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Exhibit 10.33
EXECUTIVE SEVERANCE AGREEMENT
THIS IS AN AGREEMENT between DURAMETALLIC CORPORATION (the
"Corporation") whose principal offices are located at 0000 Xxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, and Xxxxx X. Xxxx (the "Employee"),
who resides at _____________________________, dated January 6, 1994.
1. Term of Agreement. This Agreement will begin on the date
entered above (the "Commencement Date") and will continue in effect
through the third anniversary of the Commencement Date; provided,
however, that if a Change of Control occurs during the term of this
Agreement, this Agreement will continue in effect for 36 months beyond
the end of the month in which any Change of Control occurs.
2. Definitions. The following defined terms shall have the
meanings set forth below, for purposes of this Agreement.
(a) Change of Control. "Change of Control" means an
occurrence 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"). Without limiting the inclusiveness of the
definition in the preceding sentence, a Change of Control of the
Corporation shall be deemed to have occurred if:
(i) 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 under the Exchange Act),
directly or indirectly, of securities of the Corporation
representing forty percent (40%) or more of the combined
voting power of the Corporation's then-outstanding
securities; or
(ii) At any time a majority of the Board of Directors of
the Corporation is comprised of other than Continuing
Directors (for purposes of this paragraph, the term
Continuing Director means a director who was either (A) first
elected or appointed as a Director prior to the date of this
Agreement; (B) subsequently elected or appointed as a
director if such director was nominated or appointed by at
least a majority of the then-Continuing Directors); or
(iii) Any of the following occur:
(A) any merger or consolidation of the Corporation,
other than a merger or consolidation in which the voting
securities of the Corporation immediately prior to the
merger or consolidation continue to represent (either by
remaining outstanding or being converted into securities
of the surviving
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entity) fifty-one percent (51%) or more of the combined
voting power of the Corporation or surviving entity
immediately after the merger or consolidation with another
entity;
(B) any sale, exchange, lease, mortgage, pledge,
transfer, or other disposition (in a single transaction or a
series of related transactions) of all or substantially all
of the assets of the Corporation which shall include, without
limitation, the sale of assets or earning power aggregating
more than fifty percent (50%) of the assets or earning power
of the Corporation on a consolidated basis;
(C) any liquidation or dissolution of the Corporation;
(D) any reorganization, reverse stock split, or
recapitalization of the Corporation which would result in a
Change of Control; or
(E) any transaction or series of related transactions
having, directly or indirectly, the same effect as any of the
foregoing; or any agreement, contract, or other arrangement
providing for any of the foregoing.
(b) Disability. "Disability" means that, as a result of Employee's
incapacity due to physical or mental illness, the Employee shall have
been absent from the full-time performance of his duties with the
Corporation for 6 consecutive months and, within 30 calendar days after
written notice of suspension due to Disability is given, the Employee
shall not have returned to the full-time performance of his duties.
(c) Cause. "Cause" means (i) Employee's willful and continued
failure to substantially perform Employee's duties with the Corporation
under this Agreement (other than any such failure resulting from
Disability or occurring after issuance by Employee of a Notice of
Termination for Good Reason), after a written demand for substantial
performance is delivered to the Employee that specifically identifies
the manner in which the Corporation believes that the Employee has
willfully failed to substantially perform his duties, and after the
Employee has failed to resume substantial performance of his duties on
a continuous basis within 14 calendar days of receiving such demand;
(ii) the Employee willfully engaging in conduct (other than conduct
covered under (I) above, which is demonstrably and materially injurious
to the Corporation, monetarily or otherwise; or (iii) the Employee's
having been convicted of a felony which impairs his ability
substantially to perform his duties with the Corporation. For purposes
of this subparagraph, no act, or failure to act, on the Employee's part
shall be deemed "willful" unless done, or omitted to be done, by the
Employee not in good faith and without reasonable belief that the
action or omission was in the best interest of the Corporation.
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(d) Good Reason. For purposes of this Agreement, "Good Reason"
means the occurrence of any one or more of the following after a Change
of Control (or before a Change of Control, if covered by subparagraph
(viii), below) without the Employee's express written consent:
(i) The assignment to Employee of duties inconsistent with
the duties, responsibilities, and status of Employee's position as
of the day prior to the Change of Control of the Corporation;
(ii) A reduction by the Corporation in Employee's base salary
as of the day prior to the Change of Control, or reduction of
Employee's most recent target incentive award opportunity prior to
the Change of Control under the Corporation's Executive Incentive
Bonus Plan, or any successor plan (provided, however, that a
reduction in bonus opportunity will not constitute Good Reason if
there is a corresponding increase in the Employee's salary);
(iii) The Corporation's requiring Employee to be based at a
location in excess of 50 miles from the location where Employee is
currently based;
(iv) Any reduction in Employee's fringe benefits, including
insurance, retirement and other benefits, provided, however, that
except as provided elsewhere in this subsection (d), a reduction
in benefits shall not constitute "Good Reason" if it affects all
salaried employees of the Corporation who receive such benefit and
is taken as a legitimate and prudent management action to bring
the Corporation's benefits into line with prevailing benefits paid
to employees holding comparable positions with other businesses of
comparable size in the United States;
(v) The failure of the Corporation to obtain a satisfactory
agreement from any successor to the Corporation to assume and
agree to perform this Agreement, as contemplated in Paragraph 7
hereof;
(vi) Any termination by the Corporation of Employee's
employment that is not effected pursuant to a Notice of
Termination;
(vii) Any action adverse to Employee, if taken to denigrate
Employee's status within the Corporation; or
(viii) Any termination of Employee's employment, reduction in
Employee's compensation or benefits, or adverse change in
Employee's location or duties, if such termination, reduction or
adverse change occurs within 12 months before a Change of Control,
is in contemplation of such Change in Control, and is taken to
avoid the effect of this Agreement should such action occur after
such Change in Control.
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The existence of Good Reason shall not be affected by
Employee's incapacity due to physical or mental illness.
Employee's continued employment shall not constitute a waiver of
Employee's rights with respect to any circumstances constituting
Good Reason hereunder.
(e) Notice of Termination. "Notice of Termination" means a
written notice indicating the specific termination provision in
this Agreement relied upon and setting forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the employment under the provision so indicated.
3. Eligibility for Severance Benefits. Subject to Paragraph 5, the
Employee shall receive the Severance Benefits described in Paragraph 4
if the Employee's employment is terminated during the term of this
Agreement; and:
(a) the termination occurs within 36 months after a Change of
Control, unless the termination is (i) because of Employee's
death or Disability, (ii) by the Corporation for Cause, or (iii)
by the Employee other than for Good Reason; or
(b) the Corporation terminates the employment within 12
months before a Change of Control, in contemplation of such Change
of Control, and to avoid the effect of this Agreement should such
action occur after such Change of Control.
4. Severance Benefits. Subject to Paragraph 5, the Employee shall
receive the following Severance Benefits (in addition to accrued
compensation and vested benefits) if eligible under Paragraph 3:
(a) Employee's average annual W-2 compensation from the
Corporation for the five full calendar year period ending at the
end of the calendar year immediately preceding that in which the
employment terminates (and not counting any year in which Employee
was not employed by the Corporation for the full year), multiplied
by 3;
(b) Immediate full vesting of all shares of the Corporation's
stock which have theretofore been granted to Employee under the
Corporation's Executive Incentive Bonus Plan; and
(c) For a 3-year period after the date the employment is
terminated, the Corporation will arrange to provide to Employee at
the Corporation's expense, with:
(i) the same health care coverage Employee had prior to
the termination (or, if more favorable to Employee, that
furnished generally to salaried employees of the Corporation)
including, but not limited to, hospital, surgical, medical,
dental, and dependent coverages. Health care benefits
otherwise receivable by Employee pursuant to this Paragraph
4(c) shall be reduced to the extent comparable benefits are
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actually received by Employee from a subsequent employer
during the 3-year period following the date the employment is
terminated and any such benefits actually received by
Employee shall be reported to the Corporation;
(ii) life and accidental death and dismembership
insurance coverage (including supplemental coverage purchase
opportunity and double indemnity for accidental death) equal
(including policy terms) to that in effect at the time
Notice of Termination is given or, if more favorable to
Employee, equal to that in effect at the date the Change of
Control occurs; and
(iii) disability insurance coverage (including policy
terms) equal to that in effect at the time Notice of
Termination is given or, if more favorable to Employee, equal
to that in effect immediately prior to the Change of Control;
provided, however, that no income replacement benefits will
be payable under such disability policy with regard to the
3-year period following a termination of employment provided
that the payments payable under subparagraphs 4(a) and (b)
above have been made.
(d) in computing and determining Severance Benefits under
subparagraphs 4(a), (b), and (c) above, a decrease in Employee's
salary, target bonus, or insurance benefits shall be disregarded
if such decrease occurs within 12 months before a Change of
Control, is in contemplation of such Change of Control, and is
taken to avoid the effect of this Agreement should such action be
taken after such Change of Control; in such event, the salary,
target bonus, and/or insurance benefits used to determine
Severance Benefits shall be that in effect immediately before the
decrease that is disregarded pursuant to this subparagraph 4(d).
(e) Employee shall not be required to mitigate the amount of
any payment provided for in this paragraph 4 by seeking other
employment or otherwise, nor shall the amount of any payment
provided for in this paragraph be reduced by any compensation
earned by Employee as the result of employment by another employer
after the date the employment is terminated, or otherwise, with
the exception of a reduction in health insurance coverage as
provided in subparagraph 4(c) (i).
The payments provided in subparagraphs 4(a) and (b) above shall be
made not later than 10 business days following the date the employment
terminates.
Any termination by the Corporation for Cause or due to Employee's
Disability, or by Employee for Good Reason shall be communicated by
Notice of Termination to the other party.
5. Maximum Payments. Notwithstanding any provision in this
Agreement to the contrary, if part or all of any amount to be paid to
Employee by the Corporation under this Agreement or otherwise
constitute a "parachute payment" (or payments) under Section 280G
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or any other similar provision of the Internal Revenue Code of 1986, as
amended (the "Code"), the following limitation shall apply:
If the aggregate present value of such parachute payments
(the "Parachute Amount") exceeds 2.99 times Employee's "base
amount" as defined in Section 28OG of the Code, the amounts
otherwise payable to or for the benefit of the Employee subsequent
to the termination of his employment, and taken into account in
calculating the Parachute Amount (the "termination payments"),
shall be reduced and/or delayed, as further described below, to
the extent necessary so that the Parachute Amount is equal to 2.99
times the Employee's "base amount."
Any determination or calculation described in this Paragraph 5
shall be made by the Corporation's independent accountants. Such
determination, and any proposed reduction and/or delay in termination
payments shall be furnished in writing promptly by the accountants to
the Employee. The Employee may then elect, in his sole discretion,
which and how much of any particular termination payment shall be
reduced and/or delayed and shall advise the Corporation in writing of
his election, within 30 days of the accountant's determination, of the
reduction or delay in termination payments. If no such election is made
by the Employee within such 3O-day period, the Corporation may elect
which and how much of any termination payment shall be reduced and/or
delayed and shall notify the Employee promptly of such election. As
promptly as practicable following such determination and the elections
hereunder, the Corporation shall pay to or distribute to or for the
benefit of the Employee such amounts as are then due to the Employee.
Any disagreement regarding a reduction or delay in termination
payments will be subject to arbitration under Paragraph 14 of this
Agreement. Neither the Employee's designation of specific payments to
be reduced or delayed, nor the Employee's acceptance of the reduced or
delayed payments, shall waive the Employee's right to contest such
reduction or delay.
6. Successors; Binding Agreements. This Agreement shall inure to
the benefit of and be enforceable by Employee's personal and legal
representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees. Employees rights and benefits
under this Agreement may not be assigned, except that if Employee dies
while any amount would still be payable to Employee hereunder if
Employee had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms
of this Agreement, to the beneficiaries designated by the Employee to
receive benefits under this Agreement in a writing on file with the
Corporation at the time of the Employee's death or, if there is no
such beneficiary, to Employee's estate. The Corporation will require
any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all of substantially all of the
business and/or assets of the Corporation (or any division or
subsidiary thereof employing Employee) 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 assumption
and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle Employee to
compensation from the Corporation in the same amount and on the same
terms to which Employee would be entitled
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hereunder if Employee terminated the employment for Good Reason
following a Change of Control.
7. Withholding of Taxes. The Corporation may withhold from any
amounts payable under this Agreement all federal, state, city, or other
taxes as required by law.
8. Notice. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt required, postage
prepaid, addressed to the respective addressees set forth on the first
page of this Agreement, or at such other addresses as the parties may
designate in writing.
9. 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 Employee and such officer as may be
specifically designed by the Board of Directors of the Corporation. The
validity, interpretation, construction, and performance of this
Agreement shall be governed by the laws of the State of Michigan.
10. Employment Rights. This Agreement shall not confer upon
Employee any right to continue in the employ of the Corporation or its
subsidiaries and shall not in any way affect the right of the
Corporation or its subsidiaries to dismiss or otherwise terminate
Employee's employment at any time with or without cause.
11. No Vested Interest. Neither Employee nor Employee's
beneficiary shall have any right, title, or interest in any benefit
under this Agreement prior to the occurrence of the right to the
payment thereof, or in any property of the Corporation or its
subsidiaries or affiliates.
12. Prior Agreements. If there is any discrepancy or conflict
between this Agreement and any plan, policy, or program of the
Corporation regarding any term or condition of severance benefits in
connection with a Change of Control of the Corporation, the language of
this Agreement shall govern.
13. 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.
14. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
15. Arbitration. The sole and exclusive method for resolving any
dispute arising out of this Agreement shall be arbitration in
accordance with this paragraph. Except as provided otherwise in this
paragraph, arbitration pursuant to this paragraph shall be governed by
the Commercial Arbitration Rules of the American Arbitration
Association. A party wishing to obtain arbitration of an issue shall
deliver written notice to the other party, including a description of
the issue to be arbitrated. Within 15 days after either party demands
arbitration, the Corporation and the Employee shall each appoint an
arbitrator. Within 15 additional days, these two arbitrators shall
appoint the third arbitrator by mutual
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agreement; if they fail to agree within said 15-day period, then the
third arbitrator shall be selected promptly pursuant to the rules of
the American Arbitration Association for Commercial Arbitration. The
arbitration panel shall hold a hearing in Kent Country, Michigan,
within 90 days after the appointment of the third arbitrator. The fees
and expenses of the arbitrator, and any American Arbitration
Association fees, shall be paid by the Corporation. Both the
Corporation and the Employee may be represented by counsel and may
present testimony and other evidence at the hearing. Within 90 days
after commencement of the hearing, the arbitration panel will issue a
written decision; the majority vote of two of the three arbitrators
shall control. The majority decision of the arbitrators shall be final
and binding on the parties, and shall be enforceable in accordance with
law. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The Employee shall be entitled to seek specific
performances of his rights under this Agreement during the pendency of
any dispute or controversy arising under or in connection with this
Agreement. The Corporation will reimburse Employee for all reasonable
attorney fees incurred by Employee as the result of any arbitration
with regard to any issue under this Agreement (or any judicial
proceeding to compel or to enforce such arbitration): (i) which is
initiated by Employee if the Corporation is found in such proceeding to
have violated this Agreement substantially as alleged by Employee; or
(ii) which is initiated by the Corporation, unless Employee is found in
such proceeding to have violated this Agreement substantially as
alleged by the Corporation.
IN WITNESS WHEREOF, the parties have signed this Agreement as of
the day and year written above.
DURAMETALLIC CORPORATION
By /s/ Xxxxx X. Xxxxxxxx
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Its Sr. VP Finance
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"Corporation"
/s/ Xxxxx X. Xxxx
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"Employee"
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AMENDMENT NO.1
TO EXECUTIVE SEVERANCE AGREEMENT
This is an Amendment No.1 to an Executive Severance Agreement (the
"Agreement") between Durametallic Corporation (the "Corporation")
whose principal offices are located at 0000 Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxx, 00000, and Xxxxx X. Xxxx (the "Employee") dated January 6,
1994.
The Corporation and Employee agree to the following amendment of the
Agreement:
1. Section 4(b) shall be deleted in its entirety.
The remainder of the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have signed this Agreement as of
the day and year written below.
EMPLOYEE DURAMETALLIC CORPORATION
/s/ Xxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxxxx
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Date: 9/11/95 Title: Sr. VP Finance
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"Corporation"
Date 9/11/95
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