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Exhibit 10(E)
June 1, 1998
Dear :
The BFGoodrich Company (the "Company") considers the establishment and
maintenance of a sound and vital senior management to be essential to protecting
and enhancing the best interests of the Company and its shareholders. In this
connection, the Company recognizes that, as is the case with many publicly-held
corporations, the possibility of a change in control may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the distraction and even the departure of senior
management personnel to the detriment of the Company and its shareholders.
Accordingly, the Company's Board of Directors has determined that appropriate
steps should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's senior management, including yourself, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control of the
Company.
In order to induce you to remain in the employ of the Company, and to
continue your employment notwithstanding the occurrence or threat of occurrence
of a transaction that results in a change in control of the Company, this letter
agreement ("Agreement") sets forth the employment arrangement and benefits which
the Company agrees will be provided to you in the event a Change in Control (as
hereinafter defined in Paragraph 3) should occur during the term of this
Agreement and in the event that your employment is thereafter terminated under
such circumstances as are expressly provided in Paragraph 5 hereof.
In making provision for the payment of these benefits, it is not the
Company's intention to alter in any way the compensation and benefits that would
be paid to you in the absence of a Change in Control.
1. TERM. This Agreement shall commence on the date hereof and shall
continue through December 31 of this year, provided, however, that commencing on
January 1 of the following year and each January 1st thereafter, the term of
this Agreement shall automatically be extended for one additional year, unless
at least 90 days prior to such January 1st date, the Company shall have given
notice that it does not wish to extend this Agreement. Upon the occurrence of a
Change in Control during the term of this Agreement, including any extensions
thereof, this Agreement shall automatically be extended until the end of your
Period of Employment (as hereinafter defined in Paragraph 2), and may not be
terminated by the Company during such time.
2. PERIOD OF EMPLOYMENT. Your "Period of Employment" shall commence on
the date on which a Change in Control occurs and shall end on the later to occur
of (i) the date which is
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24 months after the date on which such Change in Control occurs, or (ii) the
date which is 24 months after the first date on which a majority of the Board of
Directors (the "Board") of the Company consists of persons who were not members
of the Board on the date immediately preceding the date on which a Change in
Control occurs. Notwithstanding the foregoing, however, your Period of
Employment shall not extend beyond either any Mandatory Retirement Date (as
hereinafter defined in Paragraph 3) applicable to you or the date which is 48
months after the date on which a Change in Control occurs.
3. CERTAIN DEFINITIONS. For purposes of this Agreement:
(a) A "Change in Control" shall mean
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control: (A) any
acquisition directly from the Company (other than by exercise
of a conversion privilege), (B) any acquisition by the Company
or any of its subsidiaries, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or (D)
any acquisition by any corporation with respect to which,
following such acquisition, more than 70% of, respectively,
the then outstanding shares of common stock of such
corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Company Voting Securities immediately prior
to such acquisition in substantially the same proportions as
their ownership, immediately prior to such acquisition, of the
Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be; or
(ii) During any period of two consecutive years,
individuals who, as of the beginning of such period,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the beginning of such period whose election, or
nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
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(iii) Approval by the shareholders of the Company of
a reorganization, merger or consolidation, in each case, with
respect to which all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such reorganization,
merger or consolidation, do not, following such
reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 70% of, respectively, the
then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such
reorganization, merger or consolidation in substantially the
same proportions as their ownership, immediately prior to such
reorganization, merger or consolidation of the Outstanding
Company Common Stock and Outstanding Company Voting
Securities, as the case may be; or
(iv) Approval by the shareholders of the Company of
(A) a complete liquidation or dissolution of the Company or
(B) a sale or other disposition of all or substantially all of
the assets of the Company, other than to a corporation, with
respect to which following such sale or other disposition,
more than 70% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power
of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the
Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be.
(b) The term "Mandatory Retirement Date" shall mean the compulsory
retirement date, if any, established by the Company for those executives of the
Company who, by reason of their positions and the size of their nonforfeitable
annual retirement benefits under the Company's pension, profit-sharing, and
deferred compensation plans, are exempt from the provisions of the Age
Discrimination in Employment Act, 29 U.S.C. Sections 621, et seq, which date
shall not in any event be earlier for any executive than the last day of the
month in which such executive reaches age 65.
4. COMPENSATION DURING PERIOD OF EMPLOYMENT. For so long during your
Period of Employment as you are an employee of the Company, the Company shall be
obligated to compensate you as follows:
(a) You shall continue to receive your full base salary at the rate in
effect immediately prior to the Change in Control. Your base salary shall be
increased annually, with each such increase due on the anniversary date of your
most recent previous increase. Each such increase shall be no less than an
amount which at least equals on a percentage basis the mean of the annualized
percentage increases in base salary for all elected officers of the Company
during the two full calendar years immediately preceding the Change in Control.
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(b) You shall continue to participate in all benefit and compensation
plans (including but not limited to the Stock Option Plan, Long-Term Incentive
Plan, Management Incentive Program, Non-Qualified Benefit Security Plan,
Executive Life Insurance Program, Savings Benefit Restoration Plan, Performance
Share Deferred Compensation Plan, pension plan, savings plan, flexible benefits
plan, life insurance plan, health and accident plan or disability plan) in which
you were participating immediately prior to the Change in Control, or in plans
providing substantially similar benefits, in either case upon terms and
conditions and at levels at least as favorable as those provided to you under
the plans in which you were participating immediately prior to the Change in
Control;
(c) You shall continue to receive all fringe benefits, perquisites, and
similar arrangements which you were entitled to receive immediately prior to the
Change in Control; and
(d) You shall continue to receive annually the number of paid vacation
days and holidays which you were entitled to receive immediately prior to the
Change in Control.
5. COMPENSATION UPON TERMINATION OF EMPLOYMENT. If, during the Period
of Employment, the Company shall terminate your employment for any reason (other
than for a reason and as expressly provided in Paragraph 6 hereof), or if you
shall terminate your employment for "Good Reason" (as hereinafter defined in
subparagraph 5(f)), or without any reason during the "Window Period" (as
hereinafter defined in subparagraph 5(g)) then the Company shall be obligated to
compensate you as follows:
(a) The Company shall pay to you in a lump sum, by not later than the
fifth day following the Date of Termination (as hereinafter defined in Paragraph
8), an amount equal to one-twelfth of your annualized base salary in effect
immediately prior to the Date of Termination, multiplied by the number of
months, including fractional months, in the Payment Period which shall be the
shorter of (A) three (3) years, commencing on the Date of Termination, or (B)
the period from the Date of Termination to your Mandatory Retirement Date, if
any;
(b) By not later than the fifth day following the Date of Termination,
the Company shall pay you in a lump sum an amount equal to the product of (x)
the number of months, including fractional months, in the Payment Period and (y)
the sum of
(i) under the Company's Management Incentive Program the
greatest of one-twelfth of: (A) the amount most recently paid to you
for a full calendar year; (B) your "target incentive amount" for the
calendar year in which your Date of Termination occurs; or (C) your
"target incentive amount" in effect prior to the Change in Control for
the calendar year in which the Change in Control occurs; plus, if
applicable,
(ii) under the Company's Long-Term Incentive Plan the greatest
of (A) one-thirty-sixth of the "calculated market value" of the sum of
(1) the Restricted Shares awarded to you, (2) the Performance Shares as
to which restrictions were removed, if any, and (3) the awarding of
Additional Shares, if any, (including the value of any Performance
Shares you may have elected to defer under the Performance Share
Deferred Compensation Plan) under the Long-Term Incentive Plan for the
Plan Cycle 1995-1997 (if you were a participant in such
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Plan Cycle); (B) with respect to the most recently completed Plan Cycle
commencing with the 1998-2000 Plan Cycle (if completed), one-twelfth of
the "calculated market value" of the Performance Shares actually
awarded to you (including the value of any Performance Shares you may
have elected to defer under the Performance Share Deferred Compensation
Plan); (C) with respect to the most recently commenced Plan Cycle under
the Long-Term Incentive Plan (if you are a participant in such Plan
Cycle) prior to your Date of Termination, the sum of one-twelfth of the
"calculated market value" of the phantom Performance Shares, if any,
awarded to you; or (D) with respect to the most recently commenced Plan
Cycle prior to the date of the occurrence of the Change in Control, the
sum of one-twelfth of the "calculated market value" of the phantom
Performance Shares, if any, awarded to you.
Your "target incentive amount" under the Management Incentive Program
is determined by multiplying your salary range midpoint by the incentive target
percentage which is applicable to your incentive category under such Program.
The "calculated market value" of Restricted Shares, Performance Shares,
Additional Shares, shares deferred under the Performance Share Deferred
Compensation Plan or phantom Performance Shares under the Long-Term Incentive
Plan shall be the mean of the high and low prices of the Company's common stock
on the relevant date as reported on the New York Stock Exchange Composites
Transactions listing (or similar report), or, if no sale was made on such date,
then on the next preceding day on which a sale was made multiplied by the number
of shares involved in the calculation. The relevant date for clauses
5(b)(ii)(A)(1), 5(b)(ii)(C) and 5(b)(ii)(D) is the date upon which the
Compensation Committee ("Committee") of the Board of Directors awarded the
shares of stock in question; for clauses 5(b)(ii)(A)(2) and 5(b)(ii)(A)(3) is
the date on which the Committee made a determination of attainment of financial
objectives and removed restrictions on Performance Shares and, if applicable,
awarded Additional Shares and for clause 5(b)(ii)(B) is the date on which the
Committee made a determination of attainment of financial objectives and awarded
Performance Shares (including any Performance Shares you may have elected to
defer under the Performance Share Deferred Compensation Plan);
(c) If you are under age 55, or over the age of 55 but not eligible to
retire, at the Date of Termination, the Company shall maintain in full force and
effect, for your continued benefit, for the Payment Period, all health and
welfare benefit plans and programs or arrangements in which you were entitled to
participate immediately prior to the Date of Termination, as long as your
continued participation is possible under the general terms and provisions of
such plans and programs. In the event that your participation in any such plan
or program is barred, the Company shall provide you with benefits substantially
similar to those to which you would have been entitled to receive under such
plans and programs, had you continued to participate in them as an executive of
the Company plus an amount in cash equal to the amount necessary to cause the
amount of the aggregate after-tax compensation and employee benefits you receive
pursuant to this provision to be equal to the aggregate after-tax value of the
benefits which you would have received if you continued to receive such benefits
as an employee. If you are age 55 or over and eligible to retire on the Date of
Termination, the Company shall provide you with those health and welfare
benefits to which you would be entitled under the Company's general retirement
policies if you retired on the Termination Date with the Company paying that
percentage of the premium cost of the plans which it would have paid under the
terms of the plans in effect immediately prior to the Change of Control with
respect to individuals who retire at age 65, regardless of your actual age on
the Termination Date, provided
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such benefits would be at least equal to those which would have been payable if
you had been eligible to retire and had retired immediately prior to the Change
in Control;
(d) The Company shall, for the Payment Period, continue and you shall
be entitled to receive each and every fringe benefit program, perquisite, and
similar arrangement which you were entitled to receive or in which you were
entitled to participate immediately prior to the Date of Termination; and
(e) The Company shall, in addition to the benefits to which you are
entitled under the retirement plans or programs in which you participate, pay
you in a lump sum in cash at your normal retirement date (or earlier retirement
date should you so elect), as defined in the retirement plans or programs in
which you participate, an amount equal to
the actuarial equivalent of the retirement pension to which you would
have been entitled under the terms of such retirement plans or programs
had you accumulated additional years of continuous service under such
plans equal in length to your Payment Period. The length of the Payment
Period will be added to total years of continuous service for
determining vesting, the amount of benefit accrual, to the age which
you will be considered to be for the purposes of determining
eligibility for normal or early retirement calculations and the age
used for determining the amount of any actuarial reduction. For the
purposes of calculating benefit accrual, the amount of compensation you
will be deemed to have received during each month of your Payment
Period shall be equal to the sum of your annual base salary prorated on
a monthly basis as provided for under subparagraph 4(a) immediately
prior to the Date of Termination (including salary increases), plus
under the Company's Management Incentive Program the greatest of
one-twelfth of:
(i) the amount most recently paid to you for a full
calendar year,
(ii) your "target incentive amount" for the calendar
year in which your Date of Termination occurs, or
(iii) your "target incentive amount" in effect prior
to the Change in Control for the calendar year in which the
Change in Control occurs
reduced by the actuarial equivalent of any amounts to which you are
actually entitled pursuant to the provisions of said retirement plans
and programs.
For purposes of illustration, but not intending to be exhaustive, the following
are examples of how inclusion of the Payment Period may affect the calculation
of your retirement benefit.
A. If as of your Date of Termination your actual years of
service plus the length of your Payment Period is at least 10, then
1) If as of your Date of Termination your age plus
the length of your Payment Period is at least 65, your
retirement benefit under subparagraph 5(e) will be calculated
as a "normal retirement" benefit to which you would have been
entitled
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under the terms of the retirement plan in which you
participate had you accumulated continuous service equal to
such sum; and
2) If as of your Date of Termination your age plus
the length of your Payment Period is at least 55 but less than
65, your retirement benefit under subparagraph 5(e) will be
calculated as an "early retirement" benefit to which you would
have been entitled under the terms of the retirement plan in
which you participate had you accumulated continuous service
equal to such sum. The actuarial reduction used shall be the
actuarial reduction factor for early retirement, calculated to
your actual age plus the length of your Payment Period at your
Date of Termination.
Furthermore, if you were on the active rolls of the Company as
of December 31, 1989 and if the sum of your actual years of service
plus the length of your Payment Period is at least 10 but less than 24,
then for purposes of subparagraph 5(e) you will also receive an
Additional Credit for up to 4 years. The Additional Credit you will
receive will depend upon the sum of the years of your actual service
plus the length of your Payment Period and will be equal to the lesser
of:
(x) 4 years of Additional Credit; or
(y) The amount of Additional Credit needed such that,
when added to the sum of your actual years of service plus the
length of your Payment Period, it will create a total of
exactly 24.
No Additional Credit will be applied if the sum of your actual years of
service plus the length of your Payment Period is 24 or greater. You
will not receive any Additional Credit if you commenced employment with
the Company on or after January 1, 1990.
B. If as of your Date of Termination the sum of your actual
years of service plus the length of your Payment Period is less than
10, or your age plus the length of your Payment Period is less than 55,
your retirement benefit under subparagraph 5(e) will be calculated as a
"deferred vested pension" to which you would have been entitled under
the terms of the retirement plan in which you participate had you
accumulated continuous service equal to such sum. The actuarial
reduction used shall be the actuarial reduction factor for a deferred
vested pension, calculated to your actual age at your Date of
Termination plus the length of your Payment Period.
For purposes of this subparagraph 5(e), "actuarial equivalent" shall be
determined using the same methods and assumptions as those utilized under the
Company's retirement plans and programs immediately prior to the Change in
Control.
(f) For purposes of this Agreement, "Good Reason" shall mean:
(i) except as a result of the termination of your employment
pursuant to Paragraph 6 hereof and without your express written
consent, (A) the assignment to you of any new
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duties or responsibilities inconsistent with your positions, duties,
responsibilities, and reporting relationships and status within the
Company immediately prior to a Change in Control, (B) a change in your
duties, responsibilities, reporting relationships, titles or offices as
in effect immediately prior to a Change in Control, except that a
reduction in your duties or responsibilities which occurs solely
because the Company is no longer an independent publicly-held entity
shall not be deemed to be a reduction in your duties, or (C) any
removal of you from or any failure to re-elect you to any of such
positions;
(ii) the failure of the Company to comply with any of its
obligations under Paragraph 4 herein;
(iii) the relocation of the offices of the Company at which
you were employed immediately prior to the Change in Control to a
location which is more than twenty (20) miles from such prior location,
any increase in your obligation to travel on the Company's business
over your present business travel obligations, or the failure of the
Company to (A) pay or reimburse you, in accordance with the Company's
presently existing relocation policy for its employees, for all
reasonable costs and expenses, plus "gross-ups" referred to in such
policy incurred by you relating to a change of your principal residence
in connection with any relocation of the Company's offices to which you
consent, and (B) indemnify you against any loss (defined as the
difference between the actual sale price of such residence and the
higher of (1) your aggregate investment in such residence or (2) the
fair market value of such residence as determined by the relocation
management organization used by the Company immediately prior to the
Change in Control (or other real estate appraiser designated by you and
reasonably satisfactory to the Company)) realized in the sale of your
principal residence in connection with any such change of residence;
(iv) the failure of the Company to obtain the assumption of
and the agreement to perform this Agreement by any successor as
contemplated in Paragraph 11 hereof; or
(v) any purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Paragraph 7 hereof.
(g) For purposes of this Agreement, the "Window Period" shall mean the
thirty (30) day period immediately following the first anniversary of the date
on which the Change in Control occurs.
6. TERMINATION FOR CAUSE. If your employment is terminated for any of
the following reasons and in accordance with the provisions of this Paragraph 6,
you shall not be entitled by virtue of this Agreement to any of the benefits
provided in the foregoing Paragraph 5:
(a) If, as a result of your incapacity due to physical or mental
illness, you shall have been absent from your duties with the Company on a
full-time basis for 120 consecutive business days, and within thirty (30) days
after a written Notice of Termination (as hereinafter defined in Paragraph 7) is
given, you shall not have returned to the full-time performance of your duties;
(b) If the Company shall have Cause. For the purposes of this
Agreement, the Company shall have "Cause" to terminate your employment hereunder
upon (i) the willful and continued failure by
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you to substantially perform your duties with the Company, which failure causes
material and demonstrable injury to the Company (other than any such failure
resulting from your incapacity due to physical or mental illness), after a
demand for substantial performance is delivered to you by the Board which
specifically identifies the manner in which the Board believes that you have not
substantially performed your duties, and after you have been given a period
(hereinafter known as the "Cure Period") of at least thirty (30) days to correct
your performance, or (ii) the willful engaging by you in other gross misconduct
materially and demonstrably injurious to the Company. For purposes of this
paragraph, no act, or failure to act, on your part shall be considered "willful"
unless conclusively demonstrated to have been done, or omitted to be done, by
you not in good faith and without reasonable belief that your action or omission
was in the best interests of the Company.
Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters of the entire membership of
the Board at a meeting of the Board called and held for the purpose (after
reasonable notice to you and an opportunity for you, together with your counsel,
to be heard before the Board), finding that in the good faith opinion of the
Board you were guilty of conduct set forth above in clauses (i), including the
expiration of the Cure Period without the correction of your performance, or
(ii) of the preceding subparagraph and specifying the particulars thereof in
detail.
(c) If you die while employed by the Company or if you retire from such
employment during your Period of Employment, then you shall not be entitled to
any of the benefits provided by this Agreement and the benefits to which you or
your beneficiary shall be entitled shall be determined without regard to the
provisions hereof.
7. NOTICE OF TERMINATION. Any termination of your employment by the
Company or any termination by you either without any reason during the Window
Period or for Good Reason shall be communicated by written notice to the other
party hereto. For purposes of this Agreement, such notice shall be referred to
as a "Notice of Termination." Such notice shall, to the extent applicable, set
forth the specific reason for termination, and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
your employment under the provision so indicated.
8. DATE OF TERMINATION. "Date of Termination" shall mean:
(a) If you terminate your employment for Good Reason, the date
specified in the Notice of Termination, but in no event more than sixty (60)
days after Notice of Termination is given.
(b) If you terminate your employment without any reason during the
Window Period, unless otherwise specified in the Notice of Termination, as of
the first day during the Window Period.
(c) If your employment is terminated for Cause under subparagraph 6(b),
the date on which a Notice of Termination is given, except that the Date of
Termination shall not be any date prior to the date on which the Cure Period
expires without the correction of your performance.
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(d) If your employment pursuant to this Agreement is terminated
following absence due to physical incapacity, under subparagraph 6(a), then the
Date of Termination shall be thirty (30) days after Notice of Termination is
given (provided that you shall not have returned to the performance of your
duties on a full-time basis during such thirty (30) day period).
A termination of employment by either the Company or by you shall not
affect any rights you or your surviving spouse may have pursuant to any other
agreement or plan of the Company providing benefits to you, except as provided
in such agreement or plan.
9. CERTAIN ADDITIONAL PAYMENTS. (a) Anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any payment
or distribution by the Company to you or for your benefit (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise, but determined without regard to any additional payments required
under this paragraph 9) (a "Payment") would be subject to the excise tax imposed
by Section 4999 (or any successor provisions) of the Internal Revenue Code of
1986, as amended (the "Code"), or any interest or penalties are incurred by you
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the "Excise
Tax"), then you shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by you of all taxes (including
any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed on the Gross-Up Payment, you retain
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of subparagraph 9(c), all determinations
required to be made under this paragraph 9, including whether and when such a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
Ernst & Young (or their successors) (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and to you within fifteen
(15) business days of the receipt of notice from you that there has been a
Payment, or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, you shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
paragraph 9, shall be paid by the Company to you within five (5) days of the
receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by you, it shall furnish you with a
written opinion that failure to report the Excise Tax on your applicable federal
income tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding upon the
Company and you. As a result of the uncertainty of the application of Section
4999 of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 9(c) and you thereafter are required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has
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occurred and any such Underpayment shall be promptly paid by the Company to you
or for your benefit.
(c) You shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after you are informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. You shall not pay such
claim prior to the expiration of the thirty (30) day period following the date
on which it gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due). If the
Company notifies you in writing prior to the expiration of such period that it
desires to contest such claim, you shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold you harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs
and expenses. Without limitation on the foregoing provisions of this
subparagraph 9(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of any such claim and may, at its sole option, either
direct you to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and you agree to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs you to pay such claim
and sue for a refund, the Company shall advance the amount of such payment to
you, on an interest-free basis and shall indemnify and hold you harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for your taxable year with respect to which such contested amount is claimed to
be due is limited solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and you shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
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(d) If, after the receipt by you of an amount advanced by the Company
pursuant to subparagraph 9(c), you become entitled to receive any refund with
respect to such claim, you shall (subject to the Company's complying with the
requirements of subparagraph 9(c)) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by you of an amount advanced by the
Company pursuant to subparagraph 9(c), a determination is made that you shall
not be entitled to any refund with respect to such claim and the Company does
not notify you in writing of its intent to contest such denial of refund prior
to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
10. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL
RIGHTS. You shall not be required to refund the amount of any payment or
employee benefit provided for or otherwise mitigate damages under this Agreement
by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for under this Agreement be reduced by any compensation or the
value of any benefits earned by you as the result of any employment by another
employer after the date of termination of your employment with the Company, or
otherwise.
The provisions of this Agreement, and any payment or benefit provided
for hereunder, shall not reduce any amount otherwise payable, or in any way
diminish your existing rights, or rights which would occur solely as a result of
the passage of time, under any other agreement, contract, plan or arrangement
with the Company.
11. SUCCESSORS AND BINDING AGREEMENT. (a) The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company,
by agreement in form and substance satisfactory to you, to assume and agree to
perform this Agreement.
(b) This Agreement shall be binding upon the Company and any successor
of or to the Company, including, without limitation, any person acquiring
directly or indirectly all or substantially all of the assets of the Company
whether by merger, consolidation, sale or otherwise (and such successor shall
thereafter be deemed "the Company" for the purposes of this Agreement), but
shall not otherwise be assignable by the Company.
(c) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amounts would still be payable to you pursuant to Paragraph 5 hereunder if
you had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your devisee,
legatee, or other designee or, if there be no such designee, to your estate.
12. NOTICES. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid,
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addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company shall be directed to the
attention of the Chief Executive Officer of the Company with a copy to the
Secretary of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
13. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Ohio, without giving effect to the principles of conflict of laws of such State.
14. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in a writing signed by you and the Company. No waiver by either party hereto at
any time of any breach by the other party hereto or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof, have been made by either party which are not set forth expressly in this
Agreement.
15. VALIDITY. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement which shall remain in full force and effect.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same agreement.
17. WITHHOLDING OF TAXES The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or government regulation or ruling.
18. NONASSIGNABILITY. This Agreement is personal in nature and neither
of the parties hereto shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder, except as
provided in Section 11 above. Without limiting the foregoing, your right to
receive payments hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other than by a transfer
by your will or by the laws of descent and distribution and in the event of any
attempted assignment or transfer contrary to this Section the Company shall have
no liability to pay any amounts so attempted to be assigned or transferred.
19. LEGAL FEES AND EXPENSES. If a Change in Control shall have
occurred, thereafter the Company shall pay and be solely responsible for any and
all attorneys' and related fees and expenses incurred by you to successfully (in
whole or in part, and whether by modification of the Company's position,
agreement, compromise, settlement, or administrative or judicial determination)
enforce this Agreement or any provision hereof or as a result of the Company or
any shareholder of the Company contesting the validity or enforceability of this
Agreement or any provision hereof. To
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secure the foregoing obligation, the Company shall, within 90 days after being
requested by you to do so, enter into a contract with an insurance company, open
a letter of credit or establish an escrow in a form satisfactory to you.
20. EMPLOYMENT RIGHTS. Nothing expressed or implied in this Agreement
shall create any right or duty on your part or on the part of the Company to
have you remain in the employment of the Company prior to the commencement of
the Period of Employment; provided, however, that any termination of your
employment, for any reason other than those set forth in Paragraph 6, following
the commencement of any discussion with a third party, or the announcement by a
third party of the commencement of, or the intention to commence, a tender
offer, or other intention to acquire all or a portion of the equity securities
of the Company that ultimately results in a Change in Control shall (unless such
termination is conclusively demonstrated to have been wholly unrelated to any
such activity relating to a Change in Control) be deemed to be a termination of
your employment after a Change in Control for purposes of this Agreement and
both the Period of Employment and the Payment Period shall be deemed to have
begun on the date of such termination.
21. RIGHT OF SETOFF. There shall be no right of setoff or counterclaim
against, or delay in, any payment by the Company to you or your designated
beneficiary or beneficiaries provided for in this Agreement in respect of any
claim against you or any debt or obligation owed by you, whether arising
hereunder or otherwise.
22. RIGHTS TO OTHER BENEFITS. The existence of this Agreement and your
rights hereunder shall be in addition to, and not in lieu of, your rights under
any other of the Company's compensation and benefit plans and programs, and
under any other contract or agreement between you and the Company.
23. SUPERSEDED AGREEMENT. The agreement between you and the Company
dated June 1, 1992 relating to the same subject matter as this Agreement (the
?Original Agreement?), is hereby amended and superseded in its entirety by this
Agreement, and the Original Agreement shall be of no further force or effect as
of the date of this Agreement.
If this letter correctly sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter
which will then constitute our agreement on this subject.
Sincerely,
THE BFGOODRICH COMPANY
ACCEPTED AND AGREED TO By direction of the Compensation
AS OF THE DATE HEREOF. Committee on behalf of the
Board of Directors
___________________________________ By ___________________________________
Employee Signature
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