Exhibit 10(iii)(A)(viii)
INCOME CONTINUATION POLICY FOR
SELECT SENIOR EXECUTIVES OF
MELVILLE CORPORATION
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as amended
May 12, 1988
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TABLE OF CONTENTS
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ARTICLE 1. Purpose.................................. 1
ARTICLE 2. Definitions ............................. 1
ARTICLE 3. Membership .............................. 4
ARTICLE 4. Amount and Payment of Benefits .......... 4
ARTICLE 5. Administration .......................... 11
ARTICLE 6. General Provisions ...................... 12
ARTICLE 7. Amendment or Termination ................ 14
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ARTICLE 1. Purpose
The purpose of this Policy is to maximize the effort and contribution that
can be made by selected executive personnel of the Corporation by relieving
their concerns about employment security and income continuation in the event of
a significant change in the ownership or control of the Corporation.
ARTICLE 2. Definitions
2.0l. "Benefit Event" shall have the meaning provided in Section 4.02(a).
2.02 "Board of Directors" shall mean the Board of Directors of Melville
Corporation.
2.03. "Cause" shall have the meaning provided in Section 4.02(d).
2.04. "Committee" shall mean, prior to the occurrence of a Benefit Event,
the committee appointed by the Board of Directors from those of its members who
are not employees of the Corporation to administer the policy in accordance with
Article 5. After the occurrence of a Benefit Event, the Investment Committee as
constituted from time to time under the Trust Agreement shall be deemed to be
the Committee.
2.05. "Compensation" shall mean the Member's annual base pay rate plus
full normal annual incentive compensation award as in effect immediately
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prior to a Termination of Employment, but in each case not less than the annual
base pay rate and annual incentive compensation award as in effect immediately
prior to the occurrence of the Benefit Event.
2.06. "Corporation" shall mean Melville Corporation and, with respect to
any Executive Employee employed by any subsidiary or other entity 50% or more of
the voting power or beneficial interest of which is owned directly or indirectly
by Melville Corporation, such subsidiary or other entity. References in the
Policy to Melville Corporation shall be deemed to include successors to Melville
Corporation.
2.07. "Effective Date" shall mean January 1, 1987.
2.08. "ERISA" shall mean the Employee Retirement Income Security Act of
l974, as amended.
2.09. "Executive Employee" shall mean the Chairman, Vice Chairman,
President, or any corporate Vice President or more senior officer of Melville
Corporation and any Divisional President of the Corporation (including
Presidents of Divisions which are in corporate form).
2.10. "Good Reason" shall have the meaning provided by Section 4.02(c).
2.11. "Member" shall mean any person included in the membership of the
Policy as provided in Article 3.
2.12. "Policy" shall mean the Income Continuation Policy for Select
Senior Executives of Melville Corporation, as
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described herein or as hereafter amended.
2.13. "Senior Executive Employee" shall mean the Chairman, Vice Chairman,
President and Executive Vice Presidents of Melville Corporation.
2.14 "Termination of Employment" shall mean (i) termination by the
Corporation of a Member's employment with the Corporation for any reason other
than Cause and (ii) any voluntary termination by the Member of a Member's
employment with the Corporation for Good Reason, which in each case occurs
coincident with or within the twenty-four (24) month period immediately
following the occurrence of a Benefit Event.
2.15 "Trust Agreement" shall mean the trust agreement to be established
in connection with the Policy pursuant to a resolution of the Board of Directors
on May , 1988.
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ARTICLE 3. Membership
3.01 Every Executive Employee in the employ of the Corporation on the
Effective Date shall become a Member of the Policy on the Effective Date.
3.02 Any other employee of the Corporation who becomes an Executive
Employee shall become a Member of the Policy on the date he shall become an
Executive Employee.
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ARTICLE 4. Amount and Payment of Benefits
4.01 (a) Upon the occurrence of a Benefit Event each Member shall (i) be
fully vested in all shares previously awarded to the Member under the Melville
Corporation 1980 Restricted Stock Plan without regard to any restrictions
previously imposed under the terms of such plan, and (ii) become entitled to
exercise any stock options on the Corporation Common Stock not then exercisable.
In addition, each stock option then held by such Member shall remain exercisable
during the period ending at the earlier of (A) six (6) months after such Member
ceases to be employed by the Corporation, if permitted under the terms of the
plan under which such option as granted, or (B) the expiration of the option
period specified in such stock option.
(b) Upon the Termination of Employment of a Member, such Member shall be
(i) in the case of a Senior Executive Employee, entitled to receive from the
Corporation a single sum payment equal to three (3) times his Compensation, (ii)
in the case of a Member who is not a Senior Executive Employee, entitled to
receive from the Corporation a single sum payment equal to two (2) times his
Compensation, and (ii) entitled to remain a full participant in all employee
welfare benefit plans, as defined in section 3(1) of ERISA, maintained by the
Corporation and in which such Member was a participant at the time of such
Termination of Employment for a period of twenty- 333333four (24) months after
such Termination of Employment (or if such
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participation is not possible under the terms of any such plan, such Member
shall be provided by the Corporation with benefits which are comparable to the
coverage provided by such plan),
(c) Payment of the amount due under (b)(i) or (b)(ii) above shall be made
as a single sum within fifteen (15) days after a Member's Termination of
Employment. No reduction in any amount due, or benefit provided, under this
Policy shall be affected by reason of any employment of the Member after his
Termination of Employment.
4.02 For purposes of this Policy:
(a) Subject to clause (b) of this Section 4.02, a "Benefit Event" shall
occur if:
(1) any "person" or "group of persons" as such terms are used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
purchases or otherwise becomes "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) directly or indirectly, of securities representing
25% or more of the combined voting power of Melville Corporation
(including, without limitation, securities which may be acquired upon the
exercise of any option or options owned by such person or group of persons
to purchase any such voting securities, or conversion of securities
convertible into such voting securities, whether or not such option or
options or convertible securities were outstanding on January 1, 1987 and
whether or not such options are exercisable or such securities are
convertible
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at the time of the Benefit Event); or
(2) during any period of two consecutive years, the individuals who at the
beginning of such period constitute the Board of Directors cease for any
reason to constitute at least a majority thereof, unless (A) there are four
or more directors then still in office who were directors at the beginning
of the period and (B) the election, or the nomination for election, by
Melville Corporation's shareholders of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period; or
(3) the shareholders of Melville Corporation shall have voted to approve an
agreement to merge or consolidate Melville Corporation with or into another
corporation as a result of which less than 50% of the outstanding voting
securities of the surviving or resulting entity are or are to be owned by
the former shareholders of Melville Corporation (excluding from former
shareholders, a shareholder who is an "affiliate," as defined in Rule 12b-2
under the Exchange Act of any party to such consolidation or merger); or
(4) the shareholders of Melville Corporation approve the sale of all or
substantially all of Melville Corporation's business and/or assets to a
person or entity which is not a wholly-owned subsidiary of the Corporation.
(b) Notwithstanding the foregoing provisions of Section 4.02(a), none
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of the events listed therein shall be deemed to constitute a Benefit Event if in
connection therewith it shall be necessary to file a Schedule 13E-3 pursuant to
Rule 13e-3 under the Securities Exchange act of 1934, unless immediately prior
to such event the Board of Directors shall determine such event to constitute a
Benefit Event.
(c) "Good Reason" means any of the following which occur after the
occurrence of a Benefit Event without the express written consent of the
affected Member:
(1) the assignment to the Member of any duties inconsistent with his
position, responsibilities, reporting relationships, authority or status
with the Corporation as in effect immediately prior to a Benefit Event, or
a material alteration or diminution of his position, duties,
responsibilities, reporting relationships, authority or status (including
corresponding perquisites) from those in effect, or otherwise accorded to
him, immediately prior to such Benefit Event;
(2) the relocation of the Member's principal place of employment to a
location more than fifty miles from the location of such place of
employment at the time of a Benefit Event or the Corporation's requiring
the Member to be based anywhere other than such principal place of
employment except for required travel on the Corporation's business to an
extent substantially consistent with his business travel obligations as in
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effect immediately prior to such Benefit Event;
(3) a reduction in the Member's base salary as in effect immediately prior
to a Benefit Event or as the same may be increased from time to time;
(4) a reduction in the annual incentive compensation paid or payable to the
Member, including a reduction in the rate at which such incentive
compensation is computed or a reduction in the level of such Member's
incentive compensation, or potential incentive compensation, relative to
other recipients or potential recipients of incentive compensation from the
Corporation;
(5) the failure by the Corporation to continue to provide the member with
benefits at least as favorable as those enjoyed by him under any employee
benefit plan, as defined in Section 3(2) of ERISA, in which the member was
participating at the time of a Benefit Event, the taking of any action by
the Corporation which would directly or indirectly materially reduce any of
such benefits, or the failure by the Corporation to provide the Member with
the number of paid vacation day or other perquisites to which he was
entitled prior to such Benefit Event;
(d) "Cause" shall mean, in connection with an involuntary termination by
the Corporation of a Member's employment, a substantial failure by the Member
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to perform the duties of his position, which failure involves dishonesty or
conduct materially injurious to the financial condition or reputation of the
Corporation, or the conviction of the Member of a crime which constitutes a
felony under the laws of the State of New York.
4.03. (a) In the event that the Committee determines at the time of a
Benefit Event or thereafter, or in the event it is established pursuant to a
final determination of a court or an Internal Revenue Proceeding, that any
payment to a Member by the Corporation upon the occurrence of a Benefit Event or
upon a Member's Termination of Employment after a Benefit Event whether such
payment is made pursuant to the Policy or otherwise, is subject to any tax under
Section 4999 of the Internal Revenue Code of 1986, as amended, then the
Corporation shall pay to such Member, within 15 days of such determination, an
additional amount or amounts equal to that amount which, when reduced by
Federal, state and local income taxes on such amount computed at the highest
marginal applicable income tax rates for the year in which such additional
payment is made to the Member, is equal to the amount of such tax under said
Section 4999, plus any interest and penalties imposed on such tax in the event
that the payment of such tax and the payment under this section 4.03 (a) with
respect thereto are made after the date such tax is ultimately determined to
have been due.
(b) The determination of whether any such additional payment
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is required to be made pursuant to Section 4.03 (a) above and the amount thereof
shall be made by the Committee with sole discretion, provided, however, that
final determination of a court or an Internal Revenue proceeding with respect to
the amount of tax imposed on such a payment under said Section 4999 shall be
binding upon the Committee.
ARTICLE 5. Administration.
(a) Prior to a Benefit Event, the administration of the Policy, the
exclusive power to interpret it, and the responsibility for carrying out its
provisions are vested in the Committee. The Committee shall establish such
rules, regulations and procedures as it shall deem necessary or advisable. The
expenses of the committee shall be paid directly by Melville Corporation.
(b) Upon and after the occurrence of a Benefit Event, the responsibilities,
authorities, rights and liabilities of the Committee shall be vested exclusively
in the Investment Committee under the Trust Agreement.
ARTICLE 6. General Provisions.
6.01. (a) The establishment of the Policy shall not be construed as
conferring any legal rights upon any Executive Employee or other person for a
continuation of employment, nor shall it interfere with the rights of the
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Corporation to discharge any Executive Employee and to treat him without regard
to the effect which such treatment might have upon him as a Member of the
Policy.
(b) Any benefits due or provided hereunder to a Member shall be in addition
to, and not in substitution of, any benefit to which the Member is otherwise
entitled without regard to this Policy.
6.02. In the event that the Committee shall find that a Member is unable
to care for his affairs because of illness or accident, the Committee may direct
that any payment due him, unless claim shall have been made therefor by a duly
appointed legal representative, be paid to his spouse, a child, a parent or
other blood relative, or to a person with whom he resides, and any such payment
so made shall be a complete discharge of the liabilities under the Policy
therefor.
6.03. The Corporation shall have the right to deduct from each payment to
be made under the Policy any required withholding taxes.
6.04. Subject to any applicable law, no benefit under the policy shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt so to do shall be void, nor shall
any such benefit be in any manner liable for or subject to the debts, contracts,
liabilities, engagements or torts of the Member.
6.05. The rights of any Member to benefits under the policy prior
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to the actual receipt of such benefits shall be limited to those of a general
unsecured creditor of the Corporation. Notwithstanding the foregoing, prior to
the occurrence of a Benefit Event of which the Corporation has notice, or
immediately after the occurrence of a Benefit Event of which the Corporation
does not have prior notice, the Corporation shall transfer to the trustee then
acting under the Trust Agreement that amount of cash which, when added to the
other assets then held in said trust, the Committee deems with sole discretion
to be sufficient to provide for the payment of benefits, including any and all
contingent benefits, under the Policy as well as (a) the payments required to be
made upon the ^Termination of Employment or death within 2 years following such
Benefit Event of a Member of ^ the Supplemental Retirement Plan for Select
Senior Management of Melville Corporation (hereinafter the "SERP Payments")^and
(b) any and all expenses and contingent expenses under the Trust Agreement.
6.06 The Corporation will pay or reimburse each Member for all costs and
expenses (including court costs and attorneys' fees) incurred by the Member as a
result of any claim, order or proceeding arising out of, or challenging the
validity, advisability or enforceability of this Policy, any provision hereof,
or the SERP Payment, if any, to which such Member is entitled.
6.07 The Policy shall be construed, regulated and administered under the
laws of the State of New York.
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6.08. The masculine pronoun shall mean the feminine wherever appropriate.
ARTICLE 7. Amendment or Termination.
The Board of Directors reserves the right to modify or to amend, in whole
or in part, or to terminate, this Policy at any time provided, however, no such
modification or amendment or termination (except to improve benefits or increase
eligibility) shall be effective until twenty-four (24) months after its adoption
by the Board of Directors.
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