MAYTAG CORPORATION
Exhibit 10(b)
Executive Severance Agreements.
The following executives are covered under this severance agreement:
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EXECUTIVE SEVERANCE AGREEMENT
THIS AGREEMENT is made the ___ day of ________, 199_, by and between 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 its
subsidiaries as is determined by the Chairman and Chief Executive Officer.
B. Should the Company receive or learn of any proposal by a third person
about a possible business combination with the Company or the acquisition of its
equity securities, the Board considers it imperative that the Company be able to
rely upon the Executive to continue in his or her position. This to the end
that the Company be able to receive and rely upon the Executive's advice
concerning the best interests of the Company and its stockholders, without
concern that person might be distracted by the personal uncertainties and risks
created by such a proposal.
C. Should the Company receive any such proposals, in addition to the
Executive's regular duties, he or she may be called upon to assist in the
assessment of such proposals, advise management and the Board as to whether such
proposals would be in the best interests of the Company and its stockholders,
and to take such other actions as the Board might determine to be appropriate.
AGREEMENT
NOW, THEREFORE, to assure the Company that it will have the continued
dedication of the Executive and the availability of that person's advice and
counsel notwithstanding the possibility, threat or occurrence of a bid to take
over control of the Company, and to induce the Executive to remain in the employ
of the Company, and for other good and valuable consideration, the Company and
the Executive agree that the Executive Severance Agreement described above be
amended and restated in its entirety as follows:
A. Should a third person, in order to effect a change of control (as
defined), begin a tender or exchange offer, circulate a proxy to stockholders or
take other steps, the Executive agrees that he or she will not voluntarily leave
the employ of the Company, and will render the services contemplated in the
recitals to this agreement, until the third person has abandoned or terminated
his efforts to effect a change of control or until a change of control has
occurred.
B. Should the Executive's employment with the Company or its subsidiaries
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 be provided:
1. "Lump Sum Cash Payment." On or before the Executive's last day of
employment with the Company or its subsidiaries, or as soon thereafter as
possible, the Company will pay to the Executive as compensation for services
rendered, 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 the rate in
effect immediately prior to the change of control and (2) the maximum annual
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incentive bonus opportunity provided by the Plan and any discretionary bonus
declared for the year in which the change of control occurred, or the preceding
year if not established plus (B) an amount equal to the compensation (at the
Executive's rate of pay in effect immediately prior to the change of control)
payable for any period for which the Executive could have, immediately prior to
the date of his termination of employment, been on vacation and received such
compensation, for unused and accrued vacation benefits determined under the
Company's vacation pay plan or program covering the Executive immediately prior
to the change of control. If the time from the Executive's last day of
employment with the Company or its subsidiaries to the Executive's 65th birthday
is less than 36 months, there shall be a proportionate reduction of the payment
computed under 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 benefits
received under the Salaried Retirement Plans maintained by the Company or its
subsidiaries, including The Maytag Corporation Salaried Retirement Plan and any
Supplemental Executive Retirement Plan, such benefit to commence on the first to
occur of (a) the commencement of payment of benefits under the Maytag
Corporation Salaried Retirement Plan or (b) attainment of age 65, but not prior
to three (3) years following the date of termination of employment or age 65,
whichever first occurs, such benefit to be an amount equal to the excess of (i)
the aggregate benefits under such Salaried Retirement Plans to which the
Executive would be entitled if he or she remained employed by the Company or its
subsidiaries, for an additional period of three (3) years or until his or her
65th birthday, whichever is earlier, at the rate of annual compensation
specified herein; over (ii) the benefits to which the Executive is 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 plan or plans of
the Company or its subsidiaries, including but not limited to those providing
major medical and hospitalization benefits, dental benefits and vision benefits;
and (iii) the Company's long-term disability plan or plans; as all such plans
existed immediately prior to the change of control shall continue as though he
or she remained employed by the Corporation or its subsidiaries for an
additional period of three (3) years or until the obtainment of such coverages
with another employer, whichever is earlier. To the extent such participation
or entitlement is not possible for any reason whatsoever, equivalent benefits
shall be provided.
4. Participation in Employee Benefit Plans. After termination of em-
ployment, the Executive shall continue to participate in the Salaried Retirement
Plans as contemplated above. The Executive's participation in any other
savings, capital accumulation, retirement, incentive compensation, profit
sharing, stock option, and/or stock appreciation rights plans of the Company or
any of its subsidiaries shall continue only through the last day of his or her
employment. Any terminating distributions and/or vested rights under such
plans shall be governed by the terms of those respective plans. Furthermore,
the Executive's participation in any insurance plans of the Company and rights
to any other fringe benefits shall, except as otherwise specifically provided in
such plans or Company policy, terminate as of the close of the Executive's last
day of employment, except to the extent specifically provided to the contrary in
this agreement.
5. "Incentive Plans." In addition to the payments required by paragraph
1 of this Section, the Company shall pay to the Executive as compensation for
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services rendered cash in an amount equal to the maximum amount which could be
payable to the Executive under any and all incentive compensation plans in which
the Executive is a participant or under which the Executive holds 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 of stock of the Company,
the Executive's such cash payment shall include an amount equal to the aggregate
value of such shares determined as of the day of the change of control. Any
payment due pursuant to this paragraph 5 shall be paid at the same time as the
amount payable pursuant to paragraph 1 of this Section.
6. "Reimbursement for Loss on Sale of Principal Residence." If on the
date of the change of control the Executive shall own a private residence within
Jasper County, Iowa (the "Executive's residence"), the Executive shall be paid
an amount equal to the excess, if any, of the amount by which the greater of (i)
the "aggregate purchase price" (as defined below) of the Executive's residence
and (ii) the "change of control market value" (as defined below) of the
Executive's residence, over the amount realized by the Executive upon the sale
of such residence. Any amount payable to the Executive under this agreement
shall be paid to the Executive on the date on which the Executive's residence is
sold in a bona fide transaction with an unrelated party. Notwithstanding the
foregoing, if the Executive's residence shall not be sold within 6 months after
the date on which the Executive's residence is first offered for sale, the
Company shall purchase the Executive's residence from the Executive for a cash
amount equal to the "change of control market value" of the Executive's
residence. For purposes of this paragraph, the "aggregate purchase price" of
the Executive's residence shall be the sum of the amount paid therefor plus the
cost of any significant repairs such as the cost of siding, or roof repair or
maintenance, incurred within the 5 year period ending on the date on which a
change of control occurs, plus the cost of any improvements to such residence
made by the Executive, the "amount realized" upon the sale of such residence
shall be the net amount, after deduction for brokers' fees, title charges,
transfer taxes and similar items, realized by the Executive upon the 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 change of control occurred,
as determined by an independent appraiser selected by the Executive. The fees
and expenses of such appraiser shall be paid by the Company.
7. "Excise Tax-Additional Payment." (a) Notwithstanding anything in this
agreement or any written or unwritten policy of the Company or its subsidiaries
to the contrary, (i) if it shall be determined that any payment or distribution
by the Company or its subsidiaries to or for the benefit of the Executive,
whether paid or payable or distributed or distributable pursuant to the terms of
this agreement, any other agreement between the Company or its subsidiaries and
the Executive or otherwise (a "Payment"), would be subject to the excise tax
imposed by section 4999 of the Internal Revenue Code of 1986, as amended, (the
"Code") or any interest or penalties 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"), or (ii) if the Executive shall
otherwise become obligated to pay the Excise Tax in respect of a Payment, then
the Company shall pay to the Executive 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 any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
such Payment.
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(b) All determinations and computations required to be made under this
paragraph 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, shall be made
by the Company's regularly engaged independent certified public accountants (the
"Accounting Firm"). The Company shall cause the Accounting Firm to provide
detailed supporting calculations both to the Company and the Executive within 15
business days after such determination or computation is requested by the
Executive. Any initial Gross-Up Payment determined pursuant to this paragraph
B7 shall be paid by the Company or the subsidiary to the Executive within 5 days
of the receipt of the Accounting Firm's determination. A determination that no
Excise Tax is payable by the Executive shall not be valid or binding unless
accompanied by a written opinion of the Accounting Firm to the Executive that
the Executive has substantial authority not to report any Excise Tax on his
federal income tax return. Any determination by the Accounting Firm shall be
binding upon the Company, its subsidiaries and the Executive, except to the
extent the Executive becomes obligated to pay an Excise Tax in respect of a
Payment. In the event that the Company or the subsidiary exhausts or waives its
remedies pursuant to subparagraph 7B(c) and the Executive thereafter shall
become obligated to make a payment of any Excise Tax, and if the amount thereof
shall exceed the amount, if any, of any Excise Tax computed by the Accounting
Firm pursuant to this subparagraph (b) in respect to which an initial Gross-Up
Payment was made to the Executive, the Accounting Firm shall within 15 days
after Notice thereof determine the amount of such excess Excise Tax and the
amount of the additional Gross-Up Payment to the Executive. All expenses and
fees of the Accounting Firm incurred by reason of this paragraph B7 shall be
paid by the Company.
(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive knows of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the thirty-day period following the date
on which it gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested
relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected
by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim,
(iv) permit the Company to participate in any proceedings
relating to such claim;
PROVIDED, HOWEVER, that the Company shall bear and pay directly all costs 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
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penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this subparagraph B7(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and ▇▇▇ for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company or the
subsidiary shall determine; PROVIDED, HOWEVER, that if the Company or the
subsidiary directs the Executive to pay such claim and ▇▇▇ for a refund, the
Company or the subsidiary shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax, including
interest or penalties with respect thereto, imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and FURTHER
PROVIDED, that any extension of the statue of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, control of the contest by the Company or the subsidiary 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.
(d) If, after the receipt by the Executive of an amount advanced by the
Company or the subsidiary pursuant to subparagraph B7(c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to compliance with the requirements of paragraph B7 by the Company or
the subsidiary) promptly pay to the Company or the subsidiary the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company or the subsidiary pursuant to subparagraph B7(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall off-set,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
C. Definitions.
1. "Change of Control." For purposes of this Agreement, "change of
control" shall mean:
(a) The acquisition 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")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition by
the Company, (ii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company or (iii) any acquisition by any corporation pursuant to a
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transaction which complies with clauses (i), (ii) and (iii) of subsection (c)
below; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of a 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 occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(d) Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company.
2. "Subsidiary". For purposes of this agreement, a "Subsidiary" shall
mean any domestic or foreign corporation at least 20% of whose shares normally
entitled to vote in electing directors is owned directly or indirectly by the
Company or by other subsidiaries.
D. General Provisions.
1. "No Guaranty of Employment." Nothing in this agreement shall be deemed
to entitle the Executive to continued employment with the Company or its sub-
sidiaries, and the rights of the Company to terminate the employment of the
Executive shall continue as fully as if this agreement were not in effect,
PROVIDED that any such termination of employment within three (3) years fol-
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lowing a change of control shall entitle the Executive to the benefits herein
provided.
2. "Confidentiality." The Executive shall retain in confidence any confi-
dential information known to him concerning the Company and its business so long
as such information is not publicly disclosed.
3. "Payment Obligation Absolute." The Company's obligation to pay the
Executive the compensation and to make the arrangements provided herein shall be
absolute and unconditional and shall not be affected by any circumstances,
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 be paid without notice or demand.
The Company waives all rights which it may now have or may hereafter have
conferred upon it, by statute or otherwise, to terminate, cancel or rescind this
agreement in whole or in part. Each and every payment made hereunder by the
Company shall be final and the Company shall not seek to recover all or any part
of such payment from the Executive or from whoever may be entitled thereto, for
any reason whatsoever.
4. "Indemnification." If litigation shall be brought to enforce or inter-
pret any provision contained herein, the Company hereby indemnifies the Execu-
tive for his or her reasonable attorney's fees and disbursements incurred in
such litigation, and hereby agrees to pay prejudgment interest on any money
judgment obtained by the Executive calculated by using the prevailing prime
interest rate on the date that payment(s) to him or her should have been made
under this agreement.
5. "Successors". This agreement shall be binding upon and inure to the
benefit 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 arising here-
under may be assigned or pledged by the Executive.
6. "Severability." Any provision in this agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
or affecting the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
7. "Controlling Law". This agreement shall in all respects be governed
by, and construed in accordance with, the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have executed this agreement on the date
set out above.
MAYTAG CORPORATION
By ___________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CEO
___________________________
, Executive
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