Executive Severance Agreements - Maytag Corp., Robert F. Dunkerley and Nelson E. Wooldridge
The following executives are covered under this severance agreement: 1. Robert F. Dunkerley 2. Nelson E. Wooldridge EXECUTIVE SEVERANCE AGREEMENT THIS AGREEMENT is made the ___ day of ________, 1994, by and betweenMaytag Corporation, a Delaware corporation (the 'Company'), and____________________ (the 'Executive'). RECITALS A. The Board of Directors of the Company has approved the Company en-tering into severance agreements with such executives of the Company and itssubsidiaries as is determined by the Chairman and Chief Executive Officer. B. Should the Company receive or learn of any proposal by a third personabout a possible business combination with the Company or the acquisition ofits equity securities, the Board considers it imperative that the Company beable to rely upon the Executive to continue in his or her position. This tothe end that the Company be able to receive and rely upon the Executive'sadvice concerning the best interests of the Company and its stockholders,without concern that person might be distracted by the personal uncertaintiesand risks created by such a proposal. C. Should the Company receive any such proposals, in addition to theExecutive's regular duties, he or she may be called upon to assist in theassessment of such proposals, advise management and the Board as to whethersuch proposals would be in the best interests of the Company and its stock-holders, and to take such other actions as the Board might determine to beappropriate. AGREEMENT NOW, THEREFORE, to assure the Company that it will have the continueddedication of the Executive and the availability of that person's advice andcounsel notwithstanding the possibility, threat or occurrence of a bid totake over control of the Company, and to induce the Executive to remain inthe employ of the Company, and for other good and valuable consideration, theCompany and the Executive agree that the Executive Severance Agreement de-scribed above be amended and restated in its entirety as follows: A. Should a third person, in order to effect a change of control (asdefined), begin a tender or exchange offer, circulate a proxy to stockholdersor take other steps, the Executive agrees that he or she will not voluntarilyleave the employ of the Company, and will render the services contemplated inthe recitals to this agreement, until the third person has abandoned orterminated his efforts to effect a change of control or until a change ofcontrol has occurred. B. Should the Executive's employment with the Company or its subsidiariesterminate for any reason (either voluntary or involuntary, other than
- 2-because of death, disability or normal retirement) within three (3) yearsafter a change of control of the Company the following will be provided: 1. Lump Sum Cash Payment. On or before the Executive's last day ofemployment with the Company or its subsidiaries, or as soon thereafter aspossible, the Company will pay to the Executive as compensation for servicesrendered, a lump sum cash amount (subject to the usual withholding taxes)equal to (A) two times the sum of (1) the Executive's annual salary at therate in effect immediately prior to the change of control and (2) the maximumannual incentive bonus opportunity provided by the Plan and any discretionarybonus declared for the year in which the change of control occurred, or thepreceding year if not established plus (B) an amount equal to thecompensation (at the Executive's rate of pay in effect immediately prior tothe change of control) payable for any period for which the Executive couldhave, immediately prior to the date of his termination of employment, been onvacation and received such compensation, for unused and accrued vacationbenefits determined under the Company's vacation pay plan or program coveringthe Executive immediately prior to the change of control. If the time fromthe Executive's last day of employment with the Company or its subsidiariesto the Executive's 65th birthday is less than 36 months, there shall be aproportionate reduction of the payment computed under clause (A) of thepreceding sentence. 2. Salaried and Supplemental Executive Retirement Plans. The Executiveshall be paid a monthly retirement benefit, in addition to any benefitsreceived under the Salaried Retirement Plans maintained by the Company or itssubsidiaries, including The Maytag Corporation Salaried Retirement Plan andany Supplemental Executive Retirement Plan, such benefit to commence on thefirst to occur of (a) the commencement of payment of benefits under theMaytag Corporation Salaried Retirement Plan or (b) attainment of age 65, butnot prior to three (3) years following the date of termination of employmentor age 65, whichever first occurs, such benefit to be an amount equal to theexcess of (i) the aggregate benefits under such Salaried Retirement Plans towhich the Executive would be entitled if he or she remained employed by theCompany or its subsidiaries, for an additional period of three (3) years oruntil his or her 65th birthday, whichever is earlier, at the rate of annualcompensation specified herein; over (ii) the benefits to which the Executiveis actually entitled under such Salaried Retirement Plans. 3. Life, Dental, Vision, Health and Long Term Disability Coverage. TheExecutive's participation in, and entitlement to, benefits under: (i) thelife insurance plan of the Company; (ii) all the health insurance plan orplans of the Company or its subsidiaries, including but not limited to thoseproviding major medical and hospitalization benefits, dental benefits andvision benefits; and (iii) the Company's long-term disability plan or plans;as all such plans existed immediately prior to the change of control shallcontinue as though he or she remained employed by the Corporation or itssubsidiaries for an additional period of three (3) years or until theobtainment of such coverages with another employer, whichever is earlier. Tothe extent such participation or entitlement is not possible for any reasonwhatsoever, equivalent benefits shall be provided.
- 3 - 4. Participation in Employee Benefit Plans. After termination of em-ployment, the Executive shall continue to participate in the Salaried Retire-ment Plans as contemplated above. The Executive's participation in any othersavings, capital accumulation, retirement, incentive compensation, profitsharing, stock option, and/or stock appreciation rights plans of the Companyor any of its subsidiaries shall continue only through the last day of his orher employment. Any terminating distributions and/or vested rights undersuch plans shall be governed by the terms of those respective plans. Furthermore, the Executive's participation in any insurance plans of theCompany and rights to any other fringe benefits shall, except as otherwisespecifically provided in such plans or Company policy, terminate as of theclose of the Executive's last day of employment, except to the extentspecifically provided to the contrary in this agreement. 5. Incentive Plans. In addition to the payments required by paragraph 1of this Section, the Company shall pay to the Executive as compensation forservices rendered cash in an amount equal to the maximum amount which couldbe payable to the Executive under any and all incentive compensation plans inwhich the Executive is a participant or under which the Executive holds anyoutstanding award as of the day prior to the change of control. To theextent that any such award is represented by restricted shares of stock ofthe Company, the Executive's such cash payment shall include an amount equalto the aggregate value of such shares determined as of the day of the changeof control. Any payment due pursuant to this paragraph 5 shall be paid atthe same time as the amount payable pursuant to paragraph 1 of this Section. 6. Reimbursement for Loss on Sale of Principal Residence. If on thedate of the change of control the Executive shall own a private residencewithin Jasper County, Iowa (the 'Executive's residence'), the Executive shallbe paid an amount equal to the excess, if any, of the amount by which thegreater of (i) the 'aggregate purchase price' (as defined below) of theExecutive's residence and (ii) the 'change of control market value' (asdefined below) of the Executive's residence, over the amount realized by theExecutive upon the sale of such residence. Any amount payable to theExecutive under this agreement shall be paid to the Executive on the date onwhich the Executive's residence is sold in a bona fide transaction with anunrelated party. Notwithstanding the foregoing, if the Executive's residenceshall not be sold within 6 months after the date on which the Executive'sresidence is first offered for sale, the Company shall purchase theExecutive's residence from the Executive for a cash amount equal to the'change of control market value' of the Executive's residence. For purposesof this paragraph, the 'aggregate purchase price' of the Executive'sresidence shall be the sum of the amount paid therefor plus the cost of anysignificant repairs such as the cost of siding, or roof repair ormaintenance, incurred within the 5 year period ending on the date on which achange of control occurs, plus the cost of any improvements to such residencemade by the Executive, the 'amount realized' upon the sale of such residenceshall be the net amount, after deduction for brokers' fees, title charges,transfer taxes and similar items, realized by the Executive upon the sale ofthe Executive residence and 'change of control market value' shall mean thevalue of the Executive's residence on the date on which the change of control
- 4 - occurred, as determined by an independent appraiser selected by theExecutive. The fees and expenses of such appraiser shall be paid by theCompany. 7. Excise Tax-Additional Payment. (a) Notwithstanding anything in thisagreement or any written or unwritten policy of the Company or its subsidiar-ies to the contrary, (i) if it shall be determined that any payment ordistribution by the Company or its subsidiaries to or for the benefit of theExecutive, whether paid or payable or distributed or distributable pursuantto the terms of this agreement, any other agreement between the Company orits subsidiaries and the Executive or otherwise (a 'Payment'), would besubject to the excise tax imposed by section 4999 of the Internal RevenueCode of 1986, as amended, (the 'Code') or any interest or penalties withrespect to such excise tax (such excise tax, together with any such interestand penalties, are hereinafter collectively referred to as the 'Excise Tax'),or (ii) if the Executive shall otherwise become obligated to pay the ExciseTax in respect of a Payment, then the Company shall pay to the Executive anadditional payment (a 'Gross-Up Payment') in an amount such that afterpayment by the Executive of all taxes (including any interest or penaltiesimposed with respect to such taxes), including any Excise Tax, imposed uponthe Gross-Up Payment, the Executive retains an amount of the Gross-Up Paymentequal to the Excise Tax imposed upon such Payment. (b) All determinations and computations required to be made under thisparagraph B5, including whether a Gross-Up Payment is required under clause(ii) of paragraph B7(a) above, and the amount of any Gross-Up Payment, shallbe made by the Company's regularly engaged independent certified public ac-countants (the 'Accounting Firm'). The Company shall cause the AccountingFirm to provide detailed supporting calculations both to the Company and theExecutive within 15 business days after such determination or computation isrequested by the Executive. Any initial Gross-Up Payment determined pursuantto this paragraph B7 shall be paid by the Company or the subsidiary to theExecutive within 5 days of the receipt of the Accounting Firm's deter-mination. A determination that no Excise Tax is payable by the Executiveshall not be valid or binding unless accompanied by a written opinion of theAccounting Firm to the Executive that the Executive has substantial authoritynot to report any Excise Tax on his federal income tax return. Any deter-mination by the Accounting Firm shall be binding upon the Company, itssubsidiaries and the Executive, except to the extent the Executive becomesobligated to pay an Excise Tax in respect of a Payment. In the event thatthe Company or the subsidiary exhausts or waives its remedies pursuant tosubparagraph 7B(c) and the Executive thereafter shall become obligated tomake a payment of any Excise Tax, and if the amount thereof shall exceed theamount, if any, of any Excise Tax computed by the Accounting Firm pursuant tothis subparagraph (b) in respect to which an initial Gross-Up Payment wasmade to the Executive, the Accounting Firm shall within 15 days after Noticethereof determine the amount of such excess Excise Tax and the amount of theadditional Gross-Up Payment to the Executive. All expenses and fees of theAccounting Firm incurred by reason of this paragraph B7 shall be paid by theCompany.
- 5 - (c) The Executive shall notify the Company in writing of any claim by theInternal Revenue Service that, if successful, would require the payment bythe Company of a Gross-Up Payment. Such notification shall be given as soonas practicable but no later than ten business days after the Executive knowsof such claim and shall apprise the Company of the nature of such claim andthe date on which such claim is requested to be paid. The Executive shallnot pay such claim prior to the expiration of the thirty-day period followingthe date on which it gives such notice to the Company (or such shorter periodending on the date that any payment of taxes with respect to such claim isdue). If the Company notifies the Executive in writing prior to the expira-tion of such period that it desires to contest such claim, the Executiveshall: (i) give the Company any information reasonably requested 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, (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 andexpenses (including additional interest and penalties) incurred in connectionwith such contest and shall indemnify and hold the Executive harmless, on anafter-tax basis, for any Excise Tax or income tax, including interest andpenalties with respect thereto, imposed as a result of such representationand payment of costs and expenses. Without limitation on the foregoingprovisions of this subparagraph B7(c), the Company shall control allproceedings taken in connection with such contest and, at its sole option,may pursue or forgo any and all administrative appeals, proceedings, hearingsand conferences with the taxing authority in respect of such claim and may,at its sole option, either direct the Executive to pay the tax claimed andsue for a refund or contest the claim in any permissible manner, and theExecutive agrees to prosecute such contest to a determination before anyadministrative tribunal, in a court of initial jurisdiction and in one ormore appellate courts, as the Company or the subsidiary shall determine;provided, however, that if the Company or the subsidiary directs theExecutive to pay such claim and sue for a refund, the Company or thesubsidiary shall advance the amount of such payment to the Executive, on aninterest-free basis and shall indemnify and hold the Executive harmless, onan after-tax basis, from any Excise Tax or income tax, including interest orpenalties with respect thereto, imposed with respect to such advance or withrespect to any imputed income with respect to such advance; and furtherprovided, that any extension of the statue of limitations relating to payment
-6-of taxes for the taxable year of the Executive with respect to which suchcontested amount is claimed to be due is limited solely to such contestedamount. Furthermore, control of the contest by the Company or the subsidiaryshall be limited to issues with respect to which a Gross-Up Payment would bepayable hereunder and the Executive shall be entitled to settle or contest,as the case may be, any other issue raised by the Internal Revenue Service orany other taxing authority. (d) If, after the receipt by the Executive of an amount advanced by theCompany or the subsidiary pursuant to subparagraph B7(c), the Executive be-comes entitled to receive any refund with respect to such claim, theExecutive shall (subject to compliance with the requirements of paragraph B7by the Company or the subsidiary) promptly pay to the Company or thesubsidiary the amount of such refund (together with any interest paid orcredited thereon after taxes applicable thereto). If, after the receipt bythe Executive of an amount advanced by the Company or the subsidiary pursuantto subparagraph B7(c), a determination is made that the Executive shall notbe entitled to any refund with respect to such claim and the Company does notnotify the Executive in writing of its intent to contest such denial ofrefund prior to the expiration of thirty days after such determination, thensuch advance shall be forgiven and shall not be required to be repaid and theamount of such advance shall off-set, to the extent thereof, the amount ofGross-Up Payment required to be paid. C. Definitions. 1. Change of Control. For purposes of this Agreement, a 'change ofcontrol' shall occur when (i) any person, either individually or togetherwith such persons' affiliates or associates (other than any employee benefitplan of the Company or any subsidiary of the Company, or any entity holdingshares of the Company stock, for or pursuant to the terms of any such plan),shall have become the beneficial owner, directly or indirectly, of shares ofthe Company having 20% or more of the total number of votes that may be castfor the election of directors of the Company and there shall have been apublic announcement of such occurrence by the Company or such persons or (ii)individuals who shall qualify as continuing directors (as defined below)shall have ceased for any reason to constitute at least a majority of theBoard of Directors of the Company. 'Continuing director' shall mean anymember of the Board of Directors of the Company, while such person is amember of such Board of Directors, who is not an affiliate or associate of anacquiring person (as defined below) or of any such acquiring person'saffiliate or associate and was a member of such Board of Directors prior tothe time when such acquiring person shall have become an acquiring person,and any successor of a continuing director, while such successor is a memberof such Board of Directors, who is not an acquiring person or arepresentative or nominee of an acquiring person or of any affiliate orassociate of such acquiring person and is recommended or elected to succeedthe continuing director by a majority of the continuing directors. 'Acquiring person' shall mean any person or group of affiliates or associates(as such terms are defined on February 1, 1987 in Rule 12b-2 of the GeneralRules and Regulations under the Securities Exchange Act of 1934, as amended,other than any employee benefit plan of the Company or any subsidiary of the
Company, or any entity holding shares of Company stock for or pursuant to theterms of any such plan), who is or becomes the beneficial owner, directly orindirectly, of 20% or more of the shares of the Company, having 20% or moreof the total number of votes that may be cast for the election of directorsof the Company. 2. Subsidiary. For purposes of this agreement, a 'Subsidiary' shallmean any domestic or foreign corporation at least 20% of whose sharesnormally entitled to vote in electing directors is owned directly orindirectly by the Company or by other subsidiaries. D. General Provisions. 1. No Guaranty of Employment. Nothing in this agreement shall be deemedto entitle the Executive to continued employment with the Company or its sub-sidiaries, and the rights of the Company to terminate the employment of theExecutive shall continue as fully as if this agreement were not in effect,provided that any such termination of employment within three (3) years fol-lowing a change of control shall entitle the Executive to the benefits hereinprovided. 2. Confidentiality. The Executive shall retain in confidence any confi-dential information known to him concerning the Company and its business solong as such information is not publicly disclosed. 3. Payment Obligation Absolute. The Company's obligation to pay theExecutive the compensation and to make the arrangements provided herein shallbe absolute and unconditional and shall not be affected by any circumstances,including without limitation, any set-off, counterclaim, recoupment, defenseor other right which the Company may have against him, her or anyone else. All amounts payable by the Company hereunder shall be paid without notice ordemand. The Company waives all rights which it may now have or may hereafterhave conferred upon it, by statute or otherwise, to terminate, cancel or re-scind this agreement in whole or in part. Each and every payment madehereunder by the Company shall be final and the Company shall not seek torecover all or any part of such payment from the Executive or from whoevermay be entitled thereto, for any reason whatsoever. 4. Indemnification. If litigation shall be brought to enforce or inter-pret any provision contained herein, the Company hereby indemnifies theExecutive for his or her reasonable attorney's fees and disbursementsincurred in such litigation, and hereby agrees to pay prejudgment interest onany money judgment obtained by the Executive calculated by using theprevailing prime interest rate on the date that payment(s) to him or hershould have been made under this agreement.
- 8 - 5. Successors. This agreement shall be binding upon and inure to thebenefit of the Executive and his or her estate, and the Company and any suc-cessor of the Company, but neither this agreement nor any rights arisinghereunder may be assigned or pledged by the Executive. 6. Severability. Any provision in this agreement which is prohibited orunenforceable in any jurisdiction shall, as to such jurisdiction, be ineffec-tive only to the extent of such prohibition or unenforceability withoutinvalidating or affecting the remaining provisions hereof, and any suchprohibition or unenforceability in any jurisdiction shall not invalidate orrender unenforceable such provision in any other jurisdiction. 7. Controlling Law. This agreement shall in all respects be governedby, and construed in accordance with, the laws of the State of Delaware. IN WITNESS WHEREOF, the parties have executed this agreement on the dateset out above. MAYTAG CORPORATION By ___________________________ XXXXXXXXXXXXXXXX , CEO ___________________________ XXXXXXXXXXXXXX, Executive