EMPLOYMENT AGREEMENT
AGREEMENT by and between PREMARK INTERNATIONAL, INC., a
Delaware corporation (the "Company") and _____________________ (the
"Executive"), dated as of the ____ day of ________________, 1996.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of
the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change
of Control which ensure that the compensation and benefits
expectations of the Executive will be satisfied and which are
competitive with those of other corporations. Therefore, in order
to accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Term of Agreement. (a) The term of this Agreement
shall commence on the date hereof and shall terminate, except to
the extent that any obligation of the Company hereunder remains
unpaid, three years from the date hereof, subject to extension as
provided in Section 1(b) below; provided, however, that if a Change
of Control shall have occurred prior to such date of termination
this Agreement shall continue in effect until three years beyond
the Effective Date (as defined in Section 1(c))and for such
additional period as any obligation of the company under this
Agreement shall remain unpaid.
(b) Commencing one year from the date hereof, and
on each subsequent anniversary of such date (such date and each
subsequent anniversary thereof is hereinafter referred to as a
"Renewal Date"), the term of this Agreement shall be automatically
extended so as to terminate three years thereafter, unless at least
60 days prior to the next Renewal Date the Company shall give
written notice to the Executive that the term of this Agreement
shall not be so extended.
(c) The "Effective Date" shall be the first date
during the term of this Agreement (as defined in Section 1(b)) on
which a Change of Control occurs. Anything in this Agreement to
the contrary notwithstanding, if a Change of Control occurs and if
the Executive's employment with the Company is terminated or the
Executive ceases to be an officer of the Company prior to the date
on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment
or cessation of status as an officer of the Company (i) was at the
request of a third party who has taken steps reasonably calculated
to effect the Change of Control or (ii) otherwise arose in
connection with or anticipation of the Change of Control, then for
all purposes of this Agreement the "Effective Date" shall mean the
date immediately prior to the date of such termination of
employment or cessation of status as an officer employed by the
Company.
(d) Nothing contained in this Agreement shall
impair or interfere in any way with the right of the Executive to
terminate the Executive's employment or the right of the Company or
any affiliated company to terminate the employment of the Executive
with or without cause prior to the Effective Date. Nothing
contained in this Agreement shall be construed as a contract of
employment between the Company or any affiliated company and the
Executive or as a right of the Executive to continue in the employ
of the Company or any affiliated company, or as a limitation of the
right of the Company or any affiliated company to discharge the
Executive with or without cause prior to a Change of Control.
Moreover, if prior to the Effective Date, (i) the Executive's
employment with the Company terminates or (ii) the Executive ceases
to be an officer of the Company, then the Executive shall have no
further rights under this Agreement.
2. Change of Control. For the purpose of this
Agreement, a "Change of Control" shall mean:
(a) The acquisition, other than from the Company,
by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
securities representing 20% or more of the combined voting power of
the Company's securities entitled to vote in the election of
directors; provided, however, that any acquisition by the Company
or any of its subsidiaries, or by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its
subsidiaries, or any merger or acquisition following which more
than 60% of the combined voting power of the securities of the
resulting parent corporation is held by the holders of the combined
voting power of the Company's securities in substantially the
same proportion as their ownership immediately prior to such
transaction and the Incumbent Board still constitutes at least a
majority of the Board, shall not constitute a Change of Control; or
(b) Individuals who, as of November 6, 1996,
constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board, provided that any
individual becoming a director subsequent to November 6, 1996,
whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office is in connection with an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual
or threatened solicitation of proxies or consents; or
(c) Approval by the shareholders of the Company of
(i) a complete liquidation or dissolution of the Company, or (ii)
the sale or other disposition of all or substantially all of the
assets of the Company, or (iii) a reorganization, merger or
consolidation of the Company, provided that such transaction shall
not constitute a Change of Control if, following such transaction,
the holders of the combined voting power of the Company's
securities own more than 60% of the combined voting power of the
securities of the corporation which acquires the assets in (ii)
above or the parent corporation which results from the
reorganization, merger or consolidation in (iii) above and the
Incumbent Board still constitutes at least a majority of such
entities; or
(d) The sale or other disposition, in response to
a pending or threatened Change of Control, of a majority of the
voting stock or all or substantially all of the assets of the
corporations comprising the decorative laminate business or the
food equipment business, if the sales or operating income of such
business constituted at least 20% of the Company's consolidated
sales or operating income during the most recently completed fiscal
year; provided that, if such an event takes place, the Executive
will not have the right to terminate employment for any reason or
for no reason during the Window Period under Section 5(c) and
receive the benefits set forth in Section 6, but will have the
right to terminate employment for Good Reason under Section 5(c)
and receive such benefits. The Board of Directors of the Company
shall determine, in its sole discretion, whether the sale or other
disposition of such businesses is in response to a pending or
threatened Change of Control. If the Board determines that such
transaction is not in response to a pending or threatened Change of
Control, the Executive shall have no right to the benefits set
forth in this Agreement; provided, however, that the Board shall
review the circumstances of such transaction, including
management's role in initiating the transaction, its effect on
shareholder value, and its effect on the Executive's
responsibilities and terms of employment, and shall determine, in
its sole discretion, whether all or any part of the benefits set
forth in this Agreement shall be awarded to the Executive.
3. Employment Period. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company, for the period
commencing on the Effective Date and ending on the third
anniversary of such date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day
period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or
any office or location less than 35 miles from such location.
For purposes of Section 4(a)(i) (A) such position,
authority, duties and responsibilities shall be regarded as not
commensurate if, as a result of a Change of Control, (I) the
Company becomes a direct or indirect subsidiary of another
corporation or becomes controlled, directly or indirectly, by an
unincorporated entity (such ultimate parent corporation or
unincorporated entity is hereinafter referred to as a "parent
company"), or (II) all or substantially all of the assets of the
Company are acquired by another corporation or corporations or
unincorporated entity or entities owned or controlled, directly or
indirectly, by another corporation or unincorporated entity (such
ultimate parent corporation or unincorporated entity is also
hereinafter referred to as a "parent company"), unless, in each
case, (x) Section 12(b) of this Agreement shall have been complied
with by any such parent company and (y) the Executive shall have
assumed a position with such parent company and the Executive's
position, authority, duties and responsibilities with such parent
company are at least commensurate in all material respects with the
most significant of those held, exercised and assigned with the
Company at any time during the 90-day period immediately preceding
the Effective Date.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business affairs of the
Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period it
shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of
the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the
Employment Period, the Executive shall receive an annual base
salary ("Annual Base Salary"), which shall be paid at a monthly
rate, at least equal to twelve times the highest monthly base
salary paid or payable to the Executive by the Company and its
affiliated companies in respect of the twelve-month period
immediately preceding the month in which the Effective Date occurs.
During the Employment Period, the Annual Base Salary shall be
reviewed at least annually and shall be increased at any time and
from time to time as shall be substantially consistent with
increases in base salary generally awarded in the ordinary course
of business to other peer executives of the Company and its
affiliated companies. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or
under common control with the Company.
(ii) Incentive Awards. In addition to Annual Base
Salary, the Executive shall be paid, for each fiscal year ending
during the Employment Period, an annual incentive award (the
"Annual Incentive Award") and a long-term incentive award (the
"Long-Term Incentive Award" and together with the Annual Incentive
Award, the "Incentive Awards") in cash at least equal to the
average annual incentive award and the average long-term incentive
award, respectively paid or payable, including by reason of any
deferral, to the Executive by the Company and its affiliated
companies in respect of the three fiscal years immediately
preceding the fiscal year in which the Effective Date occurs
(together, the "Recent Incentive Awards"). In cases where the
Executive received or deferred a pro rata award because his or her
participation was for less than the full Annual Incentive Award
fiscal year or Long-Term Incentive Award performance period, the
Recent Incentive Awards shall be recalculated by increasing the
awards for which a pro rata payment was received or deferred to the
level they would have been had the Executive participated for the
full fiscal year and performance period. The recalculation is
solely for purposes of defining the term Recent Incentive Awards,
and shall not entitle the Executive to any increase in awards paid
or payable prior to the Effective Date. Each such Annual Incentive
Award and Long-Term Incentive Award shall be paid no later than
the end of the third month of the year next following the years for
which the Annual Incentive Award or the Long-Term Incentive Award,
as the case may be, is awarded, unless the Executive shall elect to
defer the receipt of such Annual Incentive Award or Long-Term
Incentive Award.
(iii) Profit Sharing, Thrift, Savings and Pension
Plans. In addition to Annual Base Salary and Incentive Awards
payable as hereinabove provided, the Executive shall be entitled to
participate during the Employment Period in all profit sharing,
thrift, savings, supplemental plans and pension plans, practices,
policies and programs generally applicable to other peer executives
of the Company and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide the Executive
with profit sharing opportunities (measured with respect to both
regular and special profit sharing opportunities), thrift
opportunities, savings opportunities and pension benefits
opportunities, in each case, less favorable, in the aggregate, than
the most favorable of those provided by the Company and its
affiliated companies for the Executive under such plans, practices,
policies and programs as in effect at any time during the 90-day
period immediately preceding the Effective Date.
(iv) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case
may be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs)
to the extent generally applicable to other peer executives of the
Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide benefits which are
less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive
at any time during the 90-day period immediately preceding the
Effective Date.
(v) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with
the most favorable policies, practices and procedures of the
Company and its affiliated companies in effect for the Executive at
any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies.
(vi) Perquisites. During the Employment Period, the
Executive shall be entitled to perquisites in accordance with the
most favorable plans, practices, programs and policies of the
Company and its affiliated companies in effect for the Executive at
any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the
Employment Period, the Executive shall be entitled to an office or
offices of a size and with furnishings and other appointments, and
to exclusive personal secretarial and other assistance, at least
equal to the most favorable of the foregoing provided to the
Executive by the Company and its affiliated companies at any time
during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided at any time
thereafter generally with respect to other peer executives of the
Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the
most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect for the Executive
at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies.
5. Termination of Employment. (a) Death or
Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment
Period (pursuant to the definition of "Disability" set forth
below), it may give to the Executive written notice in accordance
with Section 12(b) of this Agreement of its intention to terminate
the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after such
receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this
Agreement, "Disability" means the absence of the Executive from the
Executive's duties with the Company on a substantially full-time
basis for 180 consecutive business days as a result of incapacity
due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be
withheld unreasonably).
(b) Cause. The Company may terminate the
Executive's employment during the Employment Period for Cause. For
purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the
Executive to perform substantially the Executive's duties with the
Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the
Company which specifically identifies the manner in which the Board
or Chief Executive Officer believes that the Executive has not
substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in
illegal conduct or gross misconduct which is materially and
demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act on the
part of the Executive shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive's action or omission
was in the best interests of the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the Company or based upon
the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive
a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board
(after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be
heard before the Board), finding that, in the good faith opinion of
the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(c) Good Reason; Window Period. The Executive's
employment may be terminated (i) during the Employment Period by
the Executive for Good Reason or (ii) during the Window Period by
the Executive for any reason or for no reason (except as set forth
in Section 2(d)). For purposes of this Agreement, the "Window
Period" shall mean that 30-day period immediately following the
first anniversary of the Effective Date. For purposes of this
Agreement, "Good Reason" shall mean:
(A) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(B) any failure by the Company to comply with any
of the provisions of Section 4(b) of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(C) the Company's requiring the Executive to be
based at any office or location other than that described in
Section 4(a)(i)(B) hereof;
(D) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by
this Agreement; or
(E) any failure by the Company or any successor to
comply with and satisfy Section 11(c) of this Agreement, provided
that such successor has received at least ten days prior written
notice from the Company or the Executive of the requirements of
Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive during the Window Period or
for Good Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii)
if the Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen days after the giving of
such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause, as the case may
be, shall not waive any right of the Executive or the Company
hereunder or preclude the Executive or the Company from asserting
such fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) Date of Termination. "Date of Termination"
shall mean (i) if the Executive's employment is terminated by the
Company for Cause, or by the Executive during the Window Period or
for Good Reason, the date of receipt of the Notice of Termination
or any later date specified therein, as the case may be, (ii) if
the Executive's employment is terminated by the Company other than
for Cause, Disability or death, the Date of Termination shall be
the date on which the Company notifies the Executive of such
termination, and (iii) if the Executive's employment is terminated
by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective
Date, as the case may be.
6. Obligations of the Company upon Termination. (a)
Good Reason or during the Window Period; Other than for Cause or
Disability. If, during the Employment Period, the Company shall
terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment either for
Good Reason or for any reason or for no reason during the Window
Period, the Company shall have the following obligations:
(i) The Company shall pay to the Executive in a
lump sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
(A) the amount equal to the product of (x) three
and (y) the sum of the Executive's Annual Base Salary and
the greater of (i) the Executive's Recent Incentive
Awards and (ii) the sum of the Annual Incentive Award and
the Long-Term Incentive Award paid or payable, including
by reason of any deferral, to the Executive for the most
recently completed fiscal year in the case of the Annual
Incentive Award and the most recently completed
performance period in the case of the Long-Term Incentive
Award ("Most Recent Incentive Awards"). In cases where
the Executive received or deferred a pro rata award
because his or her participation was for less than the
full Annual Incentive Award fiscal year or Long-Term
Incentive Award performance period, the Most Recent
Incentive Awards shall be recalculated by increasing the
awards for which a pro rata payment was received or
deferred to the level they would have been had the
Executive participated for the full fiscal year and
performance period. The recalculation is solely for
purposes of defining the term Most Recent Incentive
Awards. Such amount shall be paid in lieu of, and the
Executive hereby waives the right to receive, any other
amount of severance relating to salary or bonus
continuation to be received by the Executive upon such
termination of employment under any severance plan,
policy or arrangement of the Company; and
(B) the amount equal to the product of (x) the sum
of the maximum Annual Incentive Award and the maximum
Long-Term Incentive Award that would have applied to the
Executive under the applicable incentive plans of the
Company and the policies and procedures thereunder for
the fiscal year of the Company in which the Date of
Termination occurs, and (y) a fraction, the numerator of
which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of
which is 365; and
(C) the amount of the Executive's Annual Base
Salary through the Date of Termination to the extent not
theretofore paid and the amount of any compensation
previously deferred by the Executive (together with any
accrued interest thereon) and not yet paid by the Company
and any accrued vacation pay of the Executive not yet
paid by the Company.
For purposes of this Agreement, the aggregate of the amounts
described in clauses (A), (B) and (C) of this Section 6(a) shall
hereafter be referred to as the "Special Termination Amount".
(ii) For the remainder of the Employment Period, or
such longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Executive and,
where applicable, the Executive's family at least equal to those
which would have been provided to them in accordance with the
plans, programs, practices and policies described in Section
4(b)(iv) of this Agreement if the Executive's employment had not
been terminated, in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated
companies generally applicable to other peer executives and their
families during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their
families (for purposes of determining eligibility of the Executive
for retiree benefits pursuant to such plans, practices, programs
and policies, the Executive shall be considered to have remained
employed until the end of the Employment Period and to have retired
on the last day of such period); provided, however, that with
respect to medical benefits, the Company shall continue, for the
lifetime of the Executive, medical benefits for the Executive and
the Executive's family no less favorable than the medical benefits
provided to the Executive under the Premark International, Inc.
health care plans (or any successor plans thereto) during the 90-
day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect at any time thereafter
generally with respect to any other peer executives of the Company
and its affiliated companies and their families; and, provided,
further, that, in the event the Executive becomes reemployed with
another employer and is eligible to receive medical or other
welfare benefits under any employer provided plan, the medical and
other welfare benefits described herein shall not be provided by
the Company during such applicable period of eligibility, but shall
resume if such period of eligibility shall terminate.
(iii) To the extent not theretofore paid or
provided, the Company shall timely pay or provide to the Executive
any other amounts or benefits required to be paid or provided or
which the Executive is eligible to receive under any plan, program,
policy or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is
terminated by reason of the Executive's death during the Employment
Period, this Agreement shall terminate without further obligations
to the Executive's legal representatives under this Agreement,
other than the payment by the Company of the Special Termination
Amount, provided however, that the amount of such payment
determined under Section 6(a)(i)(A) shall be adjusted as follows.
The amount set forth in clause (A) shall be offset in all cases by
the basic Company life insurance benefit paid or payable in respect
of the Executive's death and, in addition, if the death occurs
after the one year anniversary following the Change of Control, it
shall be offset by the amount of any salary payments made to the
Executive for any periods of employment following the Change of
Control. The adjusted Special Termination Amount shall be paid to
the Executive's estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination. Anything in
this Agreement to the contrary notwithstanding, the Executive's
family shall be entitled to receive benefits at least equal to the
most favorable benefits provided generally by the Company and any
of its affiliated companies to surviving families of peer
executives of the Company and such affiliated companies under such
plans, programs, practices and policies relating to family death
benefits, if any, as in effect generally with respect to other peer
executives and their families at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Executive and/or the Executive's family, as in effect on the
date of the Executive's death generally with respect to other peer
executives of the Company and its affiliated companies and their
families.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than the payment by the Company
of the Special Termination Amount. The Special Termination Amount
shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination. Anything in this Agreement to the
contrary notwithstanding, the Executive shall be entitled after the
Disability Effective Date to receive disability and other benefits
at least equal to the most favorable of those generally provided by
the Company and its affiliated companies to disabled executives
and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families
at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter through the
Date of Termination generally with respect to other peer executives
of the Company and its affiliated companies and their families.
(d) Cause; Other than for Good Reason or during the
Window Period. If the Executive's employment shall be terminated
for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than
the obligation to pay to the Executive Annual Base Salary through
the Date of Termination plus the amount of any compensation
previously deferred by the Executive, in each case to the extent
theretofore unpaid. If the Executive terminates employment during
the Employment Period, excluding a termination either for Good
Reason or for any reason or for no reason during the Window Period,
this Agreement shall terminate without further obligations to the
Executive, other than for the following obligations: (i) payment
of the Executive's Annual Base Salary through the Date of
Termination to the extent not theretofore paid, (ii) payment of the
product of (x) the greater of the Recent Incentive Awards and the
Most Recent Incentive Awards and (y) a fraction, the numerator of
which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365 and (iii)
payment of any compensation previously deferred by the Executive
(together with any accrued interest thereon) and not yet paid by
the Company and any accrued vacation pay of the Executive not yet
paid by the Company (the amounts described in paragraphs (i), (ii)
and (iii) shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination).
7. Non-exclusivity. Except as explicitly modified or
otherwise explicitly provided by this Agreement, (i) nothing in
this Agreement shall prevent or limit the Executive's continuing or
future participation in any benefit, bonus, incentive or other
plans, programs, policies or practices provided by the Company or
any of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any other agreements with
the Company or any of its affiliated companies and (ii) amounts
which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of
the Company or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with
such plan, policy, practice or program except as explicitly
modified by this Agreement.
8. Full Settlement. The Company's obligation to make
the payments 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 which the Company may have against the Executive or others.
In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement and, except as provided in Section 6(a)(ii) of this
Agreement, such amounts shall not be reduced whether or not the
Executive obtains other employment. With the exception of any
disputes regarding determinations made by the Board of Directors of
the Company under Section 2(d) of this Agreement, the Company
agrees to pay, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the Company,
the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee
of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at
the applicable Federal rate provided for in Section 7872(f)(2)(A)
of the Internal Revenue Code of 1986, as amended (the"Code").
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that as a
result, directly or indirectly, of any payment or distribution by
the Company to or for the benefit of the Executive, whether paid or
payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise (a "Payment"), the Executive would be
subject to the excise tax imposed by Section 4999 of the Code or
any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to promptly
receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, but excluding any income taxes on the
Payment, the Executive is in the same after-tax position as if no
Excise Tax had been imposed upon the Executive.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including
whether or 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, shall be made by the Company's
public accounting firm (the "Accounting Firm"). All fees and
expenses of the Accounting Firm shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this
Section 9, shall be paid to the Executive within five days of the
receipt of the Accounting Firm's determination.
(c) The Executive shall notify the Company as soon
as possible in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of
the Gross-Up Payment. If the Company notifies the Executive in
writing within 30 days that it desires to contest such claim, the
Executive shall cooperate with the Company in good faith in order
effectively to contest such claim.
The Company shall control all proceedings taken in connection with
such contest; provided, however, that the Company shall bear and
pay directly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis,
for any Excise Tax or income tax (including interest and penalties
with respect thereto) imposed as a result of such representation
and payment of costs and expenses and advances; and further
provided that any extension of the statute of limitations is
limited solely to such contested amount; and the Company's control
of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the 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.
10. Confidential Information. The Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret
or confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during
the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive
in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not,
without prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of
the provisions of this Section 10 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under
this Agreement.
11. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company
shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.
(c) 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 assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed
by and construed in accordance with the laws of the State of
Illinois, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed
by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
____________________
____________________
____________________
If to the Company:
Premark International, Inc.
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Attention: 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 effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts
payable under this Agreement such Federal, state or local taxes as
shall be required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof shall not
be deemed to be a waiver of such provision or any other provision
of this Agreement.
13. Acknowledgement. The Executive acknowledges that he
or she is a "bona fide executive" within the meaning of the Age
Discrimination in Employment Act and may be involuntarily retired
at age 65.
14. Termination of Prior Agreement. The Employment
Agreement dated _______________ between the Executive and the
Company regarding rights and obligations following a change of
control is hereby terminated.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board
of Directors, the Company has caused these presents to be executed
in its name on its behalf, all as of the day and year first above
written.
______________________________
(Executive)
PREMARK INTERNATIONAL, INC.
By ____________________________
