EXHIBIT 10.38
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT (the "Agreement")
is made as of the 26th day of September, 2001 (the "Agreement Date"),
by and between ▇▇▇▇▇ Lemmerz International, Inc. (the "Company") and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Executive").
WHEREAS, the Executive and the Company entered into an
Employment Agreement dated August 1, 2001 (the "Original Agreement");
and
WHEREAS, the Executive and the Company each desire to
amend and restate the Original Agreement in its entirety as set forth
herein.
NOW, THEREFORE, in consideration of the premises and
the respective covenants and agreements of the parties herein
contained, the parties agree as follows:
1. Employment. The Company agrees to employ the
Executive and the Executive agrees to be employed on a full-time basis
by the Company for the period and upon the terms and conditions
hereinafter set forth.
2. Term; Employment Period. The term of this Agreement
(the "Term") shall be two years, commencing on August 1, 2001 (the
"Effective Date"); provided, however, that commencing on the second day
of the Term and each day thereafter, the Term shall automatically be
extended for one additional day. The period during which the Executive
is employed by the Company pursuant to this Agreement is referred to
herein as the "Employment Period." The date on which the termination of
the Executive's employment hereunder shall become effective is referred
to herein as the "Termination Date." Press releases related to the
Executive's commencement of employment hereunder shall be subject to
reasonable review and approval by the Executive.
3. Position and Duties. During the Employment Period,
the Executive shall serve as President and Chief Executive Officer of
the Company and shall have such responsibilities, duties and authority
as are customarily and ordi-
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narily exercised by executives in similar positions in similar
businesses in the United States and shall exercise such
responsibilities, duties and authority consistent with the foregoing as
the Company's Board of Directors (the "Board") shall determine from
time to time. During the Employment Period, the Executive shall report
to the Board. It is the intention of the parties that, during the Term,
Executive shall be nominated, and following his election or
appointment, shall serve, as a director of the Company; provided,
however, that the Executive shall resign as a director of the Company
immediately if his employment hereunder is terminated for any reason.
The Executive shall devote substantially all his working time and
efforts to the business and affairs of the Company and shall use his
best efforts to carry out his responsibilities faithfully and
efficiently in a professional manner. Notwithstanding the foregoing, it
is understood that (i) during the first year of the Employment Period,
the Executive shall not serve as a director of any for-profit business
enterprise other than ▇▇▇▇▇▇▇ Associates and (ii) subject to any
conflict of interest policies of the Company and Section 8, following
the first year of the Employment Period, the Executive may with the
prior consent of the Board, which shall not be unreasonably withheld,
serve on the board of directors of up to two additional for-profit
business enterprises. It is further understood that during the
Employment Period, subject to any conflict of interest policies of the
Company and Section 8, the Executive may (x) serve in any capacity with
any civic, charitable, educational or professional organization
provided that such service does not materially interfere with his
duties and responsibilities hereunder and (y) make and manage personal
investments of his choice.
4. Place of Performance. During the Employment Period,
the Executive's place of performance of his services shall be at the
Company's Northville, Michigan headquarters, except for required travel
by the Executive on the Company's business or as may be reasonably
required by the Company.
5. Compensation and Benefits.
(a) Salary. During the Employment Period, the Company
shall pay to the Executive an initial annual base salary of Seven
Hundred Fifty-Five Thousand Dollars ($755,000) (the "Base Salary"),
such salary to be paid in periodic installments in accordance with the
Company's payroll practices as in effect from time to time. The Base
Salary shall be reviewed annually by the compensation committee of the
Board and may be increased from time to time in accordance with normal
business practices of the Company and, if so increased, shall not
thereafter be reduced.
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(b) Cash-Based Incentives. During the Employment
Period, the Executive shall be eligible to earn an annual bonus under
the Company's Short-Term Incentive Plan, or a successor plan thereto,
as in effect from time to time (the "Incentive Plan"), up to a maximum
of two hundred percent (200%) of his Base Salary, subject to
achievement of performance goals determined after consultation with the
Executive in accordance with the terms of the Incentive Plan (such
annual bonus, the "Annual Bonus"). With respect to that portion of the
Employment Period commencing on the Effective Date and ending January
31, 2002, the Executive shall receive in respect of his Annual Bonus an
amount not less than One Hundred and Ninety Thousand Dollars
($190,000). The Annual Bonus shall be payable in a cash lump sum at
such time as bonuses are ordinarily paid in accordance with the terms
of the Incentive Plan, but in no event later than 120 days after the
end of each fiscal year of the Company.
(c) Sign-On/Retention Bonus. Within [two] business
days after the Agreement Date, the Company shall pay the Executive a
one-time sign-on/retention bonus of One Million Two Hundred Thousand
Dollars ($1,200,000) (the "Sign-on/Retention Bonus"), which will result
in an after-tax payment to the Executive of $669,000.00 (the "After-Tax
Retention Bonus Payment Amount"). The Sign-on/Retention Bonus is being
paid on the condition that the Executive remains in the employ of the
Company for a period of not less than three (3) years and, accordingly,
the after-tax portion of the Sign-on/Retention Bonus shall be subject
to the set-off and repayment provisions set forth in Section 6(f).
(d) Equity-Based Incentives.
(i) Option Grants. The Company shall, (i)
effective as of the Effective Date, grant to the Executive an
option (the "Initial Option") pursuant to the Company's 1996
Stock Option Plan or otherwise (the "Option Plan") to purchase up
to one million (1,000,000) shares of the Company's common stock,
par value $0.01 per share ("Common Stock") and (ii) effective as
of September 26th, 2001, grant to the Executive an option (the
"Additional Option" and, together and with the Initial Option,
the "Options") pursuant to the Option Plan to purchase up to four
hundred thousand (400,000) shares of Common Stock. The Initial
Option and the Additional Option shall each be evidenced by an
agreement containing such terms and conditions as the Board shall
determine are necessary and desirable, consistent with the terms
of the Option Plan; provided, however, that the Options shall (i)
have a per share exercise price
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equal to the closing price of the Common Stock on the New York
Stock Exchange ("NYSE") as of the Effective Date, with respect
to the Initial Option and, as of September 26, 2001, with
respect to the Additional Option; (ii) become cumulatively
vested and exercisable with respect to twenty percent (20%) of
the shares covered thereby on each of the first five
anniversaries of the Effective Date; (iii) become fully vested
and exercisable with respect to one-hundred percent (100%) of
the shares covered thereby upon the occurrence of a Change in
Control (as defined below); (iv) upon a termination of
employment hereunder either (x) by the Company without Cause
or (y) by the Executive for Good Reason (each as defined in
Section 6(g)), become vested with respect to that number of
shares that would have become vested in the normal course
during the 36-month period following the Termination Date,
absent such termination of employment (and without taking into
account any subsequent Change in Control); and (v)
notwithstanding the vesting and exercise period stated in such
Options or the Option Plan, the Executive shall have not less
than a period expiring seven months following the Termination
Date to exercise such Options.
For purposes of this Agreement, a Change in Control shall be deemed to
have occurred upon the first of the following to occur:
(A) any Person (within the meaning of Section 3(a)(9)
of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), as modified and
used in Sections 13(d) and 14(d) thereof), other
than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ Fund II, L.P. (or
any affiliate (within the meaning of Regulation D
Rule 501(b) under the Securities Act of 1933, as
amended (the "Securities Act")) thereof), TSG
Capital Fund II, L.P. (or any affiliate thereof),
or Canadian Imperial Bank of Commerce (or
affiliate thereof) (such entitles, collectively,
the "JLL Group"), is or becomes the "Beneficial
Owner" (within the meaning of Rule 13d-3 under
the Exchange Act) of fifty percent (50%) or more
of either (1) the then-outstanding Common Stock
or (2) the combined voting power of the
then-outstanding voting securities of the Company
entitled to vote generally in the election of
directors;
(B) the following individuals cease for any reason to
constitute a majority of the number of directors
then serving: individuals
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who, as of the Effective Date, constitute the Board and
any new director (other than a director whose initial
assumption of office is in connection with an actual or
threatened election contest, including but not limited
to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election
by the Board or nomination for election by the
Company's stockholders was approved or recommended by a
vote of at least a majority of the directors then still
in office who either were directors on the date hereof
or whose appointment, election or nomination for
election was previously so approved or recommended;
(C) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the
Company with any other corporation, other than a merger
or consolidation which would result in the voting
securities of the Company outstanding immediately prior
to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted
into voting securities of the surviving entity or any
parent thereof) at least fifty percent (50%) of the
combined voting power of the securities of the Company
or such surviving entity or any parent thereof
outstanding immediately after such merger or
consolidation, provided, however, that it shall not be
a Change in Control under this clause (C) if (i)
directors appointed or nominated by the JLL Group or
any constituent member thereof continue immediately
following such transaction to constitute a majority of
the Board and (ii) the JLL Group or any constituent
member thereof continues immediately following such
transaction to own securities representing at least
thirty-five percent (35%) of the combined voting power
of the securities of the Company or such surviving
entity or any parent thereof outstanding immediately
after such merger or consolidation; or
(D) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or
there is consummated an agreement for the sale or
disposition by the Company of all or substantially all
of its assets.
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(ii) Additional Option Grants. Based upon
the Executive's performance and annual review, the Executive
shall be eligible during the Employment Period to receive
additional stock option grants in such amounts and subject to
such terms and conditions as the compensation committee of the
Board shall determine in its sole discretion are necessary and
desirable.
(iii) Antidilution. In addition to the
antidilution provision contained in the Option Plan, in the
event that during the employment period the Company shall
issue shares of Common Stock in one transaction or a series of
similar transaction in an amount exceeding five percent (5%)
of the then outstanding shares of Common Stock, other than (A)
as a result of stock split, stock dividend or similar
transaction, (B) upon the conversion of shares of Non-Voting
Common Stock, par value $.01 per share, of the Company that
are outstanding as of the Agreement Date, (C) upon the
exercise of warrants to purchase shares of Common Stock that
are outstanding as of the Agreement Date or (D) upon the
exercise of employee stock options (each, an "Additional
Issuance"), the Company shall grant to the Executive an option
(the "Antidilution Option") pursuant to the Option Plan to
purchase the number of shares of Common Stock necessary to
cause the percentage of the outstanding shares of Common Stock
subject to the Options and the Antidilution Option to be equal
to the percentage of the outstanding shares of Common Stock
subject to the Options immediately prior to such additional
issuance of shares of Common Stock. The Antidilution Option
shall be granted contemporaneously with the Additional
Issuance, and the per share exercise price of the Additional
Option shall be equal to the per share consideration received
by the Company in such Additional Issuance, as determined by
the Board.
(e) Expenses. During the Employment Period, the Company
shall promptly reimburse the Executive for all reasonable out-of-pocket
expenses incurred by the Executive in connection with the business of
the Company and the performance of his duties under this Agreement in
accordance with the terms of the Company's policies as in effect from
time to time.
(f) Benefit Plans. During the Employment Period, the
Executive shall be entitled to participate in all of the employee
benefit plans, programs, agreements and arrangements provided to senior
executives of the
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Company, as such are in effect from time to time, on a basis no less
favorable than that provided to such senior executives.
(g) Perquisites. During the Employment Period, the
Executive shall be entitled to a Company car, membership in a country
club selected by the Executive subject to the reasonable consent of the
Board, financial, tax and estate planning, tax preparation, and an
annual executive physical examination, each such perquisite to be paid
or provided commensurate with his position and in accordance with the
Company's policies as in effect on the Effective Date. In addition, the
Company shall pay the reasonable legal fees and expenses incurred by
the Executive attendant to the review and preparation of this
Agreement.
(h) Vacations. During the Employment Period, the
Executive shall be entitled to vacation time, paid holidays and
personal days, determined in accordance with the Company's policy with
respect to its senior executives as in effect from time to time, it
being understood that the Executive shall be entitled to not less than
four weeks' vacation in any 12-month period during the Employment
Period.
(i) Relocation. For a period of 12 months immediately
following the Effective Date, the Company shall pay or reimburse the
Executive for (i) his reasonable temporary housing expenses, (ii)
automobile rental expenses and (iii) his and his spouse's reasonable
travel expenses between Chicago, Illinois and Northville, Michigan that
are incurred in connection with or prior to the relocation of his
primary residence to the Northville, Michigan area. In addition, the
Company shall pay or reimburse the Executive for his actual moving
expenses related to the relocation of his primary residence to the
Northville, Michigan area and for all taxes payable by the Executive
because of relocation-related payments by the Company, including tax
reimbursement payments. In no event shall payments and reimbursements
to or on behalf of the Executive pursuant to this Section 5(h) exceed
an aggregate of One Hundred Thousand Dollars ($100,000).
6. Termination of Employment.
(a) Accrued Benefits. In the event of the termination
of the Executive's employment hereunder for any reason, the Executive
(or his estate or representative, as applicable) shall be entitled to
receive any Base Salary, Annual Bonus, vacation time and expenses that
have in each case accrued but are unpaid as of the Termination Date,
vested options as well as any post-termination benefits to
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which he may be entitled pursuant to the Company's retirement,
insurance and other benefit plans, programs and arrangements as in
effect immediately prior to the Termination Date (the "Accrued
Benefits").
(b) Death. The Executive's employment hereunder shall
terminate as of the date of his death. Upon the termination of the
Executive's employment hereunder because of his death, the Executive's
estate or representative, as the case may be, shall be entitled to
receive the Accrued Benefits and a lump sum payment in cash equal to
(i) one year's Base Salary as in effect on the Termination Date and
(ii) the product of (x) sixty percent (60%) of the Base Salary as in
effect on the Termination Date, multiplied by a fraction (y) the
numerator of which shall be the number of months (including fractions
thereof) worked by the Executive during the Company's fiscal year in
which the Termination Date occurs and (z) the denominator of which
shall be the number 12 (such amount under this clause (ii), the "Pro
Rata Annual Bonus"). In addition, those immediate family members who
were participating in the Company's medical benefit plan as of the date
of the Executive's death shall continue to participate in the Company's
medical benefit plan at active employee contribution rates for the
one-year period immediately following the date of the Executive's
death.
(c) Disability. The Executive's employment hereunder
may be terminated during the Employment Period if the Executive is
incapable of performing his principal duties hereunder because of
physical or mental incapacity for a period of 45 consecutive working
days or for more than 90 working days in any 12-month period
("Disability"). In the event that the Executive's employment is to be
terminated pursuant to this Section 6(c), (i) this Agreement shall
terminate on the date specified in the notice of termination delivered
to the Executive (subject to Section 8(g) and Section 18), (ii) the
Executive shall as of such date resign from all of his positions,
duties and authorities hereunder but shall continue to be paid his Base
Salary and (iii) the Executive shall be placed on a medical leave of
absence until the earlier to occur of such date as he (A) qualifies for
benefits under the Company's long-term disability plan or (B) is able
to return to work, following which date his employment with the Company
shall promptly be terminated. In the case of a termination of the
Executive's employment pursuant to this Section 6(c), for purposes of
calculating benefits pursuant to clauses (B) and (C) of this Section
6(c), the Termination Date shall be the date upon which portions of
this Agreement are terminated pursuant to the immediately preceding
sentence and for all other purposes, the Termination Date shall be the
date upon which the Executive's employment with the Company is
terminated. In such event, the Executive (or his represen-
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tative, as applicable) shall be entitled to: (A) the Accrued Benefits;
(B) a lump sum payment in cash equal to one year's Base Salary as in
effect on the Termination Date; (C) the Pro Rata Annual Bonus; and (D)
the continuation of health and welfare benefits at the levels in effect
as of the Termination Date at no additional cost to the Executive than
that which was in effect as of the Termination Date for the one-year
period immediately following the Termination Date; provided, however,
that such benefits shall be reduced to the extent comparable benefits
are made available to the Executive from a successor employer, and the
Executive shall be obligated to report such benefits to the Company. It
is acknowledged and agreed by the Executive that he shall be precluded
from terminating his employment hereunder for Good Reason in the event
that his employment hereunder is terminated pursuant to this Section
6(c).
(d) For Cause; Without Good Reason. The Executive's
employment hereunder may be terminated during the Employment Period (i)
by the Company for Cause (as defined below) or (ii) by the Executive
without Good Reason (as defined below). In the event that the Company
terminates the Executive's employment hereunder for Cause, the
Termination Date shall be the date specified in the notice of
termination for Cause delivered by the Company to the Executive. In the
event that the Executive terminates his employment hereunder without
Good Reason, the Termination Date shall be no earlier than 30 days
following the date on which a notice of termination is delivered by the
Executive to the Company. In the event that the Executive's employment
hereunder is terminated pursuant to this Section 6(d), the Executive
shall be entitled to the Accrued Benefits.
(e) Without Cause; For Good Reason; Change in Control.
The Executive's employment hereunder may be terminated during the
Employment Period (i) by the Company without Cause, (ii) by the
Executive for Good Reason or (iii) by the Executive for any reason
during the three-month period immediately following a Change in
Control. In the event that the Executive's employment is terminated
pursuant to this Section 6(e) (whether by the Company or by the
Executive), the Termination Date shall be no earlier than 30 days
following the date on which a notice of termination is delivered by one
party to the other. In the event that the Executive's employment is
terminated pursuant to this Section 6(e), the Executive (or his estate
or representative, as the case may be) shall be entitled to receive and
Accrued Benefits and, for the duration of the Term as in effect
immediately prior to the Termination Date: (A) one hundred sixty
percent (160%) of the Base Salary (at the rate in effect as of the
Termination Date), paid in accordance with the Company's payroll
policies as in effect from time to time; (B) the
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continuation of health and welfare benefits at the levels in effect as
of the Termination Date at no additional cost to the Executive than
that which was in effect as of the Termination Date; provided, that
such benefits shall be reduced to the extent comparable benefits are
made available to the Executive from a successor employer, and the
Executive shall be obligated to report such benefits to the Company;
and (C) executive level career outplacement services by a firm selected
by the Executive and paid for as incurred by the Company.
(f) Set-Off and Reimbursement of Sign-On/Retention
Bonus. Notwithstanding anything to the contrary contained herein, in
the event that prior to August 1, 2004, the Executive's employment
hereunder is terminated (i) by the Company For Cause pursuant to
Section 6(d) or (ii) by the Executive without Good Reason pursuant to
Section 6(d), then and only then, the Company shall have the right to
set-off the Repayment Amount (as defined below) against any payments
due to the Executive hereunder and the Executive shall immediately
repay to the Company the balance, if any, of the Repayment Amount that
is not set-off by the Company pursuant to this Section 6(f). For
purposes of this Agreement, the "Repayment Amount" shall equal the
product of (i) the After-Tax Retention Payment Amount multiplied by
(ii) a fraction (A) the numerator of which is the difference between
1,095 less the number of days the Executive was employed by the Company
prior to the Termination Date and (B) the denominator of which is 1,095
(Repayment Amount = $669,000.00 x (1,095 - numbers of day employed) /
1,095).
(g) Definition of "Cause" and "Good Reason".
For purposes of this Agreement, "Cause" means: (i) the
willful failure of the Executive to perform his material duties with
the Company which have been duly assigned to the Executive and which
duties are commensurate with those of the position for which Executive
is then employed, and which failure is not cured (if capable of cure)
within 15 days after receipt of written notice of such failure, which
notice identifies the manner in which the Executive has willfully
failed to perform, (ii) the engaging by the Executive in willful
conduct which is demonstrably injurious to the Company, monetarily or
otherwise, (iii) the conviction of the Executive of any crime or
offense constituting a felony, or (iv) a failure by the Executive to
comply with any material provision of this Agreement, which failure is
not cured (if capable of cure) within 15 days after receipt of written
notice of such non-compliance by the Executive. Termination of the
Executive for Cause shall mean termination by action of at least a
majority of the Company's Board of Directors, at a meeting duly called
and held upon at least 15 days' written notice to the
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Executive specifying the particulars of the action or inaction alleged
to constitute Cause and at which meeting the Executive and his counsel
were entitled to be present and given adequate opportunity to be heard.
For purposes of clauses (i) and (ii) of this definition, action or
inaction by the Executive shall not be considered "willful" unless done
or omitted by him (A) intentionally or not in good faith and (B)
without reasonable belief that his action or inaction was in the best
interest of the Company, and shall not include failure to act by reason
of total or partial incapacity due to physical or mental illness.
For purposes of this Agreement, "Good Reason" means:
(i) a material adverse alteration in the nature or status of the
Executive's position, duties, responsibilities or authority from those
in effect as of the Effective Date; (ii) a material reduction in the
Executive's Base Salary or level of employee benefits (other than
across-the-board reductions applied similarly to all of the Company's
senior executives); (iii) failure to pay or provide any of the
compensation set forth in this Agreement (except for an
across-the-board deferral of compensation applied similarly to all of
the Company's senior executives) which is not cured within 15 days
after receipt by the Company of written notice thereof; (iv) the
relocation of the Executive's principal place of employment more than
30 miles from its location as of the Effective Date except for required
travel on the Company's business; (v) assignment of duties or
responsibilities to the Executive which are materially inconsistent
with the provisions of this Agreement; (vi) failure to continue the
Executive on the Board following his initial election or appointment to
the Board or (vii) a failure by the Company to comply with any material
provision of this Agreement, which failure is not cured (if capable of
cure) within 15 days after receipt of written notice of such
non-compliance by the Company.
(h) Additional Payment.
(i) If any of the payments or benefits received or
to be received by the Executive in connection with a Change in
Control or the Executive's termination of employment (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 or any Person affiliated
with the Company or such Person) (all such payments and benefits,
excluding the Gross-Up Payment, being hereinafter referred to as
the "Total Payments") will be subject to the excise tax imposed
under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code" and such excise tax, the "Excise Tax"), the
Company shall pay to the Executive an additional
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amount (the "Gross-Up Payment") such that the net amount retained
by the Executive, after deduction of any Excise Tax on the Total
Payments and any federal, state and local income and employment
taxes incurred by the Executive in connection with payment of the
Gross-Up Payment, shall be equal to the Total Payments.
(ii) For purposes of determining whether any of the
Total Payments will be subject to the Excise Tax and the amount of
such Excise Tax, (A) all of the Total Payments shall be treated as
"parachute payments" (within the meaning of section 280G(b)(2) of
the Code) unless, in the opinion of tax counsel ("Tax Counsel")
reasonably acceptable to the Executive and selected by the
accounting firm which was, immediately prior to the Change in
Control, the Company's independent auditor (the "Auditor"), such
payments or benefits (in whole or in part) do not constitute
parachute payments, including by reason of section 280G(b)(4)(A)
of the Code, (B) all "excess parachute payments" within the
meaning of section 280G(b)(l) of the Code shall be treated as
subject to the Excise Tax unless, in the opinion of Tax Counsel,
such excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered (within the
meaning of section 280G(b)(4)(B) of the Code) in excess of the
Base Amount allocable to such reasonable compensation, or are
otherwise not subject to the Excise Tax, and (C) the value of any
noncash benefits or any deferred payment or benefit shall be
determined by the Auditor in accordance with the principles of
sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive
shall be deemed to pay federal income tax at the highest marginal
rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and locality of
the Executive's residence or the Executive's place of business,
whichever is higher, on the Termination Date (or if there is not
yet a Termination Date, then the date on which the Gross-Up
Payment is calculated for purposes of this Section 6(h)), net of
the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
(iii) In the event that the Excise Tax is finally
determined to be less than the amount taken into account hereunder
in calculating the Gross-Up Payment, the Executive shall repay to
the Company, within five business days following the time that the
amount of
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such reduction in the Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction
(including that portion of the Gross-Up Payment attributable to
the Excise Tax and federal, state and local income and employment
taxes imposed on the Gross-Up Payment being repaid by the
Executive), to the extent that such repayment results in a
reduction in the Excise Tax and a dollar-for-dollar reduction in
the Executive's taxable income and wages for purposes of federal,
state and local income and employment taxes, plus interest on the
amount of such repayment at 120% of the rate provided in section
1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the
event any portion of the amount to be repaid to the Company has
been paid to any tax authority, repayment thereof shall not be
required until actual refund or credit of such portion has been
made to Executive, and interest payable to the Company shall not
exceed the interest received or credited to Executive by such tax
authority. In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder in calculating the
Gross-Up Payment (including by reason of any payment the existence
or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up
Payment in respect of such excess (including any interest,
penalties or additions payable by the Executive with respect to
such excess and the Gross-Up Payment attributable to the Excise
Tax and federal, state, and local income and employment taxes
imposed on the Gross-Up Payment being made to the Executive)
within five business days following the time that the amount of
such excess is finally determined. The Executive and the Company
shall each reasonably cooperate with the other in connection with
any administrative or judicial proceedings concerning the
existence or amount of liability for Excise Tax with respect to
the Total Payments.
(iv) The payments provided in this Section 6(h)
hereof shall be made not later than the thirtieth day following
the Date of Termination (or if there is no Date of Termination,
then the date on which the Gross-Up Payment is calculated for
purposes of this Section 6(h)).
(v) No Mitigation. Upon termination of the
Executive's employment with the Company, subject to the
Executive's affirmative obligations pursuant to Section 6(c) and
6(e), the Executive shall be under no obligation to seek other
employment or otherwise mitigate the obligations of the Company
under this Agreement.
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7. Directors' and Officers' Insurance; Indemnification.
In addition to any rights to indemnification to which the Executive is
entitled under the Company's Restated Certificate of Incorporation and
Bylaws, the Company shall indemnify the Executive at all times during
and after the Employment Period to the maximum extent permitted under
the Delaware Business Corporation Act or any successor provision
thereof, and any and all applicable state law, and shall pay the
Executive's expenses (including reasonable attorneys' fees and
expenses, which shall be paid in advance by the Company as incurred,
subject to recoupment in accordance with applicable law) in defending
any civil action, suit or proceeding in advance of the final
disposition of such action, suit or proceeding to the maximum extent
permitted under such applicable state laws for the Executive's action
or inaction on behalf of the Company under the terms of this Agreement
including but not limited to any acts or alleged acts arising out of
events prior to the Executive's employment by the Company which
obligation shall survive the termination of the Executive's employment
or the termination of the other provisions of this Agreement.
8. Confidential Information; Removal of Documents;
Non-Competition; etc. For purposes of this Section 8, "Company" shall
mean the Company, its subsidiaries and affiliates.
(a) Confidentiality. Except as otherwise provided in
this Agreement, at all times during and after the Employment Term, the
Executive shall keep secret and retain in strictest confidence, any and
all Confidential Information (as defined below) relating to the
Company, and shall use such Confidential Information only in
furtherance of the performance by the Executive of the Executive's
duties to the Company and not for personal benefit or the benefit of
any interest adverse to the Company's interests. For purposes of this
Agreement, "Confidential Information" shall mean any information
including without limitation plans, specifications, models, samples,
data, customer lists and customer information, computer programs and
documentation, and other technical and/or business information, in
whatever form, tangible or intangible, that can be communicated by
whatever means available at such time, that relates to the Company's
current Business or future business contemplated during the Employment
Period, products, services and development, or information received
from others that the Company is obligated to treat as confidential or
proprietary; provided, however, that such Confidential Information
shall not include any information that (i) has become generally
available to the public other than as a result of a disclosure by the
Executive, or (ii) was available to or became known to the Executive
prior to the
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disclosure of such information on a non-confidential basis without
breach of any duty of confidentiality from any party to the Company,
and the Executive shall not disclose such Confidential Information to
any person or entity other than the Company, except as may be required
by law or court or administrative order (in which event the Executive
shall so notify the Company as promptly as practicable). Upon
termination of the Executive's employment hereunder for any reason, the
Executive shall return to the Company all copies, reproductions and
summaries of Confidential Information in the Executive's possession and
erase the same from all media in the Executive's possession, and, if
the Company so requests, shall certify in writing that the Executive
has done so. All Confidential Information is and shall remain the
property of the Company (or, in the case of information that the
Company receives from a third party which it is obligated to treat as
confidential, then the property of such third party).
(b) Non-Competition.
(i) During the Employment Period, the Executive
shall not engage in Competition (as defined below) with the
Company. For purposes of this Agreement, "Competition" by the
Executive shall mean the Executive's engaging in, or otherwise
directly or indirectly being employed by or acting as a
consultant or lender to, or being a director, officer, employee,
principal, agent, stockholder, member, owner or partner of, or
permitting the Executive's name to be used in connection with the
activities of any other business or organization anywhere which
competes, directly or indirectly, with the Business of the
Company as the same shall be constituted at the Termination Date
or which, during the six-month period prior to the Executive's
termination, the Company had made substantial plans with the
intention of establishing operations.
(ii) Following termination of the Executive's
employment hereunder, for the remainder of the Term as in effect
immediately prior to the Termination Date, Executive shall not
engage in Competition with the Company in any locality or region
in which the Company had operations at the time of, or within six
months prior to, the Executive's termination, or in which, during
the six-month period prior to the Executive's termination, the
Company had made substantial plans with the intention of
establishing operations in such locality or region; provided,
however, that it shall not be a violation of this sub-paragraph
for the Executive to become the registered or beneficial owner of
up to three percent
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(3%) of any class of the capital stock of a competing corporation
registered under the Exchange Act, provided that the Executive does not
actively participate in the business of such corporation until such
time as this covenant expires.
(c) Non-Solicitation. Following termination of the
Executive's employment hereunder, for the remainder of the Term as in
effect immediately prior to the Termination Date, the Executive agrees
that the Executive shall not, directly or indirectly, for the
Executive's benefit or for the benefit of any other person, firm or
entity, engage any of the following conduct:
(i) solicit from any customer doing business
with the Company as of the Termination Date, business of the
same or of a similar nature to the business of the Company
with such customer;
(ii) solicit from any known potential
customer of the Company business of the same or of a similar
nature to that which has been the subject of a known written
or oral bid, offer or proposal by the Company, or of
substantial preparation with a view to making such a bid,
proposal or offer, within six months prior to the Executive's
termination;
(iii) solicit the employment or services of,
or hire, any person who was known to be employed by or was a
known consultant to the Company upon the termination of the
Executive's employment, or within six months prior thereto; or
(iv) otherwise interfere with the business or
accounts of the Company.
(d) Intellectual Property. All Intellectual Property
(as defined below) and Technology (as defined below) created,
developed, obtained or conceived of by the Executive during the
Employment Period, and all business opportunities presented to the
Executive during the Employment Period, shall be owned by and belong
exclusively to the Company, provided that they reasonably relate to the
Business, and the Executive shall (i) promptly disclose any such
Intellectual Property, Technology or business opportunity to the
Company, and (ii) execute and deliver to the Company, without
additional compensation, such instruments as the Company may require
from time to time to evidence its ownership of any such Intellectual
Property, Technology or business opportunity. For purposes of this
Agreement, (A) the term "Intellectual Property" means and includes any
and
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all trademarks, trade names, service marks, service names, patents,
copyrights, and applications therefor, and (B) the term "Technology"
means and includes any and all trade secrets, proprietary information,
invention, discoveries, know-how, formulae, processes and procedures.
(e) The Executive acknowledges that the services to be
rendered by the Executive to the Company are of a special and unique
character, which gives this Agreement a peculiar value to the Company,
the loss of which may not be reasonably or adequately compensated for
by damages in an action at law, and that a material breach or
threatened breach by the Executive of any of the provisions contained
in this Section 8 shall cause the Company irreparable injury. The
Executive therefore agrees that the Company shall be entitled, in
addition to any other right or remedy, to a temporary, preliminary and
permanent injunction, without the necessity of proving the inadequacy
of monetary damages or the posting of any bond or security, enjoining
or restraining the Executive from any such violation or threatened
violations.
(f) The Executive further acknowledges and agrees that
due to the uniqueness of the Executive's services and confidential
nature of the information the Executive shall possess, the covenants
set forth herein are reasonable and necessary for the protection of the
business and goodwill of the Company.
(g) Continuing Operation. Any termination of the
Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 8.
9. Severability. It is the desire and intent of the parties
that the provisions of this Agreement shall be enforced to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any
particular provision or portion of this Agreement shall be adjudicated
to be invalid or unenforceable, this Agreement shall be deemed amended
to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the
operation of such provision in the particular jurisdiction in which
such adjudication is made.
10. Notices. All communications, requests, consents and
other notices provided for in this Agreement shall be in writing and
shall be deemed give if delivered by hand or mailed by first class
mail, postage prepaid, to the last known address of the recipient.
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11. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Delaware, without regard to its conflicts of laws provisions.
12. Assignment. Neither this Agreement nor any rights or
duties hereunder may be assigned by the Executive without the prior
written consent of the Company. The Company shall have the right at any
time to assign this Agreement to its successors and assigns; provided,
however, that the assignee or transferee is the successor to all or
substantially all of the business and assets of the Company and such
assignee or transferee expressly assumes all of the obligations, duties
and liabilities of the Company set forth in this Agreement.
13. Amendments. No provisions of this Agreement shall be
altered, amended, revoked or waived except by an instrument in writing,
signed by each party to this Agreement.
14. Binding Effect. Except as otherwise provided herein,
this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective legal representatives, heirs,
successors and assigns.
15. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed
an original, but all of which together shall constituted one and the
same instrument.
16. Arbitration. Any dispute, controversy or question
arising under, out of, or relating to this Agreement (or the breach
thereof), or, the Executive's employment with the Company or
termination thereof, shall be referred for arbitration in the State of
Michigan to a neutral arbitrator selected by the Executive and the
Company and this shall be the exclusive and sole means for resolving
such dispute. Such arbitration shall be conducted in accordance with
the National Rules for Resolution of Employment Disputes of the
American Arbitration Association. The arbitrator shall have the
discretion to award reasonable attorneys' fees, costs and expenses to
the prevailing party. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
17. Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties and supersedes all prior
understandings, agreements (including the Original Agreement) or
representations by or between the parties, whether written or oral,
which relate in any way to the subject matter hereof.
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18. Survivorship. The provisions of this Agreement
necessary to carry out the intention of the parties as expressed herein
shall survive the termination or expiration of this Agreement.
19. Waiver. Except as provided herein, the waiver by either
party of the other party's prompt and complete performance, or breach
or violation, of any provision of this Agreement shall not operate nor
be construed as a waiver of any subsequent breach or violation, and the
failure by any party hereto to exercise any right or remedy which it
may possess hereunder shall not operate nor be construed as a bar to
the exercise of such right or remedy by such party upon the occurrence
of any subsequent breach or violation.
20. Captions. The captions of this Agreement are for
convenience and reference only and in no way define, describe, extend
or limit the scope or intent of this Agreement or the intent of any
provision hereof.
21. Construction. The parties acknowledge that this
Agreement is the result of arm's-length negotiations between
sophisticated parties each afforded representation by legal counsel.
Each and every provision of this Agreement shall be construed as though
both parties participated equally in the drafting of same, and any rule
of construction that a document shall be construed against the drafting
party shall not be applicable to this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
By:_____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ LEMMERZ INTERNATIONAL,
INC.
By:_____________________________
Name:
Title:
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