Exhibit 10.13
[LEAR CORPORATION LOGO]
October 15, 2007
Terrence B. Larkin, Esquire
[home address]
Dear Terry:
Lear Corporation (the "Company") considers it essential to its best
interest and the best interests of its stockholders to foster the continued
employment of key management personnel.
The Board of Directors of the Company (the "Board") has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of members of the Company's management, including
yourself, to their assigned duties. The Board recognizes that, as is the case
with many publicly-held companies, the possibility of a Change in Control (as
that term is hereafter defined) exists. The Company wishes to assure itself of
both present and future continuity of management in the event of any Change in
Control. In order to induce you to remain in the employ of the Company, and in
consideration of your agreement to the termination of any existing employment
contract you may have with the Company or any predecessor, the Company agrees
that you shall receive, upon the terms and conditions set forth herein, the
compensation and benefits set forth in this letter agreement ("Agreement")
during the Term hereof.
1. TERM OF AGREEMENT. This Agreement shall commence as of January 1, 2008
("Effective Date"). The initial term of this Agreement shall be two (2) years
from the Effective Date. The term of this Agreement shall at all times be two
(2) years, that is, the term of this Agreement shall be automatically extended
each day for an additional day such that this Agreement shall continually have
an unexpired term of two (2) years, until the date two (2) years after written
notice is provided by either the Company or the Executive that this Agreement is
not to be further extended (a "Notice of Non-Renewal"), the date set forth in a
Notice of Termination provided pursuant to Section 4, the date of the
Executive's death, or the date the Executive reaches his or her normal
retirement date under the Lear Corporation Pension Plan or its successor,
whichever shall first occur (the initial term as so extended is referred to
herein as the "Term").
2. TERMS OF EMPLOYMENT. During the Term, you agree to be a full-time employee of
the Company serving initially in the position of Senior Vice President, General
Counsel and Corporate Secretary of the Company. You agree to devote
substantially all of your working time and attention to the business and affairs
of the Company, to discharge the responsibilities associated with your position
with the Company, and to use your best efforts to perform faithfully and
efficiently such responsibilities. In addition, you agree to serve in such other
or different capacities or offices to which you may be assigned, appointed or
elected from time to time by the Company. Nothing herein shall prohibit you from
devoting your time to civic and community activities, serving as a member of the
Board of Directors of other corporations that do not compete with the Company,
or managing personal investments, as long as the foregoing do not
Mr. Terrence B. Larkin, Esquire
October 15, 2007
Page 2 of 15
interfere with the performance of your duties hereunder or violate the terms of
the Company's Code of Business Ethics and Conduct, the Company's Corporate
Governance Guidelines, or other policies applicable to the Company's executives
generally, as those policies may be amended from time to time by the Company.
3. COMPENSATION.
(a) As compensation for your services, under this Agreement, you shall be
entitled during the Term to receive an initial base salary the annualized
amount of which shall be $500,000.00, to be paid in accordance with
existing payroll practices for executives of the Company. Increases in
your base salary, if any, shall be as approved by the Compensation
Committee of the Board. In addition, you shall be eligible to receive an
annual incentive compensation bonus ("Bonus") to be approved from time to
time by the Compensation Committee of the Board.
(b) During the Term, you shall be eligible for participation in the
welfare, retirement, perquisite and fringe benefit, and other benefit
plans, practices, policies and programs, as may be in effect from time to
time, for senior executives of the Company generally.
(c) During the Term, you shall be eligible for prompt reimbursement for
business expenses reasonably incurred by you in accordance with the
Company's policies, as may be in effect from time to time, for its senior
executives generally.
4. TERMINATION OF EMPLOYMENT.
(a) NOTICE. You or the Company may terminate the employment relationship
by giving a Notice of Non-Renewal, as described in Section 1.
Alternatively, the employment relationship may be terminated by the
Company with or without Cause, by the Company for Incapacity, or by you
with or without Good Reason, all as defined below, by giving a Notice of
Termination. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon, if any, and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of your employment under the provision so indicated. All
notices under this Section 4(a) shall be given in accordance with the
requirements of Section 9.
(b) INCAPACITY. If the Company reasonably determines that you are unable
at any time to perform the duties of your position because of a serious
illness, injury, impairment, or physical or mental condition and you are
not eligible for or have exhausted all leave to which you may be entitled
under the Family and Medical Leave Act ("FMLA") or, if more generous,
other applicable state or local law, the Company may terminate your
employment for "Incapacity". In addition, at any time that you are on a
leave of absence, the Company may temporarily reassign the duties of your
position to one or more other executives without creating a basis for your
Good Reason resignation, provided that the Company restores such duties to
you upon your return to work.
(c) CAUSE. Termination of your employment for "Cause" shall mean
termination upon:
(i) an act of fraud, embezzlement or theft by you in connection with
your duties or in the course of your employment with the Company;
(ii) your material breach of any provision of this Agreement,
provided that in those instances in which your material breach is
capable of being cured, you have failed to cure within a thirty (30)
day period after notice from the Company;
Mr. Terrence B. Larkin, Esquire
October 15, 2007
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(iii) an act or omission, which is (x) willful or grossly negligent,
(y) contrary to established policies or practices of the Company,
and (z) materially harmful to the business or reputation of the
Company, or to the business of the Company's customers or suppliers
as such relate to the Company; or
(iv) a plea of nolo contendere to, or conviction for, a felony.
(d) GOOD REASON. For purposes of this Agreement, "Good Reason" shall mean
the occurrence of any of the following circumstances or events:
(i) any reduction by the Company in your base salary or adverse
change in the manner of computing your Bonus, as in effect from time
to time, except for across-the-board salary reductions or changes to
the manner of computing bonuses similarly affecting all executive
officers of the Company subject to Section 16(b) of the Securities
Exchange Act of 1934, as determined by the Board ("executive
officers");
(ii) the failure by the Company to pay or provide to you any
amounts of base salary or Bonus or any benefits which are due, owing
and payable to you pursuant to the terms hereof, except pursuant to
an across-the-board compensation deferral similarly affecting all
executive officers, or to pay to you any portion of an installment
of deferred compensation due under any deferred compensation program
of the Company;
(iii) except in the case of across-the-board reductions, deferrals,
eliminations, or plan modifications similarly affecting all
executive officers, the failure by the Company to continue to
provide you with benefits substantially similar in the aggregate to
the Company's life insurance, medical, dental, health, accident or
disability plans in which you are participating at the date of this
Agreement;
(iv) except on a temporary basis as described in Section 4(b), a
material adverse change in your responsibilities, position,
reporting relationships, authority or duties. For purposes of
clarification, you agree that it will not be a material adverse
change for the Company to reassign you to a position with at least
substantially similar responsibilities and authority; or
(v) without limiting the generality or effect of the foregoing, any
material breach of this Agreement by the Company.
However, the language in Sections 4(d)(i) through (iii) concerning
reductions, changes, deferrals, eliminations, or plan modifications
similarly affecting all executive officers of the Company shall not be
applicable to circumstances or events occurring in anticipation of, or
within one year after, a Change in Control, as defined in Section 4(e). In
addition, upon a Change in Control, you shall have the right to resign for
Good Reason if your principal place of employment is transferred to a
location fifty (50) or more miles from its location immediately preceding
the transfer.
Notwithstanding anything else herein, Good Reason shall not exist if, with
regard to the circumstances or events relied upon in your Notice of
Termination: (x) you failed to provide a Notice of Termination to the
Company within sixty (60) days of the date you knew or should have known
of such circumstances or events, (y) the circumstances or events are fully
corrected by the Company prior to the Date of Termination, or (z) you give
your express written consent to the circumstances or events.
Mr. Terrence B. Larkin, Esquire
October 15, 2007
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(e) CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control" of the Company shall be deemed to have occurred as of the first
day any one or more of the following paragraphs is satisfied:
(i) any Person as that term is used in Section 13(d)(3) or Section
14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act")
(other than the Company or a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or a
corporation owned directly or indirectly by the shareholders of the
Company in substantially the same proportions as their ownership of
stock of the Company) becomes the Beneficial Owner, as that term is
defined in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act, directly or indirectly, of securities of the Company,
representing more than twenty-five percent of the combined voting
power of the Company's then outstanding securities.
(ii) during any period of twenty-six (26) consecutive months
beginning on or after the Effective Date, individuals who at the
beginning of the period constituted the Board cease for any reason
(other than death, disability or voluntary retirement) to constitute
a majority of the Board. For this purpose, any new Director whose
election by the Board, or nomination for election by the Company's
shareholders, was approved by a vote of at least two-thirds of the
Directors then still in office, and who either were Directors at the
beginning of the period or whose election or nomination for election
was so approved, will be deemed to have been a Director at the
beginning of any twenty-six month period under consideration.
(iii) the shareholders of the Company approve: (A) a plan of
complete liquidation or dissolution of the Company; or (B) an
agreement for the sale or disposition of all or substantially all
the Company's assets; or (C) a merger, consolidation or
reorganization of the Company with or involving any other
corporation, other than a merger, consolidation or reorganization
that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least seventy-five percent of
the combined voting power of the voting securities of the Company
(or such surviving entity) outstanding immediately after such
merger, consolidation, or reorganization.
(f) DATE OF TERMINATION. "Date of Termination" shall mean:
(i) if your employment is terminated by reason of your death, the
date of your death;
(ii) if your employment is terminated by the Company for any reason
other than because of your death, the date specified in the Notice
of Termination (which shall not be prior to the date of the notice);
(iii) if your employment is terminated by you for any reason, the
Date of Termination shall be not less than thirty (30) nor more than
sixty (60) days from the date such Notice of Termination is given,
or such earlier date after the date such Notice of Termination is
given as may be identified by the Company.
Unless the Company instructs you not to do so, you shall continue to
perform services as provided in this Agreement through the Date of
Termination.
(g) EMPLOYEE BENEFITS. A termination by the Company pursuant to Section
4(c) hereof or by you pursuant to Section 4(d) hereof shall not affect any
rights which you may have pursuant to any other agreement, policy, plan,
program or arrangement of the Company providing employee
Mr. Terrence B. Larkin, Esquire
October 15, 2007
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benefits, which rights shall be governed by the terms thereof and by
Section 5; provided, however, that if you shall have received or shall be
receiving benefits under Section 5(a), (c), or (d) hereof and, if
applicable, Section 6 hereof, you shall not be entitled to receive
benefits under any other policy, plan, program or arrangement of the
Company providing severance compensation to which you would otherwise be
entitled.
5. COMPENSATION UPON TERMINATION. Upon your termination of employment, you
shall receive:
(a) If your employment shall be terminated by the Company for Incapacity,
(i) for the period from the Date of Termination until the end of the
calendar year in which such termination occurs, you shall receive all
compensation payable to you under the Company's disability and medical
plans and programs, as in effect on the Date of Termination, plus an
additional payment from the Company (if necessary) such that the aggregate
amount received by you from all sources equals your base salary, at the
rate in effect on the Date of Termination, plus any Bonus and all other
amounts to which you would have been entitled under any compensation or
benefit plans of the Company had your employment continued until the end
of the calendar year, (ii) for the period from the end of the calendar
year in which such termination occurs until two (2) years from the Date of
Termination (the "Payment End Date"), you shall receive all compensation
payable to you under the Company's disability and medical plans and
programs, as in effect on the Date of Termination, plus an additional
payment from the Company (if necessary) such that the aggregate amount
received by you from all sources equals your base salary at the rate in
effect on the Date of Termination, and (iii) for purposes of outstanding
awards and amounts owing or accrued as described in Section 5(d)(iii) of
this Agreement, your employment shall be deemed to have been terminated
due to your Disability (as that term is defined in the plans, programs, or
arrangements described in Section 5(d)(iii) of this Agreement). After the
Payment End Date, your benefits shall be determined under the Company's
retirement, insurance and other compensation programs then in effect in
accordance with the terms of such programs. The additional payments by the
Company described in this Section 5(a) shall be conditioned upon the
execution by you or a representative with legal authority to act on your
behalf of a general release relating to your employment in form and
substance reasonably acceptable to the Company.
(b) If your employment shall be terminated (i) by the Company for Cause or
by a Notice of Non-Renewal, or (ii) by you other than for Good Reason, the
Company shall pay you your base salary through the Date of Termination, at
the rate in effect at the time Notice of Termination is given, plus all
other amounts to which you are fully vested and irrevocably entitled under
any compensation or benefit plans of the Company as of the Date of
Termination, and the Company shall have no further obligations in any
respect whatsoever for payment of compensation or benefits to you under
this Agreement. Provided, however, that if your employment is terminated
by you other than for Good Reason, you shall be compensated under this
Section 5(b) only to the extent that you actively performed your assigned
responsibilities through the Date of Termination. In addition, you
acknowledge that a termination of employment described in this Section
5(b) shall not be considered an End of Service Date for any and all
outstanding awards under the Lear Corporation Long-Term Stock Incentive
Plan ("LTSIP") to which you are a party, except to the extent it would
otherwise qualify as a Retirement thereunder.
(c) If your employment shall be terminated by reason of your death, the
Company shall pay your estate or designated beneficiary (as designated by
you by written notice to the Company, which designation shall remain in
effect for the remainder of the Term and any extensions thereof until
revoked or a new beneficiary is designated, in either case by written
notice to the Company) your base salary through the Date of Termination,
plus a Bonus prorated for the portion of the Bonus measurement period
occurring prior to the date of your death, plus all other amounts to which
you are entitled under any compensation or benefit plans of the Company at
the date of your death, including, but not limited to, all life insurance
proceeds payable on your death to
Mr. Terrence B. Larkin, Esquire
October 15, 2007
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which your estate or beneficiaries are otherwise entitled in accordance
with the terms thereof, and the Company shall have no further obligation
to you, your beneficiaries or your estate under this Agreement.
(d) If your employment shall be terminated (a) by the Company, except for
a termination by the Company for Cause or Incapacity or by a Notice of
Non-Renewal (or due to your death), or (b) by you for Good Reason, then
you shall be entitled to the benefits provided below:
(i) The Company shall pay you your full base salary through the Date
of Termination at the rate in effect at the time Notice of
Termination is given (or, if greater, at the rate in effect at any
time within 90 days prior to the time Notice of Termination is
given), plus all other amounts to which you are entitled under any
compensation or benefit plans of the Company, including, without
limitation, a Bonus prorated for the portion of the Bonus
measurement period occurring prior to the Date of Termination, at
the time such payments are due, except as otherwise provided below.
(ii) Conditioned upon your execution of a general release relating
to your employment in form and substance reasonably acceptable to
the Company, the Company shall pay or cause to be paid to you, in
lieu of any further payments to you for the portion of the Term
subsequent to the Date of Termination an amount (the "Severance
Payment"), which shall be equal to the sum of:
(A) the aggregate base salary (at the highest rate in effect
at any time during the Term) which you would have received
pursuant to this Agreement for the Severance Period had your
employment with the Company continued for such period, and
(B) the aggregate Bonus (based upon the highest annual Bonus
that you received with respect to any calendar year during the
two years immediately preceding the calendar year in which the
Date of Termination occurred) which you would have received
pursuant to this Agreement for the Severance Period, had your
employment with the Company continued for such period.
The Severance Payment shall be paid over a period of one (1) year
(the "Severance Period") in the following manner: an amount equal to
fifty percent (50%) of the value of the Severance Payment, or, if
the Severance Period is adjusted per Section 10(e), then an amount
equal to twenty-five percent (25%) of the value of the Severance
Payment, paid in a lump sum as soon as administratively practicable
after the date that is six (6) months after your Date of
Termination; and an amount equal to the remaining fifty percent
(50%) or seventy-five percent (75%), as applicable, paid in equal
semi-monthly installments, without interest, beginning six (6)
months after the Date of Termination and continuing through the end
of the Severance Period.
(iii) All outstanding awards, and all amounts owing or accrued, on
the Date of Termination under the LTSIP, the Lear Corporation
Management Stock Purchase Plan ("MSPP"), the Lear Corporation
Executive Supplemental Savings Plan ("ESSP") and the Lear
Corporation Pension Equalization Program ("PEP"), and any other
compensation or equity-based plan, program or arrangement of the
Company in which you participated (including, following a Change in
Control, any additional accruals provided thereunder due to a Change
in Control) will be paid to you under the terms and conditions of
such plans, programs and arrangements (and the award agreements and
other documents thereunder), as modified by this Section 5(d)(iii).
Your awards and amounts owing or accrued that vest based on the
passage of time and/or continued service (and not based
Mr. Terrence B. Larkin, Esquire
October 15, 2007
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primarily upon the satisfaction of performance measures, as
described below) will vest in full as of the Date of Termination if
they would have vested during the Severance Period, had you remained
employed by the Company during that period; to the extent such
awards and amounts owing or accrued would not have vested by the end
of your Severance Period, had you remained employed by the Company
during that period, they will become vested and nonforfeitable as of
the Date of Termination on a pro rata basis determined by
multiplying the unvested awards and amounts by a fraction, the
numerator of which is the number of full months that elapsed from
the grant date to the end of your Severance Period, as adjusted by
Section 10(e), and the denominator of which is the number of full
months in the total vesting period. Your vested stock options and
stock appreciation rights shall be exercisable (A) prior to a Change
in Control, for thirteen months following your Date of Termination
(but not later than the date on which the stock options would
otherwise expire if you remained employed by the Company), and (B)
following a Change in Control, throughout their entire term. In the
case of those awards and amounts owing or accrued which would
otherwise have become vested and nonforfeitable primarily upon the
satisfaction of performance measures set forth in the relevant award
agreement, plan, program or arrangement, you shall be paid (in stock
or cash, as provided under the terms of the agreement) as soon as
administratively feasible after the end of the relevant performance
period (or such earlier period as the other participants in such
award agreement, plan, program or arrangement are eligible to be
paid out), a pro rata amount (if and to the extent all relevant
performance objectives are actually achieved at target levels),
based on a fraction, the numerator of which is the number of full
months that elapsed from the grant date to your Date of Termination
and the denominator of which is the number of full months in the
relevant performance period.
You and the Company acknowledge that references in this Section
5(d)(iii) to the PEP, the MSPP, the ESSP, and the LTSIP, shall be
deemed to be references to such plans as amended or restated from
time to time and to any similar plan of the Company that supplements
or supersedes any such plans. In addition, you and the Company
acknowledge that references in this Section 5 to any Section of the
Code shall be deemed to be references to such Section as amended
from time to time or to any successor thereto.
(iv) The Company shall arrange to provide to you, your dependents,
and beneficiaries, for the Severance Period, benefits provided under
any "welfare benefit plan" of the Company (as the term "welfare
benefit plan" is defined in Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended) ("Welfare Benefits"). If
and to the extent that any such Welfare Benefits shall not or cannot
be paid or provided under any policy, plan, program or arrangement
of the Company (A) solely due to the fact that you are no longer an
officer or employee of the Company or did not continue as an officer
or employee of the Company during the remainder of the Term or (B)
as a result of the amendment or termination of any plan providing
for Welfare Benefits, the Company shall then itself pay or provide
for the payment of such Welfare Benefits to you, your dependents and
beneficiaries. Without otherwise limiting the purposes or effect of
the no mitigation obligation in Section 5(h) hereof, Welfare
Benefits payable to you (including your dependents and
beneficiaries) pursuant to this Section 5(d)(iv) shall be reduced to
the extent comparable welfare benefits are actually received by you
(including your dependents and beneficiaries) from another employer
during such period, and any such benefits actually received by you
shall be reported by you to the Company.
(v) Your right to acquire any shares of the Company's capital stock
under any and all outstanding stock options, or other rights
previously granted to you under any equity-based plans of the
Company shall be governed by the express terms of such plans and
Mr. Terrence B. Larkin, Esquire
October 15, 2007
Page 8 of 15
the applicable agreements thereunder, except as provided in Section
5(a), 5(b), or 5(d)(iii) of this Agreement.
(e) Any Bonus that is payable to you with respect to a period that is less
than a full calendar year (a "partial calendar year") shall be prorated by
multiplying (i) the Bonus that would have been payable to you with respect
to the entire calendar year had your employment with the Company continued
until the end of such year by (ii) a fraction, the numerator of which
equals the number of days in the partial calendar year and the denominator
of which equals 365.
(f) Unless your Date of Termination occurs within one year after a Change
in Control, the Company, if permitted by law, may set-off or counterclaim
losses, fines or damages in respect of any claim, debt or obligation
against any payment to or benefit for you provided for in this Agreement.
(g) Without limiting your rights at law or in equity, if the Company fails
to make any payment or provide any benefit required to be made or provided
hereunder within thirty (30) days of the date it is due, the Company will
pay interest on the amount or value thereof at an annualized rate of
interest equal to the "prime rate" as quoted from time to time during the
relevant period in The Wall Street Journal, plus three percent. Such
interest will be payable as it accrues on demand. Any change in such prime
rate will be effective on and as of the date of such change.
(h) The Company acknowledges that its severance pay plans and policies
applicable in general to its salaried employees do not provide for
mitigation, offset or reduction of any severance payment received
thereunder. Accordingly, the parties hereto expressly agree that the
payment of the severance compensation by the Company to you in accordance
with the terms of this Agreement shall be liquidated damages and that you
shall not be required to mitigate the amount of any payment provided for
in this Agreement by seeking other employment or otherwise, nor shall any
profits, income, earnings or other benefits from any source whatsoever
create any mitigation, offset, reduction or any other obligation on the
part of you hereunder or otherwise, except as expressly provided in this
Section 5.
6. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event that it shall be determined (as hereafter provided) that any payment
(or benefit provided) by the Company to or for your benefit, whether paid
or payable pursuant to the terms of this Agreement or otherwise (a
"Payment"), would be subject to the excise tax imposed by Section 4999 (or
any successor thereto) of the Code, and any interest or penalties with
respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereafter collectively referred to as the
"Excise Tax"), then you shall be entitled to receive an additional payment
or payments (collectively, a "Gross-Up Payment"), including without
limitation any Gross-Up Payment made with respect to the Excise Tax, if
any, attributable to (i) any incentive stock option, as defined by Section
422 of the Code ("ISO"), or (ii) any stock appreciation or similar right,
whether or not limited, granted in tandem with any ISO. The Gross-Up
Payment shall be in an amount such that, after payment by you of the
Excise Tax, plus any additional taxes, penalties and interest, and any
further Excise Taxes imposed upon the Gross-Up Payment, you retain, after
payment of all such taxes and Excise Taxes, an amount of the Gross-Up
Payment equal to the Payment that you would have received if no Excise
Taxes had been imposed upon the Payment and no additional taxes,
penalties, and interest or further Excise Taxes had been imposed upon the
Gross-Up Payment.
(b) Subject to the provisions of Section 6(e) hereof, all determinations
required to be made under this Section 6, including whether an Excise Tax
is payable by you and the amount of such
Mr. Terrence B. Larkin, Esquire
October 15, 2007
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Excise Tax and whether a Gross-Up Payment is required and the amount of
such Gross-Up Payment, shall be made by a nationally recognized firm of
certified public accountants (the "Accounting Firm") selected by you in
your sole discretion, other than the Company's independent auditing firm,
to the extent prohibited by applicable Public Company Accounting Oversight
Board rules. You shall direct the Accounting Firm to submit its
determination and detailed supporting calculations to both the Company and
you within thirty (30) calendar days after the Date of Termination. If the
Accounting Firm determines that any Excise Tax is payable by you, the
Company shall pay the required Gross-Up Payment to you within five (5)
business days after receipt of the aforesaid determination and
calculations. If the Accounting Firm determines that no Excise Tax is
payable by you, it shall, at the same time as it makes such determination,
furnish you with an opinion that you do not owe any Excise Tax on your
Federal income tax return. Any determination by the Accounting Firm as to
the amount of the Gross-Up Payment to be paid by the Company within such
thirty (30) calendar day period shall be binding upon the Company and you.
As a result of the uncertainty in the application of Section 4999 (or any
successor thereto) 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 6(e) hereof and you thereafter are required to make a payment of
any Excise Tax, you shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the Company and
you as promptly as possible. Any such Underpayment shall be promptly paid
by the Company to or for your benefit within three calendar days after
receipt of such determination and calculations.
(c) The Company and you shall each cooperate with the Accounting Firm in
connection with the preparation and issuance of the determination provided
for in Section 6(b) hereof. Such cooperation shall include without
limitation providing the Accounting Firm access to and copies of any
books, records and documents in the possession of the Company or you, as
the case may be, that are reasonably requested by the Accounting Firm.
(d) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations provided for in
Section 6(b) hereof shall initially be paid by you. The Company shall
reimburse you for your payment of such costs and expenses within five (5)
business days after receipt from you of a statement therefor and evidence
of your payment thereof.
(e) You shall notify the Company in writing, of any claim by the Internal
Revenue Service (the "IRS") that, if successful, would require the payment
by the Company of a Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than ten (10) business days after you
receive notice 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.
You shall not pay such claim prior to the earlier of (x) the expiration of
the thirty (30) calendar day period following the date on which you give
such notice to the Company or (y) the date that any payment of taxes with
respect to such claim is due. If the Company notifies you in writing prior
to the expiration of such period that it desires to contest such claim,
you 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;
Mr. Terrence B. Larkin, Esquire
October 15, 2007
Page 10 of 15
(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 you 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 6(e), the Company shall, provided that
such control does not have a material adverse affect on your
individual income tax with respect to matters unrelated to the
contest of the Excise Tax, control all proceedings taken in
connection with such contest and, at its sole option, may, provided
that such pursuit or foregoing does not have a material adverse
affect on your individual income tax with respect to matters
unrelated to the contest of the Excise Tax, pursue or forego any and
all administrative appeals, proceedings, hearings and conference
with the IRS in respect of such claim (but, you may participate
therein at your own cost and expense) and may, at its sole option,
provided that such payment, suit, contest or prosecution does not
have a material adverse affect on your individual income tax with
respect to matters unrelated to the contest of the Excise Tax,
either direct you to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and you agree 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 you to pay the tax claimed and sue for a
refund, the Company shall advance the amount of such payment to you
on an interest-free basis and shall indemnify and hold you 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 your taxable year
with respect to which the contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's
control of such contest shall be limited to issues with respect to
which a Gross Up Payment would be payable hereunder, and you shall
be entitled to settle or contest, as the case may be, any other
issue raised by the IRS.
(f) If, after the receipt by you of an amount advanced by the Company
pursuant to Section 6(e) hereof, you receive any refund with respect to
such claim, you shall (subject to the Company's complying with the
requirements of Section 6(e) hereof) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon
after any taxes applicable thereto). If, after the receipt by you of an
amount advanced by the Company pursuant to Section 6(e) hereof, a
determination is made that you shall not be entitled to any refund with
respect to such claim and the Company does not notify you in writing of
its intent to contest such denial or refund prior to the expiration of
thirty (30) calendar 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.
7. TRAVEL. You shall be required to travel to the extent necessary for the
performance of your responsibilities under this Agreement.
8. SUCCESSORS; BINDING AGREEMENT. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all the business and/or assets of the Company, to expressly
assume and agree to perform this Agreement in the same manner
Mr. Terrence B. Larkin, Esquire
October 15, 2007
Page 11 of 15
and to the same extent that the Company would be required to perform it if no
such succession had taken place, and will assign its rights and obligations
hereunder to such successor. Failure of the Company to make such an assignment
and to obtain such assumption and agreement prior to the effectiveness of any
such succession, unless you agree otherwise in writing with the Company or the
successor, shall entitle you to compensation from the Company in the same amount
and on the same terms as you would be entitled to hereunder if you terminate
your employment for Good Reason and the date on which any such succession
becomes effective shall be deemed your Date of Termination. 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. This Agreement shall
inure to the benefit of and be enforceable by your personal or legal
representatives, executors, administrators, successors, heirs, distributees
and/or legatees. This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in this Section 8. Without limiting the generality of the foregoing,
your right to receive payments hereunder shall not be assignable or
transferable, whether by pledge, creation of a security interest or otherwise,
other than by a transfer by your will or by the laws of descent and distribution
and, in the event of any attempted assignment or transfer contrary to this
Section 8, the Company shall have no liability to pay to the purported assignee
or transferee any amount so attempted to be assigned or transferred. The Company
and you recognize that each party will have no adequate remedy at law for any
material breach by the other of any of the agreements contained herein and, in
the event of any such breach, the Company and you hereby agree and consent that
the other shall be entitled to a decree of specific performance, mandamus or
other appropriate remedy to enforce performance of this Agreement.
9. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing, and shall be
deemed to have been duly given when delivered by hand, or mailed by United
States certified mail, return receipt requested, postage prepaid, or sent by
Federal Express or similar overnight courier service, addressed to the
respective addresses set forth on the first page of this Agreement, or sent by
facsimile with confirmation of receipt to the respective facsimile numbers set
forth on the first page of this Agreement, provided that all notices to the
Company shall be directed to the attention of the Secretary of the Company (or,
if you are the Secretary at the time such notice is to be given, to the Chairman
of the Company's Board of Directors), or to such other address or facsimile
number as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address or facsimile number shall be
effective only upon receipt.
10. NONCOMPETITION.
(a) Until the Date of Termination, you agree not to engage in any
Competitive Activity. For purposes of this Agreement, the term
"Competitive Activity" shall mean your participation as an employee or
consultant, without the written consent of the CEO or the Board or any
authorized committee thereof, in the management of any business enterprise
anywhere in the world if such enterprise is a "Significant Customer" of
any product or service of the Company or engages in competition with any
product or service of the Company (including without limitation any
enterprise that is a supplier to an original equipment automotive vehicle
manufacturer) or is planning to engage in such competition. For purposes
of this Agreement, the term "Significant Customer" shall mean any customer
who represents in excess of 5% of the Company's sales in any of the three
calendar years prior to the date of determination. "Competitive Activity"
shall not include the mere ownership of, and exercise of rights
appurtenant to, securities of a publicly-traded company representing 5% or
less of the total voting power and 5% or less of the total value of such
an enterprise. You agree that the Company is a global business and that it
is appropriate for this Section 10 to apply to Competitive Activity
conducted anywhere in the world.
(b) You agree not to engage directly or indirectly in any Competitive
Activity (i) until one (1) year after the Date of Termination if you are
terminated by the Company for Cause, as a result of
Mr. Terrence B. Larkin, Esquire
October 15, 2007
Page 12 of 15
a Notice of Non-Renewal from the Company, or you terminate your employment
for other than Good Reason, or (ii) until two (2) years after the Date of
Termination in all other circumstances.
(c) You shall not directly or indirectly, either on your own account or
with or for anyone else, solicit or attempt to solicit any of the
Company's customers, solicit or attempt to solicit for any business
endeavor or hire or attempt to hire any employee of the Company, or
otherwise divert or attempt to divert from the Company any business
whatsoever or interfere with any business relationship between the Company
and any other person, (i) until one (1) year after the Date of Termination
if you are terminated by the Company for Cause, as a result of a Notice of
Non-Renewal from the Company, or you terminate your employment for other
than Good Reason, or (ii) until two (2) years after the Date of
Termination in all other circumstances.
(d) You acknowledge and agree that damages in the event of a breach or
threatened breach of the covenants in this Section 10 will be difficult to
determine and will not afford a full and adequate remedy, and therefore
agree that the Company, in addition to seeking actual damages pursuant to
Section 10 hereof, may seek specific enforcement of the covenant not to
compete in any court of competent jurisdiction, including, without
limitation, by the issuance of a temporary or permanent injunction,
without the necessity of a bond. You and the Company agree that the
provisions of this covenant not to compete are reasonable. However, should
any court or arbitrator determine that any provision of this covenant not
to compete is unreasonable, either in period of time, geographical area,
or otherwise, the parties agree that this covenant not to compete should
be interpreted and enforced to the maximum extent which such court or
arbitrator deems reasonable.
(e) As additional compensation for the covenants contained in Sections
10(b) and 10(c), and only if you execute a general release in form and
substance reasonably acceptable to the Company acknowledging, among other
things, your obligations under this Agreement, the Company shall increase
the Severance Period for purposes of Section 5(d) from one (1) year to two
(2) years.
11. CONFIDENTIALITY AND COOPERATION.
(a) You shall not knowingly use, disclose or reveal to any unauthorized
person, during or after the Term, any trade secret or other confidential
information relating to the Company or any of its affiliates, or any of
their respective businesses or principals, such as, without limitation,
dealers' or distributor's lists, information regarding personnel and
manufacturing processes, marketing and sales plans, pricing or cost
information, and all other such information; and you confirm that such
information is the exclusive property of the Company and its affiliates.
Upon termination of your employment, you agree to return to the Company on
demand by the Company all memoranda, books, papers, letters and other
data, and all copies thereof or therefrom, in any way relating to the
business of the Company and its affiliates, whether made by you or
otherwise in your possession.
(b) Any design, engineering methods, techniques, discoveries, inventions
(whether patentable or not), formulae, formulations, technical and product
specifications, bill of materials, equipment descriptions, plans, layouts,
drawings, computer programs, assembly, quality control, installation and
operating procedures, operating manuals, strategic, technical or marketing
information, designs, data, secret knowledge, know-how and all other
information of a confidential nature prepared or produced during the
period of your employment and which ideas, processes, and other materials
or information relate to any of the businesses of the Company, shall be
owned by the Company and its affiliates whether or not you should in fact
execute an assignment thereof or other instrument or document which may be
reasonably necessary to protect and secure such rights to the Company.
Mr. Terrence B. Larkin, Esquire
October 15, 2007
Page 13 of 15
(c) Following the termination of your employment, you agree to make
yourself reasonably available to the Company to respond to periodic
requests for information relating to the Company or your employment which
may be within your knowledge. You further agree to cooperate fully with
the Company in connection with any and all existing or future depositions,
litigation, or investigations brought by or against the Company, any
entity related to the Company, or any of its (their) agents, officers,
directors or employees, whether administrative, civil or criminal in
nature, in which and to the extent the Company deems your cooperation
necessary. In the event that you are subpoenaed in connection with any
litigation or investigation, you will immediately notify the Company. You
shall not receive any additional compensation, other than reimbursement
for reasonable costs and expenses incurred by you, in complying with the
terms of this Section 11(c).
12. ARBITRATION.
(a) Except as contemplated by Section 10(d) or Section 12(c) hereof, any
dispute or controversy arising under or in connection with this Agreement
that cannot be mutually resolved by the parties to this Agreement and
their respective advisors and representatives shall be settled exclusively
by arbitration in Southfield, Michigan, before one arbitrator of exemplary
qualifications and stature, who shall be selected jointly by an individual
to be designated by the Company and an individual to be selected by you,
or if such two individuals cannot agree on the selection of the
arbitrator, who shall be selected pursuant to the procedures of the
American Arbitration Association.
(b) The parties agree to use their best efforts to cause (i) the two
individuals set forth in the preceding Section 12(a), or, if applicable,
the American Arbitration Association, to appoint the arbitrator within
thirty (30) days of the date that a party hereto notifies the other party
that a dispute or controversy exists that necessitates the appointment of
an arbitrator, and (ii) any arbitration hearing to be held within thirty
(30) days of the date of selection of the arbitrator, and, as a condition
to his or her selection, such arbitrator must consent to be available for
a hearing, at such time.
(c) Judgment may be entered on the arbitrator's award in any court having
jurisdiction, provided that you shall be entitled to seek specific
performance of your right to be paid and to participate in benefit
programs during the pendency of any dispute or controversy arising under
or in connection with this Agreement. The Company and you hereby agree
that the arbitrator shall be empowered to enter an equitable decree
mandating specific performance of the terms of this Agreement. If any
dispute under this Section 12 shall be pending, you shall continue to
receive at a minimum the base salary which you were receiving immediately
prior to the act or omission which forms the basis for the dispute. At the
close of the arbitration, such continued base salary payments may be
offset against any damages awarded to you or may be recovered from you if
its determined that you were not entitled to the continued payment of base
salary under the other provisions of this Agreement.
13. MODIFICATIONS. No provision of this Agreement may be modified, amended,
waived or discharged unless such modification, amendment, waiver or discharge is
agreed to in writing and signed by both you and such officer of the Company as
may be specifically designated by the Board.
14. NO IMPLIED WAIVERS. Failure of either party at any time to require
performance by the other party of any provision hereof shall in no way affect
the full right to require such performance at any time thereafter. Waiver by
either party of a breach of any obligation hereunder shall not constitute a
waiver of any succeeding breach of the same obligation. Failure of either party
to exercise any of its rights provided herein shall not constitute a waiver of
such right.
Mr. Terrence B. Larkin, Esquire
October 15, 2007
Page 14 of 15
15. GOVERNING LAW. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Michigan without
giving effect to any conflicts of laws rules.
16. PAYMENTS NET OF TAXES. Except as otherwise provided in Section 6 herein, any
payments provided for herein which are subject to Federal, State local or other
governmental tax or other withholding requirements or obligations, shall have
such amounts withheld prior to payment, and the Company shall be considered to
have fully satisfied its obligation hereunder by making such payments to you net
of and after deduction for all applicable withholding obligations.
17. CAPACITY OF PARTIES. The parties hereto warrant that they have the capacity
and authority to execute this Agreement.
18. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not, at the option of the party for whose benefit such provision
was intended, affect the validity or enforceability of any other provision of
the Agreement, which shall remain in full force and effect.
19. COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
20. ENTIRE AGREEMENT. This Agreement contains the entire agreement by the
parties with respect to the matters covered herein and supersede any prior
agreement (including, but not limited to, prior employment agreement(s)),
condition, practice, custom, usage and obligation with respect to such matters
insofar as any such prior agreement, condition, practice, custom, usage or
obligation might have given rise to any enforceable right. No agreements,
understandings 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.
21. LEGAL FEES AND EXPENSES. It is the intent of the Company that you not be
required to incur the expenses associated with the enforcement of your rights
under this Agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to you hereunder. Accordingly, the Company shall pay or cause to be
paid and be solely responsible for any and all reasonable attorneys' and related
fees and expenses incurred by you (i) as a result of the Company's failure to
perform this Agreement or any provision hereof or (ii) as a result of the
Company unreasonably or maliciously contesting the validity or enforceability of
this Agreement or any provision hereof as aforesaid.
22. CODE SECTION 409A. Notwithstanding any provision in this Agreement to the
contrary, if your employment is terminated as described in Section 5(d) and
Section 409A(a)(2)(B)(i) of the Code applies to all or any portion of your
Severance Payment and you are a "specified employee" thereunder, then the
Company shall pay the portion of your Severance Payment that is subject to such
Section of the Code no earlier than six (6) months after your Date of
Termination or such other date as would be permissible under the Code. If your
employment is terminated as described in Section 5(d) and Section
409A(a)(2)(B)(i) of the Code does not apply to any portion of your Severance
Payment or you are not a "specified employee" thereunder, then the Company shall
pay your Severance Payment as described in Section 5(d).
Mr. Terrence B. Larkin, Esquire
October 15, 2007
Page 15 of 15
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject, effective on January 1, 2008
("Effective Date").
Sincerely,
LEAR CORPORATION
By: /s/ Roger A. Jackson
----------------------------------------
Roger A. Jackson
Agreed to this 2nd day of January, 2007
/s/ Terrence B. Larkin
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Terrence B. Larkin