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Exhibit 5
GOULDS PUMPS, INCORPORATED
SENIOR EXECUTIVE CHANGE OF CONTROL AGREEMENT
AGREEMENT between Goulds Pumps, Incorporated, a Delaware business
corporation (the "Corporation") and <> (the "Executive"):
WHEREAS, the Human Resources Committee (the "Committee") of the Board
of Directors (the "Board") of the Corporation has recommended, and the Board has
approved, the Corporation entering into Change of Control agreements with key
executives of the Corporation and its subsidiaries; and
WHEREAS, the Executive is a key executive of the Corporation or one of
its Subsidiaries and has been selected by the Board to be provided the benefits
stated herein, subject to the terms and conditions hereof; and
WHEREAS, should any third person pursue possible business combination
with, or acquisition of control of, the Corporation, the Board believes it
imperative that the Corporation and the Board be able to rely upon the Executive
to continue in his position, and that the Corporation be able to receive and
rely upon the Executive's advice, if it requests it, as to the best interests of
the Corporation and its stockholders without concern that he might be distracted
by the personal uncertainties and risks created by such a third party's
activities; and
WHEREAS, should the Corporation be the subject of any such third party
activities, in addition to the Executive's regular duties, he or she may be
called upon to assist in the assessment of third party proposals, to advise
management and the Board as to whether such proposals would be in the best
interests of the Corporation and its stockholders, and to take such other
actions as the Board might determine to be appropriate;
NOW, THEREFORE, to assure the Corporation that it will have the
continued dedication of the Executive and the availability of his advice and
counsel notwithstanding the possibility, threat or occurrence of a bid to take
over control of the Corporation, and to induce the Executive to remain in the
employ of the Corporation, and for other good and valuable consideration, the
Corporation and the Executive agree as follows:
1. SERVICES DURING CERTAIN EVENTS. In the event a third party
begins a tender or exchange offer, circulates a proxy to
stockholders which contemplates a Change of Control (as
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hereinafter defined), or takes other steps seeking to effect a
Change of Control, the Executive agrees not to leave the
employ of the Corporation voluntarily, and to render the
services contemplated in the recitals to this Agreement, until
the third person has abandoned or terminated efforts to effect
a Change of Control or until three months after a Change of
Control has occurred.
2. TERMINATION AFTER CHANGE OF CONTROL. In the event of a
Termination (as hereinafter defined) of the Executive's
employment with the Corporation (including its Subsidiaries)
within three years after a Change of Control of the
Corporation:
A. CASH PAYMENT. On or before the Executive's last day
of employment, or on such later date as is selected
by the Executive, the Corporation will pay to the
Executive as compensation for services rendered to
the Corporation either,
(i) a lump sum in cash (subject to any applicable
payroll or other taxes required to be withheld) equal
to three (3) times the highest annual compensation
(including only base salary, bonuses and the cash
value of incentive compensation awards) awarded, paid
or payable to the Executive by the Corporation with
respect to any 12 consecutive month period, as
selected by the Executive, during the three years
ending with the date of the Executive's termination;
or,
(ii) if the Executive provides at least 24 hours
advance written notice to the Corporation electing
not to receive the lump sum, on such date and on the
first day of each succeeding month for 35 months
thereafter, the Corporation will pay to the Executive
36 equal cash payments (subject to any applicable
payroll or other taxes required to be withheld) each
of which is equal to one-twelfth (1/12) the highest
annual compensation (including only base salary,
bonuses and the cash value of incentive compensation)
awarded, paid or payable to the Executive by the
Corporation with respect to any 12 consecutive month
period, as selected by the Executive, during the
three years ending with the date of the Executive's
termination. In the event the Executive selects the
option described in this subparagraph 2A(ii) and dies
or reaches his normal retirement date at any time
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during the 36 months following his Termination, a
lump sum payment equal to the balance of the payments
will be paid by the Company to the Executive or, if
applicable, to the Executive's estate, pursuant to
this paragraph 2A. The incentive compensation
referred to in this paragraph 2A is only that amount
awarded as stock options under the Corporation's 1988
Stock Incentive Plan, 1994 Incentive Plan to Increase
Stockholder Value, or any predecessor, successor,
substitute or additional plan or plans of the
Corporation, valued as of the date of grant, using
the Black-Scholes Model, as calculated by the
Corporation's independent compensation consultants.
The bonuses referred to in this paragraph 2A are
payments made under the Corporation's Executive
Incentive Plan (EIP), or any predecessor, successor,
substitute or additional plan or plans of the
Corporation, and shall not include more than one
payment made under the EIP during a consecutive
twelve month period.
B. SPECIAL RETIREMENT BENEFITS. The Executive shall
receive "Special Retirement Benefits" as provided in
this Paragraph 2B, so that the total retirement
benefits received will equal the retirement benefits
which would have been received had employment
continued for three years following Termination.
Special Retirement Benefits shall be paid when and as
the underlying retirement benefits are paid. In
addition to Special Retirement Benefits, the
Executive shall receive all other benefits which
would have been received had employment continued for
three years following Termination, including, without
limitation, all ancillary benefits, such as early
retirement and survivor rights and benefits available
at retirement, including hospital, medical-surgical,
major medical, group life insurance and Executive
Security Plan (if applicable), as well as benefits
(if any) under the Goulds Pumps, Incorporated Pension
Plan for Exempt Salaried Employees, the Supplemental
Executive Retirement Plan, and any predecessor,
successor, substitute or additional plan or plans of
the Corporation. The amount of Special Retirement
Benefits provided for in the first sentence of this
Paragraph 2B and
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payable hereunder to the Executive or his or her
beneficiaries shall equal the excess of the amount
specified in Paragraph 2B(i) over that in 2B(ii)
below:
(i) The total retirement benefits that would be paid
to the Executive or his or her beneficiaries, if the
three years (or the period of his death or normal
retirement date, if less) following his Termination
are added to credited service under the Corporation's
pension plans (including the Goulds Pumps,
Incorporated Pension Plan for Exempt Salaried
Employees, the Supplemental Executive Pension Plan or
any predecessor or successor or substitute plan or
plans of the Corporation), and final average
compensation is as determined under the plans
referred to in this Paragraph 2B(i) (the amount
specified in Paragraph 2A. hereof not being
considered "compensation" for purposes of calculating
final average compensation under this Paragraph
2B(i));
(ii) The total retirement benefits payable to the
Executive or his beneficiaries under the
Corporation's retirement plans (including the Goulds
Pumps, Incorporated Pension Plan for Exempt Salaried
Employees, the Supplemental Executive Pension Plan or
any successor plans of the Corporation).
All Special Retirement Benefits and other benefits
provided for herein are provided on an unfunded basis
and are not intended to meet the qualification
requirement of Section 401 of the internal Revenue
Code. All Special Retirement Benefits and other
benefits provided for herein shall be payable solely
from the general assets of the Corporation or its
appropriate affiliate.
C. OTHER PROVISIONS.
(i) Insurance and Other Special Benefits. The
Executive's participation in the Goulds Pumps,
Incorporated group life, accident and health
insurance plans of the Corporation, the Executive
Medical Reimbursement Plan, the Executive Security
Plan (if applicable) and in fringe benefits provided
the Executive prior to the Change of Control, shall
be continued, or equivalent benefits provided, by the
Corporation, at no direct cost to the Executive, for
a period of three years from the date of Termination;
provided that the provisions of this Paragraph C(i)
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shall not affect the Executive's right to receive
Special Retirement Benefits or other benefits
provided for in Paragraph 2B hereof.
(ii) Relocation Assistance. Should the Executive move
his or her residence in order to pursue other
business opportunities within two years of
Termination, the Corporation will reimburse the
Executive for any expenses incurred in that
relocation which are not reimbursed by another
employer. Benefits under this provision will include
the assistance in selling the Executive's home and
all other assistance and benefits that were
customarily provided by the Corporation to
transferred executives prior to the Change of
Control.
(iii) Incentive Compensation. Any awards previously
made shall immediately vest upon a Change of Control.
(iv) Additional Health Care Coverage. At the
expiration of the three year period following
termination, the Executive shall be eligible to
participate in any group health insurance plan
offered by the Corporation, its parent Corporation,
or its successor, to its senior executives, such plan
to be at least comparable to the coverage provided
immediately prior to termination. Such eligibility
shall continue until the Executive becomes eligible
for Medicare. The Executive's cost to participate in
all group health plans beginning after the expiration
of the three year period following Termination shall
be the amount the Executive paid, by way of payroll
deduction, for health care coverage provided by the
Corporation, immediately prior to the Change of
Control. For purposes of this paragraph, health care
coverage does not include the Executive Medical
Reimbursement Plan benefit provided to the Executive
by the Corporation. The Corporation, its parent
Corporation, or its successor shall pay the remaining
costs of providing this coverage. Notwithstanding the
foregoing, upon the expiration of the three year
period following Termination, no health coverage
shall be required under this agreement after the
Executive first becomes eligible to participate in a
group health insurance plan of any subsequent
employer of the Executive.
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D. DEFINITION OF CHANGE OF CONTROL. For the purposes of
this Agreement, a "Change of Control" shall be deemed
to have taken place if:
(i) the stockholders of the Company shall approve any
plan, proposal or agreement for, or there shall
otherwise be consummated (1) any consolidation or
merger of the Company pursuant to which any shares of
the Company's Common Stock are to be converted into
cash, securities or other property, unless, after the
consolidation or merger the Incumbent Board, as
defined below, remains a majority of the Board; or
(2) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions)
of more than 50% of the assets or earning power of
the Company to a third party unrelated to the
Company; or
(ii) the stockholders of the Company approve any plan
or proposal for the liquidation or dissolution of the
Company; or
(iii) any person (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of
1934), shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Securities Exchange
Act of 1934), directly or indirectly, of 20% or more
of the Company's then outstanding Common Stock (a
"significant acquisition of ownership"), provided
that, such person shall not be a wholly-owned
subsidiary of the Company immediately before it
becomes such 20% beneficial owner;
(iv) individuals who constitute the Company's Board
of Directors on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a
director subsequent to the date hereof whose
election, or nomination for election by the Company's
shareholders, was approved by a vote of at least
three quarters of the directors compromising the
Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in
which such person is named as a nominee for director,
without objection to such nomination) shall be, for
purposes of this clause (iv), considered as though
such person was a member of the Incumbent Board
provided that any individual whose initial assumption
of office occurs as a result of an actual or
threatened election contest (as such terms are used
in Rule
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14a-11 of Regulation 14A under the Securities
Exchange Act of 1934) or other actual or threatened
solicitation of proxies or consents by or on behalf
of a person other than the Board shall not be so
considered as a member of the Incumbent Board.
E. DEFINITION OF TERMINATION. For the purposes of this
Agreement, the term "Termination" shall mean
termination by the Corporation of the employment of
the Executive with the Corporation (including its
Subsidiaries) for any reason other than death,
disability or cause (as defined below) after the
effective date (as defined below) of a Change of
Control, or resignation of the Executive upon the
occurrence of either of the following events:
(i) A significant change in the nature or scope of
the Executive's authority, powers, function or duties
from that prior to a Change of Control, a reduction
in the Executive's total compensation (including all
bonuses, incentive compensation and benefits referred
to in Paragraphs A, B, and C of this Section 2) from
that prior to a Change of Control, or a material
change in the location where the Executive is
required to perform services from that prior to a
Change of Control; or
(ii) A reasonable determination by the Executive
that, as a result of a Change of Control and a change
in circumstances thereafter significantly affecting
his position, he is unable to exercise the authority,
powers, function or duties attached to his position.
The term "cause" means fraud, misappropriation or
intentional material damage to the property or
business of the Corporation or commission of a
felony. For purposes of determining whether an
involuntary termination by the Corporation of the
Executive's employment is within the meaning of
"Termination," the term "effective date" shall mean
the first date on which a Change of Control occurs.
F. PAYMENT OF EXCISE TAXES. In addition to the payments
specified in Paragraphs A through C of this Section
2, the Corporation shall pay to the Executive, at the
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same time as those amounts are paid, an additional
amount which, after taking into account any federal,
state or local excise tax imposed, and all federal,
state and local income taxes that the Executive is
required to pay with respect to receipt of such
additional amount, will render the net after tax
payment to the Executive of such additional amount
equal to any federal, state or local excise tax
imposed that the Executive is required to pay with
respect to the benefits provided and payments made
pursuant to this Section 2.
3. GENERAL
A. INDEMMIFICATION. If litigation shall be brought to enforce or
interpret any provision contained herein, the Corporation, to
the extent permitted by applicable law and the Corporation's
Certificate of Incorporation, hereby indemnifies the Executive
for his reasonable attorneys' fees and disbursements incurred
in such litigation, regardless of its outcome, and hereby
agrees to pay prejudgment interest on any money judgment
obtained by the Executive calculated at the Citibank prime
interest rate in effect from time-to-time from the date that
payment(s) should have been made under this Agreement.
B. PAYMENT OBLIGATIONS ABSOLUTE. The Corporation's obligation to
pay the Executive the compensation and to make the
arrangements provided herein shall be absolute and
unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim,
recoupment, defense or other right that the Corporation may
have against him or anyone else. All amounts payable by the
Corporation hereunder shall be paid without notice or demand.
Each and every payment made hereunder by the Corporation shall
be final and the Corporation will not seek to recover all or
any part of such payment from the Executive or from whosoever
may be entitled thereto, for any reason whatsoever.
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C. CONTINUING OBLIGATIONS. The Executive shall retain in
confidence any confidential information known to him
concerning the Corporation and its Subsidiaries and their
respective businesses so long as such information is not
publicly disclosed.
D. SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of the Executive and his estate, and shall be
binding on and inure to the benefit of the Corporation and any
successor of the Corporation, but neither this Agreement nor
any rights arising hereunder may be assigned or pledged by the
Executive.
E. SEVERABILITY. Any provision in this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating or
affecting the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
F. CONTROLLING LAW. This Agreement shall in all respects be
governed by, and construed in accordance with, the laws of the
State of New York.
G. TERMINATION. This Agreement shall terminate if the Board
determines, prior to any Termination of the Executive, that
the Executive is no longer a key executive to be included
within the Plan and so notifies the Executive; except that
such determination shall not be made, and if made shall have
no effect, (i) within three years after the Change of Control
in question or (ii) during any period of time when the
Corporation has knowledge that any third person has taken
steps reasonably calculated to effect a Change of Control
until, in the opinion of the Board, the third person has
abandoned or terminated his efforts to effect a Change of
Control. Any decision by the Board that the third person has
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abandoned or terminated his efforts to effect a Change of
Control shall be conclusive and binding on the Executive.
H. OTHER BENEFITS AND COMPENSATION. The compensation and benefits
provided hereunder shall not limit or reduce compensation or
benefits otherwise payable to Executive pursuant to
arrangements between Executive and the Corporation, unless
specific reference to any such reduction or limit is made
herein. It is not intended that this Agreement constitute a
waiver of rights under federal, state or local law, including,
without limitation, Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act and the Employee
Retirement Income Security Act of 1974.
I. ENTIRE AGREEMENT. This agreement embodies the entire agreement
of the Corporation and the Executive in respect of the subject
matter hereof, and it supersedes and replaces all prior
agreements and understandings between the parties with respect
to the subject matter hereof and the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement on the ____________
day of __________ 19____.
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GOULDS PUMPS, INCORPORATED
By:
_________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Chairman, Human Resources Committee
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