SEVERANCE AGREEMENT AND RELEASE
Exhibit 99.1
SEVERANCE AGREEMENT
AND RELEASE
AND RELEASE
This Severance Agreement and Release (this “Agreement”) is made and entered into on August 19,
2005 (the “Effective Date”), by and between Stoneridge, Inc., an Ohio corporation, and its
subsidiaries and affiliates and its past and present directors, shareholders, employees, agents,
officers, attorneys and assigns (the “Company”) and Xxxxxx X. Xxxxxx (“Executive”).
Recitals
A. Executive is a Vice President, Chief Financial Officer and Treasurer of the Company. He is
also an officer, director or both of several of the Company’s subsidiaries;
B. The Company and Executive now desire to enter into an agreement amicably dissolving all
employment relations between them and resolving all matters between them;
C. In connection therewith, (i) the Company and Executive have agreed, among other things,
that effective at the close of business on the Effective Date, Executive will voluntarily resign as
an employee and as a Vice President, Chief Financial Officer and Treasurer of the Company and as an
officer, director or both of all Company subsidiaries on which he serves, (ii) Executive has agreed
to waive, release and settle any claims related to or arising out of his employment and affiliation
with the Company in exchange for severance benefits to which Executive would not otherwise have
been entitled, and (iii) the Company has agreed to provide the severance benefits specified herein,
to which Executive would not otherwise have been entitled, in exchange for this Agreement; and
D. The Compensation Committee of the Board of Directors of the Company has approved this
Agreement.
NOW, THEREFORE, in consideration of the terms, conditions, premises and the mutual covenants
set forth herein, the sufficiency of which is hereby acknowledged, the parties to this Agreement
hereby agree as follows:
1. Resignations. Simultaneously with the execution and delivery of this Agreement,
Executive will resign, effective as of the close of business on the Effective Date, as an employee,
and any positions with the Company including but not limited to Vice President, Chief Financial
Officer and Treasurer of the Company by executing and delivering to the Company a letter of
resignation substantially in the form of Appendix A hereto. In addition, simultaneously with the
execution and delivery of this Agreement, Executive will resign, effective as of the close of
business on the Effective Date, as a director, officer, employee, member or manager (as applicable)
of each subsidiary of the Company of which Executive serves in any such capacity, by executing and
delivering to the Company a letter of resignation substantially in the form of Appendix B hereto.
Executive and the Company agree and acknowledge that this Agreement sets forth the parties’
mutual understanding with respect to Executive’s resignations described above. The parties agree
that (i) for all purposes the resignations described herein by the Executive are voluntary and (ii)
Executive shall remain an employee of the Company until the close of business on the Effective Date
and that the Company shall pay Executive pursuant to the Company’s customary payroll practices his
base salary and accrued but unused vacation time earned up to and through the Effective Date.
Except as otherwise provided under Section 2 below, all employee benefits provided to Executive
through the Company will cease at the close of business on the Effective Date.
2. Severance Benefits. The Company agrees to pay Executive the amounts and provide
the benefits specified in this Section in exchange for Executive executing this Agreement.
Executive acknowledges that the payments and benefits provided in this Section are extra and in
addition to all earned wages, accrued vacation time, unreimbursed expenses to be reimbursed
pursuant to the Company policy, and other payments or benefits ordinarily due Executive as a
separating employee of the Company.
a. The Company shall provide severance payments to Executive in the aggregate amount of
$180,000, less standard required deductions and withholdings. The severance payments shall
be made monthly for twelve (12) months on the last business day of the month and shall
commence on September 30, 2005. The monthly severance payment to Executive shall be
$15,000, less standard required deductions and withholdings.
b. The Company, by action of the Compensation Committee of its Board of Directors,
shall cause 18,600 shares of Executive’s Restricted Shares to vest and no longer be subject
to forfeiture on the Effective Date, and shall instruct National City Bank (who holds the
Company’s Restricted Shares as custodian) to deliver to Executive 18,600 Common Shares
promptly after the Effective Date.
c. Executive and his qualified beneficiaries shall be entitled to continue health
insurance benefits after the Effective Date, under which Executive is currently covered, as
such health insurance program may be modified by the Company from time to time, under and
through the terms of the applicable COBRA law and regulations. If Executive elects COBRA
coverage, then during the first twelve (12) months of the applicable COBRA period following
the Effective Date, the Company shall reimburse Executive or his qualified beneficiaries, if
applicable, for the monthly premiums for health insurance benefit continuation pursuant to
COBRA, which reimbursement shall cease in the event Executive is employed by a successor
employer through which comparable health insurance benefit coverage is available.
d. Executive’s Company sponsored life insurance benefits shall continue for a period of
twelve (12) month following the Effective Date; provided, however such benefits shall
immediately cease on Executive subsequently becoming employed on a full time basis during
such twelve (12) month period.
3. Covenants.
a. During his employment with the Company Executive had access to the Company’s
“confidential information” and “trade secrets.” For purposes of this Agreement,
“confidential information” shall mean information which is not publicly available including,
without limitation, information concerning customers, material sources, suppliers, marketing
plans, financial projections, financial results and operation methods, and “trade
secrets” shall mean the Company’s processes, methodologies and techniques known only to
those employees of the Company who need to know such secrets in order to perform their
duties on behalf of the Company. The Company takes numerous steps, including securing
agreements from employees and former employees to provisions such as these, to protect the
confidentiality of its confidential information and trade secrets, which it considers
unique, valuable and special assets. Executive, recognizing the Company’s significant
investment of time, efforts and money in developing and preserving its confidential
information and trade secrets, shall not, for a five (5) year period after the Effective
Date, (i) use for his direct or indirect personal benefit any of the Company’s confidential
information or trade secrets or (ii) disclose to any person or entity any of the Company’s
confidential information or trade secrets.
b. For a period of one (1) year after the Effective Date, Executive shall not (i)
directly solicit any employee of the Company or any of its subsidiaries to leave the
employment thereof or in any way interfere with the relationship of such employee with the
Company or its subsidiaries; and/or (ii) induce or attempt to induce any customer, supplier,
licensee or other individual, corporation or other business organization having a business
relationship with the Company or its subsidiaries to cease doing business with the Company
or its subsidiaries, or in any way interfere with the relationship between any such
customer, supplier, licensee or other person and the Company or its subsidiaries. Following
the one year period, for the next two (2) years, Executive shall, with respect to Company
employees, only be allowed to respond to calls that he receives from Company employees
initiating contact with Executive, or responding to advertisements, including trade
publications, to the general public.
c. Except as required by law or as requested by any governmental or self-regulatory
authority, Executive agrees that he will not make any statements, orally, in writing or
otherwise, or in any way disseminate any information, concerning the Company, its
affiliates, employees, shareholders, members, officers, directors, managers, or agents (past
or present), or concerning the business, business operations or business practices of the
Company which, in form or substance, disparages, or otherwise casts an unfavorable light
upon, the Company, its affiliates, employees, shareholders, members, officers, directors,
managers, or agents, or their reputation or standing in the business community or the
community as a whole. In the event that Executive is required by law or requested by any
governmental or self-regulatory authority to make statements or disseminate any information
concerning the Company and its related persons as described above, Executive, to the extent
possible shall notify the Company that he is required by law (or has been requested by a
governmental or self-regulatory authority) to make such disclosure at least two full
business days prior to making such disclosures. The Company agrees, on behalf of itself,
its directors, its officers and its employees, that it will not make any statement
concerning Executive or his business practices which in form or substance disparages or
otherwise casts an unfavorable light upon Executive or his reputation or standing in the
business community or the community as a whole; provided, however, nothing in this Section
3.c. shall in any manner limit or restrict the Company’s or its officers’, directors’ or
employees’ communications or disclosure (whether orally or in writing) that are required by
law or are requested by any governmental or self-regulatory authority.
d. Executive agrees for a period of one (1) year following the Effective Date to
cooperate with the Company’s officials at reasonable times with regard to any matters or
issues of which he has historical knowledge or with which he was previously involved while
employed at the Company; provided, however, such cooperation shall not materially interfere
with Executive’s full-time employment. In the event the Company requires Executive’s
cooperation and that cooperation requires travel to the Company’s headquarters in Warren,
Ohio, the
Company shall reimburse Executive solely for reasonable out-of-pocket and travel
expenses (including lodging and meals) upon submission of adequate receipts.
e. Executive understands and acknowledges that his failure to comply with his covenants
in this Agreement will be deemed a material breach of this Agreement. In the event of a
breach during the period that severance payments are continuing, Executive shall repay to
the Company all money paid by the Company pursuant to this Agreement. Notwithstanding,
however, the Agreement shall otherwise remain binding and effective and the Company may
pursue any and all additional remedies that it may have as a result of any such breach of
the Agreement.
4. Release. In exchange for the payments set forth herein, Executive, for himself and
his heirs, personal representatives, successors and assigns, forever releases, remises and
discharges the Company and each of its past, present, and future officers, directors, shareholders,
members, employees, trustees, agents, representatives, affiliates, successors and assigns
(collectively the “Employer Released Parties”) from any and all claims, claims for relief, demands,
actions and causes of action of any kind or description whatsoever, known or unknown, whether
arising out of contract, tort, statute, treaty or otherwise, in law or in equity, which Executive
now has, has had, or may hereafter have against any of the Employer Released Parties from the
beginning of his employment with the Company to the Effective Date of this Agreement, arising from,
connected with, or in any way growing out of, directly or indirectly, Executive’s employment by the
Company, Executive’s service as the Vice President and Chief Financial Officer of the Company, the
services provided by Executive to the Company, or any transaction prior to the Effective Date and
all effects, consequences, losses and damages relating thereto, including, but not limited to, all
claims arising under the Civil Rights Acts of 1866 and 1964, the Fair Labor Standards Act of 1938,
the Equal Pay Act of 1963, the Age Discrimination in Employment Act of 1967, the Rehabilitation Act
of 1973, the Older Workers Benefit Protection Act of 1990, the Americans With Disabilities Act of
1990, the Civil Rights Act of 1991, the Family and Medical Leave Act of 1993, the Consolidated
Omnibus Budget Reconciliation Act (“COBRA”), Title 4112 of the Ohio Revised Code, and all other
federal or state laws governing employers and employees; provided, however, that nothing in this
Section 4 will bar, impair or affect the obligations, covenants and agreements of the Company set
forth in this Agreement. The Company represents and warrants to Executive that to the best of the
Company’s knowledge, the Company has not engaged in any violation of law that could give rise to
Executive’s having a claim against the Company.
5. Covenant Not to Xxx. Except where such agreement is contrary to law or public
policy, Executive agrees that he will not now or hereafter commence or initiate any claim or charge
of employer discrimination with any governmental agency or xxx the Company concerning any claims
relating to his employment or resignation of employment with the Company, except as the same may
affect Executive’s rights with respect to the enforcement of this Agreement. This Agreement may be
pleaded as a full and complete defense to, and may be used as a basis for injunction against, any
action or proceeding Executive may institute, prosecute, or maintain in breach of this Agreement.
6. Indemnification.
a. If Executive is made a party to or is threatened to be made a party to or is
involved in any action, suit or proceeding, whether civil or criminal, administrative or
investigative (a “Proceeding”), by reason of the fact that he was an employee or officer of
the Company and an employee, officer or director of any of the Company’s subsidiaries,
whether the basis of such Proceeding is an alleged action in an official capacity as such,
or in any other capacity, Executive shall be indemnified and held harmless by the Company to
the fullest extent permitted or authorized by the Company’s Articles of Incorporation, Code
of Regulations and by
law at the relevant date on which Executive is made a party or is threatened to be made
a party to or is involved in any action, suit or proceeding but in no event to a lesser
extent than any then current or any former directors or officers of the Company. Reasonable
expenses incurred by Executive in such Proceeding shall be paid by the Company in advance of
the final disposition of any such Proceeding, as they are incurred, upon receipt by the
Company of a written undertaking by or on behalf of Executive to repay all amounts so
advanced if it should be determined ultimately that Executive is not entitled to be
indemnified under this Agreement or otherwise. This Section shall survive the termination of
this Agreement. To the best knowledge of Executive, there are no claims threatened or which
are likely to be threatened or prosecuted against the Company or Executive for acts or
omissions of Executive during the period of time Executive was an officer or director of the
Company.
b. The Company currently carries Officers and Directors liability insurance and
Executive will continue to be fully covered by such insurance, subject to its terms, for any
of his acts or omissions through the Effective Date as an officer, employee or agent of the
Company or as a director, trustee, officer, employee, member, manager or agent of another
corporation, limited liability company, partnership, joint venture or other enterprise,
domestic or foreign, which he served as at the request of the Company.
7. Acknowledgment.
By entering into this Agreement, and in connection with Executive’s release of claims and
covenant not to xxx set forth in Sections 4 and 5, Executive acknowledges that:
a. Executive is knowingly and voluntarily entering into this Agreement;
b. No promise or inducement has been offered to Executive except as set forth herein;
c. This Agreement is being executed by Executive without reliance upon any statements
by the Company or any of its representatives concerning the nature or extent of any claims
or damages or legal liability therefore; and
d. This Agreement has been written in understandable language, and all provisions
hereof are understood by Executive.
8. Return of Property. Executive agrees that he will, on or before the Effective
Date, return to the Company (i) all property of the Company in his possession or under his control,
including, but not limited to, any Company credit cards, keys, computers, office furniture,
automobiles, equipment, and supplies, and (ii) all originals and copies of writings and records
(including records stored in electronic form) relating to the Company’s business, confidential
information or trade secrets that are in Executive’s possession or under his control at such time.
Executive represents and warrants that immediately after the Effective Date he will not have any
property of the Company in his possession (including but not limited to at his residence or on his
personal computer) or under his control.
9. Notice. Any notice required or permitted to be given to a party pursuant to the
provisions of this Agreement must be in writing and will be deemed to have been given on the date
of receipt if delivered by messenger to, or if mailed to such party by registered or certified
mail, postage prepaid, at, the address for such party set forth below (or to such other address or
party as such party shall designate in writing to the other party from time to time).
If to the Company:
Stoneridge, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
With a copy to:
Xxxxx X. Xxxxx
Xxxxx & Xxxxxxxxx LLP
0000 Xxxx Xxxxx Xxxxxx
0000 Xxxxxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Xxxxx & Xxxxxxxxx LLP
0000 Xxxx Xxxxx Xxxxxx
0000 Xxxxxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
If to Executive:
Xxxxxx X. Xxxxxx
00000 Xxxxxxxx Xxxx Xxxxx
Xxxxxxx Xxxxx, Xxxx 00000
00000 Xxxxxxxx Xxxx Xxxxx
Xxxxxxx Xxxxx, Xxxx 00000
With a copy to:
Xxxxx Xxxxxx-Xxxxxx
Xxxxxxx & Xxxxxx-Xxxxxx Co., LPA
0000 X. 0xx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Xxxxxxx & Xxxxxx-Xxxxxx Co., LPA
0000 X. 0xx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxx 00000
10. Modification, Waiver and Disclosure.
a. No waiver or modification of this Agreement or of any covenant, condition, or
limitation herein contained will be valid or effective unless in writing and duly executed
by the party to be charged therewith and no evidence of any waiver or modification will be
offered or received in evidence in any proceeding or litigation between the parties arising
out of or affecting this Agreement, or the rights or obligations of the parties hereunder,
unless such waiver or modification is in writing, duly executed as aforesaid. No waiver of
any of the provisions of this Agreement will be deemed, or will constitute, a waiver of any
other provision, whether or not similar, nor will any waiver constitute a continuing waiver.
No waiver of any breach of condition of this Agreement will be deemed to be a waiver of any
other subsequent breach of condition, whether of a like or different nature.
b. Notwithstanding any other provision in this Agreement, but consistent with paragraph
3c above, the parties agree that the Company may make such disclosure regarding Executive’s
resignation as an employee of the Company and as Vice President and Chief Financial Officer
of the Company as in the judgment of the Company, upon the advice of counsel, is required by
law, regulation or the listing rules of the NYSE, provided, however, that prior to making
any such disclosure, the Company shall provide the proposed disclosure to Executive for his
review and will consider any revisions that Executive may timely propose. Executive
acknowledges and agrees that this Agreement will be filed by the Company as an exhibit with
the Securities and Exchange Commission. Except as may be required by law or as may be
requested by a governmental or self-regulatory authority, Executive hereby covenants and
agrees not to make any statements to any third party, including, without limitation,
any representative of any news organization, regarding the Company or the Company’s
directors, officers, employees or agents or to otherwise publish, whether in print or
through means of any electronic communication, any remarks about the Company or the
Company’s directors, officers, employees or agents, unless such statements or remarks are
agreed to in writing in advance by the President of the Company.
11. Consent to Jurisdiction, Venue and Service of Process. Each of the Company and
Executive, after having had the opportunity to consult with legal counsel, knowingly, voluntarily,
intentionally, and irrevocably: (i) consents to the jurisdiction of the Court of Common Pleas,
County of Trumbull, State of Ohio and the United States District Court for the Northern District of
Ohio, Eastern Division with respect to any action, suit, proceeding, investigation, or claim
(“Litigation”); (ii) waives any objections to the jurisdiction and venue of any Litigation in
either such court; (iii) agrees not to commence any Litigation except in either of such courts and
agrees not to contest the removal of any Litigation commenced in any other court to either of such
courts; (iv) agrees not to seek to remove, by consolidation or otherwise, any Litigation commenced
in either of such courts to any other court; and (v) waives personal service of process in
connection with any Litigation and consents to service of process by registered or certified mail,
postage prepaid, addressed as set forth herein.
12. Severability. If a judicial determination is made that any of the provisions of
this Agreement constitutes an unreasonable or otherwise unenforceable restriction against any
party, such determination shall not affect the validity of the remaining provisions. In the event
that a provision shall be declared to be invalid, then the parties agree that they will, in good
faith, negotiate with one another to replace such invalid provision with a valid provision as
similar as possible to that which was held to be invalid; provided, however if any provision of
this Agreement or the application thereof to any person or circumstance shall to any extent be held
in any proceeding to be invalid or unenforceable, the remainder of this Agreement, or the
application of such provision to persons or circumstances other than those to which it was held to
be invalid or unenforceable, shall not be affected thereby, and shall be valid and be enforceable
to the fullest extent permitted by law.
13. Injunctive Relief. Executive recognizes that the provisions of this Agreement,
especially his nondisclosure and nonsolicitation covenants, are vitally important to the continuing
welfare of the Company and its subsidiaries and that money damages would constitute a totally
inadequate remedy for any violation hereof. Accordingly, in the event of any such violation by
Executive, the Company and its subsidiaries, in addition to any other remedies they may have, shall
have the right to institute and maintain a proceeding to compel specific performance thereof or to
issue an injunction restraining any action of Executive in violation of such Sections. This
Section shall survive the expiration or termination of this Agreement for any reason.
14. Advice of Counsel. Executive acknowledges that he has been given the opportunity
to be represented by competent counsel in connection with the negotiation, preparation, and signing
of this Agreement, that he understands and agrees to every term contained herein, and that this
Agreement was negotiated at arm’s length. The Company agrees to pay Executive’s reasonable legal
expenses in connection with the review and negotiation of this Agreement, in an amount not to
exceed $3,500.
15. Other Agreements. All confidentiality, non-disclosure and other obligations that
Executive already has to the Company shall survive and remain in full force and effect. As of the
Effective Date, the Company shall not have any further obligation to Executive with respect to any
compensation, payments, or benefits or other rights under any agreements except as provided or
contemplated by this Agreement. Executive affirms that he has no charges, claims or lawsuits
pending against the Company, their officers, agents, representatives, employees, affiliates,
divisions, subsidiaries,
or their successors or assigns, trustees, heirs, administrators, executors, representatives or
principals thereof. Executive agrees he shall not hold himself out as an employee of the Company
and agrees that he shall have no authority, express, implied or otherwise to act in any agency
capacity or otherwise bind the Company.
16. Further Assurances. The parties agree to take such action and execute and
deliver, promptly upon request, such additional documents as may be reasonably necessary or
appropriate to implement the terms of this Agreement and effectuate its intent.
17. Governing Law. This Agreement will be governed by and construed in accordance
with the laws of the State of Ohio.
18. Entire Agreement. This Agreement constitutes the entire agreement between the
parties pertaining to the subject matter hereof and supersedes all prior and contemporaneous
agreements, representations, and understandings, whether oral or in writing, of the parties.
19. Successors and Assigns. Executive may not assign any rights or obligations under
this Agreement without the prior written consent of the Company. This Agreement will be binding
upon and inure to the benefit of Executive and his heirs, estate, personal representatives, and
permitted successors and assigns. The Company may assign any rights or obligations under this
Agreement without the prior written consent of Executive. This Agreement will be binding upon and
inure to the benefit of the Company and its successors and assigns.
20. Third Party Beneficiaries. Each of the Employer Released Parties that is not a
party to this Agreement will be a third party beneficiary of this Agreement. This Agreement will
be enforceable by each such Employer Released Party to the same extent as if the Employer Released
Parties were a party hereto.
21. Attorneys’ Fees. In the event that it shall be necessary or desirable for
Executive or the Company to retain legal counsel or incur other costs and expenses in connection
with the enforcement of any or all of their respective rights under this Agreement, the prevailing
party shall be entitled to recover from the other party, attorneys’ fees and costs and expenses
incurred in connection with the enforcement of his or its rights hereunder.
22. Construction. The Company and Executive have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and
no presumption or burden of proof shall arise favoring or disfavoring either party by virtue of the
authorship of any of the provisions of this Agreement.
23. Counterparts. This Agreement may be executed in one or more counterparts, each of
which will be deemed to constitute an original but all of which together will constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set forth below.
READ CAREFULLY — THIS DOCUMENT CONTAINS A RELEASE.
STONERIDGE, INC. | ||||
Dated: August 19, 2005
|
By: | /s/ Xxxxxx X. Xxxxxx | ||
Xxxxxx X. Xxxxxx | ||||
President and Chief Executive Officer | ||||
/s/ Xxxxxx X. Xxxxxx | ||||
Dated: August 19, 2005
|
Xxxxxx X. Xxxxxx |
Appendix A
Form of Resignation – Vice President, Chief Financial Officer and Treasurer
I, Xxxxxx X. Xxxxxx, hereby resign as Vice President, Chief Financial Officer and Treasurer of
Stoneridge, Inc.
Dated: August 19, 2005
Xxxxxx X. Xxxxxx |
Appendix B
Form of Resignation (Subsidiaries)
I, Xxxxxx X. Xxxxxx, hereby resign as an employee, officer, member, manager and director, as
applicable, of each subsidiary of Stoneridge, Inc.
Dated: August 19, 2005
Xxxxxx X. Xxxxxx |