EXHIBIT 10.3
2002 CHANGE IN CONTROL, SEVERANCE
AND NON-COMPETITION AGREEMENT
AGREEMENT, dated as of July 12, 2002 and effective as of July 12, 2002 by
and between Wolverine Tube, Inc., a Delaware corporation ("Wolverine" or
"Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, an individual residing at Huntsville,
Alabama (the "Executive").
W I T N E S S E T H:
WHEREAS, Wolverine recognizes the Executive's expertise in connection with
his employment by Wolverine or its subsidiaries or affiliates (collectively, the
"Company"); and
WHEREAS, the Company desires to provide the Executive with severance
benefits or the opportunity for continued employment in a different position if
the Executive's employment in his current position is terminated for the reasons
set forth herein and the Executive refrains from engaging in certain activities
in the event his employment is terminated, upon the terms and conditions
hereinafter set forth; and
WHEREAS, the Company and the Executive have heretofore in 1999 entered
into a Change in Control, Severance and Non-Competition Agreement containing
substantially the same terms and conditions as this Agreement (the "Prior
Agreement"); and
WHEREAS, the Company and the Executive believe that the Prior Agreement
should be amended and restated in its entirety in order to include a lump sum
payment election, to conform the provisions regarding bonuses, and to resolve
certain ambiguities contained therein; and
WHEREAS, the Company and the Executive have therefore agreed to enter into
this Agreement, which shall replace and supersede the Prior Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Termination of Employment
(a) Termination for Cause; Resignation without Good Reason.
(i) If the Executive's employment is terminated by the Company for
Cause, as defined in Section 1(a)(ii) hereof, or if the Executive resigns from
his employment hereunder, other than for Good Reason, as defined in Section
1(a)(iii) hereof, unless said resignation comes within two (2) years of a Change
in Control, as discussed in Section 1(b)(i) below, the Executive shall be
entitled to only (A) severance benefits as provided by the Company's general
procedures and practices, if any, (B) payment of the pro rata portion of the
Executive's salary through and including the date of termination or resignation,
and (C) such employee benefits as may be due to the Executive pursuant to the
provisions of the benefit plans which govern such issues.
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(ii) For purposes of this Agreement, termination for "Cause" shall
mean termination of the Executive's employment by the Company because of (A) the
Executive's conviction for, or guilty plea to, a felony or a crime involving
moral turpitude, (B) the Executive's commission of an act of personal dishonesty
in connection with his employment by the Company, (C) a breach of fiduciary duty
in connection with his employment with the Company which shall include, but not
be limited to, (1) investment in any person or organization with the knowledge
that such person or organization has or proposes to have dealings with the
Company, such person or organization competes with the Company, or the Company
is considering an investment in such person or organization (the reference to
"organization" excludes federal credit unions, publicly owned insurance
companies and corporations the stock of which is listed on a national securities
exchange or quoted on NASDAQ if the direct and beneficial stock ownership of the
Executive, including members of his immediate family, is not more than one
percent (1%) of the total outstanding stock of such corporation); (2) a loan
(including a guaranty of a loan) from or to any person or organization having or
proposing any dealings with the Company or in competition with the Company; (3)
participation directly or indirectly in any transaction involving the Company
other than as a director or as an officer or employee of the Company; (4)
acceptance from any person or organization having or proposing any dealings with
the Company or in competition with the Company of any gratuity, gift,
entertainment or favor which exceeds either nominal value or common courtesies
which are generally accepted business practice; or (5) service as an officer,
director, partner or employee of, or consultant to, any person or organization
having or proposing dealings with the Company or in competition with the
Company; (D) the Executive's failure to execute or follow the written policies
of the Company, including, but not limited to, the Company's policy against
discrimination or harassment, or (E) the Executive's refusal to perform the
essential functions of the job, following written notice thereof. Termination of
the Executive's employment as a result of his death or disability (if such
Executive is eligible for benefits under the Company's long-term disability plan
or would be eligible for such benefits were the Executive a participant in said
plan) shall constitute a termination by the Company with Cause for purposes of
this Agreement.
(iii) For purposes of this Agreement, resignation for "Good Reason"
shall mean the resignation of the Executive within a period of six (6) months
after (A) a reduction in the Executive's benefits or pay in an amount in the
aggregate in excess of five percent (5%) thereof, unless all individuals at the
same managerial level as the Executive experience a similar reduction in
benefits or pay or (B) a substantial adverse alteration occurs in the nature or
status of the Executive's responsibilities from those in effect on the date
hereof, disregarding change in title only.
(iv) The date of termination for Cause shall be the date of receipt
by the Executive of written notice of such termination, or such later date as
may be contained in said notice. The date of resignation without Good Reason
shall be the date of receipt by the Company of a written notice of such
resignation.
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(b) Termination without Cause; Resignation for Good Reason or after a
Change in Control.
(i) If the Executive's employment is terminated by the Company
without Cause, or if the Executive resigns from his employment for any reason
within two (2) years following a Change in Control, the Executive shall be
entitled to receive the benefits described in subparagraphs (A), (B), (C) and
(D) below. If the Executive resigns for Good Reason (unless said resignation is
within two (2) years following a Change in Control, in which event his benefits
are described in the preceding sentence), he shall be entitled to those benefits
described in (A), (B) and (D) below only. In either case, said benefits will
only be paid if the Executive executes an Agreement and General Release, which
shall be drafted by the Company, and if the Executive complies with Section 2 of
this Agreement.
(A) The Company shall pay to the Executive either (x) during
the two years immediately following a Change in Control, in the event of (i)
termination by the Company without Cause, or (ii) resignation by the Executive
for any reason, an amount equal to three (3) years' salary; or (y) at any other
time, in the event of (i) termination by the Company without Cause or (ii)
resignation by the Executive for Good Reason, an amount equal to three (3)
year(s) salary; in either case to be paid at the rate in effect immediately
prior to the Severance Date (as defined in Section 1(b)(iv)) plus pay at the
same rate for all vacation time accrued during the calendar year in which the
Severance Date occurs, with such payment to be made at the Executive's option
either:
(X) as a lump sum within 30 days after the Severance
Date, or
(Y) as a series of payments in accordance with the
Company's normal payroll procedures following the Severance Date;
An election as to the form of payment under this paragraph (b)(i)(A) shall
be made at a time and in a manner prescribed by the Company. An election of
either form of payment may be revoked or modified, in accordance with rules
prescribed by the Company, at any time that is at least twelve (12) months
before the Executive's Severance Date. A change in the payment form that occurs
within twelve (12) months of the Executive's Severance Date shall be null and
void. If the Executive does not elect a form of payment, the amount due to the
Executive under this paragraph (b)(i)(A) shall be paid as a lump sum within
thirty (30) days of the Severance Date.
The amount payable to the Executive by the Company under this paragraph
(b)(i)(A) shall be offset by the non-compete and non-solicitation fee as defined
in Section 2(d)(i)of this Agreement.
(B)(I) For a period of thirty-six (36) months following the
Executive's Severance Date (the "Continuation Period"), the Company will arrange
to provide the Executive with medical and disability benefits (the "Employee
Benefits") substantially similar to those that the Executive was receiving or
entitled to receive immediately prior to the Severance Date at no cost to the
Executive. Without otherwise limiting the purposes or effect of Section 1(b),
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Employee Benefits otherwise receivable by the Executive pursuant to this Section
1(b)(i)(B)(I) will be reduced or eliminated to the extent comparable Employee
Benefits at substantially similar cost are actually received by the Executive
from another employer during the Continuation Period following the Executive's
Termination Date, and any such benefits actually received by the Executive shall
be reported by the Executive to the Company. If and to the extent that any
benefit described in this Section 1(b)(i)(B)(I) is not or cannot be paid or
provided under any policy, plan, program or arrangement of the Company or any
Subsidiary, as the case may be, then the Company will reimburse the Executive
for the costs incurred in obtaining comparable Employee Benefits coverage.
(B)(II) Following the Continuation Period, the Company will
provide the Executive access to Employee Benefits coverage on a group basis
equal to that generally available to the majority of the company's employees or
retirees, as the case may be, who receive said benefits, at the Executive's own
expense based upon the amount charged active employees for such coverage until
the Executive attains the age of sixty-five (65). Without otherwise limiting the
purposes of effect of Section 1(b), Employee Benefits to which access is
otherwise provided to the Executive pursuant to this Section 1(b)(i)(B)(II) will
not be required to be made available to the extent comparable Employee Benefits
at substantially similar cost are actually received by the Executive from
another employer during the period following the Continuation Period until
attainment of age sixty-five (65). If and to the extent that any benefit
described in this Section 1(b)(i)(B)(II) is not or cannot be provided under any
policy, plan, program or arrangement of the Company or any Subsidiary, as the
case may be, then the Company will reimburse the Executive for the difference in
costs incurred in obtaining comparable Employee Benefits coverage on an
individual basis and the cost that would have been incurred by the Executive for
group coverage under this Section 1(b)(i)(B)(II).
(B)(III) The Company shall reimburse the Executive for any
costs incurred by the Executive in maintaining life insurance coverage
comparable to that maintained for him by the Company under its group life
insurance program for the period from the Severance Date until the earlier to
occur of:
(X) the date which follows the Severance Date by
thirty-six (36) months, or
(Y) the date on which the Executive is covered under
any other group life insurance plan;
(C) in lieu of any benefit otherwise due to him under the
Company's annual bonus plan, the Company shall pay the Executive in a lump sum
an amount equal to (i) the maximum percentage of annual base salary then payable
to the Executive under the Company's bonus plan but in no event less than
eighty-five percent (85%) of his annual base salary multiplied by (ii) the
number of years for which the Executive is entitled to pay under paragraph
(b)(i)(A) above; provided, however, that in the event that the Severance Date
occurs after the first six (6) full months of the Company's then current fiscal
year, the Company shall pay the Executive an additional amount equal to the
actual bonus which would have been paid to
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the Executive for said year had he remained employed throughout said year less
the amount of the above-described lump sum paid to him pursuant to this
subparagraph (C) for the first of the years for which he is entitled to be paid
under paragraph (b)(i)(A). The amount payable to the Executive under this
paragraph (b)(i)(C) shall be offset by the non-compete and non-solicitation fee
as defined in Section 2(d)(i) of this Agreement.
(D) the Company shall reimburse the Executive for any
reasonable costs actually incurred by the Executive for outplacement services
provided by an outplacement consultant mutually agreeable to the Executive and
the Company for a period not to exceed twelve (12) months or, alternatively, in
lieu of reimbursement for such outplacement services the Executive can elect to
be reimbursed his moving expenses to relocate from the Huntsville, Alabama area
up to an amount not to exceed the moving expenses the Executive was reimbursed
when he first accepted employment with the Company.
(ii) In the event the Executive refuses to execute or breaches the
Agreement and General Release tendered to the Executive on or about the
Severance Date, or in the event the Executive breaches any of the covenants
contained in Section 2, the Executive acknowledges and agrees that the Company
will cease any payments remaining under Section 2(b)(i) of this Agreement and
that the Executive shall be entitled to no further payments or benefits under
this Agreement.
(iii) The Executive shall have no further right under this Agreement
or otherwise to receive any bonus or other compensation with respect to the year
in which the Severance Date occurs and later years.
(iv) The date of termination of employment without Cause shall be
the date specified in a written notice of termination to the Executive and the
date of resignation for Good Reason shall be the date of receipt by the Company
of written notice of resignation (both such dates hereinafter referred to as the
"Severance Date").
(v) For purposes of this Agreement, "Change in Control" shall
mean:
(A) The Company is merged, consolidated or reorganized into
or with another corporation or other legal person, and as a result of such
merger, consolidation or reorganization less than a majority of the combined
voting power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
Voting Stock (as that term is hereafter defined) of the Company immediately
prior to such transaction;
(B) The Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other legal person,
and as a result of such sale or transfer less than a majority of the combined
voting power of the then-outstanding securities of such corporation or person
immediately after such sale or transfer is held in the aggregate by the holders
of Voting Stock of the Company immediately prior to such sale or transfer;
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(C) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as promulgated pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
disclosing that (x) any person (as the term "person" is used in Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as the
term "beneficial owner" is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities representing 15% or
more of the combined voting power of the then-outstanding securities entitled to
vote generally in the election of directors of the Company ("Voting Stock"), or
(y) any person has, during any period, increased the number of shares of Voting
Stock beneficially owned by such person by an amount equal to or greater than
15% of the outstanding shares of Voting Stock; provided, however, that transfers
of shares of Voting Stock between a person and the affiliates or associates (as
such terms are defined under Rule 12b-2 or any successor rule or regulation
promulgated under the Exchange Act) of such person shall not be considered in
determining any increase in the number of shares of Voting Stock beneficially
owned by such person;
(D) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form or report
or item therein) that a Change in Control of the Company has occurred or will
occur in the future pursuant to any then-existing contract or transaction; or
(E) If, during any period of two consecutive years,
individuals who at the beginning of any such period constitute the Directors of
the Company cease for any reason to constitute at least a majority thereof;
provided, however, that for purposes of this clause (v) each Director who is
first elected, or first nominated for election by the Company's stockholders, by
a vote of at least two-thirds of the Directors of the Company (or a committee
thereof) then still in office who were Directors of the Company at the beginning
of any such period will be deemed to have been a Director of the Company at the
beginning of such period.
Notwithstanding the foregoing provisions of Sections (C) or (D) unless
otherwise determined in a specific case by majority vote of the Board, a "Change
in Control" shall not be deemed to have occurred for purposes of Sections (C) or
(D) solely because (1) the Company, (2) an entity in which the Company directly
or indirectly beneficially owns 50% or more of the voting securities (a
"Subsidiary"), or (3) any employee stock ownership plan or any other employee
benefit plan of the Company or any Subsidiary either files or becomes obligated
to file a report or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or
report or item therein) under the Exchange Act disclosing beneficial ownership
by it of shares of Voting Stock, whether in excess of 15% or otherwise, or
because the Company reports that a Change in Control of the Company has occurred
or will occur in the future by reason of such beneficial ownership.
(c) Certain Additional Payments by the Company. In the event that this
Agreement shall become operative and it shall be determined (as hereafter
provided) that any Payment would be subject to the provisions of Section 4999 of
the Internal Revenue Code of 1986, as amended ("Code") or to any similar tax
imposed by federal, state or local law, or any other
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revenue system to which the executive may be subject, or any interest or
penalties with respect to that tax (that tax or those taxes, together with any
interest and penalties, may be hereafter referred to as the "Excise Tax"), then,
if the Executive complies in all substantial respects with the requirements of
the Gross-Up Procedure, the Executive will be entitled to receive an additional
payment or payments (collectively, a "Gross-Up Payment"), as described in the
Gross-Up Procedure.
For purposes of this subparagraph (c), "Payment" means any payment made to
the Executive (other than the Gross-Up payments provided for in the Gross-Up
Procedure) or distribution by the Company or any of its affiliates 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 pursuant to
or by reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, performance share, performance
unit, stock appreciation right or similar right, supplemental retirement plan
benefits, split dollar insurance agreements, or the lapse or termination of any
restriction on, or the vesting or exercisability of, any of the foregoing.
For purposes of this subparagraph (c), "Gross-Up Procedure" means the
Gross-Up Procedure attached hereto as Appendix A.
2. Secrecy, Non-Solicitation and Non-Competition.
(a) Secrecy. During the Executive's employment with the Company and for
a period of three (3) years after his termination from the Company for any
reason, the Executive covenants and agrees that he will not, except in
performance of the Executive's obligations to the Company, or with the prior
written consent of the Company pursuant to the authority granted by a resolution
of the Board, directly or indirectly, disclose any secret or confidential
information that he may learn or has learned by reason of his association with
the Company or use any such information. The term "secret or confidential
information" includes, without limitation, information not previously disclosed
to the public or to the trade by the Company's management with respect to the
Company's products, facilities and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, products price
lists, customer lists, financial information (including the revenues, costs or
profits associated with any of the Company's products), business plans,
prospects, employee or employees, compensation, or opportunities but shall
exclude any information already in the public domain which has been disclosed to
the public during the normal course of the Company's business.
(b) Customer Protection. During the Executive's employment with the
Company and for a period of two (2) years following the termination of the
Executive's employment for any reason, the Executive covenants and agrees that
he will not solicit or attempt to solicit any business from the Company's
customers, including actively sought prospective customers, with whom the
Executive had Material Contact during his employment, for the purpose of
providing products or services competitive with those provided by the Company.
Material Contacts exist between the Executive and each customer or prospective
customers with whom the Company
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were coordinated or supervised by the Executive, or about whom the Executive
obtained trade secrets or confidential information as a result of the
Executive's association with the Company.
(c) Non-solicitation of Employees. During the Executive's employment and
for a period of one (1) year following the termination of the Executive's
employment for any reason, the Executive covenants and agrees that he shall not
directly or indirectly, on his behalf or on behalf of any person or other
entity; solicit or induce, or attempt to solicit or induce, any person who, on
the date hereof or at anytime during the term of this Agreement, is an employee
of the Company, to terminate his or her employment with the Company, whether
expressed in a written or oral agreement or understanding or is otherwise an
"at-will" employee.
(d) Noncompetition. During the Executive's employment and for a period
of three (3) years following the termination of the Executive's employment for
any reason, the Executive covenants and agrees that he will not, directly or
indirectly, compete against the Company within the United States in the
managerial or executive capacity for another company or entity that designs,
produces, sells, or distributes copper tubing, including, but not limited to,
those companies listed on Appendix B.
(i) In consideration of the promises of Executive contained in
this Agreement, including without limitation in this Paragraph 2(d), the Company
shall pay to the Executive a non-compete and non-solicitation fee equal to two
(2) year's salary and bonus as determined in accordance with Section 1(b)(i)(C),
payable in the manner determined by the Company under Sections 1(b)(i)(A) and
1(b)(i)(C) of the Agreement. The amount otherwise payable to the Executive under
Sections 1(b)(i)(A)and 1(b)(i)(C) of this Agreement shall be offset by this
non-compete and non-solicitation fee.
(e) Equitable Relief. The Executive acknowledges and agrees that the
services performed by him are special, unique and extraordinary in that, by
reason of the Executive's employment, the Executive may acquire confidential
information and trade secrets concerning the operation of the Company, or that
the Executive may have contact with or obtain knowledge of the Company's
customers or prospects, the use or disclosure of which could cause the Company
substantial loss and damages, which could not be readily calculated and for
which no remedy at law would be adequate. Accordingly, the Executive
acknowledges and agrees that the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining the
Executive from engaging in activities prohibited by this Section 2 or such other
relief as may be required to specifically enforce any of the covenants in this
Section 2. The Executive acknowledges and agrees that the Company shall be
entitled to its attorneys' fees and court costs should the Company pursue legal
action to enforce its rights under this section.
3. Amendment; Waiver. This Agreement may not be modified, amended or waived
in any manner except by an instrument in writing signed by both parties hereto,
provided, however, that any such modification, amendment or waiver on the part
of the Company shall have been previously approved by the Board. The waiver by
either party of compliance with any provision of this Agreement by the other
party shall not operate or be construed as a waiver of any other
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provision of this Agreement, or of any subsequent breach by such party of a
provision of this Agreement.
4. Withholding. Payments to the Executive of all compensation contemplated
under this Agreement shall be subject to all applicable legal requirements
with respect to the withholding of taxes and similar deductions.
5. Governing Law. All matters affecting this Agreement, including the
validity thereof, are to be governed by, and interpreted and construed in
accordance with, the laws of the State of Alabama applicable to contracts
executed in and to be performed in that State. Nothing in this agreement shall
affect the rights of either party under state or federal laws affecting
employment.
6. Notices. Any notice hereunder by either party to the other shall be given
in writing by personal delivery or certified mail, return receipt requested. If
addressed to the Executive, the notice shall be delivered or mailed to the
Executive at the address first set forth below, or if addressed to the Company,
the notice shall be delivered or mailed to ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or such address as the Company or the Executive may
designate by written notice at any time or from time to time to the other party.
A notice shall be deemed given, if by personal delivery, on the date of such
delivery or, if by certified mail, on the date shown on the applicable return
receipt.
7. Supersedes Previous Agreements. This Agreement supersedes all prior or
contemporaneous negotiations, commitments, agreements and writings with respect
to the subject matter hereof, all such other negotiations, commitments,
agreements and writings will have no further force or effect, and the parties to
any such other negotiation, commitment, agreement or writing will have no
further rights or obligations thereunder.
8. Severability. The parties agree that if any part of this Agreement is
found to be illegal or unenforceable, including, but not limited to, the
geographic, temporal, or activity restrictions contained in Section 2, the court
should delete or modify the illegal or unenforceable provision(s) hereby leaving
the remaining or modified provision(s) fully enforceable.
9. Counterparts. This Agreement may be executed by either of the parties
hereto in counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument.
10. Headings. The headings of sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
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IN WITNESS WHEREOF, the Company has caused the Agreement to be signed by
its director pursuant to the authority of its Board, and the Executive has
executed this Agreement, as of the day and year first written above.
WOLVERINE TUBE, INC.
By:
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Compensation Committee
EXECUTIVE
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive's Address:
▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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APPENDIX A
GROSS-UP PROCEDURE
(a) If a Change in Control of the Company occurs, or a termination of
employment occurs without Cause (as defined in the Agreement), any payment or
benefit provided by the Company or any of its affiliates to or for the benefit
of the Executive, whether paid or payable or provided or to be provided pursuant
to the terms of the Agreement or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, (including without limitation
any stock option, performance share, performance unit, stock appreciation right
or similar right, supplemental retirement plan benefits, split dollar insurance
agreements, or the lapse of termination of any restriction on, or the vesting or
exercisability of, any of the foregoing) (a "Payment"), would be subject to:
(i) the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code") (or any successor provision) by reason of
being considered "contingent on a change in ownership or control" of the
Company, within the meaning of Section 280G of the Code (or any successor
provision);
(ii) any similar tax or any future tax imposed upon Payments resulting
from a termination without Cause whether or not a Change in Control has
occurred, imposed by federal, state or local law, or any other revenue
system to which the Executive may be subject, or
(iii) any interest or penalties with respect to (i) or (ii) ((I), (ii) or
those taxes, together with any interest and penalties, may be hereafter
referred to as the "Excise Tax"),
then, if the Executive complies with the requirements of this Appendix A, the
Executive will be entitled to receive an additional payment or payments
(collectively, a "Gross-Up Payment"); provided, however, that no Gross-Up
Payment will be made with respect to the Excise Tax, if any, attributable to (i)
any incentive stock option, as defined by Section 422 of the Code ("ISO")
granted prior to _________________________, 2002, or (ii) any stock appreciation
or similar right, whether or not limited, granted in tandem with any ISO
described in clause (i). The Gross-Up Payment will be in an amount such that the
Executive will be in the same position as if there was no Excise Tax imposed
upon the Payment. The Gross-Up Payment shall only reimburse the Executive for
income taxes that result from the Gross-Up Payment itself but not for income
taxes that would be normally incurred if the Excise Tax was not triggered.
(b) Subject to the provisions of subparagraph (f) below, all
determinations required to be made under this Appendix A, including whether an
Excise Tax is payable by the Executive, the amount of that Excise Tax, whether a
Gross-Up Payment is required to be paid by the Company to the Executive and the
amount of that Gross-Up Payment, if any, will be made by a
nationally recognized accounting firm (the "Accounting Firm") selected by the
Executive in the Executive's sole discretion. The Executive will direct the
Accounting Firm to submit its determination and detailed supporting calculations
to both the Company and the Executive within thirty (30) calendar days after the
Executive's date of termination, if practicable, upon or following the
triggering of the Change in Control. If the Accounting Firm determines that any
Excise Tax is payable by the Executive, the Company will pay the required
Gross-Up Payment to the Executive within five (5) business days after receipt of
the determination and calculations with respect to any Payment to the Executive.
If the Accounting Firm determines that no Excise Tax is payable by the
Executive, it will, at the same time as it makes that determination, furnish the
Company and the Executive in opinion that the Executive has substantial
authority not to report any Excise Tax on his federal, state or local income or
other tax return. As a result of the uncertainty in the application of Section
4999 of the Code (or any successor provision) and the possibility of similar
uncertainty regarding applicable state or local tax law at the time of any
determination by the Accounting Firm, it is possible that Gross-Up Payments
which will not have been made by the Company should have been made (an
"Underpayment"), consistent with the calculations required to be made under this
Appendix A. If the Company exhausts or fails to pursue its remedies pursuant to
subparagraph (f) and the Executive subsequently is required to make a payment of
any Excise Tax, the Executive will direct the Accounting Firm to determine the
amount of the Under payment that has occurred and to submit its determination
and detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment will be promptly paid by the Company
to, or for the benefit of, the Executive within five (5) business days after
receipt of the determination and calculations.
(c) The Company and the Executive will each provide the Accounting Firm
access to and copies of any books, records and documents in the possession of
the Company or the Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by subparagraph (b). Any determination by the Accounting Firm as to
the amount of the Gross-Up Payment will be binding upon the Company and the
Executive.
(d) The federal, state and local income or other tax returns filed by
the Executive will be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive will make proper payment of the amount of any
Excise Payment, and at the request of the Company, provide to the Company just
verification evidencing that payment. If prior to the filing of the Executive's
federal income tax return, or corresponding state or local return, if relevant,
the Accounting Firm determines that the amount of the Gross-Up payment should be
reduced, the Executive shall within five (5) business days pay to the Company
the amount of that reduction.
(e) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by subparagraph
(b) will be borne by the Company. If those fees and expenses are initially paid
by the Executive, the Company will
reimburse the Executive the full amount of those fees and expenses within five
(5) business days after receipt from the Executive of a statement for them and
reasonable evidence of his payment of them.
(f) The Executive will notify the Company in writing of any claim by the
Internal Revenue Service or any other taxing authority that, if successful,
would require the payment by the Company of a Gross-Up Payment. That
notification will be given as promptly as practicable but not later than thirty
(30) business days after the Executive actually receives notice of that claim
and the Executive will further apprise the Company of the nature of that claim
and the date on which that claim is requested to be paid (in each case, to the
extent known by the Executive). The Executive will not pay that claim prior to
the earlier of (i) the expiration of the thirty (30) calendar-day period
following the date on which they give notice to the Company or (ii) the date
that any with respect to that claim is due. If the Company notifies the
Executive in writing prior to the expiration of that period that is desires to
contest the claim, the Executive will:
(A) provide the Company with any written records or documents in
his possession relating to that claim reasonably requested by the Company;
(B) take that action in connection with contesting the claim as
the Company reasonably requests in writing from time to time, including, without
limitation accepting legal representation with respect to that claim by an
attorney competent in respect to the subject matter and reasonably selected by
the Company and mutually agreeable to the Executive;
(C) cooperate with the Company in good faith in order effectively
to contest that claim; and
(D) permit the Company to participate in any proceedings relating
to that claim; provided, however, that the Company will bear and pay directly
all attorney fees, costs and expenses (including, but not limited to, interest
and penalties) incurred in connection with that contest and will indemnify and
hold harmless the Executive, on an after-tax basis, for and against any Excise
Tax or income tax, including interest and penalties with respect to the Excise
Tax, imposed as a result of that representation and payment of attorney fees,
costs and expenses. Without limiting the foregoing provisions of this
subparagraph (f), the Company will control all proceedings taken in connection
with the contest of any claim contemplated by this subparagraph (f) and, after
consultation with Executive and exercising reasonable and prudent business
practices, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of that claim
(provided, however, that the Executive may participate in them at his own cost
and expense) and may, at its option, either direct the Executive to pay the tax
claimed and ▇▇▇ for a refund or contest the claim in any permissible manner, and
the Executive will prosecute that contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the company will determine; provided, however, that if the
Company directs the Executive to pay the tax claimed and ▇▇▇ for a refund, the
Company will advance the amount of that payment to the
Executive on an interest-free basis and will indemnify and hold harmless the
Executive, on an after-tax basis, from any Excise Tax or income or other tax or
imputed income from the interest-free advance, including, but not limited to,
interest or penalties with respect to the Excise Tax, imposed with respect to
that advance; and provided further, however, that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which the contested amount is claimed to be due is
limited solely to that contested amount. Furthermore, the Company's control of
any contested claim will be limited to issues with respect to which a Gross-Up
Payment would be payable pursuant to this Appendix A and the Executive will 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.
(g) The Company agrees that it will maintain any information provided to
it by the Executive or his agents, including but not limited to that described
in paragraph (f) above, in strict confidence, and will disclose same only in
accordance with this Agreement and/or as required by applicable law.
APPENDIX B
1. Cerro Copper Products Company, Inc.
2. Outokumpu American Brass Company
3. Industrias Nacobre S.A. de C.V.
4. ▇▇▇▇ Corporation
5. ▇▇▇▇▇▇▇ Industries, Inc.
6. Kobe Copper Products, Inc.
7. National Copper
8. ▇▇▇▇▇▇▇
9. Hitachi, Ltd.
10. Trefimetaux
11. Reading Tube Corporation
12. Amcast
13. NIBCO
14. High Performance Tube
15. Commercial Metals Company
Reference to the above companies shall incorporate any related companies
thereto, including, but not limited to, all parent companies, subsidiary
companies, majority-owned companies and joint ventures.
