EXECUTIVE SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of February 20, 1998, by and between JPE, Inc., a
Michigan corporation ("Corporation"), and Xxxxx X. Xxxxx, presently residing at
0000 Xxxxx-Xxxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxx ("Executive").
WITNESSETH:
WHEREAS, the Executive is presently employed by the Corporation as
Executive Vice President, Chief Financial Officer, General Counsel and
Secretary; and
WHEREAS, the Board of Directors ("Board") recognizes that the Executive has
contributed significantly to the business of the Corporation; and
WHEREAS, the Board desires that the Executive be able to perform her duties
to the Corporation without being influenced by uncertainties of her own
situation and further able to assess and advise the Board whether any proposed
transaction that would constitute a Change of Control (as defined in Section 2)
would be in the best interests of the Corporation and its shareholders; and
WHEREAS, the Executive is willing to continue serving the Corporation on
the terms and conditions provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and obligations hereinafter set forth, the parties agree as follows:
1. OPERATION AND TERMINATION OF AGREEMENT. This Agreement shall be
effective immediately upon its execution by both parties. This Agreement shall
terminate upon the earlier of:
(a) The termination of the Executive's employment with the Corporation for
any reason prior to a Change of Control (as defined in Section 2);
(b) The termination of the Executive's employment because of death,
Permanent Disability (as defined below), voluntary retirement on or after age
65, or Cause (as defined below); or
(c) The second anniversary of a Change of Control.
(d) For purposes of this Agreement:
(i) "Permanent Disability" shall mean that by reason of a physical or
mental disability or infirmity for a continuous period of six (6) months,
the Executive is unable to perform the duties of her position. The
determination of Permanent Disability shall be made by a medical board
certified physician mutually acceptable to the Corporation and the
Executive (or the Executive's legal representative, if one has been
appointed). The Executive agrees to submit to the Corporation such medical
evidence regarding such disability or infirmity as the Corporation may
reasonably request.
(ii) "Termination For Cause" shall mean any termination of the
employment of the Executive for "Cause." For purposes of this Agreement,
only the following shall be deemed to constitute "Cause":
(A) the Executive's willful engaging in dishonest or fraudulent
actions or omissions resulting or intended to result directly or
indirectly in any demonstrable material financial or economic harm to
the Corporation, or
(B) if there has been a breach of the Executive's fiduciary duty
to the Corporation resulting or intended to result directly or
indirectly in personal profit to the Executive;
provided that there shall have been delivered to the Executive at least ten
(10) days prior to the effective date of Termination for Cause a Notice of
Termination (as defined in Section 1(d)(iv)), specifying the particulars
thereof in detail. For purposes of subsection (A) or (B) above, no act or
failure to act on the Executive's part shall be considered "willful" unless
done or omitted to be done by her not in good faith and without reasonable
belief that her action or omission was in the best interests of the
Corporation.
If the Executive's employment shall be terminated by the Corporation for
Cause, the Executive shall have the right to contest such termination only
in accordance with the procedures set forth in Section 8.
(iii) "Termination Without Cause" shall mean any termination of the
employment of the Executive by the Corporation other than termination (A)
For Cause, (B) upon death, (C) upon voluntary retirement on or after age 65
or (D) because of Permanent Disability.
(iv) Any termination of the Executive's employment by the Corporation
or by the Executive (other than upon death) shall be communicated by
written "Notice of Termination" to the other party hereto. "Notice of
Termination" shall mean a notice which shall indicate the specific
termination provision relied upon in this Agreement and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated.
(v) The "Date of Termination" shall mean (A) if the Executive's
employment is terminated by her death, the date of her death, (B) if the
Executive's employment is terminated due to her Permanent Disability, the
date that is thirty (30) calendar days after Notice of Termination is
given, (C) if the Executive's employment is terminated pursuant to a
Termination For Cause, the date specified in the Notice of Termination, (D)
if by terminated by voluntary retirement on or after age 65, the date of
retirement, and (E) if termination by the Executive's employment is a
Termination Without Cause, the date provided by the Notice of Termination
which, in the case of a termination by the Corporation, shall not be less
than thirty (30) calendar days and, in the case of a termination by the
Executive, shall not be less than ten (10) calendar days nor more than
sixty (60) calendar days, respectively, after the date the Notice of
Termination is given.
2. CHANGE OF CONTROL.
(a) No benefit shall be payable under this Section 2 unless there shall
have been a Change of Control of the Corporation or Pending Change of Control
(each as defined below).
(b) For the purpose of this Agreement, a Change of Control of the
Corporation ("Change of Control") shall be deemed to have occurred if any of the
following events shall have occurred:
(i) any Person (as defined below), other than Xxxx Xxxxxxxxxxxx, is or
becomes the beneficial owner (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), directly or
indirectly, of securities of the Corporation (not including the securities
beneficially owned by such Person acquired directly from the Corporation or
its affiliates) representing 25% or more of either the then outstanding
shares of common stock of the Corporation or the combined voting power of
the Corporation's then outstanding securities; or
(ii) a change in the membership of the Board as it existed in the
immediately preceding calendar year (the "Incumbent Board") such that the
directors of the Incumbent Board no longer constitute a majority of the
Board; provided that any individual becoming a director in a subsequent
year whose election, or nomination for election, by the Company's
shareholders was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be, for purposes of this
Agreement, considered as though such individual were a member of the
Incumbent Board; or
(iii) the shareholders of the Corporation approve a plan of complete
liquidation or dissolution of the Corporation or there is consummated an
agreement for the sale or disposition by the Corporation of all or
substantially all of the Corporation's assets.
(c) Person. For the purpose of this Agreement, "Person" shall have the
meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that such term shall not include the
Corporation or any of its subsidiaries.
(d) Severance Payment Upon Change of Control. If at any time within the two
(2) years after a Change of Control, the Executive's employment with the
Corporation (i) is terminated by the Corporation for any reason other than her
death, Permanent Disability, voluntary retirement on or after age sixty-five
(65), or Termination For Cause, or (ii) is terminated by the Executive for Good
Reason (as hereafter defined), then the Corporation shall pay the Executive, in
lieu of any other severance payment, an amount equal to 2.99 times the
Executive's annual base salary (the "Base Salary"), which base salary shall not
be less than Executive's annual base salary of $185,000 as of the date of this
Agreement.
(e) Good Reason. For the purpose of this Section 2 of the Agreement, "Good
Reason" shall mean the occurrence (without the Executive's written consent)
after any Change of Control or during any Pending Change of Control (as defined
below), as the case may be, of any one of the following events:
(i) either (1) a significant alteration, as reasonably determined by
the Executive, in the nature of the Executive's reporting responsibilities,
title other than "Executive Vice President," duties or offices as in effect
immediately prior to the Change of Control or Pending Change of Control,
provided, that during any Pending Change of Control, Executive's duties and
offices may be changed by the Corporation to address the needs of the
Corporation taking into consideration Executive's capabilities and level of
experience; or (2) any diminution of more than ten percent (10%) in the
Executive's Base Salary from that in effect immediately prior to the Change
of Control or Pending Change of Control, as the case may be;
(ii) the requirement by the Corporation that the Executive's principal
place of employment be relocated more than ten (10) miles from her place of
employment immediately prior to the Change in Control or Pending Change in
Control;
(iii) the Corporation's failure to obtain, on or before the date of
the Change of Control, a satisfactory agreement from any successor to
assume and agree to perform this Agreement, as contemplated in Section 5(a)
hereof.
(iv) either (1) the discontinuance of, or any amendment to, any
compensation plan which is adverse to the Executive and in which the
Executive participated immediately prior to the Change of Control or
Pending Change of Control, as applicable, including but not limited to the
Corporation's 1993 Stock Incentive Plan, or any substitute plan(s) adopted
prior to the Change of Control or Pending Change of Control, as applicable,
unless a substantially equivalent substitute or alternative plan has been
made available to the Executive, or (2) the failure by the Corporation to
continue the Executive's participation therein (or in such substitute or
alternative plan(s)) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of the Executive's
participation relative to other participants, as existed at the time of the
Change of Control or Pending Change of Control, as applicable; or
(v) the discontinuance of any benefits enjoyed by the Executive under
any of the Corporation's pension, life insurance, medical, health and
accident, or disability plans in which the Executive was participating at
the time of the Change of Control or Pending Change of Control, as the case
may be, the taking of any action by the Corporation that would directly or
indirectly materially reduce any of such benefits enjoyed by the Executive
at the time of the Change of Control or Pending Change of Control, as
applicable, or the failure by the Corporation to provide the Executive with
the number of paid vacation days to which she is entitled on the basis of
years of service with the Corporation in accordance with the Corporation's
normal vacation policy in effect at the time of the Change of Control or
Pending Change of Control, as applicable.
(f) Severance Payment Upon Pending Change of Control.
(i) The Corporation shall promptly pay the Executive as termination
compensation the Severance Payment provided in Section 2(d) in the event
that at any time during a "Pending Change of Control" (as defined below) of
the Corporation the Executive's employment with the Corporation (i) is
terminated by the Corporation for any reason, other than her death,
Permanent Disability, or Cause or normal retirement on or after age
sixty-five (65), or (ii) is terminated by the Executive for Good Reason (as
defined in Section 2(e)).
(ii) Pending Change of Control. For the purpose of this Agreement, a
"Pending Change of Control" shall be deemed to have occurred if any of the
following events shall have occurred:
(A) the Corporation enters into an agreement, the consummation of
which would result in the occurrence of a Change of Control;
(B) the Corporation or any Person publicly announces an intention
to take or consider actions which, if consummated, would constitute a
Change of Control;
(C) any Person, other than Xxxx Xxxxxxxxxxxx, becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing
15% or more of either the then outstanding shares of common stock of
the Corporation or the combined voting power of the Corporation's then
outstanding securities (not including in the securities beneficially
owned by such Person any securities acquired directly from the
Corporation or its affiliates); or
(D) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Pending Change of Control has occurred.
3. PROTECTED INFORMATION; PROHIBITED COMPETITION.
(a) The Executive hereby recognizes and acknowledges that during the course
of the Executive's employment by the Corporation, the Corporation has disclosed
and will furnish, disclose or make available to the Executive confidential or
proprietary information related to the Corporation's business, including, but
not limited to, customer lists, ideas, processes, inventions and devices, that
such confidential or proprietary information has been developed and will be
developed through the expenditure by the Corporation of substantial time and
money and that all such confidential information could be used by the Executive
and others to compete with the Corporation. The Executive hereby agrees that all
such confidential or proprietary information shall constitute trade secrets, and
further agrees to use such confidential or proprietary information only for the
purpose of carrying out her duties with the Corporation and not otherwise to
disclose such information until the expiration of a period of three (3) years
from the date her employment with the Corporation is terminated. The foregoing
restrictions shall not apply to information which becomes public without
disclosure by the Executive or is obtained from a source other than the
Corporation, or which the Executive is required by law or judicial or
administrative order or process to disclose.
(b) The restrictions in this Section 3 shall survive the termination of the
Agreement and shall be in addition to any restrictions imposed on the Executive
by statute or at common law.
(c) Upon any termination of the Executive's employment under Section 1
(except for Termination Without Cause) the Executive agrees that for a period of
one (1) year following the Date of Termination the Executive will neither
compete with the Corporation in any market in which the Corporation operates as
of the Date of Termination, nor work for or advise, consult or otherwise serve
with, directly or indirectly, any entity whose business materially competes with
the business activities of the Corporation.
4. INJUNCTIVE RELIEF. The Executive hereby expressly acknowledges that any
breach or threatened breach by the Executive of any of the terms set forth in
Section 3 of this Agreement may result in significant and continuing injury to
the Corporation, the monetary value of which would be impossible to establish.
Therefore, the Executive hereby agrees that, notwithstanding any provision in
Section 8 hereof to the contrary, the Corporation shall be entitled to
injunctive relief granted by a court of appropriate jurisdiction without the
posting of a bond or other security in the event of any breach or threatened
breach of the terms of either of such sections. Nothing herein will be construed
as prohibiting the Corporation from pursuing any other remedies available to the
Corporation for such breach or threatened breach, including the recovery of
damages from the Executive. The provisions of this Section 4 shall survive the
termination of this Agreement.
5. SUCCESSORS; BINDING AGREEMENT.
(a) The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation, by agreement
in form and substance satisfactory to the Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Corporation would be required to perform this Agreement if no such
succession had taken place. Failure of the Corporation to obtain such agreement
prior to a date that is on or before the date of the Change of Control shall be
a breach of this Agreement and shall entitle the Executive to compensation from
the Corporation in the same amount and on the same terms as she would receive
hereunder if she were to terminate her employment for Good Reason, except that
for purposes of implementing the foregoing, the date on which such Change of
Control becomes effective shall be deemed the Date of Termination. As used in
this Agreement, "Corporation" shall mean the Corporation as previously defined
and any successor to its business and/or assets as aforesaid, which successor
executes and delivers the agreement provided for in this Section 5 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) This Agreement and all rights of the Executive hereunder shall inure to
the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die after her termination while
any amounts would still be payable to her hereunder if she had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's devisee, legatee,
or other designee or, if there be no designee, to the Executive's estate.
6. NOTICES. Any notice required or permitted by this Agreement shall be in
writing, sent by registered or certified mail, return receipt requested, or by a
national overnight delivery service, addressed to the Board and the Corporation
at the Corporation's then principal office, or to the Executive at the address
set forth in the preamble, or to such other address or addresses as any party
hereto may from time to time specify in writing for the purpose in a notice
given to the other parties in compliance with this Section 6. Notices shall be
deemed given when received.
7. INDEMNIFICATION AND INSURANCE; LEGAL EXPENSES. The Corporation shall
indemnify and hold harmless the Executive (and her legal representatives or
other successors) if she is a party, or is threatened to be made a party to any
threatened, pending or completed action, suit, proceeding or claim, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that the Executive is or was
a director, officer or employee of the Corporation, against expenses (including
reasonable attorney's fees), costs, judgments, fines and other amounts paid in
settlement (if such settlement is approved by the Board of Directors) actually
and reasonably incurred by her in connection with such action, suit or
proceeding to the fullest extent permitted by law. The Corporation shall provide
the Executive (including her heirs, executors and administrators) with coverage
under a standard directors' and officer's liability insurance policy, which
shall be in an amount not less than the directors' and officers' insurance
available to the Executive on the date hereof.
8. DISPUTES.
(a) The administrator for purposes of this Agreement shall be the
Corporation ("Administrator"), whose address is 000 Xxxxxxxxxx Xxxxx, Xxxxx 000,
Xxx Xxxxx, XX 00000, and whose telephone number is (000) 000-0000. The "Named
Fiduciary" as defined in Section 402(a)(2) of ERISA, also shall be the
Corporation. The Corporation shall have the right to designate one or more
employees of the Corporation as the Administrator and the Named Fiduciary at any
time, and to change the address and telephone number of the same. The
Corporation shall give the Executive written notice of any change in the
Administrator and Named Fiduciary, or in the address or telephone number of the
same.
(b) The Administrator shall make all determinations as to the right of any
person to receive benefits under the Agreement. Any denial by the Administrator
of a claim for benefits by the Executive ("the claimant") shall be stated in
writing by the Administrator and delivered or mailed to the claimant within ten
(10) days after receipt of the claim, unless special circumstances require an
extension of time for processing the claim. If such an extension is required,
written notice of the extension shall be furnished to the claimant prior to the
termination of the initial ten (10) day period. In no event shall such extension
exceed a period of ten (10) days from the end of the initial ten (10) day
period. Any notice of denial shall set forth the specific reasons for the
denial, specific reference to pertinent provisions of this Agreement upon which
the denial is based, a description of any additional material or information
necessary for the claimant to perfect his claim, with an explanation of why such
material or information is necessary, and any explanation of claim review
procedures, written to the best of the Administrator's ability in a manner that
may be understood without legal or actuarial counsel.
(c) A claimant whose claim for benefits has been wholly or partially denied
by the Administrator may request on or before the tenth calendar day following
the date of such denial a review of the denial in a written notice to the
Administrator. The claimant shall be entitled to submit such issues or comments
in writing or otherwise, as she shall consider relevant to a determination of
the claim, and she may include a request for a personal hearing before the
Administrator. Prior to submitting her request, the claimant shall be entitled
to review such documents as the Administrator shall agree are pertinent to the
claim. The claimant may, at all stages of review, including arbitration provided
for in Section 14(d), be represented by counsel of his choice, legal or
otherwise, and the reasonable fees and expenses of the counsel shall be borne by
the Corporation. All requests for review shall be promptly resolved. The
Administrator's decision with respect to any such review shall be set forth in
writing and shall be mailed to the claimant not later than ten (10) days
following receipt by the Administrator of the claimant's request for review
unless special circumstances, such as the need to hold a hearing, require an
extension of time for processing, in which case the Administrator's decision
shall be so mailed not later than twenty (20) days after receipt of such
request.
(d) A claimant who has followed the procedure in paragraphs (b) and (c) of
this section, but who has not obtained full relief on her claim for benefits,
may, within sixty (60) days following her receipt of the Administrator's written
decision on review, apply in writing to the Administrator for binding
arbitration of the claim before an arbitrator mutually acceptable to both
parties, the arbitration to be held in Ann Arbor, Michigan, in accordance with
the commercial arbitration rules of the American Arbitration Association, as
then in effect. If the parties are unable to mutually agree upon an arbitrator,
then the arbitration proceedings shall be held before three (3) arbitrators, one
(1) of whom shall be designated by the Corporation, one (1) of whom shall be
designated by the claimant and the third of whom shall be designated mutually by
the first two (2) arbitrators in accordance with the commercial arbitration
rules referenced above. The sole authority of the arbitrator(s) shall be to
interpret and apply the provisions of this Agreement; not to change, add to, or
subtract from, any of its provisions. The arbitrator(s) shall have the power to
compel attendance of witnesses at the hearing. Any court having jurisdiction may
enter a judgment based upon the arbitration.
9. NO MITIGATION. The Executive shall not be required to mitigate the
amount of any payments provided for by this Agreement by seeking employment or
otherwise, nor shall the amount of any payment or benefit provided in this
Agreement be reduced by any compensation or benefit earned by the Executive
after her termination.
10. NO SET-OFF. The Corporation's obligation to make any payments provided
for by this Agreement are absolute and unconditional and shall not be affected
by any circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense, claim of breach of contract or other right which the
Corporation may have against the Executive or others.
11. NONALIENATION OF BENEFITs. Except as may be contrary to applicable law,
no sale, transfer, alienation, assignment, pledge, collateralization or
attachment of any benefits under this Agreement shall be valid or recognized by
the Corporation.
12. ERISA. This Agreement is an unfunded compensation arrangement for a
member of a select group of the Corporation's management employees and any
applicable ERISA exemptions for a "top hat" arrangement shall be applicable to
this Agreement.
13. REPORTING AND DISCLOSURE. The Corporation, from time to time, shall
provide government agencies with reports concerning this Agreement as may be
required by law, and the Corporation shall provide the Executive with such
disclosure concerning this Agreement as may be required by law or as the
Corporation may deem appropriate.
14. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS. This Agreement
contains the entire agreement of the parties relating to the subject matter
hereof, and except for that certain Indemnification Agreement between the
Corporation and Executive dated February 8, 1995, which shall remain in full
force and effect, supersedes any prior written or oral agreements or
understandings relating to the same subject matter, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a type provided elsewhere including, but not limited to, any
pension benefits.
15. MODIFICATION AND WAIVER. No modification or amendment of this Agreement
shall be valid unless in writing and signed by or on behalf of the parties
hereto. A waiver of the breach of any term or condition of this Agreement shall
not be deemed to constitute a waiver of any subsequent breach of the same or any
other term or condition.
16. SEVERABILITY. This Agreement is intended to be performed in accordance
with, and only to the extent permitted by, all applicable laws, ordinances,
rules and regulations. If any provision of this Agreement, or the application
thereof to any person or circumstance, shall, for any reason and to any extent,
be held invalid or unenforceable, such invalidity and unenforceability shall not
affect the remaining provisions hereof and the application of such provisions to
other persons or circumstances, all of which shall be enforced to the greatest
extent permitted by law.
17. WITHHOLDING. The compensation provided to the Executive pursuant to
this Agreement shall be subject to any withholdings and deductions required by
any applicable income and employment federal, state and local tax laws. In the
event the Corporation fails to withhold such sums for any reason, it may require
the Executive to promptly remit to the Corporation sufficient cash to satisfy
applicable income and employment withholding taxes.
18. PAYMENT UPON DEATH. Any amounts payable to the Executive hereunder
after the death of the Executive shall be paid to the Executive's estate or
legal representative.
19. HEADINGS. The headings in this Agreement are inserted for convenience
of reference only and shall not be a part of or control or affect the meaning of
any provision hereof.
20. LATE PAYMENT OF BENEFITS. If any amount required to be paid by the
Corporation to the Executive hereunder is not paid when due, the Corporation
shall pay such amount to the Executive together with interest at the prime rate
as announced from time to time by Comerica Bank (or its successor) plus two
percentage points, for the period from and after the tenth (10th) day following
the date on which payment was due to and including the date of payment.
21. ATTORNEY CONSULTATION. The Executive has had an opportunity to consult
with an attorney of her choosing prior to executing this Agreement.
22. GOVERNING LAW. To the extent not governed by Federal law, this
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Michigan.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the day and year first above written.
JPE, INC.
By: /s/ Xxxx Xxxxxxxxxxxx
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Title: Chairman & CEO
EXECUTIVE
By: /s/ Xxxxx X. Xxxxx
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