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EXHIBIT 10.9
March 20, 1995
Mr. Kenneth L. Way
2838 Chestnut Run Drive
Bloomfield Hills, Michigan 48302
Dear Mr. Way:
Lear Seating Corporation (the "Company") considers it essential to its
best interest and the best interests of its stockholders to foster the
continuous 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. 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 the
Effective Date (as defined on the signature page hereof) and shall continue in
effect until the fourth anniversary of such date (the "Term"). The Term may be
extended pursuant to paragraph 12, hereafter.
2. Terms of Employment. During the Term, you agree to be a
full-time employee of the Company serving in the position of Chief Executive
Officer of the Company and to devote substantially all of your working time and
attention to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities associated with your position as
Chief Executive Officer of the Company, to use your best efforts to perform
faithfully and efficiently such responsibilities. In addition, you agree to
serve in such other capacities or offices to which you may be assigned,
appointed or elected from time to time by the Board. 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 who do not compete
with the Company, or managing personal investments, as long as the foregoing
do not interfere with the performance of your duties hereunder.
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3. Compensation.
(i) As compensation for your services, under this
Agreement, you shall be entitled to receive an initial base
salary of $530,000 per annum, to be paid in accordance with
existing payroll practices for executives of the Company.
Increases in your base salary, if any, shall be determined by
the Compensation Committee of the Board of Directors. In
addition, you shall be eligible to receive an annual incentive
compensation bonus ("Bonus") to be determined from time to
time by the Compensation Committee of the Board of Directors
of the Company.
(ii) In addition to compensation provided for in
Subsection (i) of this Section 3, the Company agrees (A) to
provide the same or comparable benefits with respect to any
compensation or benefit plan in which you participate as of
the Effective Date which is material to your total
compensation, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan; and (B) to maintain your ability to
participate therein (or in such substitute or alternative
plan) on a basis not materially less favorable, both in terms
of the opportunities provided and the level of your
participation relative to other participants, than exists on
the Effective Date.
(iii) The Company shall reimburse you for all reasonable
travel, entertainment and other business expenses incurred by
you in the performance of your responsibilities under this
Agreement promptly upon receipt of written substantiation of
such expenses. You shall also be paid all additional amounts
necessary to discharge all federal and state tax liabilities
incurred by you that are attributable to all deemed
compensation arising as a consequence of your personal use of
property owned or leased by the Company, excepting only your
personal use of any Company aircraft, including federal and
state taxes assessed against such additional compensation.
(iv) You shall be entitled to perquisites available to all
other executives of the Company and shall be entitled to 4
weeks of vacation per year.
4. Termination of Employment. Your employment may be terminated
by either the Company or you by giving a Notice of Termination, as defined in
Subsection (iv) of this Section 4. If your employment should terminate during
the Term, your entitlement to benefits shall be determined in accordance with
Section 5 hereof.
(i) Disability. If, as a result of your incapacity due
to physical or mental illness, you are unable to perform your
duties hereunder for more than six consecutive
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months or six months aggregate during any twelve month
period, your employment may be terminated for "Disability".
(ii) Cause. Termination of your employment for "Cause"
shall mean termination upon (A) the willful and continued
failure by you to substantially perform your duties with the
Company (other than any such failure resulting from your
Disability), (B) the engaging by you in conduct which is
significantly injurious to the Company, monetarily or
otherwise, (C) your conviction of a felony, (D) your abuse of
illegal drugs or other controlled substances or your habitual
intoxication, or (E) the breach of any of your material
obligations hereunder including without limitation any breach
of Section 9 or 10 hereof. For purposes of this Subsection,
no act or failure to act, on your part shall be deemed
"willful" unless knowingly done, or omitted to be done, by you
not in good faith and without reasonable belief that your
action or omission was in the best interest of the Company.
(iii) Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence, without your express
written consent, of any of the following circumstances unless
such circumstances are fully corrected prior to the Date of
Termination specified in the Notice of Termination, as such
terms are defined in Subsections (v) and (iv) of this Section
4, respectively, given in respect thereof:
(A) The permanent assignment to you of any duties
inconsistent with your status as an executive officer
of the Company, your physical relocation on a
permanent basis to an area outside of the
metropolitan Detroit area, a substantial adverse
alteration in the nature or status of your
responsibilities from those in effect immediately
prior to such assignment of duties, your removal from
any office specified in Section 2 hereof;
(B) Any reduction by the Company in your base
salary as in effect from time to time, except for
across-the- board salary reductions similarly
affecting all executive officers of the Company;
(C) The failure by the Company to pay or provide
to you within seven (7) days of receipt by the
Company of your written demand 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;
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(D) Except in the case of across-the-board
reductions, deferrals or eliminations similarly
affecting all executive officers of the Company, the
failure by the Company to (i) continue in effect any
compensation plan in which you participate which is
material to your total compensation, including but
not limited to the Company's plans currently in
effect or hereafter adopted, and any plans adopted in
substitution therefore, or (ii) continue to provide
you with benefits substantially similar, in
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;
or
(E) The failure of the Company to obtain a
satisfactory agreement from any successor to assume
and agree to perform this Agreement, as contemplated
in Section 7 hereof.
Your continued employment with the Company shall not
constitute consent to, or a waiver of rights with respect to,
any circumstance constituting Good Reason hereunder.
(iv) Notice of Termination. Any termination of your
employment by the Company or by you shall be communicated by
written Notice of Termination to the other party hereto in
accordance with Section 8 hereof. 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.
(v) Date of Termination, Etc. "Date of Termination"
shall mean (A) if your employment is terminated for Disability
pursuant to Subsection (i) of this Section 4, thirty (30) days
after Notice of Termination is given (provided that you shall
not have returned to the full-time performance of your duties
during such thirty (30) day period), (B) if your employment is
terminated by reason of your death, the date of your death,
(C) if by you for Good Reason or by either party for any other
reason (other than Disability, death, or your voluntary
resignation without Good Reason), the date specified in the
Notice of Termination (which, in the case of a termination by
you for Good Reason, shall not be less than thirty (30) nor
more than sixty (60) days from the date such Notice of
Termination is given), and (D) if your employment is
terminated by your voluntary resignation without Good Reason
(as defined in Subsection (iii) of this Section 4), the Date
of Termination shall be forty-five (45) days from the date
such Notice of Termination is given or such other date as may
be identified by the Company. Unless the Company instructs
you not to do
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so, you shall continue to perform services as provided in this
Agreement through the Date of Termination.
5. Compensation Upon Termination or During Disability. Upon
termination of your employment with the Company during the Term, you shall be
entitled to the following compensation and benefits:
(i) If your employment is terminated for Disability, you
shall receive until the end of the Term 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 in the nature
of salary continuation from all sources equals your base
salary at the rate in effect on the Date of Termination.
After the end of the Term, 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, provided that such terms shall not be
less advantageous to you than the terms of such programs in
effect as of the Effective Date.
(ii) If your employment shall be terminated (A) by the
Company for Cause, or (B) by you other than for Good Reason,
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, plus all other amounts to which you
are entitled under any compensation or benefit plans of the
Company at the time such payments are due, and the Company
shall have no further obligations to you under this Agreement.
Provided, however, that if your employment is terminated by
your voluntary resignation without Good Reason, you shall be
compensated per this Paragraph only to the extent that you
actively performed your assigned responsibilities through the
Date of Termination.
(iii) 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 full base salary through the Date
of Termination and for a period of 12 whole calendar months
thereafter plus, if the Date of Termination shall not occur on
the first day of a calendar month, the balance of the month in
which the Date of Termination occurs, at the rate in effect at
the time of your death, plus any Bonus earned, 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, and the
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Company shall have no further obligation to you, your
beneficiaries or your estate under this Agreement.
(iv) If your employment shall be terminated (a) by the
Company other than for Cause or Disability or (b) by you for
Good Reason, then you shall be entitled to the benefits
provided below:
(A) 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 30 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, any Bonus measurement
period occurring prior to the Date of Termination, at
the time such payments are due, except as otherwise
provided below;
(B) in lieu of any further salary payment to you
for periods subsequent to the Date of Termination,
the Company shall pay to you your full base salary at
the rate in effect immediately prior to the time
Notice of Termination is given (or, if greater, at
the rate in effect 30 days prior to the time Notice
of Termination is given), payable periodically in
accordance with past payroll practices, until the end
of the Term;
(C) in lieu of any further Bonus payments to you
for periods subsequent to the Date of Termination,
the Company shall pay to you a Bonus payable in each
March following the Date of Termination in respect of
the previous plan fiscal year equal to the quotient
obtained by aggregating the Bonuses received by you
in respect of the two plan fiscal years ending prior
to the Date of Termination (the "Bonus Period") and
dividing such sum by two. Such Bonus shall be paid
in respect of each plan fiscal year or portion
thereof ending after the Date of Termination until
the end of the Term, and shall be prorated for
partial years, if any, including without limitation
the portion of the calendar year occurring after the
Date of Termination and the final plan fiscal year in
respect of which any such March Bonus is payable
pursuant to this Section 5(iv)(C). Provided,
however, that the amount of bonus to be paid pursuant
to this Paragraph shall not be greater than the
amount of bonus that would have been paid in
accordance with Bonus Plans, existing from time to
time, had your employment not been terminated;
(D) until the end of the Term, you will continue
to participate in all other compensation and benefit
plans (including perquisites) in which you were
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participating immediately prior to the time Notice of
Termination is given, or comparable plans substituted
therefor; provided, however, that if you are
ineligible, (e.g., by operation of law or the terms
of the applicable plan to continue to participate in
any such plan) the Company will provide you with a
comparable level of compensation or benefits;
(E) the Company shall also pay to you all
reasonable legal fees and expenses incurred by you in
contesting or disputing any such termination or in
seeking to obtain or enforce any right or benefit
provided by this Agreement if such termination is
determined by arbitration to have been for Good
Reason or other than Cause or Disability; and
(F) if you should die after the Date of
Termination and prior to the end of the period of
payment provided for in paragraphs (B), (C), and (D)
hereof, the Company shall pay your estate or your
designated beneficiary any amounts that are or become
payable pursuant to any of such paragraphs until the
end of the Term.
(v) You shall be required to mitigate the amount of any
payment provided for in subsection (iv) of this Section 5 by
seeking and accepting, if offered, other comparable
employment, taking into consideration the provisions of
Section 9 of this Agreement, and the amount of any payment
provided for in this Section 5 shall be reduced by any
compensation earned by you during the remainder of the Term as
the result of your employment by another employer, or offset
against any amount owed by you to the Company or as otherwise
receivable by you pursuant to Subsection 5(iv)(D) shall be
reduced to the extent a comparable benefit of the same type
was made available to you during the applicable period of
benefit continuation set forth in such Subsection. Any
compensation and benefits actually received by you shall be
promptly reported to the Company.
(vi) In addition to all other amounts payable to you under
this Section 5, you shall be entitled to receive all benefits
payable to you pursuant to the terms of any plan or agreement
of the Company relating to retirement benefits.
6. Travel. You shall be required to travel to the extent
necessary for the performance of your responsibilities under this Agreement.
7. Successors; Binding Agreement. The Company will, by Agreement
in form and substance satisfactory to you, 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 and to
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the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such assumption
and agreement prior to the effectiveness of any such succession 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, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the Company as
herein before 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.
8. Notices. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified mail, return receipt requested, postage prepaid, addressed to
the respective addresses 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 as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.
9. Noncompetition.
(i) Until the Date of Termination, you agree not to enter
into competitive endeavors and not to undertake any commercial
activity which is contrary to the best interests of the
Company or its affiliates, including becoming an employee,
owner (except for passive investments of not more than one
percent of the outstanding shares of, or any other equity
interest in, any company or entity listed or traded on a
national securities exchange or in an over-the-counter
securities market), officer, consultant, agent or director of
any firm or person which either directly competes with a line
or lines of business of the Company accounting for ten percent
(10%) or more of the Company's gross sales, revenues or
earnings before taxes or derives ten percent (10%) or more of
such firm's or person's gross sales, revenues or earnings
before taxes from a line or lines of business which directly
compete with the Company. Notwithstanding any provision of
this Agreement to the contrary, you agree that your breach of
the provisions of this Section 9(i) shall permit the Company
to terminate your employment for Cause.
(ii) If you are terminated for Cause, until the later of
one year after the Date of Termination and during any period
that you continue to be paid your salary (including any other
payments in lieu of salary) pursuant to Section 5 hereof and
for one year thereafter, or if you resign or are terminated
other than for Cause, until
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the later of the Date of Termination and during any period
that you continue to be paid your salary (including any other
payment in lieu of salary) pursuant to Section 5 hereof, you
agree not to become an employee, owner (except for passive
investments of not more than one percent of the outstanding
shares of, or any other equity interest in, any company or
entity listed or traded on a national securities exchange or
in an over-the-counter securities market), consultant,
officer, agent or director of any firm or person which
directly competes with a business of the Company producing any
class of products accounting for ten percent (10%) or more of
the Company's gross sales, revenues or earnings before taxes.
During the period of payment provided in Section 5 hereof, you
will be available, consistent with other responsibilities that
you may then have, to answer questions and provide advice to
the Company. Notwithstanding anything in this Agreement to
the contrary, you agree that, from and after any breach by
you of the provisions of this Section 9(ii), the Company shall
cease to have any obligations to make payments to you under
this Agreement.
(iii) If you are terminated for Cause, until the later of
one year after the Date of Termination and during any period
that you continue to be paid your salary (including any other
payments in lieu of salary) pursuant to Section 5 hereof and
for one year thereafter, or if you resign or are terminated
other than for Cause, until the later of the Date of
Termination and during any period that you continue to be paid
your salary (including any other payment in lieu of salary)
pursuant to Section 5 hereof, you shall not directly or
indirectly, either on your own account or with or for anyone
else, (A) solicit or attempt to solicit any of the Company's
customers (B) solicit or attempt to solicit for any business
endeavor any employee of the Company or (C) 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.
(iv) You acknowledge and agree that damages for breach of
the covenant not to compete in this Section 9 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 11 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.
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10. Confidentiality.
(i) 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, 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 of 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.
(ii) Any ideas, processes, characters, productions,
schemes, titles, names, formats, adaptations, plots, slogans,
catchwords, incidents, treatment, and dialogue which you may
conceive, create, organize, prepare or produce during the
period of your employment and which ideas, processes, etc.
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.
(iii) Notwithstanding anything in this Agreement to the
contrary, you agree that from and after any breach by you of
the provisions of this Section 10 during any period of payment
provided in Section 5 hereof, the Company shall cease to have
any obligations to make payments to you under this Agreement.
11. Arbitration.
(i) Except as contemplated by Section 9 (iii), Section 9,
(iv), and Section 11 (iii) 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.
(ii) The parties agree to use their best efforts to cause
(a) the two individuals set forth in the preceding Section 11
(i), or, if applicable, the American Arbitration
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Association, to appoint the arbitrator within 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 (b) any arbitration hearing
to be held within 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.
(iii) 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.
(iv) If you prevail in full or in substantial part, the
Company shall bear all expenses of the arbitrator incurred in
any arbitration hereunder. The Company agrees to pay your
reasonable and documented legal fees and expenses in
connection with any arbitration hereunder if you prevail in
full or in substantial part.
12. Extension of Term. The Term of this Agreement shall be
automatically extended for a period of one year on each anniversary of the
Effective Date of this Agreement; said automatic extension commencing on the
second anniversary of the Effective Date. There shall be no renewal of the
Term after the Date of Termination.
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.
15. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Michigan.
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16. Payments Net of Taxes. Any payments provided for herein which
are subject to Federal, State or local tax or other withholding requirements,
shall have such amounts withheld prior to payment.
17. Survival of Obligations. The obligations of the Company under
Section 5(iii) and your obligations under Sections 9 and 10 hereof shall
survive the expiration of the Term of this Agreement.
18. Capacity of Parties. The parties hereto warrant that they
have the capacity and authority to execute this Agreement.
19. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of the Agreement, which shall remain in full force and effect.
20. 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.
21. Entire Agreement. This Agreement and any attachments hereto,
contain the entire agreement by the parties with respect to the matters covered
herein and supersedes any prior agreement (including without limitation any
prior employment agreement), 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.
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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 March 20, 1995
("Effective Date").
Sincerely,
LEAR SEATING CORPORATION
BY: /s/ Robert E. Rossiter
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Agreed to this day of March, 1995
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BY: /s/ Kenneth L. Way
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