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EXHIBIT 10-C-9
EMPLOYMENT CONTINUATION AGREEMENT
THIS AGREEMENT between Chrysler Corporation, a Delaware corporation (the
"Company"), and (the "Executive"), dated as of this 6th day of
July, 1995.
WITNESSETH:
WHEREAS, the Company has employed the Executive in an officer position and
has determined that the Executive holds an important position with the Company;
WHEREAS, the Company believes that, in the event it is confronted with a
situation that could result in a change in ownership or control of the Company,
continuity of management will be essential to its ability to evaluate and
respond to such situation in the best interests of shareholders;
WHEREAS, the Company understands that any such situation will present
significant concerns for the Executive with respect to his financial and job
security;
WHEREAS, the Company desires to assure itself of the Executive's services
during the period in which it is confronting such a situation, and to provide
the Executive certain financial assurances to enable the Executive to perform
the responsibilities of his position without undue distraction and to exercise
his judgment without bias due to his personal circumstances;
WHEREAS, to achieve these objectives, the Company and the Executive desire
to enter into an agreement providing the Company and the Executive with certain
rights and obligations upon the occurrence of a Change of Control or Potential
Change of Control (as defined in Section 2);
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Company and the
Executive as follows:
1. Operation of Agreement. (a) Effective Date. The effective date of this
Agreement shall be the earlier of the date on which a Potential Change of
Control or Change of Control occurs (the "Effective Date"), provided that if the
Executive is not employed by the Company, or is employed but on disability
absence or disability leave of absence, on the Effective Date, this Agreement
shall be void and without effect. If the Executive and the Company have entered
into an employment agreement prior to the Effective Date, which is still in
effect on the Effective Date, such Agreement (the "Suspended Agreement") shall
be deemed amended hereby to cause such Agreement to be suspended as of the
Effective Date, provided that, to the extent Executive notifies the Company in
writing prior to delivery of a Notice of Termination (as described in Section
6(e) below) that he believes any provision of such Suspended Agreement is more
favorable to the Executive than the terms hereof, such provision shall be deemed
incorporated herein and made a part hereof and shall supersede any provision
hereof which addresses the same subject matter.
(b) Termination of Agreement Following a Potential Change of
Control. Notwithstanding Section 1(a), in the event the Effective Date occurs
upon a Potential Change of Control, this Agreement shall cease to be effective
upon (i) a good faith determination by the Board of Directors of the Company
("Board") that the events giving rise to a Potential Change of Control will not
result in the occurrence of a Change of Control or (ii) receipt by the Company
of a written notice from the Executive, given after the first anniversary of the
occurrence of a Potential Change of Control (but prior to the occurrence of a
Change of Control), that he wants the Agreement to cease to be effective.
Following such a determination by the Board or receipt of such a notice from the
Executive, neither the Company nor the Executive shall have any obligation to
the other under this Agreement, unless and until it thereafter again becomes
effective by reason of the occurrence of another Potential Change of Control or
any actual Change of Control. If this Agreement ceases to be effective by reason
of this Section 1(b), the Suspended Agreement shall be automatically and
immediately reinstated and fully enforceable in accordance with its terms. If
the term of such Suspended Agreement would have automatically renewed during the
period during which it was suspended pursuant to Section 1(a) above, such
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Suspended Agreement shall so renew as of the date it is reinstated unless either
party gives written notice of non-renewal to the other (delivered as provided in
the Suspended Agreement) within ten business days after this Agreement ceases to
be effective by reason of this Section 1(b).
(c) Termination of Agreement Due to Disability. Notwithstanding Section
1(a), this Agreement shall cease to be effective on the date that the Executive
is placed on disability absence or disability leave of absence, as determined in
good faith in accordance with the Company's generally applicable policies and
procedures as then in effect, so long as the compensation, benefits or other
entitlements paid or made available to the Executive in respect of such
disability absence or disability leave of absence are not less favorable to the
Executive, in the aggregate, than the compensation, benefits and other
entitlements that would have been provided to him under the Company's plans,
policies or programs related to such disability absence or disability leave of
absence in effect immediately prior to the Effective Date.
2. Definitions. (a) Change of Control. For the purposes of this Agreement,
a "Change of Control" shall be deemed to have occurred if:
(i) any Person (as defined below) is or becomes the Beneficial Owner
(as defined below) of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding securities (the
"Voting Securities"), unless the event causing the 20% threshold to be
crossed is an acquisition of securities directly from the Company; or
(ii) within any 24 month period, the persons who were directors of the
Company immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at
least a majority of the Board or the board of directors of any successor to
the Company, provided that any director who was not a director at the
beginning of such period shall be deemed to be an Incumbent Director if
such director (A) was elected to the Board 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 or by prior operation of
this Section 2(a)(iii) and (B) was not designated by a person who has
entered into an agreement with the Company to effect a Transaction (as
defined in clause (iii) of this Section 2(a)); or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation (other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the entity surviving such merger or consolidation (the
"Surviving Entity") or its direct or indirect parent (the "Survivor
Parent")), in combination with voting securities of the Company or the
Surviving Entity or Survivor Parent held by a trustee or other fiduciary
pursuant to any employee benefit plan of the Company or the Surviving
Entity or of any subsidiary of the Company or the Surviving Entity, at
least 80% of the combined voting power of the securities of the Company or
the Surviving Entity or Survivor Parent outstanding immediately after such
merger or consolidation (a "Transaction").
(b) Potential Change of Control. For the purposes of this Agreement, a
Potential Change of Control shall be deemed to have occurred if:
(i) a Person commences a tender offer, which if successfully
consummated, would result in such Person being the beneficial owner of at
least 20% of the Voting Securities;
(ii) the Company enters into an agreement the consummation of which
shall constitute a Change of Control;
(iii) proxies for the election of directors of the Company are
solicited by anyone other than the Company; or
(iv) any other event occurs which is deemed to be a Potential Change
of Control by the Board.
(c) Person Defined. For purposes of this Section 2, "Person" shall have the
meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as
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supplemented by Section 13(d)(3) of the Exchange Act; provided, however, that
Person shall not include (i) the Company, any subsidiary of the Company or any
other Person controlled by the Company, (ii) any trustee or other fiduciary
holding securities under any employee benefit plan of the Company or of any
subsidiary of the Company, or (iii) a corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as
their ownership of securities of the Company.
(d) Beneficial Owner Defined. For purposes of this Section 2, a Person
shall be deemed the "Beneficial Owner" of any securities which such Person,
directly or indirectly, has the right to vote or dispose of or has "beneficial
ownership" (within the meaning of Rule 13d-3 under the Exchange Act) of,
including pursuant to any agreement, arrangement or understanding (whether or
not in writing), provided that: (i) a Person shall not be deemed the Beneficial
Owner of any security as a result of an agreement, arrangement or understanding
to vote such security (x) arising solely from a revocable proxy or consent given
in response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the Exchange Act and the applicable rules and regulations
thereunder or (y) made in connection with, or to otherwise participate in, a
proxy or consent solicitation made, or to be made, pursuant to, and in
accordance with, the applicable provisions of the Exchange Act and the
applicable rules and regulations thereunder, in either case described in clause
(x) or (y) above, whether or not such agreement, arrangement or understanding is
also then reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); and (ii) a Person engaged in business as an
underwriter of securities shall not be deemed to be the Beneficial Owner of any
securities acquired through such Person's participation in good faith in a firm
commitment underwriting until the expiration of forty days after the date of
such acquisition.
3. Employment Period. Subject to Section 6 of this Agreement, the Company
agrees to continue the Executive in its employ, and the Executive agrees to
remain in the employ of the Company, for the period (the "Employment Period")
commencing on the Effective Date and ending on the second anniversary of the
date on which a Change of Control occurs (the "Change of Control Date").
Notwithstanding the foregoing, if, prior to the Effective Date, the Executive is
demoted to a lower position than the position held on the date first set forth
above, the Board may declare that this Agreement shall be without force and
effect by written notice delivered to the Executive within 30 days following
such demotion and prior to the occurrence of a Potential Change of Control or a
Change of Control.
4. Position and Duties. (a) No Reduction in Position. During the Employment
Period, the Executive's position (including titles), authority and
responsibilities shall be at least commensurate with those held, exercised and
assigned immediately prior to the Effective Date, provided that, during the
period from the occurrence of a Potential Change of Control until the Change of
Control Date (the "Pre-Change Effective Period"), the Company may, in its
discretion, reduce, modify or otherwise change the Executive's position,
authority or responsibilities. The Executive's services shall be performed at
the location where the Executive was employed immediately preceding the
Effective Date. It is understood that, for purposes of this Agreement, such
position, authority and responsibilities shall not be regarded as not
commensurate merely by virtue of the fact that a successor shall have acquired
all or substantially all of the business and/or assets of the Company as
contemplated by Section 12(b) of this Agreement.
(b) Business Time. From and after the Effective Date, the Executive agrees
to devote his full attention during normal business hours to the business and
affairs of the Company and to use his best efforts to perform faithfully and
efficiently the responsibilities assigned to him hereunder, to the extent
necessary to discharge such responsibilities, except for (i) time spent in
managing his personal, financial and legal affairs and serving on corporate,
civic or charitable boards or committees, in each case only if and to the extent
not substantially interfering with the performance of such responsibilities, and
(ii) periods of vacation and sick leave to which he is entitled. It is expressly
understood and agreed that the Executive's continuing to serve on any boards and
committees on which he is serving or with which he is otherwise associated
immediately preceding the Effective Date which is not in violation of Policy 1-7
or 1-10 (or any successor policy thereto) shall not be deemed to interfere with
the performance of the Executive's services to the Company.
5. Compensation. (a) Base Salary. During the Employment Period, the
Executive shall receive a base salary at a monthly rate at least equal to the
monthly salary paid to the Executive by the Company and any of
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its affiliated companies immediately prior to the Effective Date, provided that,
during the Pre-Change Effective Period, the Company may pay the Executive a rate
of base salary that is less than that in effect at the Effective Date, so long
as such reduction occurs as part of a cost reduction or other program that
generally applies to all officers of the Company and is in proportion to similar
reductions applicable to such other officers. The base salary shall be reviewed
at least once each year after the Effective Date, and may be increased (but not
decreased other than in the manner described in the preceding sentence) at any
time and from time to time by action of the Board or any committee thereof or
any individual having authority to take such action in accordance with the
Company's regular practices. The Executive's base salary, as it may be increased
from time to time, shall hereafter be referred to as "Base Salary". Neither the
Base Salary nor any increase in Base Salary after the Effective Date shall serve
to limit or reduce any other obligation of the Company hereunder.
(b) Annual Bonus. During the Employment Period, in addition to the Base
Salary, for each fiscal year of the Company ending during the Employment Period,
the Executive shall have the opportunity to receive an annual bonus ("Annual
Bonus Opportunity"), based on the achievement of target levels of performance,
at least equal to the target percentage of his Base Salary that could have been
earned by, or awarded to, the Executive in respect of the fiscal year in which
the Effective Date occurs. Without limiting the generality of the foregoing,
following any Change of Control, the amount actually payable to the Executive as
an annual bonus shall not be less than an amount equal to the average of the
bonuses payable to the Executive for the three fiscal years of the Company
ending immediately prior to the Effective Date (the "Minimum Bonus Amount"). Any
amount payable in respect of the Annual Bonus Opportunity or the Minimum Bonus
Amount shall be paid in February of the year next following the year for which
the amount (or prorated portion) is earned or awarded, unless electively
deferred by the Executive pursuant to any deferral programs or arrangements that
the Company may make available to the Executive.
(c) Long-term Incentive Compensation Programs. During the Employment
Period, the Executive shall participate in all long-term incentive compensation
programs for key executives at a level that is commensurate with the Executive's
participation in such plans immediately prior to the Effective Date, or, if more
favorable to the Executive, at the level made available to the Executive or
other similarly situated officers at any time thereafter; provided that, during
the Pre-Change Effective Period, the Company may reduce the Executive's level of
participation to the extent that such reduction is part of a cost reduction or
other program that applies generally to all officers of the Company and such
reduction is in proportion to similar reductions applicable to such other
officers.
(d) Benefit Plans. During the Employment Period, the Executive (and, to the
extent applicable, his dependents) shall be entitled to participate in or be
covered under all pension, retirement, deferred compensation, savings, medical,
dental, health, disability, group life, accidental death and travel accident
insurance plans and programs of the Company and its affiliated companies at a
level that is commensurate with the Executive's participation in such plans
immediately prior to the Effective Date, or, if more favorable to the Executive,
at the level made available to the Executive or other similarly situated
officers at any time thereafter; provided that, during the Pre-Change Effective
Period, the Company may reduce the Executive's level of participation (and that
of his dependants) to the extent that such reduction is part of a cost reduction
or other program that applies generally to all officers of the Company and such
reduction is in proportion to similar reductions applicable to such other
officers.
(e) Incentive Compensation Retirement Benefits. Following a Change of
Control, the incentive compensation retirement benefit (the "Incentive
Compensation Retirement Benefit") payable to the Executive under the Company's
Supplemental Executive Retirement Plan (the "SRP") will be determined based on
the average of the percentage of incentive compensation used for benefit
accruals in the three fiscal years of the Company ending immediately prior to
the Effective Date (the "IC Accrual Rate"), or, if more favorable to the
Executive, based on the actual percentage of incentive compensation applied in
any given period with respect to the Executive or other similarly situated
officers.
(f) Expenses. During the Employment Period, the Executive shall be entitled
to receive prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the policies and
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procedures of the Company as in effect from time to time during the Pre-Change
Effective Period and, after the occurrence of a Change in Control, as in effect
immediately prior to the Change of Control Date. Notwithstanding the foregoing,
the Company may apply the policies and procedures in effect after the Change of
Control Date to the Executive, if such policies and procedures are more
favorable to the Executive than those in effect immediately prior to the Change
of Control Date.
(g) Vacation and Fringe Benefits. During the Employment Period, the
Executive shall be entitled to paid vacation and fringe benefits at a level that
is commensurate with the paid vacation and fringe benefits available to the
Executive immediately prior to the Effective Date, or, if more favorable to the
Executive, at the level made available from time to time to the Executive or
other similarly situated executive officers at any time thereafter.
(h) Indemnification. During and after the Employment Period, the Company
shall indemnify the Executive and hold the Executive harmless from and against
any claim, loss or cause of action arising from or out of the Executive's
performance as an officer, director or employee of the Company or any of its
Subsidiaries or in any other capacity, including any fiduciary capacity, in
which the Executive serves at the request of the Company to the maximum extent
permitted by applicable law and the Company's Certificate of Incorporation and
By-Laws (the "Governing Documents"), provided that in no event shall the
protection afforded to the Executive hereunder be less than that afforded under
the Governing Documents as in effect immediately prior to the Effective Date.
(i) Office and Support Staff. The Executive shall be entitled to an office
with furnishings and other appointments, and to secretarial and other
assistance, at a level that is at least commensurate with the foregoing provided
to other similarly situated officers.
6. Termination. (a) Death or Retirement. Subject to the provisions of
Section 1 hereof, this Agreement shall terminate automatically upon the
Executive's death or voluntary retirement under any of the Company's retirement
plans as in effect from time to time.
(b) Voluntary Termination. Notwithstanding anything in this Agreement to
the contrary, following a Change of Control the Executive may, upon not less
than 60 days' written notice to the Company, voluntarily terminate employment
for any reason (including early retirement under the terms of any of the
Company's retirement plans as in effect from time to time), provided that any
termination by the Executive pursuant to Section 6(d) on account of Good Reason
(as defined therein) shall not be treated as a voluntary termination under this
Section 6(b). The Executive expressly acknowledges and agrees that any voluntary
termination (other than a retirement under the terms of any of the Company's
plans) during the Pre-Change Effective Period shall constitute a material breach
of this Agreement.
(c) Cause. The Company may terminate the Executive's employment for Cause.
For purposes of this Agreement, "Cause" means (i) the Executive's conviction or
plea of nolo contendere to a felony; (ii) an act or acts of dishonesty or gross
misconduct on the Executive's part which result or are intended to result in
material damage to the Company's business or reputation; or (iii) repeated
material violations by the Executive of his obligations under Section 4 of this
Agreement, which violations are demonstrably willful and deliberate on the
Executive's part and which result in material damage to the Company's business
or reputation.
(d) Good Reason. Following the occurrence of a Change of Control, the
Executive may terminate his employment for Good Reason. For purposes of this
Agreement, "Good Reason" means the occurrence of any of the following, without
the express written consent of the Executive, after the occurrence of a
Potential Change of Control or a Change of Control:
(i) (A) the assignment to the Executive of any duties inconsistent in
any material adverse respect with the Executive's position, authority or
responsibilities as contemplated by Section 4 of this Agreement, or (B) any
other material adverse change in such position, including titles, authority
or responsibilities;
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(ii) any failure by the Company to comply with any of the provisions
of Section 5 of this Agreement, other than an insubstantial or inadvertent
failure remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(iii) the Company's requiring the Executive to be based at any office
or location more than 50 miles (or such other distance as shall be set
forth in the Company's relocation policy as in effect at the Effective
Time) from that location at which he performed his services specified under
the provisions of Section 4 immediately prior to the Change of Control,
except for travel reasonably required in the performance of the Executive's
responsibilities; or
(iv) any failure by the Company to obtain the assumption and agreement
to perform this Agreement by a successor as contemplated by Section 12(b).
Solely for the purpose of clarity and without limiting the generality of the
foregoing, the Company acknowledges and agrees that the Executive shall have
Good Reason if (i) any of his (x) position, authority or responsibilities, (y)
Base Salary or (z) level of participation in the Company's long-term incentive
programs or benefit plans is reduced during the Pre-Change Effective Period,
(ii) such reduction would constitute Good Reason had it been effected after the
Change of Control Date and (iii) within five business days following the Change
of Control Date, the affected condition of Executive's employment is not
restored to the level in effect immediately prior to the Effective Date. In no
event shall the mere occurrence of a Change of Control, absent any further
impact on the Executive, be deemed to constitute Good Reason.
(e) Notice of Termination. Any termination by the Company for Cause or by
the Executive for Good Reason shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 13(f). For purposes of
this Agreement, a "Notice of Termination" means a written notice given, in the
case of a termination for Cause, within 10 business days of the Company's having
actual knowledge of the events giving rise to such termination, and in the case
of a termination for Good Reason, within 180 days of the later of (x) the
occurrence of a Change of Control and (y) the Executive's having actual
knowledge of the events giving rise to such termination, and which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) sets
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, and (iii) if the termination date is other than the date of receipt
of such notice, specifies the termination date of this Agreement (which date
shall be not more than 15 days after the giving of such notice). The failure by
the Executive to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason shall not waive any right of the
Executive hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing his rights hereunder.
(f) Date of Termination. For the purpose of this Agreement, the term "Date
of Termination" means (i) in the case of a termination for which a Notice of
Termination is required, the date of receipt of such Notice of Termination or,
if later, the date specified therein, as the case may be, and (ii) in all other
cases, the actual date on which the Executive's employment terminates during the
Employment Period.
7. Obligations of the Company upon Termination. (a) Death. If the
Executive's employment is terminated during the Employment Period by reason of
the Executive's death, this Agreement shall terminate without further
obligations to the Executive or the Executive's legal representatives under this
Agreement other than those obligations accrued hereunder at the Date of
Termination, and the Company shall pay to the Executive the following amounts:
(i) the Executive's full Base Salary through the Date of Termination
(the "Earned Salary");
(ii) whichever of the following amounts is applicable:
(A) if the Executive's death occurs during the Pre-Change Effective
Period, the amount otherwise payable to or in respect of the Executive
as an annual bonus for the then current calendar year under the
Company's otherwise applicable plans, policies and procedures (the
"Pre-Change Bonus"); or
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(B) if Executive's death occurs after the Change of Control Date,
an amount (the "Pro-Rated Bonus") equal to the product of (x) times (y),
minus (z):
(x) the Minimum Bonus Amount, and
(y) a fraction, the numerator of which is the number of days in
the then current calendar year which have elapsed as of the Date of
Termination, and the denominator of which is 365;
(z) if the Executive's termination occurs in the same calendar
year as the Change of Control Date, an amount equal to the amount
paid to the Executive under the Change of Control provisions of the
Company's Incentive Compensation Plan or any successor annual
incentive plan (the "Actual Bonus Payment");
(iii) whichever of the following amounts is applicable:
(A) if the Executive's death occurs during the Pre-Change Effective
Period, the amount otherwise payable to or in respect of the Executive
under the Company's otherwise applicable long-term incentive
compensation plans and programs (the "Pre-Change Incentive"); or
(B) if Executive's death occurs after the Change of Control Date,
an amount (the "Pro-Rated Long Term Incentive"), equal to the product of
(x) times (y), minus (z):
(x) the amount that would be payable with respect to all awards
held by the Executive as of the Date of Termination under each
long-term incentive compensation or performance plan or program of
the Company, assuming that the Company had met its target performance
goals under each such award for the applicable performance period
(but without regard to any individual performance criteria) and that
the target amount under each such award was paid, and
(y) a fraction, the numerator of which is the number of days in
the relevant performance period which have elapsed as of the Date of
Termination and the denominator of which is the total number of days
in the applicable performance period;
(z) the amount, if any, actually paid to the Executive under any
such plan or program with respect to such awards (the "Actual
Incentive Payments");
(iv) an amount (the "Additional IC Retirement Benefit") equal to the
present value, calculated using a discount rate equal to the then
prevailing applicable Federal rate as determined under Section 1274(d) of
the Internal Revenue Code of 1986, as amended (the "Code"), of the
additional Incentive Compensation Retirement Benefit that would have been
earned (A) in the case of the Executive's death during the Pre-Change
Effective Period, in respect of the Actual Bonus Payment and the Actual
Incentive Payments, reduced by the Incentive Compensation Retirement
Benefit actually payable to the Executive in respect of the Actual Bonus
Payment and the Actual Incentive Payments or (B) in the case of the
Executive's death following a Change of Control, in respect of the
Pro-Rated Bonus and the Pro-Rated Long Term Incentive, based on the IC
Accrual Rate; and
(v) all vested amounts or benefits owing to the Executive under the
Company's otherwise applicable employee benefit plans and programs,
including any compensation previously deferred by the Executive (together
with any accrued earnings thereon) and not yet paid by the Company and any
accrued vacation pay not yet paid by the Company (the "Accrued
Obligations").
Any Earned Salary, Pro-Rated Bonus and Pro-Rated Long Term Incentive shall be
paid in cash in a single lump sum as soon as practicable, but in no event more
than 30 days (or at such earlier date required by law), following the Date of
Termination. Accrued Obligations shall be paid in accordance with the terms of
the applicable plan, program or arrangement. Any Pre-Change Bonus and Pre-Change
Incentive shall be payable at the same time as similar awards are paid to other
executives participating in the plans under which the awards are payable. The
Additional IC Retirement Benefit shall be payable in accordance with the terms
of the SRP.
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(b) Cause and Voluntary Termination. If, during the Employment Period, the
Executive's employment shall be terminated for Cause or voluntarily terminated
by the Executive (other than on account of Good Reason following a Change of
Control), the Company shall pay the Executive the Earned Salary and the Accrued
Obligations in cash in a single lump sum as soon as practicable, but in no event
more than 10 days, following the Date of Termination.
(c) Termination by the Company other than for Cause and Termination by the
Executive for Good Reason.
(i) Lump Sum Payments. If, during the Employment Period, the Company
terminates the Executive's employment other than for Cause, or following a
Change of Control the Executive terminates his employment for Good Reason,
the Company shall pay to the Executive the following amounts:
(A) the Executive's Earned Salary;
(B) a cash amount (the "Severance Amount") equal to three times the
sum of
(1) the Executive's annual Base Salary; and
(2) the higher of (x) the Minimum Bonus Amount and (y) the
average of the bonuses payable to the Executive for the three fiscal
years of the Company ending immediately prior to the Date of
Termination;
(C) a cash amount (the "Incremental Retirement Benefit") equal to
the present value, calculated using a discount rate equal to the then
prevailing applicable Federal rate as determined under Section 1274(d)
of the Code, of the additional retirement benefits (including, without
limitation, any pension, retiree life or retiree medical benefits) that
would have been payable or available to the Executive under any employee
benefit plan qualified (a "Qualified Plan") under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code") and under the
SRP, based on (x) the age and service the Executive would have attained
or completed had the Executive continued in the Company's employ until
the expiration of the Employment Period, (y) where applicable, the IC
Accrual Rate, and (z) where compensation is a relevant factor, his
pensionable compensation at the Date of Termination;
(D) the Pro-Rated Bonus;
(E) the Pro-Rated Long Term Incentive;
(F) the Additional IC Retirement Benefit;
(G) the Accrued Obligations.
Any Earned Salary, Severance Amount, Incremental Retirement Benefit,
Pro-Rated Bonus and Pro-Rated Long Term Incentive shall be paid in cash in
a single lump sum as soon as practicable, but in no event more than 30 days
(or at such earlier date required by law), following the Date of
Termination. Accrued Obligations shall be paid in accordance with the terms
of the applicable plan, program or arrangement. The Additional IC
Retirement Benefit shall be payable in accordance with the terms of the
SRP.
(ii) Continuation of Benefits. If, during the Employment Period, the
Company terminates the Executive's employment other than for Cause, or
following a Change of Control the Executive terminates his employment for
Good Reason:
(A) the Executive (and, to the extent applicable, his dependents)
shall be entitled, after the Date of Termination until the earlier of
(1) the third anniversary of the Date of Termination (the "End Date")
and (2) the date the Executive becomes eligible for comparable benefits
under a similar plan, policy or program of a subsequent employer, to
continue participation in all of the Company's employee and executive
welfare and fringe benefit plans (the "Benefit Plans"). To the extent
any such benefits cannot be provided under the terms of the applicable
plan, policy or program, the Company shall provide a comparable benefit
under another plan or from the
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Company's general assets. The Executive's participation in the Benefit
Plans will be on the same terms and conditions that would have applied
had the Executive continued to be employed by the Company through the
End Date;
(B) the Executive (or, in the event of the Executive's death during
such period, the Executive's beneficiary or estate) shall have the right
to exercise any outstanding options to purchase shares of Common Stock
of the Company then exercisable by the Executive or which would become
exercisable in accordance with the applicable option agreement and the
applicable equity incentive plan of the Company (such agreements and
plans referred to collectively as the "Equity Documents") for a period
of one year (or, if longer the period of time permitted in accordance
with the generally applicable terms of the governing option agreements)
after the Date of Termination (or, if less, until the end of the stated
term of the option); and
(C) for purposes of the Benefit Plans and the Equity Documents, the
Executive will be deemed to have terminated employment under mutually
satisfactory conditions.
(d) Discharge of the Company's Obligations. Except as expressly provided in
the last sentence of this Section 7(d), the amounts payable to the Executive
pursuant to this Section 7 following termination of his employment shall be in
full and complete satisfaction of the Executive's rights under this Agreement
and any other claims he may have in respect of his employment by the Company or
any of its Subsidiaries. Such amounts shall constitute liquidated damages with
respect to any and all such rights and claims and, upon the Executive's receipt
of such amounts, the Company shall be released and discharged from any and all
liability to the Executive in connection with this Agreement or otherwise in
connection with the Executive's employment with the Company and its
Subsidiaries. Nothing in this Section 7(d) shall be construed to release the
Company from its commitment to indemnify the Executive and hold the Executive
harmless from and against any claim, loss or cause of action arising from or out
of the Executive's performance as an officer, director or employee of the
Company or any of its Subsidiaries or in any other capacity, including any
fiduciary capacity, in which the Executive served at the request of the Company
to the maximum extent permitted by applicable law and the Governing Documents.
(e) Certain Further Payments by the Company.
(i) In the event that any amount or benefit paid or distributed to the
Executive pursuant to this Agreement, taken together with any amounts or
benefits otherwise paid or distributed to the Executive by the Company or
any affiliated company (collectively, the "Covered Payments"), are or
become subject to the tax (the "Excise Tax") imposed under Section 4999 of
the Code or any similar tax that may hereafter be imposed, the Company
shall pay to the Executive at the time specified in Section 7(e)(v) below
an additional amount (the "Tax Reimbursement Payment") such that the net
amount retained by the Executive with respect to such Covered Payments,
after deduction of any Excise Tax on the Covered Payments and any Federal,
state and local income tax and Excise Tax on the Tax Reimbursement Payment
provided for by this Section 7(e), but before deduction for any Federal,
state or local income or employment tax withholding on such Covered
Payments, shall be equal to the amount of the Covered Payments.
(ii) For purposes of determining whether any of the Covered Payments
will be subject to the Excise Tax and the amount of such Excise Tax,
(A) such Covered Payments will be treated as "parachute payments"
within the meaning of Section 280G of the Code, and all "parachute
payments" in excess of the "base amount" (as defined under Section
280G(b)(3) of the Code) shall be treated as subject to the Excise Tax,
unless, and except to the extent that, in the good faith judgment of the
Company's independent certified public accountants appointed prior to
the Effective Date or tax counsel selected by such Accountants (the
"Accountants"), the Company has a reasonable basis to conclude that such
Covered Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for personal
services actually rendered (within the meaning of Section 280G(b)(4)(B)
of the
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Code) in excess of the "base amount," or such "parachute payments" are
otherwise not subject to such Excise Tax, and
(B) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Accountants in accordance with the
principles of Section 280G of the Code.
(iii) For purposes of determining the amount of the Tax Reimbursement
Payment, the Executive shall be deemed to pay:
(A) Federal income taxes at the highest applicable marginal rate of
Federal income taxation for the calendar year in which the Tax
Reimbursement Payment is to be made, and
(B) any applicable state and local income taxes at the highest
applicable marginal rate of taxation for the calendar year in which the
Tax Reimbursement Payment is to be made, net of the maximum reduction in
Federal incomes taxes which could be obtained from the deduction of such
state or local taxes if paid in such year.
(iv) In the event that the Excise Tax is subsequently determined by
the Accountants or pursuant to any proceeding or negotiations with the
Internal Revenue Service to be less than the amount taken into account
hereunder in calculating the Tax Reimbursement Payment made, the Executive
shall repay to the Company, at the time that the amount of such reduction
in the Excise Tax is finally determined, the portion of such prior Tax
Reimbursement Payment that would not have been paid if such Excise Tax had
been applied in initially calculating such Tax Reimbursement Payment, plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any
portion of the Tax Reimbursement Payment to be refunded to the Company has
been paid to any Federal, state or local tax authority, repayment thereof
shall not be required until actual refund or credit of such portion has
been made to the Executive, and interest payable to the Company shall not
exceed interest received or credited to the Executive by such tax authority
for the period it held such portion. The Executive and the Company shall
mutually agree upon the course of action to be pursued (and the method of
allocating the expenses thereof) if the Executive's good faith claim for
refund or credit is denied.
In the event that the Excise Tax is later determined by the
Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to exceed the amount taken into account hereunder at the
time the Tax Reimbursement Payment is made (including, but not limited to,
by reason of any payment the existence or amount of which cannot be
determined at the time of the Tax Reimbursement Payment), the Company shall
make an additional Tax Reimbursement Payment in respect of such excess
(plus any interest or penalty payable with respect to such excess) at the
time that the amount of such excess is finally determined.
(v) The Tax Reimbursement Payment (or portion thereof) provided for in
Section 7(e)(i) above shall be paid to the Executive not later than 10
business days following the payment of the Covered Payments; provided,
however, that if the amount of such Tax Reimbursement Payment (or portion
thereof) cannot be finally determined on or before the date on which
payment is due, the Company shall pay to the Executive by such date an
amount estimated in good faith by the Accountants to be the minimum amount
of such Tax Reimbursement Payment and shall pay the remainder of such Tax
Reimbursement Payment (together with interest at 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 45 calendar days after payment of
the related Covered Payment. In the event that the amount of the estimated
Tax Reimbursement Payment 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 business day after written demand by the
Company for payment (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
8. Non-exclusivity of Rights. Except as expressly provided herein, nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any benefit, bonus, incentive or other plan or program provided
by the Company or any of its affiliated companies and for which the Executive
may
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qualify, nor shall anything herein limit or otherwise prejudice such rights as
the Executive may have under any other agreements with the Company or any of its
affiliated companies, including employment agreements or stock option
agreements. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan or program of the Company or any of
its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan or program.
9. Full Settlement. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which the Company may
have against the Executive or others whether by reason of the subsequent
employment of the Executive or otherwise. In the event that the Executive shall
in good faith give a Notice of Termination for Good Reason and it shall
thereafter be determined that Good Reason did not exist, the employment of the
Executive shall, unless the Company and the Executive shall otherwise mutually
agree, be deemed to have terminated, at the date of giving such purported Notice
of Termination, by mutual consent of the Company and the Executive and, except
as provided in the last preceding sentence, the Executive shall be entitled to
receive only those payments and benefits which he would have been entitled to
receive with respect to his Earned Salary and the Accrued Obligations.
10. Legal Fees and Expenses. If the Executive asserts any claim in any
contest (whether initiated by the Executive or by the Company) as to the
validity, enforceability or interpretation of any provision of this Agreement,
the Company shall pay the Executive's legal expenses (or cause such expenses to
be paid) including, without limitation, his reasonable attorney's fees, on a
quarterly basis, upon presentation of proof of such expenses in a form
acceptable to the Company, provided that the Executive shall reimburse the
Company for such amounts, plus simple interest thereon at the 90-day United
States Treasury Xxxx rate as in effect from time to time, compounded annually,
if the Executive shall not prevail, in whole or in part, as to any material
issue as to the validity, enforceability or interpretation of any provision of
this Agreement.
11. Confidential Information; Company Property. By and in consideration of
the salary and benefits to be provided by the Company hereunder, including the
severance arrangements set forth herein, the Executive agrees that:
(a) Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, (i) obtained by the
Executive during his employment by the Company or any of its affiliated
companies and (ii) not otherwise public knowledge (other than by reason of
an unauthorized act by the Executive). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior
written consent of the Company, unless compelled pursuant to an order of a
court or other body having jurisdiction over such matter, communicate or
divulge any such information, knowledge or data to anyone other than the
Company and those designated by it.
(b) Company Property. Except as expressly provided herein, promptly
following the Executive's termination of employment, the Executive shall
return to the Company all property of the Company and all copies thereof in
the Executive's possession or under his control.
(c) Injunctive Relief and Other Remedies with Respect to
Covenants. The Executive acknowledges and agrees that the covenants and
obligations of the Executive with respect to confidentiality and Company
property relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants and obligations will cause
the Company irreparable injury for which adequate remedies are not
available at law. Therefore, the Executive agrees that the Company shall
(i) be entitled to an injunction, restraining order or such other equitable
relief (without the requirement to post bond) restraining Executive from
committing any violation of the covenants and obligations contained in this
Section 11 and (ii) have no further obligation to make any payments to the
Executive hereunder following any finding by a court or arbitrator that the
Executive has engaged in a material violation of the covenants and
obligations contained in this Section 11. These remedies are cumulative and
are in addition to any other rights and remedies the Company may have at
law or in equity. In connection with the
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foregoing provisions of this Section 11, the Executive represents that his
economic means and circumstances are such that such provisions will not
prevent him from providing for himself and his family on a basis
satisfactory to him. In no event shall an asserted violation of the
provisions of this Section 11 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
12. Successors. (a) This Agreement is personal to the Executive and,
without the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors. The Company shall require any successor to all or
substantially all of the business and/or assets of the Company, whether direct
or indirect, by purchase, merger, consolidation, acquisition of stock, or
otherwise, by an 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 as the Company would be required to perform if no such
succession had taken place.
13. Miscellaneous. (a) Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, applied
without reference to principles of conflict of laws.
(b) Arbitration. Except to the extent provided in Section 11(c), any
dispute or controversy arising under or in connection with this Agreement shall
be resolved by binding arbitration. The arbitration shall be held in the city of
Auburn Hills, Michigan and except to the extent inconsistent with this
Agreement, shall be conducted in accordance with the Voluntary Labor Arbitration
Rules of the American Arbitration Association then in effect at the time of the
arbitration, and otherwise in accordance with principles which would be applied
by a court of law or equity. The arbitrator shall be acceptable to both the
Company and the Executive. If the parties cannot agree on an acceptable
arbitrator, the dispute shall be heard by a panel of three arbitrators, one
appointed by each of the parties and the third appointed by the other two
arbitrators.
(c) Amendments. This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(d) Entire Agreement. This Agreement (as supplemented in accordance with
Section 1(b)) constitutes the entire agreement between the parties hereto with
respect to the matters referred to herein. No other agreement relating to the
terms of the Executive's employment by the Company, oral or otherwise, shall be
binding between the parties unless it is in writing and signed by the party
against whom enforcement is sought. There are no promises, representations,
inducements or statements between the parties other than those that are
expressly contained herein. The Executive acknowledges that he is entering into
this Agreement of his own free will and accord, and with no duress, that he has
read this Agreement and that he understands it and its legal consequences.
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(e) Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand-delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive: at the home address of the Executive noted on the
records of the Company
If to the Company: Prior to January 1, 1996:
Chrysler Corporation
00000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000-0000
Attention: Secretary
On or after January 1, 1996:
Chrysler Corporation
000 Xxxxxxxx Xxxxx Xxxx
Xxxxxx Xxxxx, XX 00000-0000
Attention: Secretary
with a copy to: Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(f) Tax Withholding. The Company shall withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(g) Severability; Reformation. In the event that one or more of the
provisions of this Agreement shall become invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the event that any
of the provisions of any of Section 11(a) are not enforceable in accordance with
its terms, the Executive and the Company agree that such Section shall be
reformed to make such Section enforceable in a manner which provides the Company
the maximum rights permitted at law.
(h) Waiver. Waiver by any party hereto of any breach or default by the
other party of any of the terms of this Agreement shall not operate as a waiver
of any other breach or default, whether similar to or different from the breach
or default waived. No waiver of any provision of this Agreement shall be implied
from any course of dealing between the parties hereto or from any failure by
either party hereto to assert its or his rights hereunder on any occasion or
series of occasions.
(i) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
(j) Captions. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
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IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Company
has caused this Agreement 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.
CHRYSLER CORPORATION
--------------------------------------
By: Xxxxxxxx X. Xxxxxx
Title: Vice President -- Corporate
Personnel
WITNESSED:
------------------------------------------
EXECUTIVE:
--------------------------------------
WITNESSED:
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