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EXHIBIT 10.22
WALBRO CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
FOR
XXXXX X. XXXXXXXXX
Effective April 17, 1998
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TABLE OF CONTENTS
1. Employment.......................................................... 1
2. Term................................................................ 1
3. Office and Duties................................................... 2
4. Salary and Annual Incentive Compensation............................ 2
5. Long-Term Compensation, Including Stock Options, and Benefits,
Deferred Compensation, and Expense Reimbursement.................... 3
6. Governing Law; Reimbursements....................................... 9
7. Miscellaneous....................................................... 10
8. Definitions......................................................... 12
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AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Employment Agreement")
by and between WALBRO CORPORATION, a Delaware corporation (the "Company"), and
Xxxxx X. Xxxxxxxxx ("Executive") is dated August __, 1998.
RECITALS
A. Executive has been President of the Company since August 16, 1996
(the "Employment Date") and a director of the Company since 1990. Between the
Employment Date and April 17, 1998, Executive also served as Chief Operating
Officer of the Company.
B. The Company and Executive desire to amend and restate the Employment
Agreement dated October 3, 1996 in its entirety as set forth below to reflect
the appointment of Executive as President and Chief Executive Officer of the
Company on April 17, 1998.
C. The definitions of certain capitalized terms are set forth in
Section 8 of this Employment Agreement.
AGREEMENT
In consideration of the mutual agreements contained herein, the Company
and Executive hereby agree as follows:
1. EMPLOYMENT.
The Company hereby agrees to continue to employ Executive as its
President and Chief Executive Officer of the Company and Executive hereby agrees
to continue to accept such employment and serve in such capacity, during the
Term as defined in Section 2 and upon the terms and conditions set forth in this
Employment Agreement.
2. TERM. The term of employment of Executive under this Employment
Agreement (the "Term") shall be the period commencing on April 17, 1998 and
terminating on Decem ber 31, 2001 and any period of extension thereof in
accordance with this Section 2, subject to earlier termination in accordance
with the Amended and Restated Termination and Change of Control Agreement dated
the date of this Employment Agreement between the Company and the Executive
("Termination Agreement"). The Term shall be extended automatically without
further action by either party for a one-year period beginning on January 1,
2002 and each succeeding annual anniversary thereafter, unless either party
shall have served written notice in accordance with the provisions of Section
7(d) upon the other party on or prior to the applicable anniversary date upon
which such extension would become effective, electing not to extend the Term, in
which case the
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Term shall terminate (subject to earlier termination in accordance with the
Termination Agreement) on the last business day prior to the applicable
anniversary date with respect to which such notice is received. Notwithstanding
the above, if there is a Change of Control, the Company hereby agrees to
continue the Term of this Employment Agreement and the Executive in its employ,
and the Executive hereby agrees to remain in the employ of the Company, in each
case subject to the terms and conditions of the Termination Agreement and, to
the extent provided in the Termination Agreement, this Employment Agreement, for
the period commencing on the Extension Date and ending on the third anniversary
of such date (such period, the "Extended Employment Period").
3. OFFICE AND DUTIES.
The provisions of this Section 3 will apply during the Term:
(a) Generally. During the Term, Executive shall serve as President and
Chief Executive Officer of the Company, and shall perform such duties and
responsibilities as are substantially consistent with his duties,
responsibilities, rank and status as President and Chief Executive Officer of
the Company as of April 17, 1998. It is also contemplated that, in connection
with each annual meeting of stockholders of the Company during the Term, the
Board will nominate Executive for election as a member of the Board, and the
stockholders of the Company will reelect Executive as a member of the Board.
During the Term, and excluding any periods of disability, vacation, or sick
leave to which Executive is entitled, Executive shall devote full business time
and attention, and his best efforts, abilities, experience, and talent to the
performance of such duties and responsibilities for the businesses of the
Company and its subsidiaries; provided, however, that nothing in this Employment
Agreement shall preclude or prohibit Executive from engaging in other activities
to the extent that such other activities do not preclude Executive's employment
or otherwise inhibit the performance of Executive's duties and responsibilities
under this Employment Agreement or conflict with the businesses of the Company
or its subsidiaries.
(b) Place of Employment. Executive's principal place of employment
shall be the Executive's present headquarters location or such other
headquarters location as may be assigned by the Company which is less than
thirty-five (35) miles from the present headquarters location in Auburn Hills,
Michigan.
4. SALARY AND ANNUAL INCENTIVE COMPENSATION.
As partial compensation for the services to be rendered hereunder by
Executive, the Company agrees to pay to Executive during the Term the
compensation set forth in this Section 4.
(a) Base Salary. Effective as of April 17, 1998, the Company will pay
to Executive during the Term a base salary at the annual rate of $450,000
("Annual Base Salary"), payable in cash in substantially equal monthly
installments during each calendar year, or portion thereof, of the Term and
otherwise in accordance with the Company's usual payroll practices with respect
to senior executives. Executive's Annual Base Salary shall be reviewed by the
Compensation
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Committee at least once in each calendar year and may from time to time be
increased as determined by the Compensation Committee. Effective as of the date
of any such increase, the Annual Base Salary as so increased shall be considered
the new Annual Base Salary for all purposes of this Employment Agreement and may
not thereafter be reduced.
(b) Annual Incentive Compensation. For 1998 and each subsequent
calendar year during the Term, the Company will pay to Executive annual
incentive compensation ("Annual Bonus") as follows:
(i) For the calendar year 1998, the amount of the Annual Bonus
shall equal the greater of (A) 25% of Executive's Annual Base Salary,
or (B) the amount, if any, determined in accordance with the 1998 plan
for an Annual Bonus.
(ii) For calendar years 1999, 2000 and 2001, the amount of the
Annual Bonus shall be based upon Executive's satisfaction of the
following EPS performance standards, and with payouts, as a percentage
of Annual Base Salary during such year, equal to the following
benchmark percentages:
BONUS LEVEL 1999 2000 2001
----------- ---- ---- ----
25% An amount equal to the previous year's actual EPS level,
"Threshold Bonus" or if higher, as determined by the
Compensation Com mittee (after consultation with
Executive) within 90 days after the beginning of
such calendar year.
50% $1.50 $2.60 $3.00
"Target Bonus"
75% $2.60 $3.00 As determined by the Compensation
"Maximum Bonus" Committee within 90 days after the
beginning of such calendar year.
(iii) The Company shall pay the entire Annual Bonus that is
payable with respect to a calendar year in a lump-sum cash payment as
soon as practicable (but in no event more than 90 days) after the close
of such year as the Compensation Committee can determine whether and
the degree to which Maximum Bonus, Target Bonus or Threshold Bonus has
been achieved.
5. LONG-TERM COMPENSATION, INCLUDING STOCK OPTIONS, AND BENEFITS,
DEFERRED COMPENSATION, AND EXPENSE REIMBURSEMENT.
(a) Executive Equity Plans. During the Term, Executive shall be
entitled during the Term to participate in all executive equity plans,
practices, policies and programs intended for
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general participation by senior executives of the Company, as presently in
effect or as they may be modified or added to by the Company from time to time,
subject to the eligibility and other requirements of such plans and programs
(which requirements shall not result in Executive being treated any less
favorably than any other senior executive of the Company). Notwithstanding the
preceding sentence, the Company will make Option grants to the Executive as
follows:
(i) As an inducement to Executive to enter into this
Employment Agreement, the Company shall grant to Executive, effective
as of the date of this Employment Agreement, an Option to purchase
100,000 shares of Common Stock (the "First Option") and, effective as
of the date of the first meeting of the stockholders of the after the
date of this Employment Agreement, an Option to purchase 350,000 shares
of Common Stock (the "Second Option"); provided, however, that the
grant of the Second Option shall be subject to the approval by the
stockholders of the Company of an amendment of the Existing Equity Plan
or the adoption of a New Equity Plan, which amendment or New Equity
Plan authorizes the delivery of at least 350,000 additional shares of
Common Stock to employees of the Company, including Executive
("Shareholder Approval").
(ii) Although the Company and Executive intend the First
Option and the Second Option to be in lieu of normal annual or other
Option grants through Decem ber 31, 2001, the Compensation Committee
may at any time in its discretion consider Executive for possible
grants of additional Options.
(iii) Each Option shall have a term of at least ten (10) years
and an exercise price equal to 100% of the Fair Market Value of the
Common Stock on the date of its grant.
(iv) The First Option shall be fully and immediately vested
and exercisable immediately upon grant.
(v) For so long as Executive is an employee, the Second Option
shall become vested and exercisable in the following percentages based
on the Company's achievement of the following amounts of EPS:
(x) as to 33-1/3% of the shares subject to the Second
Option, when EPS first equals or exceeds $1.50,
(y) as to a total of 66-2/3% of the shares subject to
the Second Option, when EPS first equals or exceeds $2.60; and
(z) as to a total of 100% of the shares subject to
the Second Option, when EPS first equals or exceeds $3.00.
Any such vesting and exercisability in respect of any such year shall
occur on the date the Company releases its financial report for such
year (as derived from the Company's audited consolidated financial
statements for such year). Any unvested and unexercisable portion of
the Second Option shall in all events vest and become exercisable on
the fifth
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anniversary of its date of grant, if Executive is then employed by the
Company; provided, however, if the Second Option does not receive
Shareholder Approval at the April 1999 stockholders meeting, then any
unvested and unexercisable portion of the Second Option, if any, shall
in all events vest and become exercisable on April 17, 2003, if
Executive is then employed by the Company
(vi) Effective upon (x) Executive's Date of Termination that
is prior to a Change of Control and in connection with a Termination
Without Cause or a Termination For Good Reason, or (y) Executive's Date
of Termination that is prior to, on or after a Change of Control and in
connection with a termination of employment by reason of Executive's
Normal Retirement, Approved Early Retirement, death or Disability, the
portion of the Second Option that remains unvested and unexercisable as
of such Date of Termination shall vest and become exercisable on the
fifth anniversary of its date of grant; provided, however, if the
Second Option does not receive shareholder approval at the April 1999
shareholders meeting, then any unvested and unexercisable portion of
the Second Option, if any, shall in all events vest and become
exercisable on April 17, 2003.
(vii) If, immediately prior to the commencement of the
Company's cooperation with a due diligence investigation by a potential
acquiror of the Company, the Second Option is not yet granted by the
Board pursuant to paragraph (i) above, the Board shall determine
whether, in its absolute discretion, it shall cause the Second Option
to be granted notwithstanding the Shareholder Approval condition on
granting the Second Option contained in paragraph (i) above. If, on the
date of a Change of Control, the Second Option is unvested and
unexercisable as to the first 33-1/3% of the shares subject thereto,
the Second Option shall become vested and exercisable on such date as
to such 33-1/3%. If, immediately prior to the commencement of the
Company's cooperation with a due diligence investigation by a potential
acquirer of the Company, the Second Option is unvested and
unexercisable as to any portion of the remaining 66-2/3% of the shares
subject thereto, the Board shall determine whether, in its absolute
discretion, it shall cause such remaining portion of the shares subject
to the Second Option to become vested and exercisable effective upon
such Change of Control. Effective upon Executive's Date of Termination
that is on or after the date of a Change of Control and in connection
with a Termination Without Cause or a Termination For Good Reason, any
portion of the Second Option, if any, that remains unvested and
unexercisable as of such Date of Termination shall vest and become
exercisable as of such Date of Termination.
(viii) After a Termination Without Cause, a Termination for
Good Reason, or a termination of Executive's employment by reason of
death or Disability, each Option shall, to the extent such Option is
vested and exercisable on the Date of Termination (after giving effect
to any acceleration of exercisability pursuant to this Section 5(a)) or
thereafter becomes vested and exercisable pursuant to this Section
5(a), be exercisable for five years after the Date of Termination, but
not after the expiration of the term of such Option.
(ix) Executive, his Permitted Transferee or, if after
Executive's death, a Beneficiary may pay the exercise price of the
Option and any related Withholding Taxes
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in any one or more of the following: (A) cash, (B) previously-owned
shares of Common Stock (which, if acquired from the Company or an
Affiliate, shall have been held by Executive for at least six months)
valued at their Fair Market Value on the date of exercise, or (C)
pursuant to a so-called "cashless exercise" arrangement approved by the
Company (which approval shall not unreasonably be withheld or delayed).
The Company shall use its reasonable best efforts to cause all shares
issued upon the exercise of Options to be registered or qualified under
all applicable securities laws so that all such shares shall be
unrestricted and freely transferable, except for such restrictions, if
any, which result solely from Executive being considered an Affiliate.
(x) An Option shall not be transferable by Executive during
his lifetime except to a Permitted Transferee.
In addition, this Employment Agreement shall not terminate or modify
Executive's right to vest in 10,000 shares of restricted stock on December 31,
1998.
(b) Welfare Benefit Plans. During the Term, Executive and/or his
family, as the case may be, shall be eligible to participate in and shall
receive all benefits under welfare benefit plans and programs provided by the
Company (including medical, prescription, dental, disability, salary
continuance, employee life, group life, dependent life, accidental death and
travel accident insurance plans and programs) to the extent such plans and
programs are from time to time available to other senior executives of the
Company, subject to the eligibility and other requirements of such plans and
programs.
In furtherance of and not in limitation of the foregoing, during the
Term:
(i) Executive will participate in all executive and employee
vacation and time-off programs and shall be entitled to not less than
four weeks paid annual vacation;
(ii) The Company will provide Executive with coverage by
long-term disability insurance and benefits no less favorable
(including any required contributions by Executive) than the more
favorable to Executive of (x) such insurance and benefits provided to
Executive on April 17, 1998 or (y) from time to time provided to any
other senior executive of the Company; and
(iii) The Company will provide Executive coverage by group
term life insurance providing a death benefit of one and one-half
(1-1/2) times Executive's Annual Base Salary but not to exceed
$150,000.
(c) Savings, Profit Sharing and Stock Ownership Plans. In addition to
Annual Base Salary and an Annual Bonus, Executive shall be entitled to
participate during the Term in all savings, profit sharing and stock ownership
plans and programs that are from time to time available to other senior
executives of the Company.
(d) Supplemental Retirement Benefit.
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(i) The Executive will receive from the Company a nonqualified
supplemental employee retirement benefit ("Supplemental Retirement
Benefit") which will provide to Executive a single life annuity,
commencing when the Executive attains age 65, in an
amount equal to one and one-half percent (1.5%) of average Annual Base
Salary of the Executive for the three consecutive years of employment
with the Company during which Executive received the highest average
annual amount. For purposes of calculating such benefits, Executive
shall be credited with service (x) for each full or partial year of
service during calendar years 1996, 1997, 1998, 1999, 2000 and 2001, in
an amount equal to three (3) times the actual service earned during
such years and (y) for each full or partial year of service after 2001,
in an amount equal to one (1.0) times the actual service earned during
such years. (For example, at the end of 1999 and assuming a July 1,
1996 start date, the Executive will have earned 10.5 years of service
credit.) In addition, for purposes of calculating such benefits,
Executive shall be credited with no less than 10.5 years of service
credit in the event of a Termination Without Cause, a termination of
Executive's employment by reason of death or disability, or a
Termination For Good Reason. Executive's Supplemental Retirement
Benefit is and shall remain fully vested.
(ii) The Company may settle its obligation to pay the
Supplemental Retirement Benefit by directing the trustee of an
irrevocable "rabbi trust" to distribute all or part of the assets of
such trust and the Company shall be relieved of such obligation to the
extent that assets are so distributed. Executive acknowledges that his
rights to the Supplemental Retirement Benefit are no greater than those
of a general unsecured creditor of the Company, and that such rights
may not be pledged, collateralized, encumbered, hypothecated, or liable
for or subject to any lien, obligation, or liability of Executive, or
be assignable or transferable by Executive, otherwise than by will or
the laws of descent and distribution, provided that Executive may
designate one or more Beneficia xxxx to receive any payment of such
amounts in the event of his death.
(iii) If, prior to the first to occur of the Date of
Termination or the date on which first occurs a Change of Control,
Executive shall elect to receive the Supplemental Retirement Benefit in
the form of a single-life annuity, the Supplemental Retirement Benefit
shall be paid in such form in annual installments commencing on the
Date of Termination or, if earlier, the first date of a Change of
Control. If the Company shall not have been timely notified in writing
of Executive's election in accordance with the preceding sentence, the
Supplemental Retirement Benefit shall be paid as of the Date of
Termination or, if earlier, the first date of a Change of Control in a
lump sum equal to the aggregate present value of the annuity described
in this Section 5(d), as determined under generally-accepted actuarial
principles using an interest rate of 7.2% and the 1983 Group Annuity
Mortality Tables. In the event of a termination of Executive's
employment by reason of his death, the amount of such lump sum payment
to the Beneficiary shall equal the lump sum payment that would have
been payable to Executive if he had been alive on the Date of
Termination.
(iv) This Employment Agreement shall not terminate or modify
Executive's fully-vested right to a life and 50% surviving spouse
annuity in an annual amount equal
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to 60% of the annual retainer for non-employee directors (as modified
from time to time) payable pursuant to Company's Board of Directors
Retirement Policy in respect of Executive's service as a non-employee
director of the Company between 1990 and 1996.
(e) Relocation. The Executive shall be provided by the Company with a
relocation package for relocating from Illinois to Michigan, together with a
Gross-Up Payment on Taxes incurred by Executive with respect to such relocation
package. Such relocation package shall include the following features. The
Executive shall have the right to either (i) sell his home through his own
efforts, or (ii) to direct the Company to purchase the Executive's home at such
time as the Executive shall direct not later than December 31, 1999. The
purchase price for the Executive's home for purposes of the preceding sentence
shall be the fair market value of the home as established by an appraisal
performed, no more than sixty (60) days prior to the closing date of the sale,
by an appraiser who is mutually acceptable to the Executive and the Company.
Until such time as the Executive sells his home, the Company shall reimburse the
Executive for all travel costs for the Executive and the Executive's spouse
between the Executive's temporary living quarters and the Executive's current
home, and shall pay to the Executive the cost of temporary living expenses,
including the rental of a furnished apartment and utilities. Upon the
Executive's sale of his home, the Company shall pay all costs of moving and
relocating his principal residence from his current home to a new home in
Michigan at which the Executive intends to reside.
(f) Fringe Benefits. During the Term, the Company shall provide to
Executive the following fringe benefits: (i) all fringe benefits available to
other senior executives of the Company, (ii) use of corporate aircraft for
business and personal purposes (provided that such personal use shall not
significantly interfere with the Company's use such aircraft for business
purposes), together with a Gross-up Payment with respect to Taxes payable by
Executive or members of his immediate family in connection any taxable income
attributable to such personal use, (iii) an annual physical, (iv) the use of a
current model, luxury automobile in connection with Executive's services on
behalf of the Company, together with the payment of all costs relating thereto,
including gasoline, repairs, maintenance and insurance, and (v) a country club
membership.
(g) Deferral of Compensation.
(i) The Company shall permit Executive to elect to defer
receipt, pursuant to written deferral election terms and forms executed
by Executive and filed with the Company (the "Deferral Election Forms")
or as may otherwise be specified in the Termination Agreement, of all
or a specified portion of his Annual Bonus until such date(s) or
event(s) as elected by Executive and specified in the Deferral Election
Forms; provided, however, that such deferrals shall not reduce
Executive's total cash compensation in any calendar year below the sum
of the FICA maximum taxable wage base plus 1.45% of Executive's wages
in excess of such FICA maximum.
(ii) In accordance with such executed Deferral Election Forms,
the Company shall, in lieu of payment by the Company to Executive,
credit to one or more bookkeeping
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accounts maintained for Executive ("Deferral Accounts"), on each date
on which an Annual Bonus would otherwise be payable to Executive, a
number of phantom shares of Common Stock ("Deferral Shares") equal to
(1) divided by (2), where (1) is the cash amount deferred multiplied
times the number 1.25 and (2) is the Fair Market Value of a share of
Common Stock on the date such shares are credited. Phantom shares shall
not entitle Executive to vote, or receive any dividends on account of,
any shares of Common Stock.
(iii) Upon such date(s) or event(s) set forth in the Deferral
Election Forms (including forms filed after deferral but before
settlement in which Executive may elect to further defer settlement),
the Company shall pay to Executive cash equal to the then value of any
phantom shares of Common Stock then credited to Executive's Deferral
Accounts, less applicable withholding taxes, and such distribution
shall be deemed to fully settle such Deferral Accounts; provided,
however, that the Company may instead settle such Deferral Accounts in
full or in part by directing the trustee of a "rabbi trust" to
distribute all or part of the assets of such trust and the Company
shall be relieved of its obligation under this Employment Agreement and
the Termination Agreement to the extent that assets are so distributed.
The Company and Executive agree that compensa tion deferred pursuant to
this Section 5(g) shall be fully vested and nonforfeitable; provided,
however, Executive acknowledges that his rights to the deferred
compensation provided for in this Section 5(g) shall be no greater than
those of a general unsecured creditor of the Company, and that such
rights may not be pledged, collateralized, encumbered, hypothecated, or
liable for or subject to any lien, obligation, or liability of
Executive, or be assignable or transferable by Executive, otherwise
than by will or the laws of descent and distribution, provided that
Executive may designate one or more Beneficiaries to receive any
payment of such amounts in the event of his death.
(h) Expense Reimbursement. The Company shall from time to time
reimburse Executive for all reasonable employment-related expenses incurred by
him during the Term promptly after the Company's receipt of an accounting in
accordance with practices, policies and procedures applicable to other senior
executives of the Company.
6. GOVERNING LAW; REIMBURSEMENTS.
(a) Governing Law; Severability. This Employment Agreement is governed
by and is to be construed, administered, and enforced in accordance with the
laws of the State of Michigan, without regard to Michigan conflicts of law
principles, except insofar as the Delaware General Corporation Law and federal
laws and regulations may be applicable. If under the governing law, any portion
of this Employment Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation, ordinance, or other principle of law, such
portion shall be deemed to be modified or altered to the extent necessary to
conform thereto or, if that is not possible, to be omitted from this Employment
Agreement. The invalidity of any such portion shall not affect the force,
effect, and validity of the remaining portion hereof.
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(b) Legal Expense Reimbursement. All reasonable costs and expenses
(including fees and disbursements of counsel) incurred by Executive in
negotiating the terms and conditions of this Employment Agreement shall be paid
on behalf of or reimbursed to Executive promptly by the Company. All reasonable
costs and expenses (including fees and disbursements of counsel) incurred by
Executive in seeking to enforce rights pursuant to this Employment Agreement
shall be paid on behalf of or reimbursed to Executive promptly by the Company,
whether or not Executive prevails in his assertion of such rights. The Company
shall pay to Executive a Tax Gross-Up Payment with respect to any Taxes incurred
by Executive as a result of any payments made to or on behalf of Executive
pursuant to this Section 6(b).
(c) Overdue Payments. Effective as of the Date of Termination, if the
Company shall fail to pay any amount due to Executive under this Employment
Agreement within 14 days after such amount first becomes due, the Company shall
pay to Executive interest on such unpaid amount at a rate equal to the highest
rate of interest charged by the Company's principal lender or, in the absence of
such a lender, at the prime commercial lending rate published in The Wall Street
Journal on the date such amount is due or, if no such rate shall be so published
on such date, the immediately prior date on which such a rate is so published;
provided, however, that if the interest rate determined in accordance with this
Section exceeds the highest legally- permissible interest rate, then the
interest rate shall the highest legally-permissible interest rate.
(d) Gross-Up Payment. If it shall be determined that any payment to
Executive pursuant to this Employment Agreement or the Termination Agreement or
any other payment or benefit from the Company, any Affiliate, or any shareholder
of the Company or any other Person would be subject to the excise tax imposed by
Section 4999 of the Code or any similar tax payable under any United States
federal, state, local or other law, then Executive shall receive a Gross-Up
Payment with respect to all such excise taxes and similar taxes.
7. MISCELLANEOUS.
(a) Integration. This Employment Agreement modifies and supersedes any
and all prior agreements and understandings between the parties hereto with
respect to the employment of Executive by the Company and its subsidiaries,
except for the Termination Agreement and contracts relating to compensation
under executive compensation and employee benefit plans of the Company. Subject
to the rights, benefits and obligations provided for in such executive
compensation contracts and employee benefit plans of the Company, this
Employment Agreement and the Termination Agreement constitute the entire
agreement among the parties with respect to the matters herein provided, and no
modification or waiver of any provision hereof shall be effective unless in
writing and signed by the parties hereto. Executive shall not be entitled to any
payment or benefit under this Employment Agreement which duplicates a payment or
benefit received or receivable by Executive under such prior agreements and
understandings with the Company or under any benefit or compensation plan of the
Company.
(b) Non-Transferability. Neither this Employment Agreement nor the
rights or obliga tions hereunder of the parties hereto shall be transferable or
assignable by Executive, except in accordance with the laws of descent and
distribution or as specified in Sections 5(a)(ix) or 7(c).
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The Company may assign this Employment Agreement and the Company's rights and
obligations hereunder, and shall assign this Employment Agreement, to any
Successor (as hereinafter defined) which, by operation of law or otherwise,
continues to carry on substantially the business of the Company prior to the
event of succession, and the Company shall, as a condition of the succession,
require such Successor to agree to assume the Company's obligations and be bound
by this Employment Agreement and the Termination Agreement; provided, however,
that the Company shall remain jointly and severally liable with such Successor
for all of the obligations of such Successor under the Employment Agreement and
the Termination Agreement. For purposes of this Employment Agreement,
"Successor" shall mean any Person that succeeds to, or has the practical ability
to control (either immediately or with the passage of time), the Company's
business directly, by merger or consolidation, or indirectly, by purchase of the
Company's voting securities or all or substantially all of its assets, or
otherwise.
(c) Beneficiaries. If Executive dies prior to receiving all of the
amounts payable to him in accordance with the terms of this Employment
Agreement, such amounts shall be paid to one or more beneficiaries (each, a
"Beneficiary") designated by Executive in writing to the Company during his
lifetime, or if no such Beneficiary is designated, to Executive's estate. Such
payments shall be made in a lump sum to the extent so payable and, to the extent
not payable in a lump sum, in accordance with the terms of this Employment
Agreement. Executive, without the consent of any prior Beneficiary, may change
his designation of Beneficiary or Beneficiaries at any time or from time to time
by a submitting to the Company a new designation in writing.
(d) Notices. Any notice given under this Employment Agreement shall be
in writing, signed by the party or parties giving or making the same, and shall
be served on the person or persons for whom it is intended or who should be
advised or notified, by Federal Express or other similar overnight service or by
certified or registered mail, return receipt requested, postage prepaid and
addressed to such party at the address set forth below or at such other address
as may be designated by such party by like notice:
If to the Company: Walbro Corporation
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Secretary
If to Executive: Xxxxx X. Xxxxxxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxx 00000
with copies to: Xxxxx X. Xxxxx, Esquire
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
If the parties by mutual agreement supply each other with telecopier numbers for
the purposes of providing notice by facsimile, such notice shall also be proper
notice under this Employment
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Agreement. In the case of Federal Express or other similar overnight service,
such notice or advice shall be effective one business day after deposit with
such service during its normal business hours, and, in the cases of certified or
registered mail, shall be effective five business days after deposit with the
U.S. Postal Service.
(e) Headings. The headings of this Employment Agreement are for
convenience of reference only and do not constitute a part hereof.
(f) No General Waivers. The failure of any party at any time to require
performance by any other party of any provision hereof or to resort to any
remedy provided herein or at law or in equity shall in no way affect the right
of such party to require such performance or to resort to such remedy at any
time thereafter, nor shall the waiver by any party of a breach of any of the
provisions hereof be deemed to be a waiver of any subsequent breach of such
provisions. No such waiver shall be effective unless in writing and signed by
the party against whom such waiver is sought to be enforced.
(g) Successors and Assigns. This Employment Agreement shall be binding
upon and shall inure to the benefit of Executive, his heirs, executors,
administrators and Beneficiaries, and shall be binding upon and inure to the
benefit of the Company and its successors and assigns.
8. DEFINITIONS.
As used in this Employment Agreement, the terms set forth below have
the following meanings (such meanings to be applicable to both the singular and
plural forms, except where otherwise expressly indicated):
(a) "Affiliate" means any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the Company. For
the purposes of this definition, the term "control" when used with respect to
any Person means the power to direct or cause the direction of management or
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise.
(b) "Annual Base Salary" -- see Section 4(a).
(c) "Annual Bonus" -- see Section 4(b).
(d) "Approved Early Retirement" has the meaning specified in the
Termination Agreement.
(e) "Beneficiary" -- see Section 7(c).
(f) "Board" means the Board of Directors of the Company.
(g) "Cause" has the meaning specified in the Termination Agreement.
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(h) "Change of Control" has the meaning specified in the Termination
Agreement.
(i) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(j) "Common Stock" means the common stock, $0.50 par value, of the
Company.
(k) "Company" -- see the introductory paragraph of this Employment
Agreement.
(l) "Compensation Committee" means the Compensation Committee of the
Board.
(m) "Date of Termination" has the meaning specified in the Termination
Agreement.
(n) "Disability" has the meaning specified in the Termination
Agreement.
(o) "Employment Agreement" -- see the introductory paragraph of this
Employment Agreement.
(p) "EPS" means the fully diluted, net income earnings per share (as
adjusted to eliminate the effect of restructuring charges or extraordinary items
which have been approved by the Board) for such year and after all applicable
taxes.
(q) "Executive" -- see the introductory paragraph of this Employment
Agreement.
(r) "Existing Equity Plan" means the Company's Equity Based Long Term
Incentive Plan.
(s) "Extension Date" has the meaning specified in the Termination
Agreement.
(t) "Fair Market Value" means, as of any date, (a) the average of the
high and low prices of the Common Stock on such date reported on The NASDAQ
Stock Market or a national securities exchange (as applicable) or, if no sale of
the Common Stock was reported for such date, on the next preceding date on which
such a sale of such security was reported, (b) if the Common Stock is not listed
on The NASDAQ Stock Market or any national securities exchange as of such date,
the average of the high bid and low asked quotations for the Common Stock on
such date in the over-the-counter market or, if no quotation of the Common Stock
was reported for such date, on the next preceding date on which such a quotation
of such security was report ed, or (c) if there is no public market for the
Common Stock as of such date, the fair market value of the Common Stock
determined by the Compensation Committee in the good faith exercise of its
discretion.
(u) "First Option" -- see Section 5(b)(i).
(v) "Good Reason" has the meaning specified in the Termination
Agreement.
(w) "Gross-Up Payment" has the meaning specified in the Termination
Agreement.
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(x) "New Equity Plan" means any successor to the Existing Equity Plan
that permits the grant of Options on terms and conditions that are in all
material respects at least as favorable to Executive as the terms and conditions
of the Existing Equity Plan.
(y) "Option" means an option to purchase shares of Common Stock.
(z) "Permitted Transferee" means the spouse of Executive, a lineal
descendant of Executive or a spouse of a lineal descendant of Executive or a
trust, limited partnership or other entity principally benefitting all or a
portion of such individuals.
(aa) "Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government instrumentality,
division, agency, body or department.
(ab) "Second Option" -- see Section 5(b)(i).
(ac) "Supplemental Retirement Benefit" -- see Section 5(e).
(ad) "Taxes" means the incremental United States federal, state and
local income, excise and other taxes payable by Executive with respect to any
applicable item of income.
(ae) "Term" -- see Section 2.
(af) "Termination Agreement" -- see Section 2.
(ag) "Termination For Good Reason" means a termination by Executive of
his employment during the Term for a Good Reason.
(ah) "Termination Without Cause" means a termination by the Company of
Executive's employment during the Term for any reason other than Cause or
Executive's death or Disability.
(ai) "Withholding Taxes" means any United States federal, state, local
or foreign withholding taxes and other deductions required to be paid in
accordance with applicable law by reason of compensation received pursuant to
this Employment Agreement or the Termination Agreement.
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IN WITNESS WHEREOF, Executive and the Company have executed this
Employment Agreement on first date above written.
WALBRO CORPORATION
By:
--------------------------------------
Name: ------------------------------------
Title: -----------------------------------
XXXXX X. XXXXXXXXX
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