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EXHIBIT (10)-3
Other Executives Form
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT (this "Agreement") by and between TRINOVA Corporation,
an Ohio corporation (the "Company"), and _______________________________ (the
"Executive"), dated this _____ day of ____________, 199__.
WITNESSETH THAT:
WHEREAS, the Company recognizes that today's business environment
makes it difficult to attract and retain highly qualified executive and key
professional personnel unless a degree of security can be offered to those
individuals against organizational and personnel changes which frequently follow
a change in control of a corporation; and
WHEREAS, even rumors of change-in-control transactions may cause key
employees to consider major career changes in an effort to assure financial
security for themselves and their families; and
WHEREAS, the Company desires to assure fair treatment of its key
employees in the event of a change in control and to allow them to make critical
career decisions without undue time pressure and financial uncertainty,
increasing their willingness to remain with the Company notwithstanding the
outcome of a possible change-in-control transaction; and
WHEREAS, the Company recognizes that many of its key management
employees will be involved in evaluating or negotiating any offers, proposals,
or other transactions which could result in a change in control of the Company
and, recognizing the fiduciary obligations of such executives, believes that it
is in the best interests of the Company and its shareholders to provide
additional assurance that such key employees are in a position, free from
personal economic and employment considerations, to be able as a practical
matter to objectively assess and aggressively pursue the interests of the
Company's shareholders in making these evaluations and carrying on such
negotiations;
NOW THEREFORE, the parties agree as follows:
1. DEFINITIONS. When used herein, the following terms shall have the
meanings set forth below:
A. "Average Total Compensation" shall mean the sum of the
amounts determined under clauses (i) and (ii) below.
(i) The higher of the Executive's annual base
salary (without giving effect to any elected
deferrals to a plan under Section 401(k) of the
Internal Revenue Code of 1986, as amended (the
"Code")) in effect on (x) the day immediately
prior to the day on which the Change in Control
occurred, or (y) the Executive's Termination
Date.
(ii)(a) If the Executive has been employed by the
Company for the last three full consecutive
calendar years, the average of the two highest
aggregate short-term annual incentive awards
received by the Executive under the Incentive
Compensation Plan attributable to services
performed by the Executive during any calendar
year in the last five
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full calendar years (without regard to when
such awards were paid or accrued); or
(ii)(b) If the Executive has been employed by the
Company for at least one, but less than three
full consecutive calendar years, the average of
the aggregate short-term annual incentive
awards received by the Executive under the
Incentive compensation Plan attributable to
services performed by the Executive during each
full calendar year he has been employed by the
Company (without regard to when such awards
were paid or accrued); or
(ii)(c) If the Executive has been employed by the
Company for less than one full calendar year,
the greater of (x) his guaranteed annual
incentive compensation or (y) the aggregate
short-term annual incentive awards to which the
Executive would have been entitled under the
Incentive Compensation Plan of which the
Executive was a participant on the Termination
Date, if he had worked for one full calendar
year at the base salary determined under clause
(i) above.
B. A "Beneficial Owner" of Voting Stock is any Person who
would be deemed to beneficially own such Voting Stock
within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any successor rules or regulations thereto.
C. "Benefit Period" shall mean a period of one year,
commencing with the Termination Date, except that if the
Executive will reach age 65 within one year after the
Termination Date, the Benefit Period shall mean a period
of a fractional year, commencing with the Termination Date
and ending on the Executive's 65th birthday.
D. "Cause" shall mean that, prior to any Termination, the
Executive shall have committed:
(i) an intentional act of fraud, embezzlement or
theft in connection with his duties or in the
course of his employment with the Company;
(ii) intentional wrongful damage to property of the
Company; or
(iii) intentional wrongful disclosure of secret
processes or confidential information of the
Company;
and any such act shall have been materially harmful to the
Company. For purposes of this Agreement, no act, or
failure to act, on the part of the Executive shall be
deemed "intentional" if it was due primarily to an error
in judgment or negligence, but shall be deemed
"intentional" only if done, or omitted to be done, by the
Executive not in good faith and without reasonable belief
that his action or omission was in the best interest of
the Company. Notwithstanding anything in this Agreement to
the contrary, the Executive shall not be deemed to have
been terminated for "Cause" hereunder unless and until
there shall have been delivered to the Executive a copy of
a resolution duly adopted by the affirmative vote of not
less than three-quarters of the Board of Directors of the
Company (the "Board") then in office at a meeting of the
Board called and held for such purpose (after reasonable
notice to the Executive and an opportunity for the
Executive, together with his counsel, to be heard before
the Board), finding that, in the good faith opinion
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of the Board, the Executive had committed an act set forth
above in this Paragraph 1.D and specifying the particulars
thereof in detail. Nothing herein shall limit the right of
the Executive or his beneficiaries to contest the validity
or propriety of any such determination.
E. A "Change in Control" shall have occurred if there is a
report filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), each as promulgated
pursuant to the Exchange Act, disclosing that any Person
has become the Beneficial Owner of 20% or more of the
Voting Stock; provided, however, that in the event that
prior to the Termination Date, such Person files a report
on Schedule 13D or Schedule 14D-1 (or any successor
schedule, form or report) disclosing that it is no longer
a Beneficial Owner of 20% or more of the Voting Stock,
then a "Change in Control" shall not be deemed to have
occurred for the purposes of this Agreement.
Notwithstanding the foregoing provisions of Paragraph 1.E,
a "Change in Control" shall not be deemed to have occurred
for purposes of this Agreement solely because (i) the
Company, (ii) an entity in which the Company directly or
indirectly beneficially owns 50% or more of the voting
securities, or (iii) any Company-sponsored employee stock
ownership plan or any other employee benefit plan of the
Company, either files or becomes obligated to file a
report or a proxy statement under or in response to
Schedule 13D or Schedule 14D-1 (or any successor schedule,
form or report or item therein) under the Exchange Act,
disclosing beneficial ownership by it of shares of Voting
Stock, whether in excess of 20% or otherwise, or because
the Company reports that a change in control of the
Company has or may have occurred or will or may occur in
the future by reason of such beneficial ownership.
F. "Incentive Compensation Plan" shall mean the plan approved
by shareholders of the Company on April 19, 1984 (or any
Operating Company Incentive Plan) and any amendments
thereto and restatements thereof, or any successor plan
that may become effective subsequent to the date of this
Agreement and prior to a Change in Control.
G. "Operating Company" shall mean any corporation of which
the Company owns directly or indirectly more than 50% of
the outstanding stock having by its terms ordinary voting
power to elect a majority of the board of directors of
such corporation, irrespective of whether at the time
stock of any other class or classes of such corporation
shall have or might have voting power by reason of the
happening of any contingency.
H. "Person" shall mean any "person," as the term "person" is
used and defined in Section 14(d)(2) of the Exchange Act,
and any "affiliate" or "associate" of any such person, as
the terms "affiliate" and "associate" are defined in Rule
12b-2 of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement.
I. "Retirement Savings Plan" shall mean the TRINOVA
Corporation Retirement Savings and Profit Sharing Plan for
Corporate Employees as amended effective January 1, 1988
(or any Operating Company defined contribution plan,
including profit sharing plans) and any amendments thereto
and restatements thereof, or any successor plan that may
become effective subsequent to the date of this agreement
and prior to a Change in Control.
J. "Termination" shall mean termination by the Company of the
Executive's employment for any reason other than the
following:
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(i) death;
(ii) Total Disability, as defined in the Company's
long-term disability plan then in effect, and
the Executive begins actually to receive
disability benefits pursuant to such disability
plan; or
(iii) Cause.
The Executive may also deem himself to have been
terminated under this Paragraph 1.J if the aggregate cash
compensation (including base salary (without giving effect
to any elected deferrals to a plan under Section 401(k) of
the Code) plus awards under the Incentive Compensation
Plan) received by the Executive in any calendar year
following a Change in Control is an amount less than the
aggregate cash compensation (including base salary
(without giving effect to any elected deferrals to a plan
under Section 401(k) of the Code) plus awards under the
Incentive Compensation Plan) received by the Executive in
the full calendar year immediately preceding the Change in
Control; provided however, if the Executive was not
employed by the Company during all of the full calendar
year immediately preceding the Change in Control, the
amount referred to above with respect to the full calendar
year immediately preceding the Change in Control shall be
the sum of the amounts determined pursuant to Paragraphs
1.A(i) and 1.A(ii)(c).
K. "Termination Date" shall be the last day worked by an
Executive whose employment with the Company is terminated
by the Company other than for the reasons set forth in
Subparagraphs 1.J(i), (ii) or (iii) of this Agreement.
L. "Voting Stock" means all outstanding securities of the
Company entitled to vote generally in the election of
directors of the Company at the time in question.
2. PAYMENTS UPON TERMINATION. Subject to Paragraph E hereof, in the
event of Termination within four years after the Change in Control,
the Executive shall receive:
A. An amount equal to the Executive's Average Total
Compensation, multiplied by the length, by a year or a
fractional year, of the Benefit Period. This payment shall
be made by the Company within thirty calendar days after
the Executive's Termination Date.
B. A contribution by the Company (or, if applicable, the
Company shall cause the appropriate Operating Company to
make a contribution) in an amount equal to 1 times 4.5% of
the Executive's Average Total Compensation to be made
within thirty calendar days after the Executive's
Termination Date to the Executive's account in the
applicable Retirement Savings Plan. These benefits shall
be payable at the time and in the manner set forth in such
Plan as in effect immediately prior to the Change in
Control.
C. During the Benefit Period, the benefits associated with
continued participation in the employee health, life
insurance, disability income and other welfare benefit
plans of the Company and/or any Operating Company in which
he was participating immediately prior to the Change in
Control, upon provisions substantially similar to or more
favorable to the Executive than those contained in the
respective plans as of the Termination Date, provided,
however, that if participation by the Executive in any of
such plans is not permitted, due to the requirements
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for eligibility for participation contained therein, the
Company shall (or shall cause the applicable Operating
Company to) pay or provide for the payment of the benefits
described in those plans to the Executive and/or his
dependents, or, if applicable, to his beneficiaries or
estate as if he were employed by the Company during the
Benefit Period in the position held by him immediately
prior to the Change in Control.
D. Reimbursement for the cost of outplacement services
rendered to the Executive as part of efforts made by the
Executive to obtain employment following his Termination
Date.
E. In the event the "present value" (as determined under
Section 280G of the Code or any successor provision
thereto) of the amounts payable under Paragraphs 2.A
through 2.D hereof, when added to the "present value" (as
determined under Section 280G of the Code or any successor
provision thereto) of any other "parachute payments" (as
that term is defined in Section 280G of the Code or any
successor provision thereto) from the Company, exceeds an
amount (the "299% Amount") equal to 299% of the
Executive's "base amount" (as that term is defined in
Section 280G of the Code (without regard to Section
280G(b)(2)(A)(ii) thereof) or any successor provision
thereto), then the amount of the payments otherwise
payable to the Executive pursuant to this Agreement shall
be reduced to the minimum extent necessary (but in no
event to less than zero) so that no such payment causes
the 299% Amount to be exceeded. The reduction, if any,
contemplated by the immediately preceding sentence shall
be effected by reducing to the extent necessary the
benefits otherwise to be provided by Paragraph 2.C hereof,
and then, if necessary, by reducing the benefits otherwise
to be provided by Paragraph 2.B hereof, and then, if
necessary, by reducing the benefits provided by Paragraph
2.A hereof.
F. The determination of whether any amount otherwise payable
under Paragraphs 2.A through 2.D hereof causes the 299%
Amount to be exceeded shall be made, if requested by the
Executive or the Company, by Xxxxx, Day, Xxxxxx & Xxxxx or
such other counsel as may be selected for this purpose by
the Company's independent accounting firm and approved by
the Executive.
3. NO MITIGATION OBLIGATION. The Company hereby acknowledges that it
will be difficult, and may be impossible, for the Executive to find
reasonably comparable employment following the Termination Date, and
the parties desire to avoid possible disputes with respect to
mitigation and offset matters. The Company also acknowledges that,
particularly in light of Paragraph 2.E hereof, its Board of Directors
has, following due consideration of the matter, determined that the
benefits provided by Paragraph 2 hereof are reasonable. Accordingly,
the parties hereto expressly agree that the payment of the amounts
specified in Paragraph 2 hereof by the Company to the Executive in
accordance with the terms of this Agreement will be liquidated
damages, and that the Executive shall not be required to mitigate the
amounts provided for in Paragraph 2 of this Agreement by seeking
other employment or otherwise, nor shall any profits, income,
earnings or other benefits from any source whatsoever create any
mitigation, offset, reduction or any other obligation on the part of
the Executive hereunder or otherwise, except that the welfare
benefits provided by Paragraph 2.C hereof shall be reduced to the
extent comparable welfare benefits are actually received by the
Executive from another employer following the Executive's Termination
Date until the expiration of the Benefit Period.
4. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement or the breach thereof, shall be settled by arbitration
in the City of Toledo, Ohio, in accordance with the laws of the State
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of Ohio by three arbitrators, one of whom shall be appointed by the
Company, one by the Executive and the third of whom shall be
appointed by the first two arbitrators. If the first two arbitrators
cannot agree on the appointment of a third arbitrator, then the third
arbitrator shall be appointed by the Chief Judge of the United States
District Court for the Northern District of Ohio. The arbitration
shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of
arbitrators, which shall be as provided in this Paragraph 4. Judgment
upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. In the event that the Executive
determines in good faith to retain legal counsel and/or incur other
reasonable costs or expenses in connection with such arbitration to
enforce any or all of the Executive's rights under this Agreement or
under any arbitration award, the Company shall pay 50% of the first
$10,000 of attorneys' fees, costs, and expenses incurred by the
Executive in connection with the enforcement of his rights, including
the enforcement of any arbitration award in court, regardless of the
final outcome. The Company shall pay all such costs and expenses in
excess of $10,000 incurred by the Executive.
5. NOTICES. Any notices, requests, demands, and other communications,
provided for in or pertinent to this Agreement shall be sufficient if
delivered to the other party hereto by means of a written notice,
mailed by United States registered or certified mail, return receipt
requested, postage prepaid to either the Executive's last known
address, or to the Company's principal executive offices, as the case
may be.
6. GOVERNING LAW. The provisions of this Agreement shall be construed
and governed in accordance with the laws of the State of Ohio without
giving effect to the principles of conflict of laws of such State.
7. AMENDMENT. This Agreement may be amended or canceled by mutual
agreement of the parties in writing without the consent of any other
person and, so long as the Executive lives, no person, other than the
parties hereto shall have any rights under or interest in this
Agreement or the subject matter hereof.
8. Successors and Binding Agreement.
A. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all
of the business and/or assets of the Company, by agreement
in form and substance satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would
be required to perform if no such succession had taken
place. This Agreement shall be binding upon and inure to
the benefit of the Company and any successor to the
Company, including without limitation any persons
acquiring directly or indirectly all or substantially all
of the business and/or assets of the Company whether by
purchase, merger, consolidation, reorganization or
otherwise (and such successor shall thereafter be deemed
the "Company" for the purposes of this Agreement), but
shall not otherwise be assignable, transferable or
delegable by the Company.
B. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal
representatives, executors, administrators, successors,
heirs, distributees and/or legatees.
C. This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other,
assign, transfer or delegate this Agreement or any rights
or obligations hereunder except as expressly provided in
Paragraph 8.A hereof.
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Without limiting the generality of the foregoing, the
Executive's right to receive payments hereunder shall not
be assignable, transferable or delegable, whether by
pledge, creation of a security interest or otherwise,
other than by a transfer by his will or by the laws of
descent and distribution and, in the event of any
attempted assignment or transfer contrary to this
Paragraph 8.C, the Company shall have no liability to pay
any amount so attempted to be assigned, transferred or
delegated.
9. VALIDITY. If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement
and the application of such provision to any other person or
circumstances shall not be affected, and the provision so held to be
invalid, unenforceable or otherwise illegal shall be reformed to the
extent (and only to the extent) necessary to make it enforceable,
valid and legal.
10. SCOPE OF AGREEMENT. This Agreement is not a contract for employment
for any period of time, does not constitute a guarantee of employment
and shall not be deemed to confer any benefit on the Executive in the
absence of a Change in Control.
11. TERM. The period during which this Agreement shall be in effect (the
"Term") shall commence as of the date hereof and shall expire as of
the later of (i) the close of business on December 31, 1992 and (ii)
termination of the Benefit Period, provided, however, that (A)
commencing on January 1, 1989 and each January 1 thereafter, the Term
of this Agreement shall automatically be extended for an additional
year unless, not later than September 30 of the immediately preceding
year, the Company or the Executive shall have given notice that it or
he, as the case may be, does not wish to have the Term extended and
(B) subject to Paragraph 10 hereof, if, prior to a Change in Control,
the Executive ceases for any reason to be an employee of the Company,
thereupon the Term shall be deemed to have expired and this Agreement
shall immediately terminate and be of no further effect.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its secretary, all as of
the day and year first above written.
____________________________________
Executive
ATTEST: TRINOVA CORPORATION
___________________________________ By: _______________________________
Secretary Vice President
(Seal)
