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EXHIBIT 7
FORM OF
AGREEMENT
THIS AGREEMENT between LIQUID CARBONIC INDUSTRIES CORPORATION and
Subsidiaries, a Delaware corporation ("LCI"), and ___________________
("Executive"), dated this ___ day of ___________, 198_.
WITNESSETH THAT
WHEREAS, LCI wishes to attract and retain well-qualified executives and
both LCI and the Executive desire continuity of management in the event of any
Change in Ownership of LCI;
NOW, THEREFORE, it is hereby agreed by and between the parties as
follows:
1. Effective Date. The "Effective Date" of this Agreement shall be
the date on which a Change in Ownership of LCI (as defined in Section
2) occurs.
2. Change in Ownership. The term "Change in Ownership" shall
mean the occurrence of an event pursuant to which
(a) the ultimate right to elect directors of LCI is not
exercisable by CBI Industries, Inc. ("CBI") or another entity which
directly or indirectly acquires stock of LCI in a leveraged buy-out
in which the senior management of CBI participates, or
(b) Continuing Directors, as defined in that certain Rights
Agreement dated March 4, 1986, between CBI and Morgan Guaranty
Trust Company of New York as rights agent, cease to comprise a
majority of the board of directors of CBI at a time when LCI,
directly or indirectly, is a subsidiary or CBI.
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3. Employment. LCI hereby agrees that if the Executive continues as
an employee of LCI from the date of execution hereof until the Effective Date,
LCI shall continue the Executive in its employ for the period commencing on the
Effective Date and ending on the earlier to occur of the second anniversary of
such date or the 65th birthday of the Executive (the "Employment Period"), to
exercise such authority and perform such executive duties as are requested of
him by LCI, which authority and duties shall be commensurate with the authority
being exercised and duties being performed by the Executive immediately prior
to the Effective Date. The Executive shall perform such requested services at
the location where the Executive was employed immediately prior to the
Effective Date, except for required travel on LCI's business to an extent
substantially consistent with the Executive's business travel obligations prior
to the Effective Date. The Executive agrees that while an employee during the
Employment Period he shall, to the extent required, devote substantially all of
his business time to his executive duties as described herein and perform such
duties faithfully and efficiently.
4. Compensation, Compensation Plans, Benefits. During the Employment
Period, the Executive shall be compensated as follows:
(a) He shall receive an annual salary (to be paid in installments
in the manner customary prior to the Effective Date) which is not less
than his rate of annual salary in effect immediately prior to the
Effective Date, increased on each January 1 within the remainder of
the Employment Period by at least the greater of (i) the average annual
percentage salary increase for the Executive during the period of three
full calendar years immediately preceding the Effective Date, or (ii)
the percentage increase in the Implicit Price Deflator for Gross
National Product for the calendar year immediately preceding such
January 1, as published by the United States Department of Commerce in
its Survey of Current Business in December of each year, over such
Implicit Price Deflator for the calendar year next preceding such year.
(b) He shall be awarded and receive bonus and other incentive
compensation for each calendar year (or other applicable bonus or
incentive
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compensation period) any part of which is included in the Employment
Period, which in the aggregate shall not in value be a lesser
percentage of his annual salary, as determined in subsection (a) above,
for such calendar year (or period), than the aggregate bonus and other
incentive compensation during the period of three full calendar years
immediately preceding the Effective Date was of the Executive's
aggregate base salary for such three year period.
(c) He shall be entitled to receive all employee benefits to the
extent of the greater of the employee benefits provided by LCI
to executives with comparable duties or the employee benefits to which
he was entitled immediately prior to the Effective Date.
(d) During any period that Executive is unable to perform the
services for LCI specified in Section 3, whether as a result
of total disability or as a result of a physical or mental disability
that is not total or is not permanent and therefore is not a total
disability, Executive shall continue to receive base salary at the rate
in effect at the commencement of any such period, together with all
other compensation and benefits that are payable under this Agreement.
5. Termination. The term "Termination" shall mean the occurrence
during the Employment Period of:
(a) termination by LCI of the employment of the Executive for any
reason other than (i) death, (ii) physical or mental incapacity
which would entitle Executive to permanent disability benefits under
LCI's appropriate plans, or (iii) a willful and material breach of this
Agreement by the Executive which causes a direct and substantial injury
to LCI or to its business, which is not cured by Executive within 30
days after receiving written notice of such breach and reasonable
directions for cure from LCI; or
(b) the resignation of the Executive from his employment upon 30
days written notice to LCI at any time following (i) a significant
change in
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the nature or scope of the Executive's authorities or duties from those
described in Section 3, a reduction in total compensation from
that provided in Section 4, or the breach by LCI of any other
provision of this Agreement, which change, reduction or breach is not
restored or cured by LCI within 30 days after receiving written notice
of such change, reduction or breach and reasonable directions for
restoration or cure from the Executive; or (ii) a reasonable
determination by the Executive that, as a result of the Change in
Ownership and a change in circumstances thereafter significantly
affecting his position, he is unable to exercise the authorities,
powers, functions or duties attached to his position as contemplated by
Section 3.
A Termination as contemplated by this Section 5, whether or not a
breach of this Agreement by LCI, shall entitle the Executive to Termination
benefits as provided by this Agreement. Nothing in this Agreement shall
prevent the Executive from voluntarily resigning from his Employment upon 90
days written notice to LCI under circumstances which do not constitute
Termination as defined in this Section 5, and no such resignation shall be
deemed a breach of this Agreement by the Executive.
6. Termination Payment. In the event of Termination of Executive
during the Period of Employment, LCI shall pay to the Executive a lump sum
amount equal (without discount to present value) to the sum of the amounts
determined in accordance with subsections (a), (b), (c) and (d) below, and
provide the additional benefits described in subsections (w), (x), (y) and (z)
below:
(a) An amount equal to the aggregate salary which would have been
paid to the Executive during the remainder of the Employment
Period if he had received the base salary specified by Section 4(a)
above, increased by assuming the salary increase on each January 1
during the remainder of the Employment Period to be the greatest of the
average annual percentage salary increase or the percentage increase in
the Implicit Price Deflator, whichever is applicable, as of any January
1 within the three calendar years including or preceding the
Termination date.
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(b) Bonus and incentive compensation for any calendar year (or
other applicable bonus or incentive compensation period) ending
prior to the Termination date but not previously paid.
(c) An amount equal to the aggregate bonus and incentive
compensation which would have been paid to the Executive during
each calendar year (or other applicable bonus or incentive compensation
period) any part of which is included in the remainder of the
Employment Period if he had received bonus and incentive compensation
for any such year (or period) in the minimum amount specified by
Section 4(b) based on his increased salary determined under subsection
(a) above; provided, however, that in the event any bonus year (or
period) extends beyond the end of the Employment Period, bonus or other
incentive compensation for such year (or period) shall be pro-rated in
proportion to the number of days within and without the Employment
Period.
(d) In the event any shares of CBI common stock (or other
securities into which such shares may have been converted)
previously awarded to Executive under any restricted stock award plans
of CBI or separate agreements between Executive and CBI are forfeited
by reason of such Termination, an amount in cash equal to the fair
market value of such forfeited common stock (or other securities) as of
the date of Termination. The rights afforded to Executive under this
subsection (d) are without prejudice to any other rights Executive has
to shares of CBI common stock (or other securities) under such plans or
agreements or by reason of the action of the CBI Board of Directors
heretofore taken in causing restrictions on such shares to be removed
under certain circumstances including Termination of the Executive.
LCI shall also provide to the Executive:
(w) In addition to the benefits provided under any pension beneift
plan or benefit restoration plan (whether or not funded or
qualified under the Internal Revenue Code) maintained by LCI
("Retirement Plans"), the difference (the "Benefit Enhancement")
between such benefits and the
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benefits (the "Enhanced Benefits") that would have been provided under
such Retirement Plans if Executive had remained in the employ of LCI
throughout the Employment Period at the salary determined under
subsection (a) above accruing additional age and service credits
under such Retirement Plans accordingly. If after giving effect to
such additional age and service credit Executive shall not have the
necessary age or credited service at the end of the Employement Period
to qualify under the LCI Pension Plan (the "Pension Plan") for an early
retirement pension, the Enhanced Benefits under this subsection (w)
shall nevertheless include an early retirement pension under the
Pension Plan beginning upon Executive attaining age 55 or upon the date
Executive would have attained 30 years of credited service had
Executive remained continuously employed by LCI but for Termination
(whichever occurs first) (the "Enhanced Early Retirement Pension").
The Enhanced Early Retirement Pension shall be payable to the Executive
or to the spouse of the Executive (if applicable) commencing at the
time Executive attains (or would have attained) age 55 or would have
otherwise attained 30 years of credited service as provided aforesaid
(whichever occurs first). The Enhanced Early Retirement Pension shall
only be subject to reduction at the rate of four (4) percentum for year
year by which the Executive's age is less than age 65 or the
Executive's credited service is less than 40 years, whichever produces
the lesser reduction, pursuant to the first sentence of Section 4.1.3
of the Pension Plan (as in effect on the date hereof). If Executive
shall die after the end of the Employment Period but before the date
the Enhanced Early Retirement Pension is payable, the spouse of
Executive shall be entitled to an enhanced survivor's pension under
the Pension Plan as if Executive had died as an employee of LCI, giving
effect to service through the date of Executive's death and Executive's
earnings through the end of the Employment Period. Such Benefit
Enhancement will be paid beginning on the date the Enhanced Benefits
would have commenced and thereafter concurrently with the benefits
actually provided under such Retirement Plans. Nothing in this
subsection (w) shall prevent the actual commencement of benefits under
any Retirement Plan, and the Benefit Enhancements required by this
subsection (w), before the end of the Employment Period to the extent
required or permitted under the terms of the applicable Retirement
Plan, giving effect to the additional age and service credit required
by this subsection (w).
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(x) Participation in or coverage by all other employee benefits,
including, but not limited to, coverage under any health or
medical benefit insurance, plans, or arrangements, supplemental
survivors' benefit plans, or life insurance arrangements or programs,
to the same extent to which he would have been entitled under all
employee benefit plans, programs, arrangements or practices maintained
by LCI if he had remained in the employ of LCI through the Employment
Period at the salary determined under subsection (a) above.
(y) Continuation of disability income benefits pursuant to
Section 4(d) for so long as any disability may continue without
regard to the Termination of the Employment Period.
(z) Within 30 days after each written request therefor by the
Executive, cash advances or reimbursement for any fees or expenses
actually incurred or reasonably expected to be incurred by the
Executive in seeking other employment, including without limitation all
travel and relocation expenses and all fees charged by any executive
recruitment firm or firms or employment consulting or counseling firm
or firms selected by the Executive in his sole discretion.
The amount of Termination payments described in subsections (a), (b), (c) and
(d) of this Section 6 shall be determined and paid in a lump sum within 30 days
of the Termination date by cashier's check or certified check of LCI or any of
its affiliated corporations delivered to Executive together with such
calculations, worksheets, or other information as may be necessary or
appropriate to ascertain the currectness of the computation of such amount and,
if applicable, of any reduction pursuant to Section 7. Any Termination payment
(or the value thereof) not paid on or before the date provided therefor by this
Section 6 shall bear interest after such date until paid at a rate per annum
during each month such amount remains unpaid of five percentage points in
excess of the prime rate as publicly announced by the First National Bank of
Chicago or its successor from time to time as in effect on the first day of
each such month.
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7. Overall Limitations. Solely for the purposes of the computation of
benefits under this Agreement and notwithstanding any other provisions hereof,
payments to any Executive under this Agreement shall be reduced (but not below
zero) so that the present value, as determined in accordance with Section
280G(d)(4) of the Code, of such payments plus any other payments that must be
taken into account for purposes of any computation relating to Executive under
Section 280G(b)(2)(A)(ii) of the Code, shall not, in the aggregate, exceed 2.99
times Executive's "base amount," as that term is defined in Section 280G(b)(3)
of the Code. Notwithstanding any other provision hereof, no reduction in
payments under the limitation contained in the immediately preceding sentence
shall be applied to payments hereunder which do not constitute "excess
parachute payments" within the meaning of the Code. Any payments in excess of
the limitation of this Section 7 or otherwise determined to be "excess
parachute payments" made to Executive hereunder are deemed to be overpayments
which shall constitute an amount owing from the Executive receiving them to LCI
with interest from the date of receipt by the Executive to the date of
repayment (or offset) at the applicable federal rate under Section 1274(d) of
the Code, compounded semi-annually, which shall be payable to LCI upon demand;
provided, however, that no repayment shall be required under this sentence if
in the written opinion of tax counsel satisfactory to the Executive and
delivered to the Executive and LCI such repayment does not allow such
overpayment to be excluded for federal income and excise tax purposes from the
Executive's income for the year of receipt or afford the Executive a
compensating federal income tax deduction for the year of repayment.
8. Non-Competition. Whether or not a Termination occurs, the
Executive agrees to continue all non-competition and confidentiality
provisions, as specified in any other agreement in effect on the Effective Date
between the Executive and LCI relating to confidential information, during (and
to the extent specified in such agreement, after) the Employment Period.
9. Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise; provided, however, that if during the Employment
Period Executive accepts other employment in a position substantially
equivalent to or
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better than the position held by him with LCI, current cash compensation
actually received by the Executive during the Employment Period from such other
employment shall be applied to reduce Termination payments otherwise due under
subsections (a) and (c) of Section 6 of this Agreement.
10. Legal Fees and Expenses. It is the intent of LCI that no Executive
be required to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Executive hereunder. Accordingly, if it should appear to the
Executive that LCI has failed to comply with any of its obligations under this
Agreement, or in the event that LCI or any other person takes any action to
declare this Agreement void or unenforceable, or institutes any litigation
designed to deny, or to recover from, the Executive the benefits intended to be
provided to Executive hereunder, LCI irrevocably authorizes Executive from time
to time to retain counsel of his choice, at the expense of LCI as hereafter
provided, to represent Executive in connection with the initiation or defense
of any litigation, arbitration or other legal action, whether by or against LCI
or any director, officer, stockholder or other person affiliated with LCI, in
any jurisdiction. LCI shall advance to the Executive within 30 days after each
written request therefor any and all attorneys' and related fees and expenses
actually incurred or reasonably expected to be incurred by the Executive in any
such proceeding or otherwise as a result of LCI's failure to perform this
Agreement or any provision hereof or as a result of LCI or any person
contesting the validity or enforceability of this Agreement or any provision
hereof; provided, however, that to the extent the Executive does not prevail in
any such litigation, arbitration, or other legal action, the Executive shall
repay to LCI the amount (without interest) of such attorney's fees and related
fees and expenses previously advanced.
11. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he has filed
in writing with LCI or, in the case of LCI, at its principal executive offices.
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12. Non-Alienation. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien upon any amounts provided
under this Agreement; and no benefits payable hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts, or by
operation of law.
13. Governing Law. The provisions of this Agreement shall be
construed in accordance with the laws of the State of Illinois.
14. Amendment. This Agreement may be amended or cancelled by mutual
agreement of the parties in writing without the consent of any other person
and, so long as the Executive lives, no person, other than the parties hereto,
shall have any rights under or interest in this Agreement or the subject matter
hereof.
15. Successors to the Company. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of LCI and any
successor of LCI.
16. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason,
the remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect.
LIQUID CARBONIC INDUSTRIES CORPORATION
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Executive
Title:
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By:
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Title:
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ATTEST:
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[SEAL]
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FORM OF
ADDENDUM TO AGREEMENT AND
ASSIGNMENT OF SUPPLEMENTAL SURVIVOR'S BENEFIT AGREEMENT
THIS ADDENDUM dated this __ day of _________, 198_, to the Agreement
between Liquid Carbonic Industries Corporation, a Delaware corporation
("Liquid") and ____________________________ ("Executive") of even date herewith
(the "Agreement"):
WITNESSETH THAT
WHEREAS, the Executive and CBI Industries, Inc., a Delaware corporation
("CBI") previously have executed that certain Supplemental Survivor's Benefit
Agreement (the "Survivor's Agreement") dated _________, 198_; and
WHEREAS, the Executive is willing to consent to an assignment of the
Survivor's Agreement from CBI to Liquid, and, further, the Executive and
Liquid, upon such assignment, mutually desire to modify the Survivor's
Agreement;
NOW THEREFORE, in consideration of the mutual execution of the
Agreement and the premises thereof, it is agreed by and between CBI, Liquid and
the Executive as follows:
1. CBI hereby assigns to Liquid, and Liquid hereby accepts, all of
CBI's rights, duties and obligations under the Survivor's
Agreement, and the Executive hereby consents to such assignment
and releases CBI from any further duties or obligations under
the Survivor's Agreement.
2. As between Liquid and the Executive:
(a) For all purposes of the Survivor's Agreement, "the Company"
shall henceforth be Liquid.
(b) Reference in the Survivor's Agreement to the "CBI Pension
Plan" in the description of "Integrated Benefit" shall
henceforth be a reference to the "Liquid Carbonic Pension
Plan."
(c) For purposes of the Agreement, a Termination of the
Executive during the Employment Period shall be deemed a
"Retirement" under the Survivor's Agreement entitling the
Executive in the event of his death thereafter to the
"Post-Retirement Benefit" thereunder, notwithstanding that
Executive may no longer be employed by Liquid nor except
as may otherwise be provided by the Agreement be retired
for purposes of the Liquid Carbonic Pension Plan.
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Addendum and Assignment
IN WITNESS WHEREOF, the parties have caused this document to be
executed on the date first above written.
Executive:
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Title:
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CBI INDUSTRIES, INC.
By:
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Title:
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ATTEST:
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Secretary
LIQUID CARBONIC INDUSTRIES CORPORATION
By:
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Title:
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ATTEST:
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