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Exhibit 10.2
AMENDED AND RESTATED
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OFFICER SPECIAL SEVERANCE AGREEMENT
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This Amended and Restated Officer Special Severance Agreement
(this
"Agreement"), made effective on December 17, 2008 (the
"Effective Date"),
between Rogers Corporation, a Massachusetts corporation, (herein
referred to as
the "Company") and Dennis M. Loughran (the "Officer"). The
Company and the
Officer are collectively referred to herein as the "Parties" and
individually
referred to as a "Party."
WITNESSETH THAT
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WHEREAS, the Officer is employed by the Company or provides
services
directly or indirectly to the Company as a senior executive of
the Company or
one, or more than one, of the Company's subsidiaries; and
WHEREAS, under the Officer Special Severance Agreement dated
February
1, 2006 between the Company and the Officer (the "Prior
Agreement"), the Board
of Directors of the Company (the "Board") decided that the
Company should
provide certain compensation and benefits to the Officer in the
event that the
Officer's employment is terminated on or after a change in the
ownership or
control of the Company under certain circumstances and
WHEREAS, the Parties desire to amend and restate the terms of
the
Prior Agreement in its entirety to comply with and/or be exempt
from the
requirements of Section 409A of the Internal Revenue Code of
1986, as amended
(the "Code") and to make other changes provided herein.
NOW, THEREFORE, in consideration of the promises and the
mutual
covenants contained herein, the parties hereto agree as
follows:
1. Purpose. The Company considers a sound and vital management
team to be
essential. Management personnel who become concerned about
the
possibility that the Company may undergo a Change in Control
(as
defined in Paragraph 2 below) may terminate employment or
become
distracted. Accordingly, the Board has determined to extend
this
Agreement to minimize the distraction the Officer may suffer
from the
possibility of a Change in Control.
2. Change in Control. The term "Change in Control" for purposes
of this
Agreement shall mean the earliest to occur of the following
events
during the Term (as defined in Paragraph 3(d) below):
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(a) closing of the sale of all or substantially all of the
assets
of the Company on a consolidated basis to an unrelated
person
or entity,
(b) closing of the sale of all of the Company's common stock to
an
unrelated person or entity,
(c) there is a consummation of any merger, reorganization,
consolidation or share exchange unless the persons who were
the beneficial owners of the outstanding shares of the
common
stock of Company immediately before the consummation of such
transaction beneficially own more than 50% of the
outstanding
shares of the common stock of the successor or survivor
entity
in such transaction immediately following the consummation
of
such transaction. For purposes of this Paragraph 2(c), the
percentage of the beneficially owned shares of the successor
or survivor entity described above shall be determined
exclusively by reference to the shares of the successor or
survivor entity which result from the beneficial ownership
of
shares of common stock of the Company by the persons
described
above immediately before the consummation of such
transaction.
3. Term.
(a) The term of this Agreement shall be the period beginning
on
the Effective Date and ending on January 1, 2012; provided,
however, that:
(i) the term of this Agreement shall be automatically
extended thereafter for successive three year periods
unless, at least ninety (90) days prior to January 1,
2011 or twelve months prior to the then current
succeeding three-year extended term of this
Agreement, either Party has notified the other Party
that the term hereunder shall expire at the end of
the then-current term; and
(ii) if a Change in Control occurs prior to the scheduled
expiration of the term of this Agreement as described
above, the term of this Agreement shall automatically
be extended until the second anniversary of such
Change in Control (the "Protection Period").
(b) If no Change in Control occurs prior to expiration of the
Term
or if the Officer Separates from Service (as defined in
Paragraph 4(a) below) before a Change in Control, this
Agreement shall automatically terminate without any further
action; provided, however, that Paragraph 13 (regarding
arbitration) shall continue to apply to the extent the
Officer
disputes the termination of this Agreement.
(c) The obligations of the Company and the Officer under
this
Agreement which by their nature may require either partial
or
total performance after its expiration shall survive any
such
expiration.
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(d) The initial term of this Agreement, as it may be extended
or
terminated under this Paragraph 3, is herein referred to as
the "Term."
4. Severance Benefits. If, during the Protection Period (as
defined in
Paragraph 3(a)(ii) above), the Officer "Separates from Service"
(as
defined below) due to termination of employment by the Company
and its
subsidiaries without "Cause" (as defined in Paragraph 5(a)) or
by the
Officer due to "Constructive Termination" (as defined in
Paragraph
5(b)) (each, a "Qualifying Termination"), the Officer shall be
entitled
to the severance benefits set forth in this Paragraph 4. The
term
"Separation from Service" or "Separates from Service" for
purposes of
this Agreement shall mean a "separation from service" within
the
meaning of Section 409A of the Code. The Officer shall not be
entitled
to severance benefits upon any other Separation from Service,
including
due to the Officer's death or Disability (as defined in
Paragraph
5(c)). The payments and benefits provided for under this
Paragraph 4
shall be in lieu of (or offset by) any other severance benefits
or
other benefits in exchange for a non-competition agreement to
which the
Officer may have been entitled under any other plan, program or
policy
of the Company (or subsidiary) or agreement covering the
Officer.
Payment of the severance benefits set forth below shall be
subject to
the Officer's timely execution of a release that is not revoked
as
provided in Paragraph 6 below and the Officer entering into
the
"Non-Compete Agreement" (as defined and provided in Paragraph 7
below).
(a) Salary and Bonus Amount. The Company will pay to the
Officer
thirty days after a Qualifying Termination a lump sum cash
amount equal to the product obtained by multiplying (i) the
sum of (A) salary at the annualized rate which was being
paid
by the Company and/or subsidiaries to the Officer
immediately
prior to the time of such termination or, if greater, at the
time of the Change in Control plus (B) the annual target
bonus
and/or any other annual cash bonus awards last determined
for
the Officer or, if greater, most recently paid prior to the
Change in Control, by (2.5) two and one-half.
(b) Pro-Rata Bonus. The Officer shall be entitled to receive
a
lump sum cash amount equal to the Officer's target annual
bonus for the year in which Separation from Service occurs,
pro-rated based on the number of days the Officer was
employed
during such year. The pro-rata bonus will be paid at the
same
time as the Salary and Bonus Amount in Paragraph 4(a) above.
(c) Welfare Benefits. The Officer shall be entitled for a
period
of thirty (30) consecutive months following the month in
which
a Qualifying Termination occurs to receive medical, dental
and
life insurance benefits that are similar in all material
respects as those benefits provided under the Company's
employee benefit plans, policies and programs to senior
executives of Company who have not terminated their
employment
(collectively, such benefits are referred to hereinafter as
the "Welfare Benefits"), at no greater monthly cost to the
Officer than the cost paid by such senior executives. If the
Company cannot provide such benefits under its employee
benefit plans, policies and programs the Company either
shall
provide such benefits to the Officer outside such plans,
policies and programs at no additional expense or tax
liability to the Officer or shall reimburse the Officer for
the Officer's cost to purchase such benefits and for any tax
liability for any such reimbursement. The continuation
period
for medical and dental benefits Section 4980B of the Code
(COBRA) shall commence at the end the Officer's Severance
Period. Benefits otherwise receivable by the Officer
pursuant
to this Paragraph 4(d) shall be reduced to the extent
comparable benefits are actually received by or made
available
to the Officer (other than benefits available at the
Officer's
sole expense pursuant to COBRA) during the thirty (30) month
continuation period provided in this Paragraph 4(d) (and any
such benefits actually received or made available to the
Officer shall be reported to the Company by the Officer).
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To the extent the continuation of the Welfare Benefits under
this Paragraph 4(d) is, or ever becomes, taxable to the
Officer and to the extent the Welfare Benefits continue
beyond
the period in which the Officer would be entitled (or would,
but for this Agreement, be entitled) to continuation
coverage
under a group health plan of the Company under COBRA if the
Officer elected such coverage and paid the applicable
premiums, the Company shall administer such continuation of
coverage consistent with the following additional
requirements
as set forth in Treas. Reg. ss. 1.409A-3(i)(1)(iv):
(i) the Officer's eligibility for Welfare Benefits in one
year will not affect the Officer's eligibility for
Welfare Benefits in any other year (disregarding any
limit on the amount of Welfare Benefits that may be
reimbursed during such continuation period);
(ii) any reimbursement of eligible expenses will be made
on or before the last day of the year following the
year in which the expense was incurred; and
(iii) the Officer's right to Welfare Benefits is not
subject to liquidation or exchange for another
benefit.
(d) Company Car Amount. If the Officer, as of the Qualifying
Termination, either was receiving a monthly car allowance or
had a company-leased car, any such car allowance will be
discontinued as of the date of termination of employment and
any such company-leased car must be returned to the Company
within thirty (30) days after the date of termination of
employment. No cash payment shall be made due to termination
of the company car amount.
(e) Outplacement Services. In the event of a Qualifying
Termination, the Company shall provide to the Officer
executive outplacement services provided on a one-to-one
basis
by a senior counselor of a firm nationally recognized as a
reputable national provider of such services for up to six
months, plus evaluation testing, at a location mutually
agreeable to the Parties.
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(f) Equity Awards. The vesting of the Officer's Equity
Awards
shall be governed by this Section 4(g). The term "Equity
Award" shall mean stock options, stock appreciation rights,
restricted stock, restricted stock units, performance shares
or any other form of award that is measured with reference
to
the Company's common stock.
(i) The vesting of the Officer's Equity Awards granted on
or after January 1, 2009 that vest solely on the
basis of continued employment with the Company or any
of its subsidiaries or affiliates shall be
accelerated solely by reason of a Change in Control
only if the surviving corporation or acquiring
corporation following a Change in Control refuses to
assume or continue the Officer's Equity Awards or to
substitute similar Equity Awards for those
outstanding immediately prior to the Change in
Control. If such Officer's Equity Awards are so
continued, assumed or substituted and at any time
after the Change in Control the Officer incurs a
Qualifying Termination, then the vesting and
exercisability of all such unvested Equity Awards
held by the Officer shall be accelerated in full and
any reacquisition rights held by the Company with
respect to an Equity Award shall lapse in full, in
each case, upon such termination.
(ii) The vesting of the Officer's Equity Awards that vest,
in whole or in part, based upon achieving Performance
Criteria shall be accelerated on a pro rata basis by
reason of a Change in Control. The pro rata vesting
amount shall be determined in good faith by the
Compensation and Organization Committee based upon
(A) the extent to which the Performance Criteria for
any such award has been achieved after evaluating
actual performance from the start of the performance
period until the date of the Change in Control and
equitably adjusting performance targets for the
shortened period during which the Performance
Criteria could be achieved, and (B) the number of
days the Officer was employed during the award's
performance period as of the date of the Change in
Control.
(iii) For purposes of this Section 4(g), "Performance
Criteria" means any business criteria that apply to
the Officer, a business unit, division, subsidiary,
affiliate, the Company or any combination of the
foregoing.
(iv) Enforcement of the terms of this Paragraph 4(g) shall
survive termination of this Agreement.
Equity Awards granted before January 1, 2009 that vest
solely
on the basis of continued employment with the Company or any
of its subsidiaries or affiliates shall be accelerated in
full
by reason of a Change in Control, regardless of whether the
Executive becomes eligible for severance benefits under this
Section 4.
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(g) Limitation on Amounts. Notwithstanding any provision of
this
Agreement to the contrary, if it is determined that part or
all of the compensation and benefits payable to the Officer
(whether pursuant to the terms of this Agreement or
otherwise)
before application of this Paragraph 4(h) would constitute
"parachute payments" under Section 280G of the Code, and the
payment thereof would cause the Officer to incur the 20%
excise tax under Section 4999 of the Code (or its
successor),
the following provisions shall apply:
(i) The amounts otherwise payable to or for the benefit
of the Officer pursuant to this Agreement (or
otherwise) that, but for this Paragraph 4(h) would be
"parachute payments," (referred to below as the
"Total Payments") shall be reduced to an amount equal
to three times the "base amount" (as defined under
Section 280G) less $1,000 in a manner that maximizes
the net after-tax amount payable to the Officer, as
reasonably determined by the Consultant (as defined
below).
(ii) All determinations under this Paragraph 4(h) shall be
made by a nationally recognized accounting, executive
compensation or law firm appointed by the Company
(the "Consultant") that is acceptable to the Officer
on the basis of "substantial authority" (within the
meaning of Section 6662 of the Code). The
Consultant's fee shall be paid by the Company. The
Consultant shall provide a report to the Officer that
may be used by the Officer to file the Officer's
federal tax returns.
(iii) It is possible that payments will be made by the
Company which should not have been made (each, an
"Overpayment") due to the uncertain application of
Section 280G of the Code at the time of a
determination hereunder. In the event that there is a
final determination by the Internal Revenue Service,
or a final determination by a court of competent
jurisdiction, that an Overpayment has been made, any
such Overpayment shall be repaid by the Officer to
the Company together with interest at the prime rate
of interest in effect on the date of such
Overpayment; provided, however, that no amount shall
be payable by the Officer to the Company if and to
the extent such payment would not reduce the amount
which is subject to taxation under Section 4999 of
the Code.
By accepting severance benefits under this Paragraph 4, the
Officer waives the
Officer's right, if any, to have any payment made under this
Paragraph 4 taken
into account to increase the benefits otherwise payable to, or
on behalf of, the
Officer under any employee benefit plan, policy or program,
whether qualified or
nonqualified, maintained by the Company (e.g., there will be no
increase in the
Officer's qualified pension benefit or life insurance because of
severance
benefits received hereunder).
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5. Definitions of "Cause," "Constructive Termination," and
"Disability".
(a) For purposes of this Agreement, "Cause" means (i) the
Officer's conviction of (or a plea of guilty or nolo
contendere to) a felony or any other crime involving moral
turpitude, dishonesty, fraud, theft or financial
impropriety;
or (ii) a determination by a majority of the Board in good
faith that the Officer has (A) willfully and continuously
failed to perform substantially the Officer's duties (other
than any such failure resulting from the Officer's
Disability
or incapacity due to bodily injury or physical or mental
illness), after a written demand for substantial performance
is delivered to the Officer by the Board that specifically
identifies the manner in which the Board believes that the
Officer has not substantially performed the Officer's
duties,
(B) engaged in illegal conduct, an act of dishonesty or
gross
misconduct, or (C) willfully violated a material requirement
of the Company's code of conduct or the Officer's fiduciary
duty to the Company, including the covenant not to compete
under Paragraph 7 below. No act or failure to act on the
part
of the Officer shall be considered "willful" unless it is
done, or omitted to be done, by the Officer in bad faith and
without reasonable belief that the Officer's action or
omission was in, or not opposed to, the best interests of
the
Company or its subsidiaries. In order to terminate the
Officer's employment for Cause, the Company shall be
required
to provide the Officer a reasonable opportunity to be heard
(with counsel) before the Board, which shall include at
least
ten (10) business days of advance written notice to the
Officer. Further, the Officer's attempt to secure employment
with another employer that does not breach the
non-competition
covenants set froth in Paragraph 7 below shall not
constitute
an event of "Cause".
(b) For purposes of this Agreement, "Constructive
Termination"
means, without the express written consent of the Officer,
the
occurrence of any of the following during the Protection
Period (as defined in Paragraph 3(a)(ii) above):
(i) a material reduction in the Officer's annual base
salary as in effect immediately prior to a Change in
Control or as the same may be increased from time to
time, and/or a material failure to provide the
Executive with an opportunity to earn annual
incentive compensation and long-term incentive
compensation at least as favorable as in effect
immediately prior to a Change of Control or as the
same may be increased from time to time;
(ii) a material diminution in the Officer's authority,
duties, or responsibilities as in effect at the time
of the Change in Control;
(iii) a material diminution in the authority, duties, or
responsibilities of the supervisor to whom the
Officer is required to report (it being understood
that if the Officer reports to the Board, a
requirement that the Officer report to any individual
or body other than the Board will constitute
"Constructive Termination" hereunder);
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(iv) a material diminution in the budget over which the
Officer retains authority;
(v) the Company's requiring the Officer to be based
anywhere outside a fifty mile radius of the Company's
offices at which the Officer is based as of
immediately prior to a Change of Control (or any
subsequent location at which the Officer has
previously consented to be based) except for required
travel on the Company's business to an extent that is
not substantially greater than the Officer's business
travel obligations as of immediately prior to a
Change in Control or, if more favorable, as of any
time thereafter; or
(vi) any other action or inaction that constitutes a
material breach by the Company or any of its
subsidiaries of the terms of this Agreement.
In no event shall the Officer be entitled to terminate
employment with the Company on account of "Constructive
Termination" unless the Officer provides notice of the
existence of the purported condition that constitutes
"Constructive Termination" within a period not to exceed
ninety (90) days of its initial existence, and the Company
fails to cure such condition (if curable) within thirty (30)
days after the receipt of such notice.
(c) For purposes of this Agreement, "Disability" means the
Officer's inability, due to physical or mental incapacity
resulting from injury, sickness or disease, for one hundred
and eighty (180) days in any twelve-month period to perform
his duties hereunder.
6. Release. The Officer agrees that the Company will have no
obligations
to the Officer under Paragraph 4 above until the Officer
executes a
release in substantially the form which is attached as Exhibit A
to
this Agreement and, further, will have no further obligations to
the
Officer under Paragraph 4 if the Officer revokes such release.
The
Officer shall have 21 days after Separation from Service to
consider
whether or not to sign the release. If the Officer fails to
return an
executed release to the Company's Vice President of Human
Resources
within such 21 day period, or the Officer subsequently revokes a
timely
filed release, the Company shall have no obligation to pay any
amounts
or benefits under Paragraph 4 of this Agreement.
7. Non-Compete Agreement. By signing this Agreement, the
Officer
specifically acknowledges that the Severance Benefits payable
under
Paragraph 4 are expressly conditioned upon the Officer entering
into
the Non-Compete Agreement in substantially the same form as
attached as
Exhibit B to this Agreement ("Non-Compete Agreement"). The
Officer
agrees that it is the intention of the parties that the
Severance
Benefits provided to Officer under Paragraph 4 of this Agreement
are
conditioned upon strict compliance with the Non-Compete
Agreement by
the Officer. If the Officer breaches (or threatens to breach)
any
obligations under the Non-Compete Agreement, then, in addition
to any
other legal or equitable remedies that may be available to the
Company,
its subsidiaries or affiliates, under the Non-Compete Agreement
or
otherwise:
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(a) the Officer shall forthwith repay to the Company a
percentage
of the total lump sum amount paid by the Company to the
Officer under Paragraph 4(a), 4(b) and 4(c) equal to X/12,
where X equals 36 less the number of months from Separation
from Service to the date of the Officer's breach (or
threatened breach) of the Non-Compete Agreement;
(b) the Officer shall not be entitled to receive any further
Welfare Benefits at the Company's expense as provided for
Paragraph 4(d) or reimbursement or other payment of
outplacement assistance under Paragraph 4(f); and
(c) all unvested Equity Awards shall forthwith be cancelled
and
terminated, notwithstanding the provisions of any agreements
to the contrary.
The Officer agrees that should all or any part or application of
the
Non-Compete Agreement be held or found invalid or unenforceable
for any
reason whatsoever by a court of competent jurisdiction in an
action
between the Officer and the Company (and/or its subsidiaries),
the
Company nevertheless shall be entitled to take the actions
described in
Paragraph 7(a), (b) and (c) above, if the Officer breaches or
threatens
to breach any of the obligations set forth in the
Non-Compete
Agreement. The provisions of this Paragraph 7 shall survive
termination
of this Agreement. The parties agrees that any prior written
agreement,
arrangement or understanding between the Officer and the
Company, its
subsidiaries or affiliates relating to the Officer's
post-employment
obligations, including any covenant not to compete, shall not
apply to
any employment termination on and after a Change in Control, and
the
Company, its subsidiaries and affiliates shall have no
payment
obligations under any such agreement, arrangement or
understanding.
8. No Interference with Other Vested Benefits. Regardless of
the
circumstances under which the Of
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