Preview of our top selling Continuation Agreement
Goodrich B F - Form of Management Continuity Agreement
EXHIBIT 10(E)
MANAGEMENT CONTINUITY AGREEMENT
THIS AGREEMENT dated as of this [ ] day of [ ], 199[ ] between [ ](the "Executive") and The B.F. Goodrich Company, a New York corporation (the "Company").
WHEREAS, the Executive and the Company desire to set forth certain compensation and benefits that the Executive shall receive upon the happening of certain events affecting the Executive and the Company, and
WITNESSETH:
NOW, THEREFORE, in consideration of the foregoing and the mutual promises herein contained, the parties agree as follows:
1. TERM. This Agreement shall commence on the date hereof and shall continue until the Date of Termination as set forth in Section 8 hereof.
2. PERIOD OF EMPLOYMENT. Executive's "Period of Employment" shall commence on the date on which a Change in Control occurs and shall end on the date that is 24 months after the date on which such Change in Control occurs. Notwithstanding the foregoing, however, Executive's Period of Employment shall not extend beyond any Mandatory Retirement Date (as hereinafter defined in Section 3) applicable to Executive.
3. CERTAIN DEFINITIONS. For purposes of this Agreement:
(a) A "Change in Control" shall mean:
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding Shares of common stock of the
Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control: (A) any
acquisition directly from the Company (other than by exercise
of a conversion privilege), (B) any acquisition by the Company
or any of its subsidiaries, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or (D)
any acquisition by any company with respect to which,
following such acquisition, more than 70% of, respectively,
the then outstanding Shares of
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common stock of such company and the combined voting power of
the then outstanding voting securities of such company
entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such acquisition in substantially the
same proportions as their ownership, solely in their capacity
as Shareholders of the Company, immediately prior to such
acquisition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; or
(ii) Individuals who, as of the beginning of such
period, constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the beginning of such period whose election, or
nomination for election by the Company's Shareholders, was
approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms is used
in Rule 14A-11 of Regulation 14A promulgated under the
Exchange Act); or
(iii) Consummation of a reorganization, merger or
consolidation, in each case, with respect to which all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger or
consolidation, do not, following such reorganization, merger
or consolidation, beneficially own, directly or indirectly,
solely in their capacity as Shareholders of the Company, more
than 70% of, respectively, the then outstanding Shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the company
resulting from such reorganization, merger or consolidation in
substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or
consolidation of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; or
(iv) Consummation of (A) a complete liquidation or
dissolution of the Company or (B) a sale or other disposition
of all or substantially all of the assets of the Company,
other than to a company, with respect to which following such
sale or other disposition, more than 70% of, respectively, the
then outstanding Shares of common stock of such company and
the combined voting power of the then outstanding voting
securities of such company entitled to vote generally in the
election of directors is then
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beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities, solely in
their capacity as Shareholders of the Company, who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the
Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be.
(b) The term "Mandatory Retirement Date" shall mean the compulsory retirement date, if any, established by the Company for those executives of the Company who, by reason of their positions and the size of their nonforfeitable annual retirement benefits under the Company's pension, profit-sharing, and deferred compensation plans, are exempt from the provisions of the Age Discrimination in Employment Act, 29 U.S.C. Sections 621, et seq, which date shall not in any event be earlier for any executive than the last day of the month in which such Executive reaches age 65.
(c) The term "Payment Period" shall mean [twenty-four (24)] [thirty-six (36)] months.
4. COMPENSATION DURING PERIOD OF EMPLOYMENT. For so long during Executive's period of Employment as Executive is an employee of the Company, the Company shall be obligated to compensate Executive as follows:
(a) Executive shall continue to receive Executive's full base salary at the rate in effect immediately prior to the Change in Control. Executive's base salary shall be increased annually, with each such increase due on the anniversary date of Executive's most recent previous increase. Each such increase shall be no less than an amount which at least equals on a percentage basis the mean of the annualized percentage increases in base salary for all elected officers of the Company during the two full calendar years immediately preceding the Change in Control.
(b) Executive shall continue to participate in all benefit and compensation plans (including but not limited to the Stock Option Plan, Long-Term Incentive Plan, Management Incentive Program, Non-Qualified Benefit Security Plan, Executive Life Insurance Program, Savings Benefit Restoration Plan, Performance Share Deferred Compensation Plan, pension plan, savings plan, flexible benefits plan, life insurance plan, health and accident plan or disability plan) in which Executive was participating immediately prior to the Change in Control, or in plans providing substantially similar benefits, in either case upon terms and conditions and at levels at least as favorable as those provided to Executive under the plans in which Executive was participating immediately prior to the Change in Control;
(c) Executive shall continue to receive all fringe benefits, perquisites, and similar arrangements which Executive was entitled to receive immediately prior to the Change in Control; and
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(d) Executive shall continue to receive annually the number of paid vacation days and holidays Executive was entitled to receive immediately prior to the Change in Control.
5. COMPENSATION UPON TERMINATION OF EMPLOYMENT. If, during the Period of Employment, the Company shall terminate Executive's employment for any reason (other than for a reason and as expressly provided in Section 6 hereof), or if Executive shall terminate Executive's employment for "Good Reason" (as hereinafter defined in Section 6(b)) then the Company shall be obligated to compensate Executive as follows and no payments or benefits received pursuant to this Section 5 shall be reduced or terminated as a result of Executive reaching the Mandatory Retirement Date:
(a) In lieu of any salary payments that the Executive would have received if he had continued in the employment of the Company during the Payment Period, the Company shall pay to Executive in a lump sum, by not later than the fifth business day following the Date of Termination (as hereinafter defined in Section 8), an amount equal to one-twelfth of Executive's annualized base salary in effect immediately prior to the Date of Termination, multiplied by the number of months in the Payment Period.
(b) By not later than the fifth day following the Date of Termination, the Company shall pay Executive in a lump sum an amount equal to the product of (x) the number of months in the Payment Period and (y) the sum of
(i) under the Company's Management Incentive Program
(the "MIP"), and in lieu of any further grants under
the MIP that the Executive would have received if he
had continued in the employment of the Company during
the Payment Period, the greatest of one-twelfth of :
(A) the amount most recently paid to Executive for a
full calendar year; (B) Executive's "target incentive
amount" for the calendar year in which his Date of
Termination occurs; or (C) Executive's "target
incentive amount" in effect prior to the Change in
Control for the calendar year in which the Change in
Control occurs; plus, if applicable,
(ii) under the Company's Long-Term Incentive Plan
(the "LTIP"), and in lieu of any further grants under
the LTIP that the Executive would have received if he
had continued in the employment of the Company during
the Payment Period, the greatest of (A) with respect
to the most recently completed Plan Cycle commencing
with the 1998-2000 Plan Cycle (if completed),
one-twelfth of the "calculated market value" of the
Performance Shares actually awarded to Executive
(including the value of any Performance Shares
Executive may have elected to defer under the
Performance Share Deferred Compensation Plan); (B)
with respect to the most recently commenced Plan
Cycle under the Long-Term Incentive Plan (if
Executive is a participant in such Plan Cycle) prior
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to your Date of Termination, one-twelfth of the
"calculated market value" of the phantom Performance
Shares, if any, awarded to Executive; or (C) with
respect to the most recently commenced Plan Cycle
prior to the date of the occurrence of the Change in
Control, one-twelfth of the "calculated market value"
of the phantom Performance shares, if any, awarded to
Executive. Any payment received pursuant to this
Section 5 (b)(ii) shall be in addition to and not in
lieu of any payments required to be made to Executive
as the result of the happening of an event that would
constitute a change in control pursuant to the
provisions of the LTIP
Executive's "target incentive amount" under the Management Incentive Program is determined by multiplying Executive's salary range midpoint by the incentive target percentage, which is applicable to Executive's incentive category under such Program. For purposes of this Section 5, the "calculated market value" of Performance Shares, shares deferred under the Performance Share Deferred Compensation Plan, phantom Performance Shares under the LTIP or stock options under the Stock Option Plan shall be the mean of the high and low prices of the Company's common stock on the relevant date as reported on the New York Stock Exchange Composites Transactions listing (or similar report), or, if no sale was made on such date, then on the next preceding day on which a sale was made multiplied by the number of shares involved in the calculation. The relevant date for clauses 5(b)(ii)(B) and 5(b)(ii)(C) is the date upon which the Compensation Committee ("Committee") of the Board of Directors awarded the shares of stock in question; for clause 5(b)(ii)(A) is the date on which the Committee made a determination of attainment of financial objectives and awarded Performance Shares (including any Performance Shares Executive may have elected to defer under the Performance Share Deferred Compensation Plan).
Any payment received pursuant to Section 5 (b)(i) shall be in addition to and not in lieu of any payments required to be made to Executive as the result of the happening of an event that would constitute a change in control pursuant to the provisions of the MIP.
(c) If Executive is under age 55, or over the age of 55 but not eligible to retire, at the Date of Termination the Company shall maintain in full force and effect, for Executive's continued benefit, for the Payment Period, all health and welfare benefit plans and programs or arrangements in which Executive was entitled to participate immediately prior to the Date of Termination (or such other comparable plans, programs or arrangements that provide, in the aggregate, benefits which have an economic value at least as favorable to the Executive as those plans, programs and arrangements in which Executive participated prior to the Date of Termination, as long as Executive's continued participation is possible under the general terms and provisions of such plans and programs. In the event that Executive's participation in any such plan or program is barred [or modified], the Company shall provide Executive with benefits substantially similar to those to which Executive would have been entitled to receive under such plans and programs, had Executive continued to participate in them as an Executive of the
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Company plus an amount in cash equal to the amount necessary to cause the amount of the aggregate after-tax compensation and employee benefits Executive receive pursuant to this provision to be equal to the aggregate after-tax value of the benefits which Executive would have received if Executive continued to receive such benefits as an employee. If Executive is age 55 or over and eligible to retire on the Date of Termination, the Company shall provide Executive with those health and welfare benefits to which Executive would be entitled under the Company's general retirement policies if Executive retired on the Termination Date with the Company paying that percentage of the premium cost of the plans which it would have paid under the terms of the plans in effect immediately prior to the Change of Control with respect to individuals who retire at age 65, regardless of Executive's actual age on the Termination Date, provided such benefits would be at least equal to those which would have been payable if Executive had been eligible to retire and had retired immediately prior to the Change in Control;
(d) The Company shall for the Payment Period continue, and Executive shall be entitled to receive fringe benefit programs, perquisites, and similar arrangements (which, by way of illustration and not limitation, shall include: company car, health, dining and country club memberships, financial planning services, telecommunications services, home security systems and the like) which in the aggregate have an economic value at least as favorable to the Executive as those the Executive was entitled to receive or participate in immediately prior to the Date of Termination; and
(e) In lieu of further grants of stock options that would have been received by the Executive if he had remained employed by the Company during the Payment Period, the Company shall pay to the Executive a sum equal to one twelfth of the number of stock options in the last annual grant of stock options made by the Company to the Executive ("stock option grant"), multiplied by the number of months in the Payment Period, multiplied by the calculated market value of the Common Stock of the Company on the date of the stock option grant, multiplied by a factor used by the Company in valuing fully vested options with a 10 year life in the Company's most recent Annual Report on Form 10-K for options held by senior executives pursuant to the Black-Scholes method of valuing stock options, or, if such valuation was not made in the Form 10-K, then under the Black-Scholes method assuming options would be outstanding for 10 years.
The Company shall, in addition to the benefits to which Executive is entitled under the retirement plans or programs in which Executive participates, pay Executive in a lump sum in cash at Executive's normal retirement date (or earlier retirement date should Executive so elect), as such date is defined in the retirement plans or programs in which Executive participates, an amount equal to the actuarial equivalent of the retirement pension to which Executive would have been entitled under the terms of such retirement plans or programs had Executive accumulated additional years of continuous service under such plans equal in length to Executive's Payment Period. The length of the Payment Period will be added to total years of continuous service for determining vesting, the amount of benefit accrual, to the age which Executive will be considered to be for the purposes of determining eligibility for normal or early retirement calculations and the age used for determining the amount of any actuarial reduction. For the purposes
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of calculating benefit accrual, the amount of compensation Executive will be deemed to have received during each month of Executive's Payment Period shall be equal to the sum of Executive's annual base salary prorated on a monthly basis as provided for under subsection 4(a) immediately prior to the Date of Termination (including salary increases), plus under the Company's Management Incentive Program the greatest of one-twelfth of (which amount shall reduced by the actuarial equivalent of any amounts to which Executive is actually entitled pursuant to the provisions of said retirement plans and programs):
(i) the amount most recently paid to Executive for a full
calendar year,
(ii) Executive's "target incentive amount" for the
calendar year in which Executive's Date of
Termination occurs, or
(iii) Executive's "target incentive amount" in effect prior
to the Change in Control for the calendar year in
which the Change in Control occurs
Attached as Exhibit 1 is an illustration, not intending to be exhaustive, of examples of how inclusion of the Payment Period may affect the calculation of Executive's retirement benefit.
6. TERMINATION.
(a) TERMINATION WITHOUT COMPENSATION. If Executive's employment or the term of this Agreement is terminated for any of the following reasons and in accordance with the provisions of this Section 6, Executive shall not be entitled by virtue of this Agreement to any of the benefits provided in the foregoing Section 5:
(i) If prior to the Commencement of the Period of
Employment, as a result of Executive's incapacity due
to physical or mental illness, Executive shall have
been absent from Executive's duties with the Company
on a full-time basis for 120 consecutive business
days, and within thirty (30) days after a written
Notice of Termination (as hereinafter defined in
Section 7) is given, Executive shall not have
returned to the full-time performance of Executive's
duties ("Incapacity Discharge");
(ii) If prior to the Commencement of the Period of
Employment, the Company shall desire to terminate
this Agreement without reason ("Convenience
Termination").
(iii) If the Company shall have Cause. For the
purposes of this Agreement, the Company shall have
"Cause" to terminate Executive's employment hereunder
upon (A) the willful and continued failure by
Executive to substantially perform Executive's
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duties with the Company, which failure causes
material and demonstrable injury to the Company
(other than any such failure resulting from
Executive's incapacity due to physical or mental
illness), after a demand for substantial performance
is delivered to Executive by the Board which
specifically identifies the manner in which the Board
believes that Executive has not substantially
performed Executive's duties, and after Executive has
been given a period (hereinafter known as the "Cure
Period") of at least thirty (30) days to correct
Executive's performance, or (B) the willful engaging
by Executive in other gross misconduct materially and
demonstrably injurious to the Company. For purposes
of this section, no act, or failure to act, on
Executive's part shall be considered "willful" unless
conclusively demonstrated to have been done, or
omitted to be done, by Executive not in good faith
and without reasonable belief that Executive's action
or omission was in the best interests of the Company.
Notwithstanding the foregoing, Executive shall not be
deemed to have been terminated for Cause unless and
until there shall have been delivered to Executive a
Notice of Termination which shall include a copy of a
resolution duly adopted by the affirmative vote of
not less than three-quarters of the entire membership
of the Board at a meeting of the Board called and
held for the purpose (after reasonable notice to
Executive and an opportunity for Executive, together
with Executive's counsel, to be heard before the
Board), finding that in the good faith opinion of the
Board Executive was guilty of conduct set forth above
in clauses (i), including the expiration of the Cure
Period without the correction of Executive's
performance, or (ii) of the preceding subsection and
specifying the particulars thereof in detail.
(iv) This Agreement shall terminate upon the death,
retirement or voluntary resignation of the Executive
prior to the commencement of the Period of
Employment.
(b) TERMINATION WITH COMPENSATION. If Executive terminates his employment or his employment terminates for any of the following reasons and in accordance with the provisions of this Section 6, Executive shall be entitled by virtue of this Agreement to the benefits provided in the foregoing Section 5 as described below:
(i) The Executive may terminate his employment with
the Company at any time during the Period of
Employment for Good Reason ("Good Reason
Termination") and shall receive all of the benefits
and payments provided in Section 5. For purposes of
this Agreement, the term "Good Reason" shall mean:
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(A) without Executive's express written
consent, (1) any involuntary
termination of the Executive's
employment, except pursuant to
Section 6 hereof, during the
Employment Period, (2) the
assignment to Executive of any new
duties or responsibilities
inconsistent in character with
Executive's positions, duties,
responsibilities, and reporting
relationships and status within the
Company immediately prior to a
Change in Control, (3) any change
in Executive's duties,
responsibilities, reporting
relationships, titles or offices as
in effect immediately prior to a
Change in Control, including, but
not limited to, a reduction in
duties or responsibilities which
occurs because the Company is no
longer an independent publicly-held
entity (4) any removal of Executive
from or any failure to re-elect
Executive to any officer or
director position of the Company,
(5) a change in the annual or long
term incentive plan in which
Executive currently participates
such that Executive's opportunity
to earn incentive compensation is
impaired, (6) a material reduction
in the aggregate value of Company
perquisites made available to
Executive, (7) an elimination or
material impairment of Executive's
ability to participate in
retirement plans comparable to
those in which Executive currently
participates, (8) any increase in
Executive's obligation to travel on
the Company's business over
Executive's present business travel
obligations, (9) an elimination or
material impairment of Executive's
ability to receive stock options
with values comparable to those
Executive was granted within the
one year period preceding the
commencement of the Employment
Period;
(B) the failure of the Company to
comply with any other of its
obligations under Section 4 herein;
(C) the relocation of the offices of
the Company at which Executive were
employed immediately prior to the
Change in Control to a location
which is more ...
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