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Exhibit 10.e
September 9, 1997
PERSONAL & CONFIDENTIAL
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Dear _________:
The Board of Directors considers you a key officer of Huffy Corporation (the
"Company"), and needs your best efforts, skills and dedication in the event of a
threat of a major change in the control of the Company to assure that the best
interests of all shareholders are protected, as determined by the Board of
Directors. The Board of Directors recognizes that the course of action which it
decides upon and which you will be responsible to implement may be contrary to
your own personal interests and needs. In order to assure the availability of
your best efforts, skills and dedication which would be required in such
difficult circumstances to obtain the most beneficial outcome for the
shareholders, the Company is willing to provide you with income protection in
the event of termination of your employment following a change in control of the
Company. Specifically, the Company shall be bound, in consideration of your
continued services, as follows:
1. Upon the occurrence of any of the three events (herein called
"Trigger Events") set out in Section 3 below, the Company
shall immediately compute the amount of Severance Payment, as
defined in Section 2 below, and the Company shall immediately:
(a) acquire and deliver to you a non-assignable
irrevocable letter of credit in an amount equal to
the Severance Payment naming you as a beneficiary
("Letter of Credit"). The Letter of Credit shall be
issued by a major commercial bank (e.g., Bank One,
NA), and shall be redeemable by you upon the terms
described herein for a period of two (2) years
following the occurrence of any of the events
described in Section 4(a). If needed, the Company
shall renew the Letter of Credit from time to time so
that you always have a current Letter of Credit.
(b) If the Company is unable to cause the Letter of
Credit to be promptly issued, the Company shall
immediately pay to an escrow account at Bank One, NA
(the "Escrow Agent") an amount equal to the Severance
Payment.
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2. As used herein, Severance Payment shall mean an amount equal
to the sum of the following:
(a) three times your then current annual rate of salary,
plus
(b) three times the Profit Sharing Bonus Plan award for
which you are eligible based on your salary at the
time the Severance Payment is computed, payable at
the target level; plus
(c) three times the Long Term Incentive Plan award for
which you are eligible, payable at the target level
calculated on your salary at the time the Severance
Payment is computed, with all remaining years of the
cycles under the Long Term Incentive Plan to be
calculated on a pro-rata basis; plus
(d) unless an agreement has been entered into between you
and the Company whereby the Company agrees to
continue providing your then current benefits and
perquisites for a period of three (3) years following
severance of your employment, an amount equal to two
(2) times the Company's cost of providing three (3)
years of your then current benefits and perquisites
including, without limitation, life insurance,
executive and regular medical benefits, long term
disability insurance, deferred compensation, usage of
Company-owned or leased automobile (or an auto
allowance in lieu thereof), etc.; plus
(e) In the event that you become entitled to the
Severance Payment or any other benefits or payments
under this Letter Agreement or by reason of the
accelerated vesting of stock options under any of the
Company's stock option plans or other deferred
compensation plans, but specifically excluding
voluntary deferred compensation plans, hereinafter
defined as "Total Benefits", and in the event that
any of the Total Benefits will be subject to any
excise tax imposed under Section 4999 of the Internal
Revenue Code of 1986, as amended from time to time or
any successor law, rule or regulation ("Excise Tax"),
the Company shall pay you an additional amount, in
addition to the Total Benefits, equal to the amount
of the Excise Tax imposed upon the Total Benefits.
3. The three Trigger Events are as follows:
(a) Common Stock of the Company has been acquired other
than directly from the Company in exchange for cash
or property by any person who thereby becomes the
owner of more than 20% of the Company's outstanding
shares of Common Stock;
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(b) Any person has made a tender offer for, or a request
for invitations for tenders of, shares of Common
Stock of the Company; or
(c) Any person forwards or causes to be forwarded to
shareholders of the Company proxy statement(s) in any
period of twenty-four (24) consecutive months,
soliciting proxies to elect to the Board of Directors
of the Company two or more candidates who were not
nominated as candidates in a proxy statement
forwarded to shareholders during such period by the
Board of Directors of the Company.
4. If, after any Trigger Event occurs, your employment by the
Company terminates, voluntarily or involuntarily, for any
reason other than disability, retirement on or after the date
you reach normal retirement age, or death, upon your written
demand, you shall have the right to receive the Severance
Payment, subject to the conditions precedent described in
Section 4(a).
(a) Your right to demand such payment will arise only
when any one of the following events has occurred:
(i) Any person shall acquire other than directly
from the Company in exchange for cash or
property in excess of thirty percent (30%)
of the Company's outstanding shares of
Common Stock; or
(ii) There shall be a merger, consolidation or
other combination of the Company with one or
more other corporations as a result of which
more than forty-nine percent (49%) of the
voting stock of the merged, consolidated or
combined corporation is held by former
shareholders of the corporations (other than
the Company) which are parties to such
merger, consolidation or other combination;
or
(iii) Two or more persons, who were not nominated
as candidates for the Board of Directors of
the Company in proxy statements forwarded to
shareholders during any period of
twenty-four (24) consecutive months on
behalf of the Board of Directors of the
Company, are elected to the Board of
Directors of the Company by the shareholders
of the Company voting in person or by proxy,
and such persons so elected are nominated as
candidates for the Board of Directors in
proxy statements forwarded, or caused to be
forwarded, to the shareholders of the
Company during such period by any person
other than the Board of Directors of the
Company.
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(b) If your employment is terminated, voluntarily or
involuntarily, for any reason after the occurrence of
an event enumerated in Section 3(a), (b) or (c)
above, but prior to the occurrence of an event
enumerated in Section 4(a), you shall forfeit your
right to any Severance Payment under this Agreement.
(c) The Severance Payment will be paid to you immediately
in one lump sum, either by your drawing upon the
Letter of Credit or by payment to you by the Escrow
Agent, as appropriate.
(d) Your right to make a demand hereunder shall terminate
upon the expiration or termination of two (2) years
from the date of the last of any of the events
described in Section 4(a), unless you have become
entitled to make and in fact have made, a demand
within that time period.
(e) The Severance Payment shall be recomputed as of the
time of the payment set forth in Section 4(c) and if
the recomputed amount is larger, the Company shall
immediately pay you the amount by which the
recomputed severance Payment exceeds the Severance
Payment paid in escrow or secured by the Letter of
Credit.
5. The Company may terminate the Letter of Credit or may withdraw
the amount so deposited with the Escrow Agent pursuant to
Section 1 when and only when (a) two (2) years have expired
from the date of the last of any of the events described in
Section 4(a) and no proper demand has been made during that
time or (b) five (5) years have expired after the most recent
event of the kind described in Section 3(a), (b) or (c) above
and no event described in Section 4(a) has occurred or if it
did occur, no proper demand has been made during that time, or
(c) your right to a payment under this Agreement has been
forfeited by you, whichever occurs first. If, before the
expiration of such period, there shall occur another event of
the kind described in Section 3(a), (b) or (c) above, the
Company will not be required to make an additional deposit.
6. The Company agrees to pay the charges of the Letter of Credit
and of the Escrow Agent for its services under this Agreement,
and the Company will be entitled to any interest or other
income arising from the amount so deposited by it.
7. The Letter of Credit will be subject to the issuing bank's
usual rules and procedures relating to letter of credit and
the Company will indemnify such bank against any loss or
liability for any action taken by it in good faith in
connection with the Letter of Credit.
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8. The escrow arrangement will be subject to the Escrow Agent's
usual rules and procedures relating thereto, and the Company
will indemnify the Escrow Agent against any loss or liability
for any action taken by it in good faith in such capacity.
9. Nothing herein shall be deemed to prohibit either you or the
Company from terminating your employment at any time.
10. As used in this Agreement, "person" shall be deemed to have
the same meaning as when used in Section 13 of the Securities
Exchange Act of 1934. As used in this Agreement, "Company"
refers not only to Huffy Corporation but also to its
successors by merger or otherwise.
11. (a) You shall not be required to mitigate the amount
of any Severance Payment paid to you by seeking other
employment or otherwise, nor shall the amount of any
Severance Payment be reduced by any compensation
earned by you as the result of employment by another
employer, by retirement benefits, by offset against
any amount claimed to be owed by you to the Company,
or otherwise.
(b) The Company will require any successor (whether
direct or indirect, by purchase, merger, share
exchange, consolidation or otherwise) to all or
substantially all of the business and/or assets of
the Company to assume expressly and to agree to
perform this Agreement in the same manner and to the
same extent that the Company would be required to
perform it if no such successor had taken place.
Failure of the Company 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 a Severance Payment from the
Company in the same amount and on the same terms as
you would be entitled to hereunder after the
occurrence of any Trigger Event and one of the events
enumerated in Section 4(a) of this Agreement.
(c) After you have the right to receive the Severance
Payment, as provided for in Section 4 above, the
Company shall also pay to you, within thirty (30)
days after incurred by you, an amount equal to all
legal fees and expenses incurred by you as a result
of contesting or disputing your voluntary or
involuntary 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 Internal Revenue
Code of 1986, as amended from time to time, to any
payment or benefit provided hereunder.
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(d) Upon the occurrence of any event enumerated in
Section 4(a) of this Agreement, for the purpose of
determining the Supplemental/Excess Benefit payable
to you under the Company's Supplemental/Excess
Benefit Plan (the "SERP"), (i) your Credited Service
(as defined for purposes of the SERP) will be deemed
to have been increased by 36 months, and (ii) your
Supplemental/Excess Benefit will be fully vested and
nonforfeitable.
12. This Agreement cancels and supersedes, as of the date hereof,
the prior agreement between you and the Company, dated
February 12, 1994, as amended by letter dated September 9,
1997.
Please indicate your acceptance of this Agreement by signing one copy of this
letter in the space provided below and returning it to me. The other copy is for
your files.
Sincerely,
Huffy Corporation
By
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Richard L. Molen
Chairman of the Board and
Chief Executive Officer
AGREED TO AND ACCEPTED this 9th
day of September, 1997.
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