SEVERANCE AGREEMENT
THIS AGREEMENT, dated , 1997, is made by and between Harvard
Industries, Inc., a Florida corporation (the "Company"), and Xxxxxxx Xxxxxx
(the "Executive").
WHEREAS, the Company considers it essential to the best
interests of its stockholders and creditors to xxxxxx the continued employment
of key management personnel;
WHEREAS, the Executive is currently the senior legal officer
of the Company and serves as its Senior Vice President/ Law and Administration,
with such duties as are customarily assigned by the chief executive officer of
a company to individuals serving in the position of General Counsel, and such
other senior level duties and responsibilities as may be specified by the Chief
Executive Officer of the Company from time to time; and
WHEREAS, the Board has determined that appropriate steps
should be taken to encourage the retention of key members of the Company's
management, including the Executive;
NOW, THEREFORE, subject to approval by the United States
Bankruptcy Court for the District of Delaware ("Bankruptcy Court Approval"),
and in consideration of the premises and the mutual covenants herein contained,
the Company and the Executive hereby agree as follows:
1. Defined Terms. The definitions of capitalized terms used
in this Agreement are provided in the last Section hereof.
2. Term of Agreement. Subject to the provisions of Section
12.2 hereof, the Term of this Agreement shall commence on the date of
Bankruptcy Court Approval and shall continue in effect through December 31,
2000; provided, however, that commencing on December 1, 1998 and each December
1 thereafter, the Term shall automatically be extended for one additional year
unless, not later than June 30 immediately preceding each such December 1, the
Company or the Executive shall have given notice to the other not to extend the
Term.
3. Company's Covenants Summarized. In order to induce the
Executive to remain in the employ of the Company and in consideration of the
Executive's covenants set forth in Section 4 hereof, the Company agrees, under
the conditions described herein, to pay the Executive the Severance Payments
and other payments and benefits described herein. Except as provided in Section
9.1 hereof, no Severance Payments shall be payable under this Agreement unless
there shall have been a termination of the Executive's employment with the
Company during the Term.
This Agreement shall not be construed as creating an express or implied
contract of employment and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that,
subject to the terms and conditions of this Agreement, the Executive will
remain in the employ of the Company until the earliest of (i) the date of the
consummation of the Plan of Reorganization, plus, if requested by the Board, up
to an additional 60 days beyond such date, (ii) the date of termination by the
Executive of the Executive's employment for Good Reason or by reason of death,
Disability or Retirement, or (iii) the termination by the Company of the
Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
5.1. During the Term, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of any such period, together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability.
5.2. If the Executive's employment shall be terminated for
any reason during the Term, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect
immediately prior to the Date of Termination or, if higher, the rate in effect
immediately prior to the first occurrence of an event or circumstance
constituting Good Reason, and the Executive shall become fully vested in all
benefits provided under the Pension Plans, together with all compensation and
benefits payable to the Executive through the Date of Termination under the
terms of the Company's compensation and benefit plans, programs or arrangements
as in effect immediately prior to the Date of Termination or, if more favorable
to the Executive, as in effect immediately prior to the first occurrence of an
event or circumstance constituting Good Reason.
6. Severance Payments.
6.1. Subject to Section 6.2 hereof, if the Executive's
employment is terminated during the Term, other than (A) by the Company for
Cause, (B) by reason of death or Disability, or (C) by the Executive without
Good Reason, the Company shall pay the Executive the amounts, and provide the
Executive the benefits, described in this Section 6.1 ("Severance
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Payments"), in addition to any payments and benefits to which the Executive is
entitled under Section 5 hereof.
(A) In lieu of any further salary payments
to the Executive for periods subsequent to the Date of Termination and
in lieu of any severance benefit otherwise payable to the Executive,
the Company shall pay to the Executive a lump sum severance payment,
in cash, equal to two times the sum of (i) the Executive's base salary
as in effect immediately prior to the Date of Termination or, if
higher, in effect immediately prior to the first occurrence of an
event or circumstance constituting Good Reason, and (ii) the target
bonus in effect, pursuant to any annual bonus or incentive plan
maintained by the Company, for the fiscal year during which the Date
of Termination occurs or, if higher, for the fiscal year during which
first occurs an event or circumstance constituting Good Reason.
(B) For the twenty-four (24) month period
immediately following the Date of Termination, the Company shall
arrange to provide the Executive and his dependents life, disability,
accident and health insurance benefits substantially similar to those
provided to the Executive and his dependents immediately prior to the
Date of Termination or, if more favorable to the Executive, those
provided to the Executive and his dependents immediately prior to the
first occurrence of an event or circumstance constituting Good Reason,
at no greater cost to the Executive than the cost to the Executive
immediately prior to such date or occurrence; provided, however, that,
unless the Executive consents to a different method (after taking into
account the effect of such method on the calculation of "parachute
payments" pursuant to Section 6.2 hereof), such health insurance
benefits shall be provided through a third-party insurer. Benefits
otherwise receivable by the Executive pursuant to this Section 6.1(B)
shall be reduced to the extent benefits of the same type are received
by or made available to the Executive during the twenty-four (24)
month period following the Executive's termination of employment (and
any such benefits received by or made available to the Executive shall
be reported to the Company by the Executive); provided, however, that
the Company shall reimburse the Executive for the excess, if any, of
the cost of such benefits to the Executive over such cost immediately
prior to the Date of Termination or, if more favorable to the
Executive, the first occurrence of an event or circumstance
constituting Good Reason. If the Severance Payments shall be decreased
pursuant to Section 6.2 hereof, and the Section 6.1(B) benefits which
remain payable after the application of Section 6. 2 hereof are
thereafter reduced pursuant to the immediately preceding sentence, the
Company shall, no later than five (5) business days following such
reduction, pay to the Executive the least of (a) the amount of the
decrease made in the Severance
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Payments pursuant to Section 6.2 hereof, (b) the amount of the
subsequent reduction in these Section 6.1(B) benefits, or (c) the
maximum amount which can be paid to the Executive without being, or
causing any other payment to be, nondeductible by reason of Section
280G of the Code.
(C) Notwithstanding any provision of any
annual or long-term incentive plan to the contrary, the Company shall
pay to the Executive a lump sum amount, in cash, equal to the sum of
(i) any unpaid incentive compensation which has been allocated or
awarded to the Executive for a completed fiscal year or other
measuring period preceding the Date of Termination under any such plan
and which, as of the Date of Termination, is contingent only upon the
continued employment of the Executive to a subsequent date, and (ii) a
pro rata portion to the Date of Termination of the aggregate value of
all contingent incentive compensation awards to the Executive for all
then uncompleted periods under any such plan, calculated as to each
such award by multiplying the award that the Executive would have
earned on the last day of the performance award period, assuming the
achievement, at the target level, of the individual and corporate
performance goals established with respect to such award, by the
fraction obtained by dividing the number of full months and any
fractional portion of a month during such performance award period
through the Date of Termination by the total number of months
contained in such performance award period.
(D) In addition to the retirement benefits
to which the Executive is entitled under the Pension Plans under
Section 5.2 hereof, the Company shall pay the Executive a lump sum
amount, in cash, equal to the excess of (i) the actuarial equivalent
of the aggregate retirement pension (taking into account any early
retirement subsidies associated therewith and determined as a straight
life annuity commencing at the date (but in no event earlier than the
second anniversary of the Date of Termination) as of which the
actuarial equivalent of such annuity is greatest) which the Executive
would have accrued under the terms of the Pension Plans, determined as
if the Executive were fully vested thereunder and had accumulated
(after the Date of Termination) twenty-four (24) additional months of
service credit hereunder and had been credited under each Pension Plan
during such period with compensation equal to the Executive's
compensation (as defined in the Pension Plans) during the twelve (12)
months immediately preceding the Date of Termination or, if higher,
during the twelve months immediately prior to the first occurrence of
an event or circumstance constituting Good Reason, over (ii) the
actuarial equivalent of the aggregate retirement pension (taking into
account any early retirement subsidies associated therewith and
determined as a straight life annuity commencing at the date (but in
no event earlier than
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the Date of Termination) as of which the actuarial equivalent of such
annuity is greatest) which the Executive had accrued pursuant to the
provisions of the Pension Plans as of the Date of Termination. For
purposes of this Section 6.1(D), "actuarial equivalent" shall be
determined using the same assumptions utilized under the Harvard
Retirement Plan immediately prior to the Date of Termination or, if
more favorable to the Executive, immediately prior to the first
occurrence of an event or circumstance constituting Good Reason.
(E) The Company shall provide the Executive
with outplacement services suitable to the Executive's position for a
period of two years or, if earlier, until the first acceptance by the
Executive of an offer of employment; provided, however, that the
Executive may elect to receive a lump sum cash payment, payable no
later than the fifth day following the Date of Termination, in an
amount equal to the value of one year of such services.
6.2. (A) Notwithstanding any other provisions of this
Agreement, in the event that any portion of any payment or benefit received or
to be received by the Executive in connection with his employment hereunder
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Company, any Person whose actions result in a change in
control for purposes of Section 280G of the Code or any Person affiliated with
the Company or such Person) (all such payments and benefits, including the
Severance Payments, being hereinafter called "Total Payments") would not be
deductible (in whole or in part), by the Company, an affiliate or Person making
such payment or providing such benefit as a result of Section 280G of the Code,
then, to the extent necessary to make such portion of the Total Payments
deductible (and after taking into account any reduction in the Total Payments
provided by reason of Section 280G of the Code in such other plan, arrangement
or agreement), the cash Severance Payments shall first be reduced (if
necessary, to zero), and all other Severance Payments shall thereafter be
reduced (if necessary, to zero); provided, however, that the Executive may
elect to have the noncash Severance Payments reduced (or eliminated) prior to
any reduction of the cash Severance Payments.
(B) For purposes of this limitation, (i) no portion
of the Total Payments the receipt or enjoyment of which the Executive shall
have waived at such time and in such manner as not to constitute a "payment"
within the meaning of Section 280G(b) of the Code shall be taken into account,
(ii) no portion of the Total Payments shall be taken into account which, in the
opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Executive
and selected by the accounting firm which was, immediately prior to year for
which the determination was made, the Company's independent auditor (the
"Auditor"), does not constitute a "parachute payment" within the meaning of
Section
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280G(b)(2) of the Code, including by reason of Section 280G(b)(4)(A) of
the Code, (iii) the Severance Payments shall be reduced only to the extent
necessary so that the Total Payments (other than those referred to in clauses
(i) or (ii)) in their entirety constitute reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4)(B) of the Code or
are otherwise not subject to disallowance as deductions by reason of Section
280G of the Code, in the opinion of Tax Counsel, and (iv) the value of any
noncash benefit or nay deferred payment or benefit included in the Total
Payments shall be determined by the Auditor in accordance with the principles
of Sections 280G(d)(3) and (4) of the Code.
(C) If it is established pursuant to a final
determination of a court or an Internal Revenue Service proceeding that,
notwithstanding the good faith of the Executive and the Company in applying the
terms of this Section 6.2, the Total Payments paid to or for the Executive's
benefit are in an amount that would result in any portion of such Total
Payments being subject to the Excise Tax, then, if such repayment would result
in (i) no portion of the remaining Total Payment's being subject to the Excise
Tax and (ii) a dollar-for-dollar reduction in the Executive's taxable income
and wages for purposes of federal, state and local income and employment taxes,
the Executive shall have an obligation to pay the Company upon demand an amount
equal to the sum of (i) the excess of the Total Payments paid to or for the
Executive's benefit over the Total Payments that could have been paid to or for
the Executive's benefit without any portion of such Total Payments being
subject to the Excise Tax; and (ii) interest on the amount set forth in clause
(i) of this sentence at the rate provided in Section 1274(b)(2)(B) of the Code
from the date of the Executive's receipt of such excess until the date of such
payment.
6.3. The payments provided in subsections (A), (C) and (D)
of Section 6.1 hereof shall be made not later than the fifth day following the
Date of Termination; provided, however, that if the amounts of such payments,
and the limitation on such payments set forth in Section 6.2 hereof, cannot be
finally determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined in good faith by the Company
of the minimum amount of such payments to which the Executive is clearly
entitled and shall pay the remainder of such payments (together with interest
on the unpaid remainder (or on all such payments to the extent the Company
fails to make such payments when due) at 120% of 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 (30th) day after the Date of Termination.
In the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a loan
by the Company to the Executive, payable on the fifth (5th ) business day after
demand by the Company (together with interest at 120% of the rate provided in
Section 1274(b)(2)(B) of the Code). At
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the time that payments are made under this Agreement, the Company shall provide
the Executive with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from Tax
Counsel, the Auditor or other advisors or consultants (and any such opinions or
advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal
fees and expenses incurred by the Executive in disputing in good faith any
issue hereunder relating to the termination of the Executive's employment, in
seeking in good faith to obtain or enforce any benefit or right 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. Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.1. Notice of Termination. Any purported termination of the
Executive's employment (other than by reason of death) shall be communicated by
written Notice of Termination from one party hereto to the other party hereto
in accordance with Section 10 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 and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
Further, a Notice of Termination for Cause is required to include a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board), which
resolution reflects the written concurrence of both the Chief Executive Officer
of the Company and of the Chief Operating Officer of the Company (provided that
if the Chief Executive Officer of the Company is not then Xxxx Xxxxx, the
required concurrence shall be that of the Chairman of the Board and the Chief
Executive Officer of the Company), finding that, in the good faith opinion of
the Board, the Executive was guilty of conduct set forth in clause (i) or (ii)
of the definition of Cause herein, and specifying the particulars thereof in
detail.
7.2. Date of Termination. "Date of Termination," with
respect to any purported termination of the Executive's
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employment during the Term, shall mean (i) if the Executive's employment is
terminated for Disability, thirty (30) days after Notice of Termination is
given (provided that he Executive shall not have returned to the full-time
performance of the Executive's duties during such thirty (30) day period), and
(ii) if the Executive's employment is terminated for any other reason, the date
specified in the Notice of Termination (which, in the case of a termination by
the Company, shall not be less than thirty(30) days (except in the case of a
termination for Cause) and, in the case of a termination for Cause) and, in the
case of a termination by the Executive, shall not be less than fifteen (15)
days nor more than sixty (60) days, respectively, from the date such Notice of
Termination is given).
7.3. Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the Date
of Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be extended
until the earlier of (i) the date on which the Term ends or (ii) the date on
which the dispute is finally resolved, either by mutual written agreement of
the parties or by a final judgment, order or decree of an arbitrator or a court
of competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended by a notice
of dispute given by the Executive only if such notice is given in good faith
and the Executive pursues the resolution of such dispute with reasonable
diligence.
7.4. Compensation During Dispute. If a purported termination
occurs during the Term and the Date of Termination is extended in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation in effect when the notice giving rise to the dispute was
given (including, but not limited to, salary) and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the Date of Termination, as determined in accordance with Section
7.3 hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement.
8. No Mitigation. The Company agrees that, if the
Executive's employment with the Company terminates during the Term, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section
6 hereof or Section 7.4 hereof. Further, the amount of any payment or benefit
provided for in this Agreement (other than 6.1(B) hereof) shall
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not be reduced by any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
9. Successors; Binding Agreement.
9.1. In addition to any obligations imposed by law upon any
successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and 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 succession
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 the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's 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.
9.2. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall due while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminates upon the death
of the Executive) if the Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the executors, personal representatives or administrators of
the Executive's estate.
10. 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 registered mail, return receipt requested, postage prepaid, addressed,
if to the Executive, to the address inserted below the Executive's signature on
the final page hereof and, if to the Company, to the address set forth below,
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 actual receipt:
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To the Company:
Harvard Industries, Inc.
0000 Xxxxx Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: General Counsel
11. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or of any lack of compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Upon Bankruptcy
Court Approval, this Agreement supersedes any and all other agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof which have been made by either party. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Delaware. All references to sections of
the Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections. Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law
and any additional withholding to which the Executive has agreed. The
obligations of the Company and the Executive under this Agreement which by
their nature may require either partial or total performance after the
expiration of the Term (including, without limitation, those under Sections 6
and 7 hereof) shall survive such expiration.
12. Validity; Pooling.
12.1. 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.
12.2. Pooling. In the event that the Company is party to a
transaction which is otherwise intended to qualify for "pooling of interests"
accounting treatment then (A) this Agreement shall, to the extent practicable,
be interpreted so as to permit such accounting treatment, and (B) to the extent
that the application of clause (A) of this Section 12.2 does not preserve the
availability of such accounting treatment, then, to the extent that any
provision of the Agreement, disqualifies the transaction as a "pooling"
transaction (including, if applicable, the entire Agreement), such provision
shall be null and void as of the date hereof. All determinations under this
Section 12.2 shall be made by the accounting firm whose opinion with respect
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to "pooling of interests" is required as a condition to the consummation of
such transaction.
13. 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.
14. Settlement of Disputes; Arbitration.
14.1. All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Committee and shall be in
writing. Any denial by the Committee of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set forth
the specific reasons for the denial and the specific provisions of this
Agreement relied upon. The Committee shall afford a reasonable opportunity to
the Executive for a review of the decision denying a claim and shall further
allow the Executive to appeal to the Committee a decision of the Committee
within sixty (60) days after notification by the Committee that the Executive's
claim has been denied.
14.2. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Tampa, Florida, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the evidentiary standards
set forth in this Agreement shall apply. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Notwithstanding any
provision of this Agreement to the contrary, the Executive shall be entitled to
seek specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
15. Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated below:
(A) "Affiliate" shall have the meaning set forth in Rule
12b-2 promulgated under Section 12 of the Exchange Act.
(B) "Auditor" shall have the meaning set forth in Section
6.2 hereof.
(C) "Bankruptcy Court Approval" shall have the meaning set
forth on the first page of this Agreement.
(D) "Base Amount" shall have the meaning set forth in
Section 280G(b)(3) of the Code.
(E) "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act.
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(F) "Board" shall mean the Board of Directors of the
Company.
(G) "Cause" for termination by the Company of the
Executive's employment shall mean (i) the willful and continued failure by the
Executive to substantially perform the Executive's duties with the Company
(other than any such failure resulting from the Executive's incapacity due to
physical or mental illness or any such actual or anticipated failure after the
issuance of a Notice of Termination for Good Reason by the Executive pursuant
to Section 7.1 hereof) after a written demand for substantial performance is
delivered to the Executive by the Board, which demand (a) specifically
identifies the manner in which the Board believes that the Executive has not
substantially performed the Executive's duties, and (b) contains the written
concurrence of both the Chief Executive Officer of the Company and of the Chief
Operating Officer of the Company with the conclusions of the Board; provided,
however, that if the Chief Executive Officer of the Company is not then Xxxx
Xxxxx, the required concurrence shall be that of the Chairman of the Board and
the Chief Executive Officer of the Company, or (ii) the willful engaging by the
Executive in conduct which is demonstrably and materially injurious to the
Company or its subsidiaries, monetarily or otherwise. For purposes of clauses
(i) and (ii) of this definition (x) no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be done,
by the Executive not in good faith and without reasonable belief that the
Executive's act, or failure to act, was in the best interest of the Company and
(y) in the event of a dispute concerning the application of this provision, no
claim by the Company that Cause exists shall be given effect unless the Company
establishes to the Committee by clear and convincing evidence that Cause
exists.
(H) "Code shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(I) "Committee" shall mean (i) the individuals (not fewer
than three in number) who constitute the Compensation Committee of the Board,
plus (ii) in the event that fewer than three individuals are available from the
group specified in clause (i) above for any reason, such individuals as may be
appointed by the individual or individuals so available (including for this
purpose any individual or individuals previously so appointed under this clause
(ii)); provided, however, that the maximum number of individuals constituting
the Committee shall not exceed five.
(J) "Company" shall mean Harvard Industries, Inc., shall
include any successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
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(K) "Date of Termination" shall have the meaning set forth in
Section 7.2 hereof.
(L) "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result of
the Executive's incapacity due to physical or mental illness, the Executive
shall have been absent from the full-time performance of the Executive's duties
with the Company for a period of six (6) consecutive months, the Company shall
have given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive shall
not have returned to the full-time performance of the Executive's duties.
(M) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(N) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(O) "Good Reason" for termination by the Executive of the
Executive's employment shall mean either (x) the occurrence during the Term of
the consummation of a Plan of Reorganization and if requested by the Board, the
performance of services by the Executive for up to 60 days following the
consummation of the Plan of Reorganization, or (y) the occurrence (without the
Executive's express written consent) after November 15, 1997 of any one of the
following acts by the Company, or failures by the Company to act, unless, in
the case of any act or failure to act described in paragraph (I), (V) or (VII)
below, such act or failure to act is corrected prior to the Date of Termination
specified in the Notice of Termination given in respect thereof:
(I) the assignment to the Executive of any duties
materially inconsistent with the Executive's position as the
Senior Vice President/Law and Administration of the Company
with the duties and responsibilities set forth in the second
recital to this Agreement, or a substantial adverse
alteration in the nature of the Executive's responsibilities
from those in effect immediately prior to November 15, 1997,
provided that the appointment of Xxxxx Xxxxxxxx and the
substitution of Xxxxx Xxxxxxxx as the person to whom the
Executive shall report may not, in and of itself, be a basis
for an assertion by the Executive that the provisions of this
paragraph (I) have been triggered;
(II) a reduction by the Company in the Executive's
annual base salary as in effect on November 15, 1997, or as
the same may be increased from time to time except for
across-the-board salary reductions similarly affecting all
senior executives of the Company and all senior executives of
any Person in control of the Company;
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(III) the relocation of the Executive's principal
place of employment to a location more than 35 miles from the
Executive's principal place of employment on November 15,
1997 or the Company's requiring the Executive to be based
anywhere other than such principal place of employment (or
permitted relocation thereof) except for required travel on
the Company's business to an extent substantially consistent
with the Executive's present business travel obligations;
(IV) the failure by the Company, after November 15,
1997, to pay to the Executive any portion of the Executive's
compensation except pursuant to an across-the-board
compensation deferral similarly affecting all senior
executives of the Company and all senior executives of any
Person in control of the Company, or to pay to the Executive
any portion of an installment of deferred compensation under
any deferred compensation program of the Company, within
seven (7) days of the date such compensation is due;
(V) the failure by the Company to continue in effect
any compensation plan in which the Executive participates on
November 15, 1997 which is material to the Executive's total
compensation, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to
continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount or timing of
payment of benefits provided and the level of the Executive's
participation relative to other participants, as existed
immediately prior to November 15, 1997;
(VI) the failure by the Company to continue to
provide the Executive with benefits substantially similar to
those enjoyed by the Executive under any of the Company's
pension, savings, life insurance, medical, health and
accident, or disability plans on which the Executive was
participating immediately prior to November 15, 1997 (except
for across-the-board changes similarly affecting all senior
executives of the Company and all senior executives of any
Person in control of the Company), the taking of any other
action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the
Executive on the date of Bankruptcy Court Approval, or the
failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive is
entitled on the basis of years of service
-14-
with the Company in accordance with the Company's normal
vacation policy in effect on the date of Bankruptcy Court
Approval; or
(VII) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1
hereof; for purposes of this Agreement, no such purported
termination shall be effective.
The Executive's right to terminate the Executive's employment
for Good Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
For purposes of any determination regarding the existence of
Good Reason, any claim by the Executive that Good Reason exists shall be
presumed to be correct unless the Company establishes to the Committee by clear
and convincing evidence that Good Reason does not exist.
(P) "Notice of Termination" shall have the meaning set forth
in Section 7.1 hereof.
(Q) "Pension Plans" shall mean the Harvard Retirement Plan,
the Harvard Industries, Inc. Nonqualified ERISA Excess Benefit Plan, effective
January 1, 1995, in the form annexed as Exhibit A hereto, and the Harvard
Industries, Inc. Nonqualified Additional Credited Service Plan, effective
January 1, 1995, in the form annexed as Exhibit B hereto (the "Additional
Credited Service Plan") in each of which the Executive shall be treated as
participating throughout the Term (with no alterations to the determination of
"Adjusted Retirement Income" to be permitted under Section 3.1(4) of the
Additional Credited Service Plan, notwithstanding the discretion afforded under
such Section 3.1(4), with no amendments to such plans which are adverse to the
Executive being taken into account without his written consent, and without
regard to Section 3.1(5) of the Additional Credited Service Plan) regardless of
whether such plans are continued during the Term or after the Plan of
Reorganization, and regardless of whether any action which is required to have
been, or to be, taken in order for the Executive to be designated as a
participant has in fact been, or is hereafter taken.
(R) "Person" shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such terms shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly,
-15-
by the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company.
(S) "Plan of Reorganization" shall mean the final Joint Plan
of Reorganization as proposed by the Company and approved by the United States
Bankruptcy Court for the District of Delaware, as the same may be amended from
time to time.
(T) "Retirement" shall be deemed the reason for the
termination by the Executive of the Executive's employment if such employment
is terminated on or after his normal retirement date in accordance with the
Company's retirement policy generally applicable to its salaried employees.
(U) "Severance Payments" shall have the meaning set forth in
Section 6.1 hereof.
(V) "Tax Counsel" shall have the meaning set forth in Section
6.2 hereof.
(W) "Term" shall mean the period of time described in Section
2 hereof (taking into account any extension, continuation or termination
described herein).
(X) "Total Payments" shall mean those payments se described
in Section 6.2 hereof.
HARVARD INDUSTRIES, INC.
By:
-----------------------------
Name:
Title:
-----------------------------
Xxxxxxx Xxxxxx
Address:
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx, XX 00000
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SEVERANCE AGREEMENT
THIS AGREEMENT, dated , 1997, is made by and
between Harvard Industries, Inc., a Florida corporation (the "Company"), and
Xxxxxx X. Xxxxxxxxx (the "Executive").
WHEREAS, the Company considers it essential to the best
interests of its stockholders and creditors to xxxxxx the continued employment
of key management personnel;
WHEREAS, the Executive is currently the Chief Financial
Officer of the Company with such duties as are customarily assigned by the
chief executive officer of a company to individuals serving in such position,
and such other senior level duties and responsibilities as may be specified by
the Chief Executive Officer of the Company from time to time; and
WHEREAS, the Board has determined that appropriate steps
should be taken to encourage the retention of key members of the Company's
management, including the Executive;
NOW, THEREFORE, subject to approval by the United States
Bankruptcy Court for the District of Delaware ("Bankruptcy Court Approval"),
and in consideration of the premises and the mutual covenants herein contained,
the Company and the Executive hereby agree as follows:
1. Defined Terms. The definitions of capitalized terms used
in this Agreement are provided in the last Section hereof.
2. Term of Agreement. Subject to the provisions of Section
12.2 hereof, the Term of this Agreement shall commence on the date of
Bankruptcy Court Approval and shall continue in effect through December 31,
2000; provided, however, that commencing on December 1, 1998 and each December
1 thereafter, the Term shall automatically be extended for one additional year
unless, not later than June 30 immediately preceding each such December 1, the
Company or the Executive shall have given notice to the other not to extend the
Term.
3. Company's Covenants Summarized. In order to induce the
Executive to remain in the employ of the Company and in consideration of the
Executive's covenants set forth in Section 4 hereof, the Company agrees, under
the conditions described herein, to pay the Executive the Severance Payments
and other payments and benefits described herein. Except as provided in Section
9.1 hereof, no Severance Payments shall be payable under this Agreement unless
there shall have been a termination of the Executive's employment with the
Company during the Term. This Agreement shall not be construed as creating an
express or implied contract of employment and, except as otherwise agreed in
writing between the Executive and the Company, the Executive shall not have any
right to be retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that,
subject to the terms and conditions of this Agreement, the Executive will
remain in the employ of the Company until the earliest of (i) the date of the
consummation of the Plan of Reorganization, plus, if requested by the Board, up
to an additional 60 days beyond such date, (ii) the date of termination by the
Executive of the Executive's employment for Good Reason or by reason of death,
Disability or Retirement, or (iii) the termination by the Company of the
Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
5.1. During the Term, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of any such period, together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability.
5.2. If the Executive's employment shall be terminated for
any reason during the Term, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect
immediately prior to the Date of Termination or, if higher, the rate in effect
immediately prior to the first occurrence of an event or circumstance
constituting Good Reason, and the Executive shall become fully vested in all
benefits provided under the Pension Plans, together with all compensation and
benefits payable to the Executive through the Date of Termination under the
terms of the Company's compensation and benefit plans, programs or arrangements
as in effect immediately prior to the Date of Termination or, if more favorable
to the Executive, as in effect immediately prior to the first occurrence of an
event or circumstance constituting Good Reason.
6. Severance Payments.
6.1. Subject to Section 6.2 hereof, if the Executive's
employment is terminated during the Term, other than (A) by the Company for
Cause, (B) by reason of death or Disability, or (C) by the Executive without
Good Reason, the Company shall pay the Executive the amounts, and provide the
Executive the benefits, described in this Section 6.1 ("Severance Payments"),
in addition to any payments and benefits to which the Executive is entitled
under Section 5 hereof.
-2-
(A) In lieu of any further salary payments
to the Executive for periods subsequent to the Date of Termination and
in lieu of any severance benefit otherwise payable to the Executive,
the Company shall pay to the Executive a lump sum severance payment,
in cash, equal to three times the sum of (i) the Executive's base
salary as in effect immediately prior to the Date of Termination or,
if higher, in effect immediately prior to the first occurrence of an
event or circumstance constituting Good Reason, and (ii) the target
bonus in effect, pursuant to any annual bonus or incentive plan
maintained by the Company, for the fiscal year during which the Date
of Termination occurs or, if higher, for the fiscal year during which
first occurs an event or circumstance constituting Good Reason.
(B) For the thirty-six (36) month period
immediately following the Date of Termination, the Company shall
arrange to provide the Executive and his dependents life, disability,
accident and health insurance benefits substantially similar to those
provided to the Executive and his dependents immediately prior to the
Date of Termination or, if more favorable to the Executive, those
provided to the Executive and his dependents immediately prior to the
first occurrence of an event or circumstance constituting Good Reason,
at no greater cost to the Executive than the cost to the Executive
immediately prior to such date or occurrence; provided, however, that,
unless the Executive consents to a different method (after taking into
account the effect of such method on the calculation of "parachute
payments" pursuant to Section 6.2 hereof), such health insurance
benefits shall be provided through a third-party insurer. Benefits
otherwise receivable by the Executive pursuant to this Section 6.1(B)
shall be reduced to the extent benefits of the same type are received
by or made available to the Executive during the thirty-six (36) month
period following the Executive's termination of employment (and any
such benefits received by or made available to the Executive shall be
reported to the Company by the Executive); provided, however, that the
Company shall reimburse the Executive for the excess, if any, of the
cost of such benefits to the Executive over such cost immediately
prior to the Date of Termination or, if more favorable to the
Executive, the first occurrence of an event or circumstance
constituting Good Reason. If the Severance Payments shall be decreased
pursuant to Section 6.2 hereof, and the Section 6.1(B) benefits which
remain payable after the application of Section 6. 2 hereof are
thereafter reduced pursuant to the immediately preceding sentence, the
Company shall, no later than five (5) business days following such
reduction, pay to the Executive the least of (a) the amount of the
decrease made in the Severance Payments pursuant to Section 6.2
hereof, (b) the amount of the subsequent reduction in these Section
6.1(B) benefits, or (c) the maximum amount which can be paid to the
Executive
-3-
without being, or causing any other payment to be, nondeductible by
reason of Section 280G of the Code.
(C) Notwithstanding any provision of any
annual or long-term incentive plan to the contrary, the Company shall
pay to the Executive a lump sum amount, in cash, equal to the sum of
(i) any unpaid incentive compensation which has been allocated or
awarded to the Executive for a completed fiscal year or other
measuring period preceding the Date of Termination under any such plan
and which, as of the Date of Termination, is contingent only upon the
continued employment of the Executive to a subsequent date, and (ii) a
pro rata portion to the Date of Termination of the aggregate value of
all contingent incentive compensation awards to the Executive for all
then uncompleted periods under any such plan, calculated as to each
such award by multiplying the award that the Executive would have
earned on the last day of the performance award period, assuming the
achievement, at the target level, of the individual and corporate
performance goals established with respect to such award, by the
fraction obtained by dividing the number of full months and any
fractional portion of a month during such performance award period
through the Date of Termination by the total number of months
contained in such performance award period.
(D) In addition to the retirement benefits
to which the Executive is entitled under the Pension Plans under
Section 5.2 hereof, the Company shall pay the Executive a lump sum
amount, in cash, equal to the excess of (i) the actuarial equivalent
of the aggregate retirement pension (taking into account any early
retirement subsidies associated therewith and determined as a straight
life annuity commencing at the date (but in no event earlier than the
third anniversary of the Date of Termination) as of which the
actuarial equivalent of such annuity is greatest) which the Executive
would have accrued under the terms of the Pension Plans, determined as
if the Executive were fully vested thereunder and had accumulated
(after the Date of Termination) thirty-six (36) additional months of
service credit hereunder and had been credited under each Pension Plan
during such period with compensation equal to the Executive's
compensation (as defined in the Pension Plans) during the twelve (12)
months immediately preceding the Date of Termination or, if higher,
during the twelve months immediately prior to the first occurrence of
an event or circumstance constituting Good Reason, over (ii) the
actuarial equivalent of the aggregate retirement pension (taking into
account any early retirement subsidies associated therewith and
determined as a straight life annuity commencing at the date (but in
no event earlier than the Date of Termination) as of which the
actuarial equivalent of such annuity is greatest) which the Executive
had accrued pursuant to the provisions of the Pension Plans
-4-
as of the Date of Termination. For purposes of this Section 6.1(D),
"actuarial equivalent" shall be determined using the same assumptions
utilized under the Harvard Retirement Plan immediately prior to the
Date of Termination or, if more favorable to the Executive,
immediately prior to the first occurrence of an event or circumstance
constituting Good Reason.
(E) The Company shall provide the Executive
with outplacement services suitable to the Executive's position for a
period of three years or, if earlier, until the first acceptance by
the Executive of an offer of employment; provided, however, that the
Executive may elect to receive a lump sum cash payment, payable no
later than the fifth day following the Date of Termination, in an
amount equal to the value of one year of such services.
6.2. (A) Notwithstanding any other provisions of this
Agreement, in the event that any portion of any payment or benefit received or
to be received by the Executive in connection with his employment hereunder
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Company, any Person whose actions result in a change in
control for purposes of Section 280G of the Code or any Person affiliated with
the Company or such Person) (all such payments and benefits, including the
Severance Payments, being hereinafter called "Total Payments") would not be
deductible (in whole or in part), by the Company, an affiliate or Person making
such payment or providing such benefit as a result of Section 280G of the Code,
then, to the extent necessary to make such portion of the Total Payments
deductible (and after taking into account any reduction in the Total Payments
provided by reason of Section 280G of the Code in such other plan, arrangement
or agreement), the cash Severance Payments shall first be reduced (if
necessary, to zero), and all other Severance Payments shall thereafter be
reduced (if necessary, to zero); provided, however, that the Executive may
elect to have the noncash Severance Payments reduced (or eliminated) prior to
any reduction of the cash Severance Payments.
(B) For purposes of this limitation, (i) no portion
of the Total Payments the receipt or enjoyment of which the Executive shall
have waived at such time and in such manner as not to constitute a "payment"
within the meaning of Section 280G(b) of the Code shall be taken into account,
(ii) no portion of the Total Payments shall be taken into account which, in the
opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Executive
and selected by the accounting firm which was, immediately prior to year for
which the determination was made, the Company's independent auditor (the
"Auditor"), does not constitute a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code, including by reason of Section 280G(b)(4)(A) of
the Code, (iii) the Severance Payments shall be reduced only to the extent
necessary so that the Total Payments
-5-
(other than those referred to in clauses (i) or (ii)) in their entirety
constitute reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4)(B) of the Code or are otherwise not subject to
disallowance as deductions by reason of Section 280G of the Code, in the
opinion of Tax Counsel, and (iv) the value of any noncash benefit or nay
deferred payment or benefit included in the Total Payments shall be determined
by the Auditor in accordance with the principles of Sections 280G(d)(3) and (4)
of the Code.
(C) If it is established pursuant to a final
determination of a court or an Internal Revenue Service proceeding that,
notwithstanding the good faith of the Executive and the Company in applying the
terms of this Section 6.2, the Total Payments paid to or for the Executive's
benefit are in an amount that would result in any portion of such Total
Payments being subject to the Excise Tax, then, if such repayment would result
in (i) no portion of the remaining Total Payment's being subject to the Excise
Tax and (ii) a dollar-for-dollar reduction in the Executive's taxable income
and wages for purposes of federal, state and local income and employment taxes,
the Executive shall have an obligation to pay the Company upon demand an amount
equal to the sum of (i) the excess of the Total Payments paid to or for the
Executive's benefit over the Total Payments that could have been paid to or for
the Executive's benefit without any portion of such Total Payments being
subject to the Excise Tax; and (ii) interest on the amount set forth in clause
(i) of this sentence at the rate provided in Section 1274(b)(2)(B) of the Code
from the date of the Executive's receipt of such excess until the date of such
payment.
6.3. The payments provided in subsections (A), (C) and (D)
of Section 6.1 hereof shall be made not later than the fifth day following the
Date of Termination; provided, however, that if the amounts of such payments,
and the limitation on such payments set forth in Section 6.2 hereof, cannot be
finally determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined in good faith by the Company
of the minimum amount of such payments to which the Executive is clearly
entitled and shall pay the remainder of such payments (together with interest
on the unpaid remainder (or on all such payments to the extent the Company
fails to make such payments when due) at 120% of 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 (30th) day after the Date of Termination.
In the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a loan
by the Company to the Executive, payable on the fifth (5th ) business day after
demand by the Company (together with interest at 120% of the rate provided in
Section 1274(b)(2)(B) of the Code). At the time that payments are made under
this Agreement, the Company shall provide the Executive with a written
statement setting forth the manner in which such payments were calculated and
the
-6-
basis for such calculations including, without limitation, any opinions or
other advice the Company has received from Tax Counsel, the Auditor or other
advisors or consultants (and any such opinions or advice which are in writing
shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal
fees and expenses incurred by the Executive in disputing in good faith any
issue hereunder relating to the termination of the Executive's employment, in
seeking in good faith to obtain or enforce any benefit or right 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. Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.1. Notice of Termination. Any purported termination of the
Executive's employment (other than by reason of death) shall be communicated by
written Notice of Termination from one party hereto to the other party hereto
in accordance with Section 10 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 and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
Further, a Notice of Termination for Cause is required to include a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board), which
resolution reflects the written concurrence of both the Chief Executive Officer
of the Company and of the Chief Operating Officer of the Company (provided that
if the Chief Executive Officer of the Company is not then Xxxx Xxxxx, the
required concurrence shall be that of the Chairman of the Board and the Chief
Executive Officer of the Company), finding that, in the good faith opinion of
the Board, the Executive was guilty of conduct set forth in clause (i) or (ii)
of the definition of Cause herein, and specifying the particulars thereof in
detail.
7.2. Date of Termination. "Date of Termination," with
respect to any purported termination of the Executive's employment during the
Term, shall mean (i) if the Executive's employment is terminated for
Disability, thirty (30) days after Notice of Termination is given (provided
that he Executive shall
-7-
not have returned to the full-time performance of the Executive's duties during
such thirty (30) day period), and (ii) if the Executive's employment is
terminated for any other reason, the date specified in the Notice of
Termination (which, in the case of a termination by the Company, shall not be
less than thirty(30) days (except in the case of a termination for Cause) and,
in the case of a termination for Cause) and, in the case of a termination by
the Executive, shall not be less than fifteen (15) days nor more than sixty
(60) days, respectively, from the date such Notice of Termination is given).
7.3. Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the Date
of Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be extended
until the earlier of (i) the date on which the Term ends or (ii) the date on
which the dispute is finally resolved, either by mutual written agreement of
the parties or by a final judgment, order or decree of an arbitrator or a court
of competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended by a notice
of dispute given by the Executive only if such notice is given in good faith
and the Executive pursues the resolution of such dispute with reasonable
diligence.
7.4. Compensation During Dispute. If a purported termination
occurs during the Term and the Date of Termination is extended in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation in effect when the notice giving rise to the dispute was
given (including, but not limited to, salary) and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the Date of Termination, as determined in accordance with Section
7.3 hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement.
8. No Mitigation. The Company agrees that, if the
Executive's employment with the Company terminates during the Term, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section
6 hereof or Section 7.4 hereof. Further, the amount of any payment or benefit
provided for in this Agreement (other than 6.1(B) hereof) shall not be reduced
by any compensation earned by the Executive as the result of employment by
another employer, by retirement benefits,
-8-
by offset against any amount claimed to be owed by the Executive to the
Company, or otherwise.
9. Successors; Binding Agreement.
9.1. In addition to any obligations imposed by law upon any
successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and 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 succession
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 the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's 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.
9.2. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall due while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminates upon the death
of the Executive) if the Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the executors, personal representatives or administrators of
the Executive's estate.
10. 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 registered mail, return receipt requested, postage prepaid, addressed,
if to the Executive, to the address inserted below the Executive's signature on
the final page hereof and, if to the Company, to the address set forth below,
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 actual receipt:
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To the Company:
Harvard Industries, Inc.
0000 Xxxxx Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: General Counsel
11. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or of any lack of compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Upon Bankruptcy
Court Approval, this Agreement supersedes any and all other agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof which have been made by either party. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Delaware. All references to sections of
the Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections. Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law
and any additional withholding to which the Executive has agreed. The
obligations of the Company and the Executive under this Agreement which by
their nature may require either partial or total performance after the
expiration of the Term (including, without limitation, those under Sections 6
and 7 hereof) shall survive such expiration.
12. Validity; Pooling.
12.1. 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.
12.2. Pooling. In the event that the Company is party to a
transaction which is otherwise intended to qualify for "pooling of interests"
accounting treatment then (A) this Agreement shall, to the extent practicable,
be interpreted so as to permit such accounting treatment, and (B) to the extent
that the application of clause (A) of this Section 12.2 does not preserve the
availability of such accounting treatment, then, to the extent that any
provision of the Agreement, disqualifies the transaction as a "pooling"
transaction (including, if applicable, the entire Agreement), such provision
shall be null and void as of the date hereof. All determinations under this
Section 12.2 shall be made by the accounting firm whose opinion with respect
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to "pooling of interests" is required as a condition to the consummation of
such transaction.
13. 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.
14. Settlement of Disputes; Arbitration.
14.1. All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Committee and shall be in
writing. Any denial by the Committee of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set forth
the specific reasons for the denial and the specific provisions of this
Agreement relied upon. The Committee shall afford a reasonable opportunity to
the Executive for a review of the decision denying a claim and shall further
allow the Executive to appeal to the Committee a decision of the Committee
within sixty (60) days after notification by the Committee that the Executive's
claim has been denied.
14.2. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Tampa, Florida, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the evidentiary standards
set forth in this Agreement shall apply. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Notwithstanding any
provision of this Agreement to the contrary, the Executive shall be entitled to
seek specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
15. Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated below:
(A) "Affiliate" shall have the meaning set forth in Rule
12b-2 promulgated under Section 12 of the Exchange Act.
(B) "Auditor" shall have the meaning set forth in Section 6.2
hereof.
(C) "Bankruptcy Court Approval" shall have the meaning set
forth on the first page of this Agreement.
(D) "Base Amount" shall have the meaning set forth in Section
280G(b)(3) of the Code.
(E) "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act.
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(F) "Board" shall mean the Board of Directors of the Company.
(G) "Cause" for termination by the Company of the Executive's
employment shall mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from the Executive's incapacity due to physical or
mental illness or any such actual or anticipated failure after the issuance of
a Notice of Termination for Good Reason by the Executive pursuant to Section
7.1 hereof) after a written demand for substantial performance is delivered to
the Executive by the Board, which demand (a) specifically identifies the manner
in which the Board believes that the Executive has not substantially performed
the Executive's duties, and (b) contains the written concurrence of both the
Chief Executive Officer of the Company and of the Chief Operating Officer of
the Company with the conclusions of the Board; provided, however, that if the
Chief Executive Officer of the Company is not then Xxxx Xxxxx, the required
concurrence shall be that of the Chairman of the Board and the Chief Executive
Officer of the Company, or (ii) the willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of
this definition (x) no act, or failure to act, on the Executive's part shall be
deemed "willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive's act, or failure
to act, was in the best interest of the Company and (y) in the event of a
dispute concerning the application of this provision, no claim by the Company
that Cause exists shall be given effect unless the Company establishes to the
Committee by clear and convincing evidence that Cause exists.
(H) "Code shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(I) "Committee" shall mean (i) the individuals (not fewer
than three in number) who constitute the Compensation Committee of the Board,
plus (ii) in the event that fewer than three individuals are available from the
group specified in clause (i) above for any reason, such individuals as may be
appointed by the individual or individuals so available (including for this
purpose any individual or individuals previously so appointed under this clause
(ii)); provided, however, that the maximum number of individuals constituting
the Committee shall not exceed five.
(J) "Company" shall mean Harvard Industries, Inc., shall
include any successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
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(K) "Date of Termination" shall have the meaning set forth in
Section 7.2 hereof.
(L) "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result of
the Executive's incapacity due to physical or mental illness, the Executive
shall have been absent from the full-time performance of the Executive's duties
with the Company for a period of six (6) consecutive months, the Company shall
have given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive shall
not have returned to the full-time performance of the Executive's duties.
(M) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(N) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(O) "Good Reason" for termination by the Executive of the
Executive's employment shall mean either (x) the occurrence during the Term of
the consummation of a Plan of Reorganization and if requested by the Board, the
performance of services by the Executive for up to 60 days following the
consummation of the Plan of Reorganization, or (y) the occurrence (without the
Executive's express written consent) after November 15, 1997 of any one of the
following acts by the Company, or failures by the Company to act, unless, in
the case of any act or failure to act described in paragraph (I), (V) or (VII)
below, such act or failure to act is corrected prior to the Date of Termination
specified in the Notice of Termination given in respect thereof:
(I) the assignment to the Executive of any duties
materially inconsistent with the Executive's position as the
Chief Financial Officer of the Company with the duties and
responsibilities set forth in the second recital to this
Agreement, or a substantial adverse alteration in the nature
of the Executive's responsibilities from those in effect
immediately prior to November 15, 1997, provided that the
appointment of Xxxxx Xxxxxxxx and the substitution of Xxxxx
Xxxxxxxx as the person to whom the Executive shall report may
not, in and of itself, be a basis for an assertion by the
Executive that the provisions of this paragraph (I) have been
triggered;
(II) a reduction by the Company in the Executive's
annual base salary as in effect on November 15, 1997, or as
the same may be increased from time to time except for
across-the-board salary reductions similarly affecting all
senior executives of the Company and all senior executives of
any Person in control of the Company;
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(III) the relocation of the Executive's principal
place of employment to a location more than 35 miles from the
Executive's principal place of employment on November 15,
1997 or the Company's requiring the Executive to be based
anywhere other than such principal place of employment (or
permitted relocation thereof) except for required travel on
the Company's business to an extent substantially consistent
with the Executive's present business travel obligations,
provided that no relocation of the Executive's principal
place of employment shall be a basis for an assertion by the
Executive that an event of Good Reason has occurred if
mutually agreeable relocation benefits have been provided;
(IV) the failure by the Company, after November 15,
1997, to pay to the Executive any portion of the Executive's
compensation except pursuant to an across-the-board
compensation deferral similarly affecting all senior
executives of the Company and all senior executives of any
Person in control of the Company, or to pay to the Executive
any portion of an installment of deferred compensation under
any deferred compensation program of the Company, within
seven (7) days of the date such compensation is due;
(V) the failure by the Company to continue in effect
any compensation plan in which the Executive participates on
November 15, 1997 which is material to the Executive's total
compensation, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to
continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount or timing of
payment of benefits provided and the level of the Executive's
participation relative to other participants, as existed
immediately prior to November 15, 1997;
(VI) the failure by the Company to continue to
provide the Executive with benefits substantially similar to
those enjoyed by the Executive under any of the Company's
pension, savings, life insurance, medical, health and
accident, or disability plans on which the Executive was
participating immediately prior to November 15, 1997 (except
for across-the-board changes similarly affecting all senior
executives of the Company and all senior executives of any
Person in control of the Company), the taking of any other
action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the
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Executive on the date of Bankruptcy Court Approval, or the
failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive is
entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in
effect on the date of Bankruptcy Court Approval; or
(VII) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1
hereof; for purposes of this Agreement, no such purported
termination shall be effective.
The Executive's right to terminate the Executive's employment
for Good Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
For purposes of any determination regarding the existence of
Good Reason, any claim by the Executive that Good Reason exists shall be
presumed to be correct unless the Company establishes to the Committee by clear
and convincing evidence that Good Reason does not exist.
(P) "Notice of Termination" shall have the meaning set forth
in Section 7.1 hereof.
(Q) "Pension Plans" shall mean the Harvard Retirement Plan,
the Harvard Industries, Inc. Nonqualified ERISA Excess Benefit Plan, effective
January 1, 1995, in the form annexed as Exhibit A hereto, and the Harvard
Industries, Inc. Nonqualified Additional Credited Service Plan, effective
January 1, 1995, in the form annexed as Exhibit B hereto (the "Additional
Credited Service Plan") in each of which the Executive shall be treated as
participating throughout the Term (with no alterations to the determination of
"Adjusted Retirement Income" to be permitted under Section 3.1(4) of the
Additional Credited Service Plan, notwithstanding the discretion afforded under
such Section 3.1(4), with no amendments to such plans which are adverse to the
Executive being taken into account without his written consent, and without
regard to Section 3.1(5) of the Additional Credited Service Plan) regardless of
whether such plans are continued during the Term or after the Plan of
Reorganization, and regardless of whether any action which is required to have
been, or to be, taken in order for the Executive to be designated as a
participant has in fact been, or is hereafter taken.
(R) "Person" shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such terms shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or
-15-
other fiduciary holding securities under an employee benefit plan of the
Company or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
(S) "Plan of Reorganization" shall mean the final Joint Plan
of Reorganization as proposed by the Company and approved by the United States
Bankruptcy Court for the District of Delaware, as the same may be amended from
time to time.
(T) "Retirement" shall be deemed the reason for the
termination by the Executive of the Executive's employment if such employment
is terminated on or after his normal retirement date in accordance with the
Company's retirement policy generally applicable to its salaried employees.
(U) "Severance Payments" shall have the meaning set forth in
Section 6.1 hereof.
(V) "Tax Counsel" shall have the meaning set forth in Section
6.2 hereof.
(W) "Term" shall mean the period of time described in Section
2 hereof (taking into account any extension, continuation or termination
described herein).
(X) "Total Payments" shall mean those payments se described
in Section 6.2 hereof.
HARVARD INDUSTRIES, INC.
By:
---------------------------
Name:
Title:
---------------------------
Xxxxxx X. Xxxxxxxxx
Address:
0000 Xxxx Xxxxxxxxx #000
Xxxxxxxxxx, XX 00000
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SEVERANCE AGREEMENT
THIS AGREEMENT, dated , 1997, is made by and
between Harvard Industries, Inc., a Florida corporation (the "Company"), and
Xxxxx X. Xxxxxxx (the "Executive").
WHEREAS, the Company considers it essential to the best
interests of its stockholders and creditors to xxxxxx the continued employment
of key management personnel;
WHEREAS, the Executive is currently the President of the
Company reporting to the Chief Executive Officer of the Company with such
duties as are customarily assigned by the chief executive officer of a company
to individuals serving in such position, and such other senior level duties and
responsibilities as may be specified by the Chief Executive Officer of the
Company from time to time; and
WHEREAS, the Board has determined that appropriate steps
should be taken to encourage the retention of key members of the Company's
management, including the Executive;
NOW, THEREFORE, subject to approval by the United States
Bankruptcy Court for the District of Delaware ("Bankruptcy Court Approval"),
and in consideration of the premises and the mutual covenants herein contained,
the Company and the Executive hereby agree as follows:
1. Defined Terms. The definitions of capitalized terms used
in this Agreement are provided in the last Section hereof.
2. Term of Agreement. Subject to the provisions of Section
12.2 hereof, the Term of this Agreement shall commence on the date of
Bankruptcy Court Approval and shall continue in effect through December 31,
2000; provided, however, that commencing on December 1, 1998 and each December
1 thereafter, the Term shall automatically be extended for one additional year
unless, not later than June 30 immediately preceding each such December 1, the
Company or the Executive shall have given notice to the other not to extend the
Term.
3. Company's Covenants Summarized. In order to induce the
Executive to remain in the employ of the Company and in consideration of the
Executive's covenants set forth in Section 4 hereof, the Company agrees, under
the conditions described herein, to pay the Executive the Severance Payments
and other payments and benefits described herein. Except as provided in Section
9.1 hereof, no Severance Payments shall be payable under this Agreement unless
there shall have been a termination of the Executive's employment with the
Company during the Term. This Agreement shall not be construed as creating an
express or
implied contract of employment and, except as otherwise agreed in
writing between the Executive and the Company, the Executive shall not have any
right to be retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that,
subject to the terms and conditions of this Agreement, the Executive will
remain in the employ of the Company until the earliest of (i) the date of the
consummation of the Plan of Reorganization, plus, if requested by the Board, up
to an additional 60 days beyond such date, (ii) the date of termination by the
Executive of the Executive's employment for Good Reason or by reason of death,
Disability or Retirement, or (iii) the termination by the Company of the
Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
5.1. During the Term, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of any such period, together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability.
5.2. If the Executive's employment shall be terminated for
any reason during the Term, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect
immediately prior to the Date of Termination or, if higher, the rate in effect
immediately prior to the first occurrence of an event or circumstance
constituting Good Reason, and the Executive shall become fully vested in all
benefits provided under the Pension Plans, together with all compensation and
benefits payable to the Executive through the Date of Termination under the
terms of the Company's compensation and benefit plans, programs or arrangements
as in effect immediately prior to the Date of Termination or, if more favorable
to the Executive, as in effect immediately prior to the first occurrence of an
event or circumstance constituting Good Reason.
6. Severance Payments.
6.1. Subject to Section 6.2 hereof, if the Executive's
employment is terminated during the Term, other than (A) by the Company for
Cause, (B) by reason of death or Disability, or (C) by the Executive without
Good Reason, the Company shall pay the Executive the amounts, and provide the
Executive the benefits, described in this Section 6.1 ("Severance
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Payments"), in addition to any payments and benefits to which the Executive is
entitled under Section 5 hereof.
(A) In lieu of any further salary payments
to the Executive for periods subsequent to the Date of Termination and
in lieu of any severance benefit otherwise payable to the Executive,
the Company shall pay to the Executive a lump sum severance payment,
in cash, equal to three times the sum of (i) the Executive's base
salary as in effect immediately prior to the Date of Termination or,
if higher, in effect immediately prior to the first occurrence of an
event or circumstance constituting Good Reason, and (ii) the target
bonus in effect, pursuant to any annual bonus or incentive plan
maintained by the Company, for the fiscal year during which the Date
of Termination occurs or, if higher, for the fiscal year during which
first occurs an event or circumstance constituting Good Reason.
(B) For the thirty-six (36) month period
immediately following the Date of Termination, the Company shall
arrange to provide the Executive and his dependents life, disability,
accident and health insurance benefits substantially similar to those
provided to the Executive and his dependents immediately prior to the
Date of Termination or, if more favorable to the Executive, those
provided to the Executive and his dependents immediately prior to the
first occurrence of an event or circumstance constituting Good Reason,
at no greater cost to the Executive than the cost to the Executive
immediately prior to such date or occurrence; provided, however, that,
unless the Executive consents to a different method (after taking into
account the effect of such method on the calculation of "parachute
payments" pursuant to Section 6.2 hereof), such health insurance
benefits shall be provided through a third-party insurer. Benefits
otherwise receivable by the Executive pursuant to this Section 6.1(B)
shall be reduced to the extent benefits of the same type are received
by or made available to the Executive during the thirty-six (36) month
period following the Executive's termination of employment (and any
such benefits received by or made available to the Executive shall be
reported to the Company by the Executive); provided, however, that the
Company shall reimburse the Executive for the excess, if any, of the
cost of such benefits to the Executive over such cost immediately
prior to the Date of Termination or, if more favorable to the
Executive, the first occurrence of an event or circumstance
constituting Good Reason. If the Severance Payments shall be decreased
pursuant to Section 6.2 hereof, and the Section 6.1(B) benefits which
remain payable after the application of Section 6. 2 hereof are
thereafter reduced pursuant to the immediately preceding sentence, the
Company shall, no later than five (5) business days following such
reduction, pay to the Executive the least of (a) the amount of the
decrease made in the Severance
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Payments pursuant to Section 6.2 hereof, (b) the amount of the
subsequent reduction in these Section 6.1(B) benefits, or (c) the
maximum amount which can be paid to the Executive without being, or
causing any other payment to be, nondeductible by reason of Section
280G of the Code.
(C) Notwithstanding any provision of any
annual or long-term incentive plan to the contrary, the Company shall
pay to the Executive a lump sum amount, in cash, equal to the sum of
(i) any unpaid incentive compensation which has been allocated or
awarded to the Executive for a completed fiscal year or other
measuring period preceding the Date of Termination under any such plan
and which, as of the Date of Termination, is contingent only upon the
continued employment of the Executive to a subsequent date, and (ii) a
pro rata portion to the Date of Termination of the aggregate value of
all contingent incentive compensation awards to the Executive for all
then uncompleted periods under any such plan, calculated as to each
such award by multiplying the award that the Executive would have
earned on the last day of the performance award period, assuming the
achievement, at the target level, of the individual and corporate
performance goals established with respect to such award, by the
fraction obtained by dividing the number of full months and any
fractional portion of a month during such performance award period
through the Date of Termination by the total number of months
contained in such performance award period.
(D) In addition to the retirement benefits
to which the Executive is entitled under the Pension Plans under
Section 5.2 hereof, the Company shall pay the Executive a lump sum
amount, in cash, equal to the excess of (i) the actuarial equivalent
of the aggregate retirement pension (taking into account any early
retirement subsidies associated therewith and determined as a straight
life annuity commencing at the date (but in no event earlier than the
third anniversary of the Date of Termination) as of which the
actuarial equivalent of such annuity is greatest) which the Executive
would have accrued under the terms of the Pension Plans, determined as
if the Executive were fully vested thereunder and had accumulated
(after the Date of Termination) thirty-six (36) additional months of
service credit hereunder and had been credited under each Pension Plan
during such period with compensation equal to the Executive's
compensation (as defined in the Pension Plans) during the twelve (12)
months immediately preceding the Date of Termination or, if higher,
during the twelve months immediately prior to the first occurrence of
an event or circumstance constituting Good Reason, over (ii) the
actuarial equivalent of the aggregate retirement pension (taking into
account any early retirement subsidies associated therewith and
determined as a straight life annuity commencing at the date (but in
no event earlier than
-4-
the Date of Termination) as of which the actuarial equivalent of such
annuity is greatest) which the Executive had accrued pursuant to the
provisions of the Pension Plans as of the Date of Termination. For
purposes of this Section 6.1(D), "actuarial equivalent" shall be
determined using the same assumptions utilized under the Harvard
Retirement Plan immediately prior to the Date of Termination or, if
more favorable to the Executive, immediately prior to the first
occurrence of an event or circumstance constituting Good Reason.
(E) The Company shall provide the Executive
with outplacement services suitable to the Executive's position for a
period of three years or, if earlier, until the first acceptance by
the Executive of an offer of employment; provided, however, that the
Executive may elect to receive a lump sum cash payment, payable no
later than the fifth day following the Date of Termination, in an
amount equal to the value of one year of such services.
6.2. (A) Notwithstanding any other provisions of this
Agreement, in the event that any portion of any payment or benefit received or
to be received by the Executive in connection with his employment hereunder
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Company, any Person whose actions result in a change in
control for purposes of Section 280G of the Code or any Person affiliated with
the Company or such Person) (all such payments and benefits, including the
Severance Payments, being hereinafter called "Total Payments") would not be
deductible (in whole or in part), by the Company, an affiliate or Person making
such payment or providing such benefit as a result of Section 280G of the Code,
then, to the extent necessary to make such portion of the Total Payments
deductible (and after taking into account any reduction in the Total Payments
provided by reason of Section 280G of the Code in such other plan, arrangement
or agreement), the cash Severance Payments shall first be reduced (if
necessary, to zero), and all other Severance Payments shall thereafter be
reduced (if necessary, to zero); provided, however, that the Executive may
elect to have the noncash Severance Payments reduced (or eliminated) prior to
any reduction of the cash Severance Payments.
(B) For purposes of this limitation, (i) no portion
of the Total Payments the receipt or enjoyment of which the Executive shall
have waived at such time and in such manner as not to constitute a "payment"
within the meaning of Section 280G(b) of the Code shall be taken into account,
(ii) no portion of the Total Payments shall be taken into account which, in the
opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Executive
and selected by the accounting firm which was, immediately prior to year for
which the determination was made, the Company's independent auditor (the
"Auditor"), does not constitute a "parachute payment" within the meaning of
Section
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280G(b)(2) of the Code, including by reason of Section 280G(b)(4)(A) of
the Code, (iii) the Severance Payments shall be reduced only to the extent
necessary so that the Total Payments (other than those referred to in clauses
(i) or (ii)) in their entirety constitute reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4)(B) of the Code or
are otherwise not subject to disallowance as deductions by reason of Section
280G of the Code, in the opinion of Tax Counsel, and (iv) the value of any
noncash benefit or nay deferred payment or benefit included in the Total
Payments shall be determined by the Auditor in accordance with the principles
of Sections 280G(d)(3) and (4) of the Code.
(C) If it is established pursuant to a final
determination of a court or an Internal Revenue Service proceeding that,
notwithstanding the good faith of the Executive and the Company in applying the
terms of this Section 6.2, the Total Payments paid to or for the Executive's
benefit are in an amount that would result in any portion of such Total
Payments being subject to the Excise Tax, then, if such repayment would result
in (i) no portion of the remaining Total Payment's being subject to the Excise
Tax and (ii) a dollar-for-dollar reduction in the Executive's taxable income
and wages for purposes of federal, state and local income and employment taxes,
the Executive shall have an obligation to pay the Company upon demand an amount
equal to the sum of (i) the excess of the Total Payments paid to or for the
Executive's benefit over the Total Payments that could have been paid to or for
the Executive's benefit without any portion of such Total Payments being
subject to the Excise Tax; and (ii) interest on the amount set forth in clause
(i) of this sentence at the rate provided in Section 1274(b)(2)(B) of the Code
from the date of the Executive's receipt of such excess until the date of such
payment.
6.3. The payments provided in subsections (A), (C) and (D)
of Section 6.1 hereof shall be made not later than the fifth day following the
Date of Termination; provided, however, that if the amounts of such payments,
and the limitation on such payments set forth in Section 6.2 hereof, cannot be
finally determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined in good faith by the Company
of the minimum amount of such payments to which the Executive is clearly
entitled and shall pay the remainder of such payments (together with interest
on the unpaid remainder (or on all such payments to the extent the Company
fails to make such payments when due) at 120% of 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 (30th) day after the Date of Termination.
In the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a loan
by the Company to the Executive, payable on the fifth (5th ) business day after
demand by the Company (together with interest at 120% of the rate provided in
Section 1274(b)(2)(B) of the Code). At
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the time that payments are made under this Agreement, the Company shall provide
the Executive with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from Tax
Counsel, the Auditor or other advisors or consultants (and any such opinions or
advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal
fees and expenses incurred by the Executive in disputing in good faith any
issue hereunder relating to the termination of the Executive's employment, in
seeking in good faith to obtain or enforce any benefit or right 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. Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.1. Notice of Termination. Any purported termination of the
Executive's employment (other than by reason of death) shall be communicated by
written Notice of Termination from one party hereto to the other party hereto
in accordance with Section 10 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 and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
Further, a Notice of Termination for Cause is required to include a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board), which
resolution reflects the written concurrence of both the Chief Executive Officer
of the Company and of the Chief Operating Officer of the Company (provided that
if the Chief Executive Officer of the Company is not then Xxxx Xxxxx, the
required concurrence shall be that of the Chairman of the Board and the Chief
Executive Officer of the Company), finding that, in the good faith opinion of
the Board, the Executive was guilty of conduct set forth in clause (i) or (ii)
of the definition of Cause herein, and specifying the particulars thereof in
detail.
7.2. Date of Termination. "Date of Termination," with
respect to any purported termination of the Executive's
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employment during the Term, shall mean (i) if the Executive's employment is
terminated for Disability, thirty (30) days after Notice of Termination is
given (provided that he Executive shall not have returned to the full-time
performance of the Executive's duties during such thirty (30) day period), and
(ii) if the Executive's employment is terminated for any other reason, the date
specified in the Notice of Termination (which, in the case of a termination by
the Company, shall not be less than thirty(30) days (except in the case of a
termination for Cause) and, in the case of a termination for Cause) and, in the
case of a termination by the Executive, shall not be less than fifteen (15)
days nor more than sixty (60) days, respectively, from the date such Notice of
Termination is given).
7.3. Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the Date
of Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be extended
until the earlier of (i) the date on which the Term ends or (ii) the date on
which the dispute is finally resolved, either by mutual written agreement of
the parties or by a final judgment, order or decree of an arbitrator or a court
of competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended by a notice
of dispute given by the Executive only if such notice is given in good faith
and the Executive pursues the resolution of such dispute with reasonable
diligence.
7.4. Compensation During Dispute. If a purported termination
occurs during the Term and the Date of Termination is extended in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation in effect when the notice giving rise to the dispute was
given (including, but not limited to, salary) and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the Date of Termination, as determined in accordance with Section
7.3 hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement.
8. No Mitigation. The Company agrees that, if the
Executive's employment with the Company terminates during the Term, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section
6 hereof or Section 7.4 hereof. Further, the amount of any payment or benefit
provided for in this Agreement (other than 6.1(B) hereof) shall
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not be reduced by any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
9. Successors; Binding Agreement.
9.1. In addition to any obligations imposed by law upon any
successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and 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 succession
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 the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's 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.
9.2. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall due while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminates upon the death
of the Executive) if the Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the executors, personal representatives or administrators of
the Executive's estate.
10. 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 registered mail, return receipt requested, postage prepaid, addressed,
if to the Executive, to the address inserted below the Executive's signature on
the final page hereof and, if to the Company, to the address set forth below,
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 actual receipt:
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To the Company:
Harvard Industries, Inc.
0000 Xxxxx Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: General Counsel
11. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or of any lack of compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Upon Bankruptcy
Court Approval, this Agreement supersedes any and all other agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof which have been made by either party. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Delaware. All references to sections of
the Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections. Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law
and any additional withholding to which the Executive has agreed. The
obligations of the Company and the Executive under this Agreement which by
their nature may require either partial or total performance after the
expiration of the Term (including, without limitation, those under Sections 6
and 7 hereof) shall survive such expiration.
12. Validity; Pooling.
12.1. 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.
12.2. Pooling. In the event that the Company is party to a
transaction which is otherwise intended to qualify for "pooling of interests"
accounting treatment then (A) this Agreement shall, to the extent practicable,
be interpreted so as to permit such accounting treatment, and (B) to the extent
that the application of clause (A) of this Section 12.2 does not preserve the
availability of such accounting treatment, then, to the extent that any
provision of the Agreement, disqualifies the transaction as a "pooling"
transaction (including, if applicable, the entire Agreement), such provision
shall be null and void as of the date hereof. All determinations under this
Section 12.2 shall be made by the accounting firm whose opinion with respect
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to "pooling of interests" is required as a condition to the consummation of
such transaction.
13. 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.
14. Settlement of Disputes; Arbitration.
14.1. All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Committee and shall be in
writing. Any denial by the Committee of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set forth
the specific reasons for the denial and the specific provisions of this
Agreement relied upon. The Committee shall afford a reasonable opportunity to
the Executive for a review of the decision denying a claim and shall further
allow the Executive to appeal to the Committee a decision of the Committee
within sixty (60) days after notification by the Committee that the Executive's
claim has been denied.
14.2. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Tampa, Florida, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the evidentiary standards
set forth in this Agreement shall apply. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Notwithstanding any
provision of this Agreement to the contrary, the Executive shall be entitled to
seek specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
15. Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated below:
(A) "Affiliate" shall have the meaning set forth in Rule
12b-2 promulgated under Section 12 of the Exchange Act.
(B) "Auditor" shall have the meaning set forth in Section 6.2
hereof.
(C) "Bankruptcy Court Approval" shall have the meaning set
forth on the first page of this Agreement.
(D) "Base Amount" shall have the meaning set forth in Section
280G(b)(3) of the Code.
(E) "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act.
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(F) "Board" shall mean the Board of Directors of the Company.
(G) "Cause" for termination by the Company of the Executive's
employment shall mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from the Executive's incapacity due to physical or
mental illness or any such actual or anticipated failure after the issuance of
a Notice of Termination for Good Reason by the Executive pursuant to Section
7.1 hereof) after a written demand for substantial performance is delivered to
the Executive by the Board, which demand (a) specifically identifies the manner
in which the Board believes that the Executive has not substantially performed
the Executive's duties, and (b) contains the written concurrence of both the
Chief Executive Officer of the Company and of the Chief Operating Officer of
the Company with the conclusions of the Board; provided, however, that if the
Chief Executive Officer of the Company is not then Xxxx Xxxxx, the required
concurrence shall be that of the Chairman of the Board and the Chief Executive
Officer of the Company, or (ii) the willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of
this definition (x) no act, or failure to act, on the Executive's part shall be
deemed "willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive's act, or failure
to act, was in the best interest of the Company and (y) in the event of a
dispute concerning the application of this provision, no claim by the Company
that Cause exists shall be given effect unless the Company establishes to the
Committee by clear and convincing evidence that Cause exists.
(H) "Code shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(I) "Committee" shall mean (i) the individuals (not fewer
than three in number) who constitute the Compensation Committee of the Board,
plus (ii) in the event that fewer than three individuals are available from the
group specified in clause (i) above for any reason, such individuals as may be
appointed by the individual or individuals so available (including for this
purpose any individual or individuals previously so appointed under this clause
(ii)); provided, however, that the maximum number of individuals constituting
the Committee shall not exceed five.
(J) "Company" shall mean Harvard Industries, Inc., shall
include any successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
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(K) "Date of Termination" shall have the meaning set forth in
Section 7.2 hereof.
(L) "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result of
the Executive's incapacity due to physical or mental illness, the Executive
shall have been absent from the full-time performance of the Executive's duties
with the Company for a period of six (6) consecutive months, the Company shall
have given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive shall
not have returned to the full-time performance of the Executive's duties.
(M) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(N) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(O) "Good Reason" for termination by the Executive of the
Executive's employment shall mean either (x) the occurrence during the Term of
the consummation of a Plan of Reorganization and if requested by the Board, the
performance of services by the Executive for up to 60 days following the
consummation of the Plan of Reorganization, or (y) the occurrence (without the
Executive's express written consent) during the Term and after November 15,
1997 of any one of the following acts by the Company, or failures by the
Company to act, unless, in the case of any act or failure to act described in
paragraph (I), (V) or (VII) below, such act or failure to act is corrected
prior to the Date of Termination specified in the Notice of Termination given
in respect thereof:
(I) the assignment to the Executive of any duties
materially inconsistent with the Executive's position as the
President of the Company with the duties and responsibilities
set forth in the second recital to this Agreement, or a
substantial adverse alteration in the nature of the
Executive's responsibilities from those in effect immediately
prior to November 15, 1997, provided that (a) the appointment
of Xxxxx Xxxxxxxx and the substitution of Xxxxx Xxxxxxxx as
the person to whom the Executive shall report may not, in and
of itself, be a basis for an assertion by the Executive that
the provisions of this paragraph (I) have been triggered and
(b) no diminution after November 15, 1997 in the Executive's
responsibilities with regard to the management of the
Company's various Xxxxxxx-Xxxxxx affiliates shall be a basis
for an assertion by the Executive that the provisions of this
paragraph (I) have been triggered;
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(II) a reduction by the Company in the Executive's
annual base salary as in effect on November 15, 1997, or as
the same may be increased from time to time except for
across-the-board salary reductions similarly affecting all
senior executives of the Company and all senior executives of
any Person in control of the Company;
(III) the relocation of the Executive's principal
place of employment to a location more than 35 miles from the
Executive's principal place of employment on November 15,
1997 or the Company's requiring the Executive to be based
anywhere other than such principal place of employment (or
permitted relocation thereof) except for required travel on
the Company's business to an extent substantially consistent
with the Executive's present business travel obligations;
(IV) the failure by the Company, after November 15,
1997, to pay to the Executive any portion of the Executive's
compensation except pursuant to an across-the-board
compensation deferral similarly affecting all senior
executives of the Company and all senior executives of any
Person in control of the Company, or to pay to the Executive
any portion of an installment of deferred compensation under
any deferred compensation program of the Company, within
seven (7) days of the date such compensation is due;
(V) the failure by the Company to continue in effect
any compensation plan in which the Executive participates on
November 15, 1997 which is material to the Executive's total
compensation, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to
continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount or timing of
payment of benefits provided and the level of the Executive's
participation relative to other participants, as existed
immediately prior to November 15, 1997;
(VI) the failure by the Company to continue to
provide the Executive with benefits substantially similar to
those enjoyed by the Executive under any of the Company's
pension, savings, life insurance, medical, health and
accident, or disability plans on which the Executive was
participating immediately prior to November 15, 1997 (except
for across-the-board changes similarly affecting all senior
executives of the Company and all senior executives of any
Person in
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control of the Company), the taking of any other action by
the Company which would directly or indirectly materially
reduce any of such benefits or deprive the Executive of any
material fringe benefit enjoyed by the Executive on the date
of Bankruptcy Court Approval, or the failure by the Company
to provide the Executive with the number of paid vacation
days to which the Executive is entitled on the basis of years
of service with the Company in accordance with the Company's
normal vacation policy in effect on the date of Bankruptcy
Court Approval; or
(VII) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1
hereof; for purposes of this Agreement, no such purported
termination shall be effective.
The Executive's right to terminate the Executive's employment
for Good Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
For purposes of any determination regarding the existence of
Good Reason, any claim by the Executive that Good Reason exists shall be
presumed to be correct unless the Company establishes to the Committee by clear
and convincing evidence that Good Reason does not exist.
(P) "Notice of Termination" shall have the meaning set forth
in Section 7.1 hereof.
(Q) "Pension Plans" shall mean the Harvard Retirement Plan,
the Harvard Industries, Inc. Nonqualified ERISA Excess Benefit Plan, effective
January 1, 1995, in the form annexed as Exhibit A hereto, and the Harvard
Industries, Inc. Nonqualified Additional Credited Service Plan, effective
January 1, 1995, in the form annexed as Exhibit B hereto (the "Additional
Credited Service Plan") in each of which the Executive shall be treated as
participating throughout the Term (with no alterations to the determination of
"Adjusted Retirement Income" to be permitted under Section 3.1(4) of the
Additional Credited Service Plan, notwithstanding the discretion afforded under
such Section 3.1(4), with no amendments to such plans which are adverse to the
Executive being taken into account without his written consent, and without
regard to Section 3.1(5) of the Additional Credited Service Plan) regardless of
whether such plans are continued during the Term or after the Plan of
Reorganization, and regardless of whether any action which is required to have
been, or to be, taken in order for the Executive to be designated as a
participant has in fact been, or is hereafter taken.
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(R) "Person" shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such terms shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
(S) "Plan of Reorganization" shall mean the final Joint Plan
of Reorganization as proposed by the Company and approved by the United States
Bankruptcy Court for the District of Delaware, as the same may be amended from
time to time.
(T) "Retirement" shall be deemed the reason for the
termination by the Executive of the Executive's employment if such employment
is terminated on or after his normal retirement date in accordance with the
Company's retirement policy generally applicable to its salaried employees.
(U) "Severance Payments" shall have the meaning set forth in
Section 6.1 hereof.
(V) "Tax Counsel" shall have the meaning set forth in Section
6.2 hereof.
(W) "Term" shall mean the period of time described in Section
2 hereof (taking into account any extension, continuation or termination
described herein).
(X) "Total Payments" shall mean those payments se described
in Section 6.2 hereof.
HARVARD INDUSTRIES, INC.
By:
----------------------------
Name:
Title:
----------------------------
Xxxxx X. Xxxxxxx
Address:
00000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
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