Form of Change of Control Agreement
[Date]
[Name]
[Address]
Dear [ ]:
Precision Castparts Corp. (the "Company") considers it
essential to the best interests of its stockholders to
xxxxxx the continuous employment of key management
personnel. In this connection, the Board of Directors of
the Company (the "Board") recognizes that, as is the case
with many publicly held corporations, the possibility of a
change in control of the Company may exist and that such
possibility, and the uncertainty and questions which it may
raise among management, may result in the departure or
distraction of management personnel to the detriment of the
Company and it stockholders.
The Board has determined that appropriate steps should
be taken to reinforce and encourage the continued attention
and dedication of members of the Company's management,
including yourself, to their assigned duties without
distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in
control of the Company.
In order to induce you to remain in the employ of the
Company, the Company agrees that you shall receive the
severance benefits set forth in this letter agreement (the
"Agreement") in the event your employment with the Company
is terminated under the circumstances described below
subsequent to a "change in control of the Company" (as
defined in Section 2).
1. Term of Agreement. This Agreement shall commence
on January 1, 1997, and shall continue in effect through
December 31, 1997; provided, however, that commencing on
January 1, 1998, and each January 1 thereafter, the term of
this Agreement shall automatically be extended for one
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additional year unless, not later than September 30 of the
preceding year, the Company shall have given notice that it
does not wish to extend this Agreement (provided that no
such notice may be given during the pendency of a potential
change in control of the Company, as defined in Section 2);
and provided, further, that if a change in control of the
Company, as defined in Section 2, shall have occurred during
the original or extended term of this Agreement, this
Agreement shall continue in effect for a period of
twenty-four (24) months beyond the month in which such
change in control occurred. Notwithstanding anything
provided herein to the contrary, the term of this Agreement
shall not extend beyond the end of the month in which you
attain "normal retirement age" under the provisions of the
Precision Castparts Corp. Retirement Plan Restatement (or
any successor thereto) or any other tax-qualified retirement
plan of the Company or any of its subsidiaries in which you
are participating (any such plan being referred to herein as
the "Company Pension Plan").
2. Change in Control; Potential Change in Control.
(i) No benefits shall be payable hereunder unless there
shall have been a change in control of the Company, as set
forth below. For purposes of this Agreement, a "change in
control of the Company" shall be deemed to have occurred if:
(a) any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (other than the
Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or any
Company owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as
their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting
power of the Company's then outstanding securities;
(b) during any period of two consecutive
years (not including any period prior to the execution of
this Agreement), individuals who at the beginning of such
period constitute the Board, and any new director (other
than a director designated by a person who has entered into
an agreement with the Company to effect a transaction
described in clause (a), (c) or (d) of this Section) whose
election by the Board or nomination for election by the
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Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a
majority thereof;
(c) the stockholders of the Company approve
a merger or consolidation of the Company with any other
company, other than (1) a merger or consolidation which
would result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity)
more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation
or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no "person" (as hereinabove defined) acquires more
than 20% of the combined voting power of the Company's then
outstanding securities; or
(d) the stockholders of the Company approve
a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets.
Notwithstanding the foregoing, unless
otherwise determined by the Board, no change in control of
the Company shall be deemed to have occurred if (i) you are
a member of a management group which first announces a
proposal which constitutes a Potential Change in Control (as
defined in this Section 2) which proposal (including any
modifications thereof) is ultimately successful or (ii) you
acquire an equity interest in the entity which ultimately
acquires the Company pursuant to the transaction described
in (i) of this paragraph.
(ii) For purposes of this Agreement, a "potential
change in control of the Company" shall be deemed to have
occurred if:
(a) the Company enters into an agreement,
the consummation of which would result in the occurrence of
a change in the control of the Company;
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(b) any person (including the Company)
publicly announces an intention to take or to consider
taking actions which if consummated would constitute a
change in control of the Company;
(c) any person, other than a trustee or
other fiduciary holding securities under an employee benefit
plan of the Company (or a company owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of
stock of the Company), who is or becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing 9.5% or more of the combined voting power of
the Company's then outstanding securities, increases his
beneficial ownership of such securities by 3 percentage
points or more over the percentage so owned by such person
on the date hereof; or
(d) the Board adopts a resolution to the
effect that, for purposes of this Agreement, a potential
change in control of the Company has occurred.
(iii) You agree that, subject to the terms and
conditions of this Agreement, in the event of a potential
change in control of the Company, you will remain in the
employ of the Company until the earliest of (a) a date which
is 270 days from the occurrence of such potential change in
control of the Company, (b) the termination by you of your
employment by reason of Disability as defined in Section
3(ii), or (c) the date on which you first become entitled
under this Agreement to receive the benefits provided in
Section 4(iii) below.
3. Termination Following Change in Control. (i)
General. If any of the events described in Section 2
constituting a change in control of the Company shall have
occurred, you shall be entitled to the benefits provided in
Section 4(iii) upon the subsequent termination of your
employment during the term of this Agreement unless such
termination is (a) because of your death or Disability,
(b) by the Company for Cause, or (c) by you other than for
Good Reason. In the event your employment with the Company
is terminated for any reason and subsequently a change in
control of the Company should have occurred, you shall not
be entitled to any benefits hereunder.
(ii) Disability. If, as a result of your
incapacity due to physical or mental illness, you shall have
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been absent from the full-time performance of your duties
with the Company for six (6) consecutive months, and within
thirty (30) days after written notice of termination is
given you shall not have returned to the full-time
performance of your duties, your employment may be
terminated for "Disability."
(iii) Cause. Termination by the Company of
your employment for "Cause" shall mean termination (a) upon
the willful and continued failure by you to substantially
perform your duties with the Company (other than any such
failure resulting from your incapacity due to physical or
mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination (as defined in
Subsection 3(v)) by you for Good Reason (as defined in
Subsection 3(iv)), after a written demand for substantial
performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board
believes that you have not substantially performed your
duties, or (b) the willful engaging by you in conduct which
is demonstrably and materially injurious to the Company,
monetarily or otherwise. For purposes of this Subsection,
no act, or failure to act, on your part shall be deemed
"willful" unless done, or omitted to be done, by you not in
good faith and without reasonable belief that your action or
omission was in the best interest of the Company.
Notwithstanding the foregoing, you shall not be deemed to
have been terminated for Cause unless and until there shall
have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-
quarters (3/4) of the entire membership of the Board at a
meeting of the Board (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard
before the Board), finding that in the good faith opinion of
the Board you were guilty of conduct set forth above in this
Subsection and specifying the particulars thereof in detail.
(iv) Good Reason. You shall be entitled to
terminate your employment for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean, without your
express written consent, the occurrence after a change in
control of the Company of any of the following circumstances
unless, in the case of paragraphs (a), (e), (f), (g) or (h),
such circumstances are fully corrected prior to the Date of
Termination (as defined in Section 3 vi)) specified in the
Notice of Termination (as defined in Section 3(v)) given in
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respect thereof:
(a) the assignment to you of any duties
inconsistent (except in the nature of a promotion) with the
position in the Company that you held immediately prior to
the change in control of the Company, or an adverse
alteration in the nature or status of your position or
responsibilities or the conditions of your employment from
those in effect immediately prior to such change in control;
(b) a reduction by the Company in your
annual base salary as in effect on the date hereof or as the
same may be increased from time to time except for across-
the-board salary reductions similarly affecting all
management personnel of the Company and all management
personnel of any person in control of the Company;
(c) the Company's requiring you to be based
more than 200 miles from the Company's offices at which you
are principally employed immediately prior to the date of
the change in control except for required travel on the
Company's business to an extent substantially consistent
with your present business travel obligations;
(d) the failure by the Company to pay to you
any portion of your current compensation or compensation
under any deferred compensation program of the Company
within seven (7) days of the date such compensation is due;
(e) the failure by the Company to continue
in effect any material compensation or benefit plan in which
you participate immediately prior to the change in control
of the Company, unless an equitable arrangement (embodied in
an ongoing substitute or alternative plan) has been made
with respect to such plan, or the failure by the Company to
continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided
and the level of your participation relative to other
participants, than existed at the time of the change in
control of the Company;
(f) the failure by the Company to continue
to provide you with benefits substantially similar to those
enjoyed by you under any of the Company's life insurance,
medical, dental, accident, or disability plans in which you
were participating at the time of the change in control of
the Company, the taking of any action by the
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Company which would directly or indirectly materially reduce
any of such benefits, or the failure by the Company to
provide you with the number of paid vacation days to which
you are entitled on the basis of your years of service with
the Company in accordance with the Company's normal vacation
policy in effect at the time of the change in control of the
Company;
(g) the failure of the Company to obtain a
satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in Section
5 hereof; or
(h) any purported termination of your
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Subsection
(v) hereof (and, if applicable, the requirements of
Subsection (iii) hereof), which purported termination shall
not be effective for purposes of this Agreement.
Your right to terminate your employment pursuant
to this Subsection shall not be affected by your incapacity
due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of
rights with respect to, any circumstance constituting Good
Reason hereunder.
(v) Notice of Termination. Any purported
termination of your employment by the Company or by you
shall be communicated by written Notice of Termination to
the other party hereto in accordance with Section 6.
"Notice of Termination" shall mean a notice that shall
indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a
basis for termination of your employment under the provision
so indicated.
(vi) Date of Termination, Etc. "Date of
Termination" shall mean (a) if your employment is terminated
for Disability, thirty (30) days after Notice of Termination
is given (provided that you shall not have returned to the
full-time performance of you duties during such thirty (30)-
day period), and (b) if your employment is terminated
pursuant to Subsection (iii) or (iv) hereof or for any other
reason (other than Disability), the date specified in the
Notice of Termination (which, in the case
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of a termination for Cause shall not be less than thirty
(30) days from the date such Notice of Termination is given,
and in the case of a termination for Good Reason shall not
be less than fifteen (15) nor more than sixty (60) days from
the date such Notice of Termination is given); provided,
however, that if within fifteen (15) days after any Notice
of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso),
the party receiving such
Notice of Termination notifies the other party that a
dispute exists concerning the termination, then the Date of
Termination shall be the date on which the dispute is
finally Determined, either by mutual written agreement of
the parties or by a binding arbitration award; and provided,
further, that the Date of Termination shall be extended by a
notice of dispute only if such notice is given in good faith
and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the
pendency of any dispute, the Company will continue to pay
you your full compensation in effect when the notice giving
rise to the dispute was given (including, but not limited
to, base salary and continue you as a participant in all
compensation, benefit and insurance plans in which you were
participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance
with this Subsection. Amounts paid under this Subsection
are in addition to all other amounts due under this
Agreement, and shall not be offset against or reduce any
other amounts due under this Agreement and shall not be
reduced by any compensation earned by you as the result of
employment by another employer.
4. Compensation Upon Termination or During
Disability. Following a change in control of the Company,
you shall be entitled to the following benefits during a
period of disability, or upon termination of your
employment, as the case may be, provided that such period or
termination occurs during the term of this Agreement:
(i) During any period that you fail to perform
your full-time duties with the Company as a result of
incapacity due to physical or mental illness, you shall
continue to receive your base salary at the rate in effect
at the commencement of any such period, together with all
compensation payable to you under the Company's disability
plan or program or other similar plan during such period,
until this Agreement is terminated pursuant to Section 3(ii)
hereof. Thereafter, or in the event your employment shall
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be terminated by reason of your death, your benefits shall
be determined under the Company's retirement, insurance and
other compensation programs then in effect in accordance
with the terms of such programs.
(ii) If your employment shall be terminated by the
Company for Cause or by you other than for Good Reason, the
Company shall pay you your full base salary through the Date
of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you
are entitled under any compensation plan of the Company at
the time such payments are due, and the Company shall have
no further obligations to you under this Agreement.
(iii) If your employment by the Company should
be terminated by the Company other than for Cause or
Disability or if you should terminate your employment for
Good Reason, you shall be entitled to the benefits provided
below:
(a) the Company shall pay to you your full
base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given plus all
other amounts to which you are entitled under any
compensation plan of the Company, at the time such payments
are due;
(b) in lieu of any further salary payments
to you for periods subsequent to the Date of Termination,
the Company shall pay as severance pay to you, at the time
specified in Subsection (v), a lump sum severance payment
(together with the payments provided in paragraphs (d), (e)
and (f) below, the "Severance Payments") equal to 3 times
(or such lesser number of years and partial years as may
then be remaining until your normal retirement age under the
Company Pension Plan) the sum of (1) the greater of (i) your
annual rate of base salary in effect on the Date of
Termination or (ii) your annual rate of base salary in
effect immediately prior to the change in control of the
Company and (2) the greater of (i) the average of the last
three annual bonuses (annualized in the case of any bonus
paid with respect to a partial year) paid to you preceding
the Date of Termination or (ii) the average of the last
three annual bonuses (annualized in the case of any bonus
paid with respect to a partial year) paid to you preceding
such change in control;
Page 9
(c) the Company shall pay to you all legal
fees and expenses incurred by you as a result of such
termination, including all such fees and expenses, if any,
incurred in contesting or disputing any such termination or
in seeking to obtain or enforce any right or benefit
provided by this Agreement (other than any such fees or
expenses incurred in connection with any such claim which is
determined to be frivolous) or in connection with any tax
audit or proceeding to the extent attributable to the
application of section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"); and
(d) for a thirty-six (36) month period after
such termination, the Company shall arrange to provide you
with life, accident and health insurance benefits
substantially similar to those which you were receiving
immediately prior to the change in control of the Company.
Notwithstanding the foregoing, the Company shall not provide
any benefit otherwise receivable by you pursuant to this
paragraph (d) to the extent that a similar benefit is
actually received by you from a subsequent employer during
such thirty-six (36) month period, and any such benefit
actually received by you shall be reported to the Company;
(e) in addition to the retirement benefits
to which you are entitled under the Company Pension Plan and
any supplemental or excess benefit pension plan maintained
by the Company or any of its subsidiaries (collectively, the
"Plans"), the Company shall pay you a lump sum, in cash,
equal to the actuarial equivalent of the excess of (i) the
retirement pension (determined as a straight life annuity
commencing at age 65) which you would have accrued under the
terms of the Plans (without regard to the limitations
imposed by section 401(a)(17) of the Code or any amendment
to the Plans made subsequent to a change in control of the
Company and on or prior to the Date of Termination, which
amendment adversely affects in any manner the computation of
retirement benefits thereunder), determined as if you were
fully vested thereunder and had continued to be employed by
the Company (after the Date of Termination) for three
additional years and as if you had accumulated three
additional calendar years of compensation (for purposes of
determining your pension benefits thereunder), each in an
amount equal to the amount determined under clause (i) of
Section 4(iii)(b) hereof, but in no event shall you be
deemed to have continued to be employed by the Company after
your normal retirement age over (ii) the vested retirement
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pension (determined as a straight life annuity commencing at
age 65), which you had then accrued pursuant to the
provisions of the Plans. For purposes of this Subsection,
"actuarial equivalent shall be determined using the same
methods and assumptions utilized under the Company Pension
Plan immediately prior to the change in control of the
Company; and
(f) should you move your residence in order
to pursue other business opportunities within one (1) year
of the Date of Termination, the Company will pay you, at the
time specified in Subsection (v), an amount equal to the
expenses incurred by you in connection with such relocation
(including expenses incurred in selling your home to the
extent such expenses were customarily reimbursed by the
Company to transferred executives prior to the change in
control of the Company) and which are not reimbursed by
another employer.
(iv) Notwithstanding anything in this Agreement to
the contrary, whether or not you become entitled to the
Severance Payments, if any of the Severance Payments or any
other payment or benefit received or to be received by you
in connection with a change in control of the Company or the
termination of your employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result
in a change in control of the Company or any person
affiliated with the Company or such person) (collectively
with the Severance Payments, "Total Payments") will be
subject to the tax (the "Excise Tax") imposed by section
4999 of the Code (or any similar tax that may hereafter be
imposed) the Company shall pay to you at the time specified
in Subsection (v), below, an additional amount (the "Gross-
Up Payment") such that the net amount retained by you, after
deduction of any Excise Tax on the Total Payments and any
federal, state and local income tax and Excise Tax upon the
payment provided for by this subsection, shall be equal to
the Total Payments. For purposes of determining whether any
amounts will be subject to the Excise Tax and the amount of
such Excise Tax, (a) all amounts representing the Total
Payments shall be treated as "parachute payments" within the
meaning of section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of section 280G(b)(1)
of the Code shall be treated as subject to the Excise Tax,
unless in the opinion of tax counsel selected by the
Company's independent auditors and acceptable to you the
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Total Payments (in whole or in part) do not constitute
parachute payments, or such excess parachute payments (in
whole or in part) represent reasonable compensation for
services actually rendered within the meaning of section
280G(b)(4) of the Code in excess of the base amount within
the meaning of section 280G(b)(3) of the Code, or are
otherwise not subject to the Excise Tax, (b) the amount of
the Total Payments which shall be treated as subject to the
Excise Tax shall be equal to the lesser of (1) the total
amount of the Total Payments or (2) the amount of excess
parachute payments within the meaning of section 280G(b)(1)
of the Code (after applying clause (a), above), and (c) the
value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Company's independent
auditors in accordance with the principles of sections
280G(d)(3) and (4) of the Code. For purposes of determining
the amount of the Gross-Up Payment, you shall be deemed to
pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income
taxes at the highest marginal rate of taxation in the state
and locality of your residence on the Date of Termination,
net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local
taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account
hereunder at the time of termination of your employment, you
shall repay to the Company at the time that the amount of
such reduction in Excise Tax is finally determined the
portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state and
local income tax imposed on the Gross-Up Payment being
repaid by you if such repayment results in a reduction in
Excise Tax and/or a federal and state and local income tax
deduction) plus interest on the amount of such repayment at
the rate provided in section 1274(b)(2)(B) of the Code. In
the event that the Excise Tax is determined to exceed the
amount taken into account hereunder at the time of the
termination of your employment (including by reason of any
payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company
shall make an additional gross-up payment in respect of such
excess (plus any interest payable with respect to such
excess) at the time that the amount of such excess is
finally determined.
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(v) The payments provided for in Subsections
(iii) and (iv) shall be made not later than the fifth day
following the Date of Termination; provided, however, that
if the amounts of such payments cannot be finally determined
on or before such day, the Company shall pay to you on such
day an estimate, as determined in good faith by the Company,
of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code) as soon
as the amount thereof can be determined but in no event
later than the thirtieth day after the Date of Termination.
In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to you
payable on the fifth day after demand therefor by the
Company (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code).
(vi) Except as provided in Subsection (iii)(d)
hereof, you shall not be required to mitigate the amount of
any payment provided for in this Section 4 by seeking other
employment or otherwise, nor shall the amount of any payment
or benefit provided for in this Section 4 be reduced by any
compensation earned by you as the result of employment by
another employer, by retirement benefits, by offset against
any amount claimed to be owed by you to the Company, or
otherwise.
5. Successors; Binding Agreement. (i) 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 expressly assume 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. Failure of the Company to
obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of
this Agreement and shall entitle you to compensation from
the Company in the same amount and on the same terms to
which you would be entitled hereunder if you terminate your
employment for Good Reason following a change in control of
the Company, except that for purposes of implementing the
foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used
in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business
Page 13
and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of
and be enforceable by you and your personal or legal
representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If you should
die while any amount would still be payable to you hereunder
had you continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to your devisee, legatee or
other designee or, if there is no such designee, to your
estate.
6. Notice. For purposes of this Agreement, notices
and all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States certified or
registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first
page of this Agreement, provided that all notices to the
Company shall be directed to the attention of the Board with
a copy to the Secretary of the Company, or to such other
address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change
of address shall be effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may
be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed
by you and such officer as may be specifically designated by
the Board. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of
Oregon without regard to its conflicts of law principles.
All references to sections of the Exchange Act or the Code
shall be deemed also to refer to any successor provisions to
such sections. Any payments provided for hereunder shall be
paid net of any applicable withholding required under
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federal, state or local law. The obligations of the Company
under Section 4 shall survive the expiration of the term of
this Agreement.
8. Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and
the same instrument.
10. Arbitration. Any dispute or controversy arising
under or in connection with this Agreement shall be settled
exclusively by arbitration, conducted before a panel of
three arbitrators in the State of Oregon, in accordance with
the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction; provided, however, that
you shall be entitled to seek specific performance of your
right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in
connection with this Agreement.
11. Entire Agreement. This Agreement sets forth the
entire agreement of the parties hereto in respect of the
subject matter contained herein and during the term of the
Agreement supersedes the provisions of all prior agreements,
promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by
any officer, employee or representative of any party hereto
with respect to the subject matter hereof.
Page 15
12. Effective Date. This Agreement shall become effective
as of the date set forth above. If this letter sets forth
our agreement on the subject matter hereof, kindly sign and
return to the Company the enclosed copy of this letter,
which will then constitute our agreement on this subject.
Sincerely,
By _____________________
Name:
Title:
Agreed as of the ___________ day
of ____________, 199_.
________________________________
Executive
Page 16
INDEMNITY AGREEMENT
THIS AGREEMENT is made as of____________, 19__ by and
between Precision Castparts Corp., an Oregon corporation
(Company), and _________________________ (Indemnitee), an
officer of the Company.
RECITALS
A. It is essential to the Company to retain and
attract as directors and officers the most capable persons
available.
B. The increase in corporate litigation subjects
directors and officers to expensive litigation risks at the
same time that the availability and coverage of directors'
and officers' liability insurance has been reduced.
C. It is now and always has been the express policy
of the Company to indemnify its directors and officers so as
to provide them with the maximum possible protection
permitted by law.
D. The bylaws of the Company require indemnification
of the directors and officers of the Company to the fullest
extent permitted by the Oregon Business Corporation Act
(Act). The Act expressly provides that the indemnification
provisions set forth in the Act are not exclusive, and
thereby contemplates that contracts may be entered into
between the Company and members of the board of directors
and officers with respect to indemnification of directors
and officers.
E. Indemnitee does not regard the protection
available under the Company's bylaws and insurance adequate
in the present circumstances, and may not be willing to
serve as a director or officer without adequate protection,
and the Company wants Indemnitee to serve in that capacity.
NOW, THEREFORE, the Company and Indemnitee agree as
follows:
1. Services to the Company. Indemnitee will serve or
continue to serve, at the will of the Company, as a director
or officer of the Company for so long as Indemnitee is duly
elected or appointed or until Indemnitee tenders a
resignation in writing.
2. Definitions. As used in this Agreement:
(a) The term "Proceeding" shall include any
threatened, pending or completed action, suit or
proceeding, whether brought in the right of the Company
or otherwise and whether of a civil, criminal,
administrative or investigative nature, in which
Indemnitee is or was a director or officer of the
Company or is or was serving at the request of the
Company as a director, officer, or agent of another
corporation, partnership, joint venture, trust or other
enterprise, whether or not serving in such capacity at
the time any liability or expense is incurred for which
indemnification or reimbursement can be provided under
this Agreement.
(b) The term "Expenses" includes, without
limitation, expense of investigations, judicial or
administrative proceedings or appeals, attorneys' fees
and disbursements and any expenses of establishing a
right to indemnification under Section 11 of this
Agreement, but shall not include amounts paid in
settlement by Indemnitee or the amount of judgments or
fines against Indemnitee.
(c) References to "other enterprise" shall
include employee benefit plans; references to "fines"
shall include any excise tax assessed with respect to
any employee benefit plan; reference to "serving at the
request of the Company" shall include any service as a
director, officer, employee or agent of the Company
which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an
employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and
in a manner reasonably believed to be in the best
interest of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best
interests of the Company" as referred to in this
Agreement.
3. Indemnity in Third-Party Proceedings. The Company
shall indemnify Indemnitee in accordance with the provisions
of this Section 3 if Indemnitee is a party to or threatened
to be made a party to any Proceeding (other than a
Proceeding by or in the right of the Company to procure a
judgment in its favor) against all Expenses, judgments,
fines and amounts paid in settlement actually and reasonably
Page 2
incurred by Indemnitee in connection with the Proceeding,
but only if Indemnitee acted in good faith and in a manner
which Indemnitee reasonably believed to be in or not opposed
to the best interests of the Company and, in the case of a
criminal proceeding, in addition, had no reasonable cause to
believe that Indemnitee's conduct was lawful.
4. Indemnity in Proceedings by or in the Right of the
Company. The Company shall indemnify Indemnitee in
accordance with the provisions of this Section 4 if
Indemnitee is a party to or threatened to be made a party to
any Proceeding by or in the right of Company to procure a
judgment in its favor against all Expenses actually and
reasonably incurred by Indemnitee in connection with the
defense or settlement of the Proceeding, but only if
Indemnitee acted in good faith and in a manner which
Indemnitee reasonably believed to be in or not opposed to
the best interests of the Company. No indemnification for
Expenses shall be made under this Section 4 in respect of
any claim, issue or matter as to which Indemnitee shall have
been finally adjudged by a court to be liable to the
Company, unless and only to the extent that any court in
which the Proceeding was brought shall determine upon
application that, despite the adjudication of liability but
in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnity.
5. Indemnification of Expenses of Successful Party.
Notwithstanding any other provisions of this Agreement, to
the extent that Indemnitee has been successful, on the
merits or otherwise, in defense of any Proceeding or in
defense of any claim, issue or matter therein, including the
dismissal of an action without prejudice, the Company shall
indemnify Indemnitee against all Expenses incurred in
connection therewith.
6. Additional Indemnification.
(a) Notwithstanding any limitation in Sections 3,
4 or 5, the Company shall indemnify Indemnitee to the
fullest extent permitted by law if Indemnitee is a
party to or threatened to be made a party to any
Proceeding (including a Proceeding by or in the right
of the Company to procure a judgment in its favor)
against all Expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred by
Indemnitee in connection with the Proceeding. No
indemnity shall be made under this Section 6(a) on
Page 3
account of Indemnitee's conduct which constitutes a
breach of Indemnitee's duty of loyalty to the Company
or its shareholders or is an act or omission not in
good faith or which involves intentional misconduct or
a knowing violation of the law.
(b) Notwithstanding any limitation in Sections 3,
4, 5 or 6(a), the Company shall indemnify Indemnitee to
the fullest extent permitted by law if Indemnitee is a
party to or threatened to be made a party to any
Proceeding (including a Proceeding by or in the right
of the Company to procure a judgment in its favor)
against all Expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred by
Indemnitee in connection with the Proceeding.
(c) For purposes of Sections 6(a) and 6(b), the
meaning of the phrase "to the fullest extent permitted
by law" shall include, but not be limited to:
(i) to the fullest extent permitted by the
provision of the Act that authorizes or
contemplates additional indemnification by
agreement, or the corresponding provision of any
amendment to or replacement of the Act, and
(ii) to the fullest extent authorized or
permitted by any amendments to or replacements of
the Act adopted after the date of this Agreement
that increase the extent to which a corporation
may indemnify its officers and directors.
7. Exclusions. Notwithstanding any provision in this
Agreement, the Company shall not be obligated under this
Agreement to make any indemnity in connection with any claim
made against Indemnitee:
(a) for which payment has actually been made to
or on behalf of Indemnitee under any insurance policy
or other indemnity provision, except with respect to
any excess beyond the amount paid under any insurance
policy or other indemnity provision;
(b) for any transaction from which Indemnitee
derived an improper personal benefit;
Page 4
(c) for an accounting of profits made from the
purchase and sale (or sale and purchase) by Indemnitee
of securities of the Company within the meaning of
Section 16(b) of the Securities Exchange Act of 1934,
as amended, or similar provisions of state statutory
law or common law;
(d) if a court having jurisdiction in the matter
shall finally determine that such indemnification is
not lawful under any applicable statute or public
policy (and, in this respect, both the Company and
Indemnitee have been advised that the Securities and
Exchange Commission believes that indemnification for
liabilities arising under the federal securities laws
is against public policy and is, therefore,
unenforceable and that claims for indemnification
should be submitted to appropriate courts for
adjudication); or
(e) in connection with any Proceeding (or part of
any Proceeding) initiated by Indemnitee, or any
Proceeding by Indemnitee against the Company or its
directors, officers, employees or other indemnitees,
unless (i) the Company is expressly required by law to
make the indemnification, (ii) the Proceeding was
authorized by the Board of Directors of the Company,
(iii) the Company provides the indemnification, in its
sole discretion, pursuant to the powers vested in the
Company under applicable law, or (iv) Indemnitee
initiated the Proceeding pursuant to Section 11 of this
Agreement and Indemnitee is successful in whole or in
part in the Proceeding.
8. Advances of Expenses. The Company shall pay the
expenses incurred by Indemnitee in any Proceeding in advance
at the written request of Indemnitee, if Indemnitee:
(a) furnishes the Company a written affirmation
of the Indemnitee's good faith belief that Indemnitee
is entitled to be indemnified by the Company under this
Agreement; and
(b) furnishes the Company a written undertaking
to repay the advance to the extent that it is
ultimately determined that Indemnitee is not entitled
to be indemnified by the Company. Advances shall be
Page 5
made without regard to Indemnitee's ability to repay
the expenses and without regard to Indemnitee's
ultimate entitlement to indemnification under the other
provisions of this Agreement.
9. Notification and Defense of Claim. Not later than
thirty (30) days after receipt by Indemnitee of notice of
the commencement of any Proceeding, Indemnitee will, if a
claim in respect of the Proceeding is to be made against the
Company under this Agreement, notify the Company of the
commencement of the Proceeding. The omission to notify the
Company will not relieve the Company from any liability
which it may have to Indemnitee otherwise than under this
Agreement. With respect to any Proceeding as to which
Indemnitee notifies the Company of the commencement:
(a) The Company will be entitled to participate
in the Proceeding at its own expense.
(b) Except as otherwise provided below, the
Company may, at its option and jointly with any other
indemnifying party similarly notified and electing to
assume such defense, assume the defense of the
Proceeding, with legal counsel reasonably satisfactory
to the Indemnitee. Indemnitee shall have the right to
use separate legal counsel in the Proceeding, but the
Company shall not be liable to Indemnitee under this
Agreement, including Section 8 above, for the fees and
expenses of separate legal counsel incurred after
notice from the Company of its assumption of the
defense, unless (i) Indemnitee reasonably concludes
that there may be a conflict of interest between the
Company and Indemnitee in the conduct of the defense of
the Proceeding or (ii) the Company does not use legal
counsel to assume the defense of such Proceeding. The
Company shall not be entitled to assume the defense of
any Proceeding brought by or on behalf of the Company
or as to which Indemnitee shall have made the
conclusion provided for in (i) above.
(c) If two or more persons who may be entitled to
indemnification from the Company, including the
Indemnitee, are parties to any Proceeding, the Company
may require Indemnitee to use the same legal counsel as
the other parties. Indemnitee shall have the right to
use separate legal counsel in the Proceeding, but the
Company shall not be liable to Indemnitee under this
Agreement, including Section 8 above, for the fees and
Page 6
expenses of separate legal counsel incurred after
notice from the Company of the requirement to use the
same legal counsel as the other parties, unless the
Indemnitee reasonably concludes that there may be a
conflict of interest between Indemnitee and any of the
other parties required by the Company to be represented
by the same legal counsel.
(d) The Company shall not be liable to indemnify
Indemnitee under this Agreement for any amounts paid in
settlement of any Proceeding effected without its
written consent, which shall not be unreasonably
withheld. Indemnitee shall permit the Company to
settle any Proceeding the defense of which it assumes,
except that the Company shall not settle any action or
claim in any manner which would impose any penalty or
limitation on Indemnitee without Indemnitee's written
consent, which may be given or withheld in Indemnitee's
sole discretion.
10. Procedure Upon Application for Indemnification.
Any indemnification under Sections 3, 4, 5 or 6 of this
Agreement shall be made no later than 90 days after receipt
of the written request of Indemnitee for indemnification and
shall not require that a determination be made in accordance
with the Act by the persons specified in the Act that
indemnification is required under this Agreement. However,
unless it is ordered by a court in an enforcement action
under Section 11 of this Agreement, no such indemnification
shall be made if a determination is made within such 90-day
period by (a) the Board of Directors by a majority vote of a
quorum consisting of directors who were not parties to the
Proceeding, or (b) independent legal counsel in a written
opinion (which counsel shall be appointed if a quorum is not
obtainable), that the Indemnitee is not entitled to
indemnification under this Agreement.
11. Enforcement. The Indemnitee may enforce any right
to indemnification or advances granted by this Agreement to
Indemnitee in any court of competent jurisdiction if (a) the
Company denies the claim for indemnification or advances, in
whole or in part, or (b) the Company does not dispose of the
claim within 90 days of a written request for
indemnification or advances. Indemnitee, in the enforcement
action, if successful in whole or in part, shall be entitled
to be paid also the expense of prosecuting the claim. It
shall be a defense to any such enforcement action (other
than an action brought to enforce a claim for advancement of
Page 7
expenses pursuant to Section 8 above, if Indemnitee has
tendered to the Company the required affirmation and
undertaking) that Indemnitee is not entitled to
indemnification under this Agreement, but the burden of
proving this defense shall be on the Company. Neither a
failure of the Company (including its Board of Directors or
its shareholders) to make a determination prior to the
commencement of the enforcement action that indemnification
of Indemnitee is proper in the circumstances, nor an actual
determination by the Company (including its Board of
Directors or its shareholders) that indemnification is
improper shall be a defense to the action or create a
presumption that Indemnitee is not entitled to
indemnification under this Agreement or otherwise. The
termination of any Proceeding by judgment, order of court,
settlement, conviction or upon a plea of nolo contendere, or
its equivalent, shall not, of itself, create a presumption
that Indemnitee is not entitled to indemnification under
this Agreement or otherwise.
12. Partial Indemnification. If Indemnitee is
entitled under any provisions of this Agreement to
indemnification by the Company for some or part of the
Expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by Indemnitee in the
investigation, defense, appeal or settlement of any
Proceeding but not, however, for the total amount, the
Company shall indemnify Indemnitee for the portion of the
Expenses, judgments, fines and amounts paid in settlement to
which Indemnitee is entitled.
13. Nonexclusivity and Continuity of Rights. The
indemnification provided by this Agreement shall not be
deemed exclusive of any other rights to which Indemnitee may
be entitled under the articles of incorporation, the bylaws,
any other agreement, any vote of shareholders or directors,
the Act, or otherwise, both as to action in Indemnitee's
official capacity and as to action in other capacity while
holding office. The indemnification under this Agreement
shall continue as to Indemnitee even though Indemnitee
ceases to be a director or officer and shall inure to the
benefit of the heirs and personal representatives of
Indemnitee.
14. Severability. If this Agreement or any portion of
it is invalidated on any ground by any court of competent
jurisdiction, the Company shall indemnify Indemnitee as to
Expenses, judgments, fines and amounts paid in settlement
Page 8
with respect to any Proceeding to the full extent permitted
by any applicable portion of this Agreement that is not
invalidated or by any other applicable law.
15. Subrogation. In the event of payment under this
Agreement, the Company shall be subrogated to the extent of
such payment to all of the rights of recovery of Indemnitee.
Indemnitee shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to
enable the Company effectively to bring suit to enforce such
rights.
16. Modification and Waiver. No supplement,
modification or amendment of this Agreement shall be binding
unless executed in writing by both parties. No
waiver of any of the provisions of this Agreement shall
constitute a waiver of any other provisions of this
Agreement (whether or not similar) nor shall any waiver
constitute a continuing waiver, unless expressly stated in
any waiver.
17. Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and
shall be deemed to have been duly given (a) upon delivery if
delivered by hand to the party to whom the notice or other
communication shall have been directed or (b) if mailed by
certified or registered mail with postage prepaid, on the
third business day after the date on which it is so mailed:
(i) If to Indemnitee, at the address indicated on
the signature page of this Agreement.
(ii) If to the Company to
Precision Castparts Corp.
Executive Office, Suite 440
0000 XX Xxxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Chief Executive Officer
or to any other address as may have been furnished
to Indemnitee by the Company.
18. Counterparts. The parties may execute this
Agreement in two counterparts, each of which shall
constitute the original.
Page 9
19. Applicable Law. This Agreement shall be governed
by and construed in accordance with the law of the state of
Oregon.
20. Successors and Assigns. This Agreement shall be
binding upon the Company and its successors and assigns.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be signed as of the day and year first above
written.
PRECISION CASTPARTS CORP. INDEMNITEE
By:______________________________By:________________________
Signature Signature
By:______________________________By:________________________
Type or Print Name Type or Print Name
By:______________________________By:________________________
Title Title
Page 10