Exhibit 99.5
[FORM OF SEVERANCE PROTECTION AGREEMENT]
THIS AGREEMENT made as of the day of September, 1996, by and between
Chateau Properties, Inc. (the "Company") and ____________ (the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that the possibility of a Change in Control (as hereinafter
defined) exists and that the threat or the occurrence of a Change in Control
can result in significant distractions of its key management personnel because
of the uncertainties inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in the
best interest of the Company and its stockholders to retain the services of
the Executive in the event of a threat or occurrence of a Change in Control
and to ensure his continued dedication and efforts in such event without undue
concern for his personal financial and employment security; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Company, particularly in the event of a threat or the occurrence of a
Change in Control, the Company desires to enter into this Agreement with the
Executive to provide the Executive with certain benefits in the event his
employment is terminated as a result of, or in connection with, a Change in
Control and to provide the Executive with certain other benefits whether or
not the Executive's employment is terminated.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. Term of Agreement. This Agreement shall commence as of the date hereof
and shall continue in effect until December 31, 1998; provided, however, that
on December 31, 1997 and on each anniversary thereof, the term of this
Agreement shall automatically be extended for one year unless either the
Company or the Executive shall have given written notice to the other prior
thereto that the term of this Agreement shall not be so extended; and
provided, further, however, that notwithstanding any such notice by the
Company not to extend, the term of this Agreement shall not expire prior to
the expiration of 24 months after the occurrence of a Change in Control.
2. Definitions.
2.1. Accrued Compensation. For purposes of this Agreement, "Accrued
Compensation" shall mean an amount which shall include all amounts earned
or accrued through the "Termination Date" (as hereinafter defined) but not
paid as of the Termination Date including (i) base salary, (ii)
reimbursement for reasonable and necessary expenses incurred by the
Executive on behalf of the Company during the period ending on the
Termination Date, (iii) vacation and sick leave pay (to the extent provided
by Company policy or applicable law), and (iv) bonuses and incentive
compensation (other than the "Pro Rata Bonus" (as hereinafter defined)).
2.2. Base Amount. For purposes of this Agreement, "Base Amount"
shall mean the greater of (a) the Executive's annual base salary at the
rate in effect immediately prior to the Change in Control and (b) the
Executive's annual base salary at the rate in effect on the Termination
Date, and shall include all amounts of his base salary that are deferred
under the qualified and non-qualified employee benefit plans of the
Company or any other agreement or arrangement.
2.3. Bonus Amount. For purposes of this Agreement, "Bonus Amount"
shall mean the Executive's annual bonus for the fiscal year prior to which
a Change in Control has occurred.
2.4. Cause. For purposes of this Agreement, a termination of
employment is for "Cause" if the Executive has been convicted of a felony
involving moral turpitude or the termination is evidenced by a resolution
adopted in good faith by two-thirds of the Board that the Executive (a)
intentionally and continually failed substantially to perform his
reasonably assigned duties with the Company (other than a failure
resulting from the Executive's incapacity due to physical or mental
illness or from the Executive's assignment of duties that would constitute
"Good Reason" as hereinafter defined) which failure continued for a period
of at least thirty days after a written notice of demand for substantial
performance has been delivered to the Executive specifying the manner in
which the Executive has failed substantially to perform, or (b)
intentionally engaged in conduct which is demonstrably and materially
injurious to the Company; provided, however, that no termination of the
Executive's employment shall be for Cause as set forth in clause (b) above
until (x) there shall have been delivered to the Executive a copy of a
written notice setting forth that the Executive was guilty of the conduct
set forth in clause (b) and specifying the particulars thereof in detail,
and (y) the Executive shall have been provided an opportunity to be heard
in person by the Board (with the assistance of the Executive's counsel if
the Executive so desires). Neither an act nor a failure to act, on the
Executive's part shall be considered "intentional" unless the Executive
has acted or failed to act with a lack of good faith and with a lack of
reasonable belief that the Executive's action or failure to act was in the
best interest of the Company. Notwithstanding anything contained in this
Agreement to the contrary, no failure to perform by the Executive after a
Notice of Termination is given by the Executive shall constitute Cause for
purposes of this Agreement.
2.5. Change in Control. For purposes of this Agreement, a "Change
in Control" shall mean any of the following events:
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(a) An acquisition (other than directly from the Company) of
any voting securities of the Company (the "Voting Securities") by
any "Person" (as the term person is used for purposes of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of thirty percent or more of the
combined voting power of the Company's then outstanding Voting
Securities; provided, however, that in determining whether a Change
in Control has occurred, Voting Securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A
"Non-Control Acquisition" shall mean an acquisition by (1) an
employee benefit plan (or a trust forming a part thereof)
maintained by (x) the Company or (y) any corporation or other
Person of which a majority of its voting power or its equity
securities or equity interest is owned directly or indirectly by
the Company (a "Subsidiary"), (2) the Company or any Subsidiary, or
(3) any Person in connection with a "Non-Control Transaction."
(b) The individuals who, as of the date hereof, are members of
the Board (the "Incumbent Board"), cease for any reason to
constitute at least two-thirds of the Board; provided, however,
that if the election, or nomination for election by the Company's
stockholders, of any new director was approved by a vote of at
least two-thirds of the then Incumbent Board, such new director
shall, for purposes of this Agreement, be considered as a member of
the Incumbent Board; provided, further, however, that no individual
shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual
or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy
Contest; or
(c) Approval by stockholders of the Company of:
(1) A merger, consolidation or reorganization involving
the Company, unless
(A) the stockholders of the Company, immediately
before such merger, consolidation or reorganization, own,
directly or indirectly, immediately following such
merger, consolidation or reorganization, at least seventy
percent of the combined voting power of the outstanding
Voting Securities of the corporation resulting from such
merger or consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as
their ownership of the Voting Securities immediately
before such merger, consolidation or reorganization, and
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(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation or
reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving
Corporation or a corporation beneficially owning,
directly or indirectly, a majority of the Voting
Securities of the Surviving Corporation, and
(C) no Person (other than the Company, any
Subsidiary, any employee benefit plan (or any trust
forming a part thereof) maintained by the Company, the
Surviving Corporation or any Subsidiary, or any Person
who, immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of fifteen
percent or more of the then outstanding Voting
Securities) owns, directly or indirectly, fifteen percent
or more of the combined voting power of the Surviving
Corporation's then outstanding voting securities, or
(D) an agreement with ROC Communities, Inc. is
consummated on or before March 31, 1997 or such later
date as approved by the Board of Directors, and prior to
a Change in Control; and
(E) a transaction described in clauses (A) through
(D) shall herein be referred to as a "Non-Control
Transaction";
(2) A complete liquidation or dissolution of the Company;
or
(3) An agreement for the sale or other disposition of all
or substantially all of the assets of the Company to any
Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person,
provided that if a Change in Control would occur (but for the operation of
this sentence) as a result of the acquisition of Voting Securities by the
Company, and after such share acquisition by the Company, the Subject Person
becomes the Beneficial Owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control shall
occur.
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(d) Notwithstanding anything contained in this Agreement to
the contrary, if the Executive's employment is terminated prior to
a Change in Control and the Executive reasonably demonstrates that
such termination (i) was at the request of a third party who has
indicated an intention or taken steps reasonably calculated to
effect a Change in Control and who effectuates a Change in Control
(a "Third Party") or (ii) otherwise occurred in connection with, or
in anticipation of, a Change in Control which actually occurs, then
for all purposes of this Agreement, the date of a Change in Control
with respect to the Executive shall mean the date immediately prior
to the date of such termination of the Executive's employment.
2.6. Company. For purposes of this Agreement, the "Company" shall
include the Company's "Successors and Assigns" (as hereinafter defined).
2.7. Disability. For purposes of this Agreement, "Disability" shall
mean a physical or mental infirmity which impairs the Executive's ability
to substantially perform his duties with the Company for a period of one
hundred eighty consecutive days and the Executive has not returned to his
full time employment prior to the Termination Date as stated in the
"Notice of Termination" (as hereinafter defined).
2.8. Good Reason. (a) For purposes of this Agreement, "Good Reason"
shall mean the occurrence after a Change in Control of any of the events
or conditions described in subsections (1) through (8) hereof:
(1) a change in the Executive's status, title, position or
responsibilities (including reporting responsibilities) which, in
the Executive's reasonable judgment, represents an adverse change
from his status, title, position or responsibilities as in effect at
any time within ninety days preceding the date of a Change in
Control or at any time thereafter; the assignment to the Executive
of any duties or responsibilities which, in the Executive's
reasonable judgment, are inconsistent with his status, title,
position or responsibilities as in effect at any time within ninety
days preceding the date of a Change in Control or at any time
thereafter; or any removal of the Executive from or failure to
reappoint or reelect him to any of such offices or positions, except
in connection with the termination of his employment for Disability,
Cause, as a result of his death or by the Executive other than for
Good Reason;
(2) a reduction in the Executive's base salary or any failure
to pay the Executive any compensation or benefits to which he is
entitled within five days of notice thereof;
(3) the Company's requiring the Executive to be based at any
place outside a 30-mile radius from Clinton Township, Michigan,
except for reasonably required travel on the Company's business
which is not materially greater than such travel requirements prior
to the Change in Control;
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(4) the failure by the Company to provide the Executive with
compensation and benefits, in the aggregate, at least equal (in
terms of benefit levels and/or reward opportunities) to those
provided for under each other employee benefit plan, program and
practice in which the Executive was participating at any time within
ninety days preceding the date of a Change in Control or at any time
thereafter;
(5) the insolvency or the filing (by any party, including the
Company) of a petition for bankruptcy of the Company, which petition
is not dismissed within sixty days;
(6) any material breach by the Company of any provision of this
Agreement;
(7) any purported termination of the Executive's employment for
Cause by the Company which does not comply with the terms of Section
2.4; or
(8) the failure of the Company to obtain an agreement,
satisfactory to the Executive, from any Successors and Assigns to
assume and agree to perform this Agreement, as contemplated in
Section 7 hereof.
(b) Any event or condition described in Section 2.8(a)(1) through
(8) which occurs prior to a Change in Control but which the Executive
reasonably demonstrates (1) was at the request of a Third Party, or
(2) otherwise arose in connection with, or in anticipation of, a
Change in Control which actually occurs, shall constitute Good Reason
for purposes of this Agreement notwithstanding that it occurred prior
to the Change in Control.
(c) The Executive's right to terminate his employment pursuant to
this Section 2.8 shall not be affected by his incapacity due to a
Disability
2.9. Notice of Termination. For purposes of this Agreement,
following a Change in Control, "Notice of Termination" shall mean a
written notice of termination from the Company of the Executive's
employment which indicates the specific termination provision 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
Executive's employment under the provision so indicated.
2.10. Pro Rata Bonus. For purposes of this Agreement, "Pro Rata
Bonus" shall mean an amount equal to the Bonus Amount multiplied by a
fraction, the numerator of which is the number of days in the Company's
fiscal year in which Executive's employment terminates through the
Termination Date and the denominator of which is 365.
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2.11. Successors and Assigns. For purposes of this Agreement,
"Successors and Assigns" shall mean a corporation or other entity
acquiring all or substantially all the assets and business of the Company
whether by operation of law or otherwise, and any affiliate of such
Successors and Assigns.
2.12. Termination Date. For purposes of this Agreement,
"Termination Date" shall mean (a) in the case of the Executive's death,
his date of death, (b) in the case of Good Reason, the last day of his
employment, and (b) in all other cases, the date specified in the Notice
of Termination; provided, however, that if the Executive's employment is
terminated by the Company for Cause or due to Disability, the date
specified in the Notice of Termination shall be at least 30 days from the
date the Notice of Termination is given to the Executive, provided that in
the case of Disability the Executive shall not have returned to the
full-time performance of his duties during such period of at least 30
days.
3. Termination of Employment. If, during the term of this Agreement, the
Executive's employment with the Company shall be terminated within twenty-four
months following a Change in Control, the Executive shall be entitled to the
following compensation and benefits:
(a) If the Executive's employment with the Company shall be
terminated (1) by the Company for Cause or Disability, (2) by reason
of the Executive's death, or (3) by the Executive other than for Good
Reason, the Company shall pay to the Executive the Accrued
Compensation and, if such termination is other than by the Company
for Cause, the Pro Rata Bonus.
(b) If the Executive's employment with the Company shall be
terminated for any reason other than as specified in Section 3.1(a),
the Executive shall be entitled to the following:
(1) the Company shall pay the Executive all Accrued
Compensation and a Pro-Rata Bonus;
(2) the Company shall pay the Executive as severance pay and
in lieu of any further compensation for periods subsequent to the
Termination Date, in a single payment an amount in cash equal to
[one][two] times the sum of (A) the Base Amount and (B) the Bonus
Amount.
(3) for a number of months equal to [12][24] (the
"Continuation Period"), the Company shall at its expense continue
on behalf of the Executive and his dependents and beneficiaries
the medical, dental and hospitalization benefits provided (x) to
the Executive at any time during the 90-day period prior to the
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Change in Control or at any time thereafter or (y) to other
similarly situated executives who continue in the employ of the
Company during the Continuation Period. The coverage and benefits
(including deductibles and costs) provided in this Section
3.1(b)(iii) during the Continuation Period shall be no less
favorable to the Executive and his dependents and beneficiaries,
than the most favorable of such coverages and benefits during any
of the periods referred to in clauses (x) and (y) above. The
Company's obligation hereunder with respect to the foregoing
benefits shall be limited to the extent that the Executive obtains
any such benefits pursuant to a subsequent employer's benefit
plans, in which case the Company may reduce the coverage of any
benefits it is required to provide the Executive hereunder as long
as the aggregate coverages and benefits of the combined benefit
plans is no less favorable to the Executive than the coverages and
benefits required to be provided hereunder. This subsection (iii)
shall not be interpreted so as to limit any benefits to which the
Executive, his dependents or beneficiaries may be entitled under
any of the Company's employee benefit plans, programs or practices
following the Executive's termination of employment, including
without limitation, retiree medical and life insurance benefits;
(c) The amounts provided for in Sections 3.1(a) and 3.1(b)(i),
(ii) and (iv) shall be paid in a single lump sum cash payment within
five (5) days after the Executive's Termination Date (or earlier, if
required by applicable law).
(d) The Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
employment or otherwise and no such payment shall be offset or
reduced by the amount of any compensation or benefits provided to the
Executive in any subsequent employment except as provided in Section
3.1(b)(iii).
(e) (1) The severance pay and benefits provided for in this
Section 3 shall be reduced by the amount of any other severance or
termination pay to which the Executive may be entitled under any
agreement with the Company or any of its Affiliates.
(2) The Executive's entitlement to any other compensation or
benefits or any indemnification shall be determined in accordance
with the Company's employee benefit plans and other applicable
programs, policies and practices or any indemnification agreement
then in effect.
4. Notice of Termination. Following a Change in Control, any purported
termination of the Executive's employment by the Company shall be communicated
by Notice of Termination to the Executive. For purposes of this Agreement, no
such purported termination shall be effective without such Notice of
Termination.
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5. Excise Tax Limitation. (a) Notwithstanding anything contained in this
Agreement to the contrary, to the extent that the payments and benefits
provided under this Agreement and benefits provided to, or for the benefit of,
the Executive under any other Company plan or agreement (such payments or
benefits are collectively referred to as the "Payments") would be subject to
the excise tax (the "Excise Tax") imposed under Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), the Payments shall be reduced
(but not below zero) if and to the extent necessary so that no Payment to be
made or benefit to be provided to the Executive shall be subject to the Excise
Tax (such reduced amount is hereinafter referred to as the "Limited Payment
Amount"). Unless the Executive shall have given prior written notice
specifying a different order to the Company to effectuate the foregoing, the
Company shall reduce or eliminate the Payments, by first reducing or
eliminating the portion of the Payments which are not payable in cash and then
by reducing or eliminating cash payments, in each case in reverse order
beginning with payments or benefits which are to be paid the farthest in time
from the Determination (as hereinafter defined). Any notice given by the
Executive pursuant to the preceding sentence shall take precedence over the
provisions of any other plan, arrangement or agreement governing the
Executive's rights and entitlements to any benefits or compensation.
(b) The determination of whether the Payments shall be
reduced to the Limited Payment Amount pursuant to this Agreement and the
amount of such Limited Payment Amount shall be made, at the Company's
expense, by an accounting firm selected by the Company from among the six
largest accounting firms in the United States (the "Accounting Firm"). The
Accounting Firm shall provide its determination (the "Determination"),
together with detailed supporting calculations and documentation to the
Company and the Executive within ten days of the Termination Date, if
applicable, or at such other time as requested by the Company or by the
Executive (provided the Executive reasonably believes that any of the
Payments may be subject to the Excise Tax) and if the Accounting Firm
determines that no Excise Tax is payable by the Executive with respect to
the Payments, it shall furnish the Executive with an opinion reasonably
acceptable to the Executive that no Excise Tax will be imposed with
respect to any such Payments. The Determination shall be binding, final
and conclusive upon the Company and the Executive.
6. Successors; Binding Agreement.
6.1. This Agreement shall be binding upon and shall inure to the
benefit of the Company, its Successors and Assigns, and the Company shall
require any Successors and Assigns to expressly 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.
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6.2. Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his beneficiaries or
legal representatives, except by will or by the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
7. Fees and Expenses. The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) incurred by
the Executive as they become due as a result of (a) the Executive seeking to
obtain or enforce any right or benefit provided by this Agreement (including,
but not limited to, any such fees and expenses incurred in connection with the
Dispute, and (b) the Executive's hearing before the Board as contemplated in
Section 2.4 of this Agreement; provided, however, that the circumstances set
forth in clause (a) (other than as a result of the Executive's termination of
employment under circumstances described in Section 2.5(d)) occurred on or
after a Change in Control.
8. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, by overnight courier or by facsimile, addressed to the
respective addresses and facsimile numbers last given by each party to the
other, provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company. All
notices and communications shall be deemed to have been received on the date
of delivery thereof or on the third business day after the mailing thereof,
except that notice of change of address shall be effective only upon receipt.
9. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company (except for
any severance or termination policies, plans, programs or practices) and for
which the Executive may qualify, nor shall anything herein limit or reduce
such rights as the Executive may have under any other agreements with the
Company (except for any severance or termination agreement). Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan or program of the Company shall be payable in accordance with such
plan or program, except as explicitly modified by this Agreement.
10. No Guaranteed Employment. 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 may be terminated by either the Executive or the
Company at any time.
11. Settlement of Claims. 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 circumstances, including, without
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limitation, any set-off, counterclaim, recoupment, defense or other right
which the Company may have against the Executive or others.
12. Mutual Non-Disparagement. The Company, its affiliates and subsidiaries
agree and the Company shall use its best efforts to cause their respective
executive officers and directors to agree, that they will not make or publish
any statement critical of the Executive, or in any way adversely affecting or
otherwise maligning the Executive's reputation. The Executive agrees that it
will not make or publish any statement critical of the Company, its affiliates
and their respective executive officers and directors, or in any way adversely
affecting or otherwise maligning the business or reputation of any member of
the Company, its affiliates and subsidiaries and their respective officers,
directors and employees.
13. 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 the Executive 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. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly
set forth in this Agreement.
14. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Michigan without giving
effect to the conflict of laws principles thereof. Any action brought by any
party to this Agreement shall be brought and maintained in a court of
competent jurisdiction in Macomb County in the State of Michigan.
15. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
16. Entire Agreement/ROC Communities, Inc. This Agreement constitutes the
entire agreement between the parties hereto and supersedes all prior
agreements, if any, understandings and arrangements, oral or written, between
the parties hereto with respect to the subject matter hereof other than any
agreements with ROC Communities, Inc. If the proposed merger between the
Company and ROC Communities, Inc. takes place on or before March 31, 1997, or
such later date as approved by the Board of Directors, and prior to a Change
in Control, this Agreement shall terminate immediately.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
CHATEAU PROPERTIES, INC.
ATTEST: By: _____________________________
Name:
Title:
By: _____________________________
Executive
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