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EXHIBIT (10)-2
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Elected Officer Form
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT (this "Agreement") by and between TRINOVA Corporation,
an Ohio corporation (the "Company"), and _________________________________ (the
"Executive"), dated this _____ day of __________, 199__.
WITNESSETH THAT:
WHEREAS, the Company recognizes that today's business environment
makes it difficult to attract and retain highly qualified executive and key
professional personnel unless a degree of security can be offered to those
individuals against organizational and personnel changes which frequently follow
a change in control of a corporation; and
WHEREAS, even rumors of change-in-control transactions may cause key
employees to consider major career changes in an effort to assure financial
security for themselves and their families; and
WHEREAS, the Company desires to assure fair treatment of its key
employees in the event of a change in control and to allow them to make critical
career decisions without undue time pressure and financial uncertainty,
increasing their willingness to remain with the Company notwithstanding the
outcome of a possible change-in-control transaction; and
WHEREAS, the Company recognizes that many of its key management
employees will be involved in evaluating or negotiating any offers, proposals,
or other transactions which could result in a change in control of the Company
and, recognizing the fiduciary obligations of such officers, believes that it is
in the best interests of the Company and its shareholders to provide additional
assurance that such key employees are in a position, free from personal economic
and employment considerations, to be able as a practical matter to objectively
assess and aggressively pursue the interests of the Company's shareholders in
making these evaluations and carrying on such negotiations;
NOW THEREFORE, the parties agree as follows:
1. DEFINITIONS. When used herein, the following terms shall have the
meanings set forth below:
A. "Average Total Compensation" shall mean the sum of the
amounts determined under clauses (i) and (ii) below.
(i) The higher of the Executive's annual base salary
(without giving effect to any elected deferrals to
a plan under Section 401(k) of the Internal
Revenue Code of 1986, as amended (the "Code")) in
effect on (x) the day immediately prior to the day
on which the Change in Control occurred, or (y)
the Executive's Resignation Date or Termination
Date, as the case may be.
(ii)(a) If the Executive has been employed by the Company
for the last three full consecutive calendar
years, the average of the two highest aggregate
short-term annual incentive awards received by the
Executive under the Incentive Compensation Plan
attributable to services performed by
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the Executive during any calendar year in the last
five full calendar years (without regard to when
such awards were paid or accrued); or
(ii)(b) If the Executive has been employed by the Company
for at least one, but less than three full
consecutive calendar years, the average of the
aggregate short-term annual incentive awards
received by the Executive under the Incentive
compensation Plan attributable to services
performed by the Executive during each full
calendar year he has been employed by the Company
(without regard to when such awards were paid or
accrued); or
(ii)(c) If the Executive has been employed by the Company
for less than one full calendar year, the greater
of (x) his guaranteed annual incentive
compensation or (y) the aggregate short-term
annual incentive awards to which the Executive
would have been entitled under the Incentive
Compensation Plan of which the Executive was a
participant on the Termination Date or Resignation
Date, as the case may be, if he had worked for one
full calendar year at the base salary determined
under clause (i) above.
B. A "Beneficial Owner" of Voting Stock is any Person who would
be deemed to beneficially own such Voting Stock within the
meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or
any successor rules or regulations thereto.
C. "Benefit Period" shall mean a period of two years,
commencing with the Termination Date or Resignation Date,
except that if the Executive will reach age 65 within two
years after the Termination Date or Resignation Date, the
Benefit Period shall mean a period of years, including
fractional years, commencing with the Termination Date or
Resignation Date, and ending on the Executive's 65th
birthday.
D. "Cause" shall mean that, prior to any Termination or
Resignation, the Executive shall have committed:
(i) an intentional act of fraud, embezzlement or theft
in connection with his duties or in the course of
his employment with the Company;
(ii) intentional wrongful damage to property of the
Company; or
(iii) intentional wrongful disclosure of secret
processes or confidential information of the
Company;
and any such act shall have been materially harmful to the
Company. For purposes of this Agreement, no act, or failure
to act, on the part of the Executive shall be deemed
"intentional" if it was due primarily to an error in
judgment or negligence, but shall be deemed "intentional"
only if done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that his action or
omission was in the best interest of the Company.
Notwithstanding anything in this Agreement to the contrary,
the Executive shall not be deemed to have been terminated
for "Cause" hereunder unless and until there shall have been
delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than
three-quarters of the Board of Directors of the Company (the
"Board") then in office at a meeting of the Board called and
held for such purpose (after reasonable notice to the
Executive and an
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opportunity for the Executive, together with his counsel,
to be heard before the Board), finding that, in the good
faith opinion of the Board, the Executive had committed an
act set forth above in this Paragraph 1.D and specifying
the particulars thereof in detail. Nothing herein shall
limit the right of the Executive or his beneficiaries to
contest the validity or propriety of any such
determination.
E. A "Change in Control" shall have occurred if any of the
following events shall occur:
(i) The Company is merged, consolidated or reorganized
into or with another corporation or other legal
person, and as a result of such merger,
consolidation or reorganization less than a
majority of the combined voting power of the
then-outstanding securities of such corporation or
person immediately after such transaction are held
in the aggregate by the holders of Voting Stock
immediately prior to such transaction;
(ii) If the Company sells all or substantially all of
its assets to any other corporation or other legal
person, less than a majority of the combined
voting power of the then-outstanding securities of
such corporation or person immediately after such
transaction are held in the aggregate by the
holders of Voting Stock immediately prior to such
sale;
(iii) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or
report), each as promulgated pursuant to the
Exchange Act, disclosing that any Person has
become the Beneficial Owner of 20% or more of the
Voting Stock;
(iv) The Company files a report or proxy statement with
the Securities and Exchange Commission pursuant to
the Exchange Act disclosing in response to Form
8-K or Schedule 14A (or any successor schedule,
form or report or item therein) that a change in
control of the Company has or may have occurred or
will or may occur in the future pursuant to any
then-existing contract or transaction; or
(v) If during any period of two consecutive years,
individuals who at the beginning of any such
period constitute the Directors of the Company
cease for any reason to constitute at least a
majority thereof, unless the election, or the
nomination for election by the Company's
shareholders, of each Director of the Company
first elected during such period was approved by a
vote of at least two-thirds of the Directors of
the Company then still in office who were
Directors of the Company at the beginning of any
such period.
Notwithstanding the foregoing provisions of Paragraph
1.E(iii) or 1.E(iv) hereof, a "Change in Control" shall not
be deemed to have occurred for purposes of this Agreement
solely because (i) the Company, (ii) an entity in which the
Company directly or indirectly beneficially owns 50% or more
of the voting securities, or (iii) any Company-sponsored
employee stock ownership plan or any other employee benefit
plan of the Company, either files or becomes obligated to
file a report or a proxy statement under or in response to
Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or
any successor schedule, form or report or item therein)
under the Exchange Act, disclosing beneficial ownership by
it of shares of Voting Stock, whether in
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excess of 20% or otherwise, or because the Company reports
that a change in control of the Company has or may have
occurred or will or may occur in the future by reason of
such beneficial ownership.
F. "Incentive Compensation Plan" shall mean the plan approved
by shareholders of the Company on April 19, 1984 (or any
Operating Company Incentive Plan) and any amendments thereto
and restatements thereof, or any successor plan that may
become effective subsequent to the date of this Agreement
and prior to a Change in Control.
G. "Operating Company" shall mean any corporation of which the
Company owns directly or indirectly more than 50% of the
outstanding stock having by its terms ordinary voting power
to elect a majority of the board of directors of such
corporation, irrespective of whether at the time stock of
any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any
contingency.
H. "Person" shall mean any "person," as the term "person" is
used and defined in Section 14(d)(2) of the Exchange Act,
and any "affiliate" or "associate" of any such person, as
the terms "affiliate" and "associate" are defined in Rule
12b-2 of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement.
I. "Resignation" shall mean resignation by the Executive of his
employment with the Company if any of the following has
occurred:
(i) Failure to elect or reelect the Executive to the
office of the Company which the Executive held
immediately prior to the Change in Control, or the
removal of the Executive as a Director of the
Company (or any successor thereto), if the
Executive shall have been a Director of the
Company immediately prior to the Change in
Control;
(ii) A significant adverse change in the nature or
scope of the authorities, powers, functions,
responsibilities or duties attached to the
position with the Company which the Executive held
immediately prior to the Change in Control, a
reduction in the aggregate Total Compensation
received by the Executive from the Company in any
calendar year following the Change in Control, or
the termination of the Executive's rights to any
employee benefits to which he was entitled
immediately prior to the Change in Control or a
reduction in scope or value thereof without the
prior written consent of the Executive, any of
which is not remedied within 10 calendar days
after receipt by the Company of written notice
from the Executive of such change, reduction or
termination, as the case may be;
(iii) A determination by the Executive made in good
faith that as a result of the Change in Control
and a change in circumstances thereafter
significantly affecting his position, including
without limitation, a change in the scope of the
business or other activities for which he was
responsible immediately prior to the Change in
Control, he has been rendered substantially unable
to carry out, has been substantially hindered in
the performance of, or has suffered a substantial
reduction in, any of the authorities, powers,
functions, responsibilities or duties attached to
the position held by the Executive immediately
prior to the Change in
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Control, which situation is not remedied within 10
calendar days after written notice to the Company
from the Executive of such determination;
(iv) The liquidation, dissolution, merger,
consolidation or reorganization of the Company or
transfer of all or a significant portion of its
business and/or assets, unless the successor or
successors (by liquidation, merger, consolidation,
reorganization or otherwise) to which all or a
significant portion of its business and/or assets
have been transferred (directly or by operation of
law) shall have assumed all duties and obligations
of the Company under this Agreement pursuant to
Paragraph 8 hereof;
(v) The Company shall relocate its principal executive
offices, or require the Executive to have his
principal location of work changed to any location
which is in excess of 100 miles from the location
thereof immediately prior to the Change of Control
or to travel away from his office in the course of
discharging his responsibilities or duties
hereunder significantly more (in terms of either
consecutive days or aggregate days in any calendar
year) than was required of him prior to the Change
of Control without, in either case, his prior
written consent; or
(vi) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement
by the Company or any successor thereto.
J. "Resignation Date" shall be the last day worked by an
Executive who resigns his employment with the Company as
provided in Paragraph 1.I of this Agreement.
K. "Retirement Savings Plan" shall mean the TRINOVA Corporation
Retirement Savings and Profit Sharing Plan for Corporate
Employees as amended effective January 1, 1988 (or any
Operating Company defined contribution plan, including
profit sharing plans) and any amendments thereto and
restatements thereof, or any successor plan that may become
effective subsequent to the date of this agreement and prior
to a Change in Control.
L. "Termination" shall mean termination by the Company of the
Executive's employment for any reason other than the
following:
(i) death;
(ii) Total Disability, as defined in the Company's
long-term disability plan then in effect, and the
Executive begins actually to receive disability
benefits pursuant to such disability plan; or
(iii) Cause.
The Executive may also deem himself to have been terminated
under this Paragraph 1.L if the aggregate cash compensation
(including base salary (without giving effect to any elected
deferrals to a plan under Section 401(k) of the Code) plus
awards under the Incentive Compensation Plan) received by
the Executive in any calendar year following a Change in
Control is an amount less than the aggregate cash
compensation (including base salary (without giving effect
to any elected deferrals to a plan under Section 401(k) of
the Code) plus awards under the Incentive Compensation Plan)
received by the Executive in the full calendar year
immediately preceding the Change in Control;
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provided however, if the Executive was not employed by the
Company during all of the full calendar year immediately
preceding the Change in Control, the amount referred to
above with respect to the full calendar year immediately
preceding the Change in Control shall be the sum of the
amounts determined pursuant to Paragraphs 1.A(i) and
1.A(ii)(c).
M. "Termination Date" shall be the last day worked by an
Executive whose employment with the Company is terminated by
the Company other than for the reasons set forth in
Subparagraphs 1.L(i), (ii) or (iii) of this Agreement.
N. "Voting Stock" means all outstanding securities of the
Company entitled to vote generally in the election of
directors of the Company at the time in question.
2. PAYMENTS UPON TERMINATION OR RESIGNATION. Subject to Paragraph E
hereof, in the event of Termination within four years after the
Change in Control, or Resignation between six months and two years
after the Change in Control, the Executive shall receive:
A. An amount equal to the Executive's Average Total
Compensation, multiplied by the length, in years, including
fractional years, of the Benefit Period. This payment shall
be made by the Company within thirty calendar days after the
Executive's Termination Date or Resignation Date, as the
case may be.
B. A contribution by the Company (or, if applicable, the
Company shall cause the appropriate Operating Company to
make a contribution) in an amount equal to 2 times 4.5% of
the Executive's Average Total Compensation to be made within
thirty calendar days after the Executive's Termination Date
or Resignation Date, as the case may be, to the Executive's
account in the applicable Retirement Savings Plan. These
benefits shall be payable at the time and in the manner set
forth in such Plan as in effect immediately prior to the
Change in Control.
C. During the Benefit Period, the benefits associated with
continued participation in the employee health, life
insurance, disability income and other welfare benefit plans
of the Company and/or any Operating Company in which he was
participating immediately prior to the Change in Control,
upon provisions substantially similar to or more favorable
to the Executive than those contained in the respective
plans as of the Termination Date or the Resignation Date,
provided , however, that if participation by the Executive
in any of such plans is not permitted, due to the
requirements for eligibility for participation contained
therein, the Company shall (or shall cause the applicable
Operating Company to) pay or provide for the payment of the
benefits described in those plans to the Executive and/or
his dependents, or, if applicable, to his beneficiaries or
estate as if he were employed by the Company during the
Benefit Period in the position held by him immediately prior
to the Change in Control.
D. Reimbursement for the cost of outplacement services rendered
to the Executive as part of efforts made by the Executive to
obtain employment following his Termination Date or
Resignation Date.
E. In the event the "present value" (as determined under
Section 280G of the Code or any successor provision thereto)
of the amounts payable under Paragraphs 2.A through 2.D
hereof, when added to the "present value" (as determined
under Section 280G of the Code or any successor provision
thereto) of any other "parachute payments" (as that term is
defined in Section 280G of the Code or any successor
provision thereto) from the Company,
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exceeds an amount (the "299% Amount") equal to 299% of the
Executive's "base amount" (as that term is defined in
Section 280G of the Code (without regard to Section
280G(b)(2)(A)(ii) thereof) or any successor provision
thereto), then the amount of the payments otherwise payable
to the Executive pursuant to this Agreement shall be reduced
to the minimum extent necessary (but in no event to less
than zero) so that no such payment causes the 299% Amount to
be exceeded. The reduction, if any, contemplated by the
immediately preceding sentence shall be effected by reducing
to the extent necessary the benefits otherwise to be
provided by Paragraph 2.C hereof, and then, if necessary, by
reducing the benefits otherwise to be provided by Paragraph
2.B hereof, and then, if necessary, by reducing the benefits
provided by Paragraph 2.A hereof.
F. The determination of whether any amount otherwise payable
under Paragraphs 2.A through 2.D hereof causes the 299%
Amount to be exceeded shall be made, if requested by the
Executive or the Company, by Xxxxx, Day, Xxxxxx & Xxxxx or
such other counsel as may be selected for this purpose by
the Company's independent accounting firm and approved by
the Executive.
3. NO MITIGATION OBLIGATION. The Company hereby acknowledges that it will
be difficult, and may be impossible, for the Executive to find
reasonably comparable employment following the Resignation Date or the
Termination Date, and the parties desire to avoid possible disputes
with respect to mitigation and offset matters. The Company also
acknowledges that, particularly in light of Paragraph 2.E hereof, its
Board of Directors has, following due consideration of the matter,
determined that the benefits provided by Paragraph 2 hereof are
reasonable. Accordingly, the parties hereto expressly agree that the
payment of the amounts specified in Paragraph 2 hereof by the Company
to the Executive in accordance with the terms of this Agreement will
be liquidated damages, and that the Executive shall not be required to
mitigate the amounts provided for in Paragraph 2 of this Agreement by
seeking other employment or otherwise, nor shall any profits, income,
earnings or other benefits from any source whatsoever create any
mitigation, offset, reduction or any other obligation on the part of
the Executive hereunder or otherwise, except that the welfare benefits
provided by Paragraph 2.C hereof shall be reduced to the extent
comparable welfare benefits are actually received by the Executive
from another employer following the Executive's Resignation Date or
Termination Date, as the case may be, until the expiration of the
Benefit Period.
4. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement or the breach thereof, shall be settled by arbitration
in the City of Toledo, Ohio, in accordance with the laws of the State
of Ohio by three arbitrators, one of whom shall be appointed by the
Company, one by the Executive and the third of whom shall be appointed
by the first two arbitrators. If the first two arbitrators cannot
agree on the appointment of a third arbitrator, then the third
arbitrator shall be appointed by the Chief Judge of the United States
District Court for the Northern District of Ohio. The arbitration
shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of
arbitrators, which shall be as provided in this Paragraph 4. Judgment
upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. In the event that the Executive
determines in good faith to retain legal counsel and/or incur other
reasonable costs or expenses in connection with any such arbitration
or to enforce any or all of the Executive's rights under this
Agreement or under any arbitration award, the Company shall pay 50% of
the first $10,000 of attorneys' fees, costs, and expenses incurred by
the Executive in connection with the enforcement of his rights,
including the enforcement of any arbitration award in court,
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regardless of the final outcome. The Company shall pay all such costs
and expenses in excess of $10,000 incurred by the Executive.
5. NOTICES. Any notices, requests, demands, and other communications,
provided for in or pertinent to this Agreement shall be sufficient if
delivered to the other party hereto by means of a written notice,
mailed by United States registered or certified mail, return receipt
requested, postage prepaid to either the Executive's last known
address, or to the Company's principal executive offices, as the case
may be.
6. GOVERNING LAW. The provisions of this Agreement shall be construed and
governed in accordance with the laws of the State of Ohio without
giving effect to the principles of conflict of laws of such State.
7. AMENDMENT. This Agreement may be amended or canceled by mutual
agreement of the parties in writing without the consent of any other
person and, so long as the Executive lives, no person, other than the
parties hereto shall have any rights under or interest in this
Agreement or the subject matter hereof.
8. Successors and Binding Agreement.
A. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization
or otherwise) to all or substantially all of the business
and/or assets of the Company, by agreement in form and
substance satisfactory to the Executive, expressly to assume
and agree to perform this Agreement in the same manner and
to the same extent the Company would be required to perform
if no such succession had taken place. This Agreement shall
be binding upon and inure to the benefit of the Company and
any successor to the Company, including without limitation
any persons acquiring directly or indirectly all or
substantially all of the business and/or assets of the
Company whether by purchase, merger, consolidation,
reorganization or otherwise (and such successor shall
thereafter be deemed the "Company" for the purposes of this
Agreement), but shall not otherwise be assignable,
transferable or delegable by the Company.
B. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal
representatives, executors, administrators, successors,
heirs, distributees and/or legatees.
C. This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other,
assign, transfer or delegate this Agreement or any rights or
obligations hereunder except as expressly provided in
Paragraph 8.A hereof. Without limiting the generality of the
foregoing, the Executive's right to receive payments
hereunder shall not be assignable, transferable or
delegable, whether by pledge, creation of a security
interest or otherwise, other than by a transfer by his will
or by the laws of descent and distribution and, in the event
of any attempted assignment or transfer contrary to this
Paragraph 8.C, the Company shall have no liability to pay
any amount so attempted to be assigned, transferred or
delegated.
9. VALIDITY. If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement
and the application of such provision to any other person or
circumstances shall not be affected, and the provision so held to be
invalid, unenforceable or otherwise illegal shall be reformed to the
extent (and only to the extent) necessary to make it enforceable,
valid and legal.
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10. SCOPE OF AGREEMENT. This Agreement is not a contract for employment
for any period of time, does not constitute a guarantee of employment
and shall not be deemed to confer any benefit on the Executive in the
absence of a Change in Control.
11. TERM. The period during which this Agreement shall be in effect (the
"Term") shall commence as of the date hereof and shall expire as of
the later of (i) the close of business on December 31, 1992 and (ii)
the expiration of the Benefit Period, provided, however, that (A)
commencing on January 1, 1989 and each January 1 thereafter, the Term
of this Agreement shall automatically be extended for an additional
year unless, not later than September 30 of the immediately preceding
year, the Company or the Executive shall have given notice that it or
he, as the case may be, does not wish to have the Term extended and
(B) subject to Paragraph 10 hereof, if, prior to a Change in Control,
the Executive ceases for any reason to be an officer of the Company,
thereupon the Term shall be deemed to have expired and this Agreement
shall immediately terminate and be of no further effect.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its secretary, all as of
the day and year first above written.
____________________________________
Executive
ATTEST: TRINOVA CORPORATION
___________________________________ By: _______________________________
Secretary Vice President
(Seal)
