SEVERANCE COMPENSATION AGREEMENT
This Agreement (the "Agreement) is made this 17th day of November,
1995, by and between Champion Parts, Inc., an Illinois corporation
(the "Company"), and Richard B. Hebert (the "Employee").
WITNESSETH:
WHEREAS, the Company desires to continue to employ Employee and
Employee is willing to continue such employment, in part upon the
terms and conditions hereinafter set forth;
WHEREAS, the Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and
dedication of members of the Company's management, including the
Employee, to their assigned duties without distraction in potentially
disturbing circumstances arising from the financial hardship facing
the Company; and
WHEREAS, the parties desire to set forth the severance compensation
which the Company agrees it will pay to the Employee if the Employee's
employment with the Company terminates under one of the circumstances
described herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
1. Term. This Agreement shall terminate, except to the extent
that any obligation of the Company hereunder remains unpaid as of
such time, upon the earlier of (i) the termination of the Employee's
employment with the Company based on the Employee's death, Cause
(as defined in Section 2(a), Disability (as defined in Section 2(b),
or by the Employee other than for Good Reason (as defined in Section
2(c)); or (ii) one year after written notice from the Company to the
Executive that it has elected to terminate this Agreement.
2. Termination.
(a) Cause. For the purposes of this Agreement, "Cause" shall
mean any one or more of the following:
i. the perpetration by the Employee of a dishonest act, subversion,
misappropriation or fraud against the Company or any subsidiary of the
Company, or any willful misrepresentation by such Employee to any member
of executive management or the Board of Directors of the Company, any of
which is, in the opinion of executive management or the Board of Directors,
materially injurious to the Company or any subsidiary of the Company;
ii. any willful and material breach by the Employee of his employment
agreement, if any, or of any fiduciary duty in connection with his
employment by the Company or any subsidiary of the Company;
iii. any conviction of the Employee by a federal or state court for
the commission of or a guilty plea to a felony; or
iv. one or more demonstrable and, in the opinion of the Board of
Directors, material acts of dishonesty, disloyalty, or insubordination.
(b) Disability. For purposes of this Agreement,
"Disability" shall occur if, as a result of the Employee's
incapacity due to physical or mental illness, the Employee
shall have been absent from his duties with the Company on
a full-time basis for either 120 consecutive days or 180
days within any twelve month period.
(c) Good Reason. For purposes of this Agreement,
"Good Reason" shall mean any one or more of the following
(without the Employee's express written consent):
i. a permanent relocation of the Employee's principal place
of employment with the Company, other than for reasonably required
travel on the business of the Company or a subsidiary of the Company;
ii. a material reduction in the Employee's base or aggregate
compensation, other than a general reduction applicable to all or
substantially all of the executive employees of the Company or its
subsidiaries; or
iii. a change in the Employee's status, title, position or
responsibilities (including reporting responsibilities) which
represents an adverse change from the Employee's prior status,
title, position or responsibilities.
(d) Notice of Termination. Any termination by the
Company by reason of Cause or Disability shall be
communicated by a Notice of Termination. For purpose
of this Agreement, a "Notice of Termination" shall mean
a written notice which shall indicate those specific
termination provisions in this Agreement relied upon
and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination
of the Employee's employment under the provision so
indicated. For purposes of this Agreement, no such
purported termination by the Company shall be effective
without such Notice of Termination.
(e) Date of Termination. For purposes of this
Agreement, "Date of Termination: shall mean (a) if this
Agreement is terminated by the Company for Disability,
30 days after Notice of Termination is given to the
Employee (provided that the Employee shall not have
returned to the performance of the Employee's duties
on a full-time basis during such 30-day period) or
(b) if the Employee's employment is terminated by the
Company for any other reason, the date on which a
Notice of Termination is given.
3. Severance Compensation upon Termination of
Employment . If the Company shall terminate the
Employee's employment other than for Cause or Disability,
or if the Employee shall terminate his employment for Good
Reason, then the Company shall pay to the Employee as
severance pay three monthly installments in cash,
commencing on or before the fifth day following the Date
of Termination, with each such installment being equal to
his regular monthly salary (minus withholding taxes and
other applicable payroll deductions) immediately prior to
the Date of Termination or, if there has been a material
reduction in the Employee's compensation such as would
permit the Employee to terminate his employment for Good
Reason pursuant to Section 2(c)(ii) hereof, as of the date
immediately preceding such reduction; provided, however,
that if any successor or assigned corporation as contemplated
by Section 6 below assumes the obligation of this agreement,
then there shall be no termination pursuant to this agreement.
4. No Obligation to Mitigate Damages; No Effect on
Other Contractual Rights.
(a) The employee shall not be required to mitigate
damages or the amount of any payment provided for under
this Agreement by seeking other employment or otherwise,
nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned
by the Employee as the result of employment by another
employer after the Date of Termination, or otherwise.
(b) The provisions of this Agreement, and any payment
provided for hereunder, shall not reduce any amounts
otherwise payable, or in any way diminish the Employee's
existing rights, or rights which would accrue solely as a
result of the passage of time, under the Champion Parts,
Inc. Employee Stock Ownership Plan, or any other benefit
plan, incentive plan, bonus plan, stock option plan,
employment agreement or other contract, plan or arrangement.
5. General Release. As a condition to the Company's
obligation to pay any severance compensation under
Section 3 hereof, prior to the first such payment Employee
agrees to execute a general release of the Company from any
claims, actual or potential, which the Employee has or may
believe he has, with respect to events involving or arising
out of his employment relationship with the Company or the
termination of such relationship, except for matters referred
to in Section 4(b) above.
6. Successorship.
(a) The Company will require any successor or assign
(whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company, absolutely
and unconditionally to assume 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 or assignment had taken place. Any failure
of the Company to obtain such agreement prior to the
effectiveness of any such succession or assignment
shall be a material breach of this Agreement and shall
entitle the Employee to terminate the Employee's
employment for Good Reason. As used in this Agreement,
"Company" shall include the Company as hereinbefore
defined which executes and delivers the agreement
provided for in this Section 6 or which otherwise
becomes bound by all terms and provisions of this
Agreement by operation of law. If at any time during
the term of this Agreement the Employee is employed
by any corporation a majority of the voting securities
of which is then owned by the Company, "Company" as
used in Sections 2 and 13 hereof shall in addition
include such employer.
(b) This Agreement shall inure to the benefit and
be enforceable by the Employee's personal and legal
representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If the
Employee should die while any amounts are still payable
to him hereunder, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the
terms of this Agreement to the Employee's devisee,
legatee, or other designee or, if there be no such
designee, to the Employee's estate.
7. Notice. For purposes 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, as follows:
If to the Company:
President
Champion Parts, Inc.
2525 22nd Street
Oak Brook, Illinois 60521
If to the Employee:
Richard B. Hebert
8333 Mending Wall Drive
Woodridge, IL 60517
or such other address as either party may have furnished to the other
in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
8. Miscellaneous. No provisions of this Agreement
may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed
by the Employee and the Company. No waiver by either
party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
9. Validity. The invalidity or unenforceability of
any provisions 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. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to
be an original but all of which together will constitute
one and the same instrument.
11. Entire Agreement. No agreements or representations,
oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. This Agreement
constitutes the entire agreement between the parties, and
expressly supersedes all prior oral or written agreements or
understandings relating to the subject matter hereof.
12. Legal Fees and Expenses. The Company shall pay all
legal fees and expenses which the Employee may incur if
Employee prevails in collecting any amount under this
Agreement which has been contested by the Company. The
parties may agree in advance as to amounts which are not
contested, and any amount which the Company shall offer to
pay to the Employee in settlement of any claim shall be
deemed to be a non-contested amount.
13. Confidentiality. The Employee shall retain in
confidence any and all confidential information known to
the Employee concerning the Company and its business so
long as such information is not publicly disclosed.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
CHAMPION PARTS, INC.
By: /s/ Thomas W. Blashill
Name: Thomas W. Blashill
Title: President
/s/ Richard B. Hebert
Richard B. Hebert