EXHIBIT 10
CHANGE IN CONTROL AND TERMINATION AGREEMENT
Modine Manufacturing Company, a Wisconsin corporation
("Employer") and Xxxxxx X. Xxxxxxx ("Executive") hereby enter into
a Change in Control and Termination Agreement, effective as of
May 20 , 1999 ("Agreement"), and such Agreement is hereinafter
---------
set forth.
WITNESSETH:
WHEREAS, Executive is currently employed by Employer as its
Chief Executive Officer;
WHEREAS, Employer desires to provide security to Executive
in connection with Executive's employment with Employer in the
event of a Change in Control affecting Employer; and
WHEREAS, Executive and Employer desire to enter into this
Agreement pertaining to the terms of the security Employer is
providing to Executive with respect to his employment in the
event of a Change in Control;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, and other good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties agree as follows:
1. Term. The term of this Agreement shall be the period
----
beginning on the date hereof and terminating on the date 36
months after such date (the "Term"), provided that for each day
from and after the date hereof the Term will automatically be
extended for an additional day, unless either Employer or
Executive has given written notice to the other party of its or
his election to cease such automatic extension, in which case the
Term shall be the 36-month period beginning on the date such
notice is received by such other party.
2. Definitions. For purposes of this Agreement:
-----------
(a) "Actual Bonus" shall mean the amount of
Executive's incentive bonus compensation actually payable
for a calendar year under an incentive compensation plan
maintained by Employer; provided, however, that such amount
shall in no event be less than the highest amount payable to
Executive at any time during the Term.
(b) "Affiliate" or "Associate" shall have the meaning set
forth in Rule 12b-2 under the Securities Exchange Act of 1934.
(c) "Base Salary" shall mean Executive's per annum
base salary at the rate in effect on the date of a
termination of employment under circumstances described in
subsections 3(a) or (b) below; provided, however, that such
rate shall in no event be less than the highest rate in
effect for Executive at any time during the Term.
(d) "Beneficiary" shall mean the person or entity
designated by Executive, by written instrument delivered to
Employer, to receive the benefits payable under this
Agreement in the event of his death. If Executive fails to
designate a Beneficiary, or if no Beneficiary survives
Executive, such death benefits shall be paid:
(i) to his surviving spouse; or
(ii) if there is no surviving spouse, to his
living descendants per stirpes; or
-----------
(iii) if there is neither a surviving spouse nor
descendants, to his duly appointed and
qualified executor or personal representative.
(e) A "Change in Control" shall be deemed to take
place on the occurrence of any of the following events:
(1) The commencement by an entity, person or
group (other than Employer or an Affiliate or
Associate) of a tender offer for at least 30% of the
outstanding capital stock of Employer entitled to vote
in elections of directors ("Voting Power");
(2) The effective time of (i) a merger or
consolidation of Employer with one or more other
corporations as a result of which the holders of the
outstanding Voting Power of Employer immediately prior to
such merger or consolidation (other than the surviving or
resulting corporation or any Affiliate or Associate
thereof) hold less than 50% of the Voting Power of the
surviving or resulting corporation, or (ii) a transfer
of 30% of the Voting Power, or a Substantial Portion of
the Property, of Employer other than to an entity of
which Employer owns at least 50% of the Voting Power; or
(3) During any period of 24 months that ends during
the Term, regardless of whether such period commences
before or after the effective date of this Agreement, the
persons who at the beginning of such 24-month period were
directors of Employer cease for any reason to constitute
at least a majority of the Board of Directors of Employer.
(f) "Code" shall mean the Internal Revenue Code of
1986, as amended.
(g) "Defined Contribution Plan" shall mean any
Retirement Plan that is a defined contribution plan as
defined in Section 3(34) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
(h) "Five-Year Average Actual Bonus" shall mean the
average of Executive's Actual Bonuses (determined without
reference to the proviso in subsection 2(a)) payable for the
five-year period ending on December 31 of the calendar year
immediately preceding the calendar year of Executive's
termination of employment.
(i) "Five-Year Average Base Salary" shall mean the
average of Executive's per annum Base Salary (determined
without reference to the proviso in subsection 2(c)) payable
for the five-year period ending on December 31 of the
calendar year immediately preceding the calendar year of
Executive's termination of employment.
(j) "Good Cause" shall be deemed to exist if, and only
if:
(1) Executive engages in an act of dishonesty
constituting a felony that results or is
intended to result directly or indirectly in
gain or personal enrichment at the expense of
Employer; or
(2) Executive breaches any provision of Section 8
(relating to confidential information), and such
breach results in a demonstrably material injury
to Employer.
(k) "Pension Plan" shall mean any Retirement Plan that
is a defined benefit plan as defined in Section 3(35) of ERISA.
(l) "Retirement Plan" shall mean any qualified or
supplemental employee pension benefit plan, as defined in
Section 3(2) of ERISA, currently or hereinafter made available
by Employer in which Executive is eligible to participate.
(m) "Severance Period" shall mean the period beginning
on the date Executive's employment with Employer terminates
under circumstances described in subsection 3(a) and ending
on the date 36 months thereafter.
(n) "Substantial Portion of the Property of Employer"
shall mean 50% of the aggregate book value of the assets of
Employer and its Affiliates and Associates as set forth on
the most recent balance sheet of Employer, prepared on a
consolidated basis, by its regularly employed, independent,
certified public accountants.
(o) "Target Bonus" shall mean the amount of
Executive's target annual incentive bonus compensation for
the calendar year in which the date of a termination of
employment under circumstances described in subsection 3(a)
below occurs, under the incentive bonus compensation plan
maintained by Employer for such year; provided, however,
that such amount shall in no event be less than the highest
amount in effect for Executive at any time during the term.
(p) "Welfare Plan" shall mean any health and dental
plan, disability plan, survivor income plan or life
insurance plan, as defined in Section 3(1) of ERISA,
currently or hereafter made available by Employer in which
Executive is eligible to participate.
3. Benefits Upon Termination of Employment. (a) The
---------------------------------------
following provisions will apply if a Change in Control occurs
during the Term, and at any time during the 24 months after the
Change in Control occurs (whether during or after the expiration
of the Term), the employment of Executive with Employer is
terminated by Employer for any reason other than Good Cause, or
Executive terminates his employment with Employer for any reason:
(1) Employer shall pay Executive an amount equal to
three times the greater of: (A) the sum of Executive's Base
Salary and Target Bonus, or (B) the sum of Executive's Five-
Year Average Base Salary and Five-Year Average Actual Bonus.
Such amount shall be paid to Executive in a lump sum within
60 days after his date of termination of employment.
(2) Employer shall pay Executive an amount equal to
the pro rata portion of the Target Bonus that is applicable
to the period commencing on the first day of the calendar
year in which the employment of Executive is terminated and
ending on the date of such termination. Such amount shall
be paid to Executive in a lump sum within 60 days after his
date of termination of employment.
(3) (A) Employer shall pay to Executive a monthly
Supplemental Pension Benefit in an amount equal to the
amount determined pursuant to clause (i) below less the
amount determined pursuant to clause (ii) below:
(i) the aggregate monthly amount of the pension
benefit ("Pension") that would have been payable to
Executive under all Pension Plans if that Pension were
computed (A) by treating the Severance Period as
service for all purposes of the Pension Plans and (B)
by considering his monthly compensation during the
Severance Period to be one-twelfth of his Base Salary
and one-twelfth of the Target Bonus for all purposes of
the Pension Plans;
(ii) the aggregate monthly amount of any Pension
actually paid to Executive under all Pension Plans.
(B) The Supplemental Pension Benefit payable to
Executive hereunder shall be paid (i) commencing at the
later to occur of the last day of the Severance Period or
the date payment of his Pension commences under the Pension
Plans; and (ii) in the same form as is applicable to the
Pension payable to Executive under the Pension Plans.
(C) If Executive dies prior to commencement of
payment to him of his Pension under the Pension Plans, under
circumstances in which a death benefit under the Pension
Plans is payable to his surviving spouse or other
beneficiary, then Employer shall pay a monthly Supplemental
Death Benefit to Executive's surviving spouse or other
beneficiary entitled to receive the death benefit payable
with respect to Executive under the Pension Plans in an
amount equal to the amount determined pursuant to clause (i)
below less the amount determined pursuant to clause (ii) below:
(i) the aggregate monthly amount of the
death benefit that would have been payable to the
surviving spouse or other beneficiary of Executive
under the Pension Plans if that death benefit were
computed (A) by treating the Severance Period as
service for all purposes of the Pension Plans and (B)
by considering his monthly compensation during the
Severance Period to be one-twelfth of his Base Salary
and one-twelfth of the Target Bonus for all purposes of
the Pension Plans;
(ii) the aggregate monthly amount of any
death benefit actually paid to the surviving spouse or
other beneficiary of Executive under the Pension Plans.
(D) The Supplemental Death Benefit payable with
respect to Executive hereunder shall be payable at the same
time, in the same form, and to the same persons as is
applicable to the death benefit payable with respect to
Executive under the Pension Plans.
(E) Notwithstanding the foregoing provisions, the
total of the actual years of service of Executive for
purposes of each of the Pension Plans and the years of
service for which credit is given pursuant to subparagraphs
(3)(A) and (C) shall not exceed the maximum number of years
of service, if any, that can be considered pursuant to the
terms of such Pension Plan.
(F) Any actuarial adjustments made under the
Pension Plans with respect to the form or time of payment of
a Pension or death benefit to Executive or his surviving
spouse or other beneficiary under the Pension Plans shall
also be applicable to the Supplemental Pension Benefit or
Supplemental Death Benefit payable hereunder and shall be
based upon the same actuarial assumptions as those specified
in the Pension Plans.
(4) (A) For each calendar year ending during the
Severance Period, Employer shall pay to Executive a
Supplemental Defined Contribution Benefit in an amount equal
to the amount determined pursuant to clause (i) below less
the amount determined pursuant to clause (ii) below:
(i) the amount that would have been allocated to
Executive's accounts under all Defined Contribution
Plans ("Accounts") during such calendar year, assuming
(A) that the amount of Executive's elective deferrals
(as defined in Section 402(g)(3) of the Code) equals
the amount of such elective deferrals Executive
authorized in the calendar year immediately preceding
the calendar year in which the date of commencement of
the Severance Period occurs; (B) that all Employer
contributions (except elective deferrals as defined in
Section 402(g)(3) of the Code) were allocated to
Executive's Accounts during such calendar year, in the
amount that would have been allocated on behalf of
Executive had Executive been actively employed during
such calendar year; and (C) that Executive's rate of
compensation (as defined in the applicable Defined
Contribution Plan for purposes of determining Employer
contributions) during such calendar year is identical
to such rate of compensation on the date immediately
preceding his termination of employment;
(ii) the amount, if any, actually allocated
to Executive's Accounts during such year;
(B) Each Supplemental Defined Contribution
Benefit shall be paid to Executive in a lump sum no later
than 60 days after the end of each applicable calendar year
during the Severance Period;
(C) In the event of Executive's death prior to
the end of the Severance Period, the Supplemental Defined
Contribution Benefit shall continue to accrue for the
duration of the Severance Period on the same basis as if
Executive had not died. Such Supplemental Defined
Contribution Benefit shall be payable to Executive's
Beneficiary at the same time and manner as such Benefit
would have been paid to Executive.
(5) If upon the date of termination of Executive's
employment Executive holds any options with respect to stock
of Employer, all such options will immediately become vested
and exercisable upon such date and will be exercisable for
36 months thereafter. Any restrictions on stock of Employer
owned by Executive on the date of termination of his
employment will lapse on such date.
(6) During the Severance Period, Executive and his
spouse and other dependents will continue to be covered by
all Welfare Plans maintained by Employer in which he and his
spouse and other dependents were participating immediately
prior to the date of his termination as if he continued to
be an employee of Employer and Employer will continue to pay
the costs of coverage of Executive and his spouse and other
dependents under such Welfare Plans on the same basis as is
applicable to active employees covered thereunder; provided
that, if participation in any one or more of such Welfare
Plans is not possible under the terms thereof, Employer will
provide substantially identical benefits. For purposes of the
continuation of Executive's group health plan coverage required
under Code Section 4980B, to the extent permitted by the
applicable group health plan, (i) the period of extended
coverage referred to in Code Section 4890B(f)(2)(B)(i)(I)
shall commence on the first date that follows the end of the
Severance Period, and (ii) the applicable notice period
provided under Code Section 4980B(f)(6)(B) shall commence
on the first date that follows the end of the Severance Period.
(b) If the employment of Executive with Employer is terminated
by Employer or Executive other than under circumstances set forth in
subsection 3(a), Executive's Base Salary shall be paid through the
date of his termination, and Employer shall have no further obligation
to Executive or any other person under this Agreement. Such termination
shall have no effect upon Employee's other rights, including but not
limited to, rights under the Retirement Plans and the Welfare Plans.
(c) Notwithstanding anything herein to the contrary, in the
event Employer shall terminate the employment of Executive for
Good Cause hereunder, Employer shall give Executive at least
thirty (30) days prior written notice specifying in detail the
reason or reasons for Executive's termination.
(d) This Agreement shall have no effect, and Employer shall
have no obligations hereunder, if Executive's employment
terminates for any reason at any time other than during the 24
months following a Change in Control.
4. Excise Tax. (a) In the event that a Change in Control
----------
shall occur, and a final determination is made by legislation,
regulation, ruling directed to Executive or Employer, by court
decision, or by independent tax counsel described in subsection
(b) next below, that the aggregate amount of any payment made to
Executive (1) hereunder, and (2) pursuant to any plan, program or
policy of Employer in connection with, on account of, or as a
result of, such Change in Control ("Total Payments") will be
subject to the excise tax provisions of Section 4999 of the Code,
or any successor section thereof, Executive shall be entitled to
receive from Employer, in addition to any other amounts payable
hereunder, a lump sum payment (the "Gross-Up Payment"),
sufficient to cover the full cost of such excise taxes and
Executive's federal, state and local income and employment taxes
on this additional payment, so that the net amount retained by
Executive, after the payment of all such excise taxes on the
Total Payments, and all federal, state and local income and
employment taxes and excise taxes on the Gross-Up Payment, shall
be equal to the Total Payments. The Total Payments, however,
shall be subject to any federal, state and local income and
employment taxes thereon. For this purpose, Executive shall be
deemed to be in the highest marginal rate of federal, state and
local taxes. The Gross-Up Payment shall be made at the same time
as the payments described in subsections 3(a)(1) and (2) above.
(b) Employer and Executive shall mutually and reasonably
determine the amount of the Gross-Up Payment to be made to
Executive pursuant to the preceding subsection. Prior to the
making of any such Gross-Up Payment, either party may request a
determination as to the amount of such Gross-Up Payment. If such
a determination is requested, it shall be made promptly, at
Employer's expense, by independent tax counsel selected by
Executive and approved by Employer (which approval shall not
unreasonably be withheld), and such determination shall be
conclusive and binding on the parties. Employer shall provide
such information as such counsel may reasonably request, and such
counsel may engage accountants or other experts at Employer's
expense to the extent that they deem necessary or advisable to
enable them to reach a determination. The term "independent tax
counsel," as used herein, shall mean a law firm of recognized
expertise in federal income tax matters that has not previously
advised or represented either party. It is hereby agreed that
neither Employer nor Executive shall engage any such firm as
counsel for any purpose, other than to make the determination
provided for herein, for three years following such firm's
announcement of its determination.
(c) In the event the Internal Revenue Service subsequently
adjusts the excise tax computation made pursuant to subsections
4(a) and (b) above, Employer shall pay to Executive, or Executive
shall pay to Employer, as the case may be, the full amount
necessary to make either Executive or Employer whole had the excise
tax initially been computed as subsequently adjusted, including the
amount of any underpaid or overpaid excise tax, and any related
interest and/or penalties due to the Internal Revenue Service.
5. Setoff. No payments or benefits payable to or with
------
respect to Executive pursuant to this Agreement shall be reduced
by any amount Executive or his spouse or Beneficiary, or any
other beneficiary under the Pension Plans, may earn or receive
from employment with another employer or from any other source.
6. Mitigation. Executive shall not be required to
----------
mitigate the amount of compensation and benefits set forth above
by seeking employment with others, or otherwise.
7. Death. If Executive's employment with Employer
-----
terminates under circumstances described in subsections 3(a) or
(b), then upon Executive's subsequent death, all unpaid amounts
payable to Executive under subsections 3(a)(1) or (2) or 3(b), or
Section 4, if any, shall be paid to his Beneficiary, all amounts
payable under subsections 3(a)(3) and (4) shall be paid pursuant
to the terms of said subsections to his spouse or other beneficiary
under the applicable Retirement Plan, and if subsection 3(a) applies,
his spouse and other dependents shall continue to be covered under
all applicable Welfare Plans during the remainder of the Severance
Period, if any, pursuant to subsection 3(a)(6).
8. Confidentiality and Non-competition. (a) Executive
-----------------------------------
agrees not to disclose (during the Term or at any time thereafter)
to any person not employed by the Employer, or not engaged to render
services to the Employer, except with the prior written consent of an
officer authorized to act in the matter by the Board of Directors of
Employer, any confidential information obtained by him while in the
employ of the Employer, including, without limitation, information
relating to any of the Employer's inventions, processes, formulae,
plans, devises, compilations of information, methods of distribution,
customers, client relationships, marketing strategies or trade secrets;
provided, however, that this provision shall not preclude the Executive
from use or disclosure of information known generally to the public or
of information not considered confidential by persons engaged in the
business conducted by the Employer or from disclosure required by law
or court order. The Agreement herein made in this Section 8 shall be
in addition to, and not in limitation or derogation of, any obligation
otherwise imposed by law upon the Executive in respect of confidential
information and trade secrets of the Employer and its Affiliates.
(b) There shall be no obligation on the part of the Employer to
make any further payments or provide any benefits required under this
Agreement if Executive shall, during the period that such payments are
being made or benefits provided, engage in Competition with the
Employer. "Competition" for purposes of this Agreement shall mean
(i) taking a management position with or control of a business engaged
in the design, development, manufacture, marketing or distribution of
products, which constituted 5% or more of the sales of the Employer
and its subsidiaries and affiliates during the last fiscal year of the
Employer preceding the termination of the Executive's employment, in
any geographical area in which the Employer, its subsidiaries or
affiliates is at the time engaging in the design, development,
manufacture, marketing or distribution of such products; provided,
however, that in no event shall ownership of less than 5% of the
outstanding capital stock entitled to vote for the election of
directors of a corporation with a class of equity securities held
of record by more than 500 persons, standing alone, be deemed
Competition with the Employer, (ii) soliciting any person who is a
customer of the businesses conducted by the Employer, or any
business in which Executive has been engaged on behalf of the
Employer and its subsidiaries or affiliates at any time during the
term of this Agreement on behalf of a business described in clause (i)
next above, or (iii) inducing or attempting to persuade any employee
of the Employer or any of its subsidiaries or affiliates to terminate
his employment relationship in order to enter into employment with a
business described in clause (i) of this subsection 8(b).
9. Forfeiture. If Executive shall at any time violate any
----------
obligation of his under Section 8 in a manner that results in
demonstrably material injury to the Employer, he shall immediately
forfeit his right to any benefits under this Agreement, and Employer
shall thereafter have no further obligation hereunder to Executive
or his spouse, Beneficiary or any other person.
10. Executive Assignment. No interest of Executive, his
--------------------
spouse or any Beneficiary, or any other beneficiary under the
Retirement Plans, under this Agreement, or any right to receive
any payment or distribution hereunder, shall be subject in any
manner to sale, transfer, assignment, pledge, attachment,
garnishment, or other alienation or encumbrance of any kind, nor
may such interest or right to receive a payment or distribution
be taken, voluntarily or involuntarily, for the satisfaction of
the obligations or debts of, or other claims against, Executive
or his spouse, Beneficiary or other beneficiary, including claims
for alimony, support, separate maintenance, and claims in
bankruptcy proceedings.
11. Benefits Unfunded. All rights under this Agreement of
-----------------
Executive and his spouse, Beneficiary or other beneficiary under
the Retirement Plans, shall at all times be entirely unfunded,
and no provision shall at any time be made with respect to
segregating any assets of Employer for payment of any amounts due
hereunder. None of Executive, his spouse, Beneficiary or any
other beneficiary under the Retirement Plans shall have any
interest in or rights against any specific assets of Employer,
and Executive and his spouse, Beneficiary or other beneficiary
shall have only the rights of a general unsecured creditor of
Employer. Notwithstanding the preceding provisions of this
Section, the Officer Nominating and Compensation Committee of the
Board of Directors of Employer, in its discretion, shall have the
right, at any time and from time to time, to cause amounts
payable or potentially payable to Executive or his Beneficiary
hereunder to be paid to the trustee of a Rabbi Trust or any
similar trust to be established by Employer ("Trust").
12. Waiver. No waiver by any party at any time of any
------
breach by the other party of, or compliance with, any condition
or provision of this Agreement to be performed by such other
party shall be deemed a waiver of any other provisions or
conditions at the same time or at any prior or subsequent time.
13. Litigation Expenses. Employer shall pay Executive's
-------------------
reasonable attorneys' fees and legal expenses in connection with
any judicial proceeding to enforce, construe or determine the
validity of this Agreement ("Litigation"), if Executive is a
Prevailing Party in such Litigation. Executive shall be deemed a
"Prevailing Party" if (a) a court enters a judgment in his favor
in connection with such Litigation, or (b) Employer and Executive
enter into a written agreement of settlement of such Litigation.
If Executive is not a Prevailing Party in such Litigation,
Employer shall pay Executive's reasonable attorney's fees and
legal expenses in connection therewith, up to a maximum of $100,000.
14. Applicable Law. This Agreement shall be construed and
--------------
interpreted pursuant to the laws of the State of Wisconsin.
15. Entire Agreement. This Agreement contains the entire
----------------
Agreement between the Employer and Executive and supersedes any
and all previous agreements; written or oral; between the parties
relating to the subject matter hereof, including without
limitation the provisions of Sections 7.03(b)(iii), 9.01, 9.02
and 14.01 of the Agreement dated October 16, 1996 between
Executive and Employer. No amendment or modification of the
terms of this Agreement shall be binding upon the parties hereto
unless reduced to writing and signed by Employer and Executive.
16. No Employment Contract. Nothing contained in this
----------------------
Agreement shall be construed to be an employment contract between
Executive and Employer.
17. Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed an original.
18. Severability. In the event any provision of this
------------
Agreement is held illegal or invalid, the remaining provisions of
this Agreement shall not be affected thereby.
19. Successors. This Agreement shall be binding upon and
----------
inure to the benefit of the parties hereto and their respective
heirs, representatives and successors.
20. Employment with an Affiliate. For purposes of this
----------------------------
Agreement, (A) employment or termination of employment of
Executive shall mean employment or termination of employment with
Employer and all Affiliates, (B) Base Salary, Target Bonus,
Actual Bonus, Five-Year Average Base Salary and Five-Year Average
Actual Bonus shall include remuneration received by Executive
from Employer and all Affiliates, and (C) the terms Defined
Contribution Plan, Pension Plan, Retirement Plan and Welfare Plan
maintained or made available by Employer shall include any such
plans of any Affiliate of Employer.
21. Notice. Notices required under this Agreement shall be
------
in writing and sent by registered mail, return receipt requested,
to the following addresses or to such other address as the party
being notified may have previously furnished to the other party
by written notice:
If to Employer: Modine Manufacturing Company
0000 XxXxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Legal Department
If to Executive: Xxxxxx X. Xxxxxxx
0000 Xxxx Xxxx Xxxx
Xxxxxx, XX 00000
IN WITNESS WHEREOF, Executive has hereunto set his hand, and
Employer has caused these presents to be executed in its name on
its behalf, all on the 27th day of May , 1999, effective
_________ ________
May 20 , 1999.
____________
MODINE MANUFACTURING COMPANY
By: X. X. XXXXXXX
---------------------------------
X. X. Xxxxxxx
Title: Executive Vice President, OE
-------------------------------
XXXXXX X. XXXXXXX
--------------------------------
Xxxxxx X. Xxxxxxx, Executive
