EMPLOYMENT AGREEMENT
Exhibit
10.2
AGREEMENT
by and between STRATTEC SECURITY CORPORATION, a Wisconsin corporation (the
"Company") and Xxxxx Xxxxx (the "Executive"), dated as of the 1st day
of
January,
2007.
The
Board
of Directors of the Company (the "Board"), has determined that it is in the
best
interests of the Company and its shareholders to assure that the Company
will
have the continued dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of the Company.
The Board believes it is imperative to diminish the inevitable distraction
of
the Executive by virtue of the personal uncertainties and risks created by
a
pending or threatened Change of Control and to encourage the Executive's
full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control which ensure
that the compensation and benefits expectations of the Executive will be
satisfied and which are competitive with those of other corporations. Therefore,
in order to accomplish these objectives, the Board has caused the Company
to
enter into this Agreement.
NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain
Definitions.
(a) The
"Effective Date"
shall mean the first date during the Change of Control Period (as defined
in
Section l(b)) on which a Change of Control (as defined in Section 2)
occurs. Anything in this Agreement to the contrary notwithstanding, if a
Change
of Control occurs and if the Executive's employment with the Company or this
Agreement is terminated prior to the date on which the Change of Control
occurs,
and if it is reasonably demonstrated by the Executive that such termination
of
employment or of this Agreement (i) was at the request of a third party who
has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change of
Control, then for all purposes of this Agreement the "Effective Date" shall
mean
the date immediately prior to the date of such termination of employment
or
purported termination of this Agreement.
(b) The
"Change of Control Period" shall mean the period commencing on the date hereof
and ending on the third anniversary of the date hereof; provided, however,
that
commencing on the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary thereof shall
be
hereinafter referred to as the "Renewal Date"), unless previously terminated,
the Change of Control Period shall be automatically extended so as to terminate
three years from such Renewal Date, unless at least 60 days prior to the
Renewal Date the Company shall give notice to the Executive that the Change
of
Control Period shall not be so extended.
2. Change
of Control.
For the
purpose of this Agreement, a "Change of Control" shall mean:
(a) The
acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a
Change
of Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii)
and (iii) of subsection (c) of this Section 2; or
(b) Individuals
who, as of the date hereof, constitute the Board (the "Incumbent Board")
cease
for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's shareholders,
was
approved by a vote of at least a majority of the directors then comprising
the
Incumbent Board shall be considered as though such individual were a member
of
the Incumbent Board, but excluding, for this purpose, any such individual
whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or
other
actual or threatened solicitation of proxies or consents by or on behalf
of a
Person other than the Board; or
(c) Approval
by the shareholders of the Company of a reorganization, merger or consolidation
(a "Business Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company
Common
Stock and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than
60% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation,
a
corporation which as a result of such transaction owns the Company through
one
or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company
Common
Stock and Outstanding Company Voting Securities, as the case may be,
(ii) no Person (excluding any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of, respectively,
the
then outstanding shares of common stock of the corporation resulting from
such
Business Combination or the combined voting power of the then outstanding
voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing
for
such Business Combination; or
2
(d) Approval
by the shareholders of the Company of (i) a complete liquidation or
dissolution of the Company or (ii) the sale or other disposition of all or
substantially all of the assets of the Company, other than to a corporation,
with respect to which following such sale or other disposition, [a] more
than 60% of, respectively, the then outstanding shares of common stock of
such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and outstanding
Company Voting Securities immediately prior to such sale or other disposition
in
substantially the same proportion as their ownership, immediately prior to
such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, [b] less than
20% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of
directors is then beneficially owned, directly or indirectly, by any Person
(excluding any employee benefit plan (or related trust) of the Company or
such
corporation), except to the extent that such Person owned 20% or more of
the
Outstanding Company Common Stock or Outstanding Company Voting Securities
prior
to the sale or disposition, and [c] at least a majority of the members of
the board of directors of such corporation were members of the Incumbent
Board
at the time of the execution of the initial agreement, or of the action of
the
Board, providing for such sale or other disposition of assets of the Company
or
were elected, appointed or nominated by the Board.
3. Employment
Period.
The
Company hereby agrees to continue the Executive in its employ, and the Executive
hereby agrees to remain in the employ of the Company subject to the terms
and
conditions of this Agreement, for the period commencing on the Effective
Date
and ending on the third an-niversary of such date (the "Employment
Period").
4. Terms
of Employment.
(a) Position
and Duties.
(i) During
the Employment Period, [a] the Executive's position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects
with
the most significant of those held, exercised and assigned at any time during
the 120-day period immediately preceding the Effective Date and [b] the
Executive's services shall be performed at the location where the Executive
was
employed immediately preceding the Effective Date or any office or location
less
than 35 miles from such location.
3
(ii) During
the Employment Period, and excluding any periods of vacation and sick leave
to
which the Executive is entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the business and affairs
of
the Company and, to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder, to use the Executive's reasonable best
efforts to perform faithfully and efficiently such responsibilities. During
the
Employment Period it shall not be a violation of this Agreement for the
Executive to [a] serve on corporate, civic or charitable boards or
committees, [b] deliver lectures, fulfill speaking engagements or teach at
educational institutions and [c] manage personal investments, so long as
such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance
with
this Agreement. It is expressly understood and agreed that to the extent
that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall
not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation.
(i) Base
Salary.
During
the Employment Period, the Executive shall receive an annual base salary
("Annual Base Salary"), which shall be paid at a monthly rate, at least equal
to
twelve times the highest monthly base salary paid or payable, including any
base
salary which has been earned but deferred, to the Executive by the Company
and
its affiliated companies in respect of the 12-month period immediately preceding
the month in which the Effective Date occurs. During the Employment Period,
the
Annual Base Salary shall be reviewed no more than 12 months after the last
salary increase awarded to the Executive prior to the Effective Date and
thereafter at least annually and shall be first increased no more than
12 months after the last salary increase awarded to the Executive prior to
the Effective Date and thereafter at least annually by the higher of (x)
the
average increase (excluding promotional increases) in base salary awarded
to the
Executive for each of the three full fiscal years (annualized in the case
of any
fiscal year consisting of less than twelve full months or during which the
Executive was employed for less than twelve months) prior to the Effective
Date,
and (y) the percentage increase (excluding promotional increases) in base
salary
generally awarded to peer executives of the Company and its affiliated companies
for the year of determination. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any such increase
and
the term Annual Base Salary as utilized in this Agreement shall refer to
Annual
Base Salary as so increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under
common
control with the Company.
4
(ii) Annual
Bonus.
In
addition to Annual Base Salary, the Executive shall be awarded, for each
fiscal
year ending during the Employment Period, an annual bonus (the "Annual Bonus")
in cash at least equal to the higher of (x) the average of the three highest
bonuses paid or payable, including any bonus or portion thereof which has
been
earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the five fiscal years (or such shorter period during
which the Executive has been employed by the Company) immediately preceding
the
fiscal year in which the Effective Date occurs (annualized for any fiscal
year
during such period consisting of less than twelve full months or with respect
to
which the Executive has been employed by the Company for less than twelve
full
months) and (y) the bonus paid or payable (annualized as described above),
including any bonus or portion thereof which has been earned but deferred,
to
the Executive by the Company and its affiliated companies in respect of the
most
recently completed fiscal year prior to the Effective Date (such higher amount
being referred to as the "Recent Annual Bonus"). Each such Annual Bonus shall
be
paid no later than the end of the third month of the fiscal year next following
the fiscal year for which the Annual Bonus is awarded, unless the Executive
shall elect to defer the receipt of such Annual Bonus.
(iii) Incentive,
Savings and Retirement Plans.
During
the Employment Period, the Executive shall be entitled to participate in
all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect
to
both regular and special incentive opportunities, to the extent, if any,
that
such distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for
the
Executive under such plans, practices, policies and programs as in effect
at any
time during the 120-day period immediately preceding the Effective Date or
if
more favorable to the Executive, those provided generally at any time after
the
Effective Date to other peer executives of the Company and its affiliated
companies.
(iv) Welfare
Benefit Plans.
During
the Employment Period, the Executive and/or the Executive's family, as the
case
may be, shall be eligible for participation in and shall receive all benefits
under welfare benefit plans, practices, policies and programs provided by
the
Company and its affiliated companies (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group
life,
accidental death and travel accident insurance plans and programs) to the
extent
applicable generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with benefits which are less favorable, in the aggregate,
than the most favorable of such plans, practices, policies and programs in
effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer executives
of the Company and its affiliated companies.
5
(v) 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 most favorable policies, practices and procedures of
the
Company and the affiliated companies in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if
more
favorable to the Executive, as in effect generally at any time thereafter
with
respect to other peer executives of the Company and its affiliated
companies.
(vi) Fringe
Benefits.
During
the Employment Period, the Executive shall be entitled to fringe benefits,
including, without limitation, tax and financial planning services, payment
of
club dues, and, if applicable, use of automobile and payment of related
expenses, in accordance with the most favorable plans, practices, programs
and
policies of the Company and its affiliated companies in effect for the Executive
at any time during the 120-day period immediately preceding the Effective
Date
or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vii) Office
and Support Staff.
During
the Employment Period, the Executive shall be entitled to an office or offices
of a size and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of
the
foregoing provided to the Executive by the Company and its affiliated companies
at any time during the 120-day period immediately preceding the Effective
Date
or, if more favorable to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.
(viii) Vacation.
During
the Employment Period, the Executive shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs and practices
of
the Company and its affiliated companies as in effect for the Executive at
any
time during the 120-day period immediately preceding the Effective Date or,
if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
5. Termination
of Employment.
(a) Death
or Disability.
The
Executive's employment shall terminate automatically upon the Executive's
death
during the Employment Period. If the Company determines in good faith that
the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the
30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties.
For
purposes of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected
by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably).
6
(b) Cause.
The
Company may terminate the Executive's employment during the Employment Period
for Cause. For the sole and exclusive purposes of this Agreement, "Cause"
shall
mean:
(i) The
willful and continued failure of the Executive to perform substantially the
Executive's duties with the Company or one of its affiliates (other than
any
such failure resulting from incapacity due to physical or mental illness),
after
a written demand for substantial performance is delivered to the Executive
by
the Board or the Chief Executive Officer of the Company which specifically
identifies the manner in which the Board or Chief Executive Officer believes
that the Executive has not substantially performed the Executive's duties,
or
(ii) The
willful engaging by the Executive in illegal conduct or gross misconduct
which
is materially and demonstrably injurious to the Company.
For
purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to
be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company.
Any
act, or failure to act, based upon authority given pursuant to a resolution
duly
adopted by the Board or upon the instructions of the Chief Executive Officer
or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done,
by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause 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
entire membership of the Board at a meeting of the Board called and held
for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before
the
Board), finding that, in the good faith opinion of the Board, the Executive
is
guilty of the conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.
(c) Good
Reason.
The
Executive's employment may be terminated by the Executive for Good Reason.
For
the sole and exclusive purposes of this Agreement, "Good Reason" shall
mean:
(i) The
assignment to the Executive of any duties inconsistent in any respect with
the
Executive's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by
Section 4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action
not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
7
(ii) Any
failure by the Company to comply with any of the provisions of Section 4(b)
of this Agreement, other than an isolated, insubstantial and inadvertent
failure
not occurring in bad faith and which is 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 other
than as provided in Section 4(a)(i)(b) hereof or the Company's requiring
the Executive to travel on Company business to a substantially greater extent
than required immediately prior to the Effective Date;
(iv) Any
purported termination by the Company of the Executive's employment otherwise
than as expressly permitted by this Agreement; or
(v) Any
failure by the Company to comply with and satisfy Section 11(c) of this
Agreement.
For
purposes of this Section 5(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive. Anything in this Agreement
to
the contrary notwithstanding, a termination by the Executive for any reason
during the 30-day period immediately following the first anniversary of the
Effective Date shall be deemed to be a termination for Good Reason for all
purposes of this Agreement.
(d) 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 12(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termina-tion" means a written notice which
(i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, 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
Date of Termination (as defined below) is other than the date of receipt
of such
notice, specifies the termination date (which date shall be not more than
thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance
which
contributes to a showing of Good Reason or Cause shall not waive any right
of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date
of Termination.
"Date
of Termination" means (i) if the Executive's employment is terminated by
the Company for Cause, or by the Executive for Good Reason, the date of receipt
of the Notice of Termination or any later date specified therein, as the
case
may be, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the Date of Termination shall be the
date on
which the Company notifies the Executive of such termination, and (iii) if
the Executive's employment is terminated by reason of death or Disability,
the
Date of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
8
6. Obligations
of the Company upon Termination.
(a) Good
Reason; Other Than for Cause, Death or Disability.
If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause, death or Disability or the Executive shall
terminate employment for Good Reason:
(i) The
Company shall pay to the Executive in a lump sum in cash within 30 days
after the Date of Termination the aggregate of the following
amounts:
[a] The
sum
of [i] the Executive's Annual Base Salary through the Date of Termination
to the extent not theretofore paid, [ii] the product of (x) the higher of
[A] the Recent Annual Bonus and [B] the Annual Bonus paid or payable,
including any bonus or portion thereof which has been earned but deferred
(and
annualized for any fiscal year consisting of less than 12 full months or
during
which the Executive was employed for less than 12 full months), for the most
recently completed fiscal year during the Employment Period, if any (such
higher
amount being referred to as the "Highest Annual Bonus") and (y) a fraction,
the
numerator of which is the number of days in the current fiscal year through
the
Date of Termination, and the denominator of which is 365 and [iii] any
compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued vacation pay, in each case
to the
extent not theretofore paid (the sum of the amounts described in
clauses [i], [ii] and [iii] shall be hereinafter referred to as the
"Accrued Obligations"); and
[b] The
amount equal to the product of [i] three and [ii] the sum of (x) the
Executive's Annual Base Salary and (y) the Highest Annual Bonus;
and
[c] An
amount
equal to the difference between [i] the actuarial equivalent of the benefit
(utilizing actuarial assumptions no less favorable to the Executive than
those
in effect under the Retirement Plan (as defined below) immediately prior
to the
Effective Date, except as specified below with respect to increases in base
salary and annual bonus) under the qualified defined benefit retirement plan
in
which the Executive participates (the "Retirement Plan") and any excess or
supplemental retirement plan in which the Executive participates (together,
the
"SERP") which the Executive would receive if the Executive's employment
continued for three years after the Date of Termination assuming for this
purpose that all accrued benefits are fully vested, and, assuming that
(x) the Executive's base salary increased in each of the three years by the
amount required by Section 4(b)(i) (in the case of Section 4-(b)(i)(y)
based on increases (excluding promotional increases) in base salary for the
most
recently completed fiscal year prior to the Date of Termination) had the
Executive remained employed, and (y) the Executive's annual bonus
(annualized for any fiscal year consisting of less than twelve full months
or
during which the Executive was employed for less than twelve full months)
in
each of the three years bears the same proportion to the Executive's base
salary
in such year or fraction thereof as it did for the last full year prior to
the
Date of Termination, and [ii] the actuarial equivalent of the Executive's
actual benefit (paid or payable), if any, under the Retirement Plan and the
SERP
as of the Date of Termination;
9
(ii) For
three
years after the Executive's Date of Termination, or such longer period as
may be
provided by the terms of the appropriate plan, program, practice or policy,
the
Company shall continue benefits to the Executive and/or the Executive's family
at least equal to those which would have been provided to them in accordance
with the plans, programs, practices and policies described in
Section 4(b)(iv) of this Agreement if the Executive's employment had not
been terminated in accordance with the most favorable plans, practices, programs
or policies of the Company and its affiliated companies applicable generally
to
other peer executives and their families during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives
of
the Company and its affiliated companies and their families, provided, however,
that if the Executive becomes reemployed with another employer and is eligible
to receive medical or other welfare benefits under another employer provided
plan, the medical and other welfare benefits described herein shall be secondary
to those provided under such other plan during such applicable period of
eligibility. For purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree benefits pursuant
to such
plans, practices, programs and policies, the Executive shall be considered
to
have remained employed until two and one-half years after the Date of
Termination and to have retired on the last day of such period;
(iii) The
Company shall, at its sole expense as incurred, provide the Executive with
outplacement services the scope and provider of which shall be selected by
the
Executive in his sole discretion; and
(iv) To
the
extent not theretofore paid or provided, the Company shall timely pay or
provide
to the Executive any other amounts or benefits required to be paid or provided
or which the Executive is eligible to receive under any plan, program, policy
or
practice or contract or agreement of the Company and its affiliated companies
(such other amounts and benefits shall be hereinafter referred to as the
"Other
Benefits").
(b) Death.
If the
Executive's employment is terminated by reason of the Executive's death during
the Employment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other
than for payment of Accrued Obligations and the timely payment or provision
of
Other Benefits. Accrued Obligations shall be paid to the Executive's estate
or
beneficiary, as applicable, in a lump sum in cash within 30 days of the
Date of Termination. With respect to the provision of Other Benefits, the
term
Other Benefits as utilized in this Section 6(b) shall include, without
limitation, and the Executives estate and/or beneficiaries shall be entitled
to
receive, benefits at least equal to the most favorable benefits provided
by the
Company and affiliated companies to the estates and beneficiaries of peer
executives of the Company and such affiliated companies under such plans,
programs, practices and policies relating to death benefits, if any, as in
effect with respect to other peer executives and their beneficiaries at any
time
during the 120-day period immediately preceding the Effective Date or, if
more
favorable to the Executive's estate and/or the Executive's beneficiaries,
as in
effect on the date of the Executive's death with respect to other peer
executives of the Company and its affiliated companies and their
beneficiaries.
10
(c) Disability.
If the
Executive's employment is terminated by reason of the Executive's Disability
during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations
and
the timely payment or provision of Other Benefits. Accrued Obligations shall
be
paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 6(c) shall include, and the Executive
shall be entitled after the Disability Effective Date to receive, disability
and
other benefits at least equal to the most favorable of those generally provided
by the Company and its affiliated companies to disabled executives and/or
their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to other
peer executives and their families at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect at any time thereafter generally
with respect to other peer executives of the Company and its affiliated
companies and their families.
(d) Cause;
Other than for Good Reason.
If the
Executive's employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive (i) his Annual
Base Salary through the Date of Termination, (ii) the amount of any
compensation previously deferred by the Executive, and (iii) Other
Benefits, in each case to the extent theretofore unpaid. If the Executive
voluntarily terminates employment during the Employment Period, excluding
a
termination for Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued Obligations and the
timely
payment or provision of Other Benefits. In such case, all Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days of the
Date of Termination.
7. Nonexclusivity
of Rights.
Nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which the Executive may qualify,
nor
shall anything herein limit or otherwise affect such rights as the Executive
may
have under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated companies
at or
subsequent to the Date of Termination shall be payable in accordance with
such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
11
8. 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
set-off, counterclaim, recoupment, defense or other claim, right or action
which
the Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action
by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced whether
or
not the Executive obtains other employment. The Company agrees to pay as
incurred, to the full extent permitted by law, all legal fees and expenses
which
the Executive may reasonably incur as a result of any contest (regardless
of the
outcome thereof) by the Company, the Executive or others of the validity
or
enforceability of, or liability under, any provision of this Agreement or
any
guarantee of performance thereof (including as a result of any contest by
the
Executive about the amount of any payment pursuant to this Agreement), plus
in
each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986,
as amended (the "Code").
9. Certain
Additional Payments by the Company.
(a) Anything
in this Agreement to the contrary notwithstanding, in the event it shall
be
determined that any payment or distribution by the Company to or for the
benefit
of the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section 9) (a
"Payment") would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by the Executive with
respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"),
then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax
imposed upon the Payments.
(b) Subject
to the provisions of Section 9(c), all determinations required to be made
under this Section 9, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by Xxxxxx
Xxxxxxxx & Co. or such other certified public accounting firm as may be
designated by the Executive (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive within
15 business days of the receipt of notice from the Executive that there has
been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control, the Executive
shall
appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting
12
Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne solely
by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 9, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm's determination. If the Accounting
Firm
determines that no Excise Tax is payable by the Executive, it shall furnish
the
Executive with a written opinion that failure to report the Excise Tax on
the
Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a
result
of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 9(c) and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine
the
amount of the Underpayment that has occurred and any such Underpayment shall
be
promptly paid by the Company to or for the benefit of the
Executive.
(c) The
Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company
of
the Gross-Up Payment. Such notification shall be given as soon as practicable
but no later than ten business days after the Executive is informed in writing
of such claim and shall apprise the Company of the nature of such claim and
the
date on which such claim is requested to be paid. The Executive shall not
pay
such claim prior to the expiration of the 30-day period following the date
on
which it gives such notice to the Company (or such shorter period ending
on the
date that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such
period
that it desires to contest such claim, the Executive shall:
(i) Give
the
Company any information reasonably requested by the Company relating to such
claim,
(ii) Take
such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably
selected by the Company,
(iii) Cooperate
with the Company in good faith in order effectively to contest such claim,
and
13
(iv) Permit
the Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with
such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and penalties
with
respect thereto) imposed as a result of such representation and payment of
costs
and expenses. Without limitation on the foregoing provisions of this
Section 9(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and xxx for a refund or contest the
claim
in any permissible manner, and the Executive agrees to prosecute such contest
to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay
such claim and xxx for a refund, the Company shall advance the amount of
such
payment to the Executive, on an interest-free basis and shall indemnify and
hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income
tax
(including interest or penalties with respect thereto) imposed with respect
to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to
which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited
to
issues with respect to which a Gross-Up Payment would be payable hereunder
and
the Executive shall be entitled to settle or contest, as the case may be,
any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If,
after
the receipt by the Executive of an amount advanced by the Company pursuant
to
Section 9(c), the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the Company's complying
with the requirements of Section 9(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon
after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), a determination is made
that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent
to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required
to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
14
10. 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, which shall
have been obtained by the Executive during the Executive's employment by
the
Company or any of its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or representatives
of the
Executive in violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone
other
than the Company and those designated by it. In no event shall an asserted
violation of the provisions of this Section 10 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
11. 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 and assigns.
(c) The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be
required to perform it if no such succession had taken place. As used in
this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees
to
perform this Agreement by operation of law, or otherwise.
12. Miscellaneous.
(a) This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Wisconsin, without reference to principles of conflict of laws.
The
captions of this Agreement are not part of the provisions hereof and shall
have
no force or effect. 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.
15
(b) 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, to his address appearing on the records of the Company.
If
to the
Company:
STRATTEC
SECURITY CORPORATION
0000
Xxxx
Xxxx Xxxx Xxxx
Xxxxxxxxx,
XX 00000
Attn:
Chairman and Chief Executive Officer
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.
(c) The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.
(d) The
Company may withhold from any amounts pay-able under this Agreement such
Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The
Executive's or the Company's failure to insist upon strict compliance with
any
provision hereof or any other provision of this Agreement or the failure
to
assert any right the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate employment for
Good
Reason pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be
deemed to be a waiver of such provision or right or any other provision or
right
of this Agreement.
(f) The
Executive and the Company acknowledge that, except as may otherwise be provided
under any other written agreement between the Executive and the Company,
the
employment of the Executive by the Company is "at will" and, prior to the
Effective Date, the Executive's employment and this Agreement may be terminated
by either the Executive or the Company at any time prior to the Effective
Date,
in which case the Executive shall have no further rights under this Agreement.
From and after the Effective Date this Agreement shall supersede any other
agreement between the parties with respect to the subject matter
hereof.
16
IN
WITNESS WHEREOF, the Executive has hereunto set the Executive's 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, all as of
the
day and year first above written.
/s/
Xxxxx X.
Xxxxx
Xxxxx
X. Xxxxx
STRATTEC
SECURITY CORPORATION
BY
/s/ Xxxxxx X. Xxxxxxxx
XX
Xxxxxx
X. Xxxxxxxx, XX,
Chairman of the Board
and
Chief Executive Officer
17
