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EXHIBIT 99.12
EXECUTIVE SEVERANCE AGREEMENT
This AGREEMENT ("Agreement") dated May 1, 1994, by and
between Wyman-Gordon Company, a Massachusetts corporation (the
"Company"), and J. Douglas Whelan (the "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to have the services of the
Executive as its President, Forged Products Division; and
WHEREAS, the Executive is willing to serve the Company as
its President, Forged Products Division, but desires assurance that
he will not be materially disadvantaged by a change in control of
the Company;
NOW, THEREFORE, in consideration of the Executive's
service to the Company and the mutual agreements herein contained,
the Company and the Executive hereby agree, as follows:
ARTICLE I
ELIGIBILITY FOR BENEFITS
Section 1.1 Qualifying Termination. The Company shall
not be required to provide any benefits to the Executive pursuant
to this Agreement unless a Qualifying Termination occurs before the
Agreement expires in accordance with Section 6.1 hereof. For
purposes of this Agreement, a Qualifying Termination shall occur
only if
(a) a Change in Control occurs, and
(b) within three years after the Change in Control,
(i) The Company terminates the Executive's
employment other than for Cause; or
(ii) the Executive terminates his employment with
the Company for Good Reason;
provided, that a Qualifying Termination shall not occur if the
Executive's employment with the Company terminates by reason of the
Executive's Disability, death, or retirement. For the purposes
hereof "retirement" shall mean any termination of employment which
occurs at or after age 65.
Section 1.2 Change in Control. Except as provided a
below, a Change in Control shall be deemed to occur when and only
when the first of the following events occurs:
(a) the acquisition (including by purchase, exchange,
merger or other business combination, or any combination
of the foregoing) by any individuals, firms, corporations
or other entities, other than a Major Stockholder on the
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date of this Agreement, acting in concert ("Person"),
together with all Affiliates and Associates of such
Person, of beneficial ownership of securities of the
Company representing 20 percent or more of the combined
voting power of the Company's then outstanding voting
securities; or
(b) members of the Incumbent Board cease to constitute a
majority of the Board of Directors.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur pursuant to paragraph (a), above, (i) solely
because 20 percent or more of the combined voting power of the
Company's outstanding securities is acquired by one or more
employee benefit plans maintained by the Company, or (ii) if the
Executive is included among the individuals, firms, corporations or
other entities that, acting in concert, acquire the Company's
securities. For purposes of this Section 1.2, the terms
"Affiliates" and "Associates shall have the meanings set forth in
Rule 12b-2 of the General Rules and Regulations promulgated under
the Securities Exchange Act of 1934 (the Exchange Act"); the terms
"beneficial ownership" and "beneficially owned" shall have the
meaning set forth in section 13(d) of the Exchange Act, as amended,
and in Rule 13d-3 promulgated thereunder, the term "Major
Stockholder" shall mean all shares beneficially owned by the Fuller
Foundation, the Stoddard Charitable Trust, and descendants of Harry
G. Stoddard and their spouses; the term "Board of Directors" shall
mean the Board of Directors of the Company and the term "Incumbent
Board" shall mean (i) the members of the Board of Directors on the
date hereof, to the extent that they continue to serve as members
of the Board of Directors, and (ii) any individual who becomes a
member of the Board of Directors after the date hereof, if his
election or nomination for election as a director was approved by a
vote of at least three quarters of the then 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 are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on
behalf of a person other than the Board of Directors.
Section 1.3. Termination for Cause. The Company shall have
Cause to terminate the Executive's employment with the Company for
purposes of Section 1.1 hereof only if the Executive (a) engages in
unlawful acts intended to result in the substantial personal
enrichment of the Executive at the Company's expense or (b) engages
(except (i) by reason of incapacity due to illness or injury or
(ii) in connection with an actual or anticipated termination of
employment by the Executive for Good Reason) in a material
violation of his responsibilities to the Company that results in a
material injury to the Company.
Section 1.4 Termination for Good Reason. The Executive
shall have a Good Reason for terminating employment with the
Company only if one or more of the following occurs after a Change
in Control:
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(a) a change in the Executive's status or position
(including for this purpose a change in the principal
place of the Executive's employment on a basis that does
not conform with the Company's present policies for
executive relocation, but excluding required travel on
the Company's business to an extent substantially
consistent with the Executive's present business travel
obligations) with the Company that, in the Executive's
reasonable judgment, represents an adverse change from
the Executive's status or position in effect immediately
before the Change in Control;
(b) the assignment to the Executive of any duties or
responsibilities that, in the Executive's reasonable
judgment, are inconsistent with the Executive's status or
position in effect immediately before the Change in
Control;
(c) layoff or involuntary termination of the Executive's
employment, except in connection with the termination of
the Executive's employment for Cause or as a result of
the Executive's Disability, death or retirement;
(d) a reduction by the Company in the Executive's total
compensation as in effect at the time of the Change in
Control (which shall be deemed, for this purpose, to be
equal to his base salary plus the most recent award that
he has earned under the Company's Incentive Compensation
Plan, as amended from time to time, or any successor
thereto (the "ICP")) or as the same may be increased
from time to time;
(e) the failure by the Company to continue in effect any
Plan in which the Executive is participating at the time
of the Change in Control (or plans or arrangements
providing the Executive with substantially equivalent
benefits) other than as a result of the normal expiration
of any such Plan in accordance with its terms as in
effect at the time of the Change in Control;
(f) any action or inaction by the Company that would
adversely affect the Executive's continued participation
in any Plan on at least as favorable a basis as was the
case at the time of the Change in Control, or that would
materially reduce the Executive's benefits in the future
under the Plan or deprive him of any material benefits
that he enjoyed at the time of the Change in Control,
except to the extent that such action or inaction by the
Company is required by the terms of the Plan as in effect
immediately before the Change in Control, or is necessary
to comply with applicable law or to preserve the
qualification of the Plan under section 401(a) of the
Internal Revenue Code, and except to the extent that the
Company provides the Executive with substantially
equivalent benefits;
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(g) the Company's failure to obtain the express assumption of
this Agreement by any successor to the Company as provided by
Section 6.3 hereof;
(h) any material violation by the Company of any agreement
(including this Agreement) between it and the Executive; or
(i) the failure by the Company, without the Executive's
consent, to pay to him any portion of his current
compensation, or to pay to the Executive any portion of any
deferred compensation, within 30 days of the date the
Executive notifies the Company that any such compensation
payment is past due.
Notwithstanding the foregoing, no action by the Company shall give
rise to a Good Reason if it results from the Executive's
termination for Cause, death or retirement, and no action by the
Company specified in paragraphs (a) through (d) of the preceding
sentence shall give rise to a Good Reason if it results from the
Executive's Disability. A Good Reason shall not be deemed to be
waived by reason of the Executive's continued employment as long as
the termination of the Executive's employment occurs within the
time prescribed by Section 1.1(b) hereof. For purposes of this
Section 1.4, "Plan" means any compensation plan, such as an
incentive or stock option plan, or any employee benefit plan, such
as a thrift, pension, profit-sharing, stock bonus, long-term
performance award, medical, disability, accident, or life insurance
plan, or any other plan, program or policy of the Company that is
intended to benefit employees.
Section 1.5 Disability. For purposes of this Agreement,
"Disability" shall mean illness or injury that prevents the
Executive from performing his duties (as they existed immediately
before the illness or injury) on a full-time basis for six
consecutive months.
Section 1.6 Notice. If a Change in Control occurs, the
Company shall notify the Executive of the occurrence of the Change
in Control within two weeks after the Change in Control.
ARTICLE II
BENEFITS AFTER A QUALIFYING TERMINATION
Section 2.1 Basic Severance Payment. If the Executive
incurs a Qualifying Termination following a Change in Control that
occurs on or before termination of this Agreement as provided in
Section 6.1 hereof, the Company shall pay within 30 days after the
date of the Qualifying Termination to the Executive a single lump
sum cash amount equal to his Total Annual Compensation multiplied
by the lesser of (a) 2.50 or (b) .0833 multiplied by the number of
full months remaining between termination and his attaining age 65.
"Total Annual Compensation" shall mean the sum of annual base
salary in effect immediately preceding termination or the Change of
Control, whichever is higher, and annual incentive compensation
earned under the "ICP" (annualized in the case of less than a full
year's service) in the last full fiscal year immediately preceding
termination or the Change of Control, whichever is higher.
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Section 2.2 Insurance. If the Executive incurs a Qualifying
Termination following a Change in Control that occurs on or before
termination of this Agreement as provided in Section 6.1 hereof,
the Company shall provide the Executive, at the Company's expense,
for a period beginning on the date of the Qualifying Termination,
the same medical, accident, disability, life and any other
insurance coverage as was provided to him by the Company
immediately before the Change in Control (or, if greater, as in
effect immediately before the Qualifying Termination occurs); such
coverage shall end upon the earlier of (a) the expiration of 24
months after the Qualifying Termination or (b) with respect to each
coverage, the date on which the Executive first becomes eligible
for insurance coverage of a similar nature provided by a firm that
employs his following the Qualifying Termination.
Section 2.3 Executive Long-Term Incentive Program. If
the Executive incurs a Qualifying Termination following a Change in
Control that occurs on or before termination of this Agreement as
provided in Section 6.1 hereof, all of the options to purchase
common stock of the Company (and the alternative common stock
appreciation rights) granted to the Executive prior to termination
of this Agreement as provided in Section 6.1 hereof, under the
Executive Long-Term Incentive Program shall become exercisable in
accordance with the terms set forth in the applicable Certificate
of Grant except that such options (and the alternative common stock
appreciation rights) shall be exercised within three years after
the Qualifying Termination.
Section 2.4 Nonduplication. Nothing in this Agreement
shall require the Company to make any payment or to provide any
benefit or service credit that the Company is otherwise required to
provide under any other contract, agreement, policy, plan, or
arrangement.
ARTICLE III
EFFECT OF SEVERANCE POLICY
Section 3.1 Effect on Severance Policy. If the
Executive becomes entitled to receive benefits hereunder, the
Executive shall not be entitled to any benefits under any other
Company severance policy.
ARTICLE IV
TAX MATTERS
Section 4.1 Withholding. The Company may withhold from
any amount payable to the Executive hereunder all federal, state or
other taxes that the Company may reasonably determine are required
to be withheld pursuant to any applicable law or regulation.
Section 4.2 Certain Additional Payments by the Company.
Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by
the Company to or for the benefit of the Executive that is
considered paid or payable or distributed or distributable in
connection with a Change in Control (a "Payment"), would be subject
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to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code") or any interest or penalties
are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, being
collectively the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by the Executive of all taxes on
the Gross-Up Payment (including, without limitation, any income
taxes and Excise Tax imposed upon the Gross-Up Payment and any
interest or penalties imposed with respect to such taxes), the
Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments (as determined without regard
to the Gross-Up Payment). All determinations required to be made
under this Section 4.2, including whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, shall be made by
a nationally recognized independent accounting firm selected by the
Company (the "Accounting Firm") which shall provide detailed
supporting calculations to the Company and the Executive within 30
business days following the date of the Qualifying Termination, if
applicable, or such earlier time as the Company may request. All
fees and expenses of the Accounting Firm shall borne by the
Company. The Gross-Up Payment; if any, as determined pursuant to
this Section 4.2, shall be paid to the Executive within ten days
following receipt by the Company of the Accounting Firm's
determination. The Accounting Firm shall either make the
determination that a Payment is subject to the Excise Tax or it
shall furnish the Executive with an opinion that failure to report
the Excise Tax on the Executive's applicable Federal income tax
return would not result in the imposition of a negligence or
similar penalty, and, in the latter case (subject to the last
sentence of this paragraph), no Gross-Up Payment shall be required.
Any determination by the Accounting Firm shall be binding upon the
Company and the Executive. As a result of the uncertainty in the
applicable of Section 4999 of the Code, it is possible that Gross-
Up Payments which will not have been made by the Company should
have been made (an "Underpayment") or that Gross-Up Payments which
have been made by the Company should not have been made (an
"Overpayment") or that Gross-Up Payments which have been made by
the Company should not have been made (an "Overpayment"),
consistent with the calculations required to be made hereunder.
The Accounting firm shall determine the amount of any Underpayment
or Overpayment that has occurred and (i) an amount equal to any
such Underpayment shall be promptly paid by the Company to or for
the benefit of the Executive and (ii) any amount refunded to the
Executive as a result of such Overpayment shall be promptly paid by
the Executive to the Company in an amount which will result in the
Executive being made whole on an after-tax basis.
ARTICLE V
COLLATERAL MATTERS
Section 5.1 Nature of Payments. All payments to the
Executive under this Agreement shall be considered either payments
in consideration of his continued service to the Company or
severance payments in consideration of his past services thereto.
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Section 5.2 Legal Expenses. The Company shall pay all
legal fees and expenses that the Executive may incur as a result of
the Company's contesting the validity, the enforceability or the
Executive's interpretation of, or determinations under, this
Agreement.
Section 5.3 Mitigation. The Executive shall not be
required to mitigate the amount of any payment provided for in this
Agreement either by seeking other employment or otherwise. The
amount of any payment provided for herein shall not be reduced by
any remuneration that the Executive may earn from employment with
another employer or otherwise following his Qualifying Termination.
Section 5.4 Authority. The execution of this Agreement
has been authorized by the Board of Directors of the Company.
ARTICLE VI
GENERAL PROVISIONS
Section 6.1 Term of Agreement. This Agreement shall be
come effective on the date hereof and shall continue in effect
until the earliest of (a) December 31, 1996 if no Change in Control
has occurred before that date; provided, however, that commencing
on January 1, 1997 and each January 1 thereafter, the term of this
Agreement shall automatically be extended for an additional year
unless, not later than January 30 of the same year, the Company
shall have given notice that it does not wish to extend this
Agreement; (b) the termination of the Executive's employment with
the Company for any reason prior to a Change in Control; (c) the
Company's termination of the Executive's employment for Cause, or
the Executive's resignation for other than Good Reason, following a
Change in Control and the Company's and the Executive's fulfillment
of all of their obligations hereunder; and (d) the expiration
following a Change in Control of three years and the fulfillment by
the Company and the Executive of all of their obligations
hereunder. Furthermore, nothing in this Article VI shall cause
this Agreement to terminate before both the Company and the
Executive have fulfilled all of their obligations hereunder.
Section 6.2 Governing Law. Except as otherwise
expressly provided herein, this Agreement and the rights and
obligations hereunder shall be construed and enforced in accordance
with the laws of The Commonwealth of Massachusetts.
Section 6.3 Successor to the Company. This Agreement
shall inure to the benefit of and shall be binding upon and
enforceable by the Company and any successor thereto, including,
without limitation, any corporation or corporations acquiring
directly or indirectly all or substantially all of the business or
assets of the Company, whether by merger, consolidation, sale or
otherwise, but shall not otherwise be assignable by the Company.
Without limitations of the foregoing sentence, the Company shall
require any successor (whether direct or indirect, by merger,
consolidation, sale or otherwise) to all of substantially all of
the business or assets of the Company, by agreement in form
satisfactory to the Executive, expressly, absolutely and
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unconditionally to assume and to agree to perform this Agreement in
the same manner and to the same extent as the Company would have
been required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as
heretofore defined and any successor to all or substantially all of
its business or assets that executes and delivers the agreement
provided for in this Section 6.3 or that becomes bound by this
Agreement either pursuant to this Agreement or by operation of law.
Section 6.4 Successor to the Executive. This Agreement
shall inure to the benefit of and shall be binding upon and
enforceable by the Executive and his personal and legal
representatives, executors, administrators, heirs, distributees,
legatees and, subject to the Section 6.6 hereof, his designees
("Successors"). If the Executive should die while amounts are or
may be payable to him under this Agreement, references hereunder to
the "Executive" shall, where appropriate, be deemed to refer to
this Successors; provided that nothing in this Section 6.5 shall
supersede the terms of any plan or arrangement (other than this
Agreement) that is affected by this Agreement.
Section 6.5 Nonalienability. No right of or amount
payable to the Executive under this Agreement shall be subject in
any manner to anticipation, alienation, sale, transfer, assignment,
pledge, hypothecation, encumbrance, charge, execution, attachment,
levy or similar process or to setoff against any obligations or to
assignment by operation of law. Any attempt, voluntary or
involuntary, to effect any action specified in the immediately
preceding sentence shall be void. However, this Section 6.6 shall
not prohibit the Executive from designating one or more persons, on
a form satisfactory to the Company, to receive amounts payable to
him under this Agreement in the event that he should die before
receiving them.
Section 6.6 Notices. All notices provided for in this
Agreement shall be in writing. Notices to the Company shall be
deemed given when personally delivered or sent by certified or
registered mail or overnight delivery services to Wyman-Gordon
Company, 244 Worcester Street, No. Grafton, Massachusetts 01613,
Attention: Company Clerk. Notices to the Executive shall be
deemed given when personally delivered or sent by certified or
registered mail or overnight delivery service to the last address
for the Executive shown on the records of the Company. Either the
Company or the Executive may, be notice to the other, designate an
address other than the foregoing for the receipt of subsequent
notices.
Section 6.7 Amendment. No amendment to this Agreement shall
be effective unless in writing and signed by both the Company and
the Executive.
Section 6.8 Waivers. No waiver of any provision of this
Agreement shall be valid unless approved in writing by the party
giving such waiver. No waiver of a breach under any provision of
this Agreement shall be deemed to be a waiver of such provision or
any other provision of this Agreement or any subsequent breach. No
failure on the part of either the Company or the Executive to
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exercise, and no delay in exercising, any right or remedy conferred
by law or this Agreement shall operate as waiver of such right or
remedy, and no exercise or waiver, in whole or in part, or any
right or remedy conferred by law or herein shall operate as a
waiver of any other right or remedy.
Section 6.9. Severability. If any provision of this
Agreement shall be held invalid or unenforceable in whole or in
part, such invalidity or unenforceability shall not affect any
other provision of this Agreement or part thereof, each of which
shall remain in full force and effect.
Section 6.10. Captions. The captions to the respective
articles and sections of this Agreement are intended for
convenience of reference only and have no substantive significance.
Section 6.11. Counterparts. This Agreement may be
executed in a number of counterparts, each of which shall be deemed
to be an original but all of which together shall constitute a
single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ATTEST: WYMAN-GORDON COMPANY
/s/ Shirley A. Pero By: /s/ John M. Nelson
Shirley A. Pero John M. Nelson, Chairman
and Chief Executive
Officer
ATTEST:
/s/ Wallace F. Whitney, Jr. /s/ J. Douglas Whelan
Wallace F. Whitney, Jr. J. Douglas Whelan
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