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Exhibit 10.6
EXECUTIVE SEVERANCE AGREEMENT
AGREEMENT made as of this 1st day of January, 1998 by and between DOVER
CORPORATION, a Delaware corporation (the "Corporation"), and __________________
(the "Executive");
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Corporation (the "Board") has
determined that the Executive is a key executive of the Corporation or of a
direct or indirect subsidiary of the Corporation (a "Subsidiary");
WHEREAS, the Board considers the establishment and maintenance of a sound
and vital management to be essential to protecting and enhancing the best
interests of the Corporation and its stockholders;
WHEREAS, the possibility of an unsolicited tender offer or other takeover
bid for the Corporation and the consequent change of control, and the
uncertainty and questions which such possibility may raise among management, may
result in the departure or distraction of the Executive to the detriment of the
Corporation and its stockholders;
WHEREAS, the Corporation desires to provide the Executive with severance
benefits in the event that the Executive's employment with the Corporation or
with a Subsidiary, as the case may be, is terminated under certain circumstances
in order to assure a continuing dedication by the Executive to the performance
of the Executive's duties notwithstanding the occurrence of a tender offer or
other takeover bid for the Corporation and, particularly, to ensure that the
Executive will be in a position to assess and advise the Board whether proposals
from third persons would be in the best interests of the Corporation and its
stockholders without being influenced by the uncertainties as to the Executive's
own situation;
WHEREAS, the Executive has agreed that in addition to his or her regular
duties the Executive will, in the best interests of the Corporation and its
shareholders and as requested by the Board, assist the Corporation in the
evaluation of any such takeover or tender offer proposal or potential
combination or acquisition and render such other assistance in connection
therewith as the Board may determine to be appropriate, on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. Services During Certain Events.
In the event any Person begins a tender or exchange offer, circulates a
proxy to shareholders, or takes other steps seeking to effect a Change of
Control (as hereinafter defined), the Executive will not voluntarily terminate
his or her employment with the Corporation or a Subsidiary, as the case may be,
and will continue to render services to the Corporation or such Subsidiary until
such Person has abandoned or terminated efforts to effect a Change of Control or
until 180 days after a Change of Control has occurred; provided, however, that
this Section 1 shall
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not apply if an Executive experiences a Termination (as defined in Section
3(a)).
2. Definitions.
(a) "Affiliate" shall have the meaning set forth in Rule 12b-2 under
Section 12 of the Exchange Act.
(b) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act, except that a Person shall not be deemed to be the
Beneficial Owner of any securities which are properly filed on a Form 13-G.
(c) A "Change of Control" shall be deemed to have taken place upon the
occurrence of any of the following events:
(i) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Corporation or its Affiliates) representing 20% or more of either the then
outstanding shares of common stock of the Corporation or the combined voting
power of the Corporation's then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a transaction described in
clause (A) of paragraph (iii) below; or
(ii) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Corporation) whose appointment or election
by the Board or nomination for election by the Corporation's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or
recommended; or
(iii) there is consummated a merger or consolidation of the
Corporation or any direct or indirect subsidiary of the Corporation with any
other corporation, other than (A) a merger or consolidation which would result
in the voting securities of the Corporation outstanding immediately prior to
such merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity
or any parent thereof) at least 50% of the combined voting power of the voting
securities of the Corporation or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Corporation (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Corporation or its Affiliates) representing 20% or more of either the
then outstanding shares of common stock of the Corporation or the combined
voting power of the Corporation's then outstanding securities; or
(iv) the stockholders of the Corporation approve a plan of complete
liquidation or dissolution of the Corporation or there is consummated an
agreement for the sale or disposition by
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the Corporation of all or substantially all of the Corporation's assets, other
than a sale or disposition by the Corporation of all or substantially all of the
Corporation's assets to an entity, at least 50% of the combined voting power of
the voting securities of which are owned by stockholders of the Corporation in
substantially the same proportions as their ownership of the Corporation
immediately prior to such transaction or series of transactions.
(d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(e) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Corporation or any of its Affiliates,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Corporation or any of its Affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities or
(iv) a corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of stock of
the Corporation.
(f) A "Potential Change of Control" shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall have occurred:
(i) the Corporation enters into an agreement, the consummation of
which would result in the occurrence of a Change of Control;
(ii) the Corporation or any Person publicly announces an intention
to take or to consider taking actions which, if consummated, would constitute a
Change of Control;
(iii) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing 15% or more of either
the then outstanding shares of common stock of the Corporation or the combined
voting power of the Corporation's then outstanding securities (not including in
the securities beneficially owned by such Person any securities acquired
directly from the Corporation or its Affiliates); or
(iv) the Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change of Control has occurred.
3. Termination After Change of Control.
(a) No benefits shall be payable under this Agreement except in the event
of a Termination. For purposes of this Agreement, a Termination shall be deemed
to have occurred if any of the following events occur within 18 months after a
Change of Control:
(i) The termination by the Corporation or a Subsidiary, as the case
may be, of the Executive's employment for any reason other than Cause (as
defined herein), death or Disability (as defined herein).
(ii) The termination by the Executive of the Executive's employment
for Good Reason. Good Reason shall be deemed to exist upon the occurrence,
without the Executive's express written consent, of any of the following events:
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(A) A significant reduction or alteration in the duties and
responsibilities held by the Executive prior to the Change of Control, or a
change in the Executive's reporting responsibilities, titles or status in effect
immediately prior to the Change of Control, or any removal of the Executive from
or any failure to reelect the Executive to any positions held by the Executive
immediately prior to the Change of Control, except in connection with the
termination of the Executive's employment for Cause, Disability or death; or
(B) The reduction of the Executive's base salary and/or
incentive compensation opportunity from that in effect immediately prior to the
Change of Control or as the same may be increased thereafter from time to time,
which is not remedied within 30 days after receipt by the Corporation of written
notice from the Executive; or the Executive's being required to be based in any
location that is more than thirty (30) miles from the location at which the
Executive was based immediately prior to the Change of Control, except for
required travel on business to an extent substantially consistent with the
Executive's business travel obligations immediately prior to the Change of
Control; or
(C) The failure by the Corporation to continue in effect any
benefit or compensation plan in which the Executive is participating immediately
prior to the Change of Control, the taking of any action by the Corporation
which would adversely affect the Executive's participation in or materially
reduce the Executive's benefits under any of such plans, or deprive the
Executive of any material fringe benefit enjoyed by the Executive prior to the
Change of Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan and the
Executive's participation therein, or the failure by the Corporation to provide
the Executive with vacation time to which the Executive is then entitled in
accordance with the Corporation's normal vacation policy in effect on the date
hereof; or
(D) the failure by the Corporation to pay to the Executive any
portion of the Executive's current compensation, or to pay to the Executive any
portion of an installment of deferred compensation under any deferred
compensation program of the Corporation, within five (5) days of the date such
compensation is due; or
(E) any purported termination of the Executive's employment
which is not effected pursuant to a written notice of termination; or
(F) failure of the Corporation to obtain assumption of this
Agreement by any successor to the Corporation.
(b) A Termination also shall have occurred if the Executive's employment
with the Corporation or a Subsidiary, as the case may be, is terminated for any
reason other than Cause (as defined herein), death or Disability (as defined
herein) after a Potential Change of Control has occurred, provided the
Termination is at the direction of the acquiring entity or other third party
otherwise involved in the event causing the Potential Change of Control and the
Termination occurs within the six (6) month period preceding the actual
occurrence of a Change of Control.
(c) The termination of the Executive's employment shall be deemed to have
been for Cause only if the termination shall have been based on (i) the
Executive having willfully and continually failed to perform substantially his
or her duties with the Corporation (other than such
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failure resulting from incapacity due to physical or mental illness, death or
Disability) after not less than twenty (20) days have expired following a
written demand for substantial performance has been delivered to the Executive
by the Board or the President of the Corporation which specifically identifies
the manner in which the Executive is not substantially performing his or her
duties; or (ii) the Executive having willfully engaged in conduct which is
materially and demonstrably injurious to the Corporation. For purposes of this
section, no act, or failure to act, on the part of the Executive shall be
considered "willful" unless done, or omitted to be done, by the Executive in bad
faith and without reasonable belief that such action or omission was in, or not
opposed to, the best interests of the Corporation. Any act or failure to act
based upon authority given pursuant to a resolution duly adopted by the Board or
based upon the advice of counsel to the Corporation shall be conclusively
presumed to be done or omitted to be done by the Executive in good faith and in
the best interests of the Corporation. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Executive a copy of a written resolution
duly adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting called and held for that purpose
after reasonable notice to and opportunity for the Executive and the Executive's
counsel to be heard by the Board, finding that the Executive was guilty of the
conduct set forth above in (i) or (ii) and specifying the particulars thereof in
detail.
(d) Disability shall mean the Executive's absence from the performance of
duties on a full time basis for one hundred eighty (180) consecutive days as a
result of the Executive's incapacity due to physical or mental illness, unless,
within thirty (30) days after notice of termination due to disability is given
to the Executive following such absence, the Executive shall have returned to
the full time performance of duties.
4. Severance Benefits.
Upon Termination and upon the written demand of the Executive, the
Executive shall be entitled to, and the Corporation shall provide the Executive
immediately with, the following severance benefits (the "Severance Benefits"):
(a) Payment to the Executive as compensation for services rendered to the
Corporation of a lump sum cash amount (the "Lump Sum Amount") equal to three
times the sum of (a) the Executive's base salary as in effect immediately prior
to the date of termination or, if higher, in effect immediately prior to the
first occurrence of an event or circumstance constituting Good Reason, and (b)
the average annual bonus earned by the Executive pursuant to any annual bonus or
incentive plan maintained by the Corporation in respect of the three fiscal
years ending immediately prior to the fiscal year in which occurs the date of
termination or, if higher, immediately prior to the fiscal year in which occurs
the Change of Control (but excluding therefrom any amounts paid or accrued under
the Dover Corporation Cash Performance Program).
(b) The Executive's participation in the life, accident and health
insurance plans of the Corporation prior to the Change of Control shall be
continued without interruption, or equivalent benefits provided by the
Corporation, at no direct cost to the Executive, for a period of three years
from the date of Termination.
5. Stock Option and Other Plans.
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The rights of the Executive at the date of Termination under the
Corporation's stock option, savings, cash performance, deferred compensation,
retirement and other incentive and benefit plans or programs, including but not
limited to any terminating distributions and vesting of rights under such plans
or programs or awards or grants thereunder shall be governed by the terms of
those respective plans or programs and any agreements relating to such plans or
programs.
6. Term.
This Agreement shall commence on the date hereof and shall continue in
effect until the one year anniversary thereof; provided, however, that
commencing on the date of such anniversary, the term of this Agreement shall
automatically be extended for one additional year unless at least 180 days prior
to the last day of any term, the Corporation or the Executive shall have given
notice that this Agreement shall not be extended; and provided, further, that
this Agreement shall continue in effect for a period of eighteen months beyond
the term provided herein if a Change of Control of the Corporation shall have
occurred during such term.
7. Indemnification.
If litigation or arbitration shall be brought to enforce or interpret any
provision contained herein, whether by the Corporation, the Executive, or any
other person, the Corporation will indemnify the Executive for any reasonable
attorneys' fees and disbursements incurred by the Executive in such litigation
or arbitration, and hereby agrees to pay pre-judgment interest on any money
judgment obtained by the Executive in such litigation or arbitration calculated
at the prime interest rate charged by Chase Manhattan Bank, New York, New York
in effect from time to time from the date that payment to the Executive should
have been made under this Agreement.
8. Confidentiality.
The Executive shall retain in confidence any proprietary or confidential
information known to the Executive concerning the Corporation and its
subsidiaries and their respective businesses so long as such information is not
publicly available, except as shall be required by law or as shall be reasonably
necessary for disclosure to the Executive's legal advisors.
9. Taxes.
If any payments or benefits received or to be received by the Executive in
connection with a Change of Control or the Executive's termination of employment
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Corporation or any Subsidiary or affiliate of the
Corporation or any successor to any of them, any Person whose actions result in
a Change of Control or any Person affiliated with the Corporation or such
Person) (such payments or benefits, excluding the Gross-Up Payment (as defined
below) being hereinafter referred to as the "Total Payments") shall be subject
to the Excise Tax (as defined below) on such Total Payments, then the
Corporation shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the portion of the Gross-Up Payment retained by the
Executive, after the deduction of all taxes payable by the Executive on the
Gross-Up Payment and interest and penalties on such taxes, including, without
limitation, any income and employment taxes and the Excise Tax imposed on the
Gross-Up Payment (and any interest and penalties imposed with respect thereto),
shall be equal to the Reimbursable Excise Tax (as defined below) (and any
interest and penalties imposed with
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respect thereto).
As used herein, (i) Excise Tax shall mean the tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended ("Code") or any successor
provision of the Code, together with any interest and penalties with respect
thereto; (ii) Reimbursable Excise Tax shall be the amount of the Excise Tax on
the Taxable Amount (as defined below) determined as if the Taxable Amount were
the only portion of the Total Payments on which the Excise Tax is imposed; and
(iii) Taxable Amount shall be the Lump Sum Amount as reduced by the "base
amount" determined pursuant to Section 280G(b)(3) of the Code.
In the event that the Executive and the Corporation dispute whether there
should be any reduction in payments pursuant to this Section 9, the
determination of whether such reduction is necessary shall be made by an
independent accounting firm or law firm mutually acceptable to the Executive and
the Corporation and such determination shall be conclusive and binding on the
Corporation and the Executive.
10. General.
(a) Obligations of the Corporation. In the event that the Executive is
employed by a Subsidiary, the Corporation, while remaining as primary obligor,
may cause such Subsidiary to perform the Corporation's obligations hereunder.
(b) Payment Obligations Absolute. The Corporation's obligation to pay the
Executive the amounts due hereunder and to make the arrangements provided for
herein shall be absolute and unconditional and shall not be affected by any
circumstances, including without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Corporation may have against him or
anyone else under this Agreement or otherwise. Each and every payment made
hereunder by the Corporation shall be final and the Corporation will not seek to
recover all or any part of such payment from the Executive or from whomsoever
may be entitled thereto for any reason whatsoever. In no event shall the
Executive be obligated to seek other employment in mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement, and the
obtaining of any such other employment shall in no event effect any reduction of
the Corporation's obligation to make the payments and arrangements required to
be made under this Agreement.
(c) Successors; Binding Agreement.
(i) As used in this Agreement, the Corporation refers not only to
itself but also to its successors by merger or otherwise. The Corporation will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of its business and/or
assets, by written agreement in binding form and substance, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Corporation would be required to perform it if no such succession had
occurred. Failure of the Corporation to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement, and
shall entitle the Executive to make demand upon and require the Corporation, if
it is not already required to do so, to provide the Severance Benefits required
by Section 4 above.
(ii) This Agreement shall be binding upon and inure to the benefit
of the Executive and his or her estate and to the benefit of the Corporation and
any successor to the
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Corporation, but neither this Agreement nor any rights arising hereunder may be
assigned or pledged by the Executive.
(d) Severability. Any provision in this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective, and then only to the extent of such prohibition or unenforceability
without affecting the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(e) Controlling Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without reference to
the principles of conflict of laws, except insofar as it may require application
of the corporation law of the State of Delaware.
(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered by hand to
the other party, or sent by registered or certified mail, return receipt
requested, postage prepaid, addressed to the respective party at the address
stated below or to such other address as the addressee may have given by a
similar notice:
If to the Executive:
________________________
________________________
________________________
If to the Corporation:
Dover Corporation
280 Park Avenue
New York, New York 10017
Attention: Chief Executive Officer
(g) Amendment. This Agreement may be modified or amended only by an
agreement in writing executed by both of the parties hereto.
(h) No Employment. Except as otherwise expressly provided in this
Agreement, this Agreement shall not confer any right or impose any obligation on
the Executive to continue in the employ of the Corporation nor shall it limit
the right of the Corporation or the Executive to terminate the Executive's
employment at any time prior to a Change of Control.
(i) Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in New York, New
York by three arbitrators, of which each party shall appoint one, in accordance
with the Center for Public Resources Rules for Non-Administered Arbitration of
Business Disputes then in effect. Any arbitrator not appointed by a party shall
be selected from the CPR Panels of Distinguished Neutrals. The arbitration shall
be governed by the United States Arbitration Act, 9 U.S.C. ss.ss.1 to 16.
Judgment may be entered on the arbitrators' award in any court having
jurisdiction. The Corporation shall bear all costs and expenses arising in
connection with any arbitration proceeding pursuant hereto. The arbitrators are
not empowered to award damages in excess of actual damages. Notwithstanding
anything to the
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contrary herein, in any dispute involving whether a Termination was for Good
Reason or for Cause, as the case may be, the Corporation shall have the
obligation to present its case by establishing, and shall prevail in the
proceeding only if and to the extent it establishes, with clear and convincing
evidence that the Termination was in fact not as the result of Good Reason or
was for Cause, as the case may be.
(j) Conflict in Benefits. This Agreement is not intended to and shall not
repeal or terminate any other written agreement between the Executive and the
Corporation presently in effect or hereafter executed. Any benefits provided
hereunder and not provided under any other written agreement shall be in
addition to the benefits provided by any other written agreement. In the event
that the same type of benefits are covered under this Agreement and under any
other written agreement, the Executive shall have the right to elect which
benefits the Executive shall receive. Such election shall be made in writing at
the same time that the Executive makes written demand under Section 4 of this
Agreement.
(k) Entire Agreement. This Agreement contains the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, understandings and arrangements, whether written or oral,
between the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
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EXECUTIVE
DOVER CORPORATION
By:
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