Document:

a6618109ex10-q5.htm

Exhibit 10-Q-5

CHANGE IN CONTROL

SEVERANCE AGREEMENT

THIS AGREEMENT is made as of the 12th day of April, 2010, between Otter Tail Corporation, a Minnesota corporation, with its principal offices at 215 South Cascade Street, P.O. Box 496, Fergus Falls, Minnesota 56538-0496 (the "Corporation ") and Michelle L. Kommer ("You"), residing at 1319 Elm Circle NE, Fargo, ND 58102, and supersedes any prior Change in Control Agreement between the Corporation and You.

WITNESSETH THAT:

WHEREAS, this Agreement is intended to specify the financial arrangements that the Corporation will provide to You upon Your separation from employment with the Corporation under any of the circumstances described herein; and

WHEREAS, this Agreement is entered into by the Corporation in the belief that it is in the best interests of the Corporation and its shareholders to provide stable conditions of employment for You notwithstanding the possibility, threat or occurrence of certain types of change in control, thereby enhancing the Corporation's ability to attract and retain highly qualified people; and

NOW, THEREFORE, to assure the Corporation that it will have Your continued dedication notwithstanding the possibility, threat or occurrence of a bid to take over control of the Corporation, and to induce You to remain in the employ of the Corporation, and for other good and valuable consideration, the Corporation and You agree as follows:

1.           Termination of Employment.

(i)           Prior to a Change in Control. Your rights upon termination of employment prior to a Change in Control (as defined in Section 2(i) hereof) shall be governed by the Corporation's standard employment termination policy applicable to You in effect at the time of termination or Your Employment Agreement.

	
  

	
(ii)

	
After a Change in Control.

(a)           From and after the date of a Change in Control during the term of this Agreement, the Corporation shall not terminate You from employment with the Corporation except as provided in this Section 1(ii) or as a result of Your Disability (as defined in Section 2(iv) hereof) or death.

(b)           From and after the date of a Change in Control during the term of this Agreement, the Corporation shall have the right to terminate You from employment with the Corporation at any time during the term of this Agreement for Cause (as defined in Section 2(iii) hereof), by written notice to You, specifying the particulars of Your conduct forming the basis for such termination.

 

  

  

  

 

(c)           From and after the date of a Change in Control during the term of this Agreement: (x) the Corporation shall have the right to terminate Your employment without Cause at any time; and (y) You shall, upon the occurrence of such a termination by the Corporation without Cause, or upon the voluntary termination of employment by You for Good Reason (as defined in Section 2(ii) hereof), be entitled to receive the benefits provided in Section 3 hereof. You shall evidence a voluntary termination for Good Reason by written notice to the Corporation given within 90 days after the date of the occurrence of any event that You know or should reasonably have known constitutes Good Reason for voluntary termination and the Corporation has 30 days from the date the Corporation receives the notice from You to remedy the condition.  Such notice need only identify You and set forth in reasonable detail the facts and circumstances claimed by You to constitute Good Reason.

Any notice given by You pursuant to this Section 1 shall be effective five business days after the date it is given by You.

2.            Definitions

(i)            A "Change in Control" shall mean:

(a)         a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or successor provision thereto, whether or not the Corporation is then subject to such reporting requirement;

(b)         any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Corporation representing 35% or more of the combined voting power of the Corporation's then outstanding securities;

(c)         the Continuing Directors (as defined in Section 2(v) hereof) cease to constitute a majority of the Corporation's Board of Directors; provided that such change is the direct or indirect result of a proxy fight and contested election or elections for positions on the Board of Directors; or

(d)         the majority of the Continuing Directors (as defined in Section 2(v) hereof) determine in their sole and absolute discretion that there has been a change in control of the Corporation.

(ii)           "Good Reason" shall mean the occurrence of any of the following events that results in a material negative change to You, except for the occurrence of such an event in connection with the termination or reassignment of You by the Corporation for Cause, for Disability  or for death:

(a)         the assignment to You of employment responsibilities which are not of comparable responsibility and status as the employment responsibilities held by You immediately prior to a Change in Control;

 

  

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(b)         a reduction by the Corporation in Your base salary as in effect immediately prior to a Change in Control;

(c)         an amendment or modification of the Corporation's incentive compensation program (except as may be required by applicable law) which affects the terms or administration of the program in a manner adverse to Your interest  as compared to the terms and administration of such program immediately prior to a Change in Control;

(d)         the Corporation's requiring You to be based anywhere other than within 50 miles of Your office location immediately prior to a Change in Control, except for requirements of temporary travel on the Corporation's business to an extent substantially consistent with Your business travel obligations immediately prior to a Change in Control;

(e)         except to the extent otherwise required by applicable law, the failure by the Corporation to continue in effect any benefit or compensation plan, stock ownership plan, stock purchase plan, stock incentive plan, bonus plan, life insurance plan, health-and-accident plan, or disability plan in which You are participating immediately prior to a Change in Control (or plans providing You with substantially similar benefits), the taking of any action by the Corporation which would adversely affect Your participation in, or materially reduce Your benefits under, any of such plans or deprive You of any material fringe benefit enjoyed by You immediately prior to such Change in Control, or the failure by the Corporation to provide You with the number of paid vacation days to which You are entitled immediately prior to such Change in Control in accordance with the Corporation's vacation policy as then in effect; or

(f)         the failure by the Corporation to obtain, as specified in Section 5(i) hereof, an assumption of the obligations of the Corporation to perform this Agreement by any successor to the Corporation.

(iii)           "Cause" shall mean termination by the Corporation of Your employment based upon (a) the willful and continued failure by You substantially to perform Your duties and obligations (other than any such failure resulting from Your incapacity due to physical or mental illness or any such actual or anticipated failure resulting from Your termination for Good Reason) or (b) the willful engaging by You in misconduct which is materially injurious to the Corporation, monetarily or otherwise. For purposes of this Section 2(iii), no action or failure to act on Your part shall be considered "willful" unless done, or omitted to be done, by You in bad faith and without reasonable belief that such action or omission was in the best interests of the Corporation.

(iv)           "Disability" shall mean any physical or mental condition which would qualify You for a disability benefit under the Corporation's long-term disability plan.

(v)           "Continuing Director" shall mean any person who is a member of the Board of Directors of the Corporation, while such person is a member of the Board of Directors, who is not an Acquiring Person (as hereinafter defined) or an Affiliate or Associate (as hereinafter defined) of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and who (a) was a member of the Board of Directors on the date of this Agreement as first written above or (b) subsequently becomes a member of the Board of Directors, if such person's nomination for election or initial election to the Board of Directors is recommended or approved by a majority of the Continuing Directors. For purposes of this Section 2(v): "Acquiring Person" shall mean any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) who or which, together with all Affiliates and Associates of such person, is the "beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the shares of Common Stock of the Corporation then outstanding, but shall not include the Corporation, any subsidiary of the Corporation or any employee benefit plan of the Corporation or of any subsidiary of the Corporation or any entity holding shares of Common Stock organized, appointed or established for, or pursuant to the terms of, any such plan; and "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.

 

  

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3.            Benefits upon Termination under Section 1(ii)(c)

(i)           Upon the termination (voluntary or involuntary) of Your employment pursuant to Section 1(ii)(c) hereof, You shall be entitled to receive the benefits specified in this Section 3. The amounts due to You under subparagraph (a) of this Section 3(i) shall be paid to You in a lump sum not later than one business day prior to the date that the termination of Your employment becomes effective. The amounts due to You under subparagraphs (b), (c) and (d) of this Section 3(i) shall be paid to You not later than one business day prior to the date that the termination of Your employment becomes effective. Subject to the provisions of Section 3(ii) hereof, all benefits to You pursuant to this Section 3(i) shall be subject to any applicable payroll or other taxes required by law to be withheld.

(a)           The Corporation shall pay as severance pay to You an amount equal to two times the sum of (1) Your highest annual rate of salary from the Corporation in effect at any time during the 24 months preceding the date that the termination of Your employment became effective and (2) the average of the annual bonus paid or to be paid to You in respect of each of the two fiscal years preceding the fiscal year when the termination of Your employment became effective.

(b)           For a period of 24 months following the date that the termination of Your employment became effective or until You reach age 65 or die, whichever is the shorter period, the Corporation shall continue for You, at the Corporation's expense, the health, disability and life insurance coverage in effect for You immediately prior to the date that the termination of Your employment became effective under the plans provided by the Corporation for its executive personnel generally or, if such coverage cannot by the terms of such plans be provided thereunder, then the Corporation shall provide equivalent insurance coverage for You for such period under specially obtained policies of insurance.

(c)           The Corporation shall pay to You (1) any amount earned by You as a bonus with respect to the fiscal year of the Corporation preceding the termination of Your employment if such bonus has not theretofore been paid to You, and (2) an amount representing credit for any vacation earned or accrued by You but not taken.

(d)           The Corporation shall also pay to You all legal fees and expenses incurred by You as a result of such termination of employment (including all fees and expenses, if any, incurred by You in seeking to obtain or enforce any right or benefit provided to You by this Agreement whether by arbitration or otherwise); and

 

  

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(e)           Any and all contracts, agreements or arrangements between the Corporation and You prohibiting or restricting You from owning, operating, participating in, or providing employment or consulting services to, any business or company competitive with the Corporation at any time or during any period after the date the termination of Your employment becomes effective, shall be deemed terminated and of no further force or effect as of the date the termination of Your employment becomes effective, to the extent, but only to the extent, such contracts, agreements or arrangements so prohibit or restrict You; provided that the foregoing provision shall not constitute a license or right to use any proprietary information of the Corporation and shall in no way affect any such contracts, agreements or arrangements insofar as they relate to nondisclosure and nonuse of proprietary information of the Corporation notwithstanding the fact that such nondisclosure and nonuse may prohibit or restrict You in certain competitive activities.

(f)           Notwithstanding the foregoing, to the extent that any payment due hereunder is (A) deferred compensation subject to section 409A of the Internal Revenue Code, and (B) is payable to a specified employee (as that term is defined in section 409A), and (C) is payable on account of the specified employee’s separation from service as that term is defined in section 409A), payment of any part of such amount that would have been made during the six (6) months following the separation from service shall not then be paid but shall rather be paid on the first day of the seventh (7th) month following the separation from service.

	
  

	
(A)

	
For this purpose, specified employees shall be identified by the Employer on a basis consistent with regulations issued under section 409A, and consistently applied to all plans, programs, contracts, etc. maintained by the Employer that are subject to section 409A.

	
  

	
(B)

	
For this purpose separation from service shall be defined as it is defined in the regulations under section 409A.

	
  

	
(C)

	
To the extent that 409A is applicable to this Agreement, this Agreement shall be construed and administered to comply with  the rules of section 409A.  Neither the Employer nor any of its officers, directors, agents or affiliates shall be obligated, directly or indirectly, to any Participant or any other person for any taxes, penalties, interest or like amounts that may be imposed on the Participant or other person on account of any amounts under this Plan or on account of any failure to comply with any Code section.

(ii)           Any payment not made to You when due hereunder shall thereafter, until paid in full, bear interest at the rate of interest equal to the reference rate announced from time to time by U.S. Bank National Association, plus two percent, with such interest to be paid to You upon demand or monthly in the absence of a demand.

(iii)           You shall not be required to mitigate the amount of any payment provided for in this Section 3 by seeking other employment or otherwise. The amount of any payment or benefit provided in this Section 3 shall not be reduced by any compensation earned by You as a result of any employment by another employer.

 

  

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4.

	
Your Agreements.

You agree that:

(i)           Without the consent of the Corporation, You will not terminate employment with the Corporation without giving 60 days prior notice to the Corporation, and during such 60­ day period You will assist the Corporation, as and to the extent reasonably requested by the Corporation, in training the successor to Your position with the Corporation. The provisions of this Section 4(i) shall not apply to any termination (voluntary or involuntary) of Your employment pursuant to Section 1(ii)(c) hereof.

(ii)            Without the consent of the Corporation or except as may be required by law, You will not at any time after termination of Your employment with the Corporation disclose to any person, corporation, firm, or other entity, confidential information concerning the Corporation of which You have gained knowledge during employment with the Corporation.

(iii)           In the event that You have received any benefits from the Corporation under Section 3 of this Agreement, then, during the period of 24 months following the date that the termination of Your employment became effective, You, upon request by the Corporation:

(a)         Will consult with one or more of the executive officers concerning the business and affairs of the Corporation for not to exceed four hours in any month at times and places selected by You, all without compensation other than what is provided for in Section 3 of this Agreement; and

(b)         Will testify as a witness on behalf of the Corporation in any legal proceedings involving the Corporation which arise out of events or circumstances that occurred or existed prior to the date that the termination of Your employment became effective (except for any such proceedings relating to this Agreement), without compensation other than what is provided for in Section 3 of this Agreement, provided that all out-of-pocket expenses incurred by You in connection with serving as a witness shall be paid by the Corporation.

You shall not be required to perform Your obligations under this Section 4(iii) if and so long as the Corporation is in default with respect to performance of any of its obligations under this Agreement.

 

5.            Successors and Binding Agreement.

(i)            The Corporation 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 Corporation), by agreement in form and substance satisfactory to You, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such succession had taken place. Failure of the Corporation to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle You to compensation from the Corporation in the same amount and on the same terms as You would be entitled hereunder if employee terminated employment after a Change in Control for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the date that the termination of Your employment becomes effective. As used in this Agreement, "Corporation" shall mean the Corporation and any successor to its business and/or assets which executes and delivers the agreement provided for in this Section 5(i) or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

 

  

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(ii)            This Agreement is personal to You, and You may not assign or transfer any part of Your rights or duties hereunder, or any compensation due to You hereunder, to any other person. Notwithstanding the foregoing, this Agreement shall inure to the benefit of and be enforceable by Your personal or legal representatives, executors, administrators, heirs, distributees, devisees, and legatees.

6.            Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Fergus Falls, Minnesota, in accordance with the applicable rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction.

7.            Modification; Waiver.  No provisions of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in a writing signed by You and such officer as may be designated by the Board of Directors of the Corporation. 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 at any prior or subsequent time.

8.            Notice.  All notices, requests, demands, and all other communications required or permitted by either party to the other party by this Agreement (including, without limitation, any notice of termination of employment and any notice of an intention to arbitrate) shall be in writing and shall be deemed to have been duly given when delivered personally or received by certified or registered mail, return receipt requested, postage prepaid, at the address of the other party, as first written above (directed to the attention of the Board of Directors and Corporate Secretary in the case of the Corporation ).  Either party hereto may change its address for purposes of this Section 8 by giving 15 days' prior notice to the other party hereto.

9.            Severability. If any term or provision of this Agreement or the application hereof to any person or circumstances shall to any extent be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

10.           Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

11.           Governing Law. This Agreement has been executed and delivered in the State of Minnesota and shall, in all respects, be governed by, and construed and enforced in accordance with, the laws of the State of Minnesota, including all matters of construction, validity and performance.

 

  

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12.           Effect of Agreement; Entire Agreement. The Corporation and You understand and agree that this Agreement is intended to reflect their agreement only with respect to payments and benefits upon termination in certain cases and is not intended to create any obligation on the part of either party to continue employment. This Agreement supersedes any and all other oral or written agreements or policies made relating to the subject matter hereof and constitutes the entire agreement of the parties relating to the subject matter hereof; provided that this Agreement shall not supersede or limit in any way Your rights under any benefit plan, program or arrangements in accordance with their terms.

13.           ERISA. For purposes of the Employee Retirement Income Security Act of 1974, this Agreement is intended to be a severance pay employee welfare benefit plan, and not an employee pension benefit plan, and shall be construed and administered with that intention.

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed in its name by a duly authorized director and officer, and You have hereunto set Your hand, all as of the date first written above.

 

	  	
OTTER TAIL CORPORATION

	  	  	  
	 	 	 
	  	
By:

	
/s/ John Erickson

	  	  	
John Erickson

	  	  	
Its:  President & CEO

	  	  	  
	  	  	  
	 	 	 
	 	 	 
	 	 	 
	  	
/s/ Michelle L. Kommer

	  	
Michelle L. Kommer

 

 

8Unassociated Document

Exhibit 10-A

FORD MOTOR COMPANY

Executive Separation Allowance Plan

(As amended and restated effective as of January 1, 2011)

Section 1.  Introduction.  This Plan has been established for the purpose of providing Leadership Level One or Two Employees with an Executive Separation Allowance in the event of their separation from employment with the Company under certain circumstances.

Section 2.  Definitions.  As used in the Plan, the following terms shall have the following meanings, respectively:

"Affiliate" shall mean, as applied with respect to any person or legal entity specified, a person or legal entity that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, the person or legal entity specified.

"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.

"Company" shall mean Ford Motor Company and such of the subsidiaries of Ford Motor Company as, with the consent of Ford Motor Company, shall have adopted this Plan.

"Contributory Service" shall mean, without duplication, the years and any fractional year of contributory service at retirement, not exceeding one year for any calendar year, of the Eligible Leadership Level One or Two Employee under the Ford Motor Company General Retirement Plan.

"Eligible Leadership Level One or Two Employee" shall mean a Leadership Level One or Two Employee who was hired or rehired prior to January 1, 2004 and who meets the eligibility criteria set forth in Section 3, or for periods prior to January 1, 2000, shall mean an Executive Roll Employee who meets the eligibility criteria set forth in Section 3.

"Eligible Surviving Spouse" shall mean a spouse, as defined by the Federal Defense of Marriage Act of 1996, to whom a Leadership Level One or Two Employee has been married at least one year at the date of the employee's death.

"Executive Separation Allowance" shall mean benefits payable under this Plan as determined in accordance with Section 4.

"Leadership Level One or Two Employee" shall mean an employee of the Company (but for periods prior to July 1, 1996, excluding a Company employee who is an employee of Jaguar Cars, a division of the Company) who is assigned to the Leadership Level One or Two, or its equivalent, as such term is defined in the Employee Relations Administration Manual as from time to time constituted.

"Plan" shall mean this Ford Motor Company Executive Separation Allowance Plan, as amended from time to time.

"Separation From Service" shall be determined to have occurred on the date on which an Eligible Leadership Level One or Two Employee incurs a “separation from service” within the meaning of Code Section 409A.

"Service" shall mean an eligible employee's years of service (including fractions of years) used in determining eligibility for an early retirement benefit under the Ford Motor Company General Retirement Plan.

"Specified Employee" shall mean an employee of the Company who is a "Key Employee" as defined in Code Section 416(i)(1)(A)(i), (ii) or (iii), applied in accordance with the regulations thereunder and disregarding Subsection 416(i)(5).  A Specified Employee shall be identified as of December 31st of each calendar year and such identification shall apply to any Specified Employee who shall incur a Separation From Service in the 12-month period commencing April 1st of the immediately succeeding calendar year.  An employee who is determined to be a Specified Employee shall remain a Specified Employee throughout such 12-month period regardless of whether the employee meets the definition of "Specified Employee" on the date the employee incurs a Separation From Service.  This provision is effective for Specified Employees who incur a Separation From Service on or after January 1, 2005.  For purposes of determining Specified Employees, the definition of compensation under Treasury Regulation Section 1.415(c)-2(d)(3) shall be used, applied without the use of any of the special timing rules provided in Treasury Regulation Section 1.415(c)-2(e) or the special rule in Treasury Regulation Section 1.415(c)-2(g)(5)(i), but applied with the use of the special rule in Treasury Regulation Section 1.415(c)-2(g)(5)(ii).

 

 

  

  

  

"Subsidiary" shall mean, as applied with respect to any person or legal entity specified, (i) a person or legal entity a majority of the voting stock of which is owned or controlled, directly or indirectly, by the person or legal entity specified or (ii) any other type of business organization in which the person or legal entity specified owns or controls, directly or indirectly, a majority interest.

Section 3.  Eligibility.  Each Leadership Level One or Two Employee who:

	
  

	
(1)

	
was hired or rehired prior to January 1, 2004;

	
  

	
(2)

	
is being Separated From Service with the approval of the Company;

	
  

	
(3)

	
has at least five years service at the Leadership Level One or Two level, or its equivalent;

	
  

	
(4)

	
has at least ten years of combined Contributory Service or service in any other retirement plan sponsored by a Subsidiary to which the Level One or Two Employee contributed or, if contributions were not permitted, participated;

	
  

	
(5)

	
is at least 55 years of age; and

	
  

	
(6)

	
retires from the Company prior to age 65

shall receive an Executive Separation Allowance as provided herein.  The Eligible Surviving Spouse of a Leadership Level One or Two Employee who (i) has not Separated From Service with the Company, (ii) meets the eligibility conditions set forth in Subsections (1) through (3) of this Section 3, and (iii) dies on or after January 1, 1981 shall be eligible to receive the Executive Separation Allowance that the Eligible Leadership Level One or Two Employee would have been eligible to receive if such employee had Separated From Service with the approval of the Company and retired on the date of such employee's death.

The eligibility conditions set forth in Subsections (3) and (4) of Section 3 may be waived by the Executive Chairman except in the case of a Leadership Level One or Two Employee who has not Separated From Service with the Company.

Section 4.  Calculation of Amount.

A.  Base Monthly Salary.  For purposes of the Plan, the "Base Monthly Salary" of a Leadership Level One or Two Employee shall be the highest monthly base salary rate of such employee during the employee's 12 months of service immediately preceding Separation From Service with the Company, prior to giving effect to any salary reduction agreement pursuant to an employee benefit plan, as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, (i) to which Code Section 125 or Code Section 402(e)(3), applies or (ii) which provides for the elective deferral of compensation.  It shall not include supplemental compensation or any other kind of extra or additional compensation.

B.  Amount of Executive Separation Allowance.  Subject to any limitation in other provisions of the Plan, the gross monthly amount of the Executive Separation Allowance of an Eligible Leadership Level One or Two Employee under Section 3 above shall be such employee's Base Monthly Salary multiplied by a percentage, not to exceed 60%, equal to the sum of (i) 15%, (ii) five tenths of one percent (.5%) for each month (or fraction thereof) that such employee's age at Separation From Service exceeds 55, not to exceed thirty percent (30%), and (iii) one percent (1%) for each year of such employee's Service in excess of 15, prorated for fractions of a year.

The gross amount for any month shall be reduced by any payments paid or payable for such month to the Eligible Leadership Level One or Two Employee, the employee's Eligible Surviving Spouse, contingent annuitant, or other beneficiary, (i) under the General Retirement Plan, Benefit Equalization Plan, or Select Retirement Plan, or (ii) as a Pension Parity Benefit from the Supplemental Executive Retirement Plan, other than (a) Supplemental Benefit or Conditional Annuity payments paid or payable from the Supplemental Executive Retirement Plan, or (b) any other defined benefit retirement plan in which an involuntary distribution of a lump sum benefit on an actuarially equivalent basis occurred before age 65 and without the Eligible Leadership Level One or Two Employee's retirement.

 

 

  

  

  

C.  Special Executive Separation Allowances.  In addition to any other Executive Separation Allowance provided under this Plan, the Company may, in its sole discretion, provide special Executive Separation Allowances to certain Eligible Leadership Level One or Two Employees.  Special Executive Separation Allowances provided to Eligible Leadership Level One or Two Employees whose compensation is subject to the executive compensation disclosure rules under the Securities Exchange Act of 1934 shall be set forth in Appendix A.  Special Equalization Benefits provided to Eligible Leadership Level One or Two Employees who are not subject to such disclosure rules shall be set forth in a separate confidential schedule to the Plan that is administered by the HR Director-Executive Personnel Office.  Any special Executive Separation Allowance provided pursuant to this Section shall be paid in accordance with the terms and conditions of this Plan, including without limitation Section 5.

Section 5.  Payments.  Executive Separation Allowance payments to an Eligible Leadership Level One or Two Employee, in the net amount determined in accordance with Section 4B above, shall be made monthly from the Company's general funds commencing on or as soon as reasonably practicable after the first day of the month following the date on which the Eligible Leadership Level One or Two Employee has a Separation From Service.  Payments to an Eligible Leadership Level One or Two Employee shall cease at the end of the month in which such employee attains age 65 or dies, whichever occurs first.  In the event of death of an Eligible Leadership Level One or Two Employee prior to such employee attaining age 65, or in the event of death on or after January 1, 1981 of a Leadership Level One or Two Employee whose Eligible Surviving Spouse meets the eligibility conditions set forth in Section 3 for payments hereunder, payments shall be made to such employee's Eligible Surviving Spouse, if any, commencing as soon as reasonably practicable following the date of the Eligible Leadership Level One or Two Employee's death, and continuing until the earlier of the death of such Eligible Surviving Spouse, or the end of the month in which the Eligible Leadership Level One or Two Employee would have attained age 65.

Anything herein contained to the contrary notwithstanding, the right of any Eligible Leadership Level One or Two Employee to receive an installment of Executive Separation Allowance hereunder for any month shall be payable only if:

	
(i)  

	
During the entire period from the date of such employee's Separation From Service to the end of such month, such employee shall have earned out such installment by refraining from engaging in any activity that is directly or indirectly in competition with any activity of the Company or any Subsidiary or Affiliate thereof;

	
(ii)  

	
If a Specified Employee incurs a Separation From Service, other than as a result of such Specified Employee's death, payment of any Executive Separation Allowance benefit to such Specified Employee shall commence on or as soon as reasonably practicable after the first day of the seventh month following the Separation From Service and any Executive Separation Allowance benefits to which such Specified Employee otherwise would have been entitled during the first six months following such Specified Employee's Separation From Service shall be accumulated and paid in a lump sum payment on or as soon as reasonably practicable after the first day of the seventh month following such Separation From Service; and

	
(iii)  

	
The payments delayed under this Section shall not bear interest.

In the event of an Eligible Leadership Level One or Two Employee's nonfulfillment of the condition set forth in the immediately preceding paragraph, no further installment shall be paid to such employee; provided, however, that the nonfulfillment of such condition may at any time (whether before, at the time of or subsequent to termination of the employee's employment) be waived in the following manner:

(1) with respect to any such employee who at any time shall have been a member of the Board of Directors, a Vice President, the Treasurer, the Controller or the Secretary of the Company, such waiver may be granted by the Compensation Committee upon its determination that in its sole judgment there shall have not been and will not be any substantial adverse effect upon the Company or any Subsidiary or Affiliate thereof by reason of the nonfulfillment of such condition; and

(2) with respect to any other such employee, such waiver may be granted by the Annual Incentive Compensation Committee (or any committee appointed for the purpose) upon its determination that in its sole judgment there shall not have been and will not be any such substantial adverse effect.

Anything herein contained to the contrary notwithstanding, Executive Separation Allowance payments shall not be paid to or with respect to any person as to whom it has been determined that such person at any time (whether before or subsequent to termination of the employee's employment) acted in a manner inimical to the best interests of the Company.

 

 

  

  

  

 

Any such determination shall be made by (i) the Compensation Committee with respect to any Leadership Level One Employee who at any time shall have been a member of the Board of Directors, an Executive Vice President, a Vice President, the Treasurer, the Controller or the Secretary of the Company, and (ii) the Annual Incentive Compensation Committee with respect to any other Leadership Level One or Two Employee, and shall apply to any amounts payable after the date of the applicable Committee's action hereunder, regardless of whether the person has commenced receiving Executive Separation Allowance.  Conduct which constitutes engaging in an activity that is directly or indirectly in competition with any activity of the Company or any Subsidiary or Affiliate thereof shall be governed by the four immediately preceding paragraphs of this Section and shall not be subject to any determination under this paragraph.

 

Section 6.  Deductions.  The Company may deduct from any payment of Executive Separation Allowance to an Eligible Leadership Level One or Two Employee or such employee's Eligible Surviving Spouse all amounts owing to it by such employee for any reason, and all taxes required by law or government regulation to be deducted or withheld.

Section 7.  Administration and Interpretation.  Except as the committees specified in Section 5 and the Executive Chairman is authorized to administer the Plan in certain respects, the Group Vice President –Human Resources and Corporate Services (or, in the event of a change in title, their functional equivalent) shall have full power and authority on behalf of the Company to administer and interpret the Plan.  In the event of a change in a designated officer's title, the officer or officers with functional responsibility for executive separation allowance plans shall have the power and authority to administer and interpret the Plan.  All decisions with respect to the administration and interpretation of the Plan shall be final and shall be binding upon all persons.  In the event that an Article, Section or paragraph of the Code, Treasury Regulations, or the Ford Motor Company General Retirement Plan is renumbered, such renumbered Article, Section or paragraph shall apply to applicable references herein.

Section 8.  Amendment and Termination.  The Company reserves the right to amend, modify or terminate the Plan at any time without notice; provided, however, that no distribution of Executive Separation Allowances shall occur upon termination of this Plan unless applicable requirements of Code Section 409A have been met.

Section 9.  Local Payment Authorities.  The Vice President and Treasurer and the Assistant Treasurer (or, in the event of a change in title, their functional equivalent) may act individually to delegate authority to administrative personnel to make benefit payments to Eligible Leadership Level One or Two Employees in accordance with Plan provisions.

Section 10.  No Contract of Employment.  The Plan is an expression of the Company's present policy with respect to Leadership Level One or Two Employees; it is not a part of any contract of employment.  No Leadership Level One or Two Employee, Eligible Surviving Spouse, or any other person shall have any legal or other right to any benefit under this Plan.

Section 11.  Executive Separation Allowances Not Funded.  The Company's obligations under this Plan shall not be funded and Executive Separation Allowance benefits under this Plan shall be payable only out of the general funds of the Company.

Section 12.  Visteon Corporation.  The following shall be applicable to employees of Ford who were transferred to Visteon Corporation on April 1, 2000 ("U.S. Visteon Employees") and who ceased active participation in the Plan as of June 30, 2000 after Visteon Corporation was spun-off from Ford, June 28, 2000.

(a)      Group I and Group II Employees.

 

For purposes of this paragraph, a "Group I Employee" shall mean a U.S. Visteon Employee who as of July 1, 2000 was eligible for immediate normal or regular early retirement under the provisions of the GRP as in effect on July 1, 2000.  A "Group II Employee" shall mean a U.S. Visteon Employee who (i) was not a Group I Employee; (ii) had as of July 1, 2000 a combination of age and continuous service that equals or exceeds sixty (60) points (partial months disregarded); and (iii) could become eligible for normal or regular early retirement under the provisions of the GRP as in effect on July 1, 2000 within the period after July 1, 2000 equal to the employee's Ford service as of July 1, 2000.  A Group I or Group II Employee shall retain eligibility to receive an Executive Separation Allowance and shall receive such benefits as are applicable under the terms of the Plan in effect on the retirement date, based on meeting the minimum Leadership Level required for eligibility for such benefits as of July 1, 2000, service as of July 1, 2000, and the Base Monthly Salary as of the retirement date.

(b)      Group III Employees.

 

For purposes of this paragraph, a "Group III Employee" shall mean a U.S. Visteon Employee who participated in the GRP prior to July 1, 2000 other than a Group I or Group II Employee.  The Plan shall have no liability for any Executive Separation Allowance payable to Group III Employees who were otherwise eligible hereunder with respect to service prior to July 1, 2000 on or after July 1, 2000.

 

 

  

  

  

Section 13.  Code Section 409A.

	
(a)

	
The provisions of Code Section 409A are incorporated into the Plan by reference to the extent necessary for any benefit provided under the Plan that is subject to Code Section 409A to comply with such requirements and, except as otherwise expressly determined by the Company, the Plan shall be administered in accordance with Code Section 409A as if the requirements of Code Section 409A were set forth herein.  The Company reserves the right to take such action, on a uniform basis, as the Company deems necessary or desirable to ensure compliance with Code Section 409A, and applicable additional regulatory guidance thereunder, or to achieve the goals of the Plan without having adverse tax consequences under this Plan for any employee or beneficiary.  Unless determined otherwise by the Company, any such action shall be taken in a manner that will enable any benefit provided under the Plan that is intended to be exempt from Code Section 409A to continue to be so exempt, or to enable any benefit provided under the Plan that is intended to comply with Code Section 409A to continue to so comply.

	
(b)

	
In no event shall any transfer of liabilities to or from this Plan result in an impermissible acceleration or deferral of any Executive Separation Allowance under Code Section 409A. In the event such a transfer would cause an impermissible acceleration or deferral under Code Section 409A, such transfer shall not occur.

	
(c)

	
In the event an Eligible Leadership Level One or Two Employee is reemployed following a Separation From Service, distribution of any Executive Separation Allowance shall not cease upon such Eligible Leadership Level One or Two Employee's reemployment.

	
(d)

	
After receipt of Plan benefits, the obligations of the Company with respect to such benefits shall be satisfied and no Eligible Leadership Level One or Two Employee, or their Eligible Surviving Spouse, shall have any further claims against the Plan or the Company with respect to Plan benefits.

Section 14. Claim for Benefits

Denial of a Claim.  A claim for benefits under the plan shall be submitted in writing to the plan administrator.  If a claim for benefits or participation is denied in whole or in part by the plan administrator, the Eligible Leadership Level One or Two Employee will receive written notification within a reasonable period from the date the claim for benefits or participation is received.  Such notice shall be deemed given upon mailing, full postage prepaid in the United States mail or on the date sent electronically to the Eligible Leadership Level One or Two Employee.  If the plan administrator determines that an extensive period of time for processing is required, written notice shall be furnished to the Eligible Leadership Level One or Two Employee as soon as practical.

Review of Denial of the Claim.  In the event that the plan administrator denies a claim for benefits or participation, the Eligible Leadership Level One or Two Employee may request a review by filing a written appeal to the Group Vice President – Human Resources and Corporate Services (or, in the event of a change in title, their functional equivalent), or his or her designee, within sixty (60) days of receipt of the written notification of denial.  The appeal will be considered, and a decision shall be rendered as soon as practical.  In the event a time extension is needed to consider the appeal and render the decision, written notice shall be provided to the Eligible Leadership One or Two Employee notifying them of such time extension.

Decision on Appeal.  The decision on review of the appeal shall be in writing.  Such notice shall be deemed given upon mailing, full postage prepaid in the United States mail or on the date sent electronically to the Eligible Leadership Level One or Two Employee.  Decisions on the appeal are final and conclusive and are only subject to the arbitrary and capricious standard of judicial review.

Limitations Period.  No legal action for benefits under the plan may be brought against the plan until after the claims and appeal procedures have been exhausted. Legal actions under the plan for benefits must be brought no later than two (2) years after the claim arises. No other action may be brought against the plan more than six (6) months after the claim arises.

 

 

  

  

  

 

Appendix A

Special Executive Separation Allowances

Named Executive Officers

Section 1.  Special Executive Separation Allowances Based on Notional Service and Salary.  Special Executive Separation Allowances will be provided to each Eligible Leadership Level One or Two Employee listed in Subsection 1.D below for the period of time during which such Eligible Leadership Level One or Two Employee did not receive a cash base salary from the Company by determining the Executive Separation Allowance that otherwise would have been provided to such Eligible Leadership Level One or Two Employee for such period using notional service and salary as follows; provided that, in no event shall an Eligible Leadership Level One or Two Employee receive both an Executive Separation Allowance and a special Executive Separation Allowance for the same period of service:

A.  Contributory Service.  Contributory Service, if any, for each such Eligible Leadership Level One or Two Employee for any period of time during which the Eligible Leadership Level One or Two Employee did not receive a cash base salary shall be determined by the Committee, in its sole discretion, based on the contributory service the Eligible Leadership Level One or Two Employee would have accrued had the Eligible Leadership Level One or Two Employee participated in the Ford Motor Company General Retirement Plan on a contributory basis during such period of time.

B.  Service.  Service, if any, for each such Eligible Leadership Level One or Two Employee for any period of time during which the Eligible Leadership Level One or Two Employee did not receive a cash base salary shall be determined by the Committee, in its sole discretion, based on the service the Eligible Leadership Level One or Two Employee would have accrued had the Eligible Leadership Level One or Two Employee participated in, and accrued credited service under, the Ford Motor Company General Retirement Plan during such period of time.

C.  Base Monthly Salary.  Base Monthly Salary for each such Eligible Leadership Level One or Two Employee shall be determined by the Committee, in its sole discretion, based on a notional base monthly salary for the period of time during which the Eligible Leadership Level One or Two Employee did not receive a cash base salary.

D.  Affected Eligible Leadership Level One or Two Employees.  The following Eligible Leadership Level One or Two Employees' special Executive Separation Allowances shall be determined in accordance with this Section:

William Clay Ford, Jr.

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