Exhibit (e)(5)
Exhibit (e)(5) Form of Letter Agreement by and between the Company and each of
J. Xxxxxxx Xxxxxxx, Xxxxxx X. Xxxxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxx,
Xxxxxxxx English and Xxxxxxx Xxxxxxx, each dated as of February 6, 2001.
Delco Remy International, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
February 6, 2001
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Dear ___________:
In recognition of the importance and value to Delco Remy International,
Inc. (the "Company") of your continued services, you and the Company agree as
follows:
1. If you are employed by the Company when a Change of Control (as defined
herein) occurs and your employment with the Company is terminated within two (2)
years of a Change of Control (i) by the Company for any reason other than Cause
(as defined herein) or (ii) by you for Good Reason (as defined herein):
(a) The Company will pay or cause to be paid to you a bonus (the
"Bonus") equal to (i) in the event of a termination of your employment as
described in this paragraph 1 in the first two (2) years following the
execution of this letter agreement, One Million Dollars ($1,000,000) or
(ii) in the event of a termination of your employment as described in this
paragraph 1 after the first two (2) years following the execution of this
letter agreement, three (3) times the average of the sum of (1) your annual
salary (including for this purpose any deferred salary) and (2) the amount
of all bonus payments made by the Company to you under applicable bonus or
incentive compensation plans, for the three (3) full calendar years
immediately preceding the termination of your employment. The Bonus shall
be payable to you within three (3) business days following the termination
of your employment. All payments due to you hereunder will be subject to
all applicable employment and withholding taxes.
(b) In addition to the Bonus, you and your eligible family members
shall be entitled to continuation of the welfare benefits of medical
insurance, dental insurance and life insurance until the first anniversary
of the termination of your employment with the Company. These benefits
shall be provided to you at the same premium cost, and at the same coverage
level, as in effect as of the effective date of termination of your
employment with the Company. However, in the event the premium cost and/or
level of coverage shall change for all similarly situated executive
employees of the Company, the cost and/or coverage level, likewise, shall
change for you and your eligible family members in a corresponding manner.
(c) If any benefit or payment from the Company to you in connection
with a Change of Control (whether paid or payable or distributed or
distributable pursuant to the terms of this letter agreement or otherwise)
(a "Payment") shall be determined to be an
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February 6, 2001
Page 2
"Excess Parachute Payment" as defined in Section 280G(b)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"), then the aggregate present value
of amounts or benefits payable to you pursuant to this letter agreement
("Agreement Payments") shall be reduced (but not below zero) to the Reduced
Amount. The "Reduced Amount" shall be an amount expressed in present value that
maximizes the aggregate present value of Agreement Payments without causing any
payments or benefits hereunder to be an Excess Parachute Payment. Anything to
the contrary notwithstanding, if the Reduced Amount is zero and it is determined
further that any payment from the Company to you that is not an Agreement
Payment would nevertheless be an Excess Parachute Payment, then the aggregate
present value of Payments that are not Agreement Payments shall also be reduced
(but not below zero) to an amount, if any, so that the present value of such
lesser amount maximizes the aggregate present value of Payments to you on an
after-tax basis, taking into account income and excise taxes under Section 1 and
Section 4999 of the Code. For purposes of this Section 1, present value shall
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be determined in accordance with Section 280G(d)(4) of the Code.
2. As used herein, the following shall have the meanings set forth below:
(a) "Cause" shall mean the occurrence or existence of any of the
following with respect to you, as determined in good faith by the Board of
Directors of the Company:
(i) conviction of a felony or conviction of any crime or offense
lesser than a felony involving the property of the Company
or an Affiliate of the Company, whether such conviction
occurs before or after your termination of employment;
(ii) engaging in conduct that has caused demonstrable and
material injury to the Company or an Affiliate of the
Company, monetary or otherwise;
(iii) gross dereliction of duties or other gross misconduct and
the failure to cure such situation within thirty (30) days
after receipt of notice thereof from the compensation
committee of the Company, the Board of Directors of the
Company, the Company or an Affiliate of the Company; or
(iv) the disclosure or use of confidential information other than
in the normal and ordinary performance of service for the
Company or any Affiliate of the Company.
(b) "Change of Control" means the occurrence of any of the following
events:
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February 6, 2001
Page 3
(i) the purchase or other acquisition by any single Person,
entity or group of Persons (within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any comparable successor
provisions) other than Citicorp Venture Capital Ltd.
("Citicorp") or an Affiliate (as defined herein) thereof, or
a group of Persons (within the meaning of Section 13(d) or
14(d) of the Exchange Act) of which Citicorp is a member, or
an employee benefit plan established or maintained by the
Company or any Affiliate thereof, of shares of common stock,
or of securities convertible into or exchangeable or
exercisable for shares of common stock or other voting
securities of the Company, if immediately following such
purchase or other acquisition, such single Person or group
of Persons would be the beneficial owner (within the meaning
of Rule 13d-3 under the Exchange Act), directly or
indirectly, of more than fifty percent (50%) of either (A)
the outstanding shares of common stock of the Company or (B)
the combined voting power of the Company's then outstanding
voting securities (assuming, in the case of securities
convertible into or exchangeable or exercisable for other
securities, the conversion or exchange thereof); or
(ii) except in the case of a transaction with Citicorp or an
Affiliate thereof, (a) the Company's reorganization, merger,
or consolidation with or into another Person, unless
pursuant to such transaction the holders of the Company's
voting stock immediately prior to such transaction own more
than fifty percent (50%) of the combined voting power
entitled to vote generally in the election of directors of
the reorganized, merged or consolidated Person immediately
after such transaction; (b) the sale or other disposition,
in one or a series of transactions, of all or substantially
all of the Company's assets; or (c) the approval by the
shareholders of the Company of a plan of liquidation,
dissolution or winding up of the Company.
The definition of "Change of Control" in this letter agreement shall not be
deemed to include any transaction in which you are an independent equity
participant who has made an affirmative decision to invest funds in the
transaction will not be deemed to involve an affirmative decision by you to
invest funds in such transaction, (it being understood that a transaction in
which your involvement as an equity participant is limited to a rollover of
equity interests owned by you at the time of the transaction will not be
deemed to involve an affirmative decision by you to invest funds in such
transaction). The definition of "Change of Control" in this letter agreement
shall not affect your rights under any plan adopted by the Company or any
other agreement between the Company and you. Any payments or other benefits
received by you pursuant to any such plan or agreement upon a Change of
Control shall be deemed a Payment under this
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February 6, 2001
Page 4
letter agreement and shall be subject to the provisions set forth in
Section 1(c) hereof.
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(c) "Good Reason" shall mean the occurrence or existence of any of the
following with respect to you:
(i) your base salary plus bonus at target is reduced from that
currently in effect, or your other employee benefits are in
the aggregate materially reduced from those currently in
effect prior to the Change of Control (unless such reduction
of employee benefits applies to employees of the Company
generally); or
(ii) the assignment to you of any duties or responsibilities which
are fundamentally inconsistent with your officer position
with the Company which is not cured within thirty (30) days
of receipt by the Company of written notice from you of such
assignment of inconsistent duties or responsibilities.
(d) "Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with the
specified Person. "Control" when used with respect to any Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise. The words "controlling" and "controlled" shall have
corresponding meanings. The term "Affiliate" shall include, without
limitation, any Person who beneficially owns voting securities of any other
Person or rights or warrants to purchase such voting securities (whether or
not currently exercisable), representing 10% or more of the total voting
power of the voting securities of such other Person, and any Person who
would be an Affiliate of any such beneficial owner pursuant to this
paragraph. Solely for purposes of this agreement, with respect to Citicorp
(as defined below), the term "Affiliate" shall include, without limitation,
any limited partnership, limited liability company or other investment
vehicle that is sponsored or managed (whether through the ownership of
securities having a majority of the voting power, as a general partner or
through the management of investments) by Citicorp or its Affiliates
(defined without giving effect to this clause) or present or former
employees of Citicorp or its Affiliates.
(e) "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
3. Nothing in this letter agreement shall be construed to give you any right
to remain in the employ of the Company, and you hereby acknowledge that you are
and will remain an employee-at-will of the Company whose employment may be
terminated at any time with or
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February 6, 2001
Page 5
without Cause. In addition, except as provided in this Agreement or under
applicable law, the Employee shall not be entitled to any other benefits or
compensation.
4. This term of this letter agreement shall be one (1) year commencing on
the date hereof; provided, however, that this letter agreement shall be
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automatically renewed for successive one-year periods commencing on February 6,
2002 and each year thereafter unless the Company gives notice to you of the
termination of this letter agreement at least ninety (90) days prior to February
6, 2002 or the end of any such one-year period thereafter, as applicable, in
which case this letter agreement shall terminate on February 6, 2002 or at the
end of such one-year period thereafter.
5. This letter agreement may be amended or modified only by an agreement in
writing executed by you and the Company.
6. This letter agreement shall be construed and interpreted under the laws
of the State of Indiana, without regard to conflicts of law principles of such
State. Because it is agreed that time will be of the essence in determining
whether any payments are due to you under this letter agreement, any disputes
arising hereunder shall be submitted to binding arbitration in Indianapolis,
Indiana, or such other place as the parties may agree. The parties agree that
the arbitration award shall be the sole and exclusive remedy between them
regarding any and all claims arising hereunder.
The arbitration shall be conducted pursuant to the Commercial Rules of
the American Arbitration Association, subject to the following provisions:
(a) the arbitration hearing shall be held within seven (7) days (or as
soon thereafter as possible) after the selection of the arbitrator; no
continuance of such hearing shall be allowed without the mutual consent of
the parties; absence from or nonparticipation at the hearing by either party
shall not prevent the issuance of an award; hearing procedures which will
expedite the hearing may be ordered at the arbitrator's discretion; and the
arbitrator may close the hearing in his or her sole discretion when he or
she decides he or she has heard sufficient evidence to satisfy issuance of
an award;
(b) the arbitrator's award shall be rendered as expeditiously as
possible and the parties will request that the arbitrator render the award
no later than one (1) week after the close of the hearing; the award of the
arbitrator shall be final and binding upon the parties; the award may be
enforced in any appropriate court as soon as possible after its rendition;
and if an action is brought to confirm the award, both parties agree that no
appeal shall be taken by either party from any decision rendered in such
action; and
(c) if you are the prevailing party as determined by the arbitrator in
any such arbitration proceeding you shall be awarded reasonable costs and
attorneys' fees.
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February 6, 2001
Page 6
7. This letter agreement shall inure to the benefit of your heirs, assigns
and legal representatives. This letter agreement may be executed in two (2)
counterparts, each of which shall be deemed an original and both of which shall
constitute one and the same agreement. Additionally, this agreement shall be
binding upon the parties hereto, and their respective successors and assigns.
[Signature Page Follows]
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February 6, 2001
Page 7
If the foregoing accurately sets forth our understanding with respect to the
subject matter set forth above, please sign below and return an executed copy of
this letter to the Company.
Very truly yours,
DELCO REMY INTERNATIONAL, INC.
By: ______________________________________
Name:______________________________________
Title:_____________________________________
Accepted and Agreed to this
___ day of February, 2001:
By: _______________________
Printed: __________________
Title: ____________________
