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EXHIBIT 10.149
CHANGE OF CONTROL AND EMPLOYMENT AGREEMENT
AGREEMENT ("Agreement") by and between Insurance Auto Auctions, Inc., an
Illinois corporation (the "Company") and ___________________ (the "Executive"),
dated as of February 23 , 1998.
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. Therefore, in order to accomplish these objectives, the
Board has caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
(a) Subject to the next sentence, the "Effective Date" shall mean the
first date during the Change of Control Period (as defined in Section 1(b)) on
which a Change of Control (as defined in Section 2) occurs. However, if a
Change of Control occurs and if the Executive's employment with the Company is
terminated prior to the date on which the Change of Control occurs, 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 effect a Change of Control or (ii) otherwise arose in connection
with or anticipation of a Change of Control, then the "Effective Date" shall
mean the date immediately prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period commencing
on the date hereof and ending on the second anniversary of the date hereof;
provided, however, that on the date one year after the date hereof, and on each
annual anniversary of such date (such date, and each annual anniversary
thereof, a "Renewal Date"), unless this Agreement shall have been
terminated pursuant to Section 12(b)(ii), the Change of Control Period shall be
automatically extended by an additional year (so as to terminate two years from
such Renewal Date), unless at least 60 days prior to such Renewal Date the
Company gives notice to the Executive that the Change of Control Period shall
not be so extended, in which event the Change of Control Period shall terminate
one year after such Renewal Date.
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2. Change of Control. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) 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 50% or more of
the 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 (a), any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company shall not constitute a Change of Control; or
(b) 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 (other than an individual
whose initial assumption 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) who becomes 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; or
(c) 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") unless, following such Business Combination,
(i) all or substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of the 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 Voting Securities and (ii) 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
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
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3. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company subject to the terms and conditions of this Agreement,
for the period commencing on the Effective Date and ending on the second
anniversary of such date (the "Employment Period").
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) 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 Effective Date and (B)
the Executive's services shall be performed at the location where the Executive
was employed immediately preceding the Effective Date or any office or location
less than 75 miles from such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours
to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive
shall receive an annual base salary ("Annual Base Salary"), which shall be paid
at a monthly rate, at least equal to twelve 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 twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual Base Salary
shall be reviewed not later than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and thereafter at least
annually. Based on such review, the Board, in its discretion, can increase the
Annual Base Salary. Any increase in Annual Base Salary shall not serve to limit
or reduce any other obligation to the Executive under this Agreement. Neither
the initial Annual Base Salary nor any increase to the Annual Base Salary shall
be reduced. The term Annual Base Salary as utilized in this Agreement shall
refer to Annual Base Salary as increased. As used in this Agreement, the term
"affiliated companies" shall include any company controlled by, controlling or
under common control with the Company.
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(ii) Annual Bonus. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the "Annual Bonus") in cash at least equal to greater
of (A) the Executive's target bonus payable under the Company's Officer
Incentive Plan or Management Incentive Plan, as the case may be, or any
comparable bonus under any predecessor or successor plan, for the fiscal year
in which the Effective Date occurs (annualized in the event that the Executive
was not employed by the Company for the whole of such fiscal year) and (B) the
average of the Executive's annual bonuses actually paid under the Company's
Officer Incentive Plan or Management Incentive Plan, as the case may be, for
the three fiscal years immediately preceding the fiscal year in which the
Effective Date occurs (annualized in the event that the Executive was not
employed by the Company for the whole of any such fiscal years). 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.
(iii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans practices, policies and programs
applicable generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, 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, practices, policies and programs as in effect at
any time during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit
plans, practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits which are less favorable, in the aggregate, than 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
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company
and its affiliated companies. Furthermore, the Executive shall pay the same
amounts for all such benefits as other peer executives of the Company and its
affiliated companies.
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(v) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including use of an automobile
and payment of related expenses, or an automobile allowance, in accordance
with the most favorable plans, practices, programs and policies of the Company
and its affiliated companies in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more favorable
to the Executive, in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period,
the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to personal secretarial and other
assistance, at least equal to the most favorable of the foregoing provided to
the Executive by the Company and its affiliated companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives
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 Employment Period. If the
Disability of the Executive occurs during the Employment Period, the Company
may give to the Executive written notice in accordance with Section 12(c) of
this Agreement of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the Executive (the
"Disability Effective Date"), unless within the 30-day period after such
receipt, the Executive returns to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean the absence of
the Executive from the Executive's duties with the Company on a full-time
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basis for 180 consecutive business days as a result of incapacity due to mental
or physical illness, which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) the willful and continued failure of the Executive to
perform substantially the Executive's duties with the Company or one of its
affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), 30 days after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief Executive
Officer of the Company which specifically identifies the manner in which the
Board or Chief Executive Officer believes that the Executive has not
substantially performed the Executive's duties; or
(ii) the willful engaging by the Executive in illegal conduct
or gross misconduct which is materially and demonstrably injurious to the
Company, upon the Company giving the Executive written notice thereof, in each
case as determined in the good faith opinion of the Board and set forth in a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before
the Board) specifying the particulars thereof in detail. For purposes of this
provision, no act or failure to act on the part of the Executive shall be
considered "willful" unless it is done, or omitted to be done, by the Executive
in bad faith or without reasonable belief that the Executive's action or
omission was in the best interests of the Company. Any act or failure to act
based upon authority given pursuant to a resolution duly adopted by the Board
or upon the instructions of the Chief Executive Officer or a senior officer of
the Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done or omitted to be done by the Executive in good
faith and in the best interests of the Company.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(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 4(a) of this 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, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
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(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this 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) the Company's requiring the Executive to be based at any
office or location other than as provided in Section 4(a)(i)(B) of this
Agreement or the Company's requiring the Executive to travel on Company
business to a substantially greater extent than required immediately prior to
the Effective Date;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this Agreement;
or
(v) any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(c) of
this Agreement. For purposes of this Agreement, a "Notice of Termination"
means a written notice which (i) indicates the specific termination provision
in this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated and
(iii) if the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date shall be not
more than 30 days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination 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, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact
or circumstance in enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination 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 on which the Company notifies the Executive of such termination and (iii)
if the Executive's employment is terminated by reason of death or Disability,
the date of death of the Executive or the Disability Effective Date, as the
case may be.
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6. Obligations of the Company upon Termination.
(a) Good Reason; Other than for Cause, Death or Disability. If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause, Death or Disability, or the Executive shall
terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the
following amounts:
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the greater of (I) the Annual Bonus payable for the fiscal year
in which the Executive's Date of Termination occurs (annualized in the event
that the Executive was not employed by the Company for the whole of such fiscal
year) and (II) the average of the Executive's Annual Bonuses actually paid for
the three fiscal years immediately preceding the fiscal year in which the
Executive's Date of Termination occurs (annualized in the event that the
Executive was not employed by the Company for the whole of any such fiscal
years), including in each case any bonus or portion thereof which has been
earned but deferred, if any (such higher amount being referred to as the
"Highest Annual Bonus") and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of Termination, and
the denominator of which is 365 and (3) any compensation previously deferred by
the Executive (together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid (the sum
of the amounts described in clauses (1), (2) and (3) shall be hereinafter
referred to as the "Accrued Obligations"); and
B. an amount equal to the product of (1) one and one-
half and (2) the sum of (x) the Executive's Annual Base Salary and (y) the
Highest Annual Bonus;
(ii) for 18 months after the Executive's Date of Termination,
the Company shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described in
Section 4(b)(iv) of this Agreement (the "Company Welfare Plans") if the
Executive's employment had not been terminated, provided, however, that such
benefits shall be continued only to the extent permissible under the terms of
such Company Welfare Plans and applicable law. If any of the Company's Welfare
Plans do not permit continued participation by the Executive and his family
after the Executive's Date of Termination, the Company shall reimburse the
Executive for the cost of obtaining comparable coverage from a third-party
insurer. If during the 18 month period described herein the Executive is
reemployed by another employer, the rights of the Executive and his family to
receive benefits under any Company Welfare Plan shall terminate on the date he
and his family become eligible to receive comparable benefits from such
employer. If, at the end of the 18-month period described herein, the Executive
is receiving medical benefits under the Company's medical plan and is not
employed by another employer, the
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Company shall continue to provide medical benefits to the Executive and/or the
Executive's family pursuant to Title I, Part 6 of the Employee Retirement
Income Security Act of 1974, as amended ("COBRA"), and for such purpose, the
end of such 18-month period shall be considered the date of the "qualifying
event" as such term is defined by COBRA, provided, however, that if the
Executive is receiving medical benefits from a third-party insurer pursuant to
this clause (ii), and is not then employed by another employer, the Company
shall reimburse the Executive for the portion of the cost of such medical
benefits equal to excess of the cost charged by the third-party insurer over
the amount that would have been paid by the Executive under COBRA for continued
coverage under the Company's medical plan during the COBRA period;
(iii) for 18 months after the Executive's Date of Termination,
the Company shall continue the Executive's participation as an active employee
in any excess or supplemental pension or retirement plan maintained by the
Company in which the Executive participated as of such Date of Termination; and
(iv) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or agreement of
the Company and its affiliated companies (such other amounts and benefits shall
be hereinafter referred to as the "Other Benefits").
The payments made and benefits provided pursuant to this Section 6(a) will be
in lieu of any other severance benefits offered by the Company pursuant to any
plan, program, policy or practice that may be in effect.
(b) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations shall be
paid to the Executive's estate or beneficiary, as applicable, in a lump sum in
cash within 30 days of the Date of Termination. The "Other Benefits" to
be provided shall include, without limitation, and the Executive's estate
and/or beneficiaries shall be entitled to receive, benefits at least equal to
the most favorable benefits provided by the Company and affiliated companies to
the estates and beneficiaries of peer executives of the Company and such
affiliated companies under such plans, programs, practices and policies
relating to death benefits, if any, as in effect at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive's estate and/or the Executive's beneficiaries, as in effect on the
date of the Executive's death.
(c) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive,
other than for payment of Accrued Obligations and the timely
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payment or provision of Other Benefits. Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of Termination.
The "Other Benefits" to be provided shall include, without limitation, and the
Executive shall be entitled after the Disability Effective Date to receive,
disability and other benefits at least equal to the most favorable of those
generally provided by the Company and its affiliated companies to disabled
executives and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect generally
with respect to other peer executives and their families at any time during the
120-day period immediately preceding the Effective Date or, if more favorable
to the Executive and/or the Executive's family, as in effect at any time
thereafter.
(d) Cause; Other than for Good Reason. If the Executive's employment shall be
terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the
obligation to pay to the Executive (x) his Annual Base Salary through the Date
of Termination, (y) the amount of any compensation previously deferred by the
Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive, other than for
Accrued Obligations and the timely payment or provision of Other Benefits. In
such case, all Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination.
7. Non-Exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor, subject to
Section 12(b)(iii), shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which are vested benefits
or which the Executive is otherwise entitled to receive under any plan or
policy until the Date of Termination shall be payable in accordance with the
practice or program of, or any contract or agreement with, the Company or any
of its affiliated companies at or subsequent to such plan, policy, practice or
program or contract or agreement, except as explicitly modified by this
Agreement.
8. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced whether or not the Executive obtains other
employment. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company, the Executive or others of the validity or enforceability of,
or liability under, any provision of this Agreement or any guarantee
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of performance thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable Federal rate provided for in
Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the
"Code").
9. Excise Tax.
(a) Gross-Up Payment. In the event a Change of Control shall
occur, and a determination is made by legislation, regulation, ruling directed
to the Executive or the Company, or court decision that the aggregate amount
of any payment made to the Executive hereunder, or pursuant to any plan,
program or policy of the Company in connection with, on account of, or as a
result of, such Change of Control (the "Total Payments") will be subject to
the excise tax provisions of Section 4999 of the Code, or any successor section
thereof, the Executive shall be entitled to receive from the Company, in
addition to any other amounts payable thereunder, a lump sum payment (the
"Gross-Up Payment"), sufficient to cover the full cost of such excise taxes and
the Executive's federal, state and local income and employment taxes on this
additional payment so that the net amount retained by the Executive, after the
payment of all such excise taxes on the Total Payments, and all federal, state
and local income and employment taxes and excise taxes on the Gross-Up Payment,
shall be equal to the Total Payments. The Total Payments, however, shall be
subject to any federal, state and local income and employment taxes thereon.
For this purpose, the Executive shall be deemed to be in the highest marginal
rate of federal, state and local taxes. Such amount shall be payable to the
Executive as soon as may be reasonably practicable after such final
determination is made.
(b) Determination. The Executive and the Company shall
mutually and reasonably determine whether or not such determination has
occurred, whether any appeal to such determination should be made and the
amount of the Gross-Up Payment to be made to the Executive. Prior to the
making of any such Gross-Up Payment, either party may request a determination
as to the amount of such Gross-Up Payment. If such a determination is
requested, it shall be made promptly, at the Company's expense, by independent
tax counsel selected by the Executive and approved by the Company (which
approval shall not unreasonably be withheld), and such determination shall be
conclusive and binding on the parties. The Company shall provide such
information as such counsel may reasonably request, and such counsel may engage
accountants or other experts at the Company's expense to the extent that they
deem necessary or advisable to enable them to reach a determination. The term
"independent tax counsel" as used herein shall mean a law firm of recognized
expertise in federal income tax matters that has not previously advised or
represented either party.
10. Confidentiality. At all times, the Executive agrees to be bound
by the provisions of the Restrictions on Use of Trade Secrets and Records and
Assignments of Inventions Agreement (the "Confidentiality Agreement") between
Executive and the Company, as in effect from time to time, the provisions of
which are incorporated by reference in this Agreement. In no
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event shall an asserted violation of the provisions of this Section 10 (or such
Confidentiality Agreement) constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
11. Assignment; Binding Effect; Successors.
(a) Assignment. This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) Binding Effect. This Agreement shall inure to the benefit
of and be binding upon the Company and its successors and assigns.
(c) Successors. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
assume expressly 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 had taken place. As used in this Agreement, "Company" shall mean
the Company as herein before defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
12. Miscellaneous.
(a) Governing Law; Headings.
(i) This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois without reference to the
principles of conflict of laws thereof.
(ii) The headings in this Agreement are not part of the
provisions hereof and shall have no force or effect.
(b) Amendment; Termination; Employment.
(i) Except as otherwise expressly provided herein, this
Agreement may be amended or modified only by written agreement duly executed
and delivered by the parties hereto or their respective successors or legal
representatives.
(ii) This Agreement may be terminated at any time prior
to the Effective Date by the Company or the Executive, in which case the
Executive shall have no further rights under this Agreement. No such
termination shall affect the parties' rights and obligations
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under the Confidentiality and Non-Solicitation Agreement referred to in Section
10 or any other agreement between the Executive and the Company.
(iii) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written agreement between
the Executive and the Company, the employment of the Executive by the Company
is "at will." From and after the Effective Date, this Agreement shall supersede
any other agreement between the parties with respect to the subject matter
hereof.
(c) Notices. All notices and other communications given
hereunder shall be in writing and shall be given by hand delivery (including
overnight courier or messenger) or electronic facsimile transmission to the
other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
If to the Company:
Insurance Auto Auctions, Inc.
000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
on the date on which delivered if by hand delivery, the date of confirmation of
transmission if by electronic facsimile transmission, the next business day if
by nationally-recognized overnight delivery service or the first to occur of
either the date of actual receipt or the fifth business day following deposit
in the U.S. mail if by mail.
(d) Invalidity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
(e) Taxes. The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
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(f) Waiver. The Executive's or the Company's failure to
insist upon strict compliance with any provision of this Agreement or the
failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v) of this Agreement,
shall not be deemed to be a waiver of such provision or right or of any other
provision or right of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
EXECUTIVE
__________________________________________
INSURANCE AUTO AUCTIONS, INC.
By: _______________________________________
Its: ______________________________________
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