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EXHIBIT 10.31
SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of June 15, 2000 (the "Effective
Date"), is made by and between Xxxxx Lemmerz International, Inc., a Delaware
corporation (the "Company"), and [INSERT NAME] (the "Executive").
WHEREAS, the Company considers it essential to the best
interests of its stockholders to xxxxxx the continued employment of key
management personnel; and
WHEREAS, the Board recognizes that the possibility of a Change
in Control exists and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of management personnel to the detriment of the Company and its stockholders;
and
WHEREAS, the Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including the Executive, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definitions of certain capitalized terms
used in this Agreement are provided in the last Section hereof.
2. Term of Agreement. The Term of this Agreement shall
commence on the Effective Date hereof and shall continue in effect through the
third anniversary thereof; provided, however, that commencing on the first
anniversary of the Effective Date and each anniversary thereafter (each such
date a "Renewal Date"), the Term shall automatically be extended for one
additional year unless, on or prior to such Renewal Date, the Company or the
Executive shall have given notice not to extend the Term; and further provided,
however, that if a Change in Control shall have occurred during the Term, the
Term shall expire no earlier than twenty-four (24) months beyond the month in
which such Change in Control occurred.
3. Immediate Effect of Change in Control. Promptly following a
Change in Control, the Executive shall be entitled to the immediate payment of
all unpaid compensation amounts (including the pro rata bonus payment for the
current fiscal year under any bonus plan for which he is eligible ("Pro-rata
Bonus") and all unpaid bonuses with respect to any prior fiscal year) with
respect to the Executive's employment. For purposes of this Section 3, Pro-rata
Bonus shall be an amount equal to the product of (1) the product of (x) the
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Executive's base salary as in effect immediately prior to the Change in Control
and (y) the greater of (A) the Executive's normative bonus percentage for the
fiscal year in which the Change in Control occurs and (B) the Executive's
estimated bonus percentage calculated in good faith by the Company's Finance
Department determined by projecting performance through the end of the fiscal
year in which the Change in Control occurs and (2) a fraction, the numerator of
which is the number of days in the fiscal year in which the Change in Control
occurs through the date of the Change in Control, and the denominator of which
is 365. The Pro-rata Bonus paid shall be subtracted from the amount otherwise
due the Executive as a bonus for the fiscal year in which the Change in Control
occurs, but such Pro-rata Bonus becomes a vested benefit upon a Change in
Control and in no event shall the Executive have to repay all or any portion of
the Pro-rata Bonus.
4. Company's Covenants Summarized. In order to induce the
Executive to remain in the employ of the Company, the Company agrees, under the
conditions described herein, to pay the Executive the Severance Payments and the
other payments and benefits described herein. Except as provided in Section 9.1
hereof, no Severance Payments shall be payable under this Agreement unless there
shall have been (or, under the terms of the second sentence of Section 6.1
hereof, there shall be deemed to have been) a termination of the Executive's
employment with the Company on or following a Change in Control and during the
Term. This Agreement shall not be construed as creating an express or implied
contract of employment and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be retained
in the employ of the Company.
5. Compensation Other Than Severance Payments.
5.1 Following a Change in Control and during the Term, during
any period that the Executive fails to perform the Executive's full-time duties
with the Company as a result of incapacity due to physical or mental illness,
the Company shall pay the Executive's full salary to the Executive at the rate
in effect at the commencement of any such period, together with all compensation
and benefits payable to the Executive under the terms of any compensation or
benefit plan, program or arrangement (other than the Company's short- or
long-term disability plan, as applicable, to the extent such benefits would be
duplicative and their nonpayment would not prejudice Executive's future
entitlement to benefits) maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability.
5.2 If the Executive's employment shall be terminated for any
reason on or following a Change in Control and during the Term, the Company
shall pay the Executive's full salary to the Executive through the Date of
Termination at the rate in effect immediately prior to the Date of Termination
or, if higher, the rate in effect immediately prior to the first occurrence of
an event or circumstance constituting Good Reason, together with all
compensation and benefits payable to the Executive through the Date of
Termination under the terms of the Company's compensation and benefit plans,
programs or arrangements as in effect immediately prior to the Date of
Termination or, if more favorable to the Executive, as
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in effect immediately prior to the first occurrence of an event or circumstance
constituting Good Reason (including all unpaid bonuses with respect to any prior
fiscal year). In addition, if the Executive's employment is terminated on or
following a Change in Control and during the Term, other than (A) by the Company
for Cause, (B) by reason of death or Disability, or (C) by the Executive without
Good Reason, then the Company shall pay Executive an amount equal to the product
of (1) the product of (x) the Executive's base salary as in effect immediately
prior to the Date of Termination, or, if higher, as in effect immediately prior
to the first occurrence of an event or circumstance constituting Good Reason
(the greater of such amounts, the "Base Salary") and (y) the Executive's
normative bonus percentage for the year in which the Date of Termination occurs,
or if higher, the normative bonus percentage for the fiscal year in which the
Change in Control occurs or the normative bonus percentage in effect immediately
prior to the first occurrence of an event or circumstance constituting Good
Reason (the greatest of such percentages, the "Bonus Percentage") and (2) a
fraction, the numerator of which is the number of days in the fiscal year in
which the Date of Termination occurs through the date of the Date of
Termination, and the denominator of which is 365; it being understood that, if
the Date of Termination is in the same fiscal year as the Change in Control, the
Pro-rata Bonus calculated pursuant to Section 3 shall be subtracted from the
amount payable pursuant to this sentence of Section 5.2 but shall not reduce the
amount payable below zero.
5.3 If the Executive's employment shall be terminated for any
reason on or following a Change in Control and during the Term, the Company
shall pay to the Executive the Executive's normal post-termination compensation
and benefits as such payments become due. Such post-termination compensation and
benefits shall be determined under, and paid in accordance with, the Company's
retirement, insurance and other compensation or benefit plans, programs and
arrangements as in effect immediately prior to the Date of Termination or, if
more favorable to the Executive, as in effect immediately prior to the
occurrence of the first event or circumstance constituting Good Reason.
6. Severance Payments.
6.1 If the Executive's employment is terminated on or
following a Change in Control and during the Term, other than (A) by the Company
for Cause, (B) by reason of death or Disability, or (C) by the Executive without
Good Reason, then the Company shall pay the Executive the amounts, and provide
the Executive the benefits, described in this Section 6.1 ("Severance Payments")
and Section 6.2, in addition to any payments and benefits to which the Executive
is entitled under Section 5 hereof or otherwise (except as provided herein). For
purposes of this Agreement, the Executive's employment shall be deemed to have
been terminated following a Change in Control by the Company without Cause or by
the Executive with Good Reason, if (i) the Executive's employment is terminated
by the Company without Cause prior to a Change in Control (whether or not a
Change in Control ever occurs) and such termination was at the request or
direction of a Person who enters into an agreement with the Company the
consummation of which would constitute a Change in Control, (ii) the Executive
terminates his employment for Good Reason prior to a Change in Control (whether
or not a Change in Control ever occurs) and the circumstance or event which
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constitutes Good Reason occurs at the request or direction of such Person, or
(iii) the Executive's employment is terminated by the Company without Cause or
by the Executive for Good Reason and such termination or the circumstance or
event which constitutes Good Reason is otherwise in connection with or in
anticipation of a Change in Control (whether or not a Change in Control ever
occurs).
(A) In lieu of any further salary payments to the Executive
for periods subsequent to the Date of Termination and in lieu of any severance
benefit otherwise payable to the Executive (whether pursuant to any employment
agreement, plan, policy or otherwise), the Company shall pay to the Executive a
lump sum severance payment, in cash, equal to [three] [two] [one and one
half](1) times the sum of (i) the Base Salary and (ii) the product of (x) the
Base Salary and (y) the Bonus Percentage.
(B) For the twenty-four (24) month period immediately
following the Date of Termination, the Company shall arrange to provide the
Executive and his dependents life, disability, accident and health insurance
benefits substantially similar to those provided to the Executive and his
dependents immediately prior to the Date of Termination or, if more favorable to
the Executive, those provided to the Executive and his dependents immediately
prior to the first occurrence of an event or circumstance constituting Good
Reason, at no greater cost to the Executive than the cost to the Executive
immediately prior to such date or occurrence; provided, however, that, unless
the Executive consents to a different method (after taking into account the
effect of such method on the calculation of "parachute payments" pursuant to
Section 6.2 hereof), such health insurance benefits shall be provided through a
third-party insurer. Benefits otherwise receivable by the Executive pursuant to
this Section 6.1 (B) shall be reduced to the extent benefits of the same type
are received by or made available to the Executive by another Employer of the
Executive during the twenty-four (24) month period following the Executive's
termination of employment (and any such benefits received by or made available
to the Executive shall be reported to the Company by the Executive); provided,
however, that the Company shall reimburse the Executive for the excess, if any,
of the cost of such benefits to the Executive over such cost immediately prior
to the Date of Termination or, if more favorable to the Executive, the first
occurrence of an event or circumstance constituting Good Reason.
(C) For purposes of COBRA health benefit continuation under
section 4980B of the Code, the cessation of benefits pursuant to Section 6.1(B)
shall be treated as though such cessation is the "qualifying event" under
section 4980B(f)(3) of the Code for purposes of determining the period of
coverage.
(D) The Company shall pay to the Executive a lump sum amount
equal to one hundred thousand dollars ($100,000).
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(1) Three times for CEO, two times for his direct reports, one and one-half
times for others.
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(E) The Company shall, at its sole expense as incurred,
provide Executive with "key executive level" outplacement services at a cost of
no more than fifteen percent (15%) of the sum of (1) Base Salary and (2) the
Bonus Percentage multiplied by Base Salary.
6.2 (A) Whether or not the Executive becomes entitled to the
Severance Payments, if any of the payments or benefits received or to be
received by the Executive in connection with a Change in Control or the
Executive's termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any
Person whose actions result in a Change in Control or any Person affiliated with
the Company or such Person) (all such payments and benefits, excluding the
Gross-Up Payment, being hereinafter referred to as the "Total Payments") will be
subject to the Excise Tax, the Company shall pay to the Executive an additional
amount (the "Gross-Up Payment") such that the net amount retained by the
Executive, after deduction of any Excise Tax on the Total Payments and any
federal, state and local income and employment taxes and any penalties, interest
or fees incurred by the Executive as a result of any payment under Section 6.2
being made later than five business days prior to the due date of the excise tax
with respect to which it is paid and any Excise Tax upon the Gross-Up Payment,
shall be equal to the Total Payments.
(B) For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such Excise Tax,
(i) all of the Total Payments shall be treated as "parachute payments" (within
the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax
counsel ("Tax Counsel") reasonably acceptable to the Executive and selected by
the accounting firm which was, immediately prior to the Change in Control, the
Company's independent auditor (the "Auditor"), such payments or benefits (in
whole or in part) do not constitute parachute payments, including by reason of
section 280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within
the meaning of section 280G(b)(l) of the Code shall be treated as subject to the
Excise Tax unless, in the opinion of Tax Counsel, such excess parachute payments
(in whole or in part) represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4)(B) of the Code) in excess of
the Base Amount allocable to such reasonable compensation, or are otherwise not
subject to the Excise Tax, and (iii) the value of any noncash benefits or any
deferred payment or benefit shall be determined by the Auditor in accordance
with the principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income tax at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of the Executive's residence or the Executive's place of business,
whichever is higher, on the Date of Termination (or if there is not yet a Date
of Termination, then the date on which the Gross-Up Payment is calculated for
purposes of this Section 6.2), net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is finally
determined to be less than the amount taken into account hereunder in
calculating the Gross-Up Payment, the
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Executive shall repay to the Company, within five (5) business days following
the time that the amount of such reduction in the Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable to such reduction
(including that portion of the Gross-Up Payment attributable to the Excise Tax
and federal, state and local income and employment taxes imposed on the Gross-Up
Payment being repaid by the Executive), to the extent that such repayment
results in a reduction in the Excise Tax and a dollar-for-dollar reduction in
the Executive's taxable income and wages for purposes of federal, state and
local income and employment taxes, plus interest on the amount of such repayment
at 120% of the rate provided in section 1274(b)(2)(B) of the Code.
Notwithstanding the foregoing, in the event any portion of the amount to be
repaid to the Company has been paid to any tax authority, repayment thereof
shall not be required until actual refund or credit of such portion has been
made to Executive, and interest payable to the Company shall not exceed the
interest received or credited to Executive by such tax authority. In the event
that the Excise Tax is determined to exceed the amount taken into account
hereunder in calculating the Gross-Up Payment (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess (including any interest, penalties or additions payable
by the Executive with respect to such excess and the Gross-Up Payment
attributable to the Excise Tax and federal, state, and local income and
employment taxes imposed on the Gross-Up Payment being made to the Executive)
within five (5) business days following the time that the amount of such excess
is finally determined. The Executive and the Company shall each reasonably
cooperate with the other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability for Excise Tax with
respect to the Total Payments.
6.3 The payments provided in subsections (A), of Section 6.1
hereof and in Section 6.2 hereof shall be made not later than the fifth day
following the Date of Termination (or if there is no Date of Termination, then
the date on which the Gross-up Payment is calculated for purposes of Section 6.2
hereof); provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Company shall pay to the Executive
on such day an estimate, as determined in good faith by the Company or, in the
case of payments under Section 6.2 hereof, in accordance with Section 6.2
hereof, of the minimum amount of such payments to which the Executive is clearly
entitled and shall pay the remainder of such payments (together with interest on
the unpaid remainder (or on all such payments to the extent the Company fails to
make such payments when due) at 120% of the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but
in no event later than the thirtieth (30th) day after the Date of Termination.
In the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a loan by
the Company to the Executive, payable on the fifth (5th) business day after
demand by the Company (together with interest at 120% of the rate provided in
section 1274(b)(2)(B) of the Code).
6.4 The Company also shall pay to the Executive all legal fees
and expenses incurred by the Executive in disputing in good faith any issue
hereunder relating to the termination of the Executive's employment, in seeking
in good faith to obtain or enforce any
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benefit or right provided by this Agreement or in connection with any tax audit
or proceeding to the extent attributable to the application of section 4999 of
the Code to any payment or benefit provided hereunder. Such payments shall be
made within five (5) business days after delivery of the Executive's written
requests for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and
during the Term, any purported termination of the Executive's employment (other
than by reason of death) shall be communicated by written Notice of Termination
from one party hereto to the other party hereto in accordance with Section 11
hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated. Further, a Notice of Termination for Cause is
required to include a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board which was called and held for the purpose of considering
such termination (after reasonable notice to the Executive and an opportunity
for the Executive, together with the Executive's counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, the Executive was
guilty of conduct set forth in clause (i) or (ii) of the definition of Cause
herein, and specifying the particulars thereof in detail.
7.2 Date of Termination. "Date of Termination," with respect
to any purported termination of the Executive's employment after a Change in
Control and during the Term, shall mean (i) if the Executive's employment is
terminated for Disability, thirty (30) days after Notice of Termination is given
(provided that the Executive shall not have returned to the full-time
performance of the Executive's duties during such thirty (30) day period), and
(ii) if the Executive's employment is terminated for any other reason, the date
specified in the Notice of Termination (which, in the case of a termination by
the Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive, shall
not be less than fifteen (15) days nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the Date
of Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be extended
until the earlier of (i) the date prior to the date on which the Term ends or
(ii) the date on which the dispute is finally resolved, either by mutual written
agreement of the parties or by a final judgment, order or decree of an
arbitrator or a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); provided, however, that the Date of Termination shall be
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extended by a notice of dispute only if such notice is given in good faith and
the party providing notice pursues the resolution of such dispute with
reasonable diligence.
7.4 Compensation During Dispute. If a purported termination
occurs on or following a Change in Control and during the Term and the Date of
Termination is extended in accordance with Section 7.3 hereof, the Company shall
continue to pay the Executive the full compensation in effect when the notice
giving rise to the dispute was given or, if higher, as in effect immediately
prior to the first occurrence of an event or circumstance constituting Good
Reason (including, but not limited to, Base Salary) and continue the Executive
as a participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the Date of Termination, as determined in accordance with Section
7.3 hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under the first sentence
of Section 5.2 hereof) and shall not be offset against or reduce any other
amounts due under this Agreement.
8. No Mitigation. The Company agrees that, if the Executive's
employment with the Company terminates during the Term, the Executive is not
required to seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to this Agreement. Further, the
amount of any payment or benefit provided for in this Agreement (other than
Section 6.1(B) hereof) shall not be reduced by any compensation earned by the
Executive as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by the Executive to
the Company, or otherwise.
9. Successors; Binding Agreement; Prior Agreement.
9.1 This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. In addition to any
obligations imposed by law upon any successor to the Company, the Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree in writing to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. The Company will
require any ultimate parent entity, as defined in [16 C.F.R. 8801,1(a)(3)], of
any Person who acquires 90% of the outstanding shares of common stock of the
Company or the outstanding voting securities of the Company entitled to vote
generally in the election of directors (including through a merger in which the
Company does not survive or as a result of which the Company becomes a
subsidiary of another Person or a consolidation involving the Company and
another Person) to assume and agree in writing to perform as a joint and several
obligor of the Company (including any successor to the Company), this Agreement
in the same manner and to the same extent as the Company. Failure of the Company
to obtain such assumption and agreement in writing from a successor or its
parent as described in the preceding sentences after notice and a reasonable
cure period (not to exceed ten days from the date such notice is received) shall
be a breach of this Agreement and shall entitle the Executive to compensation
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from the Company in the same amount and on the same terms as the Executive would
be entitled to hereunder if the Executive were to terminate the Executive's
employment for Good Reason after a Change in Control, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.2 This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
9.3 The Company and the Executive were parties to a Severance
Agreement dated as of [November 6, 1995] (the "Prior Agreement"), which is no
longer in effect. In consideration of the Company entering into this Agreement,
the Executive acknowledges that the Prior Agreement is no longer in effect and
hereby releases the Company and its directors, officers, stockholders and their
respective affiliates from any and all liabilities or obligations arising under
the Prior Agreement.
10. Insurance and Indemnification. From and after a Change in
Control, including after the termination of Executive's employment, the Company
shall indemnify, defend and hold the Executive harmless from and against any and
all expenses, liabilities, damages, costs, judgments, penalties, fines and
amounts paid in settlement, incurred in good faith by Executive in connection
with any proceeding involving Executive by reason of Executive's being or having
been an officer, director, employee or agent of the Company (or any affiliate of
the Company) to the fullest extent permitted by law, whether or not Executive
is, or is threatened to be made, a party to any threatened, pending, or
completed proceeding, and whether or not Executive is successful in such
proceeding. In addition, upon receipt from Executive of (i) a written request
for an advancement of reasonable expenses which Executive reasonably believes
will be subject to indemnification hereunder and (ii) a written undertaking by
Executive to repay any such amounts if it shall ultimately be determined that
the Executive is not entitled to indemnification under this Agreement or
otherwise, the Company shall advance such expenses to Executive or pay such
expenses for Executive, all in advance of the final disposition of any such
matter. From and after a Change in Control, including after the termination of
Executive's employment hereunder, Executive shall have coverage under a
director's and officer's liability insurance policy in amounts no less than, and
on terms no less favorable than those, provided to senior executive officers of
the Company from time to time.
11. Notices. For the purpose of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed, if
to the Executive, to the address inserted below the Executive's signature on the
final page hereof and, if to the Company, to the address
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set forth below, or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon actual receipt:
To the Company:
00000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Vice President -- Human
Resources and Administration
12. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or of any lack of 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. This Agreement supersedes any
other agreements or representations, oral or otherwise, express or implied, with
respect to the terms and conditions of the Executive's employment with the
Company only in the event that the Executive's employment with the Company is
terminated on or following a Change in Control, by (i) the Company other than
for Cause or (ii) the Executive other than for Good Reason. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Delaware. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law and any
additional withholding to which the Executive has agreed. The obligations of the
Company and the Executive under this Agreement which by their nature may require
either partial or total performance after the expiration of the Term (including,
without limitation, those under Sections 5, 6, 7 and 10 hereof) shall survive
such expiration.
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 will constitute one and the same instrument.
15. Settlement of Disputes. All claims by the Executive for
benefits under this Agreement shall be directed to the Board and shall be in
writing. Any denial by the Board of a claim for benefits under this Agreement
shall be delivered to the Executive in writing and shall set forth the specific
reasons for the denial and the specific provisions of this Agreement relied
upon. The Board shall afford a reasonable opportunity to the Executive for a
review of the decision denying a claim and shall further allow the Executive to
appeal to the Board a
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decision of the Board within sixty (60) days after notification by the Board
that the Executive's claim has been denied. The Executive shall be entitled to
pursue legal action, including, without limitation, filing a complaint in court
of appropriate jurisdiction.
16. Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated below:
(A) "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
(B) "Auditor" shall have the meaning set forth in Section 6.2
hereof.
(C) "Base Amount" shall have the meaning set forth in section
280G(b)(3) of the Code.
(D) "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act.
(E) "Board" shall mean the Board of Directors of the Company.
(F) "Cause" for termination by the Company of the Executive's
employment shall mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from the Executive's incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of a Notice
of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof)
that has not been cured within 30 days after a written demand for substantial
performance is delivered to the Executive by the Board, which demand
specifically identifies the manner in which the Board believes that the
Executive has not substantially performed the Executive's duties, or (ii) the
willful engaging by the Executive in conduct which is demonstrably and
materially injurious to the Company or its subsidiaries, monetarily or
otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act,
or failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive in bad faith and (y) in the event
of a dispute concerning the application of this provision, no claim by the
Company that Cause exists shall be given effect unless the Company establishes
to the Board by clear and convincing evidence that Cause exists. Any act, or
failure to act, based upon authority given pursuant to a resolution duly adopted
by the Board or upon the instructions of the Chief Executive Officer or based
upon the advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company.
(G) A "Change in Control" shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall have occurred:
(I) any Person, other than Xxxxxx Xxxxxxxxxx
& Levy Fund II, L.P. (or any affiliate thereof), TSG Capital
Fund II, L.P. (or any affiliate
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thereof), Canadian Imperial Bank of Commerce (or any affiliate
thereof), is or becomes the Beneficial Owner of more than
fifty percent of either (i) the then-outstanding common stock
of the Company ("Outstanding Common Stock") or (ii) the
combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the
election of directors ("Outstanding Voting Securities"); or
(II) the following individuals ("Incumbent
Board Members") cease for any reason to constitute a majority
of the number of directors then serving: individuals who, as
of the date hereof, constitute the Board and any new director
(other than a director whose initial assumption of office is
in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating
to the election of directors of the Company) whose appointment
or election by the Board or nomination for election by the
Company's stockholders was approved or recommended by a vote
of at least a majority of the directors then still in office
who either were directors on the date hereof or whose
appointment, election or nomination for election was
previously so approved or recommended; or
(III) there is consummated a merger,
consolidation or reorganization of the Company or any direct
or indirect subsidiary of the Company with any other entity
("Transaction"), unless each of the following events occurs in
connection with such merger, consolidation or reorganization:
(a) the Persons who are Beneficial Owners
of the Outstanding Common Stock and
the Persons who are Beneficial Owners
of the Outstanding Voting Securities,
immediately before such Transaction,
are, immediately following and after
giving effect to such Transaction (as
a result of the ownership of
securities of the Company immediately
prior to the Transaction, other than
securities of the Company issued in
connection with the Transaction),
Beneficial Owners of more than 50% of
the then-outstanding securities and
the combined voting power of the
then-outstanding voting securities
entitled to vote generally in the
election of directors of the
corporation (or in the election of a
comparable governing body of any
other type of entity) resulting from
such Transaction (including, without
limitation, an entity which as a
result of such Transaction owns the
Company or all or substantially all
of the Company's assets either
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directly or through one or more
subsidiaries), respectively;
(b) at least a majority of the
members of the board of
directors of the entity
resulting from the
Transaction were Incumbent
Board Members at the time
of the execution of the
initial agreement, or of
the action of the Board,
providing for the
Transaction; and
(c) immediately following and after giving
effect to such Transaction, the
stockholder parties to the Amended and
Restated Stockholders Agreement dated
as of June 30, 1997 among the Company
and certain of its stockholders are,
in the aggregate, the Beneficial
Owners of a greater amount of the
then-outstanding securities and the
combined voting power of the
then-outstanding securities entitled
to vote generally in the election of
directors of the corporation (or in
the election of a comparable governing
body of any other type of entity)
resulting from such Transaction
(including, without limitation, an
entity which as a result of such
Transaction owns the Company or all or
substantially all of the Company's
assets either directly or through one
or more subsidiaries), than any other
Person; or
(IV) the stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or there
is consummated an agreement for the sale, assignment, lease or
other disposition of all or substantially all of the Company's
assets.
(H) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(I) "Company" shall mean Xxxxx Lemmerz International, Inc.
and, except in determining under Section 15(G) hereof whether or not any Change
in Control of the Company has occurred, shall include any successor to its
business and/or assets which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
(J) "Date of Termination" shall have the meaning set forth in
Section 7.2 hereof.
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(K) "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result of the
Executive's incapacity due to physical or mental illness, the Executive shall
have been absent from the full-time performance of the Executive's duties with
the Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within thirty
(30) days after such Notice of Termination is given, the Executive shall not
have returned to the full-time performance of the Executive's duties.
(L) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(M) "Excise Tax" shall mean any excise tax imposed under
section 4999 of the Code or any similar state or local tax or any interest or
penalties incurred by Executive with respect to such excise tax.
(N) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(O) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the Executive's
express written consent) after any Change in Control and during the Term, or
prior to a Change in Control under the circumstances described in clauses (ii)
and (iii) of the second sentence of Section 6.1 hereof (treating all references
in paragraphs (I) through (VI) below to a "Change in Control" as references to a
"Potential Change in Control"), of any one of the following acts by the Company,
or failures by the Company to act, unless, in the case of any act or failure to
act described in paragraph (I), (IV), (V) or (VI) below, such act or failure to
act is corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(I) the assignment to the Executive of any
duties materially inconsistent with the Executive's status as
an executive officer of the Company or a material diminution
in the nature or status of the Executive's responsibilities
from those in effect immediately prior to the Change in
Control other than any such material diminution primarily
attributable to the fact that the Company may no longer be a
public company;
(II) a reduction by the Company in the
Executive's annual base salary as in effect on the date hereof
or as the same may be increased from time to time;
(III) a reduction in the Executive's
normative bonus percentage or any change in the method for
applying the normative bonus percentage to determine the
Executive's bonus which would materially reduce the amount of
the Executive's bonus:
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(IV) the relocation of the Executive's
principal place of employment to a location more than 60 miles
from the Executive's principal place of employment immediately
prior to the Change in Control or the Company's requiring the
Executive to be based anywhere other than such principal place
of employment (or permitted relocation thereof) except for
required travel on the Company's business;
(V) the failure by the Company to pay to the
Executive any portion of the Executive's current compensation,
or to pay to the Executive any portion of an installment of
deferred compensation under any deferred compensation program
of the Company, within seven (7) days of the date such
compensation is due;
(VI) the failure by the Company to continue
to provide the Executive with benefits which are not
materially less favorable in the aggregate than those enjoyed
by the Executive under any of the Company's pension, savings,
life insurance, medical, health and accident, or disability
plans in which the Executive was participating immediately
prior to the Change in Control, the taking of any other action
by the Company which would directly or indirectly materially
reduce any of such benefits or deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time
of the Change in Control, or the failure by the Company to
provide the Executive with the number of paid vacation days to
which the Executive is entitled on the basis of years of
service with the Company in accordance with the Company's
normal vacation policy in effect at the time of the Change in
Control; or
(VII) any purported termination of the
Executive's employment which is not effected pursuant to a
Notice of Termination satisfying the requirements of Section
7.1 hereof; for purposes of this Agreement, no such purported
termination shall be effective.
The Executive's right to terminate the Executive's employment
for Good Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or failure
to act constituting Good Reason hereunder.
For purposes of any determination regarding the existence of
Good Reason, any claim by the Executive that Good Reason exists shall be
presumed to be correct unless the Company establishes to the Board by clear and
convincing evidence that Good Reason does not exist.
(P) "Gross-Up Payment" shall have the meaning set forth in
Section 6.2 hereof.
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(Q) "Notice of Termination" shall have the meaning set forth
in Section 7.1 hereof.
(R) "Person" shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d) including
a "group" within the meaning of Section 13(d)(3) thereof, except that such term
shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any of its Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company.
(S) "Potential Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following paragraphs shall
have occurred:
(I) the Company enters into an agreement,
the consummation of which would result in the occurrence of a
Change in Control;
(II) the Company or any Person publicly
announces an intention to take or to consider taking actions
which, if consummated, would constitute a Change in Control;
or
(III) the Board adopts a resolution to the
effect that, for purposes of this Agreement, a Potential
Change in Control has occurred.
(T) "Retirement" shall be deemed the reason for the
termination by the Executive of the Executive's employment if such employment is
terminated in accordance with the Company's retirement policy, including early
retirement, generally applicable to its salaried employees.
(U) "Severance Payments" shall have the meaning set forth in
Section 6.1 hereof.
(V) "Tax Counsel" shall have the meaning set forth in Section
6.2 hereof.
(W) "Term" shall mean the period of time described in Section
2 hereof (including any extension, continuation or termination described
therein).
(X) "Total Payments" shall mean those payments so described in
Section 6.2 hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
XXXXX LEMMERZ INTERNATIONAL, INC.
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By:
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Name:
Title:
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[EXECUTIVE]
Address:
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(Please print carefully)
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