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Exhibit 10.25
SALARY CONTINUATION AGREEMENT
This Agreement is made as of this ___ day of __________, 19___, by and between
Universal Electronics Inc., a Delaware corporation (the "Corporation") and
_________________________ (the "Executive").
WITNESSETH:
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WHEREAS, the Corporation, on behalf of itself and its subsidiaries,
wishes to attract and retain well-qualified executive and key personnel and to
assure both itself and the Executive of continuity of management in the event of
any actual or threatened Change in Control (as defined in Paragraph 2) of the
Corporation; and
WHEREAS, to achieve this purpose, the Board of Directors of the
Corporation considered and approved this Agreement to be entered into with the
Executive as being in the best interests of the Corporation and its
stockholders;
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereto agree as follows:
1. OPERATION OF AGREEMENT. The "effective date of this Agreement" shall
be the date on which a Change in Control occurs, and this Agreement
shall not have any force or effect whatsoever prior to that date.
2. CHANGE IN CONTROL. For the purposes of this Agreement, a "Change in
Control" shall be deemed to occur when and only when the first of the
following events occurs:
a. Any "person" or "group" (as such terms are used in Sections
3(a), 3(d), and 14(d) of the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated
thereunder (the "1934 Act"), other than (i) a trustee or other
fiduciary holding securities under any employee benefit plan
of the Corporation or any of its subsidiaries or (ii) a
corporation owned directly or indirectly by the stockholders
of the Corporation in substantially the same proportions as
their ownership of stock in the Corporation, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the 1934
Act)), directly or indirectly, of securities of the
Corporation representing 20% or more of the total voting power
of the then outstanding securities of the Corporation entitled
to vote generally in the election of directors (the "Voting
Stock"); or
b. Individuals who are members of the Incumbent Board, cease to
constitute a majority of the Board of Directors of the
Corporation; or
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c. (i) The merger or consolidation of the Corporation with any
other corporation or entity, other than a merger or
consolidation which would result in the Voting Stock
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 80% of the
total voting power represented by the Voting Stock or the
voting securities of such surviving entity outstanding
immediately after such merger or consolidation, (ii) the sale,
transfer or disposition of all or substantially all of the
Corporation's assets to any other corporation or entity, or
(iii) the dissolution or liquidation of the Corporation.
The term "Incumbent Board" shall mean (i) the members of the Board of
Directors on May 19, 1995, and (ii) any individual who becomes a member
of the Board of Directors after May 19, 1995, if his or her election or
nomination for election as a director was approved by the affirmative
vote of a majority of the then Incumbent Board. For purposes of this
Agreement a Change in Control approved by the Incumbent Board will be
deemed a "friendly acquisition" and a Change in Control not approved by
the Incumbent Board will be deemed a "hostile acquisition."
3. EMPLOYMENT. The Corporation hereby agrees to continue the Executive in
its employ and/or the employ of one or more of its subsidiaries and the
Executive hereby agrees to remain in the employ of the Corporation
and/or such subsidiaries, for the period commencing on the effective
date of this Agreement and ending on the earlier to occur of the first
anniversary of such date in the case of a friendly acquisition, or the
third anniversary of such date in the case of a hostile acquisition
(the "employment period"), to exercise such authority and perform such
executive duties as are commensurate with the authority being exercised
and duties being performed by the Executive immediately prior to the
effective date of this Agreement, which services shall be performed at
a location within the metropolitan area in which the Executive was
employed immediately prior to the effective date of this Agreement.
During the employment period, the Executive agrees to devote
Executive's full business time exclusively to such executive duties and
shall perform such duties faithfully.
4. COMPENSATION, COMPENSATION PLANS, BENEFITS AND PERQUISITES. During the
employment period, the Executive shall be compensated as follows:
a. Executive shall receive an annual salary at a rate which is
not less than Executive's rate of annual salary immediately
prior to the effective date of this Agreement, with the
opportunity for increases from time to time thereafter which
are in accordance with the Corporation's regular practices.
b. Executive shall be eligible to participate on a reasonable
basis in the Corporation's stock option plans, annual
incentive bonus programs and any other bonus and incentive
compensation plans (whether now or hereinafter in effect) in
which executives with comparable authority and duties are
eligible to participate, which
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plans must provide opportunities to receive compensation which
are at least as great as the opportunities under the plans in
which the Executive was participating immediately prior to the
effective date of this Agreement.
c. Executive shall be entitled to receive employee benefits and
perquisites which are the greater of the employee benefits and
perquisites provided by the Corporation to executives with
comparable duties or the employee benefits and perquisites to
which Executive was entitled immediately prior to the
effective date of this Agreement. Such benefits and
perquisites shall include, but not be limited to, the benefits
and perquisites included under the Universal Electronics Inc.
401(K) and Profit Sharing Plan, the Universal Electronics Inc.
1993 Stock Incentive Plan, the Universal Electronics Inc. 1995
Stock Incentive Plan, the Salaried Employee Cash Incentive
Program, and the Universal Electronics Inc. group health
insurance program, which includes comprehensive medical
insurance, group disability, group life insurance, and
executive bonus (supplemental life).
5. Termination Following Change in Control
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a. For purposes of this Agreement, the term "termination" shall
mean (i) termination of the Corporation of the employment of
the Executive with the Corporation and all of its subsidiaries
for any reason other than death, disability or "cause" (as
defined below), or (ii) resignation of the Executive for "good
reason" (as defined below).
b. The term "good reason" shall mean (i) a significant change in
the nature or scope or the location for the exercise or
performance of the Executive's authority or duties from those
referred to in Section 3, a reduction in total compensation,
compensation plans, benefits or perquisites from those
provided in Section 4, or the breach by the Corporation of any
other provision of this Agreement; or (ii) a reasonable
determination by the Executive that, as a result of a Change
in Control and a change in circumstances thereafter
significantly affecting Executive's position, Executive is
unable to exercise the authorities, power, function or duties
attached to Executive's position and contemplated by Section 3
of the Agreement.
c. The term "cause" means (i) the willful and continued failure
by the Executive to substantially perform Executive's duties
with the Corporation and/or, if applicable, one or more of its
subsidiaries (other than any such failure resulting from
Executive's incapacity due to physical or mental illness)
after a demand for substantial performance is delivered to
Executive by the Board of Directors of the Corporation which
specifically identifies the manner in which the Board believes
the Executive has not substantially performed Executive's
duties, (ii) the willful engaging by the Executive in gross
misconduct materially and demonstrably injurious to the
property or business of the Corporation or any of its
subsidiaries,
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or (iii) Executive's commission of fraud, misappropriation or
a felony. For purposes of this paragraph, no act or failure to
act on the Executive's part will be considered "willful"
unless done, or omitted to be done, by Executive not in good
faith and without reasonable belief that Executive's action or
omission was in the interests of the Corporation or not
opposed to the interests of the Corporation.
6. CONFIDENTIALITY. The Executive agrees that during and after the
employment period, Executive shall retail in confidence any
confidential information known to Executive concerning the Corporation
and its subsidiaries and their respective business for as long as such
information is not publicly disclosed.
7. NO OBLIGATION TO MITIGATE DAMAGES. The Executive shall not be obligated
to seek other employment in mitigation of amounts payable or
arrangements made under the provisions of this Agreement and the
obtaining of any such other employment shall in no event effect any
reduction of the Corporation's obligations under this Agreement.
8. Severance Allowance
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a. In the event of termination of the Executive during the
employment period, the Executive shall be entitled to receive
a lump sum severance allowance within five days of such
termination, in an amount which is equal to the sum of the
following:
(i) The amount equivalent to salary payments for 12
calendar months, in the case of a friendly
acquisition, or 36 calendar months, in the case of a
hostile acquisition, at the rate required by
paragraph 4(a) and in effect immediately prior to
termination, plus a PRO RATA share of the estimated
amount of any bonus which would have been payable for
the bonus period which includes the termination date;
and
(ii) The amount equivalent to 12 calendar months of bonus
in the case of a friendly acquisition, or 36 calendar
months of bonus in the case of a hostile acquisition,
at the greater of (A) the monthly rate of the bonus
payment for the bonus period immediately prior to
Executive' s termination date, or (B) the estimated
amount of the bonus for the period which includes
Executive's termination date.
b. In addition to such amount under paragraph (a) above, the
Executive shall also receive in cash the value of the
incentive compensation (including, but not limited to,
employer contributions to the Universal Electronics Inc.
401(K) and Profit Sharing Plan and the rights to receive stock
awards and to exercise stock options and other bonus and
similar incentive compensation benefits) to which Executive
would have been entitled under all incentive compensation
plans maintained by the Corporation if Executive had remained
in the employ of the Corporation for
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12 months after such termination in the case of a friendly
acquisition, or 36 months after such termination in the case
of a hostile acquisition. The amount of such payment shall be
determined as of the date of termination and shall be paid as
promptly as practicable and in no event later than 30 days
after such termination.
c. The Corporation shall maintain in full force and effect for
the Executive's continued benefit (and, to the extent
applicable, the continued benefit of Executive's dependents)
all of the employee benefits (including, not limited to,
coverage under any medical and insurance plans, programs or
arrangements) to which Executive would have been entitled
under all employee benefit plans, programs or arrangements
maintained by the Corporation if Executive had remained in the
employ of the Corporation for 12 calendar months after
Executive's termination in the case of a friendly acquisition,
or 36 calendar months after Executive's termination in the
case of a hostile acquisition, or if such continuation is not
possible under the terms and provisions of such plans,
programs or arrangements, the Corporation shall arrange to
provide benefits substantially similar to those which the
Executive (and, to the extent applicable, Executive's
dependents) would have been entitled to receive if the
Executive had remained a participant in such plans, programs
or for such 12-month or 36-month period, as the case may be.
9. ADJUSTMENTS IN CASE OF EXCESS PARACHUTE PAYMENTS. In the event that the
aggregate present value (determined in accordance with applicable
federal, state and local income tax law, rules and regulations) of all
payments to be made and benefits to be provided to the Executive under
this Agreement and/or under any other plan, program or arrangement
maintained or entered into by the Corporation or any of its
subsidiaries shall result in "excess parachute payments" to the
Executive within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), or any comparable provision of
successor legislation, which subject the Executive to the Excise Tax
under Section 4999 of the Code or any comparable provision of successor
legislation, the Corporation shall pay to the Executive an additional
amount (the "gross-up payment") calculated so that the net amount
received by Executive after deduction of the Excise Tax and of all
federal, state, and local income taxes upon the gross-up payment shall
equal the payments to be made and the benefits to be provided to the
Executive under this Agreement. For purposes of determining the amount
of the gross-up payment, the Executive shall be deemed to pay federal,
state, and local income taxes at the highest marginal rates thereof in
the calendar year in which the gross-up payment is to be made, net of
the maximum reduction in federal income taxes obtainable from deduction
of such state and local taxes. The computations required by this
Section 9 shall be made by the independent public accountants then
regularly retained by the Corporation, in consultation with tax counsel
selected thereby and acceptable to the Executive. Said accountants' and
tax counsel's fees shall be paid by the Corporation.
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10. Interest; Indemnification
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a. In the event any payment to Executive under this Agreement is
not paid within five business days after it is due, such
payment shall thereafter bear interest at the prime rate from
time to time in effect at The Provident Bank, Cleveland, Ohio.
b. The Corporation hereby indemnifies the Executive for all legal
and accounting fees and expenses incurred by Executive in
contesting any action of the Corporation with respect to this
Agreement, including the termination of Executive's employment
hereunder, or incurred by Executive in seeking to obtain or
enforce any right or benefit provided by this Agreement.
11. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and
if sent by registered or certified mail to the Executive at the last
address Executive has filed in writing with the Corporation or, in the
case of the Corporation, at its principal executive offices.
12. NON-ALIENATION. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien upon any amounts
provided under this Agreement; and no benefits payable hereunder shall
be assignable in anticipation of payment either by voluntary or
involuntary acts, or by operation of law, except by will or the laws
of descent and distribution.
13. GOVERNING LAW. The provisions of this Agreement shall be construed in
accordance with the laws of the State of Ohio, without regard to its
conflict of laws provisions.
14. AMENDMENT. This Agreement may be amended or canceled only by mutual
agreement of the parties in writing without the consent of any other
person and, so long as the Executive lives, no person, other than the
parties hereto, shall have any rights under or interest in this
Agreement or the subject matter hereof.
15. SUCCESSOR TO THE CORPORATION. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of the
Corporation and any successor of the Corporation.
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16. PARTIAL INVALIDITY. The various covenants and provisions of this
Agreement are intended to be severable and to constitute independent
and distinct binding obligations of the parties hereto. Should any
covenant or provision of this Agreement be determined to be void and
unenforceable, in whole or in part, to any party hereto or in any
circumstance, it shall not be deemed to affect or impair the validity
of any other covenant or provision of part thereof, and shall continue
in effect to the extent valid, enforceable and applicable in other
circumstances and to the other party, and such covenant or provision of
part thereof shall be deemed modified but only to such a minimum extent
required to permit it to remain valid, enforceable and applicable to
such party or circumstance. Without limiting the generality of the
foregoing, if the scope of any covenant, provision or part thereof
contained in this Agreement is too broad to permit enforcement to its
full extent, such covenant, provision or part thereof shall be enforced
to the maximum extent permitted by law, and the parties hereto agree
that such scope may be judicially modified accordingly.
IN WITNESS WHEREOF, the Executive has executed this Agreement and, pursuant to
the authorization from its Board of Directors, the Corporation has caused this
Agreement to be executed in its name on its behalf, and attested by its
Secretary, all as of the day and year first above written.
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[Type Name of Executive]
UNIVERSAL ELECTRONICS INC.,
A Delaware Corporation
By:
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Xxxxx X. Xxxxxxxxxx, President and
Chief Executive Officer
ATTEST:
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Xxxxxxx X. Xxxxxxxxxx, Xx., Secretary
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