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EXHIBIT 10.12
CHANGE OF CONTROL AGREEMENT
This Agreement entered into this 31st day December, 1997, by and
between Amcast Industrial Corporation (the "Company") and Xxxx X. Xxxxx (the
"Executive").
WHEREAS, Executive has performed valuable services to Company in senior
executive positions in the past and;
WHEREAS, it is the desire of the Company to continue to retain the
services of Executive in the future as the Company's chief executive officer
and;
WHEREAS, the Company recognizes that as is the case with most publicly
held corporations, the possibility of a change in control may raise distracting
and disrupting uncertainties especially for the chief executive officer, may
create a conflict and make it difficult for Executive to give his whole-hearted
attention and devotion to the performance of his duties, and may even lead to
his departure, all to the detriment of the best interests of the Company and its
shareholders.
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that the best interests of the Company and its shareholders will be
served by assuring Executive, the protection provided by an agreement which
defines the respective rights and obligations of the Company and the Executive
in the event of termination of employment subsequent to a change in control of
the Company and to induce Executive to remain in the employ of the Company.
NOW, THEREFORE, the parties agree that this agreement sets forth the
severance benefits which the Company agrees will be provided to Executive in the
event Executive's employment with the Company [or, in the case of a transaction
described in clause (iv) of paragraph 2, with the successor to the Company (a
"Successor")] is terminated subsequent to a "change in control of the Company"
under the circumstances described below.
Except where the context otherwise indicates, the term "Company"
hereinafter includes the Company and any Successor.
1. OPERATION AND TERM OF AGREEMENT. This agreement, although
effective immediately, shall not become operative unless and
until there has been a change in control of the Company. None
of the provisions of this agreement shall be applicable to any
termination of Executive's employment, however occurring,
which is effective prior to a change in control of the
Company. This agreement shall continue until the later of
December 31, 2000 or two years after the occurrence of a
change in control of the Company, provided such change in
control occurs on or before December 31, 2000, subject to
extension beyond that date by mutual written consent. This
agreement will be reviewed with Executive between January 1,
2000 and July 31, 2000, for the purpose of determining whether
or not an extension beyond December 31, 2000 is mutually
agreeable and, if so, on what basis and for how long.
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CHANGE OF CONTROL AGREEMENT
2. CHANGE IN CONTROL. No benefits shall be payable hereunder
unless there shall have been a change in control of the
Company, as set forth below. For purposes of this agreement, a
"change in control of the Company" shall mean and be deemed to
have occurred on (i) the date upon which the Company is
provided a copy of a Schedule 13D, filed pursuant to Section
13(d) of the Securities Exchange Act of 1934 (the "1934 Act"),
indicating that a group or person, as defined in Rule 13d-3
under the 1934 Act, has become the beneficial owner of 20% or
more of the outstanding Voting Shares of the Company or the
date upon which the Company first learns that a person or
group has become the beneficial owner of 20% or more of the
outstanding Voting Shares of the Company if a Schedule 13D is
not filed; (ii) the date of a change in the composition of the
Board of Directors of the Company such that individuals who
were members of the Board of Directors on the date two years
prior to such change (or who were subsequently elected to fill
a vacancy in the Board, or were subsequently nominated for
election by the Company's shareholders, by the affirmative
vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such two year
period) no longer constitute a majority of the Board of
Directors of the Company; (iii) the date the shareholders of
the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or
consolidation which would result in the holders of the Voting
Shares of the Company outstanding immediately prior to the
merger or consolidation continuing to own immediately after
the merger or consolidation 80% or more of the Voting Shares
of the Company or the surviving entity, if the Company is not
the surviving entity in the merger or consolidation; or (iv)
the date shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
the Company's assets. "Voting Shares" means any securities of
the Company which vote generally in the election of directors.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(A) If any of the events described in paragraph 2
constituting a change in control of the Company shall
have occurred, then upon any subsequent termination
of Executive's employment at any time within two
years following the occurrence of such event,
Executive shall be entitled to the benefits provided
by this agreement, as set forth in paragraph 5,
unless such termination is for Cause.
(B) As used in this agreement, the term "Cause" shall
have the meaning set forth below:
(i) Cause. "Cause" shall mean (a) the willful
and continued failure by Executive to
substantially perform Executive's duties
with the Company (other than any such
failure resulting from Executive's physical
or mental illness or other physical or
mental incapacity), after a demand for
substantial
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CHANGE OF CONTROL AGREEMENT
performance is delivered to Executive by the Board which
specifically identifies the manner in which the Board believes
that Executive has not substantially performed Executive's
duties, or (b) the willful engaging by Executive in gross
misconduct which is materially and demonstrably injurious to
the Company resulting or intended to result, directly or
indirectly, in substantial personal gain or substantial
personal enrichment at the expense of the Company. For
purposes of this subparagraph, no act, or failure to act, on
Executive's part shall be considered "willful" unless done, or
omitted to be done, by Executive not in good faith and without
reasonable belief that Executive's action or omission was in
the best interests of the Company. Notwithstanding the
foregoing, Cause shall not be deemed to exist unless and until
there shall have been delivered to Executive a copy of a
resolution duly adopted by the affirmative vote of not less
than three-fourths of the number of directors then in office
at a meeting of the Board called and held for that purpose
(after reasonable notice to Executive and an opportunity for
Executive, together with Executive's counsel, to be heard
before the Board), finding that in the good faith opinion of
the Board Executive is guilty of conduct set forth above in
clauses (a) or (b) of the first sentence of this subparagraph
and specifying the particulars thereof in detail.
(C) If subsequent to a change in control of the Company
Executive's employment is terminated by the Company for Cause,
the Company shall pay Executive's full salary through the Date
of Termination at Executive's annual base salary rate in
effect at the time Notice of Termination is given, and
Executive shall also receive all accrued or vested benefits of
any kind to which Executive is, or would otherwise have been,
entitled through the Date of Termination (as defined in
paragraph 4), and the Company shall thereupon have no further
obligation to Executive under this agreement.
4. NOTICE AND DATE OF TERMINATION.
(A) Any termination of Executive's employment subsequent to a
change in control of the Company shall be consummated by
written Notice of Termination given to the other party. For
purposes of this agreement, "Notice of Termination" shall mean
a notice which indicates the specific termination provision or
provisions in this agreement relied upon, if any, and sets
forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's employment.
(B) "Date of Termination" shall mean (i) if Executive's employment
is terminated by the Company for Cause, the date specified in
the Notice of Termination or the date on which the meeting of
the Board referred to in subparagraph 3(B)(i) is concluded,
whichever date is the later; or (ii) if Executive's employment
is
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CHANGE OF CONTROL AGREEMENT
terminated for any other reason, the date on which Notice of
Termination is given or the effective date specified in the
Notice, whichever is later. For purposes of this agreement,
termination of Executive's employment shall be deemed to have
occurred within two years following the occurrence of a change
in control of the Company if the Date of Termination is within
such two year period.
5. COMPENSATION AND BENEFITS UPON TERMINATION.
(A) "Incentive Compensation" shall mean the annual cash payment
awarded under the Annual Incentive Program (AIP) or other plan
which replaces the AIP but not including any awards under any
stock option, stock grant, stock rights, or similar plan or
any award under any company sponsored profit sharing, pension,
401k, or similar savings plan.
(B) "Long Term Incentive Compensation" shall mean compensation
payable under the terms of the Amcast (LTIP) or any other plan
which replaced the LTIP.
(C) The compensation and benefits to be provided to Executive
pursuant to paragraph 3 of this agreement upon termination of
Executive's employment with the Company for any reason other
than Cause within two years following a change in control of
the Company include the following:
(i) Subject to the provisions of paragraph 8 hereof, the
Company shall pay to Executive as severance pay in a
lump sum in cash on the first day following the Date
of Termination, the following amounts:
(a) Executive's full salary through the Date of
Termination at Executive's annual base
salary rate in effect at the time Notice of
Termination is given; and also the amount of
Incentive Compensation and Long Term
Incentive Compensation to any completed
period or periods which has been earned by
or awarded to Executive but which has not
yet been paid to Executive.
(b) In lieu of any further salary payments to
Executive for periods subsequent to the Date
of Termination, an amount (the "Additional
Compensation Payment") equal to three
hundred percent (300%) of the sum of
Executive's annual base salary at the rate
in effect as of the Date of Termination (or,
if higher, at the rate in effect at the time
of the change in control) plus an amount
equal to three times the average annual
amount awarded to Executive as Incentive
Compensation for the two years immediately
preceding the year during which the Date of
Termination occurs (whether or not fully
paid).
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CHANGE OF CONTROL AGREEMENT
(c) All amounts due Executive under the terms of
the LTIP as a result of a change of control.
(d) An amount in cash equal to the aggregate
spread between the exercise prices of all
options granted to Executive under the
Company's existing stock option plans or any
stock option plan adopted by the Company
subsequent to the date hereof ("Options")
which are then outstanding, whether or not
then fully exercisable, and the higher of
(a) the Fair Market Value of Common Share of
the Company ("Company Shares") on the Date
of Termination or (b) the average price per
Company Share actually paid by the acquiring
party in connection with any change in
control of the Company. As used in this
subparagraph, "Fair Market Value" shall mean
(1) in the event the Company Shares are
listed on any exchange or in the NASD
National Market System, the last sale price
on such exchange or System on the Date of
Termination (or last trading date prior
thereto) or, if there are no sales on such
date, the mean between the representative
bid and asked prices for Company Shares on
such exchange or System at the close of
business on such date or (2) in the event
that there is then no public market for the
Company Shares or that trading in the
Company Shares is sporadic and the mean
between any bid and asked prices is not
representative of fair market value, the
fair market value of the Company Shares
determined in accordance with Section
2031-2(f) of the Treasury Regulations or any
successor provision thereto. Any Option for
which payment is made as prescribed in this
subparagraph (c) shall be canceled effective
upon the making of such payment.
(e) All legal fees and expenses reasonably
incurred by Executive in good faith as a
result of such termination (including all
such fees and expenses, if any, incurred in
contesting or disputing any such termination
or in seeking to obtain or enforce any right
or benefit provided by this agreement).
(f) Interest at a rate equal to three percent
(3%) per annum plus the per annum rate
announced from time to time by the First
National Bank of Chicago as its "prime
rate", compounded daily from the due date of
any payment required to be made by the
company under any provision of the agreement
through the date such payment is actually
made.
(ii) The Company shall, at its expense, continue
to provide to Executive financial planning
and tax preparation services the same or
similar to those provided to Executive prior
to the change of control and to continue to
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CHANGE OF CONTROL AGREEMENT
maintain in full force and effect for
Executive's continued benefit all life
insurance, medical, health, and accident
plans, programs and arrangements in which
Executive was entitled to participate at the
time of the change in control, provided that
Executive's continued participation is
possible under the terms of such plans,
programs and arrangements. In the event that
the terms of any such plan, program, or
arrangement do not permit Executive's
continued participation or that any such
plan, program or arrangement has been or is
discontinued or the benefits thereunder have
been or are materially reduced, the Company
shall arrange to provide, at its expense,
benefits to Executive which are
substantially similar to those which
Executive was entitled to receive under such
plan, program or arrangement at the time of
the change in control. The Company's
obligation under this subparagraph (ii)
shall terminate on the earliest of the
following dates: (a) the third anniversary
date of the Date of Termination, (b) the
date an essentially equivalent and no less
favorable benefit is made available to
Executive by a subsequent employer or (c)
the date that would have been Executive's
normal retirement date under the Company's
defined benefit pension plan for salaried
employees had Executives remained employed
by the Company.
(iii) In the event that because of their
relationship to Executive, members of
Executive's family or other individuals are
covered by any plan, program, or arrangement
described in subparagraph (ii) above
immediately prior to the Date of
Termination, the provisions set forth in
subparagraph (ii) shall apply equally to
require the continued coverage of such
persons; provided, however, that if under
the terms of any such plan, program or
arrangement any such person would have
ceased to be eligible for coverage during
the period in which the Company is obligated
to continue coverage for Executive, nothing
set forth herein shall obligate the Company
to continue to provide coverage for such
person beyond the date such coverage would
have ceased even if Executive had remained
an employee of the Company.
(iv) The Company shall enable Executive to
purchase the automobile, if any, which the
Company was providing for Executive's use at
the time Notice of Termination was given at
the wholesale value as set out in the latest
Black Book published by National Auto
Research Division of Hearst Business Media
Corporation, of such automobile at such
time.
(E) In the event that any payment to the Executive (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 of control or any person affiliated
with the Company or such persons) shall be subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Internal
revenue Code of 1954, as amended (the
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CHANGE OF CONTROL AGREEMENT
"Code") or any successor provision, the Company shall pay to
the Executive, prior to the date upon which the Executive is
required to pay the Excise Tax, an additional amount (the
"Gross-Up Payment"), appropriately calculated by the Company's
independent auditor, equal to the Excise Tax on such payment
and any additional federal, state, local tax and additional
Excise Tax incurred by the Executive in respect of such
Gross-Up Payment. For purposes of determining whether any
payment to the Executive is subject to the Excise Tax (i) all
payments received or to be received by the Executive in
connection with a change of control of the Company or the
termination of employment of the Executive (whether pursuant
to the terms of this Agreement or any other plan, arrangement
or agreement with the Company, any person whose action results
in a change of control or any person affiliated with the
Company or such persons) shall be treated as "parachute
payments" within the meaning of Section 280(G)(b)(2) of the
Code, and all "excess parachute payments" within the meaning
of Section 280 (G)(b)(i) shall be treated as subject to the
Excise Tax and (ii) the value of any noncash benefits on any
deferred payment or benefit shall be determined by the
Company's independent auditors in accordance with the
principles of Sections 280 (G)(d)(3) and (7) of the Code. For
purposes of determining the amount of the Gross-Up Payment,
unless the Executive notifies the Company's independent
auditor to the contrary the Executive shall be deemed to pay
federal income taxation at the maximum applicable individual
rate in the calendar year in which the Gross-Up Payment is to
be made and taxes at the maximum applicable rate in the state
and locality of the Executive's residence on the Date of
Termination, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and
local taxes. In the event that the Excise Tax is subsequently
finally determined to be less than the amount taken into
account hereunder at the time of termination of the
Executive's employment, the Executive shall repay to the
Company at the time that the amount of such reduction in
Excise Tax is finally determined the portion of the Gross-Up
Payment attributable to such reduction plus interest on the
amount of such repayment at the then current prime rate.
(F) Executive shall not be required to mitigate the amount of any
payment provided for in this agreement by seeking other
employment or otherwise; provided, however, that in the event
that Executive shall obtain other employment at any time
within three years immediately following Executive's Date of
Termination, 20% of all earnings obtained by reason of such
other employment during the three year period immediately
following Executive's Date of Termination shall be payable to
the Company in full satisfaction of any obligation Executive
has to mitigate payment made to Executive by the Company. Upon
obtaining any such other employment, Executive, within thirty
(30) days thereof, shall notify the Company in writing of such
other employment and the aggregate compensation (including
Incentive Compensation, bonuses and all other forms
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CHANGE OF CONTROL AGREEMENT
of cash and contingent remuneration) to which Executive will
be entitled. During each of the three years immediately
following Executive's Date of Termination, Executive shall
provide the Company, on or before April 15 of each year
following such year, a photostatic copy of Executive's federal
income tax return (including all schedules and exhibits
thereto), as filed with the Internal Revenue Service for the
preceding calendar year.
6. RIGHTS AS FORMER EMPLOYEE. Nothing contained in this agreement shall be
construed as preventing Executive, and shall not prevent Executive,
following any termination of Executive's employment whether pursuant to
this agreement or otherwise, from thereafter participating in any
benefit or insurance plans, programs or arrangements (including without
limitation, any retirement plans or programs) in the same manner and to
the same extent that Executive would have been entitled to participate
as a former employee of the Company had this agreement not have been
executed, except, however, Executive shall not be entitled to any
severance payments under any severance pay programs of the Company
(other than this agreement) if Executive is paid the benefits provided
for under this agreement.
7. SUCCESSORS. The Company 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 Company, by
agreement in form and substance satisfactory to Executive, to expressly
assume and agree to perform this agreement in the same manner and to
the same extent that the Company would be required to perform it if no
such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of such succession shall be a
breach of this agreement and shall entitle Executive to compensation
from the Company in the same amount and on the same terms as Executive
would be entitled hereunder if Executive terminated Executive's
employment other than for cause, except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
This agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
If Executive should die while any amounts would still be payable to
Executive hereunder if Executive had continued to live, all such
amounts, unless otherwise provided herein, shall be paid to such
beneficiary or beneficiaries as Executive shall have designated by
written notice delivered to the Company prior to Executive's death or,
failing such written notice, to Executive's estate.
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CHANGE OF CONTROL AGREEMENT
8. UNAUTHORIZED DISCLOSURE; INVENTIONS.
(A) During the period of Executive's employment hereunder, and for
a period of five (5) years following the termination of such
employment, Executive hereby agrees that Executive will not,
without the written consent of the Board or a person
authorized thereby, disclose to any person, other than an
employee of the Company, a person to whom disclosure is
reasonably necessary or appropriate in connection with the
performance by Executive of Executive's duties as an executive
of the Company or pursuant to any order or process of any
court or regulatory agency, any material confidential
information obtained by Executive while in the employ of the
Company with respect to any of the Company's products,
improvements, formulae, designs or styles, processes,
customers, methods of distribution or methods of manufacture;
provided, however, that confidential information shall not
include any information known generally to the public (other
than as a result of unauthorized disclosure by Executive) or
any information of a type not otherwise considered
confidential by persons engaged in the same business or a
business similar to that conducted by the Company.
(B) INVENTIONS. Any and all inventions made, developed or created
by Executive (whether at the request or suggestion of the
Company or otherwise, whether alone or in conjunction with
others, and whether during regular hours of work or otherwise)
during the period of Executive's employment by the Company,
which may be directly or indirectly useful in, or relate to,
the business of or tests being carried out by the Company or
any of its subsidiaries or affiliates, will be promptly and
fully disclosed by Executive to an appropriate executive
officer of the Company and shall be the Company's exclusive
property as against Executive, and Executive will promptly
deliver to an appropriate executive officer of the Company all
papers, drawings, models, data and other material relating to
any invention made, developed or created by Executive as
aforesaid.
Executive will, upon the Company's request and without any
payment therefor, execute any documents necessary or advisable
in the opinion of the Company's counsel to direct issuance of
patents to the Company with respect to such inventions as are
to be the Company's exclusive property as against Executive
under this subsection (b) or to vest in the Company title to
such inventions as against the Executive, the expense of
securing any patent, however, to be borne by the Company.
(C) The foregoing provision of this Section 8 shall be binding
upon the Executive's heirs, successors and legal
representatives.
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CHANGE OF CONTROL AGREEMENT
9. NOTICES. All notices required or permitted to be given under this
agreement shall be in writing and shall be mailed (postage prepaid by
either registered or certified mail) or delivered, if to the Company,
addressed to:
Amcast Industrial Corporation
0000 Xxxxxxxxxx Xxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: Secretary
and if to Executive, addressed to:
Xxxx X. Xxxxx
000 Xxxxxxx Xxxx Xxxx
Xxxxxx, Xxxx 00000
Either party may change the address to which notices to such party are
to be directed by giving written notice of such change to the other
party in the manner specified in this paragraph. All notices, including
without limitation, any Notice of Termination, shall be deemed to have
been given upon the date of actual receipt of the recipient party.
10. ARBITRATION. Any dispute or controversy arising out of or relating to
this agreement shall be settled by arbitration in Dayton, Ohio, in
accordance with the rules then obtaining of the American Arbitration
Association, and judgment may be entered on the arbitrator's award in
any court having jurisdiction. The decision of such arbitrator shall be
final, binding, and not appealable.
11. MISCELLANEOUS. No provision of this agreement may be modified, waived,
or discharged unless such waiver, modification or discharge is agreed
to in writing, signed by Executive and such officer of the Company as
may be specifically designated by the Board. No waiver by either party
hereto at any time of any breach by the other party hereto of, or of
compliance by such other party with, any condition or provision of this
agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth expressly
in this agreement.
12. GOVERNING LAW. The validity, interpretation, construction and
performance of this agreement shall be governed by the laws of the
State of Ohio, without giving effect to the principles of conflicts of
law thereof.
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CHANGE OF CONTROL AGREEMENT
13. VALIDITY. The invalidity or unenforceability of any provision of this
agreement shall not affect the validity or enforceability of any other
provision, which shall remain in full force and effect.
EXECUTIVE AMCAST INDUSTRIAL CORPORATION
/s/ Xxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxx
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Xxxx X. Xxxxx Xxxxxxx X. Xxxx
12/31/97 Title: Chairman, Compensation Committee
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Date 12/31/97
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Date
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