Exhibit 10.12(h)
CYTEC INDUSTRIES INC.
Key Manager Income Continuity Plan
As Revised through December 15, 2000
1. Purpose. The purpose of this Key Manager 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, 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.
2
(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) "Executive Committee" shall mean the Executive Committee of Cytec
Industries Inc. as elected from time to time by the Board of Directors, or such
other body as shall have similar authority and responsibility.
(i) "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 by him other than for a Good Reason enumerated in any of the
following subparagraphs of this Paragraph (i);
(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
3
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 50 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. 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,
4
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 (other
than in connection with the sale or other disposition of a Plan
Member's business unit where the Plan Member becomes an employee of,
or consultant to, the acquiror, as provided in Section 4) which is not
effected pursuant to a Notice of Termination as herein defined.
(j) "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.
(k) "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.
(l) "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 of this Plan as provided in Section 3.
5
(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. The Executive Committee may designate any employee who is
not a member of the Executive Income Continuity Plan and who is Band Level No. 3
or above as a Plan Member; provided that employees in former salary grade No. 15
who are not in Band Level No. 3 or above shall not cease to be Plan Members by
reason of this changed membership requirement. Any such designation may be
revoked at any time prior to a Change in Control in the absolute discretion of
the Executive Committee, but may not be revoked thereafter for any reason.
Subject to the foregoing, 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, termination of his employment
by such Plan Member other than for Good Reason, or until such time, if any, as
he becomes a member of the Executive Income Continuity Plan.
6
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 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 a Plan Member shall not be
entitled to any income continuation payments if the termination of his
employment occurs in connection with the sale or other disposition by the
Company of the business unit within which he is employed and he becomes, in
connection with such sale or other disposition, or within six months thereof,
either (i) an employee of the acquiror or (ii) a consultant to the acquiror
earning consulting fees substantially similar to (or higher than) his base
salary and incentive compensation from the Company; and provided, further, 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 officers, directors, 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 6, upon
termination of the employment pursuant to Section 4 of a Plan Member, the
Company shall pay to the Plan Member 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, on the first day of each month; provided that in the case
of Notice of Termination given after a Change in Control, the payments shall
consist of twice his annual base salary plus twice his Annual Bonus, payable
over a 24 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 twice his annual base salary plus twice 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
7
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) Except for the lump sum payments, which shall be paid immediately as
provided above, all payments under paragraph (a) 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 by a Plan
Member 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. Competitive Employment. The Company, at its option, may discontinue
any payments being made to any Plan Member pursuant to Section 5 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.
7. 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
8
5, for one year 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.
8. Outplacement. Subject to Section 6, upon termination of a Plan Member
pursuant to Section 4, the Company shall, in addition to the payments provided
for in Section 5, provide, during the twelve months following the Date of
Termination, the services of a reputable outplacement organization, including
telephone and office expenses incurred in seeking new employment.
9
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 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 within two
years after a Change in Control, except for a termination where the Plan Member
would not be entitled to income continuation payments as provided in Section 4.
13. Amendment and Termination. The Board of Directors may at any time or
from time to time amend or terminate this Plan, including but not limited to the
reduction or termination after the termination of a Plan Member's employment of
any non-vested benefit hereunder; 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 without
the consent of all persons who were Plan Members as
10
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).
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