SENIOR OFFICER SEVERANCE AGREEMENT
This Agreement entered into as of the ------ day of -------, 1995 by
and between DAEDALUS ENTERPRISES, INC., a Delaware corporation ("Company")
and ------------------------ ("Senior Officer").
WITNESSETH:
WHEREAS, the Senior Officer currently provides valuable services to
the Company in the position of ------------------------; and
WHEREAS, the Board of Directors of the Company desires to fully
recognize the contributions of the Senior Officer to the Company and to
assure continuous harmonious management of the affairs of the Company; and
WHEREAS, the Board of Directors of the Company believes that all
public companies face the possibility of a Change in Control (as hereinafter
defined), and that the uncertainty related to a Change in Control can be
disquieting to its executives, with potential adverse effects to the Company
and its shareholders; and
WHEREAS, the Board of Directors of the Company believes that it is in
the best interests of the Company and its Shareholders that the Senior
Officer remain in the employ of the Company during an actual or threatened
Change in Control of the Company, and that the Senior Officer be granted
certain protection in the event that his employment is involuntarily
terminated or he terminates employment for Good Reason (as hereinafter
defined) prior to or following a Change in Control;
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
Section 1. Operation of Agreement. This Agreement shall be effective
immediately upon its execution by both parties.
Section 2. Termination of Agreement. This Agreement shall terminate
upon the earlier of:
(a) The termination of the Senior Officer's employment with the
Company for any reason prior to (i) a Change in Control or (ii) an
Anticipated Change in Control;
(b) At the discretion of the Board of Directors upon the Senior
Officer's assignment to a non-Senior Officer position if said assignment is
not made in anticipation of a Change in Control;
(c) The termination of the Senior Officer's employment because of
(i) death, (ii) voluntary retirement on or after age 65, or (iii) Cause (as
defined in Section 6(b)); or
(d) The date two (2) years following the date of a Change in
Control.
Section 3. Requirements for Benefits. Benefits shall be payable
under this Agreement upon the following events:
(a) There has been a Change in Control as set forth in Section 4 or
an Anticipated Change in Control as set forth in Section 5, and;
(1) The Senior Officer has incurred a Termination of Employment, as
described in Section 6, or
(2) The Company has failed to obtain a written agreement
satisfactory to the Senior Officer, as described in Section 11(a), in
which any successor to the Company agrees to assume and perform the
terms of this Agreement, or
(3) The Senior Officer terminates his employment following a Change
in Control or Anticipated Change in Control for Good Reason, as
described in Section 6(a)(2).
The benefits payable under Sections 7(a) and 7(b) shall be exclusive and the
Senior Officer shall be entitled to benefits from only one of those
Sections.
Section 4. Change in Control. A "Change in Control" as used herein
shall:
(a) Be deemed to have occurred if any person or group of persons
acting together, other than
(1) the Company or any person who on ------------- was (i) a
director or officer of the Company, or (ii) whose shares of Common
Stock of the Company are treated as "beneficially owned" by any such
director or officer, or
(2) any institutional investor (filing reports on Schedule
13G rather than on Schedule 13D under the Securities Exchange Act of
1934, as amended, including any employee benefit plan or employee
benefit trust sponsored by the Company),
becomes a beneficial owner, directly or indirectly, of securities of the
Company representing twenty percent (20%) or more of either the then
outstanding Common Stock of the Company, or the combined voting power of the
Company's then outstanding voting securities. As used herein, the term
"person" means an individual, a partnership, a corporation, an association,
an unincorporated organization, a trust, or any other entity; or
(b) Be deemed to have occurred if the Shareholders of the Company
approve an agreement to merge or consolidate or sell all or substantially
all of the Company's assets to or into any person or entity (other than a
wholly-owned subsidiary of the Company formed for the purpose of changing
the Company's corporate domicile); or
(c) Be deemed to have occurred upon the addition of new members to
the Board of Directors within any twelve-month period, which members
constitute a majority of the members of the Board of Directors.
Section 5. Anticipated Change in Control. An "Anticipated Change in
Control" as used herein shall be presumed to have occurred (subject to
reasonable rebuttal by the Company) if the Company has terminated the
employment of the Senior Officer within six (6) months prior to a Change in
Control, as set forth in Section 4.
Section 6. Termination of Employment.
(a) "Termination of Employment" as used herein shall mean:
(1) Termination by the Company of the Senior Officer's
employment for any reason other than death, voluntary retirement on
or after age 65 or Cause; or
(2) Resignation by the Senior Officer following a Change in
Control or Anticipated Change in Control for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean the occurrence
of any of the following events without the Senior Officer's express
written consent:
(i) Any reduction in the Senior Officer's salary or other
compensation, including pension, fringe benefits and other
perquisites from those in effect immediately prior to or following
the Change in Control or Anticipated Change in Control;
(ii) Any failure by the Company to continue and maintain any
bonus plans, or other incentive plans (without instituting comparable
plans) in which the Senior Officer participated immediately prior to
the Change in Control or Anticipated Change in Control, or the taking
of any action by the Company that would adversely affect the Senior
Officer's participation in or reduce the Senior Officer's benefits
under any of such plans;
(iii) Any diminution of the Senior Officer's authority, duties
and responsibilities, and a significant change in the nature or scope
of the Senior Officer's duties, including any change in the corporate
position to which the Senior Officer reports, from those that he had
with the Company immediately prior to the Change in Control or
Anticipated Change in Control;
(iv) Any change in the Senior Officer's status or title from
that which he maintained immediately prior to the Change in Control
or Anticipated Change in Control (except for a bona fide promotion);
(v) Any required relocation of the Senior Officer's residence
following a Change in Control or Anticipated Change in Control
outside of the Ann Arbor area, defined as Wayne, Oakland, Jackson,
Monroe, Livingston and Washtenaw Counties; or
(vi) The Company's breach of any provision of this Agreement.
(b) "Cause" as used herein shall mean willful gross misconduct by
the Senior Officer, willful and material breach of duties by the Senior
Officer, or an act of material dishonesty or fraud by the Senior Officer
that is injurious to the Company.
Section 7. Severance Benefit.
(a) Upon Termination of the Senior Officer's Employment as set forth
in Sections 6(a)(1) and 6(a)(2) or upon the Company's failure to obtain a
written agreement satisfactory to the Senior Officer as set forth in Section
11(a) and in addition to other Company benefits and perquisites to which the
Senior Officer may be entitled, including receipt of bonus payments from the
Company's informal bonus plan, and the exercise or surrender of stock
options, the Company shall pay the Senior Officer an amount equal to one and
one-half times the Senior Officer's highest annual W-2 Compensation from the
Company during the last three calendar years immediately preceding the
Termination of Employment.
(b) "W-2 Compensation" for purposes of Sections 7(a) and 7(b), shall
include salary, bonus, taxable fringe benefits, plus 401(k) salary
deferrals, but shall exclude bonus payments or compensation derived from the
exercise of stock options.
(c) The Senior Officer shall also be entitled to continued
participation in the Company's (or successor's) fringe benefit programs, (to
the extent permitted by law and any applicable insurance carrier), (only if
and to the extent that the Senior Officer had elected such individual
benefit coverages and such coverages had been in effect at his Termination
of Employment or the closest comparable coverage offered by a successor)
until the earlier of eighteen months following his Termination of
Employment, or the commencement of comparable coverages from another
employer; provided that any continuation medical and dental coverage shall
run concurrently with the Senior Officer's statutory COBRA period,
commencing at his Termination of Employment. Coverage of any one benefit
provided by another employer shall not preclude the Senior Officer from
continuing participation in Company benefits provided under this Section
7(d) that are not provided by the subsequent employer. The Senior Officer
shall promptly notify the Company upon receipt of comparable coverage or
benefits from a new employer of any benefit provided under this Section
7(d).
(d) The Company shall provide and pay for services for an out
placement executive search, of the Senior Officer's choice, for the Senior
Officer for a period of two years from date of Change of Control for the
purpose of providing suitable employment following a termination of the
Senior Officer's Employment as set forth in Sections 6(a)(1) and 6(a)(2).
Section 8. Method of Payment.
(a) In the case of a "Friendly Change in Control," as defined below,
the severance benefit payable to the Senior Officer under Section 7(a) of
this Agreement shall be paid to the Senior Officer in eighteen (18) equal
consecutive monthly payments on the first day of each and every month
following the Senior Officer's Termination of Employment, as defined in
Section 6. Any Termination of Employment payments payable to the Senior
Officer under this Agreement paid later than twenty (20) days after the due
date thereof, for whatever reason, shall include interest at the prime rate
(as published by Comerica Bank on the twentieth (20th) day following the due
date thereof) plus two (2%) percent, which interest shall begin accruing on
the twentieth (20th) day following such due date.
For purposes of this Agreement a "Friendly Change in Control" shall
mean a Change in Control under Section 4 or an Anticipated Change in Control
under Section 5 if the transaction under Section 4(a) or 4(b) is approved
by a majority of the members of the Board of Directors who have been in
office for at least twelve (12) months prior to voting on said termination.
A "Friendly Change in Control" shall also mean a Change in Control under
Section 4 or an Anticipated Change in Control under Section 5 if under
Section 4(c) a majority of the Board of Directors consists of (i) incumbent
members of the Board of Directors in office prior to the start of such
twelve-month period, plus (ii) new members who were recommended or appointed
by a majority of the incumbent Directors in office immediately prior to the
addition of such new members to the Board of Directors.
(b) In the case of a "Non-Friendly Change in Control," as defined
below, the severance benefit payable to the Senior Officer under Sections
7(a) of this Agreement shall be paid in a lump sum cash payment within
twenty (20) days after the Senior Officer's Termination of Employment, as
defined in Section 6. Any Termination of Employment payments payable to the
Senior Officer under this Agreement paid later than twenty (20) days after
the due date thereof, for whatever reason, shall include interest at the
prime rate (as published by Comerica Bank on the twentieth (20th) day
following the due date thereof) plus two (2%) percent, which interest shall
begin accruing on the twentieth (20th) day following such due date.
For purposes of this Agreement a "Non-Friendly Change in Control"
shall mean a Change in Control under Section 4 or Anticipated Change in
Control under Section 5 that is not a "Friendly Change in Control."
Section 9. No Mitigation or Duty to Seek Employment. The Senior
Officer shall be under no duty or obligation to seek or accept other
employment after Termination of Employment and shall not be required to
mitigate the amount of any cash payments or benefits provided for by this
Agreement by seeking or accepting employment.
Further, any cash payments or benefits, except as set forth in Section
7(c), received as a result of the Senior Officer's acceptance of other
employment shall not diminish and/or excuse the Company's obligations to the
Senior Officer after Termination of Employment as set forth in this
Agreement.
Section 10. Tax Withholding. The Company may withhold from any
amounts payable under this Agreement, or shall require the Senior Officer
to remit to the Company at the time of receipt of payments, all applicable
Federal, State, local or other withholding taxes.
Section 11. Binding Effect.
(a) This Agreement shall be binding upon the successors and assigns
of the Company. The Company shall take whatever actions are necessary to
ensure that any successor to its operations (whether by takeover, hostile
or otherwise, purchase, merger, consolidation, sale of substantially all
assets or otherwise) assumes the obligations under this Agreement and shall
cause such successor to evidence the assumption of such obligations in a
written agreement satisfactory to the Senior Officer. If the Company fails
to obtain a written agreement evidencing the assumption of the Company's
obligations under this Agreement by any such successor, the Senior Officer
shall be entitled to immediate payment of the severance compensation
provided under Section 7, irrespective of whether his employment has then
terminated.
(b) This Agreement shall be binding upon the Senior Officer and
shall inure to the benefit of and be enforceable by his legal
representatives and heirs. However, the rights of the Senior Officer under
this Agreement shall not be assigned, transferred, pledged, hypothecated or
otherwise encumbered.
Section 12. Amendment or Modification of Agreement. This Agreement
may not be modified or amended except by instrument in writing signed by the
parties hereto.
Section 13. 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 continue in full force
and effect.
Section 14. Limitation on Rights.
(a) The purpose of this Agreement is to provide the Senior Officer
with severance benefits in accordance with the terms of this Agreement if
he incurs a Termination of Employment as described in Section 6. This
Agreement shall not create any other rights or obligations on the part of
the Senior Officer or the Company except as set forth herein.
(b) This Agreement shall not be construed to exclude the Senior
Officer from participation in any other compensation or benefit programs in
which he is specifically eligible to participate either prior to or
following the execution of this Agreement, or any such programs that
generally are available to other executive personnel of the Company, nor
shall it affect the kind and amount of other compensation to which the
Senior Officer is entitled.
(c) The rights of the Senior Officer under this Agreement shall be
solely those of an unsecured general creditor of the Company.
Section 15. ERISA. This Agreement is an unfunded com-
pensation arrangement for a member of a select group of the Com-
pany's management and any exemptions under the Employee Retire- ment Income
Security Act of 1974, as amended, as applicable to such an arrangement shall
be applicable to this Agreement.
Section 16. Reporting and Disclosure. The Company, from time to time,
shall provide government agencies with such reports concerning this
Agreement as may be required by law, and the Company shall provide to the
Senior Officer such disclosure concerning this Agreement as may be required
by law or as the Company may deem appropriate.
Section 17. Miscellaneous. A waiver of the breach of any term or
condition of this Agreement shall not be deemed to constitute a wavier of
any subsequent breach of the same or any other term or condition. This
Agreement is intended to be per- formed in accordance with, and only to the
extent permitted by, all applicable laws, ordinances, rules and regulations.
The headings in this Agreement are inserted for convenience of reference
only and shall not be a part of or control or affect the meaning of any
provision hereof.
Section 18. Governing Law. To the extent not preempted by Federal
law, this Agreement shall be governed and construed in accordance with the
laws of the State of Michigan.
Section 19. Entire Agreement. This document repre- sents the entire
agreement and understanding of the parties with respect to the subject
matter of the Agreement and it may not be altered or amended except by an
agreement in writing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first written above.
ATTEST:
By:
----------------------------
Chairman
By:
----------------------------
Senior Officer