Merger Synergy Restricted Stock Agreement
This Agreement, made and entered into as of October 19,
1999, (the "Agreement") by and between CK Witco Corporation (the
"Corporation") and Name (the "Executive") of Town.
WHEREAS, Crompton & Xxxxxxx Corporation ("C&K") and Witco
Corporation ("Witco") merged on September 1, 1999, to form the
Corporation;
WHEREAS, the merger of C&K and Witco presents an opportunity
for the Corporation to realize significant cost savings through
synergies resulting from the merger; and
WHEREAS, by virtue of the Executive's position with the
Corporation, the Executive can make a valuable contribution
toward achievement by the Corporation of merger related cost
savings, and the Corporation is offering incentives to the
Executive and other senior executives of the Corporation to work
to achieve $60 million in annual savings from such synergies;
NOW, THEREFORE, the Executive and the Corporation hereby agree as
follows:
1. Definitions.
For purposes of this Agreement, the following terms shall
have the following meanings:
(a) "Performance Period" shall mean the period September
1, 1999, to December 31, 2001.
(b) "Synergy Cost Savings" shall mean total annual
savings as follows:
(i) Savings from headcount reductions. Payroll and
benefit savings from headcount reductions will be determined by
comparison to a baseline of June 30, 1999. Spending for payroll
and benefits based on the employee census as of the baseline date
will be annualized and compared to actual spending (adjusted to
eliminate wage and benefit increases that are effective on or
after January 1, 2000) for each of fiscal years 2000 and 2001.
(ii) Savings from expense reductions. Non-
capitalized expense reductions with respect to consultants,
travel and entertainment, logistics, purchasing, insurance, rent,
purchased supplies and services and communications will be
determined by the comparison of actual annual spending for those
categories of expense in each of fiscal years 2000 and 2001 to
the total combined spending of Crompton & Xxxxxxx, Witco and CK
Witco for the same categories of expense in 1999.
(iii) Manufacturing savings. Manufacturing savings
from consolidation and shutdown of plants and other facilities
and improvements in manufacturing operations will be determined
by comparison of actual spending in each of fiscal years 2000 and
2001 to a baseline of June 30, 1999.
(iv) Interest expense and tax savings. Savings
from lower interest expense for each of fiscal years 2000 and
2001 will be determined by the comparison of actual interest
expense in those years to combined interest expense for Crompton
& Xxxxxxx, Witco and CK Witco for 1999. Savings, if any, from a
lower effective tax rate will be measured based on any
improvement in the effective consolidated tax rate in years after
1999 from 39.2% (the pro forma tax rate for CK Witco as if the
merger had occurred on January 1, 1999).
KPMG LLP will report to the Organization, Compensation and
Governance Committee of the Corporation's board of directors (the
"Committee") on the savings achieved as of the last day of each
complete fiscal year of the Corporation during the Performance
Period.
(c) "Retirement" shall mean cessation of the Executive's
employment with the Corporation or a subsidiary of the
Corporation occurring on or after the Executive's sixty-second
(62nd) birthday.
(d) "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.
(e) "Good Reason" shall mean (i) the assignment to the
Executive of any duties inconsistent in any respect with the
Executive's position (including status, offices, titles, and
reporting requirements), authority, duties or responsibilities as
contemplated by 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.
(f) "Change in Control" shall have the meaning set forth
in Section 10 of the Crompton & Xxxxxxx Corporation 1998 Long
Term Incentive Plan (the "Plan").
2. Grant.
In accordance with the terms and conditions of the Plan and
of this Agreement, the Executive is granted the opportunity to
earn "Shares" shares of the common stock of the Corporation (the
shares earned by the Executive, if any, hereinafter being called
the "Award") during the Performance Period.
3. Performance Objective.
(a) An Award shall be earned upon the achievement by the
Corporation during the Performance Period of $60 million in
Synergy Cost Savings.
(b) Total Synergy Cost Savings shall be determined as of
the last day of each complete fiscal year of the Corporation
during the Performance Period, and any Award that is earned shall
vest and be paid in accordance with Section 7 hereof.
4. Termination of Employment During Performance Period and
Prior to an Award's Having Been Earned.
(a) If the Executive's employment with the Corporation
or a subsidiary of the Corporation terminates during the
Performance Period and prior to an Award's having been earned
because of death, disability or Retirement, 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 and prior to an Award's having been
earned, the Executive's employment with the Corporation or a
subsidiary of the Corporation is terminated 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 an Award.
(c) In the event that the Executive's employment with
the Corporation terminates during the Performance Period and
prior to an Award's having been earned 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. Voting of Shares.
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. Dividends.
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. Vesting and Payment of Award.
Any Award earned by the Executive hereunder shall vest in
and be paid to the Executive as follows:
(i) if earned on or before December 31, 2000
33.33% on January 1, 2001
33.33% on January 1, 2002
33.33% on January 1, 2003
(ii) if earned after December 31, 2000
33.33% on January 1, 2002
33.33% on January 1, 2003
33.33% on January 1, 2004
Notwithstanding any other provision of this Section 7, upon
the termination of the Executive's employment with the
Corporation on or after December 31, 2000, due to death,
disability, Retirement or for any reason following a Change in
Control occurring after December 31, 2000, any Award theretofore
earned by the Executive hereunder shall immediately become fully
vested in him, and be payable in shares, or the cash equivalent
of the fair market value on the date so vested. Termination of
the Executive's employment with the Corporation on or after
December 31, 2000, 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. Certain Further Payments by the Company.
In the event that any amount paid or distributed to the
Executive pursuant to this Agreement (taken together with any
amounts otherwise paid or distributed to the Executive in
connection with a change of control referred to in Section
280G(b)(i)) are subject to an excise tax under Section 4999 of
the Code or any successor or similar provision thereto (the
"Excise Tax"), the Corporation shall pay to the Executive an
additional amount such that, after taking into account all taxes
(including federal, state, local and foreign income, excise and
other taxes) incurred by the Executive on the receipt of such
additional amount, the Executive is left with the same after-tax
amount the Executive would have been left with had no Excise Tax
been imposed.
9. At Will Employment.
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.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
CK Witco Corporation
By:
Its:
Name
