Exhibit 10 (I)
EMPLOYMENT AGREEMENT
AGREEMENT by and between Arvin Industries, Inc., an Indiana
corporation (the "Company") and (the "Executive"),
dated as of the ___ day of _______, 1995.
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
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
(a) 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. Anything in this Agreement to the contrary
notwithstanding, 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 for all
purposes of this Agreement 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 third
anniversary of the date hereof; provided, however, that
commencing on the date one year after the date hereof, and
on each annual anniversary of such date (such date and each
annual anniversary thereof shall be hereinafter referred to
as the "Renewal Date"), unless previously terminated, the
Change of Control Period shall be automatically extended so
as to terminate three years from such Renewal Date, unless
at least 60 days prior to the Renewal Date the Company shall
give notice to the Executive that the Change of Control
Period shall not be so extended.
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
20% or more of either (i) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common
Stock") or (ii) 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 (a), the following
acquisitions shall not constitute a Change of Control: (i)
any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (c) of this Section 2; 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 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 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; 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"), in each case, unless, following such Business
Combination, (i) 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 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, (ii) 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, 20% 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 (iii) 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.
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 third 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 35 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. During the Employment Period it
shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or
charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational
institutions and (C) 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 Agreement. It is expressly
understood and agreed that to the extent that any such
activities have been conducted by the Executive prior
to the Effective Date, the continued conduct of such
activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with
the performance of the Executive's responsibilities to
the Company.
(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 no more than 12 months
after the last salary increase awarded to the Executive
prior to the Effective 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 Agreement. Annual Base Salary
shall not be reduced after any such increase and the
term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased. As
used in this Agreement, the term "affiliated companies"
shall include any company controlled by, controlling or
under common control with the Company.
(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
the Executive's highest bonus under the Company's
annual cash bonus incentive plan or any comparable
bonus under any predecessor or successor plan, for the
last three full fiscal years prior to the Effective
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.
(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.
(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, as 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, without limitation, tax and
financial planning services, payment of club dues, and,
if applicable, use of an automobile and payment of
related expenses, 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, as 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 exclusive 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 Company determines in
good faith that the Disability of the Executive has occurred
during the Employment Period (pursuant to the definition of
Disability set forth below), it may give to the Executive
written notice in accordance with Section 12(b) 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"), provided that, within the 30 days after
such receipt, the Executive shall not have returned 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 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), 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.
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. The
cessation of employment of the Executive shall not be deemed to
be for Cause 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 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), finding that, in
the good faith opinion of the Board, the Executive is guilty of
the conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.
(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;
(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) hereof 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.
Anything in this Agreement to the contrary notwithstanding, a
termination by the Executive for any reason during the 30-day
period immediately following the first anniversary of the
Effective Date shall be deemed to be a termination for Good
Reason for all purposes of this Agreement.
(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(b) 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 thirty 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 of Termination shall
be 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
Termination shall be the date of death of the Executive or
the Disability Effective Date, as the case may be.
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 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 higher of (I) the Recent Annual Bonus and
(II) the Annual Bonus paid or payable, including
any bonus or portion thereof which has been earned
but deferred (and annualized for any fiscal year
consisting of less than twelve full months or
during which the Executive was employed for less
than twelve full months), for the most recently
completed fiscal year during the Employment
Period, 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. the amount equal to the product of (1)
three and (2) the sum of (x) the Executive's
Annual Base Salary and (y) the Highest Annual
Bonus; and
C. an amount equal to the excess of (a) the
actuarial equivalent of the benefit under the
Company's qualified defined benefit retirement
plan (the "Retirement Plan") (utilizing actuarial
assumptions no less favorable to the Executive
than those in effect under the Company's
Retirement Plan immediately prior to the Effective
Date), and any excess or supplemental retirement
plan in which the Executive participates
(together, the "SERP") which the Executive would
receive if the Executive's employment continued
for three years after the Date of Termination
assuming for this purpose that all accrued
benefits are fully vested, and, assuming that the
Executive's compensation in each of the three
years is that required by Section 4(b)(i) and
Section 4(b)(ii), over (b) the actuarial
equivalent of the Executive's actual benefit (paid
or payable), if any, under the Retirement Plan and
the SERP as of the Date of Termination;
(ii) for three years after the Executive's Date
of Termination, or such longer period as may be
provided by the terms of the appropriate plan, program,
practice or policy, 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 if the Executive's employment had not been
terminated 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 and their families, provided,
however, that if the Executive becomes reemployed with
another employer and is eligible to receive 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 during such applicable period of
eligibility. For purposes of determining eligibility
(but not the time of commencement of benefits) of the
Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall
be considered to have remained employed until three
years after the Date of Termination and to have retired
on the last day of such period;
(iii) the Company shall, at its sole expense as
incurred, provide the Executive with out placement
services the scope and provider of which shall be
selected by the Executive in his sole discretion; 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").
(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. With
respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 6(b) 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 with respect to other peer executives and their
beneficiaries 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 with respect to other peer executives of the Company
and its affiliated companies and their beneficiaries.
(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 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. With respect to the provision
of Other Benefits, the term Other Benefits as utilized in
this Section 6(c) shall include, 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 generally with respect to other peer
executives of the Company and its affiliated companies and
their families.
(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(f), 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, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated
companies at or subsequent to the Date of Termination shall be
payable in accordance with 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 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. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding and except as set forth below, in the event
it shall be determined that any payment or distribution by
the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined
without regard to any additional payments required under
this Section 9) (a "Payment") would be subject to the excise
tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect
thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section
9(a), if it shall be determined that the Executive is
entitled to a Gross-Up Payment, but that the Executive,
after taking into account the Payments and the Gross-Up
Payment, would not receive a net after-tax benefit of at
least $50,000 (taking into account both income taxes and any
Excise Tax) as compared to the net after-tax proceeds to the
Executive resulting from an elimination of the Gross-Up
Payment and a reduction of the Payments, in the aggregate,
to an amount (the "Reduced Amount") such that the receipt of
Payments would not give rise to any Excise Tax, then no
Gross-Up Payment shall be made to the Executive and the
Payments, in the aggregate, shall be reduced to the Reduced
Amount.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9,
including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be
made by Price Waterhouse or such other certified public
accounting firm as may be designated by the Executive (the
"Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the
Executive shall appoint another nationally recognized
accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to
as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section
9, shall be paid by the Company to the Executive within five
days of the receipt of the Accounting Firm's determination.
Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required
to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 9(c) and the
Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for
the benefit of the Executive.
(c) 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 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 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 9(c), 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 sue for a refund or 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 sue
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.
(d) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 9(c), 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 Section 9(c))
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
Section 9(c), 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 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.
10. Confidential Information. The Executive shall hold in
a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the
Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no
event shall an asserted violation of the provisions of this
Section 10 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
11. Successors.
(a) 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) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) 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 hereinbefore
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) This Agreement shall be governed by and construed
in accordance with the laws of the State of Indiana, without
reference to principles of conflict of laws. The captions
of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery 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:
One Noblitt Plaza, Box 3000
Columbus, Indiana 47202-3000
Attention: General Counsel
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) 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.
(e) 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 any other provision or right of this Agreement.
(f) 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" and,
subject to Section 1(a) hereof, prior to the Effective Date,
the Executive's employment and/or this Agreement may be
terminated by either the Executive or the Company at any
time prior to the Effective Date, in which case the
Executive shall have no further rights under this Agreement.
From and after the Effective Date this Agreement shall
supersede any other agreement between the parties with
respect to the subject matter hereof, including without
limitation, the termination of the employment agreement
between the Executive and the Company dated June 17, 1993.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's 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, all as of the day and year
first above written.
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[Executive]
ARVIN INDUSTRIES, INC.
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