EXHIBIT 10.2
CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT ("Agreement") is made as of the 16th day
of June, 2004, between Dura Automotive Systems, Inc., a Delaware corporation
("DASI"), Dura Operating Corp., a Delaware corporation ("DOC" and together with
DASI, "Dura") and Xxxx X. Xxxxx ("Executive").
Dura is entering into this Agreement in recognition of the importance of
Executive's services to the continuity of management of Dura and based upon its
determination that it will be in the best interests of Dura to encourage
Executive's continued attention and dedication to Executive's duties in the
potentially disruptive circumstances of a possible Change of Control of Dura.
(As used in this Agreement, the term "Change of Control" and certain other
capitalized terms have the meanings ascribed to them in Section 7, at the end of
this Agreement.)
Dura and Executive agree, effective as of the date first set forth above
(the "Effective Date"), as follows:
1. Basic Severance Benefits. The benefits described in the subsections of
this Section 1 are subject to the limitations set forth in Subsections 4.1
(regarding withholding) and 4.2 (requiring the execution of a waiver and release
by Executive).
1.1. Lump Sum Severance Benefit if Employment is Terminated in Certain
Circumstances Within Six Months Preceding (in Contemplation of a Change of
Control) or Two Years Following a Change of Control. If, within six months
preceding (in contemplation of a Change of Control) or two years following the
occurrence of a Change of Control, Executive's employment with Dura or any of
its Subsidiaries is terminated
(a) by Dura or any of its Subsidiaries for any reason other than Cause,
Disability, or death,
(b) by Executive after a Reduction of Compensation or a Mandatory
Relocation has occurred, or
(c) by Executive following a determination in good faith by Executive
that as a result of a Change of Control his ability to carry out the
authorities, power, functions, responsibilities, or duties that he
had in the positions and offices of Dura or any of its Subsidiaries
held by Executive before the Change of Control has been
substantially impaired as compared to the authorities, powers,
functions, responsibilities, or duties attached to those positions
as in effect before the Change of Control.
Dura shall pay to Executive, within 30 days after the Termination Date, a lump
sum severance benefit equal to three times the sum of:
(x) one year's Base Salary (at the highest rate in effect at any time
during the one year period ending on the date of the Change of Control), plus
(y) Executive's Average Annual Incentive Compensation.
1.2. Accrued Base Salary and Vacation Pay. If Executive becomes entitled
to payment of a lump sum severance benefit under Subsection 1.1 above, Dura
shall, within 10 days after the Termination Date, pay to Executive (a) all Base
Salary accrued through the Termination Date but not previously paid and (b) a
cash payment equal to the value of any vacation time accrued through the
Termination Date but not used by Executive (valued at a rate equal to
Executive's Base Salary at the highest rate in effect at any time during the one
year period ending on the date of the Change of Control).
1.3. Special Prior Year MICP Payments. If Executive becomes entitled to
payment of a lump sum severance benefit under Subsection 1.1 above and the
Termination Date occurs on the last day of or after the end of a Fiscal Year but
before Dura makes final MICP payments with respect to that Fiscal Year, Dura
shall pay to Executive, at the regularly scheduled time for such final MICP
payments (the "Regular Payment Date"), but in any event not later than 60 days
after the end of the Fiscal Year, as incentive compensation, the same amount or
amounts that Dura would have paid to Executive as incentive compensation with
respect to that Fiscal Year at the Regular Payment Date if Executive's
employment had continued through the Regular Payment Date. This Subsection 1.3
is intended to override any provision of the MICP that would otherwise cause
Executive to forfeit any incentive compensation with respect to any Fiscal Year
that ends on or before the Termination Date because Executive does not remain in
the employ of Dura through the Regular Payment Date with respect to that Fiscal
Year. Payment of amounts under Subsections 1.3 and 1.4, as applicable, shall be
in full satisfaction of Dura's obligations to Executive under the MICP.
1.4. Special Pro-Rata MICP Payment. If Executive becomes entitled to
payment of a lump sum severance benefit under Subsection 1.1 above and the
Termination Date occurs on other than the last day of a Fiscal Year, in addition
to the payment, if any, provided for in Subsection 1.3 above, Dura shall, within
60 days after the end of the calendar quarter in which the Termination Date
occurs, pay to Executive, as additional incentive compensation for the period
from the first day of the Fiscal Year in which the Termination Date occurs
through the Termination Date (the "Pre-Termination Part Year"), an amount equal
to the excess of:
(a) the product of the fraction specified in the last sentence of this
Subsection 1.4 and the higher of (i) Executive's Target Annual
Incentive Compensation and (ii) the dollar amount of the cumulative
award that would have been payable to Executive under the MICP for
that entire Fiscal Year had the level of relevant performance
through the end of the Fiscal Year equaled the level of relevant
performance through the last calendar quarter, if any, in that
Fiscal Year that ended before the Termination Date, over
(b) the amount of incentive compensation previously paid to Executive
with respect to that Fiscal Year.
The fraction to be used in calculating the amount to be paid under this
Subsection 1.4 shall have a numerator equal to the number of days in the
Pre-Termination Part Year and a denominator of 365. Payment of amounts under
Subsections 1.3 and 1.4, as applicable, shall be in full satisfaction of Dura's
obligations to Executive under the MICP.
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1.5. Continued Health and Dental Insurance Coverage. If Executive becomes
entitled to payment of a lump sump severance benefit under Subsection 1.1 above,
Executive shall be entitled to elect to continue health and dental coverages for
up to 36 months (the last 18 months of which would be coverage under Section
4980B of the Internal Revenue Code ("COBRA")), at the same premium cost that
active employees pay for similar coverages. To the extent permitted under
applicable law, Dura's obligation to provide continuation coverage (or to
subsidize any continuation coverage) shall cease when Executive becomes eligible
to participate under a subsequent employer's group health and dental coverages.
1.6. Special SERP Payment. If Executive becomes entitled to payment of a
lump sum severance benefit under Subsection 1.1 above, Dura shall, within 10
days after the Termination Date, pay to Executive a lump sum benefit payment
equal to the amount that the Executive would have been entitled to receive under
the Dura Automotive Systems, Inc. 2003 Supplemental Executive Retirement Plan
(the "SERP") as of the Termination Date assuming that Executive had 10
additional "Years of Service" (as such term is defined under the SERP) under the
SERP (in excess of his Years of Service recognized under the SERP and any other
agreements which provide for recognition of enhanced service under the SERP,
limited to an aggregate maximum of 35 years). The lump sum benefit shall be the
lump sum actuarial equivalent of a single life annuity (with a 10-year certain
term) payable over the lifetime of the Participant and will be calculated using
the actuarial assumptions used for FAS 87 purposes in the most recently audited
annual report; provided, however, that the lump sum shall not be discounted due
to commencement prior to reaching age 65. This Subsection 1.6 is intended to
override any provision of the SERP that would otherwise cause Executive to
receive an amount which is less that what is provided for herein. This payment
is in full satisfaction of Dura's obligations to Executive under the SERP and
with respect to any provisions in other agreements which provide for recognition
of enhanced service under the SERP.
1.7. Extension of Stock Option Exercisability Period. If Executive
becomes entitled to a payment of a lump sum severance benefit under Subsection
1.1 above, the period during which the Executive may exercise any options
granted to Executive under DASI's 1998 Stock Incentive Plan, as amended (the
"Stock Plan") and as evidenced by one or more stock option agreements between
the Executive and DASI (collectively, the "Option Agreements") that are
exercisable as of the Termination Date (including any options that have or will
become exercisable as a result of the Change of Control in accordance with the
terms of the Stock Plan and the applicable Option Agreements) will be extended
for up to 3 successive 30 day periods following the date such options would
otherwise expire under the terms of the applicable Option Agreements if such
Executive was precluded, based upon advice of counsel, from selling shares of
common stock of DASI (or any common stock or other security of any successor to
DASI) issuable upon the exercise of such options in the public market for a
majority of the business days during any such period because the Executive was
in possession of material non-public information. Executive and DASI hereby
agree and acknowledge that this Subsection 1.7 shall be deemed to amend each
Option Agreement entered into prior to the date hereof between DASI and the
Executive.
2. Other Benefits.
2.1. Reimbursement of Certain Expenses After a Change of Control.
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(a) From and after a Change of Control, Dura or its successor shall pay,
as incurred, all expenses of Executive, including the reasonable
fees of counsel engaged by Executive, of defending any action
brought to have this agreement declared invalid or unenforceable.
(b) From and after a Change of Control, Dura or its successor shall pay,
as incurred, all expenses of Executive, including the reasonable
fees of counsel engaged by Executive, of prosecuting any action to
compel Dura or its successor to comply with the terms of this
Agreement upon receipt from Executive of an undertaking to repay
Dura for such expenses if, and only if, it is ultimately determined
by a court of competent jurisdiction that Executive had no
reasonable grounds for bringing that action (which determination
need not be made simply because Executive fails to succeed in the
action).
(c) From and after a Change of Control, expenses (including attorney's
fees) incurred by Executive in defending any action, suit, or
proceeding commenced or threatened (whether before or after the
Change of Control) against Executive for any action or failure to
act as an employee, officer, or director of Dura or any Subsidiary
shall be paid by Dura or its successor, as they are incurred, in
advance of final disposition of the action suit, or proceeding upon
receipt of an undertaking by or on behalf of Executive in which
Executive agrees to reasonably cooperate with Dura, its Subsidiary
or successor, as the case may be, concerning the action, suit, or
proceeding and (i) if the action, suit, or proceeding is commenced
or threatened against Executive for any action or failure to act as
a director, to repay the amount if it is proved by a preponderance
of evidence in a court of competent jurisdiction that Executive's
action or failure to act involved an act or omission undertaken with
deliberate intent to cause injury to Dura or a Subsidiary or
undertaken with gross negligence for the best interests of Dura or a
Subsidiary, or (ii) if the action, suit, or proceeding is commenced
or threatened against Executive for any action or failure to act as
an officer or employee, to repay the amount if it is ultimately
determined that Executive is not entitled to be indemnified.
2.2. Indemnification. From and after a Change of Control, Dura shall
indemnify Executive, to the full extent permitted or authorized by the Delaware
General Corporation Law as it may from time to time be amended, if Executive is
(whether before or after the Change of Control) made or threatened to be made a
party to any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative, by reason of the fact
that Executive is or was a director, officer, or employee of Dura or any
Subsidiary, or is or was serving at the request of Dura or any subsidiary as a
director, trustee, officer, or employee of a corporation, partnership, joint
venture, trust, or other enterprise. The indemnification provided by this
Subsection 2.2 shall not be deemed exclusive of any other rights to which
Executive may be entitled under the certificate of incorporation or the by-laws
of Dura or of any Subsidiary, or any agreement, vote of shareholders or
disinterested directors, or otherwise, both as to action in Executive's official
capacity and as to action in another capacity while holding such office, and
shall continue as to Executive after Executive has ceased to be a director,
trustee, officer, or employee and shall inure to the benefit of the heirs,
executors, and administrators of Executive.
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2.3. Disability. If, after a Change of Control and prior to the
Termination Date, Executive is unable to perform services for Dura or any of its
Subsidiaries for any period by reason of disability, Dura will pay and provide
to Executive all compensation and benefits to which Executive would have been
entitled had Executive continued to be actively employed by Dura or any of its
Subsidiaries through the earliest of the following dates: (a) the first date on
which Executive is no longer so disabled to such an extent that Executive is
unable to perform services for Dura or any of its Subsidiaries, (b) the date on
which Executive becomes eligible for payment of long term disability benefits
under a long term disability plan generally applicable to executives of Dura or
any of its Subsidiaries, (c) the date on which Dura has paid and provided 24
months of compensation and benefits to Executive during Executive's disability,
or (d) the date of Executive's death.
2.4. Gross-Up of Payments Deemed to be Excess Parachute Payments.
(a) Dura and Executive acknowledge that, following a Change of Control,
one or more payments or distributions to be made by Dura to or for
the benefit of Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement, under some
other plan, agreement, or arrangement, or otherwise, and including,
without limitation, any income recognized by Executive upon exercise
of an option granted by Dura to acquire Common Stock issued by Dura)
(a "Payment") may be determined to be an "excess parachute payment"
that is not deductible by Dura or any of its Subsidiaries for
federal income tax purposes and with respect to which Executive will
be subject to an excise tax because of Sections 280G and 4999,
respectively, of the Internal Revenue Code (hereinafter referred to
respectively as "Section 280G" and "Section 4999"). If Executive's
employment is terminated after a Change of Control occurs, the
Accounting Firm, which, subject to any inconsistent position
asserted by the Internal Revenue Service, shall make all
determinations required to be made under this Subsection 2.4, shall
determine whether any Payment would be an excess parachute payment
and shall communicate its determination, together with detailed
supporting calculations, to Dura and to Executive within 30 days
after the Termination Date or such earlier time as is requested by
Dura. Dura and Executive shall cooperate with each other and the
Accounting Firm and shall provide necessary information so that the
Accounting Firm may make all such determinations. Dura shall pay all
of the fees of the Accounting Firm for services performed by the
Accounting Firm as contemplated in this Subsection 2.4.
(b) If the Accounting Firm determines that any Payment gives rise,
directly or indirectly, to liability on the part of Executive for
excise tax under Section 4999 (and/or any penalties and/or interest
with respect to any such excise tax), Dura shall make additional
cash payments to Executive, from time to time and at the same time
as any Payment constituting an excess parachute payment is paid or
provided to Executive, in such amounts as are necessary to put
Executive in the same position, after payment of all federal, state,
and local taxes (whether income taxes, excise taxes under Section
4999, or otherwise, or other taxes) and any and all penalties and
interest with respect to any such excise tax, as Executive would
have been in after payment of all federal, state, and local income
taxes if the
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Payments had not given rise to an excise tax under Section 4999 and
no such penalties or interest had been imposed.
(c) If the Internal Revenue Service determines that any Payment gives
rise, directly or indirectly, to liability on the part of Executive
for excise tax under Section 4999 (and/or any penalties and/or
interest with respect to any such excise tax) in excess of the
amount, if any, previously determined by the Accounting Firm, Dura
shall make further additional cash payments to Executive not later
than the due date of any payment indicated by the Internal Revenue
Service with respect to these matters, in such amounts as are
necessary to put Executive in the same position, after payment of
all federal, state, and local taxes (whether income taxes, excise
taxes under Section 4999, or otherwise, or other taxes) and any and
all penalties and interest with respect to any such excise tax, as
Executive would have been in after payment of all federal, state,
and local income taxes if the Payments had not given rise to an
excise tax under Section 4999 and no such penalties or interest had
been imposed.
(d) If Dura desires to contest any determination by the Internal Revenue
Service with respect to the amount of excise tax under Section 4999,
Executive shall, upon receipt from Dura of an unconditional written
undertaking to indemnify and hold Executive harmless (on an after
tax basis) from any and all adverse consequences that might arise
from the contesting of that determination, cooperate with Dura in
that contest at Dura's sole expense. Nothing in this Paragraph (d)
shall require Executive to incur any expense other than expenses
with respect to which Dura has paid to Executive sufficient sums so
that after the payment of the expense by Executive and taking into
account the payment by Dura with respect to that expense and any and
all taxes that may be imposed upon Executive as a result of
Executive's receipt of that payment. the net effect is no cost to
Executive. Nothing in this Paragraph (d) shall require Executive to
extend the statute of limitations with respect to any item or issue
in Executive's tax returns other than, exclusively, the excise tax
under Section 4999. If, as the result of the contest of any
assertion by the Internal Revenue Service with respect to excise tax
under Section 4999, Executive receives a refund of a Section 4999
excise tax previously paid and/or any interest with respect thereto,
Executive shall promptly pay to Dura such amount as will leave
Executive, net of the repayment and all tax effects, in the same
position, after all taxes and interest, that he would have been in
if the refunded excise tax had never been paid.
3. No Set-Off; No Obligation to Seek Other Employment or to Otherwise
Mitigate Damages; No Effect Upon Other Plans. Dura'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 whatsoever that Dura or any of its Subsidiaries may have
against Executive. Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise. Except as provided in the last sentence of this Section
3, neither the amount of any payment provided for under this Agreement nor
Executive's right to any other benefit under this Agreement shall be reduced by
any compensation or benefits earned by Executive as the result of
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employment by another employer or otherwise after the termination of Executive's
employment. Neither the provisions of this Agreement, nor the execution of the
waiver and release referred to in Subsection 4.2 below, nor the making of any
payment provided for hereunder shall reduce any amounts otherwise payable, or in
any way diminish Executive's rights, under any stock option plan, tax-qualified
retirement plan, disability or insurance plan, or other similar contract, plan,
or arrangement of Dura, except that (i) the payment of a pro-rata incentive
compensation benefit under Subsections 1.3 and 1.4 shall satisfy in full all
obligations Dura has to Executive for payments under the MICP, (ii) the payment
under Subsection 1.6 shall satisfy in full all obligations Dura has to Executive
for payments under the SERP and (iii) payment of the severance under Subsection
1.1 shall satisfy in full all obligations Dura has to Executive to pay severance
under all plans, programs, arrangements or agreements.
4. Certain Limitations on Benefits.
4.1. Taxes; Withholding of Taxes. Without limiting either the right of
Dura to withhold taxes pursuant to this Subsection 4.1 or the obligation of Dura
to make gross-up payments pursuant to Subsection 2.4, Executive shall be
responsible for all income, excise, and other taxes (federal, state, city, or
other) imposed on or incurred by Executive as a result of receiving the payments
provided in this Agreement, including, without limitation, the payments provided
under Section 1 of this Agreement. Dura or any of its Subsidiaries may withhold
from any amounts payable under this Agreement all federal, state, city, or other
taxes as Dura or any of its Subsidiaries shall determine to be required pursuant
to any law or government regulation or ruling.
4.2. Waiver and Release. Dura may condition the payment of any amounts
otherwise due under Section 1 of this Agreement upon (a) the execution by
Executive of a waiver and release in the form attached to this Agreement as
Exhibit A, with blanks appropriately filled and, in the case of clause (e)
contained therein, completed with the number of days that Dura determines is
required under applicable law, but in no event more than 45 days, and (b) the
observation of such waiting or revocation periods, if any, before and after
execution of the waiver and release by Executive as are required by law, such
as, for example, the waiting or revocation periods required for a waiver and
release to be effective with respect to claims under the Age Discrimination in
Employment Act, provided that Dura delivers to Executive such a waiver and
release, appropriately completed, within seven days of the Termination Date.
5. Term of this Agreement. This Agreement shall be effective as of the
Effective Date and shall thereafter apply to any Change of Control occurring
thereafter unless this Agreement is terminated earlier pursuant to Subsection
5.1.
5.1. Termination of Agreement Upon Termination of Employment Before a
Change of Control. This Agreement shall automatically terminate and cease to be
of any further effect on the first date occurring before a Change of Control on
which Executive is no longer employed by Dura or any of its Subsidiaries, except
that, for purposes of this Agreement, any termination of employment of Executive
that is effected both (a) during the six month period ending on the date of a
Change of Control and (b) in contemplation of a Change of Control shall be
deemed to be a termination of Executive's employment as of immediately after
that Change of Control becomes irrevocable (as provided in Subsection 7.4) and
Executive shall be entitled to payments and
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benefits under this Agreement as if Executive's employment had continued through
the day after the Change of Control became irrevocable and had then been
terminated.
5.2. No Termination of Agreement During Two Year Period Beginning on Date
of a Change of Control. After a Change of Control, this Agreement may not be
terminated. However, if Executive's employment with Dura or any of its
Subsidiaries continues for more than two years following the occurrence of a
Change of Control, then, for all purposes of this Agreement other than
Subsections 2.1 and 2.2, that particular Change of Control shall thereafter be
treated as if it never occurred.
6. Miscellaneous.
6.1. Successor to Dura. Dura shall not consolidate with or merge into any
other corporation, or sell, transfer or dispose of all or substantially all of
its assets to another corporation or other entity, unless such other corporation
or other entity shall assume this Agreement in a signed writing and deliver a
copy thereof to Executive. Upon such assumption the successor corporation or
other entity shall become obligated to perform the obligations of Dura under
this Agreement and the term "Dura" as used in this Agreement shall be deemed to
refer to such successor corporation or other entity.
6.2. Notices. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given (a) when delivered in person (to Executive in the
case of notices to Executive and to the Secretary of Dura in the case of notices
to Dura) or (b) on the date actually received when sent by United States
registered mail, return receipt requested, postage prepaid, and addressed, in
the case of notices to Dura, as follows:
Dura Automotive Systems, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
Attention: Secretary
and, in the case of notices to Executive, properly addressed to Executive at
Executive's most recent home address as shown on the records of Dura, or 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.
6.3. Employment Rights. Nothing expressed or implied in this Agreement
shall create any right or duty on the part of Dura or Executive to have
Executive continue as an officer of Dura or any of its Subsidiaries or to remain
in the employment of Dura or any of its Subsidiaries.
6.4. Administration. Dura shall be responsible for the general
administration of this Agreement. All fees and expenses billed by the Accounting
Firm for services contemplated under this Agreement shall be the responsibility
of Dura.
6.5. Source of Payments. DASI and DOC shall be jointly and severally
liable for all payments required under this Agreement. All payments under this
Agreement shall be made in cash and shall be made solely from the general assets
of DASI or DOC (or from a grantor trust, if
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any, established by Dura for purposes of making payments under this Agreement
and other similar agreements), and Executive shall have the rights of an
unsecured general creditor of DASI and DOC with respect thereto.
6.6. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement which shall remain in full force and effect.
6.7. Modification, Waiver, Etc. No provision of this Agreement may be
modified, waived, or discharged unless such waiver, modification, or discharge
is agreed to in a writing signed by Executive and Dura. No waiver by either
party hereto 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 similar or dissimilar provisions or conditions
at the same time or at any prior or subsequent time. No agreement or
representation, oral or otherwise, express or implied, with respect to the
subject matter hereof has been made by either party that is not set forth
expressly in this Agreement. This Agreement shall inure to the benefit of and be
enforceable by Executive's personal representatives, executors, administrators,
successors, heirs, and designees. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
7. Definitions.
7.1. Accounting Firm. The term "Accounting Firm" means the independent
auditors of Dura for the Fiscal Year preceding the year in which the Change of
Control occurred and such firm's successor or successors; provided, however, if
such firm is unable or unwilling to serve and perform in the capacity
contemplated by this Agreement, Dura shall select another national accounting
firm of recognized standing to serve and perform in that capacity under this
Agreement, except that such other accounting firm shall not be the then
independent auditors for Dura or any of its affiliates (as defined in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended).
7.2. Base Salary. The term "Base Salary" means the annual salary,
excluding incentive compensation, payable to Executive from time to time before
any reduction for voluntary contributions to any 401(k) plan or any other
voluntary deferral. Base Salary does not include imputed income from any payment
by Dura or any of its Subsidiaries of any noncash benefits.
7.3. Cause. The employment of Executive by Dura or any of its
Subsidiaries shall have been terminated for "Cause" if the Executive's
employment is terminated and, prior to that termination of employment, any of
the following has occurred:
(a) Executive's commission of a felony;
(b) Executive commits an act or series of acts of dishonesty, disloyalty
or fraud in the course of Executive's employment which are
materially adverse to the best interests of Dura, all as determined
in good faith by the vote of a majority of all of the members of the
Board of Directors of Dura (other than Executive, if Executive is a
Director of Dura);
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(c) after being notified in writing by the Board of Directors of Dura of
the failure and having been given at least 15 days in which to cure
the failure, Executive continues to unreasonably neglect Executive's
duties and responsibilities as an executive of Dura or any of its
Subsidiaries;
(d) substantial and repeated failure to perform duties as reasonably
directed by the Board of Directors of Dura after being notified in
writing by the Board of Directors of Dura at least seven days in
advance of such repeated failure;
(e) Executive's use of alcohol or drugs (other than drugs prescribed to
Executive by a physician and used by Executive for their intended
purposes for which they had been prescribed) which repeatedly
interferes with the performance of his duties; and
(f) Executive intentionally engages in that Competitive Activity while
Executive remains in the employ of Dura or any of its Subsidiaries
to the material disadvantage or detriment of the Company or any of
its Subsidiaries.
7.4 .Change of Control. A "Change of Control" shall be deemed to have
occurred if at any time or from time to time while this Agreement is in effect:
(a) any person (other than Dura, any of its Subsidiaries, any employee
benefit plan or employee stock ownership plan of Dura, or any person
organized, appointed, or established by Dura for or pursuant to the
terms of any such plan), alone or together with any of its
affiliates, becomes the beneficial owner of 15% or more (but less
than 50%) of the Common Stock then outstanding;
(b) Any person (other than Dura, any of its Subsidiaries, any employee
benefit plan or employee stock ownership plan of Dura, or any person
organized, appointed, or established by Dura for or pursuant to the
terms of any such plan), alone or together with any of its
affiliates, becomes the beneficial owner of 50% or more of the
Common Stock then outstanding;
(c) Any person commences or publicly announces an intention to commence
a tender offer or exchange offer the consummation of which would
result in the person becoming the beneficial owner of 15% or more of
the Common Stock then outstanding;
(d) At any time during any period of 24 consecutive months, individuals
who were directors at the beginning of the 24-month period no longer
constitute a majority of the members of the Board of Directors of
Dura, unless the election, or the nomination for election by Dura's
stockholders, of each director who was not a director at the
beginning of the period is approved by at least a majority of the
directors who (i) are in office at the time of the election or
nomination and (ii) were directors at the beginning of the period;
(e) A record date is established for determining stockholders entitled
to vote upon (i) a merger or consolidation of Dura with another
corporation in which those
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persons who are stockholders of Dura immediately before the merger
or consolidation are to receive or retain less than 50% of the stock
of the surviving or continuing corporation, (ii) a sale or other
disposition of all or substantially all of the assets of Dura and
its Subsidiaries, taken as a whole, or (iii) the dissolution of
Dura; or
(f) (i) Dura is merged or consolidated with another corporation and
those persons who were stockholders of Dura immediately before the
merger or consolidation receive or retain less than 50% of the stock
of the surviving or continuing corporation, (ii) there occurs a
sale, transfer or other disposition of all or substantially all of
the assets of Dura, or (iii) Dura is dissolved.
Notwithstanding anything herein to the contrary, if an event described in clause
(b), clause (d), or clause (f) above occurs, the occurrence of that event will
constitute an irrevocable Change of Control. Furthermore, notwithstanding
anything herein to the contrary, if an event described in clause (c) occurs, and
the Board of Directors either approves such offer or takes no action with
respect to such offer, then the occurrence of that event will constitute an
irrevocable Change of Control. On the other hand, notwithstanding anything
herein to the contrary, if an event described in clause (a), or clause (e),
above occurs, or if an event described in clause (c) occurs and the Board of
Directors does not either approve such offer or take no action with respect to
such offer as described in the preceding sentence, and a majority of those
members of the Board of Directors who were Directors prior to such event
determine, within the 90-day period beginning on the date such event occurs,
that the event should not be treated as a Change of Control, then, from and
after the date that determination is made, that event will be treated as not
having occurred. If no such determination is made, a Change of Control resulting
from any of the events described in the immediately preceding sentence will
constitute an irrevocable Change of Control on the 91st day after the occurrence
of the event.
7.5. Competitive Activity. Executive shall be deemed to have engaged in
"Competitive Activity" if Executive engages, directly or indirectly and whether
as a director, officer, employee, agent, or independent contractor, in any
business or business activity in which Dura or any of its Subsidiaries engages
(other than as a director, officer, or employee of Dura or any of its
Subsidiaries) or any act or omission aiding or abetting a competitor, supplier
or customer of the Company or any of its Subsidiaries.
7.6. Disability. For purposes of this Agreement, Executive's employment
will have been terminated by Dura or any of its Subsidiaries by reason of
"Disability" of Executive only if (a) as a result of bodily injury or sickness,
Executive has been unable to perform Executive's normal duties for Dura or any
of its Subsidiaries for a period of 180 consecutive days, and (b) Executive
begins to receive payments under a long term disability plan sponsored by Dura
or any of its Subsidiaries not later than 30 days after the Termination Date.
7.7. Executive's Average Annual Incentive Compensation. Subject to the
last four sentences of this Subsection 7.7, the term "Executive's Average Annual
Incentive Compensation" means the highest of:
11
(a) the average of the dollar amounts of incentive compensation paid or
payable to Executive under the MICP for each of the two Fiscal Years
most recently ended before the first Change of Control occurring
after execution of this Agreement,
(b) the average of the dollar amounts of incentive compensation paid or
payable to Executive under the MICP for each of the two Fiscal Years
most recently ended before the Termination Date, and
(c) the average dollar amount obtained by adding together (i) the amount
of incentive compensation paid or payable to Executive under the
MICP for the Fiscal Year most recently ended before the Termination
Date and (ii) Executive's Target Annual Incentive Compensation and
dividing the sum so obtained by two.
If Executive was not a participant in the MICP for any one or more of the Fiscal
Years referred to in this Subsection 7.7, the reference to that year shall be
ignored in determining the average under clause (a), (b), and/or (c) above, as
the case may be, and the "average," if any, determined under that clause shall
be the dollar amount of incentive compensation paid or payable to Executive
under the MICP for the other Fiscal Year referred to in that clause (or, in the
case of clause (c), the dollar amount of Executive's Target Annual Incentive
Compensation). Thus, for example, if Executive was not a participant in the MICP
for the second year preceding a Change of Control but was a participant in the
MICP for the year immediately preceding a Change of Control, the average
determined under clause (a) would be equal to the amount of incentive
compensation paid or payable to Executive under the MICP for the single year
immediately preceding the Change of Control. If Executive was a participant in
the MICP for only a part of one or more Fiscal Years referred to in this
Subsection 7.7, the dollar amount of incentive compensation paid or payable to
Executive under the MICP for that year, for purposes of determining the averages
referred to in clauses (a), (b), and/or (c), as the case may be, shall be
annualized. Thus, for example, if Executive was a participant in the MICP for
only three months of a particular Fiscal Year and was paid incentive
compensation under the MICP for that period equal to $3X, the annualized amount
of $12X would be used in determining the averages referred to in clauses (a),
(b), and/or (c), as the case may be.
7.8. Executive's Target Annual Incentive Compensation. The term
"Executive's Target Annual Incentive Compensation" means the higher of (a) the
dollar amount that would have been payable to Executive under the MICP for the
Fiscal Year in which the Termination Date occurs had all relevant levels of
performance (whether corporate, personal, or other) been exactly at target
levels and had Executive remained in the employ of Dura through the date on
which incentive compensation for that Fiscal Year was paid in full, or (b) the
dollar amount that would have been payable to Executive under the MICP for the
last Fiscal Year that ended before the occurrence of a Change of Control had all
relevant levels of performance for that Fiscal Year been exactly at target
levels.
7.9. Fiscal Year. The term "Fiscal Year" means Dura's fiscal year as in
effect from time to time.
7.10. Mandatory Relocation. A "Mandatory Relocation" shall have occurred
if, at any time after a Change of Control, Executive is notified that
Executive's principal place of
12
employment for Dura or any of its Subsidiaries is to be relocated, without
Executive's written consent, more than 50 miles from where Executive's principal
place of employment was located immediately before the Change of Control.
7.11. MICP. The term "MICP" means Dura's Management Incentive Compensation
Plan as in effect on the date of this Agreement and any earlier or later year
and any similar plan in which Executive may have participated or that may be
implemented in place of the plan from time to time thereafter.
7.12. Reduction of Compensation. A "Reduction of Compensation" shall have
occurred if either or both of the following occur at any time after a Change of
Control:
(a) Executive's Base Salary is reduced or
(b) either
(i) the MICP, and/or Executive's level of participation in the
MICP, is altered for any year in such a way as to reduce
Executive's opportunity to earn incentive compensation under
the MICP for that year below the level of that opportunity as
it existed immediately before the Change of Control, or
(ii) the amount of incentive compensation paid to Executive for any
year after the Change of Control is below Executive's Target
Annual Incentive Compensation.
7.13. SERP. The term "SERP" means Dura's Supplemental Executive Retirement
Plan as in the effect on the date of this Agreement.
7.14. Subsidiary. A "Subsidiary" means any corporation, partnership, or
other entity a majority of the voting control of which is directly or indirectly
owned or controlled at the time in question by Dura.
7.15. Termination Date. The term "Termination Date" means the date on
which Executive's employment with Dura terminates.
13
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Dura Automotive Systems, Inc.
By: /s/ Xxxxxxxx X. Xxxxxx
Name: Xxxxxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
Dura Operating Corp.
By: /s/ Xxxxxxxx X. Xxxxxx
Name: Xxxxxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
"EXECUTIVE"
/s/ Xxxx X. Xxxxx
--------------------------------------
[Name of Executive]
14
EXHIBIT A
WAIVER AND RELEASE
DO NOT SIGN WITHOUT READING AND UNDERSTANDING
In consideration of the payments to be made to me following termination
of my employment with Dura Automotive Systems, Inc. pursuant to the agreement
between Dura Automotive Systems, Inc. ("DASI") Dura Operating Corp. ("DOC") and
me dated June, 2004 (the "Change of Control Agreement"), which payments I
acknowledge I am not entitled to receive without execution of this Waiver and
Release, and which payments will not commence earlier than eight days after the
execution of this Waiver and Release, I, ____________, for myself, my heirs,
administrators, executors, and assigns, release and discharge DASI, DOC, their
respective affiliates, subsidiaries, divisions, successors, and assigns and the
employees, officers, directors, and agents thereof (collectively referred to
throughout this Waiver and Release as "Dura") from any and all claims arising
out of or relating to my employment with Dura and my departure from my
employment with Dura based upon or related to any contention (i) that my
employment terminated or ended because of any wrongful, unlawful, or improper
reason or in violation or breach of any express or implied contract or
agreement, or (ii) that Dura engaged in any unlawful or discriminatory act,
event, pattern, or practice involving age, religion, sex, national origin,
ancestry, handicap, veteran status, race, or color, including without
limitation, the federal Age Discrimination in Employment Act, 29 U.S.C. Section
621 et seq., or any similar state law.
I warrant that no promise or inducement has been offered to me other
than as set forth in the Change of Control Agreement, that I am relying on no
other statement or representation by Dura, and that I have not assigned any of
my rights. I have read this Waiver and Release; I have had a full opportunity to
consider it (including the opportunity to consult with an attorney of my
choice); and I understand that by signing it I am giving up important rights,
including any right to xxx under federal, state, or local law. I also verify
that my entering into this Waiver and Release is wholly voluntary.
I further warrant that:
(a) I understand that I am specifically waiving rights or claims
under the federal Age Discrimination in Employment Act, 29
U.S.C. Section 621 et seq.;
(b) I understand that I am not hereby waiving any rights or claims
that may arise after this Waiver and Release is executed by
me;
(c) I understand that this Waiver and Release is being given by me
in exchange for consideration that is more valuable to me than
what I am entitled to without the Change of Control Agreement
and the execution of this Waiver and Release;
(d) I have been advised in writing by Dura that I should have, at
my expense, an attorney of my choice review this Waiver and
Release;
(e) I have been advised by Dura that I may take up to [twenty-one
(21) days OR forty-five (45) days AS DURA MAY DETERMINE AND
PROVIDE] from receipt of this Waiver and Release to determine
whether to execute the same; and
(f) I have been advised by Dura that this Waiver and Release may
be revoked by me within seven (7) days following execution of
this Waiver and Release whereupon this Waiver and Release
shall be null and void.
IN WITNESS WHEREOF, I, , have hereby set my hand this
------------------
day of
------- ------------------,----.
Witnesses:
--------------------------------- -------------------------------------
SCHEDULE TO CHANGE OF CONTROL AGREEMENT
In accordance with Instruction 2 to Item 601 of Regulation S-K, the
following Change of Control Agreements have not been filed as such agreements
are substantially identical in all material respects to the Change of Control
Agreement attached hereto, except as to the party thereto and the other terms
set forth below:
Name of Party Other Terms
Xxxxx Xxxxxx The first sentence of Section 1.6 of Xx. Xxxxxx'x Change
of Control Agreement provides as follows: If Executive
becomes entitled to payment of a lump sum severance
benefit under Subsection 1.1 above, Dura shall, within
10 days after the Termination Date, pay to Executive a
lump sum benefit payment equal to the amount that the
Executive would have been entitled to receive under the
Dura Automotive Systems, Inc. 2003 Supplemental
Executive Retirement Plan (the "SERP") as of the
Termination Date assuming that Executive had 10
additional "Years of Service" (as such term is defined
under the SERP) under the SERP (in excess of his Years
of Service recognized under the SERP and any agreements
which might provide for recognition of enhanced service
under the SERP, limited to an aggregate maximum of 35
years) and those additional 10 Years of Service shall be
counted as years of service of the Executive for
purposes of the Executive's employment agreement (for so
long as such employment agreement remains in effect),
which provides that Executive's Years of Service under
the SERP shall be calculated by multiplying his years of
service by two up to the maximum years of service
allowed by the SERP).
Xxxxx X. Xxxxx NA
Xxxxxxx X. Xxxxxx NA
Xxxxxx X. Xxxxxxx NA
Xxxx X. Xxxxxxxxxxxxx NA
