1999-2001 Long Term Performance Award Agreement
This Agreement, dated as of February 1, 1999, (the
"Agreement") is made by and between Crompton & Xxxxxxx
Corporation (the "Corporation") and (the "Executive").
WHEREAS, the Corporation has adopted the 1998 Long Term
Incentive Plan (the "Plan") for the purpose of attracting,
motivating and retaining key employees by offering them long term
performance-based incentives and an opportunity to acquire
ownership of shares of the Corporation's common stock.
NOW, THEREFORE, the Executive, a key employee of the
Corporation, is granted the opportunity to earn shares of common
stock of the Corporation in accordance with the terms and
conditions of the Plan and this Agreement.
1. The Executive is granted the opportunity to earn a
maximum of shares of the common stock of the Corporation (the
actual number of shares earned by the Executive, if any,
hereinafter being called the "Award") during the Performance
Period.
2. Definitions
For purposes of this Agreement, the following terms shall have
the following meanings:
(a) "Performance Period" shall mean the period
January 1, 1999, to December 31, 2001.
(b) "Retirement" shall mean cessation of the
Executive's employment with the Corporation or a subsidiary of
the Corporation on or after the first day of the month on or next
after the Executive's sixth-second (62nd) birthday.
(c) "Cause" shall mean (i) the Executive's willful
and continued failure to substantially perform assigned duties
with the Corporation or its subsidiary corporations (other than
any such failure resulting from incapacity due to physical or
mental illness or any such actual or anticipated failure
resulting from termination for Good Reason), after a demand for
substantial performance is delivered to the Executive by the
Board of Directors of the Corporation by which the Executive is
employed (the "Board"), specifically identifying the manner in
which the Board believes that the duties have not been
substantially performed, or (ii) the Executive's willful conduct
which is demonstrably and materially injurious to the Corporation
or any subsidiary corporation by which the Executive is employed.
For purposes of this subsection 2(c), no act, or failure to act,
shall be considered "willful" unless done, or omitted to be done,
not in good faith and without reasonable belief that such action
or omission was in the best interest of the Corporation and the
subsidiary corporation, if any, by which the Executive is
employed.
(d) "Good Reason" shall mean (i) the assignment to
the Executive of any duties inconsistent in any respect with the
Executive's position (including xxxxx, offices, titles, and
reporting requirements), authority, duties or responsibilities as
contemplated by any employment agreement between the Executive
and the Corporation or a subsidiary of the Corporation, or any
other action by the Corporation or the subsidiary corporation, if
any, by which the Executive is employed which results in a
diminishment in such position, authority, duties, or
responsibilities, other than an insubstantial and inadvertent
action which is remedied by the Corporation or such subsidiary
corporation promptly after receipt of notice thereof given by the
Executive; (ii) any failure by the Corporation or the subsidiary
corporation, if any, by which the Executive is employed to comply
with any of the provisions of any employment agreement between
the Executive and the Corporation or such subsidiary corporation,
other than an insubstantial and inadvertent failure which is
remedied by the Corporation or such subsidiary corporation
promptly after receipt of notice thereof given by the Executive;
(iii) any change not concurred in by the Executive in the
location of the office at which the Executive is principally
based on the date hereof, except for travel reasonably required
in the performance of the Executive's responsibilities and
substantially consistent with prior business travel obligations
of the Executive; or (iv) any purported termination by the
Corporation or the subsidiary corporation, if any, by which the
Executive is employed of the Executive's employment otherwise
than as permitted by any employment agreement between the
Executive and the Corporation or such subsidiary corporation.
(e) "Change in Control" shall mean a change in control of the
Corporation of a nature that would be required to be reported in
response to Item 1(a) of the Current Report on Form 8-K, as in
effect on January 1, 1998, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); provided
that, without limitation, such a "Change in Control" shall be
deemed to have occurred if (x) a third person, including a
"group" as such term is used in Section 13(d)(3) of the Exchange
Act, other than the trustee of any employee benefit plan of the
Corporation, becomes the beneficial owner, directly or
indirectly, of 20% or more of the combined voting power of the
Corporation's outstanding voting securities ordinarily having the
right to vote for the election of directors of the Corporation;
(y) during any period of 24 consecutive months individuals who,
at the beginning of such consecutive 24-month period, constitute
the Board of Directors of the Corporation (the "Crompton &
Xxxxxxx Board" generally and, as of the date of this Agreement,
the "Incumbent Board") cease for any reason (other than
Retirement upon reaching normal Retirement age, disability, or
death) to constitute at least a majority of the Crompton &
Xxxxxxx Board; provided that any person becoming a director of
the Corporation subsequent to the date hereof whose election, or
nomination for election by the Corporation's shareholders, was
approved by a vote of at least three quarters of the directors
comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is
in connection with an actual or threatened election contest
relating to the election of the directors of the Corporation, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent
Board; or (z) the Corporation shall cease to be a publicly owned
corporation having its outstanding common stock listed on the New
York Stock Exchange, the NASDAQ Stock Market or the American
Stock Exchange.
3. Performance Objectives
There shall be two Performance Objectives used to determine the
amount of the Award, if any, earned by the Executive, as follows:
(a) Return on Capital Objective
This objective, which must be achieved in order for the
Executive to earn an Award, shall be the achievement by the
Corporation of an average annual return on capital for the
Performance Period equal to or greater than the lesser of (i)
twelve percent (12%) or (ii) the average annual return on capital
achieved by a select group of specialty chemical companies as
monitored by the Corporation.
(b) Earnings Per Share ("EPS") Objective
This objective shall be the achievement by the Corporation
of cumulative earnings per share for the Performance Period of
not less than $4.84 per common share.
The following table shows by way of example the cumulative
earnings per share which will be realized by the Corporation if
the earnings per share increase annually during the Performance
Period at rates of eight, ten and thirteen percent from the 1998
base of $1.38 per share and the Award associated with cumulative
earnings per share at each of those levels:
Threshold Award Target Award Maximum Award
Cumulative $4.84 $5.02 $5.31
EPS
Award Earned
The actual Award, if any, earned by the Executive shall be
based upon the actual cumulative earnings per share achieved by
the Corporation during the Performance Period, and except in the
event that cumulative earnings per share for the Performance
Period are equal to the amounts shown in the above table, shall
be determined by interpolation from the values shown in the
table.
4. Termination of Employment During Performance
Period
(a) If the Executive's employment with the Corporation
or a subsidiary of the Corporation terminates during the
Performance Period because of death, disability or Retirement,
the Executive Compensation Committee of the Crompton & Xxxxxxx
Board (the "Committee") may, in its sole discretion, make a pro
rata Award to the Executive.
(b) If, following a Change in Control occurring
after the date of this Agreement, the Executive's employment with
the Corporation or a subsidiary of the Corporation is terminated
during the Performance Period by the Executive for Good Reason or
by the Corporation by which the Executive is employed other than
for Cause, the Executive shall become immediately vested in, and
shall be promptly paid a pro rata Award which Award shall be
determined on the basis of the cumulative earnings per share
achieved by the Corporation during the Performance Period through
the date of such termination of the Executive's employment and a
proration (based on the number of days in the Performance Period
which have elapsed on the date of such termination of the
Executive's employment) of the share and cumulative earnings per
share quantities specified in section 3 hereof. The Executive
shall be entitled to a prorated Award pursuant to this subsection
(b) without regard to whether or not the Corporation has achieved
the return on capital objective specified in section 3 hereof.
(c) In the event that the Executive's employment with
the Corporation terminates during the Performance Period for any
reason other than
as specified in subsections 4(a) and 4(b) hereof, the
Executive shall not be entitled to receive any Award for the
Performance Period.
5. After the date of any Award to the Executive
hereunder, and prior to the transfer to the Executive of all of
the shares of the Corporation comprising the Award, the Executive
shall have the right to instruct the trustee of the Crompton &
Xxxxxxx Corporation Long Term Incentive Plan Trust (the
"Trustee") as to the voting of such number of shares of the
Corporation comprising the Award as are held by the Trustee,
together with any other shares held by the Trustee in any account
which may be established by the Trustee on or after the date of
the Award in the name of the Executive.
6. The Executive shall be paid, at the time any shares
earned by him are transferred to him, such sum of money or, at
the sole discretion of the Corporation, such additional shares or
other property, as shall be equal to the Executive's pro rata
share of the Trust earnings to the date of and attributable to
such payment, but less such cash or shares, if any, as the
Corporation shall in its sole discretion determine are required
to be withheld to pay taxes due on the cash or shares then being
transferred to the Executive. The Executive shall have the right
to defer any portion of the earned Award.
7. Any Award made to the Executive hereunder shall
vest in the Executive and the Executive shall be entitled to
receive the Award only as follows:
25% on December 31, 2001
25% on December 31, 2002
25% on December 31, 2003
25% on Retirement of the Executive
Notwithstanding any other provision of this Section 7, upon
the termination of the Executive's employment with the
Corporation on or after December 31, 2001, due to death,
disability, Retirement or for any reason following a Change in
Control occurring after December 31, 2001, any Award theretofore
earned by the Executive hereunder shall immediately become fully
vested in him. Termination of the Executive's employment with
the Corporation on or after December 31, 2001, for any reason
other than those specified in the preceding sentence shall cause
the forfeiture of any portion of an Award not vested prior to the
date of such termination of employment.
8. This Agreement does not alter the "at will"
nature of the Executive's employment, which employment may be
terminated at any time by the Executive or the Corporation by
which the Executive is employed.
9. In the event that the shareholders of the
Corporation do not approve the Crompton & Xxxxxxx Corporation
1998 Long Term Incentive Plan on or before April 27, 1999, this
Agreement shall be null and void and of no further force or
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
CROMPTON & XXXXXXX CORPORATION
By:
The Executive
