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INTERNATIONAL FLAVORS & FRAGRANCES INC.
Executive Separation Policy Document
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INTERNATIONAL FLAVORS & FRAGRANCES INC.
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Executive Separation Policy
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1. Purpose ................................................................. 1
2. Definitions ............................................................. 1
3. Eligibility ............................................................. 6
4. Severance Payments and Benefits ......................................... 6
5. Acceleration of Equity Awards Upon a Change in Control;
Certain Provisions Applicable to Equity Awards ........................ 15
6. Excise Tax Gross-Up; Limited Reduction in Severance
Payments to Avoid Excise Taxes ........................................ 16
7. Employee Obligations and Conditions to Receipt of Payments
and Benefits .......................................................... 18
8. Other Provisions Applicable to Severance Payments and
Benefits .............................................................. 20
9. Other Plans and Policies; Non-Duplication of Payments
or Benefits ........................................................... 21
10. Miscellaneous ........................................................... 22
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INTERNATIONAL FLAVORS & FRAGRANCES INC.
Executive Separation Policy
1. Purpose. The purpose of this International Flavors & Fragrances Inc.
Executive Separation Policy (the "Policy") is to provide certain severance
payments and benefits to designated officers and other key executives and
employees of the Company and its subsidiaries (each, an "Employee") in the event
of termination of employment (i) prior to or more than three years after a
Change in Control or (ii) within three years after a Change in Control. This
Policy shall not affect the right of the Company or a subsidiary to terminate an
Employee's employment with or without Cause.
2. Definitions. The following definitions are applicable for purposes of
this Policy, in addition to terms defined in Section 1 above:
(a) "Annual Compensation" means the sum of salary and annual incentive
compensation, calculated as follows:
(i) Salary shall be calculated as the Employee's annual salary
with the Company and its subsidiaries at the highest rate in effect at
any time during the five years preceding termination of employment;
and
(ii) Annual incentive shall be calculated as the greater of
Employee's average annual incentive award paid for performance in the
three years preceding the year of termination under the AIP or the
Employee's target annual incentive for the year of termination.
(b) "AIP" means any plan or arrangement of the Company providing
cash-denominated bonuses for annual performance.
(c) "Beneficiary" means any family member or members, including by
marriage or adoption, any trust in which the Employee or any family member
or members have more than 50% of the beneficial interest, and any other
entity in which the Employee or any family member or members own more than
50% of the voting interests, in each case designated by the Employee in his
most recent written Beneficiary designation filed with the Committee as
entitled to receive payments or benefits in connection with this Policy or,
if there is no surviving designated Beneficiary, then the person, persons,
trust or trusts entitled by will or the laws of descent and distribution to
receive payments or benefits in connection with this Policy on behalf or in
lieu of such non-surviving designated Beneficiary.
(d) "Cause" means (i) the willful and continued failure by the
Employee to perform substantially his duties with the Company (other than
any such failure resulting from the Employee's incapacity due to physical
or mental illness) after a written demand for substantial performance is
delivered to the Employee by the Chairman of the Board of Directors or the
President of the Company which specifically identifies the manner in which
the Employee has not substantially performed his duties, (ii) the willful
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engagement by the Employee in conduct which is not authorized by the Board
of Directors of the Company or within the normal course of the Employee's
business decisions and is known by the Employee to be materially
detrimental to the best interests of the Company or any of its
subsidiaries, or (iii) the willful engagement by the Employee in illegal
conduct or any act of serious dishonesty which adversely affects, or, in
the reasonable estimation of the Board of Directors of the Company, could
in the future adversely affect, the value, reliability or performance of
the Employee to the Company in a material manner. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by
the Board of Directors of the Company or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be
done, by the Employee in good faith and in the best interests of the
Company. Notwithstanding the foregoing, an Employee shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to the Employee a copy of the resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership
of the Board of Directors after reasonable notice to the Employee and an
opportunity for him, together with his counsel, to be heard before the
Board of Directors, finding that, in the good faith opinion of the Board of
Directors, the Employee was guilty of the conduct set forth above in (i),
(ii) or (iii) of this Section 2(c) and specifying the particulars thereof
in detail.
(e) A "Change in Control" shall be deemed to have occurred if, after
the Effective Date and while the affected Employee is employed by the
Company or a subsidiary, there shall have occurred any of the following:
(i) Any "person," as such term is used in Section 13(d) and 14(d)
of the Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, or any company owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as
their ownership of stock of the Company), acquires voting securities
of the Company and immediately thereafter is a "40% Beneficial Owner."
For purposes of this provision, a "40% Beneficial Owner" shall mean a
person who is the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Company representing 40% or more of the combined voting power of the
Company's then-outstanding voting securities; provided, however, that
the term "40% Beneficial Owner" shall not include any person who was a
beneficial owner of outstanding voting securities of the Company at
February 20, 1990, or any person or persons who was or becomes a
fiduciary of any such person or persons who is, or in the aggregate,
are a "40% Beneficial Owner" (an "Existing Shareholder"), including
any group that may be formed which is comprised solely of Existing
Shareholders, unless and until such time after February 20, 1990 as
any such Existing Shareholder shall have become the beneficial owner
(other than by means of a stock dividend, stock split, gift,
inheritance or receipt or exercise of, or accrual of any right to
exercise, a stock option granted by the Company or receipt or
settlement of any other stock-related award granted by the Company) by
purchase of any additional voting securities of the Company; and
provided further, that the term "40% Beneficial Owner" shall not
include any person who shall become the beneficial owner of 40% or
more of the combined voting power
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of the Company's then-outstanding voting securities solely as a result
of an acquisition by the Company of its voting securities, until such
time thereafter as such person shall become the beneficial owner
(other than by means of a stock dividend or stock split) of any
additional voting securities and becomes a 40% Beneficial Owner in
accordance with this Section 2(d)(i).
(ii) During any period of two consecutive years commencing on or
after the Effective Date, individuals who at the beginning of such
period constitute the Board, and any new director (other than a
director designated by a person (as defined above) who has entered
into an agreement with the Company to effect a transaction described
in subsections (i), (iii) or (iv) of this definition) whose election
by the Board or nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved (the "Continuing Directors") cease for any reason to
constitute at least a majority thereof.
(iii) The shareholders of the Company have approved a merger,
consolidation, recapitalization, or reorganization of the Company, or
a reverse stock split of any class of voting securities of the
Company, or the consummation of any such transaction if shareholder
approval is not obtained, other than any such transaction which would
result in at least 60% of the combined voting power of the voting
securities of the Company or the surviving entity outstanding
immediately after such transaction being beneficially owned by persons
who together beneficially owned at least 80% of the combined voting
power of the voting securities of the Company outstanding immediately
prior to such transaction, with the relative voting power of each such
continuing holder compared to the voting power of each other
continuing holder not substantially altered as a result of the
transaction; provided that, for purposes of this Section 2(d)(iii),
such continuity of ownership (and preservation of relative voting
power) shall be deemed to be satisfied if the failure to meet such 60%
threshold (or to substantially preserve such relative voting power) is
due solely to the acquisition of voting securities by an employee
benefit plan of the Company, such surviving entity or a subsidiary
thereof; and provided further, that, if consummation of the corporate
transaction referred to in this Section 2(d)(iii) is subject, at the
time of such approval by shareholders, to the consent of any
government or governmental agency or approval of the shareholders of
another entity or other material contingency, no Change in Control
shail occur until such time as such consent and approval has been
obtained and any other material contingency has been satisfied.
(iv) The shareholders of the Company have approved a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets (or any transaction having a similar effect);
provided that, if consummation of the transaction referred to in this
Section 2(d)(iv) is subject, at the time of such approval by
shareholders, to the consent of any government or governmental
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agency or approval of the shareholders of another entity or other
material contingency, no Change in Control shall occur until such time
as such consent and approval has been obtained and any other material
contingency has been satisfied.
(v) Any other event which the Board of Directors of the Company
determines shall constitute a Change in Control for purposes of this
Policy.
Notwithstanding the foregoing, the Board and the Continuing Directors may
determine that no Change in Control shall be deemed to have occurred or
that some or all of the enhancements to the rights of Employees under the
Policy upon a Change in Control, as provided under Sections 4, 5 and 6,
shall not apply if, prior to the later of occurrence of the specified event
that would otherwise constitute a Change in Control under this definition
(the "Event") or the expiration of seven days after the Company has
obtained actual notice that such Event has occurred, the Board and the
Continuing Directors of the Company then in office, each by a majority vote
thereof and in consideration of the circumstances and acting in good faith,
determine that the occurrence of such Event shall not be deemed to be a
Change in Control hereunder, shall not be deemed to be a Change in Control
with respect to one or more specified Employees, or shall not result in
specified enhancements to the rights of one or more Employees that would
otherwise be triggered by the occurrence of a Change in Control. Each
Employee covered by the Policy at the date of such Event and affected by
such action of the Board and Continuing Directors shall be protected by the
legally binding obligation of the Company to maintain the Policy in effect
for at least three years after the Event for the benefit of such Employee,
except to the extent such Employee may agree to a change in or termination
of the Policy.
(f) "Committee" means the Stock Option and Compensation Committee of
the Company's Board of Directors, or such other committee as the Board may
designate to perform administrative functions under the Policy.
(g) "Company" means International Flavors & Fragrances Inc., a New
York corporation, or any successor corporation.
(h) "Designated Awards" means (i) options granted under the Company's
Employee Stock Option Plan of 1988, Employee Stock Option Plan of 1992 and
1997 Employee Stock Option Plan, (ii) any other options granted under a
Plan, whether currently existing or hereafter adopted by the Company, that,
by its terms, does not permit such options to become vested and exercisable
upon occurrence of a Change in Control and to remain outstanding for the
periods provided in Section 5(a), and (iii) restricted stock and other
equity-based awards granted under a Plan or arrangement that, by its terms,
does not permit such awards to become vested and non-forfeitable upon
occurrence of a Change in Control as provided in Section 5(a) in each case
if such options or other awards remain outstanding and held by the Employee
at the date of his termination of employment.
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(i) "Disability" means a disability entitling the Employee to
long-term disability benefits under the Company's long-term disability
policy as in effect at the date of Employee's termination of employment.
(j) "Effective Date" means the date the Policy became effective, as
set forth in Section 10(i) hereof.
(k) "Excess Benefit Plan" means the Company's Supplemental Retirement
Plan and any supplemental pensions provided to the Employee under any
resolutions adopted by the Board of Directors of the Company or any
subsidiary, and as the same may be modified, replaced or added to by the
Company and its subsidiaries from time to time.
(l) "Good Reason" means the occurrence of any of the following events,
unless the Employee has consented in writing thereto:
(i) a reduction by the Company and its subsidiaries in the
Employee's base salary as in effect immediately prior to the Change in
Control;
(ii) the failure by the Company or a subsidiary to continue in
effect any Plan (as hereinafter defined) in which the Employee was
participating at the time of the Change in Control, unless such Plan
(x) is replaced by a successor Plan providing to the Employee
substantially similar compensation and benefits (which replacement
Plan shall continue to be subject to this provision) or (y) terminates
as a result of the normal expiration of such Plan in accordance with
its terms, as in effect immediately prior to the Change in Control; or
the taking of any other action, or the failure to act, by the Company
or a subsidiary which would materially adversely affect the Employee's
continued participation in any of such Plans as compared to the terms
of such participation on the date of the Change in Control, including
by materially reducing the Employee's benefits in the future under any
such Plans;
(iii) effecting a change in the position of the Employee which
does not represent a position commensurate in level, authority and
responsibilities with or a promotion from Employee's position with the
Company or any of its subsidiaries immediately prior to the date of
the Change in Control, or assigning to the Employee responsibilities
which are materially inconsistent with such prior position; or
(iv) the Company's or a subsidiary's requiring the Employee to be
based anywhere more than 45 miles from the location of Employee's
office or the location of the Company's executive offices immediately
prior to the Change in Control, except that the Company may require
Employee to be based more than 45 miles from such location if the
relocation is to a principal executive office of the Company or
principal office of a major division or subsidiary of the Company,
provided that the Employee is reimbursed, on an after-tax basis, for
all reasonable expenses incurred and losses experienced in respect of
such relocation in accordance with Company's relocation policy prior
to the date of the
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Change in Control, and except for required travel on the business of
the Company or subsidiaries to an extent substantially consistent with
the business travel obligations which the Employee undertook on behalf
of the Company or subsidiaries prior to the Change in Control;
in each case after notice in writing from the Employee to the Company and a
period of 30 days after such notice during which the Company and its
subsidiaries fail to correct such conduct.
(m) "LTIP" means a long-term performance incentive plan of the
Company.
(n) "Plan" means any compensation plan of the Company or a
subsidiary such as an incentive, stock option or restricted stock plan
or any employee benefit plan of the Company or a subsidiary such as a
pension, profit sharing, medical, dental or life insurance plan.
(o) "Prior Executive Severance Agreement" means an Executive
Severance Agreement between the Employee and the Company in effect
immediately prior to the Effective Date of this Policy.
(p) "Retirement" means retirement after attaining age 65.
(q) "Retirement Plan" means the Company's tax-qualified pension
plan in which the Employee participates, as the same may be modified,
replaced or added to by the Company or a subsidiary from time to time.
3. Eligibility. Each officer of the Company or other key executive or
employee of the Company or its subsidiaries who has been designated in writing
by the Committee shall be eligible for the severance payments and benefits and
other provisions of this Policy if his termination of employment qualifies
hereunder. Eligible persons shall include persons employed outside the United
States, if designated by the Committee and subject to Section 10(h) of this
Policy. As of the date of adoption of this Policy, each executive officer of the
Company listed on Annex I is designated as a Tier 1 participant hereunder.
4. Severance Payments and Benefits. For each Employee or class of Employees
eligible to participate under this Policy, the Committee shall specify the terms
and conditions under which severance payments and benefits will be paid and
other terms and conditions of participation. For Employees designated as Tier 1
level participants, these terms and conditions shall be as set forth in this
Section 4; provided, however, that the Committee may vary these terms or provide
enhanced benefits in a document provided to a participant otherwise designated
as Tier 1, except that the Committee shall not vary such terms and conditions in
a way adverse to a previously designated participant without the written consent
of such participant. A summary of Tier 1 terms and conditions shall be attached
hereto as Attachment A, but if there is any inconsistency between the terms and
conditions of this Section 4 and Attachment A, this Section 4 shall take
precedence. For Employees designated as participants at a level other than Tier
1, the terms and conditions of such participation approved by the Committee
shall be set forth in a matrix or other document and attached hereto as one
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or more additional attachments. Ambiguities in such terms and conditions shall
be resolved in a manner consistent with the terms of this Section 4.
(a) Termination by the Company Not for Cause Prior to or More than
Three Years After a Change in Control. An Employee who is eligible for Tier
1 severance payments and benefits under this Policy pursuant to Section 3
shall be entitled to receive the payments and benefits from the Company
upon termination of employment at any time prior to a Change in Control or
more than three years following a Change in Control, if such termination is
by the Company (or its subsidiaries) other than for Cause and such
termination is not due to death, Disability or Retirement, or by the
Employee for any reason, and shall be subject to other terms, as follows:
(i) Such Employee's annual salary otherwise payable through the
date of termination of employment, together with salary, incentive
compensation and benefits which have been earned or become payable as
of the date of termination but which have not yet been paid to the
Employee and unreimbursed business expenses reimbursable under Company
policies then in effect; provided, however, that the Company and its
subsidiaries may offset such amounts against obligations and
liabilities of the Employee to the Company and its subsidiaries.
(ii) A lump-sum cash payment of a prorated portion of the
Employee's annual incentive under any AIP that would have become
payable for performance in the year of termination had Employee's
employment continued, with such award prorated based on the number of
days during the year of termination which preceded the Employee's
termination. This amount will be payable at such time as annual
incentives for performance in the year of termination otherwise become
payable.
(iii) For a period terminating on the earliest of 24 months
following the date of termination of employment or the Employee's
attaining age 65, severance payments, paid periodically at the date
annual salary payments would otherwise have been made, at a monthly
rate equal to one-twelfth of the sum of the Employee's annual salary
at the date of termination plus the Employee's average annual
incentive award paid for performance in the three years preceding the
year of termination under any AIP (or averaged over the lesser number
of years during which the Employee was eligible for AIP awards or, if
not eligible before the year of termination, the Employee's target
annual incentive under the AIP for the year of termination).
(iv) Subject to Section 5(b), and unless otherwise determined by
the Committee, the Employee's options which have not vested at the
time of the Employee's termination of employment shall be immediately
forfeited and the Employee's options which have vested at or before
the Employee's termination of employment shall remain outstanding and
exercisable only for 90 days after such termination (but in no event
past the stated expiration date of the option), and at the end of such
period such options shall be canceled.
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(v) Subject to Section 5(b), and unless otherwise determined by
the Committee, the Employee's restricted stock and stock unit grants
and LTIP awards which have not vested at the time of the Employee's
termination of employment shall be immediately forfeited.
(vi) For a period terminating on the earliest of 24 months
following the date of termination of employment, the commencement of
eligibility for benefits under a new employer's welfare benefits plan,
or the Employee's attaining age 65, the maintenance in effect for the
continued benefit of the Employee and his dependents of:
(A) all insured and self-insured medical and dental benefit
Plans of the Company and subsidiaries in which the Employee was
participating immediately prior to termination, provided that the
Employee's continued participation is possible under the general
terms and conditions of such Plans (and any applicable funding
media) and the Employee continues to pay an amount equal to the
Employee's regular contribution for such participation; and
(B) the group life insurance, group accident insurance, and
group disability insurance policies of the Company and
subsidiaries then in effect and covering the Employee immediately
prior to termination;
provided, however, that if the Company so elects, or if such continued
participation is not possible under the general terms and conditions
of such plans or under such policies, the Company, in lieu of the
foregoing, shall arrange to have issued for the benefit of the
Employee and the Employee's dependents individual policies of
insurance providing benefits substantially similar (on an after-tax
basis) to those described in this Section 4(a)(vi), or, if such
insurance is not available at a reasonable cost to the Company, shall
otherwise provide to the Employee and the Employee's dependents
substantially equivalent benefits (on an after-tax basis); provided
further that, in no event shall the Employee be required to pay any
premiums or other charges in an amount greater than that which the
Employee would have paid in order to participate in the Company's
Plans and policies.
(vii) The Employee's benefits and rights under the Retirement
Plan and any Excess Benefit Plan shall be determined under the
applicable provisions of such Plans.
(b) Termination by the Company for Cause or Voluntary Termination by
the Employee Prior to or More than Three Years After a Change in Control.
An Employee who is eligible for Tier 1 severance payments and benefits
under this Policy pursuant to Section 3 shall be entitled to receive the
payments and benefits from the Company upon termination of employment at
any time prior to a Change in Control or more than three years following a
Change in Control, if such termination is by the Company (or its
subsidiaries) for Cause or is voluntary by the Employee and such
termination is not due to death, Disability or Retirement, and shall be
subject to other terms, as follows:
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(i) Such Employee's annual salary otherwise payable through the
date of termination of employment, together with salary, incentive
compensation and benefits which have been earned or become payable as
of the date of termination but which have not yet been paid to the
Employee and unreimbursed business expenses reimbursable under Company
policies then in effect; provided, however, that the Company and its
subsidiaries may offset such amounts against obligations and
liabilities of the Employee to the Company and its subsidiaries.
(ii) No portion of the Employee's annual incentive under any AIP
for the year of termination shall be or become payable.
(iii) Subject to Section 5(b), and unless otherwise determined by
the Committee, the Employee's options which have not vested at the
time of the Employee's termination of employment shall be immediately
forfeited and the Employee's options which have vested at or before
the Employee's termination of employment (A), if termination is by the
Company (or its subsidiaries) for Cause, such options shall be
immediately canceled, and (B), if termination is voluntary by the
Employee, such options shall remain outstanding and exercisable only
for 90 days after such termination (but in no event past the stated
expiration date of the option), and at the end of such period such
options shall be canceled.
(iv) Subject to Section 5(b), the Employee's restricted stock and
stock unit grants and LTIP awards which have not vested at the time of
the Employee's termination of employment shall be immediately
forfeited.
(v) The Employee's benefits and rights under any welfare benefit
Plan, the Retirement Plan and any Excess Benefit Plan shall be
determined under the applicable provisions of such Plans.
(c) Termination Due to Death, Disability or Retirement Prior to or
More than Three Years After a Change in Control. An Employee who is
eligible for Tier 1 severance payments and benefits under this Policy
pursuant to Section 3 shall be entitled to receive the payments and
benefits from the Company upon termination of employment at any time prior
to a Change in Control or more than three years following a Change in
Control, if such termination is due to death, Disability or Retirement and
is not for Cause, and shall be subject to other terms, as follows:
(i) Such Employee's annual salary otherwise payable through the
date of termination of employment, together with salary, incentive
compensation and benefits which have been earned or become payable as
of the date of termination but which have not yet been paid to the
Employee and unreimbursed business expenses reimbursable under Company
policies then in effect; provided, however, that the Company and its
subsidiaries may offset such amounts against obligations and
liabilities of the Employee to the Company and its subsidiaries.
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(ii) A cash payment of a prorated portion of the Employee's
annual incentive under any AIP that would have become payable for
performance in the year of termination had Employee's employment
continued, with such award prorated based on the number of days during
the year of termination which preceded the Employee's termination.
This amount will be payable at such time as annual incentives for
performance in the year of termination otherwise become payable.
(iii) Subject to Section 5(b), the Employee's options which have
not vested at the time of the Employee's termination of employment
shall be immediately fully vested and exercisable, and the Employee's
options shall remain outstanding and exercisable after termination for
the following periods (but in no event past the stated expiration date
of the option): (A) for one year if termination resulted from the
Employee's death, (B) three years if termination resulted from the
Employee's Disability, and (C) for the remaining period until the
stated expiration date of the option if termination resulted from
Retirement. At the end of the applicable post-termination exercise
period, such options shall be canceled.
(iv) Subject to Section 5(b), the Employee's restricted stock and
stock unit awards which have not vested at the time of the Employee's
termination of employment shall be immediately fully vested and,
unless waived or deferred by the Employee in the case of termination
due to Disability or Retirement, stock unit awards shall be settled as
promptly as practicable following termination.
(v) A cash payment of a prorated portion of each of the
Employee's LTIP awards that would have become payable for each
performance cycle ongoing at the time of termination had Employee's
employment continued through the end of such performance cycle, with
such LTIP award prorated based on the number of days during the
performance cycle preceding the Employee's termination. This amount
will be payable at such time as the LTIP awards for the applicable
performance cycle otherwise become payable, except the Committee may
instead make a good faith estimate of the actual performance achieved
through the date of termination and rely on this estimate to determine
the amount payable in settlement of such LTIP award, in which case
such payment will constitute full settlement of such LTIP award.
(vi) The Employee's benefits and rights under any welfare benefit
Plan, the Retirement Plan and any Excess Benefit Plan shall be
determined under the applicable provisions of such Plans.
(d) Termination by the Company Not for Cause or by Employee for Good
Reason Within Three Years After a Change in Control. An Employee who is
eligible for Tier 1 severance payments and benefits under this Policy
pursuant to Section 3 shall be entitled to receive the payments and
benefits from the Company upon termination of employment within three years
following a Change in Control, if such termination is by the Company (or
its subsidiaries) not for Cause or is by the Employee for Good Reason
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and such termination is not due to death, Disability or Retirement, and
shall be subject to other terms, as follows:
(i) Such Employee's annual salary otherwise payable through the
date of termination of employment, together with salary, incentive
compensation and benefits which have been earned or become payable as
of the date of termination but which have not yet been paid to the
Employee and unreimbursed business expenses reimbursable under Company
policies then in effect; provided, however, that the Company and its
subsidiaries may offset such amounts against obligations and
liabilities of the Employee to the Company and its subsidiaries.
(ii) A cash payment of a prorated portion of the Employee's
annual incentive under any AIP, determined as the greater of the
target annual incentive for the year of termination or the annual
incentive that would have become payable for performance in the year
of termination had Employee's employment continued, with the award so
determined then prorated based on the number of days during the year
of termination which preceded the Employee's termination. The amount
determined based on target annual incentive will be payable as a lump
sum, with any additional amount resulting from performance over the
full year of termination payable at such time as annual incentives for
performance in that year otherwise become payable.
(iii) A lump-sum cash severance payment equal to the product of
the Employee's Annual Compensation, multiplied by 2.5; provided,
however, that if Employee has attained age 62 and one-half at the date
of termination, instead of a multiplier of 2.5 the multiplier shall be
the number of whole months and any partial month from the date of
termination remaining until the Employee attains age 65, divided by
12.
(iv) A cash payment of 100% of each of the Employee's LTIP awards
for each performance cycle ongoing at the time of termination,
determined as the greater of the target LTIP award for that
performance cycle or the LTIP award that would have become payable had
Employee's employment continued through the end of such performance
cycle. The amount determined based on the target LTIP awards will be
payable as a lump sum, with any additional amount resulting from
performance over the full performance cycle payable at such time as
LTIP awards otherwise become payable.
(v) Subject to Section 5(b), the Employee's options which have
not vested at the time of the Employee's termination of employment
shall be immediately fully vested and exercisable, and the Employee's
options shall remain outstanding and exercisable for the remaining
period until the stated expiration date of the option.
(vi) Subject to Section 5(b), the Employee's restricted stock and
stock unit awards which have not vested at the time of the Employee's
termination of employment shall be immediately fully vested and,
unless waived or deferred by
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the Employee, stock unit awards shall be settled as promptly as
practicable following termination.
(vii) The Employee's Designated Awards, if any, will be subject
to the terms of the Plan under which they were granted, and, in the
case of options which are Designated Awards, Employee will be entitled
to payment pursuant to the limited stock appreciation rights, if any,
that were originally granted to Employee under the Prior Executive
Severance Agreement. These limited stock appreciation rights are
hereby amended and restated to provide that, for each share of the
Company's Common Stock subject to any option which is a Designated
Award that remains outstanding at the date of Employee's termination
subject to this Section 4(d), whether or not such option is then
exercisable, the Company shall pay to Employee the amount determined
by subtracting the exercise price thereof from the highest of (A) the
market price per share of Common Stock on the New York Stock Exchange
at the close of business on the effective day of termination, (B) the
price per share contained in any published tender offer made within
one year before or after the date of the Change in Control, (C) the
price contained in any merger or acquisition agreement entered into by
the Company and any third party within one year before or after the
date of the Change in Control, or (D) the market price per share of
Common Stock on the New York Stock Exchange on the date of the Change
in Control, and, upon such payment, such option shall be deemed
canceled and annulled.
(viii) The Employee will be credited with additional age and
years of service under any Excess Benefit Plan as though the Employee
continued to be employed for a period of 36 months after termination
or until he attains age 65, whichever period is less, and the Employee
will be deemed to be fully vested under any such Excess Benefit Plan,
with the time or times at which benefits are payable under any such
Plan unchanged; provided, however, that if an Excess Benefit Plan does
not permit such additional crediting of age and years of service, then
Employee will be paid in a lump sum the present value of the
additional benefits he would have received under such Plan had
Employee's employment continued at his previous rate of compensation
to the earlier of the third anniversary of his termination or the date
of attainment of age 65; provided further, that the Company's
obligations under any such Excess Benefit Plan shall be fully funded
by deposits into a "rabbi trust" the trustee of which shall be
independent of the Company and the terms of which shall preclude
access by the Company to any of the trust assets, except for
attachments by creditors of the Company upon insolvency or bankruptcy
of the Company, until all obligations to the Employee and his
beneficiaries have been satisfied: and provided further, that the
Company may elect to satisfy all obligations to the Employee and his
beneficiaries by payment, as a lump sum, of the present value of the
accrued benefit under any Excess Plan.
(ix) For a period terminating on the earlier of 36 months
following the date of termination of employment or the commencement of
eligibility for benefits
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under a new employer's welfare benefits plan, the maintenance in
effect for the continued benefit of the Employee and his dependents
of:
(A) all insured and self-insured medical and dental benefit
plans of the Company and subsidiaries in which the Employee was
participating immediately prior to termination, provided that the
Employee's continued participation is possible under the general
terms and conditions of such plans (and any applicable funding
media) and the Employee continues to pay an amount equal to the
Employee's regular contribution for such participation; and
(B) the group life insurance and group disability insurance
policies of the Company and subsidiaries then in effect for
Employee;
provided, however, that if the Company so elects, or if such
continued participation is not possible under the general terms and
conditions of such plans or under such policies, the Company, in lieu
of the foregoing, shall arrange to have issued for the benefit of the
Employee and the Employee's dependents individual policies of
insurance providing benefits substantially similar (on an after-tax
basis) to those described in this Section 4(d)(ix), or, if such
insurance is not available at a reasonable cost to the Company, shall
otherwise provide the Employee and the Employee's dependents
substantially equivalent benefits (on an after-tax basis); provided
further that, in no event shall the Employee be required to pay any
premiums or other charges in an amount greater than that which the
Employee would have paid in order to participate in the Company's
plans and policies.
(e) Termination by the Company for Cause or Voluntary Termination by
the Employee Within Three Years After a Change in Control. An Employee who
is eligible for Tier 1 severance payments and benefits under this Policy
pursuant to Section 3 shall be entitled to receive the payments and
benefits from the Company upon termination of employment at any time within
three years following a Change in Control, if such termination is by the
Company (or its subsidiaries) for Cause or is voluntary by the Employee not
for Good Reason and such termination is not due to death, Disability or
Retirement, and shall be subject to other terms, as follows:
(i) Such Employee's annual salary otherwise payable through the
date of termination of employment, together with salary, incentive
compensation and benefits which have been earned or become payable as
of the date of termination but which have not yet been paid to the
Employee and unreimbursed business expenses reimbursable under Company
policies then in effect; provided, however, that the Company and its
subsidiaries may offset such amounts against obligations and
liabilities of the Employee to the Company and its subsidiaries.
(ii) No portion of the Employee's annual incentive under any AIP
for the year of termination shall be or become payable.
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(iii) Subject to Section 5(b), and unless otherwise determined
by the Committee, if termination is by the Company (or its
subsidiaries) for Cause all of the Employee's options (vested and
unvested) shall be immediately forfeited and canceled, and if
termination is voluntary by the Employee, all of the Employee's options
which have not vested at the time of his termination shall be
immediately fully vested and exercisable, and all of the Employee's
options which have vested at or before his termination shall remain
outstanding and exercisable for 90 days after such termination (but in
no event past the stated expiration date of the option), and at the end
of such period such options shall be canceled.
(iv) Subject to Section 5(b), the Employee's restricted stock
and stock unit grants and LTIP awards which have not vested at the
time of the Employee's termination of employment shall be immediately
forfeited.
(v) The Employee's benefits and rights under any welfare
benefit Plan, the Retirement Plan and any Excess Benefit Plan shall be
determined under the applicable provisions of such Plans.
(f) Termination Due to Death, Disability or Retirement Within Three
Years After a Change in Control. An Employee who is eligible for Tier 1
severance payments and benefits under this Policy pursuant to Section 3
shall be entitled to receive the payments and benefits from the Company
upon termination of employment at any time within three years following a
Change in Control, if such termination is due to death, Disability or
Retirement and is not for Cause or voluntary by the Employee for Good
Reason, and shall be subject to other terms, as follows:
(i) Such Employee's annual salary otherwise payable through the
date of termination of employment, together with salary, incentive
compensation and benefits which have been earned or become payable as
of the date of termination but which have not yet been paid to the
Employee and unreimbursed business expenses reimbursable under Company
policies then in effect; provided, however, that the Company and its
subsidiaries may offset such amounts against obligations and
liabilities of the Employee to the Company and its subsidiaries.
(ii) A cash payment of a prorated portion of the Employee's
annual incentive under any AIP, determined as the greater of the
target annual incentive for the year of termination or the annual
incentive that would have become payable for performance in the year
of termination had Employee's employment continued, with the award so
determined then prorated based on the number of days during the year
of termination which preceded the Employee's termination. The amount
determined based on target annual incentive will be payable as a lump
sum, with any additional amount resulting from performance over the
full year of termination payable at such time as annual incentives for
performance in that year otherwise become payable.
(iii) Subject to Section 5(b), the Employee's options which have
not vested at the time of the Employee's termination of employment
shall be
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immediately fully vested and exercisable, and the Employee's options
shall remain outstanding and exercisable after termination for the
following periods (but in no event past the stated expiration date of
the option): (A) for one year if termination resulted from the
Employee's death, (B) three years if termination resulted from the
Employee's Disability, (C) for the remaining period until the stated
expiration date of the option if termination resulted from Retirement
or (D), unless otherwise determined by the Committee, for 90 days. At
the end of the applicable post-termination exercise period, such
options shall be canceled.
(iv) Subject to Section 5(b), the Employee's restricted stock and
stock unit awards which have not vested at the time of the Employee's
termination of employment shall be immediately fully vested and,
unless waived or deferred by the Employee in the case of termination
due to Disability or Retirement, stock unit awards shall be settled as
promptly as practicable following termination.
(v) A cash payment of a prorated portion of each of the
Employee's LTIP awards that would have become payable for each
performance cycle ongoing at the time of termination, determined as
the greater of the target LTIP award for that performance cycle or the
LTIP award that would have become payable had Employee's employment
continued through the end of such performance cycle, with each LTIP
award prorated based on the number of days during the performance
cycle preceding the Employee's termination. The amount determined
based on the target LTIP awards will be payable as a lump sum, with
any additional amount resulting from performance over the full
performance cycle payable at such time as LTIP awards otherwise become
payable.
(vi) The Employee's benefits and rights under any welfare benefit
Plan, the Retirement Plan and any Excess Benefit Plan shall be
determined under the applicable provisions of such Plans, except that
the Employee will be deemed to be fully vested under any such Excess
Benefit Plan.
5. Acceleration of Equity Awards Upon a Change in Control; Certain
Provisions Applicable to Equity Awards.
(a) Acceleration Upon Change in Control. In the event of a Change in
Control, the following provisions will apply to any stock options,
restricted stock and other awards based on stock then held by the Employee,
other than Designated Awards and limited stock appreciation rights relating
thereto:
(i) Any such option or other award carrying a right to exercise
that was not previously vested and exercisable shall become fully
vested and exercisable as of the time of the Change in Control.
(ii) All forfeiture conditions, deferral of settlement
conditions, and other restrictions applicable to such restricted stock
and other equity awards shall lapse and such awards shall be fully
payable or settleable as of the time of the Change in Control without
regard to deferral and vesting conditions, except
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to the extent of any waiver by the Employee or other express Employee
election to defer beyond a Change in Control.
(iii) With respect to such an outstanding equity award subject to
achievement of performance goals and conditions, such performance
goals and conditions shall be deemed to be fully met as of the date of
such Change in Control, unless otherwise expressly provided by the
Committee in the award document governing such award or other
agreement entered into with the Employee after the Effective Date.
Notwithstanding the foregoing, Section 7 shall continue to apply to any
such award in accordance with its terms.
(b) Effect of Policy Terms on Outstanding Options and Awards. If any
option, restricted stock or stock unit award outstanding at the effective
date of this Policy cannot, under the terms of the plan governing such
award, provide for vesting or post-termination exercise on the terms set
forth in Section 4 or this Section 5, or if the modification to the vesting
and post-termination exercise and other terms of such option or award under
Section 4 or this Section 5 would trigger an accounting expense to be
measured and recognized by the Company prior to a Change in Control, such
award shall be modified by Section 4 and this Section 5 only to the extent
that the modification is both permitted under the terms of the plan
governing such award and does not trigger such accounting expense.
(c) More Favorable Terms Apply. If and to the extent that the terms of
an option, restricted stock award, or other award based on stock are more
favorable to the Employee, in the event of a Change in Control, than those
terms provided under this Section 5, those terms shall apply, and this
Section 5 shall not operate in any way to restrict or cut back on the
rights of the Employee with respect to such award.
6. Excise Tax Gross-Up; Limited Reduction in Severance Payments to Avoid
Excise Taxes. If an Employee who has been designated for Tier 1 severance
payments and benefits (and not excluded from benefits under this Section 6) or
is otherwise designated as eligible for benefits under this Section 6 becomes
entitled to one or more payments in connection with a Change in Control or
termination of employment during the three years following a Change in Control,
other than a termination by the Company for Cause, (with a "payment" including,
without limitation, the vesting of an option or other non-cash benefit or
property, including under Section 5 of this Policy) pursuant to any plan,
agreement or arrangement of the Company (together, "Severance Payments") which
are or would be subject to the tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (or any similar tax that may be imposed) (the
"Excise Taxes"), the Company shall pay to the Employee an additional amount
("Gross-Up Payment") such that, after the payment by the Employee of all taxes
(including without limitation all income and employment tax and Excise Tax and
treating as a tax the lost tax benefit resulting from the disallowance of any
deduction of the Employee by virtue of the inclusion of the Gross-Up Payment in
the Employee's adjusted gross income), and interest and penalties with respect
to such taxes, imposed upon the Gross-Up Payment, the Employee retains an amount
of the Gross-Up Payment equal to the Excise Taxes imposed upon the Severance
Payments. Notwithstanding the foregoing, if (i) the Severance Payments
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exceed the Safe Harbor Amount (as defined below) and (ii) a reduction of up to
20% of any cash payments pursuant to Section 4(d)(iii) of this Agreement would
cause the Severance Payments to be equal to the Safe Harbor Amount and thereby
avoid the imposition of any Excise Taxes, the cash payments pursuant to Section
4(d)(iii) of this Agreement shall be reduced to the extent necessary to result
in all remaining Severance Payments equal to the Safe Harbor Amount. "Safe
Harbor Amount" shall mean one dollar less than 300% of the "base amount" as
determined in accordance with Section 280G(b)(3) of the Code.
For purposes of determining whether any of the Severance Payments will be
subject to the Excise Tax and the amount of such Excise Tax:
(i) The Severance 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, unless, and except to the
extent that, in the written opinion of independent compensation
consultants, counsel or auditors of nationally recognized standing
("Independent Advisors") selected by the Company and reasonably acceptable
to the Employee, the Severance Payments (in whole or in part) do not
constitute parachute payments, or such excess parachute payments (in whole
or in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code in excess of
the base amount within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise Tax.
(ii) The amount of the Severance Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (A) the total
amount of the Severance Payments or (B) the total amount of excess
parachute payments within the meaning of Section 280G(b)(1) of the Code
(after applying clause (i) above).
(iii) The value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Independent Advisors 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, the
Employee shall be deemed (A) to pay federal income taxes at the highest marginal
rate of federal income taxation for the calendar year in which the Gross-Up
Payment is to be made; (B) to pay any applicable state and local income taxes at
the highest marginal rate of taxation for the calendar year in which the
Gross-Up Payment is to be made, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes if
paid in such year (determined without regard to limitations on deductions based
upon the amount of the Employee's adjusted gross income); and (C) to have
otherwise allowable deductions for federal, state, and local income tax purposes
at least equal to those disallowed because of the inclusion of the Gross-Up
Payment in the Employee's adjusted gross income. In the event that the Excise
Tax is subsequently determined to be less than the amount taken into account
hereunder at the time the Gross-Up Payment is made, the Employee shall repay to
the Company at the time that the amount of such reduction in Excise Tax is
finally determined (but, if previously paid to the taxing authorities, not prior
to the time the amount of such reduction is refunded to the Employee or
otherwise realized as a benefit by the Employee) the portion of the Gross-Up
Payment that would not have been paid if such Excise Tax had been applied in
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initially calculating the Gross-Up Payment, plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is determined to exceed the amount taken into account
hereunder at the time the Gross-Up Payment is made (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest and penalties payable with respect to
such excess) at the time that the amount of such excess is finally determined.
The Gross-Up Payment provided for above shall be paid on the 30th day (or
such earlier date as the Excise Tax becomes due and payable to the taxing
authorities) after it has been determined that the Severance Payments (or any
portion thereof) are subject to the Excise Tax; provided, however, that if the
amount of such Gross-Up Payment or portion thereof cannot be finally determined
on or before such day, the Company shall pay to the Employee on such day an
estimate, as determined by the Independent Advisors, of the minimum amount of
such payments and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code), as soon as
the amount thereof can be determined. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Employee, payable on
the fifth day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code). If more than one Gross-Up
Payment is made, the amount of each Gross-Up payment shall be computed so as not
to duplicate any prior Gross-Up Payment.
The Company shall have the right to control all proceedings with the
Internal Revenue Service that may arise in connection with the determination and
assessment of any Excise Tax and, at its sole option, the Company may pursue or
forego any and all administrative appeals, proceedings, hearings, and
conferences with any taxing authority in respect of such Excise Tax (including
any interest or penalties thereon); provided, however, that the Company's
control over any such proceedings shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder, and the Employee shall be
entitled to settle or contest any other issue raised by the Internal Revenue
Service or any other taxing authority. The Employee shall cooperate with the
Company in any proceedings relating to the determination and assessment of any
Excise Tax and shall not take any position or action that would materially
increase the amount of any Gross-Up Payment hereunder.
7. Employee Obligations and Conditions to Receipt of Payments and Benefits.
(a) Obligations of the Employee. The following requirements must be
met by the Employee as a condition to his right to receive, continue to
receive, or retain payments and benefits under the Policy, as specified in
Section 7(b), (c) and (d):
(i) The Employee, acting alone or with others, directly or
indirectly, shall not, during the Non-competition Period, either as
employee, employer, consultant, advisor, or director, or as an owner,
investor, partner, or shareholder unless the Employee's interest is
insubstantial, engage in or become associated with a "Competitive
Activity". For this purpose, (A) the "Non-competition Period" means
the period prior to a Change in Control and
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either during Employee's employment or within two years following
termination of such employment with the Company and any subsidiary or
for such shorter period following such termination as may be provided
by applicable law; and (B) the term "Competitive Activity" means any
business or other endeavor that engages in a line of business in any
geographic location that is substantially the same as either (1) any
line of operating business which the Company or a subsidiary engages
in, conducts, or, to the knowledge of the Executive, has definitive
plans to engage in or conduct, or (2) any operating business that has
been engaged in or conducted by the Company or a subsidiary and as to
which, to the knowledge of the Employee, the Company or subsidiary has
covenanted in writing, in connection with the disposition of such
business, not to compete therewith. The Committee shall, in the
reasonable exercise of its discretion, determine which lines of
business the Company and its subsidiaries conduct on any particular
date and which third parties may reasonably be deemed to be in
competition with the Company and its subsidiaries. For purposes of
this Section 7(a) (including clause (ii) below), the Employee's
interest as a shareholder is insubstantial if it represents beneficial
ownership of less than five percent of the outstanding class of stock,
and the Employee's interest as an owner, investor, or partner is
insubstantial if it represents ownership, as determined by the
Committee in its discretion, of less than five percent of the
outstanding equity of the entity.
(ii) The Employee, acting alone or with others, directly or
indirectly, shall not (A) induce any customer or supplier of the
Company or a subsidiary or affiliate, or other company with which the
Company or a subsidiary or affiliate has a business relationship, to
curtail, cancel, not renew, or not continue his or her or its business
with the Company or any subsidiary or affiliate; or (B) induce, or
attempt to influence, any employee of or service provider to the
Company or a subsidiary or affiliate to terminate such employment or
service.
(iii) The Employee shall not disclose, use, sell, or otherwise
transfer, except in the course of employment with or other service to
the Company or any subsidiary or affiliate, any confidential or
proprietary information of the Company or any subsidiary or affiliate,
including but not limited to information regarding the Company's
current and potential customers, organization, employees, finances,
and methods of operation and investments, so long as such information
has not otherwise been disclosed to the public or is not otherwise in
the public domain, except as required by law or pursuant to legal
process, and the Employee shall not make statements or
representations, or otherwise communicate, directly or indirectly, in
writing, orally, or otherwise, or take any other action which may,
directly or indirectly, disparages or is damaging to the Company or
any of its subsidiaries or affiliates or their respective officers,
directors, employees, advisors, businesses or reputations, except as
required by law or pursuant to legal process.
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(iv) The Employee shall cooperate with the Company or any
subsidiary or affiliate by making himself available to testify on
behalf of the Company or such subsidiary or affiliate in any action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative, and otherwise to assist the Company or any subsidiary
or affiliate in any such action, suit, or proceeding by providing
information and meeting and consulting with members of management of,
other representatives of, or counsel to, the Company or such
subsidiary or affiliate, as reasonably requested.
(v) The Employee shall deliver promptly to the Company on
termination of the Employee's employment, or at any time the Company
may so request, all documents, memoranda, notes, records, files,
reports, and other materials, and all copies thereof, including
digital versions, relating to the Company and its subsidiaries and
affiliates, and all other property of the company and its subsidiaries
and affiliates, then in the possession of or under the Employee's
control.
(b) Effect of the Employee's Failure to Comply with Obligations. The
Company shall have no obligations to make payments or provide benefits to
the Employee under this Policy if the Employee has failed or fails to
comply with the obligations set forth in Section 7(a), other than
inadvertent and inconsequential events constituting non-compliance, during
the period of two years prior to the Employee's termination of employment
or at any time following such termination of employment.
(c) Employee Obligation to Execute Release and Termination Agreement.
The Company's obligations under this Policy to make payments and provide
benefits conditioned upon the Employee's signing a release and termination
agreement and the expiration of any revocation period set forth therein.
The Committee shall specify the form and content of such agreement, and may
modify such form and content from time to time; provided, however, that,
such agreement shall set forth the obligations in Section 7(a) and the
Employee shall agree to comply therewith, and the Employee shall agree to
the terms of Section 7(d); and provided further, that during the three
years following a Change in Control, such agreement shall not be modified
in a manner that increases the obligations or decreases the rights of the
Employee as compared to the form of such agreement in use prior to the
Change in Control.
(d) Clawback Provision. In the case of any termination of the
Employee's employment prior to a Change in Control, if the Employee has
failed to comply with the obligations under Section 7(a) (other than an
inadvertent and inconsequential event constituting non-compliance) during
the two years prior to termination or during the period following
termination which is the lesser of two years or the period during which the
obligations under Section 7(a) continue to apply, all of the following
forfeitures will result:
(i) The unexercised portion of any option, whether or not vested,
and any other award not then vested will be immediately forfeited and
canceled.
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(ii) The Employee will be obligated to repay to the Company, in
cash, within five business days after demand is made therefor by the
Company,
(A) the total amount of any cash payments made to the
Employee under this Policy, other than payments under clause (i)
of Sections 4(a) through (f) and cash payments under welfare
benefit plans;
(B) other cash amounts paid to the Employee under any AIP
and LTIP awards since the date two years prior to the Employee's
termination of employment; and
(C) the Award Gain (as defined below) realized by the
Employee upon each exercise of an option or settlement of a
restricted stock or stock unit award (regardless of any elective
deferral) since the date two years prior to Employee's
termination of employment. For purposes of this Section 7(d), the
term "Award Gain" shall mean (1), in respect of a given option
exercise, the product of (X) the fair market value per share of
stock at the date of such exercise (without regard to any
subsequent change in the market price of shares) minus the
exercise price times (Y) the number of shares as to which the
option was exercised at that date, and (ii), in respect of any
other settlement of an award granted to the Employee, the fair
market value of the cash or stock paid or payable to the Employee
(regardless of any elective deferral) less any cash or the fair
market value of any stock or property (excluding any payment of
tax withholding) paid by the Employee to the Company as a
condition of or in connection such settlement.
8. Other Provisions Applicable to Severance Payments and Benefits.
(a) Timing of Payments. All payments required to be paid as a lump sum
under Section 4 shall be paid not later than the 15th day following the date of
termination of Employee's employment. Other payments shall be made as promptly
as practicable following the earliest date such payments are due.
(b) Limitation of Benefits In Case of Certain Business Dispositions.
Notwithstanding anything in this Policy to the contrary, an Employee shall not
be entitled to any payments or benefits under Section 4(a), (b) or (c) of this
Policy, unless the Committee in its sole discretion provides otherwise, in the
event termination of employment results from the sale or spin-off of a
subsidiary, the sale of a division, other business unit or facility in which the
Employee was employed immediately prior to such sale, and the Employee has been
offered employment with the purchaser of such subsidiary, division, other
business unit or facility or the spun-off entity on substantially the same terms
and conditions under which the Employee worked prior to the sale. Such terms and
conditions must include an agreement or plan binding on such purchaser or
spun-off entity providing that, upon any termination
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of the Employee's employment with the purchaser or spun-off entity of the kinds
described in Section 4 hereof within three years following such sale or spin-off
(but not past the attainment of age 65 by the Employee), the purchaser or
spun-off entity shall pay to such Employee amounts comparable to the payments
that the Employee would have received under the applicable provision of Section
4 hereof, and provide comparable benefits, as if the Employee had been
terminated in like circumstances at the time of such sale and provided payments
and benefits under this Policy.
(c) Deferrals Included in Salary and Bonus. All references in this Policy
to salary and annual incentive amounts mean those amounts before reduction
pursuant to any deferred compensation plan or agreement.
(d) Payments and Benefits to Beneficiary Upon Employee's Death. In the
event of the death of an Employee, all payments and benefits hereunder due to
such Employee shall be paid or provided to his Beneficiary.
(e) Transfers of Employment. Anything in this Policy to the contrary
notwithstanding, a transfer of employment from the Company to a subsidiary or
vice versa shall not be considered a termination of employment for purposes of
this Policy.
(f) Calculation of Months. Provisions of this Policy which calculate the
number of months remaining until age 65 will treat, for example, the period from
August 16 through October 15 as two whole months, will treat any remaining
partial month as one whole month, and will treat any negative number resulting
from termination after age 65 as zero.
9. Other Plans and Policies; Non-Duplication of Payments or Benefits.
(a) Rights Under Other Plans. Except to the extent that the terms of this
Policy confer rights to severance payments and benefits that are more favorable
to the Employee than are available under any other employee (including
executive) benefit plan or executive compensation plan of the Company or a
subsidiary in which the Employee is a participant, the Employee's rights under
any such employee (including executive) benefit plan or executive compensation
plan shall be determined in accordance with the terms of such plan (as it may be
modified or added to by the Company from time to time), except as otherwise
provided in Section 5.
(b) Superseded Agreements and Rights. This Policy constitutes the entire
understanding between the Company and the Employee relating to severance
payments and benefits to be paid or provided to the Employee by the Company and
its subsidiaries, and supersedes and cancels all prior agreements and
understandings with respect to the subject matter of this Policy, except as
otherwise provided in this Section 9(b). In order for the Employee to be
entitled to any payments or benefits under this Policy, Employee must agree,
within such period after the Committee has designated Employee as eligible to be
covered by the Policy as the Committee may specify, that the Employee shall not
be entitled to benefits under any Prior Executive Severance Agreement between
the Company and the
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Employee, except to the extent that limited stock appreciation rights may
continue in effect under Section 4(d) and 5(a) hereof. If, however, the Employee
has previously entered or after the Effective Date enters into an employment
agreement with the Company or a subsidiary, that employment agreement will not
be superseded by this Policy unless it specifically so provides.
(c) Non-Duplication of Payments and Benefits. The Employee shall not be
entitled to any payment or benefit under this Policy which duplicates a payment
or benefit received or receivable by the Employee under any other employment
agreement, severance agreement, or other agreement or understanding, or under
any employee (including executive) compensation or benefit plan, of the Company
or a subsidiary.
10. Miscellaneous
(a) Withholding. The Company shall have the right to deduct from all
payments hereunder any taxes required by law to be withheld therefrom.
(b) No Right To Employment. Nothing in this Policy shall be construed as
giving any person the right to be retained in the employment of the Company or
any subsidiary, nor shall it affect the right of the Company or any subsidiary
to dismiss an Employee without any liability except as provided in this Policy.
(c) Legal Fees. The Company shall pay all legal fees and related expenses
incurred by an Employee in seeking to obtain or enforce any payment, benefit or
right provided by this Policy; provided; however, that the Employee shall be
required to repay any such amounts to the Company to the extent that an
arbitrator or a court of competent jurisdiction issues a final, unappeasable
order setting forth a determination that the position taken by the Employee was
frivolous or advanced in bad faith.
(d) Amendment and Termination. The Board of Directors of the Company may
amend or terminate this Policy at any time, provided, however, that, without the
written consent of an affected Employee, (i), during the three years following a
Change in Control, this Policy may not be amended or terminated in any manner
materially adverse to an Employee, and (ii), at any other time, this Policy may
not be amended or terminated in any manner materially adverse to an Employee
except with one year's advance notice to the affected Employee, and no such
amendment or termination shall be effective to limit any right or benefit under
Section 4(d), (e) or (f), 5 or 6 if a Change in Control has occurred prior to
the lapse of such one-year period.
(e) Governing Law; Arbitration. THE VALIDITY, CONSTRUCTION, AND EFFECT OF
THIS POLICY AND ANY RULES AND REGULATIONS RELATING TO THIS POLICY SHALL BE
DETERMINED IN ACCORDANCE WITH THE LAWS (INCLUDING THOSE GOVERNING CONTRACTS) OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS,
AND APPLICABLE FEDERAL LAW. If any provision hereof shall be held by a court or
arbitrator of competent jurisdiction to be invalid and unenforceable, the
remaining
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provisions shall continue to be fully effective. Any dispute or controversy
arising under or in connection with this Policy shall be settled exclusively by
arbitration in New York, New York by three arbitrators in accordance with the
rules of the American Arbitration Association in effect at the time of
submission to arbitration. Judgment may be entered on the arbitrators' award in
any court having jurisdiction. For purposes of settling any dispute or
controversy arising hereunder or for the purpose of entering any judgment upon
an award rendered by the arbitrators, the Company and the Employee hereby
consent to the jurisdiction of any or all of the following courts: (i) the
United States District Court for the Southern District of New York, (ii) any of
the courts of the State of New York, or (iii) any other court having
jurisdiction. The Company and the Employee hereby waive, to the fullest extent
permitted by applicable law, any objection which it may now or hereafter have to
such jurisdiction and any defense of inconvenient forum. The Company and the
Employee hereby agree that a judgment upon an award rendered by the arbitrators
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
(f) Nonassignability. Payments and benefits under this Policy may not be
assigned by the Employee. The terms and conditions of this Policy shall be
binding on the successors and assigns of the Company.
(g) No Duty to Mitigate. No employee shall be required to mitigate, by
seeking employment or otherwise, the amount of any payment that the Company
becomes obligated to make under this Policy, and, except as expressly provided
in this Policy, amounts or other benefits to be paid or provided to an Employee
pursuant to this Policy shall not be reduced by reason of the Employee's
obtaining other employment or receiving similar payments or benefits from
another employer.
(h) Foreign Participants. The terms and conditions of participation of any
Employee whose employment is subject to the laws or customs of any jurisdiction
other than the United States or a state thereof may be modified by the Committee
to conform to or otherwise take into account such laws and customs. In no event
shall payments or benefits be payable hereunder if and to the extent that such
benefits would duplicate severance payments or benefits payable in accordance
with such laws and customs, although severance payments and benefits payable
hereunder may supplement those payable under such laws and customs. This Policy
will be of no force or effect to the extent superseded by foreign law.
(i) Effective Date. This Policy is effective as of April 13, 2000.
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