STAY BONUS AGREEMENT
THIS AGREEMENT, dated as of September 21, 1998, by and between JPE, Inc., a
Michigan corporation ("Corporation"), and Xxxxx X. Xxxxxxx, presently residing
at 00000 Xxxx Xxxxx, Xxxx, Xxxxxxxx ("Executive").
WITNESSETH:
WHEREAS, the Executive is presently employed by the Corporation as Chief
Operating Officer and Chief Financial Officer.
WHEREAS, the Board of Directors ("Board") recognizes that the Executive has
contributed significantly to the business of the Corporation; and
WHEREAS, the Board desires to retain the services of Executive and reward
him for the performance of him duties to the Corporation, without Executive
being influenced by uncertainties of his own situation and further able to
assess and advise the Board during the Corporation's financial restructuring;
and
WHEREAS, the Executive is willing to continue serving the Corporation on
the terms and conditions provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and obligations hereinafter set forth, the parties agree as follows:
1. Operation and Termination of Agreement. This Agreement shall be
effective immediately upon its execution by both parties. This Agreement shall
terminate upon the earlier of full payment being made hereunder pursuant to
Section 2, voluntary termination by Executive other than for Good Reason (as
defined in Section 2(g)), the termination of Executive's employment for Cause
(as defined in Section 1(b) and following the expiration of the applicable cure
periods), or the termination of the Executive's employment because of death.
For purposes of this Agreement:
(a) "Permanent Disability" shall mean that by reason of a physical or
mental disability or infirmity for a continuous period of six (6) months,
the Executive is unable to perform the duties of his position. The
determination of Permanent Disability shall be made by a medical board
certified physician mutually acceptable to the Corporation and the
Executive (or the Executive's legal representative, if one has been
appointed). The Executive agrees to submit to the Corporation such medical
evidence regarding such disability or infirmity as the Corporation may
reasonably request.
(b) "Termination For Cause" shall mean any termination of the employment of
the Executive for "Cause." For purposes of this Agreement, only the
following shall be deemed to constitute "Cause":
(i) the Executive's willful engaging in dishonest or fraudulent
actions or omissions resulting or intended to result directly or
indirectly in any demonstrable material financial or economic harm to
the Corporation, or
(ii) if there has been a breach of the Executive's fiduciary duty to
the Corporation resulting or intended to result directly or indirectly
in personal profit to the Executive;
provided that there shall have been delivered to the Executive at least ten
(10) days prior to the effective date of Termination for Cause a Notice of
Termination (as defined in Section 1(d)(iv)), specifying the particulars
thereof in detail. For purposes of subsection (A) or (B) above, no act or
failure to act on the Executive's part shall be considered "willful" unless
done or omitted to be done by him not in good faith and without reasonable
belief that his action or omission was in the best interests of the
Corporation.
If the Executive's employment shall be terminated by the Corporation for
Cause, the Executive shall have the right to contest such termination only
in accordance with the procedures set forth in Section 7.
(c) "Termination Without Cause" shall mean any termination of the
employment of the Executive by the Corporation other than termination (A)
For Cause, (B) upon death, (C) upon voluntary retirement on or after age 65
or (D) because of Permanent Disability.
(d) Any termination of the Executive's employment by the Corporation or by
the Executive (other than upon death) shall be communicated by written
"Notice of Termination" to the other party hereto. "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision
relied upon in this Agreement and shall 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.
(e) The "Date of Termination" shall mean (A) if the Executive's employment
is terminated by his death, the date of his death, (B) if the Executive's
employment is terminated due to his Permanent Disability, the date that is
thirty (30) calendar days after Notice of Termination is given, (C) if the
Executive's employment is terminated pursuant to a Termination For Cause,
the date specified in the Notice of Termination, (D) if by terminated by
voluntary retirement on or after age 65, the date of retirement, and (E) if
termination by the Executive's employment is a Termination Without Cause,
the date provided by the Notice of Termination which, in the case of a
termination by the Corporation, shall not be less than thirty (30) calendar
days and, in the case of a termination by the Executive, shall not be less
than ten (10) calendar days nor more than sixty (60) calendar days,
respectively, after the date the Notice of Termination is given.
2. Stay Bonus.
(a) Executive shall be entitled to and shall receive a stay bonus ("Stay
Bonus") of Five Hundred Twenty-Five Thousand Dollars ($525,000.00), payable
as provided in subsection (b) below.
(b) Executive shall receive payment of the Stay Bonus upon the earlier to
occur of:
(1) The dates set forth in Section 2(c) below;
(2) The completion of a debt restructuring on behalf of the
Corporation:
(3) The emergence of the Corporation from a bankruptcy proceeding; and
(4) A Change in Control of the Corporation, as defined in Section
2(d).
(c) Payment Dates. Subject to prior payment as specified in Section
2(b)(2), (3), or (4), payments of the Stay Bonus shall be made in three
equal installments of One Hundred Seventy-Five Thousand Dollars
($175,000.00) on each of December 31, 1998, June 30, 1999 and January 1,
2000.
(d) Change of Control.
(1) For the purpose of this Agreement, a Change of Control of the
Corporation ("Change of Control") shall be deemed to have occurred if
any of the following events shall have occurred:
(i) any Person (as defined below), other than Xxxx Xxxxxxxxxxxx,
is or becomes the beneficial owner (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), directly or indirectly, of securities of the
Corporation representing 10% or more of either the then
outstanding shares of common stock of the Corporation or the
combined voting power of the Corporation's then outstanding
securities; or
(ii) a change in the membership of the Board as it existed in the
immediately preceding calendar year (the "Incumbent Board") such
that the directors of the Incumbent Board no longer constitute a
majority of the Board; provided that any individual becoming a
director in a subsequent year whose election, or nomination for
election, by the Company's shareholders was approved by a vote of
at least a majority of the directors then comprising the
Incumbent Board shall be, for purposes of this Agreement,
considered as though such individual were a member of the
Incumbent Board; or
(iii) the shareholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation or there
is consummated an agreement for the sale or disposition by the
Corporation of all or substantially all of the Corporation's
assets.
(2) Person. For the purpose of this Agreement, "Person" shall have the
meaning given in Section 3(a)(9) of the Exchange Act, as modified and
used in Sections 13(d) and 14(d) thereof, except that such term shall
not include the Corporation or any of its subsidiaries.
(e) Acceleration of Payments. (i) In the event a transaction described in
Sections 2(b)(2), (3) or (4) occurs prior to the Executive's receipt of all
of the Stay Bonus provided for in Section 2(c) above, or (ii) if at any
time during the period of this Agreement the Executive's employment is
terminated on account of his Permanent Disability, or by the Executive for
Good Reason (as defined in 2(g) below), then the Corporation shall pay to
Executive, in one lump sum, the unpaid portion of the Stay Bonus promptly
upon the occurrence of any such event, but in no event more than fifteen
(15) days following the occurrence of any such event.
(f) Termination of Payments. Payments of the Stay Bonus shall terminate
only in the event (i) of Executive's death or (ii) Executive's employment
with the Corporation is terminated for "Cause" as provided in Section 1(b),
following the expiration of all appropriate cure periods.
(g) Good Reason. For the purpose of this Section 2 of the Agreement, "Good
Reason" shall mean the occurrence (without the Executive's written consent)
of any one of the following events:
(i) either (1) a significant alteration, as reasonably determined by
the Executive, in the nature of the Executive's reporting
responsibilities, title other than "Chief Operating Officer and Chief
Financial Officer," duties or offices as in effect immediately prior
to the Change of Control or Pending Change of Control, provided, that
during any Pending Change of Control, Executive's duties and offices
may be changed by the Corporation to address the needs of the
Corporation taking into consideration Executive's capabilities and
level of experience; or (2) any diminution of Executive's Base Salary
in effect on the date of this Agreement;
(ii) the requirement by the Corporation that the Executive's principal
place of employment be relocated more than ten (10) miles from his
place of employment on the date of this Agreement;
(iii) either (1) the discontinuance of, or any amendment to, any
compensation plan which is adverse to the Executive and in which the
Executive participated on the date of this Agreement, including but
not limited to the Corporation's 1993 Stock Incentive Plan unless a
substantially equivalent substitute or alternative plan has been made
available to the Executive, or (2) the failure by the Corporation to
continue the Executive's participation therein (or in such substitute
or alternative plan(s)) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of the
Executive's participation relative to other participants, as existed
at the date of this Agreement; or
(iv) the discontinuance of any benefits enjoyed by the Executive under
any of the Corporation's pension, life insurance, medical, health and
accident, or disability plans in which the Executive was participating
at the date of this Agreement, the taking of any action by the
Corporation that would directly or indirectly materially reduce any of
such benefits enjoyed by the Executive at the date of this Agreement,
or the failure by the Corporation to provide the Executive with the
number of paid vacation days to which he is entitled on the basis of
years of service with the Corporation in accordance with the
Corporation's normal vacation policy in effect at the date of this
Agreement.
3. Successors; Binding Agreement.
(a) The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation, by
agreement in form and substance satisfactory to the Executive, to expressly
assume and agree to perform this Agreement in the same manner and to the
same extent that the Corporation would be required to perform this
Agreement if no such succession had taken place. Failure of the Corporation
to obtain such agreement prior to a date that is on or before the date of
the Change of Control shall be a breach of this Agreement and shall entitle
the Executive to compensation from the Corporation in the same amount and
on the same terms as he would receive hereunder if he were to terminate his
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which such Change of Control becomes effective shall
be deemed the Date of Termination. As used in this Agreement, "Corporation"
shall mean the Corporation as previously defined and any successor to its
business and/or assets as aforesaid, which successor executes and delivers
the agreement provided for in this Section 3 or which otherwise becomes
bound by all the terms and provisions of this Agreement by operation of
law.
(b) This Agreement and all rights of the Executive hereunder 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 should die after his
termination while any amounts would still be payable to him hereunder if he
had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee, or other designee or, if there be no
designee, to the Executive's estate.
4. Notices. Any notice required or permitted by this Agreement shall be in
writing, sent by registered or certified mail, return receipt requested, or by a
national overnight delivery service, addressed to the Board and the Corporation
at the Corporation's then principal office, or to the Executive at the address
set forth in the preamble, or to such other address or addresses as any party
hereto may from time to time specify in writing for the purpose in a notice
given to the other parties in compliance with this Section 4. Notices shall be
deemed given when received.
5. Indemnification and Insurance; Legal Expenses. The Corporation shall
indemnify and hold harmless the Executive (and his legal representatives or
other successors) if he is a party, or is threatened to be made a party to any
threatened, pending or completed action, suit, proceeding or claim, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that the Executive is or was
a director, officer or employee of the Corporation, against expenses (including
reasonable attorney's fees), costs, judgments, fines and other amounts paid in
settlement (if such settlement is approved by the Board of Directors) actually
and reasonably incurred by him in connection with such action, suit or
proceeding to the fullest extent permitted by law. The Corporation shall provide
the Executive (including his heirs, executors and administrators) with coverage
under a standard directors' and officer's liability insurance policy, which
shall be in an amount not less than the directors' and officers' insurance
available to the Executive on the date hereof.
6. Disputes.
(a) The administrator for purposes of this Agreement shall be the
Corporation ("Administrator"), whose address is 000 Xxxxxxxxxx Xxxxx, Xxxxx
000, Xxx Xxxxx, XX 00000, and whose telephone number is (000) 000-0000. The
"Named Fiduciary" as defined in Section 402(a)(2) of ERISA, also shall be
the Corporation. The Corporation shall have the right to designate one or
more employees of the Corporation as the Administrator and the Named
Fiduciary at any time, and to change the address and telephone number of
the same. The Corporation shall give the Executive written notice of any
change in the Administrator and Named Fiduciary, or in the address or
telephone number of the same.
(b) The Administrator shall make all determinations as to the right of any
person to receive benefits under the Agreement. Any denial by the
Administrator of a claim for benefits by the Executive ("the claimant")
shall be stated in writing by the Administrator and delivered or mailed to
the claimant within ten (10) days after receipt of the claim, unless
special circumstances require an extension of time for processing the
claim. If such an extension is required, written notice of the extension
shall be furnished to the claimant prior to the termination of the initial
ten (10) day period. In no event shall such extension exceed a period of
ten (10) days from the end of the initial ten (10) day period. Any notice
of denial shall set forth the specific reasons for the denial, specific
reference to pertinent provisions of this Agreement upon which the denial
is based, a description of any additional material or information necessary
for the claimant to perfect his claim, with an explanation of why such
material or information is necessary, and any explanation of claim review
procedures, written to the best of the Administrator's ability in a manner
that may be understood without legal or actuarial counsel.
(c) A claimant whose claim for benefits has been wholly or partially denied
by the Administrator may request on or before the tenth calendar day
following the date of such denial a review of the denial in a written
notice to the Administrator. The claimant shall be entitled to submit such
issues or comments in writing or otherwise, as he shall consider relevant
to a determination of the claim, and he may include a request for a
personal hearing before the Administrator. Prior to submitting his request,
the claimant shall be entitled to review such documents as the
Administrator shall agree are pertinent to the claim. The claimant may, at
all stages of review, including arbitration provided for in Section 6, be
represented by counsel of his choice, legal or otherwise, and the
reasonable fees and expenses of the counsel shall be borne by the
Corporation. All requests for review shall be promptly resolved. The
Administrator's decision with respect to any such review shall be set forth
in writing and shall be mailed to the claimant not later than ten (10) days
following receipt by the Administrator of the claimant's request for review
unless special circumstances, such as the need to hold a hearing, require
an extension of time for processing, in which case the Administrator's
decision shall be so mailed not later than twenty (20) days after receipt
of such request.
(d) A claimant who has followed the procedure in paragraphs (b) and (c) of
this section, but who has not obtained full relief on his claim for
benefits, may, within sixty (60) days following his receipt of the
Administrator's written decision on review, apply in writing to the
Administrator for binding arbitration of the claim before an arbitrator
mutually acceptable to both parties, the arbitration to be held in Ann
Arbor, Michigan, in accordance with the commercial arbitration rules of the
American Arbitration Association, as then in effect. If the parties are
unable to mutually agree upon an arbitrator, then the arbitration
proceedings shall be held before three (3) arbitrators, one (1) of whom
shall be designated by the Corporation, one (1) of whom shall be designated
by the claimant and the third of whom shall be designated mutually by the
first two (2) arbitrators in accordance with the commercial arbitration
rules referenced above. The sole authority of the arbitrator(s) shall be to
interpret and apply the provisions of this Agreement; not to change, add
to, or subtract from, any of its provisions. The arbitrator(s) shall have
the power to compel attendance of witnesses at the hearing. Any court
having jurisdiction may enter a judgment based upon the arbitration.
7. No Mitigation. The Executive shall not be required to mitigate the
amount of any payments provided for by this Agreement by seeking employment or
otherwise, nor shall the amount of any payment or benefit provided in this
Agreement be reduced by any compensation or benefit earned by the Executive
after his termination.
8. No Set-Off. The Corporation's obligation to make any payments provided
for by this Agreement are absolute and unconditional and shall not be affected
by any circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense, claim of breach of contract or other right which the
Corporation may have against the Executive or others.
9. Nonalienation of Benefits. Except as may be contrary to applicable law,
no sale, transfer, alienation, assignment, pledge, collateralization or
attachment of any benefits under this Agreement shall be valid or recognized by
the Corporation.
10. ERISA. This Agreement is an unfunded compensation arrangement for a
member of a select group of the Corporation's management employees and any
applicable ERISA exemptions for a "top hat" arrangement shall be applicable to
this Agreement.
11. Reporting and Disclosure. The Corporation, from time to time, shall
provide government agencies with reports concerning this Agreement as may be
required by law, and the Corporation shall provide the Executive with such
disclosure concerning this Agreement as may be required by law or as the
Corporation may deem appropriate.
12. Effect on Prior Agreements and Existing Benefits Plans. This Agreement
contains the entire agreement of the parties relating to the subject matter
hereof, and except for that certain Indemnification Agreement between the
Corporation and Executive dated February 8, 1995, which shall remain in full
force and effect, supersedes any prior written or oral agreements or
understandings relating to the same subject matter including that certain
Executive Severance Agreement dated February 20, 1998, except that this
Agreement shall not affect or operate to reduce any benefit or compensation
inuring to the Executive of a type provided elsewhere including, but not limited
to, any pension benefits.
13. Modification and Waiver. No modification or amendment of this Agreement
shall be valid unless in writing and signed by or on behalf of the parties
hereto. A waiver of the breach of any term or condition of this Agreement shall
not be deemed to constitute a waiver of any subsequent breach of the same or any
other term or condition.
14. Severability. This Agreement is intended to be performed in accordance
with, and only to the extent permitted by, all applicable laws, ordinances,
rules and regulations. If any provision of this Agreement, or the application
thereof to any person or circumstance, shall, for any reason and to any extent,
be held invalid or unenforceable, such invalidity and unenforceability shall not
affect the remaining provisions hereof and the application of such provisions to
other persons or circumstances, all of which shall be enforced to the greatest
extent permitted by law.
15. Withholding. The compensation provided to the Executive pursuant to
this Agreement shall be subject to any withholdings and deductions required by
any applicable income and employment federal, state and local tax laws. In the
event the Corporation fails to withhold such sums for any reason, it may require
the Executive to promptly remit to the Corporation sufficient cash to satisfy
applicable income and employment withholding taxes.
16. Payment Upon Death. Any amounts payable to the Executive hereunder
after the death of the Executive shall be paid to the Executive's estate or
legal representative.
17. Headings. The headings in this Agreement are inserted for convenience
of reference only and shall not be a part of or control or affect the meaning of
any provision hereof.
18. Late Payment of Benefits. If any amount required to be paid by the
Corporation to the Executive hereunder is not paid when due, the Corporation
shall pay such amount to the Executive together with interest at the prime rate
as announced from time to time by Comerica Bank (or its successor) plus two
percentage points, for the period from and after the tenth (10th) day following
the date on which payment was due to and including the date of payment.
19. Attorney Consultation. The Executive has had an opportunity to consult
with an attorney of his choosing prior to executing this Agreement.
20. Governing Law. To the extent not governed by Federal law, this
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Michigan.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the day and year first above written.
JPE, INC.
By: /s/ Xxxxx X. Xxxxx
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Title: President
EXECUTIVE
By: /s/ Xxxxx X. Xxxxxxx
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