Exhibit (e)(4)
Exhibit (e)(4) Letter Agreement by and between the Company and Xxxxxx X. Xxxxxx,
dated as of February 6, 2001
Delco Remy International, Inc
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
February 6, 2001
Xxxxxx X. Xxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Dear Xxx:
In recognition of the importance and value to Delco Remy International,
Inc. (the "Company") of your continued services, you and the Company agree as
follows:
1. If you are employed by the Company when a Change of Control (as
defined herein) occurs and your employment with the Company is terminated within
two (2) years of a Change of Control (i) by the Company for any reason other
than Cause (as defined herein) or (ii) by you for Good Reason (as defined
herein):
(a) The Company will pay or cause to be paid to you a bonus (the
"Bonus") in an amount equal to Two Million Seven Hundred Thousand Dollars
($2,700,000). The Bonus shall be payable to you within three (3) business
days following termination of your employment with the Company. All payments
due to you hereunder will be subject to all applicable employment and
withholding taxes.
(b) In addition to the Bonus, you and your eligible family members
shall be entitled to continuation of the welfare benefits of medical
insurance, dental insurance and life insurance until the earlier of (i) the
date of your death or (ii) your 65th birthday, subject to appropriate
amendments of the applicable benefit plans and any tax consequences that may
result therefrom. These benefits shall be provided to you at the same
premium cost, and at the same coverage level, as in effect as of the
effective date of termination of your employment with the Company. However,
in the event the premium cost and/or level of coverage shall change for all
similarly situated executive employees of the Company, the cost and/or
coverage level, likewise, shall change for you and your eligible family
members in a corresponding manner.
(c) If any benefit or payment from the Company to you in connection
with a Change of Control (whether paid or payable or distributed or
distributable pursuant to the terms of this letter agreement or otherwise)
(a "Payment") shall be determined to be an "Excess Parachute Payment" as
defined in Section 280G(b)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"), then the Company shall pay to you an additional amount
(the "Gross-Up Payment") such that the net amount retained by you, after
deduction of any excise tax on the total Payments and any Federal, state and
local income and employment taxes and excise taxes upon the Gross-Up
Payment, shall be equal to the specified amount of the Payments paid or
provided to you. You shall be responsible for the timely payment of any
Federal, state or local income and excise taxes upon any of the Payments.
2. As used herein, the following shall have the meanings set forth
below:
(a) "Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with the
specified Person. "Control" when used with respect to any Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise. The words "controlling" and "controlled" shall have
corresponding meanings. The term "Affiliate" shall include, without
limitation, any Person who beneficially owns voting securities of any other
Person or rights or warrants to purchase such voting securities (whether or
not currently exercisable), representing 10% or more of the total voting
power of the voting securities of such other Person, and any Person who
would be an Affiliate of any such
beneficial owner pursuant to this paragraph. Solely for purposes of this
agreement, with respect to Citicorp (as defined below), the term "Affiliate"
shall include, without limitation, any limited partnership, limited
liability company or other investment vehicle that is sponsored or managed
(whether through the ownership of securities having a majority of the voting
power, as a general partner or through the management of investments) by
Citicorp or its Affiliates (defined without giving effect to this clause) or
present or former employees of Citicorp or its Affiliates.
(b) "Cause" shall mean the occurrence or existence of any of the
following with respect to you, as determined in good faith by the Board of
Directors of the Company:
(1) conviction of a felony or conviction of any crime or offense
lesser than a felony involving the property of the Company or an Affiliate
of the Company, whether such conviction occurs before or after your
termination of employment;
(2) engaging in conduct that has caused demonstrable and material
injury to the Company or an Affiliate of the Company, monetary or otherwise;
(3) gross dereliction of duties or other gross misconduct and the
failure to cure such situation within thirty (30) days after receipt of
notice thereof from the compensation committee of the Company, the Board of
Directors of the Company, the Company or an Affiliate of the Company; or
(4) the disclosure or use of confidential information other than
in the normal and ordinary performance of service for the Company or any
Affiliate of the Company.
(c) "Change of Control" means the occurrence of any of the following
events:
(i) the purchase or other acquisition by any single person, entity or group
of persons (within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
any comparable successor provisions) other than Citicorp Venture
Capital Ltd. ("Citicorp"), or an Affiliate (as defined herein) thereof,
or a group of persons (within the meaning of Section 13(d) or 14(d) of
the Exchange Act) of which Citicorp is a member, or an employee benefit
plan established or maintained by the Company or any Affiliate thereof,
of shares of common stock, or of securities convertible into or
exchangeable or exercisable for shares of common stock or other voting
securities of the Company, if immediately following such purchase or
other acquisition, such single person, entity or group would be the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange
Act), directly or indirectly, of more than fifty percent (50%) of
either (A) the outstanding shares of common stock of the Company or (B)
the combined voting power of the Company's then outstanding voting
securities (assuming, in the case of securities convertible into or
exchangeable or exercisable for other securities, the conversion or
exchange thereof); or
(ii) except in the case of a transaction with Citicorp or an Affiliate
thereof, (a) the Company's reorganization, merger, or consolidation
with or into another corporation or entity, unless pursuant to such
transaction the holders of the Company's voting stock immediately prior
to such transaction own more than fifty percent (50%) of the combined
voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated entity immediately after such
transaction; (b) the sale or other disposition, in one or a series of
transactions, of all or substantially all of the Company's assets; or
(c) the approval by the shareholders of the Company of a plan of
liquidation, dissolution or winding up of the Company.
The definition of "Change of Control" in this letter agreement shall
not be deemed to include any transaction in which you are an
independent equity participant who has made an affirmative decision to
invest funds in the transaction (it being understood that a
transaction in which your involvement as an equity participant is
limited to a rollover of equity interests owned by you at the time of
the transaction will not be deemed to involve an affirmative decision
by you to invest funds in such transaction). The definition of "Change
of Control" in this letter agreement shall not affect your rights
under any plan adopted by the Company or any other agreement between
the Company and you. Any payments or other benefits received by you
pursuant to any such plan or agreement upon a Change of Control shall
be deemed a Payment under this letter agreement and shall be subject
to the gross-up provisions set forth in Section 1(c) hereof.
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(d) "Good Reason" shall mean the occurrence or existence of any of
the following with respect to you:
(1) your base salary plus bonus at target is reduced from that
currently in effect, or your other employee benefits are in the
aggregate materially reduced from those currently in effect prior to
the Change of Control (unless such reduction of employee benefits
applies to employees of the Company generally); or
(2) the assignment to you of any duties or responsibilities
which are fundamentally inconsistent with your officer position with
the Company which is not cured within thirty (30) days of receipt by
the Company of written notice from you of such assignment of
inconsistent duties or responsibilities.
(e) "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
3. Nothing in this letter agreement shall be construed to give you any
right to remain in the employ of the Company, and you hereby acknowledge that
you are and will remain an employee-at-will of the Company whose employment may
be terminated at any time with or without cause. In addition, except as set
forth in the Agreement or under applicable law, you shall not be entitled to any
other compensation or benefits.
4. This term of this letter agreement shall be one (1) year commencing
on the date hereof; provided, however, that this letter agreement shall be
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automatically renewed for successive one-year periods commencing on February 6,
2002 and each year thereafter unless the Company gives notice to you of the
termination of this letter agreement at least ninety (90) days prior to February
6, 2002 or the end of any such one-year period thereafter, as applicable, in
which case this letter agreement shall terminate on February 6, 2002 or at the
end of such one-year period thereafter.
5. This letter agreement may be amended or modified only by an agreement
in writing executed by you and the Company.
6. This letter agreement shall be construed and interpreted under the laws
of the State of Indiana, without regard to conflict of laws principles of such
State. Because it is agreed that time will be of the essence in determining
whether any payments are due to you under this letter agreement, any disputes
arising hereunder shall be submitted to binding arbitration in Indianapolis,
Indiana, or such other place as the parties may agree. The parties agree that
the
arbitration award shall be the sole and exclusive remedy between them regarding
any and all claims arising hereunder.
The arbitration shall be conducted pursuant to the Commercial Rules of the
American Arbitration Association, subject to the following provisions:
(a) the arbitration hearing shall be held within seven (7) days (or as
soon thereafter as possible) after the selection of the arbitrator; no
continuance of such hearing shall be allowed without the mutual consent of
the parties; absence from or nonparticipation at the hearing by either
party shall not prevent the issuance of an award; hearing procedures which
will expedite the hearing may be ordered at the arbitrator's discretion;
and the arbitrator may close the hearing in his or her sole discretion when
he or she decides he or she has heard sufficient evidence to satisfy
issuance of an award;
(b) the arbitrator's award shall be rendered as expeditiously as
possible and the parties will request that the arbitrator render the award
no later than one (1) week after the close of the hearing; the award of the
arbitrator shall be final and binding upon the parties; the award may be
enforced in any appropriate court as soon as possible after its rendition;
and if an action is brought to confirm the award, both parties agree that
no appeal shall be taken by either party from any decision rendered in such
action; and
(c) the prevailing party as determined by the arbitrator in any
such arbitration proceeding shall be awarded reasonable costs and
attorneys' fees.
7. This letter agreement shall inure to the benefit of your heirs, assigns
and legal representatives. This letter agreement may be executed in two (2)
counterparts, each of which shall be deemed an original and both of which shall
constitute one and the same agreement. Additionally, this agreement shall be
binding upon the parties hereto, and their respective successors and assigns.
[Signature Page Follows]
If the foregoing accurately sets forth our understanding with respect to
the subject matter set forth above, please sign below and return an executed
copy of this letter to the Company.
Very truly yours,
DELCO REMY INTERNATIONAL, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
Accepted and Agreed to this
___ day of February, 2001:
___________________________
Xxxxxx X. Xxxxxx
741781.1
