Exhibit 99.1
THIS AGREEMENT is entered into as of
_________________, by and between Xxxxxx Xxxxxx, Inc., a Michigan corporation, and
_________________________________ (the “Executive”).
WHEREAS, the Executive currently
serves as a key employee of the Company (as defined in Section 1) and his services and
knowledge are valuable to the Company in connection with the management of one or more of
the Company’s principal operating facilities, divisions, departments or subsidiaries;
and
WHEREAS, the Board (as defined in
Section 1) has determined that it is in the best interests of the Company and its
stockholders to secure the Executive’s continued services and to ensure the
Executive’s continued dedication and objectivity in the event of any threat or
occurrence of, or negotiation or other action that could lead to, or create the
possibility of, a Change in Control (as defined in Section 1) of the Company, without
concern as to whether the Executive might be hindered or distracted by personal
uncertainties and risks created by any such possible Change in Control, and to encourage
the Executive’s full attention and dedication to the Company, the Board has
authorized the Company to enter into this Agreement.
NOW, THEREFORE, for and in
consideration of the premises and the mutual covenants and agreements herein contained,
the Company and the Executive hereby agree as follows:
| 1. |
Definitions. As used in this Agreement, the following terms shall
have the respective meanings set forth below: |
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a) |
“Board” means
the Board of Directors of the Company |
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b) |
“Bonus Reserve Account” has the meaning stated in the Incentive Cash
Bonus Plan. |
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c) |
“Cause” means (1) a material breach by the Executive of those duties
and responsibilities of the Executive which do not differ in any material
respect from the duties and responsibilities of the Executive during the ninety
(90) day period immediately prior to a Change in Control (other than as a result
of incapacity due to physical or mental illness) which is demonstrably willful
and deliberate on the Executive’s part, which is committed in bad faith or
without reasonable belief that such breach is in the best interests of the
Company and which is not remedied in a reasonable period of time after receipt
of written notice from the Company specifying such breach or (2) the commission
by the Executive of a felony involving moral turpitude. |
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d) |
“Change in Control” means: |
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(1) |
acquisition by any Person of beneficial ownership within the meaning of Rule
13d-3 promulgated under the Exchange Act, of 35 percent or more of either
(i) the then outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) |
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or
(ii) the combined voting power of the then outstanding 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 in Control: (A) any acquisition directly from the Company (excluding
any acquisition resulting from the exercise of a conversion or exchange privilege in
respect of outstanding convertible or exchangeable securities unless such outstanding
convertible or exchangeable securities were acquired directly from the Company), (B) any
acquisition by the Company, (C) any acquisition by an employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation controlled by the
Company or (D) any acquisition by any corporation pursuant to a reorganization, merger or
consolidation involving the Company, if, immediately after such reorganization, merger or
consolidation, each of the conditions described in clauses (i), (ii) and (iii) of
subsection (3) of this Section (1)(d) shall be satisfied; and provided further that, for
purposes of clause (B), (i) a Change in Control shall not occur solely because any Person
becomes the beneficial owner of 35 percent or more of the Outstanding Company Common Stock
or 35 percent or more of the Outstanding Company Voting Securities by reason of an
acquisition by the Company of Outstanding Company Common Stock or Outstanding Company
Voting Securities that reduces the number of outstanding shares of Outstanding Company
Common Stock or Outstanding Company Voting Securities and (ii) if, after such acquisition
by the Company, such Person becomes the beneficial owner of any additional shares of
Outstanding Company Common Stock or any additional Outstanding Company Voting Securities,
such additional beneficial ownership shall constitute a Change in Control; |
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(2) |
individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason within any 24-month period to
constitute at least a majority of such Board; provided, however, that any
individual who becomes a director of the Company subsequent to the date hereof
whose election, or nomination for election by the Company’s stockholders,
was approved by the vote of at least a majority of the directors then comprising
the Incumbent Board shall be deemed to have been a member of the Incumbent
Board; and provided further, that no individual who was initially elected as a
director of the Company as a result of an actual or threatened election contest,
as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act, or any other actual or threatened solicitation of proxies or
consents by or on behalf of any Person other than the Board shall be deemed to
have been a member of the Incumbent Board; |
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(3) |
consummation of a reorganization, merger or consolidation unless, in any such
case, immediately after such reorganization, merger or consolidation, (i) more
than 60 percent of the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation (the
“Surviving Corporation”) (or, if applicable, the ultimate parent
corporation that beneficially owns all or substantially all of the outstanding
voting securities entitled to vote generally in the election of directors of |
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the
Surviving Corporation) and more than 60 percent of the combined voting power of the then
outstanding securities of the Surviving Corporation (or such ultimate parent corporation)
entitled to vote generally in the election of directors is represented by the shares of
Outstanding Company Common Stock and the Outstanding Company Voting Securities,
respectively, that were outstanding immediately prior to such reorganization, merger or
consolidation (or, if applicable, is represented by shares into which such Outstanding
Company Common Stock and Outstanding Company Voting Securities were converted pursuant to
such reorganization, merger or consolidation) and such ownership of common stock and
voting power among the holders thereof is in substantially the same proportions as their
ownership, immediately prior to such reorganization, merger or consolidation, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case
may be, (ii) no Person (other than the Company, any employee benefit plan [or related
trust] sponsored or maintained by the Company or the corporation resulting from such
reorganization, merger or consolidation [or any corporation controlled by the Company] and
any Person which beneficially owned, immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 35 percent or more of the Outstanding Company
Common Stock or the Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 35 percent or more of the then outstanding
shares of common stock of such corporation or 35 percent or more of the combined voting
power of the then outstanding securities of such corporation entitled to vote generally in
the election of directors and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of the execution of the
initial agreement or action of the Board providing for such reorganization, merger or
consolidation; or |
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(4) |
consummation of (i) a plan of 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, immediately
after such sale or other disposition, (A) more than 60 percent of the then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation (the “Surviving Corporation”)
(or, if applicable, the ultimate parent corporation that beneficially owns all
or substantially all of the outstanding voting securities entitled to vote
generally in the election of directors of the Surviving Corporation) and more
than 60 percent of the combined voting power of the then outstanding securities
of the Surviving Corporation (or such ultimate parent corporation) entitled to
vote generally in the election of directors is represented by the shares of
Outstanding Company Common Stock and the Outstanding Company Voting Securities,
respectively, that were outstanding immediately prior to such reorganization,
merger or consolidation (or, if applicable, is represented by shares into which
such Outstanding Company Common Stock and Outstanding Company Voting Securities
were converted pursuant to such reorganization, merger or consolidation) and
such ownership of common stock and voting power among the holders thereof is in
substantially the same |
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proportions
as their ownership, immediately prior to such reorganization, merger or consolidation, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the
case may be, (B) no Person (other than the Company, any employee benefit plan [or related
trust] sponsored or maintained by the Company or such corporation [or any corporation
controlled by the Company] and any Person which beneficially owned, immediately prior to
such sale or other disposition, directly or indirectly, 35 percent or more of the
Outstanding Company Common Stock or the Outstanding Company Voting Securities, as the case
may be) beneficially owns, directly or indirectly, 35 percent or more of the then
outstanding shares of common stock thereof or 35 percent or more of the combined voting
power of the then outstanding securities thereof entitled to vote generally in the
election of directors and (C) at least a majority of the members of the board of directors
thereof were members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale of other disposition. |
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e) |
“Company” means Xxxxxx Xxxxxx, Inc., a Michigan
corporation. |
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f) |
“Date of Termination” means (1) except as otherwise provided in
Section 1(p), the effective date on which the Executive’s employment by the
Company terminates as specified in a prior written notice by the Company or the
Executive, as the case may be, to the other, delivered pursuant to Section 11 or
(2) if the Executive’s employment by the Company terminates by reason of
death, the date of death of the Executive. |
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g) |
“Deferred Compensation Plan” means the Xxxxxx Xxxxxx, Inc. Key
Executive Deferred Compensation Plan. |
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h) |
“Earned Bonus” has the meaning stated in the Incentive Cash Bonus
Plan. |
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i) |
“Exchange Act” means the Securities Exchange Act of 1934, as amended. |
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j) |
“Good Reason” means, without the Executive’s express written
consent, the occurrence of any of the following events after a Change in
Control: |
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(1) |
any of (i) the assignment to the Executive of any duties inconsistent in any
material adverse respect with the Executive’s position(s), duties,
responsibilities or status with the Company immediately prior to such Change in
Control, (ii) a change in any material adverse respect in the Executive’s
reporting responsibilities, titles or offices with the Company as in effect
immediately prior to such Change in Control or (iii) any removal or involuntary
termination of the Executive from any position held by the Executive with the
Company immediately prior to such Change in Control otherwise than as expressly
permitted by this Agreement or any failure to re-elect the Executive to any
position with the Company held by the Executive immediately prior to such Change
in Control; |
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(2) |
a reduction by the Company in the Executive’s rate of annual base salary or
annual Target Bonus as in effect immediately prior to such Change in Control or
as the same may be increased from time to time thereafter; |
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(3) |
any requirement of the Company that the Executive be based at a location in
excess of 50 miles from the facility which is the Executive’s principal
business office at the time of the Change in Control; |
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(4) |
a reduction of at least 5% in the aggregate benefits provided to the Executive
and the Executive’s dependents under the Company’s employee benefit
plans (including, without limitation, retirement, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) in which the Executive is
participating immediately prior to such Change in Control; or |
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(5) |
the failure of the Company to obtain the assumption agreement from any successor
as contemplated in Section 10(b). |
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For
purposes of this Agreement, any good faith determination of Good Reason made by the
Executive shall be presumed to be correct, subject to the Company proving the contrary;
provided, however, that an isolated, insubstantial and inadvertent action taken in
good faith and which is remedied by the Company promptly after receipt of notice thereof
given by the Executive shall not constitute Good Reason. |
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(k) |
“Incentive Cash Bonus Plan” means the Xxxxxx Xxxxxx, Inc. Incentive
Cash Bonus Plan which became effective September 29, 1998 or any replacement
thereof. |
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(l) |
“Nonqualifying Termination” means a termination of the
Executive’s employment (1) by the Company for Cause, (2) by the Executive
during the first 180 days following a Change in Control for any reason other
than the Good Reason specified in Section 1(j)(2) or Section 1(j)(3); (3) by the
Executive after the first 180 days following a Change in Control for any reason
other than any Good Reason, (4) as a result of the Executive’s death or (5)
by the Company due to the Executive’s absence from his duties with the
Company on a full-time basis for at least 180 consecutive days as a result of
the Executive’s incapacity due to physical or mental illness. |
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(m) |
“Person” means any individual, entity or group including any
“person” within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act. |
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(n) |
“Target Bonus” has the meaning stated in the Incentive Cash Bonus
Plan. |
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(o) |
“Termination Period” means the period of time beginning with a Change
in Control and ending on the earlier to occur of (1) 24 months following such
Change in Control and (2) the Executive’s death. Notwithstanding anything
in this Agreement to the contrary, if (i) the Executive’s employment
terminates prior to a Change in Control for a reason that would have entitled
the Executive to payments and benefits from the Company under Sections 3(a) and
(b) if it had occurred following a Change in Control; (ii) the Executive
reasonably demonstrates that such |
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termination
(or Good Reason event) was at the request of a third party who had indicated an intention
or taken steps reasonably calculated to effect a Change in Control; and (iii) a
Change in Control involving such third party (or a party competing with such third party
to effectuate a Change in Control) does occur, then for purposes of this Agreement, the
date immediately prior to the date of such termination of employment or event constituting
Good Reason shall be treated as a Change in Control. For purposes of determining the
timing of payments and benefits to the Executive under Section 3, the date of the
actual Change in Control shall be treated as the Executive’s Date of Termination
under Section 1(f), and for purposes of determining the amount of payments and
benefits to the Executive under Section 3, the date the Executive’s employment
is actually terminated shall be treated as the Executive’s Date of Termination under
Section 1(f). |
2. Obligations of the
Executive.
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(a) |
The Executive agrees that in the event any Person attempts a Change in Control,
he shall not voluntarily leave the employ of the Company without a Good Reason
specified in Section 1(j)(2) or Section 1(j)(3) until (1) such attempted Change
in Control terminates or (2) if a Change in Control shall occur, 180 days
following such Change in Control. For purposes of clause (1) of the preceding
sentence, Good Reason shall be determined as if a Change in Control had occurred
when such attempted Change in Control became known to the Board. |
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(b) |
The
following definitions apply to the remainder of this Section 2: |
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(1) |
“Affiliate” means and includes any person or entity which controls a
party, which such party controls or which is under common control with such
party. |
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(2) |
“Competing Business” means a business which engages or is making plans
to engage, in whole or in part, in the manufacturing, marketing, distribution or
sale of products which are competitive with any products manufactured,
distributed, marketed or sold by the Company during the Restricted Period. |
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(3) |
“Competing Products” means products manufactured by a Competing
Business. |
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(4) |
“Control” means the power, direct or indirect, to direct or cause the
direction of the management and policies of a person or entity through voting
securities, contract or otherwise. |
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(5) |
“Restricted Period” means the period of the Executive’s
employment with the Company and a period of two years after the Date of
Termination. |
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(c) |
Executive acknowledges and agrees that (i) through his continuing services to
the Company, he will learn valuable trade secrets and other proprietary
information relating to the Company’s business, (ii) the Executive’s
services to the Company are unique in nature, (iii) the Company’s business |
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is
international in scope and (iv) the Company would be irreparably damaged if the Executive
were to provide services to any person or entity in violation of the restrictions
contained in this Section 2(c). Accordingly, as an inducement to the Company to enter into
this Agreement, Executive agrees that if the Executive is entitled to and does receive a
payment pursuant to Section 3(a)(2) of this Agreement, neither Executive nor any Affiliate
of the Executive shall during the Restricted Period, directly or indirectly, either for
himself or for any other person or entity: |
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(a) |
anywhere
in the world in which the Company is then doing business, engage or participate
in, or assist, advise or be connected with (including as an employee, owner,
partner, shareholder, officer, director, advisor, consultant, agent or [without
limitation by the specific enumeration of the foregoing] otherwise), or permit
his name to be used by or render services for, any person or entity engaged in
a Competing Business; provided, however, that nothing in this Agreement shall
prevent Executive from acquiring or owning, as a passive investment, up to two
percent (2%) of the outstanding voting securities of an entity engaged in a
Competing Business which are publicly traded in any recognized national
securities market; |
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(b) |
take
any action, in connection with a Competing Business, which might divert from
the Company or an Affiliate of the Company any opportunity which would be
within the scope of the Company’s or such Affiliate’s then business; |
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(c) |
solicit
or attempt to solicit any person or entity who is or has been (A) a customer of
the Company at any time during the Restricted Period to purchase Competing
Products from any person or entity (other than the Company) or (B) a customer,
supplier, licensor, licensee or other business relation of the Company at any
time during the Restricted Period to cease doing business with the Company; or |
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(d) |
solicit
or hire any person or entity who is a director, officer, employee or agent of
the Company or any Affiliate of the Company to perform services for any entity
other than the Company and its Affiliates. |
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(d) |
Executive agrees that any violation by the Executive of Section 2(c) of this
Agreement would be highly injurious to the Company and would cause irreparable
harm to the Company. By reason of the foregoing, Executive consents and agrees
that if the Executive violates any provision of Section 2(c) of this Agreement,
the Company shall be entitled, in addition to any other rights and remedies that
it may have, to apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent
any continuing violation of, the provisions of such section. In the event
Executive breaches a covenant contained in Section 2(c) of this Agreement, the
Restricted Period applicable to Executive with respect to such breached covenant
shall be extended for the period of such breach. Executive also recognizes that
the territorial, time and scope limitations set forth in Sections 2(c), are
reasonable and are properly required for the protection of the Company and in
the event that any such territorial, time or scope limitation is deemed to be
unreasonable, by a court of competent jurisdiction, the Company and Executive
agree, and Executive submits, to the reduction of any or all of said
territorial, time or scope limitations to such an area, period or scope as said
court shall deem reasonable under the circumstances. |
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(e) |
Termination of the Executive’s employment shall have no effect on the
continuing operation and enforceability of Sections 2(b), 2(c) or 2(d) and each
such section shall continue to be fully effective and enforceable after any such
termination. |
3.
Obligations of the Company Upon Termination of Employment.
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(a) |
If during the Termination Period the employment of the Executive shall
terminate, other than by reason of a Nonqualifying Termination, then the Company
shall pay to the Executive (or the Executive’s beneficiary or estate)
within thirty (30) days following the Date of Termination, as compensation for
services to the Company; |
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(1) |
a cash amount equal to the sum of (i) the Executive’s base salary from the
Company and its affiliated companies through the Date of Termination, to the
extent not theretofore paid, (ii) the Executive’s Target Bonus for the
Company’s fiscal year in which the Date of Termination occurs multiplied by
a fraction, the numerator of which is the number of days in that fiscal year
through the Date of Termination and the denominator of which is 365 or 366, as
applicable, (iii) any positive balance in the Executive’s Bonus Reserve
Account; and (iv) any compensation previously deferred by the Executive other
than pursuant to the Deferred Compensation Plan or any tax qualified plan
(together with any interest and earnings thereon) and any accrued vacation pay,
in each case to the extent not theretofore paid; plus |
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(2) |
a lump-sum cash amount (subject to any applicable payroll or other taxes
required to be withheld pursuant to Section 5) in an amount equal to (i) [three
(for the CEO); two (for the other officers)] times the Executive’s highest
annual base salary from the Company and its affiliated companies in effect
during the twelve (12) month period prior to the Date of Termination, plus (ii)
[three (for the CEO); two (for the other officers)] times the higher of (a) the
average of the Executive’s Earned Bonus for the three fiscal years of the
Company preceding the fiscal year in which the Change in Control occurs, or (b)
the Executive’s Target Bonus for the fiscal year of the Company in which
the Change in Control occurs; provided, however, that any amount to be paid
pursuant to this Section 3(a)(2) shall be reduced by any other amount of
severance relating to salary or bonus continuation to be received by the
Executive upon termination of employment of the Executive under any severance
plan, policy or arrangement of the Company and any severance payments the
Company is required to make pursuant to the requirements of any U.S. or foreign
law or regulation. For purposes of the preceding sentence any amount received by
the Executive on account of the termination of the Incentive Cash Bonus Plan
will be treated as an amount paid on account of the termination of
Executive’s employment. |
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(b) |
If during the Termination Period the employment of the Executive shall
terminate, other than by reason of a Nonqualifying Termination: |
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(1) |
In addition to the payments to be made pursuant to Section 3(a), for a period of
two years commencing on the Date of Termination, the Company shall continue to
keep in full force and effect all policies of medical, accident, disability and
life insurance with respect to the Executive and his dependents with the same
level of coverage, upon the same terms and otherwise to the same extent as such
policies shall have been in effect immediately prior to the Date of Termination
or, if more favorable to the Executive, as provided generally with respect to
other peer executives of the Company and its affiliated companies, and the
Company and the Executive shall share the costs of the continuation of such
insurance coverage in the same proportion as such costs were shared immediately
prior to the Date of Termination; provided that, if the Executive cannot
continue to participate in the Company plans providing such benefits, the
Company shall otherwise provide such benefits on the same after-tax basis as if
continued participation had been permitted. Notwithstanding the foregoing, in
the event the Executive becomes reemployed with another employer and becomes
eligible to receive welfare benefits from such employer, the welfare benefits
described herein shall be secondary to such benefits during the period of the
Executive’s eligibility, but only to the extent that the Company reimburses
the Executive for any increased cost and provides additional benefits necessary
to give the Executive the benefits provided hereunder. |
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(2) |
All stock options, restricted awards, other equity based awards and all stock
units credited to the Executive’s account under the Deferred Compensation
Plan shall be fully vested. All stock options shall remain exercisable for a
period of ninety days from the Date of Termination or the earlier expiration of
their initial term; provided, that, if the Executive would be prohibited from
exercising any stock option due to restraints imposed under applicable
accounting rules or securities laws, such option shall remain exercisable for
thirty days after such restriction ceases to apply. |
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(3) |
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 through the Date of Termination (such other amounts and benefits shall
be hereinafter referred to as the “Other Benefits”). |
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(c) |
If during the Termination Period the employment of the Executive shall terminate
by reason of a Nonqualifying Termination, then the Company shall pay to the
Executive within thirty (30) days following the Date of Termination, a cash
amount equal to the sum of (1) the Executive’s full annual base salary from
the Company through the Date of Termination, to the extent not theretofore paid,
and (2) the Other Benefits. |
4.
Certain Additional Payments by the Company.
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(a) |
Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any payment or distribution by the Company or its
affiliated companies to or for the benefit of the Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
of otherwise, but determined without regard to any additional payments required
under this Section 4) (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. |
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(b) |
Subject to the provisions of Section 4(c), all determinations required to be
made under this Section 4, 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 the Company’s
public accounting firm (the “Accounting Firm”) which shall provide
detailed supporting calculations both to the Company and the Executive within
fifteen (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 Person effecting the Change in Control, the Executive shall appoint another
nationally recognized public accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
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 4, shall be paid by the Company to the Executive within five (5) 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 4(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. |
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(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 (10) 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 thirty (30) days period
following the date on which the Executive 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: |
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(1) |
give the Company any information reasonably requested by the Company relating to
such claim, |
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(2) |
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, |
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(3) |
cooperate with the Company in good faith in order effectively to contest such
claim, and |
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(4) |
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 4(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 provided further, 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 4(c), the Executive becomes entitled to receive, and
receives, any refund with respect to such claim, the Executive shall (subject to
the Company’s complying with the requirements of Section 4(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 4(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 thirty (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. |
| |
(e) |
Notwithstanding the foregoing, if it shall be determined that the Executive is
entitled to a Gross-Up Payment, but that the Payments would not be subject to
the Excise Tax if the Payments were reduced by an amount that is less than 5% of
the portion of the Payments that would be treated as “parachute
payments” under Section 280G of the Code, then the amounts payable to
the Executive under this Agreement shall be reduced (but not below zero) to the
maximum amount that could be paid to the Executive without giving rise to the
Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be
made to the Executive. The reduction of the amounts payable hereunder, if
applicable, shall be made by reducing first the payments under
Section 3(a)(2), unless an alternative method of reduction is elected by
the Executive. For purposes of reducing the Payments to the Safe Harbor Cap,
only amounts payable under this Agreement (and no other Payments) shall be
reduced. If the reduction of the amounts payable hereunder would not result in a
reduction of the Payments to the Safe Harbor Cap, no amounts payable under this
Agreement shall be reduced pursuant to this provision. |
| 5. |
Withholding Taxes. The Company may withhold from all payments due to the
Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom. |
| 6. |
Reimbursement of Expenses. If any contest or dispute shall arise under
this Agreement involving termination of the Executive’s employment with the
Company or involving the failure or refusal of the Company to perform fully in
accordance with the terms hereof, the Company shall reimburse the Executive, on
a current basis, for all reasonable legal fees and expenses, if any, incurred by
the Executive in |
| |
connection
with such contest or dispute, together with interest thereon at a rate equal to the prime
rate, as published under “Money Rates” in The Wall Street Journal from time to
time, but in no event higher than the maximum legal rate permissible under applicable law,
such interest to accrue from the date the Company receives the Executive’s statement
for such fees and expenses through the date of payment thereof; provided, however, that in
the event the resolution of any such contest or dispute includes a finding denying, in
total, the Executive’s claims in such contest or dispute, the Executive shall be
required to reimburse the Company, over a period of twelve (12) months from the date of
such resolution, for all sums advanced to the Executive pursuant to this Section 6. |
| 7. |
Operative Event. Notwithstanding any provision herein to the contrary, no
amounts shall be payable hereunder unless and until there is a Change in Control
at a time when the Executive is employed by the Company. |
| 8. |
Amendment
or Termination of Agreement. |
| |
(a) |
This Agreement shall be effective on the date hereof and shall continue until
terminated by the Company as provided in Section 8(b); provided, however, that
this Agreement shall terminate in any event upon the earlier to occur of (i)
termination of the Executive’s employment with the Company prior to a
Change in Control, other than pursuant to Section 1(p), and (ii) the
Executive’s death. |
| |
(b) |
The Company shall have the right prior to a Change in Control, in its sole
discretion, pursuant to action by the Board, to approve the amendment or
termination of this Agreement, which amendment or termination shall not become
effective until the date fixed by the Board therefor, which date shall be at
least 180 days after notice thereof is given by the Company to the Executive in
accordance with Section 11; provided, however, that no such action shall be
taken by the Board, without the written consent of the Executive, (i) during any
period of time when the Board has knowledge that any Person has taken steps
reasonably calculated to effect a Change in Control until, in the opinion of the
Board, such Person has abandoned or terminated its efforts to effect a Change in
Control or (ii) following a Change in Control. |
| 9. |
Scope of Agreement. Nothing in this Agreement shall be deemed to entitle
the Executive to continued employment with the Company or its subsidiaries and,
except as provided in Section 1(p), if the Executive’s employment with the
Company shall terminate prior to a Change in Control, then the Executive shall
have no further rights under this Agreement; provided, however, that any
termination of the Executive’s employment following a Change in Control
shall be subject to all of the provisions of this Agreement. [This Agreement
shall supersede in its entirety the Change in Control Agreement between the Company and
the Executive dated __________, which shall terminate and have no further effect
as of the date of this Agreement.] |
| 10. |
Successors;
Binding Agreement. |
| |
(a) |
This Agreement shall not be terminated by any merger or consolidation of the
Company whether the Company is or is not the surviving or resulting corporation
or as a result of any transfer of all or substantially all of the assets of the
Company. In the event of any such merger, consolidation or transfer of assets,
the provisions of this Agreement shall be binding upon the surviving or
resulting corporation or the person or entity to which such assets are
transferred. |
| |
(b) |
The Company agrees that concurrently with any merger, consolidation or transfer
of assets referred to in Section 10(a), it will cause any successor or
transferee unconditionally to assume, by written instrument delivered to the
Executive (or his beneficiary or estate), all of the obligations of the Company
hereunder. Failure of the Company to obtain such assumption prior to the
effectiveness of any such merger, consolidation or transfer of assets shall be a
breach of this Agreement and shall entitle the Executive to compensation and
other benefits from the Company in the same amount and on the same terms as the
Executive would be entitled hereunder if the Executive’s employment were
terminated following a Change in Control other than by reason of a Nonqualifying
Termination. For purposes of implementing the foregoing, the date on which any
such merger, consolidation or transfer becomes effective shall be deemed the
Date of Termination. |
| |
(c) |
This Agreement shall inure to the benefit of and be enforceable by the
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amounts would be payable to the Executive hereunder had the
Executive continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to such person or
persons appointed in writing by the Executive to receive such amounts or, if no
person is so appointed, to the Executive’s estate. |
| |
(a) |
For purposes of this Agreement, all notices and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given when delivered or five days after deposit in the United States mail,
certified and return receipt requested, postage prepaid, addressed (1) if to the
Executive, to _____________________, and if to the Company, to 000 Xxxx Xxxx
Xxxxxx, Xxxxxxx, XX 00000, attention General Counsel, with a copy to the
Secretary, or (2) to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt. |
| |
(b) |
A written notice of the Executive’s Date of Termination by the Company or
the Executive, as the case may be, to the other shall (i) indicate the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, set 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) specify the termination date (which date shall
be not less than |
| |
fifteen
(15) days after the giving of such notice). The failure by the Executive or the Company to
set forth in such notice 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 hereunder or
preclude the Executive or the Company from asserting such fact or circumstance in
enforcing the Executive’s or the Company’s rights hereunder. |
12.
Full Settlement; Resolution of Disputes.
| |
(a) |
The Company’s obligation to make any 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 except to the extent
provided in Section 3(b)(1). |
| |
(b) |
If there shall be any dispute between the Company and the Executive in the event
of any termination of the Executive’s employment, then, unless and until
there is a final, nonappealable judgment by a court of competent jurisdiction
declaring that such termination was for Cause, that the Executive terminated his
employment without Good Reason, or that the Company is not otherwise obligated
to pay any amount or provide any benefit to the Executive and his dependents or
other beneficiaries, as the case may be, under Sections 3(a), 3(b) and 4, the
Company shall pay all amounts, and provide all benefits, to the Executive and
his dependents or other beneficiaries, as the case may be, that the Company
would be required to pay or provide pursuant to Sections 3(a), 3(b) and 4 as
though such termination were by the Company without Cause or by the Executive
with Good Reason; provided, however, that the Company shall not be required to
pay any disputed amounts pursuant to this Section 12(b) except upon receipt of
an undertaking by or on behalf of the Executive to repay all such amounts to
which the Executive is ultimately adjudged by such court not to be entitled. |
| 13. |
Employment with Subsidiaries. Employment with the Company for purposes of
this Agreement shall include employment with any corporation or other entity in
which the Company has a direct or indirect ownership interest of 50 percent or
more of the total combined voting power of the then outstanding securities of
such corporation or other entity entitled to vote generally in the election of
directors. |
| 14. |
Compliance with Section 409A. It is intended that any amounts payable
under this Agreement will comply with Section 409A of the Code and treasury
regulations relating thereto so as not to subject the Executive to the payment
of any interest and tax penalty which may be imposed under Section 409A of the
Code, and the Agreement shall be interpreted and construed in accordance with
such intention. Any provision of the Agreement that would cause the Executive to
be subject to the payment of any such interest or tax penalty shall be
disregarded, and the timing of the payments or benefits provided herein shall be
modified accordingly. |
| 15. |
Governing Law; Validity. The interpretation, construction and performance
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Michigan without regard to the principle
of conflicts of laws. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which other provisions shall remain in full force
and effect. |
| 16. |
Counterparts. This Agreement may be executed in two counterparts, each of
which shall be deemed to be an original and both of which together shall
constitute one and the same instrument. |
| 17. |
Miscellaneous. Except as provided in Section 8, no provision of this
Agreement may be modified or waived unless such modification or waiver is agreed
to in writing and signed by the Executive and by a duly authorized officer of
the Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. Failure by the Executive or the Company to insist upon strict
compliance with any provisions of this Agreement or 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, shall not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement. Except as otherwise expressly set forth in this Agreement,
the rights of, and benefits payable to, the Executive, his estate or his
beneficiaries pursuant to this Agreement are in addition to any rights of, or
benefits payable to, the Executive, his estate or his beneficiaries under any
other employee benefit plan or compensation plan, policy practice or program of
the Company or any other contract or agreement with the Company. |
IN WITNESS WHEREOF, the Company has
caused this Agreement to be executed by a duly authorized officer of the Company and the
Executive has executed this Agreement as of the day and year first above written.
|
|
XXXXXX XXXXXX, INC.
By:
——————————————
EXECUTIVE
————————————————
Executive’s Name _______________ |
