CHANGE IN CONTROL AND TERMINATION AGREEMENT
Exhibit
10.1
Modine
Manufacturing Company, a Wisconsin corporation (“Employer”) and _____________
(“Executive”) entered into a Change in Control and Termination Agreement,
effective as of, 2005 (“Agreement”), and such Agreement is hereinafter set
forth.
WITNESSETH:
WHEREAS,
Executive is currently employed by Employer as its _____________
___________.
WHEREAS,
Employer desires to provide security to Executive in connection with Executive's
employment with Employer in the event of a Change in Control affecting Employer;
and
WHEREAS,
Executive and Employer desire to enter into this Agreement pertaining to the
terms of the security Employer is providing to Executive with respect to his
employment in the event of a Change in Control;
NOW,
THEREFORE, in consideration of the mutual covenants and promises contained
herein, and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Term.
The
term of this Agreement shall be the period beginning on the date hereof and
terminating on the date 36 months after such date (the "Term"), provided that
for each day from and after the date hereof the Term will automatically be
extended for an additional day, unless either Employer or Executive has given
written notice to the other party of its or his election to cease such automatic
extension, in which case the Term shall be the 36-month period beginning on
the
date such notice is received by such other party. Notwithstanding the above,
this Agreement shall automatically be terminated without further notice by
either Executive or employer, upon the occurrence of either the following events
so long the event occurred in advance of and was unrelated to a
Change-in-Control: (1) Termination of Executives employment with employer;
or
(2) a significant, negative change in the nature or scope of Executive’s
authorities, title or duties.
2. Definitions.
For
purposes of this Agreement:
(a) “Actual
Bonus” shall mean the amount of Executive’s incentive bonus compensation
actually payable for a calendar year under an incentive compensation plan
maintained by Employer; provided, however, that such amount shall in no event
be
less than the highest amount payable to Executive at any time during the
Term.
(b) "Affiliate"
or "Associate" shall have the meaning set forth in Rule 12b-2 under the
Securities Exchange Act of 1934.
(c) "Base
Salary" shall mean Executive's per annum base salary at the rate in effect
on
the date of a termination of employment under circumstances described in
subsections 3(a) or (b) below; provided, however, that such rate shall in no
event be less than the highest rate in effect for Executive at any time during
the Term.
(d) "Beneficiary"
shall mean the person or entity designated by Executive, by written instrument
delivered to Employer, to receive the benefits payable under this Agreement
in
the event of his death. If Executive fails to designate a Beneficiary, or if
no
Beneficiary survives Executive, such death benefits shall be paid:
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(i)
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to
his surviving spouse; or
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(ii)
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if
there is no surviving spouse, to his living descendants per stirpes;
or
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(iii)
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if
there is neither a surviving spouse nor descendants, to his duly
appointed
and qualified executor or personal
representative.
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(e) A
"Change
in Control" shall be deemed to take place on the occurrence of any of the
following events:
(1) The
commencement by an entity, person or group (other than Employer or an Affiliate
or Associate) of a tender offer for at least 30% of the outstanding capital
stock of Employer entitled to vote in elections of directors ("Voting
Power");
(2) The
effective time of (i) a merger or consolidation of Employer with one or more
other corporations as a result of which the holders of the outstanding Voting
Power of Employer immediately prior to such merger or consolidation (other
than
the surviving or resulting corporation or any Affiliate or Associate thereof)
hold less than 50% of the Voting Power of the surviving or resulting
corporation, or (ii) a transfer of 30% of the Voting Power, or a Substantial
Portion of the Property, of Employer other than to an entity of which Employer
owns at least 50% of the Voting Power; or
(3) During
any period of 24 months that ends during the Term, regardless of whether such
period commences before or after the effective date of this Agreement, the
persons who at the beginning of such 24-month period were directors of Employer
cease for any reason to constitute at least a majority of the Board of Directors
of Employer.
(f) “Code”
shall mean the Internal Revenue Code of 1986, as amended.
(g) “Defined
Contribution Plan” shall mean a defined contribution plan as defined in Section
3(34) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”).
(h) “Five-Year
Average Actual Bonus” shall mean the average of Executive’s Actual Bonuses
(determined without reference to the proviso in subsection 2(a)) payable
for the five-year period ending on December 31 of the calendar year
immediately preceding the calendar year of Executive’s termination of
employment.
(i) “Five-Year
Average Base Salary” shall mean the average of Executive’s per annum Base Salary
(determined without reference to the proviso in subsection 2(c)) payable
for the five-year period ending on December 31 of the calendar year
immediately preceding the calendar year of Executive’s termination of
employment.
(j) "Good
Cause" shall be deemed to exist if, and only if:
(1) Executive
engages in an act of dishonesty constituting a felony that results or is
intended to result directly or indirectly in gain or personal enrichment at
the
expense of Employer; or
(2) Executive
breaches any provision of Section 8 (relating to confidential information),
and such breach results in a demonstrably material injury to
Employer.
(k) “Good
Reason” shall be deemed to exist if, and only if:
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(1)
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there
is significant change in the nature or the scope of Executive’s
authorities or duties;
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(2)
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there
is significant reduction in Executive’s Base Salary, his opportunity to
earn a bonus under an incentive bonus compensation plan maintained
by
Employer or his benefits; or
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(3)
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Employer
changes by 100 miles or more the principal location in which Executive
is
required to perform services.
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(l) "Severance
Period" shall mean the period beginning on the date Executive's employment
with
Employer terminates under circumstances described in subsection 3(a) and ending
on the date 24 months thereafter.
(m) "Substantial
Portion of the Property of Employer" shall mean 50% of the aggregate book value
of the assets of Employer and its Affiliates and Associates as set forth on
the
most recent balance sheet of Employer, prepared on a consolidated basis, by
its
regularly employed, independent, certified public accountants.
(n) “Target
Bonus” shall mean the amount of Executive’s target annual incentive bonus
compensation for the calendar year in which the date of a termination of
employment under circumstances described in subsection 3(a) below occurs, under
the incentive bonus compensation plan maintained by Employer for such year;
provided, however, that such amount shall in no event be less than the highest
amount in effect for Executive at any time during the term.
(o) "Welfare
Plan" shall mean any health and dental plan, disability plan, survivor income
plan or life insurance plan, as defined in Section 3(1) of ERISA, currently
or
hereafter made available by Employer in which Executive is eligible to
participate.
3. Benefits
Upon Termination of Employment.
(a) The
following provisions will apply if a Change in Control occurs during the Term,
and (i) at any time during the 24 months after the Change in Control occurs
(whether during or after the expiration of the Term), the employment of
Executive with Employer is terminated by Employer for any reason other than
Good
Cause, or Executive terminates his employment with Employer for Good Reason,
or
(ii) at any time during the thirteenth month after the Change in Control
occurs (whether during or after the expiration of the Term), Executive
terminates his employment with Employer for any reason:
(1) Employer
shall pay Executive an amount equal to two times the greater of: (A) the
sum of Executive’s Base Salary and Target Bonus, or (B) the sum of
Executive’s Five-Year Average Base Salary and Five-Year Average Actual Bonus.
Such amount shall be paid to Executive in a lump sum within 60 days after his
date of termination of employment.
(2) Employer
shall pay Executive an amount equal to the pro rata portion of the Target Bonus
that is applicable to the period commencing on the first day of the calendar
year in which the employment of Executive is terminated and ending on the date
of such termination. Such amount shall be paid to Executive in a lump sum within
60 days after his date of termination of employment.
(3) (A) For
each
calendar year ending during the Severance Period, Employer shall pay to
Executive a Supplemental Defined Contribution Benefit in an amount equal to
the
amount determined pursuant to clause (i) below less the amount determined
pursuant to clause (ii) below:
(i) the
amount that would have been allocated to Executive’s accounts under all Defined
Contribution Plans (“Accounts”) during such calendar year, assuming
(A) that the amount of Executive’s elective deferrals (as defined in
Section 402(g)(3) of the Code) equals the amount of such elective deferrals
Executive authorized in the calendar year immediately preceding the calendar
year in which the date of commencement of the Severance Period occurs;
(B) that all Employer contributions (except elective deferrals as defined
in Section 402(g)(3) of the Code) were allocated to Executive’s Accounts during
such calendar year, in the amount that would have been allocated on behalf
of
Executive had Executive been actively employed during such calendar year; and
(C) that Executive’s rate of compensation (as defined in the applicable
Defined Contribution Plan for purposes of determining Employer contributions)
during such calendar year is identical to such rate of compensation on the
date
immediately preceding his termination of employment;
(ii) the
amount, if any, actually allocated to Executive’s Accounts during such
year;
(B) Each
Supplemental Defined Contribution Benefit shall be paid to Executive in a lump
sum no later than 60 days after the end of each applicable calendar year during
the Severance Period;
(C) In
the
event of Executive’s death prior to the end of the Severance Period, the
Supplemental Defined Contribution Benefit shall continue to accrue for the
duration of the Severance Period on the same basis as if Executive had not
died.
Such Supplemental Defined Contribution Benefit shall be payable to Executive’s
Beneficiary at the same time and manner as such Benefit would have been paid
to
Executive.
(4) If
upon
the date of termination of Executive's employment Executive holds any options
with respect to stock of Employer, all such options will immediately become
vested and exercisable upon such date and will be exercisable for 36 months
thereafter. Any restrictions on stock of Employer owned by Executive on the
date
of termination of his employment will lapse on such date.
(5) During
the Severance Period, Executive and his spouse and other dependents will
continue to be covered by all Welfare Plans maintained by Employer in which
he
and his spouse and other dependents were participating immediately prior to
the
date of his termination as if he continued to be an employee of Employer and
Employer will continue to pay the costs of coverage of Executive and his spouse
and other dependents under such Welfare Plans on the same basis as is applicable
to active employees covered thereunder; provided that, if participation in
any
one or more of such Welfare Plans is not possible under the terms thereof,
Employer will provide substantially identical benefits. For purposes of the
continuation of Executive’s group health plan coverage required under Code
Section 4980B, to the extent permitted by the applicable group health plan,
(i)
the period of extended coverage referred to in Code Section 4890B(f)(2)(B)(i)(I)
shall commence on the first date that follows the end of the Severance Period,
and (ii) the applicable notice period provided under Code Section
4980B(f)(6)(B) shall commence on the first date that follows the end of the
Severance Period.
(b) If
the
employment of Executive with Employer is terminated by Employer or Executive
other than under circumstances set forth in subsection 3(a), Executive's Base
Salary shall be paid through the date of his termination, and Employer shall
have no further obligation to Executive or any other person under this
Agreement. Such termination shall have no effect upon Employee's other rights,
including but not limited to, rights under the Welfare Plans.
(c) Notwithstanding
anything herein to the contrary, in the event Employer shall terminate the
employment of Executive for Good Cause hereunder, Employer shall give Executive
at least thirty (30) days prior written notice specifying in detail the reason
or reasons for Executive's termination.
(d)
This
Agreement shall have no effect, and Employer shall have no obligations
hereunder, if Executive's employment terminates for any reason at any time
other
than during the 24 months following a Change in Control.
4.
Excise
Tax.
(a) In
the event that a Change in Control shall occur, and a final determination is
made by legislation, regulation, ruling directed to Executive or Employer,
by
court decision, or by independent tax counsel described in subsection (b) next
below, that the aggregate amount of any payment made to Executive (1) hereunder,
and (2) pursuant to any plan, program or policy of Employer in connection with,
on account of, or as a result of, such Change in Control (“Total Payments”) will
be subject to the excise tax provisions of Section 4999 of the Code, or any
successor section thereof, Executive shall be entitled to receive from Employer,
in addition to any other amounts payable hereunder, a lump sum payment (the
“Gross-Up Payment”), sufficient to cover the full cost of such excise taxes and
Executive’s federal, state and local income and employment taxes on this
additional payment, so that the net amount retained by Executive, after the
payment of all such excise taxes on the Total Payments, and all federal, state
and local income and employment taxes and excise taxes on the Gross-Up Payment,
shall be equal to the Total Payments. The Total Payments, however, shall be
subject to any federal, state and local income and employment taxes thereon.
For
this purpose, Executive shall be deemed to be in the highest marginal rate
of
federal, state and local taxes. The Gross-Up Payment shall be made at the same
time as the payments described in subsections 3(a)(1) and (2)
above.
(b) Employer
and Executive shall mutually and reasonably determine the amount of the Gross-Up
Payment to be made to Executive pursuant to the preceding subsection. Prior
to
the making of any such Gross-Up Payment, either party may request a
determination as to the amount of such Gross-Up Payment. If such a determination
is requested, it shall be made promptly, at Employer's expense, by independent
tax counsel selected by Executive and approved by Employer (which approval
shall
not unreasonably be withheld), and such determination shall be conclusive and
binding on the parties. Employer shall provide such information as such counsel
may reasonably request, and such counsel may engage accountants or other experts
at Employer's expense to the extent that they deem necessary or advisable to
enable them to reach a determination. The term "independent tax counsel," as
used herein, shall mean a law firm of recognized expertise in federal income
tax
matters that has not previously advised or represented either party. It is
hereby agreed that neither Employer nor Executive shall engage any such firm
as
counsel for any purpose, other than to make the determination provided for
herein, for three years following such firm's announcement of its
determination.
(c) In
the
event the Internal Revenue Service subsequently adjusts the excise tax
computation made pursuant to subsections 4(a) and (b) above, Employer shall
pay
to Executive, or Executive shall pay to Employer, as the case may be, the full
amount necessary to make either Executive or Employer whole had the excise
tax
initially been computed as subsequently adjusted, including the amount of any
underpaid or overpaid excise tax, and any related interest and/or penalties
due
to the Internal Revenue Service.
5. Setoff.
No
payments or benefits payable to or with respect to Executive pursuant to this
Agreement shall be reduced by any amount Executive or his spouse or Beneficiary
may earn or receive from employment with another employer or from any other
source.
6. Mitigation.
Executive shall not be required to mitigate the amount of compensation and
benefits set forth above by seeking employment with others, or
otherwise.
7. Death.
If
Executive's employment with Employer terminates under circumstances described
in
subsections 3(a) or (b), then upon Executive's subsequent death, all unpaid
amounts payable to Executive under subsections 3(a)(1) or (2) or 3(b), or
Section 4, if any, shall be paid to his Beneficiary, all amounts payable under
subsection 3(a)(3) shall be paid pursuant to the terms of said subsections
to
his spouse or other beneficiary under the applicable plan, and if subsection
3(a) applies, his spouse and other dependents shall continue to be covered
under
all applicable Welfare Plans during the remainder of the Severance Period,
if
any, pursuant to subsection 3(a)(6).
8. Confidentiality.
Executive agrees not to disclose (during the Term or at any time thereafter)
to
any person not employed by the Employer, or not engaged to render services
to
the Employer, except with the prior written consent of an officer authorized
to
act in the matter by the Board of Directors of Employer, any confidential
information obtained by him while in the employ of the Employer, including,
without limitation, information relating to any of the Employer’s inventions,
processes, formulae, plans, devises, compilations of information, methods of
distribution, customers, client relationships, marketing strategies or trade
secrets; provided, however, that this provision shall not preclude the Executive
from use or disclosure of information known generally to the public or of
information not considered confidential by persons engaged in the business
conducted by the Employer or from disclosure required by law or court order.
The
Agreement herein made in this Section 8 shall be in addition to, and not in
limitation or derogation of, any obligation otherwise imposed by law upon the
Executive in respect of confidential information and trade secrets of the
Employer and its Affiliates.
9. Forfeiture.
If
Executive shall at any time violate any obligation of his under Section 8
in a manner that results in demonstrably material injury to the Employer, he
shall immediately forfeit his right to any benefits under this Agreement, and
Employer shall thereafter have no further obligation hereunder to Executive
or
his spouse, Beneficiary or any other person.
10. Executive
Assignment.
No
interest of Executive, his spouse or any Beneficiary, or any other beneficiary
under the plans, under this Agreement, or any right to receive any payment
or
distribution hereunder, shall be subject in any manner to sale, transfer,
assignment, pledge, attachment, garnishment, or other alienation or encumbrance
of any kind, nor may such interest or right to receive a payment or distribution
be taken, voluntarily or involuntarily, for the satisfaction of the obligations
or debts of, or other claims against, Executive or his spouse, Beneficiary
or
other beneficiary, including claims for alimony, support, separate maintenance,
and claims in bankruptcy proceedings.
11. Benefits
Unfunded.
All
rights under this Agreement of Executive and his spouse, Beneficiary or other
beneficiary under the plans, shall at all times be entirely unfunded, and no
provision shall at any time be made with respect to segregating any assets
of
Employer for payment of any amounts due hereunder. None of Executive, his
spouse, Beneficiary or any other beneficiary under the plans shall have any
interest in or rights against any specific assets of Employer, and Executive
and
his spouse, Beneficiary or other beneficiary shall have only the rights of
a
general unsecured creditor of Employer. Notwithstanding the preceding provisions
of this Section, the Officer Nominating and Compensation Committee of the Board
of Directors of Employer, in its discretion, shall have the right, at any time
and from time to time, to cause amounts payable or potentially payable to
Executive or his Beneficiary hereunder to be paid to the trustee of a Rabbi
Trust or any similar trust to be established by Employer (“Trust”).
12. Waiver.
No
waiver by any party at any time of any breach by the other party of, or
compliance with, any condition or provision of this Agreement to be performed
by
such other party shall be deemed a waiver of any other provisions or conditions
at the same time or at any prior or subsequent time.
13. Litigation
Expenses.
Employer shall pay Executive's reasonable attorneys' fees and legal expenses
in
connection with any judicial proceeding to enforce, construe or determine the
validity of this Agreement (“Litigation”), if Executive is a Prevailing Party in
such Litigation. Executive shall be deemed a “Prevailing Party” if (a) a
court enters a judgment in his favor in connection with such Litigation, or
(b) Employer and Executive enter into a written agreement of settlement of
such Litigation. If Executive is not a Prevailing Party in such Litigation,
Employer shall pay Executive’s reasonable attorney’s fees and legal expenses in
connection therewith, up to a maximum of $100,000.
14. Applicable
Law.
This
Agreement shall be construed and interpreted pursuant to the laws of the State
of Wisconsin.
15. Entire
Agreement.
This
Agreement contains the entire Agreement between the Employer and Executive
and
supersedes any and all previous agreements; written or oral; between the parties
relating to the subject matter hereof. No amendment or modification of the
terms
of this Agreement shall be binding upon the parties hereto unless reduced to
writing and signed by Employer and Executive.
16. No
Employment Contract.
Nothing
contained in this Agreement shall be construed to be an employment contract
between Executive and Employer.
17. Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed an
original.
18. Severability.
In the
event any provision of this Agreement is held illegal or invalid, the remaining
provisions of this Agreement shall not be affected thereby.
19. Successors.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, representatives and successors.
20. Employment
with an Affiliate.
For
purposes of this Agreement, (A) employment or termination of employment of
Executive shall mean employment or termination of employment with Employer
and
all Affiliates, (B) Base Salary, Target Bonus, Actual Bonus, Five-Year Average
Base Salary and Five-Year Average Actual Bonus shall include remuneration
received by Executive from Employer and all Affiliates, and (C) the terms
Defined Contribution Plan, and Welfare Plan maintained or made available by
Employer shall include any such plans of any Affiliate of Employer.
21. Notice.
Notices
required under this Agreement shall be in writing and sent by registered mail,
return receipt requested, to the following addresses or to such other address
as
the party being notified may have previously furnished to the other party by
written notice:
If
to
Employer: Modine
Manufacturing Company
0000
XxXxxxx Xxxxxx
Xxxxxx,
XX 00000
Attention:
Legal Department
If
to
Executive:
IN
WITNESS WHEREOF, Executive
has hereunto set his hand, and Employer has caused these presents to be executed
in its name on its behalf, all as of the ___ day of
________,
2005.
By: ______________________
Title:
President
and Chief Executive Officer
_________________________,
Executive
