Contents

Amended and Restated Employment Agreement

Amendment to Employment Agreement (October 2004)

Amendment to Employment Agreement

Corporate Officer Severance Plan (July 2006)

 

 

 

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

                                                               EXHIBIT (10)(iii)

 

                                                                February 7, 2002

 

                              AMENDED AND RESTATED

                              EMPLOYMENT AGREEMENT

 

         AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of February 7,

2002, by and between American Standard Companies Inc., a Delaware corporation

(the "Company"), and Frederic M. Poses (the "Executive").

 

                              W I T N E S S E T H:

                              - - - - - - - - - -

 

         WHEREAS, the Company and the Executive have previously entered into an

employment agreement, dated October 13, 1999, and amended March 17, 2000 (the

"Prior Agreement"), under which the Executive's employment commenced January 1,

2000;

 

         WHEREAS, the Company desires to continue to secure the services of the

Executive for a period of several years and to provide him with the appropriate

incentives to continue to enhance the value of the Company for the benefit of

its shareholders;

 

         WHEREAS, the Company and the Executive wish to amend and restate the

Prior Agreement, effective as of February 7, 2002 (the "Restatement Date"); and

 

         NOW, THEREFORE, in consideration of the mutual covenants herein

contained, the Company and the Executive hereby agree as follows:

 

    1. Employment. Except as provided in Paragraph 6(a), the Company shall

employ the Executive for the period commencing January 1, 2000 (the

"Commencement Date") and ending on December 31, 2006. The period during which

the Executive is employed pursuant to this Agreement shall be referred to as the

"Employment Period".

 

    2. Position and Duties. During the Employment Period, the Executive shall

serve as Chairman and Chief Executive Officer of the Company and report directly

to the Board of Directors of the Company (the "Board"). During the Employment

Period, the Company shall use its best efforts to have the Executive continued

as a member of the Board. During the Employment Period, the Executive shall have

the duties, responsibilities and obligations customarily assigned to the chief

executive officer of a public company of similar size and such other duties and

responsibilities for the Company and its subsidiaries consistent with his

position as the Board shall from time to time specify. The Executive shall

devote his full time to the services required of him hereunder, except for

vacation time and reasonable periods of absence due to sickness,

 

<PAGE>

 

personal injury or other disability, and shall use his best efforts, judgment,

skill and energy to perform such services in a manner consonant with the duties

of his position and to improve and advance the business and interests of the

Company and its subsidiaries. Nothing contained herein shall preclude the

Executive from (i) serving on the board of directors of any business corporation

with the consent of the Board, (ii) serving on the board of, or working for, any

charitable or community organization or (iii) pursuing his personal financial

and legal affairs, so long as such activities, individually or collectively, do

not interfere with the performance of the Executive's duties hereunder.

 

    3.   Compensation.

 

         a. Base Salary. During the Employment Period, the Company shall pay the

Executive a base salary at the annual rate of $1,000,000. The parties

acknowledge and agree that the Executive's performance warrants an increase in

his base salary from that in effect at the Commencement Date, but because any

increase in such salary would result in a non-deductible expense for the

Company, the Executive has agreed that no increase shall be implemented. The

annual base salary payable under this paragraph shall be reduced, however, to

the extent the Executive elects to defer such salary under the terms of any

deferred compensation or savings plan or arrangement maintained or established

by the Company. The Executive's annual base salary payable hereunder, without

reduction for any amounts deferred as described above, is referred to herein as

"Base Salary". The Company shall pay the Executive the portion of his Base

Salary not deferred in accordance with its standard payroll practices for senior

executives.

 

         b. Incentive Compensation. During the term of the Employment Period,

the Executive shall participate in the Company's existing and future annual and

long-term incentive compensation programs at a level commensurate with his

position at the Company and consistent with the Company's then current policies

and practices. Notwithstanding the foregoing, during the Employment Period, the

Company shall make available an annual incentive target award of at least

$1,700,000 and a long-term incentive target award for each performance period

commencing during the Employment Period of at least $1,700,000, in each case

subject to the terms and conditions of the applicable plan.

 

    4. Stock Option Grants. On the Restatement Date, the Company has awarded the

Executive an option (the "Retention Grant") to purchase 1,000,000 shares of the

Company's Common Stock at an exercise price per share equal to the fair market

value of a share of such stock (determined in accordance with the terms of the

American Standard Companies Inc. Stock Incentive Plan (the "Stock Incentive

Plan")) on the date of grant. The Retention Grant shall become exercisable as

follows: 250,000 shares will vest and become exercisable in three approximately

equal annual installments on each of the first three anniversaries of the

Restatement Date; 200,000 shares will vest and become exercisable on December

31, 2005; 300,000 shares will vest and become exercisable on December 31, 2006;

and 250,000 shares will vest on December 31, 2006 and become exercisable on

December 31, 2007. The Company has awarded the Executive an additional stock

option grant (the "Contingent Grant") in respect of 250,000 shares of the

 

<PAGE>

 

Company's Common Stock, at an exercise price per share equal to the fair market

value thereof on the Restatement Date, which will also vest on December 31, 2006

and become exercisable on December 31, 2007, and which is made under the

American Standard Companies Inc. 2002 Omnibus Incentive Plan (the "Omnibus

Plan") and is contingent on approval of the Omnibus Plan by the Company's

stockholders at their annual Meeting on May 2, 2002. Except as otherwise

provided above, each of the Retention Grant and the Contingent Grant shall be

subject to, and have such terms and conditions as are set forth in (or are

otherwise standard with respect to option grants made pursuant to), the Stock

Incentive Plan and the Omnibus Plan.

 

    5.   Benefits, Perquisites and Expenses.

 

         a. Benefits. During the Employment Period, the Executive shall be

eligible to participate in (i) each welfare benefit plan sponsored or maintained

by the Company, including, without limitation, each group life, hospitalization,

medical, dental, health, accident or disability insurance or similar plan or

program of the Company, and (ii) each pension, profit sharing, retirement,

deferred compensation or savings plan sponsored or maintained by the Company, in

each case, whether now existing or established hereafter, to the extent that the

Executive is eligible to participate in any such plan under the generally

applicable provisions thereof. The Company may amend or terminate any such plan

at its discretion. Notwithstanding anything else contained herein to the

contrary, the Executive shall at all times be deemed vested in his accrued

benefit under the Company's Supplemental Executive Retirement Plan ("SERP") and,

so long as the Executive remains in the employ of the Company through December

31, 2006, the Executive will not be subject to any actuarial reduction factor

regardless of his age when his benefits under the SERP actually commence.

 

         b. Perquisites. During the Employment Period, the Executive shall be

entitled to up to four weeks' paid vacation annually and shall also be entitled

to receive such perquisites as are generally provided to other senior officers

of the Company in accordance with the then current policies and practices of the

Company. To recognize the Executive's contribution to the organization, the

Company shall also make a contribution for each full year of the Employment

Period after 2001 in an amount of not less than $100,000 to such charitable

organization(s) as the Executive may from time to time specify to the Company in

writing, provided that such contribution shall be subject to any and all

conditions generally applicable to charitable contributions made by the Company.

 

         c. Business Expenses. During the Employment Period, the Company shall

pay or reimburse the Executive for all reasonable expenses incurred or paid by

the Executive in the performance of the Executive's duties hereunder, upon

presentation of expense statements or vouchers and such other information as the

Company may require and in accordance with the generally applicable policies and

procedures of the Company.

 

         d. Indemnification. The Company shall indemnify the Executive and hold

the Executive harmless from and against any claim, loss or cause of action

arising

 

<PAGE>

 

from or out of the Executive's performance as an officer, director or employee

of the Company or any of its subsidiaries or in any other capacity, including

any fiduciary capacity, in which the Executive serves at the request of the

Company on at least the same basis as it indemnifies members of the Board

generally and its other senior officers.

 

    6.   Termination of Employment.

 

         a. Early Termination of the Employment Period. Notwithstanding

Paragraph 1, the Employment Period shall end upon the earliest to occur of (i) a

termination of the Executive's employment on account of the Executive's death,

(ii) a termination due to Disability, (iii) a termination for Cause or (iv) a

termination without Cause or (v) a termination for Good Reason. The terms

"Cause" or "Disability" and "Good Reason" shall have the meanings ascribed

thereto in the American Standard Companies Inc., Corporate Officers Severance

Plan, as in effect on the Restatement Date or, if more favorable to the

Executive, as the same may be amended or restated after the Restatement Date

(the "Severance Plan").

 

         b. Benefits Payable Upon Termination. Following the end of the

Employment Period, whether pursuant to Paragraph 1 or as a result of an early

termination pursuant to Paragraph 6(a), the Executive (or, in the event of his

death, his surviving spouse, if any, or his estate) shall in all events receive

his Earned Salary and Vested Benefits (as each such term is defined below). In

addition, upon a termination of his employment by the Company without Cause or

by the Executive for Good Reason, the Executive shall also be entitled to

receive the benefits payable to him in accordance with the terms and conditions

of the Severance Plan (including, without limitation, any requirement that the

Executive execute a standard form of release established in accordance with the

terms of the Severance Plan). "Earned Salary" means any Base Salary earned, but

unpaid, for services rendered to the Company on or prior to the date on which

the Employment Period ends (other than compensation previously deferred pursuant

to the Executive's election, which shall be treated as a Vested Benefit).

"Vested Benefits" means amounts which are vested or which the Executive is

otherwise entitled to receive under the terms of or in accordance with any plan,

policy, practice or program of, or any contract or agreement with, the Company

or any of its subsidiaries.

 

         c. Full Discharge of Company Obligations. The amounts payable to the

Executive pursuant to this Paragraph 6 following termination of his employment

(including amounts payable with respect to Vested Benefits) and, if applicable,

the Severance Plan shall be in full and complete satisfaction of the Executive's

rights under this Agreement and any other claims he may have in respect of his

employment by the Company or any of its subsidiaries. Such amounts shall

constitute liquidated damages with respect to any and all such rights and claims

and, upon the Executive's receipt of such amounts, the Company shall be released

and discharged from any and all liability to the Executive in connection with

this Agreement or otherwise in connection with the Executive's employment with

the Company and its subsidiaries. Nothing in this Paragraph 6(c) shall be

construed to relieve the Executive from any obligations to the Company that are

imposed upon him as a condition to receive the payment of any

 

<PAGE>

 

severance or other benefits that may be due him pursuant to Paragraph 6(b) under

the Severance Plan.

 

    7.   Non-competition and Confidentiality.

 

         a. Non-competition. During the Employment Period and during the one

year period during which certain options will become exercisable as stated

herein, the Executive shall not become associated with any entity, whether as a

principal, partner, employee, consultant or shareholder (other than as a holder

of not in excess of 1% of the outstanding voting shares of any publicly traded

company), that is actively engaged in any geographic area in any business which

is in competition with the business of the Company.

 

         b. Confidentiality. Except when acting on behalf of the Company, or to

the extent required by an order of a court having competent jurisdiction or

under subpoena from an appropriate government agency, the Executive shall not

disclose any trade secrets, customer lists, drawings, designs, information

regarding product development, marketing plans, sales plans, manufacturing

plans, management organization information (including data and other information

relating to members of the Board of Directors and management), operating

policies or manuals, business plans, financial records, packaging design or

other financial, commercial, business or technical information relating to the

Company or any of its subsidiaries or information designated as confidential or

proprietary that the Company or any of its subsidiaries may receive belonging to

suppliers, customers or others who do business with the Company or any of its

subsidiaries (collectively, "Confidential Information") to any third person

unless such Confidential Information has been previously disclosed to the public

by the Company or is in the public domain (other than by reason of the

Executive's breach of this Section 7(b)).

 

         c. Company Property. Promptly following the Executive's termination of

employment, the Executive shall return to the Company all property of the

Company, and all copies thereof in the Executive's possession or under his

control.

 

         d. Non-Solicitation of Employees. During the same period set forth in

7(a) herein, the Executive shall not directly or indirectly induce any employee

of the Company or any of its subsidiaries to terminate employment with such

entity, and (directly or indirectly), either individually or as owner, agent,

employee, consultant or otherwise, employ or offer employment to any person who

is or was employed by the Company or a subsidiary thereof unless such person

shall have ceased to be employed by such entity for a period of at least 6

months.

 

         e. Injunctive Relief with Respect to Covenants. The Executive

acknowledges and agrees that the covenants and obligations of the Executive with

respect to non-competition, non-solicitation, confidentiality and Company

property relate to special, unique and extraordinary matters and that a

violation of any of the terms of such covenants and obligations will cause the

Company irreparable injury for which adequate

 

<PAGE>

 

remedies are not available at law. Therefore, the Executive agrees that the

Company shall be entitled to an injunction, restraining order or such other

equitable relief (without the requirement to post bond) restraining the

Executive from committing any violation of the covenants and obligations

contained in this Paragraph 7. These injunctive remedies are cumulative and are

in addition to any other rights and remedies the Company may have at law or in

equity. In connection with the foregoing provisions of this Paragraph 7, the

Executive represents that his economic means and circumstances are such that

such provisions will not prevent him from providing for himself and his family

on a basis satisfactory to him.

 

    8.   Miscellaneous.

 

         a. Survival. Paragraphs 6 (relating to early termination), 7 (relating

to non-competition, non-solicitation and confidentiality) and 8(g) (relating to

governing law) shall survive the termination hereof, whether such termination

shall be by expiration of the Employment Period or an early termination pursuant

to Paragraph 6 hereof.

 

         b. Successors, Assignment and Entire Agreement. This Agreement shall be

binding on, and shall inure to the benefit of, the Company and any person or

entity that succeeds to the interest of the Company (regardless of whether such

succession does or does not occur by operation of law) by reason of the sale of

all or a portion of the Company's stock, a merger, consolidation or

reorganization involving the Company or, unless the Company otherwise elects in

writing, a sale of the assets of the business of the Company (or portion

thereof) in which the Executive performs a majority of his services. This

Agreement shall also inure to the benefit of the Executive's heirs, executors,

administrators and legal representatives. Except as provided under this

Paragraph 8(b), neither this Agreement nor any of the rights or obligations

hereunder shall be assigned or delegated by any party hereto without the prior

written consent of the other party. This Agreement constitutes the entire

agreement between the parties hereto with respect to the matters referred to

herein and expressly supersedes and replaces the provisions of the letter

agreement between the Executive and the Company dated October 13, 1999 (other

than those provisions related to the grant of an option to acquire shares of the

Company's Common Stock and to the award of restricted shares of the Company's

Common Stock). No other agreement relating to the terms of the Executive's

employment by the Company, oral or otherwise, unless it is in writing and signed

by the party against whom enforcement is sought. There are no promises,

representations, inducements or statements between the parties other than those

that are expressly contained herein.

 

         c. Severability; Reformation. In the event that one or more of the

provisions of this Agreement shall become invalid, illegal or unenforceable in

any respect, the validity, legality and enforceability of the remaining

provisions contained herein shall not be affected thereby. In the event any of

Paragraph 7(a), (b) or (c) is not enforceable in accordance with its terms, the

Executive and the Company agree that such Paragraph shall be reformed to make

such Paragraph enforceable in a manner which provides the Company the maximum

rights permitted at law.

 

<PAGE>

 

         d. Notices. Any notice required or desired to be delivered under this

Agreement shall be in writing and shall be delivered personally, by courier

service, by registered mail, return receipt requested, or by telecopy and shall

be effective upon actual receipt by the party to which such notice shall be

directed, and shall be addressed to the Company, attn. General Counsel, at its

corporate headquarters and to the Executive on the address listed as his primary

residence on the Company books and records.

 

         e. Amendments; Waiver. This Agreement may not be altered, modified or

amended except by a written instrument signed by each of the parties hereto.

Waiver by any party hereto of any breach or default by the other party of any of

the terms of this Agreement shall not operate as a waiver of any other breach or

default, whether similar to or different from the breach or default waived. No

waiver of any provision of this Agreement shall be implied from any course of

dealing between the parties hereto or from any failure by either party hereto to

assert its or his rights hereunder on any occasion or series of occasions.

 

         f. Withholding. Any payments provided for herein shall be reduced by

any amounts required to be withheld by the Company from time to time under

applicable Federal, State or local income or employment tax laws or similar

statutes or other provisions of law then in effect.

 

         g. Governing Law. This Agreement shall be governed by the laws of the

State of New Jersey, without reference to principles of conflicts or choice of

law under which the law of any other jurisdiction would apply.

 

         IN WITNESS WHEREOF, the Company has caused this Agreement to be

executed by its duly authorized officer and the Executive has hereunto set his

hand as of the day and year first above written.

 

<PAGE>

 

                                       American Standard Companies Inc.

WITNESS:

/s/  Roger W. Parsons                  By: /s/ Lawrence B. Costello

------------------------------------       -------------------------------------

                                           Lawrence B. Costello

                                           Sr. Vice President, Human Resources

 

WITNESS:

/s/ Roger W. Parsons                       /s/ Frederic M. Poses

------------------------------------       -------------------------------------

                                           Frederic M. Poses

                                           Chairman and Chief Executive Officer

Top of the Document

 

 

AMENDMENT TO EMPLOYMENT AGREEMENT

          This AMENDMENT to the AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of February 7, 2002, by and between American Standard Companies, Inc., a Delaware corporation (the “Company”), and Frederic M. Poses (the “Executive”) is effective October 6, 2004.

W I T N E S S E T H:

          WHEREAS, the Company and the Executive have previously entered into an amended and restated employment agreement dated February 7, 2002 (the “Employment Agreement”);

          WHEREAS, the Company desires to continue to secure the services of Executive for an additional year and to provide him with the appropriate incentives to continue to enhance the value of the Company for the benefit of its shareholders;

          WHEREAS, the Company and the Executive wish to amend the Employment Agreement solely as set forth below; and

          NOW, THEREFORE, in consideration of the mutual covenants herein contained, the Company and Executive hereby amend the Employment Agreement as follows:

     1. The Employment Period in Paragraph 1 shall be extended through December 31, 2007.

     2. The following shall be added as Paragraph 3(c):

     Performance Bonus. At the end of the Employment Period, the independent members of the Board will determine the extent of Executive’s eligibility for a discretionary performance bonus of up to $2,500,000 (the “Performance Bonus”), based on their assessment of Executive’s success in developing both a long term strategic plan for the Company and a transition plan for his succession. The Performance Bonus will be payable (to the extent earned) on or about April 1, 2008. Executive may elect to defer receipt of the Performance Bonus upon such terms and conditions as the independent Board members may establish, provided that such deferral can be effectuated in conformance with applicable laws and regulations.

     3. The last sentence in Paragraph 5(a) shall be restated in its entirety to read:

“Notwithstanding anything else contained herein to the contrary, the Executive shall at all times be deemed vested in his accrued benefit under the Company’s Supplemental Executive Retirement Plan (“SERP”).”

     4. The following shall be added as Paragraph 5(e):

     Retirement Perquisites. So long as Executive remains in the employ of the Company throughout the Employment Period, then: (a) for the five year period commencing January 1, 2008 Executive shall be entitled to make use of an office in the Company’s New York City office or, at the Company’s election, a comparable office in New York City provided by the Company, with secretarial support provided by the Company; (b) during the same five year period, the Company shall reimburse Executive for financial planning expenses incurred up to a maximum of $10,000 per year; and (c) at the end of the Employment Period, the Company shall also pay for Executive’s buy out of the lease for Executive’s Company provided car.

     5. Paragraph 7(a) shall be restated in its entirety to read:

     Non-competition. During the Employment Period and during the one year period thereafter, Executive shall not become associated with any entity, whether as a principal, partner, employee, consultant or shareholder (other than as a holder not in excess of 1% of the outstanding shares of any publicly traded company), that is actively engaged in any geographic area in any business which is in competition with the business of the Company.

     6. Except as modified herein, all provisions of the Employment Agreement shall remain in full force and effect.

          IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and Executive has hereunto set his hand as of the day and year first above written.

 

 

 

 

 

 

 

WITNESS:

 

American Standard Companies Inc.

 

 

 

 

 

 

 

/s/ J. Paul McGrath

 

By:

 

/s/ Lawrence B. Costello

 

 


 

 

 

 


 

 

 

 

 

 

 

Lawrence B. Costello
Sr. V.P. – Human Resources

 

 

 

 

 

 

 

 

 

WITNESS:

 

 

 

/s/ Frederic M. Poses

 

 

 

 

 

 

 


 

 

 

/s/ Steven Goldstone


 

 

 

 

Frederic M. Poses

 

 

 

 

 

Top of the Document

 

EX-10.1 4 dex101.htm LETTER AGREEMENT RELATING TO THE EMPLOYMENT AGREEMENT WITH FREDERIC M. POSES

December 15, 2007

Frederic M. Poses

Trane Inc.

One Centennial Avenue

Piscataway, NJ 08855-6820

Dear Fred:

This will confirm our agreement to extend your term of service as Chief Executive Officer of Trane Inc., on the terms and conditions set forth below, beyond the expiration of the term of your current employment agreement with the Company, which will expire in accordance with its terms on December 31, 2007.

Your service as Chief Executive Officer of the Company will continue until June 30, 2008 or such earlier date as the Board of Directors of the Company shall specify. During your continued service with the Company under the terms of this letter agreement, you will be paid a base salary at the monthly rate of $416,666.66, in accordance with the Company’s standard payroll practices. Except as provided in the immediately following sentence, in the event that you work for only a portion of any month during this period, you will be paid a pro-rated portion of the monthly base salary, based on the number of days in the month elapsed up to and including your date of termination. However, in the event that, after you have commenced services in 2008, your employment terminates prior to March 31, 2008 for any reason other than your voluntarily termination of your employment or a termination by the Company for “cause” (as such term is defined in the Corporate Officers Severance Plan (the “Severance Plan”), the Company will pay you an amount equal to the excess, if any, between $1,250,000 and the amount actually payable to you as base salary for services in 2008.

During your continued employment in 2008, you shall continue to participate in the employee benefit plans and programs generally made available to employees of the Company and shall receive such perquisites as are otherwise made available to senior officers of the Company.

You agree and understand that the compensation and benefits described in the two immediately preceding paragraphs shall be your sole compensation for your services during 2008. You will not receive or be eligible for any other bonus or supplemental cash payment, any grant or any additional service credits in respects of any long-term incentive plan (so that, when your employment terminates in 2008, your rights in respect of any such previously granted long-term award will be determined on the same basis as though you retired on December 31, 2007) or any stock option or other equity or equity-based grants. Without limiting the generality of the foregoing, in determining the period of time following your termination of employment in

 

1


which you may exercise any stock options previously granted to you, such post-termination exercise period shall be measured from the actual date of your termination of employment. You also agree and acknowledge that, when your employment terminates in accordance with the terms of this letter agreement (whether at or before June 30, 2008), you shall not be entitled to receive any severance benefits under the Severance Plan, and that the termination provisions under your Employment Agreement and any additional age or service credits under the Company’s Executive Supplemental Retirement Benefits Program in the event of a Change of Control as defined in that plan will not apply.

The independent members of the Board have determined that the amount payable to you in respect of the discretionary Performance Bonus payable under paragraph 3.c. of your Employment Agreement will be $2,500,000. You and the Company hereby agree that any such Performance Bonus shall be paid to you in 2008 on or within 10 days after April 1, 2008.

You also agree and understand that certain terms of the Employment Agreement relating to the compensation and benefits to be provided to you following your termination of employment are being amended. The Company will buy out the lease of your Company provided car immediately (and in no event more than 30 days) following your termination of employment. You also agree and understand that the Company’s obligation to reimburse you, after your termination of employment, for financial planning expenses you incur, up to a maximum of $10,000 per year, shall relate to expenses incurred in each of calendar years 2009-2013. In lieu of its obligation to provide you with office space following your termination of employment, the Company will pay you an annual amount of $60,000, less appropriate taxes, to enable you to lease space at an appropriate off-site location in Manhattan suitable to accommodate you and one administrative assistant. Such amount shall be payable to you on the six month anniversary of the date of your termination of employment and on each anniversary of that date through 2012.

Additionally, during the sixty-six month period following your termination of employment, the Company will make available to you the services of your current assistant, so long as she is still an employee of the Company, and if not, another qualified assistant, remotely from the Company’s headquarters. For the five year period following the end of the sixth month following your termination, the Company shall bear all costs and expenses (including the costs of such assistant’s compensation and benefits) related to making the services of such assistant available to you (the “Administrative Expenses”). During the first six months following your termination, you shall reimburse the Company, monthly in arrears, within five business days of receipt of an invoice for such amounts, for the Administrative Expenses.

You agree and acknowledge that the covenants contained in Section 7 of your current Employment Agreement shall continue in effect during the term of your employment hereunder

 

2


and the Restriction Period (as defined in Section 7(a) of the Employment Agreement) shall be deemed to commence on the termination of your employment under this letter agreement.

Except as otherwise expressly provided herein or as otherwise expressly provided in the Employment Agreement, it is agreed and understood that your Employment Agreement will expire on December 31, 2007, and will have no further force and effect after such date.

 

Very truly yours,

/s/ Lawrence B. Costello

Lawrence B. Costello

 

Agreed to and Accepted:

/s/ Frederic M. Poses

Frederic M. Poses

 

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Top of the Document

Exhibit 10.3

 

AMERICAN STANDARD COMPANIES INC.

CHANGE OF CONTROL SEVERANCE PLAN

(Restated to include all amendments through July 7, 2006)

Section I. Purpose

The purpose of the Plan is to provide certain key employees of the Company and its subsidiaries with severance benefits should their employment terminate under the circumstances described herein. This Plan supersedes any and all previous severance pay practices or policies of the Company or its Subsidiaries, whether written or unwritten.

Section II. Definitions

A. Act - means the Securities Exchange Act of 1934, as amended.

B. Agreement and Release – means an agreement prepared by the Company under which a Participant, in return for benefits provided under the Plan, agrees to release the Company and its Subsidiaries from any and all claims which such Participant may have against such entities at the time the agreement is executed, and further agrees to certain other undertakings, including cooperation with the Company in any matter which may give rise to legal claims against the Company, a one year non-solicitation agreement, keeping confidential proprietary information of the Company as well as the terms of the Agreement and Release, settlement of any disputes concerning the Agreement and Release through binding arbitration, and such other undertakings as the Company may reasonably require from time to time.

C. ASI—means American Standard Inc., a Delaware corporation.

D. Base Amount – means an amount equal to the Participant’s Annualized Includable Compensation for the Base Period as defined in Section 280(G)(d)(1) and (2) of the Code.

E. Beneficial Owner means any “person”, as such term is used in Section 13(d) of the Act, who, directly or indirectly, has or shares the right to vote or dispose of such securities or otherwise has “beneficial ownership” of such securities (within the meaning


of Rule 13d-3 and Rule 13d-5 under the Act), including pursuant to any agreement, arrangement or understanding (whether or not in writing).

F. Board - means the Board of Directors of the Company.

G. Cause - means a Participant’s (1) willful and continued failure substantially to perform his duties with the Company or any Subsidiary (other than any such failure resulting from incapacity due to reasonably documented physical or mental illness), after a demand for substantial performance is delivered to such Participant by the Senior Vice President of Human Resources of the Company which specifically identifies the manner in which it is believed that such Participant has not substantially performed his or her duties and such Participant is provided a period of thirty (30) days to cure such failure, (2) conviction of, or plea of nolo contendere to, a felony, or (3) the willful engaging by such Participant in gross misconduct materially and demonstrably injurious to the Company or any Subsidiary or to the trustworthiness or effectiveness of the Participant in the performance of his duties. For purposes hereof, no act, or failure to act, on such Participant’s part shall be considered “willful” unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company or a Subsidiary. 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 such Participant in good faith and in the best interest of the Company or such Subsidiary.

H. “Change of Control” shall mean the occurrence of any of the following events:

(i) any “person”, as such term is used in Section 13(d) of the Act (other than the Company, any Subsidiary or any employee benefit plan maintained by the Company or any Subsidiary (or any trustee or other fiduciary thereof)) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then-outstanding securities, provided, however, that an acquisition of securities of the Company representing less than 25% of the combined voting power shall not constitute a Change of Control if, prior to meeting the 20% threshold, the members of the Board who are not employees of the Company or

 

2


a Subsidiary unanimously adopt a resolution consenting to such acquisition by such Beneficial Owners;

(ii) during any consecutive 24-month period, individuals who at the beginning of such period constitute the Board, together with those individuals who first become directors during such period (other than by reason of an agreement with the Company or the Board in settlement of a proxy contest for the election of directors) and whose election or nomination for election to the Board was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved (the “Continuing Directors”), cease for any reason to constitute a majority of the Board;

(iii) the consummation of any merger, consolidation, recapitalization or reorganization involving the Company, other than any such transaction immediately following which the persons who were the Beneficial Owners of the outstanding voting securities of the Company immediately prior to such transaction are the Beneficial Owners of at least 55% of the total voting power represented by the voting securities of the entity surviving such transaction or the ultimate parent of such entity in substantially the same relative proportions as their ownership of the Company’s voting securities immediately prior to such transaction; provided that, such continuity of ownership (and preservation of relative voting power) shall be deemed to be satisfied if the failure to meet such threshold (or to preserve such relative voting power) is due solely to the acquisition of voting securities by an employee benefit plan of the Company, such surviving entity, any Subsidiary or any subsidiary of such surviving entity;

(iv) the sale of substantially all of the assets of the Company to any person other than any Subsidiary or any entity in which the Beneficial Owners of the outstanding voting securities of the Company immediately prior to such sale are the Beneficial Owners of at least 55% of the total voting power represented by the voting securities of such entity or the ultimate parent of such entity in substantially the same relative proportions as their ownership of the Company’s voting securities immediately prior to such transaction; or

 

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(v) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company.

H. Code - means the Internal Revenue Code of 1986, as amended

I. Committee - means the Management Development and Compensation Committee of the Board (or such other committee of the Board that the Board shall designate).

J. Common Stock - means the common stock of the Company, par value $0.01 per share.

K. Company - means American Standard Companies Inc., a Delaware corporation, and any successor thereto.

L. Effective Date - means July 10, 2003.

M. Good Reason - means, coincident with or subsequent to a Change of Control, the occurrence of any of the following:

1. a material diminution in a Participant’s duties, authority, responsibilities or status;

2. relocation of the Participant’s principal place of employment to a location more than 30 miles away from the Participant’s prior principal place of employment;

3. a reduction by the Company or a Subsidiary in such Participant’s base salary;

4. the taking of any action by the Company or a Subsidiary (including the elimination of a plan without providing substitutes therefor or the reduction of such Participant’s award thereunder) that would substantially diminish the aggregate projected value of such Participant’s award opportunities under the Company’s or such Subsidiary’s incentive plans in which he or she was participating at the time of the taking of such action;

5. the taking of any action by the Company or a Subsidiary that would substantially diminish the aggregate value of the benefits provided to the Participant under the Company’s or such Subsidiary’s medical, health, accident, disability, life insurance, thrift and retirement plans in which he or she was participating at the time of

 

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the taking of such action (unless resulting from a general change in benefits applicable to all similarly situated employees of the Company and its affiliates); or

6. any purported termination by the Company or such Subsidiary of the Participant’s employment that is not a termination for Cause.

Notwithstanding the foregoing, the occurrence of any of the events described above will not constitute Good Reason unless the Participant gives the Company written notice that such event constitutes Good Reason within 90 days of first having knowledge of such event and the Company fails to cure the event within 30 days after receipt of such written notice.

N. Participant - means each employee of the Company or a Subsidiary who is in the executive grade, provided that executive officers of the Company shall not be eligible to participate in the Plan. Notwithstanding the foregoing, employees first elected to the positions of Vice President & Controller or Vice President & Treasurer on or after July 7, 2005, who do not participate in the Company’s Corporate Officer Severance Plan, shall be Participants. Effective October 6, 2005, employees elected to the position of Vice President & General Auditor, who do not participate in the Company’s Corporate Officer Severance Plan, shall be Participants.

O. Plan - means this American Standard Companies Inc. Change of Control Severance Plan.

P. Plan Administrator - means the Committee or any committee or individual designated by the Committee to perform some or all of its administrative functions hereunder.

Q. Subsidiary - means any corporation, partnership or limited liability company in which the Company owns, directly or indirectly, 50% or more of the total combined voting power of all classes of stock of such corporation or of the capital interest or profits interest of such partnership.

Section III. Eligibility.

Each Participant shall be eligible to receive the benefits provided under the Plan in the event of a Change of Control, if coincident therewith or within 24 months following thereafter (i) such Participant voluntarily terminates employment for Good Reason or (ii) such Participant’s

 

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employment is involuntarily terminated by the Company or a Subsidiary other than pursuant to a termination for Cause.

Section IV. Severance Payments.

A Participant who satisfies the eligibility requirements of Section III hereof shall receive severance payments equal to the following:

(A) an amount equal to one time the Participant’s annual base salary in effect on the date the termination occurs; plus

(B) subject to Section XI, the amount of the Participant’s annual incentive plan target award in effect for the calendar year in which the termination occurs, determined without regard to whether the applicable targets are obtained.

Notwithstanding the foregoing, payment of any severance hereunder shall be contingent upon the Participant’s execution of an Agreement and Release in a form acceptable to the Company within 30 days of such Participant’s termination of employment.

Section V. Payment of Benefits. Effective January 1, 2005, all severance payments hereunder shall be paid in a single lump sum five (5) business days following the Participant’s termination of employment, except that, if the Participant is a “key employee” within the meaning of Section 416(i) of the Code and the severance benefits payable to such Participant hereunder do not qualify as a short-term deferral not subject to such Section 409A, such lump sum payment shall be made six months following the date of the Participant’s termination of employment.

Section VI. Continuation of Welfare Plan Coverage. A Participant who is eligible to receive severance benefits pursuant to Section III above will be entitled, subject to payment of any premiums or co-payments required of the Participant for such coverage while an employee, to continue all life, accident and health coverage, on the same basis as in effect on the date he terminated employment, for a period of 12 months from the date of termination, provided that, (i) to the extent permitted by law, such coverage may be terminated at the discretion of the Plan Administrator in the event the Participant obtains at least equal alternate coverage, and (ii) the coverage provided is subject to any limitations under the terms of any applicable contract with an insurance carrier or third party administrator. Nothing herein shall restrict the right of the Company to amend or terminate any benefit plan in a manner generally applicable to similarly

 

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situated active employees of the Company and its affiliates, and Participants shall be entitled to participate on the same basis as similarly situated active employees of the Company and its affiliates. Any continuation of benefits pursuant to this Section VI shall not run concurrent with any continuation rights provided pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), and for purposes of applying Cobra with respect to coverage under any group health plan, the end of coverage under this Section VI shall be deemed to a qualifying event for the Participant.

Section VII. Outplacement Assistance. The Company will provide and pay for outplacement services to each Participant eligible for the payment of benefits pursuant to Section III. Such services are to be provided through a nationally recognized firm selected by the Company which specializes in outplacement services and shall extend for six months from the date of termination.

Section VIII. Mitigation; Offset. A Participant shall not be required to mitigate the amount of any Payment under the Plan by seeking employment or otherwise, and there shall be no right of set-off or counterclaim, in respect of any claim, debt or obligation, against any payments to the Participant. Notwithstanding the foregoing, a Participant shall promptly report any new employment obtained to the company during the period for which benefits are continued pursuant to Section VI.

Section IX. Certain Limitations on Payments.

 

 

A.

In the event a Participant’s employment is terminated pursuant to Section III of this Plan, and if in connection therewith it is determined that (i) part or all of the compensation and benefits to be paid to the Participant (whether pursuant to the terms of this Plan or otherwise) constitute “parachute payments” under Section 280G of the Code, and (ii) the payment thereof will cause the Participant to incur excise tax under Section 4999 of the Code, the following limitation shall apply:

If the aggregate present value of such parachute payments (the “Parachute Amount”) equals or exceeds 2.99 times the Participant’s Base Amount, then the amounts otherwise payable to or for the benefit of the Participant pursuant to this Plan (or otherwise), and taken into account in calculating the Parachute Amount (the “Capped Payments”), shall be reduced, as further described below, to the extent

 

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necessary so that the Parachute Amount is equal to 2.99 times the Participant’s “Base Amount.”

 

B.

The determination of the Parachute Amount, the Capped Payments and the Base Amount, as well as any other calculations necessary to implement this Section IX shall be made by the Company’s outside auditors or by a nationally recognized accounting or benefits consulting firm appointed by the Company. The auditor’s or consultant’s fee shall be paid by the Company.

 

C.

If a determination of reduction in Capped Payments is made pursuant to clause B of this Section IX, the Participant may propose which and how much of any particular entitlement shall be eliminated or reduced, by advising the Company in writing of his or her proposal within ten days of the final determination of the reduction in Capped Payments. Upon the expiration of such ten-day period, the Company shall take into consideration any proposal received and determine which and how much of any entitlement shall be eliminated or reduced, and shall notify the Participant promptly of such determination. As promptly as practicable following such determination the Company shall pay to or distribute to or for the benefit of the Participant such amounts as are then due to the Participant and shall promptly pay to or distribute for the benefit of the Participant in the future such amounts as become due to the Participant.

 

D.

As a result of the uncertainty in the application of Section 280G of the Code at the time of a determination hereunder, it is possible that payments will be made by the Company which should not have been made under clause A of this Section IX (“Overpayment”). In the event that there is a final determination by the Internal Revenue Service, or a final determination by a court of competent jurisdiction, that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to the Participant which the Participant shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f) (2) of the Code; provided, however, that no amount shall be payable by the Participant to the Company if and to the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code.

Section X. Reservation of Right to Amend and Terminate. The Company reserves the right, whether in an individual case or more generally, to amend, reduce or eliminate the Plan, in whole or in part, at any time and from time to time without notice, provided that no amendment

 

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to this Plan shall be made for two years following the occurrence of a Change of Control if such amendment would reduce the benefits hereunder and no amendment that reduces benefits hereunder shall be effective if a Change of Control occurs within six months following such amendment.

Section XI. Relationship to Other Benefits. No payment under the Plan shall be taken into account in determining any payments, benefits, coverage levels or participation rates under any incentive compensation plan, any pension, retirement, profit sharing, group insurance, or other benefit plan of the Company; provided that, (a) a Participant’s severance payment set forth in Section IV(B) of the Plan shall be offset by the amount of any payment attributable to the same incentive plan performance period that was received pursuant to Article X of the Company’s 2002 Omnibus Incentive Plan or any other Company plan with similar benefits, and (b) the amount of the severance payments described in Section IV above shall be reduced to the extent of any severance or redundancy payment or benefit (i) sponsored by the Company or a Subsidiary (other than under the Plan) (ii) provided or required by federal, state, local or foreign law or regulation, and/or (iii) owed the Participant pursuant to a contract with the Company or a Subsidiary, unless such contract specifically provides otherwise. It is the intention of this Plan that there shall be no duplication of the severance benefits provided hereunder.

Section XII. Administration. The Plan Administrator shall have full power and authority to interpret and carry out the terms of the Plan, and to exercise discretion where necessary or appropriate in the interpretation and administration of the Plan and all decisions by the Plan Administrator shall be final and binding on all affected parties, except as otherwise provided herein or by law. The Plan is intended to be administered in a manner consistent with the requirements, where applicable, of Section 409A of the Code. Where reasonably possible and practicable, the Plan shall be administered in a manner to avoid the imposition on Participants of immediate tax recognition and additional taxes pursuant to such Section 409A. Notwithstanding anything else contained herein to the contrary, neither the Plan Administrator nor the Company shall be in breach of its obligations hereunder, nor liable for any interest or other payments, if the Company fails to make any payments hereunder on the stated date on which such payment is due.

 

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Section XIII. Reimbursement of Legal Expenses. In the event it shall be necessary for a Participant to retain legal counsel in connection with the enforcement of any or all of such Participant’s right to benefits payable under the Plan, and provided that the Participant substantially prevails in the enforcement of such rights, the Company shall reimburse the Participant for reasonable attorneys fees incurred.

Section XIV. Expenses. All expenses of administering the Plan shall be borne by the Company.

Section XV. Withholding. The Company may withhold from any amounts payable hereunder such Federal, state or local taxes as may be required to be withheld pursuant to any applicable law or regulation.

Section XVI. Successors and Binding Effect. The Company shall require any successor, (including, without limitation, any persons acquiring directly or indirectly all or substantially all of the business and/or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise, and such successor shall thereafter be deemed the Company for purposes of the Plan), to assume and agree to perform the obligations under the Plan in the same manner and to the same extent the Company would be required to perform if no such succession had taken place. The Plan shall be binding upon and inure to the benefit of the Company and any successor to the Company, but shall not otherwise be assignable, transferable or delegable by the Company. The rights under the Plan shall inure to the benefit of and be enforceable by each Participant’s personal or legal representatives, executors, administrators, successors, heirs, distributees and/or legatees. Rights under the Plan are personal in nature and neither the Company nor any Participant shall, without the consent of the other, assign, transfer or delegate the Plan or any rights or obligations hereunder except as expressly provided in this Section. Without limiting the generality of the foregoing, a Participant’s right to receive payments hereunder shall not be assignable, transferable or delegable, whether by pledge, creation of a security interest or otherwise, other than by will or by the laws of descent and distribution, and, in the event of any attempted assignment or transfer contrary to this Section, the Company shall have no liability to pay any amount so attempted to be assigned, transferred or delegated. If a Participant shall die while any amounts would be payable hereunder had the Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid to such person or persons appointed in writing by such Participant to receive such amounts or, if no person is so appointed, to the Participant’s estate.

 

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Section XVII. Severability. In the event that any provision of the Plan shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of the Plan shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

Section XVIII. Governing Law. This Plan and all rights and obligations hereunder shall be construed in accordance with and governed by the laws of the State of Delaware, without reference to conflict of laws principles of such state.

 

 

 

 

Adopted pursuant to duly authorized resolution

by the Board of Directors of the Company

on July 7, 2006

 

American Standard Companies Inc.

 

 

By:

 

/s/ Mary Elizabeth Gustafsson

 

 

Mary Elizabeth Gustafsson

 

 

Senior Vice President, General Counsel & Secretary

 

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