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EXHIBIT 10.23
WALBRO CORPORATION
AMENDED AND RESTATED
TERMINATION AND CHANGE OF CONTROL AGREEMENT
FOR
XXXXX X. XXXXXXXXX
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TABLE OF CONTENTS
PAGE
1. Term and Application............................................................ 1
2. Office and Duties............................................................... 2
3. Salary and Annual Incentive Compensation........................................ 2
4. Long-Term Compensation, Including Stock Options, and Benefits, Deferred
Compensation, and Expense Reimbursement......................................... 3
5. Termination of Employment....................................................... 4
6. Payments Upon Termination of Employment......................................... 4
7. Other Amounts................................................................... 9
8. Definitions Relating to Termination Events...................................... 10
9. Excise Tax Gross-Up............................................................. 15
10. Non-Competition and Non-Disclosure; Executive Cooperation....................... 19
11. Governing Law................................................................... 20
12. Expense Reimbursement........................................................... 20
13. Funding of Company Obligations.................................................. 21
14. Miscellaneous................................................................... 21
15. Indemnification................................................................. 23
16. Definitions..................................................................... 23
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AMENDED AND RESTATED
TERMINATION AND CHANGE OF CONTROL AGREEMENT
THIS AMENDED AND RESTATED TERMINATION AND CHANGE OF CONTROL AGREEMENT
("Termination Agreement") by and between WALBRO CORPORATION, a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxxxxxx ("Executive") is dated
August __, 1998.
RECITALS
A. Executive has been President of the Company since August 16, 1996
(the "Employment Date") and a director of the Company since 1990. Between the
Employment Date and April 17, 1998, Executive also served as the Chief Operating
Officer of the Company.
B. The Company and Executive desire to amend and restate the
Termination and Change of Control Agreement dated October 3, 1996 between the
Company and Executive in its entirety as set forth below to reflect the
appointment of Executive as President and Chief Executive Officer of the Company
on April 17, 1998.
C. The definitions of certain capitalized terms used in this
Termination Agreement shall have the respective meanings specified in Sections 9
and 16 of this Termination Agreement.
D. The Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Termination Agreement.
AGREEMENT
In consideration of the mutual agreements contained herein, the Company
and Executive hereby agree as follows:
1. TERM AND APPLICATION. The term of Executive's employment under this
Termination Agreement (the "Term of this Termination Agreement") shall be the
same (subject to earlier termination in accordance with this Agreement) as the
term (the "Term of the Employment Agreement") of the Employment Agreement, dated
October 3, 1996 and as amended
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and restated as of the date of this Termination Agreement, between the Company
and the Executive (the "Employment Agreement"); provided, however,
notwithstanding the Term of the Employment Agreement, on or after the Extension
Date (as defined in Section 9(g) of this Termination Agreement), the Term of
this Termination Agreement shall be the Extended Employment Period (as defined
in the Employment Agreement). Notwithstanding the Employment Agreement, the
terms and provisions of this Termination Agreement shall also apply on and after
the Extension Date and, where specifically in conflict with the Employment
Agreement, shall supersede the Employment Agreement. In no event shall Executive
receive benefits under both this Termination Agreement and the Employment
Agreement with respect to the same Termination of Employment.
2. OFFICE AND DUTIES.
(a) Generally. During the Extended Employment Period, the Executive's
position (including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised and
assigned at any time during the 120-day period immediately preceding the
Extension Date.
During the Extended Employment Period it shall not be a violation of
the Employment Agreement for the Executive to (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures, fulfill speaking
engagements or teach at educational institutions, and (iii) manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Company in
accordance with this Termination Agreement. It is expressly understood and
agreed that, to the extent that any activities have been conducted by the
Executive prior to the Extension Date, the continued conduct of such activities
(or the conduct of activities similar in nature and scope thereto) subsequent to
the Extension Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Company.
(b) Place of Employment. During the Extended Employment Period, the
Executive's services shall be performed at the present headquarters location of
the Company in Auburn Hills, Michigan or such other headquarters location as may
be assigned by the Company which is less than thirty-five (35) miles from such
present headquarters location.
3. SALARY AND ANNUAL INCENTIVE COMPENSATION.
(a) Base Salary. During the Extended Employment Period, the Executive
shall receive an Annual Base Salary, which shall be paid at a monthly rate, at
least equal to twelve (12) times the highest monthly base salary paid or
payable, including any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of the 12-
month period immediately preceding the month in which the Extension Date occurs.
During the Extended Employment Period, the Annual Base Salary shall be reviewed
by the Compensation
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Committee of the Board no more than twelve (12) months after the last salary
increase awarded to the Executive prior to the Extension Date and thereafter at
least annually. Any increase in Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Termination Agreement.
Annual Base Salary shall not be reduced after any such increase and the term
Annual Base Salary as utilized in this Termination Agreement shall refer to
Annual Base Salary as so increased. As used in this Termination Agreement, the
term "affiliated companies" shall include any company controlled by, controlling
or under common control with the Company.
(b) Annual Incentive Compensation. During the Extended Employment
Period, any annual incentive compensation payable to Executive shall, subject to
the last sentence of this Section 3(b), be paid in accordance with the Company's
usual practices in effect prior to the Extension Date with respect to payment of
incentive compensation of senior executives (except to the extent deferred). In
addition to Annual Base Salary, the Executive shall be awarded, for each fiscal
year ending during the Extended Employment Period, an Annual Bonus in cash at
least equal to the Executive's highest Annual Bonus for the last three full
fiscal years prior to the Extension Date (annualized in the event that the
Executive was not employed by the Company for the whole of such fiscal year)
(the "Recent Annual Bonus"). Each such Annual Bonus shall be paid no later than
the end of the third month of the fiscal year next following the fiscal year for
which the Annual Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
4. LONG-TERM COMPENSATION, INCLUDING STOCK OPTIONS, AND BENEFITS,
DEFERRED COMPENSATION, AND EXPENSE REIMBURSEMENT.
(a) Executive Equity Plans. During the Extended Employment Period, the
Company shall provide Executive with benefits, options to acquire Common Stock,
and compensation and incentive award opportunities (measured with respect to
both regular and special incentive opportunities, to the extent, if any, that
such distinction is applicable) under its incentive and compensation Plans which
are no less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such Plans, including without limitation, the long-term incentive features of
the Company's Equity Based Long Term Incentive Plan (together with any successor
plan, the "EBP"), as in effect at any time during the 120-day period immediately
preceding the Extension Date or, if more favorable to the Executive, those
provided at any time after the Extension Date to any other senior executives of
the Company and its affiliated companies.
(b) Employee and Executive Benefit Plans. During the Extended
Employment Period, the Company's benefit plans and programs, including but not
limited to, the welfare benefit plans, fringe benefit plans and deferred
compensation plans described in Sections 5(b), (c), (e), (f) and (g) of the
Employment Agreement, shall provide Executive with benefits which are at least
as favorable to Executive as the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time during the 120-day
period immediately preceding the Extension Date or, if more favorable to the
Executive, those provided at any time after the
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Extension Date to any other senior executive of the Company and its affiliated
companies.
5. TERMINATION OF EMPLOYMENT
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Term of this Termination
Agreement. If the Board determines in good faith that the Disability of the
Executive has occurred during the Term of this Termination Agreement, the
Company may give to the Executive written notice of its intention to terminate
the Executive's employment. In such event, the termination of Executive's
employment is effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the thirty
(30) days after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties.
(b) Notice of Termination. Any termination by the Company for Cause, or
by the Executive for Good Reason, shall be communicated by Notice of Termination
for Cause or Notice of Termination for Good Reason, as applicable, to the other
party hereto given in accordance with Section 9(b) or 9(h), respectively, of
this Termination Agreement, including without limitation the substantive and
procedural requirements thereof.
(c) Date of Termination. "Date of Termination" means (i) if the
Executive's employ ment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination for
Cause or the Notice of Termination for Good Reason, as applicable, or any later
date specified therein, as the case may be, (ii) if the Executive's employment
is terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the Executive that
the Executive's employment will terminate, (iii) if the Executive's employment
is terminated by reason of death or Disability, the Date of termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be, (iv) if the Executive terminates his employment without Good Reason due
to Approved Early Retirement, Normal Retirement or other voluntary termination,
the date the Executive notifies the Company that the Executive's employment will
terminate, and (v) if the Executive's employment is terminated by reason of the
Company's not renewing the Term of the Employment Agreement for reasons other
than Cause, the Date of termination shall be the last day of the Term of this
Termination Agreement.
6. PAYMENTS UPON TERMINATION OF EMPLOYMENT.
(a) Normal Retirement, Approved Early Retirement, Death, or Disability.
Upon Executive's Termination of Employment due to a voluntary decision by
Executive to retire on or after the Executive's Normal Retirement Date (other
than for Good Reason) ("Normal Retirement") or a mutually agreed upon early
retirement date ("Approved Early Retirement") or due to Executive's death or
Disability, all obligations of the Company and Executive under Sections 1
through 5 of the Employment Agreement or Sections 1 through 4 of this
Termination Agreement, as applicable, shall immediately cease to accrue and the
Company shall:
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(i) pay to Executive (or his Beneficiaries) as soon as
practicable after the Date of Termination (but in any
event within ten (10) days thereafter) a lump sum
amount equal to the sum of Executive's Accrued Base
Salary, Accrued Annual Bonus and Prorata Annual
Bonus;
(ii) pay to Executive in accordance with the terms and
conditions of all compensation and benefit Plans (and
the agreements and documents thereunder) in which
Executive participated prior to the Date of Termina
tion, all vested, nonforfeitable amounts owing and
accrued at the Date of Termination under such Plans,
including any earned Performance Shares;
(iii) cause all Deferral Accounts under the Employment
Agreement to be settled in accordance with the
provisions of Section 5(g) of the Employment
Agreement and the Executive's Deferral Election Forms
(as defined in such Section); and
(iv) if the Company has terminated Executive's employment
due to Disability:
(x) provide for Executive and his family to
continue to participate throughout the
period extending from the Date of
Termination until Executive reaches age 65
in all employee benefit Plans providing
health, medical, and life insurance in
which Executive and his family were
participating immediately prior to the Date
of Termina tion and the terms of which
allow Executive's continued participa tion,
at the same times and in the same manner as
such benefits would have been received by
Executive and his family under such Plans
if the Executive had continued in
employment with the Company during such
period, and
(y) to the extent that such Plans do not
allow Executive's continued participation
therein after the Date of Termination, pay
to Executive a cash amount that is
equivalent on an after-tax basis to the
value of the additional benefits Executive
would have received under such Plans if he
had received credit under such Plans for
age and service with the Company during
such period following the Date of
Termination; provided that with respect to
any benefit to be provided on a third-party
insured basis, such value shall be the
present value of the premiums expected to
be paid for such coverage, and with respect
to other benefits, such value shall be the
present value of the expected net cost to
the Company of providing such benefits.
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(b) Termination by the Company for Cause and Termination by Executive
for Reasons Other Than Normal Retirement, Approved Early Retirement, Death or
Disability. Upon a Termination of Employment by the Company for Cause or
voluntarily by Executive for reasons other than Good Reason, but excluding a
Termination of Employment due to Normal Retirement, Approved Early Retirement,
death or Disability, all obligations of the Company and Executive under Sections
1 through 5 of the Employment Agreement or Sections 1 through 4 of this
Termination Agreement, as applicable, shall immediately cease to accrue and the
Company shall:
(i) pay to Executive (or his Beneficiaries) as soon as
practicable after the Date of Termination (but in any
event within ten (10) days thereafter) a lump sum
amount equal to the sum of Executive's Accrued Base
Salary and Accrued Annual Bonus;
(ii) pay to Executive in accordance with the terms and
conditions of all compensation and benefit Plans (and
the agreements and documents thereunder) in which
Executive participated prior to the Date of Termina
tion all vested, nonforfeitable amounts owing and
accrued at the Date of Termination under such Plans,
including any earned Performance Shares; and
(iii) pay to Executive as soon as practicable following
such Date of Termina tion, but in any event within
ten (10) days thereafter, and without regard to any
otherwise applicable period of deferral, an amount
equal to the Fair Market Value as of the Date of
Termination of all Deferral Shares credited to
Executive's Deferral Accounts as of the Date of
Termination; provided, however, that the Company may
instead settle such Deferral Accounts by directing
the trustee under a "rabbi trust" to make a
distribution of the assets of the such trust (in
which case the Company shall be relieved of its
obligation in respect of such Deferral Accounts the
extent of such distribution).
(c) Termination Without Cause and Termination for Good Reason Before
the Extension Date. Upon a Termination Without Cause or a Termination for Good
Reason, in either case prior to the Extension Date, all obligations of the
Company and Executive under Sections 1 through 5 of the Employment Agreement or
Sections 1 through 4 of this Termination Agreement, as applicable, shall
immediately cease to accrue and the Company shall:
(i) pay to Executive (or his Beneficiaries) immediately
after the Date of Termination, a lump-sum cash amount
equal to the sum of the following:
(A) Executive's Accrued Base Salary,
(B) Executive's Accrued Annual Bonus,
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(C) Executive's Prorata Annual Bonus,
(D) the product of (I) the sum of Executive's
Annual Base Salary multiplied by (II) a
factor equal to the lesser of two (2.0) or
the number of whole and fractional years
during the period commenc ing on the Date of
Termination and the date on which the Term
of this Termination Agreement would have
expired without giving effect to any
Termination of Employment; provided that
such factor shall in no event be less than
one (1.0);
(E) an amount equal to the Fair Market Value as
of the Date of Termination of all Deferral
Shares credited to Executive's Deferral
Accounts as of the Date of Termination;
provided, however, that the Company may
instead settle such Deferral Accounts by
directing the trustee under a "rabbi trust"
to make a distribution of the assets of the
such trust (in which case the Company shall
be relieved of its obligation in respect of
such Deferral Accounts to the extent of such
distribution); and
(ii) to the extent that any vested, nonforfeitable amounts
remain owing to Executive at the Date of Termination
under any compensation and benefit Plans are not
covered by clause (i) above, the Company shall pay
all such amounts under the terms and conditions of
the Plans (and agreements and documents thereunder)
pursuant to which such compensation and benefits were
granted.
Amounts which are immediately payable pursuant to this Section will be paid as
promptly as practicable (but in any event within five (5) business days) after
the Date of Termination, without regard to any stated period of deferral
otherwise remaining in respect of such amounts.
(d) Termination Without Cause and Termination for Good Reason During
the Extended Employment Period. Upon a Termination Without Cause or a
Termination for Good Reason, in either case during the Extended Employment
Period, obligations of the Company and Executive under Sections 1 through 5 of
the Employment Agreement or Sections 1 through 4 of this Termination Agreement,
as applicable, shall immediately cease to accrue and the Company shall:
(i) pay to Executive (or his Beneficiaries) immediately
after the Date of Termination (without regard to any
stated period of deferral otherwise applicable in
respect of such amounts), a lump-sum cash amount
equal to the sum of the following:
(A) Executive's Accrued Base Salary,
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(B) Executive's Accrued Annual Bonus,
(C) Executive's Prorata Annual Bonus,
(D) three (3.0) times the sum of Executive's
Annual Base Salary and Highest Annual Bonus;
(E) in lieu of any payment in respect of
Performance Shares, or other long term
incentive awards (including awards of
phantom shares under the EBP) granted prior
to the Extension Date or in accordance with
Section 4(a), for any performance period not
completed at the Date of Termination, an
amount equal to the cash amount payable plus
the Fair Market Value of any shares of
Common Stock or other property (valued as of
the Date of Termination) payable upon the
achievement of maximum performance (or in
the case of phantom shares, target
performance under the EBP) in respect of
each tranche of such Performance Shares or
awards, without proration and as if the Date
of Termination had occurred at the end of
the performance period; and
(F) a cash amount equal to the Fair Market Value
as of the Date of Termination of any
Deferral Shares credited to Executive's
Deferral Accounts as of the Date of
Termination; provided, however, that the
Company may instead settle such accounts by
directing the Trustee to distribute the
assets of the "rabbi trust" and the Company
shall be relieved of its obligation in
respect of such Deferral Accounts to the
extent of such distribution;
(ii) to the extent not covered in clause (i) above, pay to
Executive under the terms and conditions of the Plans
(and agreements and documents thereunder) pursuant to
which such compensation and benefits were granted,
all vested, nonforfeitable amounts owing or accrued
as of the Date of Termination under any other
compensation and benefit Plans in which Executive
theretofore participated;
(iii) (x) continue for three years after the Date of
Termination (or the longest period that is
provided under the terms of the applicable
Plan) to provide to the Executive and his
family welfare plan benefits at least equal
to those which would have been provided in
accordance with Section 4(b) of this
Termination Agreement if the Executive's
employment had not been terminated or, if
more favorable to the Executive, as in
effect at any time thereafter with respect
to any other senior executives of the
Company and its
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affiliated companies and their families;
provided, however, that if the Executive
becomes reemployed with another employer and
receives medical or other welfare benefits
under another employer- provided plan, the
medical and other welfare benefits described
herein shall be secondary to those provided
under such other plan, and
(y) to the extent that such Plans do not allow
Executive's continued participation therein
after the Date of Termination or that
Executive so elects, pay to Executive a cash
amount that is equivalent on an after-tax
basis to the value of the additional
benefits Executive would have received under
such Plans if he had received credit under
such Plans for age and service with the
Company during such period following the
Date of Termination; provided that with
respect to any benefit to be provided on a
third-party insured basis, such value shall
be the present value of the premiums
expected to be paid for such coverage, and
with respect to other benefits, such value
shall be the present value of the expected
net cost to the Company of providing such
benefits; and
(iv) pay or reimburse Executive as incurred for the cost
of outplacement services, the scope and provider of
which shall be selected by the Executive in his sole
discretion.
7. OTHER AMOUNTS.
(a) Stock Options and Restricted Stock. In the event of any Termination
of Employment, stock options and restricted stock held by Executive as of the
Date of Termination will be exercisable or vested, as applicable, to the extent
and for such periods, and otherwise governed, by the Plans (and the agreements
and other documents thereunder) pursuant to which such stock options or
restricted stock were granted; provided, however, that the stock options
described in Section 5(b) of the Employment Agreement shall be fully vested and
shall be exercisable to the extent and for such periods, and otherwise governed
by, the provisions of Section 5(b) of the Employment Agreement.
(b) Supplemental Retirement Benefit. In the event of any Termination of
Employment, the Executive's Supplemental Retirement Benefit shall be paid at the
time or times and in the amounts determined in accordance with Section 5(e) of
the Employment Agreement, except that in the event of a Termination Without
Cause or a Termination for Good Reason during the Extended Employment Period,
the Supplemental Retirement Benefit shall be computed as though (i) Executive's
employment with the Company had continued for three years after the Date of
Termination for purposes of determining his years of employment with the Company
(as determined pursuant to Section 5(d) of the Employment Agreement) and (ii)
Executive had
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received compensation in each of such three years determined in accordance with
Section 3 hereof.
8. DEFINITIONS RELATING TO TERMINATION EVENTS.
(a) "Cause." For purposes of this Termination Agreement, "Cause" shall
mean Executive's gross misconduct (as defined herein) or willful breach of
Section 10 of this Termination Agreement that results in financial detriment
that is material to the Company and its affiliated companies taken as a whole.
For purposes of this definition, "gross misconduct" shall mean (A) a felony
conviction in a court of law under applicable federal or state laws which
results in material damage to the Company and its affiliated companies taken as
a whole or materially impairs the value of Executive's services to the Company,
or (B) willfully engaging in one or more acts, or willfully omitting to act in
accordance with duties hereunder, which is demonstrably and materially damaging
to the Company and its affiliated companies taken as a whole. Cause shall not
include any one or more of the following: (A) any act or failure to act
resulting from any incapacity of Executive, (B) bad judgment, (C) negligence,
(D) any act or omission that Executive believed in good faith to have been in or
not opposed to the interest of the Company (without intent of Executive to gain
therefrom, directly or indirectly, a profit to which he was not legally
entitled), or (E) any act or omission of which any member of the Board who is
not a party to such act or omission has had actual knowledge for at least six
months. Notwithstanding the foregoing, Executive shall not be terminated for
Cause unless and until:
(A) no fewer than 60 days prior to the Date of
Termination, the Company provides Executive with
written notice (the "Notice of Consideration") of its
intent to consider termination of Executive's
employment for Cause, including a detailed
description of the specific reasons which form the
basis for such consideration;
(B) for a period of not less than 30 days after the date
Notice of Consideration is provided, Executive shall
have the opportunity to (x) appear before the Board,
with or without legal representation, at Executive's
election, to present arguments and evidence on his
own behalf and (y) to correct the acts or omissions
complained of, if correctable; and
(C) following the presentation to the Board as provided
in clause (B) above or Executive's failure to appear
before the Board at a date and time specified in the
Notice of Consideration (which date shall not be less
than 30 days after the date the Notice of
Consideration is provided), Executive may be
terminated for Cause only if (x) the Board, by the
affirmative vote of all of its members (excluding
Executive if he is a member of the Board, and any
other member of the Board reasonably believed by the
Board to be involved in the events leading the Board
to terminate Executive for Cause), deter mines that
the actions or inactions of Executive specified in
the Notice of Consideration did occur, that such
actions or inactions constitute Cause,
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and that Executive's employment should accordingly be
terminated for Cause; and (y) the Board provides
Executive with a written determination
(a "Notice of Termination for Cause") setting forth
in specific detail the basis of such termination of
employment, which Notice of Termination for Cause
shall be consistent with the reasons set forth in the
Notice of Consideration.
Unless the Company establishes, by clear and convincing evidence, both (x) its
full compliance with the substantive and procedural requirements of this Section
prior to its Termination for Cause, and (y) that Executive's action or inaction
specified in the Notice of Termination for Cause did occur and constituted
Cause, any Termination of Employment shall be deemed a Termination Without
Cause.
(b) "Change of Control." For purposes of this Termination Agreement, a
"Change of Control" shall mean:
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of twenty percent
(20%) or more of either (A) the then-outstanding
shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the
combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally
in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that
for purposes of this subsection (i), the following
acquisitions shall not constitute a Change of
Control: (A) any acquisition directly from the
Company, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any
corporation controlled by the Company, (D) any
acquisition by a lender to the Company pursuant to a
debt restructuring of the Company, or (E) any
acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and
(C) of subsection (iii) of this Section;
(ii) Individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the
Board; provided, however, that any individual
becoming a director subsequent to the date hereof
whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at
least a majority of the directors then comprising the
Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual
whose initial assumption
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of office occurs as a result of an actual or
threatened election contest with respect to the
election or removal of directors or other actual or
threatened solicitation of proxies or consents by or
on behalf of a Person other than the Board;
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a
"Business Combination"), in each case, unless,
following such Business Combination, (A) all or
substantially all of the individuals and entities
who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or
indirectly, more than fifty percent (50%) of,
respectively, the then- outstanding shares of common
stock and the combined voting power of the then
outstanding voting securities entitled to vote
generally in the election of directors, as the case
may be, of the corporation resulting from such
Business Combination (including, without limitation,
a corporation which as a result of such transaction
owns the Company or all or substantially all of the
Company's assets either directly or through one or
more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Company
Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person
(excluding any corporation resulting from such
Business Combination or any employee benefit plan
(or related trust) of the Company or such
corporation resulting from such Business
Combination) beneficially owns, directly or
indirectly, 15% or more of, respectively, the then
outstanding shares of common stock of the
corporation resulting from such Business
Combination, or the combined voting power of the
then-outstanding voting securities of such
corporation except to the extent that such ownership
existed prior to the Business Combination and (C) at
least a majority of the members of the board of
directors of the corporation resulting from such
Business Combination were members of the Incumbent
Board at the time of the execution of the initial
agreement, or of the action of the Board, providing
for such Business Combination; or
(iv) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(c) "Disability" means a mental or physical condition which, in the
opinion of the Board, renders Executive unable or incompetent to carry out the
material job responsibilities which such Executive held or the material duties
to which Executive was assigned at the time the disability was incurred, which
has existed for at least three months and which in the opinion of a physician
mutually agreed upon by the Company and Executive (provided that neither party
shall
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15
unreasonably withhold his agreement) is expected to be permanent or to last for
an indefinite duration or a duration in excess of six months.
(d) "Extension Date" shall mean the first date during the Term of the
Employment Agreement on which a Change of Control occurs. Anything in this
Termination Agreement or the Employment Agreement to the contrary
notwithstanding, if a Change of Control occurs after a Date of Termination, and
if the Executive reasonably demonstrates that such Termination of Employment (i)
was at the request of a third party who has taken steps reasonably calculated to
effect a Change of Control or (ii) otherwise arose in connection with or
anticipation of a Change of Control, then for all purposes of this Termination
Agreement and the Employment Agreement the "Extension Date" shall mean the date
immediately prior to the date of such Termination of Employment.
(e) "Good Reason." For purposes of this Termination Agreement, "Good
Reason" shall mean the occurrence of any of the following, without Executive's
prior written consent that such event shall not be Good Reason:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's
position (including status, offices, titles and
reporting requirements), authority, duties or
responsibilities as contemplated by Section 3(a) of
the Employment Agreement of, on or after the
Extension Date, Section 2(a) of this Termination
Agreement, or any other action by the Company which
results in a diminution in such position, authority,
duties or responsibilities, excluding for this
purpose an isolated, insubstan tial and inadvertent
action not taken in bad faith and which is remedied
by the Company promptly after receipt of notice
thereof given by the Execu tive;
(ii) any failure by the Company to comply with any of the
provisions of this Termination Agreement or the
Employment Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring
in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(iii) any failure to nominate or elect Executive as
President and Chief Executive Officer of the Company
or as member of the Board;
(iv) causing or requiring Executive to report to anyone
other than the Board; or
(v) the Company's requiring the Executive to be based at
any office or location other than as provided in
Section 3(b) of the Employment Agreement or, on or
after the Extension Date, Section 2(b) hereof or the
Company's requiring the Executive to travel on
Company business to a substantially
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16
greater extent than generally required of other
senior execu tives of the Company immediately prior
to the date of this Agreement;
(vi) any failure by the Company to perform any material
obligation under, or breach by the Company of any
material provision of, this Termination Agreement or
the Employment Agreement;
(vii) any purported Termination of Employment by the
Company otherwise than as expressly permitted by this
Termination Agreement;
(viii) any failure by the Company to comply with Section
14(b) of this Termination Agreement;
(ix) any failure of the Company to assign this Termination
Agreement and the Employment to a successor to the
Company or failure of a successor to the Company to
explicitly assume and agree to be bound by this
Termina tion Agreement and the Employment Agreement;
(x) the delivery to Executive of a Notice of
Consideration pursuant to Section 14(c) hereof if,
within a period of 90 days thereafter, the Board
fails for any reason to terminate Executive for Cause
in compliance with all of the substantive and
procedural requirements of set forth in the
definition of "Cause" in Section 8 hereof;
(xi) any termination of Employment by Executive for any
reason or no reason during the 60 day period
commencing two months after a Change of Control.
For purposes of this Section, any good faith determination of "Good Reason" made
by the Executive shall be conclusive. Any Termination for Good Reason shall be
communicated by a Notice of Termination for Good Reason to the Company given in
accordance with Section 13(d) of this Termination Agreement. For purposes of
this Termination Agreement, a "Notice of Termination for Good Reason" means a
written notice which (i) indicates the specific termination provision in this
Termination Agreement relied upon, (ii) sets forth in reasonable detail the
facts and circumstances claimed to constitute Good Reason and (iii) if the Date
of Termination is other than the date of receipt of such notice, specifies the
Date of Termination (which date shall be not more than thirty (30) days after
the giving of such notice). The failure by the Executive to set forth in the
Notice of Termination for Good Reason any fact or circumstance which contributes
to a showing of Good Reason shall not waive any right of the Executive hereunder
or preclude the Executive from asserting such fact or circumstance in enforcing
the Executive's rights hereunder.
(f) "Normal Retirement Date" means the date of Executive's attainment
of age sixty-five (65).
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17
9. EXCISE TAX GROSS-UP.
(a) If Executive becomes entitled to one or more payments (with a
"payment" including, without limitation, the vesting of an option or other
non-cash benefit or property), whether pursuant to the terms of this Termination
Agreement, the Employment Agreement or any other Plan or agreement with the
Company or any of its affiliated companies (the "Total Payments"), which are or
become subject to the tax imposed by Section 4999 of the Code or any similar tax
that may hereafter be imposed (the "Excise Tax"), the Company shall pay to
Executive at the time specified below an additional amount (the "Gross-up
Payment") (which shall include, without limitation, reimbursement for any
penalties and interest that may accrue in respect of such Excise Tax) such that
the net amount retained by Executive, after reduction for any Excise Tax
(including any penalties or interest thereon) on the Total Payments and any
federal, state and local income or employment tax and Excise Tax on the Gross-up
Payment provided for by this Section, but before reduction for any federal,
state, or local income or employment tax on the Total Payments, shall be equal
to the sum of (a) the Total Payments, and (b) an amount equal to the product of
any deductions disallowed for federal, state, or local income tax purposes
because of the inclusion of the Gross-up Payment in Executive's adjusted gross
income multiplied by the highest applicable marginal rate of federal, state, or
local income taxation, respectively, for the calendar year in which the Gross-up
Payment is to be made.
(b) For purposes of determining whether any of the Total Payments will
be subject to the Excise Tax and the amount of such Excise Tax:
(i) The Total Payments shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of
the Code, and all "excess parachute payments" within
the meaning of Section 280G(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless, and
except to the extent that, in the written opinion of
independent compensation consultants or auditors of
nationally recognized standing ("Independent
Advisors") selected by the Company and reasonably
acceptable to Executive, the Total Payments (in whole
or in part) do not constitute parachute payments, or
such excess parachute payments (in whole or in part)
represent reasonable compensa tion for services
actually rendered before a Change of Control within
the meaning of Section 280G(b)(4)(B) of the Code in
excess of the base amount within the meaning of
Section 280G(b)(3) of the Code or are otherwise not
subject to the Excise Tax;
(ii) The amount of the Total Payments which shall be
treated as subject to the Excise Tax shall be equal
to the lesser of (i) the total amount of the Total
Payments or (ii) the total amount of excess parachute
payments within the meaning of Section 280G(b)(1) of
the Code (after applying clause (a) above); and
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18
(iii) The value of any non-cash benefits or any deferred
payment or benefit shall be determined by the
Independent Advisors in accordance with the
principles of Sections 280G(d)(3) and (4) of the
Code.
(c) For purposes of determining the amount of the Gross-up Payment,
Executive shall be deemed (A) to pay federal income taxes at the highest
marginal rate of federal income taxation for the calendar year in which the
Gross-up Payment is to be made; (B) to pay any applicable state and local income
taxes at the highest marginal rate of taxation for the calendar year in which
the Gross-up Payment is to be made, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of Executive's adjusted gross income); and (C)
to have otherwise allowable deductions for federal, state, and local income tax
purposes at least equal to those disallowed because of the inclusion of the
Gross-up Payment in Executive's adjusted gross income. In the event that the
Excise Tax is subsequently determined to be less than the amount taken into
account hereunder at the time the Gross-up Payment is made, Executive shall
repay to the Company at the time that the amount of such reduction in Excise Tax
is finally determined (but, if previously paid to the taxing authorities, not
prior to the time the amount of such reduction is refunded to Executive or
otherwise realized as a benefit by Executive) the portion of the Gross-up
Payment that would not have been paid if such Excise Tax had been applied in
initially calculating the Gross-up Payment, plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is determined to exceed the amount taken into account
hereunder at the time the Gross-up Payment is made (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-up Payment), the Company shall make an additional Gross-up Payment in
respect of such excess (plus any interest and penalties payable with respect to
such excess) at the time that the amount of such excess is finally determined.
(d) The Gross-up Payment provided for above shall be paid on the 30th
day (or such earlier date as the Excise Tax becomes due and payable to the
taxing authorities) after it has been determined that the Total Payments (or any
portion thereof) are subject to the Excise Tax; provided, however, that if the
amount of such Gross-up Payment or portion thereof cannot be finally determined
on or before such day, the Company shall pay to Executive on such day an
estimate, as determined by the Independent Advisors, of the minimum amount of
such payments and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code), as soon as
the amount thereof can be determined. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to Executive, payable on the
fifth day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code). If more than one Gross-up
Payment is made, the amount of each Gross-up Payment shall be computed so as not
to duplicate any prior Gross-up Payment.
(e) Notwithstanding the foregoing, the Executive may at any time elect
to demand the payment of the amount which the Executive, in accordance with an
Opinion of counsel to the
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19
Executive, determines to be the Gross-Up Payment. Any such demand by the
Executive shall be made by delivery to the Company of a written notice which
specifies the Gross-Up Payment determined by the Executive and an Opinion of
counsel to the Executive regarding such Gross- Up Payment (such written notice
and Opinion collectively, the "Executive's Determination"). Within fourteen (14)
days after the Executive's delivery of the Executive's Determination to the
Company, the Company shall:
(i) pay to the Executive the Gross-Up Payment set forth
in the Executive's Determination
unless
(ii) the Company shall deliver to the Executive a written
notice specifying the Gross-Up Payment determined by
the Company together with an Opinion of the Company's
counsel regarding such Gross-Up Payment (such written
notice and Opinion collectively, the "Company's
Determination") and shall pay to the Executive the
Gross-Up Payment specified in the Company's
Determination.
For purposes of this Section, "Opinion" shall mean an unqualified legal opinion
that a Gross-Up Payment has been calculated in accordance with this Section and
applicable law, unless such Opinion shall state therein that an unqualified
Opinion cannot be given as to any Gross-Up Payment. In such case, the Opinion
shall state that the Gross-Up Payment set forth therein both (A) is more likely
than not to be in accordance with this Section and applicable law, and (B) is
more likely to be in accordance with this Section and applicable law than any
other Gross-Up Payment.
(f) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in
writing from time to time, including, without
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limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section, the Company shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and xxx for a refund or to contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority. If, after the receipt by the Executive of an amount advanced by the
Company pursuant to this Section, the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of this Section) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to this Section, a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
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21
10. NON-COMPETITION AND NON-DISCLOSURE; EXECUTIVE COOPERATION.
(a) Non-Competition. Without the consent in writing of the Board, upon
a Termination of Employment for any reason, Executive will not, for a period of
one year thereafter, acting alone or in conjunction with others, directly or
indirectly:
(i) engage (either as owner, investor, partner, stockholder,
employer, employee, consultant, advisor or director) in any business in
the continental United States in which he has been directly engaged, or
has supervised as an executive, during the last two years prior to such
Date of Termination and which is directly in competition with a
business conducted by the Company or its subsidiaries as of the Date of
Termination and, for the Company's most recently-completed fiscal year,
contributed more than 5% of the Company's consolidated revenues;
provided, however, that Executive shall not be deemed to have breached
this clause (i) solely as a result of Executive being employed by or
otherwise providing services to a business of which a unit is in
competition with the Company or any subsidiary but as to which unit
Executive does not have direct or indirect responsibilities for the
products or services involved;
(ii) induce any customers of the Company or any of its
subsidiaries with whom Executive has had contacts or relationships,
directly or indirectly, during and within the scope of his employment
with the Company or any of its subsidiaries, to curtail or cancel their
business with such companies or any of them; or
(iii) induce, or attempt to influence, any employee of the
Company or any of its subsidiaries to terminate employment.
The provisions of subparagraphs (i), (ii), and (iii) above are separate and
distinct commitments independent of each of the other subparagraphs. It is
agreed that the ownership of not more than one percent of the equity securities
of any company having securities listed on an exchange or regularly traded in
the over-the-counter market shall not, of itself, be deemed inconsistent with
clause (i) of this paragraph (a).
(b) Non-Disclosure. Executive shall not at any time (including
following a Termination of Employment for any reason), disclose, use, transfer,
or sell, except in the course of employment with or other service to the
Company, any confidential or proprietary information of the Company or any of
its subsidiaries so long as such information has not otherwise been disclosed or
is not otherwise in the public domain, except as required by law or pursuant to
legal process.
(c) Cooperation With Regard to Litigation. Executive agrees to
cooperate with the Company (including following a Termination of Employment for
any reason), provided that such cooperation would not unreasonably interfere
with the personal or business activities or employment obligations of the
Executive, by making himself available to testify on behalf of the
Company or any subsidiary or affiliate of the Company, in any action, suit, or
proceeding,
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22
whether civil, criminal, administrative, or investigative, and to assist the
Company, or any subsidiary or affiliate of the Company, in any such action,
suit, or proceeding, by providing information and meeting and consulting with
the Board and its representatives or counsel, or representatives or counsel of
or to the Company, or any subsidiary or affiliate of the Company, as reasonably
requested; provided, however, this subsection (c) shall not apply to any action
between the Executive and the Company to enforce this Termination Agreement or
the Employment Agreement. The Company agrees to reimburse Executive for all
expenses actually incurred in connection with his provision of testimony or
assistance, together with a Tax Gross- up Payment with respect to Taxes payable
by Executive in connection any taxable income attributable to such
reimbursement.
(d) Survival. Notwithstanding any provision of this Termination
Agreement to the contrary, the provisions of this Section shall survive the
termination or expiration of this Termination Agreement, shall be valid and
enforceable, and shall be a condition precedent to the Executive (or his
Beneficiaries) receiving any amounts payable hereunder.
11. GOVERNING LAW. This Termination Agreement is governed by and is to
be construed, administered, and enforced in accordance with the laws of the
State of Michigan, without regard to Michigan conflicts of law principles,
except insofar as the Delaware General Corporation Law and federal laws and
regulations may be applicable. If under the governing law, any portion of this
Termination Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation, ordinance, or other principle of law, such
portion shall be deemed to be modified or altered to the extent necessary to
conform thereto or, if that is not possible, to be omitted from this Termination
Agreement. The invalidity of any such portion shall not affect the force,
effect, and validity of the remaining portion hereof. If any court determines
that any provision of Section 12 hereof is unenforceable because of the duration
or geographic scope of such provision, it is the parties' intent that such court
shall have the power to modify the duration or geographic scope of such
provision, as the case may be, to the extent necessary to render the provision
enforceable and, in its modified form, such provision shall be enforced.
12. EXPENSE REIMBURSEMENT. All reasonable costs and expenses (including
fees and disbursements of counsel) incurred by Executive in negotiating the
terms and conditions of this Termination Agreement shall be paid on behalf of or
reimbursed to Executive promptly by the Company. All reasonable costs and
expenses (including fees and disbursements of counsel) incurred by Executive in
seeking to enforce rights pursuant to this Termination Agreement shall be paid
on behalf of or reimbursed to Executive promptly by the Company, whether or not
Executive is successful in asserting such rights[; provided, however, that if
Executive does not prevail (after exhaustion of all available judicial remedies)
in respect of a claim by Executive or by the Company hereunder, and the Company
establishes before a court of competent jurisdiction, by clear and convincing
evidence, that Executive had no reasonable basis for his claim hereunder, or for
his response to the Company's claim hereunder, and acted in bad faith, no
further reimbursement for legal fees and expenses shall be due to Executive in
respect of such claim and Executive shall refund any amounts previously
reimbursed hereunder with respect to such claim].
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The Company shall pay to Executive a Tax Gross-Up Payment in respect to any
Taxes incurred by Executive with respect to all amounts reimbursed pursuant to
this Section 12.
13. FUNDING OF COMPANY OBLIGATIONS. During the Extended Employment
Period, the Company agrees to maintain a minimum amount in a rabbi trust (or to
provide to the trustee of such rabbi trust an irrevocable letter of credit in an
amount equal to such minimum amount and callable at will by such trustee)
sufficient to fund the aggregate present value of all liabilities potentially
owed to the Executive hereunder or under the Employment Agreement as if the
Company had terminated Executive's employment without Cause.
14. MISCELLANEOUS.
(a) Integration. This Termination Agreement modifies and supersedes any
and all prior agreements and understandings between the parties hereto with
respect to the employment of Executive by the Company and its subsidiaries,
except for the Employment Agreement and contracts relating to compensation under
executive compensation and employee benefit Plans of the Company. Subject to the
rights, benefits and obligations provided for in such executive compensation
contracts and employee benefit Plans of the Company, this Termination Agreement
and the Employment Agreement together constitute the entire agreement among the
parties with respect to the matters herein provided, and no modification or
waiver of any provision hereof shall be effective unless in writing and signed
by the parties hereto. Executive shall not be entitled to any payment or benefit
under this Termination Agreement which duplicates a payment or benefit received
or receivable by Executive under such prior agreements and understandings with
the Company or under any benefit or compensation Plan of the Company.
(b) Non-Transferability. Executive may not assign any of his
obligations under this Employment Agreement. The Company may not assign its
rights or obligations under this Termination Agreement without the prior written
consent of Executive except to a successor of the Company's business which
expressly assumes the Company's obligations hereunder in writing. This
Termination Agreement shall be binding upon and inure to the benefit of
Executive, his estate and Beneficiaries, the Company and the successors and
permitted assigns of the Company.
(c) Beneficiaries. If Executive dies prior to receiving all of the
amounts payable to him in accordance with the terms of this Termination
Agreement, such amounts shall be paid to one or more beneficiaries (each, a
"Beneficiary") designated by Executive in writing to the Company during his
lifetime, or if no such Beneficiary is designated, to Executive's estate. Such
payments shall be made in a lump sum to the extent so payable and, to the extent
not payable in a lump sum, in accordance with the terms of this Termination
Agreement. Executive, without the consent of any prior Beneficiary, may change
his designation of Beneficiary or Beneficiaries at any time or from time to time
by a submitting to the Company a new designation in writing.
(d) Notices. Any notice under this Termination Agreement shall be in
writing, signed by the party or parties giving or making the same, and shall be
served on the person or persons
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for whom it is intended or who should be advised or notified, by Federal Express
or other similar overnight service or by certified or registered mail, return
receipt requested, postage prepaid and addressed to such party at the address
set forth below or at such other address as may be designated by such party by
like notice:
If to the Company: Walbro Corporation
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Secretary
If to Executive: Xxxxx X. Xxxxxxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxx 00000
With copies to: Xxxxx X. Xxxxx, Esquire
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
If the parties by mutual agreement supply each other with telecopier numbers for
the purposes of providing notice by facsimile, such notice shall also be proper
notice under this Termination Agreement. In the case of Federal Express or other
similar overnight service, such notice or advice shall be effective one business
day after deposit with such service during its normal business hours, and, in
the cases of certified or registered mail, shall be effective five business days
after deposit with the U.S. Postal Service.
(e) Reformation. The invalidity of any portion of this Termination
Agreement shall not deemed to render the remainder of this Termination Agreement
invalid.
(f) Headings. The headings of this Termination Agreement are for
convenience of reference only and do not constitute a part hereof.
(g) No General Waivers. The failure of any party at any time to require
performance by any other party of any provision hereof or to resort to any
remedy provided herein or at law or in equity shall in no way affect the right
of such party to require such performance or to resort to such remedy at any
time thereafter, nor shall the waiver by any party of a breach of any of the
provisions hereof be deemed to be a waiver of any subsequent breach of such
provisions. No such waiver shall be effective unless in writing and signed by
the party against whom such waiver is sought to be enforced.
(h) No Obligation to Mitigate. Executive shall not be required to seek
other employment or otherwise to mitigate Executive's damages hereunder, nor
shall the amount of any payment hereunder be reduced by any compensation earned
by the Executive as a result of employment by
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another employer; provided, however, that any health and other insurance
benefits provided for this Termination Agreement shall not duplicate any
benefits that are provided to Executive and his family by such other employer
and shall be secondary to any coverage provided by such other employer.
(i) No Offsets; Withholding. The amounts required to be paid by the
Company to Executive pursuant to this Termination Agreement shall not be subject
to offset, counterclaim, recoupment, defense or other claim, right or action
which the Company may have against Executive or others, other than with respect
to any amounts that are owed to the Company by Executive due to his receipt of
Company funds as a result of his fraudulent activity. The foregoing and other
provisions of this Termination Agreement notwithstanding, all payments to be
made to Executive under this Termination Agreement will be subject to
Withholding Taxes and other required deductions.
(j) Successors and Assigns. This Termination Agreement shall be binding
upon and shall inure to the benefit of Executive, his heirs, executors,
administrators and beneficiaries, and shall be binding upon and inure to the
benefit of the Company and its successors and assigns.
15. INDEMNIFICATION. All rights to indemnification by the Company now
existing in favor of Executive as provided in the Company's Certificate of
Incorporation or By-Laws or pursuant to other agreements in effect on the date
of this Termination Agreement shall continue in full force and effect (including
after the expiration of the Term), and the Company shall also advance expenses
for which indemnification may be ultimately claimed as such expenses are
incurred to the fullest extent permitted under applicable law, subject to any
requirement that Executive provide an undertaking to repay such advances if it
is ultimately determined that Executive is not entitled to indemnification;
provided, however, that any determination required to be made with respect to
whether Executive's conduct complies with the standards required to be met as a
condition of indemnification or advancement of expenses under applicable law and
the Company's Certificate of Incorporation, By-Laws, or other agreement shall be
made by independent counsel mutually acceptable to Executive and the Company
(except to the extent otherwise required by law). The Company shall not amend
its Certificate of Incorporation or By-Laws or any agreement in any manner which
adversely affects the rights of Executive to indemnification thereunder. Any
provision contained herein notwithstanding, this Termination Agreement shall not
limit or reduce any rights of Executive to indemnification pursuant to
applicable law. In addition, the Company will maintain directors' and officers'
liability insurance in effect and covering acts and omissions of Executive,
during the Term and for a period of six years thereafter, on terms substantially
no less favorable as those in effect on the date of this Termination Agreement.
16. DEFINITIONS. As used in this Termination Agreement, the terms set
forth below have the following meanings (such meanings to be applicable to both
the singular and plural forms, except where otherwise expressly indicated):
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(a) "Accrued Annual Bonus" means any unpaid amount of Executive's Annual
Bonus with respect to the Company's most recent fiscal year ended prior to the
Date of Termination determined in accordance with (i) Section 4(b) of the
Employment Agreement (if such fiscal year ended before an Extension Date) or
(ii) Section 3(b) of this Termination Agreement (if such fiscal year ended on or
after the Extension Date).
(b) "Accrued Base Salary" means the sum of (i) the amount of Executive's
Annual Base Salary (as determined under Section 4(a) of the Employment
Agreement) which is accrued through the Extension Date but not yet paid as of
the Date of Termination and (ii) the amount of Executive's Annual Base Salary
(as determined under Section 3(a) of this Termination Agreement) which is
accrued but not yet paid as of the Date of Termination.
(c) "affiliated companies" -- see Section 2(a) hereof.
(d) "Annual Bonus" means, for 1998 and subsequent years, the annual
incentive compensation paid to Executive pursuant to Section 4(b) of the
Employment Agreement or Section 3(b) of this Termination Agreement, as
applicable, and, for years prior to 1998, the annual cash incentive compensation
paid to Executive pursuant of the Former Employment Agreement.
(e) "Approved Early Retirement" -- see Section 6 hereof.
(f) "Beneficiary" -- see Section 14(c) hereof.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Date of Termination" -- see Section 5(b) hereof:
(i) "Deferral Account" the accounts on the Company's books that reflect
the Company's unfunded obligations under the deferral arrangements authorized
under Section 5 of the Employ ment Agreement.
(j) "Deferral Shares" means the phantom shares of Common Stock credited
to Executive's Deferral Accounts.
(k) "EBP" -- see Section 4(a).
(l) "Extended Employment Period" shall have the meaning specified in
Section 2(d) of the Employment Agreement.
(m) "Fair Market Value" has the meaning specified in Section 8 of the
Employment Agreement.
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(n) "Highest Annual Bonus" means the higher of (i) the Recent Annual
Bonus and (ii) the Annual Bonus that would have been payable (without giving
effect to any deferral elections in regard thereof) for the most recently
completed fiscal year of the Company (annualized for any fiscal year consisting
of less than twelve (12) full months), assuming full satisfaction of any
performance standards or targets applicable to determining the maximum amount
payable.
(o) "Normal Retirement" -- see Section 6 hereof.
(p) "Notice of Non-Renewal" has the meaning specified in Section 2(b) of
the Employment Agreement.
(q) "Performance Shares" means performance shares granted under the EBP
and any performance shares, performance units, stock grants, or other long-term
incentive arrangements adopted as a successor or replacement to performance
shares under the EBP or other Plans of the Company.
(r) "Plans" means plans, practices, policies, programs and arrangements.
(s) "Prorata Annual Bonus" for any year means the product of (i) the
Executive's target annual bonus for such year multiplied by (ii) a fraction of
which the numerator is the numbers of days which have elapsed in such fiscal
year through and including the Date of Termination and the denominator of which
is 365; provided, however, that if a Date of Termination occurs after the
Extension Date, the Highest Annual Bonus shall be used instead of the Target
Annual Bonus for purposes of this definition.
(t) "Recent Annual Bonus" -- see Section 3(b).
(u) "Supplemental Retirement Benefit" has the meaning specified in
Section 5(e) of the Employment Agreement.
(v) "Tax Gross-Up Payment" has the meaning specified in Section 8 of the
Employment Agreement.
(w) "Termination of Employment" means a termination by the Company or by
Executive of Executive's employment with the Company.
(x) "Termination For Good Reason" means a Termination of Employment by
Executive for a Good Reason, whether during or after the Term.
(y) "Termination Without Cause" means a Termination of Employment by the
Company for any reason other than Cause or Executive's death or Disability,
whether during or after the Term, including a Termination of Employment at the
end of the Term of the Employment Agreement after the Company's giving a Notice
of Non-Renewal.
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(z) "Withholding Taxes" has the meaning specified in Section 8 of the
Employment Agreement.
IN WITNESS WHEREOF, Executive and the Company have executed this
Termination Agreement as of the date first above written.
WALBRO CORPORATION
By:
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Name:
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Title:
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XXXXX X. XXXXXXXXX
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