Exhibit 10.12(g)
CYTEC INDUSTRIES INC.
Executive Income Continuity Plan
As Revised through January 22, 2001
1. Purpose. The purpose of this Executive Income Continuity Plan (this
Plan) is to retain the services of executives in the senior management group of
Cytec Industries Inc. and its subsidiaries and to reinforce and encourage the
continuing attention, dedication and loyalty of these executives without the
distraction of concern over the possibility of involuntary or constructive
termination of employment resulting from unforeseen developments, by providing
income continuity for a limited period.
2. Definitions. Unless the context otherwise requires, the following
terms shall have the meanings respectively indicated:
(a) "Board of Directors" shall mean the board of directors of Cytec
Industries Inc.
(b) "Cause" shall mean (A) the willful and continued failure by a
Plan Member substantially to perform his duties with the Company (other
than any such failure resulting from his incapacity due to physical or
mental illness), after a demand for substantial performance is delivered to
him by the Company which specifically identifies the manner in which the
Company believes that he has not substantially performed his duties, or (B)
the willful engaging by him in conduct demonstrably injurious to the
Company. For purposes of this definition, no act, or failure to act, on the
part of a Plan Member shall be considered "willful" unless done, or omitted
to be done, by him without reasonable belief that his action or omission
was in the best interests of the Company and was lawful.
(c) A "Change in Control" shall be deemed to have occurred if: (i)
any "person", as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (other
than the Company,
any trustee or other fiduciary holding securities under an employee benefit
plan of the Company, or any company owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 20% or more (except as
specifically provided below) of the combined voting power of the Company's
then outstanding securities; or (ii) there occurs any transaction or action
which results in the individuals who at the beginning of a period
commencing 24 hours prior to the commencement of the transaction were
members of the Board of Directors, together with individuals subsequently
elected to the Board upon the recommendation of a majority of the
continuing directors, ceasing to constitute at least a majority thereof; or
(iii) the stockholders or the Board of Directors of the Company approve a
definitive agreement to merge or consolidate the Company with or into
another corporation (including any such transaction in which the Company is
the surviving corporation), or to sell or otherwise dispose of all or
substantially all of its assets, or to adopt a plan of liquidation of the
Company. Notwithstanding clause (i) above, beneficial ownership by a
financial institution of securities of the Company representing 20% or more
of the combined voting power of the Company's then outstanding securities
shall not constitute a Change in Control if, at the first Board of
Directors meeting occurring five days or more after the Company receives
written notice of such event, and prior to the occurrence of an event
described in clause (ii) above, the Board of Directors adopts a resolution
to the effect that such ownership does not constitute a Change in Control;
provided that (x) such a resolution shall not remain in effect for any
further five percent (5%) increase in such financial institution's
beneficial ownership, unless the Board of Directors so determines in
accordance with a further resolution adopted by the Board of Directors in
accordance with the procedures set forth in this sentence, (y) such
resolution may be revoked by the Board of Directors at any time, and (z)
the Board of Directors may place any additional or more stringent
conditions on its determination that such event does not constitute a
Change in Control.
(d) "Company" shall mean Cytec Industries Inc. and, except for the
purposes of paragraph (c) of this Section,
2
shall include any of its subsidiaries which employs members of this Plan.
(e) "Compensation Committee" shall mean the Compensation and
Management Development Committee as constituted from time to time of the
Board of Directors, or such other body as shall have similar authority and
responsibility.
(f) "Date of Termination" shall mean (A) if the employment of a Plan
Member is terminated by his death, the date of his death, (B) if such
employment is terminated by his Retirement, the date of such Retirement,
(C) if such employment is terminated for Disability, upon the expiration of
his continuous service credits as determined by the Company, (D) if his
employment is terminated by him for Good Reason, the date specified in the
Notice of Termination, and (E) if his employment is terminated for any
other reason, the date on which Notice of Termination is given; provided
that if within 30 days after any Notice of Termination is given the party
receiving such notice notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be the date on
which the dispute is finally resolved, either by mutual written agreement
of the parties or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected).
(g) "Disability" shall mean inability of a Plan Member due to
sickness or injury to perform the duties pertaining to his occupation with
the Company, as determined in accordance with the Company's Long-Term
Disability Plan and personnel policies.
(h) "Good Reason" shall mean:
(A) a change in assignment resulting in the assignment to a Plan
Member of substantially reduced responsibilities compared with those
assigned to him prior to such change, or any change in his status,
authority or position which represents a demotion (actual or de facto)
from his status, authority or position immediately prior to such
change, except in connection with the termination of his employment
because of death or Retirement, by the Company for Disability or
Cause, or
3
by him other than for a Good Reason enumerated in any of the following
subparagraphs of this Paragraph (h);
(B) the assignment to a Plan Member of duties inconsistent with
his responsibilities prior to such assignment, unless such new duties
are consistent with a position of equal or greater status, authority,
and position;
(C) a reduction in the base salary of a Plan Member as the same
may be increased from time to time;
(D) a failure to continue the I.C. Plan (or a plan providing
substantially similar benefits) as the same may be modified from time
to time but in a form not less favorable than as of the date of
adoption of this Plan, or a failure to continue a Plan Member as a
participant in the I.C. Plan on a basis consistent with the basis on
which the I.C. Plan is administered as of such date;
(E) a failure to pay a Plan Member any portion of his current or
deferred compensation within seven (7) days of the date such
compensation is due;
(F) the relocation of the principal executive offices of the
Company to a location more than 50 miles from the location of the
present executive offices or outside of New Jersey, or requiring a
Plan Member to be based anywhere other than the principal executive
offices (or, if a Plan Member is not based at such executive offices,
requiring such Plan Member to be based at another location not within
25 miles of such location) except for required travel on business to
an extent substantially consistent with his duties and
responsibilities, or in the event of consent to any such relocation of
the base location of a Plan Member the failure to pay (or provide
reimbursement for) all expenses of such Plan Member incurred relating
to a change of principal residence in accordance with the applicable
personnel policies of the Company in effect as of the date of adoption
of this Plan;
(G) the failure to continue in effect any benefit or
compensation plan (including but not limited to the Retirement Plan,
the Long-Term Disability Plan, the I.C.
4
Plan, stock option and performance stock/cash features of the 1993
Stock Award and Incentive Plan (or of any subsequent and/or substitute
plan)), the Employees Savings and Profit Sharing Plan (including the
Supplemental Savings and Profit Sharing Plan), pension plan (including
but not limited to, the Supplemental, Executive Supplemental, and
Excess Retirement Plans), life insurance plan, health and accident
plan, disability or vacation plan in which a Plan Member is
participating, or the taking of any action which would adversely
affect participation (including the Plan Member's eligibility to
participate, the amount of his benefits, and the level of his
participation relative to other participants) in or materially reduce
benefits under any of such plans, or the failure to fund any "Rabbi
Trust" created for the payment of any of the foregoing benefits, when,
and to the extent, required by the terms of any such trust, unless
such action is required pursuant to law or unless substantially
similar benefits are continued in the aggregate under other plans,
programs or arrangements;
H) the failure to obtain the assumption of or an agreement to
carry out the terms of this Plan by any successor as contemplated in
Section 10; or
(I) any purported termination of a Plan Member's employment
which is not effected pursuant to a Notice of Termination as herein
defined. employment which is not effected pursuant to a Notice of
Termination as herein defined.
(i) "I.C. Plan" means the existing system of annual cash bonuses
payable to Company employees (including Plan Members), pursuant to which
annual target bonuses are established based upon job levels and payments of
bonuses as a percentage of such targets are made based upon Company,
business group and individual performance.
(j) "Notice of Termination" shall mean a notice which indicates the
specific basis for termination of employment relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide
such basis.
(k) "Plan Member" shall mean a person who is employed by the Company
on a full-time basis and for a regular fixed compensation (other than on a
retainer or compensation for temporary employment) and who is included in
the membership
5
of this Plan as provided in Section 3.
(l) "Officers" shall mean the chairman, any vice chairman, president,
and any vice president of Cytec Industries Inc. chosen by the Board of
Directors.
(m) "Retirement" shall mean termination of employment in accordance
with the provisions of the Retirement Plan; provided, however, that
termination of employment by a Plan Member before his Normal Retirement
Date (as defined in such Plan) for Good Reason shall not be deemed to be
Retirement for purposes of this Plan even though such Plan Member may be
eligible for and elect to receive retirement benefits thereunder.
(n) "Retirement Plan" means any qualified defined benefit pension
plan of the Company or its subsidiaries under which the Plan Member has
accrued a retirement benefit (whether or not vested).
(o) "Service", as used in Section 5 of this Plan, shall mean service
as a full time employee of the Company or one of its subsidiaries and, in
the case of any person who became such an employee on January 1, 1994,
shall include any period of service ending December 31, 1993 as a full time
employee of American Cyanamid Company or one of its subsidiaries.
(p) "Special Change in Control" shall have the same meaning as
"Change in Control" except that the reference to "20%" in clause (i) of the
definition of "Change in Control" shall be replaced with "50%".
The masculine pronoun wherever used herein shall include the feminine
except as the context specifically indicates.
3. Membership. All Officers shall be Plan Members. The Compensation
Committee may designate any other employee as a Plan Member. After an employee
becomes a Plan Member, his membership shall continue until his death or
Retirement, termination of his employment by the Company for Cause or
Disability, or termination of his employment by such Plan Member other than for
Good Reason.
4. Termination of Employment. Each Plan Member shall be entitled to
receive the income continuation payments provided for in Section 5 upon
termination of his employment, unless such
6
termination is (a) because of his death, Disability or Retirement, (b) by the
Company for Cause, or (c) by such Plan Member other than for Good Reason;
provided that, if Notice of Termination is given prior to a Change in Control,
such Plan Member shall have signed and delivered, in form and substance
satisfactory to the General Counsel, a waiver, effectively waiving all claims
against the Company (including its directors, officers, employees and agents)
arising out of such Plan Member's termination of employment, other than claims
for payment post-termination of employment under the terms of this Plan and
employee benefit and compensation plans of the Company, such waiver to be
delivered no later than the later of thirty days following (i) the date of
termination of employment or (ii) written request therefor by the Company.
5. Income Continuation. (a) Subject to the provisions of Section 7, upon
termination of the employment pursuant to Section 4 of a Plan Member who is an
Officer or who, on the Date of Termination, has at least one year of Service,
the Company shall pay to him the sum of his annual base salary at the rate in
effect at the time Notice of Termination is given plus his Annual Bonus
(excluding Performance Stock/Cash Awards) under the I.C. Plan based on such
rate, in equal monthly installments over a period of 12 months following the
Date of Termination; provided that in the case of Notice of Termination given
after a Change in Control, the payments shall consist of three times his annual
base salary plus three times his Annual Bonus, payable over a 36 month period;
and provided further that in the case of Notice of Termination given after a
Special Change in Control, the payments shall consist of three times his annual
base salary plus three times his Annual Bonus, payable in a single lump sum
payment at the time of the Notice of Termination. As used in this Section 5,
"Annual Bonus" means the greater of (i) the annual target bonus under the I.C.
Plan attributable to the Plan Member or (ii) said annual target bonus times a
fraction equivalent to the average percentage of said annual target bonus paid
to said Plan Member for each of the two preceding fiscal years of the Company
(or for such lesser period of time as such Plan Member participated in the I.C.
Plan).
(b) Subject to the provisions of Section 7, upon termination of the
employment pursuant to Section 4 of any other Plan Member, the Company shall pay
to him the sum of his annual base salary at the rate in effect at the time
Notice of Termination is given plus his Annual Bonus (excluding Performance
Stock/Cash Awards) under the I.C. Plan based on such rate, in equal monthly
installments over a period of 12 months following the Date of Termination;
7
provided that in the case of Notice of Termination given after a Special Change
in Control, the payments shall be payable in a single lump sum payment at the
time of the Notice of Termination.
(c) Except for the lump sum payments, which shall be paid immediately as
provided above, all payments under paragraphs (a) and (b) shall be made on the
first day of each month commencing with the first day of the first month after
the Date of Termination. Notwithstanding the foregoing, (i) no payment shall be
made with respect to any period beyond the date of a Plan Member's 65th
birthday, (ii) no payment shall be made with respect to any period (A) beyond
the date of a Plan Member's 60th birthday, or (B) (if Notice of Termination is
given prior to a Change in Control) beyond such earlier date as such Plan Member
retires under the Executive Supplemental Employees' Retirement Plan, if, in
either case, such Plan Member is a full member of such plan and is entitled to
retire on such date without having his benefits thereunder reduced by an early
retirement discount, and (iii) there shall be deducted from any payments
required hereunder (x) any payments made with respect to any required notice
period under any employment agreement between a Plan Member and the Company or
one of its subsidiaries and (y) any payments received by the Plan Member under
the Company's Long Term Disability Plan or under any short term disability plan
or program of the Company during the period with respect to which income
continuation is computed hereunder.
6. Other Payments. Subject to the provisions of Section 7, upon
termination of the employment of a Plan Member pursuant to Section 4, the
Company shall, in addition to the payments provided for in Section 5, pay to
him:
(a) all relocation payments described in Section 2(h)(F)
and all legal fees and expenses incurred by him as a result of such
termination (including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or
enforce any right or benefit provided by this Plan or in connection with
any tax audit or proceeding to the extent attributable to the application
of Section 4999 of the Internal Revenue Code of 1986, as amended, to any
payment or benefit provided hereunder); and
(b) during the period of two years following the Date of
Termination, all reasonable expenses incurred by him in seeking comparable
employment with another employer to the
8
extent not otherwise reimbursed to him, including, without limitation, the
fees and expenses of a reputable out placement organization, and reasonable
travel, telephone and office expenses.
7. Competitive Employment. The Company, at its option, may discontinue
any payments being made to any Plan Member pursuant to Section 5 or Section 6 if
such Plan Member engages in the operation or management of any business in the
United States of America, whether as owner, stockholder, partner, officer,
consultant, employee or otherwise, which at such time is in competition with any
business of the Company in any field with which such Plan Member was involved
during the last two years of his employment by the Company. Ownership by such
Plan Member of five percent or less of the shares of stock of any company listed
on a national securities exchange or having at least 100 stockholders shall not
make such Plan Member a "stockholder" within the meaning of that term as used in
this Section.
8. Maintenance of Other Benefit Plans. The Company shall maintain in full
force and effect, for the continued benefit of each Plan Member entitled to
receive payments pursuant to Section 5, for two years following his Date of
Termination, all employee benefit plans and programs or arrangements (including
Comprehensive Medical and Dental Insurance, Group Life Insurance, and Financial
Planning and Tax Preparation and Counseling Services, but not including
disability) in which he was entitled to participate at the time the Notice of
Termination was given, provided that if his continued participation is not
permitted under the general terms and provisions of such plans and programs, the
Company shall provide equivalent benefits.
9. No Mitigation. No Plan Member shall be required to mitigate the amount
of any payment provided for under this Plan by seeking other employment or
otherwise, nor shall the amount of any payment so provided for be reduced by any
compensation earned by any Plan Member as the result of employment by another
employer, by retirement benefits or by offset against any amount claimed to be
owed by him to the Company.
10. Successors. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and assets of the Company, by a written
agreement, to expressly assume and agree to carry out the provisions of this
Plan in the same manner
9
and to the same extent that the Company would be required to carry them out if
no such succession had occurred.
11. Notice. Any notice expressly provided for under this Plan shall be in
writing, shall be given either manually or by mail, telegram, telex, telefax or
cable, and shall be deemed sufficiently given, if and when received by the
Company at its offices at 5 Garret Mountain Plaza, West Paterson, New Jersey
07424 Attention: Secretary, or by any Plan Member at his address on the records
of the Company, or if an when mailed by registered mail, postage prepaid, return
receipt requested, addressed to the Company or the Plan Member to be notified at
such address. Either the Company or any Plan Member may, by notice to the
other, change its address for receiving notices.
12. Funding. All payments provided for under this Plan for Plan Members
(including those who have retired) shall not be funded or secured, and no trust
shall be created hereunder. Payments under the Plan shall become fully vested
and nonforfeitable upon the termination of a Plan Member's employment except for
termination where a Plan Member would not be entitled to income continuation
payments as provided in Section 4 and except as provided in Section 7.
13. Amendment and Termination. The Board of Directors may at any time or
from time to time amend or terminate this Plan; provided, however, that no such
amendment or termination may adversely affect any vested benefits hereunder;
and, provided further, that after a Change in Control, this Plan may not be
amended or terminated without the consent of all persons who were Plan Members
as of the date of such Change in Control (including those who have retired).
In addition, no amendment or termination made within one year before a
Change in Control and made while a Prospective Change in Control is pending may
adversely affect any benefit that might at any time be or become owing hereunder
to a person who, immediately prior to the commencement of such Prospective
Change in Control, was a Plan Member, without the consent of such person (other
than a benefit to any such person who is the person, or part of the group,
making the offer, or negotiating to make the offer, which constitutes the
Prospective Change in Control).
10
As used herein, the term "Prospective Change in Control" means (i) any
offer presented, directly or indirectly, to the Board of Directors of the
Company which, if consummated, would constitute a Change in Control or (ii) any
negotiation with the Board of Directors or any committee or representative
thereof to make such an offer (including the unilateral announcement of the
terms on which such an offer would be made).
14. Governing Law. This Plan, and the rights and obligations of the
Company and the Plan Members hereunder, shall be construed and governed in
accordance with the law of the State of New Jersey.
15. Partial Invalidity. If any provision of this Plan is determined to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
the remaining provisions of this Plan, which shall remain in effect in
accordance with its terms.
11