Exhibit 10.40
Domestic
[UCAR LETTERHEAD]
[DATE]
NAME
ADDRESS
Dear NAME:
The Board of Directors (the "Board") of UCAR International Inc. (the
"Corporation") has authorized the grant to you of this Severance Compensation
Agreement (this "Agreement"). The Board recognizes that the possibility of a
Change in Control of the Corporation exists, as is the case with many publicly
held corporations, and that 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 Corporation and its 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 a
possible Change in Control of the Corporation. The Board has also determined
that it is in the best interests of the Corporation and its stockholders to
ensure your continued availability to the Company in the event of a potential
Change in Control of the Corporation. References herein to the "Company" mean
the Corporation and its subsidiaries.
In order to induce you to remain in the employ of the Company and in
consideration of your continued service to the Company, the Corporation and its
subsidiary or subsidiaries signing the signature page of this Agreement jointly
and severally agree that you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Company is terminated
subsequent to a Change in Control of the Corporation under the circumstances
described below.
1. Definitions.
-----------
a. "CHANGE IN CONTROL OF THE CORPORATION" shall be deemed
to occur if any of the following circumstances shall occur:
(i) any "person" or "group" within the meaning of
Section 13(d) or 14(d)(2) of the Securities Exchange Act of
1934 (the "Act") becomes the beneficial owner of 15% or
more of the then outstanding Common Stock or 15% or more of
the then outstanding voting securities of the Corporation;
(ii) any "person" or "group" within the meaning of
Section 13(d) or 14(d)(2) of the Act acquires by proxy or
otherwise the right to vote on any matter or question with
respect to 15% or more of the then outstanding Common Stock
or 15% or more of the combined voting power of the then
outstanding voting securities of the Corporation;
(iii) Present Directors and New Directors cease for
any reason to constitute a majority of the Board (and, for
purposes of this clause (iii), "Present Directors" shall
mean individuals who at the beginning of any consecutive
twenty-four month period were members of the Board and "New
Directors" shall mean individuals whose election by the
Board or whose nomination for election as directors by the
Corporation's stockholders was approved by a vote of at
least two-thirds of the directors then in office who were
Present Directors or New Directors);
(iv) the stockholders of the Corporation approve a
plan of complete liquidation or dissolution of the
Corporation; or
(v) consummation of: (x) a reorganization,
restructuring, recapitalization, reincorporation, merger or
consolidation of the Corporation (a "Business Combination")
unless, following such Business Combination, (a) all or
substantially all of the individuals and entities who were
the beneficial owners of the Common Stock and the voting
securities of the Corporation outstanding immediately prior
to such Business Combination beneficially own, directly or
indirectly, more than 50% of the common equity securities
and the combined voting power of the voting securities of
the corporation or other entity resulting from such
Business Combination outstanding after such Business
Combination (including, without limitation, a corporation
or other entity which as a result of such Business
Combination owns the Corporation or all or substantially
all of the assets of the Corporation or the Company either
directly or through one or more subsidiaries) in
substantially the same proportions as their ownership
immediately prior to such Business Combination of
outstanding Common Stock and the combined voting power of
the outstanding voting securities of the Corporation,
respectively, (b) no "person" or "group" within the meaning
of Section 13(d) or 14(d)(2) of the Act (excluding (1) any
corporation or other entity resulting from such Business
Combination and (2) any employee benefit plan (or related
trust) of the Company or any corporation or other entity
resulting from such Business Combination) beneficially owns
15% or more of the common equity securities or 15% or more
of the combined voting power of the voting securities of
the corporation or other entity resulting from such
2
Business Combination outstanding after such Business
Combination, except to the extent that such beneficial
ownership existed prior to such Business Combination with
respect to the Common Stock and the voting securities of
the Corporation, and (c) at least a majority of the members
of the board of directors (or similar governing body) of
the corporation or other entity resulting from such
Business Combination were members of the Board at the time
of the execution of the initial agreement providing for
such Business Combination or at the time of the action of
the Board approving such Business Combination, whichever is
earlier; or (y) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of
all or substantially all of the assets of the Corporation
or the Company, whether held directly or indirectly through
one or more subsidiaries (excluding any pledge, mortgage,
grant of security interest, sale-leaseback or similar
transaction, but including any foreclosure sale), provided,
that, for purposes of clauses (v)(x) and (v)(y) above, the
divestiture of less than substantially all of the assets of
the Corporation or the Company in one transaction or a
series of related transactions, whether effected by sale,
lease, exchange, spin-off, sale of stock of or merger or
consolidation of a subsidiary, transfer or otherwise, shall
not constitute a Change in Control of the Corporation.
Notwithstanding the foregoing, (A) a Change in Control of the Corporation shall
not be deemed to occur:
(I) pursuant to clause (i) or (ii) above, solely because 15% or more of
the then outstanding Common Stock or the then outstanding voting securities of
the Corporation is or becomes beneficially owned or is directly or indirectly
held or acquired by one or more employee benefit plans (or related trusts)
maintained by the Company; or
(II) pursuant to clause (v)(y) above, (1) if the Board determines that any
sale, lease, exchange or other transfer does not involve all or substantially
all of the assets of the Corporation or the Company or (2) unless the Board
determines otherwise, solely because of the consummation of a transaction or a
series of transactions pursuant to which the Company sells, distributes to the
Corporation's stockholders, or otherwise transfers or disposes of any or all of
its ownership of its natural, acid-treated and flexible graphite business,
however owned (including ownership through one or more dedicated subsidiaries
and holding companies therefor and successors thereto); and
(B) to the extent that a "person" or "group" within the meaning of Section
13(d) or 14(d)(2) of the Act is the beneficial owner of 15% or more of the
Common Stock or the voting securities of the Corporation on May 9, 2000, then
the references therein to 15% shall be deemed to be references to 22.5% as (but
only as) to such "person" or "group."
For purposes of this Agreement, references to "beneficial owner" and correlative
phrases shall have the same definition as set forth in Rule 13d-3 under the Act
(except that ownership by underwriters for purposes of a distribution or
offering shall not be deemed to be "beneficial ownership"), references to the
3
Act or rules and regulations thereunder shall mean those in effect on May 9,
2000 and references to "Common Stock" shall mean the common stock of the
Corporation.
b. "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
c. "DATE OF TERMINATION" shall mean:
(i) in case 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 your duties during such thirty (30) day
period); and
(ii) in all other cases, the date specified in the
Notice of Termination (which shall not be less than thirty
(30) nor more than sixty (60) days, respectively, from the
date such Notice of Termination is given).
d. "DISABILITY" shall mean total physical or mental disability
rendering you unable to perform the duties of your employment for a continuous
period of six (6) months. Any question as to the existence of your Disability
upon which you and the Company cannot agree shall be determined by a qualified
physician (not employed by the Company) selected by you (or, if you are unable
to make such selection, made by any adult member of your immediate family) and
approved by the Company. The determination of such physician made in writing to
the Company and to you shall be final and conclusive for all purposes of this
Agreement.
e. "GOOD REASON FOR RESIGNATION" shall mean the occurrence of
any of the following:
(i) (A) a change in your status or position with the
Company, which in your reasonable judgment does not
represent a status or position comparable to your status or
position immediately prior a Change in Control of the
Corporation or a promotion from your status or position
immediately prior to a Change in Control of the
Corporation; or
(B) a reduction in the level of your reporting
responsibility as it existed immediately prior to a Change
in Control of the Corporation; or
(C) the assignment to you of any duties or
responsibilities or a diminution of duties or
responsibilities, which in your reasonable judgment are
inconsistent with your status or position with the Company
in effect immediately prior to a Change in Control of the
Corporation;
it being understood that any of the foregoing in
connection with a termination of your employment for
Retirement, Disability or Termination for Cause shall not
constitute Good Reason for Resignation;
4
(ii) a reduction by the Company in the annual rate of
your base salary as in effect immediately prior to the date
of a Change in Control of the Corporation or as the same
may be increased from time to time thereafter, or the
Company's failure to increase the annual rate of your base
salary for a calendar year in an amount at least equal to
the average percentage increase in base salary for all
employees of the Company with Severance Compensation
Agreements in the preceding calendar year (and the Company
agrees that, within three (3) days after your request, the
Company shall notify you of the average percentage increase
in base salary for all such employees in the calendar year
preceding your request);
(iii) the failure by the Company to continue in effect
any compensation plan in which you participate as in effect
immediately prior to a Change in Control of the
Corporation, including but not limited to the Retirement
Program, the Savings Program, any of the Incentive
Compensation Plans or any substitute plans adopted prior to
a Change in Control of the Corporation, unless an
arrangement satisfactory to you (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 on at least as favorable a
basis, both in terms of the amount of benefits provided and
the level of your participation relative to other
participants, as existed immediately prior to a Change in
Control of the Corporation;
(iv) the Company requiring you to be based outside of a
thirty-five (35) mile radius from where your office is
located immediately prior to a Change in Control of the
Corporation, except for required travel on the Company's
business to an extent substantially consistent with your
business travel obligations immediately prior to a Change
in Control of the Corporation;
(v) the failure by the Company to continue to provide
you with benefits at least as favorable as those enjoyed by
you (and your dependents, if applicable) under any of the
Company's pre-retirement and post-retirement life
insurance, medical, health and accident, and disability
plans or any other plan, program or policy of the Company
intended to benefit employees in which you (or your
dependents) were participating immediately prior to a
Change in Control of the Corporation, the taking of any
action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive you (or
your dependents) of any material fringe benefit enjoyed by
you (or your dependents) immediately prior to a Change in
Control of the Corporation, or the failure by the Company
to provide you with the number of annual paid vacation days
to which you were annually entitled immediately prior to a
Change in Control of the Corporation;
5
(vi) the failure of the Company to obtain a satisfactory
agreement from any Successor (as defined in Paragraph 4a
hereof) to assume and agree to perform this Agreement, as
contemplated in Paragraph 4a hereof; or
(vii) the failure of the Company to pay to you an
Incentive Compensation Award, deferred compensation or
other compensation award earned, but not paid, prior to a
Change in Control of the Corporation.
f. "INCENTIVE COMPENSATION" means any compensation, variable
compensation, bonus, benefit or award paid or payable in cash under an Incentive
Compensation Plan.
g. "INCENTIVE COMPENSATION AWARD" shall mean a cash payment or
payments awarded to you under any Incentive Compensation Plan.
h. "INCENTIVE COMPENSATION PLAN(S)" shall mean any variable
compensation or incentive compensation plan maintained by the Company in which
you were a participant immediately prior to a Change in Control of the
Corporation, including but not limited to the UCAR International Inc. Management
Incentive Plan.
i. "NOTICE OF TERMINATION" shall mean a written notice as
provided in Paragraph 8 hereof.
j. "RETIREMENT" shall mean a voluntary termination of employment in
accordance with the Retirement Program, or in accordance with any other
retirement arrangement which is established with your consent with respect to
you.
k. "RETIREMENT PROGRAM" shall mean the UCAR Carbon Retirement Plan
and any excess or supplemental pension plans maintained by the Company.
l. "SAVINGS PROGRAM" shall mean the UCAR Carbon Savings Plan.
m. "TERMINATION FOR CAUSE" shall mean termination of your
employment upon your willfully engaging in conduct demonstrably and materially
injurious to the Company, monetarily or otherwise, provided that there shall
have been delivered to you a copy of a resolution, duly adopted by the unanimous
affirmative vote of the entire membership of the Board at a meeting of the Board
called and held for such purpose (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 the
conduct set forth and specifying the particulars thereof in detail.
For purposes of this clause (m), no act, or failure to act, on your part shall
be deemed "willful" unless done, or omitted to be done, by you in bad faith and
without reasonable belief that your action or omission was in the best interest
of the Company. Any act or failure to act based upon authority given pursuant to
a resolution duly adopted by the Board or based upon the advice of counsel for
6
the Company shall be conclusively presumed to be done or omitted to be done by
you in good faith and in the best interests of the Company.
n. "VARIABLE COMPENSATION YEAR" means a calendar year of an
Incentive Compensation Plan.
2. COMPENSATION UPON TERMINATION OR WHILE DISABLED. Following a
Change in Control of the Corporation, you shall be entitled to the following
benefits:
a. TERMINATION OTHER THAN FOR RETIREMENT, DEATH, DISABILITY OR
TERMINATION FOR CAUSE; TERMINATION BY YOUR RESIGNATION WITH GOOD REASON FOR
RESIGNATION. If your employment by the Company shall be terminated subsequent to
a Change in Control of the Corporation and during the term of this Agreement (a)
by the Company other than for Retirement, Death, Disability or Termination for
Cause or (b) by you for Good Reason for Resignation, then you shall be entitled
to the benefits provided below, without regard to any contrary provision of any
plan:
(i) ACCRUED SALARY. The Company shall pay you, not later
than the fifth day following the Date of Termination, your
base salary and vacation pay accrued through the Date of
Termination (including any banked vacation and any vested
vacation for the calendar year in which the Date of
Termination occurs) at the rate in effect at the time the
Notice of Termination is given (or at the rate in effect
immediately prior to a Change in Control of the
Corporation, if such rate was higher).
(ii) ACCRUED INCENTIVE COMPENSATION. The Company shall
pay you, not later than thirty (30) days following your
Date of Termination, the amount of your accrued Incentive
Compensation which shall be determined as follows:
(A) If the Date of Termination is after the end of
a Variable Compensation Year, but before Incentive
Compensation for said Variable Compensation Year has been
paid, the Company shall pay to you under this Agreement for
your service during such Variable Compensation Year the
following:
The amount of your target variable
compensation payment (i.e., the percent of your salary
grade midpoint at risk) for such Variable Compensation
Year.
(B) In addition, if the Date of Termination is
other than the first day of a Variable Compensation Year,
the Company shall pay to you under this Agreement for your
service during such Variable Compensation Year up to the
Date of Termination, the following:
7
The amount of your target variable
compensation payment (i.e., the percent of your salary
grade midpoint at risk) for such Variable Compensation
Year (or if such target has not then been established,
your target variable compensation award for the
immediately preceding Variable Compensation Year),
multiplied by a fraction, the numerator of which is the
total number of days which have elapsed in the current
Variable Compensation Year to the Date of Termination
and the denominator of which is three hundred sixty-five
(365).
If there is more than one Incentive Compensation
Plan, your accrued Incentive Compensation under each
Incentive Compensation Plan shall be determined separately
for each such Plan.
For the purpose this Paragraph 2a(ii), the amount
of your target variable compensation payment shall be used,
whether or not such Incentive Compensation was actually
paid to you or was includible in your gross income for
Federal income tax purposes.
(iii) INSURANCE COVERAGE. The Company shall arrange to
provide you (and your dependents, if applicable) with life,
disability, accident, dental and medical benefits
substantially equivalent to those which you are receiving,
or were entitled to receive, from the Company immediately
prior to a Change in Control of the Corporation. Such
benefits shall be provided to you for the longer of (x)
thirty-six (36) months after such Date of Termination or
(y) the period during which such benefits would have been
provided to you, as a terminated employee, under the
applicable life, disability, accident, dental and medical
plans in effect immediately prior to a Change in Control of
the Corporation (except that after a period of thirty six
(36) months such benefits shall be provided to you on the
same financial terms and conditions as provided for under
the respective plans). Such benefits shall be provided to
you in lieu of any continuation coverage you would be
eligible for under COBRA.
If you are a participant in the Company's
Executive Life Insurance Plan, you shall have the same
rights thereunder as a person who retires with a
non-actuarially reduced pension (whether or not you are
eligible for such a pension).
(iv) SEVERANCE PAYMENT. The Company shall pay as a
severance payment to you, not later than the fifth day
following the Date of Termination, a lump sum severance
payment (the "Severance Payment") equal to two and
ninety-nine hundreths (2.99) times the sum of the amounts
set forth in the following paragraphs (A) and (B), less the
amount set forth in the following paragraph (C):
8
(A) the greater of your annual base salary which
was payable to you by the Company immediately prior to the
Date of Termination or your annual base salary which was
payable to you by the Company immediately prior to a Change
in Control of the Corporation; plus
(B) the greater of:
(I) The amount of your target variable
compensation payment (i.e., the percent of your salary
grade midpoint at risk) for the year in which the Date
of Termination occurs (or if such target has not then
been established, your target variable compensation
award for the immediately preceding Variable
Compensation Year); or
(II) The amount of your target
variable compensation payment (i.e., the percent of your
salary grade midpoint at risk) for the year in which the
Change in Control of the Corporation occurs (or if such
target has not then been established, your target
variable compensation award for the immediately
preceding Variable Compensation Year); minus
(C) the amount of any severance payment or
the value of any severance benefit received or to be
received by you from the Company pursuant to any plan or
policy of the Company or pursuant to any other agreement
between you and the Company.
For purposes of calculations under this
subparagraph (iv), the amounts of base salary and target
variable compensation payments shall be the amounts
calculated without regard to whether or not such amounts
were paid or includible in your gross income for Federal,
state, local, commonwealth or foreign income tax purposes.
(v) REDUCTION IN SEVERANCE PAYMENT. The Severance
Payment shall be reduced only in the event specifically
provided in this subparagraph (v). If the aggregate present
value, as determined for purposes of Code Section 280G, of
all amounts that are parachute payments for purposes of
such Section exceeds the limitation set forth in Code
Section 280G(b)(2)(A)(ii) by an amount not exceeding
$50,000, then there shall be a reduction in the amount of
your Severance Payment so that such limit is not exceeded.
(vi) PAYMENT OF TAXES.
(A) For purposes of this subparagraph (vi),
the following terms shall have the following meanings:
9
(I) "Payment"
shall mean any payment or distribution (or
acceleration of benefits) by the Company to
or for your benefit (whether paid or payable
or distributed or distributable (or
accelerated) pursuant to the terms of this
Agreement or any termination or layoff plan
referred to in clause (C) of subparagraph
(iv) of this Section 2a (thus excluding
among other things any payment under an
employment agreement), but determined
without regard to any additional payments
required under this subparagraph (vi)). In
addition, "Payment" shall also include the
amount of income deemed to be received by
you as a result of the acceleration of the
exercisability of any of your options to
purchase stock of the Corporation, the
acceleration of the lapse of any
restrictions on performance stock or
restricted stock of the Corporation held by
you or the acceleration of payment from any
deferral plan.
(II) "Excise
Tax" shall mean the excise tax imposed by
Section 4999 of the Code, or any interest or
penalties incurred by you with respect to
such excise tax.
(III) "Income
Tax" shall mean all taxes other than the
Excise Tax (including any interest or
penalties imposed with respect to such
taxes), including, without limitation, any
income and employment taxes imposed by any
Federal (including (i) FICA and Medicare
taxes and (ii) the tax resulting from the
loss of any Federal deductions or exemptions
which would have been available to you but
for receipt of the Payment), state, local,
commonwealth or foreign government.
(B) In the event it shall be determined that
a Payment would be subject to an Excise Tax, then you
shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that, after
payment by you of Income Tax and Excise Tax imposed upon
the Gross-Up Payment, you retain an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon
the Payment.
(C) All determinations required to be made
under this subparagraph (vi), including whether and when
a Gross-Up Payment is required and the amount of such
10
Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by the
public accounting firm that is retained by the Company
as of the date immediately prior to a Change in Control
of the Corporation (the "Accounting Firm") which shall
provide detailed supporting calculations both to the
Company and to you within fifteen (15) business days
after the receipt of notice from you that there has been
a Payment, or such earlier time as is requested by the
Company (collectively, the "Determination"). In the
event that the Accounting Firm is serving as accountant
or auditor for the individual, entity or group effecting
a Change in Control of the Corporation, you may appoint
another nationally recognized public accounting firm to
make the determinations required hereunder (which
accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this
subparagraph (vi), shall be paid by the Company to you
within ten (10) days after the Determination. If the
Accounting Firm determines that no Excise Tax is payable
by you, you may request the Accounting Firm to furnish
you with a written opinion that failure to report the
Excise Tax on your applicable Federal income tax return
would not result in the imposition of a negligence or
similar penalty. The Determination by the Accounting
Firm shall be binding upon the Company and you. As a
result of the uncertainty in the application of Section
4999 of the Code at the time of the Determination, it is
possible that Gross-Up Payments which will not have been
made by the Company should have been made
("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to subparagraph
(vi)(D) below and you thereafter are required to make
payment of any Excise Tax or Income Tax, the Accounting
Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly
paid by the Company to or for your benefit.
(D) You 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
the Gross-Up Payment or the Underpayment. Such
notification shall be given as soon as practicable but
no later than ten (10) business days after you are
informed in writing 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. You shall not
pay such claim prior to the expiration of the 30-day
period following the date on which you give such notice
to the Company (or such shorter period ending on the
11
date that any payment of taxes with respect to such
claim is due). If the Company notifies you in writing
prior to the expiration of such period that it desires
to contest such claim, you shall:
(1) give the
Company any information reasonably
requested by the Company relating to such
claim,
(2) 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,
(3) cooperate
with the Company in good faith in order
effectively to contest such claim, and
(4) permit the
Company to participate in any proceeding
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 you harmless, on an after-tax basis, for any Excise
Tax or Income Tax imposed as a result of such
representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this
subparagraph (vi)(D), the Company shall control all
proceedings taken in connection with such contest and,
at its sole option, may pursue or forego 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 you to
pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and you agree 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 shall determine; provided further, that if the
Company directs you to pay such claim and sue for a
refund, the Company shall advance the amount of such
payment to you on an interest-free basis and shall
indemnify and hold you harmless, on an after-tax basis,
from any Excise Tax or Income Tax imposed with respect
to such advance or with respect to any imputed income
with respect to such advance; and provided further, that
any extension of the statute of limitations relating to
payment of taxes for your taxable year with respect to
12
which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore,
the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be
payable hereunder and you 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.
(E) If, after the receipt by you of an
amount advanced by the Company pursuant to subparagraph
(vi)(D) above, you become entitled to receive, and
receive, any refund with respect to such claim, you
shall (subject to the Company's complying with the
requirements of subparagraph (vi)(D)) promptly pay to
the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by you of an amount
advanced by the Company pursuant to subparagraph
(vi)(D), a determination is made that you shall not be
entitled to any refund with respect to such claims and
the Company does not notify you in writing of its intent
to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to
be repaid.
(vii) NO DUTY TO MITIGATE. You shall not be required to
mitigate the amount of any payment provided for in this
Paragraph 2 by seeking other employment, through use of tax
deductions or credits, or otherwise, nor shall the amount
of any payment or benefit hereunder be reduced by any
compensation earned by you as the result of employment by
another employer or by retirement benefits after the Date
of Termination, or otherwise; provided, however, should you
become reemployed in a job which (a) offers medical plan
benefits which are equal to or greater than the medical
plan benefits provided to you under subparagraph 2(a)(iii)
and (b) such medical plan benefits are offered to you at no
cost, you shall no longer be eligible to receive medical
plan benefits under this Agreement.
b. PAYMENTS WHILE DISABLED. During any period prior to the Date of
Termination and during the term of this Agreement that you are unable to perform
your full-time duties with the Company, whether as a result of your Disability
or as a result of a physical or mental disability that is not total and
therefore is not a Disability, you shall continue to receive your base salary at
the rate in effect at the commencement of any such period, together with all
other compensation and benefits that are payable or provided under the Company's
benefit plans, including its disability plans. After the Date of Termination for
Disability, your benefits shall be determined in accordance with the Retirement
Program, insurance and other applicable programs of the Company. The
compensation and benefits, other than salary, payable or provided pursuant to
this subparagraph b shall be the greater of (x) the amounts computed under the
13
Retirement Program, disability benefit plans, insurance and other applicable
programs in effect immediately prior to a Change in Control of the Corporation
and (y) the amounts computed under the Retirement Program, disability benefit
plans, insurance and other applicable programs in effect at the time the
compensation and benefits are paid.
c. PAYMENTS IF TERMINATED FOR CAUSE, OR TERMINATION BY YOU OTHER
THAN WITH GOOD REASON FOR RESIGNATION. If your employment shall be terminated by
the Company as a Termination for Cause or by you other than with Good Reason for
Resignation, the Company shall pay you your full base salary and accrued
vacation pay (including any banked vacation and any vested vacation for the
calendar year in which the Date of Termination occurs) through the Date of
Termination, at the rate in effect at the time Notice of Termination is given,
plus any benefits or awards which have been earned or become payable but which
have not yet been paid to you. You shall receive any payment due under this
subparagraph c on your Date of Termination. Thereafter, the Company shall have
no further obligation to you under this Agreement.
d. AFTER RETIREMENT OR DEATH. If your employment shall be
terminated by your Retirement, or by reason of your death, your benefits
shall be determined in accordance with the Company's retirement and insurance
programs then in effect.
3. TERM OF AGREEMENT. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 2000; provided,
however, that commencing on January 1, 2001 and each January 1 thereafter, the
term of this Agreement shall automatically be extended for one additional year
unless, not later than September 30 of the preceding year, the Company or you
shall have given notice that it or you does not wish to extend this Agreement.
Notwithstanding any such notice by the Company not to extend, if a Change in
Control of the Corporation shall have occurred or been publicly reported,
proposed or announced (regardless of whether done so by the Company or a third
party) during the original or any extended term of this Agreement, or within
three months thereafter, this Agreement shall continue in effect. In any event,
the term of this Agreement shall expire on the third (3rd) anniversary of the
date of a Change in Control of the Corporation. This Agreement shall terminate
if your employment is terminated by you or the Company prior to the occurrence
of a Change in Control of the Corporation.
4. SUCCESSORS; BINDING AGREEMENT.
a. SUCCESSORS OF THE COMPANY. The Company will require any
Successor 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
assent at least five business days prior to the time a person becomes a
Successor (or where the Company does not have at least five business days
advance notice that a person may become a Successor, within three business days
after having notice that such person may become or has become a Successor) shall
constitute Good Reason for Resignation by you and, if a Change in Control of the
Corporation has occurred or thereafter occurs, shall entitle you immediately to
the benefits provided in Paragraph 2a hereof upon delivery by you of a Notice of
Termination. For purposes of this Agreement, "Successor" shall mean any person
that obtains or succeeds to, or has the practical ability to control (either
immediately or with the passage of time), the Company's business directly, by
merger or consolidation, or indirectly, by purchase of voting securities of the
Company,
14
by acquisition of rights to vote voting securities of the Company or otherwise,
including but not limited to any person or group that acquires the beneficial
ownership or voting rights described in Paragraph 1a(i) or (ii).
b. YOUR SUCCESSOR. This Agreement shall inure to the
benefit of and be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If you should die following your Date of Termination while any amount
would still be payable to you hereunder if you had 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.
5. NATURE OF PAYMENTS. All payments to you under this Agreement
shall be considered severance payments in consideration of your past service
to the Company.
6. 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.
7. 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.
8. NOTICE. Any purported termination of your employment by the Company
or by you following a Change in Control of the Corporation shall be communicated
to the other party by a written Notice of Termination. A Notice of Termination
by you shall indicate in reasonable detail the facts and circumstances claimed
to provide a basis for a Good Reason for Resignation. For the purpose 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 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.
9. FEES AND EXPENSES. The Company shall pay all legal fees and related
expenses incurred by you as a result of your termination following a Change in
Control of the Corporation or by you in seeking to obtain or enforce any right
or benefit provided by this Agreement (including all fees and expenses, if any,
incurred in contesting or disputing any such termination or incurred by you in
seeking advice in connection therewith).
10. MISCELLANEOUS. No provision of this Agreement may be amended,
modified, waived or discharged unless such amendment, modification, waiver 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,
15
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.
11. CONFLICTING EMPLOYMENT AGREEMENTS. To the extent that you have or
obtain after the date hereof a written employment agreement with the Company
which contains provisions that conflict with this Agreement, this Agreement
shall govern unless such employment agreement specifically refers to Section 11
of this Agreement and states that such employment agreement governs. To the
extent that such employment agreement provides for rights or benefits which are
duplicative of those set forth in this Agreement, you shall be entitled to only
one such right or benefit (which shall be the one which, in your judgment if
timely made, is most favorable to you). To the extent that such employment
agreement provides for rights or benefits which are additional to those set
forth in this Agreement, this Agreement shall not impair in any way your
entitlement to those additional rights or benefits.
12. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Delaware (without regard to the choice of laws provisions thereof). The Company
and you hereby agree to irrevocably submit to the jurisdiction of any State or
Federal court sitting in the State of Delaware, and any appellate court thereof,
in any action or proceeding arising out of or relating to this Agreement. The
Company and you hereby irrevocably agree that all claims in respect of such
action or proceeding shall only be heard and determined in a State or Federal
court sitting in the State of Delaware.
16
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,
UCAR INTERNATIONAL INC.
By:-------------------------------
Title:----------------------------
UCAR CARBON COMPANY INC.
By:------------------------------
Title:---------------------------
Agreed to as of the date
first above written
-----------------------------------------
Employee
17
Foreign
[UCAR LETTERHEAD]
[DATE]
NAME
LOCATION
Dear :
----------------
The Board of Directors (the "Board") of UCAR International Inc. (the
"Corporation") authorized your participation in the arrangements set forth
between UCAR (the "Company") and you in this Severance Compensation Agreement.
The Board recognizes that the possibility of a Change in Control of the
Corporation exists, as is the case with many publicly held corporations, 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
Corporation and its 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 a
possible Change in Control of the Corporation. The Board has also determined
that it is in the best interests of the Company, the Corporation and the
Corporation's stockholders to ensure your continued availability to the Company
in the event of a potential Change in Control of the Corporation.
In order to induce you to remain in the employ of the Company and in
consideration of your continued service to the Company, the Company and the
Corporation agree that you shall receive the severance benefits set forth in
this Severance Compensation Agreement ("Agreement") in the event your employment
with the Company is terminated subsequent to a Change in Control of the
Corporation under the circumstances described below. Notwithstanding anything
contained herein to the contrary, the Corporation shall not be liable for any
severance payments required to be made to you by the Corporation's subsidiary
which employs you under the statutes, rules, regulation, decrees or orders of
the country in which you are employed or any other payments other than those
specifically provided herein.
1. Definitions.
a. "CHANGE IN CONTROL OF THE CORPORATION" shall be deemed to
occur if any of the following circumstances shall occur:
(i) any "person" or "group" within the meaning of
Section 13(d) or 14(d)(2) of the Securities Exchange Act of
1934 (the "Act") becomes the beneficial owner of 15% or
more of the then outstanding Common Stock or 15% or more of
the then outstanding voting securities of the Corporation;
(ii) any "person" or "group" within the meaning of
Section 13(d) or 14(d)(2) of the Act acquires by proxy or
otherwise the right to vote on any matter or question with
respect to 15% or more of the then outstanding Common Stock
or 15% or more of the combined voting power of the then
outstanding voting securities of the Corporation;
(iii) Present Directors and New Directors cease for any
reason to constitute a majority of the Board (and, for
purposes of this clause (iii), "Present Directors" shall
mean individuals who at the beginning of any consecutive
twenty-four month period were members of the Board and "New
Directors" shall mean individuals whose election by the
Board or whose nomination for election as directors by the
Corporation's stockholders was approved by a vote of at
least two-thirds of the directors then in office who were
Present Directors or New Directors);
(iv) the stockholders of the Corporation approve a
plan of complete liquidation or dissolution of the
Corporation; or
(v) consummation of: (x) a reorganization,
restructuring, recapitalization, reincorporation, merger or
consolidation of the Corporation (a "Business Combination")
unless, following such Business Combination, (a) all or
substantially all of the individuals and entities who were
the beneficial owners of the Common Stock and the voting
securities of the Corporation outstanding immediately prior
to such Business Combination beneficially own, directly or
indirectly, more than 50% of the common equity securities
and the combined voting power of the voting securities of
the corporation or other entity resulting from such
Business Combination outstanding after such Business
Combination (including, without limitation, a corporation
or other entity which as a result of such Business
Combination owns the Corporation or all or substantially
all of the assets of the Corporation or the Company either
directly or through one or more subsidiaries) in
substantially the same proportions as their ownership
immediately prior to such Business Combination of
outstanding Common Stock and the combined voting power of
the outstanding voting securities of the Corporation,
respectively, (b) no "person" or "group" within the meaning
of Section 13(d) or 14(d)(2) of the Act (excluding (1) any
corporation or other entity resulting from such Business
Combination and (2) any employee benefit plan (or related
trust) of the Company or any corporation or other entity
resulting from such Business Combination) beneficially owns
15% or more of the common equity securities or 15% or more
2
of the combined voting power of the voting securities of
the corporation or other entity resulting from such
Business Combination outstanding after such Business
Combination, except to the extent that such beneficial
ownership existed prior to such Business Combination with
respect to the Common Stock and the voting securities of
the Corporation, and (c) at least a majority of the members
of the board of directors (or similar governing body) of
the corporation or other entity resulting from such
Business Combination were members of the Board at the time
of the execution of the initial agreement providing for
such Business Combination or at the time of the action of
the Board approving such Business Combination, whichever is
earlier; or (y) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of
all or substantially all of the assets of the Corporation
or the Company, whether held directly or indirectly through
one or more subsidiaries (excluding any pledge, mortgage,
grant of security interest, sale-leaseback or similar
transaction, but including any foreclosure sale), provided,
that, for purposes of clauses (v)(x) and (v)(y) above, the
divestiture of less than substantially all of the assets of
the Corporation or the Company in one transaction or a
series of related transactions, whether effected by sale,
lease, exchange, spin-off, sale of stock of or merger or
consolidation of a subsidiary, transfer or otherwise, shall
not constitute a Change in Control of the Corporation.
Notwithstanding the foregoing, (A) a Change in Control of the Corporation shall
not be deemed to occur:
(I) pursuant to clause (i) or (ii) above, solely because 15% or more of
the then outstanding Common Stock or the then outstanding voting securities of
the Corporation is or becomes beneficially owned or is directly or indirectly
held or acquired by one or more employee benefit plans (or related trusts)
maintained by the Company; or
(II) pursuant to clause (v)(y) above, (1) if the Board determines that any
sale, lease, exchange or other transfer does not involve all or substantially
all of the assets of the Corporation or the Company or (2) unless the Board
determines otherwise, solely because of the consummation of a transaction or a
series of transactions pursuant to which the Company sells, distributes to the
Corporation's stockholders, or otherwise transfers or disposes of any or all of
its ownership of its natural, acid-treated and flexible graphite business,
however owned (including ownership through one or more dedicated subsidiaries
and holding companies therefor and successors thereto); and
(B) to the extent that a "person" or "group" within the meaning of Section
13(d) or 14(d)(2) of the Act is the beneficial owner of 15% or more of the
Common Stock or the voting securities of the Corporation on May 9, 2000, then
the references therein to 15% shall be deemed to be references to 22.5% as (but
only as) to such "person" or "group."
3
For purposes of this Agreement, references to "beneficial owner" and correlative
phrases shall have the same definition as set forth in Rule 13d-3 under the Act
(except that ownership by underwriters for purposes of a distribution or
offering shall not be deemed to be "beneficial ownership"), references to the
Act or rules and regulations thereunder shall mean those in effect on May 9,
2000 and references to "Common Stock" shall mean the common stock of the
Corporation.
b. "DATE OF TERMINATION" shall mean:
(i) in case 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 your duties during such thirty (30) day
period), and
(ii) in all other cases, the date specified in the Notice of
Termination (which shall not be less than thirty (30) nor
more than sixty (60) days, respectively, from the date such
Notice of Termination is given).
c. "DISABILITY" shall mean total physical or mental disability
rendering you unable to perform the duties of your employment for a continuous
period of six (6) months. Any question as to the existence of your Disability
upon which you and the Company cannot agree shall be determined by a qualified
physician (not employed by the Company) selected by you (or, if you are unable
to make such selection, made by any adult member of your immediate family) and
approved by the Company. The determination of such physician made in writing to
the Company and to you shall be final and conclusive for all purposes of this
Agreement.
d. "GOOD REASON FOR RESIGNATION" shall mean the occurrence
of any of the following:
(i) (A) a change in your status or position with the Company,
which in your reasonable judgment does not represent a
status or position comparable to your status or position
immediately prior to a Change in Control of the Corporation
or a promotion from your status or position immediately
prior to a Change in Control of the Corporation; or
(B) a reduction in the level of your reporting
responsibility as it existed immediately prior to a Change
in Control of the Corporation; or
(C) the assignment to you of any duties or responsibilities
or diminution of duties or responsibilities which in your
reasonable judgment are inconsistent with your status or
position with the Company in effect immediately prior to a
Change in Control of the Corporation;
it being understood that any of the foregoing in connection
with a termination of your employment for Retirement,
Disability or Termination for Cause shall not constitute
Good Reason for Resignation;
4
(ii) a reduction by the Company in the annual rate of your
base salary as in effect immediately prior to the date
of a Change in Control of the Corporation or as the same
may be increased from time to time thereafter, or the
Company's failure to increase the annual rate of your
base salary for a calendar year in an amount at least
equal to the average percentage increase in base salary
for all employees of the Company with Severance
Compensation Agreements in the preceding calendar year.
(and the Company agrees that, within three (3) days
after your request, the Company shall notify you of the
average percentage increase in base salary for all such
employees in the calendar year preceding your request);
(iii) the failure by the Company to continue in effect any
compensation plan in which you participate as in effect
immediately prior to a Change in Control of the
Corporation, including but not limited to any Company
retirement plan, any of the Incentive Compensation
Plans, or any substitute plans adopted prior to a Change
in Control of the Corporation, unless an arrangement
satisfactory to you (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 on at least as favorable a basis,
both in terms of the amount of benefits provided and the
level of your participation relative to other
participants, as existed immediately prior to a Change
in Control of the Corporation;
(iv) the Company requiring you to be based outside of a
thirty-five (35) mile radius from where your office is
located immediately prior to a Change in Control of the
Corporation except for required travel on the Company's
business to an extent substantially consistent with your
business travel obligations immediately prior to a Change
in Control of the Corporation;
(v) the failure by the Company to continue to provide you
with benefits at least as favorable as those enjoyed by
you (and your dependents, if applicable) under any of
the Company's pre-retirement and post-retirement life
insurance, medical, health and accident, and disability
plans or any other plan, program or policy of the
Company intended to benefit employees in which you (or
your dependents) were participating immediately prior to
a Change in Control of the Corporation, the taking of
any action by the Company which would directly or
indirectly materially reduce any of such benefits or
deprive you (or your dependents) of any material fringe
benefit enjoyed by you (or your dependents) immediately
prior to a Change in Control of the Corporation, or the
failure by the Company to provide you with the number of
annual paid vacation days to which you were annually
entitled immediately prior to a Change in Control of the
Corporation;
5
(vi) the failure of the Company to obtain a satisfactory
agreement from any Successor (as defined in Paragraph 4a
hereof) to assume and agree to perform this Agreement, as
contemplated in Paragraph 4a hereof; or
(vii) the failure of the Company to pay to you an Incentive
Compensation Award, deferred compensation or other
compensation award earned, but not paid, prior to a Change
in Control of the Corporation.
e. "INCENTIVE COMPENSATION" means any compensation,
variable compensation, bonus, benefit or award paid or payable in cash under
an Incentive Compensation Plan.
f. "INCENTIVE COMPENSATION AWARD" shall mean a cash payment
or payments awarded to you under any Incentive Compensation Plan.
g. "INCENTIVE COMPENSATION PLAN(S)" shall mean any variable
compensation or incentive compensation plan maintained by the Company in
which you were a participant immediately prior to a Change in Control of the
Corporation including, but not limited to UCAR International Inc. Management
Incentive Plan.
h. "NOTICE OF TERMINATION" shall mean a written notice as
provided in Paragraph 8 hereof.
i. "RETIREMENT" shall mean a voluntary termination of
employment in accordance with any Company retirement plan or any retirement
arrangement which is established with your consent with respect to you.
j. "TERMINATION FOR CAUSE" shall mean termination of your
employment upon your willfully engaging in conduct demonstrably and materially
injurious to the Company, monetarily or otherwise, provided that there shall
have been delivered to you a copy of a resolution duly adopted by the unanimous
affirmative vote of the entire membership of the Board at a meeting of the Board
called and held for such purpose (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 the
conduct set forth and specifying the particulars thereof in detail.
For purposes of this clause (j), no act, or failure to act, on your part shall
be deemed "willful" unless done, or omitted to be done, by you in bad faith and
without reasonable belief that your action or omission was in the best interest
of the Company. Any act or failure to act based upon authority given pursuant to
a resolution duly adopted by the Board or based upon the advice of counsel for
the Company shall be conclusively presumed to be done or omitted to be done by
you in good faith and in the best interests of the Company.
k. "VARIABLE COMPENSATION YEAR" means a calendar year of an
Incentive Compensation Plan.
6
2. COMPENSATION UPON TERMINATION OR WHILE DISABLED. Following a
Change in Control of the Corporation, you shall be entitled to the following
benefits:
a. TERMINATION OTHER THAN FOR RETIREMENT, DEATH, DISABILITY OR
TERMINATION FOR CAUSE; TERMINATION BY YOUR RESIGNATION WITH GOOD REASON FOR
RESIGNATION. If your employment by the Company shall be terminated subsequent to
a Change in Control of the Corporation and during the term of this Agreement (a)
by the Company other than for Retirement, Death, Disability or Termination for
Cause, or (b) by you for Good Reason for Resignation, then you shall be entitled
to the benefits provided below, without regard to any contrary provision of any
plan:
(i) ACCRUED SALARY. The Company shall pay you, not later
than the fifth day following the Date of Termination,
your base salary and vacation pay accrued through the
Date of Termination (including any banked vacation and
any vested vacation for the calendar year in which the
Date of Termination occurs) at the rate in effect at the
time the Notice of Termination is given (or at the rate
in effect immediately prior to a Change in Control of
the Corporation, if such rate was higher).
(ii) ACCRUED INCENTIVE COMPENSATION. The Company shall pay you,
not later than thirty (30) days following your Date of
Termination, the amount of your accrued Incentive
Compensation which shall be determined as follows:
(A) If the Date of Termination is after the end of a
Variable Compensation Year, but before Incentive
Compensation for said Variable Compensation Year has been
paid, the Company shall pay to you under this Agreement for
your service during such Variable Compensation Year the
following:
The amount of your target variable compensation payment
(i.e., the percent of your salary grade midpoint at
risk) for such Variable Compensation Year.
(B) In addition, if the Date of Termination is other than
the first day of a Variable Compensation Year, the Company
shall pay to you under this Agreement for your service
during such Variable Compensation Year up to the Date of
Termination, the following:
The amount of your target variable compensation payment
(i.e., the percent of your salary grade midpoint at
risk) for such Variable Compensation Year (or if such
target has not then been established, your target
variable compensation award for the immediately
preceding Variable Compensation Year), multiplied by a
fraction, the numerator of which is the total number of
days which have elapsed in the current Variable
7
Compensation Year to the Date of Termination, and the
denominator of which is three hundred sixty-five (365).
If there is more than one Incentive Compensation Plan, your
accrued Incentive Compensation under each Incentive
Compensation Plan shall be determined separately for each
such Plan.
For the purpose this Paragraph 2a(ii), the amount of your
target variable compensation payment shall be used, whether
or not such Incentive Compensation was actually paid to you
or was includible in your gross income for income tax
purposes.
(iii) SEVERANCE PAYMENT. The Company shall pay as a severance
payment to you, not later than the fifth day following the
Date of Termination, a lump sum severance payment (the
"Severance Payment") equal to two and ninety-nine hundreths
(2.99) times the sum of the amounts set forth in the
following paragraphs (A) and (B):
(A) the greater of your annual base salary which was
payable to you by the Company immediately prior to the Date
of Termination or your annual base salary which was payable
to you by the Company immediately prior to a Change in
Control of the Corporation; plus
(B) the greater of:
(I) The amount of your target variable compensation
payment (i.e., the percent of your salary grade midpoint
at risk) for the year in which the Date of Termination
occurs (or if such target has not then been established,
your target variable compensation award for the
immediately preceding Variable Compensation Year); or
(II) The amount of your target variable compensation
payment (i.e., the percent of your salary grade midpoint
at risk) for the year in which the Change in Control of
the Corporation occurs (or if such target has not then
been established, your target variable compensation
award for the immediately preceding Variable
Compensation Year).
For purposes of calculations under this subparagraph (iii),
the amounts of base salary and target variable compensation
payments shall be the amounts calculated without regard to
whether or not such amounts were paid or includible in your
gross income for income tax purposes.
(iv) REDUCTION IN SEVERANCE PAYMENT. The Severance Payment
shall be reduced but not below zero by the amount of any
other payment or the value of any benefit received or to
be received by you upon your termination of employment
with the Company (whether payable pursuant to the terms
8
of this Agreement, any other plan, agreement or
arrangement with the Company or an affiliate or any
severance benefits required to be paid by the Company
pursuant to the laws of the country in which you are
employed), unless you shall have effectively waived your
receipt or enjoyment of such payment or benefit prior to
the date of payment of the Severance Payment.
(v) NO DUTY TO MITIGATE. You shall not be required to
mitigate the amount of any payment provided for in this
Paragraph 2 by seeking other employment or otherwise,
nor shall the amount of any payment or benefit hereunder
be reduced by any compensation earned by you as the
result of employment by another employer or by
retirement benefits after the Date of Termination, or
otherwise.
b. PAYMENTS WHILE DISABLED. During any period prior to the Date of
Termination and during the term of this Agreement that you are unable to perform
your full-time duties with the Company, whether as a result of your Disability
or as a result of a physical or mental disability that is not total and
therefore is not a Disability, you shall continue to receive your base salary at
the rate in effect at the commencement of any such period, together with all
other compensation and benefits that are payable or provided under the Company's
benefit plans, including its disability plans. After the Date of Termination for
Disability, your benefits shall be determined in accordance with any retirement
plan, insurance and other applicable programs of the Company. The compensation
and benefits, other than salary, payable or provided pursuant to this
subparagraph b shall be the greater of (x) the amounts computed under any
retirement plan, disability benefit plans, insurance and other applicable
programs in effect immediately prior to a Change in Control of the Corporation
and (y) the amounts computed under any retirement plan, disability benefit
plans, insurance and other applicable programs in effect at the time the
compensation and benefits are paid.
c. PAYMENTS IF TERMINATED FOR CAUSE, OR TERMINATION BY YOU OTHER
THAN WITH GOOD REASON FOR RESIGNATION. If your employment shall be terminated by
the Company as a Termination for Cause or by you other than with Good Reason for
Resignation, the Company shall pay you your full base salary and accrued
vacation pay (including any banked vacation and any vested vacation for the
calendar year in which the Date of Termination occurs) through the Date of
Termination, at the rate in effect at the time Notice of Termination is given,
plus any benefits or awards which have been earned or become payable but which
have not yet been paid to you. You shall receive any payment due under this
subparagraph c on your Date of Termination. Thereafter, the Company shall have
no further obligation to you under this Agreement.
d. AFTER RETIREMENT OR DEATH. If your employment shall be
terminated by your Retirement, or by reason of your death, your benefits shall
be determined in accordance with the Company's retirement and insurance programs
then in effect.
3. TERM OF AGREEMENT. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 2000; provided,
however, that commencing on January 1, 2001 and each January 1 thereafter, the
term of this Agreement shall automatically be extended for one additional year
9
unless, not later than September 30 of the preceding year, the Company or you
shall have given notice that it or you does not wish to extend this Agreement.
Notwithstanding any such notice by the Company not to extend, if a Change in
Control of the Corporation shall have occurred or been publicly reported,
proposed or announced (regardless of whether done so by the Company or a third
party) during the original or any extended term of this Agreement, or within
three months thereafter, this Agreement shall continue in effect. In any event,
the term of this Agreement shall expire on the third (3rd) anniversary of the
date of a Change in Control of the Corporation. This Agreement shall terminate
if your employment is terminated by you or the Company prior to the occurrence
of a Change in Control of the Corporation.
4. SUCCESSORS; BINDING AGREEMENT.
a. SUCCESSORS OF THE COMPANY. The Company will require any
Successor 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
assent at least five business days prior to the time a person becomes a
Successor (or where the Company does not have at least five business days
advance notice that a person may become a Successor, within three business days
after having notice that such person may become or has become a Successor) shall
constitute Good Reason for Resignation by you and, if a Change in Control of the
Corporation has occurred or thereafter occurs, shall entitle you immediately to
the benefits provided in Paragraph 2a hereof upon delivery by you of a Notice of
Termination. For purposes of this Agreement, "Successor" shall mean any person
that obtains or succeeds to, or has the practical ability to control (either
immediately or with the passage of time), the Company's business directly, by
merger or consolidation, or indirectly, by purchase of voting securities of the
Company by acquisition of rights to vote voting securities of the Company or
otherwise, including but not limited to any person or group that acquires the
beneficial ownership or voting rights described in Paragraph 1a(i) or (ii).
b. YOUR SUCCESSOR. This Agreement shall inure to the benefit of and
be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die following your Date of Termination while any amount would still be
payable to you hereunder if you had 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.
5. NATURE OF PAYMENTS. All payments to you under this Agreement
shall be considered severance payments in consideration of your past service
to the Company.
6. 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.
7. 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
8. NOTICE. Any purported termination of your employment by the Company
or by you following a Change in Control of the Corporation shall be communicated
to the other party by a written Notice of Termination. A Notice of Termination
by you shall indicate in reasonable detail the facts and circumstances claimed
to provide a basis for a Good Reason for Resignation. For the purpose 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 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.
9. FEES AND EXPENSES. The Company shall pay all legal fees and related
expenses incurred by you as a result of your termination following a Change in
Control of the Corporation or by you in seeking to obtain or enforce any right
or benefit provided by this Agreement (including all fees and expenses, if any,
incurred in contesting or disputing any such termination or incurred by you in
seeking advice in connection therewith).
10. MISCELLANEOUS. No provision of this Agreement may be amended,
modified, waived or discharged unless such amendment, modification, waiver 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.
11. CONFLICTING EMPLOYMENT AGREEMENTS. To the extent that you have or
obtain after the date hereof a written employment agreement with the Company
which contains provisions that conflict with this Agreement, this Agreement
shall govern unless such employment agreement specifically refers to Section 11
of this Agreement and states that such employment agreement governs. To the
extent that such employment agreement provides for rights or benefits which are
duplicative of those set forth in this Agreement, you shall be entitled to only
one such right or benefit (which shall be the one which, in your judgment if
timely made, is most favorable to you). To the extent that such employment
agreement provides for rights or benefits which are additional to those set
forth in this Agreement, this Agreement shall not impair in any way your
entitlement to those additional rights or benefits.
12. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Delaware (without regard to the choice of laws provisions thereof). The Company
and you hereby agree to irrevocably submit to the jurisdiction of any State or
Federal court sitting in the State of Delaware, and any appellate court thereof,
in any action or proceeding arising out of or relating to this Agreement. The
Company and you hereby irrevocably agree that all claims in respect of such
action or proceeding shall only be heard and determined in a State or Federal
court sitting in the State of Delaware.
11
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,
UCAR INTERNATIONAL INC.
By:---------------------------------
Title:------------------------------
COMPANY NAME
By:---------------------------------
Title:------------------------------
Agreed to as of the date
first above written
-------------------------------------
Name
12
