CHANGE OF CONTROL
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EMPLOYMENT AGREEMENT
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This Change of Control Employment Agreement (the "Agreement") by and between
Energizer Holdings, Inc. (the "Company"), a Missouri corporation, and Joseph E.
Lynch ("Executive"),
WITNESSETH:
WHEREAS, the Company, on behalf of itself, its subsidiaries and its
stockholders, and any successor or surviving entity, wishes to encourage
Executive's continued service and dedication in the performance of his duties,
notwithstanding the possibility, threat or occurrence of a Change of Control of
the Company; and
WHEREAS, the Board of Directors of the Company (the "Board") believes that the
prospect of a pending or threatened Change of Control inevitably creates
distractions and personal risks and uncertainties for its executives, and that
it is in the best interests of Company and its stockholders to minimize such
distractions to certain executives, and the Board further believes that it is in
the best interests of the Company to encourage its executives' full attention
and dedication to their duties, both currently and in the event of any
threatened or pending Change of Control; and
WHEREAS, the Board has determined that appropriate steps should be taken to
reinforce and encourage the continued retention of certain members of the
Company's management, including Executive, and the attention and dedication of
management to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change of
Control.
NOW, THEREFORE, in order to induce Executive to remain in the employ of the
Company and in consideration of his continued service to the Company, the
Company agrees that Executive shall receive the benefits set forth in this
Agreement in the event that Executive's employment with the Company is
terminated subsequent to a Change of Control in the circumstances described
herein, and the parties further agree as follows:
I. Definitions.
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The meaning of each defined term that is used in this Agreement is set
forth below.
(a) AAA. The American Arbitration Association.
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(b) Accounting Firm. The meaning of this term is set forth in
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Subsection IV(e)(ii).
(c) Additional Pay. The meaning of this term is set forth in
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Subsection IV(b).
(d) Agreement Payments. The meaning of this term is set forth in
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Subsection IV(e).
(e) Beneficiaries. The meaning of this term is set forth in Subsection
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VI(b).
(f) Board. The meaning of this term is set forth in the second WHEREAS
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clause of this Agreement.
(g) Business Combination. The meaning of this term is set forth in
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Subsection I(i)(iii).
(h) Cause. For purposes of this Agreement, "Cause" shall mean
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Executive's willful breach or failure to perform his/her employment duties. For
purposes of this Subsection I(h), no act, or failure to act, on the part of
Executive shall be deemed "willful" unless done, or omitted to be done, by
Executive not in good faith and without reasonable belief that such action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, Executive's employment shall not be deemed to have been terminated
for Cause unless and until the Company delivers to Executive a certificate of a
resolution duly adopted by the affirmative vote of not less than seventy-five
percent (75%) of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to Executive and an
opportunity for Executive, together with Executive's counsel, to be heard before
the Board), finding that in the good faith opinion of the Board, Executive has
engaged in such willful conduct and specifying the details of such willful
conduct.
(i) Change of Control. For purposes of this Agreement, a "Change of
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Control" shall be deemed to have occurred if there is a change of control of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not the Company is then
subject to such reporting requirement; provided that, without limitation, such a
Change of Control shall be deemed to have occurred if:
(i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) as currently in effect, of the Exchange Act) is or becomes a
"beneficial owner" (as determined for purposes of Regulation 13D-G, as currently
in effect, of the Exchange Act), directly or indirectly, of securities
representing twenty percent (20%) or more of the total voting power of all of
the Company's then outstanding voting securities. For purposes of this
Agreement, the term "person" shall not include: (A) the Company or any of its
Subsidiaries, (B) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Subsidiaries, or (C) an
underwriter temporarily holding securities pursuant to an offering of said
securities;
(ii) during any period of two (2) consecutive calendar years,
individuals who at the beginning of such period constitute the Board and any new
director(s) whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the Board;
(iii) the stockholders of the Company approve a merger,
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case, unless following
such Business Combination: (i) all or substantially all of the individuals and
entities who were the "beneficial owners" (as determined for purposes of
Regulation 13D-G, as currently in effect, of the Exchange Act) of the
outstanding voting securities of the Company immediately prior to such Business
Combination beneficially own, directly or indirectly, securities representing
more than fifty percent (50%) of the total voting power of the then outstanding
voting securities of the corporation resulting from such Business Combination or
the parent of such corporation (the "Resulting Corporation"); (ii) no "person"
(as such term is used in Section 13(d) and 14(d)(2), as currently in effect, of
the Exchange Act), other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or the Resulting Corporation, is
the "beneficial owner" (as determined for purposes of Regulation 13D-G, as
currently in effect, of the Exchange Act), directly or indirectly, of voting
securities representing twenty percent (20%) or more of the total voting power
of then outstanding voting securities of the Resulting Corporation; and (iii) at
least a majority of the members of the board of directors of the Resulting
Corporation were members of the Board at the time of the execution of the
initial agreement, or at the time of the action of the Board, providing for such
Business Combination;
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company; or
(v) any other event that a simple majority of the Board, in its
sole discretion, shall determine constitutes a Change of Control.
(j) Code. For purposes of this Agreement, "Code" shall mean the
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Internal Revenue Code of 1986, as amended.
(k) Company. The meaning of this term is set forth in the first
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paragraph of this Agreement and in Subsection VI(a).
(l) Controlled Group. For purposes of this Agreement, "Controlled
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Group" shall mean the Company and all of the Company's Subsidiaries.
(m) Disability. For purposes of this Agreement, "Disability" shall
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mean an illness, injury or similar incapacity which 52 weeks after its
commencement, continues to render Executive unable to perform the material and
substantial duties of Executive's position or any substantially similar
occupation or substantially similar employment for which Executive is qualified
or may reasonably become qualified by training, education or experience. Any
question as to the existence of a Disability upon which Executive and the
Company cannot agree shall be determined by a qualified independent physician
selected by Executive (or, if Executive is unable to make such selection, by any
adult member of Executive's immediate family or Executive's legal
representative), and approved by the Company, such approval not to be
unreasonably withheld. The determination of such physician made in writing to
both the Company and Executive shall be final and conclusive for all purposes of
this Agreement.
(n) Employer. For purposes of this Agreement, "Employer" shall mean
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the Company or the Subsidiary, as the case may be, with which Executive has an
employment relationship.
(o) Exchange Act. This term shall have the meaning set forth in
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Subsection I(i).
(p) Executive. This term shall have the meaning set forth in the first
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paragraph of this Agreement.
(q) Excise Tax. This term shall have the meaning set forth in
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Subsection IV(e)(i).
(r) Good Reason. For purposes of this Agreement, "Good Reason" shall
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mean the occurrence, without Executive's prior express written consent, of any
of the following circumstances:
(i) The assignment to Executive of any duties inconsistent with
Executive's status or responsibilities as in effect immediately prior to a
Change of Control, including imposition of travel obligations which differ
materially from required business travel immediately prior to the Change of
Control;
(ii) Any diminution in the status or responsibilities of
Executive's position from that which existed immediately prior to the Change of
Control, whether by reason of the Company ceasing to be a public company under
the Exchange Act, becoming a subsidiary of a successor public company, or
otherwise;
(iii) (A) A reduction in Executive's annual base salary as in
effect immediately before the Change of Control; or (B) the failure to pay a
bonus award to which Executive is entitled under any short-term incentive
plan(s) or program(s), any long-term incentive plan(s) or program(s), or any
other incentive compensation plan(s) or program(s) of Company in which Executive
participated immediately prior to the time of the Change of Control;
(iv) A change in the principal place of Executive's employment, as
in effect immediately prior to the Change of Control to a location more than
fifty (50) miles distant from the location of such principal place at such time;
(v) The failure by the Company to offer Executive participation in
incentive compensation or stock or stock option plans on at least a
substantially equivalent basis, both in terms of the nature and amount of
benefits provided and the level of Executive's participation, as is then being
provided by the Company to similarly situated peer executives of the Company;
(vi) (A) Except as required by law, the failure by the Company to
offer Executive benefits on at least a substantially equivalent basis, in the
aggregate, to those then being provided by the Company to similarly situated
peer executives of the Company under the qualified and non-qualified employee
benefit and welfare plans of the Company, including, without limitation, any
pension, deferred compensation, life insurance, medical, dental, health and
accident, disability, retirement or savings plan(s) or program(s) offered by the
Company; (B) the taking of any action by the Company that would, directly or
indirectly, materially reduce or deprive Executive of any other perquisite or
benefit then being offered by the Company to similarly situated peer executives
of the Company (including, without limitation, Company-paid and/or reimbursed
club memberships, financial counseling fees and the like); or (C) the failure by
the Company to treat Executive under the Company's vacation policy, past
practice or special agreement in the same manner and to the same extent as then
being provided by the Company to similarly situated peer executives of the
Company;
(vii) The failure of the Company to obtain a satisfactory written
agreement from any successor prior to consummation of the Change of Control to
assume and agree to perform this Agreement, as contemplated in Subsection VI(a);
or
(viii) Any purported termination by the Company of Executive's
employment that is not effected pursuant to a Notice of Termination satisfying
the requirements of Subsection III(d) or, if applicable, Subsection I(h). For
purposes of this Agreement, no such purported termination shall be effective
except as constituting Good Reason.
Executive's continued employment with the Company or any Subsidiary shall not
constitute a consent to, or a waiver of rights with respect to, any
circumstances constituting Good Reason hereunder. Any good faith determination
of "Good Reason" made by the Executive shall be conclusive for purposes of this
Agreement.
(s) Gross-Up Payment. The meaning of this term is set forth in
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Subsection IV(e)(i).
(t) Notice of Termination. The meaning of this term is set forth in
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Subsection III(d).
(u) Other Payments. The meaning of this term is set forth in
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Subsection IV(e)(i).
(v) Payments. The meaning of this term is set forth in Subsection IV(e)(i).
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(w) Resulting Corporation. The meaning of this term is set forth in
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Subsection I(i)(iii).
(x) Retirement. For purposes of this Agreement, "Retirement" shall
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mean Executive's voluntary termination of employment with the Company, other
than for Good Reason, and in accordance with the Company's retirement policy
generally applicable to its employees or in accordance with any prior or
contemporaneous retirement agreement or arrangement between Executive and the
Company.
(y) Severance Bonus Amount. For purposes of this Agreement, "Severance
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Bonus Amount" means the greatest of (i) an amount determined by averaging the
percentages of Executive's base salary which were actually awarded to Executive
as incentive bonuses under short-term incentive plans of the Company or any of
its Subsidiaries for the five most recently completed fiscal years prior to the
fiscal year in which the Change of Control occurs, and multiplying such average
percentage by the greater of (A) Executive's annual base salary in effect
immediately prior to the Termination Date, or (B) Executive's annual base salary
in effect as of the date of the Change of Control; (ii) Executive's Target Bonus
for the fiscal year in which the Change of Control occurs, or (iii) the
Executive's Target Bonus for the fiscal year in which the Termination Date
occurs. For purposes of the calculation in (i) above, if the five most recently
completed fiscal years include any periods during which Executive was not
employed by the Company or any of its Subsidiaries, the average shall be
determined only for those years during which Executive was so employed.
(z) Subsidiary. For purposes of this Agreement, "Subsidiary" shall
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mean any corporation of which fifty percent (50%) or more of the voting stock is
owned, directly or indirectly, by the Company.
(aa) Target Bonus. For purposes of this Agreement, "Target Bonus"
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means the assigned bonus target for the Executive under any short-term incentive
plan(s) of the Company, multiplied by his or her base salary, for the relevant
fiscal year. If the Executive's base salary is changed during the relevant
fiscal year, the Target Bonus shall be calculated by multiplying the Executive's
assigned bonus target by the highest base salary in effect during that fiscal
year.
(bb) Terminate(d) or Termination. The meaning of this term is set
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forth in Subsection III(c).
(cc) Termination Date. For purposes of this Agreement, "Termination
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Date" shall mean:
(i) If Executive's employment is terminated for Disability, thirty
(30) calendar days after Notice of Termination is given (provided that Executive
shall not have returned to the full-time performance of his/her duties during
such thirty-day period); and
(ii) If Executive's employment is terminated for Cause or Good
Reason or for any reason other than death or Disability, the date specified in
the Notice of Termination (which in the case of a termination for Cause shall
not be less than thirty (30) calendar days and in the case of a termination for
Good Reason shall not be less than thirty (30) calendar days nor more than sixty
(60) calendar days, respectively, from the date such Notice of Termination is
given).
II. Term of Agreement.
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(a) General. Upon execution by Executive, this Agreement shall
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commence effective as of March 28, 2003. This Agreement shall continue in
effect through April 1, 2005; provided, however, that commencing on April 1,
2005, and every second April 1 thereafter, the term of this Agreement shall
automatically be extended for two (2) additional years unless, not later than
ninety (90) calendar days prior to the date on which this Agreement otherwise
automatically would be extended, the Company shall have given notice to
Executive that it does not wish to extend this Agreement; provided further,
however, that if a Change of Control shall have occurred during the original or
any extended term of this Agreement, this Agreement shall continue in effect for
a period of twenty-four (24) months beyond the month in which the Change of
Control occurred. The term of this Agreement automatically shall be extended
for two (2) additional years from the date of any public announcement of an
event that would constitute a Change of Control as defined in this Agreement;
provided, however, that if any such announced event is not consummated within
that two (2) year period, the original extended term thereafter shall apply.
(b) Disposition of Employer. In the event Executive is employed by a
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Subsidiary, the terms of this Agreement shall expire if such Subsidiary is sold
or otherwise disposed of prior to the date on which a Change of Control occurs,
unless Executive continues in employment with the Controlled Group after such
sale or other disposition. If Executive's Employer is sold or disposed of on or
after the date on which a Change of Control occurs, this Agreement shall
continue through its original term or any extended term then in effect.
(c) Deemed Change of Control. If Executive's employment with Employer
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is terminated prior to the date on which a Change of Control occurs, and such
termination was at the request of a third party who has taken steps to effect a
Change of Control, or otherwise was in connection with the Change of Control,
then for all purposes of this Agreement, a Change of Control shall be deemed to
have occurred prior to such termination.
(d) Expiration of Agreement. No termination or expiration of this
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Agreement shall affect any rights, obligations or liabilities of either party
that shall have accrued on or prior to the date of such termination or
expiration.
III. Benefits Following Change of Control.
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(a) Accelerated Vesting in All Equity. If a Change of Control shall
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have occurred, Executive shall be entitled to, immediately upon the date of the
Change of Control, accelerated vesting of all unvested stock options and
restricted stock that have been granted or sold to the Executive by the Company
under any restricted terms, such that following said acceleration, all
restrictions as to the sale and ownership of this equity, as imposed by the
Company, shall have lapsed.
(b) Prorated Payout of Short Term Bonus. If a Change of Control shall
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have occurred, Executive shall be entitled to, immediately upon the date of the
Change of Control, payment in full of Executive's prorated bonus for the fiscal
year in which the Change of Control occurs. The prorated bonus amount shall be
calculated as Executive's Target Bonus for the fiscal year in which the Change
of Control occurs, or, if greater, the actual bonus awarded to Executive under
any short-term incentive plan(s) of the Company for the fiscal year immediately
preceding the fiscal year in which the Change of Control occurs, divided by 365
and multiplied by the number of calendar days in said year immediately up to the
day on which the Change of Control occurs.
(c) Entitlement to Benefits Upon Termination. If a Change of Control
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shall have occurred, Executive shall be entitled to, in addition to the benefits
described in Subsections III(a) and (b), the benefits provided in Section IV
hereof upon the subsequent termination of his/her employment with the Company
within two (2) years after the date of the Change of Control unless such
termination is (i) a result of Executive's death or Retirement, (ii) for Cause,
(iii) a result of Executive's Disability, or (iv) by Executive other than for
Good Reason. For purposes of this Agreement, "Termination" shall mean a
termination of Executive's employment that is not as a result of Executive's
death, Retirement or Disability and (x) if by the Company, is not for Cause, or
(y) if by Executive, is for Good Reason.
(d) Notice of Termination. Any purported termination of Executive's
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employment by either the Company or Executive shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section VIII.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice that indicates the specific provision(s) of this Agreement relied upon
and sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision(s)
so indicated. If Executive's employment shall be terminated by the Company for
Cause or by Executive for other than Good Reason, the Company shall pay
Executive his/her full base salary through the Termination Date at the salary
level in effect at the time Notice of Termination is given and shall pay any
amounts to be paid to Executive pursuant to any other compensation or stock or
stock option plan(s), program(s) or employment agreement(s) then in effect, and
the Company shall have no further obligations to Executive under this Agreement.
If within thirty (30) calendar days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the grounds for termination, then, notwithstanding the
meaning of "Termination Date" set forth in Subsection I(aa), the Termination
Date shall be the date on which the dispute is finally resolved, whether by
mutual written agreement of the parties or by a decision rendered pursuant to
Section XI; provided that the Termination Date shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay Executive his/her full compensation including, without limitation, base
salary, bonus, incentive pay and equity grants, in effect when the notice of the
dispute was given, and continue Executive's participation in all benefits plans
or other perquisites in which Executive was participating, or which Executive
was enjoying, when the Notice of Termination giving rise to the dispute was
given, until the dispute is finally resolved. Amounts paid under this
Subsection III(d) are in addition to and not in lieu of all other amounts due to
Executive under this Agreement and shall not be offset against or reduce any
other amounts due to Executive under this Agreement.
IV. Compensation Upon a Termination.
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Following a Change of Control, upon Executive's Termination, Executive shall be
entitled to the following benefits, provided that such Termination occurs during
the two (2) year period immediately following the date of the Change of Control:
(a) Standard Benefits. The Company shall pay Executive his/her full
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base salary through the Termination Date at the rate in effect at the time the
Notice of Termination is given, no later than the second business day following
the Termination Date, plus all other amounts to which Executive is entitled
under any compensation plan(s) or program(s) of the Company applicable to
Executive at the time such payments are due. Without limitation, amounts
payable pursuant to this Subsection IV(a) shall include, pursuant to the express
terms of any short-term incentive plan(s) in which Executive participates or
otherwise, Executive's Target Bonus for the then-current fiscal year, pro-rated
to the Termination Date. If the Termination Date shall fall within the same
short-term incentive period, as set forth by the express terms of any of the
short-term incentive plan(s) in which Executive participates or otherwise, as of
the Change of Control Date, and Executive has previously received the prorated
bonus amount as described in Subsection III(b), then Executive shall be paid the
difference between the prorated bonus amount as described here in Subsection
IV(a) and the prorated bonus amount described in Subsection III(b).
(b) Additional Benefits. The Company shall pay to Executive as
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additional pay ("Additional Pay"), the product of two (2) multiplied by the sum
of (x) the greater of (i) Executive's annual base salary in effect immediately
prior to the Termination Date, or (ii) Executive's annual base salary in effect
as of the date of the Change of Control, and (y) Executive's Severance Bonus
Amount. The Company shall pay the Additional Pay to Executive in a lump sum, in
cash, not later than the fifteenth calendar day following the Termination Date.
The Company shall maintain for Executive all such perquisites and fringe
benefits enjoyed by Executive immediately prior to the Termination Date as are
approved in writing by the Company's Chief Executive Officer for such period as
is specified in such writing.
(c) Retirement Plan Benefits. If not already vested, Executive shall
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be deemed fully vested as of the Termination Date in any Company retirement
plan(s) or other written agreement(s) between Executive and the Company relating
to pay or other benefits upon retirement in which Executive was a participant,
party or beneficiary immediately prior to the Change of Control, and any
additional plan(s) or agreement(s) in which such Executive became a participant,
party or beneficiary thereafter. In addition to the foregoing, for purposes of
determining the amounts to be paid to Executive under such plan(s) or
agreement(s), the years of service with the Company and the age of Executive
under all such plans and agreements shall be deemed increased by twenty-four
months (24). For purposes of this Subsection IV(c), the term "plan(s)"
includes, without limitation, the Company's qualified pension plan,
non-qualified pension plans, and any companion, successor or amended plan(s),
and the term "agreement(s)" encompasses, without limitation, the terms of any
offer letter(s) leading to Executive's employment with the Company where
Executive was a signatory thereto, any written amendment(s) to the foregoing and
any subsequent agreements on such matters. In the event the terms of the plans
referenced in this Subsection IV(c) do not for any reason coincide with the
provisions of this Subsection IV(c) (e.g., if plan amendments would cause
disqualification of qualified plans), Executive shall be entitled to receive
from the Company, under the terms of this Agreement, an amount equal to all
amounts Executive would have received, at the time Executive would have received
such amounts, had all such plans continued in existence as in effect on the date
of this Agreement after being amended to coincide with the terms of this
Subsection IV(c).
(d) Health and Other Benefits. Following the Termination Date, the
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Company shall continue to provide, for a period of twenty-four (24) months,
substantially the same level of health, vision and dental benefits to Executive
and Executive's eligible dependents that the Company would provide to Executive
and Executive's eligible dependents if Executive were first eligible for retiree
health, vision and dental benefits immediately prior to the Change of Control.
The eligibility of Executive's dependents shall be determined by the terms of
any retiree health, vision and dental benefit plan(s) or program(s) in effect
immediately prior to the Change of Control.
(e) Gross-Up Payments.
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(i) In the event any payment(s) or the value of any benefit(s) received or
to be received by Executive in connection with Executive's Termination or
contingent upon a Change of Control (whether received or to be received pursuant
to the terms of this Agreement (the "Agreement Payments") or of any other plan,
arrangement or agreement of the Company, its successors, any person whose
actions result in a Change of Control, or any person affiliated with any of them
(or which, as a result of the completion of the transaction(s) causing a Change
of Control, will become affiliated with any of them) ("Other Payments" and,
together with the Agreement Payments, the "Payments")), are determined, under
the provisions of Subsection IV(e)(ii), to be subject to an excise tax imposed
by Section 4999 of the Code (any such excise tax, together with any interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), as
determined in this Subsection IV(e), the Company shall pay to Executive an
additional amount such that the net amount retained by Executive, after any
federal, state, and local income and employment tax and Excise Tax payable by
Executive upon the Payment(s) provided for by this Subsection IV(e)(i), and any
interest, penalties or additions to tax payable by Executive with respect
thereto shall be equal to the Excise Tax imposed on the Payments (the "Gross-Up
Payment(s)"). The intent of the parties is that the Company shall be
responsible in full for, and shall pay, any and all Excise Tax on any Payments
and Gross-Up Payment(s) and any income and all excise and employment taxes
(including, without limitation, penalties and interest) imposed on any Gross-Up
Payment(s) as well as any loss of deduction caused by or related to the Gross-Up
Payment(s).
(ii) All determinations required to be made under this Subsection IV(e),
including, without limitation, whether and when a Gross-Up Payment is required,
and the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determinations, unless otherwise set forth in this Agreement,
shall be made by a nationally recognized certified public accounting firm
selected by the Company and reasonably acceptable to Executive (the "Accounting
Firm"). For purposes of determining the amount of any Gross-Up Payment,
Executive shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made, and state and local income taxes at the highest marginal
rate of taxation in the state and locality of Executive's residence on the
Termination Date, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes. The Company
shall cause the Accounting Firm to provide detailed supporting calculations to
the Company and Executive within fifteen (15) business days after notice is
given by Executive to the Company that any or all of the Payments have occurred,
or such earlier time as is requested by the Company. Within two (2) business
days after such notice is given to the Company, the Company shall instruct the
Accounting Firm to timely provide the data required by this Subsection IV(e)(ii)
to Executive. All fees and expenses of the Accounting Firm shall be paid in
full by the Company. Any Gross-Up Payment as determined pursuant to this
Subsection IV(e)(ii) shall be paid by the Company to the Executive within five
(5) business days after receipt of the Accounting Firm's determination, net of
applicable withholding taxes. If the Accounting Firm determines that there is
substantial authority (within the meaning of Section 6662 of the Code) that no
Excise Tax is payable by Executive, the Accounting Firm shall furnish Executive
with a written opinion that failure to disclose or report the Excise Tax on
Executive's federal income tax return will not constitute a substantial
understatement of tax or be reasonably likely to result in the imposition of a
negligence or any other penalty. Any determination by the Accounting Firm shall
be binding upon the Company and Executive in the absence of material
mathematical or legal error. As a result of the uncertainty in the application
of Section 4999 of the Code at the time the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments will not have
been made by the Company that should have been made or that Gross-Up Payments
will have been made that should not have been made, in each case, consistent
with the calculations required to be made hereunder. In the event the Company
exhausts its remedies pursuant to Subsection IV(e)(iii) below and Executive is
thereafter required to make a payment of any Excise Tax or any interest,
penalties or addition to tax related thereto, the Accounting Firm shall
determine the amount of underpayment of Excise Taxes that has occurred and any
such underpayment and interest, penalties or addition to tax shall be promptly
paid by the Company to Executive along with such additional amounts described in
Section (IV)(e)(i). In the event the Accounting Firm determines that an
overpayment of Gross-Up Payment(s) has occurred, any such overpayment shall be
treated for all purposes as a loan to Executive with interest at the applicable
federal rate provided for in Section 7872(f)(2) of the Code, due and payable
within ninety (90) days after written demand to Executive by the Company;
provided, however, that Executive shall have no duty or obligation whatsoever to
repay such loan if Executive's receipt of the overpayment, or any portion
thereof, is included in Executive's income and Executive's repayment of the same
is not deductible by Executive for federal and state income tax purposes.
(iii) Executive shall notify the Company in writing of any claim of
which Executive is aware by the Internal Revenue Service or state or local
taxing authority, that, if successful, would result in any Excise Tax or an
underpayment of any Gross-Up Payment(s). Such notice shall be given as soon as
practicable but no later than fifteen (15) business days after Executive is
informed in writing of the claim by the taxing authority and Executive shall
provide written notice of the Company of the nature of the claim, the
administrative or judicial appeal period, and the date on which any payment of
the claim must be paid. Executive shall not pay any portion of the claim prior
to the expiration of the thirty (30) day period following the date on which
Executive gives such notice to the Company (or such shorter period ending on the
date that any amount under the claim is due). If the Company notifies Executive
in writing prior to the expiration of such thirty (30) day period that it
desires to contest the claim, Executive shall:
(A) give the Company any information reasonably requested by the Company
relating to the claim;
(B) take such action in connection with contesting the claim as the Company
shall reasonably request in writing from time to time, including without
limitation, accepting legal representation concerning the claim by an attorney
selected by the Company who is reasonably acceptable to Executive; and
(C) cooperate with the Company in good faith in order to effectively contest
the claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including, without limitation, additional interest and penalties and
attorneys' fees) incurred in such contests and shall indemnify and hold
Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including, without limitation, interest and penalties thereon) imposed as a
result of such representation. Without limitation upon the foregoing provisions
of this Subsection IV(e)(iii), except as provided below, the Company shall
control all proceedings concerning such contest and, in its sole opinion, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority pertaining to the claim. At the written
request of the Company and upon payment to Executive of an amount at least equal
to any amount necessary to obtain the jurisdiction of the appropriate taxing
authority and sue for a refund, Executive agrees to prosecute in cooperation
with the Company any contest of a claim 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 requests Executive to pay the claim and sue for a refund, the Company
shall advance the amount of such payment to Executive, on an interest-free
basis, and shall indemnify and hold Executive harmless on an after-tax basis,
from any Excise Tax or income tax (including, without limitation, interest and
penalties thereon) imposed on such advance or for any imputed income on such
advance. Any extension of the statute of limitations relating to assessment of
any Excise Tax for the taxable year of Executive which is the subject of the
claim is to be limited solely to the claim. Furthermore, the Company's control
of the contest shall be limited to issues for which a Gross-Up Payment would be
payable hereunder. Executive 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.
(iv) If after the receipt by Executive of an amount advanced by the
Company pursuant to Subsection IV(e)(iii) above, Executive receives any refund
of a claim or any additional amount that was necessary to obtain jurisdiction,
Executive shall 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 Executive of an amount advanced by the Company pursuant to
Subsection IV(e)(iii) above, a determination is made that Executive shall not be
entitled to any refund of the claim, and the Company does not notify Executive
in writing of its intent to contest such denial of refund of a claim prior to
the expiration of thirty (30) calendar days after such determination, then the
portion of such advance attributable to a claim shall be forgiven by the Company
and shall not be required to be repaid by Executive. The amount of such advance
attributable to a claim shall offset, to the extent thereof, the amount of the
underpayment required to be paid by the Company to Executive.
(f) Legal Fees and Expenses. The Company shall pay to Executive all
--------------------------
legal fees and expenses as and when incurred by Executive in connection with
this Agreement, including all such fees and expenses, if any, incurred in
contesting or disputing any Termination or in seeking to obtain or enforce any
right or benefit provided by this Agreement, regardless of the outcome, unless,
in the case of a legal action brought by or in the name of Executive, a decision
is rendered pursuant to Section XI, or in any other proper legal proceeding,
that such action was not brought by Executive in good faith.
(g) No Mitigation. Executive shall not be required to mitigate the
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amount of any payment provided for in this Section IV by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for in this Section IV be reduced by any compensation earned by Executive as the
result of employment by another employer or by retirement or other benefits
received from whatever source after the Termination Date or otherwise, except as
specifically provided in this Section IV. The Company's obligation to make
payments to Executive provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action that the Company or Employer
may have against Executive or other parties.
V. Death and Disability Benefits.
--------------------------------
In the event of the death or Disability of Executive after a Change of Control,
Executive, or in the case of death, Executive's Beneficiaries (as defined below
in Subsection VI(b)), shall receive the benefits to which Executive or his/her
Beneficiaries are entitled under this Agreement and any and all retirement
plans, pension plans, disability policies and other applicable plans, programs,
policies, agreements or arrangements of the Company.
VI. Successors; Binding Agreement.
-------------------------------
(a) Obligations of Successors. The Company will require any successor
--------------------------
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company is required to perform it. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle
Executive to compensation from the Company in the same amount and on the same
terms as Executive would be entitled hereunder if Executive had terminated
employment for Good Reason following a Change of Control, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Termination Date. As used in this
Agreement, the term "Company" shall mean Company, including any surviving entity
or successor to all or substantially all of its business and/or assets and the
parent of any such surviving entity or successor.
(b) Enforceable by Beneficiaries. This Agreement shall inure to the
------------------------------
benefit of and be enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees (the "Beneficiaries"). In the event of the death of Executive while
any amount would still be payable hereunder if such death had not occurred, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to Executive's Beneficiaries.
(c) Employment. Except in the event of a Change of Control and,
----------
thereafter, only as specifically set forth in this Agreement, nothing in this
Agreement shall be construed to (i) limit in any way the right of the Company or
a Subsidiary to terminate Executive's employment at any time for any reason or
for no reason; or (ii) be evidence of any agreement or understanding, expressed
or implied, that the Company or a Subsidiary will employ Executive in any
particular position, on any particular terms or at any particular rate of
remuneration.
VII. Confidential Information.
-------------------------
Executive shall hold in fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to the Company,
the Subsidiaries and their respective businesses, which shall have been obtained
during Executive's employment with the Employer and which shall not be public
knowledge (other than by acts by Executive or his/her representatives in
violation of this Agreement). After termination of Executive's employment with
the Company or any Employer within the Controlled Group, Executive shall not,
without prior written consent of the Company or the Employer, communicate or
divulge any such information, knowledge or data to anyone other than the
Company, the Employer or those designated by them. In no event shall an
asserted violation of this Section VII constitute a basis for deferring or
withholding any amounts otherwise payable to Executive under this Agreement.
VIII. Notice.
------
All notices and communications including, without limitation, any Notice of
Termination hereunder, shall be in writing and shall be given by hand delivery
to the other party, by registered or certified mail, return receipt requested,
postage prepaid, or by overnight delivery service, addressed as follows:
If to Executive:
Name: Joseph E. Lynch
Title: President, Schick Wilkinson-Sword, Energizer Holdings, Inc.
Address: 10 Leighton Road
Address: Milford, CT 06460
If to the Company:
Energizer Holdings, Inc.
533 Maryville University Drive
St. Louis, MO 63141
Attn: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be deemed given
and effective when actually received by the addressee.
IX. Miscellaneous.
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No provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by
Executive and the Company's Chief Executive Officer or other authorized officer
designated by the Board or an appropriate committee of the Board. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any conditions 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 expressly set
forth in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Missouri. All references to sections of the Code or the Exchange Act shall be
deemed also to refer to any successor provisions of such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law. The obligations of the Company under
Sections IV and V shall survive the expiration of the term of this Agreement.
X. Validity.
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The invalidity or unenforceability of any provision 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.
XI. Arbitration.
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Executive may agree in writing with the Company (in which case this Article XI
shall have effect but not otherwise) that any dispute that may arise directly or
indirectly in connection with this Agreement, Executive's employment or the
termination of Executive's employment, whether arising in contract, statute,
tort, fraud, misrepresentation, discrimination or other legal theory, shall be
resolved by arbitration in City, State under the applicable rules and procedures
of the AAA. The only legal claims between Executive and the Company or any
Subsidiary that would not be included in this agreement to arbitration are
claims by Executive for workers' compensation or unemployment compensation
benefits, claims for benefits under a Company or Subsidiary benefit plan if the
plan does not provide for arbitration of such disputes, and claims by Executive
that seek judicial relief in the form of specific performance of the right to be
paid until the Termination Date during the pendency of any applicable dispute or
controversy. If this Article XI is in effect, any claim with respect to this
Agreement, Executive's employment or the termination of Executive's employment
must be established by a preponderance of the evidence submitted to an impartial
arbitrator. A single arbitrator engaged in the practice of law shall conduct
any arbitration under the applicable rules and procedures of the AAA. The
arbitrator shall have the authority to order a pre-hearing exchange of
information by the parties including, without limitation, production of
requested documents, and examination by deposition of parties and their
authorized agents. If this Article XI is in effect, the decision of the
arbitrator: (i) shall be final and binding, (ii) shall be rendered within
ninety (90) days after the impanelment of the arbitrator, and (iii) shall be
kept confidential by the parties to such arbitration. The arbitration award may
be enforced in any court of competent jurisdiction. The Federal Arbitration
Act, 9 U.S.C. 1 et seq., not state law, shall govern the arbitrability of all
claims.
XII. Entire Agreement.
This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company and Executive have executed this Agreement
effective as of the 28th day of March, 2003.
Energizer Holdings, Inc. Attest:
By:______________________________ By:___________________________
J. Patrick Mulcahy Timothy L. Grosch
Chief Executive Officer Secretary
________________________________ ___________________________
Executive Witness