EXHIBIT 10.53
CONTINUITY AGREEMENT
This Agreement (the "Agreement") is dated as of September 29,
2003 by and between American Axle & Manufacturing Holdings, Inc., a Delaware
corporation (the "Company"), and Xxxx X. Xxxxxxxx (the "Executive").
WHEREAS, the Company's Board of Directors (the "Board")
considers the continued services of key executives of the Company to be in the
best interests of the Company and its stockholders; and
WHEREAS, the Board desires to assure, and has determined that
it is appropriate and in the best interests of the Company and its stockholders
to reinforce and encourage the continued attention and dedication of key
executives of the Company to their duties of employment without personal
distraction or conflict of interest in circumstances which could arise from the
occurrence of a change in control of the Company; and
WHEREAS, the Board has authorized the Company to enter into
continuity agreements with those key executives of the Company, such agreements
to set forth the severance compensation which the Company agrees under certain
circumstances to pay such executives; and
WHEREAS, the Executive is a key executive of the Company and
has been designated by the Compensation Committee of the Board (the "Committee")
as an executive to be offered such a continuity agreement with the Company.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Term. This Agreement shall become effective on the
date hereof and remain in effect until the second anniversary thereof; provided,
however, that, on such anniversary and on each successive anniversary thereof,
this Agreement shall automatically renew, unless the Company provides to the
Executive, in writing, at least one year prior to the renewal date, notice that
this Agreement shall not be renewed. Notwithstanding the foregoing, in the event
that a Change in Control (as hereinafter defined) occurs at any time prior to
the termination or expiration of this Agreement in accordance with the preceding
sentence, this Agreement shall not terminate until the second anniversary of the
Change in Control.
2. Change in Control. No compensation or other benefit
shall be payable pursuant to Section 4 of this Agreement unless and until either
(i) a Change in Control shall have occurred while the Executive is an employee
of the Company and the Executive's employment by the Company thereafter shall
have terminated in accordance with Section 3(a)(i) hereof or (ii) the
Executive's employment by the Company shall have terminated in accordance with
Section 3(a)(ii) hereof prior to the occurrence of the Change in Control. For
purposes of this Agreement, a "Change in Control" shall be deemed to have
occurred when:
(a) Any "person" as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as used in
Section 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d)
of the Exchange Act (but excluding Xxxxxxxxxx X.X. Capital Partners L.P.,
Blackstone Capital Partners II Merchant Banking Fund L.P., Blackstone Offshore
Capital Partners II L.P., The Blackstone Group L.P. and entities that they
control (collectively "Blackstone"), the Company and any subsidiary and any
employee benefit plan sponsored or maintained by the Company or any subsidiary
(including any trustee of such plan acting as trustee)), directly or indirectly,
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), of securities of the Company representing both (i) a higher percentage of
the combined voting power of the then outstanding securities of the Company than
Blackstone and (ii) 20% or more of the combined voting power of the Company's
then outstanding securities; or
(b) The consummation of any merger or other business
combination involving the Company, a sale of 51% or more of the Company's
assets, liquidation or dissolution of the Company or a combination of the
foregoing transactions (the "Transactions") other than a Transaction immediately
following which the shareholders of the Company immediately prior to the
Transaction own, in the same proportion, at least 51% of the voting power,
directly or indirectly, of (i) the surviving corporation in any such merger or
other business combination; (ii) the purchaser of or successor to the Company's
assets; (iii) both the surviving corporation and the purchaser in the event of
any combination of Transactions; or (iv) the parent company owning 100% of such
surviving corporation, purchaser or both the surviving corporation and the
purchaser, as the case may be; or
(c) Within any 24 month period, the persons who were
directors immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at least
a majority of the Board or the board of directors of a successor to the Company.
For this purpose, any director who was not a director at the beginning of such
period shall be deemed to be an Incumbent Director if such director was elected
to the Board by, or on the recommendation of or with the approval of, at least
two-thirds of the directors who then qualified as Incumbent Directors (so long
as such director was not nominated by a person who commenced or threatened to
commence an election contest or proxy solicitation by or on behalf of a person
(other than the Board) or who has entered into an agreement to effect a Change
in Control or expressed an intention to cause such a Change in Control).
3. Termination of Employment; Definitions.
(a) Termination without Cause by the Company or for Good
Reason by the Executive.
(i) The Executive shall be entitled to the compensation
provided for in Section 4 hereof if, within two years after a Change in
Control, the Executive's employment by the Company shall be terminated
(A) by the Company for any reason other than (I) the Executive's
Disability or Retirement, (II) the Executive's death or (III) for
Cause, or (B) by the Executive with Good Reason (all terms are
hereinafter defined).
(ii) In addition, the Executive shall be entitled to the
compensation provided for in Section 4 hereof if the following events
occur: (A) an agreement is signed
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which, if consummated, would result in a Change of Control, (B) the
Executive is terminated without Cause by the Company (other than for
any reason listed in clauses (I) and (II) above) or terminates
employment with Good Reason prior to the Change in Control, (C) such
termination is at the direction of the acquirer or merger partner or is
otherwise in connection with the anticipated Change in Control, and (D)
such Change in Control actually occurs.
(b) Disability. For purposes of this Agreement,
"Disability" shall mean the Executive's absence from the full-time performance
of the Executive's duties (as such duties existed immediately prior to such
absence) for 180 consecutive business days, when the Executive is disabled as a
result of incapacity due to physical or mental illness, as determined by a
physician selected by the Executive and approved by the Company for such purpose
(such approval not to be unreasonably withheld).
(c) Retirement. For purposes of this Agreement,
"Retirement" shall mean the Executive's voluntary termination of employment that
constitutes a retirement under the Company's Retirement Program for Salaried
Employees, Restatement dated January 1, 2001, but only if such retirement occurs
prior to a termination (i) by the Company without Cause (and not in anticipation
of a termination for Cause) or (ii) by the Executive for Good Reason.
(d) Cause. For purposes of this Agreement, "Cause" shall
mean the occurrence of any of the following, during the term of this Agreement:
(i) The willful and continued failure of the
Executive to perform substantially all of Executive's duties with the
Company (other than any such failure resulting from incapacity due to
physical or mental illness) for a period of 10 days following delivery
of a written demand for substantial performance to such Executive by
the Board, which specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the
Executive's duties;
(ii) The Executive's conviction of, or plea of
guilty or nolo contendere to a crime under the laws of the United
States or any state thereof constituting (x) a felony or (y) a
misdemeanor involving moral turpitude; or
(iii) The Executive's willful malfeasance or
willful misconduct in connection with the Executive's duties with the
Company or any act or omission which is injurious to the financial
condition or business reputation of the Company or its Affiliates.
Termination of the Executive for Cause shall be made by delivery to the
Executive of a copy of a resolution duly adopted by the affirmative vote of not
less than a majority of the non-employee members of the Board or of the ultimate
parent of the entity which caused the Change in Control (if the Company has
become a subsidiary) at a meeting of such members called and held for such
purpose, after 30 days prior written notice to the Executive specifying the
basis for such termination and the particulars thereof and a reasonable
opportunity for the Executive to cure or otherwise resolve the behavior in
question prior to such meeting, finding that in the reasonable judgment of such
members, the conduct or event set forth in any of clauses (i) through (iii)
above has occurred and that such occurrence warrants the Executive's
termination.
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(e) Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence, during the term of this Agreement, of any of
the following without the Executive's express written consent:
(i) Any material and adverse diminution in the
Executive's duties, titles or responsibilities with the Company from
those in effect immediately prior to the Change in Control;
(ii) Any reduction in the Executive's annual base
salary or annual cash bonus percentage target from the annual base
salary or annual cash bonus percentage target in effect immediately
prior to the Change in Control;
(iii) Any requirement that the Executive be based
at a location more than 50 miles from the location at which the
Executive was based immediately prior to the Change in Control; and
(iv) Any failure by the Company to obtain from
any successor to the Company an agreement reasonably satisfactory to
the Executive to assume and perform this Agreement, as contemplated by
Section 11(a) hereof.
Notwithstanding the foregoing, in the event that the Executive wishes to resign
for Good Reason, the Executive must provide the Company with a Notice of
Termination (as defined below) referencing this Section 3(e) within six months
after the occurrence of the event giving rise to the Executive's claim of Good
Reason.
(f) Notice of Termination. Any purported termination of
the Executive's employment with the Company (other than on account of the
Executive's death) shall be communicated by a Notice of Termination to the
Executive, if such termination is by the Company, or to the Company, if such
termination is by the Executive. For purposes of this Agreement, "Notice of
Termination" shall mean a written notice which shall indicate the specific
termination provision in this Agreement relied upon 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 provisions so indicated. For
purposes of this Agreement, no purported termination of the Executive's
employment with the Company shall be effective without such a Notice of
Termination having been given.
4. Compensation Upon Termination After a Change in
Control.
If the Executive's employment by the Company shall be
terminated in accordance with Section 3(a)(i) or (ii) (the "Termination"), the
Executive shall be entitled to the following payments and benefits:
(a) Severance. The Company shall pay, or cause to be
paid, to the Executive a cash severance amount equal to the product of 2.5 times
the sum of:
(i) the Executive's annual base salary on the
date of the Change in Control (or, if higher, the annual base salary in
effect immediately prior to the giving of the Notice of Termination),
and
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(ii) the higher of (A) the average annual bonus
awarded to the Executive for the three Company fiscal years (or, if the
Executive was not eligible for a bonus for such three fiscal years,
such lesser number of fiscal years during which the Executive was
employed by the Company) preceding (I) the fiscal year in which the
Change in Control occurs, or (II) the fiscal year in which the
Termination occurs, whichever produces the higher result or (B) the
Executive's target annual bonus (expressed as a percentage of salary)
for the fiscal year in which the Change in Control occurs or in which
the Termination occurs, whichever is higher (the "Bonus Component").
This cash severance amount shall be payable in a lump sum, calculated without
any present value discount, within 10 business days after the Executive's date
of Termination; provided that, such amount shall not be paid sooner than the 8th
day following the date the Executive executes a General Release substantially in
the form attached hereto as Appendix B, and provided further that, the Executive
has not exercised his/her right to revoke the Release.
(b) Additional Payments and Benefits. The Executive shall
also be entitled to:
(i) A lump sum cash payment equal to the sum of
(A) the Executive's accrued but unpaid annual base salary through the
date of Termination, (B) the unpaid portion, if any, of annual bonuses
earned by the Executive pursuant to the Company's incentive
compensation plan for any year ending prior to the Executive's date of
Termination, (C) a pro rata portion of the Executive's Bonus Component
in respect of the year in which the date of Termination occurs
(calculated from January 1 of such year through the date of
Termination) (such payment, the "Pro Rata Bonus"), and (D) an amount,
if any, equal to compensation previously deferred (excluding any
qualified plan deferrals) and any accrued vacation pay, in each case,
in full satisfaction of the Executive's rights thereto;
(ii) Continued medical, dental, vision,
disability, accidental death and dismemberment and life insurance
coverage ("Welfare Benefit Coverage") for the Executive and the
Executive's eligible dependents or, to the extent Welfare Benefit
Coverage is not commercially available, such other arrangements
reasonably acceptable to the Executive, on the same basis as in effect
prior to the Executive's Termination, for a period ending on the
earlier of (A) the date that is 2.5 years following the date of
Termination under Section 4(a) hereof (the "Continuation Period") or
(B) the commencement of comparable coverage by the Executive with a
subsequent employer;
(iii) Immediate 100% vesting of all outstanding
stock options, stock appreciation rights, phantom stock units, and
restricted stock granted or issued by the Company to the Executive to
the extent not previously vested on or following the Change of Control;
(iv) 2.5 years of additional service credit and
credit for 2.5 years of additional age under the Company's employee
pension and welfare benefit plans (except for any plan qualified under
the Internal Revenue Code of 1986, as amended (the "Code")) for
purposes of benefit accrual, matching contributions, vesting, and
eligibility for retirement; provided that any retirement benefits shall
commence upon expiration of
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the Continuation Period. In addition, if salary and/or bonus amounts
are part of the calculation of such benefits, the amounts in Section
4(a) and 4(b)(i)(B), as applicable, shall be included in such
calculation as if the Executive had remained employed by the Company
for the entire Continuation Period. (The methodology to be applied in
calculating the benefit provided in this Section 4(b)(iv) shall follow
the Example set forth in Appendix A of this Agreement.);
(v) Continued use of the Company car then used
by the Executive, free of charge, for a six-month period, at which time
the Executive shall return the car to the Company; and
(vi) Without duplication of the amounts otherwise
provided for in this Agreement, all other accrued or vested benefits in
accordance with the terms of the applicable plan (the "Accrued
Benefits").
All lump sum payments under this Section 4(b) shall be paid within 10 business
days after the Executive's date of Termination; provided that, such payments
shall not be made sooner than the 8th day following the date the Executive
executes a General Release substantially in the form attached hereto as Appendix
B, and provided further that, the Executive has not exercised his/her right to
revoke the Release.
(c) Outplacement. If so requested by the Executive,
outplacement services shall be provided by a professional outplacement provider
selected by Executive; provided, however, that such outplacement services shall
be provided to the Executive at a cost to the Company of not more than 10% of
the Executive's annual base salary as in effect immediately prior to the date of
Termination, or, if greater, $40,000.
5. Compensation Upon Termination for Death, Disability
or Retirement.
If the Executive's employment is terminated on or after a
Change in Control by reason of Death, Disability or Retirement prior to any
other termination (other than in anticipation of a termination for Cause by the
Company), the Executive will receive:
(a) The sum of (i) the Executive's accrued but unpaid
annual base salary through the date of termination of employment by the Company,
(ii) the unpaid portion, if any, of annual bonuses earned by the Executive
pursuant to the Company's incentive compensation plan for any year ending prior
to the Executive's date of termination of employment by the Company, (iii) the
Pro Rata Bonus, and (iv) an amount, if any, equal to compensation previously
deferred (excluding any qualified plan deferrals) and any accrued vacation pay,
in each case, in full satisfaction of the Executive's rights thereto; and
(b) The Accrued Benefits.
6. Excess Parachute Excise Tax.
(a) (i) If it is determined (as hereafter provided) that
any payment or distribution by the Company to or for the benefit of the
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise pursuant to or
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by reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, stock appreciation right or
similar right, or the lapse or termination of any restriction on or the vesting
or exercisability of any of the foregoing (a "Payment"), would be subject to the
excise tax imposed under Section 4999 (or any successor provision thereto) of
the Code by reason of being "contingent on a change in ownership or control" of
the Company, within the meaning of Section 280G of the Code (or any successor
provision thereto) or to any similar tax imposed by state or local law, or any
interest or penalties with respect to such excise tax (such tax or taxes,
together with any such interest and penalties, are hereafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment or payments (a "Gross-Up Payment") in an amount
such that, after payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including any Excise Tax,
imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments; provided,
however, that if the sum of the Payments (net of any reduction including,
without limitation, any reduction attributable to obligations imposed on the
Executive hereunder, taken into account in computing the Excise Tax) exceeds by
10% or less the maximum amount that may be paid to the Executive without the
imposition of the Excise Tax, then, to the least extent necessary to eliminate
the imposition of the Excise Tax (after taking into account the aforementioned
reductions) (a) any cash payments hereunder shall first be reduced, and (b) all
other non-cash amounts hereunder shall next be reduced, until the sum of the
payments equals the maximum amount that may be paid to the Executive without the
imposition of the excise tax.
(ii) Subject to the provisions of Section 6(a)(i) hereof,
all determinations required to be made under this Section 6, including whether
an Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change in Control (or,
if such Accounting Firm declines to serve, the Accounting Firm shall be a
nationally recognized firm of certified public accountants selected by the
Executive). The Accounting Firm shall be directed by the Company or the
Executive to submit its preliminary determination and detailed supporting
calculations to both the Company and the Executive within 15 calendar days after
the date of Termination, if applicable, and any other such time or times as may
reasonably be requested by the Company or the Executive. If the Accounting Firm
determines that any Excise Tax is payable by the Executive, the Company shall
pay the required Gross-Up Payment to, or for the benefit of, the Executive
within five business days after receipt of such determination and calculations.
If the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall, at the same time as it makes such determination, furnish
the Executive with an opinion that he has substantial authority not to report
any Excise Tax on his/her federal, state and local income or other tax return.
Any determination by the Accounting Firm as to the amount of the Gross-Up
Payment shall be binding upon the Company and the Executive absent a contrary
determination by the Internal Revenue Service or a court of competent
jurisdiction; provided, however, that no such determination shall eliminate or
reduce the Company's obligation to provide any Gross-Up Payment as a result of
such contrary determination. As a result of the uncertainty in the application
of Section 4999 of the Code (or any successor provision thereto), and the
possibility of similar uncertainty regarding state or local tax law at the time
of any determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments that will not have been made
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by the Company should have been made (an "Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts or fails to pursue its remedies pursuant to Section 6(b) hereof and the
Executive thereafter is required to make a payment of any Excise Tax, the
Executive shall direct the Accounting Firm to determine the amount of the
Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both the Company and the Executive as promptly as
possible. Any such Underpayment shall be promptly paid by the Company to, or for
the benefit of, the Executive within five business days after receipt of such
determination and calculations.
(iii) The federal, state and local income or other tax
returns filed by the Executive (or any filing made by a consolidated tax group
that includes the Company) shall be prepared and filed on a consistent basis
with the determination of the Accounting Firm with respect to the Excise Tax
payable by the Executive. The Executive shall make proper payment of the amount
of any Excise Tax and, at the request of the Company, provide to the Company
true and correct copies (with any amendments) of his/her federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company, evidencing such
payment.
(b) (i) In the event that the Internal Revenue Service
claims that any payment or benefit received under this Agreement constitutes an
"excess parachute payment," within the meaning of Section 280G(b)(1) of the Code
(or any successor provision thereto), for which the Company has not made a
Gross-Up Payment, the Executive shall notify the Company in writing of such
claim. Such notification shall be given as soon as practicable but no later than
10 business days after the Executive is informed in writing of such claim and
shall apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such claim prior to
the expiration of the 30-day period following the date on which the Executive
gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall (i) give the Company any information
reasonably requested by the Company relating to such claim; (ii) take such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably
selected by the Company and reasonably satisfactory to the Executive; (iii)
cooperate with the Company in good faith in order to effectively contest such
claim; and (iv) permit the Company to participate in any proceedings relating to
such claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including, but not limited to, additional interest and
penalties and related legal, consulting or other similar fees) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for and against any Excise Tax or other tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses.
(ii) The Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and xxx for a refund or
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contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and xxx for a refund, the Company shall advance the
amount of such payment to the Executive on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or other tax (including interest and penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and provided, further, that if the Executive is
required to extend the statute of limitations to enable the Company to contest
such claim, the Executive may limit this extension solely to such contested
amount. The Company's control of the contest shall be limited to issues with
respect to which a corporate deduction would be disallowed pursuant to Section
280G of the Code, and the Executive shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority. In addition, no position may be taken nor any final
resolution be agreed to by the Company without the Executive's consent if such
position or resolution could reasonably be expected to adversely affect the
Executive (including any other tax position of the Executive unrelated to
matters covered hereby).
(iii) If, after the receipt by the Executive of an amount
advanced by the Company in connection with the contest of the Excise Tax claim,
the Executive becomes entitled to receive any refund with respect to such claim,
the Executive shall promptly pay to the Company the amount of such refund
received by the Executive (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Company in connection with an Excise Tax claim, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest the denial of such refund prior to the
expiration of 30 days after such determination, such advance shall be forgiven
and shall not be required to be repaid, and the Company shall be required to
gross up such forgiven amount in respect of any taxes attributable thereto.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by Section 6(a) hereof.
(d) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Section 6(b) hereof shall be borne by the Company. If such fees and expenses are
initially advanced by the Executive, the Company shall reimburse the Executive
the full amount of such fees and expenses within five business days after
receipt from the Executive of a statement therefor and reasonable evidence of
his/her payment thereof.
7. Legal Expenses. Each party shall pay its own costs
and expenses in connection with any claim, action or proceeding brought by the
Company or the Executive with respect to or arising out of this Agreement or any
provision hereof; provided, however, the Company shall pay such costs and
expenses, including attorneys fees and disbursements, of the Executive if the
Executive prevails on any such substantive issue in such proceeding.
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8. (a) Confidential Information. The Executive
acknowledges that all information obtained by the Executive during the term of
employment concerning the business and affairs of the Company and its
subsidiaries and affiliates are valuable, special and unique assets of the
Company and are the sole and exclusive property of the Company ("Confidential
Information"). The Executive agrees that the Executive will not at any time or
in any manner, directly or indirectly, use, exploit, disclose or communicate in
any manner such Confidential Information to any third party without the prior
written consent of the Company. All Confidential Information will be protected
in accordance with the Company's policies. The foregoing obligations will not
apply to the extent such Confidential Information (i) becomes generally known to
the public other than as a result of acts or omissions of the Executive or (ii)
as may be required by law. At the time of the termination or expiration of this
Agreement, the Executive shall immediately deliver to the Company all such
Confidential Information under control or possession of the Executive and all
copies and notes thereon, regardless of the form of storage or retrieval. The
only exceptions to the foregoing shall be the Executive's personal files
containing no Confidential Information.
(b) Non-Compete Covenant. In consideration for the
compensation paid under this Agreement, the Executive agrees and covenants that,
during the Continuation Period, the Executive will not directly or indirectly
engage in any business that is competitive with the Company and its products
immediately prior to the Change in Control and any businesses that the Company
plans to enter within the next year pursuant to its business plans, as
determined immediately prior to the Change in Control, including, without
limitation, the manufacture, assembly, distribution and/or sale of forgings,
axles, prop shafts and all related parts and components which are made, sold or
used by the Company. Engaging in competitive activity shall include, without
limitation, (i) engaging in a business as owner, partner or agent, (ii)
consulting, becoming self-employed or becoming an employee or being associated
in any capacity with any third party that is engaged in such business, (iii)
owning or controlling any interest in such business, directly or indirectly,
(iv) soliciting, calling on or communicating with any customer of the Company
for the purpose of competing with the Company, (v) inducing or attempting to
induce, or assisting others to induce or attempt to induce, any employee, agent,
representative or other person employed by, associated with, doing business with
or having a relationship with the company to terminate his, her or its
employment relationship or association with the Company, or in any way interfere
with the relationship between the Company or any such person or enterprise, or
(vi) otherwise competing with the Company. This obligation shall apply to any
geographic area where the Company has a manufacturing facility or conducts
automotive-related sales and service operations.
(c) Remedies. The Executive agrees that the Company would
suffer irreparable harm from a breach by the Employee of any of the covenants or
terms of this Section 8. Therefore, in the event of any actual or threatened
breach by the Executive of any of the provisions of this Section 8, the Company
may seek specific performance and/or injunctive or other relief in order to
enforce this Agreement. The Executive further agrees that, in the event any of
the provisions of this Section 8 are determined by a court of competent
jurisdiction to be contrary to any applicable statute, law or rule, or for any
reason to be unenforceable as written, such court may modify any of such
provisions so as to permit enforcement thereof as thus modified.
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9. Nature of Obligations; Non-Exclusivity of Rights;
Joint and Several Liability.
(a) The payments and benefits provided under Section 4
hereof are contingent on (i) the Executive's compliance with Section 8 and (ii)
the Executive's execution and delivery to the Company of the General Release
attached hereto as Appendix B. The obligations of the Company to make the
payment to the Executive, and to make the arrangements provided for herein shall
be absolute and unconditional and shall not be reduced by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Executive or any third party
at any time.
(b) Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any benefit, bonus, incentive
or other plan or program provided by the Company and for which the Executive may
qualify (other than any change in control or other severance plan or policy),
nor shall anything herein limit or reduce such rights as the Executive may have
under any agreements with the Company. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan or program
of the Company shall be payable in accordance with such plan or program, except
as explicitly modified by this Agreement.
(c) Any successors or assigns of the Company shall be
joint and severally liable with the Company under this Agreement.
10. Entire Agreement; Not an Employment Agreement.
(a) This Agreement constitutes the entire agreement of
the parties hereto and supersedes all prior and contemporaneous agreements and
understandings (including term sheets), both written and oral, between the
parties hereto, or either of them, with respect to the subject matter hereof. 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 expressly set forth in this Agreement.
(b) This Agreement is not, and nothing herein shall be
deemed to create, a contract of employment between the Executive and the
Company. The Company may terminate the employment of the Executive by the
Company at any time, subject to the terms of this Agreement and/or any
employment agreement or arrangement between the Company and the Executive that
may then be in effect.
11. Successors; Binding Agreement; Assignment.
(a) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to expressly,
absolutely and unconditionally 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. As used in this Agreement, "Company"
shall mean (i) the Company as hereinbefore defined, and (ii) any successor to
all the stock of the Company or to all or substantially all of the Company's
business or assets which executes and delivers an agreement provided for in this
Section 11(a) or which otherwise
11
becomes bound by all the terms and provisions of this Agreement by operation of
law, including any parent or subsidiary of such a successor.
(b) This Agreement 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 while any amount would be payable to the Executive
hereunder if the Executive 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 estate or designated beneficiary. Neither this
Agreement nor any right arising hereunder may be assigned or pledged by the
Executive.
12. Notice. For purposes of this Agreement, notices and
all other communications provided for in this Agreement or contemplated hereby
shall be in writing and shall be deemed to have been duly given when personally
delivered, delivered by a nationally recognized overnight delivery service or
when mailed by United States certified or registered mail, return receipt
requested, postage prepaid, and addressed, in the case of the Company, to the
Company at:
American Axle & Manufacturing Holdings, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Vice President, Chief Administrative Officer & Secretary
and in the case of the Executive, to the Executive at the address set forth on
the execution page at the end hereof.
Either party may designate a different address by giving
notice of change of address in the manner provided above, except that notices of
change of address shall be effective only upon receipt.
13. Miscellaneous.
(a) Amendments. No provision of this Agreement may be
amended, altered, modified, waived or discharged unless such amendment,
alteration, modification, waiver or discharge is agreed to in writing signed by
the Executive and such officer of the Company as shall be specifically
designated by the Committee or by the Board.
(b) Waivers. No waiver by either party, at any time, of
any breach by the other party of, or of compliance by the other party with, any
condition or provision of this Agreement to be performed or complied with by
such other party shall be deemed a waiver of any similar or dissimilar provision
or condition of this Agreement or any other breach of or failure to comply with
the same condition or provision at the same time 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 expressly set forth in this Agreement.
14. Severability. If any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the
12
remaining provisions of this Agreement shall not be affected thereby. To the
extent permitted by applicable law, each party hereto waives any provision of
law that renders any provision of this Agreement invalid, illegal or
unenforceable in any respect.
15. Governing Law; Venue. The validity, interpretation,
construction and performance of this Agreement shall be governed on a
non-exclusive basis by the laws of the State of Michigan without giving effect
to its conflict of laws rules. For purposes of jurisdiction and venue, the
Company hereby consents to jurisdiction and venue in any suit, action or
proceeding with respect to this Agreement in any court of competent jurisdiction
in the state in which Executive resides at the commencement of such suit, action
or proceeding and waives any objection, challenge or dispute as to such
jurisdiction or venue being proper.
16. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be an original and all of which shall
be deemed to constitute one and the same instrument.
[Signatures on next page.]
13
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------------
Title: Vice President, Chief Administrative
Officer & Secretary
EXECUTIVE:
/s/ Xxxx X. Xxxxxxxx
----------------------------
XXXX X. XXXXXXXX
14
APPENDIX A
Non-CEO SERP Illustration
Assume an executive is age 60, and has been employed full-time
by the Company for 10.5 years when, on September 1, 2004, a Change in Control
occurs and the executive is terminated without Cause. Assume further that the
executive's final average annual salary when the executive terminated employment
was $190,000, and that the executive's current base salary was then $200,000,
and the Bonus Component (as defined in the Continuity Agreement) was also
$200,000.
Absent the provisions of Section 4(b)(iv) of the Continuity
Agreement, the executive's pension under the Company's Supplemental Executive
Retirement Program ("SERP") would have been calculated as follows:
Age: 60
Years of Service: 10.5
Five-year Average Monthly Salary: $15,833
Pension and SERP Start Date: 9/1/04
Multiply average monthly base salary ($15,833) by 0.02 for a
result of $316.66, which is then multiplied by credited service (10.5 years) for
a result of $3,324.93. Subtract from this amount the monthly amount of the
salaried retirement program benefit before reduction for survivor benefit
($1,908) plus the result of 2% of the age 65 Social Security Primary Insurance
Amount for the year of retirement (2003 monthly amount is $1,831; multiplied by
0.02 is $36.62) multiplied by credited service (10.5 years) or $384.51. This
amount plus $1,908 equals a total of $2,292.51, which is subtracted from
$3,324.93 for a SERP benefit amount of $1,032.42 per month.
Applying, however, the provisions of Section 4(b)(iv) of the
Continuity Agreement, the executive will be considered to retire March 1, 2007
and will be age 62 1/2 at that time, with 13 years of service. The executive's
pay for purposes of calculating the executive's pension will include the
$200,000 per year that is the portion of the severance payment attributable to
the executive's salary, and, because the executive is now age 62 1/2, the
$200,000 per year that is the portion of severance attributable to the
executive's bonus will also be taken into account, because the executive will
now qualify for the SERP Alternative Formula. Therefore, the actual calculation
of the SERP benefit, after applying Section 4(b)(iv), is as follows:
Age: 62 1/2
Years of Service: 13
Five-year Average Monthly Salary: $ 16,667
Five-year Average Monthly Bonus: $ 16,667
Pension Start Date: 3/1/2007
Multiply average monthly base salary ($16,667) by 0.02 for a
result of $333.34, which is then multiplied by credited service (13 years) for a
result of $4,333.42. Subtract from this amount the monthly amount of the
salaried retirement program benefit before reduction for
survivor benefit ($2,444) plus the result of 2% of the age 65 Social Security
Primary Insurance Amount for the year of retirement (2003 monthly amount is
$1,831; multiplied by 0.02 is $36.62) multiplied by credited service (13 years)
or $476.06. This amount plus $2,444 equals a total of $2,920.06, which is
subtracted from $4,333.42 for a SERP benefit amount of $1,413.36 per month.
The SERP Alternative Formula is average total direct
compensation (salary plus bonus $33,333) multiplied by 0.015 for a result of
$500, which is then multiplied by credited service (13 years) for a result of
$6,500. Subtract from this amount the result of the monthly amount of the
salaried retirement program before reduction for survivor benefit ($2,444) plus
100% of the age 65 Social Security Primary Insurance Amount for the year of
retirement (2003 amount is $1,831) for a result of $4,275, which is subtracted
from $6,500 for a SERP benefit amount under the Alternative Formula of $2,225
per month.
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APPENDIX B
RELEASE
In exchange for a portion of the benefits described in the attached
Continuity Agreement dated September 29, 2003 (the "Agreement"), to which I
agree I am not otherwise entitled, I hereby release American Axle &
Manufacturing Holdings, Inc. (the "Company"), its respective affiliates,
subsidiaries, predecessors, successors, assigns, officers, directors, employees,
agents, stockholders, attorneys, and insurers, past, present and future (the
"Released Parties") from any and all claims of any kind which I now have or may
have against the Released Parties, whether known or unknown to me, by reason of
facts which have occurred on or prior to the date that I have signed this
Release. Such released claims include, without limitation, any and all claims
under federal, state or local laws pertaining to employment, including the Age
Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as
amended, 42 U.S.C. Section 2000e et seq., the Fair Labor Standards Act, as
amended, 29 U.S.C. Section 201 et seq., the Americans with Disabilities Act, as
amended, 42 U.S.C. Section 12101 et seq., the Reconstruction Era Civil Rights
Act, as amended, 42 U.S.C. Section 1981 et seq., the Rehabilitation Act of 1973,
as amended, 29 U.S.C. Section 701 et seq., the Family and Medical Leave Act of
1992, 29 U.S.C. Section 2601 et seq., and any and all state or local laws
regarding employment discrimination and/or federal, state or local laws of any
type or description regarding employment, including but not limited to any
claims arising from or derivative of my employment with the Company, as well as
any and all claims under state contract or tort law or otherwise.
I hereby represent that I have not filed any action, complaint, charge,
grievance or arbitration against the Company or the Released Parties.
I understand and agree that I must forever continue to keep
confidential all proprietary or confidential information which I learned while
employed by the Company, whether oral or written and as defined in the Agreement
("Confidential Information") and shall not make use of any such Confidential
Information on my own behalf or on behalf of any other person or entity;
provided however, that I may divulge such Confidential Information if I am
required to do so by a court of law, by any governmental agency having
supervisory authority over the business of the Company, or by any administrative
or legislative body with apparent jurisdiction to order me to divulge, disclose
or make accessible such Confidential Information.
I expressly understand and agree that the Company's obligations under
this Release are in lieu of any and all other amounts to which I might be, am
now or may become entitled to receive from any of the Released Parties upon any
claim whatsoever.
I understand that I must not disclose the terms of this Release and the
Agreement to anyone other than my immediate family, financial advisors (if any)
and legal counsel, that I must immediately inform my immediate family, financial
advisors (if any) and legal counsel that they are prohibited from disclosing the
terms of this Release and the Agreement.
It is understood that I will not be in breach of the nondisclosure
provisions of this Release if I am required to disclose information pursuant to
a valid subpoena or court order, provided that I notify the Company (to the
attention of the General Counsel of the Legal Department) within one business
day that I have received the subpoena or court order which may require me to
disclose information protected by this Release. Notwithstanding the foregoing, I
may also disclose the terms of this Release to government taxing authorities.
I agree that any violation or breach by me of my nondisclosure
obligations, without limiting the Company's remedies, shall give rise on the
part of the Company to a claim for relief to recover from me, before a court of
competent jurisdiction, any and all amounts previously paid to or on behalf of
me by the Company pursuant to the Agreement, but shall not release me from the
performance of my obligations under this Release.
I will not apply for or otherwise seek employment with the Released
Parties.
I have read this Release carefully, acknowledge that I have been given
at least 21 days to consider all of its terms, and have been advised to consult
with an attorney and any other advisors of my choice prior to executing this
Release, and I fully understand that by signing below I am voluntarily giving up
any right which I may have to xxx or bring any other claims against the Released
Parties, including any rights and claims under the Age Discrimination in
Employment Act. I also understand that I have a period of 7 days after signing
this Release within which to revoke my agreement, and that neither the Company
nor any other person is obligated to provide any benefits to me pursuant to the
Agreement until 8 days have passed since my signing of this Release without my
signature having been revoked. I understand that any revocation of this Release
must be received by the Vice President, Chief Administrative Officer and
Secretary within the seven-day revocation period. Finally, I have not been
forced or pressured in any manner whatsoever to sign this Release, and I agree
to all of its terms voluntarily. I represent and acknowledge that no
representation, statement, promise, inducement, threat or suggestion has been
made by any of the Released Parties or by any other individual to influence me
to sign this Release except such statements as are expressly set forth herein or
in the Agreement.
I fully understand that this Release is a legally binding document and
that by signing this Release I am prevented from filing, commencing or
maintaining any action against the Company or the Released Parties.
This Release is final and binding and may not be changed or modified.
___________________________ ____________________________
DATE Xxxx X. Xxxxxxxx
2
SUPPLEMENTAL SCHEDULE
The Company has entered into Continuity Agreements with fifteen (15) officers as
of September 29, 2003. The Continuity Agreement for Xxxxxxx X. Xxxxx,
Co-Founder, Chairman of the Board & Chief Executive Officer has been filed as
Exhibit 10.52. The other fourteen (14) Continuity Agreements are substantially
similar in all material respects to the form of the agreement set forth as
Exhibit 10.53 for Xxxx X. Xxxxxxxx and, therefore, the Continuity Agreements for
the following officers have been omitted:
1. Xxxxx X. Xxxxx
2. Xxxxxxxx X. Xxxxxxxxxx
3. Xxxxx X. Xxxxx
4. Xxxx X. Xxxxxxxx
5. Xxxxxx X. Xxxx
6. Xxxxxxx X. Xxxxx
7. Xxxxxx X. Xxxxxx
8. Xxxxxxx X. Xxxxxxxxx
9. Xxx X. Xxxxxxxxxx
10. Xxxxx X. Xxxxxx
11. Xxxxxxx X. Xxxxx
12. Xxxx X. Xxxxxxx
13. Xxxxxxxx X. Shanti
