EXHIBIT EX-10.25
[Date]
[Name]
[Title]
Transamerica [__________________]
[Street Address]
[City, State, Zip]
Dear [Name]:
The Board of Directors (the "Board") of Transamerica Corporation
(the "Company") considers it to be in the best interests of its stockholders
to foster the continuous employment of key management personnel of the Company
and its subsidiaries in the event of a possible change in control of the
Company.
In order to induce you, in the event of a possible change in control
of the Company, to remain in the employ of the Company or its subsidiaries and
to give your continued attention and dedication to your assigned duties
without distraction, and in consideration of your agreement to remain in the
employ of the Company or its subsidiaries under circumstances as set forth in
Subsection 2(iii) hereof, the Company agrees that (i) in the event your
employment is terminated in accordance with Section 3 hereof subsequent to a
"change in control of the Company" (as defined in Subsection 2(i) hereof) or a
"deemed change in control of the Company" (as defined in Section 1(iii)
hereof), you shall receive the severance benefits described in Section 4
hereof, and (ii) regardless of whether or not your employment with the Company
or its subsidiaries is terminated, if you receive a payment or benefit that is
subject to the Excise Tax (as defined in Section 5 hereof), you shall receive
the gross-up payments described in Section 5 hereof.
1. Term of Agreement.
(i) Basic Term and Extensions. This letter agreement (the
"Agreement") shall commence on the date hereof and shall continue in effect
through December 31, 1995; provided, however, that commencing on January 1,
1996 and on each January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year unless not later than
September 30 of the preceding year, the Company shall have given notice that
it does not wish to extend this Agreement, in which case this Agreement shall
expire as of December 31st of that year; and provided, further, that
notwithstanding any such notice by the Company, if a change in control of the
Company shall occur during the term of this Agreement, this Agreement shall
automatically be extended until the earlier to occur of (A) the expiration of
three years beyond the then existing term, or (B) your Normal Retirement Date
(as defined in Subsection 3(i) hereof).
(ii) Early Termination. This Agreement shall terminate immediately
if prior to a change in control of the Company (as defined in Subsection 2(i)
hereof) (A) your primary position with the Company or its subsidiaries changes
to one that is not covered by a severance agreement in a form substantially
similar to this Agreement, or (B) you are employed by a subsidiary of the
Company and such subsidiary ceases to be majority owned (directly or
indirectly) by the Company, or such subsidiary (or a principal operating unit
of such subsidiary for which you work) disposes of a majority of its assets or
(C) your employment with the Company and its subsidiaries is terminated.
(iii) Special Extension. Notwithstanding the foregoing, if, within
12 months prior to the date on which a change in control of the Company
occurs, (A) any of the events described in clauses (A), (B) or (C) of
Subsection 1(ii) above occurred or (B) the Company gave notice that it did not
intend to extend the term of this Agreement as provided in Subsection 1(i)
above, then, if you can reasonably demonstrate that each of the events
described in clauses (A) and (B) of this Subsection (iii) that did occur arose
in connection with or in anticipation of a change in control of the Company,
(Y) a "deemed change in control of the Company" shall be deemed to have
occurred on the date immediately prior to the first to occur of such events
and (Z) this Agreement shall automatically be extended until the earlier to
occur of (i) the expiration of three years beyond the then existing term or
(ii) your Normal Retirement Date.
2. Change in Control Matters.
(i) Change of Control. For purposes of this Agreement, a "change
in control of the Company" shall occur if any of the following occur:
(A) 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")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20%
or more of either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) 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 for purposes of this Subsection (A), the
following acquisitions shall not constitute, or be deemed to cause, a change
in control of the Company: (i) any increase in such percentage ownership of a
Person to 20% or more resulting solely from any acquisition of shares directly
from the Company or any acquisition of shares by the Company, provided,
however, that any subsequent acquisitions of shares by such Person that would
add, in the aggregate, 2% or more (measured as of the date of each such
subsequent acquisition) to such Person's beneficial ownership of Outstanding
Company Common Stock or Outstanding Company Voting Securities shall be deemed
to constitute a change in control of the Company, (ii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (iii) any acquisition
by any corporation pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of Subsection (C) below; or
(B) individuals who, as of the date hereof, 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 date hereof whose election, or nomination for election by
the Company's stockholders, 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 an actual or threatened election contest with respect to
the election or removal of directors, or other actual or threatened
solicitation of proxies or consents, by or on behalf of a Person other than
the Board; or
(C) consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
2
Business Combination, (i) 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 Business Combination beneficially own, directly or indirectly,
more than 50% 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 corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns
the Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination and (iii) at
least a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(D) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
(ii) Deemed Change in Control. A "deemed change in control of the
Company" is defined in Subsection 1(ii) hereof.
(iii) Potential Change in Control. For purposes of this Agreement,
a "potential change in control of the Company" shall occur if (A) the Company
enters into an agreement, the consummation of which would result in the
occurrence of a change in control of the Company, (B) any person (including
the Company) publicly announces an intention to take or to consider taking
actions which if consummated would constitute a change in control of the
Company, or (C) the Board adopts a resolution to the effect that a potential
change in control of the Company for purposes of this Agreement has occurred.
You agree that, subject to the terms and conditions of this Agreement, in the
event of a potential change in control of the Company, you will remain in the
employ of the Company or its subsidiaries during the pendency of any such
potential change in control and for a period of one year after the occurrence
of a change in control of the Company, unless you terminate for Good Reason
pursuant to Section 3 hereof. However, you acknowledge that you are an "at
will" employee and nothing in this Agreement shall confer upon you any right
to continue in the employ of the Company or its subsidiaries prior to a change
in control of the Company or shall interfere with or restrict in any way the
rights of the Company or its subsidiaries, which are hereby expressly
reserved, to discharge you at any time prior to a change in control of the
Company for any reason whatsoever, with or without cause.
3. Termination Following Change in Control. If a change in
control of the Company shall have occurred, you shall be entitled to the
benefits provided in Subsection 4(iii) hereof upon the subsequent termination
of your employment with the Company or its subsidiaries within three years
thereafter (or, if applicable, in the case of a deemed change in control of
3
the Company, within three years after the date of such deemed change in
control), unless such termination is (A) because of your death or Retirement,
(B) by the Company for Cause or Disability, or (C) by you other than for Good
Reason.
(i) Disability; Retirement. If you become permanently and totally
disabled (as defined under the long-term disability plan sponsored by the
Company or its subsidiaries) and are unable to return to the full-time
performance of your duties, the Company may terminate your employment for
"Disability". Termination by the Company or you of your employment with the
Company or its subsidiaries based on "Retirement" shall mean termination by
reason of your retirement at or after your "Normal Retirement Date" under the
Retirement Plan for Salaried U.S. Employees of Transamerica Corporation and
Affiliates (or any successor thereto).
(ii) Cause. Termination by the Company of your employment with the
Company or its subsidiaries for "Cause" shall mean termination upon the
willful engaging by you in misconduct which is demonstrably and materially
injurious to the Company and its subsidiaries taken as a whole. No act, or
failure to act, on your part shall be considered "willful" unless done, or
omitted to be done, by you not in good faith and without reasonable belief
that your action or omission was in the best interest of the Company or its
subsidiaries. Notwithstanding the foregoing, you shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
you 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 you and an
opportunity for you, together with your counsel, to be heard before the
Board), finding that in the good faith opinion of the Board you were guilty of
misconduct as set forth above in this Subsection and specifying the
particulars thereof in detail.
(iii) Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean any material breach of this Agreement by the Company or any of the
following events which occurs without your express written consent:
(A) the assignment to you of any duties inconsistent with, or a
substantial alteration in the nature or status of, your responsibilities
from those in effect immediately prior to a change in control of the
Company or, if applicable, a deemed change in control of the Company;
(B) a reduction in your annual base salary as in effect on the
date hereof or as the same may be increased from time to time, except for
across-the-board salary reductions similarly affecting all executives of
the Company and its subsidiaries and all executives of any person in
control of the Company;
(C) the Company or its subsidiaries requiring (i) you to be based
other than in the Metropolitan Area where your employment was based prior
to a change in control of the Company or, if applicable, a deemed change
in control of the Company, or (ii) business travel to an extent
substantially inconsistent with your travel obligations in effect prior
to a change in control of the Company or, if applicable, a deemed change
in control of the Company;
(D) (i) the failure by the Company or its subsidiaries to continue
in effect any compensation plan of the Company or its subsidiaries in
4
which you were participating at the time of a change in control of the
Company or, if applicable, a deemed change in control of the Company,
including but not limited to both annual and long-term incentive plans,
or replacements therefor, which provide competitive levels of
compensation, unless an equitable arrangement (embodied in ongoing
substitute or alternative plans) has been made with respect to any such
plan in connection with the change in control of the Company, or (ii) the
failure by the Company or its subsidiaries to continue your participation
therein;
(E) (i) the failure by the Company or its subsidiaries to continue
to provide you with benefits of a type and at a level substantially
similar to those enjoyed by you under the Company's Employees Stock
Savings Plan, Stock Savings Plan Plus, or any of the pension, life
insurance, medical, health and accident, or disability plans of the
Company or its subsidiaries in which you were participating at the time
of a change in control of the Company or, if applicable, a deemed change
in control of the Company, or (ii) the taking of any action by the
Company or its subsidiaries which would directly or indirectly
materially reduce any of such benefits or deprive you of any material
fringe benefit or perquisite enjoyed by you at the time of a change in
control of the Company or, if applicable, a deemed change in control of
the Company, or (iii) the failure by the Company or its subsidiaries to
provide you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Company or its
subsidiaries in accordance with the normal vacation policy of the Company
or its subsidiaries as in effect at the time of the change in control of
the Company or, if applicable, the deemed change in control of the
Company;
(F) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Subsection 7(i) hereof; or
(G) any purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the requirements
of Subsection (iv) below (and, if applicable, Subsection (ii) above); and
for purposes of this Agreement, no such purported termination shall be
effective.
Your right to terminate your employment pursuant to this Subsection (iii)
shall not be affected by your incapacity due to physical or mental illness.
For purposes of this Subsection 3 (iii), any good faith determination of "Good
Reason" made by you shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by you for any reason during the 30-
day period immediately following the first anniversary of the date of a change
in control of the Company shall be deemed to be a termination for Good Reason
for all purposes of this Agreement.
(iv) Notice of Termination. Any purported termination of your
employment by the Company or its subsidiaries or by you pursuant to this
Section 3 shall be communicated by written Notice of Termination to the other
party in accordance with Section 8 hereof. A "Notice of Termination" shall
mean a notice which indicates the specific termination provision in this
Agreement relied upon and sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment.
5
(v) Date of Termination, Etc. "Date of Termination" shall mean
(A) if your employment is terminated for Disability, 30 days after Notice of
Termination is given (provided that you shall not have returned to the
performance of your duties on a full-time basis during such 30-day period),
and (B) if your employment is terminated for any other reason, the date
specified in the Notice of Termination (which shall be not less than 30 days
from the date such Notice of Termination is given).
4. Compensation Upon Termination or During Disability.
(i) Disability. During any period that you fail to perform your
duties hereunder as a result of incapacity due to physical or mental illness,
you shall continue to receive your full base salary at the rate then in effect
unless and until your employment is terminated pursuant to Subsection 3(i)
hereof. Thereafter, your benefits shall be determined in accordance with the
Company's disability program (without regard to any amendment to such
disability program made subsequent to a change in control of the Company and
on or prior to the Date of Termination, which amendment adversely affects in
any way the computation of benefits thereunder).
(ii) Termination for Cause. If your employment by the Company or
its subsidiaries shall be terminated for Cause, the Company shall pay you your
full base salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given and the Company shall have no further
obligations to you under this Agreement.
(iii) Certain Termination Benefits. If prior to the earlier to
occur of (i) the expiration of this Agreement or (ii) the expiration of three
years after a change in control of the Company, your employment by the Company
or its subsidiaries shall be terminated (a) by the Company or its subsidiaries
other than for Cause, Retirement or Disability or (b) by you for Good Reason,
then you shall be entitled to the benefits provided below:
(A) the Company shall pay you your full base salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given;
(B) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as severance
pay to you, not later than the fifth day following the Date of
Termination, a lump sum severance payment (together with the payments
provided in Subsections (C), (E) and (F) below, the "Severance Payments")
equal to the product of (x) [three, two, one] and (y) your highest
target annual cash compensation during the last three fiscal years of the
Company immediately preceding the year in which the change in control of
the Company occurs; which shall consist of the sum of (I) your annual
base salary and (II) your target annual bonus for each such year;
provided that, in the event there are fewer than [36, 24, 12] whole or
partial months remaining from the Date of Termination to your Normal
Retirement Date, the amount provided for in this Subsection (B) will be
reduced by multiplying it by a fraction the numerator of which is the
number of whole or partial months so remaining to your Normal Retirement
Date and the denominator of which is [36, 24, 12]; provided, however,
that if (i) the payment to be made to you pursuant to this Subsection
(iii)(B) would result in the application to you of the Excise Tax (as
defined in Section 5 hereof), and (ii) a reduction of up to $25,000 in
the amount of such payment would result in your not being subject to the
6
application of the Excise Tax, then the Company may withhold, and you
shall have no entitlement to receive, such portion of such payment (not
in excess of $25,000) as is required to preclude the application of the
Excise Tax to you;
(C) notwithstanding any provision of the Company's or any
subsidiary's bonus plans, the Company shall pay to you, not later than
the fifth day following the Date of Termination, a lump sum amount equal
to the sum of (x) any incentive compensation for the fiscal year
preceding that in which the Date of Termination occurs but has not yet
been paid, which shall be the greater of (I) your target bonus for such
fiscal year, or (II) any amount determined prior to your Date of
Termination to be due you for such fiscal year, and (y) the product of
(I) your target bonus for the fiscal year in which the Date of
Termination occurs, and (II) a fraction, the numerator of which is the
number of days in the fiscal year in which the Date of Termination occurs
through the Date of Termination, and the denominator of which is 365;
(D) the Company shall also pay to you as incurred all legal fees
and expenses incurred by you as a result of such termination (including
all such fees and expenses, if any, incurred in contesting or disputing
any such termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement);
(E) the Company shall arrange to provide you, for a [36, 24,
12]-month period after such termination (or such lesser number of months
to your Normal Retirement Date), with life, disability, accident and
health insurance substantially similar to that which you are receiving at
the time of a change in control of the Company, or, if applicable, a
deemed change in control of the Company. Benefits otherwise receivable
by you pursuant to this Subsection (E) shall be reduced to the extent
comparable benefits are actually received by you from any other source
during the [36, 24, 12]-month period following your termination (or such
lesser number of months to your Normal Retirement Date), and any such
benefits actually received by you shall be reported by you to the
Company; and
(F) in addition to the retirement benefits to which you are
entitled under the qualified and supplemental pension plans of the
Company or any of its subsidiaries in which you participate or any
successor plans thereto (the "Pension Plans"), the Company shall pay to
you, not later than the fifth day following the Date of Termination, a
lump sum amount in cash equal to the actuarial equivalent of the excess
of (x) the retirement pension (determined as a single life annuity
commencing at your normal retirement date) which you would have accrued
under the terms of the Pension Plans (without regard to any amendment to
the Pension Plans made subsequent to a change in control of the Company
and on or prior to the Date of Termination, which amendment adversely
affects in any manner the computation of retirement benefits
thereunder), determined as if you were fully vested thereunder and had
accumulated (after the Date of Termination) [36, 24, 12] additional
months of benefit service credit (as defined in the Company's tax
qualified retirement plan) thereunder at your highest annual rate of
compensation (annual base salary and target annual bonus) during the 12
months immediately preceding the Date of Termination (but in no event
shall you be deemed to have accumulated additional months of benefit
service credit after your normal retirement date), over (y) the vested
retirement pension (determined as a single life annuity commencing at
7
your normal retirement date) which you had then accrued pursuant to the
provisions of the Pension Plans. For purposes of clause (x), your
highest annual rate of compensation during the 12 months immediately
preceding the Date of Termination shall be determined without regard to
the amounts payable pursuant to Subsection 4(iii)(B) hereof. For
purposes of this Subsection, "actuarial equivalent" shall be determined
using the same methods and assumptions utilized under the Pension Plans
immediately prior to the change in control of the Company.
(iv) No Mitigation. You shall not be required to mitigate the
amount of any payment provided for in this Section 4 by seeking other
employment or otherwise, nor, except as provided in Subsection 4(iii)(E)
above, shall the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation earned by you as the result of
employment by another employer or by retirement benefits after the Date of
Termination or otherwise.
(v) Retirement Benefits. In addition to all other amounts payable
to you under this Section 4, you shall be entitled to receive all benefits
payable to you under the Pension Plans, and any other plan or agreement
relating to retirement benefits.
5. Gross-Up Payments. In the event that you become entitled to
any payment or benefit in connection with a change in the ownership or
effective control of the Company, or a change in the ownership of a
substantial portion of the assets of the Company (including but not limited to
payments or benefits that you become entitled to in connection with a "change
in control of the Company" as defined in Section 2 hereof), whether payable
pursuant to the terms of this Agreement or any other plan (including
specifically, but without limitation, the 1995 Performance Stock Option Plan),
arrangement or agreement with the Company, any successor to the Company, any
person whose actions result in a change in control of the Company, or any
corporation ("Affiliate") that is or becomes affiliated with the Company or
such person (collectively with the Severance Payments, "Payments"), if any of
the Payments will be subject to the tax (the "Excise Tax") imposed by section
4999 of the Code, the Company shall pay to you, not later than the fifth day
following each date ("Payment Date") on which you become entitled to receive
any Payment (whether payable immediately or at a future date) that will be
subject to the Excise Tax (but in no event later than the fifth day following
your Date of Termination), an additional amount (collectively, the "Gross-Up
Payments") such that the net amount retained by you, after deduction of any
Excise Tax on the aggregate Payments received (or that you have become
entitled to receive) as of such Payment Date and any federal, state or local
income tax and Excise Tax upon the payment provided for by this Section 5, and
after taking into account any Gross-Up Payments previously made pursuant to
this Section 5, shall be equal to the aggregate Payments received (or that you
have become entitled to receive) as of such Payment Date. For purposes of
determining whether any Payment will be subject to the Excise Tax and the
amount of such Excise Tax, (i) all amounts received in connection with your
employment by the Company or one of its subsidiaries or to be received by you
in connection with a change in the ownership or effective control of the
Company, or a change in the ownership of a substantial portion of the assets
of the Company (including but not limited to payments or benefits that you
become entitled to in connection with a "change in control of the Company" as
defined in Section 2 hereof) shall be treated as "parachute payments" within
the meaning of section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of section 280G(b)(1) of the Code shall be
treated as subject to the Excise Tax, except to the extent that in the written
8
opinion of independent tax counsel selected by the Company's independent
auditors and approved by you (which approval shall not be unreasonably
withheld) ("Tax Counsel") which opinion shall be obtained at the Company's
expense, any such payments or benefits (in whole or in part) do not constitute
parachute payments or excess parachute payments (in whole or in part), or
represent reasonable compensation for personal services to be rendered or
actually rendered before the change in control in excess of the base amount,
within the meaning of section 280G(b)(4)(B) of the Code, and (ii) the value
of any non-cash benefit or any deferred cash payment included in the Payments
shall be determined by the Company's independent auditors in accordance with
the principles of section 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of each Gross-Up Payment, you shall be deemed to pay
federal income taxes at the highest marginal rate of federal income taxation
in effect during the calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest marginal rates of taxation in
effect in the state and locality of your residence on the date of payment, net
of the maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes, but assuming that you have no other
deductions or credits available to reduce such taxes.
6. Indemnity and Contest.
(a) Additional Gross-Up Payments. If you are required to pay
Excise Tax in addition to the amount reimbursed pursuant to Section 5 (any
such event hereafter being referred to as a "Loss"), you shall notify the
Company and the Company shall pay to you an amount (the "Additional Gross-Up
Payment") which, after deduction of all income taxes and additional federal,
state and local taxes (including, without limitation, any additional Excise
Tax) required to be paid by you in respect of receipt of such amount
(assuming, for this purpose, that you are subject to the highest marginal rate
of federal income taxation in effect during the calendar year in which the
Additional Gross-Up Payment is to be made and state and local income taxes at
the highest marginal rates of taxation in effect in the state and locality of
your residence on the date of payment, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes, but assuming that you have no other deductions or credits available to
reduce such taxes), shall be equal to the sum of (i) the Excise Tax resulting
in the Loss, and (ii) the net amount of any interest, penalties or additions
to tax payable to any taxing authority (after allowing for the deduction of
such amounts, to the extent properly deductible, for federal, state or local
income tax purposes) as a result of the Loss. Each Additional Gross-Up
Payment by the Company shall be made within 30 days after receipt of a written
demand therefor from you accompanied by a written statement describing in
reasonable detail the Loss in question, the amount of additional tax,
interest, penalties or additions to tax and the calculation of the payment due
in respect thereof; provided that, if a contest of the Loss is being conducted
pursuant to Subsection 6(b) below, payment shall not be required by the
Company until 30 days after the completion or termination of such contest.
(b) Contest. If you shall receive a written notification from
federal taxing authorities of a proposed Excise Tax for which an amount may be
payable by the Company in accordance with this Section 6, then you shall
notify the Company of such proposed Excise Tax promptly after receipt of
(which notice shall be accompanied by a copy of) such written notification.
If (i) within 30 days after receipt by the Company of such notice from you,
the Company shall deliver to you a written request that you contest such
proposed Excise Tax, which written request shall be accompanied by an opinion
(obtained at the Company's expense) of Tax Counsel that there exists
9
substantial authority in support of a favorable outcome of a contest of such
proposed Excise Tax, and (ii) the Company shall (A) have fully performed its
prior obligations under this Agreement, (B) acknowledge in writing its
liability under Subsection 6(a) above to make an Additional Gross-Up Payment
in the event that the taxing authority prevails in its position regarding the
proposed Excise Tax, and (C) deliver to you in writing an indemnity,
satisfactory to you, for any and all expenses that you may incur as a result
of contesting such proposed Excise Tax, including, without limitation,
indemnification and prompt payment of all costs, expenses, losses, legal and
accounting fees and disbursements, bonding fees, penalties and interest so
incurred (the "Indemnified Amount"):
(1) You may, in your sole discretion, choose to pursue or to
forego any and all administrative appeals, proceedings, hearings and
conferences with the relevant taxing authorities with respect to such matter
(unless and to the extent that pursuance of any such appeal, proceedings,
hearing or conference shall be required to secure judicial remedies, in which
case you shall pursue the same), but will (unless there shall be a settlement
or compromise as permitted in Subsection 6(b)(4) hereof) in good faith contest
such proposed Excise Tax in a court of competent jurisdiction selected by the
Company, in its sole discretion.
(2) You shall be required to appeal an adverse judicial
determination only if (A) an appeal is timely requested in writing by the
Company, and (B) you are furnished, at the Company's expense, with an opinion
of Tax Counsel, to the effect that it is more likely than not that an
appellate court would reverse such adverse determination.
(3) If the Company shall elect to contest a proposed Excise
Tax by paying the tax claimed (including interest, penalties or additions to
tax) and seeking a refund, then the Company shall advance to you on an
interest-free basis the aggregate amount of such taxes, interest, penalties
and additions to tax; provided, however, that if you are required to include
in income any amount with respect to such loan or the imputation of interest
thereon in any taxable year prior to final determination of the contest, then
the Company, within 30 days of written notice thereof by you, shall pay to you
an amount which, after deduction of all additional federal, state and local
taxes required to be paid by you in respect of the receipt of such amount
(assuming, for this purpose, that you are subject to the highest marginal rate
of federal income taxation in effect during the calendar year in which the
payment is to be made and state and local income taxes at the highest marginal
rates of taxation in effect in the state and locality of your residence on the
date of payment, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes, but assuming
that you have no other deductions or credits available to reduce such taxes),
shall be equal to the aggregate additional federal and state income taxes
payable by you with respect to such taxable year as a result of such
inclusion. If you subsequently receive a refund of any taxes, interest,
penalties or additions to tax which were previously advanced to you by the
Company pursuant to the preceding sentence, you shall pay to the Company
within 60 days of receipt of such refunded taxes, interest, penalties or
additions to tax, the amount thereof plus the amount of any interest received
by you and fairly attributable thereto (which amount shall be deemed to be in
repayment of the loan advanced by the Company to the extent fairly
attributable thereto); provided, however, that you may offset the amount of
such refund against any amount due and owing by the Company to you pursuant to
this Agreement. Upon disallowance of any such refund, the Company shall
forgive the amount of the advance fairly attributable thereto (which
10
forgiveness shall be deemed to be in satisfaction of a portion of the
Additional Gross-Up Payment due under Subsection 6(a) hereof).
(4) If, in the course of contesting any proposed Excise Tax
referred to in this Section 6, any taxing authority advises you that it is
willing to agree to a settlement with respect to such matter, you shall notify
the Company of such settlement proposal. If the settlement proposal is
acceptable to the Company, the Company shall so notify you and you shall agree
to the settlement proposal; provided, however, that you shall not be obligated
to agree to the settlement proposal if you release the Company from any
further obligations pursuant to this Section 6 with respect to any further
action to be taken by you to contest such proposed Excise Tax and if you agree
that the Additional Gross-Up Payment and Indemnified Amount determined under
this Section 6 in respect of such proposed Excise Tax that the Company shall
be required to pay to you shall not exceed the amount of such payments that
would have been required if you had agreed to the settlement proposal.
7. Successors; Binding Agreement. (i) The Company will require
any successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle you to compensation from
the Company in the same amount and on the same terms as you would be entitled
pursuant to Sections 4 and 5 hereof if you terminate your employment for Good
Reason and a change in control of the Company has occurred, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees
to perform this Agreement by operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
(iii) You acknowledge that the letter agreement between you and the
Company dated ___________________, 19___, relating to certain severance
matters, has been terminated and is of no further force or effect.
(iv) If pursuant to Section 3 hereof you become entitled to the
benefits provided in Subsection 4(iii) hereof, you agree that (i) all rights
you may then have under the Separation Pay Plan of the Company or any of its
subsidiaries, or any successor plan, shall lapse and you shall have no rights
thereunder, and (ii) if you were, as of your Date of Termination, an employee
of a subsidiary of the Company, you shall not be entitled to receive any
payments or other benefits from such subsidiary not specifically contemplated
by Section 4 hereof.
8. Notice. Notices and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth on the first page of this Agreement, provided that all notices to the
Company shall be directed to the attention of the Board with a copy to the
Secretary of the Company, or to such other address as either party may have
11
furnished to the other in writing in accordance herewith, except that notice
of change of address shall be effective only upon receipt. If, as of the date
you give any notice under this Agreement, you are then an employee of a
subsidiary of the Company, you shall provide such notice to such subsidiary,
directed to the attention of the Board of Directors of such subsidiary with a
copy to the Secretary of such subsidiary, as well as to the Company in the
manner set forth in this Section 8.
9. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless in writing and signed by you and such
officer as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws
of the State of California.
10. Validity. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
If this letter correctly sets forth our agreement on the subject
matter hereof, kindly sign and return to the Company the enclosed copy of this
letter which will then constitute our agreement on this subject.
TRANSAMERICA CORPORATION
_______________________________
[Name]
[Title]
Agreed to as of _____________, 19__
_____________________________
[Name]
12