clarification, it is understood that (i) if, in connection with the
spinoff of an Arch Chemicals business or Arch Chemicals’
assets as a separate public company to Arch Chemicals’
shareholders, the Executive accepts employment with, and becomes
employed at, the spunoff company or its affiliates, the termination
of the Executive’s employment with Arch Chemicals shall not
be considered a “Termination” for purposes of this
Agreement, provided that a Change in Control shall not have
occurred prior to the termination of the Executive’s
employment with Arch Chemicals and (ii) except as provided in
paragraph 4(f), in connection with the sale of an Arch Chemicals
business to a third party or the transfer or sale of an Arch
Chemicals business or Arch Chemicals’ assets to a joint
venture to be owned directly or indirectly by Arch Chemicals with
one or more third parties, if the Executive accepts employment
with, and becomes employed by, such buyer or its affiliates or such
joint venture or its affiliates in connection with such
transaction, such cessation of employment with Arch Chemicals shall
not be considered a “Termination” for purposes of this
Agreement.
2. Previous Change in Control
Agreement; Effectiveness of this Agreement. This Agreement shall
become effective immediately upon the expiration of the current
Executive Agreement dated
,
between Arch Chemicals and the Executive. Once this Agreement
becomes effective, (i) this Agreement supersedes and replaces such
earlier Executive Agreement and (ii) the Executive hereby releases
and forever discharges Arch Chemicals and its affiliates from any
and all obligations or claims the Executive may have with respect
to such prior Executive Agreement and waives any obligations or
rights Executive may have accrued under such prior Executive
Agreement, including obligations which may arise under any
circumstances, occurring prior to the date this Agreement became
effective. 1
3. Term/Executive’s
Duties.
(a) The term of this Agreement shall
expire at the end of December 31, 2007 (subject to extension and
renewal as provided herein). If during the term of this Agreement
(including any term resulting from any extension or renewal
whatsoever) a Potential Change in Control or Change in Control
occurs, the then applicable term shall be extended to the later of
(i) the end of the calendar year of the third anniversary of the
date on which any Potential Change in Control occurs and (ii) the
end of the calendar year of the third anniversary of the date on
which any Change in Control occurs. At the end of each term of this
Agreement (including any term resulting from any extension or
renewal whatsoever) the then applicable term shall be automatically
renewed for a successive one year term unless and until the Board
of Directors of Arch Chemicals (or the Compensation Committee
thereof) adopts a resolution prior to the end of the then
applicable term that states this Agreement shall not be renewed for
such one year period, in which case this Agreement shall expire at
the end of the then applicable term provided no subsequent
Potential Change in Control or Change in Control occurs. No
expiration of this Agreement will affect any of the
Executive’s rights resulting from a Termination prior to such
expiration. In the event of the Executive’s death while
employed by Arch Chemicals, this Agreement shall
terminate
|
1
|
If
Executive had a previous Tier II Agreement, revise this paragraph
accordingly. If Executive did not have a previous Tier I or Tier II
Agreement, delete this paragraph and replace with “This
paragraph intentionally left blank.”
|
4
and be of no further force or effect on the date
of his or her death; provided that the Executive’s death will
not affect any of the Executive’s rights resulting from a
Termination prior to death.
(b) During the period of the
Executive’s employment by Arch Chemicals, the Executive shall
devote his or her full time efforts during normal business hours to
Arch Chemicals’ business and affairs, except during
reasonable vacation periods and periods of illness or incapacity.
Nothing in this Agreement will preclude the Executive from devoting
reasonable periods required for service as a director or a member
of any organization involving no conflict of interest with Arch
Chemicals’ interest; provided that no additional position as
director or member shall be accepted by the Executive during the
period of his or her employment with Arch Chemicals without its
prior consent.
(c) The Executive agrees that in the
event of any Potential Change in Control of Arch Chemicals
occurring from time to time after the date hereof, the Executive
will remain in the employ of Arch Chemicals until the earlier of
(i) the end of the six month period following the occurrence of
such Potential Change in Control and (ii) a Change in
Control.
4. Executive Severance
Payment.
(a) In the event of a Termination
occurring before the expiration of this Agreement, Arch Chemicals
will pay the Executive a lump sum in an amount equal to the
Executive Severance. The payment will be made within 30 days of the
Termination or if a Change in Control has occurred, within 10 days
of the Termination.
(b) In the event of a Termination
after a Change in Control has occurred, in addition to the
Executive Severance paid under paragraph 4(a) above, Arch Chemicals
will pay a Change in Control severance premium to the Executive in
an amount equal to the sum of: (i) two times the Executive
Severance plus (ii) three times the higher of (x) Executive’s
annual long term incentive target as last determined by the Arch
Chemicals’ Board of Directors (or committee thereof) prior to
the Change in Control and (y) the Executive’s annual long
term incentive target as in effect immediately prior to the
Termination. The Change in Control severance premium, if it becomes
due, will be made within 10 days of the Termination.
(c) The amount due under paragraph
4(a) and 4(b), if any, will be reduced to the extent that, if such
amount in the aggregate were paid in equal monthly installments
over a 12-month period (or in the event both paragraph 4(a) and
4(b) are applicable, a 36-month period), no installment would be
paid after the Executive’s sixty-fifth birthday.
(d) The Executive will not be
required to mitigate the amount of any payment provided for in
paragraph 4(a) or 4(b) by seeking other employment or otherwise,
nor shall any compensation received by the Executive from a third
party reduce such payment except as explicitly provided in this
Agreement. Except as may otherwise be expressly provided herein,
nothing in this Agreement will be deemed to reduce or limit the
rights which the Executive may have under any employee benefit
plan, policy or arrangement of Arch Chemicals. Except as expressly
provided in this Agreement, payments made under paragraphs 4 or
5(e) shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim which Arch Chemicals may have
against the Executive.
5
(e) If the Executive receives the
Executive Severance, the Executive will not be entitled to receive
any other severance otherwise payable to the Executive under any
other severance plan of Arch Chemicals. If on the Termination date
the Executive is eligible and is receiving payments under any then
existing Arch Chemicals disability plan, then the Executive agrees
that all such payments may, and will be, suspended and offset for
12 months (or in the event paragraph 4(b) is also applicable, 36
months) (subject to applicable law) following the Termination date.
If after such period the Executive remains eligible to receive
disability payments, then such payments shall resume in the amounts
and in accordance with the provisions of the applicable Arch
Chemicals disability plan.
(f) In the event the Executive, in
connection with the sale of an Arch Chemicals business to a third
party or the transfer of an Arch Chemicals business or Arch
Chemicals assets to a joint venture which would be owned directly
or indirectly by Arch Chemicals with one or more third parties,
ceases to be employed by Arch Chemicals and with Arch
Chemicals’ consent becomes employed by the buyer or its
affiliates or the joint venture or its affiliates, the Executive
shall be entitled to the benefits provided under paragraph 4(a)
(using Arch Chemicals figures at the time of new employment)
(subject to paragraphs 4(c), 4(d) and 4(e)) and the first sentence
of paragraph 5(a) (subject to paragraph 5(c)), and paragraph 5(d),
if the Executive has a Termination as defined in paragraph 1(f)
with his or her new employer (with the new employer being
substituted for Arch Chemicals in such paragraph 1(f) and without
giving any effect to the Change in Control references contained
therein following such new employment) within 12 months of becoming
employed by such new employer. Any cash compensation amounts paid
under this paragraph 4(f) shall be reduced by any severance, job
transition or employment termination payments such Executive
receives in cash from his or her new employer in connection with
the Termination. In connection with this paragraph 5(f), in no
event shall the Change in Control provisions of this Agreement be
applicable once Executive ceases to be employed by Arch
Chemicals.
(g) If the Termination occurs prior
to a Change in Control, no Executive Severance and, except for
payments and benefits that the Employee is legally entitled to by
employment or labor law in the absence of this Agreement, no other
benefits and payments pursuant to paragraph 5 below, will be paid
or credited to the Executive unless and until the Executive shall
have executed and delivered to Arch Chemicals a release
substantially in the form of Exhibit A hereto and the seven day
period referred to in Exhibit A shall have elapsed without
revocation. Whether the release is “substantially” in
such form shall be determined by Arch Chemicals in its sole
discretion. If the Termination occurs at or following a Change in
Control, no such release shall be required.
5. Other Benefits.
(a) If the Executive becomes
entitled to payment under paragraph 4(a), the Executive will
receive 12 months service credit under all Arch Chemicals Pension
Plans for which the Executive was eligible at the time of the
Termination (i.e., under Arch Chemicals’ qualified Pension
Plans to the extent permitted under then applicable law, otherwise
such credit will be reflected in a supplementary pension payment
from Arch Chemicals to be due
6
at the times and in the manner payments are due
the Executive under such qualified pension plans), and for 12
months from the date of the Termination the Executive (including
covered dependents) will continue to enjoy cover