EXHIBIT 4
FORM OF
EMPLOYMENT AGREEMENT
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This Agreement, effective as of this ___ day of October, 1997 (the
"Effective Date"), by and between Shelter Components Corporation, an Indiana
corporation ("Employer"), and ______________ a resident of __________ County,
Indiana ("Executive").
WITNESSETH
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WHEREAS, Executive is employed by Employer as its Executive
____________________ and Executive has made valuable contributions to the
manufacturing operations and financial strength of Employer; and
WHEREAS, Employer desires to encourage Executive to continue to make
such contributions to Employer's overall profitability and strength; and
WHEREAS, Executive desires to be assured of a secure minimum
compensation from Employer for his services; and
WHEREAS, Employer desires to assure the continued employment services
of Executive on an objective and impartial basis and without distraction; and
WHEREAS, Employer recognizes that when faced with a proposal for a
change of control of Employer, Executive will have a significant role in helping
the Board of Directors of Employer assess the options and advising the Board of
Directors on what is in the best interests of Employer's shareholders; and
WHEREAS, Employer desires to provide fair and reasonable benefits to
Executive on the terms and conditions set forth in this Agreement; and
WHEREAS, Employer desires reasonable protection of its confidential
business and customer information which it has developed over the years at
substantial expense and assurance that Executive will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer.
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and undertakings herein contained and the continued employment of the
Executive, Employer and Executive, each intending to be legally bound, covenant
and agree as follows:
1. Upon the terms and conditions set forth in this Agreement, Employer
employs Executive and Executive accepts such employment.
2. Executive agrees to serve as Employer's Executive _________________
or an executive position with Employer of similar stature ("Job
Responsibilities"); provided, however that such duties shall be performed in or
from the offices of Employer and shall be of a character similar to those
previously performed by Executive and generally associated with the position
held by Executive. Employer shall not, without the written consent of Executive,
relocate or transfer Executive to a location more than fifty (50) miles from
Employer's current offices. Executive shall serve the Employer and its
subsidiaries in substantially the same manner and to substantially the same
extent as Executive rendered his services to Employer before the date hereof.
Executive shall devote his full business time and best efforts to Employer's
business and shall not engage in any other related business without the written
consent of Employer.
3. The term of this Agreement shall begin on the "Effective Date"
and shall end on the date which is three (3) years following such date;
provided, however, that such term shall be extended for an additional one (1)
year term on each anniversary of the Effective Date (the "Anniversary Date") so
that the term is three (3) years on each Anniversary Date, unless either party
hereto gives written notice to the other party not to so extend within ninety
(90) days prior to each such Anniversary Date, in which case no further
extension shall occur and the term of this Agreement shall end on the last day
of the term as it existed on the date that the notice of termination was given.
A notice not to so extend given by Employer shall be a termination of employment
prior to the expiration of the Term of this Agreement, for all purposes,
including Section 7 and Section 8 of this Agreement.
4. Executive shall receive an annual salary determined by the
Employer's Board of Directors, but not less than the salary rate at the
Effective Date, payable at regular intervals in accordance with Employer's
normal payroll practices now or hereafter in effect ("Base Compensation").
Employer may consider and declare from time to time adjustments in the
compensation it pays Executive and thereby adjustments in his Base Compensation.
A reduction in Executive Base Compensation can only be made prior to a Change in
Control as part of an Employer cost reduction program for substantially all
executives of the Employer. Executive shall also be entitled to participate in,
and receive compensation ("Bonus Program Compensation") under, the bonus
programs generally available to Company executives as specified under the terms
of such programs, including the EVA bonus bank (the "EVA Bonus Program"), which
Bonus Program Compensation can be reduced only if part of an Employer cost
reduction program applicable to substantially all executives of the Employer. A
reduction in actual amount of bonus payout during employment under any Bonus
Program in effect as of the Effective Date shall not be a reduction in Bonus
Program Compensation if it is pursuant to the pre-existing bonus formula in
effect on the Effective Date unless otherwise agreed to by the Executive. The
sum of Base Compensation and the total EVA Bonus Program targeted bonus amount
covering the Executive shall be "Annual Compensation."
For purposes of this Agreement, a "Change of Control" shall be deemed
to have occurred if during, or following the consummation of, a stock purchase
program, tender offer, exchange offer, merger, consolidation, sale of assets,
contested election, or any combination of the foregoing transactions, any
person, entity or group of persons acting in concert (other than the Executive),
directly or indirectly (1) acquires ownership of or the power to vote in excess
of twenty percent (20%) of the voting securities of Employer, or (2) otherwise
acquires effective control of the business and affairs of Employer; provided,
however, that a Change of Control shall not be deemed to occur as a result of
any acquisition of shares of Employer capital stock by Executive, any affiliate
of Executive, or any voting trust(s) to which Executive's capital stock is
transferred or a sale of stock or stock buy-back by Employer.
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5. So long as Executive is employed by Employer pursuant to this
Agreement, he shall be included as a participant in all present and future
employee benefit, retirement, and compensation plans generally available to
executive employees of Employer, consistent with his Annual Compensation and his
Job Responsibilities including, without limitation, Employer's 401(k) plan,
stock incentive plan, health and medical insurance plans, executive deferred
compensation plan, and group life insurance plans (collectively, the "Benefit
Plans"), each of which Employer agrees to continue in effect on terms no less
favorable than those in effect as of the Effective Date (as permitted by law)
and throughout the Term of this Agreement.
6. Executive shall receive reimbursement from Employer for all
reasonable business expenses incurred in the course of his employment by
Employer, upon submission to Employer of written vouchers and statements for
reimbursement. Executive shall attend those professional meetings, trade shows,
conventions, and/or similar functions that he deems appropriate and useful for
purposes of keeping abreast of current developments in the industry and/or
promoting the interests of Employer. Employer shall continue in effect vacation
policies applicable to Executive no less favorable from his point of view than
those vacation policies in effect on the Effective Date. Executive shall be
entitled to office space and working conditions no less favorable than those in
effect for him on the Effective Date.
7. Subject to the respective continuing obligations of the parties,
including but not limited to those set forth in Section 8 hereof, Executive's
employment by Employer and any of its subsidiaries may be terminated prior to
the expiration of the Term of this Agreement as follows:
(A) Termination For Cause. Employer, by the action of its Board of
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Directors and upon written notice to Executive, may terminate
Executive's employment with Employer for cause. For purposes of
this Subsection 7(A), "cause" shall be defined as (i) fraud or
willful misconduct, (ii) intentional and continuing material
breach of fiduciary duty involving personal profit, (iii)
continuing intentional material failure to perform stated
duties, (iv) conviction of a felony violation, or (v) any
intentional and continuing material breach of any term,
condition or covenant of this Agreement.
(B) Termination Without Cause. Employer, by action of its Board of
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Directors and upon written notice to Executive which notice may
be waived by Executive, may terminate Executive's employment
with Employer without cause at any time.
(C) Quit for Good Reason. Executive, by written notice to Employer,
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may terminate his employment with Employer for Good Reason. For
purposes of this Subsection 7(C), "Good Reason" shall be defined
as (i) any action by Employer's Board of Directors to remove the
Executive as Executive Vice President - Manufacturing of
Employer and its subsidiaries, except where the Employer's Board
of Directors properly acts to remove Executive from such office
for "cause " as defined in Subsection 7(A) hereof, (ii) any
action by Employer's Board of Directors to materially modify
Executive's Job Responsibilities without Executive's written
consent and Executive's resignation within one (1) year of such
change in responsibilities, (iii) any failure of Employer to
obtain (x) the assumption of the
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obligation to perform this Agreement by any successor, assignee,
or distributee of all or substantially all of Employer's stock
or assets (on a consolidated basis with those of its
subsidiaries) or (y) the reaffirmation of such obligation by
such successor, assignee, or distributee, as contemplated in
Section 16 hereof, (iv) any material breach by Employer of a
term, condition or covenant of this Agreement which is not cured
within thirty (30) days of such breach and Executive's
resignation within one (1) year of such breach, (v) any
reduction in Base Compensation or Bonus Program Compensation
after a Change in Control, or (vi) any liquidation, dissolution,
or reorganization of Employer by the Employer's Board of
Directors.
(D) Quit Without Good Reason. Executive may terminate his employment
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with Employer without Good Reason.
(E) Retirement, Death or Disability. Executive's employment with
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Employer shall terminate in the event of Executive's retirement,
death or permanent disability. For purposes hereof, "permanent
disability" shall be defined as Executive's permanent inability
by reason of illness or other physical or mental incapacity to
perform the duties required by his employment for any
consecutive one hundred eighty (180) day period and Executive is
determined to be disabled under Employer's long term disability
plan, if any, provided that notice of any termination by
Employer because of Executive's "permanent disability" shall
have been given to Executive prior to the full resumption by him
of the performance of such duties.
8. In the event of Termination of Executive's employment with the
Employer pursuant to Section 7 hereof, compensation shall continue to be paid by
Employer to Executive as follows:
(A) If an Executive's employment with the Company terminates prior
to a Change in Control within the term of this Agreement, then:
(i) if the Executive's termination is as described in
Section 7(A) or 7(D) (Termination for Cause or Quit
Without Good Reason), Executive shall be entitled to
receive his Annual Compensation through his date of
termination for Termination for Cause and an additional
six (6) months Annual Compensation for Quit Without Good
Reason and shall continue to receive (i) his health and
dental insurance and a payout of his accrued EVA Bonus
Program bank over twelve (12) months during which
Executive shall refrain from "competition" as specified
in Section 9. Such benefits and payments shall cease and
be forfeited if Executive fails to comply with the
requirements of Section 9 during such twelve (12) month
period;
(ii) if the Executive's termination is as described in
Section 7 (B) or 7(C) (Termination Without Cause or Quit
for Good Reason), Executive shall be entitled to receive
continuation of (i) his Annual Compensation, (ii)
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employee benefits (on the same terms and conditions as
available to employees of the Company generally) and
(iii) a payout of his accrued EVA Bonus Program bank
over a period of twelve (12) months following
termination, during which time Executive shall refrain
from " competition" as specified in Section 9. All
payments and benefits above shall terminate if Executive
engages in competition during the twelve (12) months
following termination of employment;
(iii) if Executive's termination is a result of Executive's
"permanent disability" described in Section 7(E), then
Executive shall be entitled to receive (I) a
continuation of his Annual Compensation and employee
benefits (on the same terms and conditions as available
to employees of the Company generally) and a payout of
his accrued EVA Bonus Program bank one (1) year, (II) an
additional one (1) year of Annual Compensation paid in
installments over four (4) years following termination
(25 % of Annual Compensation each year), and (III) an
extension of his right to exercise any stock options for
a period of four (4) years.
(B) If an Executive's employment with the Company terminates after a
Change in Control within the term of this Agreement, then:
(i) if the Executive's termination is as described in
Section 7(D) (Quit Without Good Reason), Executive shall
be entitled to receive his continuation of (i) his
Annual Compensation, (ii) employee benefits (on the same
terms and conditions as available to employees of the
Company generally) and (iii) a payout of his accrued EVA
Bonus Program bank through the date of termination
and for the six (6) months thereafter, and, Executive
shall refrain from "competition" as specified in Section
9 for a period of twelve (12) months. All payments and
benefits above shall terminate if Executive engages in
competition during the twelve (12) months following
termination of employment;
(ii) if the Executive's termination is as described in
Section 7(B) or 7(C) (Termination Without Cause or Quit
for Good Reason), Executive shall be entitled to receive
continuation of (i) his Annual Compensation, (ii)
employee benefits (on the same terms and conditions as
available to employees of the Company generally) and
(iii) a payout of his accrued EVA Bonus Program Bank for
a period of twelve (12) months following termination,
during which time Executive shall refrain from
"competition" as specified in Section 9. All payments
and benefits above shall terminate if Executive engages
in competition during the twelve (12) months following
termination of employment;
(iii) if Executive's termination is a result of Executive's
"permanent disability" described in Section 7(E), then
Executive shall be entitled to receive (I) a
continuation of his Annual Compensation and employee
benefits on the same terms and conditions as available
to employees of the Company
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generally) a payout of his accrued EVA Bonus Program bank one
(1) year, (II) an additional one (1) year of Annual
Compensation paid in installments over four (4) years
following termination (25 % of Annual Compensation each year),
and (III) an extension of his right to exercise any stock
options for a period of four (4) years;
(iv) if the Executive's termination is as described in Section 7(A)
(Termination for Cause), Executive shall be entitled to
receive his Annual Compensation through his date of
termination and his health and dental insurance and a payout
of his accrued EVA Bonus Program bank over a period of twelve
(12) months during which Executive shall refrain from
"competition" as specified in Section 9. Such benefits and
payments shall cease and be forfeited if Executive fails to
comply with the requirements of Section 9 during such twelve
(12) month period.
(C) In the event that any payment or benefit provided to Executive under
this Section 8, or under any other plan or arrangement of Employer,
including any such plan or arrangement providing for the grant of stock
options or the transfer or sale of stock to Executive, would be subject
to the imposition of an excise tax under Section 4999 of the Internal
Revenue Code (a "Parachute Payment"), payments or benefits under this
Agreement shall be reduced to an amount which is equal to one thousand
dollars ($1,000) less than the amount at which payments under this
Agreement or any other payments from the Employer to the Executive are
determined to be Parachute Payments as certified by the Company's
auditors or other outside experts retained to make such determination.
Company shall use its best efforts to ensure that all amounts due under
this Agreement shall be paid and not constitute Parachute Payments.
(D) Payments and benefits under this Section 8 shall not be subject to
reduction for any amounts and benefits that Executive receives or could
receive from any other employment following termination.
(E) Executive may, at his option, elect to receive all amounts under this
Section 8 paid in a single lump sum equal to the percent value of such
amounts (using the interest rate specified in the Company's pension
Plan).
9. In order to induce Employer to enter into this Agreement, Executive
hereby agrees as follows:
(A) Unless otherwise required to do so by law, including the order of a
court or governmental agency, Executive shall not during the term or
thereafter divulge or furnish any trade secrets (as defined in IND.,
CODE (S)24-2-3-2) of Employer or any confidential information acquired
by him while employed by Employer concerning the policies, plans,
procedures or customers of Employer to any person, firm or corporation,
other than Employer or upon its written request, or use any such trade
secret or confidential information directly or indirectly for
Executive's own benefit or for the benefit of any person, firm or
corporation other than
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Employer, since such trade secrets and confidential information are
confidential and shall at all times remain the property of Employer.
(B) If Employer's post-employment obligations are determined in accordance
with any subsection of Section 8, then for the period specified in the
subsection of Section 8 governing the Employer's post-employment
obligations, the Executive shall not (i) compete, directly or
indirectly, with the business of Employer (or in any business
involving, directly or indirectly, the manufacture or sale of
manufactured homes or recreational vehicles) as conducted within the
same geographic areas served by Employer during the Term (each such
person, firm or entity which so competes is referred to as
"Competitor"); (ii) solicit or accept business for or on behalf of any
Competitor; (iii) solicit, induce or persuade, any person to work for
or provide services to or provide financial assistance to, any
Competitor; (iv) solicit or accept, on behalf of, or for the benefit
of, any Competitor, any business from any person, firm or entity which
during the Term of this Agreement was a vendor or supplier to or
subcontractor for, or commercial purchaser from, Employer; or (v)
solicit any employee to leave the employment of Employer for any
reason.
(C) If Executive's employment by Employer is terminated for any reason by
either Executive or Employer, Executive will turn over immediately
thereafter to Employer all business correspondence, letters, papers,
reports, customers' lists, financial statements, records, drawings,
credit reports or other confidential information or documents of
Employer or its affiliates in the possession or control of Executive,
all of which writing are and will continue to be the sole and exclusive
property of Employer or its affiliates.
10. Any termination of Executive's employment with Employer as contemplated
by Section 7 hereof, except in the circumstances of Executive's death, shall be
communicated by written "notice of termination" by the terminating party to the
other party hereto. Any "notice of termination" shall indicate the specific
provisions of this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for such
termination.
11. Anything to the contrary contained herein notwithstanding amounts
payable to or for the benefit of Executive pursuant to Section 8 shall be so
paid whether or not deductible by Employer for federal income tax purposes,
except as provided in Section 8(C).
12. If a dispute arises regarding this Agreement, said dispute shall be
resolved by binding arbitration determined in accordance with the rules of the
American Arbitration Association and if Executive obtains a final award in his
favor or his claim is settled by Employer prior to the rendering of an award by
such arbitration, all reasonable legal fees and expenses incurred by Executive
in contesting or disputing any such termination or otherwise pursuing his claim
shall be paid by Employer, to the extent permitted by law. If a dispute arises
regarding other provisions of this Agreement, including enforcement of the
confidentiality and noncompetition provisions hereof, then such shall be heard
only by the judge and not by a jury, in any court of general jurisdiction in
Elkhart County, Indiana, to which such sole and exclusive
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jurisdiction each party irrevocably consents. Each party agrees not to assert
and hereby waives any right of removal, consolidation or joinder with any other
action, or any transfer by reason of preferred venue. The prevailing party shall
be entitled to its costs, expenses and reasonable attorney's fees, not to exceed
$20,000. It is provided, however, that in either of arbitration or judicial
proceedings, if it is determined that Employer breached any of the material
terms or conditions of this Agreement, then as liquidated damages, Executive
shall be entitled to receive not less than the payments and benefits described
in Section 8. Executive understands that Employer would not have an adequate
remedy at law for the material breach or threatened breach by Executive of any
one or more of the covenants set forth in this Agreement and agrees that, in the
event of any such material breach or threatened breach, Employer may, in
addition to other remedies which may be available to Employer, file a suit in
equity, without the necessity of posting bond, to enjoin Executive from the
breach or threatened breach of such covenants.
13. Should Executive die after termination of his employment with Employer
while any amounts are payable to him hereunder, this Agreement shall inure to
the benefit of and be enforceable by Executive's executors, administrators,
heirs, distributees, devisees and legatees and all amounts payable hereunder
shall be paid in accordance with the terms of this Agreement to Executive's
devisee, legatee or other designee or, if there is no such designee, to his
estate.
14. For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been given
when delivered or mailed by United States first class mail, courier or hand
delivery, addressed as follows:
If to Executive:
If to Employer: Shelter Components Corporation
Attention: General Counsel
0000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000-0000
or to such address as either party hereto may have furnished to the other party
in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
15. The validity, interpretation, and performance of this Agreement shall
be governed by the laws of the State of Indiana without regard to conflicts of
laws.
16. Employer shall require any successor, assignee, distributee or other
transferee of all or substantially all of its or its subsidiaries' assets or
business ("Succession") (whether direct or indirect, by purchase, merger,
dissolution, liquidation, consolidation or otherwise) by agreement in form and
substance satisfactory to Executive to expressly assume and agree to perform
this Agreement in the same manner and same extent that Employer would be
required to perform it if no such Succession had taken place. Failure of
Employer to obtain such agreement prior to the effectiveness of any such
Succession shall be a material intentional breach of this Agreement and shall
entitle Executive to terminate his employment with Employer pursuant to
Subsection 7(C) hereof. As used in this Agreement, "Employer" shall mean
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Employer and its subsidiaries from time to time and any successor to its or
their business or assets as aforesaid.
17. No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
Executive and Employer. 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 dissimilar provisions or conditions at the same or any prior or
subsequent time. No agreements or representation, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
18. The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provisions of this
Agreement which shall remain in full force and effect.
19. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same agreement.
20. This Agreement is personal in nature and neither party hereto shall,
without consent of the other, assign or transfer this Agreement or any rights or
obligations hereunder except as provided in Section 13 and Section 16 above.
Without limiting the foregoing, Executive's right to receive compensation
hereunder shall not be assignable or transferable, whether by pledge, creation
of a security interest or otherwise, other than a transfer by his will or by the
laws of descent or distribution as set forth in Section 13 hereof, and in the
event of any attempted assignment or transfer contrary to this paragraph,
Employer shall have no liability to pay any amounts so attempted to be assigned
or transferred.
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IN WITNESS WHEREOF, the parties have caused the Agreement to be executed
and delivered this ______ day of October, 1997.
"Executive" "Employer"
SHELTER COMPONENTS CORPORATION
By:
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Name: Its:
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CONSENT:
-------
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On behalf of the Independent
Committee of the Board of Directors
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