Executive Severance Agreements -. Maytag Corp., Robert L. Chaplin, John P. Cunningham, Robert W. Downing, Joseph F. Fogliano, Mark A. Garth, Brian A. Girdlestone, Edward H. Graham, Leonard A. Hadley, Richard J. Haines, Gerald J. Kamman, Donald M. Lorton, Carl R. Moe, Jon O. Nicholas, Jerry K. Rinehart, Jerry A. Schiller and Carlton F. Zacheis
Executive Severance Agreements.The following executives are covered under this severance agreement: 1. Robert L. Chaplin 2. John P. Cunningham 3. Robert W. Downing 4. Joseph F. Fogliano 5. Mark A. Garth 6. Brian A. Girdlestone 7. Edward H. Graham 8. Leonard A. Hadley 9. Richard J. Haines 10. Gerald J. Kamman 11. Donald M. Lorton 12. Carl R. Moe 13. Jon O. Nicholas 14. Jerry K. Rinehart 15. Jerry A. Schiller 16. Carlton F. Zacheis
EXECUTIVE SEVERANCE AGREEMENT THIS AGREEMENT is made the __th day of ________________, 19__, by andbetween Maytag 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. Pursuant to such agreement, the Company has heretofore entered intoan Executive Severance Agreement with the Executive dated _________________. C. Should the Company receive or learn of any proposal by a third per-son about a possible business combination with the Company or theacquisition of its equity securities, the Board considers it imperative thatthe Company be able to rely upon the Executive to continue in his or herposition. This to the end that the Company be able to receive and rely uponthe Executive's advice concerning the best interests of the Company and itsstockholders, without concern that person might be distracted by thepersonal uncertainties and risks created by such a proposal. D. 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,the Company and the Executive agree that the Executive Severance Agreementdescribed 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 tostockholders or take other steps, the Executive agrees that he or she willnot voluntarily leave the employ of the Company, and will render theservices contemplated in the recitals to this agreement, until the thirdperson has abandoned or terminated his efforts to effect a change of controlor until a change of control has occurred.
- 2 - B. Should the Executive's employment with the Company or itssubsidiaries terminate for any reason (either voluntary or involuntary,other than because of death, disability or normal retirement) within three(3) years after a change of control of the Company the following will beprovided: 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) three times the sum of (1) the Executive's annual salary at therate in effect immediately prior to the change of control and (2) themaximum annual incentive bonus opportunity provided by the Plan and anydiscretionary bonus declared for the year in which the change of controloccurred, or the preceding year if not established plus (B) an amount equalto the compensation (at the Executive's rate of pay in effect immediatelyprior to the change of control) payable for any period for which theExecutive could have, immediately prior to the date of his termination ofemployment, been on vacation and received such compensation, for unused andaccrued vacation benefits determined under the Company's vacation pay planor program covering the Executive immediately prior to the change ofcontrol. If the time from the Executive's last day of employment with theCompany or its subsidiaries to the Executive's 65th birthday is less than 36months, there shall be a proportionate reduction of the payment computedunder clause (A) of the preceding sentence. 2. Salaried and Supplemental Executive Retirement Plans. The Execu-tive shall be paid a monthly retirement benefit, in addition to any benefitsreceived under the Salaried Retirement Plans maintained by the Company orits subsidiaries, including The Maytag Corporation Salaried Retirement Planand any Supplemental Executive Retirement Plan, such benefit to commence onthe first 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. The Executive's participation in, and entitlement to, benefits under: (i)the life insurance plan of the Company; (ii) all the health insurance planor plans of the Company or its subsidiaries, including but not limited tothose providing major medical and hospitalization benefits, dental benefitsand vision benefits; and (iii) the Company's long-term disability plan orplans; as all such plans existed immediately prior to the change of controlshall continue as though he or she remained employed by the Corporation orits subsidiaries for an additional period of three (3) years or until theobtainment of such coverages with another employer, whichever is earlier. To the extent such participation or entitlement is not possible for anyreason whatsoever, 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 SalariedRetirement Plans as contemplated above. The Executive's participation inany other savings, capital accumulation, retirement, incentive compensation,profit sharing, stock option, and/or stock appreciation rights plans of theCompany or any of its subsidiaries shall continue only through the last dayof his or her employment. Any terminating distributions and/or vestedrights under such plans shall be governed by the terms of those respectiveplans. Furthermore, the Executive's participation in any insurance plans ofthe Company and rights to any other fringe benefits shall, except asotherwise specifically provided in such plans or Company policy, terminateas of the close of the Executive's last day of employment, except to theextent specifically provided to the contrary in this agreement. 5. Incentive Plans. In addition to the payments required by paragraph1 of this Section, the Company shall pay to the Executive as compensationfor services rendered cash in an amount equal to the maximum amount whichcould be payable to the Executive under any and all incentive compensationplans in which the Executive is a participant or under which the Executiveholds any outstanding award as of the day prior to the change of control. To the extent that any such award is represented by restricted shares ofstock of the Company, the Executive's such cash payment shall include anamount equal to the aggregate value of such shares determined as of the dayof the change of control. Any payment due pursuant to this paragraph 5shall be paid at the same time as the amount payable pursuant to paragraph 1of 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 Executiveshall be paid an amount equal to the excess, if any, of the amount by whichthe greater 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'sresidence shall not be sold within 6 months after the date on which theExecutive's residence is first offered for sale, the Company shall purchasethe Executive'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 suchresidence made by the Executive, the 'amount realized' upon the sale of suchresidence shall be the net amount, after deduction for brokers' fees, titlecharges, transfer taxes and similar items, realized by the Executive uponthe sale of the Executive residence and 'change of control market value'shall mean the value of the Executive's residence on the date on which the
- 4 -change of control occurred, as determined by an independent appraiserselected by the Executive. The fees and expenses of such appraiser shall bepaid by the Company. 7. Excise Tax-Additional Payment. (a) Notwithstanding anything inthis agreement or any written or unwritten policy of the Company or itssubsidiaries to the contrary, (i) if it shall be determined that any paymentor distribution by the Company or its subsidiaries to or for the benefit ofthe Executive, whether paid or payable or distributed or distributablepursuant to the terms of this agreement, any other agreement between theCompany or its subsidiaries and the Executive or otherwise (a 'Payment'),would be subject to the excise tax imposed by section 4999 of the InternalRevenue Code of 1986, as amended, (the 'Code') or any interest or penaltieswith respect to such excise tax (such excise tax, together with any suchinterest and penalties, are hereinafter collectively referred to as the'Excise Tax'), or (ii) if the Executive shall otherwise become obligated topay the Excise Tax in respect of a Payment, then the Company shall pay tothe Executive an additional payment (a 'Gross-Up Payment') in an amount suchthat after payment by the Executive of all taxes (including any interest orpenalties imposed with respect to such taxes), including any Excise Tax,imposed upon the Gross-Up Payment, the Executive retains an amount of theGross-Up Payment equal 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 determinedpursuant to this paragraph B7 shall be paid by the Company or the subsidiaryto the Executive within 5 days of the receipt of the Accounting Firm'sdetermination. A determination that no Excise Tax is payable by theExecutive shall not be valid or binding unless accompanied by a writtenopinion of the Accounting Firm to the Executive that the Executive hassubstantial authority not to report any Excise Tax on his federal income taxreturn. Any determination by the Accounting Firm shall be binding upon theCompany, its subsidiaries and the Executive, except to the extent theExecutive becomes obligated to pay an Excise Tax in respect of a Payment. In the event that the Company or the subsidiary exhausts or waives itsremedies pursuant to subparagraph 7B(c) and the Executive thereafter shallbecome obligated to make a payment of any Excise Tax, and if the amountthereof shall exceed the amount, if any, of any Excise Tax computed by theAccounting Firm pursuant to this subparagraph (b) in respect to which aninitial Gross-Up Payment was made to the Executive, the Accounting Firmshall within 15 days after Notice thereof determine the amount of suchexcess Excise Tax and the amount of the additional Gross-Up Payment to theExecutive. All expenses and fees of the Accounting Firm incurred by reasonof this paragraph B7 shall be paid by the Company.
- 5 - (c) The Executive shall notify the Company in writing of any claim bythe Internal Revenue Service that, if successful, would require the paymentby the Company of a Gross-Up Payment. Such notification shall be given assoon as practicable but no later than ten business days after the Executiveknows of such claim and shall apprise the Company of the nature of suchclaim and the date on which such claim is requested to be paid. TheExecutive shall not pay such claim prior to the expiration of the thirty-dayperiod following the date on which it gives such notice to the Company (orsuch shorter period ending on the date that any payment of taxes withrespect to such claim is due). If the Company notifies the Executive inwriting prior to the expiration of such period that it desires to contestsuch claim, the Executive shall: (i) give the Company any information reasonably requested relating to such claim, (ii) take such action in connection with con- testing 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 costsand expenses (including additional interest and penalties) incurred inconnection with such contest and shall indemnify and hold the Executiveharmless, on an after-tax basis, for any Excise Tax or income tax, includinginterest and penalties with respect thereto, imposed as a result of suchrepresentation and payment of costs and expenses. Without limitation on theforegoing provisions of this subparagraph B7(c), the Company shall controlall proceedings taken in connection with such contest and, at its soleoption, may pursue or forgo any and all administrative appeals, proceedings,hearings and conferences with the taxing authority in respect of such claimand may, at its sole option, either direct the Executive to pay the taxclaimed and sue for a refund or contest the claim in any permissible manner,and the Executive agrees to prosecute such contest to a determination beforeany administrative tribunal, in a court of initial jurisdiction and in oneor more 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
- 6 -payment of taxes for the taxable year of the Executive with respect to whichsuch contested amount is claimed to be due is limited solely to suchcontested amount. Furthermore, control of the contest by the Company or thesubsidiary shall be limited to issues with respect to which a Gross-UpPayment would be payable hereunder and the Executive shall be entitled tosettle or contest, as the case may be, any other issue raised by theInternal Revenue Service or any 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 subsidiarypursuant to subparagraph B7(c), a determination is made that the Executiveshall not be entitled to any refund with respect to such claim and theCompany does not notify the Executive in writing of its intent to contestsuch denial of refund prior to the expiration of thirty days after suchdetermination, then such advance shall be forgiven and shall not be requiredto be repaid and the amount of such advance shall off-set, to the extentthereof, the amount of Gross-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 definedbelow) shall have ceased for any reason to constitute at least a majority ofthe Board 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 ofan acquiring 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 orassociates (as such terms are defined on February 1, 1987 in Rule 12b-2 ofthe General Rules and Regulations under the Securities Exchange Act of 1934,as amended, other than any employee benefit plan of the Company or anysubsidiary of the Company, or any entity holding shares of Company stock for
- 7 -or pursuant to the terms of any such plan), who is or becomes the beneficialowner, directly or indirectly, of 20% or more of the shares of the Company,having 20% or more of the total number of votes that may be cast for theelection of directors of 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 bedeemed to entitle the Executive to continued employment with the Company orits subsidiaries, and the rights of the Company to terminate the employmentof the Executive shall continue as fully as if this agreement were not ineffect, provided that any such termination of employment within three (3)years following a change of control shall entitle the Executive to thebenefits herein provided. 2. Confidentiality. The Executive shall retain in confidence anyconfidential information known to him concerning the Company and itsbusiness so long 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 hereinshall be absolute and unconditional and shall not be affected by anycircumstances, including without limitation, any set-off, counterclaim,recoupment, defense or other right which the Company may have against him,her or anyone else. All amounts payable by the Company hereunder shall bepaid without notice or demand. The Company waives all rights which it maynow have or may hereafter have conferred upon it, by statute or otherwise,to terminate, cancel or rescind this agreement in whole or in part. Eachand every payment made hereunder by the Company shall be final and theCompany shall not seek to recover all or any part of such payment from theExecutive or from whoever may be entitled thereto, for any reasonwhatsoever. 4. Indemnification. If litigation shall be brought to enforce orinterpret 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 intereston any 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 prohibitedor unenforceable in any jurisdiction shall, as to such jurisdiction, beineffective only to the extent of such prohibition or unenforceabilitywithout invalidating or affecting the remaining provisions hereof, and anysuch prohibition or unenforceability in any jurisdiction shall notinvalidate or render 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 ___________________________ _______________________________ Executive