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EXHIBIT 10.39
SALARY CONTINUATION AGREEMENT
THIS AGREEMENT is made as of this ___ day of _____________, 1999, by and
between Universal Electronics Inc., a Delaware corporation (the "Corporation")
and __________________ (the "Executive").
WITNESSETH:
WHEREAS, the Corporation, on behalf of itself and its subsidiaries,
wishes to attract and retain well-qualified executive and key personnel and to
assure both itself and the Executive of continuity of management in the event of
any actual or threatened Change in Control (as defined in Paragraph 2) of the
Corporation; and
WHEREAS, to achieve this purpose, the Board of Directors of the
Corporation considered and approved this Agreement to be entered into with the
Executive as being in the best interests of the Corporation and its
stockholders;
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth herein, the parties hereto agree a follows:
1. Operation of Agreement. The "effective date of this Agreement" shall be
the date on which a Change in Control occurs, and this Agreement shall
not have any force or effect whatsoever prior to that date.
2. Change in Control. For the purposes of this Agreement, a "Change in
Control" shall be deemed to occur when and only when the first of the
following events occurs:
a. Any "person" or "group" (as such terms are used in Sections 3(a),
3(d), and 14(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder
(the "1934 Act"), other than (i) a trustee or other fiduciary
holding securities under any employee benefit plan of the
Corporation or any of its subsidiaries or (ii) a corporation
owned directly or indirectly by the stockholders of the
Corporation in substantially the same proportions as their
ownership of stock in the Corporation, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the 1934
Act)), directly or indirectly, of securities of the Corporation
representing 20% or more of the total voting power of the then
outstanding securities of the Corporation entitled to vote
generally in the election of directors (the "Voting Stock"); or
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b. Individuals who are members of the Incumbent Board, cease to
constitute a majority of the Board of Directors of the
Corporation; or
c. (i) The merger or consolidation of the Corporation with any other
corporation or entity, other than a merger or consolidation which
would result in the Voting Stock outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity) at least 80% of the total voting power represented by the
Voting Stock or the voting securities of such surviving entity
outstanding immediately after such merger or consolidation, (ii)
the sale, transfer or disposition of all or substantially all of
the Corporation's assets to any other corporation or entity,
and/or (iii) the dissolution or liquidation of the Corporation.
The term "Incumbent Board" shall mean (i) the members of the Board of
Directors on February 1, 1999, and (ii) any individual who becomes a
member of the Board of Directors after February 1, 1999, if his or her
election or nomination for election as a director was approved by the
affirmative vote of a majority of the then Incumbent Board. For purposes
of this Agreement, a Change in Control approved by the Incumbent Board
will be deemed a "friendly acquisition" and a Change in Control not
approved by the Incumbent Board will be deemed a "hostile acquisition."
3. Employment. The Corporation hereby agrees to continue the Executive in
its employ and/or the employ of one or more of its subsidiaries and the
Executive hereby agrees to remain in the employ of the Corporation
and/or such subsidiaries, for the period commencing on the effective
date of this Agreement and ending on the earlier to occur of eighteen
months after such date in the case of a friendly acquisition, or the
third anniversary of such date in the case of a hostile acquisition (the
"employment period"), to exercise such authority and perform such
executive duties as are commensurate with the authority being exercised
and duties being performed by the Executive immediately prior to the
effective date of this Agreement, which services shall be performed at a
location within the metropolitan area in which the Executive was
employed immediately prior to the effective date of this Agreement.
During the employment period, the Executive agrees to devote Executive's
full business time exclusively to such executive duties and shall
perform such duties faithfully.
4. Compensation, Compensation Plans, Benefits and Perquisites. During the
employment period, the Executive shall be compensated as follows:
a. Executive shall receive an annual salary at a rate which is not
less than Executive's rate of annual salary immediately prior to
the effective date of this Agreement, with the opportunity for
increases from time to time thereafter which are in accordance
with the Corporation's regular practices.
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b. Executive shall be eligible to participate on a reasonable basis
in the Corporation's stock option plans, annual incentive bonus
programs and any other bonus and incentive compensation plans
(whether now or hereinafter in effect) in which executives with
comparable authority and duties are eligible to participate,
which plans must provide opportunities to receive compensation
which are at least as great as the opportunities under the plans
in which the Executive was participating immediately prior to the
effective date of this Agreement.
c. Executive shall be entitled to receive employee benefits and
perquisites which are the greater of the employee benefits and
perquisites provided by the Corporation to executives with
comparable duties or the employee benefits and perquisites to
which Executive was entitled immediately prior to the effective
date of this Agreement. Such benefits and perquisites shall
include, but not be limited to, the benefits and perquisites
included under the Universal Electronics Inc. 401(K) and Profit
Sharing Plan, the Universal Electronics Inc. 1993 Stock Incentive
Plan, the Universal Electronics Inc. 1995 Stock Incentive Plan,
the Universal Electronics Inc. 1996 Stock Incentive Plan, the
Universal Electronics Inc. 1998 Stock Incentive Plan, the
Universal Electronics Inc. 1999 Stock Incentive Plan, the
Salaried Employee Cash Incentive Program, and the Universal
Electronics Inc. group health insurance program, which includes
comprehensive medial insurance, group disability, group life
insurance, and executive bonus (supplemental life) and such other
plans as shall be developed and implemented from time to time.
5. Termination Following Change in Control
a. For purposes of this Agreement, the term "termination" shall mean
(i) termination by the Corporation of the employment of the
Executive with the Corporation and all of its subsidiaries for
any reason other than death, disability or "cause" (as defined
below), or (ii) resignation of the Executive for "good reason"
(as defined below).
b. The term "good reason" shall mean (i) a significant change in the
nature or scope or the location for the exercise or performance
of the Executive's authority or duties from those referred to in
Section 3, a reduction in total compensation, compensation plans,
benefits or perquisites from those provided in Section 4, or the
breach by the Corporation of any other provision of this
Agreement; or (ii) a reasonable determination by the Executive
that, as a result of a Change in Control and a change in
circumstances thereafter significantly affecting Executive's
position, Executive is unable to exercise the authorities, power,
function or duties attached to Executive's position and
contemplated by Section 3 of the Agreement.
c. The term "cause" means (i) the willful and continued failure by
the Executive to substantially perform Executive's duties with
the Corporation and/or, if applicable,
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one or more of its subsidiaries (other than any such failure
resulting from Executive's incapacity due to physical or mental
illness) after a demand for substantial performance is delivered
to Executive by the Board of Directors of the Corporation which
specifically identifies the manner in which the Board believes
the Executive has not substantially performed Executive's duties,
(ii) the willful engaging by the Executive in gross misconduct
materially and demonstrably injurious to the property or business
of the Corporation or any of its subsidiaries, or (iii)
Executive's commission of fraud, misappropriation or a felony.
For purposes of this paragraph, no act or failure to act on the
Executive's part will be considered "willful" unless done, or
omitted to be done, by Executive not in good faith and without
reasonable belief that Executive's action or omission was in the
interests of the Corporation or not opposed to the interests of
the Corporation.
6. Confidentiality. The Executive agrees that during and after the
employment period, Executive shall retain in confidence any confidential
information known to Executive concerning the Corporation and its
subsidiaries and their respective business for as long as such
information is not publicly disclosed.
7. No Obligation to Mitigate Damages. The Executive shall not be obligated
to seek other employment in mitigation of amounts payable or
arrangements made under the provisions of this Agreement and the
obtaining of any such other employment shall in no event effect any
reduction of the Corporation's obligations under this Agreement.
8. Severance Allowance
a. In the event of the termination of the Executive during the
employment period, the Executive shall be entitled to receive a
lump sum severance allowance within five days of such
termination, in an amount which is equal to the sum of the
following:
(i) The amount equivalent to salary payments for 18 calendar
months, in the case of a friendly acquisition, or 36 calendar
months, in the case of a hostile acquisition, at the rate
required by paragraph 4(a) and in effect immediately prior to
termination, plus a pro rata share of the estimated amount of any
bonus which would have been payable for the bonus period which
includes the termination date; and
(ii) The amount equivalent to 18 calendar months of bonus in
the case of a friendly acquisition, or 36 calendar months of
bonus in the case of a hostile acquisition, at the greater of (A)
the monthly rate of the bonus payment for the bonus period
immediately prior to Executive' s termination date, or (B) the
estimated amount of the bonus for the period which includes
Executive's termination date.
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b. In addition to such amount under paragraph (a) above, the
Executive shall also receive in cash the value of the incentive
compensation (including, but not limited to, employer
contributions to the Universal Electronics Inc. 401(K) and Profit
Sharing Plan and the rights to receive stock awards and to
exercise stock options and other bonus and similar incentive
compensation benefits) to which Executive would have been
entitled under all incentive compensation plans maintained by the
Corporation if Executive had remained in the employ of the
Corporation for 18 months after such termination in the case of a
friendly acquisition, or 36 months after such termination in the
case of a hostile acquisition. The amount of such payment shall
be determined as of the date of termination and shall be paid as
promptly as practicable and in no event later than 30 days after
such termination.
c. The Corporation shall maintain in full force and effect for the
Executive's continued benefit (and, to the extent applicable, the
continued benefit of Executive's dependents) all of the employee
benefits (including, not limited to, coverage under any medical
and insurance plans, programs or arrangements) to which Executive
would have been entitled under all employee benefit plans,
programs or arrangements maintained by the Corporation if
Executive had remained in the employ of the Corporation for 18
calendar months after Executive's termination in the case of a
friendly acquisition, or 36 calendar months after Executive's
termination in the case of a hostile acquisition, or if such
continuation is not possible under the terms and provisions of
such plans, programs or arrangements, the Corporation shall
arrange to provide benefits substantially similar to those which
the Executive (and, to the extent applicable, Executive's
dependents) would have been entitled to receive if the Executive
had remained a participant in such plans, programs or for such
18-month or 36-month period, as the case may be.
9. Adjustments in Case of "Excess Parachute Payments. In the event that the
aggregate present value (determined in accordance with applicable
federal, state and local income tax law, rules and regulations) of all
payments to be made and benefits to be provided to the Executive under
this Agreement and/or under any other plan, program or arrangement
maintained or entered into by the Corporation or any of its subsidiaries
shall result in "excess parachute payments" to the Executive within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), or any comparable provision of successor legislation,
which subject the Executive to the Excise Tax under Section 4999 of the
Code or any comparable provision of successor legislation, the
Corporation shall pay to the Executive an additional amount (the
"gross-up payment") calculated so that the net amount received by
Executive after deduction of the Excise Tax and of all federal, state,
and
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local income taxes upon the gross-up payment shall equal the payments to
be made and the benefits to be provided to the Executive under this
Agreement. For purposes of determining the amount of the gross-up
payment, the Executive shall be deemed to pay federal, state, and local
income taxes at the highest marginal rates thereof in the calendar year
in which the gross-up payment is to be made, net of the maximum
reduction in federal income taxes obtainable from deduction of such
state and local taxes. The computations required by this Section 9 shall
be made by the independent public accountants then regularly retained by
the Corporation, in consultation with tax counsel selected thereby and
acceptable to the Executive. Said accountants' and tax counsel's fees
shall be paid by the Corporation.
10. Interest; Indemnification
a. In the event any payment to Executive under this Agreement is not
paid within five business days after it is due, such payment
shall thereafter bear interest at the prime rate from time to
time in effect at Bank of America, Los Angeles, California.
b. The Corporation hereby indemnifies the Executive for all legal
and accounting fees and expenses incurred by Executive in
contesting any action of the Corporation with respect to this
Agreement, including the termination of Executive's employment
hereunder, or incurred by Executive in seeking to obtain or
enforce any right or benefit provided by this Agreement.
11. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if
sent by registered or certified mail to the Executive at the last
address Executive has filed in writing with the Corporation or, in the
case of the Corporation, at its principal executive offices.
12. Non-Alienation. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien upon any amounts
provided under this Agreement; and no benefits payable hereunder shall
be assignable in anticipation of payment either by voluntary or
involuntary acts, or by operation of law, except by will or the laws of
descent and distribution.
13. Governing Law. The provisions of this Agreement shall be construed in
accordance with the laws of the State of California, without regard to
its conflict of laws provisions.
14. Amendment. This Agreement may be amended or canceled only by mutual
agreement of the parties in writing without the consent of any other
person and, so long as the Executive lives, no person, other than the
parties hereto, shall have any rights under or interest in this
Agreement or the subject matter hereof.
15. Successor to the Corporation. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the
Corporation and any successor of the Corporation.
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16. Partial Invalidity. The various covenants and provisions of this
Agreement are intended to be severable and to constitute independent and
distinct binding obligations of the parties hereto. Should any covenant
or provision of this Agreement be determined to be void and
unenforceable, in whole or in part, to any party hereto or in any
circumstance, it shall not be deemed to affect or impair the validity of
any other covenant or provision of part thereof, and shall continue in
effect to the extent valid, enforceable and applicable in other
circumstances and to the other party, and such covenant or provision of
part thereof shall be deemed modified but only to such a minimum extent
required to permit it to remain valid, enforceable and applicable to
such party or circumstance. Without limiting the generality of the
foregoing, if the scope of any covenant, provision or part thereof
contained in this Agreement is too broad to permit enforcement to its
full extent, such covenant, provision or part thereof shall be enforced
to the maximum extent permitted by law, and the parties hereto agree
that such scope may be judicially modified accordingly.
IN WITNESS WHEREOF, the Executive has executed this Agreement and, pursuant to
the authorization from its Board of Directors, the Corporation has caused this
Agreement to be executed in its name on its behalf, and attested by its
Secretary, all as of the day and year first above written.
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Executive
UNIVERSAL ELECTRONICS INC.,
a Delaware corporation
By: ________________________________
Camille Jayne, Chairman and Chief
Executive Officer
ATTEST:
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Richard A. Firehammer, Jr., Secretary
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