Document:

Exhibit 10.7

 

AGREEMENT

 

This Agreement, dated                 ,
200     (the “Effective
Date”), is made by and between Charles River Laboratories, Inc.,
a Delaware corporation (the “Company”)
and                            (the
“Executive”).

 

WHEREAS, the Company considers it essential to the best interests of
its shareholders to foster the continuous employment of key management
personnel;

 

WHEREAS, the Board of Directors of the Company (the “Board”) recognizes that, as is the case
with many publicly-held corporations, the possibility of a Change in Control
(as defined below) exists and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the
departure or distraction of management personnel to the detriment of the
Company and its shareholders;

 

WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company’s management, including the Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control; and

 

NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:

 

1.        
Defined Terms. Capitalized terms, not elsewhere defined in
this Agreement, are defined in Section 16 hereof.

 

2.        
Terms of Agreement. (a) This Agreement shall commence as
of the Effective Date and shall continue in effect while the Executive is
employed by the Company for a period of three years; provided, however, that commencing on the third anniversary
of the Effective Date and on each anniversary thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
later than 90-days prior to any such anniversary date either party shall have
given notice that it does not wish to extend this Agreement. Notwithstanding
the foregoing, if a Change in Control shall have occurred during the original
or extended term of this Agreement, (i) this Agreement shall continue in
effect for a period of 36 months beyond the month in which such Change in
Control occurred and (ii) any notice of nonrenewal given by the Company
during the twelve months prior to such Change in Control shall be deemed
revoked and this Agreement shall be reinstated as if never terminated in
accordance with such notice.

 

(b)       It is intended, and the parties hereto agree,
that (i) the benefit, if any, payable to the Executive under any other
severance or termination pay plan, arrangement or agreement of or with the
Company shall be reduced by the amount of any payment actually provided under Section 6.1
hereof, (ii) any option to acquire shares of the Company’s common stock
awarded to the Executive under any stock option or other long-term incentive
plan of the Company shall become fully exercisable upon the

 

 

occurrence
of a Change in Control during the term of the Agreement, and (iii) and
restrictions on any shares of restricted stock held by the Executive shall
fully lapse upon the occurrence of a Change in Control during the term of this
Agreement, provided that nothing herein shall otherwise affect or modify the
terms of any such option or restricted stock or the Executive’s right or
obligations with respect thereof.

 

3.        
Company’s Covenants
Summarized. In order to
induce the Executive to remain in the employ of the Company, and in
consideration of the Executive’s covenant set forth in Section 4 hereof,
the Company agrees to compensate the Executive as set forth herein, upon the
terms and under the conditions described herein, in the event the Executive’s
employment with the Company is terminated under the circumstances described
below following a Change in Control and during the term of this Agreement. No
amount or benefit shall be payable under this Agreement unless there shall have
been (or under the terms hereof, there shall be deemed to have been) a
termination of the Executive’s employment with the Company following a Change
in Control.

 

4.        
The Executive’s Covenants. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Change in Control
during the term of this Agreement, the Executive will remain in the employ of
the Company until the earliest of (a) a date which is six (6) months
after the date of such Change in Control, (b) the date, after such Change
in Control, of termination by the Executive of the Executive’s employment for
Good Reason, or termination of Executive’s employment by reason of Death,
Disability or Retirement, or (c) the termination by the Company, after
such Change in Control, of the Executive’s employment for any reason.

 

5.        
Compensation Other Than
Severance Payment.

 

5.1.            Disability. Following a Change in Control during the term of this Agreement,
during any period that the Executive fails to perform the Executive’s
full-time duties with the Company as a result of incapacity due to physical or
mental illness, the Company shall continue to pay the Executive’s full salary
to the Executive at the rate in effect at the commencement of any such period,
together with all compensation and benefits payable to the Executive under the
terms of any compensation or benefit plan, program or arrangement maintained by
the Company during such period, until the Executive’s employment is terminated
by the Company for Disability.

 

5.2.            Salary Continuation. If the Executive’s employment shall be
terminated for any reason following a Change in Control and during the term of
this Agreement, the Company shall pay the Executive’s full salary to the
Executive through the Date of Termination at the rate in effect at the time the
Notice of Termination is given, together with all compensation and benefits
payable to the Executive through the Date of Termination under the terms of any
compensation or benefit plan, program or arrangement maintained by the Company
during such period.

 

5.3.            Other Post-Termination Compensation. If the Executive’s employment shall be
terminated for any reason following a Change in Control and during the term of
this Agreement, the Company shall, except as provided in Section 2 above,

 

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pay
the Executive’s normal post-termination compensation and benefits to the
Executive as such payments become due. Such post-termination compensation and
benefits shall be determined under, and paid in accordance with, the Company’s
retirement, insurance, deferred compensation and other compensation or benefit
plans, programs, agreements or arrangements.

 

6.        
Company Obligations upon
Termination. If, during the
term of this Agreement and on or before the first anniversary of a Change in
Control, (i) the Company shall terminate the Executive’s employment other
than for Cause, Death or Disability or (ii) the Executive shall terminate
her employment for Good Reason, then the Company shall pay to the Executive the
payments set forth in Sections 6.1, 6.2, if applicable, 6.3 and 6.4 hereof
(collectively, the “Severance Payments”)
in addition to the payments and benefits described in Sections 5 and 6.6
hereof. The Executive’s employment shall be deemed to have been terminated
following a Change in Control by the Company without Cause or by the Executive
with Good Reason if the Executive’s employment is terminated without Cause
prior to a Change in Control at the direction of a Person who has entered into
or has proposed to enter into an agreement with the Company the consummation of
which will constitute a Change in Control, or if the Executive terminates her
employment with Good Reason prior to a Change in Control if the circumstances
or event which constitutes Good Reason occurs at the direction of such Persons;
provided in either case that a
Change in Control involving such other Person is consummated within 12 months
after any such direction.

 

6.1.            Severance Payment. In lieu of any further salary payments to
the Executive for periods subsequent to the date of Termination, the Company
shall pay the Executive a lump sum severance payment, in cash, equal
to           times
(i.e.,          of) the sum of the
Executive’s then base salary plus the target bonus contained in the Executive
Bonus Plan for the fiscal year in which the Date of Termination occurs.

 

6.2.            Golden Parachute Excise Tax. The Company intends that the Executive
shall generally not bear the economic effect of the excise tax imposed by Section 4999
of the Internal Revenue Code on so-called golden parachute payments. This
provision shall be implemented in accordance with the provisions of Annex 1.
However, if a small (up to 15%) reduction in the Executive’s entitlements would
greatly minimize the Company’s costs in providing the excise tax protection,
the Company will reduce the amounts paid to the Executive hereunder to that
small extent.

 

6.3.            Retirement Plan Payments. In the event the Executive was a
participant in the Charles River Laboratories, Inc. Pension Plan (or any
successor plan thereto) (the “Pension Plan”)
on or prior to the Date of Termination, the Company shall pay to the Executive
a separate lump-sum supplemental retirement benefit (the “Supplemental Retirement Amount”) equal to
the difference between (1) the actuarial equivalent of the benefit payable
under the Pension Plan which the Executive would receive if the Executive’s
employment continued for the        years
following the Date of Termination and if her compensation during such number of
years increased at a rate of 4% per year from the level in effect on the Date
of Termination, and (2) the actuarial equivalent of the Executive’s actual
benefit (paid or payable), if any, under the Pension

 

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Plan.
The amounts to be paid to the Executive under this Section shall be paid
out of the Pension Plan trust, to the extent permissible under applicable law.
For purposes of calculating the actuarial equivalents referred to in (1) and
(2) above, the Company shall use the actuarial assumptions utilized with
respect to the Pension Plan during the 90-day period immediately preceding the
Change in Control Date and shall assume that all accrued benefits are fully
vested and that benefit accrual formulas in effect during any years after the
Date of Termination are no less advantageous to the Executive than those in
effect during the 90-day period immediately preceding the Change in Control
Date.

 

6.4.            ESLIRP Payment. In the event that (x) the Executive is
a participant in the Charles River Laboratories, Inc. Executive
Supplemental Life Insurance Retirement Plan (the “ESLIRP”) on or prior to the Date of Termination, and (y) the
ESLIRP shall not then have been replaced by the Charles River Laboratories Deferred
Compensation Plan (the “DCP”), the
Company shall pay to the Executive a separate lump-sum supplemental retirement
benefit (the “ESLIRP Payment”) in
discharge of the Company’s obligations under the ESLIRP equal to the actuarial
equivalent of the Executive’s benefit accrued through the Date of Termination
under the ESLIRP. The ESLIRP Payment shall be calculated (i) utilizing the
actuarial assumptions specified by Section 417(e)(3)(A) of the Internal
Revenue Code, and in the case of the interest rate specified under subparagraph
(ii)(II) of such section, using such rate established for the month of November of
the year preceding the year in which the payment occurs; (ii) assuming
that the Executive’s employment continued
for        years following the Date of
Termination, and (iii) assuming that the Executive’s compensation during
such number of years referred to in (ii) increased at a rate of 4% per
year from the level in effect on the Date of Termination. Notwithstanding the
foregoing, however, to the extent the ESLIRP Payment is funded through a trust
of which the Executive is a beneficiary, such amount to the extent so funded
shall be paid from such trust. In the event that the provisions of this
subsection are in conflict with provisions of the ESLIRP, the provisions
of this Agreement shall prevail if the provisions of this Agreement are more
favorable to the Executive. No payment shall be made under this Section 6.4
if the DCP shall have been adopted and implemented prior to the Change in
Control.

 

6.5.            Timing of Payment. The payment provided for in Section 6.1
hereof shall be made not later than the fifth day following the Date of
Termination, provided, however, that if the amount of such payment, and the
limitation on such payment set forth in Section 6.2 hereof, cannot be
finally determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined in good faith by the Company,
of the minimum amount of such payment to which the Executive is clearly
entitled and shall pay the remainder of such payment (together with interest at
the rate provided in Section 1274(b)(2)(B) of the Code) as soon as
the amount thereof can be determined but in no event later than the 30th day after the Date of
Termination. In the event that the amount of the estimated payment exceeds the
amount subsequently determined to have been due, such excess shall be paid back
to the Company within five business days after demand by the Company and such
payment shall not be considered a loan, therefore no interest shall be due or
payable. At the time that payments are made under this Section 6 the
Company shall provide the Executive with a written statement setting forth the
manner in which such payments were calculated and the basis for such

 

4

 

calculation
including, without limitation, any opinions or other advice the Company has
received from outside counsel, auditors or consultants (and any such opinions
or advice which are in writing shall be attached to the statement).

 

6.6.            Payment of Legal Fees and Expense. The Company shall pay to the Executive all
legal fees and expenses incurred by the Executive as a result of or in
connection with a termination of employment (other than any such termination by
the Company for Cause) following a Change in Control and during the term of the
Agreement (including all such fees and expenses, if any, incurred in good faith
in disputing any such termination or in seeking in good faith to obtain or
enforce any benefit or right provided by the Agreement or in connection with
any tax audit or proceeding to the extent attributable to the application of Section 4999
of the Code to any payment or benefit provided hereunder). Such payments shall
be made within five business days after delivery of the Executive’s written
request for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.

 

6.7.            Continuation of Benefits. If the Executive’s employment terminates as
provided in Section 6, (a) the Company shall,
for          years following the
Date of Termination, or such longer period as any plan, program, practice or
policy may provide, continue benefits to the Executive and/or the
Executive’s family at least equal to those which would have been provided had
the Executive’s employment not been terminated, in accordance with the plans,
programs, practices and policies in effect and applicable generally to other
peer executives and their families during the 90-day period immediately
preceding the Effective Date that provided for group health, dental and life
insurance and other welfare-type plans, or if more favorable to the Executive,
in accordance with such plan, program, practice or policy as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies; provided,
however, that if the Executive becomes employed by another employer and is
eligible to receive medical or other welfare benefits under another employer
provided plan, the medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such applicable period
of eligibility. For purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed until the end of
the        year period following the Date of
Termination and to have retired on the last day of such period.

 

(b)           Executive shall be permitted to purchase her then currently
Company-leased vehicle in accordance with the most attractive terms available
under such lease.

 

(c)           The Company shall provide (or reimburse) Executive with 26 weeks of
fully paid outplacement services, up to a maximum of $         
..

 

7.                 Termination Procedures and Compensation
During Dispute.

 

7.1.            Notice of Termination. After a Change in Control and during the
term of this Agreement, any purported termination of the Executive’s employment
(other than by reason of Death) shall be communicated by written Notice of
Termination from one

 

5

 

party
hereto to the other party in accordance with Section 10 hereof. For
purposes of this Agreement, a “Notice of
Termination” shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated.
Further, a Notice of Termination for Cause is required to include a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire Board at a meeting of the Board which was called and held for the
purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with her counsel, to
be heard before the Board) finding that, in the good faith opinion of the
Board, the Executive was guilty of conduct set forth in the definition of Cause
herein, and specifying the particulars thereof in detail.

 

7.2.            Date of Termination. “Date of
Termination” with respect to any termination of the Executive’s
employment after a Change in Control and during the term of this Agreement,
shall mean (a) if the Executive’s employment is terminated for Disability,
30 days after Notice of Termination is given (provided that the Executive shall
not have returned to the full-time performance of the Executive’s duties during
such 30-day period), and (b) if the Executive’s employment is terminated
for any other reason, the date specified in the Notice of Termination (which,
in the case of termination by the Company, shall not be less than 30 days
(except in the case of a termination for Cause), and, in the case of a
termination by the Executive, shall not be less than 15 days nor more than 60
days, respectively, from the date of such Notice of Termination is given).

 

7.3.            Dispute Concerning Termination. Notwithstanding any provision of Section 7.2
hereof to the contrary, if within 15 days after Notice of Termination is
received, or, if later, prior to the Date of Termination (as determined without
regard to this Section 7.3), the party receiving such Notice of
Termination notifies the other party in writing that a dispute exists
concerning the termination, the Date of Termination shall be the date on which
the dispute is finally resolved, either by mutual written agreement of the
parties or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); provided that
the Date of Termination shall be extended by a notice of dispute only if such
notice is given in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence. For the purposes of the
preceding sentence, a dispute concerning termination shall be deemed finally
resolved if, within 30 days of an arbitration award concerning such dispute,
neither party commences an action in any court seeking the modification of or
other relief from such award.

 

7.4.            Compensation During Dispute. If a proposed termination occurs following
a Change in Control and during the term of this Agreement, and such termination
is disputed in accordance with Section 7.3 hereof, the Company shall continue
to pay the Executive the full compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, salary) and
continue the Executive as a participant in all compensation, benefit and
insurance plans in which the Executive was participating when the notice giving
rise to the dispute was given, until the dispute is

 

6

 

finally
resolved in accordance with Section 7.3 hereof. Amounts paid under this Section 7.4
are in addition to all other amounts due under this Agreement (other than those
due under Section 5.2 hereof).

 

8.        
No Mitigation; Set-Off. The Company agrees that, if the Executive’s
employment by the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to this
Agreement. Further, except as provided in Section 6.7, the amount of any
payment or benefit provided for in this Agreement shall not be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company or otherwise. The Company’s obligation to
make the payments provided in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive.

 

9.        
Successors. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if
no such succession had taken place, unless such obligations are binding upon
such successor by operation of law. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the same terms as the Executive
would be entitled to hereunder if the Executive were to terminate the Executive’s
employment for Good Reason after a Change in Control, except that for purposes
of implementing the foregoing the date on which any such succession becomes
effective shall be deemed the Date of Termination.

 

10.      
Notices. For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by the US
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, 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 actual receipt:

 

To the Company:

 

Charles River Laboratories, Inc.

251 Ballardvale St.

Wilmington, MA 01887

Attention: Chief Executive Officer

Copy to: General Counsel

 

7

 

To the Executive:

 

At the address then
appearing 

on the employment records

of the Company.

 

11.           
Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer of the
Company as may be specifically designated by the Board. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with respect
to the subject matter hereof have been made by either party which are not
expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the Commonwealth of Massachusetts. Any payments provided for hereunder shall be
paid net of any applicable withholding required under federal, state or local
law and any additional withholding to which the Executive has agreed. The
obligations of the Company and the Executive under Sections 5, 6 and 7 shall
survive the expiration of this Agreement.

 

12.           
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.

 

13.           
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.

 

14.           
Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration
conducted before a single arbitrator in Boston, Massachusetts in accordance
with the commercial rules of the American Arbitration Association (“AAA”) then in effect. Unless a mutually
acceptable arbitrator shall have been selected by the parties within 30 days of
the initiation of arbitration proceedings, then upon application of either
party to the Boston office of the AAA, the AAA shall designate such arbitrator.
Judgment may be entered on the arbitrator’s award in any court having
jurisdiction, provided, however, that the Executive shall be entitled to seek
specific performance of her right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in
connection with this Agreement.

 

15.           
Confidentiality. The Executive shall keep secret and
confidential and shall not disclose to any third party in any fashion or for
any purpose whatsoever, any information regarding this Agreement which is (i) not
available to the general public, and/or (ii) not generally known outside
the Company. Notwithstanding the foregoing

 

8

 

provisions
of this Section 15, the Executive may discuss this Agreement with the
members of her immediate family and with her personal legal and tax advisors,
provided that prior to disclosing any term or condition of this Agreement to
any person, the Executive shall obtain from such person for the benefit of the
Company his or her agreement to observe the foregoing confidentiality
provisions.

 

16.           
Definitions. For purposes of this Agreement, the
following shall have the meanings indicated below:

 

16.1.            “Beneficial
Owner” and “Beneficial Ownership”
shall have the meaning defined in, and shall be determined pursuant to, Rule l3d-3
under the Securities Exchange Act of 1934, as amended.

 

16.2.            “Board”
shall mean the Board of Directors of the Company.

 

16.3.            “Cause”
for termination by the Company of the Executive’s employment, after any Change
in Control, shall mean (a) the willful and continued failure by the
Executive to perform the Executive’s duties with the Company, (b) a
substantial and not de minimis violation of the Company’s Code of Business
Conduct and Ethics (and any successor policy), as the same are in effect from
time to time, (c) the Executive’s conviction of a felony, or (d) engaging
in conduct that constitutes a violation of Section 15 hereof.

 

16.4.            “Change in
Control” means any one of the following: (i) the closing of the
sale of all or substantially all of the Company’s assets as an entirety to any
person or related group of persons; (ii) the merger or consolidation of
the Company with or into another corporation or the merger or consolidation of
another corporation with or into the Company or a subsidiary of the Company, in
either case with the effect that immediately after such transaction the
outstanding voting securities of the Company immediately prior to such
transaction represent less than a majority in interest of the total voting
power of the outstanding voting securities of the entity surviving such merger
or consolidation; or (iii) the closing of a transaction pursuant to which
Beneficial Ownership of more than 50% of the Company’s outstanding Common Stock
(assuming the issuance of Common Stock upon conversion or exercise of all then
exercisable conversion or purchase rights of holders of outstanding convertible
securities, options, warrants, exchange rights and other rights to acquire
Common Stock) is transferred to a single person or entity, or a “group” (within
the meaning of Rule l3d-5(b)(l) under the Securities Exchange Act of 1934)
of persons or entities, in a single transaction or a series or related
transactions. It shall also be treated as a Change in Control hereunder if any
of the events described in clauses (i), (ii) or (iii) occur to
Charles River Laboratories International, Inc., or any other company
directly or indirectly controlling the Company at the time of any such
transaction.

 

16.5.            “Change in
Control Date.”  The effective date of the Change in Control.

 

9

 

16.6.          “Code” shall mean the
Internal Revenue Code of 1986, as amended. All references to the Code shall be
deemed also to refer to any successor provisions of such sections.

 

16.7.          “Company” shall mean
Charles River Laboratories, Inc. and any successor to its business and/or
assets which assumes and agrees to perform this Agreement by operation of
law, or otherwise (except in determining, under Section 16.4 hereof,
whether or not a Change in Control of the Company has occurred in connection
with such succession).

 

16.8.          “Date of Termination”
shall have the meaning stated in Sections 7.2 and 7.3 hereof.

 

16.9.          “Disability” shall be
deemed the reason for termination by the Company of the Executive’s employment
if, as a result of the Executive’s incapacity due to physical or mental
illness, the Executive shall have been absent from the full-time performance of
the Executive’s duties with the Company for a period of [six (6)] consecutive
months, the Company shall have given the Executive a Notice of Termination for
Disability, and within 30 days after such Notice of Termination is given, the
Executive shall not have returned to the full-time performance of her duties.

 

16.10.        “Executive” shall mean the
individual named in the first paragraph of this Agreement.

 

16.11.        “Good Reason” for
termination by the Executive of the Executive’s employment shall mean the
occurrence after a Change in Control (without the Executive’s express written
consent) of any one of the following acts by the Company, or failures by the
Company to act, unless in the case of any act or failure to act described in
paragraph (i), (iv), (v), (vi) or (vii) below, such act or failure to
act is corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:

 

(i)                                     the assignment to the Executive of any duties
inconsistent with the Executive’s position and responsibilities as in effect
immediately prior to the Change in Control;

 

(ii)                                  a reduction by the Company in the Executive’s
annual base salary as in effect on the date hereof or as the same may be
increased from time to time except for across-the-board salary reductions
similarly affecting all senior executives of the Company and all senior
executives of any Person in control of the Company;

 

(iii)                               the failure by the Company to pay to the Executive any portion of the
Executive’s current compensation except pursuant to an across- the-board salary
reduction similarly affecting all senior executives of the Company and all
senior executives of any Person in control of the Company, or to pay to the
Executive any portion of an installment of deferred compensation under any
deferred

 

10

 

compensation
program of the Company, within 14 days of the date such compensation is due;

 

(iv)                              the failure by the Company to continue in effect any compensation plan
in which the Executive participates immediately prior to the Change in Control
which is material to the Executive’s total compensation, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Company to continue the
Executive’s participation therein (or in a substitute or alternative plan) on a
basis not materially less favorable, both in terms of the amount of benefits
provided and the level of the Executive’s participation relative to other
participants, as existed at the time of the Change in Control;

 

(v)                                 the failure by the Company to continue to
provide the Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company’s pension, life insurance, medical,
health and accident, or disability plans in which the Executive was
participating at the time of the Change in Control, the taking of any action by
the Company which would directly or indirectly materially reduce any of such
benefits or deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of the Change in Control, or the failure by the Company to
provide the Executive with the number of paid vacation days to which the
Executive is entitled on the basis of years of service with the Company in
accordance with the Company’s normal vacation policy in effect at the time of
the Change in Control;

 

(vi)                              any proposed termination of the Executive’s employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of Section 7.1,
for purposes of this Agreement, no such purported termination shall be
effective;

 

(vii)                           the failure by the Company to obtain a satisfactory agreement from any
successor to assume and agree to perform this Agreement as contemplated in
Section 9 hereof; or

 

(viii)                        the Company’s requiring the Executive to relocate to an office or
location more than 50 miles distant from the office or location at which the
Executive was based immediately prior to the Date of Termination.

 

16.12.        “Notice of Termination”
shall have the meaning stated in Section 7.1 hereof.

 

11

 

16.13.        “Person” shall have the
meaning defined in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended.

 

16.14.        “Retirement” shall mean
retirement after attaining “normal retirement age” under any pension or
retirement plan maintained by the Company in which the Executive participates.

 

16.15.        “Severance Payments” shall
mean the payment(s) described in Section 6 hereof.

 

 

	
   

  	
  CHARLES RIVER LABORATORIES,

  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

12

 

	
  Agreed
  and Accepted:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

13

 

Annex 1

 

(a)           Anything in the Agreement to the contrary notwithstanding but subject
to paragraph (b) of this Annex, in the event it shall be determined that
any payment or distribution by the Company to or for the benefit of Executive,
whether paid or payable or distributed or distributable pursuant to the terms
of the Agreement or otherwise (a “Payment”),
would be subject to the excise tax imposed by Section 4999 of the Code or
similar section or any interest or penalties with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise
Tax”), Executive shall be entitled to receive an additional payment
(a “Gross-Up Payment”) in lump sum
in an amount such that after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax, imposed upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payment.

 

(b)           Notwithstanding paragraph (a) of this Annex, if the aggregate
value of the Payment is less than 315% of the Executive’s “base amount” (as
defined in Section 280G(b)(3) of the Code), then the Executive shall
not be entitled to any Gross-Up Payment and, instead, the Payment shall be
reduced to an amount equal to $1.00 less than 300% of the “base amount”.

 

(c)           Subject to the provisions of paragraph (d) of this Annex, all
determinations required to be made under this Annex, including whether a
Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be
made at the Company’s expense by an accounting firm selected by the Company and
acceptable to the Executive which is designated as one of the four (4) largest
accounting firms in the United States (the “Accounting
Firm”) which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of termination of
employment under the Agreement, if applicable, or such earlier time as is
requested by the Executive or the Company. When calculating the amount of the
Gross-Up Payment, the Executive shall be deemed to pay:

 

(i)            federal income taxes at the highest applicable
marginal rate of federal income taxation for the calendar year in which the
Gross-Up Payment is to be made, and

 

(ii)           any applicable state and local income taxes
at the highest applicable marginal rate of taxation for the calendar year in
which the Gross-up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes if paid in such year.

 

If
the Accounting Firm determines that no Excise Tax is payable by the Executive,
it shall state in writing to Executive that Executive has substantial authority
not to report any Excise Tax on Executive’s federal income tax return. Any
determination by the Accounting Firm shall be binding upon the Company and
Executive. As a result of the

 

A-1

 

uncertainty
in the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to paragraph (d) of this Annex, and
Executive is thereafter required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive.

 

(d)           The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 10 business days after Executive knows of such
claim and shall notify the Company of the nature of such claim and the date on
which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which
Executive gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due). If the
Company notifies Executive in writing prior to the expiration of such period
that it desires to contest such claim, Executive shall:

 

(iii)          give the Company any information reasonably
requested by the Company relating to such claim,

 

(iv)          take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company,

 

(v)           cooperate with the Company in good faith in
order effectively to contest such claim, and

 

(vi)          permit the Company to participate in any
proceedings relating to such claim;

 

provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold Executive harmless, on an after-tax basis,
for any Excise Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of such representation and payment of costs and
expenses.

 

Without
limitation on the foregoing provisions of this paragraph (d), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner,
and Executive agrees to prosecute such contest to a

 

A-2

 

determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company shall determine; provided,
however, that if the Company directs Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to Executive, on
an interest-free basis and shall indemnify and hold Executive harmless, on an
after-tax basis, from any Excise Tax or income tax, including interest or penalties
with respect thereto, imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
Executive’s taxable year with respect to which such contested amount is claimed
to be due is limited solely to such contested amount. Furthermore, the
Company’s control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and Executive shall be
entitled to settle or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing authority.

 

(e)           If after the receipt by Executive of an amount advanced by the Company
pursuant to paragraph (d) of this Annex, Executive becomes entitled to
receive any refund with respect to such claim, Executive shall (subject to the
Company’s complying with the requirements of paragraph (d) of this Annex)
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon by the taxing authority after deducting any
taxes applicable thereto). If, after the receipt by Executive of an amount
advanced by the Company pursuant to paragraph (d) of this Annex, a
determination is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify Executive in writing of
its intent to contest such denial of refund prior to the expiration of 30-days
after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid under
paragraph (d) of this Annex. The forgiveness of such advance shall be
considered part of the Gross-Up Payment and subject to gross-up for any
taxes (including interest or penalties) associated therewith.

 

A-3

 

CEO, EVP and SVP version

 

FORM OF
FIRST AMENDMENT TO AGREEMENT

 

This First
Amendment to Agreement (the “Amendment”), dated December     ,
2008 (the “Effective Date”), by and between
Charles River Laboratories, Inc., a Delaware corporation (the “Company”)
and                     (the
“Executive”) amends that certain Agreement
dated                ,
200  , by and between the Company and the Executive (the
“Agreement”).  Any capitalized terms not
defined in this Amendment shall have the meaning ascribed thereto in the
Agreement.

 

WHEREAS, in
light of Section 409A of the Code (“Section 409A”) and the
regulations thereunder, the Company and the Executive have determined that the
following amendments to the Agreement would be prudent; and

 

NOW THEREFORE,
in consideration of the premises and the mutual covenants herein contained, the
Company and the Executive hereby agree as follows:

 

1.             The following
paragraphs shall be inserted as new Section 18 of the Agreement:

 

18.           Section
409A.

 

(a)           Notwithstanding anything to the contrary in
this Agreement, if Executive is a “specified employee” within the meaning of Section 409A
and the regulations thereunder, as determined by the Compensation Committee of
the Board as of the date of Executive’s “separation from service” as defined in
Treasury Regulation Section 1.409A-1(h) (or any successor regulation)
and if any payments or entitlements provided for in this Agreement constitute a
“deferral of compensation” within the meaning of Section 409A and cannot
be paid or provided in the manner provided herein without subjecting Executive
to additional tax, interest or penalties under Section 409A, then any such
payment and/or entitlement which is payable during the first six months
following Executive’s “separation from service” (including without limitation
amounts payable under Section 6.1 (Severance Payment) and 6.3 (Retirement
Plan Payments) hereof) shall be paid or provided to Executive (or the
Executive’s estate, if applicable) in a lump sum (together with interest on the
deferred payment or payments at a per annum rate equal to the GATT Rate (i.e.
the 30-year Treasury bond interest rate) on the date of such “separation from
service”) on the earlier of (i) the first business day immediately
following the six-month anniversary of Executive’s “separation from service” or
(ii) Executive’s death.

 

(b)           Any payments or benefits due hereunder upon
a termination of Executive’s employment which are a “deferral of compensation”
within the meaning of Section 409A shall only be payable or provided to
Executive (or his or her estate) upon a “separation from service” as defined in
Section 409A.

 

1

 

(c)           Any amount required to be paid pursuant to Section 6.2
(Golden Parachute Excise Tax) shall be paid no later than the end of
Executive’s taxable year following the year in which the applicable taxes are
remitted.

 

(d)           With respect to any benefits hereunder that
constitute a “reimbursement plan” for purposes of Section 409A, (i) the
reimbursement payment be made by no later than the end of the calendar year
following the year in which the expense is incurred and (ii) the amount of
reimbursable expenses incurred (or in-kind benefits available) in one taxable
year of the Executive cannot affect the amount of reimbursable expenses (or
in-kind benefits) available in a different taxable year.

 

2.               Any provision of
the Agreement not specifically modified by this Amendment shall remain in full
force and effect.

 

3.               The headings and
captions contained herein are for convenience and shall not control or affect
the meaning or construction of any provision hereof.

 

4.               This Amendment may
be executed in counterparts, each of which shall be deemed to be an original
and which together shall constitute one and the same instrument.

 

 

	
   

  	
  CHARLES
  RIVER LABORATORIES,

    INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  James C. Foster

  
	
   

  	
   

  	
  Title:

  	
  Chairman, President and

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  

Agreed and Accepted:

 

 

	
   

  	
   

  

 

2

 

VP version

 

FORM OF
FIRST AMENDMENT TO AGREEMENT

 

This First
Amendment to Agreement (the “Amendment”), dated December     ,
2008 (the “Effective Date”), by and between
Charles River Laboratories, Inc., a Delaware corporation (the “Company”) and       (the “Executive”) amends that certain Agreement dated
          , 200  ,
by and between the Company and the Executive (the “Agreement”).  Any capitalized terms not defined in this
Amendment shall have the meaning ascribed thereto in the Agreement.

 

WHEREAS, in
light of Section 409A of the Code (“Section 409A”)
and the regulations thereunder, the Company and the Executive have determined
that the following amendments to the Agreement would be prudent; and

 

NOW THEREFORE,
in consideration of the premises and the mutual covenants herein contained, the
Company and the Executive hereby agree as follows:

 

1.             The following
paragraphs shall be inserted as new Section 18 of the Agreement:

 

“18.         Section 409A.

 

(a)           Notwithstanding anything to the contrary in
this Agreement, if Executive is a “specified employee” within the meaning of Section 409A
and the regulations thereunder, as determined by the Compensation Committee of
the Board as of the date of Executive’s “separation from service” as defined in
Treasury Regulation Section 1.409A-1(h) (or any successor regulation)
and if any payments or entitlements provided for in this Agreement constitute a
“deferral of compensation” within the meaning of Section 409A and cannot
be paid or provided in the manner provided herein without subjecting Executive
to additional tax, interest or penalties under Section 409A, then any such
payment and/or entitlement which is payable during the first six months
following Executive’s “separation from service” (including without limitation
amounts payable under Section 6.1 (Severance Payment) and 6.3 (Retirement
Plan Payments) hereof) shall be paid or provided to Executive (or the
Executive’s estate, if applicable) in a lump sum (together with interest on the
deferred payment or payments at a per annum rate equal to the GATT Rate (i.e.
the 30-year Treasury bond interest rate) on the date of such “separation from
service”) on the earlier of (i) the first business day immediately
following the six-month anniversary of Executive’s “separation from service” or
(ii) Executive’s death.

 

(b)           Any payments or benefits due hereunder upon
a termination of Executive’s employment which are a “deferral of compensation”
within the meaning of Section 409A shall only be payable or provided to
Executive (or his or her estate) upon a “separation from service” as defined in
Section 409A.

 

1

 

(c)           Any amount required to be paid pursuant to Section 6.2
(Golden Parachute Excise Tax) shall be paid no later than the end of
Executive’s taxable year following the year in which the applicable taxes are
remitted.

 

(d)           With respect to any benefits hereunder that
constitute a “reimbursement plan” for purposes of Section 409A, (i) the
reimbursement payment be made by no later than the end of the calendar year
following the year in which the expense is incurred and (ii) the amount of
reimbursable expenses incurred (or in-kind benefits available) in one taxable
year of the Executive cannot affect the amount of reimbursable expenses (or
in-kind benefits) available in a different taxable year.”

 

2.               Paragraph (a) of
Annex 1 of the Agreement is hereby replaced in its entirety with the following:

 

“(a)         Notwithstanding anything
contained in this Agreement to the contrary, to the extent that the payments
and benefits provided under this Agreement and benefits provided to, or for the
benefit of, the Executive under any other Company plan or agreement (such
payments or benefits are collectively referred to as the “Payments”)
would be subject to the excise tax (the “Excise Tax”)
imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended (the “Code”), the Payments shall be
reduced (but not below zero) if and to the extent that a reduction in the
Payments would result in the Executive retaining a larger amount, on an
after-tax basis (taking into account federal, state and local income taxes and
the Excise Tax), than if the Executive received all of the Payments (such
reduced amount is hereinafter referred to as the “Limited
Payment Amount”).  The Company
shall reduce or eliminate the Payments by first reducing or eliminating those
payments or benefits which are not payable in cash and then by reducing or
eliminating cash payments, in each case in reverse order beginning with
payments or benefits which are to be paid the farthest in time from the “Determination” (as hereinafter defined); provided, however,
that any reduction/elimination of Payments are made by the Company in a manner
intended to result in the best economic benefit and, to the extent economically
equivalent, to reduce the payments pro rata. 
Any notice given by the Executive pursuant to the preceding sentence
shall take precedence over the provisions of any other plan, arrangement or
agreement governing the Executive’s rights and entitlements to any benefits or
compensation.”

 

3.               Any provision of
the Agreement not specifically modified by this Amendment shall remain in full
force and effect.

 

4.               The headings and
captions contained herein are for convenience and shall not control or affect
the meaning or construction of any provision hereof.

 

2

 

5.               This Amendment may
be executed in counterparts, each of which shall be deemed to be an original
and which together shall constitute one and the same instrument.

 

 

	
   

  	
  CHARLES
  RIVER LABORATORIES,

    INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  James C. Foster

  
	
   

  	
   

  	
  Title:

  	
  Chairman, President and

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  

Agreed and Accepted:

 

 

	
   

  	
   

  

 

3Exhibit
10.8

 

 

Executive Incentive Compensation Program

 

PURPOSE

 

The Executive Incentive
Compensation Program (“EICP” or the “Program”) of Charles River Laboratories, Inc.
(the “Company”) is designed to focus corporate officers, senior-level
management and other key employees on the achievement of organizational,
financial and operational goals that have been identified as important for the
success of the Company.  The Program is
also intended to attract and retain talented individuals with desired skills in
a competitive labor market.

 

DEFINITIONS

 

As
used herein, the following terms shall have the following meanings:

 

“Annual
Base Salary” refers
to a Participant’s base rate of pay, annualized, as of the last day of the
Program fiscal year.  It does not include
any additional payments that may have been made such as commissions, bonus
payments, overtime pay or imputed income.

 

“Award
Amount” is a
dollar amount determined for each Participant by multiplying the Participant’s
Annual Base Salary by their Award Percentage  for  each performance measure. 
The Award Amounts for each performance measure are then aggregated to
determine the total Award Amount.

 

“Award
Percentage” is a
percentage of the Target Percentage determined for each Participant by
multiplying his or her Target Percentage by his or her actual performance
rating at the end of a Program Year.

 

“Participant”
means an employee
of the Company who is eligible to participate in the EICP.

 

“Program
Year” means the
applicable Company fiscal year.

 

“Target
Award” means a
Participant’s targeted award amount which is determined by multiplying the
Participant’s Annual Base Salary by his or her Target Percentage.

 

“Target
Percentage” is a
pre-determined percentage of a Participant’s Annual Base Salary.  Target Percentages are determined based on a
Participant’s salary grade at the end of a Program Year.  Salary Grades of 88 through 93 and equivalent
grades receive a single Target Percentage.

 

“Target
Percentage Range” is
a range of Target Percentages of a Participant’s Annual Base Salary.  Target Percentage Ranges are determined based
on a Participant’s salary grade at the end of a Program Year.  Salary Grades of 94 and above receive a
Target Percentage Range.

 

ELIGIBILITY

 

Regular, full-time
employees who hold a position with a U.S. salary grade of 88 or higher (or
current or future salary grade equivalents) are eligible to participate in the
Program.  In addition, in order to be
eligible for participation in the Program, employees must be hired or promoted
into an eligible salary grade position on or before June 30th of the
applicable Program Year.  Employees hired
or promoted into an 

 

Effective:  January 1, 2009

 

1

 

EICP eligible Salary
Grade position on or after July 1st of a Program Year are eligible to participate
in the Program the following fiscal year.

 

Employees, who
participate in the Company’s Technical Incentive Compensation Program (TICP) or
other Company-approved bonus/incentive programs, including sales commission
plans, are specifically excluded from participation in the EICP.

 

The Company’s
Chairman, President and Chief Executive Officer has the right to exclude
otherwise eligible employees from the Program if they are eligible for
alternate forms of incentive compensation (e.g., participation in a
post-acquisition earn-out).

 

Participants who move
from one eligible salary grade to another during the Program Year will
participate on a full-year basis at the Target Percentage or Target Percentage
Ranges, as applicable, corresponding to their new salary grade.  Target Percentages and Target Percentage
Ranges may be modified at the discretion of the Compensation Committee for
individual Participants or salary grades.

 

PERFORMANCE
MEASURES

 

Early in each Program
Year, Participants are assigned financial and/or operational objectives which
are established annually by the Company’s Chairman, President and Chief
Executive Officer and, in the case of Corporate Officers of the Company, are
reviewed and approved by the Compensation Committee of the Board of Directors.

 

Each Participant’s
performance during the Program Year is measured against financial or other
approved goals established for the Company, function and/or business unit(s) overseen
or supported by the Participant. 
Company, function and/or business unit objectives are weighted to
reflect their priority and to ensure that incentives are appropriately aligned
with business objectives.  Financial
performance measures underlying Program targets for each Program Year are
reviewed and approved annually in conjunction with the annual budget review
process by the Company’s Chairman, President and Chief Executive Officer, the
Company’s Corporate Executive Vice President, Human Resources and Chief
Administrative Officer, the Board of Directors and, as required, by the
Compensation Committee.

 

Participants who are
promoted and/or transferred during the Program Year and whose responsibilities
are significantly modified may have their performance objectives modified,
subject to the review and approval by the Company’s Chairman, President and
Chief Executive Officer and, as required, by the Compensation Committee.

 

AWARD CALCULATIONS

 

A Participant’s Award
Percentage is determined by evaluating actual performance against targeted
objectives.  Performance which falls
below targeted objectives by a specified percentage, total dollar amount or
other approved performance measures results in a zero performance rating, while
performance which exceeds targeted objectives by a specified percentage, total
dollar amount or other approved performance measures equates to a 250%
performance rating (i.e., an EICP Award Percentage that is two and one half
times the Participant’s targeted percentage). 
These specified performance parameters establish the slope along which
pay for performance is determined. 
Annual payouts for performance which exceed targeted objectives are
subject to a cap equal to a maximum of 250% of target.  However, if 

 

2

 

total Company performance
for a given Program Year exceeds the maximum of the performance range
established by the Board of Directors for that Program Year, 30% of the excess
amount is made available for the Chairman, President and Chief Executive
Officer to make upward modifications to the Award Percentages of certain
Participants, at his discretion, subject to the limitation that any total Award
Amount is capped at a payment level equal to 300% of target.

 

At the discretion of the
Company’s Chairman, President and Chief Executive Officer and with the
concurrence of the Compensation Committee, a Participant’s calculated Award
Amount may be modified, upward or downward, if it is determined that the
calculated amount does not accurately reflect actual performance.

 

AWARD PAYMENTS

 

Award Amount payments
will be made to each Participant no later than 2 1⁄2 months after the end of each
Program Year.

 

TERMINATION OF EMPLOYMENT

 

In the event a
Participant resigns or if the Participant’s employment with the Company
terminates for any voluntary or involuntary reason other than retirement,
death, or disability at any time prior to the actual distribution of EICP Award
Amounts for a Program Year, such employee is no longer considered to be a
Participant in the Program as of the date of employment termination and is not
eligible to receive any Award Amount for such Program Year.

 

If a Participant’s
employment with the Company terminates due to his or her death, disability or
retirement prior to the end of a Program Year and the Participant had at least
six months of service to the Company during such Program Year, the Participant
(or the Participant’s beneficiary or estate in the event of death) may receive
a pro rated Award Amount for such Program Year at the discretion of the Company’s
Chairman, President and Chief Executive Officer and the Corporate Executive
Vice President of the Participant’s department and/or business unit.  Pro-rated Award Amounts will be determined
based upon the Participant’s actual period of active employment during the
Program year.  Severance periods and
periods of leaves of absence will not count toward satisfaction of such 6-month
service requirement or, if applicable, the computing of any pro-rated payment.

 

If a Participant’s
employment with the Company terminates due to his or her death, disability or
retirement after the close of a Program Year but prior to the actual
distribution of Award Amounts, the Participant (or the Participant’s
beneficiary or estate in the event of death) will be awarded his or her full
Award Amount for the Program Year.

 

In the event a
Participant’s employment with the Company is terminated because of a facilities
shut-down, full or partial business unit divestiture, or similar action
resulting in the termination of a Participant’s employment, the Company shall
not be obligated to pay any Award Amounts to an affected Participant as a
consequence of such employment termination.

 

3

 

AWARD APPROVAL

 

Final Award Amounts for
all Participants are submitted to the Company’s Chairman, President and Chief
Executive Officer for review.  The
Chairman, President and Chief Executive Officer then reviews and approves
submissions relating to non-officer Participants, and submits to the
Compensation Committee his final Award Amount recommendations for Company
Corporate Officers, as well as any proposed Award Amount modifications.  The Chairman, President and Chief Executive
Officer may, at his discretion, modify any proposed final Award Amounts prior
to submitting them to the Compensation Committee.  The payment of Award Amounts to Company
Officers and all award modifications are subject to the review and approval of
the Compensation Committee.

 

PROGRAM ADMINISTRATION

 

The Compensation
Committee of the Board of Directors is responsible for the overall
administration of the Program.  The
Committee reviews and approves the standards and financial objectives
underlying the Program prior to its implementation for each Program Year.  The Committee may delegate the ongoing
oversight and handling of routine administrative matters under the Program to
the Company’s Corporate Executive Vice President, Human Resources &
Chief Administrative Officer.  The
Compensation Committee has the authority to alter or terminate the Program at
any time, and no Participant has any rights with respect to an incentive award
payable under the Program until it has actually been paid to the Participant.

 

Any questions pertaining
to the Program design, eligibility, calculation of Award Amounts, or other
procedures should be directed to the Company’s Corporate Executive Vice
President, Human Resources & Chief Administrative Officer.

 

APPROVED:

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
	
  James C. Foster

  	
   

  	
   

  	
   

  
	
  Chairman,
  President & CEO

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
	
  David P. Johst

  	
   

  	
   

  	
   

  
	
  Corporate Exec. V.P.,
  Human Resources

  	
   

  	
   

  	
   

  
	
  & Chief
  Administrative Officer

  	
   

  	
   

  	
   

  

 

4

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