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EXHIBIT 10.27
SEVERANCE COMPENSATION AND
CONSULTING AGREEMENT
dated as of December 20, 1993
between WALBRO CORPORATION, a Delaware Corporation
(the "Company"), and XXXXXXX X. XXXXX,
(the "Executive")
The Company's Board of Directors has determined that, in light of the
importance of the Executive's continued service to the stability and continuity
of management of the Company and its subsidiaries, it is appropriate and in the
best interests of the Company and its shareholders to reinforce and encourage
the Executive's continued attention and undistracted dedication to his duties
in the circumstances of a possible Change in Control of the Company (as defined
below).
The Company's Board of Directors has determined that in order to
induce the Executive to remain in the employ of the Company, and to assist in
assuring the Executive of a continuation in the management style and operating
terms and conditions currently in effect at the Company, it is desirable to pay
the Executive the severance pay and benefits set forth herein if the
Executive's employment with the Company terminates following a Change in
Control of the Company.
The Company's Board of Directors has determined, in certain events
following a termination of the Executive's employment subsequent to a Change in
Control, it would be desirable to utilize the valuable knowledge and experience
which the Executive possesses by retaining the Executive as a consultant to the
Company.
In consideration of the foregoing premises and the mutual covenants
contained in this Agreement, the Company and the Executive agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
whenever used in the following capitalized form shall have the meaning set
forth below unless the context clearly indicates otherwise:
(a) "Board" or "Board of Directors" means the Board of Directors of
the Company.
(b) "Cause" means an act or acts of dishonesty by the Executive
constituting a felony under applicable law and resulting or intending
to result directly or indirectly in gain to or personal enrichment of
the Executive at the Company's expense. Notwithstanding the foregoing,
the Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a copy of a
resolution, duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board of Directors of the
Company at a meeting of the Board called and held for that purpose
(after reasonable notice to him has been given or has been made and an
opportunity for him, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board the
Executive was guilty of conduct set forth above in the first sentence
of this Section l(b) and specifying the particulars
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thereof in detail.
(c) "Change in Control" shall be deemed to have occurred on the first
of any of the following dates:
(1) on the date any individual, entity, or group
(within the meaning of Sections 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") ("Person")) shall become the beneficial owner (within
the meaning of Rule 13(d)-3 promulgated under the Exchange
Act) of securities of the Company representing thirty percent
or more of the Company's then outstanding securities having
the right to vote in the election offer, open market
purchases, privately negotiated purchases or otherwise;
provided, however, that the following acquisitions shall not
be considered in determining whether there has been a Change
in Control: (a) any acquisition directly from the Company; (b)
any acquisition by the Company; (c) any acquisition by a
Person including the Executive or with whom or with which the
Executive is affiliated; (d) any acquisition by a Person or
Persons one or more of which is a member of the Board of
Directors or an officer of the Company or an affiliate of any
of the foregoing on the date hereof; (e) any acquisition by
any employee benefit plan (or related trust) sponsored or
maintained by . the Company or any corporation controlled by
the Company; or (f) any acquisition by any corporation
pursuant to a reorganization, merger, consolidation, if
following such reorganization, merger or consolidation, the
conditions described in clauses (A), (B) and (C) of Subsection
(2) of this Section (c) are satisfied; or
(2) on the date of a reorganization, merger or
consolidation, in each case, unless, following such
reorganization, merger or consolidation, (A) more than 60% of
the then outstanding securities having the right to vote in
the election of directors of the corporation resulting from
such reorganization, merger or consolidation is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals vi 1 c ;and entities who
were the beneficial owners of the outstanding securities
having the right to vote in the election of directors of the
Company immediately prior to such reorganization, merger of
consolidation, (B) no Person (excluding the Company, any
employee benefit plan (or related trust) of the Company or
such corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning, immediately
prior to such reorganization, merger or consolidation,
directly or indirectly, 30% or more of the outstanding
securities having the right to vote in the election of
directors of the Company) beneficially owns, directly or
indirectly, 30t or more of the then outstanding securities
having the right to vote in the election of directors of the
corporation resulting from such reorganization, merger or
consolidation, and (C) at least a majority of the members of
the board of directors of the corporation resulting from such
reorganization, merger or consolidation are Continuing
Directors at the time of the execution of the initial
agreement providing for such reorganization, merger or
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consolidation: or
(3) the date on which the shareholders of the Company
approve (A) a complete liquidation or dissolution of the
Company or (B) the sale or other disposition of all or
substantially all of the assets of the Company, other than to
a corporation, with respect to which following such sale or
other disposition, (1) more than 60t of the then
outstanding-securities having the right to vote in the
election of directors of such corporation is then beneficially
owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners of
the outstanding securities having the right to vote in the
election of directors of the Company immediately prior to such
sale or other disposition of such outstanding securities, (2)
no Person (excluding the Company and any employee benefit plan
(or related trust) of the Company or such corporation and any
Person beneficially owning, immediately prior to such sale or
other disposition, directly or indirectly, 30% or more of the
outstanding securities having the right to vote in the
election of directors of the Company) beneficially owns,
directly or indirectly, 30t or more of the then outstanding
securities having the right to vote in the election of
directors of such corporation and (3) at least a majority of
the members of the board of directors of such corporation are
Continuing Directors at the time of the execution of the
initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company.
(4) on the date, during any period of twenty-four
(24) consecutive months commencing on or after the close of
business on February 26, 1990, on which individuals who at the
beginning of such period constitute the entire board of
directors of the Company shall cease for any reason to
constitute a majority thereof unless the election, or the
nomination for election, by the Company's stockholders, of
each new director was approved by a vote of at least
two-thirds of the Continuing Directors, as hereinafter
defined, in office on the date of such election or nomination
for election for the new director. For purposes hereof, a
"Continuing Director" shall mean:
(i) any member of the board of directors of
the Company at the close of business on February 26,
1990; or
(ii) any member of the board of directors of
the Company who succeeded any Continuing Director
described in subparagraph (i) above if such
successor's election, or nomination for election by
the Company's stockholders, was approved by a vote of
at least two-thirds of the Continuing Directors then
still in office
Continuing Director shall not include any individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such term is used in
Rule 14a-11 of Regulation 14A
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promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board.
(d) "Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time.
(e) "Compensation" means payments in the nature of compensation that
arise out of an employment relationship or are associated with the performance
of services and that are (i) paid or payable by the Company or any other entity
to the extent permitted or required by Section 280G of the Code and the
regulations thereunder and (ii) includible in the gross income of the
Executive; provided that compensation is the maximum amount of compensation
that would be calculated with respect to the Executive under Section 280G and
the regulations thereunder if the Change in Control under this Agreement were a
change in control under Section 280G and the regulations thereunder. In the
event that Section 2(d) of this Agreement applies to the Executive,
Compensation under this Section l(e) shall not exceed the Executive's annual
compensation as determined under Department of Labor Regulation Section
2510.3-2(b).
(f) "Disability" means an incapacity due to physical or mental
illness, which renders the Executive unable to engage in an occupation or
employment substantially similar in nature to the employment in which he was
engaged at the time of the illness and such condition is expected to continue
indefinitely or for a substantial period of time.
(h) "Good Reason" means any of the following events unless it occurs
with the Executive's express prior written consent:
(i) the assignment to the Executive by the Company of any
duties inconsistent with, or a diminution of, the Executive's
position, duties, titles, offices, responsibilities and status with
the Company, including without limitation, any diminution of the
Executive's position or responsibility in the decision or management
processes of the Company in effect, immediately prior to a Change in
Control of the Company, or any removal of the Executive from, or any
failure to reelect the Executive to, any of such positions, except in
connection with the termination of the Executive's employment for
Disability, Retirement or Cause or as a result of the Executive's
death or by the Executive other than for Good Reason;
(ii) a reduction by the Company in the Executive's base salary
as in effect on the date hereof or as the same may be increased from
time to time during the term of this Agreement or the Company's
failure to increase (within twelve months of the Executive's last
increase in base salary) the Executive's base salary after a Change in
Control of the Company in an amount which is substantially similar, on
a percentage basis, to the Executive's last increase in base salary
prior to the Change in Control, other than (1) a reduction of the
Executive's base salary pursuant to the terms of the Company's
short-term disability plan or long-term disability plan during a
period in which the Executive
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is disabled (within the meaning of such plan or plans) and qualifies
for benefits under such plan or plans; or (2) a reduction of the
Executive's base salary in connection with the termination of the
Executive's employment for Disability, Retirement or Cause, or as a
result of the Executive's death or by the Executive other than for
Good Reason;
(iii) any failure by the Company to continue in effect any
benefit plan or arrangement (including, without limitation, the
Company's pension plan, profit sharing or stock bonus plan, the
portion of any such plan which includes a cash or deferred arrangement
described in Section 401(k) of the Code, group life insurance plan,
medical, dental, accident and disability plans and annual social
events in which the Executive is participating or eligible to
participate or is an invitee at the time of a Change in Control of the
Company) (or to substitute and continue other plans providing the
Executive with substantially similar benefits) (hereinafter referred
to as "Benefit Plans"), or the taking of any action by the Company
which would adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such Benefit Plan
or deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of a Change in Control of the Company, or the
failure, by the Company to provide the Executive with the number of
paid vacation days to which the Executive is entitled or may become
entitled upon the passage of time, in accordance with the vacation
policies in effect at the time of a Change in Control of the Company;
(iv) any failure by the Company to continue in effect any
incentive plan or arrangement (including, without limitation, the
Company's incentive compensation -plan, annual bonus and contingent
bonus arrangements and credits and the right to receive performance
awards and similar incentive compensation benefits) in which the
Executive is participating at the time of a Change in Control of the
Company (or to substitute and continue other plans or arrangements
providing the Executive with substantially similar benefits)
(hereinafter referred to as "Incentive Plans" or the taking of any
action by the Company which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan;
(v) any failure by the Company to continue in effect any plan
or arrangement to receive securities of the Company and any other plan
or arrangement to receive and exercise stock options, stock
appreciation rights, restricted stock or grants thereof or to acquire
stock or other securities of the Company) in which the Executive is
participating at the time of a Change in Control of the Company (or to
substitute and continue plans or arrangements providing the Executive
with substantially similar benefits) (hereinafter referred to as
"Securities Plans") or the taking of any action by the Company which
would adversely affect the Executive's participation in or materially
reduce the Executive's benefits under any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
or the Executive's relocation to any place other than the location at
which the Executive performed the Executive's duties prior to a Change
in Control of the
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Company;
(vii) a substantial increase in business travel obligations
over such obligations as they existed at the time of a Change in
Control of the Company;
(viii) any material breach by the Company of any provision of
this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assignee of the Company;
(x) any purported termination of the Executive's employment
which is not affected pursuant to the Company's stated policy at the
time of the Change in Control;
(xi) any change in the procedure for evaluating the Executive
relative to compensation, bonus or promotion;
(xii) any change in the employment security provisions of the
Company's employment policy at the time of the Change in Control which
results in such policy being less protective of the Executive's
procedural or substantive rights; or
(xiii) any reduction or elimination of the rehabilitation,
athletic or medical facilities maintained by the Company, or a
reduction or elimination of the Executive's privileges with respect to
such facilities.
(i) "Retirement" as used in this Agreement shall mean termination by
the Company or the Executive of the Executive's employment based on (1) the
Executive's retirement in accordance with the Company's retirement policy in
effect immediately prior to the Change in Control, or (2) in the event the
Company has no retirement policy, the Executives commencing to receive benefits
under the Company's retirement or pension plan. Notwithstanding the foregoing,
Retirement shall not include for purposes of this Agreement, the Executive's
commencing to receive benefits under the Company's retirement or pension plan
if the Executive's employment was terminated by the Executive for Good Reason
or by the Company other than for Cause or not in accordance with the Company's
retirement policy as previously described.
2. Severance Compensation Upon Termination.
(a) If the Executive's employment with the Company is terminated at
any time within the two year period immediately following the Change in Control
other than as a result of (i) the Executive's death; (ii) the Executive's
Disability; (iii) the Executive's Retirement; (iv) the Executive's termination
by the Company for Cause; (v) the Executive's decision to terminate employment
other than for Good Reason; or (vi) the Executive's decision to terminate
employment for any reason within ninety days after the Change in Control, then
the Executive shall be entitled to the severance pay and benefits provided
below:
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(i) The Company shall pay to the Executive as severance pay in
a single sum, in cash, not later than the fifth business day following
the termination of employment, an amount equal to three times the sum
of the Executive's annual Compensation for the most recent five
taxable years ending before the date on which the Change in Control
occurs divided by five (or such number of years, if less than five,
for which Compensation would be annualized under the next following
sentence and during which the Executive performed personal services
for the Company). If the Executive performed personal services for the
Company for less than all of a taxable year prior to the Change in
Control, the Executive's Compensation for such short taxable year
shall be annualized before determining the amount under the preceding
sentence.
(ii) The Company shall, at its expense, provide the Executive,
for a period of thirty-six months following the date of the
termination of employment, life, health, dental, long-term disability
and accident insurance substantially similar to the insurance or
benefits in effect and provided by the Company at the time of the
Change in Control of the Company and all other benefits and
perquisites substantially similar to those which the Executive was
eligible to receive at the time of the Change in Control.
(b) If the Executive's employment with the Company is terminated in
anticipation of a Change in Control or prior to the occurrence of a Change in
Control, and if it is reasonably demonstrated by the Executive that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to affect the Change in Control or (ii) otherwise
arose in connection with or anticipation of the Change in Control, then the
Executive shall be entitled to the severance pay and benefits provided below:
(i) The Company shall pay to the Executive as severance pay in
a single sum, in cash, not later than the fifth business day following
the termination of employment, an amount equal to three times the sum
of the Executive's annual Compensation for the most recent five
taxable years ending on the date of termination divided by five (or
such number of years, if less than five, for which Compensation would
be annualized under the next following sentence and during which the
Executive performed personal services for the Company). If the
Executive performed personal services for the Company for less than
all of a taxable year prior to the Change in Control, the Executive's
Compensation for such short taxable year shall be annualized before
determining the amount under the preceding sentence.
(ii) The Company shall, at its expense, provide the Executive,
for a period of thirty-six months following the date of the
termination of employment, life, health, dental, long-term disability
and accident insurance substantially similar to the insurance or
benefits in effect and provided by the Company at the time of the
termination of employment and all other benefits and perquisites
substantially similar to those which the Executive was eligible to
receive at the time of the termination of employment.
(c) If the amount of any payment under this Section 2 cannot or is
not made by
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the date otherwise required, the Company shall pay to the Executive on such
required date an estimate, as determined in good faith by the Company, of the
minimum amount of such payment and shall pay the remainder (together with
interest at the rate provided in Section 7872(f)(2)(A) of the Code) as soon as
the amount thereof can be determined, but in no event later than thirty days
following the date the payment was otherwise required. In the event that the
amount of the estimated payment exceeds the amount subsequently determined to
have been due, such excess shall be paid by the Executive to the Company on the
fifth day following demand by the Company (together with interest at the rate
provided in Section 7872(f)(2)(A) of the Code).
(d) In the event that this Agreement constitutes an employee pension
benefit plan within the meaning of Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") for an employee not included
in a select group of management or highly compensated employees, then the
severance pay and benefits under this Agreement shall be limited or reduced
until this Agreement shall not constitute an employee pension benefit plan for
an employee not included in a select group of management or highly compensated
employees within the meaning of ERISA.
3. Consulting Services.
(a) If a Change in Control of the Company shall occur while the
Executive is an employee of the Company and if the Executive's
employment with the Company is terminated by the Executive subsequent
to a Change in Control other than for Retirement or Good Reason and
has not or could not have been terminated at that time by the Company
for Cause, death or Disability, the Executive shall have the right,
upon written notice to the Company within thirty days following the
termination of employment, to continue as a consultant to the Company
for a period of one year, commencing on the date the notice of the
election to render such services is delivered to the Company.
Notwithstanding the foregoing, if the Executive's employment with the
Company is terminated by the Executive less than ninety days after the
Change in Control for any reason, the Executive shall not have the
right to continue as a consultant to the Company as provided in this
Section 3. During the one-year consulting period, the Executive shall
be regarded as an independent contractor and not as an employee of the
Company and shall render advisory services concerning the business
affairs of the Company with which the Executive shall have had
substantial familiarity in the course of his prior employment
responsibilities. During the one-year consulting period, the Executive
shall not be required to devote more than one day each week and three
days each calendar month to such services, and shall not be required
to render any services at a distance of more than fifty miles from his
then home, it being understood that the Executive may move from the
area in which he presently resides. The Executive's consulting
services under this Agreement shall be required only at times and
places consistent with his other employment or with his private
activities.
(b) In consideration for the Executive's agreement to provide
consulting services, the Company shall pay to the Executive not later
than the fifth day following the date the Executive provides notice
under Section 3(a) an amount equal to the Executive's base salary
(determined on an annual basis using the
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rate in effect on the date of the termination of employment) plus
bonus; provided, however, that if the Executive's base salary or bonus
cannot be finally determined on or before such day, the Company shall
pay to the Executive on such day the estimated minimum amount of such
compensation, as determined in good faith by the Company and (i) the
Company shall pay to the Executive any deficiency in such estimated
amount as soon as it can be finally determined but in no event later
than the thirtieth day after the date of termination or (ii) the
Executive shall repay to the Company, not later than the fifth day
after demand by the Company, any excess of such estimated amount over
the Executive's compensation as finally determined (in each case,
together with interest at the rate provided in Section 7872(f)(2)(A)
of the Code.)
(c) The Company shall, at its expense, provide the Executive, for the
one-year consulting period, life, health, dental, long-term disability
and accident insurance substantially similar to the insurance in
effect and provided by the Company at the time of the election to
render consulting services and all other benefits and perquisites
substantially similar to those which the Executive was eligible to
receive immediately prior to the election.
4. Term of Agreement. This Agreement shall terminate, except to the
extent that any obligation of the Company hereunder remains unpaid as of such
time and until such obligation is satisfied, two years from the date hereof. It
is provided, however, that commencing on the date two years after the date of
this Agreement and each anniversary date of the Agreement thereafter, the term
of this Agreement shall be automatically extended for one additional year,
unless, not later than six months prior to the date two years after the date of
this Agreement or any subsequent anniversary date, the Company shall have
delivered to the Executive or the Executive shall have delivered to the Company
written notice that the term of this Agreement will not be extended.
Notwithstanding the foregoing, in no event shall this Agreement terminate prior
to two years after a Change in Control if the Executive is employed by the
Company on the date of such Change in Control; provided that any obligation of
the Executive or the Company arising under Section 3 shall continue until the
Executive has rendered all services required thereunder and the Company has
paid for all services thereunder.
5. No Obligation to Mitigate Damages: No Effect on Other Contractual
Rights.
(a) The 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, nor shall the amount of any payment
provided for under this Agreement be reduced by any compensation
earned by the Executive as the result of employment by the Company at
any time or by another employer after the date of termination or
otherwise.
(b) The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in
any way diminish the Executive's existing rights, or rights which
would accrue solely as a result of the passage of time, under any
employment agreement contract, plan or arrangement to which the
Executive is a party, a participant or a beneficiary.
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6. Enforcement of Agreement; Resolution of Disputes.
(a) The Company recognizes that in anticipation of a Change in
Control or upon the occurrence of a Change in Control there may be an
attempt to cause the Company to refuse to comply with its obligations
under this Agreement, or to cause the Company to institute, or there
may be instituted, litigation seeking to have this Agreement declared
unenforceable, or there may be made an attempt to take other action to
deny the Executive the benefits intended under this Agreement. In
these circumstances, the purpose of this Agreement could be
frustrated. It is the intent of the Company that the Executive not be
required to incur the expenses associated with the enforcement of his
rights under this Agreement by litigation or other legal action, or be
bound to negotiate any settlement of his rights hereunder, because the
cost and expense of such legal action or settlement would
substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if it should appear to the Executive
that the Company has failed to comply with any of its obligations
under this Agreement or in the event that the Company or any other
person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation or other legal action
designed to deny, diminish or to recover from the Executive the
benefits entitled to be provided to the Executive hereunder, and that
Executive has complied with all of his obligations under this
Agreement, the Company irrevocably authorizes the Executive from time
to time to retain counsel of his choice, at the expense of the Company
as provided in this Section 6, to represent the Executive in
connection with the initiation or defense of any litigation or other
legal action, whether such' action is by or against the Company or any
Director, officer, shareholder or other person affiliated with the
Company, in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to the Executive entering into an
attorney client relationship with such counsel, and in that connection
the Company and the Executive agree that a confidential relationship
shall exist between the Executive and such counsel. The reasonable
fees and expenses of counsel selected from time to time by the
Executive, as hereinabove provided, shall be paid or reimbursed to the
Executive by the Company on a regular, periodic basis upon
presentation by the Executive of a statement or statements prepared by
such counsel in accordance with its customary practices, up to a
maximum aggregate amount of $500,000. Any legal expenses incurred by
the Company by reason of any dispute between the parties as to the
enforceability of or 'the terms contained in this Agreement,
notwithstanding the outcome of any such dispute, shall be the sole
responsibility of the Company, and the Company shall not take any
action to seek reimbursement from the Executive for such expenses.
(b) If there shall be any dispute between the Company and the
Executive, then, unless and until there is a final, nonappealable
judgment by a court of competent jurisdiction declaring that the
Executive is not entitled to severance pay and benefits or to be a
consultant under this Agreement, the Company shall pay all amounts,
and provide all benefits, to the Executive and/or
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the Executive's family or other beneficiaries, as the case may be,
that the Company would be required to pay or provide pursuant to
Section 2 or Section 3; provided, however, that the Company shall not
be required to pay any disputed amounts pursuant to this Section
except upon receipt of an undertaking by or on behalf of the Executive
to repay all such amounts to which the Executive is ultimately
adjudged by such court not to be entitled.
7. Successor to the Company.
(a) The Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and
agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession or assignment had taken place. As used in this Agreement,
the term "Company" shall mean the Company, as hereinbefore defined,
and any successor or assign to its business and/or assets 2S aforesaid
which executes and delivers the agreement provided for in this Section
7 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law. If at any time during the term of
this Agreement the Executive is employed by any corporation, a
majority of the voting securities of which is then owned by the
Company, the term "Company" as used in this Agreement, except as used
in Section l(c) hereof, prior to a Change in Control, shall also
include such employer. In such event, the Company agrees that it shall
pay or shall cause such employer to pay any amounts owed to the
Executive pursuant to this Agreement.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devises
and legatees. If the Executive shall die while any amounts are still
payable to him hereunder, 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 such designee, to the Executive's estate.
8. Obligation of Executive to Provide Notice of Entitlement. Prior to
providing the severance pay and benefits described in Section 2, the Company
may require the Executive to submit a written notice indicating the facts and
circumstances on which he has determined that he is entitled to severance pay
and benefits under the Agreement'. If the Company determines that the Executive
is not entitled to severance pay and benefits under the Agreement, the
Executive may request the Company to provide a written notice indicating the
facts and circumstances on which the Company has determined that the Executive
is not entitled to severance pay and benefits under the Agreement. The failure
by the Executive or the Company to set forth in the written notice any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder.
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9. Notice. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when mailed by first-class mail, postage
prepaid, transmitted by customary electronic methods, delivered by courier or
personally delivered, addressed as follows:
If to the Company:
Walbro Corporation
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Secretary of the Company
If to the Executive:
Xxxxxxx X. Xxxxx
Walbro Corporation
0000 Xxxxxxxx
Xxxx Xxxx, XX 00000
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.
10. Source of Payment. The obligation of the Company under this
Agreement shall be satisfied from the general funds of the Company, and no
special or separate funds shall be established and no other segregation of
assets shall be made to assure payment. The Executive shall have no right,
title, or interest whatever in or to any investments which the Company may make
to aid the Company in meeting its obligations hereunder. Nothing contained in
this Agreement, and no action taken pursuant to its provisions, shall create or
be construed to create a trust of any kind, or a fiduciary relationship,
between the Company and the Executive. To the extent that the Executive
acquires a right to receive payments from the Company hereunder, such right
shall be no greater than the right of an unsecured creditor of the Company. The
Board of Directors may in its discretion establish one or more irrevocable
letters of credit, surety bonds, or trusts for the purpose of assisting the
Company in fulfilling its obligation hereunder provided that such letters of
credit, surety bonds or trusts shall be subject to the general creditors of the
Company in the event of the Company's insolvency to be used as a reserve for
the discharge of the Company's obligations under the Agreement to the
Executive. Any payments made to the Executive under the separate letter of
credit, surety bond or trust for his benefit shall reduce dollar for dollar the
amount payable to the Executive from the general assets of the Company. The
amounts payable under the Agreement shall be reflected on the accounting
records of the Company but shall not be construed to create or require the
creation of a trust, custodial or escrow account, except as described above in
this section.
11. Mitigation of Excise Tax. If any severance pay or benefits payable
under this Agreement (without the application of this Section 11), either alone
or together with other payments pursuant to any agreement, plan or arrangement
with the Company
13
("Total Payments"), would constitute a "parachute payment" (as defined in
Section 280G of the Code and regulations thereunder), such severance pay or
benefits payable under this Agreement shall be reduced until no portion of the
Total Payments is not deductible as a result of Section 280G of the Code and
regulations thereunder or the severance pay and benefits provided in this
Agreement are reduced to zero. In the event that the severance pay and benefits
payable to the Executive under this Agreement are reduced in accordance with
the foregoing sentence, the Executive shall elect whether either the severance
pay or benefits (or a combination thereof) is reduced, unless the total
severance pay and benefits is to be reduced to zero. The determination of
whether the severance pay and benefits payable to the Executive are to be
reduced under this Section 11 shall be made by the Executive in good faith
after consultation with the Company. The Company shall cooperate in good faith
with the Executive in making such determination and in providing the
information necessary for such determination. For purposes of this Section 11,
no portion of the Total Payments the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior to the Company
providing the severance pay and benefits shall be taken into account. The
provisions of this Section 11 shall apply to the Executive only if (a) the
Executive's Total Payments reduced (i) by federal excise tax imposed by Section
4999 of the Code, (ii) by federal income taxes and (iii) by state and local
income and excise taxes do not exceed (b) the Executive's Total Payments
reduced (i) in accordance with the provisions of this Section 11, (ii) by
federal income taxes and (iii) by state and local income and excise taxes.
12. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by either
party hereto at the time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar of dissimilar
provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, 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. This Agreement shall be governed by
and construed in accordance with the laws of the State of Michigan, except its
law respecting choice of law.
13. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EXECUTIVE WALBRO CORPORATION
/s/ Xxxxxxx X. Xxxxx By: /s/ L. E. Althaver
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Xxxxxxx X. Xxxxx L.E. Althaver, Chairman
Chief Financial Officer President & CEO
