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EXHIBIT NO. 00.xx
FORM OF CHANGE IN CONTROL AGREEMENT
The following individuals have executed change in control agreements in the
form set forth below:
Xxxxx X. Xxxxx
Xxxx X. Xxxxxxxxx
Xxxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxx
Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxx
Xxxx X. Xxxxxxxx
Xxx X. XxXxxxx
Xxxxxxx X. Xxxx
Xxxxxx X. Xxxxxx, Xx.
Xxxxxxx X. Xxxxxxx
June , 1999
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Dear :
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The Standard Products Company (the "Company") considers it essential to the best
interests of the Company and its shareholders that key members of its management
be encouraged to remain with the Company and continue to devote full attention
to the Company's business in the event an effort is made by a third party to
obtain control of the Company. In this connection, the Company recognizes that
the possibility of a change in control and the uncertainty and questions which
it may raise among management may result in the departure or distraction of key
management personnel, to the detriment of the Company and its shareholders.
Accordingly, the Company's Board of Directors (the "Board") has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of certain key members of the management of the
Company, including yourself, to their assigned duties without distraction in the
face of the potentially unsettling circumstances and uncertainty arising from
the possibility of a change in control of the Company.
In order to induce you to remain in the employ of the Company, and to continue
your employment during and after a transaction that results in a "Change in
Control" of the Company (as defined in Paragraph 2 hereof), this letter
agreement (the "Agreement") sets forth the employment arrangements and benefits
which the Company agrees will be provided to you in the event a Change in
Control should occur and your employment with the Company is hereafter
terminated, or you resign your employment for Good Reason (as defined in
Paragraph 3(c) hereof).
Nothing in this Agreement shall be construed to prevent either you or the
Company from terminating your employment at any time, for cause or otherwise,
subject only to the specific payment and other provisions hereinafter provided
for under certain circumstances in the event a Change in Control shall have
occurred prior to the date your termination becomes effective.
1. CONTINUED EMPLOYMENT; TERM. This confirms that you have advised the
Company that, in consideration of, among other things, the Company's
entering into this Agreement with you, it is your present intention to
remain in the employ of the Company
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unless and until there occurs a Change in Control. This Agreement
shall commence on the date hereof and shall continue until December
31, 1999; provided, however, that commencing on January 1, 2000, and
each January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year unless at least
thirty (30) days prior to such January 1 date, the Company shall have
given notice that it does not wish to extend the Agreement; and
provided further, that this Agreement shall continue in effect beyond
the term provided herein if a Change in Control shall have occurred
during such term.
2. CHANGE IN CONTROL. No benefit shall be payable hereunder unless a
Change in Control shall have occurred and your employment by the
Company shall have been terminated or you shall have resigned for Good
Reason within two (2) years thereafter, in accordance with Paragraph 3
below. For purposes of this Agreement, a "Change in Control" shall mean
the occurrence of any of the following events:
(a) When any "person," as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") and as used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) of the
Exchange Act, but excluding the Company and any subsidiary and
any employee benefit plan sponsored or maintained by the
Company or any subsidiary (including any trustee of such plan
acting as trustee), directly or indirectly, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act, as amended from time to time), of securities of
the Company representing 30% or more of the combined voting
power of the Company's then outstanding capital stock;
provided, however, that with respect to any director who on
the effective date of this Agreement is the beneficial owner
or has the option to acquire 5% or more of such capital stock
outstanding on such effective date, capital stock so owned or
acquired pursuant to any such options shall not be counted in
determining such 30% or more combined voting power;
(b) When, during any period of 24 consecutive months during the
existence of this Agreement, the individuals who, at the
beginning of such period, constitute the Board of Directors of
the Company (the "Incumbent Directors") cease for any reason
other than death to constitute at least a majority thereof;
provided, however, that a director who was not a director at
the beginning of such 24-month period shall be deemed to have
satisfied such 24-month requirement (and be an Incumbent
Director) if such director was elected by, or on the
recommendation of or with the approval of, at least two-thirds
of the directors who then qualified as Incumbent Directors
either actually (because they were directors at the beginning
of such 24-month period) or by prior operation of this
Paragraph 2(b); or
(c) The completion of a transaction requiring shareholder approval
for the acquisition of the Company by an entity other than the
Company or a subsidiary through purchase of assets or
otherwise or any merger of the Company into another company
(unless the persons who were shareholders of the Company
immediately
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prior to such transaction own more than 70% of the voting
stock and value of the surviving company immediately
following such merger in substantially the same proportions
as they owned immediately prior to the merger).
Provided, however, that if you, in your individual capacity, are a party to an
agreement under which you agree to the consummation of a transaction which is a
Change of Control as described in subparagraphs (a) or (c) above and if,
pursuant to that agreement, you become an equity holder in the Company or any
entity which acquires the Company, then notwithstanding the foregoing provisions
of Paragraph 2 of this Agreement, unless you and the Company shall in writing
otherwise agree, such transaction shall not be deemed to be a Change in Control.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. If any of the events described
in Paragraph 2 hereof constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Paragraph 4
hereof upon the subsequent termination of your employment unless such
termination is (a) because of your death or disability, (b) by the
Company for Cause, or (c) by you other than for Good Reason, all as
defined hereafter:
(a) Disability. "Disability" means any medically determinable
physical or mental impairment that can be expected to last for
a continuous period of not less than six (6) months, and that
renders you unable to perform your assigned duties. The date
of the determination of Disability is the date on which you
are certified as having incurred a Disability by a physician
mutually acceptable to you and the Company.
(b) Cause. "Cause" means (a) your conviction of or plea of guilty
or nolo contendere to any felony or other crime involving
dishonesty or moral turpitude; (b) any serious misconduct in
the course of your employment; (c) your habitual neglect of
your duties other than on account of disability; or (d) the
violation of a material Company policy after notice thereof,
except that Cause shall not mean:
(1) An isolated instance of bad judgment or negligence;
(2) any act or omission believed by you in good faith to
have been in or not opposed to the best interest of
the Company (without your intent to gain therefrom,
directly or indirectly, a profit to which you were
not legally entitled); or
(3) any act or omission with respect to which a
determination could properly have been made by the
Board that you met the applicable standard of conduct
for indemnification or reimbursement under the Code
of Regulations of the Company, any applicable
indemnification agreement or the laws and regulations
under which the Company is governed, in each case in
effect at the time of such act or omission.
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(c) Good Reason. "Good Reason" means:
(1) Without your express written consent, the assignment
to you of any duties materially and adversely
inconsistent with your positions, duties,
responsibilities and status with the Company
immediately prior to a Change in Control, or an
adverse change in your reporting responsibilities,
titles or offices as in effect immediately prior to a
Change in Control, or any removal of you from, or any
failure to re-elect you to, any of such positions
except in connection with the termination of your
employment for Cause or Disability, or as a result of
your death, or by you other than for Good Reason;
(2) a reduction by the Company in your annualized base
compensation from your level of base compensation in
effect immediately prior to a Change in Control, or a
reduction in the formula used to calculate your
annual incentive compensation under the Officers'
Incentive Compensation Plan;
(3) a failure by the Company to either continue the
Officers' Incentive Compensation Plan or maintain an
incentive compensation plan which provides you with
an opportunity to obtain substantially the same level
of incentive compensation upon the achievement of a
specified level of corporate earnings performance as
you could have obtained had the Officers' Incentive
Compensation Plan remained in effect, or a failure by
the Company to continue you as a participant in such
incentive compensation plan on at least the same
basis as your participation for the fiscal year
immediately preceding a Change in Control;
(4) the failure by the Company to continue in effect any
benefit or compensation plan or material perquisite
including, but not limited to, its vacation policy,
stock option plans, savings and pension plans, dental
plans, life insurance plans, health and accident
plans or disability plans in which you are
participating or which you were receiving at the time
of a Change in Control (or plans or perquisites
providing you with substantially similar benefits),
or the taking of any action by the Company which
would materially adversely affect your participation
in or reduce your benefits under any of such plans or
deprive you of any fringe benefit enjoyed by you at
the time of the Change in Control;
(5) the failure of the Company to obtain the assumption
of this Agreement by any successor as contemplated in
Paragraph 6 hereof;
(6) the Company's requiring you to be based anywhere
other than within 150 miles of your present location
or the Company's principal executive offices, except
for required travel on the Company's business to an
extent substantially consistent with your present
business travel obligations, or in
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the event you consent to any such relocation, the
failure to pay, or reimburse you for, all reasonable
moving expenses incurred by you; or
(7) any purported termination of your employment which is
not effected pursuant to a Notice of Termination
satisfying the requirements of subparagraph (d) below
and for purposes of this Agreement, no such purported
termination shall be effective.
(d) Notice of Termination. Any termination by the Company pursuant
to subparagraphs (a) or (b) above or otherwise, or by you
pursuant to subparagraph (c) above shall be communicated by
written Notice of Termination to the other party thereto. 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 your employment under the
provision so indicated.
(e) Date of Termination. "Date of Termination" shall mean:
(1) If your employment is terminated for Disability,
thirty (30) days after Notice of Termination is given
(provided that you shall not have returned to the
performance of your duties on a full-time basis
during such thirty (30) day period);
(2) if your employment is terminated for Cause, the date
on which you receive the Notice of Termination;
(3) if you terminate your employment for Good Reason
pursuant to subparagraph (c) above, thirty (30) days
after the date on which the Notice of Termination is
given; and
(4) if your employment is terminated for any other
reason, thirty (30) days after the date on which the
Notice of Termination is given;
provided that if within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination shall
be the date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding and final arbitration award or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected).
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) If the Company shall terminate your employment for any reason
other than because of your Disability or for Cause, or if you
shall terminate your
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employment for Good Reason, the Company shall pay to you in a
lump sum, on the fifth day following the Date of Termination,
the following amounts:
(1) Your full base salary through the Date of Termination
at the rate in effect at the time Notice of
Termination is given and a pro rata portion of any
incentive compensation to which you are entitled
through the Date of Termination in accordance with
the Officers' Incentive Compensation Plan as in
effect immediately prior to the Change in Control.
The amount of incentive compensation payable
hereunder shall be the product of the actual amount
of incentive compensation received by you for the
fiscal year immediately preceding the year in which
your Date of Termination occurs, multiplied by a
fraction, the numerator of which is the number of
days that have elapsed between the end of the last
fiscal year and your Date of Termination, and the
denominator of which is 365.
(2) In lieu of any further salary payments to you for
periods subsequent to the Date of Termination, an
amount equal to two and one-half times the sum of 1)
your annual salary in effect on your Date of
Termination (or on the date immediately prior to the
Change of Control, if your base salary was higher on
such date), and 2) your "target bonus" under the
Officers' Incentive Compensation Plan, or any
comparable plan then in effect, for the fiscal year
in which your Date of Termination occurs (or your
target bonus under the Officers' Incentive
Compensation Plan for the year in which the Change of
Control occurs, if greater). Your "target bonus" for
purposes of this calculation is the amount you would
be paid if the Company reached its earnings per share
target as established for the applicable fiscal year
by the Compensation Committee of the Board of
Directors, and, if you are the head of a business
unit, the amount you would be paid if the business
unit meets its budgeted performance target, assuming
the Committee did not exercise its discretion to
reduce your bonus.
(b) Unless you are terminated for Cause, the Company shall
maintain in full force and effect, for your continued benefit
for two and one-half years after your Date of Termination, all
employee and executive benefit plans, programs, arrangements,
and perquisites, in which you were entitled to participate
immediately prior to the date on which a Change in Control
occurs. If your continued participation in any such plan is
not permitted because you are no longer an employee or because
such participation would disqualify an employee benefit plan
or trust under the Internal Revenue Code or cause such a plan
to violate ERISA, the Company shall provide you with benefits
that are substantially similar to those which you would have
been entitled to receive under such plans and programs, had
you continued to participate in them as an executive of the
Company.
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(c) Upon your termination of employment for any reason, if under
any election form filed by you under any non-qualified
deferral arrangement for years prior to the year of the Date
of Termination payments are to commence upon retirement,
termination of active employment, incapacity or death, all
such deferred amounts, with all interest and earnings accrued
on the account, shall instead be paid in full on the fifth day
following the Date of Termination.
(d) You shall receive service credit under the Company's
Retirement Program for Salaried Employees and, if applicable,
Supplemental Employees' Retirement Plan (the "Pension Plans")
for two and one-half additional years following your Date of
Termination, and you shall be considered vested in your
accrued benefit under the Pension Plans, regardless of your
period of service credit under the Pension Plans. If payment
of any portion of your accrued benefit as calculated in
accordance with the foregoing provisions cannot be made from
the trust fund established under the Retirement Program for
Salaried Employees, the actuarial equivalent of such amount
will be paid to you in a lump sum within 60 days after your
Date of Termination. The actuarial assumptions used in
calculating lump sum benefits under the Retirement Program for
Salaried Employees will be used to determine the amount of
such lump sum.
(e) Unless you are terminated for Cause, you shall be entitled to
outplacement services paid for by the Company at a level
appropriate for a senior executive of the Company.
(f) Unless you are terminated for Cause, the Company shall also
pay to you all legal fees and expenses incurred by you as a
result of any controversy over this Agreement.
(g) Notwithstanding any other provision of this Agreement, if the
aggregate present value of the "parachute payments" made to
you hereunder, determined under Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code") exceed 2.99
times your "base amount," as defined under Section 280G and
any regulations promulgated thereunder, the amounts payable to
you under this Agreement shall be reduced so that the
aggregate present value of the parachute payments to you does
not exceed 2.99 times the base amount. Any such reduction
shall be applied first to those benefits under subparagraph
(e) above which are considered parachute payments, then to
those benefits under subparagraph (d) which are considered
parachute payments, and then to those benefits under
subparagraphs (b) or (a), as elected by you, which are
considered to be parachute payments.
5. NO MITIGATION REQUIRED. You shall not be required to mitigate the
amount of any payment or benefit provided for in Paragraph 4 by seeking
other employment or otherwise, nor shall the amount of any payment or
benefit provided for in Paragraph 4 be
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reduced by any compensation earned by you as a result of employment by
another employer after the Date of Termination, or otherwise.
6. SUCCESSORS, BINDING AGREEMENT. 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, by agreement in form and substance reasonably satisfactory
to you, to expressly assume and agree 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. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms
as you would be entitled hereunder if you terminated your employment
after a change in control of the Company for Good Reason, except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination.
As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in
this Paragraph 6 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law. This Agreement shall
inure to the benefit of and be enforceable by your personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die after your Date
of Termination; and while any amount would still be payable to you
hereunder if you had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms
of this Agreement to your devisee, legatee, or other designee or, if
there be no such designee, to your estate.
7. NOTICE. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement, provided that
all notices to the Company shall be directed to the attention of the
Secretary of the Company, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except
that notices of change of address shall be effective only upon receipt.
8. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such modification, waiver or discharge is agreed
to in writing signed by you and such officer as may be specifically
designated by the Board (which shall in any event include the Company's
Chief Executive Officer). No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either
party which
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are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Ohio.
9. VALIDITY. The invalidity or unenforceability of any one or more
provisions 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.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
11. ARBITRATION. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in
Detroit, Michigan, in accordance with the rules of the American
Arbitration Association then in effect; provided that all arbitration
expenses shall be borne by the Company. Notwithstanding the pendency of
any dispute or controversy concerning termination or the effects
thereof, the Company will continue to pay you your full compensation in
effect immediately before any Notice of Termination giving rise to the
dispute was given (including, but not limited to, base salary and
incentive pay) and continue you as a participant in all compensation,
benefit and insurance plans in which you were then participating, until
the dispute is finally resolved. Amounts paid under this paragraph are
in addition to all other amounts due under this Agreement and shall not
be offset against or reduce any other amounts due under this Agreement.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
12. SCOPE OF AGREEMENT. This Agreement is not a contract of employment for
any period of time, does not constitute a guarantee of employment, and
shall not be deemed to confer any benefit in the absence of a change in
control of the Company.
13. SUPERSEDING OF SEVERANCE RIGHTS. The receipt of payments by you under
this Agreement shall be in lieu of, and not in addition to, any
severance payments payable to you under any other severance agreement
between you and the Company or any severance pay plan or policy of the
Company, all of which are hereby waived.
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If this letter correctly sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.
Sincerely,
THE STANDARD PRODUCTS COMPANY
Xxxxxx X. Xxxxxxxxx
Vice Chairman and Chief Executive Officer
Agreed to this day of , 1999.
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