EXHIBIT 10.28
STANDARD MOTOR PRODUCTS CORPORATION
SEVERANCE COMPENSATION AGREEMENT
December 12, 2001
Xxxxx Xxxxx
0 Xxxxx Xxxxx
Xxxxxxx, XX 00000
Dear Xx. Xxxxx:
The Board of Directors (the "Board") of Standard Motor Products
Corporation (the "Corporation") has authorized your participation in the
arrangements set forth in this Severance Compensation Agreement (the
"Agreement").
The Board recognizes that the possibility of a Change in Control of the
Corporation exists, 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 Corporation and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Corporation's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from a
possible Change in Control of the Corporation. The Board has also determined
that it is in the best interests of the Corporation and its stockholders to
ensure your continued availability to the Corporation in the event of a
potential Change in Control of the Corporation.
In order to induce you to remain in the employ of the Corporation and
in consideration of your continued service the Corporation, the Corporation
agrees that you shall receive the severance benefits set forth in this Agreement
in the event your employment with the Corporation is terminated subsequent to a
Change in Control of the Corporation under the circumstances described below.
1. DEFINITIONS:
a. CAUSE shall mean:
(i) deliberate or intentional failure to substantially perform
the material duties of your position (other than due to disability);
(ii) an intentional act of fraud, embezzlement, theft or any
other material violation of law;
(iii) intentional wrongful damage to material assets of the
Corporation;
(iv) intentional wrongful disclosure of material confidential
information of the Corporation; or
(v) intentional breach of any material employment policy of
the Corporation.
No act, or failure to act, on your part shall be deemed "intentional"
if it was due primarily to an error in judgement or negligence, but shall be
deemed "intentional" only if done, or omitted to be done, by you not in good
faith and without reasonable belief that your action or omission was in, or not
opposed to, the best interest of the Corporation. Failure to meet performance
standards or objectives of the Corporation shall not constitute Cause for
purposes hereof.
b) "CHANGE IN CONTROL OF THE CORPORATION" shall be deemed to occur if
any of the following circumstances shall occur:
(i) the sale, lease, transfer, conveyance or other
disposition, in one or a series of related transactions,
of all or substantially all of the assets of the
Corporation to any "person" or "group" (as such terms
are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 ("Act")) other than the Permitted
Holders;
(ii) any person or group, other than the Permitted Holders,
is or becomes the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Act, except that a
person shall be deemed to have "beneficial ownership" of
all shares that any such person has the right to
acquire, whether such right is exercisable immediately
or only after the passage of time), directly or
indirectly, of more than 50 percent of the total voting
power of the voting stock of the Corporation, including
by way of merger, consolidation or otherwise;
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(iii) Xxxxx Xxxxx is no longer the Chairman of the Board of
Directors of the Corporation or he is no longer the
Chief Executive Officer of the Corporation.
For the purposes of this Section 1b, "Permitted Holders" shall
mean, as of the date of determination: (A) any and all of
Xxxxx Xxxxx, his spouse, his parents, his siblings and their
spouses, and descendants of them (whether natural or adopted)
(collectively, the "Xxxxx Group"); and (B) any trust
established and maintained primarily for the benefit of any
member of the Xxxxx Group and any entity controlled by any
member of the Xxxxx Group.
c. "GOOD REASON FOR RESIGNATION" shall mean, without your express
written consent, any of the following:
(i) (A) a change in your status or position with the
Corporation, which in your reasonable judgement does
not represent a promotion from your status or
position, immediately prior to a Change in Control of
the Corporation; or
(B) a reduction in the level of your reporting
responsibility as it existed immediately prior to a
Change in Control of the Corporation; or
(C) the assignment to you of any duties or
responsibilities or diminution of duties or
responsibilities which in your reasonable judgment
are inconsistent with your status or position with
the Corporation in effect immediately prior to a
Change in Control of the Corporation;
(ii) a reduction by the Corporation in the annual rate of
your base salary as in effect immediately prior to the
date of a Change in Control of the Corporation or as the
same may be increased from time to time thereafter;
(iii) the Corporation requiring you to be based outside of a
fifteen (15) mile radius from where your office is
located immediately prior to a Change in Control of the
Corporation except for required travel on the
Corporation's business to an extent substantially
consistent with your business travel obligations
immediately prior to a Change in Control of the
Corporation;
2. CHANGE IN CONTROL.
a. EFFECT OF A CHANGE IN CONTROL. Notwithstanding anything contained
herein to the contrary, if your employment is terminated within 12 months
following a Change in Control by either you with Good Reason for Resignation or
by the Corporation for any reason other than Cause, then you shall receive the
following benefits:
(i) SEVERANCE. The Corporation shall pay to you an amount
equal to three times your Cash Compensation (which shall
mean your base salary plus your bonus at par as defined
in the Standard Motor Products Corporation Bonus Plan),
as in effect immediately prior to such termination of
employment (or the Cash Compensation in effect
immediately prior to the Change in Control, if greater).
Such amount shall be paid to you on a pro-rata bases,
semi-monthly, for a period of two years following your
termination of employment.
(ii) WELFARE PLAN COVERAGES. You shall continue to
participate for a period of thirty-six (36) months in
any group medical, dental or life insurance plan that
you participated in prior to the date of the Change in
Control, under such terms and conditions as applied to
you while you were an active employee. Notwithstanding
the foregoing, you may not continue to participate in
such plans on a pre-tax basis.
(iii) SUPPLEMENTAL COMPENSATION PLAN AND ALL OTHER WELFARE
PLANS. You shall receive an immediate three years
additional service credit for all purposes under the
Corporation's Supplement Compensation Plan and under any
other Corporate Welfare Plans as well.
(iv) You shall be allowed the exclusive use of your company
automobile for the duration of the lease then in effect
on the date of your separation. No contribution shall be
required from you towards the cost of the lease. You
will however be responsible for the costs of fuel,
maintenance and auto liability insurance. Proof of
insurance must be furnished to the company.
(v) You will receive executive outplacement, arranged by the
company, at the company's cost.
(vi) Any outstanding stock options which have been issued to
you, and which are not yet vested as of the date of your
separation, shall have their vesting accelerated so as
to vest on the date of your separation. The life of all
such options shall be the lesser of their remaining life
or two years.
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3. MISCELLANEOUS.
a. NOTICE. For the purposes of this Agreement, notices, demands and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered by hand or by facsimile or
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to you: Xxxxx Xxxxx
0 Xxxxx Xxxxx
Xxxxxxx, XX 00000
If to the Corporation: Standard Motor Products Corporation
00-00 Xxxxxxxx Xxxxxxxxx
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
Attn: Mr. Xxxxxxx Xxx
Fax: (000) 000-0000
With a copy to: Xxx X. Xxxxxx, Esq.
Xxxxxx Xxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
or to such other address as any 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.
b. MODIFICATION OR WAIVER; ENTIRE AGREEMENT. No provision of this
Agreement may be modified or waived except in a document signed by you and the
Corporation. If any change in the U.S. Tax laws renders any part of this
agreement invalid, the parties shall agree on such modifications as are
necessary to conform this Agreement to the requirements of the new law. This
Agreement, along with any documents incorporated herein by reference, constitute
the entire agreement between the parties regarding their employment
relationship. To the extend that this Agreement is in any way inconsistent with
any prior or contemporaneous stock option agreements between the parties, this
Agreement shall control. No agreement or representations, oral or otherwise,
with respect to the subject matter hereof have been made by either party that
are not set forth expressly in the Agreement.
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c. GOVERNING LAW. The validity, interpretation, construction,
performance, and enforcement of this Agreement shall be governed by the laws of
the State of New York without reference to New York's choice of law rules. In
the event of any dispute, you agree to submit to binding arbitration under the
auspices of the American Arbitration Association at the Company's expense.
d. NO MITIGATION OR OFFSET. In the event your employment with the
Corporation terminates for any reason, you shall not be obligated to seek other
employment following such termination and there shall be no offset of the
payments or benefits set forth herein.
e. WITHHOLDING. All payments required to be made by the Corporation
hereunder to you or your estate or beneficiaries shall be subject to the
withholding of such amounts as the Corporation may reasonably determine it
should withhold pursuant to any applicable law.
f. NO CONFLICT. You represent and warrant that you are not party to any
agreement, contract, understanding, covenant, judgement or decree or under any
obligation, contractual or otherwise, in any way restricting or adversely
affecting your ability to act for the Corporation in all of the respects
contemplated hereby.
g. ENFORCEABILITY. Each of the covenants and agreements set forth in
this Agreement are separate and independent covenants, each of which has been
separately bargained for and the parties hereto intend that the provisions of
each such covenant shall be enforced to the fullest extend permissible. Should
the whole or any part or provision of any such separate covenant be held or
declared invalid, such invalidity shall not in any way affect the validity of
any other such covenant or of any part or provision of the same covenant not
also held or declared invalid. If any covenant shall be found to be invalid but
would be valid if some part thereof were deleted or the period or area of
application reduced, then such covenant shall apply with such minimum
modification as may be necessary to make it valid and effective. The failure of
either party at any time to require performance by the other party of any
provision hereunder will in no way affect the right of that party thereafter to
enforce the same, nor will it affect any other party's right to enforce the
same, or to enforce any of the other provisions in this Agreement; nor will the
waiver by either party of the breach of any provisions hereof be taken or held
to be a waiver of any prior or subsequent breach of such provision or as a
waiver of the provision itself.
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h. MISCELLANEOUS. No right or interest to, or in, any payments shall be
assignable by you; PROVIDED, HOWEVER, that this provision shall not preclude you
from designating in writing one or more beneficiaries to receive any amount that
may be payable after your death and shall not preclude the legal representative
of your estate from assigning any right hereunder to the person or persons
entitled thereto. If you should die while any amounts would still be payable to
you hereunder, all such amounts shall be paid in accordance with the terms of
this Agreement to your written designee or, if there be no such designee, to
your estate. This Agreement shall be binding upon and shall inure to the benefit
of, and shall be enforceable by, you, your heirs and legal representatives and
the Corporation and its successors. The section headings shall not be taken into
account for purposes of the construction of any provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date and year first above written.
STANDARD MOTOR PRODUCTS
CORPORATION
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By: Xxxxx Xxxxx
Title:
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