TERMINATION
PROTECTION AGREEMENT
AGREEMENT effective
June 1, 2005 between Thomas and Betts Corporation and its
successors and assigns (the “Company”) and Stanley P.
Locke (“Executive”).
WHEREAS, Executive has important
management responsibilities and talents which benefit the Company
and its affiliates; and
WHEREAS, the Company believes that
its best interests are served if Executive is encouraged to remain
with the Company and the Company has determined that
Executive’s ability to perform Executive’s
responsibilities and utilize Executive’s talents for the
benefit of the Company, and the Company’s ability to retain
Executive as an employee, will be significantly enhanced if
Executive is provided with fair and reasonable protection from the
risks associated with a change in ownership or control of the
Company; and
WHEREAS, the Board has approved the
terms and provisions of this Agreement at its meeting on
June 1, 2005;
NOW, THEREFORE, the Company and
Executive hereby agree as follows:
1. Defined Terms .
Unless otherwise indicated,
capitalized terms used in this Agreement which are defined in
Schedule A shall have the meanings set forth in
Schedule A.
The Company and the Executive both
agree that the definition of “Change of Control” listed
in Schedule A shall be used for Executive in any and all
plans, programs or agreements in which the Executive participates
or to which Executive is a party in lieu of any similar definition
used in such plans, programs or agreements.
2. Effective Date; Term .
This Agreement shall commence on
June 1, 2005 (the “Effective Date”) and shall
continue in effect through June 1, 2008; provided ,
however , that the term of this Agreement shall
automatically be extended for one additional year beyond
June 1, 2008 and for successive one year periods thereafter,
unless, not later than January 31 st of the third
calendar year preceding the year in which the term would otherwise
automatically extend (e.g., 2006 for the 2009 calendar year, 2007
for the 2010 calendar year, etc.), the Company shall have given
written notice to Executive that it does not wish to extend this
Agreement for an additional year, in which event this Agreement
shall continue to be effective until June 1 of the calendar year
immediately proceeding the calendar year in which the term would
have otherwise automatically extended; provided ,
further , that, notwithstanding any such notice by the
Company not to extend, if a Change in Control occurs during the
original or any extended term of this Agreement, this Agreement
shall remain in effect for a period of three (3) years after
such Change in Control.
3. Change in Control Benefits
.
If Executive’s employment with
the Company or its affiliates is terminated at any time within
three (3) years following a Change in Control (i) by the
Company or its affiliates without Cause, or (ii) by Executive
for Good Reason (the effective date of either such termination
hereafter referred to as the “Termination Date”),
Executive shall be entitled to the benefits provided hereafter in
this Section 3 and as otherwise set forth in this Agreement.
If Executive’s employment is terminated within one
(1) year prior to a Change in Control, and Executive
reasonably demonstrates after such Change in Control that such
termination was at the request or suggestion of any individual or
entity who or which ultimately effects a Change in Control (an
“Anticipatory Termination”), then Executive’s
Termination Date shall be deemed to have occurred immediately
following the Change in Control, and Executive shall be entitled to
the benefits provided hereafter in this Section 3 and as
otherwise set forth in this Agreement. In the event that
Executive’s employment is terminated as a result of death or
Disability, Executive shall not be entitled to the benefits
provided in this Section 3 however, the Executive and/or the
Executive’s Family shall be entitled to receive benefits at
least equal to the most favorable benefits provided by the Company
under such plans, programs and policies relating to death and/or
disability benefits as in effect at any time during the 90-day
period immediately preceding the Termination Date.
(a) Severance Benefits
. Within ten (10) business days after the Termination Date,
the Company shall pay Executive the aggregate of the following
amounts:
(i) Executive’s earned
but unpaid base salary through the Termination Date at the rate in
effect on the Termination Date, or if higher, at the highest rate
in effect at any time within the 90-day period preceding the Change
in Control;
(ii) any unpaid annual bonus
payable to Executive in respect of the calendar year ending prior
to the Termination Date (but not less than the Average Bonus);
(iii) a prorated Average Bonus
for the calendar year in which the Termination Date occurs,
calculated by multiplying the Average Bonus by a fraction, the
numerator of which is the number of days elapsed in the calendar
year up to and including the Termination Date and the denominator
of which is 365;
(iv) a lump sum amount, in cash,
equal to three (3) times Executive’s Annual
Compensation;
(v) any unpaid earned and/or
accrued vacation;
(b) Additional Health Care
Coverage . Until the third anniversary of the Termination Date,
Executive and, as applicable, Executive’s family shall be
eligible, at the Company’s expense, to Participate in each of
the Company’s welfare benefit plans, including, without
limitation, all medical, prescription, dental, disability, salary
continuance, group life, accidental death and travel accident
insurance plans and programs of the Company, at the highest level
provided to Executive during the period beginning one year prior to
the Change in Control and ending on the Termination Date;
provided , however , that if Executive becomes
employed by a new employer, the coverages provided by the Company
pursuant to this sentence shall become secondary to those coverages
provided by Executive’s new employer. In addition, Executive
will be entitled to full COBRA continuation coverage commencing on
the third anniversary of the Termination Date.
If the Company reasonably determines that the coverage required
under this Section 3(b) would cause a welfare plan sponsored by the
Company to violate any provision of the Code prohibiting
discrimination in favor of highly compensated employees or key
employees, or if any benefits described in this Section 3(b) cannot
be provided (or the Company determines that it does not wish to
provide such benefits) pursuant to the appropriate plan or program
maintained for employees of the Company, the Company shall provide
such benefits outside such plan or program at no additional costs
(including, without limitation, tax costs) to the Executive or, as
determined by the Company it its sole discretion, the Company will
pay to the Executive the cash equivalent thereof.
(c) Full Vesting of All
Stock Options and Restricted Shares . *
Notwithstanding any provision to the contrary in the
Company’s equity incentive plans (the “Equity
Plans”) or any award agreement under the Equity Plans,
(i) any outstanding, unexercisable stock options or unvested
restricted shares shall become fully exercisable and vested as of
the Termination Date and (ii) all stock options, whether or
not such stock options first become exercisable pursuant to this
Agreement, shall remain exercisable until the third anniversary of
the Termination Date; provided , however , that this
sentence shall not restrict the Company’s ability to adjust
or settle outstanding stock options pursuant to the terms of the
Equity Plans, so long as Executive is treated in any such
adjustment or settlement no less favorably than any other employee
of the Company.
(d) Retirement Benefits
. Executive shall be entitled to receive retirement benefits under
the change in control provisions of the Company’s Executive
Retirement Plan.
(e) Deferred
Compensation . Except as provided otherwise under the
Company’s Supplemental Executive Investment Plan, within ten
(10) business days after the Termination Date, the Company
shall pay Executive any undistributed amounts relating to
compensation which were previously deferred by Executive.
(f) Outplacement
Services . The Company shall provide Executive with standard
outplacement services by any one qualified outplacement agency
selected by Executive and reasonably satisfactory to the
Company.
(g) Other Payments And
Benefits . Executive shall be entitled to receive any payments
or benefits that Executive is entitled to pursuant to the terms of
any Company plans, programs or arrangements (including, but not
limited to, retention arrangements), and any such payments or
benefits shall vest, (except as provided in the Thomas & Betts
Pension Plan and the Thomas & Betts Corporation
Employee’s Investment Plan) and, if applicable, become
payable immediately upon the Termination Date.
4. Mitigation .
Executive shall not be required to
mitigate damages or the amount of any payment provided for under
this Agreement by seeking other employment or otherwise, and
compensation earned from such employment or otherwise shall not
reduce the amounts otherwise payable under this Agreement. No
amounts payable under this Agreement shall be subject to reduction
or offset in respect of any claims which the Company (or any other
person or entity) may have against Executive.
5. Gross-Up .
(a) In the event that any
payment or benefit received or to be received by Executive pursuant
to the terms of this Agreement (the “Contract
Payments”) or otherwise in connection with Executive’s
termination of employment or contingent upon a change in ownership
or control pursuant to any plan or arrangement or other agreement
with the Company (or any affiliate) (“Other Payments”
and, together with the Contract Payments, the
“Payments”) would be subject to the excise tax (the
“Excise Tax”) imposed by Section 4999 of the Code,
as determined as provided below, the Company shall pay to
Executive, at the time specified in Section 5(b) below, an
additional amount (the “Gross-Up Payment”) such that
the net amount retained by Executive, after deduction of the Excise
Tax on the Payments and any federal, state and local income or
other tax and excise tax upon the payment provided for by this
Section 5(a), and any interest, penalties or additions to tax
payable by Executive with respect thereto, shall be equal to the
total value of the Payments at the time such Payments are to be
made. For purposes of determining whether any of the Payments will
be subject to the Excise Tax and the amounts of such Excise Tax,
(1) the total amount of the Payments shall be treated as
“parachute payments” within the meaning of
Section 280G(b)(2) of the Code, and all “excess
parachute payments” within the meaning of
Section 280G(b)(1) of the Code shall be treated as subject to
the Excise Tax, except to the extent that, in the opinion of
independent tax counsel selected by the Company’s independent
auditors and reasonably acceptable to Executive (“Tax
Counsel”), a Payment (in whole or in part) does not
constitute a “parachute payment” within the meaning of
Section 280G(b)(2) of the Code, or such “excess
parachute payments” (in whole or in part) are not subject to
the Excise Tax, (2) the amount of the Payments that shall be
treated as subject to the Excise Tax shall be equal to the lesser
of (A) the total amount of the Payments or (B) the amount
of “excess parachute payments” within the meaning of
Section 280G(b)(1) of the Code (after applying clause
(1) hereof), and (3) the value of any non-cash benefits
or any deferred payment or benefit shall be determined by Tax
Counsel in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code. For purposes of determining the amount of
the Gross-Up Payment, Executive shall be deemed to pay federal
income tax at the highest marginal rates of federal income taxation
applicable to individuals in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at
the highest effective rates of taxation applicable to individuals
as are in effect in the state and locality of Executive’s
residence or place of employment in the calendar year in which the
Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes that can be obtained from deduction of such
state and local taxes, taking into account any limitations
applicable to individuals subject to federal income tax at the
highest marginal rates.
(b) The Gross-Up Payments
provided for in Section 5(a) hereof shall be made upon the earlier
of (i) the payment to Executive of any Payment or
(ii) the imposition upon Executive or payment by Executive of
any Excise Tax.
(c) Executive shall notify the
Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of a
Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 10 business days after Executive is
informed in writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is
requested to be paid. Executive shall not pay such claim prior to
the expiration of the 30 day period following the date on
which Executive gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies Executive in writing
prior to the expiration of such period that it desires to contest
such claim, Executive shall:
(i) give
the Company any information reasonably requested by the Company
relating to such claim;
(ii) take
such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company and
reasonably satisfactory to Executive;
(iii) cooperate with the Company in good faith in order to
effectively contest such claim; and
(iv)&nbs
