Exhibit 10.1
OHIO CASUALTY CORPORATION
CHANGE IN CONTROL AGREEMENT
This Agreement between _________________ ("Employee"), the Ohio Casualty
Corporation, an Ohio corporation ("Corporation") and the Ohio Casualty Insurance
Company ("Company"), is effective ________________ ("Effective Date").
1.00 PURPOSE
The Corporation and the Company believe that [1] a sound and stable management
team is essential to promoting the best interests of the Group and the
Corporation's shareholders, [2] as is the case with many publicly held
corporations, a Change in Control may materially alter the Group's structure and
adversely affect managers' employment security, [3] appropriate steps should be
taken to enable certain managers, including the Employee, to devote their full
and continued attention to the Group's business affairs during the crucial (and
often tumultuous) period preceding and immediately following a Change in Control
and [4] subject to the terms of this Agreement, these objectives can best be met
by providing the Employee with the severance payments described in this
Agreement.
2.00 DEFINITIONS
When used in this Agreement, the following terms will have the meanings given to
them in this section unless another meaning is expressly provided elsewhere in
this Agreement. When applying these definitions, the form of any term or word
will include any of its other forms and the word "including" will mean
"including, without limitation."
2.01 BOARD. The board of directors of the Corporation.
2.02 CAUSE. [1] Any act of fraud, intentional misrepresentation, embezzlement,
misappropriation or conversion by the Employee of the assets or business
opportunities of the Group, the Company, the Corporation, the Employer or of any
other Group Member, [2] conviction of the Employee of a felony or intentional
and repeated violations by the Employee of the Employer's written policies or
procedures, [3] the Employee's [a] willful and continued refusal to
substantially perform assigned duties (other than any refusal resulting from
incapacity due to physical or mental illness, including Disability), [b]
willful engagement in gross misconduct materially and demonstrably injurious to
any Group Member or [c] breach of any term of this Agreement or [4] any
intentional cooperation with any party attempting to effect a Change in Control
unless [a] the Board has approved or ratified that action before the Change in
Control or [b] that cooperation is required by law. However, [5] Cause will not
arise [a] solely because the Employee is absent from active employment during
periods of vacation, consistent with the Employer's applicable vacation policy,
or other period of absence initiated by the Employee and approved by the
Employer or [b] due to any event that constitutes Good Reason.
1
2.03 CHANGE IN CONTROL.
[1] Subject to the rules of application described in Section 2.03[2], the
date on which the earliest of the following events occurs:
[a] After the Effective Date, an event that would be required to be
reported as a change in control for purposes of the Exchange Act.
[b] During any 24-consecutive-calendar-month period ending after the
Effective Date, there is a change in a majority of the Board;
provided, however, that any new director whose nomination for
election by the Corporation's shareholders was approved, or who was
appointed or elected to the Board, by the vote of two-thirds of the
directors then still in office who were in office at the beginning
of the 24-consecutive-calendar-month period will be disregarded in
determining if there has been a change in the majority of the Board.
[c] During any 12-consecutive-calendar month period beginning after
the Effective Date, any entity or "person," [including a "group" as
contemplated by Exchange Act Sections 13(d)(3) and 14(d)(2)] is or
becomes the "beneficial owner" [as defined in Rule 13d-3 under the
Exchange Act], through a tender offer or otherwise, of Common Shares
representing more than 20 percent or more of the combined voting
power of the Corporation's then outstanding Common Shares. However,
this element of this definition will be applied without regard to
the effect of any redemption of Common Shares by the Corporation or
the acquisition of Common Shares by any Group Member and, solely for
purposes of applying this subsection 2.03[1][c], after ignoring any
Common Shares acquired:
[i] By any employee benefit plan maintained by any Group
Member;
[ii] Directly, through an equity compensation plan maintained
by any Group Member;
[iii] Directly, through inheritance, gift, bequest or by
operation of law on the death of an individual; or
[iv] By any entity or "person" [including a "group" as
contemplated by Exchange Act Sections 13(d)(3) and 14(d)(2)]
with respect to which that acquirer has filed SEC Schedule 13G
indicating that the Common Shares were not acquired and are
not held for the purpose of or with the effect of changing or
influencing, directly or indirectly, the Corporation's
management or policies, unless and until that entity or person
indicates that its intent has changed by filing SEC Schedule
13D.
[d] After the Effective Date, any entity or "person," [including a
"group" as contemplated by Exchange Acts Sections 13(d)(3) and
14(d)(2) and, in the aggregate, all employee pension benefit plans,
as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, maintained by any Group Member] is
or becomes the "beneficial owner" [as defined in Rule 13d-3 under
2
the Exchange Act], through a tender offer or otherwise, of Common
Shares representing more than 50 percent or more of the combined
voting power of the Corporation's then outstanding Common Shares.
[e] After the Effective Date, the Corporation's shareholders approve
a definitive agreement to merge or combine the Corporation with or
into another entity, a majority of the directors of which were not
members of the Board immediately before the merger and in which the
Corporation's shareholders will hold less than 50 percent of the
voting power of the surviving entity. When applying this element of
this definition, shareholders will be determined immediately before
and immediately after the merger or combination.
[f] Within any 12-consecutive-calendar-month period ending after the
Effective Date, any entity or "person" [including a "group" as
contemplated by Exchange Act Sections 13(d)(3) and 14(d)(2) and Code
Section 280G] acquires, either directly or as a "beneficial owner"
[as defined in Rule 13d-3 under the Exchange Act] of another entity
or person, Group assets having a total gross fair market value equal
to or greater than 50 percent of the book value of the Group's
assets. For purposes of this definition, "book value" will be
established on the basis of the latest consolidated financial
statement the Corporation filed with the Securities and Exchange
Commission before the date any 12-consecutive-calendar-month
measurement period began. However, except as otherwise provided in
this section, this element of this definition will be applied after
ignoring:
[i] Any transfer of assets to an entity, more than 50 percent
of the total value or voting power of which is owned by one or
more Group Members; or
[ii] Any transfer of assets to any entity or "person"
[including a "group" as contemplated by Exchange Act
Sections 13(d)(3) and 14(d)(2)] that, immediately before the
transfer, owns, directly or as a "beneficial owner" [as
defined in Rule 13d-3 under the Exchange Act], more than 50
percent of the total value or voting power of the
Corporation's outstanding securities.
[2] For purposes of applying all parts of this definition, [a] Common
Shares owned or acquired by the Employee or by any other entity or
"person" [including a "group" as contemplated by Exchange Act Sections
13(d)(3) and 14(d)(2)] acting in concert with the Employee will be
disregarded, [b] any transfer of assets to the Employee or to (or merger
of the Corporation with) any other entity or "person" [including a "group"
as contemplated by Exchange Act Sections 13(d)(3) and 14(d)(2)] acting in
concert with the Employee will be disregarded and [c] the constructive
ownership rules of Code Section 318(a) will be applied to determine share
ownership.
2.04 CODE. The Internal Revenue Code of 1986, as amended, or any successor
statute.
3
2.05 COMMON SHARES. The Corporation's common shares or any security issued in
substitution, exchange or in place of the Corporation's common shares.
2.06 CONFIDENTIAL INFORMATION. Any and all information (other than information
in the public domain) related to the Group's business or that of any Group
Member, including all processes, inventions, trade secrets, computer programs,
technical data, drawings or designs, information concerning pricing and pricing
policies, marketing techniques, plans and forecasts, new product information,
information concerning methods and manner of operations and information relating
to the identity and location of all past, present and prospective agents and
policy holders.
2.07 DATE OF TERMINATION. Except as otherwise provided in this Agreement:
[1] If the Employee is Terminated at or after reaching Retirement Age or
because of Disability or for Cause, the date specified in the Notice of
Termination;
[2] If the Employee dies, the date of death;
[3] If the Employee is Terminated for Good Reason, the date specified in
the Notice of Termination;
[4] If the Employee Terminates after Retirement Age or is Terminated for
any reason other than Retirement, Cause, Disability, death or Good Reason,
the date on which a Notice of Termination is given; or
[5] If the Employer Terminates the Employee without giving a Notice of
Termination, the date on which that Termination is effective.
However, if either Party utilizes the procedures described in Section 7.03 to
dispute the basis on which the Employee's employment is being terminated, the
Date of Termination will be established by the adjudicator acting under Section
7.03 but will never be later than the last day of the Employee's active
employment as an employee of all Group Members.
2.08 DISABILITY. A disability as defined in Code Section 22(e)(3).
2.09 EFFECTIVE PERIOD. Except as otherwise provided in this Agreement, the 24
consecutive calendar months beginning after a Change in Control occurring during
the Term, even if that period extends beyond the Term.
2.10 EMPLOYEE OBLIGATION PAYMENT. A lump sum equal in value to the obligations
the Employee assumes under Section 3.05. This amount will consist of [1] the
larger of [a] the annualized base salary the Employee was receiving on the Date
of Termination or [b] the annualized salary the Employee was receiving on the
date of the Change in Control, multiplied by [2] 100 percent.
2.11 EMPLOYER. The Group Member by which the Employee is directly employed on
the date of any event, act or occurrence described in this Agreement, including
execution of this Agreement. If, without incurring a Termination, the Employee
becomes an employee of a Group
4
Member other than the Employer, that Group Member will automatically become the
Employee's "Employer" under this Agreement and will be fully liable, as the
Employee's Employer, for all obligations arising under this Agreement, including
the payment of any amount described in Section 5.00 that becomes due during the
course of that employment relationship.
2.12 EXCHANGE ACT. The Securities Exchange Act of 1934, as amended, or any
successor statute.
2.13 GOOD REASON. Any of the following to which the Employee has not consented
in writing:
[1] At any time after a Change in Control and as of any time during the
Effective Period, any breach of this Agreement of any nature whatsoever by
or on behalf of the Group or any Group Member;
[2] At any time after a Change in Control and as of any time during the
Effective Period, a reduction in the Employee's title, duties,
responsibilities or status, as compared to either [a] the Employee's
title, duties, responsibilities or status immediately before a Change in
Control or [b] any enhanced or increased title, duties, responsibilities
or status assigned to the Employee after the Change in Control;
[3] At any time after a Change in Control and as of any time during the
Effective Period, the permanent assignment to the Employee of duties that
are inconsistent with [a] the Employee's office immediately before the
date of a Change in Control or [b] any more senior office to which the
Employee is promoted after a Change in Control;
[4] During any calendar year ending after a Change in Control and as of
any time during the Effective Period, a 15 percent (or larger) reduction
(other than a reduction that is attributable to any [a] Termination for
[i] death, [ii] Termination after reaching Retirement Age, [iii]
Disability or [iv] Cause, [b] voluntary Termination by the Employee other
than for Good Reason attributable to an event or condition arising under
other subsections of this definition or [c] for any period of temporary
absence initiated by the Employee and approved by the Employer) in the
highest of [d] the Employee's total cash compensation for the preceding
calendar year (including base salary, bonus potential, employee benefits
and fringe benefits) or, if higher, [e] the Employee's total cash
compensation for the last calendar year ending before the Change in
Control (including base salary, bonus potential, employee benefits and
fringe benefits) but [f] in both cases, determined without regard to any
amounts, paid or payable, under Section 5.01[2] through 5.01[8];
[5] At any time after a Change in Control and as of any time during the
Effective Period, a requirement that the Employee relocate to a principal
office or worksite (or accept indefinite assignment) to a location more
than 50 miles distant from [a] the principal office or worksite to which
the Employee was assigned immediately before a Change in Control or [b]
any location to which the Employee agreed, in writing, to be assigned
after a Change in Control;
[6] At any time after a Change in Control and as of any time during the
Effective Period, the imposition on the Employee of business travel
obligations substantially greater than the Employee's business travel
obligations during the 12-consecutive-
5
calendar-month period ending before the Change in Control but determined
without regard to any special business travel obligations associated with
activities relating to the Change in Control;
[7] At any time after a Change in Control and as of any time during the
Effective Period, the Employer's [a] failure to continue in effect any
material fringe benefit or compensation plan, retirement or deferred
compensation plan, life insurance plan, health and accident plan, sick pay
plan or disability plan in which the Employee is participating at the time
of a Change in Control, [b] modification of any of the plans or programs
just described that adversely affects the value of the Employee's benefits
under those plans or [c] failure to provide the Employee, after a Change
in Control, with the same number of paid vacation days to which the
Employee is or becomes entitled at or anytime on or after a Change in
Control under the terms of the Employer's vacation policy or program.
However, Good Reason will not arise under this subsection solely because
[d] the Corporation or the Employer terminates or modifies any program
after a Change in Control solely to comply with applicable law but only to
the extent of the legally required change, [e] a plan or benefit program
expires under self-executing terms contained in that plan or benefit
program before the Change in Control or [f] the Corporation or the
Employer replaces a plan or program with a successor plan or program of
equal or equivalent value to the Employee;
[8] For the duration of any period of any absence from active employment
that begins or continues at any time after a Change in Control and before
the earlier of Termination or the end of the Effective Period, failure to
provide or continue any benefits (including disability benefits) available
to employees who are absent from active employment (including because of
disability) under programs maintained by the Employer on the date the
absence (including disability) begins;
[9] During any period after a Change in Control and as of any time during
the Effective Period, the Employee is unable to perform normally assigned
duties because of a physical or mental condition and before the Employee
Terminates, the Employer delivers to the Employee a Notice of Termination
that is inconsistent with any disability program maintained by the
Employer on the date of the Change in Control;
[10] After a Change in Control and as of any time during the Effective
Period, the Employer unsuccessfully attempts to Terminate the Employee for
Cause, in which case the Effective Period will not end earlier than 60
days after the conclusion of the Employer's unsuccessful attempt to
Terminate the Employee for Cause;
[11] After a Change in Control and as of any time during the Effective
Period, the Employer attempts to amend or terminate this Agreement without
regard to the procedures described in Sections 6.01 or 6.02; or
[12] For any act or event described in Section 2.13[1] through [11] that
occurs within six months before a Change in Control.
6
2.14 GROUP. The Employer, the Corporation, the Company and any other entity to
which either is related through common ownership as defined in Code section 1504
either on the Effective Date or at any time during the Term.
2.15 GROUP MEMBER. Each entity that is a member of the Group either on the
Effective Date or at any time during the Term.
2.16 NOTICE OF PAYMENT. The written notice by which the Employer apprises the
Employee of [1] the amount of any payment due under this Agreement, [2] the
reason that amount is payable and [3] the basis on which that payment was
calculated.
2.17 NOTICE OF TERMINATION. A written notice that describes in reasonable detail
the facts and circumstances claimed to provide a basis for Termination.
2.18 PARTIES. The Employer, the Corporation, the Company and the Employee.
2.19 RETIREMENT AGE. The latest date on which the Employee is first entitled to
retire and receive unreduced normal retirement benefits under any tax-qualified
retirement plan sponsored by the Employer.
2.20 TERM. Initially, the period beginning on the Effective Date and ending
midnight, December 31, ______ ("Termination Date"). Subject to Section 6.02, the
Term will automatically be extended for successive one-year periods beginning on
the Termination Date and anniversaries of each Termination Date.
2.21 TERMINATION. Termination of the employee-employer relationship between the
Employee and all Group Members for any reason, whether or not the Employee
subsequently becomes a consultant or adviser to any Group Member or serves as a
member of the board of directors of any Group Member and regardless of services
performed pursuant to Sections 3.02 through 3.09. However, a Termination will
not be deemed to have occurred [1] solely because the Employee's Employer ceases
to be a Group Member and the Employee continues to be employed by that former
Group Member or, [2] subject to Section 4.06, if the Employee's employment
relationship is transferred between Group Members without interruption.
3.00 EMPLOYEE'S OBLIGATIONS
By signing this Agreement, the Employee agrees to be bound by and to comply with
the following restrictions, whether or not the Employee also receives the
Employee Obligation Payments or any of the amounts and benefits described in
Section 5.00.
3.01 SERVICES DURING CERTAIN EVENTS. If any "person" (as used in Section
2.03[1][c]) initiates a tender or exchange offer, distributes proxy materials to
the Corporation's shareholders or takes other steps to effect, or that may
result in, a Change in Control, the Employee agrees not to Terminate voluntarily
during the pendency of that activity other than by reason of Termination after
reaching Retirement Age or Disability and to continue to serve as a full-time
employee of the Employer until those efforts are abandoned, that activity is
terminated or until a Change in Control has occurred.
7
3.02 CONFIDENTIAL INFORMATION. In exchange for the compensation described in
Sections 2.10[1] and [2][a] and subject to Section 4.00, and except as otherwise
required by applicable law, Employee expressly agrees to keep and maintain
Confidential Information confidential and not, at any time during or subsequent
to the Employee's employment with any Group Member, to use any Confidential
Information for Employee's own benefit or to divulge, disclose or communicate
any Confidential Information to any person or entity in any manner except [1] to
employees or agents of the Employer or of the Corporation or any Group Member
that need the Confidential Information to perform their duties on behalf of any
Group Member, [2] in the performance of Employee's duties to the Employer or [3]
as a necessary (and only to the extent necessary) part of any undertaking by the
Employee to enforce the Employee's rights under this Agreement. Employee also
agrees to notify the Corporation promptly of any circumstance Employee believes
may legally compel the disclosure of Confidential Information and to give this
notice before disclosing any Confidential Information.
3.03 SOLICITATION OF EMPLOYEES. In exchange for the compensation described in
Sections 2.10[1] and subject to Section 4.00, the Employee agrees that for two
years after Termination [1] not, directly or indirectly, to solicit any employee
of any Group Member to leave employment with the Group, [2] not, directly or
indirectly, to employ or seek to employ any employee of any Group Member and [3]
not to cause or induce any of the Group's (or Group Member's) competitors to
solicit or employ any employee of any Group Member.
3.04 SOLICITATION OF THIRD PARTIES. In exchange for the compensation described
in Sections 2.10[1] and subject to Section 4.00, the Employee agrees that during
employment and for two years after terminating employment with all Group Members
not, directly or indirectly, to recruit, solicit or otherwise induce or
influence any agent or policy holder, sales representative, lender, lessor,
lessee or any other person having a business relationship with the Group (or any
Group Member) to discontinue or reduce the extent of that relationship except in
the course of discharging the duties described in this Agreement and with the
good faith objective of advancing the Group's (or any Group Member's) business
interests.
3.05 NON-COMPETITION. In exchange for the compensation described in Sections
2.10[1] and subject to Section 4.00, the Employee agrees that for one year after
terminating employment with all Group Members not, directly or indirectly, to
accept employment with, act as a consultant to, or otherwise perform services
that are substantially the same or similar to those for which the Employee was
compensated by any Group Member (this comparison will be based on job-related
functions and responsibilities and not on job title) for any business that
directly competes with any portion of the Group's (or any Group Member's)
business with which the Employee was directly involved at any time during the
five calendar years preceding Termination. This restriction applies to any
parent, division, affiliate, newly formed or purchased business(es) and/or
successor of a business that competes with the Group's (or any Group Member's)
business.
3.06 POST-TERMINATION COOPERATION. The Employee agrees that during and after
employment with any Group Members and without additional compensation (other
than reimbursement for reasonable associated expenses) to cooperate with the
Group (and with each Group Member) in the following areas:
8
[1] COOPERATION WITH THE GROUP. The Employee agrees [a] to be reasonably
available to answer questions for the Group's (and any Group Member's)
officers regarding any matter, project, initiative or effort for which the
Employee was responsible while employed by any Group Member and [b] to
cooperate with the Group (and with each Group Member) during the course of
all third-party proceedings arising out of the Group's (and any Group
Member's) business about which the Employee has knowledge or information.
For purposes of this Agreement, [c] "proceedings" includes internal
investigations, administrative investigations or proceedings and lawsuits
(including pre-trial discovery and trial testimony) and [d] "cooperation"
includes [i] the Employee's being reasonably available for interviews,
meetings, depositions, hearings and/or trials without the need for
subpoena or assurances by the Group (or any Group Member), [ii] providing
any and all documents in the Employee's possession that relate to the
proceeding and [iii] providing assistance in locating any and all relevant
notes and/or documents.
[2] COOPERATION WITH THIRD PARTIES. Unless compelled to do so by
lawfully-served subpoena or court order, the Employee agrees not to
communicate with, or give statements or testimony to, any attorney
representing an interest opposed to the Group's (or any Group Member's)
interest ("Opposing Attorney"), Opposing Attorney's representative
(including private investigator) or current or former employee relating to
any matter (including pending or threatened lawsuits or administrative
investigations) about which the Employee has knowledge or information
(other than knowledge or information that is not Confidential Information
as defined in Section 2.06) as a result of employment with the Group (or
any Group Member). The Employee also agrees to notify the Corporation
immediately after being contacted by a third party or receiving a subpoena
or court order to appear and testify with respect to any matter that may
include a claim opposed to the Group's (or any Group Member's) interest.
However, this subsection will not apply to any effort undertaken by the
Employee to enforce the Employee's rights under this Agreement but only to
the extent necessary for that purpose.
[3] COOPERATION WITH MEDIA. The Employee agrees not to communicate with,
or give statements to, any member of the media (including print,
television or radio media) relating to any matter (including pending or
threatened lawsuits or administrative investigations) about which the
Employee has knowledge or information (other than knowledge or information
that is not Confidential Information as defined in Section 2.06) as a
result of employment with the Group (or any Group Member). The Employee
also agrees to notify the Corporation immediately after being contacted by
any member of the media with respect to any matter affected by this
section.
3.07 NON-DISPARAGEMENT. The Employee, the Corporation and the Company (on their
behalf and on behalf of the Group and each Group Member) agree that neither will
make any disparaging remarks about the other and the Employee will not make any
disparaging remarks about the Corporation's or the Company's Chairman, Chief
Executive Officer or any of the Group's officers, directors or employees.
However, this section will not preclude [1] remarks by any employee of a Group
Member made in the normal course of business, [2] remarks by the Employee that
are required to discharge the Employee's regular duties or other duties
described in this Agreement, [3] the Corporation or the Company from making (or
eliciting from any
9
person) disparaging remarks about the Employee concerning any conduct that may
lead to a termination for Cause, as defined in Section 2.02 (including
initiating an inquiry or investigation that may result in a termination for
Cause), but only to the extent reasonably necessary to investigate the
Employee's conduct and to protect the Group's (or any Group Member's) interests
or [4] any remarks made by either Party that are necessary (but only to the
extent necessary) to resolve any dispute arising under this Agreement and that
are made solely in the context of proceeding undertaken to pursuant to Sections
7.02 and 7.03.
3.08 EFFECT OF BREACH OF OBLIGATIONS. If the Employee breaches any obligation
described in this Agreement:
[1] If that breach occurs before a Change in Control, this Agreement will
terminate as of the date of the breach, even if the fact of the breach
becomes apparent at a later date and no amount will be due under this
Agreement;
[2] If that breach occurs after a Change in Control but before the
Employee has Terminated, this Agreement will terminate as of the date of
the breach, even if the fact of the breach becomes apparent at a later
date and no amounts will be due under this Agreement; or
[3] If that breach occurs after a Change in Control and after the Employee
Terminates, [a] the Corporation will be entitled to the remedies described
in Section 7.00 and [b] Employee will repay the portion of the Employee
Benefit Payment received in exchange for the post-termination commitment
breached plus interest calculated with reference to the mid-term
applicable federal rate [as defined in Code Section 1274(d)] for January 1
of each calendar year, compounded annually until paid.
3.09 RELEASE. In exchange for the payments and benefits to Employee described in
this Agreement, as well as any and all other mutual promises made in this
Agreement, Employee, and his/her personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, legatees, and assigns
agree to release and forever discharge the Corporation, the Company, the Group
and each Group Member their employees, officers, directors, agents, attorneys,
successors and assigns, from any and all claims, suits and/or causes of action
that grow out of or are in any way related to, his/her recruitment to or his/her
employment with any group Member, except Employee does not release and discharge
the Corporation or any other Group Member for any claim that the Corporation or
any Group Member has breached this Agreement. This release includes, but is not
limited to, any claims that the Corporation, the Company or any Group Member
violated the Employee Retirement and Income Security Act, the Age Discrimination
in Employment Act, the Older Worker's Benefit Protection Act, the Americans with
Disabilities Act, Title VII of the Civil Rights Act of 1964, the Family and
Medical Leave Act, any law prohibiting discrimination, harassment, or
retaliation in employment, any claim of promissory estoppel or detrimental
reliance, defamation, intentional infliction of emotional distress, the public
policy of any state, or any federal, state, or local law. Employee agrees, upon
receipt of the payment provided under this Agreement, to reaffirm and execute
this release in writing. If Employee fails to reaffirm and execute this release
within 30 days of the Date of Termination, Employee agrees that the payments
otherwise due under this Agreement will not be due or payable. Specifically,
Employee agrees that a necessary condition for the payment of any
10
of the amounts described in this Agreement (except termination because of death)
is Employee's reaffirmation of this release within 30 days of the Date of
Termination. Employee agrees that the Employee is knowledgeable about the claims
that might arise in the course of employment with the Employer and all Group
Members, and that the Employee knowingly agrees that the payments provided for
in this Agreement are satisfactory consideration for the release of such
possible claims. Employee is advised to consult with an attorney before signing
this Agreement. Employee agrees that given 21 days has been given in which to
consider this release. Employee may revoke his/her consent to this Agreement by
delivering a written notice (which may be given only by certified or registered
letter deposited with the U. S. Postal Service, postage paid) of such revocation
within seven days of signing this Agreement. Should Employee revoke this
Agreement, it shall become null and void and Employee must return any amount
received under it.
No provision of this Agreement may be modified or waived except in a document
signed by the Parties. This Agreement constitutes the entire agreement between
the parties regarding to the subject matter of this agreement, and any other
agreements relating to the subject of this agreement are terminated and of no
further force or legal effect. No agreements or representations, oral or
otherwise, with respect to the subject matter of this agreement have been made
or relied upon by either party which are not set forth expressly in this
Agreement.
4.00 COMPENSATION PAID IF EMPLOYEE TERMINATES
AFTER A CHANGE IN CONTROL
4.01 TERMINATION FOR CAUSE.
[1] The Employer may Terminate the Employee for Cause at any time before
or after a Change in Control and for any action or series of acts that
constitute Cause that occurred or began at any time before or after a
Change in Control (other than an action or series of acts the effect of
which was known to the Employer before the Change in Control but, before a
Change in Control, the Employer concluded did not constitute Cause) by
delivering to the Employee a Notice of Termination specifying the
effective date of the Termination (which may not be earlier than the date
the Notice of Termination is given) and the basis upon which the Employer
believes that it has Cause to Terminate the Employee.
[2] As of the Date of Termination specified in the Notice of Termination,
[a] the Employee's employment will end, [b] this Agreement will terminate
and [c] no amounts will be paid or due under this Agreement at any time.
4.02 TERMINATION BECAUSE OF DEATH. Except as provided in Section 4.06, if the
Employee Terminates because of death, this Agreement will terminate as of the
date the Employee dies and no amounts will be paid or due under this Agreement
at any time.
4.03 TERMINATION AT OR AFTER RETIREMENT AGE. Except as provided in Section 4.06,
no benefits will be paid under this Agreement of the Employee Terminates
employment at or after Retirement Age.
11
4.04 TERMINATION BECAUSE OF DISABILITY. Except as provided in Section 4.06 and
in the last sentence of this section, if the Employee Terminates because of
Disability, this Agreement will terminate as of the date specified in the Notice
of Termination and no amounts will be paid or due under this Agreement at any
time. However, if ant any time during the Effective Period, the Employer
terminates disability benefits payable to the Employee during Disability,
regardless of whether that Disability began before or after the Change in
Control, the Employee will be deemed to have Terminated for Good Reason and will
be entitled to the amounts described in Section 5.00, calculated as of the last
day of the Employee's active employment with any Group Member.
4.05 TERMINATION WITHOUT CAUSE.
[1] The Employer may Terminate the Employee without Cause before or after
a Change in Control for any reason by delivering to the Employee a Notice
of Termination that specifies the Date of Termination, which may not be
earlier than the date the Notice of Termination is given.
[2] If the Notice of Termination without Cause is delivered within the
period beginning six months before and Change in Control and ending on the
last day of the Effective Period and is for reasons other than death,
Disability or Cause or is given after the Employee reaches Retirement Age,
the Corporation or the Company will pay (or cause the Employer to pay) to
the Employee the amount described in Section 5.00. After those amounts
have been paid, this Agreement will terminate and no further amounts will
be paid or due under this Agreement.
[3] The Employer may not Terminate the Employee for Cause if [a] before
the Notice of Termination for Cause is delivered to the Employee, the
Employee has delivered to the Employer a Notice of Termination for Good
Reason and [b] it is subsequently determined that the Employee had Good
Reason to Terminate. If the Employer delivers to the Employee a Notice of
Termination for Cause after the Employee has delivered to the Employer a
Notice of Termination for Good Reason, the Employer's Notice of
Termination for Cause [c] will not become effective until it is
established that the Employee did not have Good Reason to Terminate and
[d] will not be effective at all if it is established that the Employee
did have Good Reason to Terminate.
4.06 TERMINATION FOR GOOD REASON.
[1] The Employee may Terminate for Good Reason after a Change in Control
by delivering to the Company a Notice of Termination for Good Reason
specifying the Date of Termination (which may not be earlier than the date
the Notice of Termination is given) and the basis upon which the Employee
believes that Good Reason has arisen.
[2] A Notice of Termination for Good Reason will be effective only if [a]
it is given before the Employee Terminates because of death, or Disability
or before reaching Retirement Age and [b] it is given no later than 60
days after occurrence of the event or development of the condition upon
which it is based (or, if later, 60 days after the event
12
or development of the condition upon which it is based became apparent),
even if that period ends after the Effective Period.
[3] If [a] the Date of Termination specified in the Notice of Termination
is within the period beginning six months before the beginning of an
Effective Period and ending on the last day of the same Effective Period
and [b] within 30 days after the Date of Termination, the Employer does
not cure the Good Reason event or condition (if the event or condition may
be cured) described in the Notice of Termination, [c] the Corporation or
the Company will pay (or cause the Employer to pay) to the Employee the
amount described in Section 5.00, even if the 30-day correction period
ends after the Effective Period. After those amounts have been paid, this
Agreement will terminate and no further amounts will be paid or due under
this Agreement.
[4] A Notice for Termination for Good Reason that is given within the
period otherwise described in this section will be effective (and the
amounts described in Section 5.00 will be due) even though the Employee
Retires, dies or becomes Disabled before those benefits are paid.
5.00 CHANGE IN CONTROL PAYMENTS
5.01 CALCULATION OF CHANGE IN CONTROL PAYMENTS. Subject to the terms of this
Agreement, if the Employee is Terminated (or deemed Terminated) under Section
4.05 or 4.06, the Corporation or the Company (or the Employer) will:
[1] Continue to pay the Employee's compensation and other benefits through
the Date of Termination and also will pay the Employee the value of any
unused vacation days determined under the Employer's personnel policy. The
amounts attributable to unused vacation [a] will equal the Employee's
annualized base salary at Termination divided by 260 and multiplied by the
number of unused vacation days, [b] will be paid no later than 30 days
after the Employee's Date of Termination and [c] will be based on the
rate of compensation and value of benefits in effect before the Notice of
Termination was delivered.
[2] Reimburse the Employee for the cost of continued participation in all
programs subject to the benefit provisions of the Consolidated Omnibus
Budget Reconciliation Act of 1993 ("COBRA") for the period beginning on
the Employee's Date of Termination and ending on the earlier of [a] the
date the Employee acquires replacement coverage or [b] the maximum
coverage period prescribed by COBRA. These amounts will be reimbursed on
the date the required premium is due; plus
[3] [a] A lump sum amount equal to the difference between [i] the lump sum
present value of all amounts that the Employee would have accrued or been
credited with under each tax-qualified and nonqualified deferred
compensation arrangements in which the Employee actively accrues a benefit
at any time between the date of the Change in Control ("Deferred
Compensation Plans") and the Date of Termination (other than an accretion
based solely on the passage of time), calculated as provided in Section
5.01[3][b] as if the Employee's Date of Termination had been 24 months
after
13
the Employee's actual Date of Termination ("Calculation Period") minus
[ii] the lump sum present value of all amounts actually accrued and
credited under the Deferred Compensation Plans as of the Date of
Termination.
[b] For purposes of this computation and comparison:
[i] The amount determined under Section 5.01[3][a] will be
calculated separately for each Deferred Compensation Plan;
[ii] If a Deferred Compensation Plan is terminated, frozen or
amended to diminish benefit accruals or the rate of benefit
accruals (collectively and separately, these actions are
referred to as "Diminished") before the end of the Calculation
Period, [A] the calculation of the amount described in
Section 5.01[3][a][i] will be made on the assumption that the
Diminished Deferred Compensation Plan had not been Diminished
and [B] calculation of the amount described in Section
5.01[3][a][ii] will be based on the amount actually earned or
accrued under the Diminished Deferred Compensation Plan as of
the date of the Deferred Compensation Plan is Diminished and
(I) will not be adjusted for the portion of any benefit
accretion attributable solely to the passage of time and (II)
will not be adjusted by the amount of any hypothetical benefit
that might have been earned or accrued if the Diminished
Deferred Compensation Plan had not been Diminished;
[iii] The amount calculated under Section 5.01[3][a][i] will
be determined as if the Employee is fully vested in each
Deferred Compensation Plan and the amount calculated under
Section 5.01[3][a][ii] will be determined on the basis of the
Employee's actual vesting service under each Deferred
Compensation Plan;
[iv] Only accruals or allocations attributable to Employer
contributions will be considered;
[v] If any Deferred Compensation Plan requires that the
Employee make either pretax or after-tax contributions as a
condition of accruing a benefit or receiving an allocation,
the calculation and comparison described in Section 5.01[3][a]
will be based on the assumption that, throughout the
Calculation Period, the Employee made pretax or after-tax
contributions (whichever may be applicable) for each period at
the rate required to generate the highest possible accrual or
allocation attributable to Employer contributions and at the
time that would have produced the highest possible accrual or
allocation attributable to Employer contributions (although
the Employee will not be required to make any contributions to
receive the amount described in Section 5.01[3][a]);
14
[vi] The Employee will be deemed to have received compensation
throughout the Calculation Period equal to the rate of
compensation in effect on the Date of Termination;
[vii] The Employee's benefit accrual service will be increased
by the Calculation Period;
[viii] In the case of a Deferred Compensation Plan that is a
defined contribution plan, the lump sum present value of
benefits will be based on [A] the Employee's account balance
as of the Date of Termination and [B] the balance that would
have been credited to the Employee's account if [I] Employer
contributions had continued during the Calculation Period at a
rate equal to the highest of the annualized rate [X] in effect
on the Date of Termination, [Y] in effect for the most
recently completed plan year before the Date of Termination or
[Z] in effect for the most recently completed plan year before
the Change in Control, (II) Employer contributions had been
made throughout the Calculation Period at the time prescribed
in the Deferred Compensation Plan document or if no schedule
is specified in the document, at a time that is consistent
with the Employer's customary practice for the last complete
plan year and [III] the Employee's Deferred Compensation Plan
account had realized investment earnings throughout the
Calculation Period at a rate equal to the larger of [X] the
Discount Rate defined below, [Y] the annualized rate realized
for the last valuation period before the Date of Termination
or [Z] the rate realized for the most recently completed plan
year before the Date of Termination or the rate realized for
the most recently completed plan year before the date of the
Change in Control; and
[ix] In the case of a Deferred Compensation Plan that is a
defined benefit plan, [A][I] the lump sum present value of the
benefit calculated under Section 5.01[3][a][i] will be based
on [Y] the applicable mortality table and the applicable
interest rate determined under Code Section 417(e)(3)(A),
without regard to Code Section 417(e)(3)(B) or [Z] the
actuarial assumptions applied by the Deferred Compensation
Plan for purposes of calculating benefits under Code Section
417(e), if those actuarial assumptions produce a greater
benefit that produced under the assumptions described in
Section 5.01[2][b][ix][I][x] and [II] the lump sum value of
the benefit calculated under Section 5.01[3][a][ii] will be
based on the mortality table and interest rates applied by the
Deferred Compensation Plan to calculate the value of a lump
sum distribution or, if a lump sum form of distribution is not
available under the Deferred Compensation Plan, the
assumptions prescribed in Section 5.01[3][b][ix][A] and [B]
the amount calculated under Sections 5.01[3][a][i] and
5.01[3][a][ii] will be based on the highest accrual rate in
effect [I] on the Date of Termination, [II] for the most
recently completed plan year before the Date of Termination or
[III] for the most recently completed plan year before the
Change in Control.
15
[x] The present value of the lump sum amounts described in
this subsection will be calculated [A] in the case of a
Deferred Compensation Plan that is a defined benefit plan, by
applying the applicable factors described in Section
5.01[3][a][ix] and [B] in the case of a Deferred Compensation
Plan that is a defined contribution plan, by applying a
discount rate over the Calculation Period equal to 120 percent
of the applicable federal rate (determined under Code Section
1274(d) and regulations issued under that Code section)
compounded semiannually. The applicable federal rate to be
used for this purpose is the federal rate that is in effect on
the date as of which the present value is determined, using
the period until the payment otherwise would have been made.
[c] This amount will be paid not more than 60 days after the
occurrence of the event giving rise to the payment obligation.
[4] Reimbursement (or direct payment) for executive outplacement services
from an independent executive outplacement organization until the earlier
of [a] the date the Employee is able to secure acceptable employment
acceptable or [b] the fees paid to the independent executive outplacement
service equal $15,000. This amount will be paid as incurred; and
[5] Pay the Employee a lump sum equal to the amount described in this
Section 5.01[5]. This payment will be made no more than 60 days after the
occurrence giving rise to the payment obligation. The amount payable under
this subsection will be the sum of:
[a] The Employee Obligation Payment; plus
[b] 100 percent of the larger of [i] the annualized base salary rate
the Employee was receiving from the Employer as in effect on the
date of the Change in Control or [ii] the highest annualized base
salary rate the Employee was receiving from the Employer any time
during the 24 months beginning on the date of the Change in Control;
plus
[c] 200 percent of the value of the highest Employee's bonus earned
(in whatever form paid or payable) [i] for the full fiscal year that
ended coincident with or before the Change in Control or [ii] at any
time after the Change in Control occurs; plus
[6] Any other benefits (including change in control benefits) to which the
Employee is entitled under any other plan, program or agreement with the
Corporation, the Company, the Employer or any other Group Member; plus
[7] All awards issued under any equity based compensation plan or program
will become fully exercisable (whether or not exercisable by the terms of
the award agreement), all restrictions will lapse as of the date of the
merger, consolidation or reclassification and the Employee will receive,
upon payment of any exercise price, if applicable, securities or cash, or
both, equal to those the Employee would have been
16
entitled to receive under the plan or agreement if the Employee had
already exercised the award
[8] If appropriate, the additional amount described in Section 5.02.
5.02 EFFECT OF CODE Sections 280G. If the sum of the payments described in
Section 5.01 constitute "excess parachute payments" as defined in Code
Section 280G(b)(1), the Employer will either:
[1] Reimburse the Employee for the amount of any excise tax due under Code
Section 4999, if this procedure provides the Employee with an after-tax
amount that is larger than the after-tax amount produced under Section
5.02[2]; or
[2] Reduce the Employee's benefits under this Agreement so that the
Employee's total "parachute payment" as defined in Code Section
280G(b)(2)(A) under this and all other agreements will be $1.00 less than
the amount that would be an "excess parachute payment" if this procedure
provides the Employee with an after-tax amount that is larger than the
after-tax amount produced under Section 5.02[1].
If Section 5.02[2] applies, within 10 days of the Date of Termination the
Corporation will apprise the Employee of the amount of the reduction ("Notice of
Reduction"). Within 10 days of receiving that information, the Employee may
specify how (and against which benefit or payment source) the reduction is to be
applied ("Notice of Allocation"). The Employer will be required to implement
these directions within 10 days of receiving the Notice of Allocation. If, the
Corporation has not received a Notice of Allocation from the Employee within 10
days of the date of the Notice of Reduction or if the allocation provided in the
Notice of Allocation is not sufficient to fully implement Section 5.02[2], the
Corporation will apply Section 5.02[2] proportionately based on the amounts
otherwise payable under Section 5.01 or, if a Notice of Allocation has been
returned that does not sufficiently implement Section 5.02[2], on the basis of
the reductions specified in the Notice of Allocation.
5.03 CONDITIONS AFFECTING PAYMENTS.
[1] Except as expressly provided in this Agreement, the Employee's right
to receive the payments described in this Agreement will not decrease the
amount of, or otherwise adversely affect, any other benefits payable to
the Employee under any other plan, agreement or arrangement between the
Employee and any Group Member.
[2] The Employee is not required to mitigate the amount of any payment
described in this Agreement by seeking other employment or otherwise, nor,
except as provided in Section 5.01[2], will the amount of any payment or
benefit provided for in this Agreement be reduced by any compensation or
benefits the Employee earns, or is entitled to receive, in any capacity
after Termination or by reason of the Employee's receipt of or right to
receive any retirement or other benefits attributable to employment with
the Group on or after Termination.
[3] However, the amount of any payment made under this Agreement will be
reduced by amounts the Employer is required to withhold in payment (or in
anticipation of payment) of any income, wage or employment taxes imposed
on the payment.
17
[4] If the Employee is a "key employee" as defined in Code Section
409A(a)(2)(B)(i) at the time of Termination, amounts due under this
Agreement will be distributed as the earliest time permitted by Code
Section 409A(a)(2)(B)(i).
6.00 AMENDMENT AND TERMINATION
6.01 AMENDMENT. This Agreement may be amended at any time by written agreement
between the Parties. Also, the Parties agree that this Agreement may be amended,
without any further consideration due to or from either party, to conform with
requirements imposed under Code Section 409A.
6.02 TERMINATION. This Agreement will terminate on the earliest of the following
to occur:
[1] Except as provided in Section 4.00, the Employee's employment with all
Group Members is Terminated before a Change in Control;
[2] Before a Change in Control and except as provided in Section 4.00, the
Employee is reassigned to a more junior position than that held on the
date of this Agreement; however, if the more junior position is in a
classification, the majority of whose members have change in control
agreement, this Agreement will remain in effect, although benefit levels
will automatically be reduced to the level established under those
agreements;
[3] The Parties mutually agree, in writing, to terminate this Agreement,
whether or not it is replaced with a similar agreement;
[4] The Employer notifies the Employee, in writing, that the Agreement is
to terminate at the end of its then current Term. To be effective,
however, this written notice [a] must be given no later than 60
consecutive calendar days before the end of the then current Term but [b]
may never be effective [i] during an Effective Period or [ii] at any time
after the Corporation learns that activities have begun that, if
completed, would cause a Change in Control, although a notice of
termination of this Agreement may be given if those activities end without
generating a Change in Control;
[5] All payments due under this Agreement have been fully paid; or
[6] As provided in (and subject to the terms of) Section 4.00.
7.00 EQUITABLE RELIEF/DISPUTE RESOLUTION
7.01 UNIQUENESS OF OBLIGATIONS. The Employee's obligations described in this
Agreement are of a special and unique character which gives them a peculiar
value to the Group and the Group cannot be reasonably or adequately compensated
solely in damages in an action at law if Employee breaches those obligations.
Employee therefore expressly agrees that, in addition to any other rights or
remedies that the Corporation, the Company, the Employer or the Group may have,
and whether or not the Employee receives the Employee Obligation Payments or any
other payments described in Section 5.00, the Corporation, the Company, the
Employer and the Group will be entitled to injunctive and other equitable relief
in the form of preliminary and permanent
18
injunctions without bond or other security if the Employee actually breaches (or
threatens to breach) any obligation under this Agreement.
7.02 INITIAL RESOLUTION OF DISPUTES AFFECTING PAYMENT AMOUNT.
[1] The Employee may request the Corporation to recalculate the amount of
payments due under this Agreement. That request must [a] be filed in
writing no later than 30 days after the Employee receives the Notice of
Payment and [b] specify the basis upon which the Employee believes that an
additional amount is due. Any request for recalculation that does not
comply with both requirements will be ineffective.
[2] Within 30 days of receiving a request that complies with Section
7.02[1], the Corporation will notify the Employee of any changes to its
calculations and the effect of any changes on the amount payable to the
Employee. If the Corporation does not deliver this information to the
Employee within this 30-day period, the Employee may regard the request as
having been denied.
[3] The Employee expressly waives any right to proceed under Section 7.03
to dispute the calculation of the amount payable under this Agreement
unless and until the administrative remedies described in this Section
7.02 are fully exhausted.
7.03 ARBITRATION Any [1] disagreement concerning the calculation of any payment
due under this Agreement that is not resolved after utilizing the procedures
described in Section 7.02, [2] breach of any term of this Agreement or [3] other
dispute or controversy arising out of or relating to this Agreement, including
the basis on which the Employee is Terminated, will be resolved by arbitration
in accordance with the rules of the American Arbitration Association. The award
of the arbitrator will be final, conclusive and nonappealable and judgment upon
the award rendered by the arbitrator may be entered in any court having
competent jurisdiction. The arbitrator must be an arbitrator qualified to serve
in accordance with the rules of the American Arbitration Association and one who
is approved by the Corporation and the Employee. If the Employee and the
Corporation fail to agree on an arbitrator, each must designate a person
qualified to serve as an arbitrator in accordance with the rules of the American
Arbitration Association and these persons will select the arbitrator from among
those persons qualified to serve in accordance with the rules of the American
Arbitration Association. Any arbitration relating to this Agreement will be held
in the city in which the Employee's last principal place of employment with a
Group Member before the Employee's Date of Termination is or was located or
another place the Parties mutually select immediately before the arbitration.
7.04 COSTS. The Corporation or the Employer will bear all reasonable costs
associated with any dispute arising under this Agreement, including reasonable
accounting and legal fees incurred by the Employee through any proceeding
described in Section 7.02 or 7.03.
7.05 PAYMENT DURING DISPUTE RESOLUTION PERIOD. If otherwise due, the Employer
may not defer (or cause the Employer to defer) payment of any amount that is not
being contested under Section 7.02 or 7.03.
7.06 PAYMENT OF ADDITIONAL AMOUNTS. If the arbitrator decides, at the conclusion
of the arbitration proceedings described in Section 7.03, that the Corporation
has understated the
19
amount due under this Agreement, the Corporation will, subject to application of
Section 5.02 to the aggregate of the amount initially paid under Section 5.00
and the additional award, pay the additional amount, if any, to the Employee
within 30 days after the date of the award along with interest calculated at the
interest rate prescribed in Section 3.08[3]. However, if, after application of
Section 5.02 to the arbitrator's award, the net amount due to the Employee would
not increase, no amounts will be paid under this subsection, regardless of the
arbitrator's award.
7.07 EFFECT OF SUBSEQUENT TAX CLAIM.
[1] EMPLOYEE'S OBLIGATIONS.
[a] The Employee will notify the Corporation in writing of any claim
by the Internal Revenue Service or any other taxing authority
relating to any "excise taxes" arising under Code Section 4999
("Excise Taxes") due with respect to payments under Section 5.00
("Tax Claim"). The Employee must give this notification in writing
as soon as practicable but no later than 10 business days after
receipt of the notice of any Tax Claim. Simultaneously, the Employee
will apprise the Corporation of the nature of the Tax Claim. The
Employee agrees not to pay any Tax Claim before the expiration of
the 30-day period following the date on which the Employee gives
this notice to the Corporation (or any shorter period ending on the
date that any payment of taxes with respect to the Tax Claim is
due).
[b] EMPLOYEE'S DUTY TO COOPERATE. If, before the expiration of the
period described in the last sentence of the preceding subsection,
the Corporation notifies the Employee in writing that it intends to
contest the Tax Claim, the Employee will:
[i] Give the Corporation any information it reasonably
requests in writing that is related to the Tax Claim;
[ii] Take any action in connection with contesting the Tax
Claim that the Corporation reasonably requests in writing,
including accepting legal representation with respect to the
Tax Claim by an attorney selected by the Corporation;
[iii] Cooperate with the Corporation in good faith to contest
the Tax Claim effectively; and
[iv] Permit the Corporation to participate in and to control
any proceedings relating to any Tax Claim.
If the Employee does not comply in every respect with the procedures
described in Section 7.07[1] and Section 7.09, the Corporation will
be discharged from all obligations described in Section 7.07[2].
[2] CORPORATION'S OBLIGATIONS. Upon receipt of the notice described in
Section 7.07[1][a], the Corporation will notify the Employee that it will
either accede to or contest the Tax Claim. If this notice is not given
within 30 days of the receipt of the
20
notice described in Section 7.07[1], the Corporation will be deemed to
have acceded to the Tax Claim.
[a] If the Corporation accedes to the Tax Claim, the Corporation and
the Employee agree that [i] the Corporation will treat the Tax Claim
as a final notice of deficiency and implement Section 7.10 and [ii]
this decision will be binding on the Employee and the Group even if
this procedure results in a smaller after-tax benefit to the
Employee.
[b] If the Corporation decides to contest the Tax Claim, the
Corporation and the Employee agree that the Corporation will:
[i] Assume control of all proceedings taken in connection with
any contest relating to the Tax Claim and, at the
Corporation's sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of any Tax Claim; and
[ii] Directly bear and pay all costs and expenses (including
additional interest and penalties) incurred in connection with
any contest relating to a Tax Claim and, after application of
Section 5.02 with respect to the Tax Claim, will, if
appropriate, indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or income tax, including
associated interest and penalties imposed as a result of the
Corporation's payment of the costs of resisting any Tax Claim.
7.08 REPAYMENT OF REFUNDS. If, after the receipt by the Employee of an amount
under Section 7.07 (including any amount under Section 5.02[2], if applicable),
the Employee becomes entitled to receive any tax refund relating to any
overpayment of any Excise Tax or other tax, including interest and penalties,
the Employee will promptly pay to the Corporation the amount of any refund
(together with any interest received with respect to that refund).
7.09 NOTICE OF EXTENSION OF STATUTE OF LIMITATIONS. The Employee agrees to
notify the Corporation if and when the Employee consents to the extension of the
statute of limitations for any year for which a payment is made under Section
5.00.
7.10 EFFECT OF MISCALCULATING PAYMENT.
[1] If an arbitrator subsequently and conclusively decides the Corporation
has miscalculated the amount of any payment under Section 5.00 and if that
decision, had it been made initially:
[a] Would have resulted in a larger payment than initially
calculated, the Corporation will reapply Sections 5.02[1] and [2]
based on the revised calculation to identify the Employee's revised
payment and immediately pay that additional amount to the Employee.
21
[b] If, after the recalculation described in Section 7.10[1][a], the
Employee is entitled to a smaller amount under this Agreement than
initially calculated, the Corporation and the Employee agree that,
within 30 days of the arbitrator's decision, the Employee will repay
to the Corporation the difference between the amount initially paid
and the amount due under Section 7.10[1][a] along with interest,
calculated from the date of the initial payment, at the lowest prime
rate of interest calculated as provided in Section 3.08[3] during
the period between the date the arbitrator's decision is issued and
the date the excess amount is repaid.
[2] If the Internal Revenue Service issues a final notice of liability
with respect to any Tax Claim, the Corporation will reapply Section 5.02.
If, after that reapplication, the Corporation concludes that a smaller
amount should have been paid to the Employee, the Corporation and the
Employee agree that, within 30 days of the arbitrator's decision, the
Employee will repay to the Corporation the difference between the amount
initially paid and the amount due under Section 7.10 along with interest,
calculated as provided in Section 3.08[3].
8.00 MISCELLANEOUS
8.01 SECURITY. At any time during the Term, the Corporation may provide (or
cause the Employer to provide) security for payment of the amounts and benefits
described in Section 5.00. This security may include one or more of [1] a
stand-by letter of credit issued by a reputable financial institution, [2] an
irrevocable grantor trust (the "Trust") established on terms the Corporation
believes to be appropriate, including a ruling from the Internal Revenue Service
(or opinion of counsel satisfactory to the Corporation), to the effect that any
funds held by the Trust will be includable in the Employee's gross income only
for the taxable year or years paid to the Employee under the terms of the
Trust's related trust agreement or [3] any other form of security the
Corporation believes is appropriate.
8.02 NONASSIGNMENT. The right of an Employee or any other person to receive any
amount under this Agreement may not be assigned, transferred, pledged or
encumbered except by will or by applicable laws of descent and distribution. Any
attempt to assign, transfer, pledge or encumber any amount that is or may be
receivable under this Agreement will be null and void and of no legal effect.
8.03 SUCCESSORS TO THE EMPLOYEE. Subject to Section 8.02, this Agreement inures
to the benefit of and may be enforced by the Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
8.04 TRANSFERS.
[1] If, either before or after a Change in Control, the Employee's
employment relationship shifts within the Group and there has been no
intervening Termination, this Agreement will remain in full force and
effect and for all purposes of this Agreement, the Employee's new Employer
will be substituted for the Employee's prior Employer.
[2] If the Employee's Employer is no longer a Group Member, whether or not
as part of a transaction that constitutes a Change in Control, this
Agreement will remain in full
22
force and effect as described in Section 8.03. However, the Employee will
not be entitled to any amount under this Agreement on account of a Change
in Control that [a] solely affects the Group after that transfer and [b]
is not part of the same transaction through which the Employer left the
Group.
8.05 NOTICES. All notices and other communications provided for in this
Agreement must be written and will be deemed to have been given when deposited
with a reputable delivery service or in United States registered mail, return
receipt requested, postage prepaid. Also,:
[1] All notices must be directed to the address shown on the last page of
this Agreement (or, if appropriate, to the Employee's Beneficiary at the
address shown in the latest Beneficiary designation form filed with the
Employer);
[2] Notices and other communications to the Corporation and the Employer
will not be deemed to have been given unless they are directed to the
attention of the Corporation's Chief Executive Officer and copies are sent
to the Corporation's Secretary.
[3] Neither Party will be required to use any address other than that
shown on the last page of this Agreement (or, if appropriate, the latest
Beneficiary designation the Employee filed with the Corporation) unless
notified of a change in the other Party's (or Beneficiary's) address. Any
change in either Party's (or Beneficiary's) address must be given in
writing to the other Party and will be effective only upon receipt.
8.06 COMPLETE AGREEMENT. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter of this Agreement have
been made by either Party that are not set forth expressly in this Agreement.
8.07 APPLICABLE LAW. The validity, interpretation, construction and performance
of this Agreement will be governed by the laws (but not the law of conflicts of
laws) of the State of Ohio.
8.08 VALIDITY. The invalidity or unenforceability of any provisions of this
Agreement will not affect the validity or enforceability of any other provisions
of this Agreement, which will remain in full force and effect.
23
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement to be
effective as of the date and year first above written.
THE OHIO CASUALTY INSURANCE CORPORATION
By: ______________________________
Title: ___________________________
ADDRESS:
__________________________________
__________________________________
__________________________________
__________________________________
ADDRESS:
__________________________________
__________________________________
__________________________________
24