Executive Severance Agreement - Maytag Corp., John P Cunningham, Robert W Downing, Joseph F Fogliano, Mark A Garth, Brian A Girdlestone, Edward H Graham, Leonard A Hadley, Richard J Haines, Gerald J Kamman, Donald M Lorton, Carl R Moe, Jon O Nicholas, Jerry K Rinehart and Carlton F Zacheis
Executive Severance Agreements.
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The following executives are covered under this severance agreement:
1. John P. Cunningham
2. Robert W. Downing
3. Joseph F. Fogliano
4. Mark A. Garth
5. Brian A. Girdlestone
6. Edward H. Graham
7. Leonard A. Hadley
8. Richard J. Haines
9. Gerald J. Kamman
10. Donald M. Lorton
11. Carl R. Moe
12. Jon O. Nicholas
13. Jerry K. Rinehart
14. Carlton F. Zacheis
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EXECUTIVE SEVERANCE AGREEMENT
THIS AGREEMENT is made the __th day of ________________, 19__, by and
between Maytag Corporation, a Delaware corporation (the "Company"), and
______________________ (the "Executive").
RECITALS
A. The Board of Directors of the Company has approved the Company entering
into severance agreements with such executives of the Company and its
subsidiaries as is determined by the Chairman and Chief Executive Officer.
B. Pursuant to such agreement, the Company has heretofore entered into an
Executive Severance Agreement with the Executive dated _________________.
C. Should the Company receive or learn of any proposal by a third person
about a possible business combination with the Company or the acquisition of its
equity securities, the Board considers it imperative that the Company be able to
rely upon the Executive to continue in his or her position. This to the end
that the Company be able to receive and rely upon the Executive's advice
concerning the best interests of the Company and its stockholders, without
concern that person might be distracted by the personal uncertainties and risks
created by such a proposal.
D. Should the Company receive any such proposals, in addition to the
Executive's regular duties, he or she may be called upon to assist in the
assessment of such proposals, advise management and the Board as to whether such
proposals would be in the best interests of the Company and its stockholders,
and to take such other actions as the Board might determine to be appropriate.
AGREEMENT
NOW, THEREFORE, to assure the Company that it will have the continued
dedication of the Executive and the availability of that person's advice and
counsel notwithstanding the possibility, threat or occurrence of a bid to take
over control of the Company, and to induce the Executive to remain in the employ
of the Company, and for other good and valuable consideration, the Company and
the Executive agree that the Executive Severance Agreement described above be
amended and restated in its entirety as follows:
A. Should a third person, in order to effect a change of control (as
defined), begin a tender or exchange offer, circulate a proxy to stockholders or
take other steps, the Executive agrees that he or she will not voluntarily leave
the employ of the Company, and will render the services contemplated in the
recitals to this agreement, until the third person has abandoned or terminated
his efforts to effect a change of control or until a change of control has
occurred.
B. Should the Executive's employment with the Company or its subsidiaries
terminate for any reason (either voluntary or involuntary, other than because of
death, disability or normal retirement) within three (3) years after a change of
control of the Company the following will be provided: <PAGE>
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1. Lump Sum Cash Payment. On or before the Executive's last day of
employment with the Company or its subsidiaries, or as soon thereafter as
possible, the Company will pay to the Executive as compensation for services
rendered, a lump sum cash amount (subject to the usual withholding taxes) equal
to (A) three times the sum of (1) the Executive's annual salary at the rate in
effect immediately prior to the change of control and (2) the maximum annual
incentive bonus opportunity provided by the Plan and any discretionary bonus
declared for the year in which the change of control occurred, or the preceding
year if not established plus (B) an amount equal to the compensation (at the
Executive's rate of pay in effect immediately prior to the change of control)
payable for any period for which the Executive could have, immediately prior to
the date of his termination of employment, been on vacation and received such
compensation, for unused and accrued vacation benefits determined under the
Company's vacation pay plan or program covering the Executive immediately prior
to the change of control. If the time from the Executive's last day of
employment with the Company or its subsidiaries to the Executive's 65th birthday
is less than 36 months, there shall be a proportionate reduction of the payment
computed under clause (A) of the preceding sentence.
2. Salaried and Supplemental Executive Retirement Plans. The Executive
shall be paid a monthly retirement benefit, in addition to any benefits received
under the Salaried Retirement Plans maintained by the Company or its
subsidiaries, including The Maytag Corporation Salaried Retirement Plan and any
Supplemental Executive Retirement Plan, such benefit to commence on the first to
occur of (a) the commencement of payment of benefits under the Maytag
Corporation Salaried Retirement Plan or (b) attainment of age 65, but not prior
to three (3) years following the date of termination of employment or age 65,
whichever first occurs, such benefit to be an amount equal to the excess of (i)
the aggregate benefits under such Salaried Retirement Plans to which the
Executive would be entitled if he or she remained employed by the Company or its
subsidiaries, for an additional period of three (3) years or until his or her
65th birthday, whichever is earlier, at the rate of annual compensation
specified herein; over (ii) the benefits to which the Executive is actually
entitled under such Salaried Retirement Plans.
3. Life, Dental, Vision, Health and Long Term Disability Coverage. The
Executive's participation in, and entitlement to, benefits under: (i) the life
insurance plan of the Company; (ii) all the health insurance plan or plans of
the Company or its subsidiaries, including but not limited to those providing
major medical and hospitalization benefits, dental benefits and vision benefits;
and (iii) the Company's long-term disability plan or plans; as all such plans
existed immediately prior to the change of control shall continue as though he
or she remained employed by the Corporation or its subsidiaries for an
additional period of three (3) years or until the obtainment of such coverages
with another employer, whichever is earlier. To the extent such participation
or entitlement is not possible for any reason whatsoever, equivalent benefits
shall be provided.
4. Participation in Employee Benefit Plans. After termination of em-
ployment, the Executive shall continue to participate in the Salaried Retirement
Plans as contemplated above. The Executive's participation in any other
savings, capital accumulation, retirement, incentive compensation, profit
sharing, stock option, and/or stock appreciation rights plans of the Company or
any of its subsidiaries shall continue only through the last day of his or her
employment. Any terminating distributions and/or vested rights under such plans
shall be governed by the terms of those respective plans. Furthermore, the
Executive's participation in any insurance plans of the Company and rights to
any other fringe benefits shall, except as otherwise specifically provided in
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such plans or Company policy, terminate as of the close of the Executive's last
day of employment, except to the extent specifically provided to the contrary in
this agreement.
5. Incentive Plans. In addition to the payments required by paragraph 1
of this Section, the Company shall pay to the Executive as compensation for
services rendered cash in an amount equal to the maximum amount which could be
payable to the Executive under any and all incentive compensation plans in which
the Executive is a participant or under which the Executive holds any
outstanding award as of the day prior to the change of control. To the extent
that any such award is represented by restricted shares of stock of the Company,
the Executive's such cash payment shall include an amount equal to the aggregate
value of such shares determined as of the day of the change of control. Any
payment due pursuant to this paragraph 5 shall be paid at the same time as the
amount payable pursuant to paragraph 1 of this Section.
6. Reimbursement for Loss on Sale of Principal Residence. If on the date
of the change of control the Executive shall own a private residence within
Jasper County, Iowa (the "Executive's residence"), the Executive shall be paid
an amount equal to the excess, if any, of the amount by which the greater of (i)
the "aggregate purchase price" (as defined below) of the Executive's residence
and (ii) the "change of control market value" (as defined below) of the
Executive's residence, over the amount realized by the Executive upon the sale
of such residence. Any amount payable to the Executive under this agreement
shall be paid to the Executive on the date on which the Executive's residence is
sold in a bona fide transaction with an unrelated party. Notwithstanding the
foregoing, if the Executive's residence shall not be sold within 6 months after
the date on which the Executive's residence is first offered for sale, the
Company shall purchase the Executive's residence from the Executive for a cash
amount equal to the "change of control market value" of the Executive's
residence. For purposes of this paragraph, the "aggregate purchase price" of
the Executive's residence shall be the sum of the amount paid therefor plus the
cost of any significant repairs such as the cost of siding, or roof repair or
maintenance, incurred within the 5 year period ending on the date on which a
change of control occurs, plus the cost of any improvements to such residence
made by the Executive, the "amount realized" upon the sale of such residence
shall be the net amount, after deduction for brokers' fees, title charges,
transfer taxes and similar items, realized by the Executive upon the sale of the
Executive residence and "change of control market value" shall mean the value of
the Executive's residence on the date on which the change of control occurred,
as determined by an independent appraiser selected by the Executive. The fees
and expenses of such appraiser shall be paid by the Company.
7. Excise Tax-Additional Payment. (a) Notwithstanding anything in this
agreement or any written or unwritten policy of the Company or its subsidiaries
to the contrary, (i) if it shall be determined that any payment or distribution
by the Company or its subsidiaries to or for the benefit of the Executive,
whether paid or payable or distributed or distributable pursuant to the terms of
this agreement, any other agreement between the Company or its subsidiaries and
the Executive or otherwise (a "Payment"), would be subject to the excise tax
imposed by section 4999 of the Internal Revenue Code of 1986, as amended, (the
"Code") or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), or (ii) if the Executive shall
otherwise become obligated to pay the Excise Tax in respect of a Payment, then
the Company shall pay to the Executive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes), <PAGE>
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including any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
such Payment.
(b) All determinations and computations required to be made under this
paragraph B5, including whether a Gross-Up Payment is required under clause (ii)
of paragraph B7(a) above, and the amount of any Gross-Up Payment, shall be made
by the Company's regularly engaged independent certified public accountants (the
"Accounting Firm"). The Company shall cause the Accounting Firm to provide
detailed supporting calculations both to the Company and the Executive within 15
business days after such determination or computation is requested by the
Executive. Any initial Gross-Up Payment determined pursuant to this paragraph
B7 shall be paid by the Company or the subsidiary to the Executive within 5 days
of the receipt of the Accounting Firm's determination. A determination that no
Excise Tax is payable by the Executive shall not be valid or binding unless
accompanied by a written opinion of the Accounting Firm to the Executive that
the Executive has substantial authority not to report any Excise Tax on his
federal income tax return. Any determination by the Accounting Firm shall be
binding upon the Company, its subsidiaries and the Executive, except to the
extent the Executive becomes obligated to pay an Excise Tax in respect of a
Payment. In the event that the Company or the subsidiary exhausts or waives its
remedies pursuant to subparagraph 7B(c) and the Executive thereafter shall
become obligated to make a payment of any Excise Tax, and if the amount thereof
shall exceed the amount, if any, of any Excise Tax computed by the Accounting
Firm pursuant to this subparagraph (b) in respect to which an initial Gross-Up
Payment was made to the Executive, the Accounting Firm shall within 15 days
after Notice thereof determine the amount of such excess Excise Tax and the
amount of the additional Gross-Up Payment to the Executive. All expenses and
fees of the Accounting Firm incurred by reason of this paragraph B7 shall be
paid by the Company.
(c) The Executive 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 a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive knows 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. The Executive shall not pay
such claim prior to the expiration of the thirty-day period following the date
on which it gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested relating to such claim,
(ii) take such action in connection with con-
testing 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,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim,
(iv) permit the Company to participate in any
proceedings relating to such claim;<PAGE>
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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 the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this subparagraph B7(c), the Company shall control
all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo 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 the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner,
and the Executive agrees 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 or the subsidiary shall determine;
provided, however, that if the Company or the subsidiary directs the
Executive to pay such claim and sue for a refund, the Company or the
subsidiary shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on
an after-tax basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further
provided, that any extension of the statue of limitations relating to
payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, control of the contest by the Company or the
subsidiary shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive 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.
(d) If, after the receipt by the Executive of an amount advanced by the
Company or the subsidiary pursuant to subparagraph B7(c), the Executive be-
comes entitled to receive any refund with respect to such claim, the
Executive shall (subject to compliance with the requirements of paragraph B7
by the Company or the subsidiary) promptly pay to the Company or the
subsidiary the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company or the subsidiary
pursuant to subparagraph B7(c), a determination is made that the Executive
shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of thirty days after such
determination, then such advance shall be forgiven and shall not be required
to be repaid and the amount of such advance shall off-set, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
C. Definitions.
1. Change of Control. For purposes of this Agreement, a "change of
control" shall occur when (i) any person, either individually or together
with such persons' affiliates or associates (other than any employee benefit
plan of the Company or any subsidiary of the Company, or any entity holding
shares of the Company stock, for or pursuant to the terms of any such plan),
shall have become the beneficial owner, directly or indirectly, of shares of
the Company having 20% or more of the total number of votes that may be cast
for the election of directors of the Company and there shall have been a
public announcement of such occurrence by the Company or such persons or <PAGE>
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(ii) individuals who shall qualify as continuing directors (as defined
below) shall have ceased for any reason to constitute at least a majority of
the Board of Directors of the Company. "Continuing director" shall mean any
member of the Board of Directors of the Company, while such person is a
member of such Board of Directors, who is not an affiliate or associate of
an acquiring person (as defined below) or of any such acquiring person's
affiliate or associate and was a member of such Board of Directors prior to
the time when such acquiring person shall have become an acquiring person,
and any successor of a continuing director, while such successor is a member
of such Board of Directors, who is not an acquiring person or a
representative or nominee of an acquiring person or of any affiliate or
associate of such acquiring person and is recommended or elected to succeed
the continuing director by a majority of the continuing directors.
"Acquiring person" shall mean any person or group of affiliates or
associates (as such terms are defined on February 1, 1987 in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended, other than any employee benefit plan of the Company or any
subsidiary of the Company, or any entity holding shares of Company stock for
or pursuant to the terms of any such plan), who is or becomes the beneficial
owner, directly or indirectly, of 20% or more of the shares of the Company,
having 20% or more of the total number of votes that may be cast for the
election of directors of the Company.
2. Subsidiary. For purposes of this agreement, a "Subsidiary" shall
mean any domestic or foreign corporation at least 20% of whose shares
normally entitled to vote in electing directors is owned directly or
indirectly by the Company or by other subsidiaries.
D. General Provisions.
1. No Guaranty of Employment. Nothing in this agreement shall be
deemed to entitle the Executive to continued employment with the Company or
its subsidiaries, and the rights of the Company to terminate the employment
of the Executive shall continue as fully as if this agreement were not in
effect, provided that any such termination of employment within three (3)
years following a change of control shall entitle the Executive to the
benefits herein provided.
2. Confidentiality. The Executive shall retain in confidence any
confidential information known to him concerning the Company and its
business so long as such information is not publicly disclosed.
3. Payment Obligation Absolute. The Company'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 which the Company may have against him,
her or anyone else. All amounts payable by the Company hereunder shall be
paid without notice or demand. The Company waives all rights which it may
now have or may hereafter have conferred upon it, by statute or otherwise,
to terminate, cancel or rescind this agreement in whole or in part. Each
and every payment made hereunder by the Company shall be final and the
Company shall not seek to recover all or any part of such payment from the
Executive or from whoever may be entitled thereto, for any reason
whatsoever.
4. Indemnification. If litigation shall be brought to enforce or
interpret any provision contained herein, the Company hereby indemnifies the
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Executive for his or her reasonable attorney's fees and disbursements
incurred in such litigation, and hereby agrees to pay prejudgment interest
on any money judgment obtained by the Executive calculated by using the
prevailing prime interest rate on the date that payment(s) to him or her
should have been made under this agreement.
5. Successors. This agreement shall be binding upon and inure to the
benefit of the Executive and his or her estate, and the Company and any suc-
cessor of the Company, but neither this agreement nor any rights arising
hereunder may be assigned or pledged by the Executive.
6. Severability. Any provision in this agreement which 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.
7. Controlling Law. This agreement shall in all respects be governed
by, and construed in accordance with, the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have executed this agreement on the date
set out above.
MAYTAG CORPORATION
By ___________________________
_______________________________
Executive