AMPCO PITTSBURGH
600 Grant St., Suite 4600
Pittsburgh, Pennsylvania 15219
(412) 456-4400
Fax (412) 456-4404
July 1, 1997
Ms. Rose Hoover
c/o Ampco-Pittsburgh Corporation
600 Grant St., Suite 4600
Pittsburgh, Pennsylvania 15219
Dear Rose:
Ampco-Pittsburgh Corporation (the "Corporation") recognizes that
your contribution to the success of the Corporation has been substantial and
desires to assure the Corporation of your continued employment. In this
connection, the Board of Directors of the Corporation (the "Board") recognizes
that, as is the case with other publicly held corporations, the possibility of a
change in control may exist and that such possibility, and the uncertainty that
it may raise among the Company's management, may result in the departure or
distraction of management personnel to the detriment of the Corporation and its
stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Corporation's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in the employ of the Corporation,
the Corporation agrees that you shall receive the severance benefits set forth
in this letter agreement ("Agreement") in the event your employment with the
Corporation is
Ms. Rose Hoover 2
terminated subsequent to a "Change in Control" (as defined in Section 2 hereof)
under the circumstances described below.
1. TERM OF AGREEMENT. This Agreement will commence on the date
hereof and shall continue in effect for twenty-four (24) months from the date
hereof; PROVIDED, HOWEVER, that commencing on July 1, 1999 and on each
anniversary thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than thirty (30) days prior
to such date, the Corporation shall have given notice that it does not wish to
extend this Agreement; PROVIDED, FURTHER, HOWEVER, that if a Change in Control
shall have occurred during the original or extended term of this Agreement, this
Agreement cannot be cancelled.
2. CHANGE IN CONTROL.
(a) No benefits shall be payable hereunder unless there shall
have been a Change in Control as set forth below. For purposes of this
Agreement, a "Change in Control" shall be deemed to have occurred if:
(i) any "Person" (as defined in Sections 13(d) and 14(d)
of the Exchange Act) other than the persons or the group of persons in
control of the Corporation on the date hereof is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the corporation representing
fifty percent (50%) or more of the combined voting power of the
Corporation's then outstanding securities;
Ms. Rose Hoover 3
(ii) within any period of two consecutive years (not
including any period prior to the execution of this Agreement) there shall
cease to be a majority of the Board comprised as follows: individuals who
at the beginning of such period constitute the Board and any new
director(s) whose election was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election
was previously so approved;
(iii) the shareholders of the Corporation approve a
merger of, or consolidation involving, the Corporation in which (A) the
Corporation's Common Stock, par value $1.00 per share (such stock, or any
other securities of the Corporation into which such stock shall have been
converted through a reincorporation, recapitalization or similar
transaction, hereinafter called "Common Stock of the Corporation"), is
converted into shares or securities of another corporation, or into cash
or other property, or (B) the Common Stock of the Corporation is not
converted as described in Clause (A), but in which more than forty percent
(40%) of the Common Stock of the surviving corporation in the merger is
owned by shareholders other than those who owned such amount prior to the
merger; or any other transaction after which the Corporation's Common
Stock is no longer to be publicly traded; in each case, other than a
transaction solely for the purpose of reincorporating the Corporation in
another jurisdiction or recapitalizing the Common Stock of the
Corporation; or
Ms. Rose Hoover 4
(iv) the shareholders of the Corporation approve a plan
of complete liquidation of the Corporation, or an agreement for the sale
or disposition by the Corporation of all or substantially all the
Corporation's assets, either of which is followed by a distribution of all
or substantially all of the proceeds to the shareholders.
3. AGREEMENT OF EMPLOYEE. You agree that in the event of a
Potential Change in Control of the Corporation, you will not terminate
employment with the Corporation for any reason until the occurrence of a Change
in Control of the Corporation.
For purposes of this Agreement, a "Potential Change in Control of
the Corporation" shall be deemed to have occurred if (i) the Corporation enters
into an agreement, the consummation of which would result in the occurrence of a
Change in Control, (ii) any person (including the Corporation) publicly
announces an intention to take or to consider taking actions which if
consummated would constitute a Change in Control, or (iii) the Board adopts a
resolution to the effect that, for purposes of this Agreement, a Potential
Change in Control of the Corporation has occurred.
4. TERMINATION FOLLOWING A CHANGE IN CONTROL OF THE
CORPORATION.
(a) If any of the events described in Section 2 hereof
constituting a Change in Control shall have occurred, you shall be entitled to
the benefits provided in Section 5(d) upon the termination of your employment
within twenty-four (24) months after the Change in Control has occurred, unless
such
Ms. Rose Hoover 5
termination is (i) because of your death or Disability, (ii) by the Corporation
for Cause, or (iii) by you other than for Good Reason.
(b) For purposes of this Agreement, "Disability" shall mean
that if, as a result of your incapacity due to physical or mental illness, you
shall have been absent from the full-time performance of your duties with the
Corporation for six (6) consecutive months, and within thirty (30) days after
written notice of termination shall have been given to you, you shall not have
returned to the full-time performance of your duties.
(c) For purposes of this Agreement, termination by the
Corporation of your employment for "Cause" shall mean termination upon:
(i) the willful and continued failure by you to
substantially perform duties consistent with your position with the
Corporation (other than any such failure resulting from incapacity due to
physical or mental illness or termination by you for Good Reason), after a
demand for substantial performance is delivered to you by the Board,
together with a copy of the resolution of the Board that specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, which resolution must be passed by at
least two-thirds (2/3) of the entire Board at a meeting called for the
purpose and after an opportunity for you and your counsel to be heard by
the Board, and you have failed to resume substantial performance of your
duties on a continuous basis within fourteen (14) days of receiving such
demand,
Ms. Rose Hoover 6
(ii) the willful engaging by you in conduct that is
demonstrably and materially injurious to the Corporation, monetarily or
otherwise, as set forth in a resolution of the Board, which resolution
must be passed by at least two-thirds (2/3) of the entire Board at a
meeting called for the purpose and after an opportunity for you and your
counsel to be heard by the Board, or
(iii) your conviction of a felony, or conviction of a
misdemeanor involving assets of the Corporation.
For purposes of this Section 4(c), no act, or failure to act, on your part shall
be deemed "willful" unless done, or omitted to be done, by you not in good faith
and without reasonable belief that your action or omission was in the best
interest of the Corporation.
(d) For purposes of this Agreement, "Good Reason" shall mean,
without your express written consent, the occurrence after a Change in Control
of any one or more of the following:
(i) the assignment to you of duties inconsistent with
your duties, responsibilities and status immediately before the Change in
Control or a reduction or alteration in the nature or status of your
responsibilities from those in effect immediately before the Change in
Control;
(ii) a reduction by the Corporation in your base salary
as in effect immediately before the Change in Control, a failure to
increase such base salary at the same intervals as prevailed before the
Change in
Ms. Rose Hoover 7
Control in an amount at least equal to the same percentage increase as the
last increase prior to the Change in Control, or a reduction in bonus
after the Change in Control over the last bonus paid before the Change in
Control unless there are equivalent reductions in bonuses for all
executives of the Corporation;
(iii) the requirement that you be based at a location in
excess of twenty-five (25) miles from the location where you are currently
based;
(iv) the failure by the Corporation to continue in
effect any of the Corporation's employee benefit plans, policies,
practices or arrangements in which you participate or under which you are
entitled to benefits, or the failure by the Corporation to continue your
participation therein or benefits thereunder on substantially the same
basis, both in terms of the amount of benefits provided and the level of
your participation relative to other participants, as existed immediately
prior to the Change in Control; or
(v) the failure of the Corporation to obtain a
satisfactory agreement from any successor to the Corporation to assume and
agree to perform this Agreement, as contemplated in Section 6.
(e) "Good Reason" may be established notwithstanding your
possible incapacity due to physical or mental illness, provided that Disability
has not been established pursuant to Section 4(b). Your continued employment
following the Change in Control shall not constitute a waiver of any rights
hereunder, including,
Ms. Rose Hoover 8
but not limited to, rights with respect to any circumstance constituting Good
Reason or rights under Section 6.
5. COMPENSATION UPON TERMINATION OR DURING INCAPACITY.
Following
a Change in Control, upon termination of your employment or during a period of
incapacity but before termination for Disability, you shall be entitled to the
following benefits:
(a) During any period prior to termination for Disability in
which you fail to perform your full-time duties with the Corporation as a result
of incapacity due to physical or mental illness, you shall continue to receive
your Base Salary at the rate in effect at the commencement of any such period.
Following termination for Disability, your benefits shall be determined in
accordance with the Corporation's retirement, insurance and other applicable
programs and plans then in effect.
(b) If your employment shall be terminated by the Corporation
for Cause or by you other than for Good Reason, the Corporation shall pay to you
your full Base Salary through the date of termination of your employment at the
rate then in effect, plus all other amounts to which you are entitled under any
compensation or benefit plans of the Corporation at the time such amounts are
due, and the Corporation shall have no further obligations to you under this
Agreement.
(c) If your employment terminates by reason of your death,
your benefits shall be determined in accordance with the Corporation's
retirement, survivor's benefits, insurance and other applicable programs and
plans then in effect.
Ms. Rose Hoover 9
(d) If your employment by the corporation shall be terminated
within twenty-four (24) months after the Change in Control, unless such
termination is (i) by the Corporation for Cause, (ii) because of your death or
Disability, or (iii) by you other than for Good Reason, you shall be entitled to
the following benefits (the "Severance Payments"):
(A) the Corporation shall pay to you your full Base
Salary through the date of termination of your employment at the
rate then in effect;
(B) the Corporation shall pay to you, as severance
benefits, a lump sum severance payment equal to (i) the sum of two
times your annual base salary either at the time of the Change in
Control or at termination, whichever is higher, and (ii) two times
your bonus paid for the prior year;
(C) in lieu of shares of Common Stock of the Corporation
("Shares") issuable upon exercise of outstanding options
("Options"), if any, granted to you under the Corporation's
Incentive Stock Option Plan, or under any additional, substitute or
successor option program or plan as may be in effect from time to
time (which Options shall be cancelled upon the making of the
payment referred to below), you shall receive an amount in cash
equal to the product of (i) the higher of the closing price per
Share as reported on the New York Stock Exchange on the date of
termination of your employment or
Ms. Rose Hoover 10
the highest price per Share actually paid in connection with any
Change in Control, over the exercise price per Share of each Option
held by you, times (ii) the number of Shares covered by each such
Option;
(D) for a twenty-four (24) month period after such
termination, the Corporation will arrange to provide you at the
Corporation's expense with benefits under the Corporation's health,
dental, disability, life insurance, and other similar plans, or
benefits substantially similar to the benefits you were receiving
under such plans immediately prior to the termination of your
employment; and
(E) the opportunity to purchase the leased company car,
which has been assigned to you, at its then book value under the
Corporation's leasing arrangements.
(e) Notwithstanding the foregoing provisions of this Section
5, in the event you are determined by the Board to be a "disqualified
individual" (within the meaning of Section 280G(c) of the Internal Revenue Code
of 1986, as amended (the "Code")) with respect to the Company, the amount of the
payments hereunder, which are determined to be "parachute payments" (within the
meaning of Section 280G(b) of the Code), shall be reduced to the extent
necessary so that the total of (i) such payments and (ii) any other payment or
the value of any benefit received or to be received by you in connection with a
Change in Control remains deductible by the Company for federal income tax
purposes. If any payments payable hereunder or under any other agreement with
the Corporation are required to
Ms. Rose Hoover 11
be reduced pursuant to the preceding sentence, such reduction shall be made to
such payments in the order elected by you.
(f) The payments provided for in Section 5(d) shall be made
not later than the fifth day following your termination pursuant to the
provisions of Section 5(d); PROVIDED, HOWEVER, that if the amounts of such
payments cannot be finally determined on or before such day, the Corporation
shall pay to you on such day an estimate as determined in good faith by the
Corporation 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, but
in no event later than the thirtieth day after the date of such termination. If
the amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Corporation to you
payable on the fifth day after demand by the Corporation (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code).
(g) The Corporation shall also pay to you all legal fees and
expenses incurred by you as a result of such termination of your employment
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of Section 4999 of the
Code to any payment or benefit provided hereunder).
Ms. Rose Hoover 12
(h) You shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
nor shall the amount of any payment provided for in this Agreement be reduced by
any compensation earned by you as the result of employment by another employer
after the date of termination of your employment, or otherwise.
6. SUCCESSORS; BINDING AGREEMENT.
(a) The Corporation 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 Corporation or of any
division or subsidiary thereof employing you to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Corporation would be required to perform if no such succession had taken place.
Failure of the Corporation to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Corporation in the same amount and on
the same terms as you would be entitled hereunder if you terminated your
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed to be the date of termination of your employment.
(b) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
Ms. Rose Hoover 13
7. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, or to any
changed address, notice of which either of us shall have given to the other.
8. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Pennsylvania.
9. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. EFFECTIVE DATE. This Agreement shall become effective as of the
date signed by you.
* * *
Ms. Rose Hoover 14
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Corporation the enclosed copy of this
letter which will then constitute our agreement on this subject.
Sincerely,
AMPCO-PITTSBURGH CORPORATION
By: /s/ Robert A. Paul
---------------------------------
Accepted and Agreed to
this 15th day of July, 1997.
/s/ Rose Hoover
- ---------------------------------