Exhibit 10.C
ampco pittsburgh
600 Grant St., Suite 4600
Pittsburgh, Pennsylvania 15219
(412) 456-4400
Fax (412) 456-4404
February 25, 1999
Mr. Terrence Kenny
c/o Ampco-Pittsburgh Corporation
600 Grant St., Suite 4600
Pittsburgh, Pennsylvania 15219
Dear Terry:
Ampco-Pittsburgh Corporation (the "Corporation") recognizes that your
contribution to the success of the Corporation has been substantial and desires
to assure the Corporation of your continued employment. In this connection, the
Board of Directors of the Corporation (the "Board") recognizes that, as is the
case with other publicly held corporations, the possibility of a change in
control may exist and that such possibility, and the uncertainty that it may
raise among the Company's management, may result in the departure or distraction
of management personnel to the detriment of the Corporation and its
stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Corporation's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in the employ of the Corporation, the
Corporation agrees that you shall receive the severance benefits set forth in
this letter
Mr. Terrence Kenny 2
agreement ("Agreement") in the event your employment with the Corporation is
terminated subsequent to a "Change in Control" (as defined in Section 2 hereof)
under the circumstances described below.
1. Term of Agreement. This Agreement will commence on the date
-----------------
hereof and shall continue in effect for twenty-four (24) months from the date
hereof; provided, however, that commencing on February 25, 2001 and on each
-------- -------
anniversary thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than thirty (30) days prior
to such date, the Corporation shall have given notice that it does not wish to
extend this Agreement; provided, further, however, that if a Change in Control
-------- ------- -------
shall have occurred during the original or extended term of this Agreement, this
Agreement cannot be cancelled.
2. Change in Control.
-----------------
(a) No benefits shall be payable hereunder unless there shall have
been a Change in Control as set forth below. For purposes of this Agreement, a
"Change in Control" shall be deemed to have occurred if:
(i) any "Person" (as defined in Sections 13(d) and 14(d) of the
Exchange Act) other than the persons or the group of persons in control of
the Corporation on the date hereof is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the corporation representing fifty percent (50%) or
Mr. Terrence Kenny 3
more of the combined voting power of the Corporation's then outstanding
securities;
(ii) within any period of two consecutive years (not including
any period prior to the execution of this Agreement) there shall cease to
be a majority of the Board comprised as follows: individuals who at the
beginning of such period constitute the Board and any new director(s) whose
election was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously
so approved;
(iii) the shareholders of the Corporation approve a merger of, or
consolidation involving, the Corporation in which (A) the Corporation's
Common Stock, par value $1.00 per share (such stock, or any other
securities of the Corporation into which such stock shall have been
converted through a reincorporation, recapitalization or similar
transaction, hereinafter called "Common Stock of the Corporation"), is
converted into shares or securities of another corporation, or into cash or
other property, or (B) the Common Stock of the Corporation is not converted
as described in Clause (A), but in which more than forty percent (40%) of
the Common Stock of the surviving corporation in the merger is owned by
shareholders other than those who owned such amount prior to the merger; or
any other transaction after which the Corporation's Common Stock is no
longer to be publicly traded; in
Mr. Terrence Kenny 4
each case, other than a transaction solely for the purpose of
reincorporating the Corporation in another jurisdiction or recapitalizing
the Common Stock of the Corporation; or
(iv) the shareholders of the Corporation approve a plan of
complete liquidation of the Corporation, or an agreement for the sale or
disposition by the Corporation of all or substantially all the
Corporation's assets, either of which is followed by a distribution of all
or substantially all of the proceeds to the shareholders.
3. Agreement of Employee. You agree that in the event of a
---------------------
Potential Change in Control of the Corporation, you will not terminate
employment with the Corporation for any reason until the occurrence of a Change
in Control of the Corporation.
For purposes of this Agreement, a "Potential Change in Control of the
Corporation" shall be deemed to have occurred if (i) the Corporation enters into
an agreement, the consummation of which would result in the occurrence of a
Change in Control, (ii) any person (including the Corporation) publicly
announces an intention to take or to consider taking actions which if
consummated would constitute a Change in Control, or (iii) the Board adopts a
resolution to the effect that, for purposes of this Agreement, a Potential
Change in Control of the Corporation has occurred.
4. Termination Following a Change in Control of the Corporation.
-------------------------------------------- ---------------
Mr. Terrence Kenny 5
(a) If any of the events described in Section 2 hereof constituting a
Change in Control shall have occurred, you shall be entitled to the benefits
provided in Section 5(d) upon the termination of your employment within twenty-
four (24) months after the Change in Control has occurred, unless such
termination is (i) because of your death or Disability, (ii) by the Corporation
for Cause, or (iii) by you other than for Good Reason.
(b) For purposes of this Agreement, "Disability" shall mean that if,
as a result of your incapacity due to physical or mental illness, you shall have
been absent from the full-time performance of your duties with the Corporation
for six (6) consecutive months, and within thirty (30) days after written notice
of termination shall have been given to you, you shall not have returned to the
full-time performance of your duties.
(c) For purposes of this Agreement, termination by the Corporation of
your employment for "Cause" shall mean termination upon:
(i) the willful and continued failure by you to substantially
perform duties consistent with your position with the Corporation (other
than any such failure resulting from incapacity due to physical or mental
illness or termination by you for Good Reason), after a demand for
substantial performance is delivered to you by the Board, together with a
copy of the resolution of the Board that specifically identifies the manner
in which the Board believes that you have not substantially performed your
duties, which resolution
Mr. Terrence Kenny 6
must be passed by at least two-thirds (2/3) of the entire Board at a
meeting called for the purpose and after an opportunity for you and your
counsel to be heard by the Board, and you have failed to resume substantial
performance of your duties on a continuous basis within fourteen (14) days
of receiving such demand,
(ii) the willful engaging by you in conduct that is demonstrably
and materially injurious to the Corporation, monetarily or otherwise, as
set forth in a resolution of the Board, which resolution must be passed by
at least two-thirds (2/3) of the entire Board at a meeting called for the
purpose and after an opportunity for you and your counsel to be heard by
the Board, or
(iii) your conviction of a felony, or conviction of a
misdemeanor involving assets of the Corporation.
For purposes of this Section 4(c), no act, or failure to act, on your part shall
be deemed "willful" unless 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 Corporation.
(d) For purposes of this Agreement, "Good Reason" shall mean, without
your express written consent, the occurrence after a Change in Control of any
one or more of the following:
Mr. Terrence Kenny 7
(i) the assignment to you of duties inconsistent with your
duties, responsibilities and status immediately before the Change in
Control or a reduction or alteration in the nature or status of your
responsibilities from those in effect immediately before the Change in
Control;
(ii) a reduction by the Corporation in your base salary as in
effect immediately before the Change in Control, a failure to increase such
base salary at the same intervals as prevailed before the Change in Control
in an amount at least equal to the same percentage increase as the last
increase prior to the Change in Control, or a reduction in bonus after the
Change in Control over the last bonus paid before the Change in Control
unless there are equivalent reductions in bonuses for all executives of the
Corporation;
(iii) the requirement that you be based at a location in excess
of twenty-five (25) miles from the location where you are currently based;
(iv) the failure by the Corporation to continue in effect any of
the Corporation's employee benefit plans, policies, practices or
arrangements in which you participate or under which you are entitled to
benefits, or the failure by the Corporation to continue your participation
therein or benefits thereunder on substantially the same basis, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed immediately prior
to the Change in Control; or
Mr. Terrence Kenny 8
(v) the failure of the Corporation to obtain a satisfactory
agreement from any successor to the Corporation to assume and agree to
perform this Agreement, as contemplated in Section 6.
(e) "Good Reason" may be established notwithstanding your possible
incapacity due to physical or mental illness, provided that Disability has not
been established pursuant to Section 4(b). Your continued employment following
the Change in Control shall not constitute a waiver of any rights hereunder,
including, but not limited to, rights with respect to any circumstance
constituting Good Reason or rights under Section 6.
5. Compensation Upon Termination or During Incapacity. Following a
--------------------------------------------------
Change in Control, upon termination of your employment or during a period of
incapacity but before termination for Disability, you shall be entitled to the
following benefits:
(a) During any period prior to termination for Disability in which you
fail to perform your full-time duties with the Corporation as a result of
incapacity due to physical or mental illness, you shall continue to receive your
Base Salary at the rate in effect at the commencement of any such period.
Following termination for Disability, your benefits shall be determined in
accordance with the Corporation's retirement, insurance and other applicable
programs and plans then in effect.
Mr. Terrence Kenny 9
(b) If your employment shall be terminated by the Corporation for
Cause or by you other than for Good Reason, the Corporation shall pay to you
your full Base Salary through the date of termination of your employment at the
rate then in effect, plus all other amounts to which you are entitled under any
compensation or benefit plans of the Corporation at the time such amounts are
due, and the Corporation shall have no further obligations to you under this
Agreement.
(c) If your employment terminates by reason of your death, your
benefits shall be determined in accordance with the Corporation's retirement,
survivor's benefits, insurance and other applicable programs and plans then in
effect.
(d) If your employment by the corporation shall be terminated within
twenty-four (24) months after the Change in Control, unless such termination is
(i) by the Corporation for Cause, (ii) because of your death or Disability, or
(iii) by you other than for Good Reason, you shall be entitled to the following
benefits (the "Severance Payments"):
(A) the Corporation shall pay to you your full Base Salary
through the date of termination of your employment at the rate then in
effect;
(B) the Corporation shall pay to you, as severance benefits,
a lump sum severance payment equal to (i) the sum of two times your
annual base salary either at the time of the Change in Control
Mr. Terrance Kenny
or at termination, whichever is higher, and (ii) two times your bonus
paid for the prior year;
(C) in lieu of shares of Common Stock of the Corporation
("Shares") issuable upon exercise of outstanding options ("Options"),
if any, granted to you under the Corporation's Incentive Stock Option
Plan, or under any additional, substitute or successor option program
or plan as may be in effect from time to time (which Options shall be
cancelled upon the making of the payment referred to below), you shall
receive an amount in cash equal to the product of (i) the higher of
the closing price per Share as reported on the New York Stock Exchange
on the date of termination of your employment or the highest price per
Share actually paid in connection with any Change in Control, over the
exercise price per Share of each Option held by you, times (ii) the
number of Shares covered by each such Option;
(D) for a twenty-four (24) month period after such
termination, the Corporation will arrange to provide you at the
Corporation's expense with benefits under the Corporation's health,
dental, disability, life insurance, and other similar plans, or
benefits substantially similar to the benefits you were receiving
under such plans immediately prior to the termination of your
employment; and
Mr. Terrence Kenny 11
(E) the opportunity to purchase the leased company car,
which has been assigned to you, at its then book value under the
Corporation's leasing arrangements.
(e) Notwithstanding the foregoing provisions of this Section 5, in the
event you are determined by the Board to be a "disqualified individual" (within
the meaning of Section 280G(c) of the Internal Revenue Code of 1986, as amended
(the "Code")) with respect to the Company, the amount of the payments hereunder,
which are determined to be "parachute payments" (within the meaning of Section
280G(b) of the Code), shall be reduced to the extent necessary so that the total
of (i) such payments and (ii) any other payment or the value of any benefit
received or to be received by you in connection with a Change in Control remains
deductible by the Company for federal income tax purposes. If any payments
payable hereunder or under any other agreement with the Corporation are required
to be reduced pursuant to the preceding sentence, such reduction shall be made
to such payments in the order elected by you.
(f) The payments provided for in Section 5(d) shall be made not later
than the fifth day following your termination pursuant to the provisions of
Section 5(d); provided, however, that if the amounts of such payments cannot be
-------- -------
finally determined on or before such day, the Corporation shall pay to you on
such day an estimate as determined in good faith by the Corporation of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at
Mr. Terrence Kenny 12
the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined, but in no event later than the thirtieth day after
the date of such termination. If the amount of the estimated payments exceeds
the amount subsequently determined to have been due, such excess shall
constitute a loan by the Corporation to you payable on the fifth day after
demand by the Corporation (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).
(g) The Corporation shall also pay to you all legal fees and expenses
incurred by you as a result of such termination of your employment (including
all such fees and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit provided by
this Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code to any payment or
benefit provided hereunder).
(h) 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 the amount of any payment provided for in this Agreement be reduced by any
compensation earned by you as the result of employment by another employer after
the date of termination of your employment, or otherwise.
6. Successors; Binding Agreement.
-----------------------------
(a) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
Mr. Terrence Kenny 13
substantially all of the business and/or assets of the Corporation or of any
division or subsidiary thereof employing you to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Corporation would be required to perform if no such succession had taken place.
Failure of the Corporation to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Corporation in the same amount and on
the same terms as you would be entitled hereunder if you terminated 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 to be the date of termination of your employment.
(b) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
7. Notice. 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
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, or to any
changed address, notice of which either of us shall have given to the other.
8. Miscellaneous. No provision of this Agreement may be modified,
-------------
waived or discharged unless such waiver, modification or discharge is agreed
Mr. Terrence Kenny 14
to in writing and signed by you and such officer as may be specifically
designated by the Board. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the Commonwealth
of Pennsylvania.
9. Validity. The invalidity or unenforceability of any provision of
--------
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. Effective Date. This Agreement shall become effective as of the
--------------
date signed by you.
* * *
Mr. Terrence Kenny 15
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Corporation the enclosed copy of this letter which
will then constitute our agreement on this subject.
Sincerely,
AMPCO-PITTSBURGH CORPORATION
By:_________________________________
Accepted and Agreed to
this ____ day of February, 1999.
_________________________________