Form of 2009 Retention Agreement
 
 
 
 

 

<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>4
<FILENAME>ex10_127c.txt
<DESCRIPTION>RETENTION
<TEXT>
                                                                 Exhibit 10.127c
                                                                   Tiffany & Co.
                                       Report on Form 8-K Dated February 2, 2009
 
 
 
                       [Form of 2009 Retention Agreement]
                           [Tiffany & Co. Letterhead]
 
 
 
 
 
 
 
                                  [Insert Date]
 
[Name of Executive]
600 Madison Avenue
New York, NY 10022
 
         Re:  Retention Agreement
 
Dear [Executive]:
 
     Tiffany  and  Company  and  Tiffany  & Co.  (respectively,  "Employer"  and
"Parent,") wish to take steps to retain key management, it being recognized that
future discussions  concerning a Change of Control or a decision to cooperate in
or effect a Change of Control  could result in the departure or  distraction  of
key  management at a time when Parent and Employer Board would require the clear
and focused attention of experienced  management,  unafflicted with concerns for
personal  financial  and job  security.  Accordingly,  in order to induce you to
remain in the employ of the  Employer,  Parent and Employer  have  determined to
enter into this letter  agreement (this  "Agreement")  which addresses the terms
and conditions of your employment in the event of a Change of Control.
 
     This Agreement will provide you with certain  payments and benefits  should
you incur an Involuntary Termination after a Change of Control Date.
 
     An "Involuntary  Termination"  means (i) your  termination of employment by
Employer  during the Term without Cause or (ii) your  resignation  of employment
with the  Employer  within one (1) year of the  Change of Control  Date for Good
Reason.  The terms "Change of Control Date," "Term,"  "Cause," "Good Reason" and
other  initially  capitalized  words and phrases  used in this letter  agreement
shall have the meanings ascribed to them in Appendix I attached. With respect to
your  specific  situation,  you would  also have "Good  Reason"  to resign  from
employment  with  Employer  if any of the  following  occurs  after a Change  of
Control Date and within one (1) year of such Change of Control Date:
 
          (A)  at any  time  you  are  not  the  [insert  basic  description  of
               Executive's  job]  of the  Successor  Entity  or the  Controlling
               Entity;
 
<PAGE>
 
 
          (B)  any  similar  material  adverse  change on or after the Change in
               Control Date in your position or reporting responsibilities.
 
     1. Term of Employment  under This  Agreement.  The Term of your  employment
under this  Agreement  shall not  commence  unless and until a Change in Control
Date occurs and shall continue  thereafter  until the second  anniversary of the
Change in Control Date.
 
     2. Cash Payments in the Event of Involuntary  Termination  during the Term;
Timing of Payments. In the event of your Involuntary Termination during the Term
you will be paid the following amounts in cash by the Employer:
 
          (a)  your Earned Compensation; and
 
          (b)  subject to Section 8 below, a severance  payment equal to the sum
               of (i) two times  your  Reference  Salary and (ii) two times your
               Reference Bonus.
 
Payments  under (a) and (c) above will be made within ten (10) days of your Date
of Termination.
 
     3. Benefit Continuation in the Event of Involuntary  Termination During the
Term.  In the event of your  Involuntary  Termination  during the Term  Employer
shall  maintain all Benefit  Plans in full force and effect,  for the  continued
benefit of you and your eligible dependents for a maximum Benefits  Continuation
Period of two years.  Employer's  obligation  under this Section 3 is subject to
the  following:   (i)  that  your  and  your  eligible   dependent's   continued
participation is possible under the general terms and provisions of such Benefit
Plans (and under the terms of any  applicable  funding  media) and (ii) that you
continue to pay an amount  equal to your regular  contribution  under such plans
for such participation. You and your eligible dependents continued participation
in such  plans  shall also be subject  to the  additional  conditions  stated in
Appendix II.
 
     4. Notice of Termination;  Employer's  Opportunity to Cure. Any termination
of your  employment by Employer or by you during the Term shall be  communicated
by a  Notice  of  Termination  to the  other  parties  hereto.  No  event  shall
constitute Good Reason for your resignation unless:
 
     (i)  your  claim to that  effect  is  communicated  by you to  Employer  in
          writing  within the lesser of (a) sixty (60) days of the event alleged
          by you to constitute Good Reason and (b) that number of days remaining
          in the one-year period following the Change in Control date; and
 
     (ii) such event is not corrected by Employer or Parent in a manner which is
          reasonably  satisfactory to you (including full retroactive correction
          with respect to any monetary  matter)  within  thirty (30) days of the
          Employer's  receipt of such
 
                                  Page 2 of 12
 
<PAGE>
 
 
     written  notice from you. For the avoidance of doubt,  you will be required
     to remain in employment during the aforesaid thirty-day cure period.
 
     5. No  Mitigation  or Offset.  You shall not be required  to  mitigate  the
amount of any payment provided for in this Agreement by seeking other employment
or  otherwise,  nor shall the amount of any payment or benefit  provided  for in
this  Agreement  be reduced by any  compensation  earned by you as the result of
employment  by another  employer  or by pension  benefits  paid by  Employer  or
Employer's plans after the Date of Termination or otherwise,  except as provided
in the definition of "Benefit Continuation Period."
 
     6. Legal Fees and  Expenses  Necessary to Enforce  Agreement.  The Employer
shall  pay or  reimburse  you for all  costs and  expenses  (including,  without
limitation,  court costs and  reasonable  legal fees and expenses  which reflect
common  practice  with  respect to the  matters  involved)  incurred by you as a
result of any claim, action or proceeding (i) contesting, disputing or enforcing
any right,  benefits or obligations under this Agreement or which you reasonably
claim to have or to be owed to you by Employer or Parent or (ii)  arising out of
or challenging the validity, advisability or enforceability of this Agreement or
any provision hereof.
 
     7.  Employment  during the Term.  During the Term you shall be  employed by
Employer  on the terms and  conditions  on which you were  employed  immediately
prior to the Change in Control Date without any Substantial Change.
 
     8. Limitation.  Notwithstanding anything in this Agreement to the contrary,
your  entitlement  to a  payment  under  Section  2(b)  above  shall be  limited
(reduced)  to the  extent  necessary  so  that no  payment  to be made to you on
account  of your  Involuntary  Termination  will be  subject  to the  excise tax
imposed by Section 4999 of the Code, but only if, by reason of such  limitation,
your Net After Tax  Benefit  shall  exceed  your Net After Tax  Benefit  if such
reduction  were not  made.  "Net  After  Tax  Benefit"  means (i) the sum of all
payments and benefits  that you are  entitled to receive  under  Section 2(b) or
under any other plan or agreement  that would  constitute a "parachute  payment"
within the meaning of Section 280G of the Code,  less (ii) the amount of federal
income tax payable with respect to the payments and benefits described in clause
(i) above  calculated at the maximum  marginal  income tax rate for each year in
which such  payments  and  benefits  shall be paid you  (based  upon the rate in
effect  for such year as set forth in the Code at the time of the first  payment
of the  foregoing),  less (iii) the amount of excise tax imposed with respect to
the payments  and benefits  described in clause (i) above by Section 4999 of the
Code.
 
     9. Successors; Binding Agreement; Respective Responsibilities of Parent and
Employer.
 
          (a)  Assumption  by  Successor.  Parent and Employer will each require
     their  respective  successors  (whether  direct or  indirect,  by purchase,
     merger,  consolidation  or  otherwise) to all or  substantially  all of the
     business or assets of either, to expressly
 
                                  Page 3 of 12
 
<PAGE>
 
 
     assume and to agree to perform this  Agreement for your benefit in the same
     manner and to the same extent that the Parent or the Employer,  as the case
     may be,  would be  required to perform it if no such  succession  had taken
     place; provided,  however, that no such assumption shall relieve either the
     Parent or the  Employer  of its  obligations  hereunder,  and no failure to
     expressly  assume and agree to perform  this  Agreement  shall  relieve any
     successor of its obligations under this Agreement by operation of law.
 
          (b)  Enforceability;  Beneficiaries.  This Agreement  shall be binding
     upon,  inure to the benefit of and be enforceable by you (and your personal
     or legal representatives,  executors,  administrators,  successors,  heirs,
     distributees,  devisees and  legatees)  and the Parent and Employer and any
     Person(s) which succeeds to substantially  all of the business or assets of
     the  Parent  or  Employer,  whether  by  means  of  merger,  consolidation,
     acquisition  of all or  substantially  all of the  assets of the  Parent or
     Employer or  otherwise,  including,  without  limitation,  as a result of a
     Change in Control or by operation of law.
 
          (c) Joint and Several Liability. Parent shall be jointly and severally
     liable with Employer for all Employer's  obligations hereunder and Employer
     shall  be  jointly  and  severally  liable  with  Parent  for all  Parent's
     obligations hereunder.
 
     10.  Notices.  For the  purposes of this  Agreement,  notices and all other
communications  provided for in this Agreement  shall be in writing and shall be
deemed to have been duly  given  when  hand-delivered  or when  mailed by United
States registered mail, return receipt requested, postage prepaid, addressed, if
to Parent or Employer, to the Boards of Directors, Tiffany & Co. and Tiffany and
Company, 600 Madison Avenue, New York, NY 10022, Attn. Legal Department,  or, if
to you, to you at the address set forth on the first page of this Agreement,  or
to such other address as either party may have furnished to the other in writing
in  accordance  herewith,  except  that  notice of change  of  address  shall be
effective only upon receipt.
 
     11. Miscellaneous.
 
          (a)  Amendments,  Waivers,  Etc. No provision of this Agreement may be
     modified,  waived  or  discharged  unless  such  waiver,   modification  or
     discharge  is agreed to in writing,  No waiver by either  party  hereto any
     time of any breach by the other party hereto of, or  compliance  with,  any
     condition  or  provision  of this  Agreement  to be performed by such other
     party  shall be deemed a waiver  of  similar  or  dissimilar  provision  or
     conditions at the same or at any later or subsequent time. No agreements or
     representations, oral or otherwise, express or implied, with respect to the
     subject  matter here have been made by either party which are not expressly
     set forth in this  Agreement and this Agreement  shall  supersede all prior
     agreements, negotiations,  correspondence,  undertakings and communications
     of the parties, oral or written, with respect to the subject matter hereof.
     Without limiting the generality of the foregoing, this Agreement supersedes
     all prior Retention Agreements between the parties, it being understood and
     agreed that any such prior Retention  Agreement shall be deemed voluntarily
     surrendered by you in exchange for this Agreement.  Parent,  acting through
     the  Compensation
 
                                  Page 4 of 12
 
<PAGE>
 
     Committee  of the  Parent  Board,  reserves  the  unilateral  right  to add
     additional  events  that  shall  constitute  a Change in Control to reflect
     changing techniques for effecting corporate changes in control;  such right
     may not be exercised after the occurrence of such an event.
 
          (b) Validity.  The invalidity or  unenforceability of any provision of
     this Agreement shall not affect the validity or enforceability of any other
     provision of this Agreement, which shall remain in full force and effect.
 
          (c)   Counterparts.   This   Agreement  may  be  executed  in  several
     counterparts,  each of which shall be deemed to be an  original  but all of
     which together will constitute one and the same instrument.
 
          (d) No  Contract of  Employment.  Nothing in this  Agreement  shall be
     construed  as giving you any right to be retained in the employ of Employer
     or Parent nor shall it affect the terms and  conditions of your  employment
     with Employer  prior to the  commencement  of the Term hereof.  Failing the
     occurrence of a Change in Control Date your employment shall continue to be
     "at  will,"  meaning  that  either  you  or  Employer  may  terminate  your
     employment  with or without  cause,  for any  reason or no reason,  with or
     without notice.
 
          (e) Withholding. Amounts paid to you hereunder shall be subject to all
     applicable federal, state and local withholding taxes.
 
          (f) Source of Payments.  All payments  provided under this  Agreement,
     other  than  payments  made  pursuant  to a  Benefit  Plan  which  provides
     otherwise,  shall be paid in cash from the  general  funds of  Employer  or
     Parent, and no special or separate fund shall be established,  and no other
     segregation  of assets  made,  to assure  payment.  You will have no right,
     title or interest  whatsoever in or to any  investments  which  Employer or
     Parent  may make to aid it in meeting  its  obligations  hereunder.  To the
     extent that any person  acquires a right to receive  payments from Employer
     or Parent  hereunder,  such right shall be no greater  than the right of an
     unsecured creditor of Parent or Employer, as the case may be.
 
          (g) Headings.  The headings  contained in this  Agreement are intended
     solely for  convenience of reference and shall not affect the rights of the
     parties to this Agreement.
 
          (h) Governing  Law. The validity,  interpretation,  construction,  and
     performance of this Agreement shall be governed by the laws of the State of
     New York  applicable to contracts  entered into and to be performed in this
     State.
 
                                  Page 5 of 12
 
<PAGE>
 
     If this letter set forth our agreement on the subject matter hereof, kindly
sign and return to Employer  the  enclosed  copy of this letter  which will then
constitute the agreement among us on this subject.
 
Sincerely,
 
TIFFANY & CO. ("Parent")
 
 
 
 
By: _________________________________
       Name:  Michael J. Kowalski
       Title: Chairman and Chief Executive Officer
 
TIFFANY AND COMPANY ("Employer")
 
 
 
 
By: _________________________________
       Name: Michael J. Kowalski
       Title:  Chairman and Chief Executive Officer
 
Agreed to as of this _____ day of _______ 200__
 
 
____________________________________
         [Name of Executive]
 
Attachment: Appendices I through II
 
                                  Page 6 of 12
 
<PAGE>
 
1
 
                                                       Appendix I -- Definitions
 
For purposes of the Agreement,  the following initially  capitalized words shall
have the meanings set forth below:
 
     "Affiliate"  shall mean any Person that  controls,  is  controlled by or is
under common control with, any other Person, directly or indirectly.
 
     "Benefit  Continuation  Period" means the period  beginning on your Date of
Termination  and  ending  following  the  period of years  stated in  Section 3,
provided that such period shall earlier  terminate on the  commencement  date of
equivalent  benefits from your new employer or your attainment of age sixty-five
(65), whichever first occurs.
 
     "Benefit  Plan" mean all  insured  and  self-insured  employee  medical and
dental  welfare  benefit  plans  in  which  you  were  entitled  to  participate
immediately prior to your Date of Termination.
 
     "Cause" shall mean a termination of your  employment  during the Term which
is the result of:
 
          (i)  your  conviction  or plea of nolo  contendere  to a felony or any
               other crime involving  financial  impropriety or which would tend
               to subject  Employer or any of its Affiliates to public criticism
               or materially interfere with your continued service to Employer;
 
          (ii) your willful violation of the Code of Conduct;
 
          (iii) your  willful  failure or refusal to perform  substantially  all
               such proper and  achievable  directives  issued by your  superior
               (other than any such failure  resulting from your  incapacity due
               to physical  or mental  illness,  any such actual or  anticipated
               failure  resulting from a resignation by you for Good Reason,  or
               any such  refusal  made by you in good faith  because you believe
               such  directives  to be illegal,  unethical  or immoral)  after a
               written demand for substantial performance is delivered to you on
               behalf of Employer,  which  demand  specifically  identifies  the
               manner in which you have not substantially performed your duties,
               and  which  performance  is not  substantially  corrected  by you
               within ten (10) days of receipt of such demand;
 
          (iv) your  gross  negligence  in the  performance  of your  duties and
               responsibilities materially injurious to the Employer;
 
          (v)  your willful breach of any material  obligation  that you have to
               Parent or Employer under any written agreement that you have with
               either Parent or Employer;
 
          (vi) your fraud or  dishonesty  with  regard to Employer or any of its
               Affiliates;
 
          (vii) your failure to  reasonably  cooperate in any  investigation  of
               alleged  misconduct  by you or by any other  employee  of Parent,
               Employer or any affiliate of Parent or Employer;
 
          (viii) your death; or
 
          (ix) your Disability.
 
                                  Page 7 of 12
<PAGE>
 
For  purposes of the  previous  sentence,  no act or failure to act on your part
shall be deemed  "willful"  unless  done,  or omitted to be done,  by you in bad
faith toward,  or without  reasonable belief that your action or omission was in
the best interests of,  Parent,  Employer or an Affiliate of Parent or Employer.
Notwithstanding  the foregoing,  you shall not be deemed to have been terminated
for Cause with respect to items (i) through  (vii) or item (ix) unless and until
there shall have been  delivered to you a copy of a  resolution  duly adopted by
the  affirmative  vote of not less  than  three-fourths  (3/4th)  of the  entire
membership of the Employer  Board at a meeting  called and held for such purpose
(after  reasonable  notice to you and an opportunity for you, together with your
counsel, to be heard before such Board), finding that, in the good faith opinion
of such Board,  Cause exists as set forth in items (i), (ii), (iii),  (iv), (v),
(vi), (vii) or (ix) above.
 
     "Change in Control." A Change in Control  shall be deemed to have  occurred
if:
 
          (i)  any Person, or any syndicate or group deemed to be a person under
               Section 14(d)(2) of the Exchange Act,  excluding Parent or any of
               its  Affiliates,  a trustee or any fiduciary  holding  securities
               under  an  employee   benefit  plan  of  Parent  or  any  of  its
               Affiliates,   an  underwriter   temporarily   holding  securities
               pursuant  to an  offering  of such  securities  or a  corporation
               owned,  directly  or  indirectly  by  stockholders  of  Parent in
               substantially  the same  proportion as their ownership of Parent,
               is or becomes the "beneficial owner" (as defined in Rule 13d-3 of
               the  General  Rules  and  Regulations  under the  Exchange  Act),
               directly or  indirectly,  of  securities  of Parent  representing
               Thirty-five percent (35%) or more of the combined voting power of
               Parent's  then  outstanding  securities  entitled  to vote in the
               election of directors of Parent;
 
          (ii) if the Incumbent  Directors cease to constitute a majority of the
               Parent Board;  provided,  however, that no person shall be deemed
               an  Incumbent  Director if he or she was  appointed or elected to
               the Parent  Board after  having been  designated  to serve on the
               Parent Board by a Person who has entered  into an agreement  with
               Parent to effect a  transaction  described in clauses (i) through
               (iv) of this definition;
 
          (iii) there occurs a  reorganization,  merger,  consolidation or other
               corporate transaction involving Parent, in each case with respect
               to which the  stockholders  of Parent  immediately  prior to such
               transaction do not, immediately after such transaction,  own more
               than Fifty  percent  (50%) of the  combined  voting  power of the
               Parent or other corporation  resulting from such transaction,  as
               the case may be;
 
          (iv) all or substantially  all of the assets of Parent or Employer are
               sold,  liquidated  or  distributed,  except  to an  Affiliate  of
               Parent.
 
     "Change in Control  Date"  shall mean the date on which a Change of Control
occurs.
 
     "Code" shall mean the Internal  Revenue Code of 1986,  as amended,  and any
successor provisions thereto.
 
     "Code of Conduct"  shall mean  Parent's  (i) Code of  Business  and Ethical
Conduct for Directors,  the Chief Executive Officer, the Chief Financial Officer
and All  Other  Officers  of the  Company  and (ii)  Business  Conduct  Policy -
Worldwide,  as amended from time to time prior to the Change of Control Date and
as in effect as of the Change of Control Date.
 
     "Common Stock" shall mean the common stock of Parent.
 
     "Controlling  Entity"  shall mean the  Controlling  Person of the Successor
Entity if such a Controlling Person exists; otherwise "Controlling Entity" shall
mean the Successor Entity.
 
                                  Page 8 of 12
 
<PAGE>
 
 
     The  "Controlling  Person"  of any  Person  shall  mean  the  Person  which
ultimately  controls  such first Person and all other  Affiliates  of such first
Person, directly or indirectly, through ownership of voting stock or otherwise.
 
     Your "Date of Termination" shall mean:
 
          (i)  if your employment is terminated for Disability, thirty (30) days
               after a Notice of Termination  is given  (provided that you shall
               not have  returned to the  full-time  performance  of your duties
               during such thirty (30) day period);
 
          (ii) if your  employment is  terminated by Employer in an  Involuntary
               Termination,   five  (5)  days  after  the  date  the  Notice  of
               Termination is received by you;
 
          (iii) if your  employment  is  terminated by Employer for Cause (other
               than  Disability),  the later of the date specified in the Notice
               of Termination or ten (10) days following the date such Notice is
               received by you;
 
          (iv) if you resign and specify Good Reason, thirty (30) days after the
               date your Notice of  Termination  is received by Employer  unless
               Employer  has  corrected  the matter as  provided  for in Section
               4(c); and
 
          (v)  if you resign and fail to specify Good Reason, the date set forth
               in your Notice of Termination, which shall be no earlier than ten
               (10) days after the date such notice is received by Employer.
 
     "Disability"  shall mean your  incapacity due to physical or mental illness
which causes you to be absent from the full-time performance of your duties with
Employer for six (6) consecutive months provided, however, that you shall not be
determined to be subject to a Disability for purposes of this  Agreement  unless
you fail to return to full-time  performance of your duties with Employer within
thirty (30) days after written Notice of Termination  due to Disability is given
to you.
 
     "Earned Compensation" shall mean:
 
          (i)  any  earned  but  unpaid  base  salary   through   your  Date  of
               Termination  at the rate in effect  at the time of the  Notice of
               Termination  and any  earned  bonus or  incentive  award  for any
               completed fiscal year that remains unpaid;
 
          (ii) all unused  vacation  time which you may have  accrued as of your
               Date of Termination; and
 
          (iii) a portion of your  Reference  Bonus  pro-rated  for your service
               during the  fiscal  year in which  your  Involuntary  Termination
               occurs, calculated on the assumption that all performance targets
               (including  your  individual  performance  targets  and sales and
               earnings  targets  applicable  to  the  Employer  and/or  to  the
               Successor Entity) have been or will be achieved.
 
     "Employer" shall mean Tiffany and Company, a New York corporation,  and any
successor to its business and/or assets by operation of law or otherwise.
 
     "Employer Board" shall mean the Board of Directors of Employer.
 
     "Exchange Act" shall mean the Securities  Exchange Act of 1934, as amended,
and any successor provisions thereto.
 
                                  Page 9 of 12
<PAGE>
 
 
     "Excise  Tax" shall mean the excise tax imposed by Section 4999 of the Code
and interest or penalties with respect to such excise tax.
 
     "Good Reason" means, in addition to those reasons stated in the body of the
Agreement,  your resignation from employment with Employer as a result of any of
the following:
 
          (i)  a meaningful and  detrimental  alteration in your position or the
               nature  or  status  of  your  responsibilities   (including  your
               reporting  responsibilities)  from  those in  effect  immediately
               before the Change in Control Date;
 
          (ii) a material  failure by Employer  to pay you a bonus or  incentive
               award  commensurate  with the bonus paid other key  executives of
               Employer at your level  (expressed as a percentage of your target
               bonus)  unless such failure is  justified by clear and  objective
               deficiencies of the business units for which you are responsible;
 
          (iii) the relocation of the office of Employer where you were employed
               immediately  prior to the  Change in  Control  Date to a location
               which is more than 50 miles away or should  Employer  require you
               to be based more than 50 miles away from such office  (except for
               required   travel  on  the  Employer's   business  to  an  extent
               substantially  consistent  with your  customary  business  travel
               obligations  in the  ordinary  course  of  business  prior to the
               Change in Control Date);
 
          (iv) the failure of Employer and Parent to obtain an express agreement
               reasonably satisfactory to you from their successors,  if any, to
               assume and agree to perform this  Agreement,  as  contemplated in
               Section 8(a) of the Agreement; or
 
          (v)  a material breach by Employer or Parent of this Agreement.
 
     "Incumbent  Directors" shall mean those individuals who were members of the
Board of Directors of Tiffany & Co., a Delaware  corporation,  as of the date of
this Agreement and those  individuals  whose later appointment to such Board, or
whose later nomination for election to such Board by the stockholders of Tiffany
& Co.,  was  approved by a vote of at least a majority of those  members of such
Board who either were members of such Board as of the date of this Agreement, or
whose election or nomination for election was previously so approved.
 
     "Notice of Termination" shall mean a written notice indicating the specific
termination  provision  in this  Agreement  relied  upon  and  setting  forth in
reasonable  detail  the facts and  circumstances  claimed to provide a basis for
termination of your employment under the provision so indicated.
 
     "Parent"  shall  mean  Tiffany  & Co.,  a  Delaware  corporation,  and  any
successor to its business and/or assets by operation of law or otherwise.
 
     "Parent Boar" shall mean the Board of Directors of Parent.
 
     "Person" shall mean any individual, firm, corporation, partnership, limited
partnership,  limited liability  partnership,  business trust, limited liability
company,  unincorporated  association  or other  entity,  and shall  include any
successor (by merger or otherwise) of such entity.
 
     "Reference  Bonus" shall mean the target annual bonus applicable to you for
the year in which your Involuntary  Termination  occurs.  For this purpose,  the
term "bonus"  shall also refer to cash  Incentive  Award under the 2005 Employee
Incentive Plan or any successor plan thereto.
 
     "Reference  Salary"  shall mean the  greater of (i) the annual rate of your
base  salary  from  Employer  in  effect  immediately  prior to the date of your
Involuntary  Termination  and (ii) the  highest
 
                                 Page 10 of 12
 
<PAGE>
 
annual rate of your base salary from  Employer in effect at any point during the
three-year period ended on the Change in Control Date.
 
     "Regulations"  shall  mean  regulations  under  Section  280G of the  Code,
including  proposed and  temporary  regulations,  and any  successor  provisions
thereto.
 
     "Substantial  Chang" means any material  change in the terms or conditions
of your employment (including in your salary or target bonus) following a Change
of Control Date that is less  favorable to you than those in effect  previous to
the  Change of Control  Date  other  than (i) a change  that has been made on an
across-the-board  basis for substantially all of Employer's  employees or (ii) a
change in  equity-based  compensation  (including a the reduction or elimination
thereof) resulting from the Change in Control.
 
     "Successor  Entity" shall mean the Person who is in most immediate control,
whether through voting stock ownership of one or more subsidiaries or otherwise,
of the worldwide consolidated business of Parent's Affiliates,  substantially as
such business existed immediately prior to the Change in Control Date whether or
not such Person is ultimately controlled by another Person.
 
     "Taxes"  shall mean the federal,  state and local income taxes to which you
are subject at the time of determination, calculated on the basis of the highest
marginal rates then in effect,  plus any additional payroll or withholding taxes
to which you are then subject.
 
     "Term"  shall  mean the term of your  employment  under this  Agreement  as
defined in Section 1.
 
                                 Page 11 of 12
 
<PAGE>
 
                                              Appendix II - Benefit Continuation
 
(A) In the event that your participation in any Benefit Plan is barred, Employer
shall,  at its sole cost and expense,  arrange to have issued for the benefit of
you and your  eligible  dependents  individual  policies of insurance  providing
benefits  substantially  similar  (on an  after-tax  basis)  to those  which you
otherwise  would have been  entitled to receive under such Benefit Plan pursuant
to Section 3 for the Benefit Continuation Period.
 
(B) In lieu of the benefits provided in (A) above, if, in the reasonable opinion
of  Employer,  such  insurance  is not  available  at a  reasonable  cost to the
Employer,  the Employer shall directly provide you and your eligible  dependents
with equivalent benefits (on an after-tax basis).
 
(C) In either of the  circumstances  described  in (A) or (B),  you shall not be
required to pay any  premiums or other  charges in an amount  greater  than that
which you would have paid in order  participate  in such  Benefit  Plan had your
Involuntary Termination not occurred.
 
(D) If at the end of the  Benefit  Continuation  Period you have not reached age
sixty-five  and you  have not  previously  received  or are not  then  receiving
equivalent benefits from a new employer, Employer shall arrange to enable you to
convert your and your eligible  dependents'  coverage under the Benefit Plans to
individual policies or programs upon the same terms as employees of the Employer
may apply for such  conversions.  Employer  shall  bear the cost of making  such
conversions  available  to you;  you shall bear the cost of coverage  under such
converted policies or programs.
 
(E) For the purposes of Section 3 and this Appendix,  a dependent will be deemed
"eligible" if, at the time in question,  you would,  if an employee of Employer,
be entitled to cover such dependent under the plan in question.
 
 
 
                                 Page 12 of 12
 
<PAGE>
                          Returned Retention Agreements
 
 
Name
 
Michael J. Kowalski
James E. Quinn
Beth O. Canavan
James N. Fernandez
Patrick B. Dorsey
Jon M. King
Pamela H. Cloud
John S. Petterson
 
 
Note:    Other Executive Officers are expected to sign and return the form.
</TEXT>
</DOCUMENT>