UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended February 28, 1995
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________________ to _______________________
Commission File No. 1-8862
MARK IV INDUSTRIES, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 23-1733979
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(State or other jurisdiction of (IRS employer Identification number)
incorporation or organization)
501 John James Audubon Pkwy., P.O. Box 810, Amherst, NY 14226-0810
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (716) 689-4972
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange on
Title of Class which registered
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Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X . No .
---- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
The aggregate market value of the voting stock of the Registrant held by
non-affiliates of the Registrant based on the closing price of the Common
Stock on May 19, 1995 on the New York Stock Exchange was $938,481,594.
As of May 19, 1995, the number of outstanding shares of Registrant's
Common Stock, $.01 par value, was 60,138,070 shares.
Documents Incorporated By Reference
Portions of the Registrant's definitive proxy statement to be filed
pursuant to Regulation 14A not later than 120 days after the end of the fiscal
year are incorporated by reference into Part III.
MARK IV INDUSTRIES, INC.
INDEX TO ANNUAL REPORT
ON FORM 10-K
PART I Page
Item 1: Business . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2: Properties . . . . . . . . . . . . . . . . . . . . . . . . .14
Item 3: Legal Proceedings. . . . . . . . . . . . . . . . . . . . . .15
Item 4: Submission of Matters to a Vote
of Security Holders . . . . . . . . . . . . . . . . . . . .15
PART II
Item 5: Market for the Company's Common Stock and
Related Security Holder Matters . . . . . . . . . . . . . .16
Item 6: Selected Financial Data. . . . . . . . . . . . . . . . . . .17
Item 7: Management's Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . . . . . .19
Item 8: Financial Statements and Supplementary
Data. . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Item 9: Disagreement on Accounting and Financial
Disclosure. . . . . . . . . . . . . . . . . . . . . . . . .54
PART III
Item 10: Directors and Executive Officers of the
Registrant. . . . . . . . . . . . . . . . . . . . . . . . .54
Item 11: Executive Compensation . . . . . . . . . . . . . . . . . . .54
Item 12: Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . . .54
Item 13: Certain Relationships and Related
Transactions. . . . . . . . . . . . . . . . . . . . . . . .54
PART IV
Item 14: Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . .55
Signatures . . . . . . . . . . . . . . . . . . . . . . . . .62
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . 63
PART I
ITEM 1. BUSINESS
General
Mark IV Industries, Inc. ("Mark IV" or "the company") is a diversified
manufacturer of a broad range of proprietary and other power and fluid
transfer products and systems which serve four markets: general industrial;
automotive aftermarket; automotive original equipment manufacturers ("OEMs");
and infrastructure. Power and fluid transfer products and systems accounted
for approximately 90% of Mark IV's net sales in fiscal 1995 after giving pro
forma effect to the company's recent acquisition of Purolator Products Company
("Purolator"). Mark IV is also a leading manufacturer of professional audio
products.
Many of Mark IV's products have a significant, and in certain instances
the leading, share of their respective markets. Products manufactured by Mark
IV principally serve specialized needs in markets in which relatively few
manufacturers compete. These products are primarily sold directly, and
through independent distributors, to other manufacturers and commercial users
in the United States and Europe and, to a lesser extent, in Canada, Latin
America and the Far East. Mark IV operates 71 manufacturing facilities and 52
distribution and sales locations and employs approximately 16,200 people in
eighteen countries.
Mark IV's business strategy is focused on building its power and fluid
transfer business through internal growth, continuation of cost control and
quality improvement programs, and selective strategic domestic and foreign
acquisitions. The company's operating strategy emphasizes management for
continuous improvement, establishing co-operative programs with customers to
engineer, design and develop higher value added systems in addition to
individual products, and the introduction of new, more cost effective and
durable products.
In furtherance of these strategies, over the past five years Mark IV
has: (i) emphasized continuous product development, with over 50% of its
current sales worldwide arising from the introduction of new products or
products which have been redesigned; (ii) significantly expanded its presence
in Western Europe through its June 1993 acquisition of Pirelli Trasmissioni
Industriali, S.p.A. ("PTI"), a leading Italian-based manufacturer of power
transmission products; (iii) substantially increased its domestic production
capacity and strengthened its market position in the power steering and garden
hose markets through its fiscal 1991 acquisition of Anchor Swan, a leading
manufacturer of these and other products; (iv) established distribution
centers to serve markets in Central and South America and the Pacific Rim, and
acquired manufacturing and distribution facilities in Mexico and Sweden; and
(v) implemented cost savings and efficiency programs in its Power and Fluid
Transfer business segment which have contributed to the improvement of the
segment's operating income margins.
Acquisition of Purolator Products Company
As part of the company's strategic emphasis on its power and fluid
transfer business, in November 1994 Mark IV acquired Purolator, which is a
leading manufacturer of filtration products, including automotive oil, air and
fuel filters; residential and commercial heating, ventilating and air-
conditioning ("HVAC") filters; high-technology liquid filtration products; and
specialized industrial filters and filtration systems. The total cost of the
acquisition was $286.3 million. Purolator's filtration business complements
the company's fluid transfer products since many of Purolator's products serve
customers in the same markets as the company's other power and fluid transfer
products, such as certain industrial markets, the automotive aftermarket and,
to a much lesser extent, the automotive OEM market. In addition, filters are
generally an integral part of most power and fluid transfer systems produced
by the company. In particular, the acquisition of Purolator will strengthen
Mark IV's presence in the automotive aftermarket since more than 60% of
Purolator's sales are made to customers in this market. Mark IV also believes
that its extensive sales and distribution network will provide opportunities
for increased sales of Purolator's products.
Segment Information
Prior to the acquisition of Purolator, the company classified its
operations into three business segments: Power and Fluid Transfer;
Transportation; and Professional Audio. Following the acquisition of
Purolator, management reviewed its existing businesses and determined that its
Transportation business segment should be combined with the Power and Fluid
Transfer business segment in view of the similarity in markets and customers
served. Management also believes that the revised classification will enable
the company to benefit from a global organizational structure and the
coordination of distribution activities.
The company now classifies its operations into the following two
business segments:
(i) Power and Fluid Transfer, which includes the design, manufacture
and distribution of products and systems primarily in the general
industrial market, the automotive aftermarket, the automotive OEM
market and the infrastructure market. Such products and systems
include those related to rubber and plastic belts, hose, fittings
and related assemblies; filters; power transfer mechanisms for
door control systems used in mass transit vehicles; information
displays; and advanced traffic control and management systems; and
(ii) Professional Audio, which includes the design and manufacture of
products and systems used primarily in the high-performance
professional audio market, such as microphones, speakers, public
address and musical instrument loudspeaker systems, audio signal
processors, and sound enhancement and noise canceling equipment.
The results of operations of Purolator have been included in the
company's results of operations for fiscal 1995 from its November 1994
acquisition date. The results of operations of PTI have been included in the
company's results of operations from its June 1993 acquisition date. Selected
summary information has been presented below to facilitate the review of the
company's business segment discussion. The summary information has been
derived from the more detailed information regarding industry segments in
accordance with generally accepted accounting principles as presented in Note
14 to the company's audited consolidated financial statements included
elsewhere herein. Such summary information is as follows (dollars in
thousands):
1995
Pro Forma (1) 1995 1994
(Unaudited)
Net Sales to Customers:
Power and Fluid Transfer $1,728,000 $1,418,000 $1,070,700
Professional Audio 185,300 185,300 173,500
Total $1,913,300 $1,603,300 $1,244,200
Operating Income (2):
Power and Fluid Transfer $ 184,500 $ 158,400 $ 124,800
Professional Audio 21,800 21,800 21,900
Total $ 206,300 $ 180,200 $ 146,700
(1) To reflect acquisition and equity transactions as if they had occurred
at the beginning of the year, as described in Note 2 to the audited
financial statements referred to above.
(2) Represents income before corporate expenses, interest expense and taxes.
POWER AND FLUID TRANSFER
Dayco Products Inc. ("Dayco"), a subsidiary of the company, and
Purolator produce a variety of belts, hose, filters, and related assemblies
and systems, for industrial, automotive aftermarket and automotive OEM
customers, primarily in North America and Europe. The acquisition of
Purolator significantly increased the size and scope of the Power and Fluid
Transfer segment. The complementary nature of the product lines, particularly
in the automotive aftermarket, Original Equipment Service (OES) market and
industrial markets integrates the segments's systems and distribution approach
to product offerings. The acquisition of Purolator roughly balances the power
and fluid transfer product lines, and increases the pro forma revenue of these
core products to about $1.5 billion. The balance of this segment serves the
infrastructure market, generating about $228 million of revenue.
The Power and Fluid Transfer segment was expanded and reorganized during
fiscal 1995. Added to the segment's three markets -- General Industrial,
Automotive Aftermarket and Automotive OEM -- were products for the
Infrastructure market, which are produced by the operating units that
previously comprised the company's Transportation business segment. In the
Infrastructure market, sales improved and backlogs continued at record levels.
Also included in this business segment is Protective Closures, which
manufactures plastic and metal caps, plugs, seals and protective netting sold
to a broad base of industrial and automotive OEM customers, and Mokon, which
produces circulating oil and water temperature control systems.
General Industrial
Approximately 30% of fiscal 1995's pro forma sales were to industrial
customers, making General Industrial the largest market in this segment.
General Industrial products include a variety of belts, hose, filters,
tensioners, pulleys, couplings, assemblies and systems for a number of
markets, including agricultural, oil field, mining, lawn and garden, food and
beverage handling, construction, environmental, chemical, lumber and specialty
applications.
Many of the General Industrial products are sold directly to industrial
OEMs for use in agricultural, manufacturing, office, mining, environmental,
fuel dispensing and fuel flow equipment, as well as in products such as
snowmobiles, washing machines, golf carts, vacuum cleaners, outboard motors
and lawn mowers. The balance of sales in this market are to distributors of
industrial replacement belts and hose, and lawn and garden product
distributors and retailers, such as hardware chains, home centers and mass
merchandisers.
The segment's product offerings were expanded in fiscal 1995 to include
the industrial filters and filtration systems which Purolator supplies to the
industrial, aviation and marine markets, broadening the company's product
offerings and customer base in the industrial marketplace. Facet
International, Inc. ("Facet") a Purolator subsidiary, has also expanded the
segment's General Industrial product lines and markets. Facet is a
manufacturer of high performance filtration and separation products and
systems for commercial and military aviation applications. Facet's products,
which have been approved by numerous governmental and industry-related
organizations around the world, are sold to oil companies, airlines and
defense ministries. Facet also produces bilge separators for the commercial
and military marine markets, as well as an environmental protection product
which removes oil pollution from water.
The May 1994 acquisition of the U.S. Rubber Hose Co. ("U.S. Rubber") in
Vero Beach, Florida, is enabling Dayco to enter new areas in the industrial
hose market. U.S. Rubber provides the capability of manufacturing rigid
mandrel hose up to 200 feet in length, in a variety of bore sizes. This new
capability allows Dayco to better serve customers in the paper, oil drilling
and refining, water pumping, natural gas production, manufacturing,
cement/construction, chemical and trucking industries.
Areas of concentration in the General Industrial business include:
strengthening product lines and continuing to integrate the products of Dayco,
Purolator, PTI, U.S. Rubber and Citla, S.A. de C.V. ("Citla"); centralizing
distribution of these products to provide better, more efficient customer
service; expanding the markets and distribution channels for many products by
partnering with customers, as well as by finding new markets for existing
product lines; and increasing manufacturing capacity in certain product areas,
including couplings and hydraulic hose.
Automotive Aftermarket
The Automotive Aftermarket accounted for roughly 28% of fiscal 1995's
pro forma sales. The products in this market include a vast array of
automotive belts, hose, filters and accessories sold to automotive warehouse
distributors, oil companies, original equipment service centers, retail and
auto parts chains, mass merchandisers, farm and fleet stores, and hardware
distributors.
Products include V-ribbed belts, V-belts, and timing belts; radiator,
automotive service, fuel line and heater hose and assemblies; as well as fan
clutches, transmission oil coolers, fan blades, electric fans, couplings and
pulleys. With the addition of Purolator, product offerings were expanded to
include a complete line of automotive oil, air and fuel filters for virtually
all automobiles and light duty trucks currently operated in North America,
including those manufactured by North American, Japanese and European OEMs.
The combined Dayco/Purolator distribution system and complementary customer
base provide opportunities for revenue growth, margin improvement and
increased market penetration.
Dayco's strategy of expansion into new geographic markets was evident in
fiscal 1995 in a number of areas. Purolator's equity interest with Anand
Corporation in Purolator India Limited provides access to the Indian
marketplace. In Australia, a new distribution center was established in
Melbourne to support automotive aftermarket growth in the Asia Pacific region.
Automotive OEM
The segment's Automotive OEM business accounted for 20% of fiscal 1995's
proforma sales. Dayco designs, develops and manufactures automotive accessory
drive, camshaft drive, fuel, air conditioning, and power steering systems for
the global automotive OEM market, as well as radiator, heater, fuel, engine
and transmission oil cooler assemblies, consisting of various hose, belts,
filters, tensioners, brackets, pulleys, canisters and sprockets.
In response to the increased global nature of the automotive OEM
industry, Dayco's Automotive OEM business is now organized into a single
global unit, to better meet the needs of its worldwide customers, and to
maximize the use of its resources on a global basis.
In keeping with the company's long-term growth strategy to expand its
geographic presence, several strategic acquisitions were made in fiscal 1995.
Citla, a manufacturer of industrial and automotive belts and hose products
with headquarters in Mexico City, Mexico, was acquired in June 1994. Citla
provides support to the company's existing OEM customers in Mexico, as well as
access to the Mexican automotive aftermarket and industrial marketplace.
Acquired in September 1994, Dayco Hevas ("Hevas") of Varberg, Sweden,
manufactures automotive tubes and tube assemblies. Hevas' products complement
existing power steering and air conditioning components for the European
automobile industry, further enhancing the company's market position in
Europe.
The acquisition of Purolator also provided increased market
opportunities with the company's global OEM customers. Purolator's products
will be incorporated into Dayco's systems, and the distribution of Purolator's
products will be enhanced by Dayco's global OEM programs. Purolator's equity
interest in Purolator India Limited expands the company's manufacturing
capabilities and OEM markets in Southeast Asia, while the company's 50%
ownership in Purodenso Corp. provides access to the OEM transplant market in
the U.S.
Dayco also has multiple development programs with the Detroit "Big
Three," U.S. foreign-based OEMs, and most of the major European automotive
manufacturers. Fiscal 1995 saw improvements in the truck OEM market with new
orders from Iveco, Mercedes and Scania, and increased volume with Mack,
Navistar, and Cummins. Dayco also continues to benefit from the increasing
demand in Europe for automobiles equipped with power steering and air
conditioning.
Emphasis on vertical integration as a hose and assembly producer has
helped Dayco gain market share in the power steering hose assembly market,
while the increase in the number of motor vehicles and the climate in Asia
are expected to create a strong demand for Dayco's air conditioning hose
assemblies.
Infrastructure
Mark IV designs and manufactures products and systems serving two
principal components of the Infrastructure market. Mark IV produces
information displays, door systems, interior hardware, lighting and other
systems, primarily for mass transit buses and railcars. In addition the
company produces electronic vehicle identification products for the electronic
toll and traffic management markets, as well as information signs and signals.
These products, which are manufactured and sold in North America and
throughout Europe, accounted for 12% of fiscal 1995's pro forma sales.
Customers include OEMs of mass transit bus and rail vehicles, and
commercial aircraft, as well as state and local highway and transportation
agencies. Some of the Infrastructure products are also sold to the
aftermarket.
The Infrastructure market is predominantly contract-driven, with many of
the contracts spanning one or more years. At times, there are delays in the
completion of contracts which may cause fluctuations in the timing of
revenues, allowing inventories to build. Backlogs in the Infrastructure market
have been growing steadily over the past several years, and are at record
levels today.
Luminator Mass Transit, together with LLE in Germany and SLE in France,
design, market, and produce electronic vehicle information and passenger
information display systems and components for mass transit buses and railcars
throughout the world. These systems are also sold throughout Europe and Asia.
While most of these products are sold directly to vehicle manufacturers, there
is also a large market for replacement parts used to repair or upgrade mass
transit vehicles. The marketing efforts of these companies are directed
primarily at transit agencies, who can specify that Mark IV products be
included in their mass transit systems, as well as to the OEMs.
F-P Electronics is a producer of digital electromagnetic display
components, supplying product to all of the major manufacturers of mass
transit information display systems in North America and Europe -- including
the company's Luminator, LLE and SLE operations. These products are also used
in gasoline pump displays, variable message signs for highways, time and
temperature displays, and scoreboards. This market was enhanced by a new line
of high intensity fiber optic displays designed to dramatically improve
visibility.
Vapor supplies complete bus door systems, as well as basic components,
to the transit industry. Vapor also supplies the railroad industry with
various electronic products. Vapor introduced three new door systems during
the year. These unique systems, which include microprocessor-based controls,
were developed to meet the changing needs of domestic customers, and to
position Vapor for entry into the Asian market.
Mark IV's Luminator Aircraft Products unit supplies interior lighting
and other passenger comfort systems for commercial aircraft, including the
MD-11 and the new MD-90, and every other McDonnell Douglas aircraft produced
since the DC-3. In addition, Luminator provides components for several Boeing
aircraft models, as well as aircraft panel, navigation, landing and emergency
lighting for general aviation customers. The company also makes a
comprehensive line of night vision-compatible interior and exterior lighting
used in military applications. Luminator supplies its airline customers with
aftermarket replacement and spare parts through its Product Support Center in
Texas.
Mark IV's Automatic Signal/Eagle Signal and Interstate Highway Sign
operations manufacture products sold to state and local governments, as well
as transportation agencies, primarily in the U.S. and Canada. Automatic
Signal/Eagle Signal is a leading, full-line supplier of traffic control
equipment and systems in the U.S., including traffic and pedestrian signals,
signal control devices and complete traffic management systems. Some of these
products are also sold to the U.S. Government and to foreign municipalities.
Interstate Highway Sign is a leading manufacturer of reflective directional,
informational, regulatory and warning signs for the nation's highways and
other roadways. Interstate's products include a newer line of signs, using
exterior light, that provide better visibility and are easier to maintain.
NRD, a leading supplier of ionization elements used in smoke detectors, also
manufactures self-energized, luminous exit signs, as well as static control
devices used mainly in the electronics and printing industries.
Mark IV's Intelligent Vehicle Highway Systems (IVHS) products and their
markets have been in development for a number of years. In March 1994, Mark IV
IVHS equipment was selected by a group representing eight toll authorities in
New Jersey, New York, Pennsylvania and Delaware for use in the new E-ZPass(SM)
electronic toll collection system. Mark IV IVHS will provide the tag and
reader equipment for the E-ZPass system, which is designed to eliminate the
need for motorists to exchange cash, tokens, or tickets at toll booths. Tolls
will be paid electronically, as vehicles pass through the booths, reducing
congestion and pollution, increasing accuracy in toll collection, and
improving driver convenience on toll roads, bridges and tunnels.
PROFESSIONAL AUDIO
The Professional Audio business segment accounted for approximately 10%
of total pro forma sales, and 11% of pro forma operating income in fiscal
1995. This group of companies, known in the marketplace as Mark IV Audio,
provides a comprehensive range of high quality, high performance audio
products to the professional audio market, including recording studio
equipment, systems for live performance, and permanently installed engineered
sound systems. Products include microphones, mixing consoles, signal
processors, amplifiers and loudspeakers, and accessory items for use in a wide
variety of installations, such as arenas, stadiums, theaters, amusement parks,
airports, churches and factories, and in concert sound applications.
In fiscal 1995, Mark IV Audio took significant steps forward in
realizing the objectives of its recent organizational restructuring, including
a better focus on its diversified technologies, brand recognition, and
geographic distribution and manufacturing. General administration, research
and development, and manufacturing responsibilities are now centralized for
all Mark IV Audio companies, for more effective coordination and utilization
of resources.
Marketing, sales and other business development activities are divided
into three regions -- the Americas, Europe and the Pacific. Each region is
structured with a business development team whose mission is to identify and
aggressively pursue growth opportunities within its territory. This new
strategy enables Mark IV Audio to provide products, pricing and programs
tailored to the specific needs of the customers in each area, with an
understanding of the cultures, conditions and business practices of the given
region.
Mark IV Audio has a full-line strategy for the production of all
components required in sound systems, which allows it to serve its customers
as a single-source audio supplier. The Mark IV Audio group is a leader in
many segments of the professional audio market, and is diversified globally,
with over 58% of the group's fiscal 1995 revenue coming from outside the U.S.
Mark IV Audio holds a large share of the worldwide market for fixed
installations of engineered sound systems under its Electro-Voice, Altec
Lansing and Dynacord product lines. The group also accounts for a leading
share of the wired dynamic and high-end wireless microphones employed in the
broadcast and production segments of the professional audio market, with
products under the Vega and Electro-Voice brand names, as well as signal
processing products under the Klark Teknik brand. Mark IV Audio is also a
leading supplier of high-speed tape cassette duplication equipment under its
Gauss and Electro Sound brands, and mixers under the DDA and Midas labels. In
addition, Mark IV Audio has developed numerous digital audio signal processing
(DSP) applications under its Dynacord and Klark Teknik brand names.
Under the Dynacord and University Sound brand names, Mark IV Audio
serves the commercial sound segment of the professional audio market,
providing products for fixed installations with typically less demanding
performance requirements than those of engineered sound systems. The concert
sound market, which consists of audio equipment used in touring sound systems
for live performances, is served by the company's Electro-Voice, Klark Teknik,
Midas and Vega product lines.
In fiscal 1995, Electro-Voice introduced the RE 2000, a true condenser
studio microphone that delivers exceptional sound quality and other superior
performance specifications that exceed those of much more expensively priced
microphones. The RE 2000 is used primarily in high-end professional recording
studios, and also has some applications in the broadcast market in areas where
flawless performance is required.
University Sound commercial speaker products were used in all of the
security systems and nearly all of the paging systems at the 1994 World Cup
Soccer events held in the United States, and viewed by billions throughout the
world. The new Duplex Technology Systems (DTS) speakers from Altec Lansing
were used in the main sound system of the 1994 tour of Ice Capades. These DTS
speakers have also received an enthusiastic response in churches and other
houses of worship, with sales growing rapidly.
The introduction of the Midas XL 200 and XL 4 mixing consoles is
expected to add to the success already experienced by the Midas XL 3 console.
The XL 200 offers quality and performance in a mid-priced touring console. The
Midas XL 4 is a world-class mixing console combining state-of-the-art analog
circuitry with a digital automation control system.
Digital Signal Processing (DSP) is the latest trend in the professional
audio market. Recognizing the trend in its early stages, Mark IV Audio
offered its first digital products in 1987. With DSP technology, sound system
users in airports, sports facilities, convention centers, churches and concert
halls throughout the world, will have access to operation, reconfiguration and
system status information that is flexible and easy to use. Musicians can now
purchase a single "black box" that can be programmed to provide effects such
as reverberation and echo, and tailor the effects through software.
The group's structural reorganization in fiscal 1995 brings increased
effectiveness in the area of customer service within the three geographic
regions defined for business development. The centralization of manufacturing
and engineering is helping Mark IV Audio to achieve a worldwide unity of
effort, bring a tighter focus on key developments, share intellectual and
physical resources, and concentrate investment in process and design
technologies.
Marketing and Competition
Mark IV's products are marketed primarily in the United States and
Europe, and to a lesser extent in Canada and the Far East. The company uses
its own sales engineers and other sales personnel, independent distributors
and sales representatives to market its products.
A majority of the company's products have a significant and in many
instances the leading market share in their respective markets. Most of the
markets for the company's products are characterized by a limited number of
competitors. However, competition in certain of those markets is intense.
Some of the company's competitors are substantially larger than Mark IV and
have greater financial resources. The company competes on the basis of price,
quality, technical innovation and its ability to fill orders promptly, with
the relative importance of each factor depending on the market for the
particular product.
Backlog
The company does not believe that the backlog of orders for any of its
products is material to the company as a whole. However, backlogs are a
significant factor in the Infrastructure market of the Power and Fluid
Transfer segment.
Patents and Trademarks
Although a number of patents and trademarks have been issued to the
company and its subsidiaries, the company believes its competitive position is
more dependent on its technical knowledge and processes than on patent or
trademark protection. The company believes, however, that its trademarks and
tradenames used in connection with certain products may be significant to its
business.
Research and Development
The company is engaged in ongoing research and development in connection
with new and existing products. Research and development expenditures are
expensed as incurred, and amounted to $34,800,000; $30,900,000; and
$26,100,000 in the company's operations in fiscal 1995, 1994 and 1993,
respectively.
Raw Materials and Supplies
The materials and supplies used to produce the company's products are
generally obtained from a wide variety of suppliers, and the company has not
experienced any shortages. Although certain materials used in the manufacture
of flip-dots, electrostatic control equipment, self-illuminating lights and
smoke-detector ionization elements are readily available from only a few
suppliers, the company does not anticipate any significant difficulties in
obtaining any of these raw materials in the foreseeable future.
Government Regulation
Certain of the company's process control systems, electrostatic control
devices, smoke-detector ionization elements and self-illuminating lights have
radioactive components, the production, storage and transportation of which
are subject to federal, state and local laws and regulations. Federal and
state regulations also limit the amount of exposure the company's employees
may have to such radioactive materials. The company has obtained the
necessary licenses and approvals required for its businesses and believes it
is in material compliance with all applicable regulations concerning
radioactive materials and employee safety.
A portion of the company's business is conducted pursuant to U.S.
Government contracts or sub-contracts. Generally, government contracts and
sub-contracts contain provisions permitting termination at any time at the
convenience of the Government upon payment to the company of costs incurred
plus a profit related to the work performed to the date of termination.
Substantially all of the company's government contracts and sub-contracts
contain these provisions. The company, as a government contractor, is subject
to various statutes and regulations governing defense contracts.
Other than as described above with respect to radioactive components,
the company is not subject to any particular environmental laws or regulations
which are not generally applicable to all manufacturing companies. The
company believes that it is in material compliance with all applicable
environmental laws and regulations. Mark IV does not anticipate having to
incur material capital expenditures for environmental compliance in fiscal
1996 or fiscal 1997.
Employees
The company currently employs approximately 16,200 persons, of whom
approximately 11,300 are production employees, with the remainder serving in
executive, administrative, engineering or sales capacities. Approximately
3,300 production employees are covered by seventeen collective bargaining
agreements which expire at various times through the year 2000. The company
believes its relationship with its employees is good.
Other
Mark IV was incorporated in Delaware in 1970 and its executive offices
are at 501 John James Audubon Parkway, Amherst, New York 14226-0810. Its
telephone number is (716) 689-4972.
ITEM 2. PROPERTIES
The table below summarizes the approximate floor space of the company's
corporate office and principal manufacturing facilities by business segment.
Approximate Floor Space
(In Thousands of Square Feet)
Owned Leased Total
Corporate Office - 23 23
Power and Fluid Transfer (1) 6,994 2,472 9,466
Professional Audio (2) 506 188 694
(1) Consisting of the following fifty-eight facilities:
North American facilities (approximately 8,055,000 square feet):
Waynesville, NC; Springfield, MO; Walterboro, SC; Williston, SC; Ocala,
FL; Fort Scott, KS; Fort Worth, TX; Alliance, NE; Eldora, IA; McCook,
NE; Fayetteville, AR; Red Wing, MN; Weston, Ontario, Canada; Walnut, CA;
Rock Island, IL; Easley, SC; Bucyrus, OH; Lexington, TN; Buffalo, NY;
Vero Beach, FL; Stillwell, OK; Tulsa, OK; Henderson, NC; Kenly, NC;
Davenport, IA; Sacramento, CA; Newark, NJ; Dexter, MO; Fayettville, NC;
Salt Lake City, UT; Greensboro, NC; Mexico City, Mexico; Pasteje,
Mexico; Plano, TX; Montreal, Quebec, Canada; Niles, IL; Mississauga,
Ontario, Canada (3); Cobourg, Ontario, Canada; Little Rock, AR; Austin,
TX; Grand Island, NY; Clinton, MA; Hudsonville, MI.
European Facilities (approximately 1,411,000 square feet): Halesowen,
U.K.; Torino, Italy (2); Barcelona, Spain; Baudour, Belgium; Chieti,
Italy; Manopello, Italy (2); Treforest, Wales, UK; Lacoruna, Spain;
Varberg, Sweden; Rastatt, Germany and Nice, France.
(2) Consisting of the following thirteen facilities:
North American facilities (approximately 518,000 square feet):
Buchanan, MI; Newport, TN; Sevierville, TN; Mishawaka, IN; Oklahoma
City, OK(2); Sun Valley, CA; El Monte, CA; Gananoque, Ontario, Canada.
European facilities (approximately 176,000 square feet):
Straubing, West Germany; Hohenwarth, West Germany; Kidderminster,
Worchester, U.K.; Hounslow, Middlesex, U.K.
The company also owns or leases various small production facilities,
sales offices, distribution and research centers which are not included in the
above list of properties.
The company believes that its existing facilities have sufficient
capacity to meet its anticipated needs in each of its industry segments for
the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
The company is involved in various legal and environmental related
claims or disputes in the ordinary course of business. In the opinion of
management, the ultimate cost to resolve these matters will not have a
material adverse effect on the company's financial position, results of
operations, or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The company's Common Stock is listed on the New York Stock Exchange
(Symbol: IV). The following table sets forth, for the fiscal periods
indicated, the high and low closing sale prices per share of the company's
Common Stock as reported by the New York Stock Exchange. All amounts have
been adjusted for the 5% stock dividend issued in April 1995.
Fiscal 1995 Fiscal 1994
Low High Low High
1st Quarter $15.000 $18.125 $14.875 $17.875
2nd Quarter $17.125 $19.875 $18.000 $21.000
3rd Quarter $19.250 $21.875 $17.125 $23.375
4th Quarter $17.625 $19.375 $16.250 $19.000
As of February 28, 1995, the approximate number of holders of record of
the company's Common Stock was 2,600.
The company declared total cash dividends of $.107 and $.093 per share
during fiscal 1995 and 1994, respectively.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
The following table sets forth selected consolidated financial information of the company
for each of the five fiscal years in the period ended February 28, 1995. This table should be
read in conjunction with the audited consolidated financial statements for the company and the
related notes thereto included elsewhere herein.
FIVE YEAR SUMMARY OF OPERATIONS
(Amounts in thousands, except per share data)
Fiscal Year Ended the Last Day of February,
1995
Pro Forma (1) 1995 (2) 1994 1993 1992 1991
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Net sales $1,913,300 $1,603,300 $1,244,200 $1,085,700 $1,004,300 $ 789,700
Operating income (3) $ 190,400 $ 164,300 $ 131,800 $ 113,600 $ 108,600 $ 88,000
Interest expense 63,400 53,900 50,100 51,600 64,700 60,600
Operating income,
net of interest
expense $ 127,000 $ 110,400 $ 81,700 $ 62,000 $ 43,900 $ 27,400
Income from continuing
operations:
Before securities
transactions $ 78,300 $ 67,900 $ 51,100 $ 39,100 $ 28,400 $ 17,000
Securities
transactions - - - - (1,600) 600
Income from
continuing
operations 78,300 67,900 51,100 39,100 26,800 17,600
Income from
discontinued
operations - - - 3,600 2,000 4,700
Extraordinary items (1,100) (1,100) (21,700) (3,700) (4,500) 700
Cumulative effect of
accounting change - - (26,000) - - -
NET INCOME $ 77,200 $ 66,800 $ 3,400 $ 39,000 $ 24,300 $ 23,000
Primary income
per share (4):
Continuing operations:
Before securities
transactions $ 1.46 $ 1.40 $ 1.15 $ .89 $ .82 $ .64
Securities
transactions - - - - (.05) .02
Continuing
operations 1.46 1.40 1.15 .89 .77 .66
Discontinued
operations - - - .08 .06 .18
Extraordinary items (.02) (.02) (.49) (.08) (.13) .03
Cumulative effect of
accounting change - - (.58) - - -
NET INCOME $ 1.44 $ 1.38 $ .08 $ .89 $ .70 $ .87
Fiscal Year Ended the Last Day of February,
1995
Pro Forma(1) 1995 (2) 1994 1993 1992 1991
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Fully-diluted income
per share (4):
Continuing operations:
Before securities
transactions $ 1.35 $ 1.29 $ 1.04 $ .83 $ .75 $ .56
Securities
transactions - - - - (.04) .02
Continuing
operations 1.35 1.29 1.04 .83 .71 .58
Discontinued
operations - - - .07 .05 .13
Extraordinary items (.02) (.02) (.41) (.07) (.12) .02
Cumulative effect of
accounting change - - (.48) - - -
NET INCOME $ 1.33 $ 1.27 $ .15 $ .83 $ .64 $ .73
Weighted average
number of shares
outstanding (4):
Primary 53,700 48,600 44,600 44,100 34,800 26,600
Fully-diluted 60,100 55,000 53,300 52,800 40,300 35,100
Balance Sheet Data:
Working capital $ 379,700 $ 379,700 $ 312,800 $ 275,400 $ 285,500 $ 345,100
Total assets $1,846,400 $1,846,400 $1,282,300 $1,124,800 $1,104,500 $1,100,100
Long-term debt $ 610,700 $ 610,700 $ 567,200 $ 497,100 $ 525,400 $ 717,600
Stockholders'
equity (5) $ 635,500 $ 635,500 $ 345,400 $ 345,600 $ 311,900 $ 170,000
____________________________
</TABLE>
(1) Presents the proforma consolidated condensed results of operations
as if the following transactions had occurred at the beginning of
fiscal 1995: (i) the acquisition of Purolator in November 1994 and
the related borrowings under the credit agreement; and (ii) the sale
of the company's common stock in December 1994.
(2) Includes the results of operations of the Purolator business from
its November 1994 acquisition date.
(3) Represents income from continuing operations before interest
expense, securities transactions and taxes.
(4) Adjusted to reflect the 5% stock dividend issued in April 1995.
(5) The company declared cash dividends of approximately $.107; $.093;
$.08; $.063 and $.055 per share in fiscal 1995, 1994, 1993, 1992 and
1991, respectively.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The company's short-term capital needs are met by cash generated through
operations, and supplemented by its various credit facilities to the extent
required. During fiscal 1995, net cash provided by earnings was $126.5
million, a 39% increase over the $91.2 million generated in fiscal 1994, which
in turn represented a 46% increase over fiscal 1993. At February 28, 1995,
the company's working capital investment was $379.7 million, a net increase of
$66.9 million in comparison to February 28, 1994. Excluding the effects of
the Purolator acquisition, net working capital was actually reduced by
approximately $5.6 million in fiscal 1995. Management believes that cash
generated from operations should be sufficient to support working capital
requirements and anticipated capital expenditures for the foreseeable future.
The company's long-term capital needs are met by cash generated from
operations, bank financing, and a combination of public debt and equity
offerings. Recent financing activities of a longer term nature include the
following:
- In October 1994, the company entered into agreements with certain
holders of its 6-1/4% Convertible Debentures due February 15, 2011 to
convert approximately $76.7 million of the debentures into
approximately 5.6 million shares of the company's common stock. In
January 1995, the company called for redemption the $37.5 million
remaining principal amount of these debentures. As a result of the
call for redemption, substantially all of the remaining debentures were
converted into 2.7 million shares of the company's common stock.
- In November 1994, the company entered into a $650 million credit
agreement (the "1994 Credit Agreement") with a group of financial
institutions which provides for (i) a five-year term loan in the
principal amount of approximately $300 million used to finance the
acquisition of Purolator and to repay certain existing Purolator debt,
and (ii) a five-year revolving credit facility in an amount of up to
$350 million used for refinancing the company's previously existing
credit facility (the "1993 Credit Facility") and certain existing
Purolator debt, and for working capital and other general corporate
purposes. The loans outstanding under the 1994 Credit Agreement bear
interest, at the company's option, at (i) the reference rate of the
agent acting on behalf of the financial institutions, or (ii) under a
LIBOR option with borrowing spreads of LIBOR plus 0.55% to LIBOR plus
1.00%, depending on the company's consolidated leverage ratio (as
defined in the 1994 Credit Agreement). The company is currently paying
interest on the loan at LIBOR plus 0.55% per annum. The 1994 Credit
Agreement contains certain affirmative and negative covenants customary
for this type of agreement and is guaranteed by all of the company's
significant domestic subsidiaries. All of such guarantees are secured
by all of the outstanding capital stock of each guarantor subsidiary.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- In November 1994, the company acquired all of the stock of Purolator
Products Company ("Purolator") for a total cash purchase price,
including expenses, of approximately $286.3 million. Funding for the
acquisition was provided by borrowings under the company's 1994 Credit
Agreement. Purolator is a significant addition to the company's Power
and Fluid Transfer business segment. The company also completed a
number of smaller acquisitions during fiscal 1995 for a total purchase
price of approximately $14.5 million.
- In December 1994, the company completed an underwritten public offering
of 6.5 million shares of its common stock, at a public offering price
of $18.10 per share (the "Offering"). The net proceeds from the
Offering of approximately $113 million were used to repay a portion of
the company's outstanding indebtedness under the 1994 Credit Agreement.
Under the terms of the 1994 Credit Agreement, the amount of net
proceeds from the Offering used to repay outstanding indebtedness under
the revolving credit facility may be reborrowed by the company.
As a result of all of the activities discussed above, long-term debt at
February 28, 1995 increased $43.5 million from the total amount outstanding at
February 28, 1994. Absent the effects of the company's acquisitions and
divestitures, as well as the effects of the equity offerings and debt
conversion in fiscal 1995, long-term debt was actually reduced by
approximately $17 million from the levels at February 28, 1994. The company's
long-term debt as a percentage of total capitalization at February 28, 1995 is
49%, versus the 62.2% relationship which existed at February 28, 1994.
In addition to the financing mentioned above, the company also has a revolving
credit agreement (the "Multi-Currency Agreement") which it entered into in May
1993 and amended during fiscal 1995. The Multi-Currency Agreement provides
for a five year multi-currency revolving credit facility with a group of
financial institutions in the U.S. and Europe. The Multi-Currency Agreement
provides for a revolving loan commitment for the first two years of the
equivalent of $100,000,000. The commitment declines by $12,500,000 at each of
six semi-annual dates beginning in June 1995, with the remaining $25,000,000
of commitment expiring May 1998. Interest rates on borrowings under the
Multi-Currency Agreement are subject to change based on a specified pricing
grid which increases from LIBOR plus 0.55% to LIBOR plus 1.00% per annum based
on the company's senior debt rating (as defined in the Multi-Currency
Agreement). The company is currently paying interest at LIBOR plus .55% on
borrowings under the Multi-Currency Agreement. The Multi-Currency Agreement
also contains certain affirmative and negative covenants customary in an
agreement of this nature.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The company has borrowing availability under its primary credit agreements,
including the Multi-Currency Agreement, of $411.7 million and additional
availability under its various domestic and foreign demand lines of credit of
approximately $87.0 million as of February 28, 1995. Management believes that
cash generated from operations should be sufficient to support the company's
working capital requirements and anticipated capital expenditures for the
foreseeable future and that availability under existing credit agreements is
adequate to support operations and to provide flexibility in the balance
sheet.
Foreign Currency
The company does not hold or issue derivatives for trading purposes and is not
a party to leveraged derivatives transactions. The company's sales from
foreign locations and exports are about $580 million and as a result, the
company does enter into foreign currency forward contracts as a hedge for
certain existing or anticipated business transactions denominated in various
foreign currencies. Foreign currency transactions included in income amounted
to gains (losses) of approximately $100,000; $300,000 and ($700,000) in fiscal
1995, 1994 and 1993, respectively. Unrealized gains and losses related to
foreign currency forward contracts were not significant at February 28, 1995
or February 28, 1994. The maximum notional amount of foreign currency forward
contracts outstanding at any one time during fiscal 1995 amounted to
approximately $31.3 million and the approximate notional amounts of such
contracts outstanding were $12,700,000 and $27,700,000 at the end of fiscal
1995 and 1994, respectively.
At February 28, 1995, the company also had an interest rate swap outstanding
on debt of approximately $17 million, which effectively converts variable rate
debt to a fixed annual interest rate of approximately 4.75% through September
1996. From time to time, the company may enter into such arrangements to
balance the mix of fixed and variable rate debt.
Results of Operations
Prior to the acquisition of Purolator, the company classified its operations
into three business segments: Power and Fluid Transfer; Transportation; and
Professional Audio. Following the acquisition of Purolator, management
reviewed its existing businesses and determined that its Transportation
business segment should be combined with the Power and Fluid Transfer business
segment in view of the similarity in markets and customers served. Management
also believes that the revised classification will enable the company to
benefit from a global organizational structure and the coordination of
distribution activities.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The company now classifies its operations into the following two business
segments:
(i) Power and Fluid Transfer, which includes the design, manufacture
and distribution of products and systems primarily in the general
industrial market, the automotive aftermarket, the original
equipment manufacturers ("OEM") market and the infrastructure
market. Such products and systems include those related to
rubber and plastic belts, hose, fittings and related assemblies;
filters; power transfer mechanisms for door control systems used
in mass transit vehicles; information displays; and advanced
traffic control and management systems; and
(ii) Professional Audio, which includes the design and manufacture of
products and systems used primarily in the high-performance
professional audio market, such as microphones, speakers, public
address and musical instrument loudspeaker systems, audio signal
processors, and sound enhancement and noise canceling equipment.
The results of operations of Purolator have been included in the company's
results of operations for fiscal 1995 from its November 1994 acquisition date.
The results of operations of Pirelli Trasmissioni SpA ("PTI"), a significant
acquisition in fiscal 1994, have been included in the company's results of
operations from its June 1993 acquisition date.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
In reviewing the company's sales performance, the following results by segment
should be considered for each of the fiscal years presented (dollars in
thousands):
1995 1994
------------------ -----------
% Increase % Increase
Over Prior Over Prior
Amount Year Amount Year 1993
----
Net Sales
to Customers:
Power and Fluid
Transfer $1,418,000 32.4% $1,070,700 17.8% $ 908,900
Professional
Audio 185,300 6.8% 173,500 (1.9%) 176,800
Total $1,603,300 28.9% $1,244,200 14.6% $1,085,700
The increase in the Power and Fluid Transfer sales in fiscal 1995 is primarily
the result of the Purolator acquisition and other smaller acquisitions, as
well as the inclusion of PTI (acquired in June 1993), for all of fiscal 1995
and only nine months in fiscal 1994. Excluding the acquisitions, sales
increased approximately $201.1 million (21.1%) over fiscal 1994, with $105.3
million of the increase in the U.S., and the $95.8 million balance of the
increase primarily in Europe. Foreign currency exchange rate movements did
not significantly effect fiscal 1995 sales in comparison to fiscal 1994. The
increase in fiscal 1994 in comparison to fiscal 1993 is the result of internal
growth of approximately $54.1 million (6.0%), and the inclusion of the PTI
operations. Excluding PTI and the negative effect of foreign currency
movements, the internal growth in fiscal 1994 was approximately $74.8 million
(8.2%), with $45.7 million (5.0%) of such growth generated from the segment's
U.S. operations and the balance from its foreign based operations.
The $11.8 million increase in Professional Audio sales in fiscal 1995 was
generated equally by the segment's U.S. and Pacific Rim operations. Sales in
the segment's European operations remained comparable to the prior year's,
with relative strengthening beginning in the latter part of fiscal 1995.
Sales in the Professional Audio segment in fiscal 1994 remained comparable to
fiscal 1993, with a slight increase in U.S. sales being offset by a decline in
the segment's foreign operations, primarily in Europe.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cost of products sold as a percentage of consolidated net sales were 66.1%,
64.6%, and 64.4% in fiscal 1995, 1994 and 1993, respectively. The increase in
the percentage of costs in fiscal 1995 is primarily the result of the
Purolator acquisition, due to its historically lower gross margin, with its
last four months tending to be the lowest margin months. This level of costs
also reflects the positive effects of the company's cost control programs,
which have helped to substantially offset the negative pressures on the
margins experienced by both of the company's business segments.
Selling and administration costs as a percentage of consolidated net sales
were 18.3%, 19.0%, and 19.8% in fiscal 1995, 1994 and 1993, respectively. The
reductions in fiscal 1995 and 1994 are primarily the result of operating
synergies achieved from the combination of the PTI business with the
previously existing European operations of the Power and Fluid Transfer
business segment. The relatively consistent level of costs also indicates the
company's continued emphasis on cost control has been successful in
substantially offsetting the impact of inflation on such costs.
Research and development costs increased by $3.9 million (12.6%) in fiscal
1995 over fiscal 1994, which in turn increased by $4.8 million (18.4%) over
fiscal 1993. The increases in fiscal 1995 and 1994 are primarily caused by
the Purolator and PTI acquisitions. As a percentage of consolidated net
sales, such costs were in the range of 2.2% to 2.5% in each of fiscal 1995,
1994 and 1993. This consistent level of investment reflects the company's
continuing emphasis on new product development.
Depreciation and amortization expense increased by $9.8 million (23.5%) in
fiscal 1995 over fiscal 1994, which in turn increased by $9.6 million (29.9%)
over fiscal 1993. The increases in fiscal 1995 and 1994 are primarily
attributable to the Purolator and PTI acquisitions. The fiscal 1995 amount
also includes $1.6 million related to the restricted stock grants made
primarily in fiscal 1994, compared to $800,000 in fiscal 1994. The remaining
increases are primarily the result of increased capital equipment
expenditures.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The above mentioned items resulted in the following operating income for each
of the fiscal years presented (dollars in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
% of % of % of
Related Related Related
Amount Sales Amount Sales Amount Sales
<S> <C> <C> <C> <C> <C> <C>
OPERATING INCOME
Power and Fluid Transfer $158,400 11.2% $124,800 11.7% $104,100 11.5%
Professional Audio 21,800 11.8% 21,900 12.6% 22,000 12.4%
Total operating income 180,200 11.2% 146,700 11.8% 126,100 11.6%
Corporate expenses (15,900) (1.0) (14,900) (1.2)% (12,500) (1.1)%
Continuing operations,
before interest
and taxes $164,300 10.2% $131,800 10.6% $113,600 10.5%
</TABLE>
In spite of the increased interest cost resulting from the Purolator and PTI
acquisitions, as well as the increase in the overall interest rate
environment, interest expense was up only $3.8 million (7.6%) in fiscal 1995
in comparison to fiscal 1994. The relatively slight increase in fiscal 1995's
expense was achieved as a result of the financing transactions referred to in
the Liquidity and Capital Resources section, as well as the new 1994 Credit
Agreement which provided for lower interest rates as a result of the company's
improved debt to total capitalization position. Fiscal 1994's interest
expense was actually down $1.5 million (2.9%) from fiscal 1993's expense. The
reduction in fiscal 1994 was primarily the result of the company's repurchase
and in-substance defeasance of its 13-3/8% subordinated debentures at the
beginning of fiscal 1994, which was refinanced with the issuance of the
company's 8-3/4% Senior Subordinated Notes. The interest expense amounts
reported for continuing operations also reflect the allocation of $1.4
million, $2.2 million, and $5 million to discontinued operations in fiscal
1995, 1994 and 1993, respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The company's provision for income tax as a percentage of pre-tax accounting
income was 38.5%, 37.5%, and 36.9% in fiscal 1995, 1994 and 1993,
respectively. The higher rates in fiscal 1995 and 1994 are primarily the
result of increased income in foreign jurisdictions with higher statutory tax
rates than in the U.S.
As a result of all of the above, the company's income from continuing
operations in fiscal 1995 increased $16.8 million (32.9%) over fiscal 1994.
In turn, fiscal 1994's income from continuing operations increased $12 million
(30.7%) over fiscal 1992.
As a result of replacing the prior credit agreement with the 1994 Credit
Agreement and the other debt extinguishment referred to above, the company
incurred extraordinary losses, net of related tax benefits, of $1.1 million,
$21.7 million and $3.7 million in fiscal 1995, 1994 and 1993, respectively.
Additionally, the company's adoption of SFAS No. 106 in fiscal 1994 resulted
in the recognition of a net of tax charge of $26 million as the cumulative
effect of the accounting change in fiscal 1994. The above extraordinary items
and cumulative effect of the accounting change in fiscal 1994 resulted in
significantly reduced net income of $3.4 million in fiscal 1994 in comparison
to the $66.8 million earned in fiscal 1995 and the $39 million earned in
fiscal 1993.
Impact of Inflation
Generally, the company has been able to pass on or offset inflation-related
cost increases; consequently, inflation has had no material impact on income
from operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements
Page
Report of Independent Accountants for
each of the three fiscal years in the
period ended February 28, 1995. . . . . . . . . . . . . . . . . . . . .28
Financial Statements:
Consolidated Balance Sheets at February 28, 1995 and 1994 . . . . . . . .29
Consolidated Statements of Income for each of
the three fiscal years in the period ended
February 28, 1995. . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Consolidated Statements of Stockholders' Equity for
each of the three fiscal years in the period
ended February 28, 1995. . . . . . . . . . . . . . . . . . . . . . . . .31
Consolidated Statements of Cash Flows
for each of the three fiscal years in
the period ended February 28, 1995 . . . . . . . . . . . . . . . . . . .32
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . .33
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Mark IV Industries, Inc.
We have audited the accompanying consolidated balance sheets of Mark IV
Industries, Inc. and Subsidiaries as of February 28, 1995 and 1994, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended February 28, 1995. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Mark IV
Industries, Inc. and Subsidiaries as of February 28, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended February 28, 1995, in conformity with
generally accepted accounting principles.
As discussed in Note 11 to the consolidated financial statements, in 1994 the
company changed its method of accounting for postretirement benefits other
than pensions.
COOPERS & LYBRAND L.L.P.
Rochester, New York
March 30, 1995
MARK IV INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
FEBRUARY 28, 1995 AND 1994
(Dollars in Thousands)
ASSETS 1995 1994
Current Assets:
Cash $ 800 $ 500
Accounts receivable 383,700 275,100
Inventories 361,900 265,000
Other current assets 58,600 42,100
Total current assets 805,000 582,700
Pension and other non-current assets 197,100 138,200
Property, plant and equipment, net 487,900 365,300
Cost in excess of net assets acquired 356,400 196,100
TOTAL ASSETS $1,846,400 $1,282,300
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current maturities of debt $ 67,300 $ 45,000
Accounts payable 174,000 99,700
Compensation related liabilities 70,400 43,100
Accrued interest 13,800 13,600
Other current liabilities 99,800 68,500
Total current liabilities 425,300 269,900
Long-Term Debt:
Senior debt 352,700 195,000
Subordinated debt 258,000 372,200
Total long-term debt 610,700 567,200
Other non-current liabilities 174,900 99,800
Stockholders' Equity:
Common stock - $.01 par value;
Authorized 100,000,000 shares;
Issued 59,900,000 shares in 1995 and
44,800,000 shares in 1994 600 400
Additional paid-in capital 550,200 261,500
Retained earnings 90,800 88,600
Foreign currency translation adjustment (6,100) (5,100)
Total stockholders' equity 635,500 345,400
TOTAL LIABILITIES
& STOCKHOLDERS' EQUITY $1,846,400 $1,282,300
The accompanying notes are an integral part of these financial statements.
MARK IV INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED THE LAST DAY OF FEBRUARY 1995, 1994 and 1993
(Amounts in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Pro Forma
1995* 1995 1994 1993
(Unaudited)
<S> <C> <C> <C> <C>
Net sales $1,913,300 $1,603,300 $1,244,200 $1,085,700
Operating costs:
Cost of products sold 1,285,200 1,060,000 803,500 698,800
Selling and administration 338,200 292,700 236,300 215,100
Research and development 38,900 34,800 30,900 26,100
Depreciation and amortization 60,600 51,500 41,700 32,100
Total operating costs 1,722,900 1,439,000 1,112,400 972,100
Operating income 190,400 164,300 131,800 113,600
Interest expense 63,400 53,900 50,100 51,600
Income from continuing operations,
before provision for taxes 127,000 110,400 81,700 62,000
Provision for taxes 48,700 42,500 30,600 22,900
Income from continuing operations 78,300 67,900 51,100 39,100
Income from discontinued operations,
net - - - 3,600
Income before extraordinary items
and accounting change 78,300 67,900 51,100 42,700
Extraordinary loss from early
extinguishment of debt, net of tax
benefit of $700; $12,300; and $2,000 (1,100) (1,100) (21,700) (3,700)
Cumulative effect of a change in
accounting principle - - (26,000) -
NET INCOME $ 77,200 $ 66,800 $ 3,400 $ 39,000
Net income per share of common stock:
Primary:
Income from continuing operations $ 1.46 $ 1.40 $ 1.15 $ .89
Income from discontinued operations - - - .08
Extraordinary loss (.02) (.02) (.49) (.08)
Cumulative effect of a change in
accounting principle - - (.58) -
NET INCOME $ 1.44 $ 1.38 $ .08 $ .89
Fully-diluted:
Income from continuing operations $ 1.35 $ 1.29 $ 1.04 $ .83
Income from discontinued operations - - - .07
Extraordinary loss (.02) (.02) (.41) (.07)
Cumulative effect of a change in
accounting principle - - (.48) -
NET INCOME $ 1.33 $ 1.27 $ .15 $ .83
Weighted average shares outstanding:
Primary 53,700 48,600 44,600 44,100
Fully-diluted 60,100 55,000 53,300 52,800
The accompanying notes are an integral part of these financial statements.
* To reflect acquisition and equity transactions occurring as of the
beginning of the year, as discussed further in Note 2.
</TABLE>
MARK IV INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED THE LAST DAY OF FEBRUARY 1995, 1994 AND 1993
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Foreign
Additional Currency
Common Paid-in Retained Translation
Stock Capital Earnings Adjustment
<S> <C> <C> <C> <C>
Balance at February 29, 1992 $ 400 $154,800 $156,500 $ 200
Net income for fiscal 1993 39,000
Cash dividends of $.08 per share (3,600)
Stock dividend of 5%
issued in July 1992 27,900 (27,900)
Stock dividend of 5%
issued in May 1993 35,700 (35,700)
Exercise of stock options 900
Translation adjustments (2,600)
Balance at February 28, 1993 400 219,300 128,300 (2,400)
Net income for fiscal 1994 3,400
Cash dividends of $.093 per share (4,200)
Stock dividend of 5% issued
in April 1994 38,900 (38,900)
Conversion of 6-1/4% Convertible
Debentures 100
Restricted stock grants, net 800
Exercise of stock options,
including related tax benefits 2,400
Translation adjustments (2,700)
Balance at February 28, 1994 400 261,500 88,600 (5,100)
Net income for fiscal 1995 66,800
Cash dividends of $.107 per share (5,600)
Stock dividend of 5% issued
in April 1995 59,000 (59,000)
Public sale of common stock at
$18.10 per share,net of expenses 100 112,400
Sale of common stock to employee
benefits plans at $18.10 per share 2,000
Conversion of 6-1/4% Convertible
Debentures, net of expenses 100 111,100
Restricted stock grants, net 1,600
Stock options activity,
including related tax benefits 2,600
Translation adjustments ( 1,000)
Balance at February 28, 1995 $ 600 $550,200 $ 90,800 ($ 6,100)
The accompanying notes are an integral part of these financial statements.
</TABLE>
MARK IV INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED THE LAST DAY OF FEBRUARY 1995, 1994 AND 1993
(Dollars in Thousands)
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Income from continuing operations $ 67,900 $ 51,100 $ 39,100
Items not affecting cash:
Depreciation and amortization 51,500 41,700 32,100
Deferred income taxes 18,200 10,800 3,900
Pension income, net of other items (11,100) (12,400) (12,500)
Net cash provided by earnings 126,500 91,200 62,600
Changes in assets and liabilities, net
of effects of acquired and discontinued
businesses:
Accounts receivable (20,900) (27,200) (12,000)
Inventories (23,100) (7,700) 1,300
Other assets (3,000) (5,700) 6,000
Accounts payable 33,700 (2,600) 3,800
Other liabilities (16,100) (8,400) (21,400)
Net cash provided by
continuing operations 97,100 39,600 40,300
Discontinued operations,
before non-cash items - 1,100 8,800
Extraordinary items, before
deferred charges - (30,100) (4,900)
Net cash provided
by operating activities 97,100 10,600 44,200
Cash flows from investing activities:
Acquisitions (300,900) (65,000) (4,000)
Divestitures and asset sales 12,100 35,000 13,500
Purchase of plant and equipment, net (49,600) (38,000) (32,900)
Net cash used in investing activities (338,400) (68,000) (23,400)
Cash flows from financing activities:
Credit agreement borrowings, net 121,400 (30,000) 65,000
Multi-currency credit agreement
borrowings, net (10,200) 48,400 -
Purchases of senior and
subordinated debt - (190,200) (62,800)
Issuance of subordinated debt - 258,000 -
Other changes in long-term debt, net 900 (18,900) (33,600)
Changes in short-term bank borrowings 19,500 (8,300) 11,700
Common stock transactions 114,800 800 900
Cash dividends paid (5,100) (4,100) (3,300)
Net cash provided by (used in)
financing activities 241,300 55,700 (22,100)
Effect of exchange rate fluctuations 300 (500) (600)
Net increase (decrease) in cash 300 (2,200) (1,900)
Cash and cash equivalents:
Beginning of the year 500 2,700 4,600
End of the year $ 800 $ 500 $ 2,700
</TABLE>
The accompanying notes are an integral part of these financial statements.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The Company and its Significant Accounting Policies
The Company
The company is a diversified manufacturer of proprietary and other products,
with operations in Power and Fluid Transfer and Professional Audio businesses.
Principles of Consolidation
The consolidated financial statements include the accounts of the company and
all of its subsidiaries. All significant intercompany transactions have been
eliminated.
Inventories
Inventories are stated at the lower of cost or market, with cost determined
primarily on the last-in, first-out (LIFO) method.
Property, Plant and Equipment
Property, plant and equipment are presented at cost, net of accumulated
depreciation. The cost of property, plant and equipment retired or otherwise
disposed of, and the accumulated depreciation thereon, are eliminated from the
asset and related accumulated depreciation accounts, and any resulting gain or
loss is reflected in income. The company provides for depreciation of plant
and equipment primarily on the straight-line method to amortize the cost of
such plant and equipment over its useful life.
Cost in Excess of Net Assets Acquired
Cost in excess of net assets acquired ("goodwill") is presented net of
accumulated amortization. The company continually evaluates the existence of
goodwill impairment on the basis of whether the goodwill is fully recoverable
from projected, undiscounted net cash flows of the related business unit.
Goodwill is amortized on the straight-line method over 40 year periods from
the acquisition dates of the respective businesses acquired.
Income Taxes
The company adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (SFAS No. 109), in fiscal 1994. The adoption of
this standard changed the company's method of accounting for income taxes from
the deferred method to the liability method. The company adopted SFAS No. 109
retroactively by restating prior years' financial statements for all years
back to and including fiscal 1986.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Postretirement Benefits
Through fiscal 1993, the company accounted for the cost of postretirement
benefits on the cash basis as they were paid. In fiscal 1994, the company
adopted Statement of Financial Accounting Standards No. 106, Employers
Accounting for Postretirement Benefits Other Than Pensions (SFAS No. 106).
SFAS No. 106 required the estimated present-value of the company's liability
for its commitments to provide health and life insurance benefits to its
retirees to be included in the balance sheet. The related expense is required
to be recognized on the accrual method over the remaining years of the
employees' active service, up to the dates of individual eligibility to retire
and begin receiving the benefit.
Foreign Currency
The assets and liabilities of the company's foreign subsidiaries are
translated at year-end exchange rates, and resulting gains and losses are
accumulated in a separate component of stockholders' equity. Foreign currency
transactions are included in income as realized. The company enters into
foreign currency forward contracts as a hedge for certain existing or
anticipated business transactions denominated in various foreign currencies.
Gains or losses on contracts related to existing business transactions are
deferred and recognized as the related transaction is completed. Gains or
losses on contracts related to anticipated transactions are recognized as of
the balance sheet date.
Net Income Per Share of Common Stock
Primary net income per share is calculated on the basis of the weighted
average number of shares outstanding during each year, adjusted for subsequent
stock distributions. Common stock equivalents which would arise from the
exercise of stock options, using the treasury stock method, were not
significant and have not been included in the calculation.
Fully-diluted net income per share, in addition to the weighted average
determined above, includes common stock equivalents which would arise from the
exercise of stock options using the treasury stock method, and assumes the
conversion of the company's 6-1/4% Convertible Debentures (for the periods
outstanding), as well as the elimination of related interest expense, net of
income tax effects.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Cash Flows
For purposes of cash flows, the company considers overnight investments as
cash equivalents. The company paid interest of approximately $56,000,000;
$52,900,000; and $58,700,000 in fiscal 1995, 1994 and 1993, respectively. Such
amounts include $1,400,000; $2,200,000 and $5,000,000 allocated to the costs
of discontinued operations in fiscal 1995, 1994 and 1993, respectively. The
company paid income taxes of approximately $21,900,000; $13,700,000; and
$11,800,000 in fiscal 1995, 1994 and 1993, respectively.
2. Acquisitions and Divestitures
In November 1994, the company acquired substantially all of the stock of
Purolator Products Company ("Purolator") for a total cash purchase price,
including expenses, of approximately $286,300,000. Funding for the
acquisition was provided by borrowings under the company's 1994 Credit
Agreement. Purolator is a manufacturer of a broad range of filters used
principally in the automotive aftermarket, and specialized separation systems
for marine, high-technology and industrial applications. Purolator is a
significant addition to the company's Power and Fluid Transfer business
segment.
The acquisition has been accounted for under the purchase method, and
Purolator's results of operations have been consolidated with the company's
results of operations effective as of the acquisition date. The company has
made a preliminary determination and allocation of the purchase price as of
the acquisition date, consisting of the following (dollars in thousands):
Accounts receivable $ 83,300
Inventories 69,900
Other current assets 22,000
Accounts payable and
other current liabilities (102,700)
Net working capital acquired 72,500
Fixed assets 106,900
Cost in excess of net assets acquired 154,200
Long-term bank indebtedness (38,600)
Other non-current items, net (8,700)
Total purchase price,
including expenses $286,300
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The financial position of Purolator has been included in the consolidated
balance sheet of the company as of February 28, 1995 based upon the above
preliminary determination and allocation. Such amounts will be finalized upon
additional analysis and asset valuation determinations to be made by the
company with the assistance of various outside firms. The final changes will
be recorded in fiscal 1996, and are not expected to have a significant impact
on the company's results of operations as reported herein.
The pro forma 1995 information presented in the consolidated statements of
income is based upon the following information, which presents the pro forma
consolidated condensed results of operations as if the acquisition of
Purolator in November 1994 and the sale of the company's common stock in
December 1994 had occurred at the beginning of each of the years presented.
The pro forma amounts do not purport to be indicative of the results that
actually would have been obtained had the transactions identified above
actually taken place at the beginning of each of the years, nor are they
intended to be a projection of future results (dollars in thousands, except
per share amounts):
1995 1994
(Unaudited)
Net sales $1,913,300 $1,654,500
Income before interest
and taxes $ 190,400 $ 160,400
Income before
extraordinary items and
accounting changes $ 78,300 $ 60,800
Income per share,
before extraordinary items
and accounting changes:
Primary $ 1.46 $ 1.19
Fully-diluted $ 1.35 $ 1.09
The company made several other small acquisitions during fiscal 1995 for a
total purchase price of approximately $14,500,000. During fiscal 1994, the
company decided to sell its non-core business units, and accounted for them as
discontinued operations. The sale of certain of the company's assets held for
sale generated proceeds of $12,100,000 in fiscal 1995 and $35,000,000 in
fiscal 1994. At February 28, 1995, the company's net assets of its remaining
discontinued operations amounted to approximately $19,500,000. Such amounts
have been segregated in the balance sheet and offset by a corresponding amount
of long-term debt, on the assumption that the net sale proceeds will equal or
exceed the net asset amount, and all such proceeds will be utilized to offset
existing borrowings of the company.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Accounts Receivable
Accounts receivable are reflected net of allowances for doubtful accounts of
$18,600,000 and $12,000,000 at February 28, 1995 and 1994, respectively.
4. Inventories
Inventories consist of the following at February 28, 1995 and 1994 (dollars in
thousands):
1995 1994
Raw materials, parts, and sub-assemblies $ 103,500 $ 67,700
Work-in-process 60,200 43,500
Finished goods 198,200 153,800
Total $361,900 $265,000
As a result of the fair value determination of inventories required by the
purchase method of accounting for acquired companies as of their acquisition
date, LIFO costs exceed FIFO costs by approximately $39,300,000 and
$35,000,000 at February 28, 1995 and 1994, respectively.
5. Property, Plant and Equipment
Property, plant and equipment are stated at cost and consist of the following
at February 28, 1995 and 1994 (dollars in thousands):
1995 1994
Land and land improvements $ 41,500 $ 35,700
Buildings 145,300 115,700
Machinery and equipment 451,600 324,700
Total property, plant and equipment 638,400 476,100
Less accumulated depreciation 150,500 110,800
Property, plant and equipment, net $487,900 $365,300
Depreciation expense was approximately $40,900,000; $33,200,000; and
$29,800,000 in fiscal 1995, 1994 and 1993, respectively.
6. Cost in Excess of Net Assets Acquired
Cost in excess of net assets acquired is presented net of accumulated
amortization of approximately $29,700,000 and $22,700,000 at February 28, 1995
and 1994, respectively. Amortization expense was approximately $7,000,000;
$5,700,000 and $4,700,000 in fiscal 1995, 1994 and 1993, respectively.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Long-Term Debt
Long-term debt consists of the following at February 28, 1995 and 1994
(dollars in thousands):
1995 1994
Senior debt:
Credit Agreement $ 300,000 $140,000
Multi-Currency Agreement 38,300 48,400
Other items 42,500 40,500
Total 380,800 228,900
Less current maturities (8,600) (5,800)
Less amounts allocated
to discontinued operations (19,500) (28,100)
Net senior debt 352,700 195,000
Subordinated debt:
8-3/4% Senior Subordinated Notes 258,000 258,000
6-1/4% Convertible Debentures - 114,200
Total subordinated debt 258,000 372,200
Total long-term debt 610,700 567,200
Total stockholders' equity 635,500 345,400
Total capitalization $1,246,200 $912,600
Long-term debt as a percentage of
total capitalization 49.0% 62.2%
In November 1994, the company entered into a new $650,000,000 credit agreement
(the "1994 Credit Agreement") with a group of financial institutions which
provides for (i) a five-year term loan in the principal amount of
approximately $300,000,000 used to finance the acquisition of Purolator and to
repay certain existing Purolator debt, and (ii) a five-year revolving credit
facility in an amount of up to $350,000,000 used for refinancing the company's
previously existing credit facility (the "1993 Credit Facility") and certain
existing Purolator debt, and for working capital and other general corporate
purposes.
The loans outstanding under the 1994 Credit Agreement bear interest, at the
company's option, at (i) the reference rate of the agent acting on behalf of
the financial institutions, or (ii) under a LIBOR option, with borrowing
spreads of LIBOR plus 0.55% to LIBOR plus 1.00% depending on the company's
consolidated leverage ratio (as defined in the 1994 Credit Agreement). The
company is currently paying interest on the loan at LIBOR plus 0.55% per
annum. The 1994 Credit Agreement contains certain affirmative and negative
covenants customary for this type of agreement and is guaranteed by all of the
company's significant domestic subsidiaries. All such guarantees are
collateralized by first priority pledges of all outstanding capital stock of
each guarantor subsidiary.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In October 1994, the company entered into agreements with certain holders of
its 6-1/4% Convertible Debentures due February 15, 2011 to convert
approximately $76,700,000 of the debentures into approximately 5,600,000
shares of the company's common stock. In January 1995, the company called for
redemption the $37,500,000 remaining principal amount of these debentures. As
a result of the call for redemption, substantially all of the debentures were
voluntarily converted into 2,700,000 shares of the company's common stock.
The principal amount of converted debt, as well as related unamortized
deferred charges, have been reclassified to common stock and additional paid
in capital.
In May 1993, the company entered into a revolving credit agreement (as amended
in January 1995, the "Multi-Currency Agreement") providing for a five year
multi-currency revolving credit facility with a group of financial
institutions in the U.S. and Europe. The Multi-Currency Agreement provides
for a revolving loan commitment for the first two years of the equivalent of
$100,000,000. The commitment declines by $12,500,000 at each of six semi-
annual dates beginning in June 1995, with the remaining $25,000,000 of
commitment expiring in May 1998. Interest rates on borrowings under the
Multi-Currency Agreement are subject to change based on a specified pricing
grid which increases from LIBOR plus 0.55% to LIBOR plus 1.00% per annum based
on the company's senior debt rating (as defined in the Multi-Currency
Agreement). The company is currently paying interest at LIBOR plus .55% on
borrowings under the Multi-Currency Agreement. The Multi-Currency Agreement
also contains certain affirmative and negative covenants customary in an
agreement of this nature.
In March 1993, the company completed a public offering of $258,000,000
principal amount of its 8-3/4% Senior Subordinated Notes due April 2003. A
substantial portion of the net proceeds from the sale of the notes was used to
fund the retirement of the company's 13-3/8% Subordinated Debentures. There
are no sinking fund requirements on the Senior Subordinated Notes and they may
not be redeemed until April 1998. At such date they are redeemable at
104.375% of principal amount, and thereafter at an annually declining premium
over par until April 2001 when they are redeemable at par. The Indenture
limits the payment of dividends and the repurchase of capital stock, and
includes certain other restrictions and limitations customary with
subordinated indebtedness of this type.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In March 1993, the company offered to purchase its 13-3/8% Subordinated
Debentures for a cash price of $1,137.50 per $1,000 principal amount, plus
accrued interest. As a result of the offer, and certain open-market
purchases, the company acquired approximately $138,000,000 principal amount of
these debentures. The company then completed an "in-substance defeasance" in
which approximately $60,400,000 was deposited in an irrevocable trust to cover
both the remaining outstanding principal amount ($52,000,000) and the related
interest expense requirements of these debentures. The company recognized an
extraordinary loss, net of tax, of approximately $21,700,000 as a result of
the extinguishment of this debt in fiscal 1994. The company also acquired or
defeased approximately $63,000,000 of its indebtedness and recognized an
extraordinary loss, net of tax, of $3,700,000 in fiscal 1993.
The fair value of the 8-3/4% Senior Subordinated Notes is less than their
recorded value by approximately $9,000,000 as of February 28, 1995, based upon
the quoted market value of such notes as of that date. Since the rest of the
company's notes payable and senior debt are primarily floating rate debt,
their recorded amounts approximate their fair values as of February 28, 1995.
The recorded amounts for other financial instruments, such as cash and
accounts receivable, approximate their fair value.
Annual maturities of the company's long-term debt for the next five fiscal
years are approximately: 1996-$8,600,000; 1997-$4,200,000; 1998-$17,100,000;
1999-$27,000,000; and 2000-$312,700,000. The amounts for fiscal 1996 through
1999 exclude maturities related to the term loan portion of the 1994 Credit
Agreement as it is anticipated that such amounts will be offset with
availability under the revolving credit facility portion of such agreement
until maturity in 2000, by which date it is anticipated that the agreement
will have been extended, or replaced.
8. Leases
The company has operating leases which expire at various dates through 2010
with, in some instances, renewal privileges. Certain leases provide for
escalation of the rentals primarily for increases in maintenance costs and
property taxes. Total rental expense under operating leases was approximately
$18,300,000; $15,900,000; and $15,900,000 in fiscal 1995, 1994 and 1993,
respectively. Minimum rental payments under operating leases having an
initial or remaining noncancellable term in excess of 12 months are
approximately: 1996-$18,500,000; 1997-$15,300,000; 1998-$13,300,000; 1999-
$11,400,000; 2000-$8,400,000; 2001 and thereafter $19,300,000.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Income Taxes
Income from continuing operations and the related provision for taxes for
fiscal 1995, 1994 and 1993 consists of the following (dollars in thousands):
1995 1994 1993
Income from continuing operations,
before provision for taxes:
United States $ 69,500 $45,800 $41,400
Foreign 40,900 35,900 20,600
Total $110,400 $81,700 $62,000
Provision for taxes on income from
continuing operations:
Currently payable:
United States $ 12,500 $14,500 $10,900
Foreign 11,800 5,300 8,100
Total currently payable 24,300 19,800 19,000
Deferred:
United States 7,600 3,600 4,200
Foreign 10,600 7,200 (300)
Total deferred 18,200 10,800 3,900
Total provision for taxes $ 42,500 $30,600 $22,900
The provision for taxes on income for fiscal 1995, 1994, and 1993 differs from
the amount computed using the United States statutory income tax rate as
follows (dollars in thousands):
1995 1994 1993
Expected tax at United States
statutory income tax rate $ 38,600 $28,600 $21,100
Permanent differences 2,100 1,200 900
State and local income taxes 1,900 1,200 600
Tax credits (700) (500) (400)
Foreign tax rate differences 600 100 700
Total provision for taxes $ 42,500 $30,600 $22,900
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The tax effects of temporary differences which give rise to a significant
portion of deferred tax assets (liabilities) consist of the following at
February 28, 1995 and 1994 (dollars in thousands):
1995 1994
Current:
Accounts receivable $ 7,300 $ 3,900
Inventories (5,000) (9,500)
Compensation related 8,000 3,400
Tax credit and net
operating loss carryforwards - 9,000
Other items 7,000 7,500
Total current asset 17,300 14,300
Valuation allowance (5,600) (4,000)
Net current asset $ 11,700 $ 10,300
Non-current:
Fixed and intangible assets $(52,100) $(39,500)
Pension and other benefit plans (5,500) (21,400)
Tax credits 23,000 29,400
Capital loss carryforwards 11,000 11,300
All other items 26,800 19,600
Total non-current liability 3,200 (600)
Valuation allowance (14,100) (16,800)
Net non-current liability $(10,900) $(17,400)
The current valuation allowance primarily offsets foreign tax benefits
established in a previous acquisition which may not be realized. The non-
current valuation allowance is primarily attributable to the capital loss
carryforwards which are available to use substantially through fiscal 1996.
Based on the company's history of prior operating earnings and its
expectations for the future, management of the company has determined that it
is more likely than not that operating income will be sufficient to utilize
the tax credits in their carryforward periods, which run substantially through
fiscal 2007. The undistributed earnings of the company's foreign subsidiaries
have been reinvested in each country, and are not expected to be remitted back
to the parent company. The determination of the possible tax effect relating
to such reinvested income is not practicable.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Pension and Profit Sharing Plans
The company has a variety of defined benefit pension plans covering both union
and non-union employees. Under the union plans, employee benefits are
computed based on a dollar amount multiplied by the number of years of
service. Benefits under the non-union plans are computed in a similar manner
for certain plans, and based on the employees' earnings in other plans.
The following table sets forth the funded status of the company's defined
benefit plans and the net asset amount included in the consolidated balance
sheets at February 28, 1995 and 1994 (dollars in thousands):
1995 1994
Actuarial present value of benefit obligations:
Vested $(259,400) $(233,300)
Accumulated $(264,500) $(236,100)
Projected $(273,700) $(241,900)
Plan assets at fair value 335,400 314,300
Plan assets in excess of projected
benefit obligation 61,700 72,400
Unrecognized net loss and
differences in assumptions 49,100 36,400
Unrecognized prior service costs 2,700 3,100
Prepaid pension cost recognized in the
consolidated balance sheets $ 113,500 $ 111,900
The plans' assets consist of corporate and government bonds, guaranteed
investment contracts, listed common stocks and real estate investments.
Included in the plans' assets are common stock of the company with a market
value of approximately $28,800,000 and the company's 8-3/4% subordinated
debentures with a market value of $6,700,000 at February 28, 1995. The funded
status of Purolator's defined benefit plans as of the acquisition date
consisted of plan assets of approximately $42,500,000 and a projected benefit
obligation of approximately $53,500,000.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Net pension income for the defined benefit pension plans in fiscal 1995, 1994,
and 1993 includes the following components (dollars in thousands):
1995 1994 1993
Service cost-benefits
earned during the period $ (3,600) $ (2,900) $ (2,700)
Interest cost on projected
benefit obligation (19,500) (18,200) (17,300)
Actual return on assets 4,300 32,100 36,600
Net amortization and deferral 31,300 2,500 (4,100)
Net pension income $ 12,500 $ 13,500 $ 12,500
The assumptions utilized to measure net pension income and the projected
benefit obligations are as follows:
1995 1994 1993
Discount rate 8.75% 7.75% 9.00%
Expected long-term rate of return 11.50% 12.00% 12.00%
Average increase in compensation 4.00% 5.00% 5.00%
The changes in the expected long-term rate of return and the rate of
compensation increase did not have a significant effect on fiscal 1995's
income, nor are they expected to have a significant effect on fiscal 1996's
income.
The company also has defined contribution pension and profit sharing plans for
a significant number of its salaried and hourly employees. The company's
contributions to these plans are based on various percentages of compensation,
and in some instances are based upon the amount of the employees'
contributions to the plans. The annual cost of these plans, the substantial
part of which is funded currently, amounted to approximately $8,100,000;
$6,700,000; and $6,600,000 in fiscal 1995, 1994 and 1993, respectively.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Post-retirement Benefits
The company currently provides health and life insurance benefits to a number
of existing retirees from certain of its operations under the provisions of a
number of different plans. Contributions currently required to be paid by the
retirees towards the cost of such plans range from zero to 100%. The company
also has a number of active employees who might receive such benefits upon
their retirement. A number of the plans which relate to retirees and active
non-union employees include provisions which allow the company to increase the
cost to participants, or otherwise modify or terminate them as determined by
management. The plans which relate to active union employees are subject to
modification in the same manner as are all other compensation and benefits
matters in the process of the company's negotiations of contracts covering its
union employees.
The company recognized a $40,000,000 liability for the cost of these plans,
referred to as the accumulated post-retirement benefit obligation (APBO),
entirely in fiscal 1994 in accordance with SFAS No. 106. Since the company
also adopted SFAS No. 109 at the same date, the company recognized a deferred
tax asset of $14,000,000 representing the future tax benefits to be received
related to the APBO. The resulting net charge of $26,000,000 ($.48 per fully
diluted share) was included as the cumulative effect of a change in accounting
principle in the consolidated statement of income for fiscal 1994. The
company continues to fund such costs on the cash-basis, which amounted to
approximately $4,700,000; $4,600,000; and $3,600,000 in fiscal 1995, 1994 and
1993, respectively.
The following table sets forth the amount included with other non-current
liabilities in the consolidated balance sheets at February 28, 1995 and 1994
(dollars in thousands):
1995 1994
Accumulated post-retirement benefit obligation:
Retirees and beneficiaries receiving benefits $64,100 $34,700
Active employees, fully eligible for benefits 6,100 4,600
Active employees, not fully eligible for benefits 10,300 6,500
Total accumulated benefit obligation 80,500 45,800
Unrecognized net loss (2,900) (6,600)
Post-retirement benefit liability recognized
in the consolidated balance sheets $77,600 $39,200
The company's post-retirement benefit expense on the accrual method for fiscal
1995 and 1994 includes the following components (dollars in thousands):
1995 1994
Service cost-benefits earned
during the period $ 500 $ 400
Interest cost on the APBO 4,600 3,400
Total expense $5,100 $3,800
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The APBO for Purolator's various plans was approximately $38,200,000 as of the
acquisition date, and such amount is the primary cause of the increase in the
APBO from the end of fiscal 1994. The APBO was calculated using a discount
rate of 8.75% at February 28, 1995, and 7.75% at February 28, 1994. The
change in the discount rate did not have a significant effect on the expense
determination for fiscal 1995 and 1994, and is not expected to have a
significant effect for fiscal 1996. The APBO determinations assume an initial
health care cost trend rate of approximately 10%, trending down rateably to an
ultimate rate of 5%, which is expected to be reached in five years. The
impact of a one-percentage-point increase in such trend rate would be to
increase the APBO at February 28, 1995 by approximately $3,000,000 and
increase annual expense by approximately $500,000.
12. Legal Proceedings
The company is involved in various legal and environmental related issues. In
the opinion of the company's management, the ultimate cost to resolve these
matters will not have a material adverse effect on the company's financial
position, results of operations or cash flows.
13. Stockholders' Equity and Stock Options
In December 1994, the company completed an underwritten public offering of
approximately 6,500,000 shares of its common stock, at a public offering price
of $18.10 per share (the "Offering"). The net proceeds from the Offering of
approximately $113,000,000 were used to repay a portion of the indebtedness
outstanding under the company's 1994 Credit Agreement. The company also sold
approximately 110,000 shares of its common stock to one of its pension plans
in December 1994 at a price of $18.10 per share, or a total cost of
approximately $2,000,000.
The company granted certain executives restricted stock awards with respect to
22,000 shares in fiscal 1995 and 353,075 shares in fiscal 1994, at $.01 par
value per share. In certain situations the restrictions on the stock lapse
after a five year period. Therefore, the expense is being recognized as it is
earned over the restriction period, with $1,600,000 and $800,000 recognized as
an expense in fiscal 1995 and 1994, respectively. The unearned balance as of
February 28, 1995 is approximately $4,500,000. As of February 28, 1995,
approximately 250,500 shares remain available for issuance under the company's
Restricted Stock Plan.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The company's qualified Incentive Stock Option Plans provide for granting
officers and other key employees options to purchase the company's common
stock at an exercise price equal to 100% of the market price on the date of
grant. The options may be exercised in cumulative annual increments of 25%
commencing one year after the date of grant, and have a maximum duration of
seven to ten years. There were approximately 952,419 and 1,486,791 shares
reserved for the future granting of qualified incentive stock options at
February 28, 1995 and 1994.
As a result of the company's acquisition of Purolator, holders of Purolator
non-qualified stock options were entitled to receive an immediate cash payment
equal to their built-in gain in such options as of the acquisition date. In
lieu of the cash payment, holders of Purolator options were given the
opportunity to convert their options into options to acquire company stock at
an exercise price that would give them the same built-in gain as they had in
the Purolator options. As a result, certain of the Purolator options were
converted into non-qualified options to acquire approximately 334,600 shares
of the company's common stock at an average exercise price of $12.80 per
share. The company's common stock and additional paid in capital were
increased by approximately $2,000,000 to recognize the issuance of these "in-
the-money" company stock options. The holders of such options are 100% vested
in their exercise rights, and all such options have a duration of 10 years
from the date they were originally granted by Purolator.
The following table summarizes the status of all of the company's stock option
transactions for fiscal 1995, 1994 and 1993 (dollars in thousands, except per
share amounts):
1995 1994 1993
Average Average Average
Option Option Option Option Option Option
Shares Price Shares Price Shares Price
Balance at
beginning
of year 596,650 $ 8.55 774,149 $ 7.29 885,252 $ 4.05
Activity during
the year:
Granted 870,946 $15.45 14,333 $18.37 245,069 $12.43
Exercised (100,583) $ 5.98 (175,680) $ 3.70 (352,525) $ 2.86
Canceled (6,421) $11.49 (16,152) $ 9.18 (3,647) $ 5.90
Balance at
end of year:
Outstanding 1,360,592 $13.12 596,650 $ 8.55 774,149 $ 7.29
Exercisable 644,348 $10.50 267,803 $ 6.83 271,783 $ 3.92
As a result of the exercise of certain employees' incentive stock options, the
company realized a tax benefit of $200,000 and $1,700,000 in fiscal 1995 and
1994, respectively, and such amounts have been recognized as a direct increase
in additional paid-in capital.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The company's Board of Directors declared five percent stock dividends which
were distributed in April 1995 (declared March 30, 1995), April 1994, and May
1993. All share amounts have been presented as if the stock distributions had
occurred on March 1, 1992, the beginning of fiscal 1993. The company
continues to be authorized by its Board of Directors to repurchase
approximately 6,700,000 shares, or approximately 11%, of the company's
outstanding common stock as of February 28, 1995. The company is authorized
to issue 10,000,000 shares of preferred stock, and there are no shares
outstanding at the present time.
14. Industry Segments, Geographic Areas and Currency Transactions
Prior to the acquisition of Purolator, the company classified its operations
into three business segments: Power and Fluid Transfer; Transportation; and
Professional Audio. Following the acquisition of Purolator, management
reviewed its existing businesses and determined that its Transportation
business segment should be combined with the Power and Fluid Transfer business
segment in view of the similarity in markets and customers served. Management
also believes that the revised classification will enable the company to
benefit from a global organizational structure and the coordination of
distribution activities.
The company now classifies its operations into the following two business
segments:
(i) Power and Fluid Transfer, which includes the design, manufacture
and distribution of products and systems primarily in the general
industrial market, the automotive aftermarket, the original
equipment manufacturers ("OEM") market and the infrastructure
market. Such products and systems include those related to
rubber and plastic belts, hose, fittings and related assemblies;
filters; power transfer mechanisms for door control systems used
in mass transit vehicles; information displays; and advanced
traffic control and management systems; and
(ii) Professional Audio, which includes the design and manufacture of
products and systems used primarily in the high-performance
professional audio market, such as microphones, speakers, public
address and musical instrument loudspeaker systems, audio signal
processors, and sound enhancement and noise canceling equipment.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information concerning the company's business segments for fiscal 1995, 1994
and 1993 is as follows (dollars in thousands):
Proforma
1995 * 1995 1994 1993
(Unaudited)
NET SALES TO CUSTOMERS
Power and Fluid Transfer $1,728,000 $1,418,000 $1,070,700 $ 908,900
Professional Audio 185,300 185,300 173,500 176,800
Total net sales
to customers $1,913,300 $1,603,300 $1,244,200 $1,085,700
OPERATING INCOME
Power and Fluid Transfer $ 184,500 $ 158,400 $ 124,800 $ 104,100
Professional Audio 21,800 21,800 21,900 22,000
Total operating income 206,300 180,200 146,700 126,100
General corporate (15,900) (15,900) (14,900) (12,500)
Interest expense (63,400) (53,900) (50,100) (51,600)
Income from continuing
operations, before
provision for taxes $ 127,000 $ 110,400 $ 81,700 $ 62,000
IDENTIFIABLE ASSETS
Power and Fluid Transfer $1,614,600 $1,614,600 $1,062,100 $ 843,100
Professional Audio 177,800 177,800 162,700 158,900
General corporate 54,000 54,000 57,500 122,800
Total
identifiable assets $1,846,400 $1,846,400 $1,282,300 $1,124,800
DEPRECIATION AND AMORTIZATION
Power and Fluid Transfer $ 52,400 $ 43,300 $ 34,600 $ 25,800
Professional Audio 4,500 4,500 4,500 4,400
General corporate 3,700 3,700 2,600 1,900
Total depreciation
and amortization $ 60,600 $ 51,500 $ 41,700 $ 32,100
CAPITAL OUTLAYS
Power and Fluid Transfer $ 55,900 $ 46,900 $ 38,900 $ 32,600
Professional Audio 3,900 3,900 2,500 1,700
General corporate - - - 1,200
Total capital outlays $ 59,800 $ 50,800 $ 41,400 $ 35,500
* To reflect acquisition and equity transactions occurring as of
the beginning of the year, as discussed further in Note 2.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Operating income represents net sales less operating expenses, and excludes
general corporate expenses, interest expense and income taxes. Litigation
costs are considered to be corporate expenses. Identifiable assets are those
assets employed in each segment's operations, including an allocated value to
each segment of cost in excess of net assets acquired. Corporate assets
consist primarily of cash, investments and assets not employed in production.
The company's foreign operations are located primarily in Europe, and to a
lesser extent in Canada and the Far East. Information concerning the
company's operations by geographic area for fiscal 1995, 1994 and 1993 is as
follows (dollars in thousands):
Pro Forma
1995 * 1995 1994 1993
(Unaudited)
NET SALES TO CUSTOMERS
United States $1,385,200 $1,115,600 $ 884,500 $ 815,200
Foreign 528,100 487,700 359,700 270,500
Total net sales
to customers $1,913,300 $1,603,300 $1,244,200 $1,085,700
OPERATING INCOME
United States $ 151,200 $ 126,400 $ 105,700 $ 102,100
Foreign 55,100 53,800 41,000 24,000
Total operating
income $ 206,300 $ 180,200 $ 146,700 $ 126,100
IDENTIFIABLE ASSETS
United States $1,350,100 $1,350,100 $ 898,700 $ 916,800
Foreign 496,300 496,300 383,600 208,000
Total identifiable
assets $1,846,400 $1,846,400 $1,282,300 $1,124,800
* To reflect acquisition and equity transactions occurring as of
the beginning of the year, as discussed further in Note 2.
The net sales to customers reflect the sales of the operating units in each
geographic area to unaffiliated customers. Export sales from the United
States to unaffiliated customers were $92,900,000; $71,300,000; and
$67,800,000 in fiscal 1995, 1994, and 1993, respectively. Inter-segment sales
are not material. Sales between geographic areas are accounted for at prices
which are competitive with prices charged to unaffiliated customers.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Foreign currency transactions included in income amounted to gains (losses) of
approximately $100,000; $300,000 and ($700,000) in fiscal 1995, 1994 and 1993,
respectively. Unrealized gains and losses related to foreign currency forward
contracts were not significant at February 28, 1995 or February 28, 1994. The
maximum notional amount of foreign currency forward contracts outstanding at
any one time during fiscal 1995 amounted to approximately $31,300,000 and the
approximate notional amounts of such contracts outstanding at the end of
fiscal 1995 was approximately $12,700,000. At February 28, 1995, the company
also had an interest rate swap outstanding on debt of approximately
$17,000,000 which effectively converts variable rate debt to a fixed rate of
approximately 4.75% through September 1996. The company does not hold or
issue derivatives for trading purposes and is not a party to leveraged
derivatives transactions.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Quarterly Financial Data and Information (Unaudited)
<TABLE>
<CAPTION>
The following table sets forth the unaudited quarterly results of operations for
each of the fiscal quarters in the years ended February 28, 1995 and 1994 (dollars
in thousands, except per share data):
First Second Third Fourth Total
Fiscal 1995 Quarter Quarter Quarter(a) Quarter(a) Year
<S> <C> <C> <C> <C> <C>
Net sales $363,800 $357,200 $397,300 $485,000 $1,603,300
Gross profit (b) $127,700 $124,700 $135,600 $155,300 $ 543,300
Income from
continuing operations $ 17,100 $ 16,700 $ 16,500 $ 17,600 $ 67,900
Extraordinary items - - (1,100) - ( 1,100)
Net income $ 17,100 $ 16,700 $ 15,400 $ 17,600 $ 66,800
Income per share (d):
Primary:
Continuing operations $ .38 $ .37 $ .34 $ .31 $ 1.40
Extraordinary items - - (.02) - (.02)
Net income $ .38 $ .37 $ .32 $ .31 $ 1.38
Fully-diluted:
Continuing operations $ .34 $ .33 $ .32 $ .30 $ 1.29
Extraordinary items - - (.02) - (.02)
Net income $ .34 $ .33 $ .30 $ .30 $ 1.27
Fiscal 1994
Net sales $287,800 $316,600 $320,000 $319,800 $1,244,200
Gross profit (b) $102,000 $110,800 $113,800 $114,100 $ 440,700
Income from
continuing operations $ 13,600 $ 13,100 $ 12,800 $ 11,600 $ 51,100
Extraordinary items (21,700) - - - (21,700)
Cumulative effect of
accounting change (26,000) - - - (26,000)
Net income $(34,100) $ 13,100 $ 12,800 $ 11,600 $ 3,400
Income per share (c) (d):
Primary:
Continuing operations $ .31 $ .29 $ .29 $ .26 $ 1.15
Extraordinary items (.49) - - - (.49)
Cumulative effect of
accounting change (.59) - - - (.58)
Net income $ (.77) $ .29 $ .29 $ .26 $ .08
Fully-diluted:
Continuing operations $ .28 $ .27 $ .26 $ .24 $ 1.04
Extraordinary items (.41) - - - (.41)
Cumulative effect of
accounting change (.49) - - - (.48)
Net income $ (.62) $ .27 $ .26 $ .24 $ .15
</TABLE>
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________________________________
(a) Includes the results of operations of Purolator from its acquisition
date of November 4, 1994.
(b) Excluding depreciation expense.
(c) The sum of the quarterly amounts do not equal the total as a result of
common stock transactions during the year. The impact of those
transactions on the determination of the weighted average number of
shares outstanding is different in each quarter, and for the year in
total.
(d) Restated to reflect the five percent stock dividend issued in April
1995.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Items 10-13
The information required for Items 10, 11, 12 and 13 is incorporated
herein by reference to the information set forth in the definitive Proxy
Statement for the company's 1995 Annual Meeting of Stockholders which will be
filed with the Securities and Exchange Commission not later than 120 days
after February 28, 1995.
PART IV
ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Page
(a) (1) Financial Statements
Report of Independent Accountants for
each of the three fiscal years in the
period ended February 28, 1995 . . . . . . . . . . . . . . .28
Consolidated Balance Sheets at February 28, 1995 and 1994. . .29
Consolidated Statements of Income for each of
the three fiscal years in the period ended
February 28, 1995. . . . . . . . . . . . . . . . . . . . . .30
Consolidated Statements of Stockholders' Equity for
each of the three fiscal years in the period
ended February 28, 1995. . . . . . . . . . . . . . . . . . .31
Consolidated Statements of Cash Flows
for each of the three fiscal years in
the period ended February 28, 1995 . . . . . . . . . . . . .32
Notes to Consolidated Financial Statements . . . . . . . . . .33
(2) Financial Statement Schedule
Report of Independent Accountants
for each of the three fiscal years in the
period ended February 28, 1995 . . . . . . . . . . . . . . .60
II. Valuation and qualifying accounts . . . . . . . . . . . .61
All other schedules and statements have been omitted as the required
information is inapplicable or is presented in the financial
statements or notes thereto.
(b) Reports on Form 8-K
The following reports on Form 8-K were filed pertaining to
events occurring during the quarter ended February 28, 1995.
1. A current report on Form 8-K dated December 21, 1994 was
filed to report under Item 5 that the company completed an
underwritten public offering of 6,483,750 shares of its
common stock at a public offering price of $18.10 per share.
2. A current report on Form 8-K dated February 17, 1995 was
filed to report under Item 5 that the company completed a
redemption of the $37,478,000 outstanding aggregate
principal amount of its 6-1/4% Convertible Subordinated
Debentures due February 15, 2007. As a result of the call
for redemption, substantially all of the debentures were
voluntarily converted into approximately 2.7 million shares
of common stock.
(c) Exhibits
2.1 Agreement and Plan of Merger dated as of October 3, 1994 by and
among Mark IV Industries, Inc., Mark IV Acquisition Corp., and
Purolator Products Company, incorporated by reference to exhibit
(c)(1) to Schedule 14D-1 (Tender Offer) dated October 7, 1994,
as filed with the SEC on such date (incorporated by reference to
the exhibit (c)(1) to Schedule 14D - (Tender Offer) dated
October 7, 1994, as filed with the SEC on such date).
2.2 Offer to Purchase, as revised, incorporated by reference to
exhibit (a)(1) to Amendment No. 1 to Schedule 14D-1 Tender
Offer) dated October 11, 1994, as filed with the SEC on such
date.
2.3 Share Purchase Agreement dated April 29, 1993 among Mark IV
Industries, Inc., a Delaware Corporation, and its indirect
wholly-owned subsidiary, Dayco Italy, S.p.A., an Italian
Corporation, and Pirelli S.p.A., an Italian Corporation
(incorporated by reference to exhibit 2.1 to the company's
Current Report on Form 8-K dated May 27, 1993, as filed on June
17, 1993). All schedules and other attachments to this exhibit,
as identified on the last page of the exhibit, have been
omitted.
3.1 Certificate of Incorporation, as amended (incorporated by
reference to Exhibit 28.1 to the company's Registration
Statement No. 33-45215 on Form S-3, as filed with the SEC on
January 24, 1993).
4.1 Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4.11 to Amendment No. 1 to the Registrant's Registration
Statement No. 33-41553 on Form S-3 dated August 6, 1991).
4.2 By-Laws of the Registrant (incorporated by reference to Exhibit
4.12 To Amendment No. 1 to the Registrant's Registration
Statement No. 33-41553 on Form S-3, dated August 6, 1991).
4.3 Conformed copy of the Indenture, dated as of March 15, 1993,
between Mark IV Industries, Inc. and Citibank, N.A.; including
the form of Senior Subordinated Notes due April 1, 2003
(incorporated by reference to Exhibit 4.1 to the company's
Current Report on Form 8-K dated March 29, 1993).
Executive Compensation Plans and Arrangements (10.1 -10.20)
10.1* Employment Agreement dated March 1, 1995 between the Company and
Sal Alfiero.
10.2* Employment Agreement dated March 1, 1995 between the Company and
Clement R. Arrison.
10.3* Employment Agreement dated March 1, 1995 between the Company and
Gerald S. Lippes.
10.4* Employment Agreement dated March 1, 1995 between the Company and
William P. Montague.
10.5* Employment Agreement dated March 1, 1995 between the Company and
Frederic L. Cook.
10.6* Employment Agreement dated March 1, 1995 between the Company and
John J. Byrne.
10.7* Employment Agreement dated March 1, 1995 between the Company and
Richard L. Grenolds.
10.8* Employment Agreement dated March 1, 1995 between the Company and
Douglas J. Fiegel.
10.9* Employment Agreement dated January 1, 1995 between the Company,
Dayco Products, Inc. ("Dayco") and Bruce A. McNiel.
10.10* Employment Agreement dated January 1, 1995 between the Company,
Dayco, Dayco Europe, A.B. and Kurt J. Johansson.
10.11* Employment Agreement dated January 1, 1995 between the Company,
Dayco and Patricia Richert.
10.12 Amendment and Restatement of Mark IV Industries, Inc. and
Subsidiaries Incentive Stock Option Plan, as of February 8, 1988
(incorporated by reference to Exhibit 10.13.1 to the Company's
Registration Statement No. 33-42307 on Form S-8 dated August 19,
1991).
10.13 Amendment and Restatement of the Mark IV Industries, Inc. and
Subsidiaries 1992 Incentive Stock Option Plan Effective March
30, 1994 (incorporated by reference to Exhibit 10.4 to the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1994).
10.14* Amendment and Restatement of the Mark IV Industries, Inc. 1992
Restricted Stock Plan Effective March 1, 1995.
10.15 Mark IV Industries, Inc. Executive Bonus Plan (incorporated by
reference to Exhibit 10.8 to the Company's Annual Report on Form
10-K for the fiscal year ended February 28, 1991).
10.16 First Amendment and Restatement of the Mark IV Industries, Inc.
Enhanced Executive Incentive Plan (incorporated by reference to
Exhibit 10.16 to the Company's Annual Report on Form 10-K dated
February 29, 1992).
10.17 Third Amendment and Restatement of the Non-Qualified Plan of
Deferred Compensation of Mark IV Industries, Inc. Effective
September 1, 1993 (incorporated by reference to the Company's
Annual Report on Form 10-K for the fiscal year ended February
28, 1994).
10.18 First Amendment and Restatement of the Non-Qualified Plan of
Deferred Compensation for Non-Employee Directors of Mark IV
Industries, Inc. Effective December 1, 1993 (incorporated by
reference to the Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1994).
10.19* First Amendment and Restatement of the Non-qualified Plan of
Deferred Incentive Compensation for Executives of Certain
Operating Divisions and Subsidiaries of Mark IV Industries, Inc.
Effective November 30, 1993.
10.20* Short Term Incentive Bonus Plan of Dayco Products, Inc. dated
March 30, 1994.
Other Material Contract Exhibits
10.21 Credit and Guarantee Agreement dated as of November 2, 1994,
among Mark IV Industries, Inc., as Borrower, Mark IV
Transportation Products Corp., Gulton Industries, Inc., Dayco
Products, Inc. Electro-Voice Incorporated, Anchor Swan, Inc. and
Mark IV Acquisition Corp., as Guarantors, the banks and other
financial institutions which are parties thereto, Bank of
American National Trust and Savings Association, as
Administrative Agent and BID Agent, and BA Securities, Inc. as
Arranger (incorporated by reference to exhibit (b)(2) to
Amendment No. 3 to Schedule 14D-1 (Tender Offer) dated November
2, 1994, as filed on that date).
10.22 Revolving Credit Facility Agreement dated May 27, 1993, among
Mark IV Industries, Inc., a Delaware Corporation, Dayco Italy
S.p.A., an Italian Corporation, Bank of America National Trust
and Savings Association, Chemical Investment Bank Limited, and
Citibank, N.A. and Chase Manhattan Bank N.A., as co-agents for
various financial institutions that are signatories thereto
(incorporated by reference to the Company's Current Report on
Form 8-K dated May 27, 1993 as filed on June 17, 1993). All
schedules and other attachments to this exhibit, as identified
on page v of the exhibit, have been omitted.
11* Statement regarding computation of per share earnings.
21* Subsidiaries of the Registrant.
23* Consent of Independent Accountants.
27* Financial Data Schedule.
______________________
* Filed herewith by direct transmission pursuant to the EDGAR program.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Mark IV Industries, Inc.
Our report on the consolidated financial statements of Mark IV Industries,
Inc. is included in Item 8 of this Form 10-K. In connection with our audits
of such financial statements, we have also audited the related financial
statement schedule listed in Item 14 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Rochester, New York
March 30, 1995
<TABLE>
<CAPTION>
MARK IV INDUSTRIES, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Additions
Charged Deductions
Beginning (Credited) Accounts Ending
Classifications Balance to Expense Charged Off Other(a) Balance
<S> <C> <C> <C> <C> <C>
Year ended February 28, 1995
Allowance for doubtful
accounts $ 12,000,000 $ 3,300,000 $ (3,100,000) $ 6,400,000 $ 18,600,000
Year ended February 28, 1994
Allowance for doubtful
accounts $ 10,300,000 $ 2,400,000 $ (3,100,000) $ 2,400,000 $ 12,000,000
Year ended February 29, 1993
Allowance for doubtful
accounts $ 10,900,000 $ 2,700,000 $ (3,600,000) $ 300,000 $ 10,300,000
(a) Represents the following
February February February
28, 1995 28, 1994 28, 1993
Reserve at date of acquisition of subsidiary $5,500,000 $3,700,000 $ -
Reclassification from other reserves 400,000 100,000 500,000
Reserves of discontinued operations
at February 28, 1993 - (900,000) -
Foreign currency translation adjustment 500,000 (500,000) (200,000)
$6,400,000 $2,400,000 $ 300,000
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
MARK IV INDUSTRIES, INC.
By: /s/ Sal H. Alfiero
Sal H. Alfiero, Chairman of the
Board and Chief Executive Officer
Dated: May 25, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report on Form 10-K has been signed below by the following
persons in the capacities and on the date indicated.
Signature Title Date
/s/ Sal H. Alfiero Chairman of the Board May 25, 1995
Sal H. Alfiero and Chief Executive Officer
/s/ Clement R. Arrison President, Director May 25, 1995
Clement R. Arrison
/s/ William P. Montague Executive Vice President May 25, 1995
William P. Montague and Chief Financial Officer
/s/ Frederic L. Cook Senior Vice President - May 25, 1995
Frederic L. Cook Administration
/s/ John J. Byrne Vice President-Finance May 25, 1995
John J. Byrne
/s/ Richard L. Grenolds Vice President - May 25, 1995
Richard L. Grenolds Chief Accounting Officer
/s/ Gerald S. Lippes Secretary and Director May 25, 1995
Gerald S. Lippes
/s/ Joseph G. Donohoo Director May 25, 1995
Joseph G. Donohoo
/s/ Herb Roth, Jr. Director May 25, 1995
Herb Roth, Jr.
Exhibit Index
2.1 Agreement and Plan of Merger dated as of October 3, 1994 by and
among Mark IV Industries, Inc., Mark IV Acquisition Corp., and
Purolator Products Company, incorporated by reference to exhibit
(c)(1) to Schedule 14D-1 (Tender Offer) dated October 7, 1994, as
filed with the SEC on such date (incorporated by reference to the
exhibit (c)(1) to Schedule 14D - (Tender Offer) dated October 7,
1994, as filed wiht the SEC on such date).
2.2 Offer to Purchase, as revised, incorporated by reference to
exhibit (a)(1) to Amendment No. 1 to Schedule 14D-1 Tender Offer)
dated October 11, 1994, as filed with the SEC on such date.
2.3 Share Purchase Agreement dated April 29, 1993 among Mark IV
Industries, Inc., a Delaware Corporation, and its indirect wholly-
owned subsidiary, Dayco Italy, S.p.A., an Italian Corporation, and
Pirelli S.p.A., an Italian Corporation (incorporated by reference
to exhibit 2.1 to the Company's Current Report on Form 8-K dated
May 27, 1993, as filed on June 17, 1993). All schedules and other
attachments to this exhibit, as identified on the last page of the
exhibit, have been omitted.
3.1 Certificate of Incorporation, as amended (incorporated by
reference to Exhibit 28.1 to the Company's Registration Statement
No. 33-45215 on Form S-3, as filed with the SEC on January 24,
1993).
4.1 Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4.11 to Amendment No. 1 to the Registrant's Registration
Statement No. 33-41553 on Form S-3 dated August 6, 1991).
4.2 By-Laws of the Registrant (incorporated by reference to Exhibit
4.12 To Amendment No. 1 to the Registrant's Registration Statement
No. 33-41553 on Form S-3, dated August 6, 1991).
4.3 Conformed copy of the Indenture, dated as of March 15, 1993,
between Mark IV Industries, Inc. and Citibank, N.A.; including the
form of Senior Subordinated Notes due April 1, 2003 (incorporated
by reference to Exhibit 4.1 to the Company's Current Report on
Form 8-K dated March 29, 1993).
Executive Compensation Plans and Arrangements (10.1 -10.20)
10.1* Employment Agreement dated March 1, 1995 between the Company and
Sal Alfiero.
10.2* Employment Agreement dated March 1, 1995 between the Company and
Clement R. Arrison.
10.3* Employment Agreement dated March 1, 1995 between the Company and
Gerald S. Lippes.
10.4* Employment Agreement dated March 1, 1995 between the Company and
William P. Montague.
10.5* Employment Agreement dated March 1, 1995 between the Company and
Frederic L. Cook.
10.6* Employment Agreement dated March 1, 1995 between the Company and
John J. Byrne.
10.7* Employment Agreement dated March 1, 1995 between the Company and
Richard L. Grenolds.
10.8* Employment Agreement dated March 1, 1995 between the Company and
Douglas J. Fiegel.
10.9* Employment Agreement dated January 1, 1995 between the Company,
Dayco Products, Inc. ("Dayco") and Bruce A. McNiel.
10.10* Employment Agreement dated January 1, 1995 between the Company,
Dayco, Dayco Europe, A.B. and Kurt J. Johansson.
10.11* Employment Agreement dated January 1, 1995 between the Company,
Dayco and Patricia Richert.
10.12 Amendment and Restatement of Mark IV Industries, Inc. and
Subsidiaries Incentive Stock Option Plan, as of February 8, 1988
(incorporated by reference to Exhibit 10.13.1 to the Company's
Registration Statement No. 33-42307 on Form S-8 dated August 19,
1991).
10.13 Amendment and Restatement of the Mark IV Industries, Inc. and
Subsidiaries 1992 Incentive Stock Option Plan Effective March 30,
1994 (incorporated by reference to Exhibit 10.4 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28,
1994).
10.14* Amendment and Restatement of the Mark IV Industries, Inc. 1992
Restricted Stock Plan Effective March 1, 1995.
10.15 Mark IV Industries, Inc. Executive Bonus Plan (incorporated by
reference to Exhibit 10.8 to the Company's Annual Report on Form
10-K for the fiscal year ended February 28, 1991).
10.16 First Amendment and Restatement of the Mark IV Industries, Inc.
Enhanced Executive Incentive Plan (incorporated by reference to
Exhibit 10.16 to the Company's Annual Report on Form 10-K dated
February 29, 1992).
10.17 Third Amendment and Restatement of the Non-Qualified Plan of
Deferred Compensation of Mark IV Industries, Inc. Effective
September 1, 1993 (incorporated by reference to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28,
1994).
10.18 First Amendment and Restatement of the Non-Qualified Plan of
Deferred Compensation for Non-Employee Directors of Mark IV
Industries, Inc. Effective December 1, 1993 (incorporated by
reference to the Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1994).
10.19* First Amendment and Restatement of the Non-qualified Plan of
Deferred Incentive Compensation for Executives of Certain
Operating Divisions and Subsidiaries of Mark IV Industries, Inc.
Effective November 30, 1993.
10.20* Short Term Incentive Bonus Plan of Dayco Products, Inc. dated
March 30, 1994.
Other Material Contract Exhibits
10.21 Credit and Guarantee Agreement dated as of November 2, 1994, among
Mark IV Industries, Inc., as Borrower, Mark IV Transportation
Products Corp., Gulton Industries, Inc., Dayco Products, Inc.
Electro-Voice Incorporated, Anchor Swan, Inc. and Mark IV
Acquisition Corp., as Guarantors, the banks and other financial
institutions which are parties thereto, Bank of American National
Trust and Savings Association, as Administrative Agent and BID
Agent, and BA Securities, Inc. as Arranger (incorporated by
reference to exhibit (b)(2) to Amendment No. 3 to Schedule 14D-1
(Tender Offer) dated November 2, 1994, as filed on that date).
10.22 Revolving Credit Facility Agreement dated May 27, 1993, among Mark
IV Industries, Inc., a Delaware Corporation, Dayco Italy S.p.A.,
an Italian Corporation, Bank of America National Trust and Savings
Association, Chemical Investment Bank Limited, and Citibank, N.A.
and Chase Manhattan Bank N.A., as co-agents for various financial
institutions that are signatories thereto (incorporated by
reference to the Company's Current Report on Form 8-K dated May
27, 1993 as filed on June 17, 1993). All schedules and other
attachments to this exhibit, as identified on page v of the
exhibit, have been omitted.
11* Statement regarding computation of per share earnings.
21* Subsidiaries of the Registrant.
23* Consent of Independent Accountants.
27* Financial Data Schedule.
______________________
* Filed herewith by direct transmission pursuant to the EDGAR program.
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 1st day of March, 1995, by and between
MARK IV INDUSTRIES, INC., a Delaware corporation, with offices at 501 John
James Audubon Parkway, Amherst, New York 14228 ("Mark IV"), and Sal H.
Alfiero, an individual residing at 9 Four Winds Way, Snyder, New York 14226
(the "Executive").
RECITALS:
WHEREAS, the Executive is expected to make a major contribution to the
profitability, growth and financial strength of the Corporation; and
WHEREAS, the Corporation has determined that retaining the services of
the Executive is in the best interests of the Corporation and its stockholders
and, accordingly, the Corporation desires to secure the services of the
Executive on behalf of the Corporation;
CONSIDERATION:
NOW, THEREFORE, in consideration of the conditions and covenants set
forth in this Agreement, the parties hereto agree as follows:
ARTICLE 1.
Employment and Duties
1.01 Employment. The Corporation hereby agrees to, and does hereby
employ the Executive, and the Executive hereby agrees to and does hereby
accept employment, by the Corporation as the Chairman of the Board and Chief
Executive Officer of the Corporation. It is contemplated that the Executive
will continue to serve as Chairman of the Board and Chief Executive Officer of
the Corporation subject to the provisions of this Agreement and the right of
the Board of Directors of the Corporation to elect new officers.
1.02 Duties. During the period of his employment under this Agreement
the Executive shall perform such executive duties and responsibilities as are
commensurate with his responsibilities as Chairman and Chief Executive
Officer. The Executive may become a director or trustee of any corporation
or entity that does not constitute a Competitive Operation as described in
Section 4.03 hereof. The Corporation shall not require the Executive to
perform services hereunder outside the Buffalo, New York metropolitan area
with such frequency or duration as would require the Executive to move his
residence from the Buffalo, New York area.
ARTICLE 2.
Compensation and Fringe Benefits
2.01 Base Salary. During the period of the Executive's employment
hereunder, the Corporation shall pay to the Executive, an annual salary ("Base
Salary") of not less than $520,000.00 payable in substantially equal monthly
installments. The Board of Directors of the Corporation, through it's
Compensation Committee, shall in good faith review the Base Salary of the
Executive, on an annual basis, and increase the Base Salary of the Executive
if, in the Compensation Committee's judgment, such increase is advisable.
2.02 Bonuses. The Executive shall be entitled to participate in the
Mark IV Industries, Inc. Executive Bonus Plan, as amended (the "Executive
Bonus Plan") and to receive bonuses in accordance with the terms thereof. In
addition, the Executive shall be entitled to participate in the Mark IV
Industries, Inc. Enhanced Executive Incentive Plan (the "Enhanced Incentive
Plan") and to receive bonuses in accordance with the terms thereof. The Board
of Directors of the Corporation may, in its discretion and from time to time,
amend or change the terms of the Executive Bonus Plan and the terms of the
Enhanced Incentive Plan and, in addition, may award such additional bonuses to
the Executive as it may from time to time determine.
2.03 Stock Based Incentive Compensation. The Executive shall be
eligible to receive incentive stock option awards under the terms of the Mark
IV Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan, as
amended, (the "Incentive Stock Option Plan") and restricted stock awards under
the terms of the Mark IV Industries, Inc. 1992 Restricted Stock Plan, as
amended, (the "Restricted Stock Plan"); provided that, the determination of
whether or not incentive stock options and restricted stock shall be awarded
to the Executive and the amount, if any, of the incentive stock options or
restricted stock to be awarded to the Executive shall be made by the
Compensation Committee of the Corporation's Board of Directors.
The Executive shall also be eligible to receive awards of non-
qualified stock options, stock appreciation rights and any other stock based
incentive compensation awards which may, from time to time, be awarded to
other executive officers of the Corporation pursuant to the terms of any
omnibus plan or any other plan which may, from time to time, be adopted by the
Board of Directors of the Corporation.
2.04 Reimbursement of Expenses. The Corporation shall reimburse the
Executive for all reasonable expenses which the Executive may, from time to
time, incur on behalf of the Corporation in the performance of his
responsibilities and duties under this Agreement, provided that the Executive
accounts to the Corporation for such expenses in the manner prescribed by the
Corporation.
2.05 Deferred Comp Plan. During the term of this Agreement, the
Executive shall receive his proportionate share of any amounts allocated
annually to participants in the Non-Qualified Plan of Deferred Compensation of
Mark IV Industries, Inc., as amended (hereinafter the "Deferred Comp Plan").
In addition, during the term of this Agreement, the Executive shall be
permitted to defer the receipt of payment of all or any portion of the Base
Salary to which the Executive is entitled under the terms of this Agreement
and to defer the receipt of payment of all or any portion of the amount of any
bonus or other incentive compensation (which is otherwise payable immediately)
to which the Executive may become entitled during the term of this Agreement,
all in the manner permitted by the terms of the Deferred Comp Plan.
2.06 Tax Qualified Plans. The Executive shall be entitled to
participate in all tax qualified pension, profit sharing 401(k) or other tax
qualified plans maintained, from time to time, by the Corporation for the
employees of the Corporation who are employed at the Corporation's corporate
headquarters.
2.07 Insurance Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Corporation shall: (a)
maintain and pay all premiums necessary to maintain a policy of business
travel accident insurance which provides the Executive with coverage and
benefits which are at least reasonably comparable to the business travel
accident insurance coverage which was in effect for the Executive as of the
date of this Agreement; (b) continue to pay the trustees of a trust
established by the Executive, the amount of the premiums payable with respect
to life insurance held by the trustees of such trust as provided for under the
terms of a split-dollar agreement between the Corporation and such trustees
(such arrangement being hereinafter referred to as the "Split Dollar Plan");
and (c) if, as of the date of this Agreement, the Corporation maintains any
life insurance or long term disability insurance policies for the benefit of
the Executive other than as a result of or in connection with an election made
by the Executive pursuant to the terms of the Flex IV Plan (as defined below
in Section 2.08) the Corporation shall continue to maintain and pay any
premiums necessary to maintain such policies of life insurance and long term
disability insurance for the benefit of the Executive during the period of his
employment under the terms of this Agreement.
2.08 Group Welfare Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Executive shall be eligible
to participate in the Mark IV Industries, Inc. and Subsidiaries Group Welfare
Benefit Program as applicable to exempt salaried employees of the Corporation
whose primary place of employment is the Corporation's corporate headquarters
(hereinafter the "Flex IV Plan"). As provided for by the terms of the Flex IV
Plan, the Executive shall be entitled to elect to participate in one or more
of the group welfare benefit programs which are contained within the Flex IV
Plan and available to exempt salaried employees of the Corporation whose
primary place of employment is the Corporation's corporate headquarters,
including, but not limited to: (a) medical insurance coverage; (b) dental
insurance coverage; (c) employee life insurance coverage; (d) accidental death
and dismemberment insurance coverage; (e) dependent life insurance coverage;
(f) long term disability insurance coverage; (g) health care spending account
benefits; and (h) dependent care spending account benefits. In the event that
the Flex IV Plan is amended during the term of this Agreement to increase or
reduce the number or type of group welfare benefit programs which are
available to exempt salaried employees of the Corporation whose principal
place of employment is the Corporation's corporate headquarters, the Executive
shall thereafter be entitled to elect to participate in any one or more of the
new group welfare benefit programs which are available under the terms of the
Flex IV Plan, as amended. Notwithstanding the foregoing, except as otherwise
provided in Sections 2.09(b) and (c) hereof, the Corporation shall have no
obligation to maintain or provide such group welfare benefits to the Executive
unless the Executive pays to the Corporation, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
benefits by the Corporation for exempt salaried employees of the Corporation's
corporate headquarters as determined under the provisions of the Flex IV Plan
(or such greater or lesser amount as may, from time to time, be required to be
contributed by exempt salaried employees of the Corporation's corporate
headquarters toward the cost of maintaining and providing such benefits to
such employees).
2.09 Continuation of Insurance Coverage. (a)If the Executive's
employment with the Corporation is terminated by the Corporation, without
cause, as permitted by Section 3.03 hereof, the Corporation shall, for a
period of one (1) year following the date the Executive's employment with the
Corporation is terminated, maintain and pay any premiums necessary to maintain
group welfare benefits for the Executive which are the same as the group
welfare benefits which were in effect for the Executive under the terms of the
Flex IV Plan immediately prior to the termination of the Executive's
employment. Notwithstanding the foregoing, the Corporation shall have no
obligation to maintain or provide such group welfare benefits to the Executive
unless the Executive pays to the Corporation, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
benefits by the Corporation to exempt salaried employees of the Corporation's
corporate headquarters as determined under the provisions of the Flex IV Plan
(or such greater or lesser amount as may, from time to time, be required to be
contributed by exempt salaried employees of the Corporation's corporate
headquarters toward the cost of maintaining and providing such benefit to such
employees). At the end of the one (1) year period following the date on which
the Executive's employment is terminated (without cause) or, if earlier, at
such time that the Corporation shall terminate the group welfare benefit
coverage being provided to the Executive by reason of the Executive's failure
to pay the employee portion of any costs associated with the maintenance and
provision of such benefits, the Executive shall
be entitled to elect to receive continuation coverage with respect to any
group health plan benefits which are being provided to the Executive under the
Flex IV Plan, in accordance with the applicable continuation coverage
provisions of section 4980B of the Internal Revenue Code of 1986, as amended
(hereinafter the "Code") and the applicable continuation coverage provisions
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
In addition, if the Executive's employment with the Corporation is terminated
by the Corporation, without cause, as permitted by Section 3.03 hereof, and
if, at the time the Executive's employment with the Corporation is terminated,
the Corporation maintains any life insurance or long term disability insurance
for the Executive (other than any life insurance or long term disability
insurance provided to the Executive as a result of and in connection with an
election made by the Executive in connection with the Flex IV Plan) or if, at
the time the Executive's employment with the Corporation is terminated, the
Corporation is obligated to make any payments for life insurance premiums to
the trustees of the trust established by the Executive in connection with the
Split Dollar Plan, the Corporation shall maintain and pay any premiums
necessary to maintain any such life insurance and long term disability
insurance policies and the Corporation shall continue to make any payments due
for life insurance premiums in connection with the Split Dollar Plan, for a
one (1) year period following the date on which the Executive's employment
with the Corporation is terminated.
(b) If the Executive's employment with the Corporation is
terminated as a result of the Executive's suffering of a Total and Permanent
Disability as defined in Section 6.04 hereof, the Corporation shall continue
to maintain and pay the full amount of all premiums necessary to maintain: (i)
medical and life insurance coverage for the benefit of the Executive for the
remainder of the Executive's life; (ii) medical insurance coverage for the
benefit of the Executive's spouse for the remainder of her life; and (iii)
medical insurance coverage for the benefit of the Executive's dependents until
such dependents reach age 21. In addition, if the Executive's employment with
the Corporation is terminated as a result of his suffering of a Total and
Permanent Disability as defined in Section 6.04 hereof, following such
termination of the Executive's employment, the Corporation shall continue to
pay to the trustees of the trust established by the Executive in connection
with the Split Dollar Plan, the amount of any premiums due in connection with
the life insurance policies held by such trustees pursuant to the terms of the
Split Dollar Plan.
(c) If the Executive's employment with the Corporation is
terminated as a result of a Change in Control Termination as defined in
Section 8.01 hereof, the Corporation shall continue to maintain and pay the
full amount of any premiums necessary to maintain: (i) medical, long term
disability and life insurance coverage for the benefit of the Executive for
the remainder of the Executive's life; (ii) medical insurance coverage for the
benefit of the Executive's spouse for the remainder of her life; and (iii)
medical insurance coverage for the benefit of the Executive's dependents until
such dependents attain age 21. In addition, if the Executive's employment
with the Corporation is terminated as a result of a Change in Control
Termination defined in Section 8.01 hereof, following such termination, the
Corporation shall continue to pay to the trustees of the trust established by
the Executive in connection with the Split Dollar Plan, the amount of any
premiums due in connection with the life insurance policies held by such
trustees pursuant to the terms of the Split Dollar Plan.
(d) The amount of the life insurance which is required to be
provided to the Executive pursuant to Sections 2.09(b) and (c) above shall
provide a death benefit which is at least equal to the sum of: (i) the amount
of the life insurance, if any, which is maintained for the Executive other
than under the terms of the Flex IV Plan; and (ii) the largest dollar amount
of the death benefit which could have been provided to the Executive's
beneficiaries under any life insurance coverage which was available to the
Executive under the terms of the Flex IV Plan immediately prior to the date
the Executive's employment is terminated as a result of his suffering of a
Total and Permanent Disability or the date on which the Change in Control
occurs, whichever is applicable.
(e) The terms of the long term disability insurance coverage
which is required to be provided to the Executive pursuant to Section 2.09(c)
hereof shall provide an annual disability income to the Executive which is not
less than the total annual amount of the disability income which was payable
to the Executive under all policies of long term disability insurance
maintained for the benefit of the Executive (whether or not provided under for
the Executive the terms of the Flex IV Plan) immediately prior to the date the
Change in Control occurs. In addition, the terms of the long term disability
insurance which is required to be provided to the Executive pursuant to
Section 2.09(c) above shall contain a definition of total and permanent
disability which is at least reasonably comparable to the most liberal
definition of total and permanent disability (in terms of the ease with which
such definition can be met) contained in any long term disability insurance
policy maintained for the Executive immediately prior to the date the Change
in Control occurs. Finally, the terms of the long term disability insurance
which is required to be provided to the Executive pursuant to Section 2.09(c)
above shall provide that the disability income payments to be made to the
Executive as described above will continue to be made to the Executive for
life.
(f) The type and amount of the medical insurance coverage which
is required to be provided to the Executive pursuant to Sections 2.09(b) and
(c) above shall be at least reasonably comparable to the most comprehensive
medical insurance coverage which was available to the Executive, his spouse
and dependents under the Flex IV Plan immediately prior to the date on which
the Executive's employment with the Corporation is terminated as a result of
his suffering of a Total and Permanent Disability or the date on which the
Change in Control occurs (whichever is applicable); provided that, in no event
shall the maximum amount of the annual deductible under such medical insurance
coverage exceed the amount of the annual deductible which was in effect with
respect to the most comprehensive medical insurance coverage which was
available to the Executive, his spouse and dependents under the Flex IV Plan
immediately prior to the date on which the Executive's employment is
terminated as a result of his suffering of a Total and Permanent Disability or
the date on which the Change in Control occurs, whichever is applicable.
2.10 Vacation and Other Benefits. During each full year of the
Executive's employment hereunder, the Executive shall be entitled to paid
vacations for such reasonable periods of time as may be determined by the
Executive. The Executive shall also be entitled to receive all other
employment benefits and participate in such other employee benefit plans as
may, from time to time, be provided or maintained by the Corporation for its
executive officers.
ARTICLE 3.
Term and Termination
3.01 Term. The period of employment of the Executive under this
Agreement shall commence January 1, 1995 ("Effective Date") and continue
through December 31, 1999, provided that on each anniversary of the Effective
Date which occurs after the date hereof and prior to the date on which the
Executive attains age sixty-one (61), the term of this Agreement shall
automatically be extended for an additional twelve-month period. The effect
of the preceding sentence shall be that on each anniversary of the Effective
Date which occurs after the date hereof and prior to the date on which the
Executive attains age sixty-one (61), the then remaining term of this
Agreement shall be five (5) years, and beginning with the first anniversary of
the Effective Date following the date on which the Executive attains age sixty
(60), and on each anniversary of the Effective Date thereafter, the remaining
term of this Agreement shall be that number of years which exists between any
such anniversary of the Effective Date and the end of the calendar year in
which the Executive attains age sixty-five (65).
Notwithstanding the foregoing, beginning on the January 1
immediately following the date on which the Executive attains age sixty-five
(65) and on each January 1 thereafter, unless otherwise terminated by the
Corporation pursuant to Section 3.03 hereof, the term of this Agreement shall
automatically be renewed for one (1) or more successive annual renewal terms
of one (1) year.
3.02 Termination For Cause. Notwithstanding the provisions of Section
3.01 hereof, the Corporation may terminate the Executive's employment
hereunder at any time for cause, by delivering to the Executive a written
notice of termination to the Executive setting forth the date on which such
termination is to be effective and specifying in reasonable detail the facts
and circumstances claimed to provide a basis for the termination.
For purposes of this Agreement, the Corporation shall have "cause"
to terminate the Executive's employment hereunder upon the Executive's: (a)
willful and continued failure to substantially perform his duties hereunder
other than any such failure resulting from the Executive's incapacity due to
physical or mental illness; (b) illegal or criminal conduct; (c) intentional
falsification of records or reports or any other act or acts of dishonesty
constituting a felony and resulting, or intended to result, directly or
indirectly, in personal gain or enrichment of the Executive at the expense of
the Corporation; (d) excessive and/or chronic use of alcohol, narcotics or
other controlled substances (other than under the supervision of a licensed
physician); or (e) willful engagement in gross misconduct materially injurious
to the Corporation.
3.03 Termination Without Cause. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Corporation may, at any time on
or after the date hereof, terminate the Executive's employment, without cause,
by delivering a written notice of termination to the Executive which sets
forth the date on which such termination is to be effective; provided that,
the effective date of any such termination shall not be less than ninety (90)
days following the date on which such written notice of termination is
delivered to the Executive. Notwithstanding the foregoing, if the Executive
has attained at least age sixty-five (65), the written notice of termination
which is delivered to the Executive pursuant to this Section 3.03 shall permit
the Executive, at the Executive's option to elect to retire from his
employment with the Corporation pursuant to Section 3.05 hereof.
3.04 Termination by the Executive. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Executive may terminate his
employment hereunder at any time by delivering a written notice of termination
to the Corporation which sets forth the date on which such termination is to
be effective; provided that, the effective date of any such termination shall
not be less than ninety (90) days following the date on which such written
notice of termination is delivered to the Corporation.
3.05 Retirement. The Executive may retire his employment with the
Corporation at any time following his attainment of age sixty (60), by
delivering to the Corporation a written notice of his intent to terminate his
employment with the Corporation and retire, which written notice shall set
forth the date on which such retirement (and its related termination of
employment) is to be effective. Thereafter, provided that the effective date
of such retirement is not less than thirty (30) days following the date on
which such written notice of termination is delivered to the Corporation, the
Executive shall be permitted to terminate his employment with the Corporation
and retire at the time stated in the written notice of termination delivered
by the Executive to the Corporation.
In addition to the foregoing, in the event that the Executive has
attained at least age sixty-five (65) and has received a written notice of
termination from the Corporation pursuant to Section 3.03 and, as required by
Section 3.03 hereof, such written notice of termination provides the
Executive, at his option, the right to retire, the Executive may exercise such
right and retire from his employment with the Corporation by delivering
written notice of his desire to exercise such right and retire to the
Corporation no later than sixty (60) days following the date of the
Executive's receipt of the written notice of termination from the Corporation
provided for by Section 3.03 hereof. In the event that the Executive elects
to retire in connection with the Executive's receipt of a written notice of
termination from the Corporation pursuant to Section 3.03 hereof, the
Executives retirement shall be effective at the time stated in the written
notice delivered to the Corporation by the Executive in connection with the
Executive's exercise of his right to retire.
3.06 Effect of Notice of Intent to Terminate. Upon delivery by the
Corporation to the Executive of a written notice of intent to terminate, the
Executive's employment with the Corporation shall be terminated, effective at
the time stated in such written notice of intent to terminate, provided that,
if applicable, the effective date of such termination as stated in the notice
of intent to terminate complies with the advance notice of termination
requirements of Section 3.03 hereof. In addition, upon the Executive's
delivery to the Corporation of a written notice of intent to terminate
(whether or not such termination is intended to be a retirement) the
Executive's employment with the Corporation shall be terminated effective at
the time stated in such written notice of intent to terminate, provided that
the effective date of such termination as stated in the notice of intent to
terminate complies with the applicable advance notice of termination
requirements of Sections 3.04 and 3.05 hereof.
ARTICLE 4.
Confidentiality; Non-Compete Provisions
4.01 Confidentiality. During the period of the Executive's employment
hereunder the Executive agrees that he will not, without the written consent
of the Board of Directors of the Corporation, disclose to any person (other
than a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of his duties as an executive
of the Corporation or to a person as required by any order or process of any
court or regulatory agency) any material confidential information obtained by
the Executive while in the employ of the Corporation with respect to any
management strategies, policies or techniques or with respect to any products,
improvements, formulae, designs or styles, processes, customers, methods of
distribution, or methods of manufacture of the Corporation or any of its
subsidiaries; provided, however, that confidential information shall not
include any information known generally to the public (other than as a result
of unauthorized disclosure by the 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 Corporation.
4.02 Non-Compete. During a period of two (2) years after the date of
any termination of the Executive's employment hereunder, the Executive will
not, directly or indirectly, own, manage, operate, control or participate in
the ownership, management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any financial
interest in, or aid or assist anyone else in the conduct of, any business
which competes with any business conducted by the Corporation or with any
group, division or subsidiary of the Corporation in any geographic area where
such business is being conducted at the time of such termination (any such
business being hereinafter referred to as a "Competitive Operation").
Ownership by the Executive of 2% or less of the voting stock of any publicly
held corporation shall not constitute a violation of this Section 4.02.
4.03 Competitive Operation. For purposes of Section 4.02 hereof: (a)
a business shall not be deemed to be a Competitive Operation unless: (i) 25%
or more of the consolidated gross sales and operating revenues of the
Corporation is derived from such business; or (ii) 25% or more of the
consolidated net income of the Corporation is derived from such business; or
(iii) 25% or more of the consolidated assets of the Corporation are devoted to
such business; and (b) a business which is conducted by the Corporation at the
time of the Executive's termination and which subsequently is sold or
discontinued by the Corporation shall not, subsequent to the date of such sale
or discontinuance, be deemed to be a Competitive Operation within the meaning
of Section 4.02 hereof.
ARTICLE 5.
Death Benefits
5.01 Death Benefits. If the Executive dies during the term of his
employment hereunder, in addition to any death benefits payable under the
terms of any life insurance policies maintained by the Corporation on the life
of the Executive, any death benefits payable on account of the death of the
Executive under the terms of the Deferred Comp Plan and any death benefits
payable on account of the death of the Executive under the terms of any tax
qualified retirement plans maintained by the Corporation, the Corporation
shall, within ninety (90) days following the Executive's death, pay to the
estate of the Executive a death benefit equal to fifty percent (50%) of the
Executive's Base Salary at the rate in effect on the date of the Executive's
death. In addition, if the Corporation pays a bonus to its executive
officers for the fiscal year of the Corporation in which the Executive's death
occurs, at the time the Corporation pays such bonuses to its executive
officers for such fiscal year: (a) if the Executive's death occurs during the
first six (6) months of the Corporation's fiscal year, the Corporation shall
pay to the Executive's estate an amount equal to the fifty percent (50%) of
the amount of all bonuses which would have been payable to the Executive
pursuant to Section 2.02 hereof for the fiscal year of the Corporation in
which the Executive's death occurs; and (b) if the Executive's death occurs at
any time after the first six (6) months of the Corporation's fiscal year, the
Corporation shall pay to the Executive's estate an amount equal to the amount
of all bonuses which would have been payable to the Executive pursuant to
Section 2.02 hereof for the fiscal year of the Corporation in which the
Executive's death occurs.
5.02 Continuation of Medical Insurance Coverage. If the Executive dies
during the term of this Agreement and his spouse or dependents are still
living, the Corporation shall maintain and pay any premiums needed to maintain
medical insurance coverage for the benefit of the Executive's spouse for the
remainder of her life and medical insurance coverage for the benefit of the
Executive's dependents until such dependents attain age 21; provided that, the
Corporation shall not be obligated to continue to provide such medical
insurance coverage to the Executive's spouse and dependents unless the
Executive's spouse and dependents (as the case may be) pay to the Corporation,
on a monthly basis, the amount which is required to be contributed by exempt
salaried employees of the Corporation's corporate headquarters toward the cost
of their medical insurance coverage as determined as of the date of the
Executive's death. The type and amount of the medical insurance coverage to
be provided to the Executive's spouse and dependents pursuant to this Section
5.02 shall be at least reasonably comparable to the type and amount of the
most comprehensive medical insurance coverage which was available to the
Executive, his spouse and dependents under the Flex IV Plan immediately prior
to the date of the Executive's death; provided that, in no event shall the
maximum amount of the annual deductible under such medical insurance coverage
exceed the amount of the annual deductible which was in effect with respect to
the most comprehensive medical insurance coverage which was available to the
Executive, his spouse and dependents under the terms of the Flex IV Plan
immediately prior to the date of the Executive's death. For purposes of this
Agreement, the term "dependents" shall have the same meaning as contained in
Section 152 of the Code.
ARTICLE 6.
Disability Benefits
6.01 Short-Term Disability. Except as otherwise provided in Section
6.02 hereof, in the event the Executive becomes disabled and is unable to
perform his duties hereunder, there shall be no reduction in the amount of the
Executive's Base Salary or any other benefits payable to him under this
Agreement.
6.02 Long-Term Disability. If, during the term of this Agreement, it
is determined that the Executive suffers from a Total and Permanent Disability
(as hereinafter defined), then, effective on the last day of the month in
which such determination is made, the Executive's employment hereunder shall
be deemed to be terminated. Upon such termination, unless a Change in Control
has occurred within the three (3) year period preceding such termination and
the Executive, as permitted by Section 8.01 hereof, has elected, in writing,
to receive payment of the Change in Control benefits described in Article 8 of
this Agreement, the Corporation shall, for each twelve (12) month period
beginning on the day immediately following the date of such termination and
any anniversary thereof (an "Anniversary Date"), for the remainder of the
Executive's life, an amount equal to, his Base Salary, at the rate in effect
on the date his employment is terminated, up to a maximum of $200,000 per year
(adjusted as set forth below), less the amounts of all social security,
retirement or disability benefits payable to the Executive for each such
twelve (12) month period by any agency of the United States Government or the
State of New York. In addition, upon the termination of the Executive's
employment as a result of his suffering of a Total and Permanent Disability,
the Corporation shall continue to maintain medical insurance coverage for the
Executive, his spouse and dependents in accordance with the provisions of
Section 2.09 hereof.
6.03 Cost of Living Adjustment. On each Anniversary Date, the $200,000
per year limit contained in Section 6.02 hereof shall be adjusted on a
cumulative basis for each annual increase in the U. S. Department of Labor
Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and
Clerical Workers, New York, New York, 1982-84 = 100 measured between the month
prior to the first month in which such compensation payments were made and the
month prior to the commencement of each such successive year.
6.04 Determination of Total and Permanent Disability. Any question as
to the existence or extent of disability of the Executive upon which the
Executive and the Corporation cannot agree shall be determined by a qualified
independent physician selected by the Executive and approved by the
Corporation (or, if the Executive is unable to make such selection, as
selected by any adult member of his immediate family). For purposes of this
Agreement, the Executive shall be deemed to suffer from a Total and Permanent
Disability if it is determined that the Executive is physically or mentally
unable to substantially perform his duties under this Agreement for a period
of twelve (12) consecutive months. The determination of any question as to
disability under this Section 6.04 by such physician shall be made in writing
to the Corporation and to the Executive and shall be final and conclusive for
all purposes of this Agreement.
ARTICLE 7.
Top Hat Benefits
7.01 "Top Hat" Benefits. In addition to the compensation and other
benefits otherwise provided for hereunder, if the Executive's employment with
the Corporation is terminated for any reason, the Executive and/or his
beneficiaries shall be entitled to receive the retirement, disability and
death benefits they would have been entitled to receive under the applicable
provisions of any tax qualified retirement plans maintained by the Corporation
and in which the Executive is or was a participant at any time prior to the
termination of his employment including, without limitation, any pension,
profit sharing, 401(k) or other comparable plans (individually a "Plan" and
collectively the "Plans") pursuant to the provisions of the Plans as in effect
during the Executive's employment but in any event, computed without reference
to: (a) any deferral of Base Salary or bonuses made by the Executive pursuant
to the terms of the Deferred Comp Plan; (b) any restrictions in the Plans upon
the use of employer contributions for an employee who is among the twenty-five
(25) highest paid; (c) any restrictions in the Plans upon the maximum benefits
payable pursuant to the Code; (d) any limitations on the amount of the
Executive's compensation that may be taken into account under the Plans
pursuant to Section 401(a)(17) of the Code; (e) any limitations on the amount
of the annual benefit which may be accrued by the Executive under the Plans
pursuant to Section 415 of the Code; or (f) any other restriction on the
Executive's benefits as determined under the Plans which are in effect at any
time pursuant to the Code or to ERISA, (the restrictions described in (a),
(b), (c), (d), (e) and (f) above being hereinafter collectively referred to as
the "Restrictions").
7.02 Form and Timing of Payments. At the time the Executive or his
beneficiaries is or are entitled to payment of any benefits under the terms of
any Plan, the Corporation shall pay to the Executive, from its general assets,
the difference between the amount which would, but for the Restrictions, have
been paid to the Executive or his beneficiaries under the terms of such Plan
(as determined pursuant to Section 7.04 hereof) and the amount which is
actually paid or payable to the Executive or his beneficiaries under the terms
of any such Plan. Any amount payable to the Executive or his beneficiaries
under the terms of this Article shall be available for payment to the
Executive or his beneficiaries in any form provided for by the applicable Plan
and shall be paid to the Executive or his beneficiaries in the form elected by
the Executive or his beneficiaries.
7.03 Lump Sum Option. If the Executive requests a lump sum
distribution under the Plan or Plans, and is denied the request or, if there
is no lump sum distribution option available under the Plan or Plans and the
Executive states in writing that he would have otherwise elected to receive a
lump sum distribution, the Corporation shall pay the Executive, in cash, an
amount equal to the benefit to which the Executive would have been entitled as
a lump sum under each Plan from which the Executive would have elected a lump
sum, determined without regard to the Restrictions, regardless of the payment
form in which the benefit would otherwise have been payable under the Plan or
Plans. The Corporation shall also pay the Executive an additional amount in a
lump sum so that the total amount received by the Executive, net of all
federal, state, and local taxes imposed upon the Executive as a result of the
lump sum payment and this additional amount, is equal to the maximum amount
which would have been paid to the Executive as a lump sum distribution under
the terms of the Plan (determined without regard to the Restrictions) which
lump sum distribution would have been eligible for tax free rollover treatment
under Section 402 of the Code. Prior to the making of any lump sum payment to
the Executive under this Section, the Executive and, if the Executive is
married, the Executive's spouse shall waive all benefits payable to him, his
spouse or his beneficiaries under any such Plan or Plans, and shall execute
any and all releases or other instruments to effect such waiver. Such waiver
and releases also will require payment to the Corporation of any amounts
received by the Executive or his beneficiaries under such Plan or Plans.
7.04 Determination of "Top Hat" Payments. The amount of retirement and
death benefits which would, but for the Restrictions, have been payable to the
Executive and his beneficiaries under the Plans shall be determined using the
actual number of years of service completed by the Executive and the actual
amount of Base Salary and bonuses which is payable to the Executive (whether
or not the Executive actually receives payment of any such Base Salary or
bonus as a result of a deferral made by the Executive pursuant to the terms of
the Deferred Comp Plan) as determined by the provisions of the applicable Plan
without regard to the Restrictions. In addition, if, in the case of any
defined contribution Plan or any combination of defined contribution Plans,
the amount which is actually contributed to such Plan or Plans by the
Corporation on behalf of the Executive is limited by operation of the
Restrictions, the amount of the retirement, disability and death benefits
which would, (but for the Restrictions), have been payable to the Executive
and his beneficiaries under any such defined contribution Plans shall be
determined by assuming that: (a) the Corporation made a contribution to such
Plan or Plans for the benefit of the Executive for each plan year (including
plan years ending prior to the effective date of this Agreement if the
Executive, at such time, was also a participant in the Deferred Comp Plan) in
which the actual contribution of the Corporation to such Plan or Plans is
limited by operation of the Restrictions, at the time that the Corporation
actually makes its contributions to such Plan or Plans for such plan year and
in an amount equal to the amount which the Corporation would, but for the
Restrictions, have contributed to such Plan or Plans on behalf of the
Executive for such plan year; and (b) the total value of the amounts which are
deemed to have been contributed by the Corporation to the Plan or the Plans
pursuant to subparagraph 7.04(a) above is equal to the greater of: (i) the
total value of all such amounts together with interest thereon between the
date such amounts are deemed to be contributed to the Plan or Plans and the
date for payment of such amounts, assuming that such amounts earn interest at
a variable annual interest rate, adjusted on a quarterly basis as of March 1,
June 1, September 1 and December 1 of each calendar year and equaling one
hundred twenty percent (120%) of the Federal long-term interest rate
established for such months by the Secretary of the Treasury pursuant to
section 1274 of the Code and the regulations thereunder; and (ii) the total
value (determined according to the principles established by the Deferred Comp
Plan, as in effect as of the date of this Agreement (whether or not the
Deferred Comp Plan is in effect on the date the payments are required to be
made pursuant to this Article 7)) of the number of shares of common stock of
the Corporation which could have been purchased (determined according to the
principles established by the Deferred Comp Plan as in effect as of the date
of this Agreement (whether or not the Deferred Comp Plan is in effect on the
date the payments are required to be made pursuant to this Article 7)) if the
amounts which would, but for the Restrictions, have been contributed to the
Plan or Plans were used to purchase common stock of the Corporation.
7.05 Payments Following Plan Termination. If payments are being made
by the Corporation pursuant to this Article 7 in the form of an annuity or
other periodic form of distribution, and the amount being paid from the assets
of the trust or trusts established to hold assets under the Plan or Plans
(individually a "Trust" and collectively the "Trusts") is reduced as a result
of any of the limitations in the Plan or Plans relating to the benefits
payable to an employee who is among the twenty-five (25) highest paid
employees or by virtue of the termination of the Plan or Plans (including the
operation of Section 4045 of ERISA) or for any other reason other than the
operation of the provisions of the optional form selected under the Plan or
Plans, the amount of the payments being made by the Corporation under this
Article 7 shall be increased by the amount of any reduction in the amount
being paid to the Executive from the assets of the Trust or Trusts.
If payments required to be made by the Corporation pursuant to
this Article 7 are being made or have been made in full, but the Executive or
any of his beneficiaries are required to make a payment to any trustee or
trustees appointed under the terms of any Trust, (whether the result of a loss
of collateral, interest on such collateral or otherwise) as the result of the
operation of the any limitations in the Plan or Plans relating to the use of
employer contributions for an employee who is among the twenty-five (25)
highest paid or by virtue of the termination of the Plan or Plans (including
the operation of Section 4045 of ERISA) or for any other reason, the
Corporation shall reimburse the Executive or his beneficiaries, as the case
may be, directly from its general assets, for each such payment to such
trustee or trustees and if the Executive or any of his beneficiaries does not
receive a deduction for Federal income tax purposes for such a payment or
incurs any penalty tax because of such repayment, the amount of the
reimbursement shall be increased to an amount so that after the application of
Federal income tax to the reimbursement, the Executive or his beneficiary
shall have received an amount from the Corporation approximately equal to the
amount repaid to the trustee or trustees.
ARTICLE 8.
Change in Control Benefits
8.01 Change in Control Termination. The Corporation will provide or
cause to be provided to the Executive the rights and benefits described in
Section 8.03 hereof in the event that, during the term of this Agreement
(including any renewal terms), the Executive's employment by the Corporation
is terminated at any time within three (3) years following a "Change in
Control" (as hereinafter defined) either:
(a) by the Corporation for any reason other than the Executive's
fraudulent conduct in connection with his employment by the Corporation or
conviction of a felony; or
(b) by the Executive following the occurrence of any of the
following events:
(i) the assignment to the Executive of any duties or
responsibilities that are inconsistent with his position, duties,
responsibilities or status immediately preceding such Change in Control;
(ii) a reduction of the Executive's Base Salary, bonuses or
other compensation or benefits from those types or amounts in effect
immediately prior to the Change in Control; or
(iii) the relocation of the principal executive offices of
the Corporation or a change in the duties of the Executive which requires the
Executive to move his residence from the Buffalo, New York metropolitan area;
or
(c) by the Executive, if he shall determine in good faith that
following a Change in Control, he is no longer able to effectively discharge
his duties under this Agreement.
For purposes of this Agreement, if the Executive's employment with
the Corporation is terminated after the occurrence of a Change in Control (as
hereinafter defined) for any of the reasons described above in this Section
8.01, such termination of employment shall hereinafter be referred to as a
"Change in Control Termination."
In the event that the Executive's employment with the Corporation
is terminated within the three (3) years following a Change in Control and,
following the date the Executive's employment with the Corporation is
terminated, it is determined (in accordance with Section 6.04 hereof) that, at
the time the Executive's employment with the Corporation was terminated, the
Executive suffered from a Total and Permanent Disability (as defined in
Section 6.04 hereof) the Executive shall have the right to elect, in writing,
to receive the Change in Control benefits provided for by this Article 8 or
the disability benefits provided for by Section 6.02 hereof. Upon receipt by
the Corporation of such written election from the Executive, the Corporation
shall pay (or cause to be paid) to the Executive the Change in Control
benefits provided for by this Article 8 or the disability benefits provided
for by Section 6.02 hereof, whichever is elected by the Executive. The
Corporation shall not be entitled to object to or contest its obligation to
make such payments (or cause such payments to be made) as elected by the
Executive or the Executive's right to make any such election on the grounds
that the Executive suffered from a Total and Permanent Disability at the time
his employment was terminated. In addition, if the Executive has attained at
least age sixty (60) and the Executive elects to terminate his employment with
the Corporation for any of the reasons set forth above in this Section 8.01
and within three (3) years following the occurrence of a Change in Control,
the Corporation shall have no right to object to or challenge the right of the
Executive to receive any payments provided for under this Article 8 on the
grounds that the Executive was otherwise entitled to retire from his
employment with the Corporation pursuant to Section 3.05 hereof.
8.02 Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if: (a) any person or group (within
the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") but excluding the Corporation and each
of the Corporation's officers and directors, whether individually or
collectively), shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of 20% or more of the Corporation's outstanding
common stock otherwise than through a transaction arranged by or consummated
with the prior approval of the Corporation's Board of Directors; or (b) during
any period of three (3) consecutive years, individuals who at the beginning of
such period constitute the entire Board of Directors of the Corporation (and
any new director whose election to the Board of Directors of the Corporation
or whose nomination for election by the Corporation's stockholders was
approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period or whose election or
nomination for election was previously so approved) (hereinafter referred to
as the "Continuing Directors") shall cease, to constitute a majority of the
Corporation's Board of Directors; or (c) any consolidation or merger of the
Corporation is consummated, as a result of which, the Corporation is not the
continuing or surviving corporation or pursuant to which shares of the
Corporation's common stock would be converted into cash, securities or other
property, other than a merger or consolidation of the Corporation which would
result in voting securities of the Corporation immediately prior thereto
continuing to represent (either by remaining outstanding or being converted
into voting securities of the surviving entity) at least eighty percent (80%)
of the combined voting power of the Corporation or such surviving entity
immediately after such merger or consolidation (provided, however, that if the
Board of Directors of the Corporation adopts a resolution that is approved by
a majority of the Continuing Directors providing that such merger or
consolidation shall not constitute a "Change in Control" for purposes of this
Agreement, then such merger or consolidation shall not constitute a Change in
Control); or (d) the stockholders of the Corporation approve an agreement for
the sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Corporation; or (e) the stockholders of the Corporation approve any plan or
proposal for the liquidation or dissolution of the Corporation.
8.03 Payments on Change in Control Termination. If a Change in Control
Termination occurs the Corporation shall pay to the Executive within ten (10)
days after the date of such Change in Control Termination, a lump sum payment
equal to three (3) times the sum of: (a) the average of the Base Salary of the
Executive in effect during the three (3) year period ending on the date the
Change in Control Termination occurs; and (b) the average of the amount of all
bonuses awarded to or received by the Executive during the three (3) year
period ending on the date of the Change in Control Termination. In no event
shall the provisions of Section 280 G of the Code be deemed to restrict or
limit the amount of any payments which the Executive is entitled to upon the
occurrence of a Change in Control as provided for in this Section 8.03 or
under the terms of any of the Plans, the Deferred Comp Plan, the Incentive
Stock Option Plan or the Restricted Stock Plan.
8.04 Effect of Deferred Compensation. The amounts payable to the
Executive pursuant to Section 8.03 hereof shall be determined based on the
amount of the Base Salary and the amount of any bonus which is payable to the
Executive, whether or not the Executive actually receives payment of such Base
Salary or bonus as a result of a deferral made by the Executive of the receipt
of payment of any portion of such Base Salary or bonus as permitted by the
terms of the Deferred Comp Plan as applicable to the Executive.
8.05 Benefits Upon Death. If the Executive dies following a Change
in Control Termination but prior to the payment of the applicable lump sum
provided for in Section 8.03 above, the Corporation shall pay the applicable
lump sum described in Section 8.03 hereof to the Executive's personal
representative or the executor or administrator of his estate within ten (10)
days from the date such personal representative, executor or administrator is
appointed.
8.06 Effect of Change in Control Termination on Other Benefits.
(a) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the Executive's right to receive any
payments due to the Executive under the terms of any of the Plans or due under
the Deferred Comp Plan. All such payments will be made in accordance with the
provisions of the applicable document containing the terms of any Plan and the
terms of the Deferred Comp Plan. In addition, the occurrence of a Change in
Control Termination with respect to the Executive shall not affect the
obligation of the Corporation to pay to the Executive and, if applicable, to
the Executive's beneficiaries, the amounts described in Article 7 hereof as
provided for in such Article.
(b) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the obligation of the Corporation
under Section 2.09 hereof to pay the full amount of all premiums and other
costs associated with the maintenance by the Corporation of policies of life
insurance, long term disability insurance and medical insurance for the
benefit of the Executive, his spouse and dependents as required by Section
2.09 hereof.
(c) Except as set forth in Sections 8.06(a) and (b) hereof, any
payments required to be made to the Executive or his beneficiaries pursuant to
Sections 8.03 and 8.05 hereof shall, when received by the Executive, or his
beneficiaries, be in lieu of any payments otherwise provided with respect to
the Executive's termination of employment under any other severance pay or
other similar plan or policy maintained by the Corporation. The Corporation
may, in its sole discretion, change, replace or eliminate any retirement plan
or insurance policy described in Sections 8.06(a) and (b) above at any time,
but shall not do so after a Change in Control in a manner which would prevent
the Executive, his spouse and dependents from receiving any benefit which he
would otherwise have been entitled to receive either immediately preceding the
Change of Control or immediately preceding a Change in Control Termination.
8.07 Certain Additional Payments by the Corporation. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Corporation 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 (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties being hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (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.
(b) Subject to the provisions of Section 8.07(c) hereof, all
determinations required to be made under this Section 8.07, including whether
a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall
be made by Coopers & Lybrand, L.L.P. or any other nationally recognized firm
of certified public accountants (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Corporation and the Executive
within 15 business days of termination of the Executive's employment under
this Agreement, if applicable, or such earlier time as is requested by the
Executive or the Corporation. When calculating the amount of the Gross-Up
Payment, the Executive shall be deemed to pay:
(i) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which the
Gross-Up Payment is to be made, and
(ii) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from deduction of such state and local
taxes if paid in such year.
If the Accounting Firm has performed services for the person,
entity or group who caused the Change of Control, as described in Section 8.02
hereof or any affiliate thereof, the Executive may select an alternative
accounting firm from any nationally recognized firm of certified public
accountants. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive with an opinion that he has
substantial authority not to report any Excise Tax on his federal income tax
return. Any determination by the Accounting Firm shall be binding upon the
Corporation and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Corporation should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Corporation exhausts it remedies pursuant to
Section 8.07(c) hereof, and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Corporation to or for the benefit of the Executive.
(c) The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than ten business days after the
Executive knows of such claim and shall apprise the Corporation 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 thirty-day
period following the date on which it gives such notice to the Corporation (or
such shorter period ending on the date that any payment of taxes with respect
to such claim is due). If the Corporation 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 Corporation any information reasonably
requested by the Corporation relating to such claim,
(ii) take such action in connection with contesting such
claim as the Corporation 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 Corporation,
(iii) cooperate with the Corporation in good faith in order
to effectively contest such claim, and
(iv) permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 8.07(c), the Corporation shall control
all proceedings taken in connection with such contest and, at its sole option,
may pursue or forego 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 sue
for a refund or 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 Corporation shall determine; provided, however, that if the
Corporation directs the Executive to pay such claim and sue for a refund, the
Corporation 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 income tax, including interest or
penalties with respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further
provided that any extension of the statue of limitations relating to payment
of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder 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.
(d) If, after the receipt by the Executive of an amount advanced
by the Corporation pursuant to Section 8.07(c) hereof, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Corporation's complying with the requirements of Section
8.07(c)) promptly pay to the Corporation the amount of such refund (together
with any interest paid or credited thereon by the taxing authority after
deducting any taxes applicable thereto). If, after the receipt by the Execu-
tive of an amount advanced by the Corporation pursuant to Section 8.07(c)
hereof, a determination is made that the Executive shall not be entitled to
any refund with respect to such claim and the Corporation does not notify the
Executive in writing of its intent to contest such denial of refund prior to
the expiration of thirty days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid under Section 8.07(a) hereof. The forgiveness of
such advance shall be considered part of the Gross-Up Payment and subject to
gross-up for any taxes (including interest or penalties) associated therewith.
ARTICLE 9.
Severance and Effects of Termination
9.01 Effect of Termination for Cause. In the event the Executive's
employment with the Corporation is terminated for cause by the Corporation
pursuant to the provisions of Section 3.02 hereof, the Corporation shall pay
to the Executive any monthly installment of his Base Salary which is accrued
and unpaid as of the date of the Executive's termination at the monthly rate
then in effect and, thereafter, the Corporation shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder, and, except as otherwise
provided under the terms of Sections 9.06 and 9.07 hereof, no further
obligation to pay any other benefits provided to the Executive hereunder.
9.02 Effect of Termination Without Cause. (a) In the event the
Executive's employment with the Corporation is terminated by the Corporation
without cause pursuant to Section 3.03 hereof and prior to the date the
Executive attains age sixty-one (61), the Corporation shall, within ninety
(90) days following the termination of the Executive's employment, pay the
Executive in one lump sum payment, an amount equal to: (i) the greater of: (A)
two and one-half (2.5) times the sum of: (x) his Base Salary at the rate then
in effect; and (y) an amount equal to all bonuses paid or payable by the
Corporation to the Executive with respect to the fiscal year of the
Corporation which ends immediately prior to the date of such termination; or
(B) five (5) times the amount of the Executive's Base Salary, at the rate then
in effect; and (ii) any "Top Hat" retirement benefits to be provided to the
Executive pursuant to Article 7 hereof. In addition, if the Executive's
employment with the Corporation is terminated without cause pursuant to
Section 3.03 hereof and prior to the date the Executive attains age sixty-one
(61), the Corporation shall, as required by Section 2.09(a) hereof, continue
to provide the Executive with the group welfare benefits and any other life
insurance and long term disability insurance for the one (1) year period
following the date the Executive's employment with the Corporation is
terminated, all as more particularly provided for by Section 2.09(a) hereof.
(b) In the event that the Executive's employment is terminated,
without cause, pursuant to Section 3.03 hereof, and, at the time the
Executive's employment is terminated, the Executive has attained at least age
sixty-one (61), the Corporation shall, within ninety (90) days following the
termination of the Executive's employment, pay to the Executive in one lump
sum payment: (i) any "Top Hat" retirement benefits to be provided to the
Executive pursuant to Article 7 hereof; and (ii) the amount described in
subparagraph 9.02(a)(i) above, reduced by twenty percent (20%) for each year
or part thereof by which the Executive's age exceeds age sixty (60) so that,
if the Executive's employment with the Corporation is terminated, without
cause, as provided for by Section 3.03 hereof, at any time after the Executive
attains age sixty-five (65), the Executive shall, except as otherwise provided
by Sections 2.09(a), 9.06 and 9.07 hereof, not be entitled to payment of any
benefits other than the "Top Hat" retirement benefits required to be provided
to the Executive pursuant to Article 7 hereof. If the Executive's employment
with the Corporation is terminated without cause pursuant to Section 3.03
hereof and after the Executive attains age sixty-one (61), the Corporation
shall, as required by Section 2.09(a) hereof, continue to provide the
Executive with the group welfare benefits and any other life insurance and
long term disability insurance for the one (1) year period following the date
the Executive's employment with the Corporation is terminated, all as more
particularly provided for by Section 2.09(a) hereof.
(c) Except as otherwise provided above in this Section 9.02,
following the termination of the Executive's employment, without cause, as
provided for by Section 3.03 hereof, the Corporation shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder, hereof and, except as
otherwise provided in Sections 9.06 and 9.07 hereof, no further obligation to
provide any other benefits otherwise provided to the Executive hereunder.
9.03 Effect of Voluntary Termination. In the event the Executive
voluntarily terminates his employment with the Corporation pursuant to Section
3.04 hereof, the Corporation shall pay to the Executive any monthly
installment of his Base Salary which is accrued and unpaid as of the date of
the Executive's termination at the monthly rate then in effect and any "Top
Hat" retirement benefits to be provided to the Executive pursuant to Article 7
hereof. Except as otherwise provided above in this Section 9.03, following
the Executive's voluntary termination of his employment with the Corporation
as provided for by Section 3.04 hereof, the Corporation shall have no further
obligation to pay to the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder and, except as otherwise
provided by Sections 9.06 and 9.07 hereof, no further obligation to provide
any other benefits otherwise provided to the Executive hereunder.
9.04 Effect of Retirement. In the event the Executive terminates his
employment with the Corporation by reason of his retirement as provided for in
Section 3.05 hereof, the Corporation shall pay to the Executive: (a) any
monthly installment of his Base Salary which is accrued and unpaid as of the
date of the Executive's retirement at the monthly rate then in effect; (b) an
amount equal to the amount of all bonuses which would have been payable to the
Executive by the Corporation pursuant to Section 2.02 hereof if the Executive
had remained in the employ of the Corporation until the end of the fiscal year
of the Corporation in which the Executive retires and assuming that average
monthly earnings of the Corporation for the portion of the Corporation's
fiscal year which has elapsed prior to the date the Executive retires
continues at such rate after the Executive retires through the end of the
fiscal year of the Corporation in which the Executive retires; and (c) any
"Top Hat" retirement benefits to be provided to the Executive pursuant to
Article 7 hereof. Except as otherwise provided for above in this Section
9.04, following the Executive's retirement from employment with the
Corporation as provided for by Section 3.05 hereof, the Corporation shall have
no further obligation to pay to the Executive any additional Base Salary,
compensation or bonus, no further obligation to provide any medical, life,
disability or other insurance benefits to the Executive hereunder and, except
as provided by Sections 9.06 and 9.07 hereof, no further obligation to provide
any other benefits otherwise provided to the Executive hereunder.
9.05 Effect of Termination Due to Disability. In the event the
Executive's employment with the Corporation is terminated as a result of his
suffering of a Total and Permanent Disability as described in Section 6.04
hereof, the Corporation shall pay to the Executive the amounts described in
Section 6.02 hereof and any "Top Hat" retirement benefits to be provided to
the Executive pursuant to Article 7 hereof. In addition, in the event the
Executive's employment is terminated by reason of his suffering of a Total and
Permanent Disability as described in Section 6.04 hereof, the Corporation
shall, as required by Section 2.09 hereof, continue to pay all premiums
necessary to maintain medical and life insurance for the life of the
Executive, medical insurance for the Executive's spouse for the life of the
Executive's spouse and medical insurance for the Executive's dependents until
such dependents reach age 21. As more particularly provided for by Section
2.09 hereof, the amount of the medical and life insurance coverage which shall
be provided to the Executive, his spouse and dependents following his
suffering of a Total and Permanent Disability shall be at least reasonably
comparable to the amount of the medical and life insurance coverage which was
in effect for the Executive, his spouse and dependents immediately prior to
the date the Executive's employment with the Corporation is terminated as a
result of his suffering of a Total and Permanent Disability. Except as
otherwise provided for by Sections 2.09 and 6.02 hereof and above in this
Section 9.05, following the Executive's suffering of a Total and Permanent
Disability, the Corporation shall have no further obligation to pay to the
Executive any additional Base Salary, compensation or bonus, no further
obligation to provide any medical, life, disability or other insurance
benefits to the Executive hereunder and, except as otherwise provided by
Sections 9.06 and 9.07 hereof, no further obligation to provide any other
benefits otherwise provided to the Executive hereunder.
9.06 Deferred Comp Plan Payments. Notwithstanding anything to the
contrary contained in this Agreement, upon termination of the Executive's
employment with the Corporation for any reason, the Executive shall be
entitled to payment in full of all amounts payable to the Executive under the
terms of the Deferred Comp Plan at the time and in the manner provided for by
the terms of the Deferred Comp Plan.
9.07 Retirement Plan Payments. Nothing in this Agreement shall be
deemed to limit the Executive's rights to receive or the obligations of the
Corporation to pay or provide for the Executive and his beneficiaries, any
continuation coverage as required by ERISA or any retirement or other benefits
accrued by the Executive at any time under the terms of any retirement plans
maintained by the Corporation which are subject to the requirements of ERISA
or otherwise satisfy the requirements of Section 401 of the Code.
ARTICLE 10.
Miscellaneous
10.01 Litigation Expenses. In the event that any dispute shall arise
under this Agreement between the Executive and the Corporation which is
related to the Change in Control Termination provisions of Article 8 hereof,
the Corporation shall be responsible for the payment of all reasonable
expenses of all parties to such dispute, including reasonable attorney fees,
regardless of the outcome thereof.
10.02 Amendments. This Agreement may not be amended or modified
orally, and no provision hereof may be waived, except in a writing signed by
the parties hereto.
10.03 Assignment. This Agreement cannot be assigned by either party
hereto except with the written consent of the other
10.04 Prior Agreements. This Agreement shall supersede and replace any
and all prior agreements between the Corporation and the Executive, whether
express or implied; provided, however, that, notwithstanding the foregoing,
nothing contained in this Agreement shall be deemed to supersede, replace,
amend or modify the terms of the Split Dollar Plan. Except as specifically
provided herein, nothing contained in this Agreement shall be construed to
constitute a waiver by the Executive or his beneficiaries of any rights or
claims under any existing pension or retirement plans of the Corporations.
10.05 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the personal representatives and successors in interest of
the Executive and any successors in interest of the Corporation.
10.06 Applicable Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed wholly within such State except with respect to the
internal affairs of the Corporation and its respective stockholders, which
shall be governed by the General Corporation Law of the State of Delaware.
10.07 Notices. All notices and other communications given pursuant to
this Agreement shall be deemed to have been properly given or delivered if
hand-delivered, or if mailed, by certified mail or registered mail postage
prepaid, addressed to the Executive at the address first above written or if
to the Corporation, at its address first above written with a copy to the
attention of Gerald S. Lippes, Secretary, 700 Guaranty Building, Buffalo, New
York 14202. From time to time, any party hereto may designate by written
notice any other address or party to which such notice or communication or
copies thereof shall be sent.
10.08 Severability of Provisions. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and this Agreement shall be interpreted as if such invalid,
illegal or unenforceable provision was not contained herein.
10.09 Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Executive and the Corporation have caused
this Agreement to be executed as of the day and year first above written.
MARK IV INDUSTRIES, INC.
By: /s/ William P. Montague /s/ Sal H. Alfiero
Name: William P. Montague Sal H. Alfiero
Title: Executive Vice President and
Chief Financial Officer
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 1st day of March, 1995, by and between
MARK IV INDUSTRIES, INC., a Delaware corporation, with offices at 501 John
James Audubon Parkway, Amherst, New York 14228 ("Mark IV"), and Clement R.
Arrison, an individual residing at 70 Farmington Road, Williamsville, New York
14221 (the "Executive").
RECITALS:
WHEREAS, the Executive is expected to make a major contribution to the
profitability, growth and financial strength of the Corporation; and
WHEREAS, the Corporation has determined that retaining the services of
the Executive is in the best interests of the Corporation and its stockholders
and, accordingly, the Corporation desires to secure the services of the
Executive on behalf of the Corporation;
CONSIDERATION:
NOW, THEREFORE, in consideration of the conditions and covenants set
forth in this Agreement, the parties hereto agree as follows:
ARTICLE 1.
Employment and Duties
1.01 Employment. The Corporation hereby agrees to, and does hereby
employ the Executive, and the Executive hereby agrees to and does hereby
accept employment, by the Corporation as the President of the Corporation. It
is contemplated that the Executive will continue to serve as President of the
Corporation subject to the provisions of this Agreement and the right of the
Board of Directors of the Corporation to elect new officers.
1.02 Duties. During the period of his employment under this Agreement
the Executive shall perform such executive duties and responsibilities as may
be assigned to him, from time to time, by the Board of Directors of the
Corporation and shall be subject, at all times, to the control of the
Corporation's Board of Directors. The Executive may become a director or
trustee of any corporation or entity that does not constitute a Competitive
Operation as described in Section 4.03 hereof. The Corporation shall not
require the Executive to perform services hereunder outside the Buffalo, New
York metropolitan area with such frequency or duration as would require the
Executive to move his residence from the Buffalo, New York area.
ARTICLE 2.
Compensation and Fringe Benefits
2.01 Base Salary. During the period of the Executive's employment
hereunder, the Corporation shall pay to the Executive, an annual salary ("Base
Salary") of not less than $520,000.00 payable in substantially equal monthly
installments. The Board of Directors of the Corporation, through it's
Compensation Committee, shall in good faith review the Base Salary of the
Executive, on an annual basis, and increase the Base Salary of the Executive
if, in the Compensation Committee's judgment, such increase is advisable.
2.02 Bonuses. The Executive shall be entitled to participate in the
Mark IV Industries, Inc. Executive Bonus Plan, as amended (the "Executive
Bonus Plan") and to receive bonuses in accordance with the terms thereof. In
addition, the Executive shall be entitled to participate in the Mark IV
Industries, Inc. Enhanced Executive Incentive Plan (the "Enhanced Incentive
Plan") and to receive bonuses in accordance with the terms thereof. The Board
of Directors of the Corporation may, in its discretion and from time to time,
amend or change the terms of the Executive Bonus Plan and the terms of the
Enhanced Incentive Plan and, in addition, may award such additional bonuses to
the Executive as it may from time to time determine.
2.03 Stock Based Incentive Compensation. The Executive shall be
eligible to receive incentive stock option awards under the terms of the Mark
IV Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan, as
amended, (the "Incentive Stock Option Plan") and restricted stock awards under
the terms of the Mark IV Industries, Inc. 1992 Restricted Stock Plan, as
amended, (the "Restricted Stock Plan"); provided that, the determination of
whether or not incentive stock options and restricted stock shall be awarded
to the Executive and the amount, if any, of the incentive stock options or
restricted stock to be awarded to the Executive shall be made by the
Compensation Committee of the Corporation's Board of Directors.
The Executive shall also be eligible to receive awards of non-
qualified stock options, stock appreciation rights and any other stock based
incentive compensation awards which may, from time to time, be awarded to
other executive officers of the Corporation pursuant to the terms of any
omnibus plan or any other plan which may, from time to time, be adopted by the
Board of Directors of the Corporation.
2.04 Reimbursement of Expenses. The Corporation shall reimburse the
Executive for all reasonable expenses which the Executive may, from time to
time, incur on behalf of the Corporation in the performance of his
responsibilities and duties under this Agreement, provided that the Executive
accounts to the Corporation for such expenses in the manner prescribed by the
Corporation.
2.05 Deferred Comp Plan. During the term of this Agreement, the
Executive shall receive his proportionate share of any amounts allocated
annually to participants in the Non-Qualified Plan of Deferred Compensation of
Mark IV Industries, Inc., as amended (hereinafter the "Deferred Comp Plan").
In addition, during the term of this Agreement, the Executive shall be
permitted to defer the receipt of payment of all or any portion of the Base
Salary to which the Executive is entitled under the terms of this Agreement
and to defer the receipt of payment of all or any portion of the amount of any
bonus or other incentive compensation (which is otherwise payable immediately)
to which the Executive may become entitled during the term of this Agreement,
all in the manner permitted by the terms of the Deferred Comp Plan.
2.06 Tax Qualified Plans. The Executive shall be entitled to
participate in all tax qualified pension, profit sharing 401(k) or other tax
qualified plans maintained, from time to time, by the Corporation for the
employees of the Corporation who are employed at the Corporation's corporate
headquarters.
2.07 Insurance Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Corporation shall: (a)
maintain and pay all premiums necessary to maintain a policy of business
travel accident insurance which provides the Executive with coverage and
benefits which are at least reasonably comparable to the business travel
accident insurance coverage which was in effect for the Executive as of the
date of this Agreement; (b) continue to pay the trustees of a trust
established by the Executive, the amount of the premiums payable with respect
to life insurance held by the trustees of such trust as provided for under the
terms of a split-dollar agreement between the Corporation and such trustees
(such arrangement being hereinafter referred to as the "Split Dollar Plan");
and (c) if, as of the date of this Agreement, the Corporation maintains any
life insurance or long term disability insurance policies for the benefit of
the Executive other than as a result of or in connection with an election made
by the Executive pursuant to the terms of the Flex IV Plan (as defined below
in Section 2.08) the Corporation shall continue to maintain and pay any
premiums necessary to maintain such policies of life insurance and long term
disability insurance for the benefit of the Executive during the period of his
employment under the terms of this Agreement.
2.08 Group Welfare Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Executive shall be eligible
to participate in the Mark IV Industries, Inc. and Subsidiaries Group Welfare
Benefit Program as applicable to exempt salaried employees of the Corporation
whose primary place of employment is the Corporation's corporate headquarters
(hereinafter the "Flex IV Plan"). As provided for by the terms of the Flex IV
Plan, the Executive shall be entitled to elect to participate in one or more
of the group welfare benefit programs which are contained within the Flex IV
Plan and available to exempt salaried employees of the Corporation whose
primary place of employment is the Corporation's corporate headquarters,
including, but not limited to: (a) medical insurance coverage; (b) dental
insurance coverage; (c) employee life insurance coverage; (d) accidental death
and dismemberment insurance coverage; (e) dependent life insurance coverage;
(f) long term disability insurance coverage; (g) health care spending account
benefits; and (h) dependent care spending account benefits. In the event that
the Flex IV Plan is amended during the term of this Agreement to increase or
reduce the number or type of group welfare benefit programs which are
available to exempt salaried employees of the Corporation whose principal
place of employment is the Corporation's corporate headquarters, the Executive
shall thereafter be entitled to elect to participate in any one or more of the
new group welfare benefit programs which are available under the terms of the
Flex IV Plan, as amended. Notwithstanding the foregoing, except as otherwise
provided in Sections 2.09(b) and (c) hereof, the Corporation shall have no
obligation to maintain or provide such group welfare benefits to the Executive
unless the Executive pays to the Corporation, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
benefits by the Corporation for exempt salaried employees of the Corporation's
corporate headquarters as determined under the provisions of the Flex IV Plan
(or such greater or lesser amount as may, from time to time, be required to be
contributed by exempt salaried employees of the Corporation's corporate
headquarters toward the cost of maintaining and providing such benefits to
such employees).
2.09 Continuation of Insurance Coverage. (a)If the Executive's
employment with the Corporation is terminated by the Corporation, without
cause, as permitted by Section 3.03 hereof, the Corporation shall, for a
period of one (1) year following the date the Executive's employment with the
Corporation is terminated, maintain and pay any premiums necessary to maintain
group welfare benefits for the Executive which are the same as the group
welfare benefits which were in effect for the Executive under the terms of the
Flex IV Plan immediately prior to the termination of the Executive's
employment. Notwithstanding the foregoing, the Corporation shall have no
obligation to maintain or provide such group welfare benefits to the Executive
unless the Executive pays to the Corporation, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
benefits by the Corporation to exempt salaried employees of the Corporation's
corporate headquarters as determined under the provisions of the Flex IV Plan
(or such greater or lesser amount as may, from time to time, be required to be
contributed by exempt salaried employees of the Corporation's corporate
headquarters toward the cost of maintaining and providing such benefit to such
employees). At the end of the one (1) year period following the date on which
the Executive's employment is terminated (without cause) or, if earlier, at
such time that the Corporation shall terminate the group welfare benefit
coverage being provided to the Executive by reason of the Executive's failure
to pay the employee portion of any costs associated with the maintenance and
provision of such benefits, the Executive shall be entitled to elect to
receive continuation coverage with respect to any group health plan benefits
which are being provided to the Executive under the Flex IV Plan, in
accordance with the applicable continuation coverage provisions of section
4980B of the Internal Revenue Code of 1986, as amended (hereinafter the
"Code") and the applicable continuation coverage provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). In addition, if
the Executive's employment with the Corporation is terminated by the
Corporation, without cause, as permitted by Section 3.03 hereof, and if, at
the time the Executive's employment with the Corporation is terminated, the
Corporation maintains any life insurance or long term disability insurance for
the Executive (other than any life insurance or long term disability insurance
provided to the Executive as a result of and in connection with an election
made by the Executive in connection with the Flex IV Plan) or if, at the time
the Executive's employment with the Corporation is terminated, the Corporation
is obligated to make any payments for life insurance premiums to the trustees
of the trust established by the Executive in connection with the Split Dollar
Plan, the Corporation shall maintain and pay any premiums necessary to
maintain any such life insurance and long term disability insurance policies
and the Corporation shall continue to make any payments due for life insurance
premiums in connection with the Split Dollar Plan, for a one (1) year period
following the date on which the Executive's employment with the Corporation is
terminated.
(b) If the Executive's employment with the Corporation is
terminated as a result of the Executive's suffering of a Total and Permanent
Disability as defined in Section 6.04 hereof, the Corporation shall continue
to maintain and pay the full amount of all premiums necessary to maintain: (i)
medical and life insurance coverage for the benefit of the Executive for the
remainder of the Executive's life; (ii) medical insurance coverage for the
benefit of the Executive's spouse for the remainder of her life; and (iii)
medical insurance coverage for the benefit of the Executive's dependents until
such dependents reach age 21. In addition, if the Executive's employment with
the Corporation is terminated as a result of his suffering of a Total and
Permanent Disability as defined in Section 6.04 hereof, following such
termination of the Executive's employment, the Corporation shall continue to
pay to the trustees of the trust established by the Executive in connection
with the Split Dollar Plan, the amount of any premiums due in connection with
the life insurance policies held by such trustees pursuant to the terms of the
Split Dollar Plan.
(c) If the Executive's employment with the Corporation is
terminated as a result of a Change in Control Termination as defined in
Section 8.01 hereof, the Corporation shall continue to maintain and pay the
full amount of any premiums necessary to maintain: (i) medical, long term
disability and life insurance coverage for the benefit of the Executive for
the remainder of the Executive's life; (ii) medical insurance coverage for the
benefit of the Executive's spouse for the remainder of her life; and (iii)
medical insurance coverage for the benefit of the Executive's dependents until
such dependents attain age 21. In addition, if the Executive's employment
with the Corporation is terminated as a result of a Change in Control
Termination defined in Section 8.01 hereof, following such termination, the
Corporation shall continue to pay to the trustees of the trust established by
the Executive in connection with the Split Dollar Plan, the amount of any
premiums due in connection with the life insurance policies held by such
trustees pursuant to the terms of the Split Dollar Plan.
(d) The amount of the life insurance which is required to be
provided to the Executive pursuant to Sections 2.09(b) and (c) above shall
provide a death benefit which is at least equal to the sum of: (i) the amount
of the life insurance, if any, which is maintained for the Executive other
than under the terms of the Flex IV Plan; and (ii) the largest dollar amount
of the death benefit which could have been provided to the Executive's
beneficiaries under any life insurance coverage which was available to the
Executive under the terms of the Flex IV Plan immediately prior to the date
the Executive's employment is terminated as a result of his suffering of a
Total and Permanent Disability or the date on which the Change in Control
occurs, whichever is applicable.
(e) The terms of the long term disability insurance coverage
which is required to be provided to the Executive pursuant to Section 2.09(c)
hereof shall provide an annual disability income to the Executive which is not
less than the total annual amount of the disability income which was payable
to the Executive under all policies of long term disability insurance
maintained for the benefit of the Executive (whether or not provided under for
the Executive the terms of the Flex IV Plan) immediately prior to the date the
Change in Control occurs. In addition, the terms of the long term disability
insurance which is required to be provided to the Executive pursuant to
Section 2.09(c) above shall contain a definition of total and permanent
disability which is at least reasonably comparable to the most liberal
definition of total and permanent disability (in terms of the ease with which
such definition can be met) contained in any long term disability insurance
policy maintained for the Executive immediately prior to the date the Change
in Control occurs. Finally, the terms of the long term disability insurance
which is required to be provided to the Executive pursuant to Section 2.09(c)
above shall provide that the disability income payments to be made to the
Executive as described above will continue to be made to the Executive for
life.
(f) The type and amount of the medical insurance coverage which
is required to be provided to the Executive pursuant to Sections 2.09(b) and
(c) above shall be at least reasonably comparable to the most comprehensive
medical insurance coverage which was available to the Executive, his spouse
and dependents under the Flex IV Plan immediately prior to the date on which
the Executive's employment with the Corporation is terminated as a result of
his suffering of a Total and Permanent Disability or the date on which the
Change in Control occurs (whichever is applicable); provided that, in no event
shall the maximum amount of the annual deductible under such medical insurance
coverage exceed the amount of the annual deductible which was in effect with
respect to the most comprehensive medical insurance coverage which was
available to the Executive, his spouse and dependents under the Flex IV Plan
immediately prior to the date on which the Executive's employment is
terminated as a result of his suffering of a Total and Permanent Disability or
the date on which the Change in Control occurs, whichever is applicable.
2.10 Vacation and Other Benefits. During each full year of the
Executive's employment hereunder, the Executive shall be entitled to paid
vacations for such reasonable periods of time as may be determined by the
Executive. The Executive shall also be entitled to receive all other
employment benefits and participate in such other employee benefit plans as
may, from time to time, be provided or maintained by the Corporation for its
executive officers.
ARTICLE 3.
Term and Termination
3.01 Term. The period of employment of the Executive under this
Agreement shall commence January 1, 1995 ("Effective Date") and continue
through December 31, 1999, provided that on each anniversary of the Effective
Date which occurs after the date hereof and prior to the date on which the
Executive attains age sixty-one (61), the term of this Agreement shall
automatically be extended for an additional twelve-month period. The effect
of the preceding sentence shall be that on each anniversary of the Effective
Date which occurs after the date hereof and prior to the date on which the
Executive attains age sixty-one (61), the then remaining term of this
Agreement shall be five (5) years, and beginning with the first anniversary of
the Effective Date following the date on which the Executive attains age sixty
(60), and on each anniversary of the Effective Date thereafter, the remaining
term of this Agreement shall be that number of years which exists between any
such anniversary of the Effective Date and the end of the calendar year in
which the Executive attains age sixty-five (65).
Notwithstanding the foregoing, beginning on the January 1
immediately following the date on which the Executive attains age sixty-five
(65) and on each January 1 thereafter, unless otherwise terminated by the
Corporation pursuant to Section 3.03 hereof, the term of this Agreement shall
automatically be renewed for one (1) or more successive annual renewal terms
of one (1) year.
3.02 Termination For Cause. Notwithstanding the provisions of Section
3.01 hereof, the Corporation may terminate the Executive's employment
hereunder at any time for cause, by delivering to the Executive a written
notice of termination to the Executive setting forth the date on which such
termination is to be effective and specifying in reasonable detail the facts
and circumstances claimed to provide a basis for the termination.
For purposes of this Agreement, the Corporation shall have "cause"
to terminate the Executive's employment hereunder upon the Executive's: (a)
willful and continued failure to substantially perform his duties hereunder
other than any such failure resulting from the Executive's incapacity due to
physical or mental illness; (b) illegal or criminal conduct; (c) intentional
falsification of records or reports or any other act or acts of dishonesty
constituting a felony and resulting, or intended to result, directly or
indirectly, in personal gain or enrichment of the Executive at the expense of
the Corporation; (d) excessive and/or chronic use of alcohol, narcotics or
other controlled substances (other than under the supervision of a licensed
physician); or (e) willful engagement in gross misconduct materially injurious
to the Corporation.
3.03 Termination Without Cause. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Corporation may, at any time on
or after the date hereof, terminate the Executive's employment, without cause,
by delivering a written notice of termination to the Executive which sets
forth the date on which such termination is to be effective; provided that,
the effective date of any such termination shall not be less than ninety (90)
days following the date on which such written notice of termination is
delivered to the Executive. Notwithstanding the foregoing, if the Executive
has attained at least age sixty-five (65), the written notice of termination
which is delivered to the Executive pursuant to this Section 3.03 shall permit
the Executive, at the Executive's option to elect to retire from his
employment with the Corporation pursuant to Section 3.05 hereof.
3.04 Termination by the Executive. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Executive may terminate his
employment hereunder at any time by delivering a written notice of termination
to the Corporation which sets forth the date on which such termination is to
be effective; provided that, the effective date of any such termination shall
not be less than ninety (90) days following the date on which such written
notice of termination is delivered to the Corporation.
3.05 Retirement. The Executive may retire his employment with the
Corporation at any time following his attainment of age sixty (60), by
delivering to the Corporation a written notice of his intent to terminate his
employment with the Corporation and retire, which written notice shall set
forth the date on which such retirement (and its related termination of
employment) is to be effective. Thereafter, provided that the effective date
of such retirement is not less than thirty (30) days following the date on
which such written notice of termination is delivered to the Corporation, the
Executive shall be permitted to terminate his employment with the Corporation
and retire at the time stated in the written notice of termination delivered
by the Executive to the Corporation.
In addition to the foregoing, in the event that the Executive has
attained at least age sixty-five (65) and has received a written notice of
termination from the Corporation pursuant to Section 3.03 and, as required by
Section 3.03 hereof, such written notice of termination provides the
Executive, at his option, the right to retire, the Executive may exercise such
right and retire from his employment with the Corporation by delivering
written notice of his desire to exercise such right and retire to the
Corporation no later than sixty (60) days following the date of the
Executive's receipt of the written notice of termination from the Corporation
provided for by Section 3.03 hereof. In the event that the Executive elects
to retire in connection with the Executive's receipt of a written notice of
termination from the Corporation pursuant to Section 3.03 hereof, the
Executives retirement shall be effective at the time stated in the written
notice delivered to the Corporation by the Executive in connection with the
Executive's exercise of his right to retire.
3.06 Effect of Notice of Intent to Terminate. Upon delivery by the
Corporation to the Executive of a written notice of intent to terminate, the
Executive's employment with the Corporation shall be terminated, effective at
the time stated in such written notice of intent to terminate, provided that,
if applicable, the effective date of such termination as stated in the notice
of intent to terminate complies with the advance notice of termination
requirements of Section 3.03 hereof. In addition, upon the Executive's
delivery to the Corporation of a written notice of intent to terminate
(whether or not such termination is intended to be a retirement) the
Executive's employment with the Corporation shall be terminated effective at
the time stated in such written notice of intent to terminate, provided that
the effective date of such termination as stated in the notice of intent to
terminate complies with the applicable advance notice of termination
requirements of Sections 3.04 and 3.05 hereof.
ARTICLE 4.
Confidentiality; Non-Compete Provisions
4.01 Confidentiality. During the period of the Executive's employment
hereunder the Executive agrees that he will not, without the written consent
of the Board of Directors of the Corporation, disclose to any person (other
than a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of his duties as an executive
of the Corporation or to a person as required by any order or process of any
court or regulatory agency) any material confidential information obtained by
the Executive while in the employ of the Corporation with respect to any
management strategies, policies or techniques or with respect to any products,
improvements, formulae, designs or styles, processes, customers, methods of
distribution, or methods of manufacture of the Corporation or any of its
subsidiaries; provided, however, that confidential information shall not
include any information known generally to the public (other than as a result
of unauthorized disclosure by the 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 Corporation.
4.02 Non-Compete. During a period of two (2) years after the date of
any termination of the Executive's employment hereunder, the Executive will
not, directly or indirectly, own, manage, operate, control or participate in
the ownership, management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any financial
interest in, or aid or assist anyone else in the conduct of, any business
which competes with any business conducted by the Corporation or with any
group, division or subsidiary of the Corporation in any geographic area where
such business is being conducted at the time of such termination (any such
business being hereinafter referred to as a "Competitive Operation").
Ownership by the Executive of 2% or less of the voting stock of any publicly
held corporation shall not constitute a violation of this Section 4.02.
4.03 Competitive Operation. For purposes of Section 4.02 hereof: (a)
a business shall not be deemed to be a Competitive Operation unless: (i) 25%
or more of the consolidated gross sales and operating revenues of the
Corporation is derived from such business; or (ii) 25% or more of the
consolidated net income of the Corporation is derived from such business; or
(iii) 25% or more of the consolidated assets of the Corporation are devoted to
such business; and (b) a business which is conducted by the Corporation at the
time of the Executive's termination and which subsequently is sold or
discontinued by the Corporation shall not, subsequent to the date of such sale
or discontinuance, be deemed to be a Competitive Operation within the meaning
of Section 4.02 hereof.
ARTICLE 5.
Death Benefits
5.01 Death Benefits. If the Executive dies during the term of his
employment hereunder, in addition to any death benefits payable under the
terms of any life insurance policies maintained by the Corporation on the life
of the Executive, any death benefits payable on account of the death of the
Executive under the terms of the Deferred Comp Plan and any death benefits
payable on account of the death of the Executive under the terms of any tax
qualified retirement plans maintained by the Corporation, the Corporation
shall, within ninety (90) days following the Executive's death, pay to the
estate of the Executive a death benefit equal to fifty percent (50%) of the
Executive's Base Salary at the rate in effect on the date of the Executive's
death. In addition, if the Corporation pays a bonus to its executive
officers for the fiscal year of the Corporation in which the Executive's death
occurs, at the time the Corporation pays such bonuses to its executive
officers for such fiscal year: (a) if the Executive's death occurs during the
first six (6) months of the Corporation's fiscal year, the Corporation shall
pay to the Executive's estate an amount equal to the fifty percent (50%) of
the amount of all bonuses which would have been payable to the Executive
pursuant to Section 2.02 hereof for the fiscal year of the Corporation in
which the Executive's death occurs; and (b) if the Executive's death occurs at
any time after the first six (6) months of the Corporation's fiscal year, the
Corporation shall pay to the Executive's estate an amount equal to the amount
of all bonuses which would have been payable to the Executive pursuant to
Section 2.02 hereof for the fiscal year of the Corporation in which the
Executive's death occurs.
5.02 Continuation of Medical Insurance Coverage. If the Executive dies
during the term of this Agreement and his spouse or dependents are still
living, the Corporation shall maintain and pay any premiums needed to maintain
medical insurance coverage for the benefit of the Executive's spouse for the
remainder of her life and medical insurance coverage for the benefit of the
Executive's dependents until such dependents attain age 21; provided that, the
Corporation shall not be obligated to continue to provide such medical
insurance coverage to the Executive's spouse and dependents unless the
Executive's spouse and dependents (as the case may be) pay to the Corporation,
on a monthly basis, the amount which is required to be contributed by exempt
salaried employees of the Corporation's corporate headquarters toward the cost
of their medical insurance coverage as determined as of the date of the
Executive's death. The type and amount of the medical insurance coverage to
be provided to the Executive's spouse and dependents pursuant to this Section
5.02 shall be at least reasonably comparable to the type and amount of the
most comprehensive medical insurance coverage which was available to the
Executive, his spouse and dependents under the Flex IV Plan immediately prior
to the date of the Executive's death; provided that, in no event shall the
maximum amount of the annual deductible under such medical insurance coverage
exceed the amount of the annual deductible which was in effect with respect to
the most comprehensive medical insurance coverage which was available to the
Executive, his spouse and dependents under the terms of the Flex IV Plan
immediately prior to the date of the Executive's death. For purposes of this
Agreement, the term "dependents" shall have the same meaning as contained in
Section 152 of the Code.
ARTICLE 6.
Disability Benefits
6.01 Short-Term Disability. Except as otherwise provided in Section
6.02 hereof, in the event the Executive becomes disabled and is unable to
perform his duties hereunder, there shall be no reduction in the amount of the
Executive's Base Salary or any other benefits payable to him under this
Agreement.
6.02 Long-Term Disability. If, during the term of this Agreement, it
is determined that the Executive suffers from a Total and Permanent Disability
(as hereinafter defined), then, effective on the last day of the month in
which such determination is made, the Executive's employment hereunder shall
be deemed to be terminated. Upon such termination, unless a Change in Control
has occurred within the three (3) year period preceding such termination and
the Executive, as permitted by Section 8.01 hereof, has elected, in writing,
to receive payment of the Change in Control benefits described in Article 8 of
this Agreement, the Corporation shall, for each twelve (12) month period
beginning on the day immediately following the date of such termination and
any anniversary thereof (an "Anniversary Date"), for the remainder of the
Executive's life, an amount equal to, his Base Salary, at the rate in effect
on the date his employment is terminated, up to a maximum of $200,000 per year
(adjusted as set forth below), less the amounts of all social security,
retirement or disability benefits payable to the Executive for each such
twelve (12) month period by any agency of the United States Government or the
State of New York. In addition, upon the termination of the Executive's
employment as a result of his suffering of a Total and Permanent Disability,
the Corporation shall continue to maintain medical insurance coverage for the
Executive, his spouse and dependents in accordance with the provisions of
Section 2.09 hereof.
6.03 Cost of Living Adjustment. On each Anniversary Date, the $200,000
per year limit contained in Section 6.02 hereof shall be adjusted on a
cumulative basis for each annual increase in the U. S. Department of Labor
Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and
Clerical Workers, New York, New York, 1982-84 = 100 measured between the month
prior to the first month in which such compensation payments were made and the
month prior to the commencement of each such successive year.
6.04 Determination of Total and Permanent Disability. Any question as
to the existence or extent of disability of the Executive upon which the
Executive and the Corporation cannot agree shall be determined by a qualified
independent physician selected by the Executive and approved by the
Corporation (or, if the Executive is unable to make such selection, as
selected by any adult member of his immediate family). For purposes of this
Agreement, the Executive shall be deemed to suffer from a Total and Permanent
Disability if it is determined that the Executive is physically or mentally
unable to substantially perform his duties under this Agreement for a period
of twelve (12) consecutive months. The determination of any question as to
disability under this Section 6.04 by such physician shall be made in writing
to the Corporation and to the Executive and shall be final and conclusive for
all purposes of this Agreement.
ARTICLE 7.
Top Hat Benefits
7.01 "Top Hat" Benefits. In addition to the compensation and other
benefits otherwise provided for hereunder, if the Executive's employment with
the Corporation is terminated for any reason, the Executive and/or his
beneficiaries shall be entitled to receive the retirement, disability and
death benefits they would have been entitled to receive under the applicable
provisions of any tax qualified retirement plans maintained by the Corporation
and in which the Executive is or was a participant at any time prior to the
termination of his employment including, without limitation, any pension,
profit sharing, 401(k) or other comparable plans (individually a "Plan" and
collectively the "Plans") pursuant to the provisions of the Plans as in effect
during the Executive's employment but in any event, computed without reference
to: (a) any deferral of Base Salary or bonuses made by the Executive pursuant
to the terms of the Deferred Comp Plan; (b) any restrictions in the Plans upon
the use of employer contributions for an employee who is among the twenty-five
(25) highest paid; (c) any restrictions in the Plans upon the maximum benefits
payable pursuant to the Code; (d) any limitations on the amount of the
Executive's compensation that may be taken into account under the Plans
pursuant to Section 401(a)(17) of the Code; (e) any limitations on the amount
of the annual benefit which may be accrued by the Executive under the Plans
pursuant to Section 415 of the Code; or (f) any other restriction on the
Executive's benefits as determined under the Plans which are in effect at any
time pursuant to the Code or to ERISA, (the restrictions described in (a),
(b), (c), (d), (e) and (f) above being hereinafter collectively referred to as
the "Restrictions").
7.02 Form and Timing of Payments. At the time the Executive or his
beneficiaries is or are entitled to payment of any benefits under the terms of
any Plan, the Corporation shall pay to the Executive, from its general assets,
the difference between the amount which would, but for the Restrictions, have
been paid to the Executive or his beneficiaries under the terms of such Plan
(as determined pursuant to Section 7.04 hereof) and the amount which is
actually paid or payable to the Executive or his beneficiaries under the terms
of any such Plan. Any amount payable to the Executive or his beneficiaries
under the terms of this Article shall be available for payment to the
Executive or his beneficiaries in any form provided for by the applicable Plan
and shall be paid to the Executive or his beneficiaries in the form elected by
the Executive or his beneficiaries.
7.03 Lump Sum Option. If the Executive requests a lump sum
distribution under the Plan or Plans, and is denied the request or, if there
is no lump sum distribution option available under the Plan or Plans and the
Executive states in writing that he would have otherwise elected to receive a
lump sum distribution, the Corporation shall pay the Executive, in cash, an
amount equal to the benefit to which the Executive would have been entitled as
a lump sum under each Plan from which the Executive would have elected a lump
sum, determined without regard to the Restrictions, regardless of the payment
form in which the benefit would otherwise have been payable under the Plan or
Plans. The Corporation shall also pay the Executive an additional amount in a
lump sum so that the total amount received by the Executive, net of all
federal, state, and local taxes imposed upon the Executive as a result of the
lump sum payment and this additional amount, is equal to the maximum amount
which would have been paid to the Executive as a lump sum distribution under
the terms of the Plan (determined without regard to the Restrictions) which
lump sum distribution would have been eligible for tax free rollover treatment
under Section 402 of the Code. Prior to the making of any lump sum payment to
the Executive under this Section, the Executive and, if the Executive is
married, the Executive's spouse shall waive all benefits payable to him, his
spouse or his beneficiaries under any such Plan or Plans, and shall execute
any and all releases or other instruments to effect such waiver. Such waiver
and releases also will require payment to the Corporation of any amounts
received by the Executive or his beneficiaries under such Plan or Plans.
7.04 Determination of "Top Hat" Payments. The amount of retirement and
death benefits which would, but for the Restrictions, have been payable to the
Executive and his beneficiaries under the Plans shall be determined using the
actual number of years of service completed by the Executive and the actual
amount of Base Salary and bonuses which is payable to the Executive (whether
or not the Executive actually receives payment of any such Base Salary or
bonus as a result of a deferral made by the Executive pursuant to the terms of
the Deferred Comp Plan) as determined by the provisions of the applicable Plan
without regard to the Restrictions. In addition, if, in the case of any
defined contribution Plan or any combination of defined contribution Plans,
the amount which is actually contributed to such Plan or Plans by the
Corporation on behalf of the Executive is limited by operation of the
Restrictions, the amount of the retirement, disability and death benefits
which would, (but for the Restrictions), have been payable to the Executive
and his beneficiaries under any such defined contribution Plans shall be
determined by assuming that: (a) the Corporation made a contribution to such
Plan or Plans for the benefit of the Executive for each plan year (including
plan years ending prior to the effective date of this Agreement if the
Executive, at such time, was also a participant in the Deferred Comp Plan) in
which the actual contribution of the Corporation to such Plan or Plans is
limited by operation of the Restrictions, at the time that the Corporation
actually makes its contributions to such Plan or Plans for such plan year and
in an amount equal to the amount which the Corporation would, but for the
Restrictions, have contributed to such Plan or Plans on behalf of the
Executive for such plan year; and (b) the total value of the amounts which are
deemed to have been contributed by the Corporation to the Plan or the Plans
pursuant to subparagraph 7.04(a) above is equal to the greater of: (i) the
total value of all such amounts together with interest thereon between the
date such amounts are deemed to be contributed to the Plan or Plans and the
date for payment of such amounts, assuming that such amounts earn interest at
a variable annual interest rate, adjusted on a quarterly basis as of March 1,
June 1, September 1 and December 1 of each calendar year and equaling one
hundred twenty percent (120%) of the Federal long-term interest rate
established for such months by the Secretary of the Treasury pursuant to
section 1274 of the Code and the regulations thereunder; and (ii) the total
value (determined according to the principles established by the Deferred Comp
Plan, as in effect as of the date of this Agreement (whether or not the
Deferred Comp Plan is in effect on the date the payments are required to be
made pursuant to this Article 7)) of the number of shares of common stock of
the Corporation which could have been purchased (determined according to the
principles established by the Deferred Comp Plan as in effect as of the date
of this Agreement (whether or not the Deferred Comp Plan is in effect on the
date the payments are required to be made pursuant to this Article 7)) if the
amounts which would, but for the Restrictions, have been contributed to the
Plan or Plans were used to purchase common stock of the Corporation.
7.05 Payments Following Plan Termination. If payments are being made
by the Corporation pursuant to this Article 7 in the form of an annuity or
other periodic form of distribution, and the amount being paid from the assets
of the trust or trusts established to hold assets under the Plan or Plans
(individually a "Trust" and collectively the "Trusts") is reduced as a result
of any of the limitations in the Plan or Plans relating to the benefits
payable to an employee who is among the twenty-five (25) highest paid
employees or by virtue of the termination of the Plan or Plans (including the
operation of Section 4045 of ERISA) or for any other reason other than the
operation of the provisions of the optional form selected under the Plan or
Plans, the amount of the payments being made by the Corporation under this
Article 7 shall be increased by the amount of any reduction in the amount
being paid to the Executive from the assets of the Trust or Trusts.
If payments required to be made by the Corporation pursuant to
this Article 7 are being made or have been made in full, but the Executive or
any of his beneficiaries are required to make a payment to any trustee or
trustees appointed under the terms of any Trust, (whether the result of a loss
of collateral, interest on such collateral or otherwise) as the result of the
operation of the any limitations in the Plan or Plans relating to the use of
employer contributions for an employee who is among the twenty-five (25)
highest paid or by virtue of the termination of the Plan or Plans (including
the operation of Section 4045 of ERISA) or for any other reason, the
Corporation shall reimburse the Executive or his beneficiaries, as the case
may be, directly from its general assets, for each such payment to such
trustee or trustees and if the Executive or any of his beneficiaries does not
receive a deduction for Federal income tax purposes for such a payment or
incurs any penalty tax because of such repayment, the amount of the
reimbursement shall be increased to an amount so that after the application of
Federal income tax to the reimbursement, the Executive or his beneficiary
shall have received an amount from the Corporation approximately equal to the
amount repaid to the trustee or trustees.
ARTICLE 8.
Change in Control Benefits
8.01 Change in Control Termination. The Corporation will provide or
cause to be provided to the Executive the rights and benefits described in
Section 8.03 hereof in the event that, during the term of this Agreement
(including any renewal terms), the Executive's employment by the Corporation
is terminated at any time within three (3) years following a "Change in
Control" (as hereinafter defined) either:
(a) by the Corporation for any reason other than the Executive's
fraudulent conduct in connection with his employment by the Corporation or
conviction of a felony; or
(b) by the Executive following the occurrence of any of the
following events:
(i) the assignment to the Executive of any duties or
responsibilities that are inconsistent with his position, duties,
responsibilities or status immediately preceding such Change in Control;
(ii) a reduction of the Executive's Base Salary, bonuses or
other compensation or benefits from those types or amounts in effect
immediately prior to the Change in Control; or
(iii) the relocation of the principal executive offices of
the Corporation or a change in the duties of the Executive which requires the
Executive to move his residence from the Buffalo, New York metropolitan area;
or
(c) by the Executive, if he shall determine in good faith that
following a Change in Control, he is no longer able to effectively discharge
his duties under this Agreement.
For purposes of this Agreement, if the Executive's employment with
the Corporation is terminated after the occurrence of a Change in Control (as
hereinafter defined) for any of the reasons described above in this Section
8.01, such termination of employment shall hereinafter be referred to as a
"Change in Control Termination."
In the event that the Executive's employment with the Corporation
is terminated within the three (3) years following a Change in Control and,
following the date the Executive's employment with the Corporation is
terminated, it is determined (in accordance with Section 6.04 hereof) that, at
the time the Executive's employment with the Corporation was terminated, the
Executive suffered from a Total and Permanent Disability (as defined in
Section 6.04 hereof) the Executive shall have the right to elect, in writing,
to receive the Change in Control benefits provided for by this Article 8 or
the disability benefits provided for by Section 6.02 hereof. Upon receipt by
the Corporation of such written election from the Executive, the Corporation
shall pay (or cause to be paid) to the Executive the Change in Control
benefits provided for by this Article 8 or the disability benefits provided
for by Section 6.02 hereof, whichever is elected by the Executive. The
Corporation shall not be entitled to object to or contest its obligation to
make such payments (or cause such payments to be made) as elected by the
Executive or the Executive's right to make any such election on the grounds
that the Executive suffered from a Total and Permanent Disability at the time
his employment was terminated. In addition, if the Executive has attained at
least age sixty (60) and the Executive elects to terminate his employment with
the Corporation for any of the reasons set forth above in this Section 8.01
and within three (3) years following the occurrence of a Change in Control,
the Corporation shall have no right to object to or challenge the right of the
Executive to receive any payments provided for under this Article 8 on the
grounds that the Executive was otherwise entitled to retire from his
employment with the Corporation pursuant to Section 3.05 hereof.
8.02 Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if: (a) any person or group (within
the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") but excluding the Corporation and each
of the Corporation's officers and directors, whether individually or
collectively), shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of 20% or more of the Corporation's outstanding
common stock otherwise than through a transaction arranged by or consummated
with the prior approval of the Corporation's Board of Directors; or (b) during
any period of three (3) consecutive years, individuals who at the beginning of
such period constitute the entire Board of Directors of the Corporation (and
any new director whose election to the Board of Directors of the Corporation
or whose nomination for election by the Corporation's stockholders was
approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period or whose election or
nomination for election was previously so approved) (hereinafter referred to
as the "Continuing Directors") shall cease, to constitute a majority of the
Corporation's Board of Directors; or (c) any consolidation or merger of the
Corporation is consummated, as a result of which, the Corporation is not the
continuing or surviving corporation or pursuant to which shares of the
Corporation's common stock would be converted into cash, securities or other
property, other than a merger or consolidation of the Corporation which would
result in voting securities of the Corporation immediately prior thereto
continuing to represent (either by remaining outstanding or being converted
into voting securities of the surviving entity) at least eighty percent (80%)
of the combined voting power of the Corporation or such surviving entity
immediately after such merger or consolidation (provided, however, that if the
Board of Directors of the Corporation adopts a resolution that is approved by
a majority of the Continuing Directors providing that such merger or
consolidation shall not constitute a "Change in Control" for purposes of this
Agreement, then such merger or consolidation shall not constitute a Change in
Control); or (d) the stockholders of the Corporation approve an agreement for
the sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Corporation; or (e) the stockholders of the Corporation approve any plan or
proposal for the liquidation or dissolution of the Corporation.
8.03 Payments on Change in Control Termination. If a Change in Control
Termination occurs the Corporation shall pay to the Executive within ten (10)
days after the date of such Change in Control Termination, a lump sum payment
equal to three (3) times the sum of: (a) the average of the Base Salary of the
Executive in effect during the three (3) year period ending on the date the
Change in Control Termination occurs; and (b) the average of the amount of all
bonuses awarded to or received by the Executive during the three (3) year
period ending on the date of the Change in Control Termination. In no event
shall the provisions of Section 280 G of the Code be deemed to restrict or
limit the amount of any payments which the Executive is entitled to upon the
occurrence of a Change in Control as provided for in this Section 8.03 or
under the terms of any of the Plans, the Deferred Comp Plan, the Incentive
Stock Option Plan or the Restricted Stock Plan.
8.04 Effect of Deferred Compensation. The amounts payable to the
Executive pursuant to Section 8.03 hereof shall be determined based on the
amount of the Base Salary and the amount of any bonus which is payable to the
Executive, whether or not the Executive actually receives payment of such Base
Salary or bonus as a result of a deferral made by the Executive of the receipt
of payment of any portion of such Base Salary or bonus as permitted by the
terms of the Deferred Comp Plan as applicable to the Executive.
8.05 Benefits Upon Death. If the Executive dies following a Change
in Control Termination but prior to the payment of the applicable lump sum
provided for in Section 8.03 above, the Corporation shall pay the applicable
lump sum described in Section 8.03 hereof to the Executive's personal
representative or the executor or administrator of his estate within ten (10)
days from the date such personal representative, executor or administrator is
appointed.
8.06 Effect of Change in Control Termination on Other Benefits.
(a) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the Executive's right to receive any
payments due to the Executive under the terms of any of the Plans or due under
the Deferred Comp Plan. All such payments will be made in accordance with the
provisions of the applicable document containing the terms of any Plan and the
terms of the Deferred Comp Plan. In addition, the occurrence of a Change in
Control Termination with respect to the Executive shall not affect the
obligation of the Corporation to pay to the Executive and, if applicable, to
the Executive's beneficiaries, the amounts described in Article 7 hereof as
provided for in such Article.
(b) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the obligation of the Corporation
under Section 2.09 hereof to pay the full amount of all premiums and other
costs associated with the maintenance by the Corporation of policies of life
insurance, long term disability insurance and medical insurance for the
benefit of the Executive, his spouse and dependents as required by Section
2.09 hereof.
(c) Except as set forth in Sections 8.06(a) and (b) hereof, any
payments required to be made to the Executive or his beneficiaries pursuant to
Sections 8.03 and 8.05 hereof shall, when received by the Executive, or his
beneficiaries, be in lieu of any payments otherwise provided with respect to
the Executive's termination of employment under any other severance pay or
other similar plan or policy maintained by the Corporation. The Corporation
may, in its sole discretion, change, replace or eliminate any retirement plan
or insurance policy described in Sections 8.06(a) and (b) above at any time,
but shall not do so after a Change in Control in a manner which would prevent
the Executive, his spouse and dependents from receiving any benefit which he
would otherwise have been entitled to receive either immediately preceding the
Change of Control or immediately preceding a Change in Control Termination.
8.07 Certain Additional Payments by the Corporation. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Corporation 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 (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties being hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (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.
(b) Subject to the provisions of Section 8.07(c) hereof, all
determinations required to be made under this Section 8.07, including whether
a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall
be made by Coopers & Lybrand, L.L.P. or any other nationally recognized firm
of certified public accountants (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Corporation and the Executive
within 15 business days of termination of the Executive's employment under
this Agreement, if applicable, or such earlier time as is requested by the
Executive or the Corporation. When calculating the amount of the Gross-Up
Payment, the Executive shall be deemed to pay:
(i) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which the
Gross-Up Payment is to be made, and
(ii) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from deduction of such state and local
taxes if paid in such year.
If the Accounting Firm has performed services for the person,
entity or group who caused the Change of Control, as described in Section 8.02
hereof or any affiliate thereof, the Executive may select an alternative
accounting firm from any nationally recognized firm of certified public
accountants. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive with an opinion that he has
substantial authority not to report any Excise Tax on his federal income tax
return. Any determination by the Accounting Firm shall be binding upon the
Corporation and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Corporation should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Corporation exhausts it remedies pursuant to
Section 8.07(c) hereof, and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Corporation to or for the benefit of the Executive.
(c) The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than ten business days after the
Executive knows of such claim and shall apprise the Corporation 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 thirty-day
period following the date on which it gives such notice to the Corporation (or
such shorter period ending on the date that any payment of taxes with respect
to such claim is due). If the Corporation 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 Corporation any information reasonably
requested by the Corporation relating to such claim,
(ii) take such action in connection with contesting such
claim as the Corporation 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 Corporation,
(iii) cooperate with the Corporation in good faith in order
to effectively contest such claim, and
(iv) permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 8.07(c), the Corporation shall control
all proceedings taken in connection with such contest and, at its sole option,
may pursue or forego 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 sue
for a refund or 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 Corporation shall determine; provided, however, that if the
Corporation directs the Executive to pay such claim and sue for a refund, the
Corporation 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 income tax, including interest or
penalties with respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further
provided that any extension of the statue of limitations relating to payment
of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder 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.
(d) If, after the receipt by the Executive of an amount advanced
by the Corporation pursuant to Section 8.07(c) hereof, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Corporation's complying with the requirements of Section
8.07(c)) promptly pay to the Corporation the amount of such refund (together
with any interest paid or credited thereon by the taxing authority after
deducting any taxes applicable thereto). If, after the receipt by the Execu-
tive of an amount advanced by the Corporation pursuant to Section 8.07(c)
hereof, a determination is made that the Executive shall not be entitled to
any refund with respect to such claim and the Corporation does not notify the
Executive in writing of its intent to contest such denial of refund prior to
the expiration of thirty days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid under Section 8.07(a) hereof. The forgiveness of
such advance shall be considered part of the Gross-Up Payment and subject to
gross-up for any taxes (including interest or penalties) associated therewith.
ARTICLE 9.
Severance and Effects of Termination
9.01 Effect of Termination for Cause. In the event the Executive's
employment with the Corporation is terminated for cause by the Corporation
pursuant to the provisions of Section 3.02 hereof, the Corporation shall pay
to the Executive any monthly installment of his Base Salary which is accrued
and unpaid as of the date of the Executive's termination at the monthly rate
then in effect and, thereafter, the Corporation shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder, and, except as otherwise
provided under the terms of Sections 9.06 and 9.07 hereof, no further
obligation to pay any other benefits provided to the Executive hereunder.
9.02 Effect of Termination Without Cause. (a) In the event the
Executive's employment with the Corporation is terminated by the Corporation
without cause pursuant to Section 3.03 hereof and prior to the date the
Executive attains age sixty-one (61), the Corporation shall, within ninety
(90) days following the termination of the Executive's employment, pay the
Executive in one lump sum payment, an amount equal to: (i) the greater of: (A)
two and one-half (2.5) times the sum of: (x) his Base Salary at the rate then
in effect; and (y) an amount equal to all bonuses paid or payable by the
Corporation to the Executive with respect to the fiscal year of the
Corporation which ends immediately prior to the date of such termination; or
(B) five (5) times the amount of the Executive's Base Salary, at the rate then
in effect; and (ii) any "Top Hat" retirement benefits to be provided to the
Executive pursuant to Article 7 hereof. In addition, if the Executive's
employment with the Corporation is terminated without cause pursuant to
Section 3.03 hereof and prior to the date the Executive attains age sixty-one
(61), the Corporation shall, as required by Section 2.09(a) hereof, continue
to provide the Executive with the group welfare benefits and any other life
insurance and long term disability insurance for the one (1) year period
following the date the Executive's employment with the Corporation is
terminated, all as more particularly provided for by Section 2.09(a) hereof.
(b) In the event that the Executive's employment is terminated,
without cause, pursuant to Section 3.03 hereof, and, at the time the
Executive's employment is terminated, the Executive has attained at least age
sixty-one (61), the Corporation shall, within ninety (90) days following the
termination of the Executive's employment, pay to the Executive in one lump
sum payment: (i) any "Top Hat" retirement benefits to be provided to the
Executive pursuant to Article 7 hereof; and (ii) the amount described in
subparagraph 9.02(a)(i) above, reduced by twenty percent (20%) for each year
or part thereof by which the Executive's age exceeds age sixty (60) so that,
if the Executive's employment with the Corporation is terminated, without
cause, as provided for by Section 3.03 hereof, at any time after the Executive
attains age sixty-five (65), the Executive shall, except as otherwise provided
by Sections 2.09(a), 9.06 and 9.07 hereof, not be entitled to payment of any
benefits other than the "Top Hat" retirement benefits required to be provided
to the Executive pursuant to Article 7 hereof. If the Executive's employment
with the Corporation is terminated without cause pursuant to Section 3.03
hereof and after the Executive attains age sixty-one (61), the Corporation
shall, as required by Section 2.09(a) hereof, continue to provide the
Executive with the group welfare benefits and any other life insurance and
long term disability insurance for the one (1) year period following the date
the Executive's employment with the Corporation is terminated, all as more
particularly provided for by Section 2.09(a) hereof.
(c) Except as otherwise provided above in this Section 9.02,
following the termination of the Executive's employment, without cause, as
provided for by Section 3.03 hereof, the Corporation shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder, hereof and, except as
otherwise provided in Sections 9.06 and 9.07 hereof, no further obligation to
provide any other benefits otherwise provided to the Executive hereunder.
9.03 Effect of Voluntary Termination. In the event the Executive
voluntarily terminates his employment with the Corporation pursuant to Section
3.04 hereof, the Corporation shall pay to the Executive any monthly
installment of his Base Salary which is accrued and unpaid as of the date of
the Executive's termination at the monthly rate then in effect and any "Top
Hat" retirement benefits to be provided to the Executive pursuant to Article 7
hereof. Except as otherwise provided above in this Section 9.03, following
the Executive's voluntary termination of his employment with the Corporation
as provided for by Section 3.04 hereof, the Corporation shall have no further
obligation to pay to the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder and, except as otherwise
provided by Sections 9.06 and 9.07 hereof, no further obligation to provide
any other benefits otherwise provided to the Executive hereunder.
9.04 Effect of Retirement. In the event the Executive terminates his
employment with the Corporation by reason of his retirement as provided for in
Section 3.05 hereof, the Corporation shall pay to the Executive: (a) any
monthly installment of his Base Salary which is accrued and unpaid as of the
date of the Executive's retirement at the monthly rate then in effect; (b) an
amount equal to the amount of all bonuses which would have been payable to the
Executive by the Corporation pursuant to Section 2.02 hereof if the Executive
had remained in the employ of the Corporation until the end of the fiscal year
of the Corporation in which the Executive retires and assuming that average
monthly earnings of the Corporation for the portion of the Corporation's
fiscal year which has elapsed prior to the date the Executive retires
continues at such rate after the Executive retires through the end of the
fiscal year of the Corporation in which the Executive retires; and (c) any
"Top Hat" retirement benefits to be provided to the Executive pursuant to
Article 7 hereof. Except as otherwise provided for above in this Section
9.04, following the Executive's retirement from employment with the
Corporation as provided for by Section 3.05 hereof, the Corporation shall have
no further obligation to pay to the Executive any additional Base Salary,
compensation or bonus, no further obligation to provide any medical, life,
disability or other insurance benefits to the Executive hereunder and, except
as provided by Sections 9.06 and 9.07 hereof, no further obligation to provide
any other benefits otherwise provided to the Executive hereunder.
9.05 Effect of Termination Due to Disability. In the event the
Executive's employment with the Corporation is terminated as a result of his
suffering of a Total and Permanent Disability as described in Section 6.04
hereof, the Corporation shall pay to the Executive the amounts described in
Section 6.02 hereof and any "Top Hat" retirement benefits to be provided to
the Executive pursuant to Article 7 hereof. In addition, in the event the
Executive's employment is terminated by reason of his suffering of a Total and
Permanent Disability as described in Section 6.04 hereof, the Corporation
shall, as required by Section 2.09 hereof, continue to pay all premiums
necessary to maintain medical and life insurance for the life of the
Executive, medical insurance for the Executive's spouse for the life of the
Executive's spouse and medical insurance for the Executive's dependents until
such dependents reach age 21. As more particularly provided for by Section
2.09 hereof, the amount of the medical and life insurance coverage which shall
be provided to the Executive, his spouse and dependents following his
suffering of a Total and Permanent Disability shall be at least reasonably
comparable to the amount of the medical and life insurance coverage which was
in effect for the Executive, his spouse and dependents immediately prior to
the date the Executive's employment with the Corporation is terminated as a
result of his suffering of a Total and Permanent Disability. Except as
otherwise provided for by Sections 2.09 and 6.02 hereof and above in this
Section 9.05, following the Executive's suffering of a Total and Permanent
Disability, the Corporation shall have no further obligation to pay to the
Executive any additional Base Salary, compensation or bonus, no further
obligation to provide any medical, life, disability or other insurance
benefits to the Executive hereunder and, except as otherwise provided by
Sections 9.06 and 9.07 hereof, no further obligation to provide any other
benefits otherwise provided to the Executive hereunder.
9.06 Deferred Comp Plan Payments. Notwithstanding anything to the
contrary contained in this Agreement, upon termination of the Executive's
employment with the Corporation for any reason, the Executive shall be
entitled to payment in full of all amounts payable to the Executive under the
terms of the Deferred Comp Plan at the time and in the manner provided for by
the terms of the Deferred Comp Plan.
9.07 Retirement Plan Payments. Nothing in this Agreement shall be
deemed to limit the Executive's rights to receive or the obligations of the
Corporation to pay or provide for the Executive and his beneficiaries, any
continuation coverage as required by ERISA or any retirement or other benefits
accrued by the Executive at any time under the terms of any retirement plans
maintained by the Corporation which are subject to the requirements of ERISA
or otherwise satisfy the requirements of Section 401 of the Code.
ARTICLE 10.
Miscellaneous
10.01 Litigation Expenses. In the event that any dispute shall arise
under this Agreement between the Executive and the Corporation which is
related to the Change in Control Termination provisions of Article 8 hereof,
the Corporation shall be responsible for the payment of all reasonable
expenses of all parties to such dispute, including reasonable attorney fees,
regardless of the outcome thereof.
10.02 Amendments. This Agreement may not be amended or modified
orally, and no provision hereof may be waived, except in a writing signed by
the parties hereto.
10.03 Assignment. This Agreement cannot be assigned by either party
hereto except with the written consent of the other
10.04 Prior Agreements. This Agreement shall supersede and replace any
and all prior agreements between the Corporation and the Executive, whether
express or implied; provided, however, that, notwithstanding the foregoing,
nothing contained in this Agreement shall be deemed to supersede, replace,
amend or modify the terms of the Split Dollar Plan. Except as specifically
provided herein, nothing contained in this Agreement shall be construed to
constitute a waiver by the Executive or his beneficiaries of any rights or
claims under any existing pension or retirement plans of the Corporations.
10.05 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the personal representatives and successors in interest of
the Executive and any successors in interest of the Corporation.
10.06 Applicable Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed wholly within such State except with respect to the
internal affairs of the Corporation and its respective stockholders, which
shall be governed by the General Corporation Law of the State of Delaware.
10.07 Notices. All notices and other communications given pursuant to
this Agreement shall be deemed to have been properly given or delivered if
hand-delivered, or if mailed, by certified mail or registered mail postage
prepaid, addressed to the Executive at the address first above written or if
to the Corporation, at its address first above written with a copy to the
attention of Gerald S. Lippes, Secretary, 700 Guaranty Building, Buffalo, New
York 14202. From time to time, any party hereto may designate by written
notice any other address or party to which such notice or communication or
copies thereof shall be sent.
10.08 Severability of Provisions. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and this Agreement shall be interpreted as if such invalid,
illegal or unenforceable provision was not contained herein.
10.09 Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Executive and the Corporation have caused
this Agreement to be executed as of the day and year first above written.
MARK IV INDUSTRIES, INC.
By: /s/ Sal H. Alfiero /s/ Clement R. Arrison
Name: Sal H. Alfiero Clement R. Arrison
Title: Chairman of the Board
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 1st day of March, 1995, by and between
MARK IV INDUSTRIES, INC., a Delaware corporation, with offices at 501 John
James Audubon Parkway, Amherst, New York 14228 ("Mark IV"), and Gerald S.
Lippes, an individual residing at 77 Middlesex, Buffalo, New York 14216 (the
"Executive").
RECITALS:
WHEREAS, the Executive is expected to make a major contribution to the
profitability, growth and financial strength of the Corporation; and
WHEREAS, the Corporation has determined that retaining the services of
the Executive is in the best interests of the Corporation and its stockholders
and, accordingly, the Corporation desires to secure the services of the
Executive on behalf of the Corporation;
CONSIDERATION:
NOW, THEREFORE, in consideration of the conditions and covenants set
forth in this Agreement, the parties hereto agree as follows:
ARTICLE 1.
Employment and Duties
1.01 Employment. The Corporation hereby agrees to, and does hereby
employ the Executive, and the Executive hereby agrees to and does hereby
accept employment, by the Corporation as the Secretary and General Counsel of
the Corporation. It is contemplated that the Executive will continue to serve
as Secretary and General Counsel of the Corporation subject to the provisions
of this Agreement and the right of the Board of Directors of the Corporation
to elect new officers.
1.02 Duties. During the period of his employment under this Agreement
the Executive shall perform such executive duties and responsibilities as may
be assigned to him, from time to time, by the Board of Directors of the
Corporation and shall be subject, at all times, to the control of the
Corporation's Board of Directors. The Executive may become a director or
trustee of any corporation or entity that does not constitute a Competitive
Operation as described in Section 4.03 hereof. The Corporation shall not
require the Executive to perform services hereunder outside the Buffalo, New
York metropolitan area with such frequency or duration as would require the
Executive to move his residence from the Buffalo, New York area.
ARTICLE 2.
Compensation and Fringe Benefits
2.01 Base Salary. During the period of the Executive's employment
hereunder, the Corporation shall pay to the Executive, an annual salary ("Base
Salary") of not less than $141,000.00 payable in substantially equal monthly
installments. The Board of Directors of the Corporation, through it's
Compensation Committee, shall in good faith review the Base Salary of the
Executive, on an annual basis, and increase the Base Salary of the Executive
if, in the Compensation Committee's judgment, such increase is advisable.
2.02 Bonuses. The Executive shall be entitled to participate in the
Mark IV Industries, Inc. Executive Bonus Plan, as amended (the "Executive
Bonus Plan") and to receive bonuses in accordance with the terms thereof. In
addition, the Executive shall be entitled to participate in the Mark IV
Industries, Inc. Enhanced Executive Incentive Plan (the "Enhanced Incentive
Plan") and to receive bonuses in accordance with the terms thereof. The Board
of Directors of the Corporation may, in its discretion and from time to time,
amend or change the terms of the Executive Bonus Plan and the terms of the
Enhanced Incentive Plan and, in addition, may award such additional bonuses to
the Executive as it may from time to time determine.
2.03 Stock Based Incentive Compensation. The Executive shall be
eligible to receive incentive stock option awards under the terms of the Mark
IV Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan, as
amended, (the "Incentive Stock Option Plan") and restricted stock awards under
the terms of the Mark IV Industries, Inc. 1992 Restricted Stock Plan, as
amended, (the "Restricted Stock Plan"); provided that, the determination of
whether or not incentive stock options and restricted stock shall be awarded
to the Executive and the amount, if any, of the incentive stock options or
restricted stock to be awarded to the Executive shall be made by the
Compensation Committee of the Corporation's Board of Directors.
The Executive shall also be eligible to receive awards of non-
qualified stock options, stock appreciation rights and any other stock based
incentive compensation awards which may, from time to time, be awarded to
other executive officers of the Corporation pursuant to the terms of any
omnibus plan or any other plan which may, from time to time, be adopted by the
Board of Directors of the Corporation.
2.04 Reimbursement of Expenses. The Corporation shall reimburse the
Executive for all reasonable expenses which the Executive may, from time to
time, incur on behalf of the Corporation in the performance of his
responsibilities and duties under this Agreement, provided that the Executive
accounts to the Corporation for such expenses in the manner prescribed by the
Corporation.
2.05 Deferred Comp Plan. During the term of this Agreement, the
Executive shall receive his proportionate share of any amounts allocated
annually to participants in the Non-Qualified Plan of Deferred Compensation of
Mark IV Industries, Inc., as amended (hereinafter the "Deferred Comp Plan").
In addition, during the term of this Agreement, the Executive shall be
permitted to defer the receipt of payment of all or any portion of the Base
Salary to which the Executive is entitled under the terms of this Agreement
and to defer the receipt of payment of all or any portion of the amount of any
bonus or other incentive compensation (which is otherwise payable immediately)
to which the Executive may become entitled during the term of this Agreement,
all in the manner permitted by the terms of the Deferred Comp Plan.
2.06 Tax Qualified Plans. The Executive shall be entitled to
participate in all tax qualified pension, profit sharing 401(k) or other tax
qualified plans maintained, from time to time, by the Corporation for the
employees of the Corporation who are employed at the Corporation's corporate
headquarters.
2.07 Insurance Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Corporation shall: (a)
maintain and pay all premiums necessary to maintain a policy of business
travel accident insurance which provides the Executive with coverage and
benefits which are at least reasonably comparable to the business travel
accident insurance coverage which was in effect for the Executive as of the
date of this Agreement; (b) continue to pay the trustees of a trust
established by the Executive, the amount of the premiums payable with respect
to life insurance held by the trustees of such trust as provided for under the
terms of a split-dollar agreement between the Corporation and such trustees
(such arrangement being hereinafter referred to as the "Split Dollar Plan");
and (c) if, as of the date of this Agreement, the Corporation maintains any
life insurance or long term disability insurance policies for the benefit of
the Executive other than as a result of or in connection with an election made
by the Executive pursuant to the terms of the Flex IV Plan (as defined below
in Section 2.08) the Corporation shall continue to maintain and pay any
premiums necessary to maintain such policies of life insurance and long term
disability insurance for the benefit of the Executive during the period of his
employment under the terms of this Agreement.
2.08 Group Welfare Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Executive shall be eligible
to participate in the Mark IV Industries, Inc. and Subsidiaries Group Welfare
Benefit Program as applicable to exempt salaried employees of the Corporation
whose primary place of employment is the Corporation's corporate headquarters
(hereinafter the "Flex IV Plan"). As provided for by the terms of the Flex IV
Plan, the Executive shall be entitled to elect to participate in one or more
of the group welfare benefit programs which are contained within the Flex IV
Plan and available to exempt salaried employees of the Corporation whose
primary place of employment is the Corporation's corporate headquarters,
including, but not limited to: (a) medical insurance coverage; (b) dental
insurance coverage; (c) employee life insurance coverage; (d) accidental death
and dismemberment insurance coverage; (e) dependent life insurance coverage;
(f) long term disability insurance coverage; (g) health care spending account
benefits; and (h) dependent care spending account benefits. In the event that
the Flex IV Plan is amended during the term of this Agreement to increase or
reduce the number or type of group welfare benefit programs which are
available to exempt salaried employees of the Corporation whose principal
place of employment is the Corporation's corporate headquarters, the Executive
shall thereafter be entitled to elect to participate in any one or more of the
new group welfare benefit programs which are available under the terms of the
Flex IV Plan, as amended. Notwithstanding the foregoing, except as otherwise
provided in Sections 2.09(b) and (c) hereof, the Corporation shall have no
obligation to maintain or provide such group welfare benefits to the Executive
unless the Executive pays to the Corporation, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
benefits by the Corporation for exempt salaried employees of the Corporation's
corporate headquarters as determined under the provisions of the Flex IV Plan
(or such greater or lesser amount as may, from time to time, be required to be
contributed by exempt salaried employees of the Corporation's corporate
headquarters toward the cost of maintaining and providing such benefits to
such employees).
2.09 Continuation of Insurance Coverage. (a)If the Executive's
employment with the Corporation is terminated by the Corporation, without
cause, as permitted by Section 3.03 hereof, the Corporation shall, for a
period of one (1) year following the date the Executive's employment with the
Corporation is terminated, maintain and pay any premiums necessary to maintain
group welfare benefits for the Executive which are the same as the group
welfare benefits which were in effect for the Executive under the terms of the
Flex IV Plan immediately prior to the termination of the Executive's
employment. Notwithstanding the foregoing, the Corporation shall have no
obligation to maintain or provide such group welfare benefits to the Executive
unless the Executive pays to the Corporation, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
benefits by the Corporation to exempt salaried employees of the Corporation's
corporate headquarters as determined under the provisions of the Flex IV Plan
(or such greater or lesser amount as may, from time to time, be required to be
contributed by exempt salaried employees of the Corporation's corporate
headquarters toward the cost of maintaining and providing such benefit to such
employees). At the end of the one (1) year period following the date on which
the Executive's employment is terminated (without cause) or, if earlier, at
such time that the Corporation shall terminate the group welfare benefit
coverage being provided to the Executive by reason of the Executive's failure
to pay the employee portion of any costs associated with the maintenance and
provision of such benefits, the Executive shall be entitled to elect to
receive continuation coverage with respect to any group health plan benefits
which are being provided to the Executive under the Flex IV Plan, in
accordance with the applicable continuation coverage provisions of section
4980B of the Internal Revenue Code of 1986, as amended (hereinafter the
"Code") and the applicable continuation coverage provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). In addition, if
the Executive's employment with the Corporation is terminated by the
Corporation, without cause, as permitted by Section 3.03 hereof, and if, at
the time the Executive's employment with the Corporation is terminated, the
Corporation maintains any life insurance or long term disability insurance for
the Executive (other than any life insurance or long term disability insurance
provided to the Executive as a result of and in connection with an election
made by the Executive in connection with the Flex IV Plan) or if, at the time
the Executive's employment with the Corporation is terminated, the Corporation
is obligated to make any payments for life insurance premiums to the trustees
of the trust established by the Executive in connection with the Split Dollar
Plan, the Corporation shall maintain and pay any premiums necessary to
maintain any such life insurance and long term disability insurance policies
and the Corporation shall continue to make any payments due for life insurance
premiums in connection with the Split Dollar Plan, for a one (1) year period
following the date on which the Executive's employment with the Corporation is
terminated.
(b) If the Executive's employment with the Corporation is
terminated as a result of the Executive's suffering of a Total and Permanent
Disability as defined in Section 6.04 hereof, the Corporation shall continue
to maintain and pay the full amount of all premiums necessary to maintain: (i)
medical and life insurance coverage for the benefit of the Executive for the
remainder of the Executive's life; (ii) medical insurance coverage for the
benefit of the Executive's spouse for the remainder of her life; and (iii)
medical insurance coverage for the benefit of the Executive's dependents until
such dependents reach age 21. In addition, if the Executive's employment with
the Corporation is terminated as a result of his suffering of a Total and
Permanent Disability as defined in Section 6.04 hereof, following such
termination of the Executive's employment, the Corporation shall continue to
pay to the trustees of the trust established by the Executive in connection
with the Split Dollar Plan, the amount of any premiums due in connection with
the life insurance policies held by such trustees pursuant to the terms of the
Split Dollar Plan.
(c) If the Executive's employment with the Corporation is
terminated as a result of a Change in Control Termination as defined in
Section 8.01 hereof, the Corporation shall continue to maintain and pay the
full amount of any premiums necessary to maintain: (i) medical, long term
disability and life insurance coverage for the benefit of the Executive for
the remainder of the Executive's life; (ii) medical insurance coverage for the
benefit of the Executive's spouse for the remainder of her life; and (iii)
medical insurance coverage for the benefit of the Executive's dependents until
such dependents attain age 21. In addition, if the Executive's employment
with the Corporation is terminated as a result of a Change in Control
Termination defined in Section 8.01 hereof, following such termination, the
Corporation shall continue to pay to the trustees of the trust established by
the Executive in connection with the Split Dollar Plan, the amount of any
premiums due in connection with the life insurance policies held by such
trustees pursuant to the terms of the Split Dollar Plan.
(d) The amount of the life insurance which is required to be
provided to the Executive pursuant to Sections 2.09(b) and (c) above shall
provide a death benefit which is at least equal to the sum of: (i) the amount
of the life insurance, if any, which is maintained for the Executive other
than under the terms of the Flex IV Plan; and (ii) the largest dollar amount
of the death benefit which could have been provided to the Executive's
beneficiaries under any life insurance coverage which was available to the
Executive under the terms of the Flex IV Plan immediately prior to the date
the Executive's employment is terminated as a result of his suffering of a
Total and Permanent Disability or the date on which the Change in Control
occurs, whichever is applicable.
(e) The terms of the long term disability insurance coverage
which is required to be provided to the Executive pursuant to Section 2.09(c)
hereof shall provide an annual disability income to the Executive which is not
less than the total annual amount of the disability income which was payable
to the Executive under all policies of long term disability insurance
maintained for the benefit of the Executive (whether or not provided under for
the Executive the terms of the Flex IV Plan) immediately prior to the date the
Change in Control occurs. In addition, the terms of the long term disability
insurance which is required to be provided to the Executive pursuant to
Section 2.09(c) above shall contain a definition of total and permanent
disability which is at least reasonably comparable to the most liberal
definition of total and permanent disability (in terms of the ease with which
such definition can be met) contained in any long term disability insurance
policy maintained for the Executive immediately prior to the date the Change
in Control occurs. Finally, the terms of the long term disability insurance
which is required to be provided to the Executive pursuant to Section 2.09(c)
above shall provide that the disability income payments to be made to the
Executive as described above will continue to be made to the Executive for
life.
(f) The type and amount of the medical insurance coverage which
is required to be provided to the Executive pursuant to Sections 2.09(b) and
(c) above shall be at least reasonably comparable to the most comprehensive
medical insurance coverage which was available to the Executive, his spouse
and dependents under the Flex IV Plan immediately prior to the date on which
the Executive's employment with the Corporation is terminated as a result of
his suffering of a Total and Permanent Disability or the date on which the
Change in Control occurs (whichever is applicable); provided that, in no event
shall the maximum amount of the annual deductible under such medical insurance
coverage exceed the amount of the annual deductible which was in effect with
respect to the most comprehensive medical insurance coverage which was
available to the Executive, his spouse and dependents under the Flex IV Plan
immediately prior to the date on which the Executive's employment is
terminated as a result of his suffering of a Total and Permanent Disability or
the date on which the Change in Control occurs, whichever is applicable.
2.10 Vacation and Other Benefits. During each full year of the
Executive's employment hereunder, the Executive shall be entitled to paid
vacations for such reasonable periods of time as may be determined by the
Executive. The Executive shall also be entitled to receive all other
employment benefits and participate in such other employee benefit plans as
may, from time to time, be provided or maintained by the Corporation for its
executive officers.
ARTICLE 3.
Term and Termination
3.01 Term. The period of employment of the Executive under this
Agreement shall commence January 1, 1995 ("Effective Date") and continue
through December 31, 1999, provided that on each anniversary of the Effective
Date which occurs after the date hereof and prior to the date on which the
Executive attains age sixty-one (61), the term of this Agreement shall
automatically be extended for an additional twelve-month period. The effect
of the preceding sentence shall be that on each anniversary of the Effective
Date which occurs after the date hereof and prior to the date on which the
Executive attains age sixty-one (61), the then remaining term of this
Agreement shall be five (5) years, and beginning with the first anniversary of
the Effective Date following the date on which the Executive attains age sixty
(60), and on each anniversary of the Effective Date thereafter, the remaining
term of this Agreement shall be that number of years which exists between any
such anniversary of the Effective Date and the end of the calendar year in
which the Executive attains age sixty-five (65).
Notwithstanding the foregoing, beginning on the January 1
immediately following the date on which the Executive attains age sixty-five
(65) and on each January 1 thereafter, unless otherwise terminated by the
Corporation pursuant to Section 3.03 hereof, the term of this Agreement shall
automatically be renewed for one (1) or more successive annual renewal terms
of one (1) year.
3.02 Termination For Cause. Notwithstanding the provisions of Section
3.01 hereof, the Corporation may terminate the Executive's employment
hereunder at any time for cause, by delivering to the Executive a written
notice of termination to the Executive setting forth the date on which such
termination is to be effective and specifying in reasonable detail the facts
and circumstances claimed to provide a basis for the termination.
For purposes of this Agreement, the Corporation shall have "cause"
to terminate the Executive's employment hereunder upon the Executive's: (a)
willful and continued failure to substantially perform his duties hereunder
other than any such failure resulting from the Executive's incapacity due to
physical or mental illness; (b) illegal or criminal conduct; (c) intentional
falsification of records or reports or any other act or acts of dishonesty
constituting a felony and resulting, or intended to result, directly or
indirectly, in personal gain or enrichment of the Executive at the expense of
the Corporation; (d) excessive and/or chronic use of alcohol, narcotics or
other controlled substances (other than under the supervision of a licensed
physician); or (e) willful engagement in gross misconduct materially injurious
to the Corporation.
3.03 Termination Without Cause. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Corporation may, at any time on
or after the date hereof, terminate the Executive's employment, without cause,
by delivering a written notice of termination to the Executive which sets
forth the date on which such termination is to be effective; provided that,
the effective date of any such termination shall not be less than ninety (90)
days following the date on which such written notice of termination is
delivered to the Executive. Notwithstanding the foregoing, if the Executive
has attained at least age sixty-five (65), the written notice of termination
which is delivered to the Executive pursuant to this Section 3.03 shall permit
the Executive, at the Executive's option to elect to retire from his
employment with the Corporation pursuant to Section 3.05 hereof.
3.04 Termination by the Executive. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Executive may terminate his
employment hereunder at any time by delivering a written notice of termination
to the Corporation which sets forth the date on which such termination is to
be effective; provided that, the effective date of any such termination shall
not be less than ninety (90) days following the date on which such written
notice of termination is delivered to the Corporation.
3.05 Retirement. The Executive may retire his employment with the
Corporation at any time following his attainment of age sixty (60), by
delivering to the Corporation a written notice of his intent to terminate his
employment with the Corporation and retire, which written notice shall set
forth the date on which such retirement (and its related termination of
employment) is to be effective. Thereafter, provided that the effective date
of such retirement is not less than thirty (30) days following the date on
which such written notice of termination is delivered to the Corporation, the
Executive shall be permitted to terminate his employment with the Corporation
and retire at the time stated in the written notice of termination delivered
by the Executive to the Corporation.
In addition to the foregoing, in the event that the Executive has
attained at least age sixty-five (65) and has received a written notice of
termination from the Corporation pursuant to Section 3.03 and, as required by
Section 3.03 hereof, such written notice of termination provides the
Executive, at his option, the right to retire, the Executive may exercise such
right and retire from his employment with the Corporation by delivering
written notice of his desire to exercise such right and retire to the
Corporation no later than sixty (60) days following the date of the
Executive's receipt of the written notice of termination from the Corporation
provided for by Section 3.03 hereof. In the event that the Executive elects
to retire in connection with the Executive's receipt of a written notice of
termination from the Corporation pursuant to Section 3.03 hereof, the
Executives retirement shall be effective at the time stated in the written
notice delivered to the Corporation by the Executive in connection with the
Executive's exercise of his right to retire.
3.06 Effect of Notice of Intent to Terminate. Upon delivery by the
Corporation to the Executive of a written notice of intent to terminate, the
Executive's employment with the Corporation shall be terminated, effective at
the time stated in such written notice of intent to terminate, provided that,
if applicable, the effective date of such termination as stated in the notice
of intent to terminate complies with the advance notice of termination
requirements of Section 3.03 hereof. In addition, upon the Executive's
delivery to the Corporation of a written notice of intent to terminate
(whether or not such termination is intended to be a retirement) the
Executive's employment with the Corporation shall be terminated effective at
the time stated in such written notice of intent to terminate, provided that
the effective date of such termination as stated in the notice of intent to
terminate complies with the applicable advance notice of termination
requirements of Sections 3.04 and 3.05 hereof.
ARTICLE 4.
Confidentiality; Non-Compete Provisions
4.01 Confidentiality. During the period of the Executive's employment
hereunder the Executive agrees that he will not, without the written consent
of the Board of Directors of the Corporation, disclose to any person (other
than a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of his duties as an executive
of the Corporation or to a person as required by any order or process of any
court or regulatory agency) any material confidential information obtained by
the Executive while in the employ of the Corporation with respect to any
management strategies, policies or techniques or with respect to any products,
improvements, formulae, designs or styles, processes, customers, methods of
distribution, or methods of manufacture of the Corporation or any of its
subsidiaries; provided, however, that confidential information shall not
include any information known generally to the public (other than as a result
of unauthorized disclosure by the 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 Corporation.
4.02 Non-Compete. During a period of two (2) years after the date of
any termination of the Executive's employment hereunder, the Executive will
not, directly or indirectly, own, manage, operate, control or participate in
the ownership, management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any financial
interest in, or aid or assist anyone else in the conduct of, any business
which competes with any business conducted by the Corporation or with any
group, division or subsidiary of the Corporation in any geographic area where
such business is being conducted at the time of such termination (any such
business being hereinafter referred to as a "Competitive Operation").
Ownership by the Executive of 2% or less of the voting stock of any publicly
held corporation shall not constitute a violation of this Section 4.02.
4.03 Competitive Operation. For purposes of Section 4.02 hereof: (a)
a business shall not be deemed to be a Competitive Operation unless: (i) 25%
or more of the consolidated gross sales and operating revenues of the
Corporation is derived from such business; or (ii) 25% or more of the
consolidated net income of the Corporation is derived from such business; or
(iii) 25% or more of the consolidated assets of the Corporation are devoted to
such business; and (b) a business which is conducted by the Corporation at the
time of the Executive's termination and which subsequently is sold or
discontinued by the Corporation shall not, subsequent to the date of such sale
or discontinuance, be deemed to be a Competitive Operation within the meaning
of Section 4.02 hereof.
ARTICLE 5.
Death Benefits
5.01 Death Benefits. If the Executive dies during the term of his
employment hereunder, in addition to any death benefits payable under the
terms of any life insurance policies maintained by the Corporation on the life
of the Executive, any death benefits payable on account of the death of the
Executive under the terms of the Deferred Comp Plan and any death benefits
payable on account of the death of the Executive under the terms of any tax
qualified retirement plans maintained by the Corporation, the Corporation
shall, within ninety (90) days following the Executive's death, pay to the
estate of the Executive a death benefit equal to fifty percent (50%) of the
Executive's Base Salary at the rate in effect on the date of the Executive's
death. In addition, if the Corporation pays a bonus to its executive
officers for the fiscal year of the Corporation in which the Executive's death
occurs, at the time the Corporation pays such bonuses to its executive
officers for such fiscal year: (a) if the Executive's death occurs during the
first six (6) months of the Corporation's fiscal year, the Corporation shall
pay to the Executive's estate an amount equal to the fifty percent (50%) of
the amount of all bonuses which would have been payable to the Executive
pursuant to Section 2.02 hereof for the fiscal year of the Corporation in
which the Executive's death occurs; and (b) if the Executive's death occurs at
any time after the first six (6) months of the Corporation's fiscal year, the
Corporation shall pay to the Executive's estate an amount equal to the amount
of all bonuses which would have been payable to the Executive pursuant to
Section 2.02 hereof for the fiscal year of the Corporation in which the
Executive's death occurs.
5.02 Continuation of Medical Insurance Coverage. If the Executive dies
during the term of this Agreement and his spouse or dependents are still
living, the Corporation shall maintain and pay any premiums needed to maintain
medical insurance coverage for the benefit of the Executive's spouse for the
remainder of her life and medical insurance coverage for the benefit of the
Executive's dependents until such dependents attain age 21; provided that, the
Corporation shall not be obligated to continue to provide such medical
insurance coverage to the Executive's spouse and dependents unless the
Executive's spouse and dependents (as the case may be) pay to the Corporation,
on a monthly basis, the amount which is required to be contributed by exempt
salaried employees of the Corporation's corporate headquarters toward the cost
of their medical insurance coverage as determined as of the date of the
Executive's death. The type and amount of the medical insurance coverage to
be provided to the Executive's spouse and dependents pursuant to this Section
5.02 shall be at least reasonably comparable to the type and amount of the
most comprehensive medical insurance coverage which was available to the
Executive, his spouse and dependents under the Flex IV Plan immediately prior
to the date of the Executive's death; provided that, in no event shall the
maximum amount of the annual deductible under such medical insurance coverage
exceed the amount of the annual deductible which was in effect with respect to
the most comprehensive medical insurance coverage which was available to the
Executive, his spouse and dependents under the terms of the Flex IV Plan
immediately prior to the date of the Executive's death. For purposes of this
Agreement, the term "dependents" shall have the same meaning as contained in
Section 152 of the Code.
ARTICLE 6.
Disability Benefits
6.01 Short-Term Disability. Except as otherwise provided in Section
6.02 hereof, in the event the Executive becomes disabled and is unable to
perform his duties hereunder, there shall be no reduction in the amount of the
Executive's Base Salary or any other benefits payable to him under this
Agreement.
6.02 Long-Term Disability. If, during the term of this Agreement, it
is determined that the Executive suffers from a Total and Permanent Disability
(as hereinafter defined), then, effective on the last day of the month in
which such determination is made, the Executive's employment hereunder shall
be deemed to be terminated. Upon such termination, unless a Change in Control
has occurred within the three (3) year period preceding such termination and
the Executive, as permitted by Section 8.01 hereof, has elected, in writing,
to receive payment of the Change in Control benefits described in Article 8 of
this Agreement, the Corporation shall, for each twelve (12) month period
beginning on the day immediately following the date of such termination and
any anniversary thereof (an "Anniversary Date"), for the remainder of the
Executive's life, an amount equal to, his Base Salary, at the rate in effect
on the date his employment is terminated, up to a maximum of $200,000 per year
(adjusted as set forth below), less the amounts of all social security,
retirement or disability benefits payable to the Executive for each such
twelve (12) month period by any agency of the United States Government or the
State of New York. In addition, upon the termination of the Executive's
employment as a result of his suffering of a Total and Permanent Disability,
the Corporation shall continue to maintain medical insurance coverage for the
Executive, his spouse and dependents in accordance with the provisions of
Section 2.09 hereof.
6.03 Cost of Living Adjustment. On each Anniversary Date, the $200,000
per year limit contained in Section 6.02 hereof shall be adjusted on a
cumulative basis for each annual increase in the U. S. Department of Labor
Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and
Clerical Workers, New York, New York, 1982-84 = 100 measured between the month
prior to the first month in which such compensation payments were made and the
month prior to the commencement of each such successive year.
6.04 Determination of Total and Permanent Disability. Any question as
to the existence or extent of disability of the Executive upon which the
Executive and the Corporation cannot agree shall be determined by a qualified
independent physician selected by the Executive and approved by the
Corporation (or, if the Executive is unable to make such selection, as
selected by any adult member of his immediate family). For purposes of this
Agreement, the Executive shall be deemed to suffer from a Total and Permanent
Disability if it is determined that the Executive is physically or mentally
unable to substantially perform his duties under this Agreement for a period
of twelve (12) consecutive months. The determination of any question as to
disability under this Section 6.04 by such physician shall be made in writing
to the Corporation and to the Executive and shall be final and conclusive for
all purposes of this Agreement.
ARTICLE 7.
Top Hat Benefits
7.01 "Top Hat" Benefits. In addition to the compensation and other
benefits otherwise provided for hereunder, if the Executive's employment with
the Corporation is terminated for any reason, the Executive and/or his
beneficiaries shall be entitled to receive the retirement, disability and
death benefits they would have been entitled to receive under the applicable
provisions of any tax qualified retirement plans maintained by the Corporation
and in which the Executive is or was a participant at any time prior to the
termination of his employment including, without limitation, any pension,
profit sharing, 401(k) or other comparable plans (individually a "Plan" and
collectively the "Plans") pursuant to the provisions of the Plans as in effect
during the Executive's employment but in any event, computed without reference
to: (a) any deferral of Base Salary or bonuses made by the Executive pursuant
to the terms of the Deferred Comp Plan; (b) any restrictions in the Plans upon
the use of employer contributions for an employee who is among the twenty-five
(25) highest paid; (c) any restrictions in the Plans upon the maximum benefits
payable pursuant to the Code; (d) any limitations on the amount of the
Executive's compensation that may be taken into account under the Plans
pursuant to Section 401(a)(17) of the Code; (e) any limitations on the amount
of the annual benefit which may be accrued by the Executive under the Plans
pursuant to Section 415 of the Code; or (f) any other restriction on the
Executive's benefits as determined under the Plans which are in effect at any
time pursuant to the Code or to ERISA, (the restrictions described in (a),
(b), (c), (d), (e) and (f) above being hereinafter collectively referred to as
the "Restrictions").
7.02 Form and Timing of Payments. At the time the Executive or his
beneficiaries is or are entitled to payment of any benefits under the terms of
any Plan, the Corporation shall pay to the Executive, from its general assets,
the difference between the amount which would, but for the Restrictions, have
been paid to the Executive or his beneficiaries under the terms of such Plan
(as determined pursuant to Section 7.04 hereof) and the amount which is
actually paid or payable to the Executive or his beneficiaries under the terms
of any such Plan. Any amount payable to the Executive or his beneficiaries
under the terms of this Article shall be available for payment to the
Executive or his beneficiaries in any form provided for by the applicable Plan
and shall be paid to the Executive or his beneficiaries in the form elected by
the Executive or his beneficiaries.
7.03 Lump Sum Option. If the Executive requests a lump sum
distribution under the Plan or Plans, and is denied the request or, if there
is no lump sum distribution option available under the Plan or Plans and the
Executive states in writing that he would have otherwise elected to receive a
lump sum distribution, the Corporation shall pay the Executive, in cash, an
amount equal to the benefit to which the Executive would have been entitled as
a lump sum under each Plan from which the Executive would have elected a lump
sum, determined without regard to the Restrictions, regardless of the payment
form in which the benefit would otherwise have been payable under the Plan or
Plans. The Corporation shall also pay the Executive an additional amount in a
lump sum so that the total amount received by the Executive, net of all
federal, state, and local taxes imposed upon the Executive as a result of the
lump sum payment and this additional amount, is equal to the maximum amount
which would have been paid to the Executive as a lump sum distribution under
the terms of the Plan (determined without regard to the Restrictions) which
lump sum distribution would have been eligible for tax free rollover treatment
under Section 402 of the Code. Prior to the making of any lump sum payment to
the Executive under this Section, the Executive and, if the Executive is
married, the Executive's spouse shall waive all benefits payable to him, his
spouse or his beneficiaries under any such Plan or Plans, and shall execute
any and all releases or other instruments to effect such waiver. Such waiver
and releases also will require payment to the Corporation of any amounts
received by the Executive or his beneficiaries under such Plan or Plans.
7.04 Determination of "Top Hat" Payments. The amount of retirement and
death benefits which would, but for the Restrictions, have been payable to the
Executive and his beneficiaries under the Plans shall be determined using the
actual number of years of service completed by the Executive and the actual
amount of Base Salary and bonuses which is payable to the Executive (whether
or not the Executive actually receives payment of any such Base Salary or
bonus as a result of a deferral made by the Executive pursuant to the terms of
the Deferred Comp Plan) as determined by the provisions of the applicable Plan
without regard to the Restrictions. In addition, if, in the case of any
defined contribution Plan or any combination of defined contribution Plans,
the amount which is actually contributed to such Plan or Plans by the
Corporation on behalf of the Executive is limited by operation of the
Restrictions, the amount of the retirement, disability and death benefits
which would, (but for the Restrictions), have been payable to the Executive
and his beneficiaries under any such defined contribution Plans shall be
determined by assuming that: (a) the Corporation made a contribution to such
Plan or Plans for the benefit of the Executive for each plan year (including
plan years ending prior to the effective date of this Agreement if the
Executive, at such time, was also a participant in the Deferred Comp Plan) in
which the actual contribution of the Corporation to such Plan or Plans is
limited by operation of the Restrictions, at the time that the Corporation
actually makes its contributions to such Plan or Plans for such plan year and
in an amount equal to the amount which the Corporation would, but for the
Restrictions, have contributed to such Plan or Plans on behalf of the
Executive for such plan year; and (b) the total value of the amounts which are
deemed to have been contributed by the Corporation to the Plan or the Plans
pursuant to subparagraph 7.04(a) above is equal to the greater of: (i) the
total value of all such amounts together with interest thereon between the
date such amounts are deemed to be contributed to the Plan or Plans and the
date for payment of such amounts, assuming that such amounts earn interest at
a variable annual interest rate, adjusted on a quarterly basis as of March 1,
June 1, September 1 and December 1 of each calendar year and equaling one
hundred twenty percent (120%) of the Federal long-term interest rate
established for such months by the Secretary of the Treasury pursuant to
section 1274 of the Code and the regulations thereunder; and (ii) the total
value (determined according to the principles established by the Deferred Comp
Plan, as in effect as of the date of this Agreement (whether or not the
Deferred Comp Plan is in effect on the date the payments are required to be
made pursuant to this Article 7)) of the number of shares of common stock of
the Corporation which could have been purchased (determined according to the
principles established by the Deferred Comp Plan as in effect as of the date
of this Agreement (whether or not the Deferred Comp Plan is in effect on the
date the payments are required to be made pursuant to this Article 7)) if the
amounts which would, but for the Restrictions, have been contributed to the
Plan or Plans were used to purchase common stock of the Corporation.
7.05 Payments Following Plan Termination. If payments are being made
by the Corporation pursuant to this Article 7 in the form of an annuity or
other periodic form of distribution, and the amount being paid from the assets
of the trust or trusts established to hold assets under the Plan or Plans
(individually a "Trust" and collectively the "Trusts") is reduced as a result
of any of the limitations in the Plan or Plans relating to the benefits
payable to an employee who is among the twenty-five (25) highest paid
employees or by virtue of the termination of the Plan or Plans (including the
operation of Section 4045 of ERISA) or for any other reason other than the
operation of the provisions of the optional form selected under the Plan or
Plans, the amount of the payments being made by the Corporation under this
Article 7 shall be increased by the amount of any reduction in the amount
being paid to the Executive from the assets of the Trust or Trusts.
If payments required to be made by the Corporation pursuant to
this Article 7 are being made or have been made in full, but the Executive or
any of his beneficiaries are required to make a payment to any trustee or
trustees appointed under the terms of any Trust, (whether the result of a loss
of collateral, interest on such collateral or otherwise) as the result of the
operation of the any limitations in the Plan or Plans relating to the use of
employer contributions for an employee who is among the twenty-five (25)
highest paid or by virtue of the termination of the Plan or Plans (including
the operation of Section 4045 of ERISA) or for any other reason, the
Corporation shall reimburse the Executive or his beneficiaries, as the case
may be, directly from its general assets, for each such payment to such
trustee or trustees and if the Executive or any of his beneficiaries does not
receive a deduction for Federal income tax purposes for such a payment or
incurs any penalty tax because of such repayment, the amount of the
reimbursement shall be increased to an amount so that after the application of
Federal income tax to the reimbursement, the Executive or his beneficiary
shall have received an amount from the Corporation approximately equal to the
amount repaid to the trustee or trustees.
ARTICLE 8.
Change in Control Benefits
8.01 Change in Control Termination. The Corporation will provide or
cause to be provided to the Executive the rights and benefits described in
Section 8.03 hereof in the event that, during the term of this Agreement
(including any renewal terms), the Executive's employment by the Corporation
is terminated at any time within three (3) years following a "Change in
Control" (as hereinafter defined) either:
(a) by the Corporation for any reason other than the Executive's
fraudulent conduct in connection with his employment by the Corporation or
conviction of a felony; or
(b) by the Executive following the occurrence of any of the
following events:
(i) the assignment to the Executive of any duties or
responsibilities that are inconsistent with his position, duties,
responsibilities or status immediately preceding such Change in Control;
(ii) a reduction of the Executive's Base Salary, bonuses or
other compensation or benefits from those types or amounts in effect
immediately prior to the Change in Control; or
(iii) the relocation of the principal executive offices of
the Corporation or a change in the duties of the Executive which requires the
Executive to move his residence from the Buffalo, New York metropolitan area;
or
(c) by the Executive, if he shall determine in good faith that
following a Change in Control, he is no longer able to effectively discharge
his duties under this Agreement.
For purposes of this Agreement, if the Executive's employment with
the Corporation is terminated after the occurrence of a Change in Control (as
hereinafter defined) for any of the reasons described above in this Section
8.01, such termination of employment shall hereinafter be referred to as a
"Change in Control Termination."
In the event that the Executive's employment with the Corporation
is terminated within the three (3) years following a Change in Control and,
following the date the Executive's employment with the Corporation is
terminated, it is determined (in accordance with Section 6.04 hereof) that, at
the time the Executive's employment with the Corporation was terminated, the
Executive suffered from a Total and Permanent Disability (as defined in
Section 6.04 hereof) the Executive shall have the right to elect, in writing,
to receive the Change in Control benefits provided for by this Article 8 or
the disability benefits provided for by Section 6.02 hereof. Upon receipt by
the Corporation of such written election from the Executive, the Corporation
shall pay (or cause to be paid) to the Executive the Change in Control
benefits provided for by this Article 8 or the disability benefits provided
for by Section 6.02 hereof, whichever is elected by the Executive. The
Corporation shall not be entitled to object to or contest its obligation to
make such payments (or cause such payments to be made) as elected by the
Executive or the Executive's right to make any such election on the grounds
that the Executive suffered from a Total and Permanent Disability at the time
his employment was terminated. In addition, if the Executive has attained at
least age sixty (60) and the Executive elects to terminate his employment with
the Corporation for any of the reasons set forth above in this Section 8.01
and within three (3) years following the occurrence of a Change in Control,
the Corporation shall have no right to object to or challenge the right of the
Executive to receive any payments provided for under this Article 8 on the
grounds that the Executive was otherwise entitled to retire from his
employment with the Corporation pursuant to Section 3.05 hereof.
8.02 Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if: (a) any person or group (within
the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") but excluding the Corporation and each
of the Corporation's officers and directors, whether individually or
collectively), shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of 20% or more of the Corporation's outstanding
common stock otherwise than through a transaction arranged by or consummated
with the prior approval of the Corporation's Board of Directors; or (b) during
any period of three (3) consecutive years, individuals who at the beginning of
such period constitute the entire Board of Directors of the Corporation (and
any new director whose election to the Board of Directors of the Corporation
or whose nomination for election by the Corporation's stockholders was
approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period or whose election or
nomination for election was previously so approved) (hereinafter referred to
as the "Continuing Directors") shall cease, to constitute a majority of the
Corporation's Board of Directors; or (c) any consolidation or merger of the
Corporation is consummated, as a result of which, the Corporation is not the
continuing or surviving corporation or pursuant to which shares of the
Corporation's common stock would be converted into cash, securities or other
property, other than a merger or consolidation of the Corporation which would
result in voting securities of the Corporation immediately prior thereto
continuing to represent (either by remaining outstanding or being converted
into voting securities of the surviving entity) at least eighty percent (80%)
of the combined voting power of the Corporation or such surviving entity
immediately after such merger or consolidation (provided, however, that if the
Board of Directors of the Corporation adopts a resolution that is approved by
a majority of the Continuing Directors providing that such merger or
consolidation shall not constitute a "Change in Control" for purposes of this
Agreement, then such merger or consolidation shall not constitute a Change in
Control); or (d) the stockholders of the Corporation approve an agreement for
the sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Corporation; or (e) the stockholders of the Corporation approve any plan or
proposal for the liquidation or dissolution of the Corporation.
8.03 Payments on Change in Control Termination. If a Change in Control
Termination occurs the Corporation shall pay to the Executive within ten (10)
days after the date of such Change in Control Termination, a lump sum payment
equal to three (3) times the sum of: (a) the average of the Base Salary of the
Executive in effect during the three (3) year period ending on the date the
Change in Control Termination occurs; and (b) the average of the amount of all
bonuses awarded to or received by the Executive during the three (3) year
period ending on the date of the Change in Control Termination. In no event
shall the provisions of Section 280 G of the Code be deemed to restrict or
limit the amount of any payments which the Executive is entitled to upon the
occurrence of a Change in Control as provided for in this Section 8.03 or
under the terms of any of the Plans, the Deferred Comp Plan, the Incentive
Stock Option Plan or the Restricted Stock Plan.
8.04 Effect of Deferred Compensation. The amounts payable to the
Executive pursuant to Section 8.03 hereof shall be determined based on the
amount of the Base Salary and the amount of any bonus which is payable to the
Executive, whether or not the Executive actually receives payment of such Base
Salary or bonus as a result of a deferral made by the Executive of the receipt
of payment of any portion of such Base Salary or bonus as permitted by the
terms of the Deferred Comp Plan as applicable to the Executive.
8.05 Benefits Upon Death. If the Executive dies following a Change
in Control Termination but prior to the payment of the applicable lump sum
provided for in Section 8.03 above, the Corporation shall pay the applicable
lump sum described in Section 8.03 hereof to the Executive's personal
representative or the executor or administrator of his estate within ten (10)
days from the date such personal representative, executor or administrator is
appointed.
8.06 Effect of Change in Control Termination on Other Benefits.
(a) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the Executive's right to receive any
payments due to the Executive under the terms of any of the Plans or due under
the Deferred Comp Plan. All such payments will be made in accordance with the
provisions of the applicable document containing the terms of any Plan and the
terms of the Deferred Comp Plan. In addition, the occurrence of a Change in
Control Termination with respect to the Executive shall not affect the
obligation of the Corporation to pay to the Executive and, if applicable, to
the Executive's beneficiaries, the amounts described in Article 7 hereof as
provided for in such Article.
(b) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the obligation of the Corporation
under Section 2.09 hereof to pay the full amount of all premiums and other
costs associated with the maintenance by the Corporation of policies of life
insurance, long term disability insurance and medical insurance for the
benefit of the Executive, his spouse and dependents as required by Section
2.09 hereof.
(c) Except as set forth in Sections 8.06(a) and (b) hereof, any
payments required to be made to the Executive or his beneficiaries pursuant to
Sections 8.03 and 8.05 hereof shall, when received by the Executive, or his
beneficiaries, be in lieu of any payments otherwise provided with respect to
the Executive's termination of employment under any other severance pay or
other similar plan or policy maintained by the Corporation. The Corporation
may, in its sole discretion, change, replace or eliminate any retirement plan
or insurance policy described in Sections 8.06(a) and (b) above at any time,
but shall not do so after a Change in Control in a manner which would prevent
the Executive, his spouse and dependents from receiving any benefit which he
would otherwise have been entitled to receive either immediately preceding the
Change of Control or immediately preceding a Change in Control Termination.
8.07 Certain Additional Payments by the Corporation. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Corporation 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 (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties being hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (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.
(b) Subject to the provisions of Section 8.07(c) hereof, all
determinations required to be made under this Section 8.07, including whether
a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall
be made by Coopers & Lybrand, L.L.P. or any other nationally recognized firm
of certified public accountants (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Corporation and the Executive
within 15 business days of termination of the Executive's employment under
this Agreement, if applicable, or such earlier time as is requested by the
Executive or the Corporation. When calculating the amount of the Gross-Up
Payment, the Executive shall be deemed to pay:
(i) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which the
Gross-Up Payment is to be made, and
(ii) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from deduction of such state and local
taxes if paid in such year.
If the Accounting Firm has performed services for the person,
entity or group who caused the Change of Control, as described in Section 8.02
hereof or any affiliate thereof, the Executive may select an alternative
accounting firm from any nationally recognized firm of certified public
accountants. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive with an opinion that he has
substantial authority not to report any Excise Tax on his federal income tax
return. Any determination by the Accounting Firm shall be binding upon the
Corporation and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Corporation should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Corporation exhausts it remedies pursuant to
Section 8.07(c) hereof, and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Corporation to or for the benefit of the Executive.
(c) The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than ten business days after the
Executive knows of such claim and shall apprise the Corporation 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 thirty-day
period following the date on which it gives such notice to the Corporation (or
such shorter period ending on the date that any payment of taxes with respect
to such claim is due). If the Corporation 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 Corporation any information reasonably
requested by the Corporation relating to such claim,
(ii) take such action in connection with contesting such
claim as the Corporation 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 Corporation,
(iii) cooperate with the Corporation in good faith in order
to effectively contest such claim, and
(iv) permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 8.07(c), the Corporation shall control
all proceedings taken in connection with such contest and, at its sole option,
may pursue or forego 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 sue
for a refund or 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 Corporation shall determine; provided, however, that if the
Corporation directs the Executive to pay such claim and sue for a refund, the
Corporation 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 income tax, including interest or
penalties with respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further
provided that any extension of the statue of limitations relating to payment
of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder 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.
(d) If, after the receipt by the Executive of an amount advanced
by the Corporation pursuant to Section 8.07(c) hereof, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Corporation's complying with the requirements of Section
8.07(c)) promptly pay to the Corporation the amount of such refund (together
with any interest paid or credited thereon by the taxing authority after
deducting any taxes applicable thereto). If, after the receipt by the Execu-
tive of an amount advanced by the Corporation pursuant to Section 8.07(c)
hereof, a determination is made that the Executive shall not be entitled to
any refund with respect to such claim and the Corporation does not notify the
Executive in writing of its intent to contest such denial of refund prior to
the expiration of thirty days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid under Section 8.07(a) hereof. The forgiveness of
such advance shall be considered part of the Gross-Up Payment and subject to
gross-up for any taxes (including interest or penalties) associated therewith.
ARTICLE 9.
Severance and Effects of Termination
9.01 Effect of Termination for Cause. In the event the Executive's
employment with the Corporation is terminated for cause by the Corporation
pursuant to the provisions of Section 3.02 hereof, the Corporation shall pay
to the Executive any monthly installment of his Base Salary which is accrued
and unpaid as of the date of the Executive's termination at the monthly rate
then in effect and, thereafter, the Corporation shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder, and, except as otherwise
provided under the terms of Sections 9.06 and 9.07 hereof, no further
obligation to pay any other benefits provided to the Executive hereunder.
9.02 Effect of Termination Without Cause. (a) In the event the
Executive's employment with the Corporation is terminated by the Corporation
without cause pursuant to Section 3.03 hereof and prior to the date the
Executive attains age sixty-one (61), the Corporation shall, within ninety
(90) days following the termination of the Executive's employment, pay the
Executive in one lump sum payment, an amount equal to: (i) the greater of: (A)
two and one-half (2.5) times the sum of: (x) his Base Salary at the rate then
in effect; and (y) an amount equal to all bonuses paid or payable by the
Corporation to the Executive with respect to the fiscal year of the
Corporation which ends immediately prior to the date of such termination; or
(B) five (5) times the amount of the Executive's Base Salary, at the rate then
in effect; and (ii) any "Top Hat" retirement benefits to be provided to the
Executive pursuant to Article 7 hereof. In addition, if the Executive's
employment with the Corporation is terminated without cause pursuant to
Section 3.03 hereof and prior to the date the Executive attains age sixty-one
(61), the Corporation shall, as required by Section 2.09(a) hereof, continue
to provide the Executive with the group welfare benefits and any other life
insurance and long term disability insurance for the one (1) year period
following the date the Executive's employment with the Corporation is
terminated, all as more particularly provided for by Section 2.09(a) hereof.
(b) In the event that the Executive's employment is terminated,
without cause, pursuant to Section 3.03 hereof, and, at the time the
Executive's employment is terminated, the Executive has attained at least age
sixty-one (61), the Corporation shall, within ninety (90) days following the
termination of the Executive's employment, pay to the Executive in one lump
sum payment: (i) any "Top Hat" retirement benefits to be provided to the
Executive pursuant to Article 7 hereof; and (ii) the amount described in
subparagraph 9.02(a)(i) above, reduced by twenty percent (20%) for each year
or part thereof by which the Executive's age exceeds age sixty (60) so that,
if the Executive's employment with the Corporation is terminated, without
cause, as provided for by Section 3.03 hereof, at any time after the Executive
attains age sixty-five (65), the Executive shall, except as otherwise provided
by Sections 2.09(a), 9.06 and 9.07 hereof, not be entitled to payment of any
benefits other than the "Top Hat" retirement benefits required to be provided
to the Executive pursuant to Article 7 hereof. If the Executive's employment
with the Corporation is terminated without cause pursuant to Section 3.03
hereof and after the Executive attains age sixty-one (61), the Corporation
shall, as required by Section 2.09(a) hereof, continue to provide the
Executive with the group welfare benefits and any other life insurance and
long term disability insurance for the one (1) year period following the date
the Executive's employment with the Corporation is terminated, all as more
particularly provided for by Section 2.09(a) hereof.
(c) Except as otherwise provided above in this Section 9.02,
following the termination of the Executive's employment, without cause, as
provided for by Section 3.03 hereof, the Corporation shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder, hereof and, except as
otherwise provided in Sections 9.06 and 9.07 hereof, no further obligation to
provide any other benefits otherwise provided to the Executive hereunder.
9.03 Effect of Voluntary Termination. In the event the Executive
voluntarily terminates his employment with the Corporation pursuant to Section
3.04 hereof, the Corporation shall pay to the Executive any monthly
installment of his Base Salary which is accrued and unpaid as of the date of
the Executive's termination at the monthly rate then in effect and any "Top
Hat" retirement benefits to be provided to the Executive pursuant to Article 7
hereof. Except as otherwise provided above in this Section 9.03, following
the Executive's voluntary termination of his employment with the Corporation
as provided for by Section 3.04 hereof, the Corporation shall have no further
obligation to pay to the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder and, except as otherwise
provided by Sections 9.06 and 9.07 hereof, no further obligation to provide
any other benefits otherwise provided to the Executive hereunder.
9.04 Effect of Retirement. In the event the Executive terminates his
employment with the Corporation by reason of his retirement as provided for in
Section 3.05 hereof, the Corporation shall pay to the Executive: (a) any
monthly installment of his Base Salary which is accrued and unpaid as of the
date of the Executive's retirement at the monthly rate then in effect; (b) an
amount equal to the amount of all bonuses which would have been payable to the
Executive by the Corporation pursuant to Section 2.02 hereof if the Executive
had remained in the employ of the Corporation until the end of the fiscal year
of the Corporation in which the Executive retires and assuming that average
monthly earnings of the Corporation for the portion of the Corporation's
fiscal year which has elapsed prior to the date the Executive retires
continues at such rate after the Executive retires through the end of the
fiscal year of the Corporation in which the Executive retires; and (c) any
"Top Hat" retirement benefits to be provided to the Executive pursuant to
Article 7 hereof. Except as otherwise provided for above in this Section
9.04, following the Executive's retirement from employment with the
Corporation as provided for by Section 3.05 hereof, the Corporation shall have
no further obligation to pay to the Executive any additional Base Salary,
compensation or bonus, no further obligation to provide any medical, life,
disability or other insurance benefits to the Executive hereunder and, except
as provided by Sections 9.06 and 9.07 hereof, no further obligation to provide
any other benefits otherwise provided to the Executive hereunder.
9.05 Effect of Termination Due to Disability. In the event the
Executive's employment with the Corporation is terminated as a result of his
suffering of a Total and Permanent Disability as described in Section 6.04
hereof, the Corporation shall pay to the Executive the amounts described in
Section 6.02 hereof and any "Top Hat" retirement benefits to be provided to
the Executive pursuant to Article 7 hereof. In addition, in the event the
Executive's employment is terminated by reason of his suffering of a Total and
Permanent Disability as described in Section 6.04 hereof, the Corporation
shall, as required by Section 2.09 hereof, continue to pay all premiums
necessary to maintain medical and life insurance for the life of the
Executive, medical insurance for the Executive's spouse for the life of the
Executive's spouse and medical insurance for the Executive's dependents until
such dependents reach age 21. As more particularly provided for by Section
2.09 hereof, the amount of the medical and life insurance coverage which shall
be provided to the Executive, his spouse and dependents following his
suffering of a Total and Permanent Disability shall be at least reasonably
comparable to the amount of the medical and life insurance coverage which was
in effect for the Executive, his spouse and dependents immediately prior to
the date the Executive's employment with the Corporation is terminated as a
result of his suffering of a Total and Permanent Disability. Except as
otherwise provided for by Sections 2.09 and 6.02 hereof and above in this
Section 9.05, following the Executive's suffering of a Total and Permanent
Disability, the Corporation shall have no further obligation to pay to the
Executive any additional Base Salary, compensation or bonus, no further
obligation to provide any medical, life, disability or other insurance
benefits to the Executive hereunder and, except as otherwise provided by
Sections 9.06 and 9.07 hereof, no further obligation to provide any other
benefits otherwise provided to the Executive hereunder.
9.06 Deferred Comp Plan Payments. Notwithstanding anything to the
contrary contained in this Agreement, upon termination of the Executive's
employment with the Corporation for any reason, the Executive shall be
entitled to payment in full of all amounts payable to the Executive under the
terms of the Deferred Comp Plan at the time and in the manner provided for by
the terms of the Deferred Comp Plan.
9.07 Retirement Plan Payments. Nothing in this Agreement shall be
deemed to limit the Executive's rights to receive or the obligations of the
Corporation to pay or provide for the Executive and his beneficiaries, any
continuation coverage as required by ERISA or any retirement or other benefits
accrued by the Executive at any time under the terms of any retirement plans
maintained by the Corporation which are subject to the requirements of ERISA
or otherwise satisfy the requirements of Section 401 of the Code.
ARTICLE 10.
Miscellaneous
10.01 Litigation Expenses. In the event that any dispute shall arise
under this Agreement between the Executive and the Corporation which is
related to the Change in Control Termination provisions of Article 8 hereof,
the Corporation shall be responsible for the payment of all reasonable
expenses of all parties to such dispute, including reasonable attorney fees,
regardless of the outcome thereof.
10.02 Amendments. This Agreement may not be amended or modified
orally, and no provision hereof may be waived, except in a writing signed by
the parties hereto.
10.03 Assignment. This Agreement cannot be assigned by either party
hereto except with the written consent of the other
10.04 Prior Agreements. This Agreement shall supersede and replace any
and all prior agreements between the Corporation and the Executive, whether
express or implied; provided, however, that, notwithstanding the foregoing,
nothing contained in this Agreement shall be deemed to supersede, replace,
amend or modify the terms of the Split Dollar Plan. Except as specifically
provided herein, nothing contained in this Agreement shall be construed to
constitute a waiver by the Executive or his beneficiaries of any rights or
claims under any existing pension or retirement plans of the Corporations.
10.05 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the personal representatives and successors in interest of
the Executive and any successors in interest of the Corporation.
10.06 Applicable Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed wholly within such State except with respect to the
internal affairs of the Corporation and its respective stockholders, which
shall be governed by the General Corporation Law of the State of Delaware.
10.07 Notices. All notices and other communications given pursuant to
this Agreement shall be deemed to have been properly given or delivered if
hand-delivered, or if mailed, by certified mail or registered mail postage
prepaid, addressed to the Executive at the address first above written or if
to the Corporation, at its address first above written with a copy to the
attention of Gerald S. Lippes, Secretary, 700 Guaranty Building, Buffalo, New
York 14202. From time to time, any party hereto may designate by written
notice any other address or party to which such notice or communication or
copies thereof shall be sent.
10.08 Severability of Provisions. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and this Agreement shall be interpreted as if such invalid,
illegal or unenforceable provision was not contained herein.
10.09Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Executive and the Corporation have caused
this Agreement to be executed as of the day and year first above written.
MARK IV INDUSTRIES, INC.
By: /s/ Sal H. Alfiero /s/ Gerald S. Lippes
Name: Sal H. Alfiero Gerald S. Lippes
Title: Chairman of the Board
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 1st day of March, 1995, by and between
MARK IV INDUSTRIES, INC., a Delaware corporation, with offices at 501 John
James Audubon Parkway, Amherst, New York 14228 ("Mark IV"), and William P.
Montague, an individual residing at 9695 Rocky Pt., Clarence, New York 14031-
1588 (the "Executive").
RECITALS:
WHEREAS, the Executive is expected to make a major contribution to the
profitability, growth and financial strength of the Corporation; and
WHEREAS, the Corporation has determined that retaining the services of
the Executive is in the best interests of the Corporation and its stockholders
and, accordingly, the Corporation desires to secure the services of the
Executive on behalf of the Corporation;
CONSIDERATION:
NOW, THEREFORE, in consideration of the conditions and covenants set
forth in this Agreement, the parties hereto agree as follows:
ARTICLE 1.
Employment and Duties
1.01 Employment. The Corporation hereby agrees to, and does hereby
employ the Executive, and the Executive hereby agrees to and does hereby
accept employment, by the Corporation as the Executive Vice President and
Chief Financial Officer of the Corporation. It is contemplated that the
Executive will continue to serve as Executive Vice President and Chief
Financial Officer of the Corporation subject to the provisions of this
Agreement and the right of the Board of Directors of the Corporation to elect
new officers.
1.02 Duties. During the period of his employment under this Agreement
the Executive shall perform such executive duties and responsibilities as may
be assigned to him, from time to time, by the Board of Directors of the
Corporation and shall be subject, at all times, to the control of the
Corporation's Board of Directors. The Executive may become a director or
trustee of any corporation or entity that does not constitute a Competitive
Operation as described in Section 4.03 hereof. The Corporation shall not
require the Executive to perform services hereunder outside the Buffalo, New
York metropolitan area with such frequency or duration as would require the
Executive to move his residence from the Buffalo, New York area.
ARTICLE 2.
Compensation and Fringe Benefits
2.01 Base Salary. During the period of the Executive's employment
hereunder, the Corporation shall pay to the Executive, an annual salary ("Base
Salary") of not less than $400,000.00 payable in substantially equal monthly
installments. The Board of Directors of the Corporation, through it's
Compensation Committee, shall in good faith review the Base Salary of the
Executive, on an annual basis, and increase the Base Salary of the Executive
if, in the Compensation Committee's judgment, such increase is advisable.
2.02 Bonuses. The Executive shall be entitled to participate in the
Mark IV Industries, Inc. Executive Bonus Plan, as amended (the "Executive
Bonus Plan") and to receive bonuses in accordance with the terms thereof. In
addition, the Executive shall be entitled to participate in the Mark IV
Industries, Inc. Enhanced Executive Incentive Plan (the "Enhanced Incentive
Plan") and to receive bonuses in accordance with the terms thereof. The Board
of Directors of the Corporation may, in its discretion and from time to time,
amend or change the terms of the Executive Bonus Plan and the terms of the
Enhanced Incentive Plan and, in addition, may award such additional bonuses to
the Executive as it may from time to time determine.
2.03 Stock Based Incentive Compensation. The Executive shall be
eligible to receive incentive stock option awards under the terms of the Mark
IV Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan, as
amended, (the "Incentive Stock Option Plan") and restricted stock awards under
the terms of the Mark IV Industries, Inc. 1992 Restricted Stock Plan, as
amended, (the "Restricted Stock Plan"); provided that, the determination of
whether or not incentive stock options and restricted stock shall be awarded
to the Executive and the amount, if any, of the incentive stock options or
restricted stock to be awarded to the Executive shall be made by the
Compensation Committee of the Corporation's Board of Directors.
The Executive shall also be eligible to receive awards of non-
qualified stock options, stock appreciation rights and any other stock based
incentive compensation awards which may, from time to time, be awarded to
other executive officers of the Corporation pursuant to the terms of any
omnibus plan or any other plan which may, from time to time, be adopted by the
Board of Directors of the Corporation.
2.04 Reimbursement of Expenses. The Corporation shall reimburse the
Executive for all reasonable expenses which the Executive may, from time to
time, incur on behalf of the Corporation in the performance of his
responsibilities and duties under this Agreement, provided that the Executive
accounts to the Corporation for such expenses in the manner prescribed by the
Corporation.
2.05 Deferred Comp Plan. During the term of this Agreement, the
Executive shall receive his proportionate share of any amounts allocated
annually to participants in the Non-Qualified Plan of Deferred Compensation of
Mark IV Industries, Inc., as amended (hereinafter the "Deferred Comp Plan").
In addition, during the term of this Agreement, the Executive shall be
permitted to defer the receipt of payment of all or any portion of the Base
Salary to which the Executive is entitled under the terms of this Agreement
and to defer the receipt of payment of all or any portion of the amount of any
bonus or other incentive compensation (which is otherwise payable immediately)
to which the Executive may become entitled during the term of this Agreement,
all in the manner permitted by the terms of the Deferred Comp Plan.
2.06 Tax Qualified Plans. The Executive shall be entitled to
participate in all tax qualified pension, profit sharing 401(k) or other tax
qualified plans maintained, from time to time, by the Corporation for the
employees of the Corporation who are employed at the Corporation's corporate
headquarters.
2.07 Insurance Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Corporation shall: (a)
maintain and pay all premiums necessary to maintain a policy of business
travel accident insurance which provides the Executive with coverage and
benefits which are at least reasonably comparable to the business travel
accident insurance coverage which was in effect for the Executive as of the
date of this Agreement; (b) continue to pay the trustees of a trust
established by the Executive, the amount of the premiums payable with respect
to life insurance held by the trustees of such trust as provided for under the
terms of a split-dollar agreement between the Corporation and such trustees
(such arrangement being hereinafter referred to as the "Split Dollar Plan");
and (c) if, as of the date of this Agreement, the Corporation maintains any
life insurance or long term disability insurance policies for the benefit of
the Executive other than as a result of or in connection with an election made
by the Executive pursuant to the terms of the Flex IV Plan (as defined below
in Section 2.08) the Corporation shall continue to maintain and pay any
premiums necessary to maintain such policies of life insurance and long term
disability insurance for the benefit of the Executive during the period of his
employment under the terms of this Agreement.
2.08 Group Welfare Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Executive shall be eligible
to participate in the Mark IV Industries, Inc. and Subsidiaries Group Welfare
Benefit Program as applicable to exempt salaried employees of the Corporation
whose primary place of employment is the Corporation's corporate headquarters
(hereinafter the "Flex IV Plan"). As provided for by the terms of the Flex IV
Plan, the Executive shall be entitled to elect to participate in one or more
of the group welfare benefit programs which are contained within the Flex IV
Plan and available to exempt salaried employees of the Corporation whose
primary place of employment is the Corporation's corporate headquarters,
including, but not limited to: (a) medical insurance coverage; (b) dental
insurance coverage; (c) employee life insurance coverage; (d) accidental death
and dismemberment insurance coverage; (e) dependent life insurance coverage;
(f) long term disability insurance coverage; (g) health care spending account
benefits; and (h) dependent care spending account benefits. In the event that
the Flex IV Plan is amended during the term of this Agreement to increase or
reduce the number or type of group welfare benefit programs which are
available to exempt salaried employees of the Corporation whose principal
place of employment is the Corporation's corporate headquarters, the Executive
shall thereafter be entitled to elect to participate in any one or more of the
new group welfare benefit programs which are available under the terms of the
Flex IV Plan, as amended. Notwithstanding the foregoing, except as otherwise
provided in Sections 2.09(b) and (c) hereof, the Corporation shall have no
obligation to maintain or provide such group welfare benefits to the Executive
unless the Executive pays to the Corporation, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
benefits by the Corporation for exempt salaried employees of the Corporation's
corporate headquarters as determined under the provisions of the Flex IV Plan
(or such greater or lesser amount as may, from time to time, be required to be
contributed by exempt salaried employees of the Corporation's corporate
headquarters toward the cost of maintaining and providing such benefits to
such employees).
2.09 Continuation of Insurance Coverage. (a)If the Executive's
employment with the Corporation is terminated by the Corporation, without
cause, as permitted by Section 3.03 hereof, the Corporation shall, for a
period of one (1) year following the date the Executive's employment with the
Corporation is terminated, maintain and pay any premiums necessary to maintain
group welfare benefits for the Executive which are the same as the group
welfare benefits which were in effect for the Executive under the terms of the
Flex IV Plan immediately prior to the termination of the Executive's
employment. Notwithstanding the foregoing, the Corporation shall have no
obligation to maintain or provide such group welfare benefits to the Executive
unless the Executive pays to the Corporation, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
benefits by the Corporation to exempt salaried employees of the Corporation's
corporate headquarters as determined under the provisions of the Flex IV Plan
(or such greater or lesser amount as may, from time to time, be required to be
contributed by exempt salaried employees of the Corporation's corporate
headquarters toward the cost of maintaining and providing such benefit to such
employees). At the end of the one (1) year period following the date on which
the Executive's employment is terminated (without cause) or, if earlier, at
such time that the Corporation shall terminate the group welfare benefit
coverage being provided to the Executive by reason of the Executive's failure
to pay the employee portion of any costs associated with the maintenance and
provision of such benefits, the Executive shall be entitled to elect to
receive continuation coverage with respect to any group health plan benefits
which are being provided to the Executive under the Flex IV Plan, in
accordance with the applicable continuation coverage provisions of section
4980B of the Internal Revenue Code of 1986, as amended (hereinafter the
"Code") and the applicable continuation coverage provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). In addition, if
the Executive's employment with the Corporation is terminated by the
Corporation, without cause, as permitted by Section 3.03 hereof, and if, at
the time the Executive's employment with the Corporation is terminated, the
Corporation maintains any life insurance or long term disability insurance for
the Executive (other than any life insurance or long term disability insurance
provided to the Executive as a result of and in connection with an election
made by the Executive in connection with the Flex IV Plan) or if, at the time
the Executive's employment with the Corporation is terminated, the Corporation
is obligated to make any payments for life insurance premiums to the trustees
of the trust established by the Executive in connection with the Split Dollar
Plan, the Corporation shall maintain and pay any premiums necessary to
maintain any such life insurance and long term disability insurance policies
and the Corporation shall continue to make any payments due for life insurance
premiums in connection with the Split Dollar Plan, for a one (1) year period
following the date on which the Executive's employment with the Corporation is
terminated.
(b) If the Executive's employment with the Corporation is
terminated as a result of the Executive's suffering of a Total and Permanent
Disability as defined in Section 6.04 hereof, the Corporation shall continue
to maintain and pay the full amount of all premiums necessary to maintain: (i)
medical and life insurance coverage for the benefit of the Executive for the
remainder of the Executive's life; (ii) medical insurance coverage for the
benefit of the Executive's spouse for the remainder of her life; and (iii)
medical insurance coverage for the benefit of the Executive's dependents until
such dependents reach age 21. In addition, if the Executive's employment with
the Corporation is terminated as a result of his suffering of a Total and
Permanent Disability as defined in Section 6.04 hereof, following such
termination of the Executive's employment, the Corporation shall continue to
pay to the trustees of the trust established by the Executive in connection
with the Split Dollar Plan, the amount of any premiums due in connection with
the life insurance policies held by such trustees pursuant to the terms of the
Split Dollar Plan.
(c) If the Executive's employment with the Corporation is
terminated as a result of a Change in Control Termination as defined in
Section 8.01 hereof, the Corporation shall continue to maintain and pay the
full amount of any premiums necessary to maintain: (i) medical, long term
disability and life insurance coverage for the benefit of the Executive for
the remainder of the Executive's life; (ii) medical insurance coverage for the
benefit of the Executive's spouse for the remainder of her life; and (iii)
medical insurance coverage for the benefit of the Executive's dependents until
such dependents attain age 21. In addition, if the Executive's employment
with the Corporation is terminated as a result of a Change in Control
Termination defined in Section 8.01 hereof, following such termination, the
Corporation shall continue to pay to the trustees of the trust established by
the Executive in connection with the Split Dollar Plan, the amount of any
premiums due in connection with the life insurance policies held by such
trustees pursuant to the terms of the Split Dollar Plan.
(d) The amount of the life insurance which is required to be
provided to the Executive pursuant to Sections 2.09(b) and (c) above shall
provide a death benefit which is at least equal to the sum of: (i) the amount
of the life insurance, if any, which is maintained for the Executive other
than under the terms of the Flex IV Plan; and (ii) the largest dollar amount
of the death benefit which could have been provided to the Executive's
beneficiaries under any life insurance coverage which was available to the
Executive under the terms of the Flex IV Plan immediately prior to the date
the Executive's employment is terminated as a result of his suffering of a
Total and Permanent Disability or the date on which the Change in Control
occurs, whichever is applicable.
(e) The terms of the long term disability insurance coverage
which is required to be provided to the Executive pursuant to Section 2.09(c)
hereof shall provide an annual disability income to the Executive which is not
less than the total annual amount of the disability income which was payable
to the Executive under all policies of long term disability insurance
maintained for the benefit of the Executive (whether or not provided under for
the Executive the terms of the Flex IV Plan) immediately prior to the date the
Change in Control occurs. In addition, the terms of the long term disability
insurance which is required to be provided to the Executive pursuant to
Section 2.09(c) above shall contain a definition of total and permanent
disability which is at least reasonably comparable to the most liberal
definition of total and permanent disability (in terms of the ease with which
such definition can be met) contained in any long term disability insurance
policy maintained for the Executive immediately prior to the date the Change
in Control occurs. Finally, the terms of the long term disability insurance
which is required to be provided to the Executive pursuant to Section 2.09(c)
above shall provide that the disability income payments to be made to the
Executive as described above will continue to be made to the Executive for
life.
(f) The type and amount of the medical insurance coverage which
is required to be provided to the Executive pursuant to Sections 2.09(b) and
(c) above shall be at least reasonably comparable to the most comprehensive
medical insurance coverage which was available to the Executive, his spouse
and dependents under the Flex IV Plan immediately prior to the date on which
the Executive's employment with the Corporation is terminated as a result of
his suffering of a Total and Permanent Disability or the date on which the
Change in Control occurs (whichever is applicable); provided that, in no event
shall the maximum amount of the annual deductible under such medical insurance
coverage exceed the amount of the annual deductible which was in effect with
respect to the most comprehensive medical insurance coverage which was
available to the Executive, his spouse and dependents under the Flex IV Plan
immediately prior to the date on which the Executive's employment is
terminated as a result of his suffering of a Total and Permanent Disability or
the date on which the Change in Control occurs, whichever is applicable.
2.10 Vacation and Other Benefits. During each full year of the
Executive's employment hereunder, the Executive shall be entitled to paid
vacations for such reasonable periods of time as may be determined by the
Executive. The Executive shall also be entitled to receive all other
employment benefits and participate in such other employee benefit plans as
may, from time to time, be provided or maintained by the Corporation for its
executive officers.
ARTICLE 3.
Term and Termination
3.01 Term. The period of employment of the Executive under this
Agreement shall commence January 1, 1995 ("Effective Date") and continue
through December 31, 1999, provided that on each anniversary of the Effective
Date which occurs after the date hereof and prior to the date on which the
Executive attains age sixty-one (61), the term of this Agreement shall
automatically be extended for an additional twelve-month period. The effect
of the preceding sentence shall be that on each anniversary of the Effective
Date which occurs after the date hereof and prior to the date on which the
Executive attains age sixty-one (61), the then remaining term of this
Agreement shall be five (5) years, and beginning with the first anniversary of
the Effective Date following the date on which the Executive attains age sixty
(60), and on each anniversary of the Effective Date thereafter, the remaining
term of this Agreement shall be that number of years which exists between any
such anniversary of the Effective Date and the end of the calendar year in
which the Executive attains age sixty-five (65).
Notwithstanding the foregoing, beginning on the January 1
immediately following the date on which the Executive attains age sixty-five
(65) and on each January 1 thereafter, unless otherwise terminated by the
Corporation pursuant to Section 3.03 hereof, the term of this Agreement shall
automatically be renewed for one (1) or more successive annual renewal terms
of one (1) year.
3.02 Termination For Cause. Notwithstanding the provisions of Section
3.01 hereof, the Corporation may terminate the Executive's employment
hereunder at any time for cause, by delivering to the Executive a written
notice of termination to the Executive setting forth the date on which such
termination is to be effective and specifying in reasonable detail the facts
and circumstances claimed to provide a basis for the termination.
For purposes of this Agreement, the Corporation shall have "cause"
to terminate the Executive's employment hereunder upon the Executive's: (a)
willful and continued failure to substantially perform his duties hereunder
other than any such failure resulting from the Executive's incapacity due to
physical or mental illness; (b) illegal or criminal conduct; (c) intentional
falsification of records or reports or any other act or acts of dishonesty
constituting a felony and resulting, or intended to result, directly or
indirectly, in personal gain or enrichment of the Executive at the expense of
the Corporation; (d) excessive and/or chronic use of alcohol, narcotics or
other controlled substances (other than under the supervision of a licensed
physician); or (e) willful engagement in gross misconduct materially injurious
to the Corporation.
3.03 Termination Without Cause. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Corporation may, at any time on
or after the date hereof, terminate the Executive's employment, without cause,
by delivering a written notice of termination to the Executive which sets
forth the date on which such termination is to be effective; provided that,
the effective date of any such termination shall not be less than ninety (90)
days following the date on which such written notice of termination is
delivered to the Executive. Notwithstanding the foregoing, if the Executive
has attained at least age sixty-five (65), the written notice of termination
which is delivered to the Executive pursuant to this Section 3.03 shall permit
the Executive, at the Executive's option to elect to retire from his
employment with the Corporation pursuant to Section 3.05 hereof.
3.04 Termination by the Executive. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Executive may terminate his
employment hereunder at any time by delivering a written notice of termination
to the Corporation which sets forth the date on which such termination is to
be effective; provided that, the effective date of any such termination shall
not be less than ninety (90) days following the date on which such written
notice of termination is delivered to the Corporation.
3.05 Retirement. The Executive may retire his employment with the
Corporation at any time following his attainment of age sixty (60), by
delivering to the Corporation a written notice of his intent to terminate his
employment with the Corporation and retire, which written notice shall set
forth the date on which such retirement (and its related termination of
employment) is to be effective. Thereafter, provided that the effective date
of such retirement is not less than thirty (30) days following the date on
which such written notice of termination is delivered to the Corporation, the
Executive shall be permitted to terminate his employment with the Corporation
and retire at the time stated in the written notice of termination delivered
by the Executive to the Corporation.
In addition to the foregoing, in the event that the Executive has
attained at least age sixty-five (65) and has received a written notice of
termination from the Corporation pursuant to Section 3.03 and, as required by
Section 3.03 hereof, such written notice of termination provides the
Executive, at his option, the right to retire, the Executive may exercise such
right and retire from his employment with the Corporation by delivering
written notice of his desire to exercise such right and retire to the
Corporation no later than sixty (60) days following the date of the
Executive's receipt of the written notice of termination from the Corporation
provided for by Section 3.03 hereof. In the event that the Executive elects
to retire in connection with the Executive's receipt of a written notice of
termination from the Corporation pursuant to Section 3.03 hereof, the
Executives retirement shall be effective at the time stated in the written
notice delivered to the Corporation by the Executive in connection with the
Executive's exercise of his right to retire.
3.06 Effect of Notice of Intent to Terminate. Upon delivery by the
Corporation to the Executive of a written notice of intent to terminate, the
Executive's employment with the Corporation shall be terminated, effective at
the time stated in such written notice of intent to terminate, provided that,
if applicable, the effective date of such termination as stated in the notice
of intent to terminate complies with the advance notice of termination
requirements of Section 3.03 hereof. In addition, upon the Executive's
delivery to the Corporation of a written notice of intent to terminate
(whether or not such termination is intended to be a retirement) the
Executive's employment with the Corporation shall be terminated effective at
the time stated in such written notice of intent to terminate, provided that
the effective date of such termination as stated in the notice of intent to
terminate complies with the applicable advance notice of termination
requirements of Sections 3.04 and 3.05 hereof.
ARTICLE 4.
Confidentiality; Non-Compete Provisions
4.01 Confidentiality. During the period of the Executive's employment
hereunder the Executive agrees that he will not, without the written consent
of the Board of Directors of the Corporation, disclose to any person (other
than a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of his duties as an executive
of the Corporation or to a person as required by any order or process of any
court or regulatory agency) any material confidential information obtained by
the Executive while in the employ of the Corporation with respect to any
management strategies, policies or techniques or with respect to any products,
improvements, formulae, designs or styles, processes, customers, methods of
distribution, or methods of manufacture of the Corporation or any of its
subsidiaries; provided, however, that confidential information shall not
include any information known generally to the public (other than as a result
of unauthorized disclosure by the 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 Corporation.
4.02 Non-Compete. During a period of two (2) years after the date of
any termination of the Executive's employment hereunder, the Executive will
not, directly or indirectly, own, manage, operate, control or participate in
the ownership, management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any financial
interest in, or aid or assist anyone else in the conduct of, any business
which competes with any business conducted by the Corporation or with any
group, division or subsidiary of the Corporation in any geographic area where
such business is being conducted at the time of such termination (any such
business being hereinafter referred to as a "Competitive Operation").
Ownership by the Executive of 2% or less of the voting stock of any publicly
held corporation shall not constitute a violation of this Section 4.02.
4.03 Competitive Operation. For purposes of Section 4.02 hereof: (a)
a business shall not be deemed to be a Competitive Operation unless: (i) 25%
or more of the consolidated gross sales and operating revenues of the
Corporation is derived from such business; or (ii) 25% or more of the
consolidated net income of the Corporation is derived from such business; or
(iii) 25% or more of the consolidated assets of the Corporation are devoted to
such business; and (b) a business which is conducted by the Corporation at the
time of the Executive's termination and which subsequently is sold or
discontinued by the Corporation shall not, subsequent to the date of such sale
or discontinuance, be deemed to be a Competitive Operation within the meaning
of Section 4.02 hereof.
ARTICLE 5.
Death Benefits
5.01 Death Benefits. If the Executive dies during the term of his
employment hereunder, in addition to any death benefits payable under the
terms of any life insurance policies maintained by the Corporation on the life
of the Executive, any death benefits payable on account of the death of the
Executive under the terms of the Deferred Comp Plan and any death benefits
payable on account of the death of the Executive under the terms of any tax
qualified retirement plans maintained by the Corporation, the Corporation
shall, within ninety (90) days following the Executive's death, pay to the
estate of the Executive a death benefit equal to fifty percent (50%) of the
Executive's Base Salary at the rate in effect on the date of the Executive's
death. In addition, if the Corporation pays a bonus to its executive
officers for the fiscal year of the Corporation in which the Executive's death
occurs, at the time the Corporation pays such bonuses to its executive
officers for such fiscal year: (a) if the Executive's death occurs during the
first six (6) months of the Corporation's fiscal year, the Corporation shall
pay to the Executive's estate an amount equal to the fifty percent (50%) of
the amount of all bonuses which would have been payable to the Executive
pursuant to Section 2.02 hereof for the fiscal year of the Corporation in
which the Executive's death occurs; and (b) if the Executive's death occurs at
any time after the first six (6) months of the Corporation's fiscal year, the
Corporation shall pay to the Executive's estate an amount equal to the amount
of all bonuses which would have been payable to the Executive pursuant to
Section 2.02 hereof for the fiscal year of the Corporation in which the
Executive's death occurs.
5.02 Continuation of Medical Insurance Coverage. If the Executive dies
during the term of this Agreement and his spouse or dependents are still
living, the Corporation shall maintain and pay any premiums needed to maintain
medical insurance coverage for the benefit of the Executive's spouse for the
remainder of her life and medical insurance coverage for the benefit of the
Executive's dependents until such dependents attain age 21; provided that, the
Corporation shall not be obligated to continue to provide such medical
insurance coverage to the Executive's spouse and dependents unless the
Executive's spouse and dependents (as the case may be) pay to the Corporation,
on a monthly basis, the amount which is required to be contributed by exempt
salaried employees of the Corporation's corporate headquarters toward the cost
of their medical insurance coverage as determined as of the date of the
Executive's death. The type and amount of the medical insurance coverage to
be provided to the Executive's spouse and dependents pursuant to this Section
5.02 shall be at least reasonably comparable to the type and amount of the
most comprehensive medical insurance coverage which was available to the
Executive, his spouse and dependents under the Flex IV Plan immediately prior
to the date of the Executive's death; provided that, in no event shall the
maximum amount of the annual deductible under such medical insurance coverage
exceed the amount of the annual deductible which was in effect with respect to
the most comprehensive medical insurance coverage which was available to the
Executive, his spouse and dependents under the terms of the Flex IV Plan
immediately prior to the date of the Executive's death. For purposes of this
Agreement, the term "dependents" shall have the same meaning as contained in
Section 152 of the Code.
ARTICLE 6.
Disability Benefits
6.01 Short-Term Disability. Except as otherwise provided in Section
6.02 hereof, in the event the Executive becomes disabled and is unable to
perform his duties hereunder, there shall be no reduction in the amount of the
Executive's Base Salary or any other benefits payable to him under this
Agreement.
6.02 Long-Term Disability. If, during the term of this Agreement, it
is determined that the Executive suffers from a Total and Permanent Disability
(as hereinafter defined), then, effective on the last day of the month in
which such determination is made, the Executive's employment hereunder shall
be deemed to be terminated. Upon such termination, unless a Change in Control
has occurred within the three (3) year period preceding such termination and
the Executive, as permitted by Section 8.01 hereof, has elected, in writing,
to receive payment of the Change in Control benefits described in Article 8 of
this Agreement, the Corporation shall, for each twelve (12) month period
beginning on the day immediately following the date of such termination and
any anniversary thereof (an "Anniversary Date"), for the remainder of the
Executive's life, an amount equal to, his Base Salary, at the rate in effect
on the date his employment is terminated, up to a maximum of $200,000 per year
(adjusted as set forth below), less the amounts of all social security,
retirement or disability benefits payable to the Executive for each such
twelve (12) month period by any agency of the United States Government or the
State of New York. In addition, upon the termination of the Executive's
employment as a result of his suffering of a Total and Permanent Disability,
the Corporation shall continue to maintain medical insurance coverage for the
Executive, his spouse and dependents in accordance with the provisions of
Section 2.09 hereof.
6.03 Cost of Living Adjustment. On each Anniversary Date, the $200,000
per year limit contained in Section 6.02 hereof shall be adjusted on a
cumulative basis for each annual increase in the U. S. Department of Labor
Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and
Clerical Workers, New York, New York, 1982-84 = 100 measured between the month
prior to the first month in which such compensation payments were made and the
month prior to the commencement of each such successive year.
6.04 Determination of Total and Permanent Disability. Any question as
to the existence or extent of disability of the Executive upon which the
Executive and the Corporation cannot agree shall be determined by a qualified
independent physician selected by the Executive and approved by the
Corporation (or, if the Executive is unable to make such selection, as
selected by any adult member of his immediate family). For purposes of this
Agreement, the Executive shall be deemed to suffer from a Total and Permanent
Disability if it is determined that the Executive is physically or mentally
unable to substantially perform his duties under this Agreement for a period
of twelve (12) consecutive months. The determination of any question as to
disability under this Section 6.04 by such physician shall be made in writing
to the Corporation and to the Executive and shall be final and conclusive for
all purposes of this Agreement.
ARTICLE 7.
Top Hat Benefits
7.01 "Top Hat" Benefits. In addition to the compensation and other
benefits otherwise provided for hereunder, if the Executive's employment with
the Corporation is terminated for any reason, the Executive and/or his
beneficiaries shall be entitled to receive the retirement, disability and
death benefits they would have been entitled to receive under the applicable
provisions of any tax qualified retirement plans maintained by the Corporation
and in which the Executive is or was a participant at any time prior to the
termination of his employment including, without limitation, any pension,
profit sharing, 401(k) or other comparable plans (individually a "Plan" and
collectively the "Plans") pursuant to the provisions of the Plans as in effect
during the Executive's employment but in any event, computed without reference
to: (a) any deferral of Base Salary or bonuses made by the Executive pursuant
to the terms of the Deferred Comp Plan; (b) any restrictions in the Plans upon
the use of employer contributions for an employee who is among the twenty-five
(25) highest paid; (c) any restrictions in the Plans upon the maximum benefits
payable pursuant to the Code; (d) any limitations on the amount of the
Executive's compensation that may be taken into account under the Plans
pursuant to Section 401(a)(17) of the Code; (e) any limitations on the amount
of the annual benefit which may be accrued by the Executive under the Plans
pursuant to Section 415 of the Code; or (f) any other restriction on the
Executive's benefits as determined under the Plans which are in effect at any
time pursuant to the Code or to ERISA, (the restrictions described in (a),
(b), (c), (d), (e) and (f) above being hereinafter collectively referred to as
the "Restrictions").
7.02 Form and Timing of Payments. At the time the Executive or his
beneficiaries is or are entitled to payment of any benefits under the terms of
any Plan, the Corporation shall pay to the Executive, from its general assets,
the difference between the amount which would, but for the Restrictions, have
been paid to the Executive or his beneficiaries under the terms of such Plan
(as determined pursuant to Section 7.04 hereof) and the amount which is
actually paid or payable to the Executive or his beneficiaries under the terms
of any such Plan. Any amount payable to the Executive or his beneficiaries
under the terms of this Article shall be available for payment to the
Executive or his beneficiaries in any form provided for by the applicable Plan
and shall be paid to the Executive or his beneficiaries in the form elected by
the Executive or his beneficiaries.
7.03 Lump Sum Option. If the Executive requests a lump sum
distribution under the Plan or Plans, and is denied the request or, if there
is no lump sum distribution option available under the Plan or Plans and the
Executive states in writing that he would have otherwise elected to receive a
lump sum distribution, the Corporation shall pay the Executive, in cash, an
amount equal to the benefit to which the Executive would have been entitled as
a lump sum under each Plan from which the Executive would have elected a lump
sum, determined without regard to the Restrictions, regardless of the payment
form in which the benefit would otherwise have been payable under the Plan or
Plans. The Corporation shall also pay the Executive an additional amount in a
lump sum so that the total amount received by the Executive, net of all
federal, state, and local taxes imposed upon the Executive as a result of the
lump sum payment and this additional amount, is equal to the maximum amount
which would have been paid to the Executive as a lump sum distribution under
the terms of the Plan (determined without regard to the Restrictions) which
lump sum distribution would have been eligible for tax free rollover treatment
under Section 402 of the Code. Prior to the making of any lump sum payment to
the Executive under this Section, the Executive and, if the Executive is
married, the Executive's spouse shall waive all benefits payable to him, his
spouse or his beneficiaries under any such Plan or Plans, and shall execute
any and all releases or other instruments to effect such waiver. Such waiver
and releases also will require payment to the Corporation of any amounts
received by the Executive or his beneficiaries under such Plan or Plans.
7.04 Determination of "Top Hat" Payments. The amount of retirement and
death benefits which would, but for the Restrictions, have been payable to the
Executive and his beneficiaries under the Plans shall be determined using the
actual number of years of service completed by the Executive and the actual
amount of Base Salary and bonuses which is payable to the Executive (whether
or not the Executive actually receives payment of any such Base Salary or
bonus as a result of a deferral made by the Executive pursuant to the terms of
the Deferred Comp Plan) as determined by the provisions of the applicable Plan
without regard to the Restrictions. In addition, if, in the case of any
defined contribution Plan or any combination of defined contribution Plans,
the amount which is actually contributed to such Plan or Plans by the
Corporation on behalf of the Executive is limited by operation of the
Restrictions, the amount of the retirement, disability and death benefits
which would, (but for the Restrictions), have been payable to the Executive
and his beneficiaries under any such defined contribution Plans shall be
determined by assuming that: (a) the Corporation made a contribution to such
Plan or Plans for the benefit of the Executive for each plan year (including
plan years ending prior to the effective date of this Agreement if the
Executive, at such time, was also a participant in the Deferred Comp Plan) in
which the actual contribution of the Corporation to such Plan or Plans is
limited by operation of the Restrictions, at the time that the Corporation
actually makes its contributions to such Plan or Plans for such plan year and
in an amount equal to the amount which the Corporation would, but for the
Restrictions, have contributed to such Plan or Plans on behalf of the
Executive for such plan year; and (b) the total value of the amounts which are
deemed to have been contributed by the Corporation to the Plan or the Plans
pursuant to subparagraph 7.04(a) above is equal to the greater of: (i) the
total value of all such amounts together with interest thereon between the
date such amounts are deemed to be contributed to the Plan or Plans and the
date for payment of such amounts, assuming that such amounts earn interest at
a variable annual interest rate, adjusted on a quarterly basis as of March 1,
June 1, September 1 and December 1 of each calendar year and equaling one
hundred twenty percent (120%) of the Federal long-term interest rate
established for such months by the Secretary of the Treasury pursuant to
section 1274 of the Code and the regulations thereunder; and (ii) the total
value (determined according to the principles established by the Deferred Comp
Plan, as in effect as of the date of this Agreement (whether or not the
Deferred Comp Plan is in effect on the date the payments are required to be
made pursuant to this Article 7)) of the number of shares of common stock of
the Corporation which could have been purchased (determined according to the
principles established by the Deferred Comp Plan as in effect as of the date
of this Agreement (whether or not the Deferred Comp Plan is in effect on the
date the payments are required to be made pursuant to this Article 7)) if the
amounts which would, but for the Restrictions, have been contributed to the
Plan or Plans were used to purchase common stock of the Corporation.
7.05 Payments Following Plan Termination. If payments are being made
by the Corporation pursuant to this Article 7 in the form of an annuity or
other periodic form of distribution, and the amount being paid from the assets
of the trust or trusts established to hold assets under the Plan or Plans
(individually a "Trust" and collectively the "Trusts") is reduced as a result
of any of the limitations in the Plan or Plans relating to the benefits
payable to an employee who is among the twenty-five (25) highest paid
employees or by virtue of the termination of the Plan or Plans (including the
operation of Section 4045 of ERISA) or for any other reason other than the
operation of the provisions of the optional form selected under the Plan or
Plans, the amount of the payments being made by the Corporation under this
Article 7 shall be increased by the amount of any reduction in the amount
being paid to the Executive from the assets of the Trust or Trusts.
If payments required to be made by the Corporation pursuant to
this Article 7 are being made or have been made in full, but the Executive or
any of his beneficiaries are required to make a payment to any trustee or
trustees appointed under the terms of any Trust, (whether the result of a loss
of collateral, interest on such collateral or otherwise) as the result of the
operation of the any limitations in the Plan or Plans relating to the use of
employer contributions for an employee who is among the twenty-five (25)
highest paid or by virtue of the termination of the Plan or Plans (including
the operation of Section 4045 of ERISA) or for any other reason, the
Corporation shall reimburse the Executive or his beneficiaries, as the case
may be, directly from its general assets, for each such payment to such
trustee or trustees and if the Executive or any of his beneficiaries does not
receive a deduction for Federal income tax purposes for such a payment or
incurs any penalty tax because of such repayment, the amount of the
reimbursement shall be increased to an amount so that after the application of
Federal income tax to the reimbursement, the Executive or his beneficiary
shall have received an amount from the Corporation approximately equal to the
amount repaid to the trustee or trustees.
ARTICLE 8.
Change in Control Benefits
8.01 Change in Control Termination. The Corporation will provide or
cause to be provided to the Executive the rights and benefits described in
Section 8.03 hereof in the event that, during the term of this Agreement
(including any renewal terms), the Executive's employment by the Corporation
is terminated at any time within three (3) years following a "Change in
Control" (as hereinafter defined) either:
(a) by the Corporation for any reason other than the Executive's
fraudulent conduct in connection with his employment by the Corporation or
conviction of a felony; or
(b) by the Executive following the occurrence of any of the
following events:
(i) the assignment to the Executive of any duties or
responsibilities that are inconsistent with his position, duties,
responsibilities or status immediately preceding such Change in Control;
(ii) a reduction of the Executive's Base Salary, bonuses or
other compensation or benefits from those types or amounts in effect
immediately prior to the Change in Control; or
(iii) the relocation of the principal executive offices of
the Corporation or a change in the duties of the Executive which requires the
Executive to move his residence from the Buffalo, New York metropolitan area;
or
(c) by the Executive, if he shall determine in good faith that
following a Change in Control, he is no longer able to effectively discharge
his duties under this Agreement.
For purposes of this Agreement, if the Executive's employment with
the Corporation is terminated after the occurrence of a Change in Control (as
hereinafter defined) for any of the reasons described above in this Section
8.01, such termination of employment shall hereinafter be referred to as a
"Change in Control Termination."
In the event that the Executive's employment with the Corporation
is terminated within the three (3) years following a Change in Control and,
following the date the Executive's employment with the Corporation is
terminated, it is determined (in accordance with Section 6.04 hereof) that, at
the time the Executive's employment with the Corporation was terminated, the
Executive suffered from a Total and Permanent Disability (as defined in
Section 6.04 hereof) the Executive shall have the right to elect, in writing,
to receive the Change in Control benefits provided for by this Article 8 or
the disability benefits provided for by Section 6.02 hereof. Upon receipt by
the Corporation of such written election from the Executive, the Corporation
shall pay (or cause to be paid) to the Executive the Change in Control
benefits provided for by this Article 8 or the disability benefits provided
for by Section 6.02 hereof, whichever is elected by the Executive. The
Corporation shall not be entitled to object to or contest its obligation to
make such payments (or cause such payments to be made) as elected by the
Executive or the Executive's right to make any such election on the grounds
that the Executive suffered from a Total and Permanent Disability at the time
his employment was terminated. In addition, if the Executive has attained at
least age sixty (60) and the Executive elects to terminate his employment with
the Corporation for any of the reasons set forth above in this Section 8.01
and within three (3) years following the occurrence of a Change in Control,
the Corporation shall have no right to object to or challenge the right of the
Executive to receive any payments provided for under this Article 8 on the
grounds that the Executive was otherwise entitled to retire from his
employment with the Corporation pursuant to Section 3.05 hereof.
8.02 Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if: (a) any person or group (within
the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") but excluding the Corporation and each
of the Corporation's officers and directors, whether individually or
collectively), shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of 20% or more of the Corporation's outstanding
common stock otherwise than through a transaction arranged by or consummated
with the prior approval of the Corporation's Board of Directors; or (b) during
any period of three (3) consecutive years, individuals who at the beginning of
such period constitute the entire Board of Directors of the Corporation (and
any new director whose election to the Board of Directors of the Corporation
or whose nomination for election by the Corporation's stockholders was
approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period or whose election or
nomination for election was previously so approved) (hereinafter referred to
as the "Continuing Directors") shall cease, to constitute a majority of the
Corporation's Board of Directors; or (c) any consolidation or merger of the
Corporation is consummated, as a result of which, the Corporation is not the
continuing or surviving corporation or pursuant to which shares of the
Corporation's common stock would be converted into cash, securities or other
property, other than a merger or consolidation of the Corporation which would
result in voting securities of the Corporation immediately prior thereto
continuing to represent (either by remaining outstanding or being converted
into voting securities of the surviving entity) at least eighty percent (80%)
of the combined voting power of the Corporation or such surviving entity
immediately after such merger or consolidation (provided, however, that if the
Board of Directors of the Corporation adopts a resolution that is approved by
a majority of the Continuing Directors providing that such merger or
consolidation shall not constitute a "Change in Control" for purposes of this
Agreement, then such merger or consolidation shall not constitute a Change in
Control); or (d) the stockholders of the Corporation approve an agreement for
the sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Corporation; or (e) the stockholders of the Corporation approve any plan or
proposal for the liquidation or dissolution of the Corporation.
8.03 Payments on Change in Control Termination. If a Change in Control
Termination occurs the Corporation shall pay to the Executive within ten (10)
days after the date of such Change in Control Termination, a lump sum payment
equal to three (3) times the sum of: (a) the average of the Base Salary of the
Executive in effect during the three (3) year period ending on the date the
Change in Control Termination occurs; and (b) the average of the amount of all
bonuses awarded to or received by the Executive during the three (3) year
period ending on the date of the Change in Control Termination. In no event
shall the provisions of Section 280 G of the Code be deemed to restrict or
limit the amount of any payments which the Executive is entitled to upon the
occurrence of a Change in Control as provided for in this Section 8.03 or
under the terms of any of the Plans, the Deferred Comp Plan, the Incentive
Stock Option Plan or the Restricted Stock Plan.
8.04 Effect of Deferred Compensation. The amounts payable to the
Executive pursuant to Section 8.03 hereof shall be determined based on the
amount of the Base Salary and the amount of any bonus which is payable to the
Executive, whether or not the Executive actually receives payment of such Base
Salary or bonus as a result of a deferral made by the Executive of the receipt
of payment of any portion of such Base Salary or bonus as permitted by the
terms of the Deferred Comp Plan as applicable to the Executive.
8.05 Benefits Upon Death. If the Executive dies following a Change
in Control Termination but prior to the payment of the applicable lump sum
provided for in Section 8.03 above, the Corporation shall pay the applicable
lump sum described in Section 8.03 hereof to the Executive's personal
representative or the executor or administrator of his estate within ten (10)
days from the date such personal representative, executor or administrator is
appointed.
8.06 Effect of Change in Control Termination on Other Benefits.
(a) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the Executive's right to receive any
payments due to the Executive under the terms of any of the Plans or due under
the Deferred Comp Plan. All such payments will be made in accordance with the
provisions of the applicable document containing the terms of any Plan and the
terms of the Deferred Comp Plan. In addition, the occurrence of a Change in
Control Termination with respect to the Executive shall not affect the
obligation of the Corporation to pay to the Executive and, if applicable, to
the Executive's beneficiaries, the amounts described in Article 7 hereof as
provided for in such Article.
(b) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the obligation of the Corporation
under Section 2.09 hereof to pay the full amount of all premiums and other
costs associated with the maintenance by the Corporation of policies of life
insurance, long term disability insurance and medical insurance for the
benefit of the Executive, his spouse and dependents as required by Section
2.09 hereof.
(c) Except as set forth in Sections 8.06(a) and (b) hereof, any
payments required to be made to the Executive or his beneficiaries pursuant to
Sections 8.03 and 8.05 hereof shall, when received by the Executive, or his
beneficiaries, be in lieu of any payments otherwise provided with respect to
the Executive's termination of employment under any other severance pay or
other similar plan or policy maintained by the Corporation. The Corporation
may, in its sole discretion, change, replace or eliminate any retirement plan
or insurance policy described in Sections 8.06(a) and (b) above at any time,
but shall not do so after a Change in Control in a manner which would prevent
the Executive, his spouse and dependents from receiving any benefit which he
would otherwise have been entitled to receive either immediately preceding the
Change of Control or immediately preceding a Change in Control Termination.
8.07 Certain Additional Payments by the Corporation. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Corporation 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 (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties being hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (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.
(b) Subject to the provisions of Section 8.07(c) hereof, all
determinations required to be made under this Section 8.07, including whether
a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall
be made by Coopers & Lybrand, L.L.P. or any other nationally recognized firm
of certified public accountants (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Corporation and the Executive
within 15 business days of termination of the Executive's employment under
this Agreement, if applicable, or such earlier time as is requested by the
Executive or the Corporation. When calculating the amount of the Gross-Up
Payment, the Executive shall be deemed to pay:
(i) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which the
Gross-Up Payment is to be made, and
(ii) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from deduction of such state and local
taxes if paid in such year.
If the Accounting Firm has performed services for the person,
entity or group who caused the Change of Control, as described in Section 8.02
hereof or any affiliate thereof, the Executive may select an alternative
accounting firm from any nationally recognized firm of certified public
accountants. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive with an opinion that he has
substantial authority not to report any Excise Tax on his federal income tax
return. Any determination by the Accounting Firm shall be binding upon the
Corporation and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Corporation should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Corporation exhausts it remedies pursuant to
Section 8.07(c) hereof, and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Corporation to or for the benefit of the Executive.
(c) The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than ten business days after the
Executive knows of such claim and shall apprise the Corporation 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 thirty-day
period following the date on which it gives such notice to the Corporation (or
such shorter period ending on the date that any payment of taxes with respect
to such claim is due). If the Corporation 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 Corporation any information reasonably
requested by the Corporation relating to such claim,
(ii) take such action in connection with contesting such
claim as the Corporation 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 Corporation,
(iii) cooperate with the Corporation in good faith in order
to effectively contest such claim, and
(iv) permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 8.07(c), the Corporation shall control
all proceedings taken in connection with such contest and, at its sole option,
may pursue or forego 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 sue
for a refund or 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 Corporation shall determine; provided, however, that if the
Corporation directs the Executive to pay such claim and sue for a refund, the
Corporation 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 income tax, including interest or
penalties with respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further
provided that any extension of the statue of limitations relating to payment
of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder 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.
(d) If, after the receipt by the Executive of an amount advanced
by the Corporation pursuant to Section 8.07(c) hereof, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Corporation's complying with the requirements of Section
8.07(c)) promptly pay to the Corporation the amount of such refund (together
with any interest paid or credited thereon by the taxing authority after
deducting any taxes applicable thereto). If, after the receipt by the Execu-
tive of an amount advanced by the Corporation pursuant to Section 8.07(c)
hereof, a determination is made that the Executive shall not be entitled to
any refund with respect to such claim and the Corporation does not notify the
Executive in writing of its intent to contest such denial of refund prior to
the expiration of thirty days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid under Section 8.07(a) hereof. The forgiveness of
such advance shall be considered part of the Gross-Up Payment and subject to
gross-up for any taxes (including interest or penalties) associated therewith.
ARTICLE 9.
Severance and Effects of Termination
9.01 Effect of Termination for Cause. In the event the Executive's
employment with the Corporation is terminated for cause by the Corporation
pursuant to the provisions of Section 3.02 hereof, the Corporation shall pay
to the Executive any monthly installment of his Base Salary which is accrued
and unpaid as of the date of the Executive's termination at the monthly rate
then in effect and, thereafter, the Corporation shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder, and, except as otherwise
provided under the terms of Sections 9.06 and 9.07 hereof, no further
obligation to pay any other benefits provided to the Executive hereunder.
9.02 Effect of Termination Without Cause. (a) In the event the
Executive's employment with the Corporation is terminated by the Corporation
without cause pursuant to Section 3.03 hereof and prior to the date the
Executive attains age sixty-one (61), the Corporation shall, within ninety
(90) days following the termination of the Executive's employment, pay the
Executive in one lump sum payment, an amount equal to: (i) the greater of: (A)
two and one-half (2.5) times the sum of: (x) his Base Salary at the rate then
in effect; and (y) an amount equal to all bonuses paid or payable by the
Corporation to the Executive with respect to the fiscal year of the
Corporation which ends immediately prior to the date of such termination; or
(B) five (5) times the amount of the Executive's Base Salary, at the rate then
in effect; and (ii) any "Top Hat" retirement benefits to be provided to the
Executive pursuant to Article 7 hereof. In addition, if the Executive's
employment with the Corporation is terminated without cause pursuant to
Section 3.03 hereof and prior to the date the Executive attains age sixty-one
(61), the Corporation shall, as required by Section 2.09(a) hereof, continue
to provide the Executive with the group welfare benefits and any other life
insurance and long term disability insurance for the one (1) year period
following the date the Executive's employment with the Corporation is
terminated, all as more particularly provided for by Section 2.09(a) hereof.
(b) In the event that the Executive's employment is terminated,
without cause, pursuant to Section 3.03 hereof, and, at the time the
Executive's employment is terminated, the Executive has attained at least age
sixty-one (61), the Corporation shall, within ninety (90) days following the
termination of the Executive's employment, pay to the Executive in one lump
sum payment: (i) any "Top Hat" retirement benefits to be provided to the
Executive pursuant to Article 7 hereof; and (ii) the amount described in
subparagraph 9.02(a)(i) above, reduced by twenty percent (20%) for each year
or part thereof by which the Executive's age exceeds age sixty (60) so that,
if the Executive's employment with the Corporation is terminated, without
cause, as provided for by Section 3.03 hereof, at any time after the Executive
attains age sixty-five (65), the Executive shall, except as otherwise provided
by Sections 2.09(a), 9.06 and 9.07 hereof, not be entitled to payment of any
benefits other than the "Top Hat" retirement benefits required to be provided
to the Executive pursuant to Article 7 hereof. If the Executive's employment
with the Corporation is terminated without cause pursuant to Section 3.03
hereof and after the Executive attains age sixty-one (61), the Corporation
shall, as required by Section 2.09(a) hereof, continue to provide the
Executive with the group welfare benefits and any other life insurance and
long term disability insurance for the one (1) year period following the date
the Executive's employment with the Corporation is terminated, all as more
particularly provided for by Section 2.09(a) hereof.
(c) Except as otherwise provided above in this Section 9.02,
following the termination of the Executive's employment, without cause, as
provided for by Section 3.03 hereof, the Corporation shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder, hereof and, except as
otherwise provided in Sections 9.06 and 9.07 hereof, no further obligation to
provide any other benefits otherwise provided to the Executive hereunder.
9.03 Effect of Voluntary Termination. In the event the Executive
voluntarily terminates his employment with the Corporation pursuant to Section
3.04 hereof, the Corporation shall pay to the Executive any monthly
installment of his Base Salary which is accrued and unpaid as of the date of
the Executive's termination at the monthly rate then in effect and any "Top
Hat" retirement benefits to be provided to the Executive pursuant to Article 7
hereof. Except as otherwise provided above in this Section 9.03, following
the Executive's voluntary termination of his employment with the Corporation
as provided for by Section 3.04 hereof, the Corporation shall have no further
obligation to pay to the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder and, except as otherwise
provided by Sections 9.06 and 9.07 hereof, no further obligation to provide
any other benefits otherwise provided to the Executive hereunder.
9.04 Effect of Retirement. In the event the Executive terminates his
employment with the Corporation by reason of his retirement as provided for in
Section 3.05 hereof, the Corporation shall pay to the Executive: (a) any
monthly installment of his Base Salary which is accrued and unpaid as of the
date of the Executive's retirement at the monthly rate then in effect; (b) an
amount equal to the amount of all bonuses which would have been payable to the
Executive by the Corporation pursuant to Section 2.02 hereof if the Executive
had remained in the employ of the Corporation until the end of the fiscal year
of the Corporation in which the Executive retires and assuming that average
monthly earnings of the Corporation for the portion of the Corporation's
fiscal year which has elapsed prior to the date the Executive retires
continues at such rate after the Executive retires through the end of the
fiscal year of the Corporation in which the Executive retires; and (c) any
"Top Hat" retirement benefits to be provided to the Executive pursuant to
Article 7 hereof. Except as otherwise provided for above in this Section
9.04, following the Executive's retirement from employment with the
Corporation as provided for by Section 3.05 hereof, the Corporation shall have
no further obligation to pay to the Executive any additional Base Salary,
compensation or bonus, no further obligation to provide any medical, life,
disability or other insurance benefits to the Executive hereunder and, except
as provided by Sections 9.06 and 9.07 hereof, no further obligation to provide
any other benefits otherwise provided to the Executive hereunder.
9.05 Effect of Termination Due to Disability. In the event the
Executive's employment with the Corporation is terminated as a result of his
suffering of a Total and Permanent Disability as described in Section 6.04
hereof, the Corporation shall pay to the Executive the amounts described in
Section 6.02 hereof and any "Top Hat" retirement benefits to be provided to
the Executive pursuant to Article 7 hereof. In addition, in the event the
Executive's employment is terminated by reason of his suffering of a Total and
Permanent Disability as described in Section 6.04 hereof, the Corporation
shall, as required by Section 2.09 hereof, continue to pay all premiums
necessary to maintain medical and life insurance for the life of the
Executive, medical insurance for the Executive's spouse for the life of the
Executive's spouse and medical insurance for the Executive's dependents until
such dependents reach age 21. As more particularly provided for by Section
2.09 hereof, the amount of the medical and life insurance coverage which shall
be provided to the Executive, his spouse and dependents following his
suffering of a Total and Permanent Disability shall be at least reasonably
comparable to the amount of the medical and life insurance coverage which was
in effect for the Executive, his spouse and dependents immediately prior to
the date the Executive's employment with the Corporation is terminated as a
result of his suffering of a Total and Permanent Disability. Except as
otherwise provided for by Sections 2.09 and 6.02 hereof and above in this
Section 9.05, following the Executive's suffering of a Total and Permanent
Disability, the Corporation shall have no further obligation to pay to the
Executive any additional Base Salary, compensation or bonus, no further
obligation to provide any medical, life, disability or other insurance
benefits to the Executive hereunder and, except as otherwise provided by
Sections 9.06 and 9.07 hereof, no further obligation to provide any other
benefits otherwise provided to the Executive hereunder.
9.06 Deferred Comp Plan Payments. Notwithstanding anything to the
contrary contained in this Agreement, upon termination of the Executive's
employment with the Corporation for any reason, the Executive shall be
entitled to payment in full of all amounts payable to the Executive under the
terms of the Deferred Comp Plan at the time and in the manner provided for by
the terms of the Deferred Comp Plan.
9.07 Retirement Plan Payments. Nothing in this Agreement shall be
deemed to limit the Executive's rights to receive or the obligations of the
Corporation to pay or provide for the Executive and his beneficiaries, any
continuation coverage as required by ERISA or any retirement or other benefits
accrued by the Executive at any time under the terms of any retirement plans
maintained by the Corporation which are subject to the requirements of ERISA
or otherwise satisfy the requirements of Section 401 of the Code.
ARTICLE 10.
Miscellaneous
10.01 Litigation Expenses. In the event that any dispute shall arise
under this Agreement between the Executive and the Corporation which is
related to the Change in Control Termination provisions of Article 8 hereof,
the Corporation shall be responsible for the payment of all reasonable
expenses of all parties to such dispute, including reasonable attorney fees,
regardless of the outcome thereof.
10.02 Amendments. This Agreement may not be amended or modified
orally, and no provision hereof may be waived, except in a writing signed by
the parties hereto.
10.03 Assignment. This Agreement cannot be assigned by either party
hereto except with the written consent of the other
10.04 Prior Agreements. This Agreement shall supersede and replace any
and all prior agreements between the Corporation and the Executive, whether
express or implied; provided, however, that, notwithstanding the foregoing,
nothing contained in this Agreement shall be deemed to supersede, replace,
amend or modify the terms of the Split Dollar Plan. Except as specifically
provided herein, nothing contained in this Agreement shall be construed to
constitute a waiver by the Executive or his beneficiaries of any rights or
claims under any existing pension or retirement plans of the Corporations.
10.05 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the personal representatives and successors in interest of
the Executive and any successors in interest of the Corporation.
10.06 Applicable Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed wholly within such State except with respect to the
internal affairs of the Corporation and its respective stockholders, which
shall be governed by the General Corporation Law of the State of Delaware.
10.07 Notices. All notices and other communications given pursuant to
this Agreement shall be deemed to have been properly given or delivered if
hand-delivered, or if mailed, by certified mail or registered mail postage
prepaid, addressed to the Executive at the address first above written or if
to the Corporation, at its address first above written with a copy to the
attention of Gerald S. Lippes, Secretary, 700 Guaranty Building, Buffalo, New
York 14202. From time to time, any party hereto may designate by written
notice any other address or party to which such notice or communication or
copies thereof shall be sent.
10.08 Severability of Provisions. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and this Agreement shall be interpreted as if such invalid,
illegal or unenforceable provision was not contained herein.
10.09Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Executive and the Corporation have caused
this Agreement to be executed as of the day and year first above written.
MARK IV INDUSTRIES, INC.
By: /s/ Sal H. Alfiero /s/ William P. Montague
Name: Sal H. Alfiero William P. Montague
Title: Chairman of the Board
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 1st day of March, 1995, by and between
MARK IV INDUSTRIES, INC., a Delaware corporation, with offices at 501 John
James Audubon Parkway, Amherst, New York 14228 ("Mark IV"), and Frederic L.
Cook, an individual residing at 6415 Woodberry Court, East Amherst, New York
14051 (the "Executive").
RECITALS:
WHEREAS, the Executive is expected to make a major contribution to the
profitability, growth and financial strength of the Corporation; and
WHEREAS, the Corporation has determined that retaining the services of
the Executive is in the best interests of the Corporation and its stockholders
and, accordingly, the Corporation desires to secure the services of the
Executive on behalf of the Corporation;
CONSIDERATION:
NOW, THEREFORE, in consideration of the conditions and covenants set
forth in this Agreement, the parties hereto agree as follows:
ARTICLE 1.
Employment and Duties
1.01 Employment. The Corporation hereby agrees to, and does hereby
employ the Executive, and the Executive hereby agrees to and does hereby
accept employment, by the Corporation as the Senior Vice President -
Administration of the Corporation. It is contemplated that the Executive will
continue to serve as Senior Vice President - Administration of the Corporation
subject to the provisions of this Agreement and the right of the Board of
Directors of the Corporation to elect new officers.
1.02 Duties. During the period of his employment under this Agreement
the Executive shall perform such executive duties and responsibilities as may
be assigned to him, from time to time, by the Board of Directors of the
Corporation and shall be subject, at all times, to the control of the
Corporation's Board of Directors. The Executive may become a director or
trustee of any corporation or entity that does not constitute a Competitive
Operation as described in Section 4.03 hereof. The Corporation shall not
require the Executive to perform services hereunder outside the Buffalo, New
York metropolitan area with such frequency or duration as would require the
Executive to move his residence from the Buffalo, New York area.
ARTICLE 2.
Compensation and Fringe Benefits
2.01 Base Salary. During the period of the Executive's employment
hereunder, the Corporation shall pay to the Executive, an annual salary ("Base
Salary") of not less than $231,000.00 payable in substantially equal monthly
installments. The Board of Directors of the Corporation, through it's
Compensation Committee, shall in good faith review the Base Salary of the
Executive, on an annual basis, and increase the Base Salary of the Executive
if, in the Compensation Committee's judgment, such increase is advisable.
2.02 Bonuses. The Executive shall be entitled to participate in the
Mark IV Industries, Inc. Executive Bonus Plan, as amended (the "Executive
Bonus Plan") and to receive bonuses in accordance with the terms thereof. In
addition, the Executive shall be entitled to participate in the Mark IV
Industries, Inc. Enhanced Executive Incentive Plan (the "Enhanced Incentive
Plan") and to receive bonuses in accordance with the terms thereof. The Board
of Directors of the Corporation may, in its discretion and from time to time,
amend or change the terms of the Executive Bonus Plan and the terms of the
Enhanced Incentive Plan and, in addition, may award such additional bonuses to
the Executive as it may from time to time determine.
2.03 Stock Based Incentive Compensation. The Executive shall be
eligible to receive incentive stock option awards under the terms of the Mark
IV Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan, as
amended, (the "Incentive Stock Option Plan") and restricted stock awards under
the terms of the Mark IV Industries, Inc. 1992 Restricted Stock Plan, as
amended, (the "Restricted Stock Plan"); provided that, the determination of
whether or not incentive stock options and restricted stock shall be awarded
to the Executive and the amount, if any, of the incentive stock options or
restricted stock to be awarded to the Executive shall be made by the
Compensation Committee of the Corporation's Board of Directors.
The Executive shall also be eligible to receive awards of non-
qualified stock options, stock appreciation rights and any other stock based
incentive compensation awards which may, from time to time, be awarded to
other executive officers of the Corporation pursuant to the terms of any
omnibus plan or any other plan which may, from time to time, be adopted by the
Board of Directors of the Corporation.
2.04 Reimbursement of Expenses. The Corporation shall reimburse the
Executive for all reasonable expenses which the Executive may, from time to
time, incur on behalf of the Corporation in the performance of his
responsibilities and duties under this Agreement, provided that the Executive
accounts to the Corporation for such expenses in the manner prescribed by the
Corporation.
2.05 Deferred Comp Plan. During the term of this Agreement, the
Executive shall receive his proportionate share of any amounts allocated
annually to participants in the Non-Qualified Plan of Deferred Compensation of
Mark IV Industries, Inc., as amended (hereinafter the "Deferred Comp Plan").
In addition, during the term of this Agreement, the Executive shall be
permitted to defer the receipt of payment of all or any portion of the Base
Salary to which the Executive is entitled under the terms of this Agreement
and to defer the receipt of payment of all or any portion of the amount of any
bonus or other incentive compensation (which is otherwise payable immediately)
to which the Executive may become entitled during the term of this Agreement,
all in the manner permitted by the terms of the Deferred Comp Plan.
2.06 Tax Qualified Plans. The Executive shall be entitled to
participate in all tax qualified pension, profit sharing 401(k) or other tax
qualified plans maintained, from time to time, by the Corporation for the
employees of the Corporation who are employed at the Corporation's corporate
headquarters.
2.07 Insurance Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Corporation shall: (a)
maintain and pay all premiums necessary to maintain a policy of business
travel accident insurance which provides the Executive with coverage and
benefits which are at least reasonably comparable to the business travel
accident insurance coverage which was in effect for the Executive as of the
date of this Agreement; (b) continue to pay the trustees of a trust
established by the Executive, the amount of the premiums payable with respect
to life insurance held by the trustees of such trust as provided for under the
terms of a split-dollar agreement between the Corporation and such trustees
(such arrangement being hereinafter referred to as the "Split Dollar Plan");
and (c) if, as of the date of this Agreement, the Corporation maintains any
life insurance or long term disability insurance policies for the benefit of
the Executive other than as a result of or in connection with an election made
by the Executive pursuant to the terms of the Flex IV Plan (as defined below
in Section 2.08) the Corporation shall continue to maintain and pay any
premiums necessary to maintain such policies of life insurance and long term
disability insurance for the benefit of the Executive during the period of his
employment under the terms of this Agreement.
2.08 Group Welfare Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Executive shall be eligible
to participate in the Mark IV Industries, Inc. and Subsidiaries Group Welfare
Benefit Program as applicable to exempt salaried employees of the Corporation
whose primary place of employment is the Corporation's corporate headquarters
(hereinafter the "Flex IV Plan"). As provided for by the terms of the Flex IV
Plan, the Executive shall be entitled to elect to participate in one or more
of the group welfare benefit programs which are contained within the Flex IV
Plan and available to exempt salaried employees of the Corporation whose
primary place of employment is the Corporation's corporate headquarters,
including, but not limited to: (a) medical insurance coverage; (b) dental
insurance coverage; (c) employee life insurance coverage; (d) accidental death
and dismemberment insurance coverage; (e) dependent life insurance coverage;
(f) long term disability insurance coverage; (g) health care spending account
benefits; and (h) dependent care spending account benefits. In the event that
the Flex IV Plan is amended during the term of this Agreement to increase or
reduce the number or type of group welfare benefit programs which are
available to exempt salaried employees of the Corporation whose principal
place of employment is the Corporation's corporate headquarters, the Executive
shall thereafter be entitled to elect to participate in any one or more of the
new group welfare benefit programs which are available under the terms of the
Flex IV Plan, as amended. Notwithstanding the foregoing, except as otherwise
provided in Sections 2.09(b) and (c) hereof, the Corporation shall have no
obligation to maintain or provide such group welfare benefits to the Executive
unless the Executive pays to the Corporation, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
benefits by the Corporation for exempt salaried employees of the Corporation's
corporate headquarters as determined under the provisions of the Flex IV Plan
(or such greater or lesser amount as may, from time to time, be required to be
contributed by exempt salaried employees of the Corporation's corporate
headquarters toward the cost of maintaining and providing such benefits to
such employees).
2.09 Continuation of Insurance Coverage. (a)If the Executive's
employment with the Corporation is terminated by the Corporation, without
cause, as permitted by Section 3.03 hereof, the Corporation shall, for a
period of one (1) year following the date the Executive's employment with the
Corporation is terminated, maintain and pay any premiums necessary to maintain
group welfare benefits for the Executive which are the same as the group
welfare benefits which were in effect for the Executive under the terms of the
Flex IV Plan immediately prior to the termination of the Executive's
employment. Notwithstanding the foregoing, the Corporation shall have no
obligation to maintain or provide such group welfare benefits to the Executive
unless the Executive pays to the Corporation, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
benefits by the Corporation to exempt salaried employees of the Corporation's
corporate headquarters as determined under the provisions of the Flex IV Plan
(or such greater or lesser amount as may, from time to time, be required to be
contributed by exempt salaried employees of the Corporation's corporate
headquarters toward the cost of maintaining and providing such benefit to such
employees). At the end of the one (1) year period following the date on which
the Executive's employment is terminated (without cause) or, if earlier, at
such time that the Corporation shall terminate the group welfare benefit
coverage being provided to the Executive by reason of the Executive's failure
to pay the employee portion of any costs associated with the maintenance and
provision of such benefits, the Executive shall be entitled to elect to
receive continuation coverage with respect to any group health plan benefits
which are being provided to the Executive under the Flex IV Plan, in
accordance with the applicable continuation coverage provisions of section
4980B of the Internal Revenue Code of 1986, as amended (hereinafter the
"Code") and the applicable continuation coverage provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). In addition, if
the Executive's employment with the Corporation is terminated by the
Corporation, without cause, as permitted by Section 3.03 hereof, and if, at
the time the Executive's employment with the Corporation is terminated, the
Corporation maintains any life insurance or long term disability insurance for
the Executive (other than any life insurance or long term disability insurance
provided to the Executive as a result of and in connection with an election
made by the Executive in connection with the Flex IV Plan) or if, at the time
the Executive's employment with the Corporation is terminated, the Corporation
is obligated to make any payments for life insurance premiums to the trustees
of the trust established by the Executive in connection with the Split Dollar
Plan, the Corporation shall maintain and pay any premiums necessary to
maintain any such life insurance and long term disability insurance policies
and the Corporation shall continue to make any payments due for life insurance
premiums in connection with the Split Dollar Plan, for a one (1) year period
following the date on which the Executive's employment with the Corporation is
terminated.
(b) If the Executive's employment with the Corporation is
terminated as a result of the Executive's suffering of a Total and Permanent
Disability as defined in Section 6.04 hereof, the Corporation shall continue
to maintain and pay the full amount of all premiums necessary to maintain: (i)
medical and life insurance coverage for the benefit of the Executive for the
remainder of the Executive's life; (ii) medical insurance coverage for the
benefit of the Executive's spouse for the remainder of her life; and (iii)
medical insurance coverage for the benefit of the Executive's dependents until
such dependents reach age 21. In addition, if the Executive's employment with
the Corporation is terminated as a result of his suffering of a Total and
Permanent Disability as defined in Section 6.04 hereof, following such
termination of the Executive's employment, the Corporation shall continue to
pay to the trustees of the trust established by the Executive in connection
with the Split Dollar Plan, the amount of any premiums due in connection with
the life insurance policies held by such trustees pursuant to the terms of the
Split Dollar Plan.
(c) If the Executive's employment with the Corporation is
terminated as a result of a Change in Control Termination as defined in
Section 8.01 hereof, the Corporation shall continue to maintain and pay the
full amount of any premiums necessary to maintain: (i) medical, long term
disability and life insurance coverage for the benefit of the Executive for
the remainder of the Executive's life; (ii) medical insurance coverage for the
benefit of the Executive's spouse for the remainder of her life; and (iii)
medical insurance coverage for the benefit of the Executive's dependents until
such dependents attain age 21. In addition, if the Executive's employment
with the Corporation is terminated as a result of a Change in Control
Termination defined in Section 8.01 hereof, following such termination, the
Corporation shall continue to pay to the trustees of the trust established by
the Executive in connection with the Split Dollar Plan, the amount of any
premiums due in connection with the life insurance policies held by such
trustees pursuant to the terms of the Split Dollar Plan.
(d) The amount of the life insurance which is required to be
provided to the Executive pursuant to Sections 2.09(b) and (c) above shall
provide a death benefit which is at least equal to the sum of: (i) the amount
of the life insurance, if any, which is maintained for the Executive other
than under the terms of the Flex IV Plan; and (ii) the largest dollar amount
of the death benefit which could have been provided to the Executive's
beneficiaries under any life insurance coverage which was available to the
Executive under the terms of the Flex IV Plan immediately prior to the date
the Executive's employment is terminated as a result of his suffering of a
Total and Permanent Disability or the date on which the Change in Control
occurs, whichever is applicable.
(e) The terms of the long term disability insurance coverage
which is required to be provided to the Executive pursuant to Section 2.09(c)
hereof shall provide an annual disability income to the Executive which is not
less than the total annual amount of the disability income which was payable
to the Executive under all policies of long term disability insurance
maintained for the benefit of the Executive (whether or not provided under for
the Executive the terms of the Flex IV Plan) immediately prior to the date the
Change in Control occurs. In addition, the terms of the long term disability
insurance which is required to be provided to the Executive pursuant to
Section 2.09(c) above shall contain a definition of total and permanent
disability which is at least reasonably comparable to the most liberal
definition of total and permanent disability (in terms of the ease with which
such definition can be met) contained in any long term disability insurance
policy maintained for the Executive immediately prior to the date the Change
in Control occurs. Finally, the terms of the long term disability insurance
which is required to be provided to the Executive pursuant to Section 2.09(c)
above shall provide that the disability income payments to be made to the
Executive as described above will continue to be made to the Executive for
life.
(f) The type and amount of the medical insurance coverage which
is required to be provided to the Executive pursuant to Sections 2.09(b) and
(c) above shall be at least reasonably comparable to the most comprehensive
medical insurance coverage which was available to the Executive, his spouse
and dependents under the Flex IV Plan immediately prior to the date on which
the Executive's employment with the Corporation is terminated as a result of
his suffering of a Total and Permanent Disability or the date on which the
Change in Control occurs (whichever is applicable); provided that, in no event
shall the maximum amount of the annual deductible under such medical insurance
coverage exceed the amount of the annual deductible which was in effect with
respect to the most comprehensive medical insurance coverage which was
available to the Executive, his spouse and dependents under the Flex IV Plan
immediately prior to the date on which the Executive's employment is
terminated as a result of his suffering of a Total and Permanent Disability or
the date on which the Change in Control occurs, whichever is applicable.
2.10 Vacation and Other Benefits. During each full year of the
Executive's employment hereunder, the Executive shall be entitled to paid
vacations for such reasonable periods of time as may be determined by the
Executive. The Executive shall also be entitled to receive all other
employment benefits and participate in such other employee benefit plans as
may, from time to time, be provided or maintained by the Corporation for its
executive officers.
ARTICLE 3.
Term and Termination
3.01 Term. The period of employment of the Executive under this
Agreement shall commence January 1, 1995 ("Effective Date") and continue
through December 31, 1999, provided that on each anniversary of the Effective
Date which occurs after the date hereof and prior to the date on which the
Executive attains age sixty-one (61), the term of this Agreement shall
automatically be extended for an additional twelve-month period. The effect
of the preceding sentence shall be that on each anniversary of the Effective
Date which occurs after the date hereof and prior to the date on which the
Executive attains age sixty-one (61), the then remaining term of this
Agreement shall be five (5) years, and beginning with the first anniversary of
the Effective Date following the date on which the Executive attains age sixty
(60), and on each anniversary of the Effective Date thereafter, the remaining
term of this Agreement shall be that number of years which exists between any
such anniversary of the Effective Date and the end of the calendar year in
which the Executive attains age sixty-five (65).
Notwithstanding the foregoing, beginning on the January 1
immediately following the date on which the Executive attains age sixty-five
(65) and on each January 1 thereafter, unless otherwise terminated by the
Corporation pursuant to Section 3.03 hereof, the term of this Agreement shall
automatically be renewed for one (1) or more successive annual renewal terms
of one (1) year.
3.02 Termination For Cause. Notwithstanding the provisions of Section
3.01 hereof, the Corporation may terminate the Executive's employment
hereunder at any time for cause, by delivering to the Executive a written
notice of termination to the Executive setting forth the date on which such
termination is to be effective and specifying in reasonable detail the facts
and circumstances claimed to provide a basis for the termination.
For purposes of this Agreement, the Corporation shall have "cause"
to terminate the Executive's employment hereunder upon the Executive's: (a)
willful and continued failure to substantially perform his duties hereunder
other than any such failure resulting from the Executive's incapacity due to
physical or mental illness; (b) illegal or criminal conduct; (c) intentional
falsification of records or reports or any other act or acts of dishonesty
constituting a felony and resulting, or intended to result, directly or
indirectly, in personal gain or enrichment of the Executive at the expense of
the Corporation; (d) excessive and/or chronic use of alcohol, narcotics or
other controlled substances (other than under the supervision of a licensed
physician); or (e) willful engagement in gross misconduct materially injurious
to the Corporation.
3.03 Termination Without Cause. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Corporation may, at any time on
or after the date hereof, terminate the Executive's employment, without cause,
by delivering a written notice of termination to the Executive which sets
forth the date on which such termination is to be effective; provided that,
the effective date of any such termination shall not be less than ninety (90)
days following the date on which such written notice of termination is
delivered to the Executive. Notwithstanding the foregoing, if the Executive
has attained at least age sixty-five (65), the written notice of termination
which is delivered to the Executive pursuant to this Section 3.03 shall permit
the Executive, at the Executive's option to elect to retire from his
employment with the Corporation pursuant to Section 3.05 hereof.
3.04 Termination by the Executive. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Executive may terminate his
employment hereunder at any time by delivering a written notice of termination
to the Corporation which sets forth the date on which such termination is to
be effective; provided that, the effective date of any such termination shall
not be less than ninety (90) days following the date on which such written
notice of termination is delivered to the Corporation.
3.05 Retirement. The Executive may retire his employment with the
Corporation at any time following his attainment of age sixty (60), by
delivering to the Corporation a written notice of his intent to terminate his
employment with the Corporation and retire, which written notice shall set
forth the date on which such retirement (and its related termination of
employment) is to be effective. Thereafter, provided that the effective date
of such retirement is not less than thirty (30) days following the date on
which such written notice of termination is delivered to the Corporation, the
Executive shall be permitted to terminate his employment with the Corporation
and retire at the time stated in the written notice of termination delivered
by the Executive to the Corporation.
In addition to the foregoing, in the event that the Executive has
attained at least age sixty-five (65) and has received a written notice of
termination from the Corporation pursuant to Section 3.03 and, as required by
Section 3.03 hereof, such written notice of termination provides the
Executive, at his option, the right to retire, the Executive may exercise such
right and retire from his employment with the Corporation by delivering
written notice of his desire to exercise such right and retire to the
Corporation no later than sixty (60) days following the date of the
Executive's receipt of the written notice of termination from the Corporation
provided for by Section 3.03 hereof. In the event that the Executive elects
to retire in connection with the Executive's receipt of a written notice of
termination from the Corporation pursuant to Section 3.03 hereof, the
Executives retirement shall be effective at the time stated in the written
notice delivered to the Corporation by the Executive in connection with the
Executive's exercise of his right to retire.
3.06 Effect of Notice of Intent to Terminate. Upon delivery by the
Corporation to the Executive of a written notice of intent to terminate, the
Executive's employment with the Corporation shall be terminated, effective at
the time stated in such written notice of intent to terminate, provided that,
if applicable, the effective date of such termination as stated in the notice
of intent to terminate complies with the advance notice of termination
requirements of Section 3.03 hereof. In addition, upon the Executive's
delivery to the Corporation of a written notice of intent to terminate
(whether or not such termination is intended to be a retirement) the
Executive's employment with the Corporation shall be terminated effective at
the time stated in such written notice of intent to terminate, provided that
the effective date of such termination as stated in the notice of intent to
terminate complies with the applicable advance notice of termination
requirements of Sections 3.04 and 3.05 hereof.
ARTICLE 4.
Confidentiality; Non-Compete Provisions
4.01 Confidentiality. During the period of the Executive's employment
hereunder the Executive agrees that he will not, without the written consent
of the Board of Directors of the Corporation, disclose to any person (other
than a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of his duties as an executive
of the Corporation or to a person as required by any order or process of any
court or regulatory agency) any material confidential information obtained by
the Executive while in the employ of the Corporation with respect to any
management strategies, policies or techniques or with respect to any products,
improvements, formulae, designs or styles, processes, customers, methods of
distribution, or methods of manufacture of the Corporation or any of its
subsidiaries; provided, however, that confidential information shall not
include any information known generally to the public (other than as a result
of unauthorized disclosure by the 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 Corporation.
4.02 Non-Compete. During a period of two (2) years after the date of
any termination of the Executive's employment hereunder, the Executive will
not, directly or indirectly, own, manage, operate, control or participate in
the ownership, management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any financial
interest in, or aid or assist anyone else in the conduct of, any business
which competes with any business conducted by the Corporation or with any
group, division or subsidiary of the Corporation in any geographic area where
such business is being conducted at the time of such termination (any such
business being hereinafter referred to as a "Competitive Operation").
Ownership by the Executive of 2% or less of the voting stock of any publicly
held corporation shall not constitute a violation of this Section 4.02.
4.03 Competitive Operation. For purposes of Section 4.02 hereof: (a)
a business shall not be deemed to be a Competitive Operation unless: (i) 25%
or more of the consolidated gross sales and operating revenues of the
Corporation is derived from such business; or (ii) 25% or more of the
consolidated net income of the Corporation is derived from such business; or
(iii) 25% or more of the consolidated assets of the Corporation are devoted to
such business; and (b) a business which is conducted by the Corporation at the
time of the Executive's termination and which subsequently is sold or
discontinued by the Corporation shall not, subsequent to the date of such sale
or discontinuance, be deemed to be a Competitive Operation within the meaning
of Section 4.02 hereof.
ARTICLE 5.
Death Benefits
5.01 Death Benefits. If the Executive dies during the term of his
employment hereunder, in addition to any death benefits payable under the
terms of any life insurance policies maintained by the Corporation on the life
of the Executive, any death benefits payable on account of the death of the
Executive under the terms of the Deferred Comp Plan and any death benefits
payable on account of the death of the Executive under the terms of any tax
qualified retirement plans maintained by the Corporation, the Corporation
shall, within ninety (90) days following the Executive's death, pay to the
estate of the Executive a death benefit equal to fifty percent (50%) of the
Executive's Base Salary at the rate in effect on the date of the Executive's
death. In addition, if the Corporation pays a bonus to its executive
officers for the fiscal year of the Corporation in which the Executive's death
occurs, at the time the Corporation pays such bonuses to its executive
officers for such fiscal year: (a) if the Executive's death occurs during the
first six (6) months of the Corporation's fiscal year, the Corporation shall
pay to the Executive's estate an amount equal to the fifty percent (50%) of
the amount of all bonuses which would have been payable to the Executive
pursuant to Section 2.02 hereof for the fiscal year of the Corporation in
which the Executive's death occurs; and (b) if the Executive's death occurs at
any time after the first six (6) months of the Corporation's fiscal year, the
Corporation shall pay to the Executive's estate an amount equal to the amount
of all bonuses which would have been payable to the Executive pursuant to
Section 2.02 hereof for the fiscal year of the Corporation in which the
Executive's death occurs.
5.02 Continuation of Medical Insurance Coverage. If the Executive dies
during the term of this Agreement and his spouse or dependents are still
living, the Corporation shall maintain and pay any premiums needed to maintain
medical insurance coverage for the benefit of the Executive's spouse for the
remainder of her life and medical insurance coverage for the benefit of the
Executive's dependents until such dependents attain age 21; provided that, the
Corporation shall not be obligated to continue to provide such medical
insurance coverage to the Executive's spouse and dependents unless the
Executive's spouse and dependents (as the case may be) pay to the Corporation,
on a monthly basis, the amount which is required to be contributed by exempt
salaried employees of the Corporation's corporate headquarters toward the cost
of their medical insurance coverage as determined as of the date of the
Executive's death. The type and amount of the medical insurance coverage to
be provided to the Executive's spouse and dependents pursuant to this Section
5.02 shall be at least reasonably comparable to the type and amount of the
most comprehensive medical insurance coverage which was available to the
Executive, his spouse and dependents under the Flex IV Plan immediately prior
to the date of the Executive's death; provided that, in no event shall the
maximum amount of the annual deductible under such medical insurance coverage
exceed the amount of the annual deductible which was in effect with respect to
the most comprehensive medical insurance coverage which was available to the
Executive, his spouse and dependents under the terms of the Flex IV Plan
immediately prior to the date of the Executive's death. For purposes of this
Agreement, the term "dependents" shall have the same meaning as contained in
Section 152 of the Code.
ARTICLE 6.
Disability Benefits
6.01 Short-Term Disability. Except as otherwise provided in Section
6.02 hereof, in the event the Executive becomes disabled and is unable to
perform his duties hereunder, there shall be no reduction in the amount of the
Executive's Base Salary or any other benefits payable to him under this
Agreement.
6.02 Long-Term Disability. If, during the term of this Agreement, it
is determined that the Executive suffers from a Total and Permanent Disability
(as hereinafter defined), then, effective on the last day of the month in
which such determination is made, the Executive's employment hereunder shall
be deemed to be terminated. Upon such termination, unless a Change in Control
has occurred within the three (3) year period preceding such termination and
the Executive, as permitted by Section 8.01 hereof, has elected, in writing,
to receive payment of the Change in Control benefits described in Article 8 of
this Agreement, the Corporation shall, for each twelve (12) month period
beginning on the day immediately following the date of such termination and
any anniversary thereof (an "Anniversary Date"), for the remainder of the
Executive's life, an amount equal to, his Base Salary, at the rate in effect
on the date his employment is terminated, up to a maximum of $200,000 per year
(adjusted as set forth below), less the amounts of all social security,
retirement or disability benefits payable to the Executive for each such
twelve (12) month period by any agency of the United States Government or the
State of New York. In addition, upon the termination of the Executive's
employment as a result of his suffering of a Total and Permanent Disability,
the Corporation shall continue to maintain medical insurance coverage for the
Executive, his spouse and dependents in accordance with the provisions of
Section 2.09 hereof.
6.03 Cost of Living Adjustment. On each Anniversary Date, the $200,000
per year limit contained in Section 6.02 hereof shall be adjusted on a
cumulative basis for each annual increase in the U. S. Department of Labor
Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and
Clerical Workers, New York, New York, 1982-84 = 100 measured between the month
prior to the first month in which such compensation payments were made and the
month prior to the commencement of each such successive year.
6.04 Determination of Total and Permanent Disability. Any question as
to the existence or extent of disability of the Executive upon which the
Executive and the Corporation cannot agree shall be determined by a qualified
independent physician selected by the Executive and approved by the
Corporation (or, if the Executive is unable to make such selection, as
selected by any adult member of his immediate family). For purposes of this
Agreement, the Executive shall be deemed to suffer from a Total and Permanent
Disability if it is determined that the Executive is physically or mentally
unable to substantially perform his duties under this Agreement for a period
of twelve (12) consecutive months. The determination of any question as to
disability under this Section 6.04 by such physician shall be made in writing
to the Corporation and to the Executive and shall be final and conclusive for
all purposes of this Agreement.
ARTICLE 7.
Top Hat Benefits
7.01 "Top Hat" Benefits. In addition to the compensation and other
benefits otherwise provided for hereunder, if the Executive's employment with
the Corporation is terminated for any reason, the Executive and/or his
beneficiaries shall be entitled to receive the retirement, disability and
death benefits they would have been entitled to receive under the applicable
provisions of any tax qualified retirement plans maintained by the Corporation
and in which the Executive is or was a participant at any time prior to the
termination of his employment including, without limitation, any pension,
profit sharing, 401(k) or other comparable plans (individually a "Plan" and
collectively the "Plans") pursuant to the provisions of the Plans as in effect
during the Executive's employment but in any event, computed without reference
to: (a) any deferral of Base Salary or bonuses made by the Executive pursuant
to the terms of the Deferred Comp Plan; (b) any restrictions in the Plans upon
the use of employer contributions for an employee who is among the twenty-five
(25) highest paid; (c) any restrictions in the Plans upon the maximum benefits
payable pursuant to the Code; (d) any limitations on the amount of the
Executive's compensation that may be taken into account under the Plans
pursuant to Section 401(a)(17) of the Code; (e) any limitations on the amount
of the annual benefit which may be accrued by the Executive under the Plans
pursuant to Section 415 of the Code; or (f) any other restriction on the
Executive's benefits as determined under the Plans which are in effect at any
time pursuant to the Code or to ERISA, (the restrictions described in (a),
(b), (c), (d), (e) and (f) above being hereinafter collectively referred to as
the "Restrictions").
7.02 Form and Timing of Payments. At the time the Executive or his
beneficiaries is or are entitled to payment of any benefits under the terms of
any Plan, the Corporation shall pay to the Executive, from its general assets,
the difference between the amount which would, but for the Restrictions, have
been paid to the Executive or his beneficiaries under the terms of such Plan
(as determined pursuant to Section 7.04 hereof) and the amount which is
actually paid or payable to the Executive or his beneficiaries under the terms
of any such Plan. Any amount payable to the Executive or his beneficiaries
under the terms of this Article shall be available for payment to the
Executive or his beneficiaries in any form provided for by the applicable Plan
and shall be paid to the Executive or his beneficiaries in the form elected by
the Executive or his beneficiaries.
7.03 Lump Sum Option. If the Executive requests a lump sum
distribution under the Plan or Plans, and is denied the request or, if there
is no lump sum distribution option available under the Plan or Plans and the
Executive states in writing that he would have otherwise elected to receive a
lump sum distribution, the Corporation shall pay the Executive, in cash, an
amount equal to the benefit to which the Executive would have been entitled as
a lump sum under each Plan from which the Executive would have elected a lump
sum, determined without regard to the Restrictions, regardless of the payment
form in which the benefit would otherwise have been payable under the Plan or
Plans. The Corporation shall also pay the Executive an additional amount in a
lump sum so that the total amount received by the Executive, net of all
federal, state, and local taxes imposed upon the Executive as a result of the
lump sum payment and this additional amount, is equal to the maximum amount
which would have been paid to the Executive as a lump sum distribution under
the terms of the Plan (determined without regard to the Restrictions) which
lump sum distribution would have been eligible for tax free rollover treatment
under Section 402 of the Code. Prior to the making of any lump sum payment to
the Executive under this Section, the Executive and, if the Executive is
married, the Executive's spouse shall waive all benefits payable to him, his
spouse or his beneficiaries under any such Plan or Plans, and shall execute
any and all releases or other instruments to effect such waiver. Such waiver
and releases also will require payment to the Corporation of any amounts
received by the Executive or his beneficiaries under such Plan or Plans.
7.04 Determination of "Top Hat" Payments. The amount of retirement and
death benefits which would, but for the Restrictions, have been payable to the
Executive and his beneficiaries under the Plans shall be determined using the
actual number of years of service completed by the Executive and the actual
amount of Base Salary and bonuses which is payable to the Executive (whether
or not the Executive actually receives payment of any such Base Salary or
bonus as a result of a deferral made by the Executive pursuant to the terms of
the Deferred Comp Plan) as determined by the provisions of the applicable Plan
without regard to the Restrictions. In addition, if, in the case of any
defined contribution Plan or any combination of defined contribution Plans,
the amount which is actually contributed to such Plan or Plans by the
Corporation on behalf of the Executive is limited by operation of the
Restrictions, the amount of the retirement, disability and death benefits
which would, (but for the Restrictions), have been payable to the Executive
and his beneficiaries under any such defined contribution Plans shall be
determined by assuming that: (a) the Corporation made a contribution to such
Plan or Plans for the benefit of the Executive for each plan year (including
plan years ending prior to the effective date of this Agreement if the
Executive, at such time, was also a participant in the Deferred Comp Plan) in
which the actual contribution of the Corporation to such Plan or Plans is
limited by operation of the Restrictions, at the time that the Corporation
actually makes its contributions to such Plan or Plans for such plan year and
in an amount equal to the amount which the Corporation would, but for the
Restrictions, have contributed to such Plan or Plans on behalf of the
Executive for such plan year; and (b) the total value of the amounts which are
deemed to have been contributed by the Corporation to the Plan or the Plans
pursuant to subparagraph 7.04(a) above is equal to the greater of: (i) the
total value of all such amounts together with interest thereon between the
date such amounts are deemed to be contributed to the Plan or Plans and the
date for payment of such amounts, assuming that such amounts earn interest at
a variable annual interest rate, adjusted on a quarterly basis as of March 1,
June 1, September 1 and December 1 of each calendar year and equaling one
hundred twenty percent (120%) of the Federal long-term interest rate
established for such months by the Secretary of the Treasury pursuant to
section 1274 of the Code and the regulations thereunder; and (ii) the total
value (determined according to the principles established by the Deferred Comp
Plan, as in effect as of the date of this Agreement (whether or not the
Deferred Comp Plan is in effect on the date the payments are required to be
made pursuant to this Article 7)) of the number of shares of common stock of
the Corporation which could have been purchased (determined according to the
principles established by the Deferred Comp Plan as in effect as of the date
of this Agreement (whether or not the Deferred Comp Plan is in effect on the
date the payments are required to be made pursuant to this Article 7)) if the
amounts which would, but for the Restrictions, have been contributed to the
Plan or Plans were used to purchase common stock of the Corporation.
7.05 Payments Following Plan Termination. If payments are being made
by the Corporation pursuant to this Article 7 in the form of an annuity or
other periodic form of distribution, and the amount being paid from the assets
of the trust or trusts established to hold assets under the Plan or Plans
(individually a "Trust" and collectively the "Trusts") is reduced as a result
of any of the limitations in the Plan or Plans relating to the benefits
payable to an employee who is among the twenty-five (25) highest paid
employees or by virtue of the termination of the Plan or Plans (including the
operation of Section 4045 of ERISA) or for any other reason other than the
operation of the provisions of the optional form selected under the Plan or
Plans, the amount of the payments being made by the Corporation under this
Article 7 shall be increased by the amount of any reduction in the amount
being paid to the Executive from the assets of the Trust or Trusts.
If payments required to be made by the Corporation pursuant to
this Article 7 are being made or have been made in full, but the Executive or
any of his beneficiaries are required to make a payment to any trustee or
trustees appointed under the terms of any Trust, (whether the result of a loss
of collateral, interest on such collateral or otherwise) as the result of the
operation of the any limitations in the Plan or Plans relating to the use of
employer contributions for an employee who is among the twenty-five (25)
highest paid or by virtue of the termination of the Plan or Plans (including
the operation of Section 4045 of ERISA) or for any other reason, the
Corporation shall reimburse the Executive or his beneficiaries, as the case
may be, directly from its general assets, for each such payment to such
trustee or trustees and if the Executive or any of his beneficiaries does not
receive a deduction for Federal income tax purposes for such a payment or
incurs any penalty tax because of such repayment, the amount of the
reimbursement shall be increased to an amount so that after the application of
Federal income tax to the reimbursement, the Executive or his beneficiary
shall have received an amount from the Corporation approximately equal to the
amount repaid to the trustee or trustees.
ARTICLE 8.
Change in Control Benefits
8.01 Change in Control Termination. The Corporation will provide or
cause to be provided to the Executive the rights and benefits described in
Section 8.03 hereof in the event that, during the term of this Agreement
(including any renewal terms), the Executive's employment by the Corporation
is terminated at any time within three (3) years following a "Change in
Control" (as hereinafter defined) either:
(a) by the Corporation for any reason other than the Executive's
fraudulent conduct in connection with his employment by the Corporation or
conviction of a felony; or
(b) by the Executive following the occurrence of any of the
following events:
(i) the assignment to the Executive of any duties or
responsibilities that are inconsistent with his position, duties,
responsibilities or status immediately preceding such Change in Control;
(ii) a reduction of the Executive's Base Salary, bonuses or
other compensation or benefits from those types or amounts in effect
immediately prior to the Change in Control; or
(iii) the relocation of the principal executive offices of
the Corporation or a change in the duties of the Executive which requires the
Executive to move his residence from the Buffalo, New York metropolitan area;
or
(c) by the Executive, if he shall determine in good faith that
following a Change in Control, he is no longer able to effectively discharge
his duties under this Agreement.
For purposes of this Agreement, if the Executive's employment with
the Corporation is terminated after the occurrence of a Change in Control (as
hereinafter defined) for any of the reasons described above in this Section
8.01, such termination of employment shall hereinafter be referred to as a
"Change in Control Termination."
In the event that the Executive's employment with the Corporation
is terminated within the three (3) years following a Change in Control and,
following the date the Executive's employment with the Corporation is
terminated, it is determined (in accordance with Section 6.04 hereof) that, at
the time the Executive's employment with the Corporation was terminated, the
Executive suffered from a Total and Permanent Disability (as defined in
Section 6.04 hereof) the Executive shall have the right to elect, in writing,
to receive the Change in Control benefits provided for by this Article 8 or
the disability benefits provided for by Section 6.02 hereof. Upon receipt by
the Corporation of such written election from the Executive, the Corporation
shall pay (or cause to be paid) to the Executive the Change in Control
benefits provided for by this Article 8 or the disability benefits provided
for by Section 6.02 hereof, whichever is elected by the Executive. The
Corporation shall not be entitled to object to or contest its obligation to
make such payments (or cause such payments to be made) as elected by the
Executive or the Executive's right to make any such election on the grounds
that the Executive suffered from a Total and Permanent Disability at the time
his employment was terminated. In addition, if the Executive has attained at
least age sixty (60) and the Executive elects to terminate his employment with
the Corporation for any of the reasons set forth above in this Section 8.01
and within three (3) years following the occurrence of a Change in Control,
the Corporation shall have no right to object to or challenge the right of the
Executive to receive any payments provided for under this Article 8 on the
grounds that the Executive was otherwise entitled to retire from his
employment with the Corporation pursuant to Section 3.05 hereof.
8.02 Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if: (a) any person or group (within
the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") but excluding the Corporation and each
of the Corporation's officers and directors, whether individually or
collectively), shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of 20% or more of the Corporation's outstanding
common stock otherwise than through a transaction arranged by or consummated
with the prior approval of the Corporation's Board of Directors; or (b) during
any period of three (3) consecutive years, individuals who at the beginning of
such period constitute the entire Board of Directors of the Corporation (and
any new director whose election to the Board of Directors of the Corporation
or whose nomination for election by the Corporation's stockholders was
approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period or whose election or
nomination for election was previously so approved) (hereinafter referred to
as the "Continuing Directors") shall cease, to constitute a majority of the
Corporation's Board of Directors; or (c) any consolidation or merger of the
Corporation is consummated, as a result of which, the Corporation is not the
continuing or surviving corporation or pursuant to which shares of the
Corporation's common stock would be converted into cash, securities or other
property, other than a merger or consolidation of the Corporation which would
result in voting securities of the Corporation immediately prior thereto
continuing to represent (either by remaining outstanding or being converted
into voting securities of the surviving entity) at least eighty percent (80%)
of the combined voting power of the Corporation or such surviving entity
immediately after such merger or consolidation (provided, however, that if the
Board of Directors of the Corporation adopts a resolution that is approved by
a majority of the Continuing Directors providing that such merger or
consolidation shall not constitute a "Change in Control" for purposes of this
Agreement, then such merger or consolidation shall not constitute a Change in
Control); or (d) the stockholders of the Corporation approve an agreement for
the sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Corporation; or (e) the stockholders of the Corporation approve any plan or
proposal for the liquidation or dissolution of the Corporation.
8.03 Payments on Change in Control Termination. If a Change in Control
Termination occurs the Corporation shall pay to the Executive within ten (10)
days after the date of such Change in Control Termination, a lump sum payment
equal to three (3) times the sum of: (a) the average of the Base Salary of the
Executive in effect during the three (3) year period ending on the date the
Change in Control Termination occurs; and (b) the average of the amount of all
bonuses awarded to or received by the Executive during the three (3) year
period ending on the date of the Change in Control Termination. In no event
shall the provisions of Section 280 G of the Code be deemed to restrict or
limit the amount of any payments which the Executive is entitled to upon the
occurrence of a Change in Control as provided for in this Section 8.03 or
under the terms of any of the Plans, the Deferred Comp Plan, the Incentive
Stock Option Plan or the Restricted Stock Plan.
8.04 Effect of Deferred Compensation. The amounts payable to the
Executive pursuant to Section 8.03 hereof shall be determined based on the
amount of the Base Salary and the amount of any bonus which is payable to the
Executive, whether or not the Executive actually receives payment of such Base
Salary or bonus as a result of a deferral made by the Executive of the receipt
of payment of any portion of such Base Salary or bonus as permitted by the
terms of the Deferred Comp Plan as applicable to the Executive.
8.05 Benefits Upon Death. If the Executive dies following a Change
in Control Termination but prior to the payment of the applicable lump sum
provided for in Section 8.03 above, the Corporation shall pay the applicable
lump sum described in Section 8.03 hereof to the Executive's personal
representative or the executor or administrator of his estate within ten (10)
days from the date such personal representative, executor or administrator is
appointed.
8.06 Effect of Change in Control Termination on Other Benefits.
(a) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the Executive's right to receive any
payments due to the Executive under the terms of any of the Plans or due under
the Deferred Comp Plan. All such payments will be made in accordance with the
provisions of the applicable document containing the terms of any Plan and the
terms of the Deferred Comp Plan. In addition, the occurrence of a Change in
Control Termination with respect to the Executive shall not affect the
obligation of the Corporation to pay to the Executive and, if applicable, to
the Executive's beneficiaries, the amounts described in Article 7 hereof as
provided for in such Article.
(b) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the obligation of the Corporation
under Section 2.09 hereof to pay the full amount of all premiums and other
costs associated with the maintenance by the Corporation of policies of life
insurance, long term disability insurance and medical insurance for the
benefit of the Executive, his spouse and dependents as required by Section
2.09 hereof.
(c) Except as set forth in Sections 8.06(a) and (b) hereof, any
payments required to be made to the Executive or his beneficiaries pursuant to
Sections 8.03 and 8.05 hereof shall, when received by the Executive, or his
beneficiaries, be in lieu of any payments otherwise provided with respect to
the Executive's termination of employment under any other severance pay or
other similar plan or policy maintained by the Corporation. The Corporation
may, in its sole discretion, change, replace or eliminate any retirement plan
or insurance policy described in Sections 8.06(a) and (b) above at any time,
but shall not do so after a Change in Control in a manner which would prevent
the Executive, his spouse and dependents from receiving any benefit which he
would otherwise have been entitled to receive either immediately preceding the
Change of Control or immediately preceding a Change in Control Termination.
8.07 Certain Additional Payments by the Corporation. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Corporation 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 (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties being hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (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.
(b) Subject to the provisions of Section 8.07(c) hereof, all
determinations required to be made under this Section 8.07, including whether
a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall
be made by Coopers & Lybrand, L.L.P. or any other nationally recognized firm
of certified public accountants (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Corporation and the Executive
within 15 business days of termination of the Executive's employment under
this Agreement, if applicable, or such earlier time as is requested by the
Executive or the Corporation. When calculating the amount of the Gross-Up
Payment, the Executive shall be deemed to pay:
(i) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which the
Gross-Up Payment is to be made, and
(ii) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from deduction of such state and local
taxes if paid in such year.
If the Accounting Firm has performed services for the person,
entity or group who caused the Change of Control, as described in Section 8.02
hereof or any affiliate thereof, the Executive may select an alternative
accounting firm from any nationally recognized firm of certified public
accountants. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive with an opinion that he has
substantial authority not to report any Excise Tax on his federal income tax
return. Any determination by the Accounting Firm shall be binding upon the
Corporation and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Corporation should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Corporation exhausts it remedies pursuant to
Section 8.07(c) hereof, and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Corporation to or for the benefit of the Executive.
(c) The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than ten business days after the
Executive knows of such claim and shall apprise the Corporation 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 thirty-day
period following the date on which it gives such notice to the Corporation (or
such shorter period ending on the date that any payment of taxes with respect
to such claim is due). If the Corporation 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 Corporation any information reasonably
requested by the Corporation relating to such claim,
(ii) take such action in connection with contesting such
claim as the Corporation 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 Corporation,
(iii) cooperate with the Corporation in good faith in order
to effectively contest such claim, and
(iv) permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 8.07(c), the Corporation shall control
all proceedings taken in connection with such contest and, at its sole option,
may pursue or forego 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 sue
for a refund or 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 Corporation shall determine; provided, however, that if the
Corporation directs the Executive to pay such claim and sue for a refund, the
Corporation 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 income tax, including interest or
penalties with respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further
provided that any extension of the statue of limitations relating to payment
of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder 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.
(d) If, after the receipt by the Executive of an amount advanced
by the Corporation pursuant to Section 8.07(c) hereof, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Corporation's complying with the requirements of Section
8.07(c)) promptly pay to the Corporation the amount of such refund (together
with any interest paid or credited thereon by the taxing authority after
deducting any taxes applicable thereto). If, after the receipt by the Execu-
tive of an amount advanced by the Corporation pursuant to Section 8.07(c)
hereof, a determination is made that the Executive shall not be entitled to
any refund with respect to such claim and the Corporation does not notify the
Executive in writing of its intent to contest such denial of refund prior to
the expiration of thirty days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid under Section 8.07(a) hereof. The forgiveness of
such advance shall be considered part of the Gross-Up Payment and subject to
gross-up for any taxes (including interest or penalties) associated therewith.
ARTICLE 9.
Severance and Effects of Termination
9.01 Effect of Termination for Cause. In the event the Executive's
employment with the Corporation is terminated for cause by the Corporation
pursuant to the provisions of Section 3.02 hereof, the Corporation shall pay
to the Executive any monthly installment of his Base Salary which is accrued
and unpaid as of the date of the Executive's termination at the monthly rate
then in effect and, thereafter, the Corporation shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder, and, except as otherwise
provided under the terms of Sections 9.06 and 9.07 hereof, no further
obligation to pay any other benefits provided to the Executive hereunder.
9.02 Effect of Termination Without Cause. (a) In the event the
Executive's employment with the Corporation is terminated by the Corporation
without cause pursuant to Section 3.03 hereof and prior to the date the
Executive attains age sixty-one (61), the Corporation shall, within ninety
(90) days following the termination of the Executive's employment, pay the
Executive in one lump sum payment, an amount equal to: (i) the greater of: (A)
two and one-half (2.5) times the sum of: (x) his Base Salary at the rate then
in effect; and (y) an amount equal to all bonuses paid or payable by the
Corporation to the Executive with respect to the fiscal year of the
Corporation which ends immediately prior to the date of such termination; or
(B) five (5) times the amount of the Executive's Base Salary, at the rate then
in effect; and (ii) any "Top Hat" retirement benefits to be provided to the
Executive pursuant to Article 7 hereof. In addition, if the Executive's
employment with the Corporation is terminated without cause pursuant to
Section 3.03 hereof and prior to the date the Executive attains age sixty-one
(61), the Corporation shall, as required by Section 2.09(a) hereof, continue
to provide the Executive with the group welfare benefits and any other life
insurance and long term disability insurance for the one (1) year period
following the date the Executive's employment with the Corporation is
terminated, all as more particularly provided for by Section 2.09(a) hereof.
(b) In the event that the Executive's employment is terminated,
without cause, pursuant to Section 3.03 hereof, and, at the time the
Executive's employment is terminated, the Executive has attained at least age
sixty-one (61), the Corporation shall, within ninety (90) days following the
termination of the Executive's employment, pay to the Executive in one lump
sum payment: (i) any "Top Hat" retirement benefits to be provided to the
Executive pursuant to Article 7 hereof; and (ii) the amount described in
subparagraph 9.02(a)(i) above, reduced by twenty percent (20%) for each year
or part thereof by which the Executive's age exceeds age sixty (60) so that,
if the Executive's employment with the Corporation is terminated, without
cause, as provided for by Section 3.03 hereof, at any time after the Executive
attains age sixty-five (65), the Executive shall, except as otherwise provided
by Sections 2.09(a), 9.06 and 9.07 hereof, not be entitled to payment of any
benefits other than the "Top Hat" retirement benefits required to be provided
to the Executive pursuant to Article 7 hereof. If the Executive's employment
with the Corporation is terminated without cause pursuant to Section 3.03
hereof and after the Executive attains age sixty-one (61), the Corporation
shall, as required by Section 2.09(a) hereof, continue to provide the
Executive with the group welfare benefits and any other life insurance and
long term disability insurance for the one (1) year period following the date
the Executive's employment with the Corporation is terminated, all as more
particularly provided for by Section 2.09(a) hereof.
(c) Except as otherwise provided above in this Section 9.02,
following the termination of the Executive's employment, without cause, as
provided for by Section 3.03 hereof, the Corporation shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder, hereof and, except as
otherwise provided in Sections 9.06 and 9.07 hereof, no further obligation to
provide any other benefits otherwise provided to the Executive hereunder.
9.03 Effect of Voluntary Termination. In the event the Executive
voluntarily terminates his employment with the Corporation pursuant to Section
3.04 hereof, the Corporation shall pay to the Executive any monthly
installment of his Base Salary which is accrued and unpaid as of the date of
the Executive's termination at the monthly rate then in effect and any "Top
Hat" retirement benefits to be provided to the Executive pursuant to Article 7
hereof. Except as otherwise provided above in this Section 9.03, following
the Executive's voluntary termination of his employment with the Corporation
as provided for by Section 3.04 hereof, the Corporation shall have no further
obligation to pay to the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder and, except as otherwise
provided by Sections 9.06 and 9.07 hereof, no further obligation to provide
any other benefits otherwise provided to the Executive hereunder.
9.04 Effect of Retirement. In the event the Executive terminates his
employment with the Corporation by reason of his retirement as provided for in
Section 3.05 hereof, the Corporation shall pay to the Executive: (a) any
monthly installment of his Base Salary which is accrued and unpaid as of the
date of the Executive's retirement at the monthly rate then in effect; (b) an
amount equal to the amount of all bonuses which would have been payable to the
Executive by the Corporation pursuant to Section 2.02 hereof if the Executive
had remained in the employ of the Corporation until the end of the fiscal year
of the Corporation in which the Executive retires and assuming that average
monthly earnings of the Corporation for the portion of the Corporation's
fiscal year which has elapsed prior to the date the Executive retires
continues at such rate after the Executive retires through the end of the
fiscal year of the Corporation in which the Executive retires; and (c) any
"Top Hat" retirement benefits to be provided to the Executive pursuant to
Article 7 hereof. Except as otherwise provided for above in this Section
9.04, following the Executive's retirement from employment with the
Corporation as provided for by Section 3.05 hereof, the Corporation shall have
no further obligation to pay to the Executive any additional Base Salary,
compensation or bonus, no further obligation to provide any medical, life,
disability or other insurance benefits to the Executive hereunder and, except
as provided by Sections 9.06 and 9.07 hereof, no further obligation to provide
any other benefits otherwise provided to the Executive hereunder.
9.05 Effect of Termination Due to Disability. In the event the
Executive's employment with the Corporation is terminated as a result of his
suffering of a Total and Permanent Disability as described in Section 6.04
hereof, the Corporation shall pay to the Executive the amounts described in
Section 6.02 hereof and any "Top Hat" retirement benefits to be provided to
the Executive pursuant to Article 7 hereof. In addition, in the event the
Executive's employment is terminated by reason of his suffering of a Total and
Permanent Disability as described in Section 6.04 hereof, the Corporation
shall, as required by Section 2.09 hereof, continue to pay all premiums
necessary to maintain medical and life insurance for the life of the
Executive, medical insurance for the Executive's spouse for the life of the
Executive's spouse and medical insurance for the Executive's dependents until
such dependents reach age 21. As more particularly provided for by Section
2.09 hereof, the amount of the medical and life insurance coverage which shall
be provided to the Executive, his spouse and dependents following his
suffering of a Total and Permanent Disability shall be at least reasonably
comparable to the amount of the medical and life insurance coverage which was
in effect for the Executive, his spouse and dependents immediately prior to
the date the Executive's employment with the Corporation is terminated as a
result of his suffering of a Total and Permanent Disability. Except as
otherwise provided for by Sections 2.09 and 6.02 hereof and above in this
Section 9.05, following the Executive's suffering of a Total and Permanent
Disability, the Corporation shall have no further obligation to pay to the
Executive any additional Base Salary, compensation or bonus, no further
obligation to provide any medical, life, disability or other insurance
benefits to the Executive hereunder and, except as otherwise provided by
Sections 9.06 and 9.07 hereof, no further obligation to provide any other
benefits otherwise provided to the Executive hereunder.
9.06 Deferred Comp Plan Payments. Notwithstanding anything to the
contrary contained in this Agreement, upon termination of the Executive's
employment with the Corporation for any reason, the Executive shall be
entitled to payment in full of all amounts payable to the Executive under the
terms of the Deferred Comp Plan at the time and in the manner provided for by
the terms of the Deferred Comp Plan.
9.07 Retirement Plan Payments. Nothing in this Agreement shall be
deemed to limit the Executive's rights to receive or the obligations of the
Corporation to pay or provide for the Executive and his beneficiaries, any
continuation coverage as required by ERISA or any retirement or other benefits
accrued by the Executive at any time under the terms of any retirement plans
maintained by the Corporation which are subject to the requirements of ERISA
or otherwise satisfy the requirements of Section 401 of the Code.
ARTICLE 10.
Miscellaneous
10.01 Litigation Expenses. In the event that any dispute shall arise
under this Agreement between the Executive and the Corporation which is
related to the Change in Control Termination provisions of Article 8 hereof,
the Corporation shall be responsible for the payment of all reasonable
expenses of all parties to such dispute, including reasonable attorney fees,
regardless of the outcome thereof.
10.02 Amendments. This Agreement may not be amended or modified
orally, and no provision hereof may be waived, except in a writing signed by
the parties hereto.
10.03 Assignment. This Agreement cannot be assigned by either party
hereto except with the written consent of the other
10.04 Prior Agreements. This Agreement shall supersede and replace any
and all prior agreements between the Corporation and the Executive, whether
express or implied; provided, however, that, notwithstanding the foregoing,
nothing contained in this Agreement shall be deemed to supersede, replace,
amend or modify the terms of the Split Dollar Plan. Except as specifically
provided herein, nothing contained in this Agreement shall be construed to
constitute a waiver by the Executive or his beneficiaries of any rights or
claims under any existing pension or retirement plans of the Corporations.
10.05 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the personal representatives and successors in interest of
the Executive and any successors in interest of the Corporation.
10.06 Applicable Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed wholly within such State except with respect to the
internal affairs of the Corporation and its respective stockholders, which
shall be governed by the General Corporation Law of the State of Delaware.
10.07 Notices. All notices and other communications given pursuant to
this Agreement shall be deemed to have been properly given or delivered if
hand-delivered, or if mailed, by certified mail or registered mail postage
prepaid, addressed to the Executive at the address first above written or if
to the Corporation, at its address first above written with a copy to the
attention of Gerald S. Lippes, Secretary, 700 Guaranty Building, Buffalo, New
York 14202. From time to time, any party hereto may designate by written
notice any other address or party to which such notice or communication or
copies thereof shall be sent.
10.08 Severability of Provisions. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and this Agreement shall be interpreted as if such invalid,
illegal or unenforceable provision was not contained herein.
10.09Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Executive and the Corporation have caused
this Agreement to be executed as of the day and year first above written.
MARK IV INDUSTRIES, INC.
By: /s/ Sal H. Alfiero /s/ Frederic L. Cook
Name: Sal H. Alfiero Frederic L. Cook
Title: Chairman of the Board
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 1st day of March, 1995, by and between
MARK IV INDUSTRIES, INC., a Delaware corporation, with offices at 501 John
James Audubon Parkway, Amherst, New York 14228 ("Mark IV"), and John J. Byrne,
an individual residing at 89 Halston Parkway, East Amherst, New York 14051
(the "Executive").
RECITALS:
WHEREAS, the Executive is expected to make a major contribution to the
profitability, growth and financial strength of the Corporation; and
WHEREAS, the Corporation has determined that retaining the services of
the Executive is in the best interests of the Corporation and its stockholders
and, accordingly, the Corporation desires to secure the services of the
Executive on behalf of the Corporation;
CONSIDERATION:
NOW, THEREFORE, in consideration of the conditions and covenants set
forth in this Agreement, the parties hereto agree as follows:
ARTICLE 1.
Employment and Duties
1.01 Employment. The Corporation hereby agrees to, and does hereby
employ the Executive, and the Executive hereby agrees to and does hereby
accept employment, by the Corporation as the Vice President - Finance of the
Corporation. It is contemplated that the Executive will continue to serve as
Vice President - Finance of the Corporation subject to the provisions of this
Agreement and the right of the Board of Directors of the Corporation to elect
new officers.
1.02 Duties. During the period of his employment under this Agreement
the Executive shall perform such executive duties and responsibilities as may
be assigned to him, from time to time, by the Board of Directors of the
Corporation and shall be subject, at all times, to the control of the
Corporation's Board of Directors. The Executive may become a director or
trustee of any corporation or entity that does not constitute a Competitive
Operation as described in Section 4.03 hereof. The Corporation shall not
require the Executive to perform services hereunder outside the Buffalo, New
York metropolitan area with such frequency or duration as would require the
Executive to move his residence from the Buffalo, New York area.
ARTICLE 2.
Compensation and Fringe Benefits
2.01 Base Salary. During the period of the Executive's employment
hereunder, the Corporation shall pay to the Executive, an annual salary ("Base
Salary") of not less than $196,000.00 payable in substantially equal monthly
installments. The Board of Directors of the Corporation, through it's
Compensation Committee, shall in good faith review the Base Salary of the
Executive, on an annual basis, and increase the Base Salary of the Executive
if, in the Compensation Committee's judgment, such increase is advisable.
2.02 Bonuses. The Executive shall be entitled to participate in the
Mark IV Industries, Inc. Executive Bonus Plan, as amended (the "Executive
Bonus Plan") and to receive bonuses in accordance with the terms thereof. In
addition, the Executive shall be entitled to participate in the Mark IV
Industries, Inc. Enhanced Executive Incentive Plan (the "Enhanced Incentive
Plan") and to receive bonuses in accordance with the terms thereof. The Board
of Directors of the Corporation may, in its discretion and from time to time,
amend or change the terms of the Executive Bonus Plan and the terms of the
Enhanced Incentive Plan and, in addition, may award such additional bonuses to
the Executive as it may from time to time determine.
2.03 Stock Based Incentive Compensation. The Executive shall be
eligible to receive incentive stock option awards under the terms of the Mark
IV Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan, as
amended, (the "Incentive Stock Option Plan") and restricted stock awards under
the terms of the Mark IV Industries, Inc. 1992 Restricted Stock Plan, as
amended, (the "Restricted Stock Plan"); provided that, the determination of
whether or not incentive stock options and restricted stock shall be awarded
to the Executive and the amount, if any, of the incentive stock options or
restricted stock to be awarded to the Executive shall be made by the
Compensation Committee of the Corporation's Board of Directors.
The Executive shall also be eligible to receive awards of non-
qualified stock options, stock appreciation rights and any other stock based
incentive compensation awards which may, from time to time, be awarded to
other executive officers of the Corporation pursuant to the terms of any
omnibus plan or any other plan which may, from time to time, be adopted by the
Board of Directors of the Corporation.
2.04 Reimbursement of Expenses. The Corporation shall reimburse the
Executive for all reasonable expenses which the Executive may, from time to
time, incur on behalf of the Corporation in the performance of his
responsibilities and duties under this Agreement, provided that the Executive
accounts to the Corporation for such expenses in the manner prescribed by the
Corporation.
2.05 Deferred Comp Plan. During the term of this Agreement, the
Executive shall receive his proportionate share of any amounts allocated
annually to participants in the Non-Qualified Plan of Deferred Compensation of
Mark IV Industries, Inc., as amended (hereinafter the "Deferred Comp Plan").
In addition, during the term of this Agreement, the Executive shall be
permitted to defer the receipt of payment of all or any portion of the Base
Salary to which the Executive is entitled under the terms of this Agreement
and to defer the receipt of payment of all or any portion of the amount of any
bonus or other incentive compensation (which is otherwise payable immediately)
to which the Executive may become entitled during the term of this Agreement,
all in the manner permitted by the terms of the Deferred Comp Plan.
2.06 Tax Qualified Plans. The Executive shall be entitled to
participate in all tax qualified pension, profit sharing 401(k) or other tax
qualified plans maintained, from time to time, by the Corporation for the
employees of the Corporation who are employed at the Corporation's corporate
headquarters.
2.07 Insurance Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Corporation shall: (a)
maintain and pay all premiums necessary to maintain a policy of business
travel accident insurance which provides the Executive with coverage and
benefits which are at least reasonably comparable to the business travel
accident insurance coverage which was in effect for the Executive as of the
date of this Agreement; (b) continue to pay the trustees of a trust
established by the Executive, the amount of the premiums payable with respect
to life insurance held by the trustees of such trust as provided for under the
terms of a split-dollar agreement between the Corporation and such trustees
(such arrangement being hereinafter referred to as the "Split Dollar Plan");
and (c) if, as of the date of this Agreement, the Corporation maintains any
life insurance or long term disability insurance policies for the benefit of
the Executive other than as a result of or in connection with an election made
by the Executive pursuant to the terms of the Flex IV Plan (as defined below
in Section 2.08) the Corporation shall continue to maintain and pay any
premiums necessary to maintain such policies of life insurance and long term
disability insurance for the benefit of the Executive during the period of his
employment under the terms of this Agreement.
2.08 Group Welfare Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Executive shall be eligible
to participate in the Mark IV Industries, Inc. and Subsidiaries Group Welfare
Benefit Program as applicable to exempt salaried employees of the Corporation
whose primary place of employment is the Corporation's corporate headquarters
(hereinafter the "Flex IV Plan"). As provided for by the terms of the Flex IV
Plan, the Executive shall be entitled to elect to participate in one or more
of the group welfare benefit programs which are contained within the Flex IV
Plan and available to exempt salaried employees of the Corporation whose
primary place of employment is the Corporation's corporate headquarters,
including, but not limited to: (a) medical insurance coverage; (b) dental
insurance coverage; (c) employee life insurance coverage; (d) accidental death
and dismemberment insurance coverage; (e) dependent life insurance coverage;
(f) long term disability insurance coverage; (g) health care spending account
benefits; and (h) dependent care spending account benefits. In the event that
the Flex IV Plan is amended during the term of this Agreement to increase or
reduce the number or type of group welfare benefit programs which are
available to exempt salaried employees of the Corporation whose principal
place of employment is the Corporation's corporate headquarters, the Executive
shall thereafter be entitled to elect to participate in any one or more of the
new group welfare benefit programs which are available under the terms of the
Flex IV Plan, as amended. Notwithstanding the foregoing, except as otherwise
provided in Sections 2.09(b) and (c) hereof, the Corporation shall have no
obligation to maintain or provide such group welfare benefits to the Executive
unless the Executive pays to the Corporation, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
benefits by the Corporation for exempt salaried employees of the Corporation's
corporate headquarters as determined under the provisions of the Flex IV Plan
(or such greater or lesser amount as may, from time to time, be required to be
contributed by exempt salaried employees of the Corporation's corporate
headquarters toward the cost of maintaining and providing such benefits to
such employees).
2.09 Continuation of Insurance Coverage. (a)If the Executive's
employment with the Corporation is terminated by the Corporation, without
cause, as permitted by Section 3.03 hereof, the Corporation shall, for a
period of one (1) year following the date the Executive's employment with the
Corporation is terminated, maintain and pay any premiums necessary to maintain
group welfare benefits for the Executive which are the same as the group
welfare benefits which were in effect for the Executive under the terms of the
Flex IV Plan immediately prior to the termination of the Executive's
employment. Notwithstanding the foregoing, the Corporation shall have no
obligation to maintain or provide such group welfare benefits to the Executive
unless the Executive pays to the Corporation, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
benefits by the Corporation to exempt salaried employees of the Corporation's
corporate headquarters as determined under the provisions of the Flex IV Plan
(or such greater or lesser amount as may, from time to time, be required to be
contributed by exempt salaried employees of the Corporation's corporate
headquarters toward the cost of maintaining and providing such benefit to such
employees). At the end of the one (1) year period following the date on which
the Executive's employment is terminated (without cause) or, if earlier, at
such time that the Corporation shall terminate the group welfare benefit
coverage being provided to the Executive by reason of the Executive's failure
to pay the employee portion of any costs associated with the maintenance and
provision of such benefits, the Executive shall be entitled to elect to
receive continuation coverage with respect to any group health plan benefits
which are being provided to the Executive under the Flex IV Plan, in
accordance with the applicable continuation coverage provisions of section
4980B of the Internal Revenue Code of 1986, as amended (hereinafter the
"Code") and the applicable continuation coverage provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). In addition, if
the Executive's employment with the Corporation is terminated by the
Corporation, without cause, as permitted by Section 3.03 hereof, and if, at
the time the Executive's employment with the Corporation is terminated, the
Corporation maintains any life insurance or long term disability insurance for
the Executive (other than any life insurance or long term disability insurance
provided to the Executive as a result of and in connection with an election
made by the Executive in connection with the Flex IV Plan) or if, at the time
the Executive's employment with the Corporation is terminated, the Corporation
is obligated to make any payments for life insurance premiums to the trustees
of the trust established by the Executive in connection with the Split Dollar
Plan, the Corporation shall maintain and pay any premiums necessary to
maintain any such life insurance and long term disability insurance policies
and the Corporation shall continue to make any payments due for life insurance
premiums in connection with the Split Dollar Plan, for a one (1) year period
following the date on which the Executive's employment with the Corporation is
terminated.
(b) If the Executive's employment with the Corporation is
terminated as a result of the Executive's suffering of a Total and Permanent
Disability as defined in Section 6.04 hereof, the Corporation shall continue
to maintain and pay the full amount of all premiums necessary to maintain: (i)
medical and life insurance coverage for the benefit of the Executive for the
remainder of the Executive's life; (ii) medical insurance coverage for the
benefit of the Executive's spouse for the remainder of her life; and (iii)
medical insurance coverage for the benefit of the Executive's dependents until
such dependents reach age 21. In addition, if the Executive's employment with
the Corporation is terminated as a result of his suffering of a Total and
Permanent Disability as defined in Section 6.04 hereof, following such
termination of the Executive's employment, the Corporation shall continue to
pay to the trustees of the trust established by the Executive in connection
with the Split Dollar Plan, the amount of any premiums due in connection with
the life insurance policies held by such trustees pursuant to the terms of the
Split Dollar Plan.
(c) If the Executive's employment with the Corporation is
terminated as a result of a Change in Control Termination as defined in
Section 8.01 hereof, the Corporation shall continue to maintain and pay the
full amount of any premiums necessary to maintain: (i) medical, long term
disability and life insurance coverage for the benefit of the Executive for
the remainder of the Executive's life; (ii) medical insurance coverage for the
benefit of the Executive's spouse for the remainder of her life; and (iii)
medical insurance coverage for the benefit of the Executive's dependents until
such dependents attain age 21. In addition, if the Executive's employment
with the Corporation is terminated as a result of a Change in Control
Termination defined in Section 8.01 hereof, following such termination, the
Corporation shall continue to pay to the trustees of the trust established by
the Executive in connection with the Split Dollar Plan, the amount of any
premiums due in connection with the life insurance policies held by such
trustees pursuant to the terms of the Split Dollar Plan.
(d) The amount of the life insurance which is required to be
provided to the Executive pursuant to Sections 2.09(b) and (c) above shall
provide a death benefit which is at least equal to the sum of: (i) the amount
of the life insurance, if any, which is maintained for the Executive other
than under the terms of the Flex IV Plan; and (ii) the largest dollar amount
of the death benefit which could have been provided to the Executive's
beneficiaries under any life insurance coverage which was available to the
Executive under the terms of the Flex IV Plan immediately prior to the date
the Executive's employment is terminated as a result of his suffering of a
Total and Permanent Disability or the date on which the Change in Control
occurs, whichever is applicable.
(e) The terms of the long term disability insurance coverage
which is required to be provided to the Executive pursuant to Section 2.09(c)
hereof shall provide an annual disability income to the Executive which is not
less than the total annual amount of the disability income which was payable
to the Executive under all policies of long term disability insurance
maintained for the benefit of the Executive (whether or not provided under for
the Executive the terms of the Flex IV Plan) immediately prior to the date the
Change in Control occurs. In addition, the terms of the long term disability
insurance which is required to be provided to the Executive pursuant to
Section 2.09(c) above shall contain a definition of total and permanent
disability which is at least reasonably comparable to the most liberal
definition of total and permanent disability (in terms of the ease with which
such definition can be met) contained in any long term disability insurance
policy maintained for the Executive immediately prior to the date the Change
in Control occurs. Finally, the terms of the long term disability insurance
which is required to be provided to the Executive pursuant to Section 2.09(c)
above shall provide that the disability income payments to be made to the
Executive as described above will continue to be made to the Executive for
life.
(f) The type and amount of the medical insurance coverage which
is required to be provided to the Executive pursuant to Sections 2.09(b) and
(c) above shall be at least reasonably comparable to the most comprehensive
medical insurance coverage which was available to the Executive, his spouse
and dependents under the Flex IV Plan immediately prior to the date on which
the Executive's employment with the Corporation is terminated as a result of
his suffering of a Total and Permanent Disability or the date on which the
Change in Control occurs (whichever is applicable); provided that, in no event
shall the maximum amount of the annual deductible under such medical insurance
coverage exceed the amount of the annual deductible which was in effect with
respect to the most comprehensive medical insurance coverage which was
available to the Executive, his spouse and dependents under the Flex IV Plan
immediately prior to the date on which the Executive's employment is
terminated as a result of his suffering of a Total and Permanent Disability or
the date on which the Change in Control occurs, whichever is applicable.
2.10 Vacation and Other Benefits. During each full year of the
Executive's employment hereunder, the Executive shall be entitled to paid
vacations for such reasonable periods of time as may be determined by the
Executive. The Executive shall also be entitled to receive all other
employment benefits and participate in such other employee benefit plans as
may, from time to time, be provided or maintained by the Corporation for its
executive officers.
ARTICLE 3.
Term and Termination
3.01 Term. The period of employment of the Executive under this
Agreement shall commence January 1, 1995 ("Effective Date") and continue
through December 31, 1999, provided that on each anniversary of the Effective
Date which occurs after the date hereof and prior to the date on which the
Executive attains age sixty-one (61), the term of this Agreement shall
automatically be extended for an additional twelve-month period. The effect
of the preceding sentence shall be that on each anniversary of the Effective
Date which occurs after the date hereof and prior to the date on which the
Executive attains age sixty-one (61), the then remaining term of this
Agreement shall be five (5) years, and beginning with the first anniversary of
the Effective Date following the date on which the Executive attains age sixty
(60), and on each anniversary of the Effective Date thereafter, the remaining
term of this Agreement shall be that number of years which exists between any
such anniversary of the Effective Date and the end of the calendar year in
which the Executive attains age sixty-five (65).
Notwithstanding the foregoing, beginning on the January 1
immediately following the date on which the Executive attains age sixty-five
(65) and on each January 1 thereafter, unless otherwise terminated by the
Corporation pursuant to Section 3.03 hereof, the term of this Agreement shall
automatically be renewed for one (1) or more successive annual renewal terms
of one (1) year.
3.02 Termination For Cause. Notwithstanding the provisions of Section
3.01 hereof, the Corporation may terminate the Executive's employment
hereunder at any time for cause, by delivering to the Executive a written
notice of termination to the Executive setting forth the date on which such
termination is to be effective and specifying in reasonable detail the facts
and circumstances claimed to provide a basis for the termination.
For purposes of this Agreement, the Corporation shall have "cause"
to terminate the Executive's employment hereunder upon the Executive's: (a)
willful and continued failure to substantially perform his duties hereunder
other than any such failure resulting from the Executive's incapacity due to
physical or mental illness; (b) illegal or criminal conduct; (c) intentional
falsification of records or reports or any other act or acts of dishonesty
constituting a felony and resulting, or intended to result, directly or
indirectly, in personal gain or enrichment of the Executive at the expense of
the Corporation; (d) excessive and/or chronic use of alcohol, narcotics or
other controlled substances (other than under the supervision of a licensed
physician); or (e) willful engagement in gross misconduct materially injurious
to the Corporation.
3.03 Termination Without Cause. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Corporation may, at any time on
or after the date hereof, terminate the Executive's employment, without cause,
by delivering a written notice of termination to the Executive which sets
forth the date on which such termination is to be effective; provided that,
the effective date of any such termination shall not be less than ninety (90)
days following the date on which such written notice of termination is
delivered to the Executive. Notwithstanding the foregoing, if the Executive
has attained at least age sixty-five (65), the written notice of termination
which is delivered to the Executive pursuant to this Section 3.03 shall permit
the Executive, at the Executive's option to elect to retire from his
employment with the Corporation pursuant to Section 3.05 hereof.
3.04 Termination by the Executive. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Executive may terminate his
employment hereunder at any time by delivering a written notice of termination
to the Corporation which sets forth the date on which such termination is to
be effective; provided that, the effective date of any such termination shall
not be less than ninety (90) days following the date on which such written
notice of termination is delivered to the Corporation.
3.05 Retirement. The Executive may retire his employment with the
Corporation at any time following his attainment of age sixty (60), by
delivering to the Corporation a written notice of his intent to terminate his
employment with the Corporation and retire, which written notice shall set
forth the date on which such retirement (and its related termination of
employment) is to be effective. Thereafter, provided that the effective date
of such retirement is not less than thirty (30) days following the date on
which such written notice of termination is delivered to the Corporation, the
Executive shall be permitted to terminate his employment with the Corporation
and retire at the time stated in the written notice of termination delivered
by the Executive to the Corporation.
In addition to the foregoing, in the event that the Executive has
attained at least age sixty-five (65) and has received a written notice of
termination from the Corporation pursuant to Section 3.03 and, as required by
Section 3.03 hereof, such written notice of termination provides the
Executive, at his option, the right to retire, the Executive may exercise such
right and retire from his employment with the Corporation by delivering
written notice of his desire to exercise such right and retire to the
Corporation no later than sixty (60) days following the date of the
Executive's receipt of the written notice of termination from the Corporation
provided for by Section 3.03 hereof. In the event that the Executive elects
to retire in connection with the Executive's receipt of a written notice of
termination from the Corporation pursuant to Section 3.03 hereof, the
Executives retirement shall be effective at the time stated in the written
notice delivered to the Corporation by the Executive in connection with the
Executive's exercise of his right to retire.
3.06 Effect of Notice of Intent to Terminate. Upon delivery by the
Corporation to the Executive of a written notice of intent to terminate, the
Executive's employment with the Corporation shall be terminated, effective at
the time stated in such written notice of intent to terminate, provided that,
if applicable, the effective date of such termination as stated in the notice
of intent to terminate complies with the advance notice of termination
requirements of Section 3.03 hereof. In addition, upon the Executive's
delivery to the Corporation of a written notice of intent to terminate
(whether or not such termination is intended to be a retirement) the
Executive's employment with the Corporation shall be terminated effective at
the time stated in such written notice of intent to terminate, provided that
the effective date of such termination as stated in the notice of intent to
terminate complies with the applicable advance notice of termination
requirements of Sections 3.04 and 3.05 hereof.
ARTICLE 4.
Confidentiality; Non-Compete Provisions
4.01 Confidentiality. During the period of the Executive's employment
hereunder the Executive agrees that he will not, without the written consent
of the Board of Directors of the Corporation, disclose to any person (other
than a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of his duties as an executive
of the Corporation or to a person as required by any order or process of any
court or regulatory agency) any material confidential information obtained by
the Executive while in the employ of the Corporation with respect to any
management strategies, policies or techniques or with respect to any products,
improvements, formulae, designs or styles, processes, customers, methods of
distribution, or methods of manufacture of the Corporation or any of its
subsidiaries; provided, however, that confidential information shall not
include any information known generally to the public (other than as a result
of unauthorized disclosure by the 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 Corporation.
4.02 Non-Compete. During a period of two (2) years after the date of
any termination of the Executive's employment hereunder, the Executive will
not, directly or indirectly, own, manage, operate, control or participate in
the ownership, management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any financial
interest in, or aid or assist anyone else in the conduct of, any business
which competes with any business conducted by the Corporation or with any
group, division or subsidiary of the Corporation in any geographic area where
such business is being conducted at the time of such termination (any such
business being hereinafter referred to as a "Competitive Operation").
Ownership by the Executive of 2% or less of the voting stock of any publicly
held corporation shall not constitute a violation of this Section 4.02.
4.03 Competitive Operation. For purposes of Section 4.02 hereof: (a)
a business shall not be deemed to be a Competitive Operation unless: (i) 25%
or more of the consolidated gross sales and operating revenues of the
Corporation is derived from such business; or (ii) 25% or more of the
consolidated net income of the Corporation is derived from such business; or
(iii) 25% or more of the consolidated assets of the Corporation are devoted to
such business; and (b) a business which is conducted by the Corporation at the
time of the Executive's termination and which subsequently is sold or
discontinued by the Corporation shall not, subsequent to the date of such sale
or discontinuance, be deemed to be a Competitive Operation within the meaning
of Section 4.02 hereof.
ARTICLE 5.
Death Benefits
5.01 Death Benefits. If the Executive dies during the term of his
employment hereunder, in addition to any death benefits payable under the
terms of any life insurance policies maintained by the Corporation on the life
of the Executive, any death benefits payable on account of the death of the
Executive under the terms of the Deferred Comp Plan and any death benefits
payable on account of the death of the Executive under the terms of any tax
qualified retirement plans maintained by the Corporation, the Corporation
shall, within ninety (90) days following the Executive's death, pay to the
estate of the Executive a death benefit equal to fifty percent (50%) of the
Executive's Base Salary at the rate in effect on the date of the Executive's
death. In addition, if the Corporation pays a bonus to its executive
officers for the fiscal year of the Corporation in which the Executive's death
occurs, at the time the Corporation pays such bonuses to its executive
officers for such fiscal year: (a) if the Executive's death occurs during the
first six (6) months of the Corporation's fiscal year, the Corporation shall
pay to the Executive's estate an amount equal to the fifty percent (50%) of
the amount of all bonuses which would have been payable to the Executive
pursuant to Section 2.02 hereof for the fiscal year of the Corporation in
which the Executive's death occurs; and (b) if the Executive's death occurs at
any time after the first six (6) months of the Corporation's fiscal year, the
Corporation shall pay to the Executive's estate an amount equal to the amount
of all bonuses which would have been payable to the Executive pursuant to
Section 2.02 hereof for the fiscal year of the Corporation in which the
Executive's death occurs.
5.02 Continuation of Medical Insurance Coverage. If the Executive dies
during the term of this Agreement and his spouse or dependents are still
living, the Corporation shall maintain and pay any premiums needed to maintain
medical insurance coverage for the benefit of the Executive's spouse for the
remainder of her life and medical insurance coverage for the benefit of the
Executive's dependents until such dependents attain age 21; provided that, the
Corporation shall not be obligated to continue to provide such medical
insurance coverage to the Executive's spouse and dependents unless the
Executive's spouse and dependents (as the case may be) pay to the Corporation,
on a monthly basis, the amount which is required to be contributed by exempt
salaried employees of the Corporation's corporate headquarters toward the cost
of their medical insurance coverage as determined as of the date of the
Executive's death. The type and amount of the medical insurance coverage to
be provided to the Executive's spouse and dependents pursuant to this Section
5.02 shall be at least reasonably comparable to the type and amount of the
most comprehensive medical insurance coverage which was available to the
Executive, his spouse and dependents under the Flex IV Plan immediately prior
to the date of the Executive's death; provided that, in no event shall the
maximum amount of the annual deductible under such medical insurance coverage
exceed the amount of the annual deductible which was in effect with respect to
the most comprehensive medical insurance coverage which was available to the
Executive, his spouse and dependents under the terms of the Flex IV Plan
immediately prior to the date of the Executive's death. For purposes of this
Agreement, the term "dependents" shall have the same meaning as contained in
Section 152 of the Code.
ARTICLE 6.
Disability Benefits
6.01 Short-Term Disability. Except as otherwise provided in Section
6.02 hereof, in the event the Executive becomes disabled and is unable to
perform his duties hereunder, there shall be no reduction in the amount of the
Executive's Base Salary or any other benefits payable to him under this
Agreement.
6.02 Long-Term Disability. If, during the term of this Agreement, it
is determined that the Executive suffers from a Total and Permanent Disability
(as hereinafter defined), then, effective on the last day of the month in
which such determination is made, the Executive's employment hereunder shall
be deemed to be terminated. Upon such termination, unless a Change in Control
has occurred within the three (3) year period preceding such termination and
the Executive, as permitted by Section 8.01 hereof, has elected, in writing,
to receive payment of the Change in Control benefits described in Article 8 of
this Agreement, the Corporation shall, for each twelve (12) month period
beginning on the day immediately following the date of such termination and
any anniversary thereof (an "Anniversary Date"), for the remainder of the
Executive's life, an amount equal to, his Base Salary, at the rate in effect
on the date his employment is terminated, up to a maximum of $200,000 per year
(adjusted as set forth below), less the amounts of all social security,
retirement or disability benefits payable to the Executive for each such
twelve (12) month period by any agency of the United States Government or the
State of New York. In addition, upon the termination of the Executive's
employment as a result of his suffering of a Total and Permanent Disability,
the Corporation shall continue to maintain medical insurance coverage for the
Executive, his spouse and dependents in accordance with the provisions of
Section 2.09 hereof.
6.03 Cost of Living Adjustment. On each Anniversary Date, the $200,000
per year limit contained in Section 6.02 hereof shall be adjusted on a
cumulative basis for each annual increase in the U. S. Department of Labor
Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and
Clerical Workers, New York, New York, 1982-84 = 100 measured between the month
prior to the first month in which such compensation payments were made and the
month prior to the commencement of each such successive year.
6.04 Determination of Total and Permanent Disability. Any question as
to the existence or extent of disability of the Executive upon which the
Executive and the Corporation cannot agree shall be determined by a qualified
independent physician selected by the Executive and approved by the
Corporation (or, if the Executive is unable to make such selection, as
selected by any adult member of his immediate family). For purposes of this
Agreement, the Executive shall be deemed to suffer from a Total and Permanent
Disability if it is determined that the Executive is physically or mentally
unable to substantially perform his duties under this Agreement for a period
of twelve (12) consecutive months. The determination of any question as to
disability under this Section 6.04 by such physician shall be made in writing
to the Corporation and to the Executive and shall be final and conclusive for
all purposes of this Agreement.
ARTICLE 7.
Top Hat Benefits
7.01 "Top Hat" Benefits. In addition to the compensation and other
benefits otherwise provided for hereunder, if the Executive's employment with
the Corporation is terminated for any reason, the Executive and/or his
beneficiaries shall be entitled to receive the retirement, disability and
death benefits they would have been entitled to receive under the applicable
provisions of any tax qualified retirement plans maintained by the Corporation
and in which the Executive is or was a participant at any time prior to the
termination of his employment including, without limitation, any pension,
profit sharing, 401(k) or other comparable plans (individually a "Plan" and
collectively the "Plans") pursuant to the provisions of the Plans as in effect
during the Executive's employment but in any event, computed without reference
to: (a) any deferral of Base Salary or bonuses made by the Executive pursuant
to the terms of the Deferred Comp Plan; (b) any restrictions in the Plans upon
the use of employer contributions for an employee who is among the twenty-five
(25) highest paid; (c) any restrictions in the Plans upon the maximum benefits
payable pursuant to the Code; (d) any limitations on the amount of the
Executive's compensation that may be taken into account under the Plans
pursuant to Section 401(a)(17) of the Code; (e) any limitations on the amount
of the annual benefit which may be accrued by the Executive under the Plans
pursuant to Section 415 of the Code; or (f) any other restriction on the
Executive's benefits as determined under the Plans which are in effect at any
time pursuant to the Code or to ERISA, (the restrictions described in (a),
(b), (c), (d), (e) and (f) above being hereinafter collectively referred to as
the "Restrictions").
7.02 Form and Timing of Payments. At the time the Executive or his
beneficiaries is or are entitled to payment of any benefits under the terms of
any Plan, the Corporation shall pay to the Executive, from its general assets,
the difference between the amount which would, but for the Restrictions, have
been paid to the Executive or his beneficiaries under the terms of such Plan
(as determined pursuant to Section 7.04 hereof) and the amount which is
actually paid or payable to the Executive or his beneficiaries under the terms
of any such Plan. Any amount payable to the Executive or his beneficiaries
under the terms of this Article shall be available for payment to the
Executive or his beneficiaries in any form provided for by the applicable Plan
and shall be paid to the Executive or his beneficiaries in the form elected by
the Executive or his beneficiaries.
7.03 Lump Sum Option. If the Executive requests a lump sum
distribution under the Plan or Plans, and is denied the request or, if there
is no lump sum distribution option available under the Plan or Plans and the
Executive states in writing that he would have otherwise elected to receive a
lump sum distribution, the Corporation shall pay the Executive, in cash, an
amount equal to the benefit to which the Executive would have been entitled as
a lump sum under each Plan from which the Executive would have elected a lump
sum, determined without regard to the Restrictions, regardless of the payment
form in which the benefit would otherwise have been payable under the Plan or
Plans. The Corporation shall also pay the Executive an additional amount in a
lump sum so that the total amount received by the Executive, net of all
federal, state, and local taxes imposed upon the Executive as a result of the
lump sum payment and this additional amount, is equal to the maximum amount
which would have been paid to the Executive as a lump sum distribution under
the terms of the Plan (determined without regard to the Restrictions) which
lump sum distribution would have been eligible for tax free rollover treatment
under Section 402 of the Code. Prior to the making of any lump sum payment to
the Executive under this Section, the Executive and, if the Executive is
married, the Executive's spouse shall waive all benefits payable to him, his
spouse or his beneficiaries under any such Plan or Plans, and shall execute
any and all releases or other instruments to effect such waiver. Such waiver
and releases also will require payment to the Corporation of any amounts
received by the Executive or his beneficiaries under such Plan or Plans.
7.04 Determination of "Top Hat" Payments. The amount of retirement and
death benefits which would, but for the Restrictions, have been payable to the
Executive and his beneficiaries under the Plans shall be determined using the
actual number of years of service completed by the Executive and the actual
amount of Base Salary and bonuses which is payable to the Executive (whether
or not the Executive actually receives payment of any such Base Salary or
bonus as a result of a deferral made by the Executive pursuant to the terms of
the Deferred Comp Plan) as determined by the provisions of the applicable Plan
without regard to the Restrictions. In addition, if, in the case of any
defined contribution Plan or any combination of defined contribution Plans,
the amount which is actually contributed to such Plan or Plans by the
Corporation on behalf of the Executive is limited by operation of the
Restrictions, the amount of the retirement, disability and death benefits
which would, (but for the Restrictions), have been payable to the Executive
and his beneficiaries under any such defined contribution Plans shall be
determined by assuming that: (a) the Corporation made a contribution to such
Plan or Plans for the benefit of the Executive for each plan year (including
plan years ending prior to the effective date of this Agreement if the
Executive, at such time, was also a participant in the Deferred Comp Plan) in
which the actual contribution of the Corporation to such Plan or Plans is
limited by operation of the Restrictions, at the time that the Corporation
actually makes its contributions to such Plan or Plans for such plan year and
in an amount equal to the amount which the Corporation would, but for the
Restrictions, have contributed to such Plan or Plans on behalf of the
Executive for such plan year; and (b) the total value of the amounts which are
deemed to have been contributed by the Corporation to the Plan or the Plans
pursuant to subparagraph 7.04(a) above is equal to the greater of: (i) the
total value of all such amounts together with interest thereon between the
date such amounts are deemed to be contributed to the Plan or Plans and the
date for payment of such amounts, assuming that such amounts earn interest at
a variable annual interest rate, adjusted on a quarterly basis as of March 1,
June 1, September 1 and December 1 of each calendar year and equaling one
hundred twenty percent (120%) of the Federal long-term interest rate
established for such months by the Secretary of the Treasury pursuant to
section 1274 of the Code and the regulations thereunder; and (ii) the total
value (determined according to the principles established by the Deferred Comp
Plan, as in effect as of the date of this Agreement (whether or not the
Deferred Comp Plan is in effect on the date the payments are required to be
made pursuant to this Article 7)) of the number of shares of common stock of
the Corporation which could have been purchased (determined according to the
principles established by the Deferred Comp Plan as in effect as of the date
of this Agreement (whether or not the Deferred Comp Plan is in effect on the
date the payments are required to be made pursuant to this Article 7)) if the
amounts which would, but for the Restrictions, have been contributed to the
Plan or Plans were used to purchase common stock of the Corporation.
7.05 Payments Following Plan Termination. If payments are being made
by the Corporation pursuant to this Article 7 in the form of an annuity or
other periodic form of distribution, and the amount being paid from the assets
of the trust or trusts established to hold assets under the Plan or Plans
(individually a "Trust" and collectively the "Trusts") is reduced as a result
of any of the limitations in the Plan or Plans relating to the benefits
payable to an employee who is among the twenty-five (25) highest paid
employees or by virtue of the termination of the Plan or Plans (including the
operation of Section 4045 of ERISA) or for any other reason other than the
operation of the provisions of the optional form selected under the Plan or
Plans, the amount of the payments being made by the Corporation under this
Article 7 shall be increased by the amount of any reduction in the amount
being paid to the Executive from the assets of the Trust or Trusts.
If payments required to be made by the Corporation pursuant to
this Article 7 are being made or have been made in full, but the Executive or
any of his beneficiaries are required to make a payment to any trustee or
trustees appointed under the terms of any Trust, (whether the result of a loss
of collateral, interest on such collateral or otherwise) as the result of the
operation of the any limitations in the Plan or Plans relating to the use of
employer contributions for an employee who is among the twenty-five (25)
highest paid or by virtue of the termination of the Plan or Plans (including
the operation of Section 4045 of ERISA) or for any other reason, the
Corporation shall reimburse the Executive or his beneficiaries, as the case
may be, directly from its general assets, for each such payment to such
trustee or trustees and if the Executive or any of his beneficiaries does not
receive a deduction for Federal income tax purposes for such a payment or
incurs any penalty tax because of such repayment, the amount of the
reimbursement shall be increased to an amount so that after the application of
Federal income tax to the reimbursement, the Executive or his beneficiary
shall have received an amount from the Corporation approximately equal to the
amount repaid to the trustee or trustees.
ARTICLE 8.
Change in Control Benefits
8.01 Change in Control Termination. The Corporation will provide or
cause to be provided to the Executive the rights and benefits described in
Section 8.03 hereof in the event that, during the term of this Agreement
(including any renewal terms), the Executive's employment by the Corporation
is terminated at any time within three (3) years following a "Change in
Control" (as hereinafter defined) either:
(a) by the Corporation for any reason other than the Executive's
fraudulent conduct in connection with his employment by the Corporation or
conviction of a felony; or
(b) by the Executive following the occurrence of any of the
following events:
(i) the assignment to the Executive of any duties or
responsibilities that are inconsistent with his position, duties,
responsibilities or status immediately preceding such Change in Control;
(ii) a reduction of the Executive's Base Salary, bonuses or
other compensation or benefits from those types or amounts in effect
immediately prior to the Change in Control; or
(iii) the relocation of the principal executive offices of
the Corporation or a change in the duties of the Executive which requires the
Executive to move his residence from the Buffalo, New York metropolitan area;
or
(c) by the Executive, if he shall determine in good faith that
following a Change in Control, he is no longer able to effectively discharge
his duties under this Agreement.
For purposes of this Agreement, if the Executive's employment with
the Corporation is terminated after the occurrence of a Change in Control (as
hereinafter defined) for any of the reasons described above in this Section
8.01, such termination of employment shall hereinafter be referred to as a
"Change in Control Termination."
In the event that the Executive's employment with the Corporation
is terminated within the three (3) years following a Change in Control and,
following the date the Executive's employment with the Corporation is
terminated, it is determined (in accordance with Section 6.04 hereof) that, at
the time the Executive's employment with the Corporation was terminated, the
Executive suffered from a Total and Permanent Disability (as defined in
Section 6.04 hereof) the Executive shall have the right to elect, in writing,
to receive the Change in Control benefits provided for by this Article 8 or
the disability benefits provided for by Section 6.02 hereof. Upon receipt by
the Corporation of such written election from the Executive, the Corporation
shall pay (or cause to be paid) to the Executive the Change in Control
benefits provided for by this Article 8 or the disability benefits provided
for by Section 6.02 hereof, whichever is elected by the Executive. The
Corporation shall not be entitled to object to or contest its obligation to
make such payments (or cause such payments to be made) as elected by the
Executive or the Executive's right to make any such election on the grounds
that the Executive suffered from a Total and Permanent Disability at the time
his employment was terminated. In addition, if the Executive has attained at
least age sixty (60) and the Executive elects to terminate his employment with
the Corporation for any of the reasons set forth above in this Section 8.01
and within three (3) years following the occurrence of a Change in Control,
the Corporation shall have no right to object to or challenge the right of the
Executive to receive any payments provided for under this Article 8 on the
grounds that the Executive was otherwise entitled to retire from his
employment with the Corporation pursuant to Section 3.05 hereof.
8.02 Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if: (a) any person or group (within
the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") but excluding the Corporation and each
of the Corporation's officers and directors, whether individually or
collectively), shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of 20% or more of the Corporation's outstanding
common stock otherwise than through a transaction arranged by or consummated
with the prior approval of the Corporation's Board of Directors; or (b) during
any period of three (3) consecutive years, individuals who at the beginning of
such period constitute the entire Board of Directors of the Corporation (and
any new director whose election to the Board of Directors of the Corporation
or whose nomination for election by the Corporation's stockholders was
approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period or whose election or
nomination for election was previously so approved) (hereinafter referred to
as the "Continuing Directors") shall cease, to constitute a majority of the
Corporation's Board of Directors; or (c) any consolidation or merger of the
Corporation is consummated, as a result of which, the Corporation is not the
continuing or surviving corporation or pursuant to which shares of the
Corporation's common stock would be converted into cash, securities or other
property, other than a merger or consolidation of the Corporation which would
result in voting securities of the Corporation immediately prior thereto
continuing to represent (either by remaining outstanding or being converted
into voting securities of the surviving entity) at least eighty percent (80%)
of the combined voting power of the Corporation or such surviving entity
immediately after such merger or consolidation (provided, however, that if the
Board of Directors of the Corporation adopts a resolution that is approved by
a majority of the Continuing Directors providing that such merger or
consolidation shall not constitute a "Change in Control" for purposes of this
Agreement, then such merger or consolidation shall not constitute a Change in
Control); or (d) the stockholders of the Corporation approve an agreement for
the sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Corporation; or (e) the stockholders of the Corporation approve any plan or
proposal for the liquidation or dissolution of the Corporation.
8.03 Payments on Change in Control Termination. If a Change in Control
Termination occurs the Corporation shall pay to the Executive within ten (10)
days after the date of such Change in Control Termination, a lump sum payment
equal to three (3) times the sum of: (a) the average of the Base Salary of the
Executive in effect during the three (3) year period ending on the date the
Change in Control Termination occurs; and (b) the average of the amount of all
bonuses awarded to or received by the Executive during the three (3) year
period ending on the date of the Change in Control Termination. In no event
shall the provisions of Section 280 G of the Code be deemed to restrict or
limit the amount of any payments which the Executive is entitled to upon the
occurrence of a Change in Control as provided for in this Section 8.03 or
under the terms of any of the Plans, the Deferred Comp Plan, the Incentive
Stock Option Plan or the Restricted Stock Plan.
8.04 Effect of Deferred Compensation. The amounts payable to the
Executive pursuant to Section 8.03 hereof shall be determined based on the
amount of the Base Salary and the amount of any bonus which is payable to the
Executive, whether or not the Executive actually receives payment of such Base
Salary or bonus as a result of a deferral made by the Executive of the receipt
of payment of any portion of such Base Salary or bonus as permitted by the
terms of the Deferred Comp Plan as applicable to the Executive.
8.05 Benefits Upon Death. If the Executive dies following a Change
in Control Termination but prior to the payment of the applicable lump sum
provided for in Section 8.03 above, the Corporation shall pay the applicable
lump sum described in Section 8.03 hereof to the Executive's personal
representative or the executor or administrator of his estate within ten (10)
days from the date such personal representative, executor or administrator is
appointed.
8.06 Effect of Change in Control Termination on Other Benefits.
(a) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the Executive's right to receive any
payments due to the Executive under the terms of any of the Plans or due under
the Deferred Comp Plan. All such payments will be made in accordance with the
provisions of the applicable document containing the terms of any Plan and the
terms of the Deferred Comp Plan. In addition, the occurrence of a Change in
Control Termination with respect to the Executive shall not affect the
obligation of the Corporation to pay to the Executive and, if applicable, to
the Executive's beneficiaries, the amounts described in Article 7 hereof as
provided for in such Article.
(b) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the obligation of the Corporation
under Section 2.09 hereof to pay the full amount of all premiums and other
costs associated with the maintenance by the Corporation of policies of life
insurance, long term disability insurance and medical insurance for the
benefit of the Executive, his spouse and dependents as required by Section
2.09 hereof.
(c) Except as set forth in Sections 8.06(a) and (b) hereof, any
payments required to be made to the Executive or his beneficiaries pursuant to
Sections 8.03 and 8.05 hereof shall, when received by the Executive, or his
beneficiaries, be in lieu of any payments otherwise provided with respect to
the Executive's termination of employment under any other severance pay or
other similar plan or policy maintained by the Corporation. The Corporation
may, in its sole discretion, change, replace or eliminate any retirement plan
or insurance policy described in Sections 8.06(a) and (b) above at any time,
but shall not do so after a Change in Control in a manner which would prevent
the Executive, his spouse and dependents from receiving any benefit which he
would otherwise have been entitled to receive either immediately preceding the
Change of Control or immediately preceding a Change in Control Termination.
8.07 Certain Additional Payments by the Corporation. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Corporation 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 (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties being hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (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.
(b) Subject to the provisions of Section 8.07(c) hereof, all
determinations required to be made under this Section 8.07, including whether
a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall
be made by Coopers & Lybrand, L.L.P. or any other nationally recognized firm
of certified public accountants (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Corporation and the Executive
within 15 business days of termination of the Executive's employment under
this Agreement, if applicable, or such earlier time as is requested by the
Executive or the Corporation. When calculating the amount of the Gross-Up
Payment, the Executive shall be deemed to pay:
(i) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which the
Gross-Up Payment is to be made, and
(ii) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from deduction of such state and local
taxes if paid in such year.
If the Accounting Firm has performed services for the person,
entity or group who caused the Change of Control, as described in Section 8.02
hereof or any affiliate thereof, the Executive may select an alternative
accounting firm from any nationally recognized firm of certified public
accountants. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive with an opinion that he has
substantial authority not to report any Excise Tax on his federal income tax
return. Any determination by the Accounting Firm shall be binding upon the
Corporation and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Corporation should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Corporation exhausts it remedies pursuant to
Section 8.07(c) hereof, and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Corporation to or for the benefit of the Executive.
(c) The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than ten business days after the
Executive knows of such claim and shall apprise the Corporation 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 thirty-day
period following the date on which it gives such notice to the Corporation (or
such shorter period ending on the date that any payment of taxes with respect
to such claim is due). If the Corporation 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 Corporation any information reasonably
requested by the Corporation relating to such claim,
(ii) take such action in connection with contesting such
claim as the Corporation 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 Corporation,
(iii) cooperate with the Corporation in good faith in order
to effectively contest such claim, and
(iv) permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 8.07(c), the Corporation shall control
all proceedings taken in connection with such contest and, at its sole option,
may pursue or forego 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 sue
for a refund or 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 Corporation shall determine; provided, however, that if the
Corporation directs the Executive to pay such claim and sue for a refund, the
Corporation 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 income tax, including interest or
penalties with respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further
provided that any extension of the statue of limitations relating to payment
of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder 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.
(d) If, after the receipt by the Executive of an amount advanced
by the Corporation pursuant to Section 8.07(c) hereof, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Corporation's complying with the requirements of Section
8.07(c)) promptly pay to the Corporation the amount of such refund (together
with any interest paid or credited thereon by the taxing authority after
deducting any taxes applicable thereto). If, after the receipt by the Execu-
tive of an amount advanced by the Corporation pursuant to Section 8.07(c)
hereof, a determination is made that the Executive shall not be entitled to
any refund with respect to such claim and the Corporation does not notify the
Executive in writing of its intent to contest such denial of refund prior to
the expiration of thirty days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid under Section 8.07(a) hereof. The forgiveness of
such advance shall be considered part of the Gross-Up Payment and subject to
gross-up for any taxes (including interest or penalties) associated therewith.
ARTICLE 9.
Severance and Effects of Termination
9.01 Effect of Termination for Cause. In the event the Executive's
employment with the Corporation is terminated for cause by the Corporation
pursuant to the provisions of Section 3.02 hereof, the Corporation shall pay
to the Executive any monthly installment of his Base Salary which is accrued
and unpaid as of the date of the Executive's termination at the monthly rate
then in effect and, thereafter, the Corporation shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder, and, except as otherwise
provided under the terms of Sections 9.06 and 9.07 hereof, no further
obligation to pay any other benefits provided to the Executive hereunder.
9.02 Effect of Termination Without Cause. (a) In the event the
Executive's employment with the Corporation is terminated by the Corporation
without cause pursuant to Section 3.03 hereof and prior to the date the
Executive attains age sixty-one (61), the Corporation shall, within ninety
(90) days following the termination of the Executive's employment, pay the
Executive in one lump sum payment, an amount equal to: (i) the greater of: (A)
two and one-half (2.5) times the sum of: (x) his Base Salary at the rate then
in effect; and (y) an amount equal to all bonuses paid or payable by the
Corporation to the Executive with respect to the fiscal year of the
Corporation which ends immediately prior to the date of such termination; or
(B) five (5) times the amount of the Executive's Base Salary, at the rate then
in effect; and (ii) any "Top Hat" retirement benefits to be provided to the
Executive pursuant to Article 7 hereof. In addition, if the Executive's
employment with the Corporation is terminated without cause pursuant to
Section 3.03 hereof and prior to the date the Executive attains age sixty-one
(61), the Corporation shall, as required by Section 2.09(a) hereof, continue
to provide the Executive with the group welfare benefits and any other life
insurance and long term disability insurance for the one (1) year period
following the date the Executive's employment with the Corporation is
terminated, all as more particularly provided for by Section 2.09(a) hereof.
(b) In the event that the Executive's employment is terminated,
without cause, pursuant to Section 3.03 hereof, and, at the time the
Executive's employment is terminated, the Executive has attained at least age
sixty-one (61), the Corporation shall, within ninety (90) days following the
termination of the Executive's employment, pay to the Executive in one lump
sum payment: (i) any "Top Hat" retirement benefits to be provided to the
Executive pursuant to Article 7 hereof; and (ii) the amount described in
subparagraph 9.02(a)(i) above, reduced by twenty percent (20%) for each year
or part thereof by which the Executive's age exceeds age sixty (60) so that,
if the Executive's employment with the Corporation is terminated, without
cause, as provided for by Section 3.03 hereof, at any time after the Executive
attains age sixty-five (65), the Executive shall, except as otherwise provided
by Sections 2.09(a), 9.06 and 9.07 hereof, not be entitled to payment of any
benefits other than the "Top Hat" retirement benefits required to be provided
to the Executive pursuant to Article 7 hereof. If the Executive's employment
with the Corporation is terminated without cause pursuant to Section 3.03
hereof and after the Executive attains age sixty-one (61), the Corporation
shall, as required by Section 2.09(a) hereof, continue to provide the
Executive with the group welfare benefits and any other life insurance and
long term disability insurance for the one (1) year period following the date
the Executive's employment with the Corporation is terminated, all as more
particularly provided for by Section 2.09(a) hereof.
(c) Except as otherwise provided above in this Section 9.02,
following the termination of the Executive's employment, without cause, as
provided for by Section 3.03 hereof, the Corporation shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder, hereof and, except as
otherwise provided in Sections 9.06 and 9.07 hereof, no further obligation to
provide any other benefits otherwise provided to the Executive hereunder.
9.03 Effect of Voluntary Termination. In the event the Executive
voluntarily terminates his employment with the Corporation pursuant to Section
3.04 hereof, the Corporation shall pay to the Executive any monthly
installment of his Base Salary which is accrued and unpaid as of the date of
the Executive's termination at the monthly rate then in effect and any "Top
Hat" retirement benefits to be provided to the Executive pursuant to Article 7
hereof. Except as otherwise provided above in this Section 9.03, following
the Executive's voluntary termination of his employment with the Corporation
as provided for by Section 3.04 hereof, the Corporation shall have no further
obligation to pay to the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder and, except as otherwise
provided by Sections 9.06 and 9.07 hereof, no further obligation to provide
any other benefits otherwise provided to the Executive hereunder.
9.04 Effect of Retirement. In the event the Executive terminates his
employment with the Corporation by reason of his retirement as provided for in
Section 3.05 hereof, the Corporation shall pay to the Executive: (a) any
monthly installment of his Base Salary which is accrued and unpaid as of the
date of the Executive's retirement at the monthly rate then in effect; (b) an
amount equal to the amount of all bonuses which would have been payable to the
Executive by the Corporation pursuant to Section 2.02 hereof if the Executive
had remained in the employ of the Corporation until the end of the fiscal year
of the Corporation in which the Executive retires and assuming that average
monthly earnings of the Corporation for the portion of the Corporation's
fiscal year which has elapsed prior to the date the Executive retires
continues at such rate after the Executive retires through the end of the
fiscal year of the Corporation in which the Executive retires; and (c) any
"Top Hat" retirement benefits to be provided to the Executive pursuant to
Article 7 hereof. Except as otherwise provided for above in this Section
9.04, following the Executive's retirement from employment with the
Corporation as provided for by Section 3.05 hereof, the Corporation shall have
no further obligation to pay to the Executive any additional Base Salary,
compensation or bonus, no further obligation to provide any medical, life,
disability or other insurance benefits to the Executive hereunder and, except
as provided by Sections 9.06 and 9.07 hereof, no further obligation to provide
any other benefits otherwise provided to the Executive hereunder.
9.05 Effect of Termination Due to Disability. In the event the
Executive's employment with the Corporation is terminated as a result of his
suffering of a Total and Permanent Disability as described in Section 6.04
hereof, the Corporation shall pay to the Executive the amounts described in
Section 6.02 hereof and any "Top Hat" retirement benefits to be provided to
the Executive pursuant to Article 7 hereof. In addition, in the event the
Executive's employment is terminated by reason of his suffering of a Total and
Permanent Disability as described in Section 6.04 hereof, the Corporation
shall, as required by Section 2.09 hereof, continue to pay all premiums
necessary to maintain medical and life insurance for the life of the
Executive, medical insurance for the Executive's spouse for the life of the
Executive's spouse and medical insurance for the Executive's dependents until
such dependents reach age 21. As more particularly provided for by Section
2.09 hereof, the amount of the medical and life insurance coverage which shall
be provided to the Executive, his spouse and dependents following his
suffering of a Total and Permanent Disability shall be at least reasonably
comparable to the amount of the medical and life insurance coverage which was
in effect for the Executive, his spouse and dependents immediately prior to
the date the Executive's employment with the Corporation is terminated as a
result of his suffering of a Total and Permanent Disability. Except as
otherwise provided for by Sections 2.09 and 6.02 hereof and above in this
Section 9.05, following the Executive's suffering of a Total and Permanent
Disability, the Corporation shall have no further obligation to pay to the
Executive any additional Base Salary, compensation or bonus, no further
obligation to provide any medical, life, disability or other insurance
benefits to the Executive hereunder and, except as otherwise provided by
Sections 9.06 and 9.07 hereof, no further obligation to provide any other
benefits otherwise provided to the Executive hereunder.
9.06 Deferred Comp Plan Payments. Notwithstanding anything to the
contrary contained in this Agreement, upon termination of the Executive's
employment with the Corporation for any reason, the Executive shall be
entitled to payment in full of all amounts payable to the Executive under the
terms of the Deferred Comp Plan at the time and in the manner provided for by
the terms of the Deferred Comp Plan.
9.07 Retirement Plan Payments. Nothing in this Agreement shall be
deemed to limit the Executive's rights to receive or the obligations of the
Corporation to pay or provide for the Executive and his beneficiaries, any
continuation coverage as required by ERISA or any retirement or other benefits
accrued by the Executive at any time under the terms of any retirement plans
maintained by the Corporation which are subject to the requirements of ERISA
or otherwise satisfy the requirements of Section 401 of the Code.
ARTICLE 10.
Miscellaneous
10.01 Litigation Expenses. In the event that any dispute shall arise
under this Agreement between the Executive and the Corporation which is
related to the Change in Control Termination provisions of Article 8 hereof,
the Corporation shall be responsible for the payment of all reasonable
expenses of all parties to such dispute, including reasonable attorney fees,
regardless of the outcome thereof.
10.02 Amendments. This Agreement may not be amended or modified
orally, and no provision hereof may be waived, except in a writing signed by
the parties hereto.
10.03 Assignment. This Agreement cannot be assigned by either party
hereto except with the written consent of the other
10.04 Prior Agreements. This Agreement shall supersede and replace any
and all prior agreements between the Corporation and the Executive, whether
express or implied; provided, however, that, notwithstanding the foregoing,
nothing contained in this Agreement shall be deemed to supersede, replace,
amend or modify the terms of the Split Dollar Plan. Except as specifically
provided herein, nothing contained in this Agreement shall be construed to
constitute a waiver by the Executive or his beneficiaries of any rights or
claims under any existing pension or retirement plans of the Corporations.
10.05 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the personal representatives and successors in interest of
the Executive and any successors in interest of the Corporation.
10.06 Applicable Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed wholly within such State except with respect to the
internal affairs of the Corporation and its respective stockholders, which
shall be governed by the General Corporation Law of the State of Delaware.
10.07 Notices. All notices and other communications given pursuant to
this Agreement shall be deemed to have been properly given or delivered if
hand-delivered, or if mailed, by certified mail or registered mail postage
prepaid, addressed to the Executive at the address first above written or if
to the Corporation, at its address first above written with a copy to the
attention of Gerald S. Lippes, Secretary, 700 Guaranty Building, Buffalo, New
York 14202. From time to time, any party hereto may designate by written
notice any other address or party to which such notice or communication or
copies thereof shall be sent.
10.08 Severability of Provisions. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and this Agreement shall be interpreted as if such invalid,
illegal or unenforceable provision was not contained herein.
10.09Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Executive and the Corporation have caused
this Agreement to be executed as of the day and year first above written.
MARK IV INDUSTRIES, INC.
By: /s/ Sal H. Alfiero /s/ John J. Byrne
Name: Sal H. Alfiero John J. Byrne
Title: Chairman of the Board
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 1st day of March, 1995, by and between
MARK IV INDUSTRIES, INC., a Delaware corporation, with offices at 501 John
James Audubon Parkway, Amherst, New York 14228 ("Mark IV"), and Richard L.
Grenolds, an individual residing at 8353 Black Walnut, East Amherst, New York
14051 (the "Executive").
RECITALS:
WHEREAS, the Executive is expected to make a major contribution to the
profitability, growth and financial strength of the Corporation; and
WHEREAS, the Corporation has determined that retaining the services of
the Executive is in the best interests of the Corporation and its stockholders
and, accordingly, the Corporation desires to secure the services of the
Executive on behalf of the Corporation;
CONSIDERATION:
NOW, THEREFORE, in consideration of the conditions and covenants set
forth in this Agreement, the parties hereto agree as follows:
ARTICLE 1.
Employment and Duties
1.01 Employment. The Corporation hereby agrees to, and does hereby
employ the Executive, and the Executive hereby agrees to and does hereby
accept employment, by the Corporation as the Vice President and Chief
Accounting Officer of the Corporation. It is contemplated that the Executive
will continue to serve as Vice President and Chief Accounting Officer of the
Corporation subject to the provisions of this Agreement and the right of the
Board of Directors of the Corporation to elect new officers.
1.02 Duties. During the period of his employment under this Agreement
the Executive shall perform such executive duties and responsibilities as may
be assigned to him, from time to time, by the Board of Directors of the
Corporation and shall be subject, at all times, to the control of the
Corporation's Board of Directors. The Executive may become a director or
trustee of any corporation or entity that does not constitute a Competitive
Operation as described in Section 4.03 hereof. The Corporation shall not
require the Executive to perform services hereunder outside the Buffalo, New
York metropolitan area with such frequency or duration as would require the
Executive to move his residence from the Buffalo, New York area.
ARTICLE 2.
Compensation and Fringe Benefits
2.01 Base Salary. During the period of the Executive's employment
hereunder, the Corporation shall pay to the Executive, an annual salary ("Base
Salary") of not less than $195,000.00 payable in substantially equal monthly
installments. The Board of Directors of the Corporation, through it's
Compensation Committee, shall in good faith review the Base Salary of the
Executive, on an annual basis, and increase the Base Salary of the Executive
if, in the Compensation Committee's judgment, such increase is advisable.
2.02 Bonuses. The Executive shall be entitled to participate in the
Mark IV Industries, Inc. Executive Bonus Plan, as amended (the "Executive
Bonus Plan") and to receive bonuses in accordance with the terms thereof. In
addition, the Executive shall be entitled to participate in the Mark IV
Industries, Inc. Enhanced Executive Incentive Plan (the "Enhanced Incentive
Plan") and to receive bonuses in accordance with the terms thereof. The Board
of Directors of the Corporation may, in its discretion and from time to time,
amend or change the terms of the Executive Bonus Plan and the terms of the
Enhanced Incentive Plan and, in addition, may award such additional bonuses to
the Executive as it may from time to time determine.
2.03 Stock Based Incentive Compensation. The Executive shall be
eligible to receive incentive stock option awards under the terms of the Mark
IV Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan, as
amended, (the "Incentive Stock Option Plan") and restricted stock awards under
the terms of the Mark IV Industries, Inc. 1992 Restricted Stock Plan, as
amended, (the "Restricted Stock Plan"); provided that, the determination of
whether or not incentive stock options and restricted stock shall be awarded
to the Executive and the amount, if any, of the incentive stock options or
restricted stock to be awarded to the Executive shall be made by the
Compensation Committee of the Corporation's Board of Directors.
The Executive shall also be eligible to receive awards of non-
qualified stock options, stock appreciation rights and any other stock based
incentive compensation awards which may, from time to time, be awarded to
other executive officers of the Corporation pursuant to the terms of any
omnibus plan or any other plan which may, from time to time, be adopted by the
Board of Directors of the Corporation.
2.04 Reimbursement of Expenses. The Corporation shall reimburse the
Executive for all reasonable expenses which the Executive may, from time to
time, incur on behalf of the Corporation in the performance of his
responsibilities and duties under this Agreement, provided that the Executive
accounts to the Corporation for such expenses in the manner prescribed by the
Corporation.
2.05 Deferred Comp Plan. During the term of this Agreement, the
Executive shall receive his proportionate share of any amounts allocated
annually to participants in the Non-Qualified Plan of Deferred Compensation of
Mark IV Industries, Inc., as amended (hereinafter the "Deferred Comp Plan").
In addition, during the term of this Agreement, the Executive shall be
permitted to defer the receipt of payment of all or any portion of the Base
Salary to which the Executive is entitled under the terms of this Agreement
and to defer the receipt of payment of all or any portion of the amount of any
bonus or other incentive compensation (which is otherwise payable immediately)
to which the Executive may become entitled during the term of this Agreement,
all in the manner permitted by the terms of the Deferred Comp Plan.
2.06 Tax Qualified Plans. The Executive shall be entitled to
participate in all tax qualified pension, profit sharing 401(k) or other tax
qualified plans maintained, from time to time, by the Corporation for the
employees of the Corporation who are employed at the Corporation's corporate
headquarters.
2.07 Insurance Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Corporation shall: (a)
maintain and pay all premiums necessary to maintain a policy of business
travel accident insurance which provides the Executive with coverage and
benefits which are at least reasonably comparable to the business travel
accident insurance coverage which was in effect for the Executive as of the
date of this Agreement; (b) continue to pay the trustees of a trust
established by the Executive, the amount of the premiums payable with respect
to life insurance held by the trustees of such trust as provided for under the
terms of a split-dollar agreement between the Corporation and such trustees
(such arrangement being hereinafter referred to as the "Split Dollar Plan");
and (c) if, as of the date of this Agreement, the Corporation maintains any
life insurance or long term disability insurance policies for the benefit of
the Executive other than as a result of or in connection with an election made
by the Executive pursuant to the terms of the Flex IV Plan (as defined below
in Section 2.08) the Corporation shall continue to maintain and pay any
premiums necessary to maintain such policies of life insurance and long term
disability insurance for the benefit of the Executive during the period of his
employment under the terms of this Agreement.
2.08 Group Welfare Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Executive shall be eligible
to participate in the Mark IV Industries, Inc. and Subsidiaries Group Welfare
Benefit Program as applicable to exempt salaried employees of the Corporation
whose primary place of employment is the Corporation's corporate headquarters
(hereinafter the "Flex IV Plan"). As provided for by the terms of the Flex IV
Plan, the Executive shall be entitled to elect to participate in one or more
of the group welfare benefit programs which are contained within the Flex IV
Plan and available to exempt salaried employees of the Corporation whose
primary place of employment is the Corporation's corporate headquarters,
including, but not limited to: (a) medical insurance coverage; (b) dental
insurance coverage; (c) employee life insurance coverage; (d) accidental death
and dismemberment insurance coverage; (e) dependent life insurance coverage;
(f) long term disability insurance coverage; (g) health care spending account
benefits; and (h) dependent care spending account benefits. In the event that
the Flex IV Plan is amended during the term of this Agreement to increase or
reduce the number or type of group welfare benefit programs which are
available to exempt salaried employees of the Corporation whose principal
place of employment is the Corporation's corporate headquarters, the Executive
shall thereafter be entitled to elect to participate in any one or more of the
new group welfare benefit programs which are available under the terms of the
Flex IV Plan, as amended. Notwithstanding the foregoing, except as otherwise
provided in Sections 2.09(b) and (c) hereof, the Corporation shall have no
obligation to maintain or provide such group welfare benefits to the Executive
unless the Executive pays to the Corporation, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
benefits by the Corporation for exempt salaried employees of the Corporation's
corporate headquarters as determined under the provisions of the Flex IV Plan
(or such greater or lesser amount as may, from time to time, be required to be
contributed by exempt salaried employees of the Corporation's corporate
headquarters toward the cost of maintaining and providing such benefits to
such employees).
2.09 Continuation of Insurance Coverage. (a)If the Executive's
employment with the Corporation is terminated by the Corporation, without
cause, as permitted by Section 3.03 hereof, the Corporation shall, for a
period of one (1) year following the date the Executive's employment with the
Corporation is terminated, maintain and pay any premiums necessary to maintain
group welfare benefits for the Executive which are the same as the group
welfare benefits which were in effect for the Executive under the terms of the
Flex IV Plan immediately prior to the termination of the Executive's
employment. Notwithstanding the foregoing, the Corporation shall have no
obligation to maintain or provide such group welfare benefits to the Executive
unless the Executive pays to the Corporation, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
benefits by the Corporation to exempt salaried employees of the Corporation's
corporate headquarters as determined under the provisions of the Flex IV Plan
(or such greater or lesser amount as may, from time to time, be required to be
contributed by exempt salaried employees of the Corporation's corporate
headquarters toward the cost of maintaining and providing such benefit to such
employees). At the end of the one (1) year period following the date on which
the Executive's employment is terminated (without cause) or, if earlier, at
such time that the Corporation shall terminate the group welfare benefit
coverage being provided to the Executive by reason of the Executive's failure
to pay the employee portion of any costs associated with the maintenance and
provision of such benefits, the Executive shall be entitled to elect to
receive continuation coverage with respect to any group health plan benefits
which are being provided to the Executive under the Flex IV Plan, in
accordance with the applicable continuation coverage provisions of section
4980B of the Internal Revenue Code of 1986, as amended (hereinafter the
"Code") and the applicable continuation coverage provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). In addition, if
the Executive's employment with the Corporation is terminated by the
Corporation, without cause, as permitted by Section 3.03 hereof, and if, at
the time the Executive's employment with the Corporation is terminated, the
Corporation maintains any life insurance or long term disability insurance for
the Executive (other than any life insurance or long term disability insurance
provided to the Executive as a result of and in connection with an election
made by the Executive in connection with the Flex IV Plan) or if, at the time
the Executive's employment with the Corporation is terminated, the Corporation
is obligated to make any payments for life insurance premiums to the trustees
of the trust established by the Executive in connection with the Split Dollar
Plan, the Corporation shall maintain and pay any premiums necessary to
maintain any such life insurance and long term disability insurance policies
and the Corporation shall continue to make any payments due for life insurance
premiums in connection with the Split Dollar Plan, for a one (1) year period
following the date on which the Executive's employment with the Corporation is
terminated.
(b) If the Executive's employment with the Corporation is
terminated as a result of the Executive's suffering of a Total and Permanent
Disability as defined in Section 6.04 hereof, the Corporation shall continue
to maintain and pay the full amount of all premiums necessary to maintain: (i)
medical and life insurance coverage for the benefit of the Executive for the
remainder of the Executive's life; (ii) medical insurance coverage for the
benefit of the Executive's spouse for the remainder of her life; and (iii)
medical insurance coverage for the benefit of the Executive's dependents until
such dependents reach age 21. In addition, if the Executive's employment with
the Corporation is terminated as a result of his suffering of a Total and
Permanent Disability as defined in Section 6.04 hereof, following such
termination of the Executive's employment, the Corporation shall continue to
pay to the trustees of the trust established by the Executive in connection
with the Split Dollar Plan, the amount of any premiums due in connection with
the life insurance policies held by such trustees pursuant to the terms of the
Split Dollar Plan.
(c) If the Executive's employment with the Corporation is
terminated as a result of a Change in Control Termination as defined in
Section 8.01 hereof, the Corporation shall continue to maintain and pay the
full amount of any premiums necessary to maintain: (i) medical, long term
disability and life insurance coverage for the benefit of the Executive for
the remainder of the Executive's life; (ii) medical insurance coverage for the
benefit of the Executive's spouse for the remainder of her life; and (iii)
medical insurance coverage for the benefit of the Executive's dependents until
such dependents attain age 21. In addition, if the Executive's employment
with the Corporation is terminated as a result of a Change in Control
Termination defined in Section 8.01 hereof, following such termination, the
Corporation shall continue to pay to the trustees of the trust established by
the Executive in connection with the Split Dollar Plan, the amount of any
premiums due in connection with the life insurance policies held by such
trustees pursuant to the terms of the Split Dollar Plan.
(d) The amount of the life insurance which is required to be
provided to the Executive pursuant to Sections 2.09(b) and (c) above shall
provide a death benefit which is at least equal to the sum of: (i) the amount
of the life insurance, if any, which is maintained for the Executive other
than under the terms of the Flex IV Plan; and (ii) the largest dollar amount
of the death benefit which could have been provided to the Executive's
beneficiaries under any life insurance coverage which was available to the
Executive under the terms of the Flex IV Plan immediately prior to the date
the Executive's employment is terminated as a result of his suffering of a
Total and Permanent Disability or the date on which the Change in Control
occurs, whichever is applicable.
(e) The terms of the long term disability insurance coverage
which is required to be provided to the Executive pursuant to Section 2.09(c)
hereof shall provide an annual disability income to the Executive which is not
less than the total annual amount of the disability income which was payable
to the Executive under all policies of long term disability insurance
maintained for the benefit of the Executive (whether or not provided under for
the Executive the terms of the Flex IV Plan) immediately prior to the date the
Change in Control occurs. In addition, the terms of the long term disability
insurance which is required to be provided to the Executive pursuant to
Section 2.09(c) above shall contain a definition of total and permanent
disability which is at least reasonably comparable to the most liberal
definition of total and permanent disability (in terms of the ease with which
such definition can be met) contained in any long term disability insurance
policy maintained for the Executive immediately prior to the date the Change
in Control occurs. Finally, the terms of the long term disability insurance
which is required to be provided to the Executive pursuant to Section 2.09(c)
above shall provide that the disability income payments to be made to the
Executive as described above will continue to be made to the Executive for
life.
(f) The type and amount of the medical insurance coverage which
is required to be provided to the Executive pursuant to Sections 2.09(b) and
(c) above shall be at least reasonably comparable to the most comprehensive
medical insurance coverage which was available to the Executive, his spouse
and dependents under the Flex IV Plan immediately prior to the date on which
the Executive's employment with the Corporation is terminated as a result of
his suffering of a Total and Permanent Disability or the date on which the
Change in Control occurs (whichever is applicable); provided that, in no event
shall the maximum amount of the annual deductible under such medical insurance
coverage exceed the amount of the annual deductible which was in effect with
respect to the most comprehensive medical insurance coverage which was
available to the Executive, his spouse and dependents under the Flex IV Plan
immediately prior to the date on which the Executive's employment is
terminated as a result of his suffering of a Total and Permanent Disability or
the date on which the Change in Control occurs, whichever is applicable.
2.10 Vacation and Other Benefits. During each full year of the
Executive's employment hereunder, the Executive shall be entitled to paid
vacations for such reasonable periods of time as may be determined by the
Executive. The Executive shall also be entitled to receive all other
employment benefits and participate in such other employee benefit plans as
may, from time to time, be provided or maintained by the Corporation for its
executive officers.
ARTICLE 3.
Term and Termination
3.01 Term. The period of employment of the Executive under this
Agreement shall commence January 1, 1995 ("Effective Date") and continue
through December 31, 1999, provided that on each anniversary of the Effective
Date which occurs after the date hereof and prior to the date on which the
Executive attains age sixty-one (61), the term of this Agreement shall
automatically be extended for an additional twelve-month period. The effect
of the preceding sentence shall be that on each anniversary of the Effective
Date which occurs after the date hereof and prior to the date on which the
Executive attains age sixty-one (61), the then remaining term of this
Agreement shall be five (5) years, and beginning with the first anniversary of
the Effective Date following the date on which the Executive attains age sixty
(60), and on each anniversary of the Effective Date thereafter, the remaining
term of this Agreement shall be that number of years which exists between any
such anniversary of the Effective Date and the end of the calendar year in
which the Executive attains age sixty-five (65).
Notwithstanding the foregoing, beginning on the January 1
immediately following the date on which the Executive attains age sixty-five
(65) and on each January 1 thereafter, unless otherwise terminated by the
Corporation pursuant to Section 3.03 hereof, the term of this Agreement shall
automatically be renewed for one (1) or more successive annual renewal terms
of one (1) year.
3.02 Termination For Cause. Notwithstanding the provisions of Section
3.01 hereof, the Corporation may terminate the Executive's employment
hereunder at any time for cause, by delivering to the Executive a written
notice of termination to the Executive setting forth the date on which such
termination is to be effective and specifying in reasonable detail the facts
and circumstances claimed to provide a basis for the termination.
For purposes of this Agreement, the Corporation shall have "cause"
to terminate the Executive's employment hereunder upon the Executive's: (a)
willful and continued failure to substantially perform his duties hereunder
other than any such failure resulting from the Executive's incapacity due to
physical or mental illness; (b) illegal or criminal conduct; (c) intentional
falsification of records or reports or any other act or acts of dishonesty
constituting a felony and resulting, or intended to result, directly or
indirectly, in personal gain or enrichment of the Executive at the expense of
the Corporation; (d) excessive and/or chronic use of alcohol, narcotics or
other controlled substances (other than under the supervision of a licensed
physician); or (e) willful engagement in gross misconduct materially injurious
to the Corporation.
3.03 Termination Without Cause. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Corporation may, at any time on
or after the date hereof, terminate the Executive's employment, without cause,
by delivering a written notice of termination to the Executive which sets
forth the date on which such termination is to be effective; provided that,
the effective date of any such termination shall not be less than ninety (90)
days following the date on which such written notice of termination is
delivered to the Executive. Notwithstanding the foregoing, if the Executive
has attained at least age sixty-five (65), the written notice of termination
which is delivered to the Executive pursuant to this Section 3.03 shall permit
the Executive, at the Executive's option to elect to retire from his
employment with the Corporation pursuant to Section 3.05 hereof.
3.04 Termination by the Executive. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Executive may terminate his
employment hereunder at any time by delivering a written notice of termination
to the Corporation which sets forth the date on which such termination is to
be effective; provided that, the effective date of any such termination shall
not be less than ninety (90) days following the date on which such written
notice of termination is delivered to the Corporation.
3.05 Retirement. The Executive may retire his employment with the
Corporation at any time following his attainment of age sixty (60), by
delivering to the Corporation a written notice of his intent to terminate his
employment with the Corporation and retire, which written notice shall set
forth the date on which such retirement (and its related termination of
employment) is to be effective. Thereafter, provided that the effective date
of such retirement is not less than thirty (30) days following the date on
which such written notice of termination is delivered to the Corporation, the
Executive shall be permitted to terminate his employment with the Corporation
and retire at the time stated in the written notice of termination delivered
by the Executive to the Corporation.
In addition to the foregoing, in the event that the Executive has
attained at least age sixty-five (65) and has received a written notice of
termination from the Corporation pursuant to Section 3.03 and, as required by
Section 3.03 hereof, such written notice of termination provides the
Executive, at his option, the right to retire, the Executive may exercise such
right and retire from his employment with the Corporation by delivering
written notice of his desire to exercise such right and retire to the
Corporation no later than sixty (60) days following the date of the
Executive's receipt of the written notice of termination from the Corporation
provided for by Section 3.03 hereof. In the event that the Executive elects
to retire in connection with the Executive's receipt of a written notice of
termination from the Corporation pursuant to Section 3.03 hereof, the
Executives retirement shall be effective at the time stated in the written
notice delivered to the Corporation by the Executive in connection with the
Executive's exercise of his right to retire.
3.06 Effect of Notice of Intent to Terminate. Upon delivery by the
Corporation to the Executive of a written notice of intent to terminate, the
Executive's employment with the Corporation shall be terminated, effective at
the time stated in such written notice of intent to terminate, provided that,
if applicable, the effective date of such termination as stated in the notice
of intent to terminate complies with the advance notice of termination
requirements of Section 3.03 hereof. In addition, upon the Executive's
delivery to the Corporation of a written notice of intent to terminate
(whether or not such termination is intended to be a retirement) the
Executive's employment with the Corporation shall be terminated effective at
the time stated in such written notice of intent to terminate, provided that
the effective date of such termination as stated in the notice of intent to
terminate complies with the applicable advance notice of termination
requirements of Sections 3.04 and 3.05 hereof.
ARTICLE 4.
Confidentiality; Non-Compete Provisions
4.01 Confidentiality. During the period of the Executive's employment
hereunder the Executive agrees that he will not, without the written consent
of the Board of Directors of the Corporation, disclose to any person (other
than a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of his duties as an executive
of the Corporation or to a person as required by any order or process of any
court or regulatory agency) any material confidential information obtained by
the Executive while in the employ of the Corporation with respect to any
management strategies, policies or techniques or with respect to any products,
improvements, formulae, designs or styles, processes, customers, methods of
distribution, or methods of manufacture of the Corporation or any of its
subsidiaries; provided, however, that confidential information shall not
include any information known generally to the public (other than as a result
of unauthorized disclosure by the 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 Corporation.
4.02 Non-Compete. During a period of two (2) years after the date of
any termination of the Executive's employment hereunder, the Executive will
not, directly or indirectly, own, manage, operate, control or participate in
the ownership, management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any financial
interest in, or aid or assist anyone else in the conduct of, any business
which competes with any business conducted by the Corporation or with any
group, division or subsidiary of the Corporation in any geographic area where
such business is being conducted at the time of such termination (any such
business being hereinafter referred to as a "Competitive Operation").
Ownership by the Executive of 2% or less of the voting stock of any publicly
held corporation shall not constitute a violation of this Section 4.02.
4.03 Competitive Operation. For purposes of Section 4.02 hereof: (a)
a business shall not be deemed to be a Competitive Operation unless: (i) 25%
or more of the consolidated gross sales and operating revenues of the
Corporation is derived from such business; or (ii) 25% or more of the
consolidated net income of the Corporation is derived from such business; or
(iii) 25% or more of the consolidated assets of the Corporation are devoted to
such business; and (b) a business which is conducted by the Corporation at the
time of the Executive's termination and which subsequently is sold or
discontinued by the Corporation shall not, subsequent to the date of such sale
or discontinuance, be deemed to be a Competitive Operation within the meaning
of Section 4.02 hereof.
ARTICLE 5.
Death Benefits
5.01 Death Benefits. If the Executive dies during the term of his
employment hereunder, in addition to any death benefits payable under the
terms of any life insurance policies maintained by the Corporation on the life
of the Executive, any death benefits payable on account of the death of the
Executive under the terms of the Deferred Comp Plan and any death benefits
payable on account of the death of the Executive under the terms of any tax
qualified retirement plans maintained by the Corporation, the Corporation
shall, within ninety (90) days following the Executive's death, pay to the
estate of the Executive a death benefit equal to fifty percent (50%) of the
Executive's Base Salary at the rate in effect on the date of the Executive's
death. In addition, if the Corporation pays a bonus to its executive
officers for the fiscal year of the Corporation in which the Executive's death
occurs, at the time the Corporation pays such bonuses to its executive
officers for such fiscal year: (a) if the Executive's death occurs during the
first six (6) months of the Corporation's fiscal year, the Corporation shall
pay to the Executive's estate an amount equal to the fifty percent (50%) of
the amount of all bonuses which would have been payable to the Executive
pursuant to Section 2.02 hereof for the fiscal year of the Corporation in
which the Executive's death occurs; and (b) if the Executive's death occurs at
any time after the first six (6) months of the Corporation's fiscal year, the
Corporation shall pay to the Executive's estate an amount equal to the amount
of all bonuses which would have been payable to the Executive pursuant to
Section 2.02 hereof for the fiscal year of the Corporation in which the
Executive's death occurs.
5.02 Continuation of Medical Insurance Coverage. If the Executive dies
during the term of this Agreement and his spouse or dependents are still
living, the Corporation shall maintain and pay any premiums needed to maintain
medical insurance coverage for the benefit of the Executive's spouse for the
remainder of her life and medical insurance coverage for the benefit of the
Executive's dependents until such dependents attain age 21; provided that, the
Corporation shall not be obligated to continue to provide such medical
insurance coverage to the Executive's spouse and dependents unless the
Executive's spouse and dependents (as the case may be) pay to the Corporation,
on a monthly basis, the amount which is required to be contributed by exempt
salaried employees of the Corporation's corporate headquarters toward the cost
of their medical insurance coverage as determined as of the date of the
Executive's death. The type and amount of the medical insurance coverage to
be provided to the Executive's spouse and dependents pursuant to this Section
5.02 shall be at least reasonably comparable to the type and amount of the
most comprehensive medical insurance coverage which was available to the
Executive, his spouse and dependents under the Flex IV Plan immediately prior
to the date of the Executive's death; provided that, in no event shall the
maximum amount of the annual deductible under such medical insurance coverage
exceed the amount of the annual deductible which was in effect with respect to
the most comprehensive medical insurance coverage which was available to the
Executive, his spouse and dependents under the terms of the Flex IV Plan
immediately prior to the date of the Executive's death. For purposes of this
Agreement, the term "dependents" shall have the same meaning as contained in
Section 152 of the Code.
ARTICLE 6.
Disability Benefits
6.01 Short-Term Disability. Except as otherwise provided in Section
6.02 hereof, in the event the Executive becomes disabled and is unable to
perform his duties hereunder, there shall be no reduction in the amount of the
Executive's Base Salary or any other benefits payable to him under this
Agreement.
6.02 Long-Term Disability. If, during the term of this Agreement, it
is determined that the Executive suffers from a Total and Permanent Disability
(as hereinafter defined), then, effective on the last day of the month in
which such determination is made, the Executive's employment hereunder shall
be deemed to be terminated. Upon such termination, unless a Change in Control
has occurred within the three (3) year period preceding such termination and
the Executive, as permitted by Section 8.01 hereof, has elected, in writing,
to receive payment of the Change in Control benefits described in Article 8 of
this Agreement, the Corporation shall, for each twelve (12) month period
beginning on the day immediately following the date of such termination and
any anniversary thereof (an "Anniversary Date"), for the remainder of the
Executive's life, an amount equal to, his Base Salary, at the rate in effect
on the date his employment is terminated, up to a maximum of $200,000 per year
(adjusted as set forth below), less the amounts of all social security,
retirement or disability benefits payable to the Executive for each such
twelve (12) month period by any agency of the United States Government or the
State of New York. In addition, upon the termination of the Executive's
employment as a result of his suffering of a Total and Permanent Disability,
the Corporation shall continue to maintain medical insurance coverage for the
Executive, his spouse and dependents in accordance with the provisions of
Section 2.09 hereof.
6.03 Cost of Living Adjustment. On each Anniversary Date, the $200,000
per year limit contained in Section 6.02 hereof shall be adjusted on a
cumulative basis for each annual increase in the U. S. Department of Labor
Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and
Clerical Workers, New York, New York, 1982-84 = 100 measured between the month
prior to the first month in which such compensation payments were made and the
month prior to the commencement of each such successive year.
6.04 Determination of Total and Permanent Disability. Any question as
to the existence or extent of disability of the Executive upon which the
Executive and the Corporation cannot agree shall be determined by a qualified
independent physician selected by the Executive and approved by the
Corporation (or, if the Executive is unable to make such selection, as
selected by any adult member of his immediate family). For purposes of this
Agreement, the Executive shall be deemed to suffer from a Total and Permanent
Disability if it is determined that the Executive is physically or mentally
unable to substantially perform his duties under this Agreement for a period
of twelve (12) consecutive months. The determination of any question as to
disability under this Section 6.04 by such physician shall be made in writing
to the Corporation and to the Executive and shall be final and conclusive for
all purposes of this Agreement.
ARTICLE 7.
Top Hat Benefits
7.01 "Top Hat" Benefits. In addition to the compensation and other
benefits otherwise provided for hereunder, if the Executive's employment with
the Corporation is terminated for any reason, the Executive and/or his
beneficiaries shall be entitled to receive the retirement, disability and
death benefits they would have been entitled to receive under the applicable
provisions of any tax qualified retirement plans maintained by the Corporation
and in which the Executive is or was a participant at any time prior to the
termination of his employment including, without limitation, any pension,
profit sharing, 401(k) or other comparable plans (individually a "Plan" and
collectively the "Plans") pursuant to the provisions of the Plans as in effect
during the Executive's employment but in any event, computed without reference
to: (a) any deferral of Base Salary or bonuses made by the Executive pursuant
to the terms of the Deferred Comp Plan; (b) any restrictions in the Plans upon
the use of employer contributions for an employee who is among the twenty-five
(25) highest paid; (c) any restrictions in the Plans upon the maximum benefits
payable pursuant to the Code; (d) any limitations on the amount of the
Executive's compensation that may be taken into account under the Plans
pursuant to Section 401(a)(17) of the Code; (e) any limitations on the amount
of the annual benefit which may be accrued by the Executive under the Plans
pursuant to Section 415 of the Code; or (f) any other restriction on the
Executive's benefits as determined under the Plans which are in effect at any
time pursuant to the Code or to ERISA, (the restrictions described in (a),
(b), (c), (d), (e) and (f) above being hereinafter collectively referred to as
the "Restrictions").
7.02 Form and Timing of Payments. At the time the Executive or his
beneficiaries is or are entitled to payment of any benefits under the terms of
any Plan, the Corporation shall pay to the Executive, from its general assets,
the difference between the amount which would, but for the Restrictions, have
been paid to the Executive or his beneficiaries under the terms of such Plan
(as determined pursuant to Section 7.04 hereof) and the amount which is
actually paid or payable to the Executive or his beneficiaries under the terms
of any such Plan. Any amount payable to the Executive or his beneficiaries
under the terms of this Article shall be available for payment to the
Executive or his beneficiaries in any form provided for by the applicable Plan
and shall be paid to the Executive or his beneficiaries in the form elected by
the Executive or his beneficiaries.
7.03 Lump Sum Option. If the Executive requests a lump sum
distribution under the Plan or Plans, and is denied the request or, if there
is no lump sum distribution option available under the Plan or Plans and the
Executive states in writing that he would have otherwise elected to receive a
lump sum distribution, the Corporation shall pay the Executive, in cash, an
amount equal to the benefit to which the Executive would have been entitled as
a lump sum under each Plan from which the Executive would have elected a lump
sum, determined without regard to the Restrictions, regardless of the payment
form in which the benefit would otherwise have been payable under the Plan or
Plans. The Corporation shall also pay the Executive an additional amount in a
lump sum so that the total amount received by the Executive, net of all
federal, state, and local taxes imposed upon the Executive as a result of the
lump sum payment and this additional amount, is equal to the maximum amount
which would have been paid to the Executive as a lump sum distribution under
the terms of the Plan (determined without regard to the Restrictions) which
lump sum distribution would have been eligible for tax free rollover treatment
under Section 402 of the Code. Prior to the making of any lump sum payment to
the Executive under this Section, the Executive and, if the Executive is
married, the Executive's spouse shall waive all benefits payable to him, his
spouse or his beneficiaries under any such Plan or Plans, and shall execute
any and all releases or other instruments to effect such waiver. Such waiver
and releases also will require payment to the Corporation of any amounts
received by the Executive or his beneficiaries under such Plan or Plans.
7.04 Determination of "Top Hat" Payments. The amount of retirement and
death benefits which would, but for the Restrictions, have been payable to the
Executive and his beneficiaries under the Plans shall be determined using the
actual number of years of service completed by the Executive and the actual
amount of Base Salary and bonuses which is payable to the Executive (whether
or not the Executive actually receives payment of any such Base Salary or
bonus as a result of a deferral made by the Executive pursuant to the terms of
the Deferred Comp Plan) as determined by the provisions of the applicable Plan
without regard to the Restrictions. In addition, if, in the case of any
defined contribution Plan or any combination of defined contribution Plans,
the amount which is actually contributed to such Plan or Plans by the
Corporation on behalf of the Executive is limited by operation of the
Restrictions, the amount of the retirement, disability and death benefits
which would, (but for the Restrictions), have been payable to the Executive
and his beneficiaries under any such defined contribution Plans shall be
determined by assuming that: (a) the Corporation made a contribution to such
Plan or Plans for the benefit of the Executive for each plan year (including
plan years ending prior to the effective date of this Agreement if the
Executive, at such time, was also a participant in the Deferred Comp Plan) in
which the actual contribution of the Corporation to such Plan or Plans is
limited by operation of the Restrictions, at the time that the Corporation
actually makes its contributions to such Plan or Plans for such plan year and
in an amount equal to the amount which the Corporation would, but for the
Restrictions, have contributed to such Plan or Plans on behalf of the
Executive for such plan year; and (b) the total value of the amounts which are
deemed to have been contributed by the Corporation to the Plan or the Plans
pursuant to subparagraph 7.04(a) above is equal to the greater of: (i) the
total value of all such amounts together with interest thereon between the
date such amounts are deemed to be contributed to the Plan or Plans and the
date for payment of such amounts, assuming that such amounts earn interest at
a variable annual interest rate, adjusted on a quarterly basis as of March 1,
June 1, September 1 and December 1 of each calendar year and equaling one
hundred twenty percent (120%) of the Federal long-term interest rate
established for such months by the Secretary of the Treasury pursuant to
section 1274 of the Code and the regulations thereunder; and (ii) the total
value (determined according to the principles established by the Deferred Comp
Plan, as in effect as of the date of this Agreement (whether or not the
Deferred Comp Plan is in effect on the date the payments are required to be
made pursuant to this Article 7)) of the number of shares of common stock of
the Corporation which could have been purchased (determined according to the
principles established by the Deferred Comp Plan as in effect as of the date
of this Agreement (whether or not the Deferred Comp Plan is in effect on the
date the payments are required to be made pursuant to this Article 7)) if the
amounts which would, but for the Restrictions, have been contributed to the
Plan or Plans were used to purchase common stock of the Corporation.
7.05 Payments Following Plan Termination. If payments are being made
by the Corporation pursuant to this Article 7 in the form of an annuity or
other periodic form of distribution, and the amount being paid from the assets
of the trust or trusts established to hold assets under the Plan or Plans
(individually a "Trust" and collectively the "Trusts") is reduced as a result
of any of the limitations in the Plan or Plans relating to the benefits
payable to an employee who is among the twenty-five (25) highest paid
employees or by virtue of the termination of the Plan or Plans (including the
operation of Section 4045 of ERISA) or for any other reason other than the
operation of the provisions of the optional form selected under the Plan or
Plans, the amount of the payments being made by the Corporation under this
Article 7 shall be increased by the amount of any reduction in the amount
being paid to the Executive from the assets of the Trust or Trusts.
If payments required to be made by the Corporation pursuant to
this Article 7 are being made or have been made in full, but the Executive or
any of his beneficiaries are required to make a payment to any trustee or
trustees appointed under the terms of any Trust, (whether the result of a loss
of collateral, interest on such collateral or otherwise) as the result of the
operation of the any limitations in the Plan or Plans relating to the use of
employer contributions for an employee who is among the twenty-five (25)
highest paid or by virtue of the termination of the Plan or Plans (including
the operation of Section 4045 of ERISA) or for any other reason, the
Corporation shall reimburse the Executive or his beneficiaries, as the case
may be, directly from its general assets, for each such payment to such
trustee or trustees and if the Executive or any of his beneficiaries does not
receive a deduction for Federal income tax purposes for such a payment or
incurs any penalty tax because of such repayment, the amount of the
reimbursement shall be increased to an amount so that after the application of
Federal income tax to the reimbursement, the Executive or his beneficiary
shall have received an amount from the Corporation approximately equal to the
amount repaid to the trustee or trustees.
ARTICLE 8.
Change in Control Benefits
8.01 Change in Control Termination. The Corporation will provide or
cause to be provided to the Executive the rights and benefits described in
Section 8.03 hereof in the event that, during the term of this Agreement
(including any renewal terms), the Executive's employment by the Corporation
is terminated at any time within three (3) years following a "Change in
Control" (as hereinafter defined) either:
(a) by the Corporation for any reason other than the Executive's
fraudulent conduct in connection with his employment by the Corporation or
conviction of a felony; or
(b) by the Executive following the occurrence of any of the
following events:
(i) the assignment to the Executive of any duties or
responsibilities that are inconsistent with his position, duties,
responsibilities or status immediately preceding such Change in Control;
(ii) a reduction of the Executive's Base Salary, bonuses or
other compensation or benefits from those types or amounts in effect
immediately prior to the Change in Control; or
(iii) the relocation of the principal executive offices of
the Corporation or a change in the duties of the Executive which requires the
Executive to move his residence from the Buffalo, New York metropolitan area;
or
(c) by the Executive, if he shall determine in good faith that
following a Change in Control, he is no longer able to effectively discharge
his duties under this Agreement.
For purposes of this Agreement, if the Executive's employment with
the Corporation is terminated after the occurrence of a Change in Control (as
hereinafter defined) for any of the reasons described above in this Section
8.01, such termination of employment shall hereinafter be referred to as a
"Change in Control Termination."
In the event that the Executive's employment with the Corporation
is terminated within the three (3) years following a Change in Control and,
following the date the Executive's employment with the Corporation is
terminated, it is determined (in accordance with Section 6.04 hereof) that, at
the time the Executive's employment with the Corporation was terminated, the
Executive suffered from a Total and Permanent Disability (as defined in
Section 6.04 hereof) the Executive shall have the right to elect, in writing,
to receive the Change in Control benefits provided for by this Article 8 or
the disability benefits provided for by Section 6.02 hereof. Upon receipt by
the Corporation of such written election from the Executive, the Corporation
shall pay (or cause to be paid) to the Executive the Change in Control
benefits provided for by this Article 8 or the disability benefits provided
for by Section 6.02 hereof, whichever is elected by the Executive. The
Corporation shall not be entitled to object to or contest its obligation to
make such payments (or cause such payments to be made) as elected by the
Executive or the Executive's right to make any such election on the grounds
that the Executive suffered from a Total and Permanent Disability at the time
his employment was terminated. In addition, if the Executive has attained at
least age sixty (60) and the Executive elects to terminate his employment with
the Corporation for any of the reasons set forth above in this Section 8.01
and within three (3) years following the occurrence of a Change in Control,
the Corporation shall have no right to object to or challenge the right of the
Executive to receive any payments provided for under this Article 8 on the
grounds that the Executive was otherwise entitled to retire from his
employment with the Corporation pursuant to Section 3.05 hereof.
8.02 Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if: (a) any person or group (within
the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") but excluding the Corporation and each
of the Corporation's officers and directors, whether individually or
collectively), shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of 20% or more of the Corporation's outstanding
common stock otherwise than through a transaction arranged by or consummated
with the prior approval of the Corporation's Board of Directors; or (b) during
any period of three (3) consecutive years, individuals who at the beginning of
such period constitute the entire Board of Directors of the Corporation (and
any new director whose election to the Board of Directors of the Corporation
or whose nomination for election by the Corporation's stockholders was
approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period or whose election or
nomination for election was previously so approved) (hereinafter referred to
as the "Continuing Directors") shall cease, to constitute a majority of the
Corporation's Board of Directors; or (c) any consolidation or merger of the
Corporation is consummated, as a result of which, the Corporation is not the
continuing or surviving corporation or pursuant to which shares of the
Corporation's common stock would be converted into cash, securities or other
property, other than a merger or consolidation of the Corporation which would
result in voting securities of the Corporation immediately prior thereto
continuing to represent (either by remaining outstanding or being converted
into voting securities of the surviving entity) at least eighty percent (80%)
of the combined voting power of the Corporation or such surviving entity
immediately after such merger or consolidation (provided, however, that if the
Board of Directors of the Corporation adopts a resolution that is approved by
a majority of the Continuing Directors providing that such merger or
consolidation shall not constitute a "Change in Control" for purposes of this
Agreement, then such merger or consolidation shall not constitute a Change in
Control); or (d) the stockholders of the Corporation approve an agreement for
the sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Corporation; or (e) the stockholders of the Corporation approve any plan or
proposal for the liquidation or dissolution of the Corporation.
8.03 Payments on Change in Control Termination. If a Change in Control
Termination occurs the Corporation shall pay to the Executive within ten (10)
days after the date of such Change in Control Termination, a lump sum payment
equal to three (3) times the sum of: (a) the average of the Base Salary of the
Executive in effect during the three (3) year period ending on the date the
Change in Control Termination occurs; and (b) the average of the amount of all
bonuses awarded to or received by the Executive during the three (3) year
period ending on the date of the Change in Control Termination. In no event
shall the provisions of Section 280 G of the Code be deemed to restrict or
limit the amount of any payments which the Executive is entitled to upon the
occurrence of a Change in Control as provided for in this Section 8.03 or
under the terms of any of the Plans, the Deferred Comp Plan, the Incentive
Stock Option Plan or the Restricted Stock Plan.
8.04 Effect of Deferred Compensation. The amounts payable to the
Executive pursuant to Section 8.03 hereof shall be determined based on the
amount of the Base Salary and the amount of any bonus which is payable to the
Executive, whether or not the Executive actually receives payment of such Base
Salary or bonus as a result of a deferral made by the Executive of the receipt
of payment of any portion of such Base Salary or bonus as permitted by the
terms of the Deferred Comp Plan as applicable to the Executive.
8.05 Benefits Upon Death. If the Executive dies following a Change
in Control Termination but prior to the payment of the applicable lump sum
provided for in Section 8.03 above, the Corporation shall pay the applicable
lump sum described in Section 8.03 hereof to the Executive's personal
representative or the executor or administrator of his estate within ten (10)
days from the date such personal representative, executor or administrator is
appointed.
8.06 Effect of Change in Control Termination on Other Benefits.
(a) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the Executive's right to receive any
payments due to the Executive under the terms of any of the Plans or due under
the Deferred Comp Plan. All such payments will be made in accordance with the
provisions of the applicable document containing the terms of any Plan and the
terms of the Deferred Comp Plan. In addition, the occurrence of a Change in
Control Termination with respect to the Executive shall not affect the
obligation of the Corporation to pay to the Executive and, if applicable, to
the Executive's beneficiaries, the amounts described in Article 7 hereof as
provided for in such Article.
(b) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the obligation of the Corporation
under Section 2.09 hereof to pay the full amount of all premiums and other
costs associated with the maintenance by the Corporation of policies of life
insurance, long term disability insurance and medical insurance for the
benefit of the Executive, his spouse and dependents as required by Section
2.09 hereof.
(c) Except as set forth in Sections 8.06(a) and (b) hereof, any
payments required to be made to the Executive or his beneficiaries pursuant to
Sections 8.03 and 8.05 hereof shall, when received by the Executive, or his
beneficiaries, be in lieu of any payments otherwise provided with respect to
the Executive's termination of employment under any other severance pay or
other similar plan or policy maintained by the Corporation. The Corporation
may, in its sole discretion, change, replace or eliminate any retirement plan
or insurance policy described in Sections 8.06(a) and (b) above at any time,
but shall not do so after a Change in Control in a manner which would prevent
the Executive, his spouse and dependents from receiving any benefit which he
would otherwise have been entitled to receive either immediately preceding the
Change of Control or immediately preceding a Change in Control Termination.
8.07 Certain Additional Payments by the Corporation. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Corporation 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 (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties being hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (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.
(b) Subject to the provisions of Section 8.07(c) hereof, all
determinations required to be made under this Section 8.07, including whether
a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall
be made by Coopers & Lybrand, L.L.P. or any other nationally recognized firm
of certified public accountants (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Corporation and the Executive
within 15 business days of termination of the Executive's employment under
this Agreement, if applicable, or such earlier time as is requested by the
Executive or the Corporation. When calculating the amount of the Gross-Up
Payment, the Executive shall be deemed to pay:
(i) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which the
Gross-Up Payment is to be made, and
(ii) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from deduction of such state and local
taxes if paid in such year.
If the Accounting Firm has performed services for the person,
entity or group who caused the Change of Control, as described in Section 8.02
hereof or any affiliate thereof, the Executive may select an alternative
accounting firm from any nationally recognized firm of certified public
accountants. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive with an opinion that he has
substantial authority not to report any Excise Tax on his federal income tax
return. Any determination by the Accounting Firm shall be binding upon the
Corporation and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Corporation should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Corporation exhausts it remedies pursuant to
Section 8.07(c) hereof, and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Corporation to or for the benefit of the Executive.
(c) The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than ten business days after the
Executive knows of such claim and shall apprise the Corporation 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 thirty-day
period following the date on which it gives such notice to the Corporation (or
such shorter period ending on the date that any payment of taxes with respect
to such claim is due). If the Corporation 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 Corporation any information reasonably
requested by the Corporation relating to such claim,
(ii) take such action in connection with contesting such
claim as the Corporation 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 Corporation,
(iii) cooperate with the Corporation in good faith in order
to effectively contest such claim, and
(iv) permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 8.07(c), the Corporation shall control
all proceedings taken in connection with such contest and, at its sole option,
may pursue or forego 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 sue
for a refund or 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 Corporation shall determine; provided, however, that if the
Corporation directs the Executive to pay such claim and sue for a refund, the
Corporation 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 income tax, including interest or
penalties with respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further
provided that any extension of the statue of limitations relating to payment
of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder 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.
(d) If, after the receipt by the Executive of an amount advanced
by the Corporation pursuant to Section 8.07(c) hereof, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Corporation's complying with the requirements of Section
8.07(c)) promptly pay to the Corporation the amount of such refund (together
with any interest paid or credited thereon by the taxing authority after
deducting any taxes applicable thereto). If, after the receipt by the Execu-
tive of an amount advanced by the Corporation pursuant to Section 8.07(c)
hereof, a determination is made that the Executive shall not be entitled to
any refund with respect to such claim and the Corporation does not notify the
Executive in writing of its intent to contest such denial of refund prior to
the expiration of thirty days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid under Section 8.07(a) hereof. The forgiveness of
such advance shall be considered part of the Gross-Up Payment and subject to
gross-up for any taxes (including interest or penalties) associated therewith.
ARTICLE 9.
Severance and Effects of Termination
9.01 Effect of Termination for Cause. In the event the Executive's
employment with the Corporation is terminated for cause by the Corporation
pursuant to the provisions of Section 3.02 hereof, the Corporation shall pay
to the Executive any monthly installment of his Base Salary which is accrued
and unpaid as of the date of the Executive's termination at the monthly rate
then in effect and, thereafter, the Corporation shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder, and, except as otherwise
provided under the terms of Sections 9.06 and 9.07 hereof, no further
obligation to pay any other benefits provided to the Executive hereunder.
9.02 Effect of Termination Without Cause. (a) In the event the
Executive's employment with the Corporation is terminated by the Corporation
without cause pursuant to Section 3.03 hereof and prior to the date the
Executive attains age sixty-one (61), the Corporation shall, within ninety
(90) days following the termination of the Executive's employment, pay the
Executive in one lump sum payment, an amount equal to: (i) the greater of: (A)
two and one-half (2.5) times the sum of: (x) his Base Salary at the rate then
in effect; and (y) an amount equal to all bonuses paid or payable by the
Corporation to the Executive with respect to the fiscal year of the
Corporation which ends immediately prior to the date of such termination; or
(B) five (5) times the amount of the Executive's Base Salary, at the rate then
in effect; and (ii) any "Top Hat" retirement benefits to be provided to the
Executive pursuant to Article 7 hereof. In addition, if the Executive's
employment with the Corporation is terminated without cause pursuant to
Section 3.03 hereof and prior to the date the Executive attains age sixty-one
(61), the Corporation shall, as required by Section 2.09(a) hereof, continue
to provide the Executive with the group welfare benefits and any other life
insurance and long term disability insurance for the one (1) year period
following the date the Executive's employment with the Corporation is
terminated, all as more particularly provided for by Section 2.09(a) hereof.
(b) In the event that the Executive's employment is terminated,
without cause, pursuant to Section 3.03 hereof, and, at the time the
Executive's employment is terminated, the Executive has attained at least age
sixty-one (61), the Corporation shall, within ninety (90) days following the
termination of the Executive's employment, pay to the Executive in one lump
sum payment: (i) any "Top Hat" retirement benefits to be provided to the
Executive pursuant to Article 7 hereof; and (ii) the amount described in
subparagraph 9.02(a)(i) above, reduced by twenty percent (20%) for each year
or part thereof by which the Executive's age exceeds age sixty (60) so that,
if the Executive's employment with the Corporation is terminated, without
cause, as provided for by Section 3.03 hereof, at any time after the Executive
attains age sixty-five (65), the Executive shall, except as otherwise provided
by Sections 2.09(a), 9.06 and 9.07 hereof, not be entitled to payment of any
benefits other than the "Top Hat" retirement benefits required to be provided
to the Executive pursuant to Article 7 hereof. If the Executive's employment
with the Corporation is terminated without cause pursuant to Section 3.03
hereof and after the Executive attains age sixty-one (61), the Corporation
shall, as required by Section 2.09(a) hereof, continue to provide the
Executive with the group welfare benefits and any other life insurance and
long term disability insurance for the one (1) year period following the date
the Executive's employment with the Corporation is terminated, all as more
particularly provided for by Section 2.09(a) hereof.
(c) Except as otherwise provided above in this Section 9.02,
following the termination of the Executive's employment, without cause, as
provided for by Section 3.03 hereof, the Corporation shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder, hereof and, except as
otherwise provided in Sections 9.06 and 9.07 hereof, no further obligation to
provide any other benefits otherwise provided to the Executive hereunder.
9.03 Effect of Voluntary Termination. In the event the Executive
voluntarily terminates his employment with the Corporation pursuant to Section
3.04 hereof, the Corporation shall pay to the Executive any monthly
installment of his Base Salary which is accrued and unpaid as of the date of
the Executive's termination at the monthly rate then in effect and any "Top
Hat" retirement benefits to be provided to the Executive pursuant to Article 7
hereof. Except as otherwise provided above in this Section 9.03, following
the Executive's voluntary termination of his employment with the Corporation
as provided for by Section 3.04 hereof, the Corporation shall have no further
obligation to pay to the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder and, except as otherwise
provided by Sections 9.06 and 9.07 hereof, no further obligation to provide
any other benefits otherwise provided to the Executive hereunder.
9.04 Effect of Retirement. In the event the Executive terminates his
employment with the Corporation by reason of his retirement as provided for in
Section 3.05 hereof, the Corporation shall pay to the Executive: (a) any
monthly installment of his Base Salary which is accrued and unpaid as of the
date of the Executive's retirement at the monthly rate then in effect; (b) an
amount equal to the amount of all bonuses which would have been payable to the
Executive by the Corporation pursuant to Section 2.02 hereof if the Executive
had remained in the employ of the Corporation until the end of the fiscal year
of the Corporation in which the Executive retires and assuming that average
monthly earnings of the Corporation for the portion of the Corporation's
fiscal year which has elapsed prior to the date the Executive retires
continues at such rate after the Executive retires through the end of the
fiscal year of the Corporation in which the Executive retires; and (c) any
"Top Hat" retirement benefits to be provided to the Executive pursuant to
Article 7 hereof. Except as otherwise provided for above in this Section
9.04, following the Executive's retirement from employment with the
Corporation as provided for by Section 3.05 hereof, the Corporation shall have
no further obligation to pay to the Executive any additional Base Salary,
compensation or bonus, no further obligation to provide any medical, life,
disability or other insurance benefits to the Executive hereunder and, except
as provided by Sections 9.06 and 9.07 hereof, no further obligation to provide
any other benefits otherwise provided to the Executive hereunder.
9.05 Effect of Termination Due to Disability. In the event the
Executive's employment with the Corporation is terminated as a result of his
suffering of a Total and Permanent Disability as described in Section 6.04
hereof, the Corporation shall pay to the Executive the amounts described in
Section 6.02 hereof and any "Top Hat" retirement benefits to be provided to
the Executive pursuant to Article 7 hereof. In addition, in the event the
Executive's employment is terminated by reason of his suffering of a Total and
Permanent Disability as described in Section 6.04 hereof, the Corporation
shall, as required by Section 2.09 hereof, continue to pay all premiums
necessary to maintain medical and life insurance for the life of the
Executive, medical insurance for the Executive's spouse for the life of the
Executive's spouse and medical insurance for the Executive's dependents until
such dependents reach age 21. As more particularly provided for by Section
2.09 hereof, the amount of the medical and life insurance coverage which shall
be provided to the Executive, his spouse and dependents following his
suffering of a Total and Permanent Disability shall be at least reasonably
comparable to the amount of the medical and life insurance coverage which was
in effect for the Executive, his spouse and dependents immediately prior to
the date the Executive's employment with the Corporation is terminated as a
result of his suffering of a Total and Permanent Disability. Except as
otherwise provided for by Sections 2.09 and 6.02 hereof and above in this
Section 9.05, following the Executive's suffering of a Total and Permanent
Disability, the Corporation shall have no further obligation to pay to the
Executive any additional Base Salary, compensation or bonus, no further
obligation to provide any medical, life, disability or other insurance
benefits to the Executive hereunder and, except as otherwise provided by
Sections 9.06 and 9.07 hereof, no further obligation to provide any other
benefits otherwise provided to the Executive hereunder.
9.06 Deferred Comp Plan Payments. Notwithstanding anything to the
contrary contained in this Agreement, upon termination of the Executive's
employment with the Corporation for any reason, the Executive shall be
entitled to payment in full of all amounts payable to the Executive under the
terms of the Deferred Comp Plan at the time and in the manner provided for by
the terms of the Deferred Comp Plan.
9.07 Retirement Plan Payments. Nothing in this Agreement shall be
deemed to limit the Executive's rights to receive or the obligations of the
Corporation to pay or provide for the Executive and his beneficiaries, any
continuation coverage as required by ERISA or any retirement or other benefits
accrued by the Executive at any time under the terms of any retirement plans
maintained by the Corporation which are subject to the requirements of ERISA
or otherwise satisfy the requirements of Section 401 of the Code.
ARTICLE 10.
Miscellaneous
10.01 Litigation Expenses. In the event that any dispute shall arise
under this Agreement between the Executive and the Corporation which is
related to the Change in Control Termination provisions of Article 8 hereof,
the Corporation shall be responsible for the payment of all reasonable
expenses of all parties to such dispute, including reasonable attorney fees,
regardless of the outcome thereof.
10.02 Amendments. This Agreement may not be amended or modified
orally, and no provision hereof may be waived, except in a writing signed by
the parties hereto.
10.03 Assignment. This Agreement cannot be assigned by either party
hereto except with the written consent of the other
10.04 Prior Agreements. This Agreement shall supersede and replace any
and all prior agreements between the Corporation and the Executive, whether
express or implied; provided, however, that, notwithstanding the foregoing,
nothing contained in this Agreement shall be deemed to supersede, replace,
amend or modify the terms of the Split Dollar Plan. Except as specifically
provided herein, nothing contained in this Agreement shall be construed to
constitute a waiver by the Executive or his beneficiaries of any rights or
claims under any existing pension or retirement plans of the Corporations.
10.05 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the personal representatives and successors in interest of
the Executive and any successors in interest of the Corporation.
10.06 Applicable Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed wholly within such State except with respect to the
internal affairs of the Corporation and its respective stockholders, which
shall be governed by the General Corporation Law of the State of Delaware.
10.07 Notices. All notices and other communications given pursuant to
this Agreement shall be deemed to have been properly given or delivered if
hand-delivered, or if mailed, by certified mail or registered mail postage
prepaid, addressed to the Executive at the address first above written or if
to the Corporation, at its address first above written with a copy to the
attention of Gerald S. Lippes, Secretary, 700 Guaranty Building, Buffalo, New
York 14202. From time to time, any party hereto may designate by written
notice any other address or party to which such notice or communication or
copies thereof shall be sent.
10.08 Severability of Provisions. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and this Agreement shall be interpreted as if such invalid,
illegal or unenforceable provision was not contained herein.
10.09Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Executive and the Corporation have caused
this Agreement to be executed as of the day and year first above written.
MARK IV INDUSTRIES, INC.
By: /s/ Sal H. Alfiero /s/ Richard L. Grenolds
Name: Sal H. Alfiero Richard L. Grenolds
Title: Chairman of the Board
EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 1st day of March, 1995, by and between
MARK IV INDUSTRIES, INC., a Delaware corporation, with offices at 501 John
James Audubon Parkway, Amherst, New York 14228 ("Mark IV"), and Douglas J.
Fiegel, an individual residing at 57 Fieldstone, Grand Island, New York 14072
(the "Executive").
RECITALS:
WHEREAS, the Executive is expected to make a major contribution to the
profitability, growth and financial strength of the Corporation; and
WHEREAS, the Corporation has determined that retaining the services of
the Executive is in the best interests of the Corporation and its stockholders
and, accordingly, the Corporation desires to secure the services of the
Executive on behalf of the Corporation;
CONSIDERATION:
NOW, THEREFORE, in consideration of the conditions and covenants set
forth in this Agreement, the parties hereto agree as follows:
ARTICLE 1.
Employment and Duties
1.01 Employment. The Corporation hereby agrees to, and does hereby
employ the Executive, and the Executive hereby agrees to and does hereby
accept employment, by the Corporation as the Corporation's Vice President -
Financial Control and Reporting. It is contemplated that the Executive will
continue to serve as Vice President - Financial Control and Reporting, subject
to the provisions of this Agreement and the right of the Board of Directors of
the Corporation to elect new officers.
1.02 Duties. During the period of his employment under this Agreement
the Executive shall perform such executive duties and responsibilities as may
be assigned to him, from time to time, by the Board of Directors of the
Corporation and shall be subject, at all times, to the control of the
Corporation's Board of Directors.
ARTICLE 2.
Compensation and Fringe Benefits
2.01 Base Salary. During the period of the Executive's employment
hereunder, the Corporation shall pay to the Executive, an annual salary ("Base
Salary") of not less than $141,000.00 payable in substantially equal monthly
installments. The Board of Directors of the Corporation, through it's
Compensation Committee, shall in good faith review the Base Salary of the
Executive, on an annual basis, and increase the Base Salary of the Executive
if, in the Compensation Committee's judgment, such increase is advisable.
2.02 Bonuses. The Executive shall be entitled to participate in the
Mark IV Industries, Inc. Executive Bonus Plan, as amended, (the "Executive
Bonus Plan") and to receive bonuses in accordance with the terms thereof. In
addition, the Executive shall be entitled to participate in the Mark IV
Industries, Inc. Enhanced Executive Incentive Plan, (the "Enhanced Incentive
Plan") and to receive bonuses in accordance with the terms thereof. The Board
of Directors of the Corporation may also, in its discretion and from time to
time, award such additional bonuses to the Executive as it may from time to
time determine.
2.03 Stock Based Incentive Compensation. The Executive shall be
eligible to receive incentive stock option awards under the terms of the Mark
IV Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan, as
amended, (the "Incentive Stock Option Plan") and restricted stock awards under
the terms of the Mark IV Industries, Inc. 1992 Restricted Stock Plan, as
amended, (the "Restricted Stock Plan"); provided that, the determination of
whether or not incentive stock options and restricted stock shall be awarded
to the Executive and the amount, if any, of the incentive stock options or
restricted stock to be awarded to the Executive shall be made by the
Compensation Committee of the Corporation's Board of Directors.
The Executive shall also, in the discretion of the Compensation
Committee of the Corporation's Board of Directors, be eligible to receive
awards of non-qualified stock options, stock appreciation rights and any other
stock based incentive compensation awards which may, from time to time, be
awarded to other executive officers of the Corporation pursuant to the terms
of any omnibus plan or any other plan which may, from time to time, be adopted
by the Board of Directors of the Corporation.
2.04 Reimbursement of Expenses. The Corporation shall reimburse the
Executive for all reasonable expenses which the Executive may, from time to
time, incur on behalf of the Corporation in the performance of his
responsibilities and duties under this Agreement, provided that the Executive
accounts to the Corporation for such expenses in the manner prescribed by the
Corporation.
2.05 Deferred Comp Plan. During the term of this Agreement, the
Executive shall receive his proportionate share of any amounts allocated
annually to participants in the Non-Qualified Plan of Deferred Compensation of
Mark IV Industries, Inc., as amended, (hereinafter the "Deferred Comp Plan").
In addition, during the term of this Agreement, the Executive shall be
permitted to defer the receipt of payment of all or any portion of the Base
Salary to which the Executive is entitled under the terms of this Agreement
and to defer the receipt of payment of all or any portion of the amount of any
bonus or other incentive compensation (which is otherwise payable immediately)
to which the Executive may become entitled during the term of this Agreement,
all in the manner permitted by the terms of the Deferred Comp Plan.
2.06 Tax Qualified Plans. The Executive shall be entitled to
participate in all tax qualified pension, profit sharing or other retirement
or 401(k) plans maintained, from time to time, by the Corporation for the
employees of the Corporation who are employed at the Corporation's corporate
headquarters.
2.07 Group Welfare Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Executive shall be eligible
to participate in the Mark IV Industries, Inc. and Subsidiaries Group Welfare
Benefit Program as applicable to exempt salaried employees of the Corporation
whose primary place of employment is the Corporation's corporate headquarters
(hereinafter the "Flex IV Plan"). As provided for by the terms of the Flex IV
Plan, the Executive shall be entitled to elect to participate in one or more
of the group welfare benefit programs which are contained within the Flex IV
Plan and available to exempt salaried employees of the Corporation whose
primary place of employment is the Corporation's corporate headquarters,
including, but not limited to: (a) medical insurance coverage; (b) dental
insurance coverage; (c) employee life insurance coverage; (d) accidental death
and dismemberment insurance coverage; (e) dependent life insurance coverage;
(f) long term disability insurance coverage; (g) health care spending account
benefits; and (h) dependent care spending account benefits. In the event that
the Flex IV Plan is amended during the term of this Agreement to increase or
reduce the number or type of group welfare benefit programs which are
available to exempt salaried employees of the Corporation whose principal
place of employment is the Corporation's corporate headquarters, the Executive
shall thereafter be eligible to elect to participate in any one or more of the
new group welfare programs which are available under the terms of the Flex IV
Plan, as amended. Notwithstanding the foregoing, except as provided in
Sections 2.08(b) and (c) hereof, the Corporation shall have no obligation to
maintain or provide such benefits to the Executive unless the Executive pays
to the Corporation, on a monthly basis, the employee portion of any costs
associated with the maintenance and provision of such benefits by the
Corporation for exempt salaried employees of the Corporation's corporate
headquarters, as determined under the provisions of the Flex IV Plan (or such
greater or lesser amount as may, from time to time, be required to be
contributed by exempt salaried employees of the Corporation's corporate
headquarters toward the cost of maintaining and providing such benefits to
such employees). The Corporation shall also pay all premiums necessary to
maintain a business travel accident insurance policy for the Executive which
provides the Executive with coverage and benefits which are at least
reasonably comparable to the business travel accident insurance coverage in
effect for the Executive as of the date of this Agreement.
2.08 Continuation of Insurance Coverage. (a) If the Executive's
employment with the Corporation is terminated by the Corporation, without
cause, as permitted by Section 3.03 hereof, the Corporation shall, for a
period of one (1) year following the date the Executive's employment with the
Corporation is terminated, maintain and pay any premiums necessary to maintain
group welfare benefits for the Executive which are the same as the group
welfare benefits which were in effect for the Executive under the terms of the
Flex IV Plan immediately prior to the termination of the Executive's
employment. Notwithstanding the foregoing, the Corporation shall have no
obligation to maintain or provide such group welfare benefits to the Executive
unless the Executive pays to the Corporation, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
benefits by the Corporation to exempt salaried employees of the Corporation's
corporate headquarters as determined under the provisions of the Flex IV Plan
(or such greater or lesser amount as may, from time to time, be required to be
contributed by exempt salaried employees of the Corporation's corporate
headquarters toward the cost of maintaining and providing such benefit to such
employees). At the end of the one (1) year period following the date on which
the Executive's employment is terminated (without cause) or, if earlier, at
such time that the Corporation shall terminate the group welfare benefit
coverage being provided to the Executive by reason of the Executive's failure
to pay the employee portion of any costs associated with the maintenance and
provision of such benefits, the Executive shall be entitled to elect to
receive continuation coverage with respect to any group health plan benefits
which are being provided to the Executive under the Flex IV Plan, in
accordance with the applicable continuation coverage provisions of section
4980B of the Internal Revenue Code of 1986, as amended (hereinafter the
"Code") and the applicable continuation coverage provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
(b) If the Executive's employment with the Corporation is
terminated as a result of the Executive's suffering of a Total and Permanent
Disability as defined in Section 6.04 hereof, the Corporation shall continue
to maintain and pay the full amount of all premiums necessary to maintain: (i)
medical and life insurance coverage for the benefit of the Executive for the
remainder of the Executive's life; (ii) medical insurance coverage for the
benefit of the Executive's spouse for the remainder of her life; and (iii)
medical insurance coverage for the benefit of the Executive's dependents until
such dependents reach age 21.
(c) If the Executive's employment with the Corporation is
terminated as a result of a Change in Control Termination as defined in
Section 8.01 hereof, the Corporation shall continue to maintain and pay the
full amount of any premiums necessary to maintain: (i) medical, long term
disability and life insurance coverage for the benefit of the Executive for
the remainder of the Executive's life; (ii) medical insurance coverage for the
benefit of the Executive's spouse for the remainder of her life; and (iii)
medical insurance coverage for the benefit of the Executive's dependents until
such dependents attain age 21.
(d) The amount of the life insurance which is required to be
provided to the Executive pursuant to Sections 2.08(b) and (c) above shall
provide a death benefit which is at least equal to the sum of: (i) the amount
of the life insurance, if any, which is maintained for the Executive other
than under the terms of the Flex IV Plan; and (ii) the largest dollar amount
of the death benefit which could have been provided to the Executive's
beneficiaries under any life insurance coverage which was available to the
Executive under the terms of the Flex IV Plan immediately prior to the date
the Executive's employment is terminated as a result of his suffering of a
Total and Permanent Disability or the date on which the Change in Control
occurs, whichever is applicable.
(e) The terms of the long term disability insurance coverage
which is required to be provided to the Executive pursuant to Section 2.08(c)
hereof shall provide an annual disability income to the Executive which is not
less than the total annual amount of the disability income which was payable
to the Executive under all policies of long term disability insurance
maintained for the benefit of the Executive (whether or not provided under for
the Executive the terms of the Flex IV Plan) immediately prior to the date the
Change in Control occurs. In addition, the terms of the long term disability
insurance which is required to be provided to the Executive pursuant to
Section 2.08(b) above shall contain a definition of total and permanent
disability which is at least reasonably comparable to the most liberal
definition of total and permanent disability (in terms of the ease with which
such definition can be met) contained in any long term disability insurance
policy maintained for the Executive immediately prior to the date the Change
in Control occurs. Finally, the terms of the long term disability insurance
which is to be provided to the Executive pursuant to Section 2.08(c) above
shall provide that the disability income payment to be made to the Executive
as described above will continue to be made to the Executive for life.
(f) The type and amount of the medical insurance coverage which
is required to be provided to the Executive pursuant to Sections 2.08(b) and
(c) above shall be at least reasonably comparable to the most comprehensive
medical insurance coverage which was available to the Executive, his spouse
and dependents under the Flex IV Plan immediately prior to the date on which
the Executive's employment with the Corporation is terminated as a result of
his suffering of a Total and Permanent Disability or the date on which the
Change in Control occurs (whichever is applicable); provided that, in no event
shall the maximum amount of the annual deductible under such medical insurance
coverage exceed the amount of the annual deductible which was in effect with
respect to the most comprehensive medical insurance coverage which was
available to the Executive, his spouse and dependents under the Flex IV Plan
immediately prior to the date on which the Executive's employment is
terminated as a result of his suffering of a Total and Permanent Disability or
the date on which the Change in Control occurs, whichever is applicable.
2.09 Vacation and Other Benefits. During each full year of the
Executive's employment hereunder, the Executive shall be entitled to paid
vacations for such reasonable periods of time as may be determined by the
Executive. The Executive shall also be entitled to receive all other
employment benefits and participate in such other employee benefit plans as
may, from time to time, be provided or maintained by the Corporation for its
executive officers.
ARTICLE 3.
Term and Termination
3.01 Term. The period of employment of the Executive under this
Agreement shall commence January 1, 1995 ("Effective Date") and continue
through December 31, 1997. Thereafter, unless otherwise terminated by the
Corporation pursuant to Section 3.03 hereof, effective January 1, 1998 and on
each January 1 thereafter, the term of this Agreement shall automatically be
extended for an additional period of twelve (12) months.
3.02 Termination For Cause. Notwithstanding the provisions of Section
3.01 hereof, the Corporation may terminate the Executive's employment
hereunder at any time for cause, by delivering to the Executive a written
notice of termination to the Executive setting forth the date on which such
termination is to be effective and specifying in reasonable detail the facts
and circumstances claimed to provide a basis for the termination.
For purposes of this Agreement, the Corporation shall have "cause"
to terminate the Executive's employment hereunder upon the Executive's: (a)
willful and continued failure to substantially perform his duties hereunder
other than any such failure resulting from the Executive's incapacity due to
physical or mental illness; (b) illegal or criminal conduct; (c) intentional
falsification of records or reports or any other act or acts of dishonesty
constituting a felony and resulting, or intended to result, directly or
indirectly, in personal gain or enrichment of the Executive at the expense of
the Corporation; (d) excessive and/or chronic use of alcohol, narcotics or
other controlled substances (other than under the supervision of a licensed
physician); or (e) willful engagement in gross misconduct materially injurious
to the Corporation.
3.03 Termination Without Cause. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Corporation may, at any time on
or after December 31, 1997, terminate the Executive's employment, without
cause, by delivering a written notice of termination to the Executive which
sets forth the date on which such termination is to be effective; provided
that, the effective date of any such termination shall not be less than ninety
(90) days following the date on which such written notice of termination is
delivered to the Executive. Notwithstanding the foregoing, if the Executive
has attained at least age sixty-five (65), the written notice of termination
which is delivered to the Executive pursuant to this Section 3.03 shall permit
the Executive, at the Executive's option, to retire from his employment with
the Corporation pursuant to Section 3.05 hereof.
3.04 Termination by the Executive. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Executive may terminate his
employment hereunder at any time by delivering a written notice of termination
to the Corporation which sets forth the date on which such termination is to
be effective; provided that, the effective date of any such termination shall
not be less than ninety (90) days following the date on which such written
notice of termination is delivered to the Corporation.
3.05 Retirement. The Executive may retire his employment with the
Corporation at any time following his attainment of age sixty (60) by
delivering to the Corporation a written notice of his intent to terminate his
employment with the Corporation and retire, which written notice shall set
forth the date on which such retirement (and its related termination of
employment) is to be effective. Thereafter, provided that the effective date
of such retirement is not less than thirty (30) days following the date on
which such written notice of termination is delivered to the Corporation the
Executive shall be permitted to terminate his employment with the Corporation
and retire at the time stated in the written notice of termination delivered
by the Executive to the Corporation.
In addition to the foregoing, in the event that the Executive has
attained at least age sixty-five (65) and has received a written notice of
termination from the Corporation pursuant to Section 3.03 and, as required by
Section 3.03 hereof, such written notice of termination provides the
Executive, at his option, the right to retire, the Executive may exercise such
right and retire from his employment with the Corporation by delivering
written notice of his desire to exercise such right and retire to the
Corporation no later than sixty (60) days following the date of the
Executive's receipt of the written notice of termination from the Corporation
provided for by Section 3.03 hereof. In the event that the Executive elects
to retire in connection with the Executive's receipt of a written notice of
termination from the Corporation pursuant to Section 3.03 hereof, the
Executive's retirement shall be effective at the time stated in the written
notice delivered to the Corporation by the Executive in connection with the
Executive's exercise of his election to retire.
3.06 Effect of Notice of Intent to Terminate. Upon delivery by the
Corporation to the Executive of a written notice of intent to terminate, the
Executive's employment with the Corporation shall be terminated, effective at
the time stated in such written notice of intent to terminate, provided that,
if applicable, the effective date of such termination as stated in the notice
of intent to terminate complies with the advance notice of termination
requirements of Section 3.03 hereof. In addition, upon the Executive's
delivery to the Corporation of a written notice of intent to terminate
(whether or not such termination is intended to be a retirement) the
Executive's employment with the Corporation shall be terminated effective at
the time stated in such written notice of intent to terminate, provided that
the effective date of such termination as stated in the notice of intent to
terminate complies with the applicable advance notice of termination
requirements of Sections 3.04 and 3.05 hereof.
ARTICLE 4.
Confidentiality; Non-Compete Provisions
4.01 Confidentiality. During the period of the Executive's employment
hereunder the Executive agrees that he will not, without the written consent
of the Board of Directors of the Corporation, disclose to any person (other
than a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of his duties as an executive
of the Corporation or to a person as required by any order or process of any
court or regulatory agency) any material confidential information obtained by
the Executive while in the employ of the Corporation with respect to any
management strategies, policies or techniques or with respect to any products,
improvements, formulae, designs or styles, processes, customers, methods of
distribution, or methods of manufacture of the Corporation or any of its
subsidiaries; provided, however, that confidential information shall not
include any information known generally to the public (other than as a result
of unauthorized disclosure by the 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 Corporation.
4.02 Non-Compete. During a period of two (2) years after the date of
any termination of the Executive's employment hereunder, the Executive will
not, directly or indirectly, own, manage, operate, control or participate in
the ownership, management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any financial
interest in, or aid or assist anyone else in the conduct of, any business
which competes with any business conducted by the Corporation or with any
group, division or subsidiary of the Corporation in any geographic area where
such business is being conducted at the time of such termination (any such
business being hereinafter referred to as a "Competitive Operation").
Ownership by the Executive of 2% or less of the voting stock of any publicly
held corporation shall not constitute a violation of this Section 4.02.
4.03 Competitive Operation. For purposes of Section 4.02 hereof: (a)
a business shall not be deemed to be a Competitive Operation unless: (i) 25%
or more of the consolidated gross sales and operating revenues of the
Corporation is derived from such business; or (ii) 25% or more of the
consolidated net income of the Corporation is derived from such business; or
(iii) 25% or more of the consolidated assets of the Corporation are devoted to
such business; and (b) a business which is conducted by the Corporation at the
time of the Executive's termination and which subsequently is sold or
discontinued by the Corporation shall not, subsequent to the date of such sale
or discontinuance, be deemed to be a Competitive Operation within the meaning
of Section 4.02 hereof.
ARTICLE 5.
Death Benefits
5.01 Death Benefits. If the Executive dies during the term of his
employment hereunder, in addition to any death benefits payable under the
terms of any life insurance policies maintained by the Corporation on the life
of the Executive, any death benefits payable on account of the death of the
Executive under the terms of the Deferred Comp Plan and any death benefits
payable on account of the death of the Executive under the terms of any tax
qualified retirement plans maintained by the Corporation, the Corporation
shall, within ninety (90) days following the Executive's death, pay to the
estate of the Executive a death benefit equal to fifty percent (50%) of the
Executive's Base Salary at the rate in effect on the date of the Executive's
death. In addition, if the Corporation pays a bonus to its executive
officers for the fiscal year of the Corporation in which the Executive's death
occurs, at the time the Corporation pays such bonuses to its executive
officers for such fiscal year: (a) if the Executive's death occurs during the
first six (6) months of the Corporation's fiscal year, the Corporation shall
pay to the Executive's estate an amount equal to the fifty percent (50%) of
the amount of all bonuses which would have been payable to the Executive
pursuant to Section 2.02 hereof for the fiscal year of the Corporation in
which the Executive's death occurs; and (b) if the Executive's death occurs at
any time after the first six (6) months of the Corporation's fiscal year, the
Corporation shall pay to the Executive's estate an amount equal to the amount
of all bonuses which would have been payable to the Executive pursuant to
Section 2.02 hereof for the fiscal year of the Corporation in which the
Executive's death occurs.
5.02 Continuation of Medical Insurance Coverage. If the Executive dies
during the term of this Agreement and his spouse or dependents are still
living, the Corporation shall maintain and pay any premiums needed to provide
medical insurance coverage for the benefit of the Executive's spouse for the
remainder of her life and medical insurance coverage for the benefit of the
Executive's dependents until such dependents attain age 21; provided that, the
Corporation shall not be obligated to continue to provide such medical
insurance coverage to the Executive's spouse and dependents unless the
Executive's spouse and dependents (as the case may be) pay to the Corporation,
on a monthly basis, the amount which is required to be contributed by exempt
salaried employees of the Corporation's corporate headquarters toward the cost
of their medical insurance coverage, as determined as of the date of the
Executive's death. The type and amount of the medical insurance coverage to
be provided to the Executive's spouse and dependents pursuant to this Section
5.02 shall be at least reasonably comparable to the type and amount of the
most comprehensive medical insurance coverage which was available to the
Executive, his spouse and dependents under the Flex IV Plan immediately prior
to the date of the Executive's death; provided that, in no event shall the
maximum amount of the annual deductible under such medical insurance coverage
exceed the amount of the annual deductible which was in effect with respect to
the most comprehensive medical insurance coverage which was available to the
Executive, his spouse and dependents under the terms of the Flex IV Plan
immediately prior to the date of the Executive's death. For purposes of this
Agreement, the term "dependents" shall have the same meaning as contained in
Section 152 of the Code.
ARTICLE 6.
Disability Benefits
6.01 Short-Term Disability. Except as otherwise provided in Section
6.02 hereof, in the event the Executive becomes disabled and is unable to
perform his duties hereunder, there shall be no reduction in the amount of the
Executive's Base Salary or any other benefits payable to him under this
Agreement.
6.02 Long-Term Disability. If, during the term of this Agreement, it
is determined that the Executive suffers from a Total and Permanent Disability
(as hereinafter defined), then, effective on the last day of the month in
which such determination is made, the Executive's employment hereunder shall
be deemed to be terminated. Upon such termination, the Corporation shall, in
addition to maintaining medical insurance coverage for the Executive as
required by Section 2.08 hereof, pay to the Executive in equal monthly
installments, for each twelve (12) month period which elapses during the five
(5) year period beginning on the day immediately following the date of such
deemed termination and any anniversary thereof (an "Anniversary Date"), an
amount equal to, his Base Salary, at the rate in effect on the date his
employment is terminated, up to a maximum of $100,000 per year (adjusted as
set forth below), less the amounts of all social security, retirement or
disability benefits payable to the Executive for each such twelve (12) month
period by any agency of the United States Government or the State of New York.
6.03 Cost of Living Adjustment. On each Anniversary Date, the $100,000
per year limit contained in Section 6.02 hereof shall be adjusted on a
cumulative basis for each annual increase in the U. S. Department of Labor
Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and
Clerical Workers, New York, New York, 1982-84 = 100 measured between the month
prior to the first month in which such compensation payments were made and the
month prior to the commencement of each such successive year.
6.04 Determination of Total and Permanent Disability. Any question as
to the existence or extent of disability of the Executive upon which the
Executive and the Corporation cannot agree shall be determined by a qualified
independent physician selected by the Executive and approved by the
Corporation (or, if the Executive is unable to make such selection, as
selected by any adult member of his immediate family). For purposes of this
Agreement, the Executive shall be deemed to suffer from a Total and Permanent
Disability if it is determined that the Executive is physically or mentally
unable to substantially perform his duties under this Agreement for a period
of twelve (12) consecutive months. The determination of any question as to
disability under this Section 6.04 by such physician shall be made in writing
to the Corporation and to the Executive and shall be final and conclusive for
all purposes of this Agreement.
ARTICLE 7.
Top Hat Benefits
7.01 "Top Hat" Benefits. In addition to the compensation and other
benefits otherwise provided for hereunder, if the Executive's employment is
terminated for any reason, the Executive and/or his beneficiaries shall be
entitled to receive the retirement, disability and death benefits they would
have been entitled to receive under the applicable provisions of any tax
qualified retirement plans maintained by the Corporation and in which the
Executive is or was a participant at any time prior to the termination of his
employment including, without limitation, any pension, profit sharing, 401(k)
or other comparable plans (individually a "Plan" and collectively the "Plans")
pursuant to the provisions of the Plans as in effect during the Executive's
employment but in any event, computed without reference to: (a) any deferral
of Base Salary or bonuses made by the Executive pursuant to the terms of the
Deferred Comp Plan; (b) any restrictions in the Plans upon the use of employer
contributions for an employee who is among the twenty-five (25) highest paid;
(c) any restrictions in the Plans upon the maximum benefits payable pursuant
to the Code; (d) any limitations on the amount of the Executive's compensation
that may be taken into account under the Plans pursuant to Section 401(a)(17)
of the Code; (e) any limitations on the amount of the annual benefit which may
be accrued by the Executive under the Plans pursuant to Section 415 of the
Code; or (f) any other restriction on the Executive's benefits as determined
under the Plans which are in effect at any time pursuant to the Code or ERISA,
(the restrictions described in (a), (b), (c), (d), (e) and (f) above being
hereinafter collectively referred to as the "Restrictions").
7.02 Form and Timing of Payments. At the time the Executive or his
beneficiaries is or are entitled to payment of any benefits under the terms of
any Plan, the Corporation shall pay to the Executive, from its general assets,
the difference between the amount which would, but for the Restrictions, have
been paid to the Executive or his beneficiaries under the terms of such Plan
(as determined pursuant to Section 7.04 hereof) and the amount which is
actually paid or payable to the Executive or his beneficiaries under the terms
of any such Plan. Any amount payable to the Executive or his beneficiaries
under the terms of this Article shall be available for payment to the
Executive or his beneficiaries in any form provided for by the applicable Plan
and shall be paid to the Executive or his beneficiaries in the form elected by
the Executive or his beneficiaries.
7.03 Lump Sum Option. If the Executive requests a lump sum
distribution under the Plan or Plans, and is denied the request or, if there
is no lump sum distribution option available under the Plan or Plans and the
Executive states in writing that he would have otherwise elected to receive a
lump sum distribution, the Corporation shall pay the Executive, in cash, an
amount equal to the benefit to which the Executive would have been entitled as
a lump sum under each Plan from which the Executive would have elected a lump
sum, determined without regard to the Restrictions, regardless of the payment
form in which the benefit would otherwise have been payable under the Plan or
Plans. The Corporation shall also pay the Executive an additional amount in a
lump sum so that the total amount received by the Executive, net of all
federal, state, and local taxes imposed upon the Executive as a result of the
lump sum payment and this additional amount, is equal to the maximum amount
which would have been paid to the Executive as a lump sum distribution under
the terms of the Plan (determined without regard to the Restrictions) which
lump sum distribution would have been eligible for tax free rollover treatment
under Section 402 of the Code. Prior to the making of any lump sum payment to
the Executive under this Section, the Executive and, if the Executive is
married, the Executive's spouse shall waive all benefits payable to him, his
spouse or his beneficiaries under any such Plan or Plans, and shall execute
any and all releases or other instruments to effect such waiver. Such waiver
and releases also will require payment to the Corporation of any amounts
received by the Executive or his beneficiaries under such Plan or Plans.
7.04 Determination of "Top Hat" Payments. The amount of retirement and
death benefits which would, but for the Restrictions, have been payable to the
Executive and his beneficiaries under the Plans shall be determined using the
actual number of years of service completed by the Executive and the actual
amount of Base Salary and bonuses which is payable to the Executive (whether
or not the Executive actually receives payment of any such Base Salary or
bonus as a result of a deferral made by the Executive pursuant to the terms of
the Deferred Comp Plan) as determined by the provisions of the applicable Plan
without regard to the Restrictions. In addition, if, in the case of any
defined contribution Plan or any combination of defined contribution Plans,
the amount which is actually contributed to such Plan or Plans by the
Corporation on behalf of the Executive is limited by operation of the
Restrictions, the amount of the retirement, disability and death benefits
which would, (but for the Restrictions), have been payable to the Executive
and his beneficiaries under any such defined contribution Plans shall be
determined by assuming that: (a) the Corporation made a contribution to such
Plan or Plans for the benefit of the Executive for each plan year (including
plan years ending prior to the effective date of this Agreement if the
Executive, at such time, was also a participant in the Deferred Comp Plan) in
which the actual contribution of the Corporation to such Plan or Plans is
limited by operation of the Restrictions, at the time that the Corporation
actually makes its contribution to such Plan or Plans for such plan year and
in an amount equal to the amount which the Corporation would, but for the
Restrictions, have contributed to such Plan or Plans on behalf of the
Executive for such plan year; and (b) the total value of the amounts which are
deemed to have been contributed by the Corporation to the Plan or the Plans
pursuant to subparagraph 7.04(a) above is equal to the greater of: (i) the
total value of all such amounts together with interest thereon between the
date such amounts are deemed to be contributed to the Plan or Plans and the
date for payment of such amounts, assuming that such amounts earn interest at
a variable annual interest rate, adjusted on a quarterly basis as of March 1,
June 1, September 1 and December 1 of each calendar year and equaling one
hundred twenty percent (120%) of the Federal long-term interest rate
established for such months by the Secretary of the Treasury pursuant to
section 1274 of the Code and the regulations thereunder; and (ii) the total
value (determined according to the principles established by the Deferred Comp
Plan, as in effect as of the date of this Agreement (whether or not the
Deferred Comp Plan is in effect on the date the payments are required to be
made pursuant to this Article 7)) of the number of shares of common stock of
the Corporation which could have been purchased (determined according to the
principles established by the Deferred Comp Plan as in effect as of the date
of this Agreement (whether or not the Deferred Comp Plan is in effect on the
date the payments are required to be made pursuant to this Article 7)) if the
amounts which would, but for the Restrictions, have been contributed to the
Plan or Plans were used to purchase common stock of the Corporation.
7.05 Payments Following Plan Termination. If payments are being made
by the Corporation pursuant to this Article 7 in the form of an annuity or
other periodic form of distribution, and the amount being paid from the assets
of the trust or trusts established to hold assets under the Plan or Plans
(individually a "Trust" and collectively the "Trusts") is reduced as a result
of any of the limitations in the Plan or Plans relating to the benefits
payable to an employee who is among the twenty-five (25) highest paid
employees or by virtue of the termination of the Plan or Plans (including the
operation of Section 4045 of ERISA) or for any other reason other than the
operation of the provisions of the optional form selected under the Plan or
Plans, the amount of the payments being made by the Corporation under this
Article 7 shall be increased by the amount of any reduction in the amount
being paid to the Executive from the assets of the Trust or Trusts.
If payments required to be made by the Corporation pursuant to
this Article 7 are being made or have been made in full, but the Executive or
any of his beneficiaries are required to make a payment to any trustee or
trustees appointed under the terms of any Trust, (whether the result of a loss
of collateral, interest on such collateral or otherwise) as the result of the
operation of the any limitations in the Plan or Plans relating to the use of
employer contributions for an employee who is among the twenty-five (25)
highest paid or by virtue of the termination of the Plan or Plans (including
the operation of Section 4045 of ERISA) or for any other reason, the
Corporation shall reimburse the Executive or his beneficiaries, as the case
may be, directly from its general assets, for each such payment to such
trustee or trustees and if the Executive or any of his beneficiaries does not
receive a deduction for Federal income tax purposes for such a payment or
incurs any penalty tax because of such repayment, the amount of the
reimbursement shall be increased to an amount so that after the application of
Federal income tax to the reimbursement, the Executive or his beneficiary
shall have received an amount from the Corporation approximately equal to the
amount repaid to the trustee or trustees.
ARTICLE 8.
Change in Control Benefits
8.01 Change in Control Termination. The Corporation will provide or
cause to be provided to the Executive the rights and benefits described in
Section 8.03 hereof in the event that, during the term of this Agreement
(including any renewal terms), the Executive's employment by the Corporation
is terminated at any time within three (3) years following a "Change in
Control" (as hereinafter defined) either:
(a) by the Corporation for any reason other than the Executive's
fraudulent conduct in connection with his employment by the Corporation or
conviction of a felony; or
(b) by the Executive following the occurrence of any of the
following events:
(i) the assignment to the Executive of any duties or
responsibilities that are inconsistent with his position, duties,
responsibilities or status immediately preceding such Change in Control;
(ii) a reduction of the Executive's Base Salary, bonuses or
other compensation or benefits from those types or amounts in effect
immediately prior to the Change in Control; or
(iii) the relocation of the principal executive offices of
the Corporation or a change in the duties of the Executive which requires the
Executive to move his residence from the Buffalo, New York metropolitan area;
or
(c) by the Executive, if he shall determine in good faith that,
following a Change in Control, he is no longer able to effectively discharge
his duties under this Agreement.
For purposes of this Agreement, if the Executive's employment with
the Corporation is terminated after the occurrence of a Change in Control (as
hereinafter defined) for any of the reasons described above in this Section
8.01, such termination of employment shall hereinafter be referred to as a
"Change in Control Termination."
If the Executive has attained at least age sixty (60) and the
Executive elects to terminate his employment with the Corporation for any of
the reasons set forth above in this Section 8.01 and within three (3) years
following the occurrence of a Change in Control, the Corporation shall have no
right to object to or challenge the right of the Executive to receive any
payments provided for under this Article 8 on the grounds that the Executive
was otherwise entitled to retire from his employment with the Corporation
pursuant to Section 3.05 hereof.
8.02 Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if: (a) any person or group (within
the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") but excluding the Corporation and each
of the Corporation's officers and directors, whether individually or
collectively), shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of 20% or more of the Corporation's outstanding
common stock otherwise than through a transaction arranged by or consummated
with the prior approval of the Corporation's Board of Directors; or (b) during
any period of three (3) consecutive years, individuals who at the beginning of
such period constitute the entire Board of Directors of the Corporation (and
any new director whose election to the Board of Directors of the Corporation
or whose nomination for election by the Corporation's stockholders was
approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period or whose election or
nomination for election was previously so approved) (hereinafter referred to
as the "Continuing Directors") shall cease, to constitute a majority of the
Corporation's Board of Directors; or (c) any consolidation or merger of the
Corporation is consummated, as a result of which, the Corporation is not the
continuing or surviving corporation or pursuant to which shares of the
Corporation's common stock would be converted into cash, securities or other
property, other than a merger or consolidation of the Corporation which would
result in voting securities of the Corporation immediately prior thereto
continuing to represent (either by remaining outstanding or being converted
into voting securities of the surviving entity) at least eighty percent (80%)
of the combined voting power of the Corporation or such surviving entity
immediately after such merger or consolidation (provided, however, that if the
Board of Directors of the Corporation adopts a resolution that is approved by
a majority of the Continuing Directors providing that such merger or
consolidation shall not constitute a "Change in Control" for purposes of this
Agreement, then such merger or consolidation shall not constitute a Change in
Control); or (d) the stockholders of the Corporation approve an agreement for
the sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Corporation; or (e) the stockholders of the Corporation approve any plan or
proposal for the liquidation or dissolution of the Corporation.
8.03 Payments on Change in Control Termination.
(a) If a Change in Control Termination occurs prior to the end
of the first year of the Executive's employment hereunder, the Corporation
shall pay to the Executive within ten (10) days after the date of such Change
in Control Termination, a lump sum payment equal to three (3) times the sum
of: (i) the Base Salary of the Executive in effect on the date of such Change
in Control Termination; and (ii) the annualized amount of all bonuses awarded
to or received by the Executive pursuant to Section 2.02 hereof prior to the
Change in Control Termination, or, if no bonus has been awarded to or received
by the Executive prior to the Change in Control Termination, the amount of all
bonuses which would have been awarded to or received by the Executive on an
annualized basis pursuant to Section 2.02 hereof with respect to the fiscal
year of in which the Change in Control Termination occurs, assuming the
Executive's employment with the Corporation continued through the end of such
fiscal year (the annualized amount of all bonuses awarded to or received by
the Executive or to be awarded to or received by the Executive with respect to
the fiscal year of the Corporation in which the Change in Control Termination
occurs being hereinafter referred to as the "Initial Bonus");
(b) If a Change in Control Termination occurs after the end of
the first year of the Executive's employment hereunder but prior to the end of
the second year of the Executive's employment hereunder, the Corporation shall
pay to the Executive within ten (10) days after the date of such Change in
Control Termination, a lump sum payment equal to three (3) times the sum of:
(i) the average of the Base Salary of the Executive in effect for each year of
the Executive's employment hereunder; and (ii) the average of the sum of: (A)
the Initial Bonus; and (B) the amount of all bonuses awarded to or received by
the Executive under Section 2.02 hereof during the second year of the
Executive's employment hereunder, or, if no bonus has been awarded to or
received by the Executive during the second year of the Executive's employment
hereunder, the amount of all bonuses which would have been awarded to or
received by the Executive on an annualized basis pursuant to Section 2.02
hereof with respect to the fiscal year of the Corporation in which the Change
in Control Termination occurs, assuming the Executive's employment with the
Corporation continued through the end of such fiscal year (the amount of all
bonuses awarded to or received by the Executive or to be awarded to or
received by the Executive with respect to the fiscal year of the Corporation
in which the Change in Control Termination occurs being hereinafter referred
to as the "Second Bonus");
(c) If a Change in Control Termination occurs after the end of
the second year of the Executive's employment hereunder but prior to the end
of the third year of the Executive's employment hereunder, the Corporation
shall pay the Executive within ten (10) days after the date of such Change in
Control Termination, a lump sum payment equal to three (3) times the sum of:
(i) the average of the Base Salary of the Executive in effect for each year of
the Executive's employment hereunder; and (ii) the average of the sum of: (A)
the amount of the Initial Bonus; (B) the Second Bonus; and (C) amount of all
bonuses awarded to or received by the Executive under Section 2.02 hereof
during the third year of the Executive's employment hereunder, or, if no bonus
has been awarded to or received by the Executive during the third year of the
Executive's employment hereunder, the amount of all bonuses which would have
been awarded to or received by the Executive on an annualized basis pursuant
to Section 2.02 hereof with respect to the fiscal year of the Corporation in
which the Change in Control Termination occurs, assuming the Executive's
employment with the Corporation continued through the end of such fiscal year;
and
(d) If a Change in Control Termination occurs after the end of
the third year of the Executive's employment hereunder, the Corporation shall
pay to the Executive within ten (10) days after the date of such Change in
Control Termination, a lump sum payment equal to three (3) times the sum of:
(i) the average of the Base Salary of the Executive in effect during the three
(3) year period ending on the date the Change in Control Termination occurs;
and (ii) the average of the amount of all bonuses awarded to or received by
the Executive under Section 2.02 hereof during the three (3) year period
ending on the date of the Change in Control Termination.
8.04 Effect of Deferred Compensation. The amounts payable to the
Executive pursuant to Section 8.03 hereof shall be determined based on the
amount of the Base Salary and the amount of any bonus which is payable to the
Executive, whether or not the Executive actually receives payment of such Base
Salary or bonus as a result of a deferral made by the Executive of the receipt
of payment of any portion of such Base Salary or bonus as permitted by the
terms of the Deferred Comp Plan as applicable to the Executive.
8.05 Benefits Upon Death. If the Executive dies following a Change
in Control Termination but prior to the payment of the applicable lump sum
provided for in Section 8.03 above, the Corporation shall pay the applicable
lump sum described in Section 8.03 hereof to the Executive's personal
representative or the executor or administrator of his estate within ten (10)
days from the date such personal representative, executor or administrator is
appointed.
8.06 Effect of Change in Control Termination on Other Benefits.
(a) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the Executive's right to receive any
payments due to the Executive under the terms of any of the Plans or due under
the Deferred Comp Plan. All such payments will be made in accordance with the
provisions of the applicable document containing the terms of any such Plans
and the terms of the Deferred Comp Plan.
(b) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the obligation of the Corporation
under Section 2.08 hereof to pay the full amount of all premiums and other
costs associated with the maintenance by the Corporation of policies of life
insurance and medical insurance for the benefit of the Executive, his spouse
and dependents as required by Section 2.08 hereof.
(c) Except as set forth in Sections 8.06(a) and (b) hereof, any
payments required to be made to the Executive or his beneficiaries pursuant to
Sections 8.03 and 8.05 hereof shall, when received by the Executive, or his
beneficiaries, be in lieu of any payments otherwise provided with respect to
the Executive's termination of employment under any other severance pay or
other similar plan or policy maintained by the Corporation. The Corporation
may, in its sole discretion, change, replace or eliminate any retirement plan
or insurance policy described in Sections 8.06(a) and (b) above at any time,
but shall not do so after a Change in Control in a manner which would prevent
the Executive, his spouse or dependents from receiving any benefit which he
would otherwise have been entitled to receive either immediately preceding the
Change of Control or immediately preceding a Change in Control Termination.
8.07 Certain Additional Payments by the Corporation. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Corporation 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 (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties being hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (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.
(b) Subject to the provisions of Section 8.07(c) hereof, all
determinations required to be made under this Section 8.07, including whether
a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall
be made by Coopers & Lybrand, L.L.P. or any other nationally recognized firm
of certified public accountants (the "Accounting Firm" ) which shall provide
detailed supporting calculations both to the Corporation and the Executive
within 15 business days of termination of the Executive's employment under
this Agreement, if applicable, or such earlier time as is requested by the
Executive or the Corporation. When calculating the amount of the Gross-Up
Payment, the Executive shall be deemed to pay:
(i) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which the
Gross-Up Payment is to be made, and
(ii) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from deduction of such state and local
taxes if paid in such year.
If the Accounting Firm has performed services for the person,
entity or group who caused the Change of Control, as described in Section 8.02
hereof or any affiliate thereof, the Executive may select an alternative
accounting firm from any nationally recognized firm of certified public
accountants. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive with an opinion that he has
substantial authority not to report any Excise Tax on his federal income tax
return. Any determination by the Accounting Firm shall be binding upon the
Corporation and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Corporation should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Corporation exhausts it remedies pursuant to
Section 8.07(c) hereof, and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Corporation to or for the benefit of the Executive.
(c) The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than ten business days after the
Executive knows of such claim and shall apprise the Corporation 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 thirty-day
period following the date on which it gives such notice to the Corporation (or
such shorter period ending on the date that any payment of taxes with respect
to such claim is due). If the Corporation 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 Corporation any information reasonably
requested by the Corporation relating to such claim,
(ii) take such action in connection with contesting such
claim as the Corporation 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 Corporation,
(iii) cooperate with the Corporation in good faith in order
to effectively contest such claim, and
(iv) permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 8.07(c), the Corporation shall control
all proceedings taken in connection with such contest and, at its sole option,
may pursue or forego 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 sue
for a refund or 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 Corporation shall determine; provided, however, that if the
Corporation directs the Executive to pay such claim and sue for a refund, the
Corporation 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 income tax, including interest or
penalties with respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further
provided that any extension of the statue of limitations relating to payment
of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder 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.
(d) If, after the receipt by the Executive of an amount advanced
by the Corporation pursuant to Section 8.07(c) hereof, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Corporation's complying with the requirements of Section
8.07(c)) promptly pay to the Corporation the amount of such refund (together
with any interest paid or credited thereon by the taxing authority after
deducting any taxes applicable thereto). If, after the receipt by the Execu-
tive of an amount advanced by the Corporation pursuant to Section 8.07(c)
hereof, a determination is made that the Executive shall not be entitled to
any refund with respect to such claim and the Corporation does not notify the
Executive in writing of its intent to contest such denial of refund prior to
the expiration of thirty days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid under Section 8.07(a) hereof. The forgiveness of
such advance shall be considered part of the Gross-Up Payment and subject to
gross-up for any taxes (including interest or penalties) associated therewith.
ARTICLE 9.
Severance and Effects of Termination
9.01 Effect of Termination for Cause. In the event the Executive's
employment with the Corporation is terminated for cause by the Corporation
pursuant to the provisions of Section 3.02 hereof, the Corporation shall pay
to the Executive any monthly installment of his Base Salary which is accrued
and unpaid as of the date of the Executive's termination at the monthly rate
then in effect and, thereafter, the Corporation shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder, and, except as otherwise
provided under the terms of Sections 9.06 and 9.07 hereof, no further
obligation to pay any other benefits provided to the Executive hereunder.
9.02 Effect of Termination Without Cause. (a) In the event the
Executive's employment with the Corporation is terminated by the Corporation
without cause pursuant to Section 3.03 hereof the Corporation shall, within
ninety (90) days following the termination of the Executive's employment, pay
the Executive in one lump sum payment, an amount equal to: (i) the sum of: (A)
his Base Salary at the rate then in effect; and (B) an amount equal to all
bonuses paid or payable by the Corporation to the Executive with respect to
the fiscal year of the Corporation which ends immediately prior to the date of
such termination; and (ii) any "Top Hat" retirement benefits to be provided to
the Executive pursuant to Article 7 hereof. In addition, if the Executive's
employment with the Corporation is terminated without cause pursuant to
Section 3.03 hereof, the Corporation shall, as required by Section 2.08(a)
hereof, continue to provide the Executive with the group welfare benefits for
the one (1) year period following the date the Executive's employment with the
Corporation is terminated, all as more particularly provided for by Section
2.08 hereof.
(b) Except as otherwise provided above in this Section 9.02,
following the termination of the Executive's employment, without cause, as
provided for by Section 3.03 hereof, the Corporation shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder, hereof and, except as
otherwise provided in Sections 9.06 and 9.07 hereof, no further obligation to
provide any other benefits otherwise provided to the Executive hereunder.
9.03 Effect of Voluntary Termination. In the event the Executive
voluntarily terminates his employment with the Corporation pursuant to Section
3.04 hereof, the Corporation shall pay to the Executive any monthly
installment of his Base Salary which is accrued and unpaid as of the date of
the Executive's termination at the monthly rate then in effect and any "Top
Hat" retirement benefits to be provided to the Executive pursuant to Article 7
hereof. Except as otherwise provided above in this Section 9.03, following
the Executive's voluntary termination of his employment with the Corporation
as provided for by Section 3.04 hereof, the Corporation shall have no further
obligation to pay to the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder and, except as otherwise
provided by Sections 9.06 and 9.07 hereof, no further obligation to provide
any other benefits otherwise provided to the Executive hereunder.
9.04 Effect of Retirement. In the event the Executive terminates his
employment with the Corporation by reason of his retirement as provided for in
Section 3.05 hereof, the Corporation shall pay to the Executive: (a) any
monthly installment of his Base Salary which is accrued and unpaid as of the
date of the Executive's retirement at the monthly rate then in effect; (b) an
amount equal to the amount of all bonuses which would have been payable to the
Executive by the Corporation pursuant to Section 2.02 hereof if the Executive
had remained in the employ of the Corporation until the end of the fiscal year
of the Corporation in which the Executive retires and assuming that average
monthly earnings of the Corporation for the portion of the Corporation's
fiscal year which has elapsed prior to the date the Executive retires
continues at such rate after the Executive retires through the end of the
fiscal year of the Corporation in which the Executive retires; and (c) any
"Top Hat" retirement benefits to be provided to the Executive pursuant to
Article 7 hereof. Except as otherwise provided for above in this Section
9.04, following the Executive's retirement from employment with the
Corporation as provided for by Section 3.05 hereof, the Corporation shall have
no further obligation to pay to the Executive any additional Base Salary,
compensation or bonus, no further obligation to provide any medical, life,
disability or other insurance benefits to the Executive hereunder and, except
as provided by Sections 9.06 and 9.07 hereof, no further obligation to provide
any other benefits otherwise provided to the Executive hereunder.
9.05 Effect of Termination Due to Disability. In the event the
Executive's employment with the Corporation is terminated as a result of his
suffering of a Total and Permanent Disability as described in Section 6.04
hereof, the Corporation shall pay to the Executive the amounts described in
Section 6.02 hereof and any "Top Hat" retirement benefits to be provided to
the Executive pursuant to Article 7 hereof. In addition, in the event the
Executive's employment is terminated by reason of his suffering of a Total and
Permanent Disability as described in Section 6.04 hereof, the Corporation
shall, as required by Section 2.08 hereof, continue to pay all premiums
necessary to maintain medical and life insurance for the life of the
Executive, medical insurance for the Executive's spouse for the life of the
Executive's spouse and medical insurance for the Executive's dependents until
such dependents reach age 21. As more particularly provided for by Section
2.08 hereof, the amount of the medical and life insurance coverage which shall
be provided to the Executive, his spouse and dependents following his
suffering of a Total and Permanent Disability shall be at least reasonably
comparable to the amount of the medical and life insurance coverage which was
in effect for the Executive, his spouse and dependents immediately prior to
the date the Executive's employment with the Corporation is terminated as a
result of his suffering of a Total and Permanent Disability. Except as
otherwise provided for by Sections 2.08 and 6.02 hereof and above in this
Section 9.05, following the Executive's suffering of a Total and Permanent
Disability, the Corporation shall have no further obligation to pay to the
Executive any additional Base Salary, compensation or bonus, no further
obligation to provide any medical, life, disability or other insurance
benefits to the Executive hereunder and, except as otherwise provided by
Sections 9.06 and 9.07 hereof, no further obligation to provide any other
benefits otherwise provided to the Executive hereunder.
9.06 Deferred Comp Plan Payments. Notwithstanding anything to the
contrary contained in this Agreement, upon termination of the Executive's
employment with the Corporation for any reason, the Executive shall be
entitled to payment in full of all amounts payable to the Executive under the
terms of the Deferred Comp Plan at the time and in the manner provided for by
the terms of the Deferred Comp Plan.
9.07 Retirement Plan Payments. Nothing in this Agreement shall be
deemed to limit the Executive's rights to receive or the obligations of the
Corporation to pay or provide for the Executive and his beneficiaries, any
continuation coverage as required by ERISA or any retirement or other benefits
accrued by the Executive at any time under the terms of any retirement plans
maintained by the Corporation which are subject to the requirements of ERISA
or otherwise satisfy the requirements of Section 401 of the Code.
ARTICLE 10.
Miscellaneous
10.01 Litigation Expenses. In the event that any dispute shall arise
under this Agreement between the Executive and the Corporation which is
related to the Change in Control Termination provisions of Article 8 hereof,
the Corporation shall be responsible for the payment of all reasonable
expenses of all parties to such dispute, including reasonable attorney fees,
regardless of the outcome thereof.
10.02 Amendments. This Agreement may not be amended or modified
orally, and no provision hereof may be waived, except in a writing signed by
the parties hereto.
10.03 Assignment. This Agreement cannot be assigned by either party
hereto except with the written consent of the other
10.04 Prior Agreements. This Agreement shall supersede and replace any
and all prior agreements between the Corporation and the Executive, whether
express or implied. Except as specifically provided herein, nothing contained
in this Agreement shall be construed to constitute a waiver by the Executive
or his beneficiaries of any rights or claims under any existing pension or
retirement plans of the Corporations.
10.05 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the personal representatives and successors in interest of
the Executive and any successors in interest of the Corporation.
10.06 Applicable Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed wholly within such State except with respect to the
internal affairs of the Corporation and its respective stockholders, which
shall be governed by the General Corporation Law of the State of Delaware.
10.07 Notices. All notices and other communications given pursuant to
this Agreement shall be deemed to have been properly given or delivered if
hand-delivered, or if mailed, by certified mail or registered mail postage
prepaid, addressed to the Executive at the address first above written or if
to the Corporation, at its address first above written with a copy to the
attention of Gerald S. Lippes, Secretary, 700 Guaranty Building, Buffalo, New
York 14202. From time to time, any party hereto may designate by written
notice any other address or party to which such notice or communication or
copies thereof shall be sent.
10.08 Severability of Provisions. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and this Agreement shall be interpreted as if such invalid,
illegal or unenforceable provision was not contained herein.
10.09 Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Executive and the Corporation have caused
this Agreement to be executed as of the day and year first above written.
MARK IV INDUSTRIES, INC.
By: /s/ Sal H. Alfiero /s/ Douglas J. Fiegel
Name: Sal H. Alfiero Douglas J. Fiegel
Title: Chairman of the Board
EXHIBIT 10.9
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 1st day of January, 1995, by and between
MARK IV INDUSTRIES, INC., a Delaware corporation, with offices at 501 John
James Audubon Parkway, Amherst, New York 14228 ("Mark IV"), Dayco Products,
Inc., a Delaware corporation with offices at One Prestige Place, Miamisburg,
Ohio 45342 ("Dayco"), (Mark IV and Dayco being sometimes hereinafter
collectively referred to as the "Corporations") and Bruce A. McNiel, an
individual residing at 8558 Eagle Ridge Court, Springboro, Ohio 45066 (the
"Executive").
RECITALS:
WHEREAS, the Executive is expected to make a major contribution to the
profitability, growth and financial strength of each of the Corporations; and
WHEREAS, the Corporations have determined that retaining the services of
the Executive is in their respective best interests and in the best interests
of the stockholders of Mark IV and, accordingly, the Corporations desire to
secure the services of the Executive on behalf of the Corporations;
CONSIDERATION:
NOW, THEREFORE, in consideration of the conditions and covenants set
forth in this Agreement, the parties hereto agree as follows:
ARTICLE 1.
Employment and Duties
1.01 Employment. The Corporations hereby agree to, and do hereby
employ the Executive, and the Executive hereby agrees to and does hereby
accept employment, by Mark IV, as Senior Vice President of Mark IV, and by
Dayco, as President of Dayco (a wholly owned subsidiary of Mark IV). It is
contemplated that the Executive will continue to serve as Senior Vice
President of Mark IV and President of Dayco subject to the provisions of this
Agreement and the right of the Board of Directors of Dayco and Mark IV to
elect new officers.
1.02 Duties. During the period of his employment under this Agreement,
the Executive shall perform such executive duties and responsibilities as may
be assigned to him, from time to time, by the Board of Directors of Mark IV
and the Board of Directors of Dayco (as the case may be) and shall be subject,
at all times, to the control of the applicable Board of Directors. The
Executive shall devote substantially full time and energies to the supervision
and management of the business and affairs of Mark IV and Dayco and to the
furtherance of their respective interests. The Executive shall report
directly to the Chief Executive Officer of Mark IV or such other officer of
Mark IV as may be designated by the Chief Executive Officer of Mark IV. The
Corporations shall not require the Executive to perform services hereunder
outside the Dayton, Ohio metropolitan area with such frequency or duration as
would require the Executive to move his residence from the Dayton area.
ARTICLE 2.
Compensation and Fringe Benefits
2.01 Base Salary. During the period of the Executive's employment
hereunder, the Corporations shall pay to the Executive an annual salary ("Base
Salary") of $300,000, payable in substantially equal semi-monthly
installments. The Board of Directors of Mark IV, through its Compensation
Committee, shall in good faith review the Base Salary of the Executive on an
annual basis. For purposes of determining the Executive's rights under any
plans, programs, arrangements or benefits provided to the Executive pursuant
to this Agreement, the full amount of any cash bonuses payable to the
Executive shall be deemed to be paid by Dayco.
2.02 Bonuses. The Executive shall be entitled to participate in all
current and deferred worldwide bonus and incentive compensation programs which
may be maintained, from time to time, by Dayco for its executive officers.
2.03 Reimbursement of Expenses. Dayco shall reimburse the Executive
for all reasonable expenses which the Executive may, from time to time, incur
on its behalf in the performance of his responsibilities and duties under this
Agreement, provided that the Executive accounts to Dayco for such expenses in
the manner prescribed by Dayco.
2.04 Mark IV Fringe Benefits. The Executive shall be permitted to
participate in and receive awards under the terms of (a) the Mark IV
Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan, as
amended; (b) the Mark IV Industries, Inc. 1992 Restricted Stock Plan, as
amended; (c) the Non-Qualified Plan of Deferred Incentive Compensation for
Executives of Certain Operating Divisions and Subsidiaries of Mark IV
Industries, Inc., as amended (hereinafter the "Deferred Comp Plan"); and (d)
the Mark IV Savings & Retirement Plan (the "Master 401(k) Plan") (a master
profit sharing/401(k) plan maintained by Mark IV for certain employees of
certain of its subsidiaries) as applicable to salaried employees of Dayco.
Except as otherwise expressly provided for above in this Section 2.04, the
Executive shall not be permitted to participate in or receive any benefits
under the terms of any plan, program or arrangement maintained or contributed
to by Mark IV for Mark IV employees.
2.05 Deferred Comp Plan. During the term of this Agreement, the
Executive shall be permitted to defer the receipt of payment of all or any
portion of the Base Salary to which the Executive is entitled under the terms
of this Agreement and to defer the receipt of payment of all or any portion of
the amount of any bonuses or other incentive compensation (which is otherwise
payable immediately) to which the Executive may become entitled under the
terms of this Agreement or any bonus or incentive compensation plan maintained
by Dayco, all in the manner permitted for certain specified executives
pursuant to the terms of the Deferred Comp Plan. In addition, during the term
of this Agreement, the Executive shall be entitled to receive his
proportionate share of any amounts allocated annually by the Compensation
Committee of the Board of Directors of Mark IV to participants in the Deferred
Comp Plan whose principal place of employment is Dayco's corporate
headquarters.
2.06 Tax Qualified Plans. The Executive shall be entitled to
participate in the Master 401(k) Plan and all other tax qualified pension,
profit sharing or retirement plans maintained, from time to time, by either of
the Corporations for salaried employees of Dayco.
2.07 Medical Benefits. Dayco currently provides salaried employees of
Dayco whose principal place of employment is Dayco's corporate headquarters
(hereinafter referred to as "Dayco Corporate Employees") and certain retired
salaried employees of Dayco whose principal place of employment was Dayco's
corporate headquarters (hereinafter referred to as "Retired Dayco Corporate
Employees") with group medical insurance type protection against certain costs
and expenses relating to medical services and treatments provided to such
Dayco Corporate Employees (or Retired Dayco Corporate Employees), their
spouses and their dependents under a group medical program which is commonly
referred to as a "self-insured" medical plan (such group medical program being
hereinafter the "Dayco Medical Plan"). In connection with its maintenance and
administration of the Dayco Medical Plan, Dayco calculates and establishes, on
an annual basis, an amount which, generally, is equal to the expected per
capita cost to Dayco of maintaining the Dayco Medical Plan for such year and
which is used by Dayco for purposes of determining the amount of the
contributions which Dayco will require from Dayco Corporate Employees (and
Retired Dayco Corporate Employees) in order to provide such Dayco Corporate
Employees (and Retired Dayco Corporate Employees) the group medical insurance
type coverage provided by the Dayco Medical Plan (such amount being
hereinafter referred to as a "Premium"). During the term of this Agreement,
the Corporations shall provide the Executive, his spouse and his dependents
with the same type of group medical insurance coverage which is provided to
Dayco Corporate Employees under the terms of the Dayco Medical Plan; provided
that neither of the Corporations shall have any obligation to provide such
group medical insurance type coverage to the Executive, his spouse and his
dependents unless the Executive pays to Dayco, on a monthly basis, the same
portion of the Premium (hereinafter the "Employee Portion") which all other
Dayco Corporate Employees are required to pay for such group medical insurance
type coverage.
2.08 Group Welfare Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Executive shall be eligible
to participate in the Mark IV Industries, Inc. and Subsidiaries Group Welfare
Benefit Program as applicable to Dayco Corporate Employees (hereinafter the
"Flex Choice Plan"). As provided for by the terms of the Flex Choice Plan,
the Executive shall be entitled to elect to receive one or more of the
following benefits under the terms of the group welfare benefit programs which
are contained within the Flex Choice Plan and available to Dayco Corporate
Employees: (a) group medical insurance type coverage under the Dayco Medical
Plan; (b) dental insurance coverage; (c) employee life insurance coverage; (d)
accidental death and dismemberment insurance coverage; (e) dependent life
insurance coverage; (f) long term disability insurance coverage; (g) health
care spending account benefits; and (h) dependent care spending account
benefits. In the event that the Flex Choice Plan is amended during the term of
this Agreement to increase or reduce the number or type of group welfare
benefit programs which are available to Dayco Corporate Employees, the
Executive shall be entitled to elect to receive one or more of the new group
welfare benefit programs which are available under the terms of the Flex
Choice Plan. Notwithstanding the foregoing, the Corporations shall have no
obligation to maintain or provide any such group welfare benefits to the
Executive unless the Executive pays to Dayco, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
group welfare benefits to the same extent that such employee portion is paid
by all other Dayco Corporate Employees and determined, from time to time,
under the provisions of the Flex Choice Plan. The Corporations shall also pay
all premiums necessary to maintain a business travel accident insurance policy
for the Executive which provides the Executive with coverage and benefits
which are at least reasonably comparable to the business travel accident
insurance coverage in effect for the Executive as of the date of this
Agreement.
2.09 Continuation of Medical Benefits and Insurance Coverage. (a) If
the Executive retires from his employment with the Corporations as permitted
by Section 3.05 hereof, the Corporations shall have no obligation to continue
to provide any life, medical disability or other insurance coverage to the
Executive except to the extent that Dayco provides life insurance and retiree
medical insurance type coverage for its Retired Dayco Corporate Employees. In
the event that the Executive elects to receive retiree medical insurance type
coverage under the Dayco Medical Plan, the Corporations shall provide such
retiree medical insurance type coverage to the Executive, his spouse and
dependents; provided that, the Executive pays to Dayco on a monthly basis, the
portion of the Premium due in connection with the provision of such retiree
medical insurance type coverage under the Dayco Medical Plan to the same
extent that such portion of the Premium is required to be paid by all other
Retired Dayco Corporate Employees. In the event that the Executive elects to
receive the life insurance coverage which is available to Retired Dayco
Corporate Employees, the Corporations shall provide such life insurance
protection to the Executive provided that the Executive pays to Dayco the
portion of any life insurance premiums due in connection with the maintenance
of such life insurance coverage to the same extent that such portion of such
life insurance premiums is paid by all other Retired Dayco Corporate
Employees.
(b) If the Executive's employment with the Corporations is
terminated by either of the Corporations, either for cause, as permitted by
Section 3.02 hereof, or without cause, as permitted by Section 3.03 hereof,
following the Executive's termination, the Corporations shall take such action
as may be necessary to cause group medical insurance type coverage which is at
least reasonably comparable to the group medical insurance type coverage which
was in effect under the Dayco Medical Plan for the Executive, his spouse and
dependents immediately prior to the termination of his employment, to be
continued for a period of two (2) years following the date on which the
Executive's employment with the Corporations is terminated. Notwithstanding
the foregoing, the Corporations shall not be obligated to continue to provide
such group medical insurance type coverage to the Executive, his spouse and
dependents unless, in the event the Executive's employment is terminated by
either of the Corporations for cause (as permitted by Section 3.02 hereof),
the Executive pays to Dayco, on a monthly basis, the full amount of the
Premium which is payable with respect to the provision of such group medical
insurance type coverage to a Dayco Corporate Employee and, in the event the
Executive's employment is terminated by either of the Corporations without
cause (as permitted by Section 3.03 hereof), the Executive pays to Dayco on a
monthly basis, an amount which shall not exceed the Employee Portion
(determined at the time such group medical insurance type coverage is
provided) of the Premium payable by Dayco Corporate Employees, for the group
medical insurance type coverage which is then being provided to such Dayco
Corporate Employees. At the end of the two (2) year period following the date
on which the Executive's employment with the Corporations is terminated
(without cause) or, if earlier, at such time that the Corporations terminate
the group medical insurance type coverage required to be provided to the
Executive hereunder by reason of the Executive's failure to pay the Employee
Portion of the Premiums described above, the Executive shall be entitled to
elect to receive continuation coverage with respect to such medical insurance
coverage in accordance with the applicable provisions of Section 4980B of the
Internal Revenue Code of 1986, as amended, and the applicable continuation
coverage provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
(c) If the Executive's employment with the Corporations is
terminated as a result of his suffering of a Total and Permanent Disability as
described in Section 6.04 hereof, following the Executive's termination, the
Corporations shall provide group medical insurance type coverage to the
Executive, his spouse and dependents which is the same as the group medical
insurance type coverage which is provided under the Dayco Medical Plan to
Dayco Corporate Employees; provided that, the Corporations shall have no
obligation to provide such group medical insurance type coverage to the
Executive, his spouse and dependents unless the Executive pays to Dayco, on a
monthly basis, an amount which shall not exceed the Employee Portion
(determined at the time such medical insurance coverage is provided) of the
Premium payable by Dayco Corporate Employees for the group medical insurance
type coverage which is then being provided to such Dayco Corporate Employees.
Provided that the Executive continues to pay Dayco the amount described in the
preceding sentence, the Corporations shall continue to provide such group
medical insurance type coverage to the Executive, his spouse and dependents
after the date he suffers from a Total and Permanent Disability until the
earlier of the date that the Executive qualifies for Social Security
Disability Insurance benefits, including Medicare, or the date the Executive
attains age 65. Notwithstanding the foregoing, if Dayco provides group
medical insurance type coverage under the Dayco Medical Plan for its Retired
Dayco Corporate Employees which is more valuable than the group medical
insurance type coverage provided to the Executive under Medicare, the
Corporations shall, at the earlier of the date the Executive qualifies for
Medicare and the date the Executive attains age 65, provide the Executive the
same group medical insurance type coverage which is provided by Dayco for such
Retired Dayco Corporate Employees provided that the Executive pays to Dayco
the portion of the Premiums due from Retired Dayco Corporate Employees with
respect to such group medical insurance type coverage as described Section
2.09(a) above.
(d) If the Executive incurs a Change in Control Termination as
defined in Section 7.01 hereof, the Corporations shall continue to maintain
and pay, for the life of the Executive, any premiums due for life insurance
coverage in an amount which is at least reasonably comparable to the life
insurance coverage which was provided to the Executive immediately prior to
the Executive's Change in Control Termination provided that the Executive
shall continue to be obligated during such period to pay to the Corporations
the employee portion of the premiums due for such insurance coverage as
determined at the time the Executive's Change in Control Termination occurs.
In addition, if the Executive incurs a Change in Control Termination as
defined in Section 7.01 hereof, the Corporations shall take any such action as
may be necessary to continue to provide group medical insurance type coverage
to the Executive, his spouse and dependents for life which is at least
reasonably comparable the group medical insurance type coverage which was in
effect for the Executive under the Dayco Medical Plan immediately prior to the
Executive's Change in Control Termination; provided that, the Executive shall
continue to be obligated during such period, to pay to the Corporations, the
Employee Portion of the Premiums due for any such group medical insurance type
coverage as determined at the time the Executive's Change in Control
Termination occurs.
2.10 Vacation and Other Benefits. During each full year of the
Executive's employment hereunder, the Executive shall be entitled to paid
vacations as prescribed in Dayco's vacation policy based on all years of the
Executive's service with Dayco. In addition, the Executive shall be entitled
to receive such other employment benefits and participate in such other
employee benefit plans as may, from time to time, be provided by either of the
Corporations, to executive officers of Dayco, including, without limitation,
any and all benefits payable to the Executive under the terms of a frozen
supplemental non-qualified retirement plan maintained by Dayco and commonly
known as the "Dayco Plan of 55".
ARTICLE 3.
Term and Termination
3.01 Term. The period of employment of the Executive under this
Agreement shall commence January 1, 1995 and continue through December 31,
1997. Thereafter, unless otherwise terminated by either of the Corporations
pursuant to Section 3.03 hereof, effective January 1, 1998 and on each January
1 thereafter, the term of this Agreement shall automatically be renewed for an
additional period of twelve (12) months.
3.02 Termination For Cause. Notwithstanding the provisions of Section
3.01 hereof, each of the Corporations may terminate the Executive's employment
hereunder at any time for cause, by delivering to the Executive a written
notice of termination setting forth the date on which such termination is to
be effective and specifying in reasonable detail the facts and circumstances
claimed to provide a basis for the termination.
For purposes of this Agreement, each Corporation shall have
"cause" to terminate the Executive's employment hereunder upon the
Executive's: (a) willful and continued failure to substantially perform his
duties hereunder other than any such failure resulting from the Executive's
incapacity due to physical or mental illness; (b) illegal or criminal conduct;
(c) intentional falsification of records or reports or any other act or acts
of dishonesty constituting a felony and resulting, or intended to result,
directly or indirectly, in personal gain or enrichment of the Executive at the
expense of either of the Corporations; (d) excessive and/or chronic use of
alcohol, narcotics or other controlled substances (other than under the
supervision of a licensed physician); or (e) willful engagement in gross
misconduct materially injurious to either of the Corporations.
3.03 Termination Without Cause. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, each of the Corporations may, at
any time on or after December 31, 1997 terminate the Executive's employment,
without cause, by delivering a written notice of termination to the Executive
which sets forth the date on which such termination is to be effective;
provided that, the effective date of any such termination shall not be less
than ninety (90) days following the date on which such written notice of
termination is delivered to the Executive.
3.04 Termination by the Executive. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Executive may terminate his
employment hereunder at any time by delivering a written notice of termination
to either of the Corporations which sets forth the date on which such
termination is to be effective; provided that, the effective date of any such
termination shall not be less than ninety (90) days following the date on
which such written notice of termination is delivered to either of the
Corporations.
3.05 Retirement. The Executive may retire from his employment with the
Corporations at any time following his attainment of age sixty (60) by
delivering to either of the Corporations a written notice of his intent to
terminate his employment with either of the Corporations and retire, which
written notice sets forth the date on which such retirement (and its related
termination of employment) is to be effective; provided that, the effective
date of such retirement shall not be less than thirty (30) days following the
date on which such written notice of termination is delivered to either of the
Corporations.
3.06 Effect of Notice of Intent to Terminate. Upon delivery by either
of the Corporations to the Executive of a written notice of intent to
terminate, the Executive's employment with both of the Corporations shall be
terminated, effective at the time stated in such written notice of intent to
terminate. In addition, upon the Executive's delivery to either of the
Corporations of a written notice of intent to terminate (whether or not such
termination is intended to be a retirement) the Executive's employment with
both the Corporations shall be terminated effective at the time stated in such
written notice of intent to terminate.
ARTICLE 4.
Confidentiality; Non-Compete Provisions
4.01 Confidentiality. During the period of the Executive's employment
hereunder and for a period of ten (10) years following the termination of the
Executive's employment for any reason whatsoever (including, without
limitation, retirement, a "for cause" termination or any other voluntary or
involuntary termination), the Executive agrees that he will not, without the
written consent of the Board of Directors of Mark IV, disclose to any person
(other than a person to whom disclosure is reasonably necessary or appropriate
in connection with the performance by the Executive of his duties as an
executive of the Corporations or to a person as required by any order or
process of any court or regulatory agency) any material confidential
information obtained by the Executive while in the employ of the Corporations
with respect to any management strategies, policies or techniques or with
respect to any products, improvements, formulae, designs or styles, processes,
customers, methods of distribution, or methods of manufacture of any of the
Corporations; provided, however, that confidential information shall not
include any information known generally to the public (other than as a result
of unauthorized disclosure by the 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 either of the Corporations.
4.02 Non-Compete. During the period of eighteen (18) months after the
date of termination of the Executive's employment hereunder, for any reason
whatsoever (including, without limitation, retirement, "for cause" termination
or any other voluntary or involuntary termination), the Executive will not,
directly or indirectly, own, manage, operate, control or participate in the
ownership, management, operation or control of, or be connected as an officer,
employee, partner, director or otherwise with, or have any financial interest
in, or aid or assist anyone else in the conduct of, any business which
competes with any business conducted by either of the Corporations or with any
group, division or subsidiary of either of the Corporations in any geographic
area where such business is being conducted at the time of such termination
(any such business being hereinafter referred to as a "Competitive
Operation"). Ownership by the Executive of 2% or less of the voting stock of
any publicly held corporation shall not constitute a violation of this Section
4.02.
4.03 Competitive Operation. For purposes of Section 4.02 hereof: (a)
a business shall not be deemed to be a Competitive Operation unless: (i) 25%
or more of the consolidated gross sales and operating revenues, of either of
the Corporations is derived from such business; or (ii) 25% or more of the
consolidated net income of either of the Corporations is derived from such
business; or (iii) 25% or more of the consolidated assets of either of the
Corporations are devoted to such business; and (b) a business which is
conducted by either of the Corporations at the time of the Executive's
termination and which subsequently is sold or discontinued by either of the
Corporations shall not, subsequent to the date of such sale or discontinuance,
be deemed to be a Competitive Operation within the meaning of Section 4.02.
ARTICLE 5.
Death Benefits
5.01 Death Benefits. If the Executive dies during the term of his
employment hereunder, in addition to any death benefits payable under the
terms of any life insurance policies maintained by the Corporations on the
life of the Executive, any death benefits payable on account of the death of
the Executive under the terms of the Deferred Comp Plan, any death benefits
payable on account of the death of the Executive under the terms of the Dayco
Plan of 55 and any death benefits payable on account of the death of the
Executive under the terms of any tax qualified retirement plans maintained by
the Corporations, the Corporations shall pay to such person, firm,
corporation, trust or other entity which shall, from time to time, be
designated by the Executive to either of the Corporations, in writing, as the
intended recipient of death benefits provided for under the terms of this
Agreement (such person, firm, corporation, trust or other entity being
hereinafter referred to as the Executive's "Beneficiary") a death benefit
equal to 50% of the Executive's Base Salary at the rate in effect on the date
of the Executive's death. In addition, if Dayco pays a bonus to its
executive officers for the fiscal year of Mark IV in which the Executive's
death occurs, at the time Dayco pays such bonuses to its executive officers
for such fiscal year: (a) if the Executive's death occurs during the first six
(6) months of Mark IV's fiscal year, the Corporations shall pay to the
Executive's Beneficiary, an amount equal to the fifty percent (50%) of the
amount of the bonus which would have been payable to the Executive pursuant to
the bonus plans referred to in Section 2.02 hereof for the fiscal year of Mark
IV in which the Executive's death occurs; and (b) if the Executive's death
occurs at any time after the first six (6) months of Mark IV's fiscal year,
the Corporations shall pay to the Executive's Beneficiary, an amount equal to
the amount of the bonus which would have been payable to the Executive
pursuant to the bonus plans referred to in Section 2.02 hereof for the fiscal
year of Mark IV in which the Executive's death occurs.
5.02 Continuation of Medical Insurance Coverage. If the Executive
dies prior to the termination of his employment and if, at the time of the
Executive's death, the Executive's spouse or dependents are still living, the
Corporations shall take such action as may be necessary to provide group
medical insurance type coverage to the Executive's spouse and dependents which
is at least reasonably comparable to the group medical insurance type
coverage, if any, which was in effect for the Executive, his spouse and
dependents under the Dayco Medical Plan immediately prior to the Executive's
death, to be continued for the Executive's spouse and dependents for a period
of two (2) years following the date of the Executive's death; provided that
the Corporations shall not be obligated to continue to provide such group
medical insurance type coverage to the Executive's spouse and dependents
unless the Executive's spouse pays to Dayco, on a monthly basis, an amount
which shall not exceed the Employee Portion (determined at the time such group
medical insurance type coverage is provided) of the Premium payable by Dayco
Corporate Employees for the group medical insurance type coverage which is
then being provided to such Dayco Corporate Employees. At the end of the two
(2) year period following the date of the Executive's death or, if earlier, at
such time that the Corporations terminate the group medical insurance type
coverage required to be provided to the Executive's spouse and dependents
hereunder by reason of the failure of the Executive's spouse to pay the
Employee Portion of the Premium described above, the Executive's spouse and
dependents shall be entitled to elect to receive continuation coverage with
respect to such medical insurance in accordance with the applicable provisions
of Section 4980B of the Internal Revenue Code of 1986, as amended, and the
applicable continuation coverage provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
ARTICLE 6.
Disability Benefits
6.01 Short-Term Disability. Except as otherwise provided in Section
6.02 hereof, in the event the Executive becomes disabled and is unable to
perform his duties hereunder, there shall be no reduction in the amount of the
Executive's Base Salary or any other benefits payable to him under this
Agreement.
6.02 Long-Term Disability. If, during the term of this Agreement, it
is determined that the Executive suffers from a Total and Permanent Disability
(as hereinafter defined), then, effective on the last day of the month in
which such determination is made, the Executive's employment hereunder shall
be deemed to be terminated. Upon such termination, unless a Change in Control
(as defined in Section 7.02 hereof) has occurred within the three (3) year
period preceding such termination and the Executive, as permitted by Section
7.01 hereof, has elected, in writing, to receive payment of the Change in
Control benefits described in Article 7 of this Agreement, the Corporations
shall pay to the Executive in equal monthly installments, for each twelve (12)
month period beginning on the day immediately following the date of such
termination and any anniversary thereof (an "Anniversary Date"), until the
Executive's 65th birthday, an amount equal to, his Base Salary, at the rate in
effect on the date his employment is terminated, up to a maximum of $150,000
per year (adjusted as set forth below), less the amounts of all social
security, retirement or disability benefits payable to the Executive for each
such twelve (12) month period by any agency of the United States Government or
the State of Ohio.
In addition to the foregoing, in the event the Executive's
employment with the Corporations is terminated as a result of his suffering of
a Total and Permanent Disability, the Corporation shall continue to provide
group medical insurance type coverage to the Executive as required by Section
2.09(c) hereof.
6.03 Cost of Living Adjustment. On each Anniversary Date, the $150,000
per year limit contained in Section 6.02 shall be adjusted on a cumulative
basis for each annual increase in the U. S. Department of Labor Bureau of
Labor Statistics Consumer Price Index for Urban Wage Earners and Clerical
Workers, New York, New York, 1982-84 = 100 measured between the month prior to
the first month in which such compensation payments were made and the month
prior to the commencement of each such successive year.
6.04 Determination of Total and Permanent Disability. Any question as
to the existence or extent of disability of the Executive upon which the
Executive and the Corporations cannot agree shall be determined by a qualified
independent physician selected by the Executive and approved by the
Corporations (or, if the Executive is unable to make such selection, as
selected by any adult member of his immediate family). For purposes of this
Agreement, the Executive shall be deemed to suffer from a Total and Permanent
Disability if it is determined that the Executive is physically or mentally
unable to substantially perform his duties under this Agreement for a period
of twelve (12) consecutive months. The determination of any question as to
disability under this Section 6.04 by such physician shall be made in writing
to the Corporations and to the Executive and shall be final and conclusive for
all purposes of this Agreement.
ARTICLE 7.
Change in Control Benefits
7.01 Change in Control Termination. The Corporations will provide or
cause to be provided to the Executive the rights and benefits described in
Section 7.03 hereof in the event that, during the term of this Agreement
(including any renewal terms), the Executive's employment by the Corporations
is terminated at any time within three (3) years following a "Change in
Control" (as hereinafter defined) either:
(a) by either of the Corporations for any reason other than the
Executive's fraudulent conduct in connection with his employment by the
Corporations or conviction of a felony; or
(b) by the Executive following the occurrence of any of the
following events:
(i) the assignment to the Executive of any duties or
responsibilities that are inconsistent with his position, duties,
responsibilities or status immediately preceding such Change in Control;
(ii) a reduction of the Executive's Base Salary, bonuses or
other compensation or benefits from those types or amounts in effect
immediately prior to the Change in Control; or
(iii) the relocation of the principal executive offices of
either of the Corporations or a change in the duties of the Executive which
requires the Executive to move his residence from its Dayton, Ohio
metropolitan area; or
(c) by the Executive, if he shall determine in good faith that
due to a Change in Control, he is no longer able to effectively discharge his
duties under this Agreement.
For purposes of this Agreement, if the Executive's employment with
the Corporations is terminated after the occurrence of a Change in Control (as
hereinafter defined) for any of the reasons described above in this Section
7.01, such termination of employment shall hereinafter be referred to as a
"Change in Control Termination."
In the event that the Executive's employment with either of the
Corporations is terminated within three (3) years following a Change in
Control and, following the date the Executive's employment with either of the
Corporations is terminated, it is determined (in accordance with Section 6.04
hereof) that, at the time the Executive's employment with either of the
Corporations was terminated, the Executive suffered from a Total and Permanent
Disability (as defined in Section 6.04 hereof), the Executive shall have the
right to elect, in writing, to receive the Change in Control benefits provided
for by this Article 7 or the disability benefits provided for by Section 6.02
hereof. Upon receipt by either of the Corporations of such written election
from the Executive, the Corporations shall pay (or cause to be paid) to the
Executive, the Change in Control benefits provided for by this Article 7 or
the disability benefits provided for by Section 6.02 hereof, whichever is
elected by the Executive. The Corporations shall not be entitled to object to
or contest their obligations to make any such payments (or cause such payments
to be made) or the Executive's right to make any such election on the grounds
that the Executive suffered from a Total and Permanent Disability at the time
his employment was terminated. In addition, if the Executive has attained at
least age sixty (60) and the Executive elects to terminate his employment with
the Corporations for any of the reasons set forth above in this Section 7.01
and within three (3) years following the occurrence of a Change in Control,
the Corporations shall have no right to object to or challenge the right of an
Executive to receive any payments provided for under this Article 7 on the
grounds that the Executive was otherwise entitled to retire from his
employment with the Corporation pursuant to Section 3.05 hereof.
7.02 Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if: (a) any consolidation or merger
of Mark IV is consummated, as a result of which, Mark IV is not the continuing
or surviving corporation, or pursuant to which shares of Mark IV's common
stock would be converted into cash, securities or other property, other than a
merger of Mark IV in which the holders of Mark IV's common stock immediately
prior to the merger have the same proportionate ownership of common stock of
the surviving corporation immediately after the merger, or (b) any
consolidation or merger of Dayco is consummated, as a result of which, Dayco
is not the continuing or surviving corporation or pursuant to which shares of
Dayco's common stock would be converted to cash, securities or other property
other than a merger of Dayco in which Mark IV, immediately following such
merger, directly or indirectly owns not less than fifty-one percent (51%) of
the issued and outstanding common stock of the surviving corporation; (c) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of Mark IV
is consummated, or (d) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all
of the assets of Dayco is consummated except any such transaction or series of
transactions which result in the transfer of all or substantially all the
assets of Dayco to Mark IV or any direct or indirect wholly owned subsidiaries
of Mark IV; or (e) the stockholders of Mark IV approve any plan or proposal
for the liquidation or dissolution of Mark IV; or (f) any person (as such term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") but excluding Mark IV and each of Mark IV's
officers and directors, whether individually or collectively), shall become
the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act)
of 20% or more of Mark IV's outstanding common stock or more than fifty
percent (50%) of Dayco's outstanding common stock other than as a result of an
initial public offering of the common stock of Dayco pursuant to a
registration statement filed with the United States Securities and Exchange
Commission under the applicable provisions of the Securities Act of 1993, as
amended; or (g) during any period of three (3) consecutive years, individuals
who at the beginning of such period constitute the entire Board of Directors
of Mark IV shall cease for any reason to constitute a majority thereof unless
the election, or the nomination for election by Mark IV's stockholders, of
each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the
period.
7.03 Payments on Change in Control Termination.
(a) If a Change in Control Termination occurs prior to the end
of the first year of the Executive's employment hereunder, the Corporations
shall pay to the Executive within ten (10) days after the date of such Change
in Control Termination, a lump sum payment equal to three (3) times the sum
of: (i) the Base Salary of the Executive in effect on the date of such Change
in Control Termination; and (ii) the annualized amount of all bonuses awarded
to or received by the Executive pursuant to Section 2.02 hereof prior to the
Change in Control Termination, or, if no bonus has been awarded to or received
by the Executive prior to the Change in Control Termination, the amount of the
bonuses which would have been awarded to or received by the Executive on an
annualized basis pursuant to Section 2.02 hereof with respect to the fiscal
year of Mark IV in which the Change in Control Termination occurs, assuming
the Executive's employment with the Corporations continued through the end of
such fiscal year (the annualized amount of the bonus awarded to or received by
the Executive or to be awarded to or received by the Executive with respect to
the fiscal year of Mark IV in which the Change in Control Termination occurs
being hereinafter referred to as the "Initial Bonus");
(b) If a Change in Control Termination occurs after the end of
the first year of the Executive's employment hereunder but prior to the end of
the second year of the Executive's employment hereunder, the Corporations
shall pay to the Executive within ten (10) days after the date of such Change
in Control Termination, a lump sum payment equal to three (3) times the sum
of: (i) the average of the Base Salary of the Executive in effect during the
Executive's employment hereunder; and (ii) the average of the sum of: (A)
Initial Bonus; and (B) the amount of all bonuses awarded to or received by the
Executive under Section 2.02 hereof during the second year of the Executive's
employment hereunder, or, if no bonus has been awarded to or received by the
Executive during the second year of the Executive's employment hereunder, the
amount of the bonuses which would have been awarded to or received by the
Executive on an annualized basis pursuant to Section 2.02 hereof with respect
to the fiscal year of Mark IV in which the Change in Control Termination
occurs, assuming the Executive's employment with the Corporations continued
through the end of such fiscal year (the amount of the bonus awarded to or
received by the Executive or to be awarded to or received by the Executive
with respect to the fiscal year of Mark IV in which the Change in Control
Termination occurs being hereinafter referred to as the "Second Bonus");
(c) If a Change in Control Termination occurs after the end of
the second year of the Executive's employment hereunder but prior to the end
of the third year of the Executive's employment hereunder, the Corporations
shall pay the Executive within ten (10) days after the date of such Change in
Control Termination, a lump sum payment equal to three (3) times the sum of:
(i) the average of the Base Salary of the Executive in effect during the
Executive's employment hereunder; and (ii) the average of the sum of: (A) the
amount of the Initial Bonus; (B) the Second Bonus; and (C) the amount of all
bonuses awarded to or received by the Executive under Section 2.02 hereof
during the third year of the Executive's employment hereunder, or, if no bonus
has been awarded to or received by the Executive during the third year of the
Executive's employment hereunder, the amount of the bonuses which would have
been awarded to or received by the Executive on an annualized basis pursuant
to Section 2.02 hereof with respect to the fiscal year of Mark IV in which the
Change in Control Termination occurs, assuming the Executive's employment with
the Corporations continued through the end of such fiscal year; and
(d) If a Change in Control Termination occurs after the end of
the third year of the Executive's employment hereunder, the Corporations shall
pay to the Executive within ten (10) days after the date of such Change in
Control Termination, a lump sum payment equal to three (3) times the sum of:
(i) the average of the Base Salary of the Executive in effect during the three
(3) year period ending on the date the Change in Control Termination occurs;
and (ii) the average of the amount of all bonuses awarded to or received by
the Executive pursuant to Section 2.02 hereof during the three (3) year period
ending on the date of the Change in Control Termination.
7.04 Effect of Deferred Compensation. The amounts payable to the
Executive pursuant to Section 7.03 hereof shall be determined based on the
amount of the Base Salary and the amount of any bonus which is payable to the
Executive, whether or not the Executive actually receives payment of such Base
Salary or bonus as a result of a deferral made by the Executive of the receipt
of payment of any portion of such Base Salary or bonus as permitted by the
terms of the Deferred Comp Plan as applicable to the Executive.
7.05 Benefits Upon Death. If the Executive dies following a Change
in Control Termination but prior to the payment of the applicable lump sum
provided for in Section 7.03 above, the Corporations shall pay the applicable
lump sum described in Section 7.03 hereof to the Executive's Beneficiary (as
described in Section 5.01 hereof) within ten (10) days following receipt by
either of the Corporations of payment instructions from such Beneficiary.
7.06 Effect of Change in Control Termination on Other Benefits.
(a) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the Executive's right to receive any
payments due to the Executive under the terms of the Master 401(k) Plan, the
Deferred Comp Plan, the Dayco Plan of 55 or any other tax qualified or other
retirement plan which the Executive is a participant in. All such payments
will be made in accordance with the provisions of the applicable document
containing the terms of the Master 401(k) Plan, the Deferred Comp Plan, the
Dayco Plan of 55 and any other such tax qualified or other retirement plan.
(b) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the obligation of the Corporations
under Section 2.09 hereof to continue to pay all premiums needed to maintain
policies of life insurance for the Executive and to continue to provide group
medical insurance type coverage for the benefit of the Executive for the rest
of the Executive's life in amounts at least reasonably comparable to the group
medical insurance type coverage which was in effect for the Executive and the
policies of such life insurance maintained by the Corporation for the benefit
of the Executive as of the date of the Executive's Change in Control
Termination.
(c) Except as set forth in Sections 7.06(a) and (b) hereof, any
payments required to be made to the Executive or his Beneficiary pursuant to
Sections 7.03 and 7.05 hereof shall, when received by the Executive, or his
Beneficiary, be in lieu of any payments otherwise provided with respect to the
Executive's termination of employment under any other severance pay or other
similar plan or policy maintained by the Corporations. The Corporations may,
in their sole discretion, change, replace or eliminate the Dayco Medical Plan
and any retirement plan or insurance policy described in Sections 7.06(a) and
(b) above at any time, but shall not do so after a Change in Control in a
manner which would prevent the Executive from receiving any benefit which he
would otherwise have been entitled to receive either immediately preceding the
Change of Control or immediately preceding a Change in Control Termination.
7.07 Certain Additional Payments by the Corporations. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by either of the Corporations 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 (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended or any similar section (the "Code")
or any interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties being hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (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.
(b) Subject to the provisions of Section 7.07(c) hereof, all
determinations required to be made under this Section 7.07, including whether
a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall
be made by Coopers & Lybrand, L.L.P. or any other nationally recognized firm
of certified public accountants (the "Accounting Firm" ) which shall provide
detailed supporting calculations both to each of the Corporations and to the
Executive within 15 business days of termination of the Executive's employment
under this Agreement, if applicable, or such earlier time as is requested by
the Executive or either of the Corporations. When calculating the amount of
the Gross-Up Payment, the Executive shall be deemed to pay:
(i) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which the
Gross-Up Payment is to be made, and
(ii) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from deduction of such state and local
taxes if paid in such year.
If the Accounting Firm has performed services for the person, entity or
group who caused the Change of Control, as described in Section 7.02 hereof or
any affiliate thereof, the Executive may select an alternative accounting firm
from any nationally recognized firm of certified public accountants. If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with an opinion that he has substantial authority
not to report any Excise Tax on his federal income tax return. Any
determination by the Accounting Firm shall be binding upon each of the
Corporations and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Corporations should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Corporations exhausts their remedies
pursuant to Section 7.07(c) hereof, and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall
be promptly paid by the Corporations to or for the benefit of the Executive.
(c) The Executive shall notify each of the Corporations in writing of
any claim by the Internal Revenue Service that, if successful, would require
the payment by either of the Corporations of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than ten
business days after the Executive knows of such claim and shall apprise each
of the Corporations 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 thirty-day period following the date on which it
gives such notice to the Corporations (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If either
of the Corporations 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 Corporations any information reasonably
requested by either of the Corporations relating to such claim,
(ii) take such action in connection with contesting such
claim as either of the Corporations 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 either of the
Corporations,
(iii)cooperate with the Corporations in good faith in order
effectively to contest such claim, and
(iv) permit each of the Corporations to participate in any
proceedings relating to such claim;
provided, however, that the Corporations shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 7.07(c), the Corporations shall control
all proceedings taken in connection with such contest and, at their sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at their sole option, either direct the Executive to pay the tax
claimed and sue for a refund or 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 Corporations shall determine; provided, however,
that if either of the Corporations directs the Executive to pay such claim and
sue for a refund, the Corporations 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 income tax,
including interest or penalties with respect thereto, imposed with respect to
such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statue of limitations
relating to payment of taxes for the taxable year of the Executive with
respect to which such contested amount is claimed to be due is limited solely
to such contested amount. Furthermore, the Corporations' control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder 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.
(d) If, after the receipt by the Executive of an amount advanced by
the Corporations pursuant to Section 7.07(c) hereof, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the compliance by the Corporations with the requirements of
Section 7.07(c)) promptly pay to the Corporations the amount of such refund
(together with any interest paid or credited thereon by the taxing authority
after deducting any taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Corporations pursuant to Section
7.07(c) hereof, a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Corporations do not
notify the Executive in writing of their intent to contest such denial of
refund prior to the expiration of thirty days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid under Section 7.07(a) hereof. The
forgiveness of such advance shall be considered part of the Gross-Up Payment
and subject to gross-up for any taxes (including interest or penalties)
associated therewith.
ARTICLE 8.
Severance and Effects of Termination
8.01 Effect of Termination for Cause. In the event the Executive's
employment with the Corporations is terminated by either of the Corporations
for cause pursuant to the provisions of Section 3.02 hereof, the Corporations
shall pay to the Executive any monthly installment of his Base Salary which is
accrued and unpaid as of the date of the Executive's termination at the
monthly rate then in effect and, thereafter, except as otherwise provided for
by Sections 2.09, 8.06 and 8.07 hereof, the Corporations shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide the Executive any medical, life,
disability or other insurance benefits hereunder and no further obligation to
pay or provide any other benefits provided to the Executive hereunder.
8.02 Effect of Voluntary Termination. In the event that the Executive
voluntarily terminates his employment with the Corporations as provided for by
Section 3.04 hereof, the Corporations shall pay to the Executive any monthly
installment of his Base Salary which is accrued and unpaid as of the date of
the Executive's termination at the monthly rate then in effect and,
thereafter, the Corporations shall have no further obligation to pay the
Executive any additional Base Salary, compensation or bonuses, no further
obligation to provide any medical, life, disability or other insurance
benefits to the Executive hereunder, and, except as otherwise provided under
the terms of Sections 8.06 and 8.07 hereof, no further obligation to pay any
other benefits provided to the Executive hereunder.
8.03 Effect of Termination Without Cause. In the event the Executive's
employment with the Corporations is terminated by either of the Corporations,
without cause, pursuant to Section 3.03 hereof, the Corporations shall,
(except as otherwise provided by Section 8.05 hereof), pay the Executive an
amount equal to the sum of: (a) one and one-half (1.5) times his Base Salary
at the rate then in effect (such amount being hereinafter referred to as the
"Base Salary Severance Payment"); (b) a pro-rata portion (determined on the
basis of the number of months the Executive was employed by the Corporations
during the fiscal year of Mark IV in which the Executive's employment is
terminated) of the amount, if any, of all bonuses which would have been
payable to the Executive had he continued in the employ of the Corporations
until the end of the fiscal year of Mark IV in which the Executive's
employment is terminated without cause (such amount being hereinafter referred
to as the "Bonus Severance Payment"); (c) any amounts with respect to which
the Executive is deemed to be vested under the terms of the Deferred Comp Plan
(such amount being hereinafter referred to as the "Deferred Comp Severance
Payment"); and (d) any amounts with respect to which the Executive is deemed
to be vested under the terms of the Dayco Plan of 55 (such amount being
hereinafter referred to as the "Plan of 55 Severance Payment"). For purposes
of this Section 8.03, (w) the Base Salary Severance Payment shall be paid to
the Executive in eighteen (18) substantially equal consecutive monthly
installments beginning on the first day of the first calendar month following
the date the Executive's employment with the Corporations is terminated; (x)
the Bonus Severance Payment, if any, shall be paid to the Executive in one
lump sum payment at the time bonuses are paid to salaried employees of Dayco
for the fiscal year of Mark IV in which the Executive's employment is
terminated; (y) the Deferred Comp Severance Payment shall be paid to the
Executive at the time and in the manner provided for in the Deferred Comp
Plan; and (z) the Plan of 55 Severance Payment shall be paid to the Executive
at the time and in the manner provided for in the Dayco Plan of 55. In
addition, if the Executive's employment with any of the Corporations is
terminated by any of the Corporations, without cause, pursuant to Section 3.03
hereof, except as otherwise provided above and in Sections 2.09 and 8.07
hereof, the Corporations shall have no further obligation following the
Executive's termination to pay the Executive any additional Base Salary,
compensation or bonuses, no further obligation to provide any medical, life,
disability or other insurance benefits to the Executive hereunder and no
further obligation to pay to the Executive any other benefits otherwise
provided to the Executive hereunder.
8.04 Effect of Retirement. In the event the Executive terminates his
employment with the Corporations by reason of his retirement as provided for
in Section 3.05 hereof, the Corporations shall pay to the Executive any
monthly installment of his Base Salary which is accrued and unpaid as of the
date of the Executive's retirement at the monthly rate then in effect plus an
amount equal to the amount of all bonuses which would have been payable to the
Executive by the Corporations pursuant to Section 2.02 hereof if the Executive
had remained in the employ of the Corporations until the end of the fiscal
year of Mark IV in which the Executive retires and assuming that average
monthly earnings of Dayco and Mark IV for the portion of Mark IV's fiscal year
which has elapsed prior to the date the Executive retires continues at such
rate after the Executive retires through the end of the fiscal year of Mark IV
in which the Executive retires. In addition, in the event the Executive
terminates his employment with the Corporations by reason of his retirement as
provided for in Section 3.05 hereof, the Corporations shall provide the
Executive group medical insurance type coverage which is the same as the group
medical insurance type coverage provided by Dayco to Retired Dayco Corporate
Employees under the terms of the Dayco Medical Plan provided that the
Executive pays to the Corporations the portion of the Premiums which is
required to be paid by all other Retired Dayco Corporate Employees in
connection with the provision of such group medical insurance type coverage as
described in the first paragraph of Section 2.09 hereof. Thereafter, except as
otherwise provided for above in this Section 8.04 and except as otherwise
provided in Sections 8.06 and 8.07 hereof, the Corporations shall have no
further obligation to pay the Executive any additional Base Salary,
compensation, bonuses or other benefits provided to the Executive hereunder.
8.05 Special Rules Relating to IPO's. Notwithstanding anything to the
contrary contained in this Agreement, in the event that the Executive's
employment with Mark IV is terminated in connection with an initial public
offering of the common stock of Dayco as described in Section 7.02(f) hereof,
and, in connection with such initial public offering, the Executive remains
the President of Dayco, such termination shall, for purposes of determining
the Executive's rights upon a termination of employment, be deemed to be a
voluntary termination of employment by the Executive pursuant to Section 3.04
hereof. In addition if, in connection with an initial public offering of
common stock of Dayco as described in Section 7.02(f) hereof, the Executive
rejects an offer from Dayco to be employed by Dayco as its President upon
terms which are at least reasonably comparable to the terms of this Agreement
and, in connection with the Executive's rejection of such offer of employment,
the Executive terminates his employment with the Corporations or the
Executive's employment with the Corporations is terminated by the
Corporations, without cause, as permitted by Section 3.03 hereof,
notwithstanding anything to the contrary contained in Section 8.03 hereof,
upon the occurrence of such termination, the Corporations shall pay to the
Executive any monthly installment of his Base Salary which is accrued and
unpaid as of the date of the Executive's termination at the monthly rate then
in effect and, thereafter, except as otherwise provided by Sections 2.09(a),
8.06 and 8.07 hereof, the Corporations shall have no further obligation to pay
the Executive any additional Base Salary, compensation or bonuses, no further
obligation to provide any medical, life, disability or other insurance
benefits to the Executive hereunder, and no further obligation to pay any
other benefits to the Executive hereunder.
8.06 Non-Qualified Deferred Compensation Plan Payments. Upon
termination of the Executive's employment with the Corporations for any
reason, the Executive shall be entitled to payment in full of the vested
portion, determined at the time the Executive's employment with the
Corporations is terminated, of: (a) the vested portion of all amounts payable
to the Executive under the terms of the Deferred Comp Plan; and (b) all
amounts payable to the Executive under the terms of the Dayco Plan of 55.
Payment of such vested portion of the amounts payable to the Executive under
the terms of the Deferred Comp Plan and the Dayco Plan of 55 shall be made at
the time and in the manner provided for by the terms of the Deferred Comp Plan
and the Dayco Plan of 55.
8.07 Retirement Plan Payments. Nothing in this Agreement shall be
deemed to limit the Executive's rights to receive or the obligations of the
Corporations to pay or provide for the Executive and his beneficiaries, any
continuation coverage as required by ERISA or any retirement or other benefits
accrued by the Executive at any time under the terms of any retirement plans
maintained by the Corporations which are subject to the requirements of ERISA
and satisfy the requirements of Section 401 of the Code.
ARTICLE 9.
Miscellaneous
9.01 Litigation Expenses. In the event that any dispute shall arise
under this Agreement between the Executive and either of the Corporation which
is related to the Change in Control Termination provisions of Article 7
hereof, the Corporations shall be responsible for the payment of all
reasonable expenses of all parties to such dispute, including reasonable
attorney fees, regardless of the outcome thereof.
9.02 Amendments. This Agreement may not be amended or modified orally,
and no provision hereof may be waived, except in a writing signed by the
parties hereto.
9.03 Assignment. This Agreement cannot be assigned by either party
hereto except with the written consent of the other
9.04 Prior Agreements. This Agreement shall supersede and replace any
and all prior agreements between either of the Corporations and the Executive,
whether express or implied. Except as specifically provided herein, nothing
contained in this Agreement shall be construed to constitute a waiver by the
Executive of any rights or claims under any existing pension or retirement
plans of either of the Corporations.
9.05 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the personal representatives and successors in interest of the
Executive and any successors in interest of either of the Corporations.
9.06 No Duplication. Each of the Corporations shall be jointly and
severally liable for providing the Executive the compensation and benefits
provided for by this Agreement. Notwithstanding the foregoing, the Executive
shall not be entitled to payment of duplicate benefits or compensation from
each of the Corporations and the payment once, by any or all of the
Corporations, of the compensation and benefits to be provided to the Executive
hereunder shall be deemed to fully satisfy the obligations of the Corporations
hereunder.
9.07 Applicable Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within such State except with respect to the
internal affairs of the Corporations and their respective stockholders, which
shall be governed by the General Corporation Law of the State of Delaware.
9.08 Notices. All notices and other communications given pursuant to
this Agreement shall be deemed to have been properly given or delivered if
hand-delivered, or if mailed, by certified mail or registered mail postage
prepaid, addressed to the Executive at the address first above written or if
to either of the Corporations, at their respective addresses first above
written with a copy to the attention of Gerald S. Lippes, Secretary, 700
Guaranty Building, Buffalo, New York 14202. From time to time, any party
hereto may designate by written notice any other address or party to which
such notice or communication or copies thereof shall be sent.
9.09 Severability of Provisions. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and this Agreement shall be interpreted as if such invalid,
illegal or unenforceable provision was not contained herein.
9.10 Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Executive and each of the Corporations
have caused this Agreement to be executed as of the day and year first above
written.
MARK IV INDUSTRIES, INC.
By: /s/ Sal H. Alfiero /s/ Bruce A. McNiel
Name: Sal H. Alfiero Bruce A. McNiel
Title: Chairman of the Board
DAYCO PRODUCTS, INC.
By: ________________________
Name:
Title:
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 1st day of January, 1995, by and between
MARK IV INDUSTRIES, INC., a Delaware corporation, with offices at 501 John
James Audubon Parkway, Amherst, New York 14228 ("Mark IV"), Dayco Products,
Inc., a Delaware corporation with offices at One Prestige Place, Miamisburg,
Ohio 45342 ("Dayco"), Dayco Europe, A.B., a Swedish corporation with offices
at S-294-01, Solvesborg, Sweden ("A.B."), (Mark IV, Dayco and A.B. being
sometimes hereinafter collectively referred to as the "Corporations") and Kurt
J. Johansson, an individual residing at Hosabyvaegen #12, S-294 00,
Solvesborg, Sweden (the "Executive").
RECITALS:
WHEREAS, the Executive is expected to make a major contribution to the
profitability, growth and financial strength of each of the Corporations; and
WHEREAS, the Corporations have determined that retaining the services of
the Executive is in their respective best interests and in the best interests
of the stockholders of Mark IV and, accordingly, the Corporations desire to
secure the services of the Executive on behalf of the Corporations;
CONSIDERATION:
NOW, THEREFORE, in consideration of the conditions and covenants set
forth in this Agreement, the parties hereto agree as follows:
ARTICLE 1.
Employment and Duties
1.01 Employment. The Corporations hereby agree to, and do hereby
employ the Executive, and the Executive hereby agrees to and does hereby
accept employment, by Mark IV, as Senior Vice President of Mark IV, by Dayco,
as Executive Vice President of Dayco (a wholly owned subsidiary of Mark IV)
and by A.B., as President and Managing Director of A.B., (a subsidiary of
Dayco). It is contemplated that the Executive will continue to serve as
Senior Vice President of Mark IV, Executive Vice President of Dayco and
President and Managing Director of A.B. subject to the provisions of this
Agreement and the right of the Boards of Directors of each of Dayco, Mark IV
and A.B. to elect new officers.
1.02 Duties. During the period of his employment under this Agreement,
the Executive shall perform such executive duties and responsibilities as may
be assigned to him, from time to time, by the Board of Directors of Mark IV,
the Board of Directors of Dayco and the Board of Directors of A.B. (as the
case may be) and shall be subject, at all times, to the control of the
applicable Board of Directors. The Executive shall devote substantially full
time and energies to the supervision and management of the business and
affairs of the Corporations and to the furtherance of their respective
interests. The Executive shall report directly to the President of Dayco and
the Chief Executive Officer of Mark IV or such other officer of Mark IV as may
be designated by the Chief Executive Officer of Mark IV.
ARTICLE 2.
Compensation and Fringe Benefits
2.01 Base Salary. During the period of the Executive's employment
hereunder, the Corporations shall pay to the Executive an annual salary ("Base
Salary") of $300,000, payable in substantially equal installments according to
A.B.'s normal payroll cycle. The amount of such Base Salary shall be
allocated among the Corporations in the proportions set forth in Exhibit A
attached hereto. The Board of Directors of Mark IV, through it's Compensation
Committee, shall in good faith review the Base Salary of the Executive on an
annual basis.
2.02 Bonuses. The Executive shall be entitled to participate in all
current and deferred worldwide bonus and incentive compensation programs which
may be maintained, from time to time, by Dayco for the executive officers of
Dayco. The portion of any bonus payable to the Executive which is
attributable to A.B. or Dayco shall be determined by the Corporations at the
time such bonus is awarded.
2.03 Reimbursement of Expenses. Each of A.B. and Dayco shall reimburse
the Executive for all reasonable expenses which the Executive may, from time
to time, incur on their behalf in the performance of his responsibilities and
duties under this Agreement, provided that the Executive accounts to each of
such Corporations for such expenses in the manner prescribed by the applicable
Corporation.
2.04 Savings & Retirement Plan Payments.The Executive shall not be
eligible to participate in the Mark IV Savings & Retirement Plan (the "Savings
& Retirement Plan"), a tax qualified profit sharing/401(k) plan maintained by
Mark IV for certain employees. However, annually on the same date that Dayco
makes employer matching contributions as provided for under the terms of the
Savings & Retirement Plan, Dayco will pay the Executive an amount not to
exceed 2.4% of the amount of the Executive's Base Salary but only to the
extent that the Executive's Base Salary does not exceed the maximum amount of
compensation (such maximum amount of compensation being hereinafter referred
to as the Executive's "Savings Plan Compensation") which may be taken into
consideration by Dayco and Mark IV under the terms of Section 401(a)(17) of
the Internal Revenue Code of 1986 (or such other amount as may be established
by the Secretary of the Treasury under Section 401(a)(17) of the Internal
Revenue Code of 1986) for purposes of determining the maximum amount which may
be contributed to the Savings & Retirement Plan on behalf of an eligible
participant. Further, at the end of each calendar year, Dayco will pay the
Executive an amount equal to the same percentage (presently 3.5%) of the
Executive's Savings Plan Compensation as is contributed by Dayco to the
Savings & Retirement Plan on behalf of its employees that are eligible for the
Savings & Retirement Plan. The amounts to be paid by Dayco to the Executive
pursuant to this Section shall be based on the total amount of the Executive's
Savings Plan Compensation, whether or not the total amount of the Executive's
Base Salary is actually received by the Executive as the result of a deferral
made by the Executive under the terms of the Non-Qualified Plan of Deferred
Incentive Compensation for Executives of Certain Operating Divisions and
Subsidiaries of Mark IV Industries, Inc. (hereinafter the "Deferred Comp
Plan").
2.05 Mark IV Fringe Benefits. The Executive shall be permitted to
participate in and receive awards under the terms of: (a) the Mark IV
Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan, as
amended; (b) the Mark IV Industries, Inc. 1992 Restricted Stock Plan, as
amended; and (c) the Deferred Comp Plan. Except as otherwise expressly
provided for above in this Section 2.05, the Executive shall not be permitted
to participate in or receive any benefits under the terms of any plan, program
or arrangement maintained or contributed to by Mark IV for Mark IV employees.
2.06 Deferred Comp Plan. During the term of this Agreement, the
Executive shall be permitted to defer the receipt of payment of all or any
portion of the Base Salary to which the Executive is entitled under the terms
of this Agreement and to defer the receipt of payment of all or any portion of
the amount of any bonus or other incentive compensation (which is otherwise
payable immediately) to which the Executive may become entitled during the
term of this Agreement, all in the manner permitted for certain specified
executives pursuant to the terms of the Deferred Comp Plan. In addition,
during the term of this Agreement, the Executive shall receive his
proportionate share of any amounts allocated annually by the Compensation
Committee of the Board of Directors of Mark IV to participants in the Deferred
Comp Plan whose principal place of employment is Dayco's corporate
headquarters, based on the entire amount of the Base Salary payable to the
Executive.
2.07 Retirement Plans. As noted in Section 2.04 above, the Executive
shall not be entitled to participate in the Savings & Retirement Plan.
However, notwithstanding the foregoing, A.B. shall make any and all payments
necessary to provide the Executive any pension or other retirement income
payments which the Executive may be entitled to under applicable Swedish law
based on the A.B. portion of the Executive's Base Salary (as determined from
Exhibit A attached hereto) and the A.B. portion of any bonuses which may be
payable to the Executive hereunder (as determined from Exhibit A attached
hereto).
2.08 Insurance Benefits. A.B. shall make any and all payments
necessary to provide the Executive with all medical benefits which the
Executive may be entitled to under applicable Swedish law based on the A.B.
portion of the Executive's Base Salary and the A.B. portion of any bonuses
which may become payable to the Executive hereunder. In addition, to the
extent that the Executive is not otherwise provided life insurance, disability
insurance and business travel accident insurance by reason of his employment
with A.B., Dayco shall provide funds toward the payment of premiums for
policies of life insurance, disability insurance and business travel accident
insurance to the extent necessary to provide the Executive with the same group
benefits programs and insurance which is provided for salaried employees of
Dayco. The Executive shall be responsible for payment of the employee portion
of any contributions required to be made with respect to the cost of the
aforementioned benefits, to the same extent that salaried employees of Dayco
or A.B. are required to make such contributions.
2.09 Continuation of Insurance Coverage.If the Executive retires from
his employment with the Corporations as permitted by Section 3.05 hereof, the
Corporations shall have no obligation to continue to provide any life,
medical, disability or other insurance coverage to the Executive except to the
extent that retiree medical insurance coverage is required, by applicable
Swedish law, to be provided for employees of A.B. If the Corporations provide
the Executive with retiree medical insurance coverage as required by the
preceding sentence, the Executive shall pay to the Corporations any premiums
or other payments due for such retiree medical insurance coverage to the
extent such premiums or other payments are required to be paid by retirees.
If the Executive incurs a Change in Control Termination as defined
in Section 7.01 hereof, the Corporations shall continue to provide funds for
the payment of any premiums due for any life insurance and any health
insurance which was provided to the Executive prior to the Executive's Change
in Control Termination. In addition, if the Executive incurs a Change in
Control Termination as defined in Section 7.01 hereof, the Corporations shall
take any such action as may be necessary to continue to provide life insurance
and medical insurance coverage to the Executive for life which is at least the
same as the life insurance and medical insurance coverage which was in effect
for the Executive prior to the Executive's Change in Control Termination;
provided that, the Executive shall continue to be obligated during such
period, to pay to the Corporations, the employee portion of any such insurance
coverage as determined at the time the Executive's Change in Control
Termination occurs.
2.10 Vacation and Other Benefits. During each full year of the
Executive's employment hereunder, the Executive shall be entitled to paid
vacations as prescribed in A.B.'s vacation policy. Except for participation
in the Savings & Retirement Plan, the Executive shall be entitled to receive
such other employment benefits and participate in such other employee benefit
plans as may, from time to time, be provided by A.B. to any of its executive
officers.
ARTICLE 3.
Term and Termination
3.01 Term. The period of employment of the Executive under this
Agreement shall commence January 1, 1995 and continue through December 31,
1997. Thereafter, unless otherwise terminated by any of the Corporations
pursuant to Section 3.03 hereof, effective January 1, 1998 and on each January
1 thereafter, the term of this Agreement shall be renewed for an additional
period of twelve (12) months.
3.02 Termination For Cause. Notwithstanding the provisions of Section
3.01 hereof, each of the Corporations may terminate the Executive's employment
hereunder at any time for cause, by delivering to the Executive a written
notice of termination setting forth the date on which such termination is to
be effective and specifying in reasonable detail the facts and circumstances
claimed to provide a basis for the termination.
For purposes of this Agreement, each Corporation shall have
"cause" to terminate the Executive's employment hereunder upon the
Executive's: (a) willful and continued failure to substantially perform his
duties hereunder other than any such failure resulting from the Executive's
incapacity due to physical or mental illness; (b) illegal or criminal conduct;
(c) intentional falsification of records or reports or any other act or acts
of dishonesty constituting a felony and resulting, or intended to result,
directly or indirectly, in personal gain or enrichment of the Executive at the
expense of any of the Corporations; (d) excessive and/or chronic use of
alcohol, narcotics or other controlled substances (other than under the
supervision of a licensed physician); or (e) willful engagement in gross
misconduct materially injurious to any of the Corporations.
3.03 Termination Without Cause. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, each of the Corporations may, at
any time on or after December 31, 1997 terminate the Executive's employment,
without cause, by delivering a written notice of termination to the Executive
which sets forth the date on which such termination is to be effective;
provided that, the effective date of any such termination shall not be less
than ninety (90) days following the date on which such written notice of
termination is delivered to the Executive.
3.04 Termination by the Executive. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Executive may terminate his
employment hereunder at any time by delivering a written notice of termination
to any of the Corporations which sets forth the date on which such termination
is to be effective; provided that, the effective date of any such termination
shall not be less than ninety (90) days following the date on which such
written notice of termination is delivered to any of the Corporations.
3.05 Retirement. The Executive may retire from his employment with the
Corporations at any time following his attainment of age sixty (60) by
delivering to any of the Corporations a written notice of his intent to
terminate his employment with the Corporations and retire, which written
notice sets forth the date on which such retirement (and its related
termination of employment) is to be effective; provided that, the effective
date of such retirement shall not be less than thirty (30) days following the
date on which such written notice of termination is delivered to any of the
Corporations.
3.06 Effect of Notice of Intent to Terminate. Upon delivery by any of
the Corporations to the Executive of a written notice of intent to terminate,
the Executive's employment with all of the Corporations shall be terminated,
effective at the time stated in such written notice of intent to terminate.
In addition, upon the Executive's delivery to any of the Corporations of a
written notice of intent to terminate (whether or not such termination is
intended to be a retirement) the Executive's employment with all of the
Corporations shall be terminated effective at the time stated in such written
notice of intent to terminate.
ARTICLE 4.
Confidentiality; Non-Compete Provisions
4.01 Confidentiality. During the period of the Executive's employment
hereunder and for a period of ten (10) years following the termination of the
Executive's employment for any reason whatsoever (including, without
limitation, retirement, a "for cause" termination or any other voluntary or
involuntary termination), the Executive agrees that he will not, without the
written consent of the Board of Directors of Mark IV, disclose to any person
(other than a person to whom disclosure is reasonably necessary or appropriate
in connection with the performance by the Executive of his duties as an
executive of the Corporations or to a person as required by any order or
process of any court or regulatory agency) any material confidential
information obtained by the Executive while in the employ of the Corporations
with respect to any management strategies, policies or techniques or with
respect to any products, improvements, formulae, designs or styles, processes,
customers, methods of distribution, or methods of manufacture of any of the
Corporations; provided, however, that confidential information shall not
include any information known generally to the public (other than as a result
of unauthorized disclosure by the 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 either of the Corporations.
4.02 Non-Compete. During the period of eighteen (18) months after the
date of termination of the Executive's employment hereunder for any reason
whatsoever (including, without limitation, retirement, a "for cause"
termination or any other voluntary or involuntary termination), the Executive
will not, directly or indirectly, own, manage, operate, control or participate
in the ownership, management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any financial
interest in, or aid or assist anyone else in the conduct of, any business
which competes with any business conducted by any of the Corporations or with
any group, division or subsidiary of any of the Corporations in any geographic
area where such business is being conducted at the time of such termination
(any such business being hereinafter referred to as a "Competitive
Operation"). Ownership by the Executive of 2% or less of the voting stock of
any publicly held corporation shall not constitute a violation of this Section
4.02.
4.03 Competitive Operation. For purposes of Section 4.02 hereof: (a)
a business shall not be deemed to be a Competitive Operation unless: (i) 25%
or more of the gross sales and operating revenues, of any of the Corporations
is derived from such business; or (ii) 25% or more of the net income of any of
the Corporations is derived from such business; or (iii) 25% or more of the
assets of any of the Corporations are devoted to such business; and (b) a
business which is conducted by any of the Corporations at the time of the
Executive's termination and which subsequently is sold or discontinued by any
of the Corporations shall not, subsequent to the date of such sale or
discontinuance, be deemed to be a Competitive Operation within the meaning of
Section 4.02.
ARTICLE 5.
Death Benefits
5.01 Death Benefits. If the Executive dies during the term of his
employment hereunder, in addition to any death benefits payable under the
terms of any life insurance policies maintained by the Corporations on the
life of the Executive, any death benefits payable on account of the death of
the Executive under the terms the Deferred Comp Plan and any death benefits
payable under the terms of applicable Swedish law, the Corporations shall pay
to such person, firm, corporation, trust or other entity which shall, from
time to time, be designated by the Executive to any of the Corporations, in
writing, as the intended recipient of the death benefits provided for under
the terms of this Agreement (such person, firm, corporation, trust or other
entity being hereinafter referred to as the Executive's "Beneficiary") a death
benefit equal to fifty percent (50%) of the Executive's Base Salary at the
rate in effect on the date of the Executive's death. In addition, if Dayco or
A.B. pay a bonus to their executive officers for the fiscal year of Mark IV in
which the Executive's death occurs, at the time that Dayco or A.B. pays such
bonus to its executive officers for such fiscal year, whichever date is
earlier, (a) if the Executive's death occurs during the first six (6) months
of Mark IV's fiscal year, the Corporations shall pay to the Executive's an
amount equal to fifty percent (50%) of the amount of the bonus which would
have been payable to the Executive pursuant to the bonus plans referred to in
Section 2.02 hereof for the fiscal year of Mark IV in which the Executive's
death occurs; and (b) if the Executive's death occurs at any time after the
first six (6) months of Mark IV's fiscal year, the Corporations shall pay to
the Executive's Beneficiary an amount equal to the amount of the bonus which
would have been payable to the Executive pursuant to the bonus plans referred
to in Section 2.02 hereof for the fiscal year of Mark IV in which the
Executive's death occurs.
ARTICLE 6.
Disability Benefits
6.01 Short-Term Disability. Except as otherwise provided in Section
6.02 hereof, in the event the Executive becomes disabled and is unable to
perform his duties hereunder, there shall be no reduction in the amount of the
Executive's Base Salary or any other benefits payable to him under this
Agreement.
6.02 Long-Term Disability. If, during the term of this Agreement, it
is determined that the Executive suffers from a Total and Permanent Disability
(as hereinafter defined), then, effective on the last day of the month in
which such determination is made, the Executive's employment hereunder shall
be deemed to be terminated. Upon such termination, unless a Change in Control
(as defined in Section 7.02 hereof) has occurred within the three (3) year
period preceding such termination and the Executive, as permitted by Section
7.01 hereof, has elected, in writing, to receive payment of the Change in
Control benefits described in Article 7 of this Agreement, the Corporations
shall pay to the Executive in equal monthly installments, for each twelve (12)
month period beginning on the day immediately following the date of such
termination and any anniversary thereof (an "Anniversary Date"), until the
Executive's 65th birthday, an amount equal to, his Base Salary, at the rate in
effect on the date his employment is terminated, up to a maximum of $150,000
per year (adjusted as set forth below), less the amounts of all social
security, retirement or disability benefits payable to the Executive for each
such twelve (12) month period by any agency of the Swedish Government.
6.03 Cost of Living Adjustment. On each Anniversary Date, the $150,000
per year limit contained in Section 6.02 shall be adjusted on a cumulative
basis for each annual increase in the U. S. Department of Labor Bureau of
Labor Statistics Consumer Price Index for Urban Wage Earners and Clerical
Workers, New York, New York, 1982-84 = 100 measured between the month prior to
the first month in which such compensation payments were made and the month
prior to the commencement of each such successive year.
6.04 Determination of Total and Permanent Disability. Any question as
to the existence or extent of disability of the Executive upon which the
Executive and the Corporations cannot agree shall be determined by a qualified
independent physician selected by the Executive and approved by the
Corporations (or, if the Executive is unable to make such selection, as
selected by any adult member of his immediate family). For purposes of this
Agreement, the Executive shall be deemed to suffer from a Total and Permanent
Disability if it is determined that the Executive is physically or mentally
unable to substantially perform his duties under this Agreement for a period
of twelve (12) consecutive months. The determination of any question as to
disability under this Section 6.04 by such physician shall be made in writing
to the Corporations and to the Executive and shall be final and conclusive for
all purposes of this Agreement.
ARTICLE 7.
Change in Control Benefits
7.01 Change in Control Termination. The Corporations will provide or
cause to be provided to the Executive the rights and benefits described in
Section 7.03 hereof in the event that, during the term of this Agreement
(including any renewal terms), the Executive's employment by the Corporations
is terminated at any time within three (3) years following a "Change in
Control" (as hereinafter defined) either:
(a) by any of the Corporations for any reason other than the
Executive's fraudulent conduct in connection with his employment by the
Corporations or conviction of a felony; or
(b) by the Executive following the occurrence of any of the
following events:
(i) the assignment to the Executive of any duties or
responsibilities that are inconsistent with his position, duties,
responsibilities or status immediately preceding such Change in Control;
(ii) a reduction of the Executive's Base Salary, bonuses or
other compensation or benefits from those types or amounts in effect
immediately prior to the Change in Control; or
(iii) the relocation of the principal executive offices of
any of the Corporations or a change in the duties of the Executive which
requires the Executive to move his residence from the Solvesborg area of
Sweden; or
(c) by the Executive, if he shall determine, in good faith, that
following a Change in Control, he is no longer able to effectively discharge
his duties under this Agreement.
For purposes of this Agreement, if the Executive's employment with
the Corporations is terminated after the occurrence of a Change in Control (as
hereinafter defined) for any of the reasons described above in this Section
7.01, such termination of employment shall hereinafter be referred to as a
"Change in Control Termination."
In the event that the Executive's employment with any of the
Corporations is terminated within three (3) years following a Change in
Control and following the date the Executive's employment with any of the
Corporation is terminated, it is determined (in accordance with Section 6.04
hereof) that, at the time the Executive's employment with any of the
Corporations was terminated, the Executive suffered from a Total and Permanent
Disability (as defined in Section 6.04 hereof), the Executive shall have the
right to elect, in writing, to receive the Change in Control benefits provided
for by this Article 7 or the disability benefits provided for by Section 6.02
hereof. Upon receipt by any of the Corporations of such written election from
the Executive, the Corporations shall pay (or cause to be paid) to the
Executive, the Change in Control benefits provided for by this Article 7 or
the disability benefits provided for by Section 6.02 hereof, whichever is
elected by the Executive. The Corporations shall not be entitled to object to
or contest their obligation to make any such payments (or cause such payments
to be made) or the Executive's right to make any such election on the grounds
that the Executive suffered from a Total and Permanent Disability at the time
his employment is terminated. In addition, if the Executive has attained at
least age sixty (60) and the Executive elects to terminate his employment with
the Corporations for any of the reasons set forth above in this Section 7.01
and within three (3) years following the occurrence of a Change in Control,
the Corporations shall have no right to object to or challenge the right of
the Executive to receive any payments provided for under this Article 7 on the
grounds that the Executive was otherwise entitled to retire from his
employment with the Corporation pursuant to Section 3.05 hereof.
7.02 Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if: (a) any consolidation or merger
of Mark IV is consummated as a result of which Mark IV is not the continuing
or surviving corporation or pursuant to which shares of Mark IV's common stock
would be converted into cash, securities or other property, other than a
merger of Mark IV in which the holders of Mark IV's common stock immediately
prior to the merger have the same proportionate ownership of common stock of
the surviving corporation immediately after the merger, or (b) any
consolidation or merger of Dayco or A.B. is consummated as a result of which
Dayco or A.B. is not the continuing or surviving corporation or pursuant to
which shares of common stock of Dayco or A.B. would be converted to cash,
securities or other property other than a merger of Dayco or A.B. in which
Mark IV, immediately following such merger, directly or indirectly owns not
less than fifty-one percent (51%) of the issued and outstanding common stock
of the surviving corporation; (c) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all, or
substantially all of the assets of Mark IV is consummated, or (d) any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of Dayco or all or
substantially all the assets of A.B. is consummated except any such
transaction or series of transactions which result in the transfer of all or
substantially all the assets of Dayco or all or substantially all the assets
of A.B. to Mark IV or any direct or indirect wholly owned subsidiaries of Mark
IV; or (e) the stockholders of Mark IV approve any plan or proposal for the
liquidation or dissolution of Mark IV; or (f) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") but excluding Mark IV and each of Mark IV's
officers and directors, whether individually or collectively), shall become
the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act)
of 20% or more of Mark IV's outstanding common stock or fifty percent (50%) or
more of the outstanding common stock of Dayco or A.B. other than as a result
of an initial public offering of the common stock of Dayco or A.B. pursuant to
the terms of a registration statement filed with the U.S. Securities and
Exchange Commission under the applicable provisions of the Securities Act of
1933, as amended, or, pursuant to any registration statement filed with the
Swedish governmental authorities under the applicable securities laws of
Sweden; or (g) during any period of three (3) consecutive years, individuals
who at the beginning of such period constitute the entire Board of Directors
of Mark IV shall cease for any reason to constitute a majority thereof unless
the election, or the nomination for election by Mark IV's stockholders, of
each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the
period.
7.03 Payments on Change in Control Termination.
(a) If a Change in Control Termination occurs prior to the end
of the first year of the Executive's employment hereunder, the Corporations
shall pay to the Executive within ten (10) days after the date of such Change
in Control Termination, a lump sum payment equal to three (3) times the sum
of: (i) the Base Salary of the Executive in effect on the date of such Change
in Control Termination; and (ii) the annualized amount of all bonuses awarded
to or received by the Executive pursuant to Section 2.02 hereof prior to the
Change in Control Termination, or, if no bonus has been awarded to or received
by the Executive prior to the Change in Control Termination, the amount of all
bonuses which would have been awarded to or received by the Executive on an
annualized basis pursuant to Section 2.02 hereof with respect to the fiscal
year of Mark IV in which the Change in Control Termination occurs, assuming
the Executive's employment with the Corporations continued through the end of
such fiscal year (the annualized amount of the bonus awarded to or received by
the Executive or to be awarded to or received by the Executive with respect to
the fiscal year of Mark IV in which the Change in Control Termination
described in this Section 7.03(a) occurs being hereinafter referred to as the
"Initial Bonus");
(b) If a Change in Control Termination occurs after the end of
the first year of the Executive's employment hereunder but prior to the end of
the second year of the Executive's employment hereunder, the Corporations
shall pay to the Executive within ten (10) days after the date of such Change
in Control Termination, a lump sum payment equal to three (3) times the sum
of: (i) the average of the Base Salary of the Executive in effect during the
Executive's employment hereunder; and (ii) the average of the sum of: (A) the
Initial Bonus, and (B) the amount of all bonuses awarded to or received by the
Executive under Section 2.02 hereof during the second year of the Executive's
employment hereunder, or, if no bonus has been awarded to or received by the
Executive during the second year of the Executive's employment hereunder, the
amount of all bonuses which would have been awarded to or received by the
Executive on an annualized basis pursuant to Section 2.02 hereof with respect
to the fiscal year of Mark IV in which the Change in Control Termination
occurs, assuming the Executive's employment with the Corporations continued
through the end of such fiscal year (the amount of the bonus awarded to or
received by the Executive or to be awarded to or received by the Executive
with respect to the fiscal year of Mark IV in which the Change in Control
Termination described in this Section 7.03(b) occurs being hereinafter
referred to as the "Second Bonus");
(c) If a Change in Control Termination occurs after the end of
the second year of the Executive's employment hereunder but prior to the end
of the third year of the Executive's employment hereunder, the Corporations
shall pay the Executive within ten (10) days after the date of such Change in
Control Termination, a lump sum payment equal to three (3) times the sum of:
(i) the average of the Base Salary of the Executive in effect during the
Executive's employment hereunder; and (ii) the average of the sum of: (A) the
amount of the Initial Bonus; (B) the amount of the Second Bonus; and (C) the
amount of all bonuses awarded to or received by the Executive under Section
2.02 hereof during the third year of the Executive's employment hereunder, or,
if no bonus has been awarded to or received by the Executive during the third
year of the Executive's employment hereunder, the amount of all bonuses which
would have been awarded to or received by the Executive on an annualized basis
pursuant to Section 2.02 hereof with respect to the fiscal year of the
Corporation in which the Change in Control Termination described in this
Section 7.03(c) occurs, assuming the Executive's employment with the
Corporation continued through the end of such fiscal year; and
(d) If a Change in Control Termination occurs after the end of
the third year of the Executive's employment hereunder, the Corporation shall
pay to the Executive within ten (10) days after the date of such Change in
Control Termination, a lump sum payment equal to three (3) times the sum of:
(i) the average of the Base Salary of the Executive in effect during the three
(3) year period ending on the date the Change in Control Termination occurs;
and (ii) the average of the amount of all bonuses awarded to or received by
the Executive under Section 2.02 hereof during the three (3) year period
ending on the date of the Change in Control Termination.
7.04 Effect of Deferred Compensation. The amounts payable to the
Executive pursuant to Section 7.03 hereof shall be determined based on the
amount of the Base Salary and the amount of any bonus which is payable to the
Executive, whether or not the Executive actually receives payment of such Base
Salary or bonus as a result of a deferral made by the Executive of the receipt
of payment of any portion of such Base Salary or bonus as permitted by the
terms of the Deferred Comp Plan as applicable to the Executive.
7.05 Benefits Upon Death. If the Executive dies following a Change
in Control Termination but prior to the payment of the applicable lump sum
provided for in Section 7.03 above, the Corporations shall pay the applicable
lump sum described in Section 7.03 hereof to the Executive's Beneficiary (as
described in Section 5.01 hereof) within ten (10) days following the receipt
by any of the Corporations of payment instructions from such Beneficiary.
7.06 Effect of Change in Control Termination on Other Benefits.
(a) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the Executive's right to receive any
payments due to the Executive under the terms of the Deferred Comp Plan or any
other retirement plan maintained or contributed to by A.B. for the Executive
under the applicable laws of Sweden. All such payments will be made in
accordance with the provisions of the applicable document containing the terms
of the Deferred Comp Plan and any other such retirement plans.
(b) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the obligation of the Corporations
under Section 2.09 hereof to continue to pay all premiums needed to maintain
policies of life and medical insurance for the benefit of the Executive for
the rest of the Executive's life in amounts at least comparable to the
policies of such insurance maintained by the Corporations for the benefit of
the Executive as of the date of the Executive's Change in Control Termination.
(c) Except as set forth in Sections 7.06(a) and (b) hereof, any
payments required to be made to the Executive or his Beneficiary pursuant to
Sections 7.03 and 7.05 hereof shall, when received by the Executive, or his
Beneficiary, be in lieu of any payments otherwise provided with respect to the
Executive's termination of employment under any other severance pay or other
similar plan or policy maintained by the Corporations. The Corporations may,
in their sole discretion, change, replace or eliminate any retirement plan or
insurance policy described in Sections 7.06(a) and (b) above at any time, but
shall not do so after a Change in Control in a manner which would prevent the
Executive from receiving any benefit which he would otherwise have been
entitled to receive either immediately preceding the Change of Control or
immediately preceding a Change in Control Termination.
7.07 Certain Additional Payments by the Corporations. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by any of the Corporations 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 (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended or any similar section (the "Code")
or any interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties being hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (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.
(b) Subject to the provisions of Section 7.07(c) hereof, all
determinations required to be made under this Section 7.07, including whether
a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall
be made by Coopers & Lybrand, L.L.P. or any other nationally recognized firm
of certified public accountants (the "Accounting Firm" ) which shall provide
detailed supporting calculations both to each of the Corporations and to the
Executive within 15 business days of termination of the Executive's employment
under this Agreement, if applicable, or such earlier time as is requested by
the Executive or any of the Corporations. When calculating the amount of the
Gross-Up Payment, the Executive shall be deemed to pay:
(i) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which the
Gross-Up Payment is to be made, and
(ii) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from deduction of such state and local
taxes if paid in such year.
If the Accounting Firm has performed services for the person, entity or
group who caused the Change of Control, as described in Section 7.02 hereof or
any affiliate thereof, the Executive may select an alternative accounting firm
from any nationally recognized firm of certified public accountants. If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with an opinion that he has substantial authority
not to report any Excise Tax on his federal income tax return. Any
determination by the Accounting Firm shall be binding upon each of the
Corporations and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Corporations should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Corporations exhausts their remedies
pursuant to Section 7.07(c) hereof, and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall
be promptly paid by the Corporations to or for the benefit of the Executive.
(c) The Executive shall notify each of the Corporations in
writing of any claim by the Internal Revenue Service that, if successful,
would require the payment by any of the Corporations of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten
business days after the Executive knows of such claim and shall apprise each
of the Corporations 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 thirty-day period following the date on which it
gives such notice to the Corporations (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If any of
the Corporations 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 Corporations any information reasonably
requested by any of the Corporations relating to such claim,
(ii) take such action in connection with contesting such
claim as any of the Corporations 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 any of the
Corporations,
(iii)cooperate with the Corporations in good faith in order
effectively to contest such claim, and
(iv) permit each of the Corporations to participate in any
proceedings relating to such claim;
provided, however, that the Corporations shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 7.07(c), the Corporations shall control
all proceedings taken in connection with such contest and, at their sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at their sole option, either direct the Executive to pay the tax
claimed and sue for a refund or 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 Corporations shall determine; provided, however,
that if any of the Corporations directs the Executive to pay such claim and
sue for a refund, the Corporations 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 income tax,
including interest or penalties with respect thereto, imposed with respect to
such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statue of limitations
relating to payment of taxes for the taxable year of the Executive with
respect to which such contested amount is claimed to be due is limited solely
to such contested amount. Furthermore, the Corporations' control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder 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.
(d) If, after the receipt by the Executive of an amount advanced
by the Corporations pursuant to Section 7.07(c) hereof, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the compliance by the Corporations with the requirements of
Section 7.07(c)) promptly pay to the Corporations the amount of such refund
(together with any interest paid or credited thereon by the taxing authority
after deducting any taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Corporations pursuant to Section
7.07(c) hereof, a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Corporations do not
notify the Executive in writing of their intent to contest such denial of
refund prior to the expiration of thirty days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid under Section 7.07(a) hereof. The
forgiveness of such advance shall be considered part of the Gross-Up Payment
and subject to gross-up for any taxes (including interest or penalties)
associated therewith.
ARTICLE 8.01
Severance and Effects of Termination
8.01 Effect of Termination for Cause. In the event the Executive's
employment with the Corporations is terminated for cause by any of the
Corporations pursuant to the provisions of Section 3.02 hereof, the
Corporations shall pay to the Executive any monthly installment of his Base
Salary which is accrued and unpaid as of the date of the Executive's
termination at the monthly rate then in effect and, thereafter, the
Corporations shall have no further obligation to pay the Executive any
additional Base Salary, compensation or bonuses and no further obligation to
provide any medical, life, disability or other insurance benefits to the
Executive hereunder. Except as otherwise provided under the terms of Sections
8.06 and 8.07 hereof, following the termination of the Executive's employment
for cause as provided for by Section 3.02 hereof, the Corporations shall have
no further obligation to pay any other benefits provided to the Executive
hereunder.
8.02 Effect of Voluntary Termination. In the event that the Executive
voluntarily terminates his employment with any of the Corporations as provided
for by Section 3.04 hereof, the Corporations shall pay to the Executive any
monthly installment of his Base Salary which is accrued and unpaid as of the
date of the Executive's termination at the monthly rate then in effect and,
thereafter, the Corporations shall have no further obligation to pay the
Executive any additional Base Salary, compensation or bonuses, no further
obligation to provide any medical, life, disability or other insurance
benefits to the Executive hereunder, and, except as otherwise provided under
the terms of Sections 8.06 and 8.07 hereof, no further obligation to pay any
other benefits provided to the Executive hereunder.
8.03 Effect of Termination Without Cause. In the event the Executive's
employment with the Corporations is terminated by any of the Corporations,
without cause, pursuant to Section 3.03 hereof, the Corporations shall,
(except as otherwise provided by Section 8.05 hereof), pay the Executive an
amount equal to the sum of: (a) one and one-half (1.5) times his Base Salary
at the rate then in effect (such amount being hereinafter referred to as the
"Base Salary Severance Payment"); (b) a pro-rata portion (determined on the
basis of the number of months the Executive was employed by the Corporation
during the fiscal year of Mark IV in which the Executive's employment is
terminated) of the amount, if any, of all bonuses which would have been
payable to the Executive had he continued in the employ of the Corporations
until the end of the fiscal year of Mark IV in which the Executive's
employment is terminated without cause (such amount being hereinafter referred
to as the "Bonus Severance Payment"); and (c) any amounts with respect to
which the Executive is deemed to be vested under the terms of the Deferred
Comp Plan (such amount being hereinafter referred to as the "Deferred Comp
Severance Payment"). For purposes of this Section 8.03, (x) the Base Salary
Severance Payment shall be paid to the Executive in eighteen (18)
substantially equal consecutive monthly installments beginning on the first
day of the first calendar month following the date the Executive's employment
with the Corporations is terminated; (y) the Bonus Severance Payment, if any,
shall be paid to the Executive in one lump sum payment at the time bonuses are
paid to salaried employees of Dayco for the fiscal year of Mark IV in which
the Executive's employment is terminated; and (z) the Deferred Comp Severance
Payment shall be paid to the Executive at the time and in the manner provided
for in the Deferred Comp Plan. Thereafter, the Corporations shall have no
further obligation to pay the Executive any additional Base Salary,
compensation or bonuses, no further obligation to provide any medical, life,
disability or other insurance benefits to the Executive hereunder and, except
as otherwise provided in Section 8.07 hereof, no further obligation to pay any
other benefits otherwise provided to the Executive hereunder.
8.04 Effect of Retirement. In the event the Executive terminates his
employment with the Corporations by reason of his retirement as provided for
in Section 3.05 hereof, the Corporations shall pay to the Executive any
monthly installment of his Base Salary which is accrued and unpaid as of the
date of the Executive's retirement at the monthly rate then in effect plus an
amount equal to the amount of all bonuses which would have been payable to the
Executive by the Corporations pursuant to Section 2.02 hereof if the Executive
had remained in the employ of the Corporations until the end of the fiscal
year of Mark IV in which the Executive retires and assuming that the average
monthly earnings of Mark IV for the portion of Mark IV's fiscal year which has
elapsed prior to the date the Executive retires continues at such rate after
the Executive retires through the end of the fiscal year of Mark IV in which
the Executive retires. In addition, in the event the Executive terminates his
employment with the Corporations by reason of his retirement as provided for
in Section 3.05 hereof, the Corporations shall provide the Executive with
medical insurance coverage, if any, which is the same as the medical insurance
coverage provided by A.B. to its retired salaried employees under applicable
Swedish law or the medical insurance coverage which is provided by Dayco to
its retired salaried employees (whichever coverage is more valuable); provided
that the Executive shall be responsible for payment of the retiree portion of
any contributions required to be made in connection with the provision of such
insurance coverage. Thereafter, except as otherwise provided for above in
this Section 8.04 and except as otherwise provided for in Sections 8.06 and
8.07 hereof, the Corporations shall have no further obligation to pay the
Executive any additional Base Salary, bonuses or other benefits provided to
the Executive hereunder.
8.05 Special Rules Relating to IPO's. Notwithstanding anything to the
contrary contained in this Agreement, in the event that the Executive's
employment with Mark IV is terminated in connection with an initial public
offering of the common stock of Dayco as described in Section 7.02(f) hereof,
and, in connection with such initial public offering, the Executive remains
the Executive Vice President of Dayco, such termination shall, for purposes of
determining the Executive's rights upon a termination of employment, be deemed
to be a voluntary termination of employment by the Executive pursuant to
Section 3.04 hereof. In addition, if the Executive's employment with both
Mark IV and Dayco is terminated in connection with an initial public offering
of stock of A.B. as described in Section 7.02(f) hereof, and, in connection
with such initial public offering, the Executive remains the President of
A.B., such termination shall, for purposes of determining the Executive's
rights upon a termination of employment, be deemed to be a voluntary
termination of employment by the Executive pursuant to Section 3.04 hereof.
In addition if, in connection with an initial public offering of common stock
of Dayco as described in Section 7.02(f) hereof, the Executive rejects an
offer from Dayco to be employed by Dayco as its Executive Vice President upon
terms which are at least reasonably comparable to the terms of this Agreement
or if, in connection with an initial public offering of stock of A.B. as
described in Section 7.02(f) hereof, the Executive rejects an offer from A.B.
to be employed by A.B. as its President, and, in connection with the
Executive's rejection of such offer of employment, the Executive terminates
his employment with the Corporations or the Executive's employment with the
Corporations is terminated by the Corporations, without cause, as permitted by
Section 3.03 hereof, notwithstanding anything to the contrary contained in
Section 8.03 hereof, upon the occurrence of such termination, the Corporations
shall pay to the Executive any monthly installment of his Base Salary which is
accrued and unpaid as of the date of the Executive's termination at the
monthly rate then in effect and, thereafter, the Corporations shall have no
further obligation to pay the Executive any additional Base Salary,
compensation or bonuses, no further obligation to provide any medical, life,
disability or other insurance benefits to the Executive hereunder, and, except
as otherwise provided under the terms of Sections 8.06 and 8.07 hereof, no
further obligation to pay any other benefits to the Executive hereunder.
8.06 Deferred Comp Plan Payments. Upon termination of the Executive's
employment with the Corporations for any reason, the Executive shall be
entitled to payment in full of the vested portion, determined at the time the
Executive's employment with the Corporations is terminated, of all amounts
payable to the Executive under the terms of the Deferred Comp Plan. Payment
of such vested portion of the amounts payable to the Executive under the terms
of the Deferred Comp Plan shall be made at the time and in the manner provided
for by the terms of the Deferred Comp Plan.
8.07 Retirement Plan Payments. Nothing in this Agreement shall be
deemed to limit the Executive's rights to receive or the obligations of the
Corporations to pay or provide for the Executive and his beneficiaries, any
continuation coverage as required by the Employee Retirement Income Security
Act of 1975, as amended ("ERISA") or any retirement or other benefits accrued
by the Executive at any time under the terms of any retirement plans
maintained by the Corporations which are subject to the requirements of ERISA,
the Code or any applicable Swedish law.
ARTICLE 9.
Miscellaneous
9.01 Litigation Expenses. In the event that any dispute shall arise
under this Agreement between the Executive and any of the Corporations which
is related to the Change in Control Termination provisions of Article 7
hereof, the Corporations shall be responsible for the payment of all
reasonable expenses of all parties to such dispute, including reasonable
attorney fees, regardless of the outcome thereof.
9.02 Amendments. This Agreement may not be amended or modified orally,
and no provision hereof may be waived, except in a writing signed by the
parties hereto.
9.03 Assignment. This Agreement cannot be assigned by either party
hereto except with the written consent of the other
9.04 Prior Agreements. This Agreement shall supersede and replace any
and all prior agreements between any of the Corporations and the Executive,
whether express or implied. Except as specifically provided herein, nothing
contained in this Agreement shall be construed to constitute a waiver by the
Executive of any rights or claims under any existing pension or retirement
plans of any of the Corporations.
9.05 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the personal representatives and successors in interest of the
Executive and any successors in interest of any of the Corporations.
9.06 No Duplication. All of the Corporations shall be jointly and
severally liable for providing the Executive the compensation and benefits
provided for by this Agreement. Notwithstanding the foregoing, the Executive
shall not be entitled to payment of duplicate benefits or compensation from
all of the Corporations and the payment once, by any or all of the
Corporations, of the compensation and benefits to be provided to the Executive
hereunder shall be deemed to fully satisfy the obligations of the Corporations
hereunder.
9.07 Applicable Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within such State except with respect to the
internal affairs of the Corporations and their respective stockholders, which
shall be governed by the General Corporation Law of the State of Delaware.
9.08 Notices. All notices and other communications given pursuant to
this Agreement shall be deemed to have been properly given or delivered if
hand-delivered, or if mailed, by certified mail or registered mail postage
prepaid, addressed to the Executive at the address first above written or if
to any of the Corporations, at their respective addresses first above written
with a copy to the attention of Gerald S. Lippes, Secretary, 700 Guaranty
Building, Buffalo, New York 14202. From time to time, any party hereto may
designate by written notice any other address or party to which such notice or
communication or copies thereof shall be sent.
9.09 Severability of Provisions. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and this Agreement shall be interpreted as if such invalid,
illegal or unenforceable provision was not contained herein.
9.10 Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Executive and each of the Corporations
have caused this Agreement to be executed as of the day and year first above
written.
MARK IV INDUSTRIES, INC. DAYCO EUROPE, A.B.
By: /s/ Sal H. Alfiero /s/ Sal H. Alfiero
Name: Sal H. Alfiero Name: Sal H. Alfiero
Title: Chairman of the Board Title: Chairman of the Board
DAYCO PRODUCTS, INC.
By: /s/ Sal H. Alfiero /s/ Kurt J. Johansson
Name: Sal H. Alfiero Kurt J. Johansson
Title: Chairman of the Board
EXHIBIT 10.11
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 1st day of January, 1995, by and between
MARK IV INDUSTRIES, INC., a Delaware corporation, with offices at 501 John
James Audubon Parkway, Amherst, New York 14228 ("Mark IV"), Dayco Products,
Inc., a Delaware corporation with offices at One Prestige Place, Miamisburg,
Ohio 45342 ("Dayco"), (Mark IV and Dayco being sometimes hereinafter
collectively referred to as the "Corporations") and Patricia Richert, an
individual residing at 1495 Finger Lakes, Dayton, Ohio 45458 (the
"Executive").
RECITALS:
WHEREAS, the Executive is expected to make a major contribution to the
profitability, growth and financial strength of each of the Corporations; and
WHEREAS, the Corporations have determined that retaining the services of
the Executive is in their respective best interests and in the best interests
of the stockholders of Mark IV and, accordingly, the Corporations desire to
secure the services of the Executive on behalf of the Corporations;
CONSIDERATION:
NOW, THEREFORE, in consideration of the conditions and covenants set
forth in this Agreement, the parties hereto agree as follows:
ARTICLE 1.
Employment and Duties
1.01 Employment. The Corporations hereby agree to, and do hereby
employ the Executive, and the Executive hereby agrees to and does hereby
accept employment, by Mark IV, as Vice President and Chief Information Officer
of Mark IV, and by Dayco, as Vice President - Information Technology of Dayco
(a wholly owned subsidiary of Mark IV). It is contemplated that the Executive
will continue to serve as Vice President and Chief Information Officer of Mark
IV and Vice President - Information Technology of Dayco subject to the
provisions of this Agreement and the right of the Board of Directors of Dayco
and Mark IV to elect new officers.
1.02 Duties. During the period of her employment under this Agreement,
the Executive shall perform such executive duties and responsibilities as may
be assigned to her, from time to time, by the Board of Directors of Mark IV
and the Board of Directors of Dayco (as the case may be) and shall be subject,
at all times, to the control of the applicable Board of Directors. The
Executive shall devote substantially full time and energies to the supervision
and management of the business and affairs of Mark IV and Dayco and to the
furtherance of their respective interests. The Executive shall report
directly to the President of Dayco and to the Chief Executive Officer of Mark
IV or such other officer of Mark IV as may be designated by the Chief
Executive Officer of Mark IV. The Corporations shall not require the
Executive to perform services hereunder outside the Dayton, Ohio metropolitan
area with such frequency or duration as would require the Executive to move
his residence from the Dayton area.
ARTICLE 2.
Compensation and Fringe Benefits
2.01 Base Salary. During the period of the Executive's employment
hereunder, the Corporations shall pay to the Executive an annual salary ("Base
Salary") of $126,000.00, payable in substantially equal semi-monthly
installments. The Board of Directors of Mark IV, through its Compensation
Committee, shall in good faith review the Base Salary of the Executive on an
annual basis and adjust the Base Salary of the Executive if, in the judgment
of the Compensation Committee, such adjustment is advisable. For purposes of
determining the Executive's rights under any plans, programs, arrangements or
benefits provided to the Executive pursuant to this Agreement, the full amount
of any cash bonuses payable to the Executive shall be deemed to be paid by
Dayco.
2.02 Bonuses. Except as otherwise specifically provided by Section
2.11(c) hereof, the Executive shall be entitled to participate in all current
and deferred worldwide bonus and incentive compensation programs which may be
maintained, from time to time, by Dayco for its executive officers, including,
but not limited to the Dayco Short-Term Bonus program.
2.03 Reimbursement of Expenses. Each of the Corporations shall
reimburse the Executive for all reasonable expenses which the Executive may,
from time to time, incur on their behalf in the performance of her
responsibilities and duties under this Agreement, provided that the Executive
accounts for such expenses in the manner prescribed by the applicable
Corporation.
2.04 Mark IV Fringe Benefits. The Executive shall be permitted to
participate in and receive awards under the terms of the Mark IV Industries,
Inc. and Subsidiaries 1992 Incentive Stock Option Plan, as amended and the
Mark IV Industries, Inc. 1992 Restricted Stock Plan, as amended. In addition,
effective as of August 1, 1994, the Executive shall be entitled to participate
in and receive benefits under the Non-Qualified Plan of Deferred Incentive
Compensation for Executives of Certain Operating Divisions and Subsidiaries of
Mark IV Industries, Inc., as amended (hereinafter the "Deferred Comp Plan")
and the Mark IV Savings & Retirement Plan (the "Master 401(k) Plan") (a master
profit sharing/401(k) plan maintained by Mark IV for certain employees of
certain of its subsidiaries) as applicable to salaried employees of Dayco
whose principal place of employment is Dayco's corporate headquarters. Except
as otherwise expressly provided for above in this Section 2.04, the Executive
shall not be permitted to participate in or receive any benefits under the
terms of any plan, program or arrangement maintained or contributed to by Mark
IV for Mark IV employees, including, but not limited to, any life insurance,
health insurance, disability insurance, travel accident insurance or any other
group insurance program or in any other health or welfare plan, benefit or
arrangement made available by Mark IV to its employees. Notwithstanding the
foregoing, nothing herein shall be deemed to reduce, modify, eliminate or
otherwise limit any rights or benefits which the Executive may have earned or
accrued as of July 31, 1994 under the terms of the Master 401(k) Plan as
applicable to employees of Mark IV whose principal place of employment is Mark
IV's corporate headquarters or under the terms of the Non-Qualified Plan of
deferred Compensation of Mark IV Industries, Inc. (the "Mark IV Deferred Comp
Plan").
2.05 Deferred Comp Plan. During the term of this Agreement, the
Executive shall be permitted to defer the receipt of payment of all or any
portion of the Base Salary to which the Executive is entitled under the terms
of this Agreement and to defer the receipt of payment of all or any portion of
the amount of any bonuses or other incentive compensation (which is otherwise
payable immediately) to which the Executive may become entitled under the
terms of this Agreement or any bonus or incentive compensation plan maintained
by Dayco, all in the manner permitted for certain specified executives
pursuant to the terms of the Deferred Comp Plan. In addition, except as
otherwise specifically provided under the terms of Section 2.11(c) hereof,
during the term of this Agreement, the Executive shall be entitled to receive
her proportionate share of any amounts allocated annually by the Compensation
Committee of the Board of Directors of Mark IV to participants in the Deferred
Comp Plan whose principal place of employment is Dayco's corporate
headquarters.
In general, under the terms of the Deferred Comp Plan, the amounts
which are or may be allocated annually to the Deferred Comp Plan on behalf of
employees of Dayco whose principal place of employment is Dayco's corporate
headquarters are "vested" at a rate of twenty percent (20%) per year. The
Corporations hereby agree that, notwithstanding anything to the contrary
contained in the Deferred Comp Plan, if, at the time the Executive's
employment with the Corporations is terminated, the Executive has not, under
the terms of the Deferred Comp Plan, acquired a one hundred percent (100%)
vested interest in the entire portion of the Executive's Account under the
terms of the Deferred Comp Plan, at the time that Mark IV pays to the
Executive the vested portion of the Executive's Account under the terms of the
Deferred Comp Plan, the Corporations shall also pay to the Executive, in one
lump sum payment, an amount equal to fifty percent (50%) of the value of the
portion of the Executive's Account which is not vested under the terms of the
Deferred Comp Plan at the time the Executive's employment with the
Corporations is terminated.
2.06 Tax Qualified Plans. The Executive shall be entitled to
participate in the Master 401(k) Plan as applicable to employees of Dayco
whose principal place of employment is Dayco's corporate headquarters and all
other tax qualified pension, profit sharing or retirement plans maintained,
from time to time, by either of the Corporations for salaried employees of
Dayco.
2.07 Medical Benefits. Dayco currently provides salaried employees of
Dayco whose principal place of employment is Dayco's corporate headquarters
(hereinafter referred to as "Dayco Corporate Employees") and certain retired
salaried employees of Dayco whose principal place of employment was Dayco's
corporate headquarters (hereinafter referred to as "Retired Dayco Corporate
Employees") with group medical insurance type protection against certain costs
and expenses relating to medical services and treatments provided to such
Dayco Corporate Employees (or Retired Dayco Corporate Employees), their
spouses and their dependents under a group medical program which is commonly
referred to as a "self-insured" medical plan (such group medical program being
hereinafter the "Dayco Medical Plan"). In connection with its maintenance and
administration of the Dayco Medical Plan, Dayco calculates and establishes, on
an annual basis, an amount which, generally, is equal to the expected per
capita cost to Dayco of maintaining the Dayco Medical Plan for such year and
which is used by Dayco for purposes of determining the amount of the
contributions which Dayco will require from Dayco Corporate Employees (and
Retired Dayco Corporate Employees) in order to provide such Dayco Corporate
Employees (and Retired Dayco Corporate Employees) the group medical insurance
type coverage provided by the Dayco Medical Plan (such amount being
hereinafter referred to as a "Premium"). During the term of this Agreement
(including any renewal terms) the Corporations shall provide the Executive,
with the same type of group medical insurance coverage which is provided to
Dayco Corporate Employees under the terms of the Dayco Medical Plan; provided
that neither of the Corporations shall have any obligation to provide such
group medical insurance type coverage to the Executive, unless the Executive
pays to Dayco, on a monthly basis, the same portion of the Premium
(hereinafter the "Employee Portion") which all other Dayco Corporate Employees
are required to pay for such group medical insurance type coverage.
2.08 Group Welfare Benefits. During the period of the Executive's
employment under the terms of this Agreement, the Executive shall be eligible
to participate in the Mark IV Industries, Inc. and Subsidiaries Group Welfare
Benefit Program as applicable to Dayco Corporate Employees (hereinafter the
"Flex Choice Plan"). As provided for by the terms of the Flex Choice Plan,
the Executive shall be entitled to elect to receive one or more of the
following benefits under the terms of the group welfare benefit programs which
are contained within the Flex Choice Plan and available to Dayco Corporate
Employees: (a) group medical insurance type coverage under the Dayco Medical
Plan; (b) dental insurance coverage; (c) employee life insurance coverage; (d)
accidental death and dismemberment insurance coverage; (e) dependent life
insurance coverage; (f) long term disability insurance coverage; (g) health
care spending account benefits; and (h) dependent care spending account
benefits. In the event that the Flex Choice Plan is amended during the term of
this Agreement to increase or reduce the number or type of group welfare
benefit programs which are available to Dayco Corporate Employees, the
Executive shall be entitled to elect to receive one or more of the new group
welfare benefit programs which are available under the terms of the Flex
Choice Plan. Notwithstanding the foregoing, the Corporations shall have no
obligation to maintain or provide any such group welfare benefits to the
Executive unless the Executive pays to Dayco, on a monthly basis, the employee
portion of any costs associated with the maintenance and provision of such
group welfare benefits to the same extent that such employee portion is paid
by all other Dayco Corporate Employees and determined, from time to time,
under the provisions of the Flex Choice Plan. The Corporations shall also pay
all premiums necessary to maintain a business travel accident insurance policy
for the Executive which provides the Executive with coverage and benefits
which are at least reasonably comparable to the business travel accident
insurance coverage in effect for the Executive as of the date of this
Agreement.
2.09 Continuation of Medical Benefits and Insurance Coverage. (a) If
the Executive's employment with the Corporations is terminated by either of
the Corporations, without cause, as permitted by Section 3.03 hereof, the
Corporations shall, for a period of one (1) year following the date the
Executive's employment with the Corporations is terminated, maintain and pay
any premiums necessary to maintain group welfare benefits for the Executive
which are the same as the group welfare benefits which were in effect for the
Executive under the terms of the Flex Choice Plan immediately prior to the
termination of the Executive's employment. Notwithstanding the foregoing, the
Corporations shall have no obligation to maintain or provide such group
welfare benefits to the Executive unless the Executive pays to Dayco, on a
monthly basis, the employee portion of any costs associated with the
maintenance and provision of such group welfare benefits to the same extent
that such employee portion is paid by all other Dayco Corporate Employees as
determined under the provisions of the Flex Choice Plan (or such greater or
lesser amount as may, from time to time, be required to be contributed by
Dayco Corporate Employees toward the cost of maintaining and providing such
benefits to such employees). At the end of the one (1) year period following
the date on which the Executive's employment is terminated (without cause) or,
if earlier, at such time that the Corporations shall terminate the group
welfare benefit coverage being provided to the Executive by reason of the
Executive's failure to pay the employee portion of any costs associated with
the maintenance and provision of such benefits, the Executive shall be
entitled to elect to receive continuation coverage with respect to any group
health plan benefits which are being provided to the Executive under the Flex
Choice Plan, in accordance with the applicable continuation coverage
provisions of section 4980B of the Internal Revenue Code of 1986, as amended
(hereinafter the "Code") and the applicable continuation coverage provisions
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(b) If the Executive retires from her employment with the
Corporations as permitted by Section 3.05 hereof, the Corporations shall have
no obligation to continue to provide any life, medical disability or other
insurance coverage to the Executive except to the extent that Dayco provides
life insurance and retiree medical insurance type coverage for its Retired
Dayco Corporate Employees. In the event that the Executive elects to receive
retiree medical insurance type coverage under the Dayco Medical Plan, the
Corporations shall provide such retiree medical insurance type coverage to the
Executive, provided that, the Executive pays to Dayco on a monthly basis, the
portion of the Premium due in connection with the provision of such retiree
medical insurance type coverage under the Dayco Medical Plan to the same
extent that such portion of the Premium is required to be paid by all other
Retired Dayco Corporate Employees. In the event that the Executive elects to
receive the life insurance coverage which is available to Retired Dayco
Corporate Employees, the Corporations shall provide such life insurance
protection to the Executive provided that the Executive pays to Dayco the
portion of any life insurance premiums due in connection with the maintenance
of such life insurance coverage to the same extent that such portion of such
life insurance premiums is paid by all other Retired Dayco Corporate
Employees.
(c) If the Executive's employment with the Corporations is
terminated as a result of her suffering of a Total and Permanent Disability as
described in Section 5.05 hereof, following the Executive's termination, the
Corporations shall provide group medical insurance type coverage to the
Executive which is the same as the group medical insurance type coverage which
is provided under the Dayco Medical Plan to Dayco Corporate Employees;
provided that, the Corporations shall have no obligation to provide such group
medical insurance type coverage to the Executive, unless the Executive pays to
Dayco, on a monthly basis, an amount which shall not exceed the Employee
Portion (determined at the time such medical insurance coverage is provided)
of the Premium payable by Dayco Corporate Employees for the group medical
insurance type coverage which is then being provided to such Dayco Corporate
Employees. Provided that the Executive continues to pay Dayco the amount
described in the preceding sentence, the Corporations shall continue to
provide such group medical insurance type coverage to the Executive, after the
date she suffers from a Total and Permanent Disability until the earlier of
the date that the Executive qualifies for Social Security Disability Insurance
benefits, including Medicare, or the date the Executive attains age 65.
Notwithstanding the foregoing, if Dayco provides group medical insurance type
coverage under the Dayco Medical Plan for its Retired Dayco Corporate
Employees which is more valuable than the group medical insurance type
coverage provided to the Executive under Medicare, the Corporations shall
provide the Executive the same group medical insurance type coverage which is
provided by Dayco for such Retired Dayco Corporate Employees provided that the
Executive pays to Dayco, on a monthly basis, the portion of the Premiums due
from Retired Dayco Corporate Employees with respect to such group medical
insurance type coverage as described in the first paragraph of this Section
2.09.
(d) If the Executive incurs a Change in Control Termination as
defined in Section 6.01 hereof, the Corporations shall continue to maintain
and pay, for the life of the Executive, any premiums due for life insurance
coverage in an amount which is at least reasonably comparable to the life
insurance coverage which was provided to the Executive immediately prior to
the Executive's Change in Control Termination provided that the Executive
shall continue to be obligated during such period to pay to the Corporations
the employee portion of the premiums due for such insurance coverage as
determined at the time the Executive's Change in Control Termination occurs.
In addition, if the Executive incurs a Change in Control Termination as
defined in Section 6.01 hereof, the Corporations shall take any such action as
may be necessary to continue to provide group medical insurance type coverage
to the Executive, for life which is at least reasonably comparable the group
medical insurance type coverage which was in effect for the Executive under
the Dayco Medical Plan immediately prior to the Executive's Change in Control
Termination; provided that, the Executive shall continue to be obligated
during such period, to pay to the Corporations, the Employee Portion of the
Premiums due for any such group medical insurance type coverage as determined
at the time the Executive's Change in Control Termination occurs.
2.10 Vacation and Other Benefits. During each full year of the
Executive's employment hereunder, the Executive shall be entitled to paid
vacations as prescribed in Dayco's vacation policy based on all years of the
Executive's service with both of the Corporations. In addition, the Executive
shall be entitled to receive such other employment benefits and participate in
such other employee benefit plans as may, from time to time, be provided by
either of the Corporations to executive officers of Dayco.
2.11 Special Transitional Benefits. (a) In connection with the
Executive's appointment as the Vice President - Information Technology of
Dayco, the Executive was required to relocate her residence from the Buffalo,
New York metropolitan area to the Dayton, Ohio metropolitan area. In
connection with such relocation, the Executive's principal place of employment
was changed from Mark IV's corporate headquarters to Dayco's corporate
headquarters. Accordingly, in order to mitigate the effects of the
Executive's relocation, the Corporations have agreed to provide the Executive
the transitional benefits described in this Section 2.11.
(b) The Corporation will reimburse to the Executive for the
expenses incurred by the Executive in connection with her relocation from the
Buffalo, New York metropolitan area to the Dayton, Ohio metropolitan area in
accordance with the Dayco relocation policy. In addition, the Corporations
shall lease an apartment in the Dayton, Ohio metropolitan area for the use of
the Executive for a period of one year, beginning August 1, 1994 and ending
July 31, 1995. In addition, during the period from August 1, 1994 through
July 31, 1997, the Corporations shall reimburse the Executive for personal
transportation expenses incurred for up to twenty (20) round trips between
Dayton, Ohio and Buffalo, New York, provided that the Executive accounts for
such expenses in a manner prescribed by the Corporations.
(c) By virtue of the Executive's employment as an officer of
Dayco and as more particularly provided by Sections 2.02 and 2.05 hereof, the
Executive is entitled to receive bonuses under the terms of the Dayco short
term incentive bonus plan and an allocation under the terms of the Deferred
Comp Plan in an amount which is up to twenty percent (20%) of the Executive's
Base Salary. Accordingly, in order to mitigate the effects of the change in
the Executive's principal place of employment, if, (i) for each of the two
fiscal years of Mark IV ending February 28, 1995 and February 28, 1996, the
sum of: (A) the amount which would have been paid to the Executive under the
terms of the Mark IV short term bonus program for such fiscal year; and (B)
the amount which would have been allocated to the Mark IV Deferred Comp Plan
for the benefit of the Executive for such fiscal year (excluding wages, salary
or bonus which could have been deferred by the Executive under the Mark IV
Deferred Comp Plan) exceeds (ii) the sum of: (A) the amount which would have
been paid to the Executive for such fiscal year under the terms of the Dayco
short term incentive bonus plan; and (B) the amount which would have been
allocated on behalf of the Executive under the Deferred Comp Plan for such
fiscal year; then (iii) notwithstanding the provisions of section 2.02 and
2.05 hereof: (A) the Executive, for such fiscal year, shall not be paid any
bonus under the terms of the Dayco short term incentive bonus plan; (B) the
Executive shall not be entitled to receive her proportionate share of any
allocations made under the Deferred Comp Plan for such fiscal year; (C) the
Executive shall be entitled to payment of a bonus for such fiscal year in an
amount determined under and at the time determined in accordance with the
terms of the Mark IV short term bonus plan; and (D) Mark IV shall cause an
amount to be allocated to the Mark IV Deferred Comp Plan for the benefit of
the Executive for such fiscal year in an amount, determined under the terms of
the Mark IV Deferred Comp Plan as if the Executive had been an employee of
Mark IV at Mark IV's corporate headquarters for the entire period of such
fiscal year. The amount to be allocated to the Mark IV Deferred Comp Plan for
a fiscal year as described in the preceding sentence shall be payable to the
Executive in accordance with the terms for payment of all other amounts
payable to the Executive under the terms of the Mark IV Deferred Comp Plan.
ARTICLE 3.
Term and Termination
3.01 Term. The period of employment of the Executive under this
Agreement shall commence January 1, 1995 and continue through December 31,
1997. Thereafter, unless otherwise terminated by either of the Corporations
pursuant to Section 3.03 hereof, effective January 1, 1998 and on each January
1 thereafter, the term of this Agreement shall automatically be renewed for an
additional period of twelve (12) months.
3.02 Termination For Cause. Notwithstanding the provisions of Section
3.01 hereof, each of the Corporations may terminate the Executive's employment
hereunder at any time for cause, by delivering to the Executive a written
notice of termination setting forth the date on which such termination is to
be effective and specifying in reasonable detail the facts and circumstances
claimed to provide a basis for the termination.
For purposes of this Agreement, each Corporation shall have
"cause" to terminate the Executive's employment hereunder upon the
Executive's: (a) willful and continued failure to substantially perform her
duties hereunder other than any such failure resulting from the Executive's
incapacity due to physical or mental illness; (b) illegal or criminal conduct;
(c) intentional falsification of records or reports or any other act or acts
of dishonesty constituting a felony and resulting, or intended to result,
directly or indirectly, in personal gain or enrichment of the Executive at the
expense of either of the Corporations; (d) excessive and/or chronic use of
alcohol, narcotics or other controlled substances (other than under the
supervision of a licensed physician); or (e) willful engagement in gross
misconduct materially injurious to either of the Corporations.
3.03 Termination Without Cause. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, each of the Corporations may, at
any time on or after December 31, 1997 terminate the Executive's employment,
without cause, by delivering a written notice of termination to the Executive
which sets forth the date on which such termination is to be effective;
provided that, the effective date of any such termination shall not be less
than ninety (90) days following the date on which such written notice of
termination is delivered to the Executive.
3.04 Termination by the Executive. Notwithstanding anything to the
contrary contained in Section 3.01 hereof, the Executive may terminate her
employment hereunder at any time by delivering a written notice of termination
to either of the Corporations which sets forth the date on which such
termination is to be effective; provided that, the effective date of any such
termination shall not be less than ninety (90) days following the date on
which such written notice of termination is delivered to either of the
Corporations.
3.05 Retirement. The Executive may retire from her employment with the
Corporations at any time following her attainment of age sixty (60) by
delivering to either of the Corporations a written notice of her intent to
terminate her employment with either of the Corporations and retire, which
written notice sets forth the date on which such retirement (and its related
termination of employment) is to be effective; provided that, the effective
date of such retirement shall not be less than thirty (30) days following the
date on which such written notice of termination is delivered to either of the
Corporations.
3.06 Effect of Notice of Intent to Terminate. Upon delivery by either
of the Corporations to the Executive of a written notice of intent to
terminate, the Executive's employment with both of the Corporations shall be
terminated, effective at the time stated in such written notice of intent to
terminate. In addition, upon the Executive's delivery to either of the
Corporations of a written notice of intent to terminate (whether or not such
termination is intended to be a retirement) the Executive's employment with
both the Corporations shall be terminated effective at the time stated in such
written notice of intent to terminate.
ARTICLE 4.
Confidentiality; Non-Compete Provisions
4.01 Confidentiality. During the period of the Executive's employment
hereunder and for a period of ten (10) years following the termination of the
Executive's employment for any reason whatsoever (including, without
limitation, retirement, a "for cause" termination or any other voluntary or
involuntary termination), the Executive agrees that she will not, without the
written consent of the Board of Directors of Mark IV, disclose to any person
(other than a person to whom disclosure is reasonably necessary or appropriate
in connection with the performance by the Executive of her duties as an
executive of the Corporations or to a person as required by any order or
process of any court or regulatory agency) any material confidential
information obtained by the Executive while in the employ of the Corporations
with respect to any management strategies, policies or techniques or with
respect to any products, improvements, formulae, designs or styles, processes,
customers, methods of distribution, or methods of manufacture of any of the
Corporations; provided, however, that confidential information shall not
include any information known generally to the public (other than as a result
of unauthorized disclosure by the 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 either of the Corporations.
4.02 Non-Compete. During the period of one (1) year after the date of
termination of the Executive's employment hereunder, for any reason whatsoever
(including, without limitation, retirement, "for cause" termination or any
other voluntary or involuntary termination), the Executive will not, directly
or indirectly, own, manage, operate, control or participate in the ownership,
management, operation or control of, or be connected as an officer, employee,
partner, director or otherwise with, or have any financial interest in, or aid
or assist anyone else in the conduct of, any business which competes with any
business conducted by either of the Corporations or with any group, division
or subsidiary of either of the Corporations in any geographic area where such
business is being conducted at the time of such termination (any such business
being hereinafter referred to as a "Competitive Operation"). Ownership by the
Executive of 2% or less of the voting stock of any publicly held corporation
shall not constitute a violation of this Section 4.02.
4.03 Competitive Operation. For purposes of Section 4.02 hereof: (a)
a business shall not be deemed to be a Competitive Operation unless: (i) 25%
or more of the consolidated gross sales and operating revenues, of either of
the Corporations is derived from such business; or (ii) 25% or more of the
consolidated net income of either of the Corporations is derived from such
business; or (iii) 25% or more of the consolidated assets of either of the
Corporations are devoted to such business; and (b) a business which is
conducted by either of the Corporations at the time of the Executive's
termination and which subsequently is sold or discontinued by either of the
Corporations shall not, subsequent to the date of such sale or discontinuance,
be deemed to be a Competitive Operation within the meaning of Section 4.02.
ARTICLE 5.
Death and Disability Benefits
5.01 Death Benefits. If the Executive dies during the term of her
employment hereunder, in addition to any death benefits payable under the
terms of any life insurance policies maintained by the Corporations on the
life of the Executive, any death benefits payable on account of the death of
the Executive under the terms of the Deferred Comp Plan, any death benefits
payable on account of the death of the Executive under the terms of the Mark
IV Deferred Comp Plan and any death benefits payable on account of the death
of the Executive under the terms of any tax qualified retirement plans
maintained by the Corporations, the Corporations shall pay to such person,
firm, corporation, trust or other entity which shall, from time to time, be
designated by the Executive to either of the Corporations, in writing, as the
intended recipient of death benefits provided for under the terms of this
Agreement (such person, firm, corporation, trust or other entity being
hereinafter referred to as the Executive's "Beneficiary") a death benefit
equal to 50% of the Executive's Base Salary at the rate in effect on the date
of the Executive's death. In addition, if Dayco pays a bonus to its executive
officers for the fiscal year of Mark IV in which the Executive's death occurs,
at the time Dayco pays such bonuses to its executive officers for such fiscal
year: (a) if the Executive's death occurs during the first six (6) months of
Mark IV's fiscal year, the Corporations shall pay to the Executive's
Beneficiary, an amount equal to the fifty percent (50%) of the amount of the
bonus which would have been payable to the Executive pursuant to the bonus
plans referred to in Section 2.02 hereof for the fiscal year of Mark IV in
which the Executive's death occurs; and (b) if the Executive's death occurs at
any time after the first six (6) months of Mark IV's fiscal year, the
Corporations shall pay to the Executive's Beneficiary, an amount equal to the
amount of the bonus which would have been payable to the Executive pursuant to
the bonus plans referred to in Section 2.02 hereof for the fiscal year of Mark
IV in which the Executive's death occurs.
5.02 Short-Term Disability. Except as otherwise provided in Section
5.03 hereof, in the event the Executive becomes disabled and is unable to
perform her duties hereunder, there shall be no reduction in the amount of the
Executive's Base Salary or any other benefits payable to her under this
Agreement.
5.03 Long-Term Disability. If, during the term of this Agreement, it
is determined that the Executive suffers from a Total and Permanent Disability
(as hereinafter defined), then, effective on the last day of the month in
which such determination is made, the Executive's employment hereunder shall
be deemed to be terminated. If it is determined that, at the time the
Executive's employment with either of the Corporations was terminated, the
Executive was suffering from a Total and Permanent Disability (as hereinafter
defined), the Corporations shall pay to the Executive in equal monthly
installments, for each twelve (12) month period which elapses during the five
(5) year period beginning on the day immediately following the date of such
deemed termination and any anniversary thereof (an "Anniversary Date"), an
amount equal to, her Base Salary, at the rate in effect on the date her
employment is terminated, up to a maximum of $100,000 per year (adjusted as
set forth below), less the amounts of all social security, retirement or
disability benefits payable to the Executive for each such twelve (12) month
period by any agency of the United States Government or the State of Ohio.
In addition to the foregoing, in the event the Executive's
employment with the Corporations is terminated as a result of her suffering of
a Total and Permanent Disability, the Corporation shall continue to provide
group medical insurance type coverage to the Executive as required by Section
2.09 hereof.
5.04 Cost of Living Adjustment. On each Anniversary Date, the $100,000
per year limit contained in Section 5.03 shall be adjusted on a cumulative
basis for each annual increase in the U. S. Department of Labor Bureau of
Labor Statistics Consumer Price Index for Urban Wage Earners and Clerical
Workers, New York, New York, 1982-84 = 100 measured between the month prior to
the first month in which such compensation payments were made and the month
prior to the commencement of each such successive year.
5.05 Determination of Total and Permanent Disability. Any question as
to the existence or extent of disability of the Executive upon which the
Executive and the Corporations cannot agree shall be determined by a qualified
independent physician selected by the Executive and approved by the
Corporations (or, if the Executive is unable to make such selection, as
selected by any adult member of her immediate family). For purposes of this
Agreement, the Executive shall be deemed to suffer from a Total and Permanent
Disability if it is determined that the Executive is physically or mentally
unable to substantially perform her duties under this Agreement for a period
of twelve (12) consecutive months. The determination of any question as to
disability under this Section 5.05 by such physician shall be made in writing
to the Corporations and to the Executive and shall be final and conclusive for
all purposes of this Agreement.
ARTICLE 6.
Change in Control Benefits
6.01 Change in Control Termination. The Corporations will provide or
cause to be provided to the Executive the rights and benefits described in
Section 6.03 hereof in the event that, during the term of this Agreement
(including any renewal terms) the Executive's employment by the Corporations
is terminated at any time within three (3) years following a "Change in
Control" (as hereinafter defined) either:
(a) by either of the Corporations for any reason other than the
Executive's fraudulent conduct in connection with her employment by the
Corporations or conviction of a felony; or
(b) by the Executive following the occurrence of any of the
following events:
(i) the assignment to the Executive of any duties or
responsibilities that are inconsistent with her position, duties,
responsibilities or status immediately preceding such Change in Control;
(ii) a reduction of the Executive's Base Salary, bonuses or
other compensation or benefits from those types or amounts in effect
immediately prior to the Change in Control; or
(iii) the relocation of the principal executive offices of
either of the Corporations or a change in the duties of the Executive which
requires the Executive to move her residence from its Dayton, Ohio
metropolitan area; or
(c) by the Executive, if she shall determine in good faith that,
following a Change in Control, she is no longer able to effectively discharge
her duties under this Agreement.
For purposes of this Agreement, if the Executive's employment with
the Corporations is terminated after the occurrence of a Change in Control (as
hereinafter defined) for any of the reasons described above in this Section
6.01, such termination of employment shall hereinafter be referred to as a
"Change in Control Termination."
If the Executive has attained at least age sixty (60) and the
Executive elects to terminate her employment with the Corporations for any of
the reasons set forth above in this Section 6.01 and within three (3) years
following the occurrence of a Change in Control, the Corporations shall have
no right to object to or challenge the right of the Executive to receive any
payments provided for under this Article 6 on the grounds that the Executive
was otherwise entitled to retire from her employment with the Corporation
pursuant to Section 3.05 hereof.
6.02 Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if: (a) any consolidation or merger
of Mark IV is consummated, as a result of which, Mark IV is not the continuing
or surviving corporation, or pursuant to which shares of Mark IV's common
stock would be converted into cash, securities or other property, other than a
merger of Mark IV in which the holders of Mark IV's common stock immediately
prior to the merger have the same proportionate ownership of common stock of
the surviving corporation immediately after the merger, or (b) any
consolidation or merger of Dayco is consummated, as a result of which, Dayco
is not the continuing or surviving corporation or pursuant to which shares of
Dayco's common stock would be converted to cash, securities or other property
other than a merger of Dayco in which Mark IV, immediately following such
merger, directly or indirectly owns not less than fifty-one percent (51%) of
the issued and outstanding common stock of the surviving corporation; (c) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of Mark IV
is consummated, or (d) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all
of the assets of Dayco is consummated except any such transaction or series of
transactions which result in the transfer of all or substantially all the
assets of Dayco to Mark IV or any direct or indirect wholly owned subsidiaries
of Mark IV; or (e) the stockholders of Mark IV approve any plan or proposal
for the liquidation or dissolution of Mark IV; or (f) any person (as such term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") but excluding Mark IV and each of Mark IV's
officers and directors, whether individually or collectively), shall become
the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act)
of 20% or more of Mark IV's outstanding common stock or more than fifty
percent (50%) of Dayco's outstanding common stock other than as a result of an
initial public offering of the common stock of Dayco pursuant to a
registration statement filed with the United States Securities and Exchange
Commission under the applicable provisions of the Securities Act of 1993, as
amended; or (g) during any period of three (3) consecutive years, individuals
who at the beginning of such period constitute the entire Board of Directors
of Mark IV shall cease for any reason to constitute a majority thereof unless
the election, or the nomination for election by Mark IV's stockholders, of
each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the
period.
6.03 Payments on Change in Control Termination.
(a) If a Change in Control Termination occurs prior to the end
of the first year of the Executive's employment hereunder, the Corporations
shall pay to the Executive within ten (10) days after the date of such Change
in Control Termination, a lump sum payment equal to three (3) times the sum
of: (i) the Base Salary of the Executive in effect on the date of such Change
in Control Termination; and (ii) the annualized amount of all bonuses awarded
to or received by the Executive pursuant to Section 2.02 hereof prior to the
Change in Control Termination, or, if no bonus has been awarded to or received
by the Executive prior to the Change in Control Termination, the amount of the
bonuses which would have been awarded to or received by the Executive on an
annualized basis pursuant to Section 2.02 hereof with respect to the fiscal
year of Mark IV in which the Change in Control Termination occurs, assuming
the Executive's employment with the Corporations continued through the end of
such fiscal year (the annualized amount of the bonus awarded to or received by
the Executive or to be awarded to or received by the Executive with respect to
the fiscal year of Mark IV in which the Change in Control Termination occurs
being hereinafter referred to as the "Initial Bonus");
(b) If a Change in Control Termination occurs after the end of
the first year of the Executive's employment hereunder but prior to the end of
the second year of the Executive's employment hereunder, the Corporations
shall pay to the Executive within ten (10) days after the date of such Change
in Control Termination, a lump sum payment equal to three (3) times the sum
of: (i) the average of the Base Salary of the Executive in effect during the
Executive's employment hereunder; and (ii) the average of the sum of: (A)
Initial Bonus; and (B) the amount of all bonuses awarded to or received by the
Executive under Section 2.02 hereof during the second year of the Executive's
employment hereunder, or, if no bonus has been awarded to or received by the
Executive during the second year of the Executive's employment hereunder, the
amount of the bonuses which would have been awarded to or received by the
Executive on an annualized basis pursuant to Section 2.02 hereof with respect
to the fiscal year of Mark IV in which the Change in Control Termination
occurs, assuming the Executive's employment with the Corporations continued
through the end of such fiscal year (the amount of the bonus awarded to or
received by the Executive or to be awarded to or received by the Executive
with respect to the fiscal year of Mark IV in which the Change in Control
Termination occurs being hereinafter referred to as the "Second Bonus");
(c) If a Change in Control Termination occurs after the end of
the second year of the Executive's employment hereunder but prior to the end
of the third year of the Executive's employment hereunder, the Corporations
shall pay the Executive within ten (10) days after the date of such Change in
Control Termination, a lump sum payment equal to three (3) times the sum of:
(i) the average of the Base Salary of the Executive in effect during the
Executive's employment hereunder; and (ii) the average of the sum of: (A) the
amount of the Initial Bonus; (B) the Second Bonus; and (C) the amount of all
bonuses awarded to or received by the Executive under Section 2.02 hereof
during the third year of the Executive's employment hereunder, or, if no bonus
has been awarded to or received by the Executive during the third year of the
Executive's employment hereunder, the amount of the bonuses which would have
been awarded to or received by the Executive on an annualized basis pursuant
to Section 2.02 hereof with respect to the fiscal year of Mark IV in which the
Change in Control Termination occurs, assuming the Executive's employment with
the Corporations continued through the end of such fiscal year; and
(d) If a Change in Control Termination occurs after the end of
the third year of the Executive's employment hereunder, the Corporations shall
pay to the Executive within ten (10) days after the date of such Change in
Control Termination, a lump sum payment equal to three (3) times the sum of:
(i) the average of the Base Salary of the Executive in effect during the three
(3) year period ending on the date the Change in Control Termination occurs;
and (ii) the average of the amount of all bonuses awarded to or received by
the Executive pursuant to Section 2.02 hereof during the three (3) year period
ending on the date of the Change in Control Termination.
6.04 Effect of Deferred Compensation. The amounts payable to the
Executive pursuant to Section 6.03 hereof shall be determined based on the
amount of the Base Salary and the amount of any bonus which is payable to the
Executive, whether or not the Executive actually receives payment of such Base
Salary or bonus as a result of a deferral made by the Executive of the receipt
of payment of any portion of such Base Salary or bonus as permitted by the
terms of the Deferred Comp Plan as applicable to the Executive.
6.05 Benefits Upon Death. If the Executive dies following a Change
in Control Termination but prior to the payment of the applicable lump sum
provided for in Section 6.03 above, the Corporations shall pay the applicable
lump sum described in Section 3.03 hereof to the Executive's Beneficiary (as
described in Section 5.01 hereof) within ten (10) days following receipt by
either of the Corporations of payment instructions from such Beneficiary.
6.06 Effect of Change in Control Termination on Other Benefits.
(a) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the Executive's right to receive any
payments due to the Executive under the terms of the Master 401(k) Plan, the
Deferred Comp Plan, the Mark IV Deferred Comp Plan or any other tax qualified
or other retirement plan which the Executive is a participant in. All such
payments will be made in accordance with the provisions of the applicable
document containing the terms of the Master 401(k) Plan, the Deferred Comp
Plan, the Mark IV Deferred Comp Plan and any other such tax qualified or other
retirement plan.
(b) The occurrence of a Change in Control Termination with
respect to the Executive shall not affect the obligation of the Corporations
under Section 2.09 hereof to continue to pay all premiums needed to maintain
policies of life insurance for the Executive and to continue to provide group
medical insurance type coverage for the benefit of the Executive for the rest
of the Executive's life in amounts at least reasonably comparable to the group
medical insurance type coverage which was in effect for the Executive and the
policies of such life insurance maintained by the Corporation for the benefit
of the Executive as of the date of the Executive's Change in Control
Termination.
(c) Except as set forth in Sections 6.06(a) and (b) hereof, any
payments required to be made to the Executive or her Beneficiary pursuant to
Sections 6.03 and 6.05 hereof shall, when received by the Executive, or her
Beneficiary, be in lieu of any payments otherwise provided with respect to the
Executive's termination of employment under any other severance pay or other
similar plan or policy maintained by the Corporations. The Corporations may,
in their sole discretion, change, replace or eliminate the Dayco Medical Plan
and any retirement plan or insurance policy described in Sections 6.06(a) and
(b) above at any time, but shall not do so after a Change in Control in a
manner which would prevent the Executive from receiving any benefit which she
would otherwise have been entitled to receive either immediately preceding the
Change of Control or immediately preceding a Change in Control Termination.
6.07 Certain Additional Payments by the Corporations. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by either of the Corporations 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 (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties being hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (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.
(b) Subject to the provisions of Section 6.07(c) hereof, all
determinations required to be made under this Section 6.07, including whether
a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall
be made by Coopers & Lybrand, L.L.P. or any other nationally recognized firm
of certified public accountant (the "Accounting Firm" ) which shall provide
detailed supporting calculations both to each of the Corporations and to the
Executive within 15 business days of termination of the Executive's employment
under this Agreement, if applicable, or such earlier time as is requested by
the Executive or either of the Corporations. When calculating the amount of
the Gross-Up Payment, the Executive shall be deemed to pay:
(i) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which the
Gross-Up Payment is to be made, and
(ii) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from deduction of such state and local
taxes if paid in such year.
If the Accounting Firm has performed services for the person, entity or
group who caused the Change of Control, as described in Section 6.02 hereof or
any affiliate thereof, the Executive may select an alternative accounting firm
from any nationally recognized firm of certified public accountants. If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with an opinion that he has substantial authority
not to report any Excise Tax on his federal income tax return. Any
determination by the Accounting Firm shall be binding upon each of the
Corporations and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Corporations should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Corporations exhausts their remedies
pursuant to Section 6.07(c) hereof, and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall
be promptly paid by the Corporations to or for the benefit of the Executive.
(c) The Executive shall notify each of the Corporations in writing of
any claim by the Internal Revenue Service that, if successful, would require
the payment by either of the Corporations of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than ten
business days after the Executive knows of such claim and shall apprise each
of the Corporations 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 thirty-day period following the date on which she
gives such notice to the Corporations (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If either
of the Corporations 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 Corporations any information reasonably
requested by either of the Corporations relating to such claim,
(ii) take such action in connection with contesting such
claim as either of the Corporations 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 either of the
Corporations,
(iii)cooperate with the Corporations in good faith in order
effectively to contest such claim, and
(iv) permit each of the Corporations to participate in any
proceedings relating to such claim;
provided, however, that the Corporations shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 6.07(c), the Corporations shall control
all proceedings taken in connection with such contest and, at their sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at their sole option, either direct the Executive to pay the tax
claimed and sue for a refund or 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 Corporations shall determine; provided, however,
that if either of the Corporations directs the Executive to pay such claim and
sue for a refund, the Corporations 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 income tax,
including interest or penalties with respect thereto, imposed with respect to
such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statue of limitations
relating to payment of taxes for the taxable year of the Executive with
respect to which such contested amount is claimed to be due is limited solely
to such contested amount. Furthermore, the Corporations' control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder 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.
(d) If, after the receipt by the Executive of an amount advanced by
the Corporations pursuant to Section 6.07(c) hereof, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the compliance by the Corporations with the requirements of
Section 6.07(c)) promptly pay to the Corporations the amount of such refund
(together with any interest paid or credited thereon by the taxing authority
after deducting any taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Corporations pursuant to Section
6.07(c) hereof, a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Corporations do not
notify the Executive in writing of their intent to contest such denial of
refund prior to the expiration of thirty days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid under Section 6.07(a) hereof. The
forgiveness of such advance shall be considered part of the Gross-Up Payment
and subject to gross-up for any taxes (including interest or penalties)
associated therewith.
ARTICLE 7.
Severance and Effects of Termination
7.01 Effect of Termination for Cause. In the event the Executive's
employment with the Corporations is terminated by either of the Corporations
for cause pursuant to the provisions of Section 3.02 hereof, the Corporations
shall pay to the Executive any monthly installment of her Base Salary which is
accrued and unpaid as of the date of the Executive's termination at the
monthly rate then in effect and, thereafter, except as otherwise provided for
by Sections 7.06 and 7.07 hereof, the Corporations shall have no further
obligation to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide the Executive any medical, life,
disability or other insurance benefits hereunder and no further obligation to
pay or provide any other benefits provided to the Executive hereunder.
7.02 Effect of Voluntary Termination. In the event that the Executive
voluntarily terminates her employment with the Corporations as provided for by
Section 3.04 hereof, the Corporations shall pay to the Executive any monthly
installment of her Base Salary which is accrued and unpaid as of the date of
the Executive's termination at the monthly rate then in effect and,
thereafter, the Corporations shall have no further obligation to pay the
Executive any additional Base Salary, compensation or bonuses, no further
obligation to provide any medical, life, disability or other insurance
benefits to the Executive hereunder, and, except as otherwise provided under
the terms of Sections 7.06 and 7.07 hereof, no further obligation to pay any
other benefits provided to the Executive hereunder.
7.03 Effect of Termination Without Cause. In the event the Executive's
employment with the Corporations is terminated by either of the Corporations,
without cause, pursuant to Section 3.03 hereof, the Corporations shall,
(except as otherwise provided by Section 8.05 hereof), pay the Executive an
amount equal to the sum of: (a) the Executive's Base Salary at the rate then
in effect (such amount being hereinafter referred to as the "Base Salary
Severance Payment"); (b) an amount equal to all bonuses payable to the
Executive by the Corporations during the twelve (12) month period ending on
the date of such termination, (whether or not the Executive actually received
payment of such bonuses as a result of a deferral of the payment of such
bonuses made by the Executive under the terms of the Deferred Comp Plan)
(such amount being hereinafter referred to as the "Bonus Severance Payment");
(c) any amounts with respect to which the Executive is deemed to be vested
under the terms of the Deferred Comp Plan (such amount being hereinafter
referred to as the "Deferred Comp Severance Payment"); and (d) any amounts
with respect to which the Executive is deemed to be vested under the terms of
the Mark IV Deferred Comp Plan (such amount being hereinafter referred to as
the "Mark IV Deferred Comp Plan Severance Payment"). For purposes of this
Section 7.03, (w) the Base Salary Severance Payment shall be paid to the
Executive in twelve (12) substantially equal consecutive monthly installments
beginning on the first day of the first calendar month following the date the
Executive's employment with the Corporations is terminated; (x) the Bonus
Severance Payment, if any, shall be paid to the Executive in one lump sum
payment at the time bonuses are paid to salaried employees of Dayco for the
fiscal year of Mark IV in which the Executive's employment is terminated; (y)
the Deferred Comp Severance Payment shall be paid to the Executive at the time
and in the manner provided for in the Deferred Comp Plan; and (z) the Mark IV
Deferred Comp Plan Severance Payment shall be paid to the Executive at the
time and in the manner provided for in the Mark IV Deferred Comp Plan. In
addition, if the Executive's employment with any of the Corporations is
terminated by any of the Corporations, without cause, pursuant to Section 3.03
hereof, except as otherwise provided above and in Section 8.07 hereof, the
Corporations shall have no further obligation following the Executive's
termination to pay the Executive any additional Base Salary, compensation or
bonuses, no further obligation to provide any medical, life, disability or
other insurance benefits to the Executive hereunder and no further obligation
to pay to the Executive any other benefits otherwise provided to the Executive
hereunder.
7.04 Effect of Retirement. In the event the Executive terminates her
employment with the Corporations by reason of her retirement as provided for
in Section 3.05 hereof, the Corporations shall pay to the Executive any
monthly installment of her Base Salary which is accrued and unpaid as of the
date of the Executive's retirement at the monthly rate then in effect plus an
amount equal to the amount of all bonuses payable to the Executive by the
Corporations during the twelve (12) month period ending on the date of such
termination (whether or not the Executive actually received payment of such
bonuses as a result of a deferral of the payment of such bonuses made by the
Executive under the terms of the Deferred Comp Plan). In addition, in the
event the Executive terminates her employment with the Corporations by reason
of her retirement as provided for in Section 3.05 hereof, the Corporations
shall provide the Executive group medical insurance type coverage which is the
same as the group medical insurance type coverage provided by Dayco to Retired
Dayco Corporate Employees under the terms of the Dayco Medical Plan provided
that the Executive pays to the Corporations the portion of the Premiums which
is required to be paid by all other Retired Dayco Corporate Employees in
connection with the provision of such group medical insurance type coverage as
described in the first paragraph of Section 2.09 hereof. Thereafter, except as
otherwise provided for above in this Section 7.04 and except as otherwise
provided in Sections 7.06 and 7.07 hereof, the Corporations shall have no
further obligation to pay the Executive any additional Base Salary,
compensation, bonuses or other benefits provided to the Executive hereunder.
7.05 Special Rules Relating to IPO's. Notwithstanding anything to the
contrary contained in this Agreement, in the event that the Executive's
employment with Mark IV is terminated in connection with an initial public
offering of the common stock of Dayco as described in Section 6.02(f) hereof,
and, in connection with such initial public offering, the Executive remains
the Vice President - Information Technology of Dayco, such termination shall,
for purposes of determining the Executive's rights upon a termination of
employment, be deemed to be a voluntary termination of employment by the
Executive pursuant to Section 3.04 hereof. In addition if, in connection with
an initial public offering of common stock of Dayco as described in Section
6.02(f) hereof, the Executive rejects an offer from Dayco to be employed by
Dayco as its Vice President - Information Technology upon terms which are at
least reasonably comparable to the terms of this Agreement and, in connection
with the Executive's rejection of such offer of employment, the Executive
terminates her employment with the Corporations or the Executive's employment
with the Corporations is terminated by the Corporations, without cause, as
permitted by Section 3.03 hereof, notwithstanding anything to the contrary
contained in Section 7.03 hereof, upon the occurrence of such termination, the
Corporations shall pay to the Executive any monthly installment of her Base
Salary which is accrued and unpaid as of the date of the Executive's
termination at the monthly rate then in effect and, thereafter, the
Corporations shall have no further obligation to pay the Executive any
additional Base Salary, compensation or bonuses, no further obligation to
provide any medical, life, disability or other insurance benefits to the
Executive hereunder, and, except as otherwise provided under the terms of
Sections 7.06 and 7.07 hereof, no further obligation to pay any other benefits
to the Executive hereunder.
7.06 Non-Qualified Deferred Compensation Plan Payments. Upon
termination of the Executive's employment with the Corporations for any
reason, the Executive shall be entitled to payment in full of the vested
portion, determined at the time the Executive's employment with the
Corporations is terminated, of: (a) the vested portion of all amounts payable
to the Executive under the terms of the Deferred Comp Plan; and (b) all
amounts payable to the Executive under the terms of the Mark IV Deferred Comp
Plan. Payment of such vested portion of the amounts payable to the Executive
under the terms of the Deferred Comp Plan and the Mark IV Deferred Comp Plan
shall be made at the time and in the manner provided for by the terms of the
Deferred Comp Plan and the Mark IV Deferred Comp Plan.
7.07 Retirement Plan Payments. Nothing in this Agreement shall be
deemed to limit the Executive's rights to receive or the obligations of the
Corporations to pay or provide for the Executive and her beneficiaries, any
continuation coverage as required by ERISA or any retirement or other benefits
accrued by the Executive at any time under the terms of any retirement plans
maintained by the Corporations which are subject to the requirements of ERISA
and satisfy the requirements of Section 401 of the Code.
ARTICLE 8.
Miscellaneous
8.01 Litigation Expenses. In the event that any dispute shall arise
under this Agreement between the Executive and either of the Corporations
which is related to the Change in Control Termination provisions of Article 6
hereof, the Corporations shall be responsible for the payment of all
reasonable expenses of all parties to such dispute, including reasonable
attorney fees, regardless of the outcome thereof.
8.02 Amendments. This Agreement may not be amended or modified orally,
and no provision hereof may be waived, except in a writing signed by the
parties hereto.
8.03 Assignment. This Agreement cannot be assigned by either party
hereto except with the written consent of the other
8.04 Prior Agreements. This Agreement shall supersede and replace any
and all prior agreements between either of the Corporations and the Executive,
whether express or implied. Except as specifically provided herein, nothing
contained in this Agreement shall be construed to constitute a waiver by the
Executive of any rights or claims under any existing pension or retirement
plans of either of the Corporations.
8.05 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the personal representatives and successors in interest of the
Executive and any successors in interest of either of the Corporations.
8.06 No Duplication. Each of the Corporations shall be jointly and
severally liable for providing the Executive the compensation and benefits
provided for by this Agreement. Notwithstanding the foregoing, the Executive
shall not be entitled to payment of duplicate benefits or compensation from
each of the Corporations and the payment once, by any or all of the
Corporations, of the compensation and benefits to be provided to the Executive
hereunder shall be deemed to fully satisfy the obligations of the Corporations
hereunder.
8.07 Applicable Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within such State except with respect to the
internal affairs of the Corporations and their respective stockholders, which
shall be governed by the General Corporation Law of the State of Delaware.
8.08 Notices. All notices and other communications given pursuant to
this Agreement shall be deemed to have been properly given or delivered if
hand-delivered, or if mailed, by certified mail or registered mail postage
prepaid, addressed to the Executive at the address first above written or if
to either of the Corporations, at their respective addresses first above
written with a copy to the attention of Gerald S. Lippes, Secretary, 700
Guaranty Building, Buffalo, New York 14202. From time to time, any party
hereto may designate by written notice any other address or party to which
such notice or communication or copies thereof shall be sent.
8.09 Severability of Provisions. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and this Agreement shall be interpreted as if such invalid,
illegal or unenforceable provision was not contained herein.
8.10 Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Executive and each of the Corporations
have caused this Agreement to be executed as of the day and year first above
written.
MARK IV INDUSTRIES, INC.
By: /s/ Sal H. Alfiero /s/ Patricia Richert
Name: Sal H. Alfiero Patricia Richert
Title: Chairman of the Board
DAYCO PRODUCTS, INC.
By: /s/ Sal H. Alfiero
Name: Sal H. Alfiero
Title: Chairman of the Board
EXHIBIT 10.14
MARK IV INDUSTRIES, INC.
1992 RESTRICTED STOCK PLAN
________________________
Amendment and Restatement
Effective March 1, 1995
________________________
WHEREAS, Mark IV Industries, Inc., a Delaware corporation with offices
at One Towne Centre, 501 John James Audubon Parkway, Amherst, New York (the
"Company"), by resolution of its Board of Directors, adopted a restricted
stock plan known as the Mark IV Industries, Inc. 1992 Restricted Stock Plan
(hereinafter the "Plan") effective December 16, 1992; and
WHEREAS, pursuant to the terms of the Plan, the Company was authorized,
effective December 16, 1992, to issue, in connection with restricted stock
awards granted by the Compensation Committee of the Company's Board of
Directors, up to 350,000 shares of restricted stock (subject to certain anti-
dilutive adjustments); and
WHEREAS, the Company, as permitted by former Section 17 of the Plan and
with the approval of a majority of the stockholders of the Company that were
present at the Company's July 20, 1994 annual meeting of stockholders, amended
the Plan, effective March 30, 1994: (1) to increase the number of shares of
restricted stock which may be issued pursuant to the Plan by 200,000; and (2)
to provide that the restrictions imposed upon shares of restricted stock
awarded to employees of divisions or subsidiaries of the Company will lapse if
substantially all the stock of a subsidiary by whom the employee is employed
is sold or if the employee's employment with the Company or any of the
Company's subsidiaries is terminated in connection with a sale of all or
substantially all the assets of the division or subsidiary by whom the
employee is employed and
WHEREAS, the Company, as permitted by former Section 17 of the Plan,
desires to amend the Plan to change the time at which the restrictions imposed
on certain large awards of shares of the Company's common stock awarded under
the terms of the Plan will lapse;
NOW, THEREFORE, in consideration of the foregoing, Mark IV Industries,
Inc. hereby adopts the following Amendment and Restatement of the Mark IV
Industries, Inc. 1992 Restricted Stock Plan effective March 1, 1995:
1. Purpose. The purposes of the Mark IV Industries, Inc. 1992
Restricted Stock Plan (the "Plan") are: (a) to enable Mark IV Industries, Inc.
(the "Company") and its direct and indirect wholly owned subsidiaries to
attract, reward and retain highly qualified executive and managerial employees
through the use of an equity based incentive compensation program; and (b) to
increase the personal interest which the executive and managerial employees of
the Company and the executive and managerial employees of any corporations
(hereinafter individually referred to as a "Subsidiary" and collectively as
the "Subsidiaries") in which the Company, directly or indirectly owns, stock
possessing more than fifty percent (50%) of the total combined outstanding
voting power of all classes of stock issued by such corporations, have in the
successful and profitable operation of the Company by linking the long-term
value of the compensation paid to such employees to the value of the Company's
common stock.
2. Stock Subject to Plan. The shares of stock which may be the
subject of awards pursuant to this Plan shall be shares of the Company's
common stock ("Common Stock"). All awards of Common Stock made pursuant to
this Plan shall be subject to the restrictions on transferability described in
Section 6 hereof and to such other restrictions as may be imposed by the
Committee (as defined in Section 3 hereof) in connection with its making of an
award under this Plan (which other restrictions need not be the same for each
Participant). Accordingly, each share of Common Stock which is the subject of
an award pursuant to the terms of this Plan is hereinafter referred to as
"Restricted Stock".
On December 16, 1992, (the date on which the Plan became effective), the
aggregate number of shares of Common Stock reserved for issuance in connection
with Restricted Stock awards made pursuant to the terms of this Plan was three
hundred fifty thousand (350,000), subject to adjustment as hereinafter
provided in this Section 3. Thereafter, effective March 30, 1994, in addition
to the number of shares of Common Stock reserved for issuance effective March
29, 1994 in connection with Restricted Stock awards which could be made
pursuant to the terms of the Plan, an additional two hundred thousand
(200,000) shares of Common Stock were reserved and made available for issuance
in connection with Restricted Stock awards made pursuant to the Plan.
Accordingly, after giving effect to Restricted Stock awards previously made
under the terms of this Plan and a five percent (5%) stock dividend effective
March 30, 1994, effective as of March 1, 1995 there remains 238,613 shares of
Common Stock which are reserved and available for issuance in connection with
Restricted Stock awards made pursuant to the terms of the Plan.
The number of shares of Restricted Stock available for awards under this
Plan shall be adjusted proportionately in the event of any change, increase or
decrease in the outstanding shares of common stock of the Company which
results either from a split-up, reverse split or consolidation of shares,
payment of a stock dividend, recapitalization, reclassification or other like
capital adjustment; provided, however, that no fractional shares shall be
issued in connection with any such capital adjustment. The Restricted Stock
which is awarded under this Plan may be either authorized but unissued Common
Stock or treasury shares. Shares which are the subject of an award granted
under this Plan shall not again become available for future grants unless the
recipient fails to pay the purchase price for the shares pursuant to Section 5
hereof.
3. Committee. The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee") which
shall consist of at least two Directors of the Company, each of whom shall be
a "disinterested person" within the meaning of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (hereinafter referred to as
the "Act").
4. Eligibility and Participation. Each employee of the Company
and each employee of any direct or indirect wholly owned Subsidiary of the
Company shall be eligible to receive an award of Restricted Stock under the
terms of this Plan. The employees of the Company (or any of its direct or
indirect wholly owned Subsidiaries) to whom awards of Restricted Stock are to
be granted under the Plan and the number of shares of Restricted Stock with
respect to which awards are to be granted to each such employee shall be
determined by the Committee. In determining which employees should receive an
award of Restricted Stock under the terms of the Plan, the Committee shall
take into account the past performance of the Company, the employee's
contributions to past performance, the capacity of the employee to contribute
in a substantial measure to the performance of the Company in the future and
such other factors as the Committee may consider relevant.
The Committee shall provide an employee who is granted such an award
written notice of the number of shares of Restricted Stock contained in the
award, the timing and terms for payment by the employee of the purchase price
of the Restricted Stock to be issued pursuant to the award, a statement of any
restrictions imposed on the Restricted Stock to be issued pursuant to the
award and a statement of the date to be used for determining whether the
restrictions imposed by this Plan have lapsed (such date being hereinafter
referred to as the "Award Date").
For purposes of this plan, if an award of Restricted Stock is granted to
an employee under the terms of this Plan, such employee shall be deemed to be
a "Participant".
5. Awards of Restricted Stock. Each Participant who is granted an
award of Restricted Stock under this Plan shall be required to pay for such
Restricted Stock. The price per share which shall be paid by a Participant
who is granted an award of Restricted Stock shall be equal to the par value of
such share. The Committee shall determine the time and manner in which a
Participant shall be required to pay for Restricted Stock which he has been
awarded under this Plan. Each share of Restricted Stock awarded to an
employee under the terms of this Plan shall be subject to the restrictions on
transferability contained in Section 6 hereof and such other restrictions as
the Committee may establish at the time the award is granted (which other
restrictions need not be the same for each Participant).
The Committee shall require the Participant to execute an agreement at
the time of issuance of the Restricted Stock to the Participant, which
agreement shall contain such terms and conditions as may be established by the
Committee.
6. Restrictions. The shares of the Restricted Stock sold to a
Participant in connection with this Plan may not be sold, pledged, encumbered
or otherwise alienated or hypothecated by the Participant until the time that
these restrictions have lapsed as hereinafter provided in Section 7 hereof.
7. Termination of Restrictions. The restrictions on the
transferability of shares of Restricted Stock imposed by Section 6 hereof and
any other restrictions which may be imposed by the Committee on shares of
Restricted Stock pursuant to Section 5 hereof shall terminate and lapse:
(a) except as otherwise specifically provided by Section 8
below, with respect to all shares of Restricted Stock contained in a
Restricted Stock award, at the end of the five (5) year period beginning on
the Award Date with respect to such Restricted Stock award;
(b) except as otherwise specifically provided by Section 8
below, with respect to one third of the shares of Restricted Stock contained
in a Restricted Stock award, for each fiscal year of the Company, beginning
with the Company's fiscal year which begins at least one (1) full fiscal year
after the Company's fiscal year containing the Award Date for such Restricted
Stock award and for each fiscal year thereafter, provided that the operating
performance of the Company for any such fiscal year is such that: (i) if the
Participant is an employee of the Company at the Company's corporate
headquarters, the Participant is entitled to payment of a bonus under the
Company's Executive Bonus Plan as adopted by the Company's Board of Directors
on May 27, 1987 and as amended from time to time thereafter; and (ii) if the
Participant is employed by any Subsidiary, the Participant is entitled to
allocation of a deferred incentive bonus under the terms of the Company's Non-
Qualified Plan of Deferred Incentive Compensation for Executives of Certain
Operating Divisions and Subsidiaries. If the restrictions on any shares of
Restricted Stock awarded to a Participant will lapse as provided for above in
this Section 7(b), the date on which such restrictions will lapse with respect
to one-third of the shares of Restricted Stock contained in a Restricted Stock
award shall be the date on which the Participant receives written notice from
or on behalf of the Committee that the Participant is entitled to payment of
any such bonus.
(c) with respect to all shares of Restricted Stock awarded to a
Participant if: (i) the Participant is employed by a division of the Company,
or any Subsidiary or any division of any Subsidiary of the Company and: (A) a
majority of the stock of the Subsidiary by whom the Participant is employed is
sold to an unrelated third party; or (B) all or substantially all the assets
of the division of the Company, the Subsidiary or the division of the
Subsidiary by whom the Participant is employed are sold to an unrelated third
party; and (C) following the sale of stock or assets described in this Section
7(c), the Participant is not otherwise employed by the Company or any of its
Subsidiaries;
(d) with respect to all shares of Restricted Stock awarded to a
Participant, upon the Participant's death, total and permanent disability (to
the extent and in a manner as shall be determined by the Committee in its sole
discretion) or retirement (as determined by the Committee in its sole
discretion);
(e) with respect to such portion of the shares of Restricted
Stock awarded to the Participant as may be determined by the Committee, in its
sole discretion, upon the occurrence of such special circumstance or event as,
in the sole discretion of the Committee, merits special consideration; and
(f) with respect to all shares of Restricted Stock awarded to a
Participant, upon the occurrence of a Change in Control which, for purposes of
this Plan, shall be deemed to have occurred if:
(i) any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Act) becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act) of more than twenty percent (20%) of the
then outstanding voting stock of the Company, otherwise than through a
transactions arranged by, or consummated with the prior approval of its Board
of Directors; or
(ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company (and any new director whose election to the Board of
Directors or whose nomination for election by the Company's shareholders was
approved by a vote of at least two thirds of the directors then still in
office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved) (hereinafter
referred to as the "Continuing Directors") cease for any reason to constitute
a majority thereof; or
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger
of consolidation which would result in the voting securities of the Company
immediately prior thereto continuing to represent (either by remaining
outstanding or being converted into voting securities of the surviving entity)
at least 80% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation (provided, however, that if prior to the merger or
consolidation, the Board of Directors of the Company adopts a resolution that
is approved by a majority of the Continuing Directors providing that such
merger or consolidation shall not constitute a "change in control" for
purposes of the Plan, then such a merger or consolidation shall not constitute
a "change in control"); or
(iv) the shareholders of the Company approve an agreement
for the sale or disposition by the Company of all or substantially all the
assets of the Company.
8. Special Rules for Certain Large Awards. Notwithstanding anything
to the contrary contained in Sections 7(a) and (b) above, if, at any time that
a Restricted Stock Award is made to a Participant hereunder, the aggregate
fair market value of such Restricted Stock award (determined using the closing
price per share of the Company's Common Stock as reported on the New York
Stock Exchange Composite Index on the date the Restricted Stock award is made)
is $500,000 or more, the restrictions imposed by Section 6 hereof and any
other restrictions which may be imposed by the Committee pursuant to Section 5
hereof shall lapse upon the earlier: (a) the end of the seven (7) year period
beginning on the Award Date; and (b) the actual retirement by the Participant
from his employment with the Company (or any Subsidiary); provided the
Participant has attained at least age 60 and provided further that the Board
of Directors of the Company (or in the event the Participant is employed by
any Subsidiary, the Board of Directors of the Subsidiary) consents to and
approves such retirement.
9. Stockholder Rights. Subject to the other provisions of this
Plan, the Participant shall have all the rights of a stockholder with respect
to the shares of Restricted Stock which are subject to his award including,
but not limited to, the right to receive all dividends, distributions and
adjustments with respect to such shares and the right to vote such shares;
provided, however, that non-cash dividends, distributions and adjustments
shall be subject to the same restrictions and risk of forfeiture set forth in
Section 6 and 10 hereof as are applicable to the original shares of Restricted
Stock subject to the Participant's award.
10. Other Restrictions. The Committee may impose such other
restrictions on any shares of Restricted Stock sold pursuant to this Plan as
it may deem advisable, including, without limitation, restrictions required
under the Securities Act of 1933 as amended, restrictions under the
requirements of any stock exchange upon which such shares or shares of the
same class are then listed, and restrictions under any blue sky or securities
laws applicable such shares.
11. Legend. In order to enforce the restrictions imposed on
Restricted Stock granted under this Plan, the Committee shall cause a legend
or legends to be placed on any certificate representing shares of Restricted
Stock issued pursuant to this Plan, which legend or legends shall make
appropriate reference to the restrictions imposed under it.
12. Termination of Employment. Except as hereinafter provided, if a
Participant's employment with the Company or any of its subsidiaries is
voluntarily or involuntarily terminated at any time prior to the date that the
restrictions imposed by Section 6 hereof have lapsed, any shares of Restricted
Stock issued to such Participant with respect to which such restrictions have
not lapsed shall be forfeited and the price paid by the Participant therefor
shall be returned to the Participant.
13. Non-Transferability of Awards. Awards granted under this Plan
shall not be transferable by the Participant otherwise than by will or the
laws of descent and distribution and the right to purchase shares of
Restricted Stock pursuant to an award under this Plan may be exercised or
surrendered during a Participant's lifetime only by the Participant.
14. Tax Withholding. The Company or subsidiary shall deduct and
withhold, from any cash payments to be made to the Participant or from any
stock to be issued to the Participant upon a lapse of the restrictions
provided for hereunder, such amounts under federal, state or local tax rules
or regulations as it deems appropriate with respect to an award under the
Plan. In addition, the Committee may, in its discretion and subject to such
rules as it may adopt, permit a Participant to satisfy the amount of tax
required by law to be withheld, in whole or in part, by electing to have the
Company withhold from any payment under the Plan, shares of Common Stock of
the Company having a fair market value equal to the amount of taxes required
to be withheld. In any event, the Participant shall make available to the
Company or subsidiary, promptly when required, sufficient funds to meet the
requirements of such withholding, and the Committee shall be entitled to take
and authorize such steps as it may deem advisable in order to have such funds
available to the Company or subsidiary when required.
15. Issuance of Shares and Compliance with Securities Act. The
Company may postpone the issuance and delivery of shares of Restricted Stock
until: (a) the admission of such shares to listing on any stock exchange on
which shares of Common Stock are then listed; and (b) the completion of such
registration or other qualification of such shares of Restricted Stock under
any state or federal law, rule or regulation as the Company shall determine to
be necessary or advisable. As a condition precedent to the issuance of shares
of Restricted Stock pursuant to the grant of an award under the Plan, the
Company may require the recipient thereof to make such representations and
furnish such information as may, in the opinion of counsel for the Company, be
appropriate to permit the Company, in the light of the then existence or non-
existence with respect to such shares of an effective Registration Statement
under the Securities Act of 1933, as amended, to issue the shares in
compliance with the provisions of that or any comparable act.
16. Administration. The Committee shall have full authority to
manage and control the operation and administration of the Plan. Any
interpretation of the Plan by the Committee and any decision made by the
Committee of any matter within its discretion is final and binding on all
persons.
17. Employees' and Participants' Rights. No employee or other
person shall have any claim or right to be granted an award of Restricted
Stock under the Plan except as the Committee shall have conferred in its
discretion in the administration of the Plan. Participation in the Plan shall
not confer upon any Participant any right with respect to continuation of
employment by the Company or its subsidiaries, nor interfere with the right of
the Company to terminate at any time the employment of any Participant.
18. Amendment and Termination. The Board of Directors of the
Company may amend, suspend or terminate the Plan or any portion thereof at any
time; provided that no amendment, suspension or termination shall impair the
rights of any Participant, without the Participant's consent, in any
Restricted Stock previously awarded under this Plan. The Committee may amend
the Plan to the extent necessary for the efficient administration of the Plan,
or to make it practically workable or to conform it to the provisions of any
federal or state law or regulation. Notwithstanding the foregoing provisions
of this Section 18, in the event that an amendment is required to be approved
by stockholders of the Company in order to comply with Rule 16b-3 under the
Act, such amendment shall be subject to the requisite approval of the
stockholders of the Company.
19. Non-Exclusivity of Plan. Neither the adoption of this Plan by
the Company's Board of Directors nor the submission of this Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Company's Board of Directors to adopt any
other incentive compensation arrangements it may deem desirable, including,
without limitation, the awarding of Common Stock to employees otherwise than
under the terms of this Plan and such other arrangements as may be either
generally applicable or applicable only in specific cases.
20. Governing Law. Except as required by Delaware corporate law,
this Plan shall be governed by and construed in accordance with the laws of
the State of New York, without giving effect to principles of conflict of
laws.
21. Effective Date of Amendment and Restatement; Stockholder
Approval. This amendment and restatement of the Plan shall be effective
March 1, 1995.
IN WITNESS WHEREOF, the undersigned has executed this Amendment and
Restatement of the Mark IV Industries, Inc. 1992 Restricted Stock Plan for and
on behalf of Mark IV Industries, Inc. this 1st day of March, 1995.
MARK IV INDUSTRIES, INC.
By: /s/ William P. Montague
William P. Montague
Executive Vice President
EXHIBIT 10.19
NON-QUALIFIED PLAN OF DEFERRED INCENTIVE COMPENSATION
FOR EXECUTIVES OF CERTAIN
OPERATING DIVISIONS AND SUBSIDIARIES
OF MARK IV INDUSTRIES, INC.
____________________________
First Amendment and Restatement
____________________________
Effective November 30, 1993
<PAGE>
NON-QUALIFIED PLAN OF DEFERRED INCENTIVE COMPENSATION
FOR EXECUTIVES OF CERTAIN
OPERATING DIVISIONS AND SUBSIDIARIES
OF MARK IV INDUSTRIES, INC.
_________________________
First Amendment and Restatement
__________________________
WHEREAS, effective March 1, 1991, Mark IV Industries, Inc., a
Delaware corporation having its principal place of business at One Towne
Centre, John James Audubon Parkway, Amherst, New York ("Mark IV") established
a non-qualified plan of deferred incentive compensation known as the "Non-
Qualified Plan of Deferred Incentive Compensation for Executives of Certain
Operating Divisions and Subsidiaries of Mark IV Industries, Inc." (hereinafter
the "Plan"); and
WHEREAS, the purpose of the Plan is to encourage certain officers
and executives of certain direct and indirect wholly owned subsidiaries of
Mark IV to implement management policies and procedures which will increase
the profitability of such direct and indirect wholly owned subsidiaries and to
provide such officers and executives an interest in the overall profitability
of Mark IV; and
WHEREAS, the Plan provides for the establishment, for accounting
purposes only, of a hypothetical account for each of the officers and
executives that becomes a participant in the Plan and, for each year that such
officers and executives are employed by a business unit of Mark IV which meets
certain profitability objectives, the Plan provides for the crediting to such
hypothetical account of an amount which is up to a stated percentage of the
base compensation earned by such executives for such year; and
WHEREAS, the stated percentage of the base compensation which
executives that are participants in the Plan are entitled to have deferred for
their benefit under the terms of the Plan and the profitability objectives
which must be met in order for such deferrals to be made are established, from
time to time, by the Committee appointed to administer the Plan unless the
executive is an executive officer of Mark IV, in which case, the stated
percentage of the base compensation and the profitability objectives for all
participants that are employed by the same business unit as the executive who
is an executive officer of Mark IV will be established by the Compensation
Committee of the Board of Directors of Mark IV; and
WHEREAS, the Plan provides that, for purposes of determining the
amounts payable to executives that are participants in this Plan, such
executives shall be permitted to elect to have the amounts which are credited
to their hypothetical accounts established under the Plan, hypothetically
invested in common stock of Mark IV; and
WHEREAS, the Plan provides that, unless there is a change in
control of Mark IV, no funds shall be set aside by Mark IV with respect to the
obligation of Mark IV to pay the deferred incentive compensation payable under
the provisions of the Plan and such obligation shall be payable from the
general assets of Mark IV; and
WHEREAS, the Plan provides that, upon the occurrence of a change
in control of Mark IV, cash or immediately available funds in an amount equal
to the value of the accounts of participants under the Plan at the time of
such change in control (as determined pursuant to Section 5.02) shall be
deposited by Mark IV in a trust established for such purpose and containing
terms and conditions which would result in such trust being determined to be a
"Rabbi Trust" under rulings and regulations of the Internal Revenue Service,
including, but not limited to Internal Revenue Service Private Letter Ruling
8113017, Internal Revenue Service Private Letter Ruling 8907034 and such other
rules and regulations as may, from time to time, be established by the
Internal Revenue Service with respect to the provisions required to be
contained in vehicles used to fund non-qualified plans of deferred incentive
compensation without resulting in the immediate recognition of income by
officers and executives for whom such plan is maintained; and
WHEREAS, Mark IV desires to amend the terms of the Plan to permit
certain specified officers and executives of the direct and indirect wholly
owned subsidiaries of Mark IV and certain specified officers and executives of
the divisions of Mark IV and its direct and indirect wholly owned subsidiaries
to defer the timing of their receipt of payment of all or any part of any
bonus or other incentive compensation which they may be entitled to receive
under the terms of certain executive bonus arrangements and to provide that
the amount of the incentive bonus, if any, which a Participant defers will be
credited with hypothetical earnings and paid in accordance with the terms of
this Plan; and
WHEREAS, Mark IV further desires to amend the Plan to permit
certain specified officers and executives of the direct and indirect wholly
owned subsidiaries of Mark IV and certain specified officers and executives of
the divisions of Mark IV and its direct and indirect wholly owned subsidiaries
to defer the receipt of all or any part of the salary or wages they are
entitled to receive and to provide that the amount of the salary or wages
deferred by a Participant, if any, shall be credited with hypothetical
earnings and paid in accordance with the terms of this Plan; and
WHEREAS, Mark IV further desires to amend the Plan to modify the
manner in which the amount of the hypothetical earnings which is credited to
the Account of a Participant that is also an executive officer of Mark IV will
be determined;
NOW, THEREFORE, Mark IV hereby adopts the following, effective
November 30, 1993, as the First Amendment and Restatement of the Non-Qualified
Plan of Deferred Incentive Compensation for Executives of Certain Operating
Divisions and Subsidiaries of Mark IV Industries, Inc.:
<PAGE>
TABLE OF CONTENTS
Article Page
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2. Annual Deferred Compensation Commitment . . . . . . . . . . . . . .8
3. Accounts and Investments. . . . . . . . . . . . . . . . . . . . . 14
4. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5. Trust Established Upon Change in Control. . . . . . . . . . . . . 37
6. Administration. . . . . . . . . . . . . . . . . . . . . . . . . . 39
7. Amendment, Termination and Merger . . . . . . . . . . . . . . . . 42
8. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 44
<PAGE>
ARTICLE 1.
Definitions
1.01 Account means the account established and maintained by the
Committee for each Participant to reflect the amount of the deferred
compensation payable to each Participant under the terms of this Plan and, in
the event a Trust Fund is established pursuant to Section 5.01 hereof, to
reflect the interest of each Participant in the Trust Fund. Each
Participant's Account shall contain one Annual Allocation Account for each
Plan Year in which a portion of any Annual Deferred Compensation Commitment is
allocated to the Participant. In addition, if a Participant elects to make a
Compensation Deferral pursuant to Section 2.03 hereof, the Participant's
Account shall also contain a Compensation Deferral Account for each Plan Year
in which the Participant makes a Compensation Deferral. In addition, each
Participant's Account shall contain an Interest Account which shall reflect
the portion, if any, of each of the Participant's Annual Allocation Accounts
and the portion, if any, of each of the Participant's Compensation Deferral
Accounts which is not allocated to the purchase of Phantom Stock and a Phantom
Stock Account which shall reflect the portion, if any, of each of the
Participant's Annual Allocation Accounts and the portion, if any, of each of
the Participant's Compensation Deferral Accounts which is allocated to the
purchase of Phantom Stock.
1.02 Affiliate means any corporation under common control with the
Employer within the meaning of Internal Revenue Code Section 414(b) and any
trade or business (whether or not incorporated) under common control with the
Employer within the meaning of Internal Revenue Code Section 414(c).
1.03 Annual Allocation Account means a sub-account established and
maintained by the Committee within the Account of each Participant, for each
Plan Year with respect to which a portion of the Annual Deferred Compensation
Commitment for such Plan Year is to be allocated to such Participant, and
which reflects the portion of the Annual Deferred Compensation Commitment, if
any, which is allocated to the Participant's Account for such Plan Year,
adjusted to reflect any earnings thereon as provided for in this Plan. The
purpose of the Annual Allocation Account is to enable the Committee to
determine the vested portion of the total amount which is credited to the
Participant's Account and attributable to the Participant's share of an Annual
Deferred Compensation Commitment. In the event a Trust Fund is established
pursuant to Section 5.01 hereof, the "Annual Allocation Account" shall mean a
sub-account established and maintained by the Committee for each Plan Year
with respect to which an Annual Deferred Compensation Commitment is to be made
and which reflects the proportionate share of the earnings or losses of the
Trust Fund attributable to the portion of the Annual Deferred Compensation
Commitment allocated to a Participant's Account for a Plan Year.
1.04 Annual Deferred Compensation Commitment means: (a) with respect to
each Business Unit in which none of the Participants is an Executive Officer,
the amount, if any, established by the Committee and representing the total
amount of the deferred incentive compensation (excluding interest) which Mark
IV has agreed and committed to allocate and pay with respect to such Plan Year
to all the Participants in such Business Unit; and (b) with respect to each
Business Unit in which any of the Participants is an Executive Officer, the
amount, if any, established by the Compensation Committee and representing the
total amount of the deferred incentive compensation (excluding interest) which
Mark IV has agreed and committed to allocate and pay with respect to such Plan
Year to all the Participant's in such Business Unit.
1.05 Applicable Interest Rate means, (a) for Plan Years ending before
November 29, 1993, an annual interest rate equal to the sum of: (i) one
percent (1%); and (ii) the average of the Prime Rates published in the Wall
Street Journal on March 1, June 1, September 1 and December 1 of each year,
or, if any such date is a Saturday, a Sunday or a legal holiday on which banks
are authorized to be closed, the Prime Rate as published by the Wall Street
Journal on the first day following such date which is not a Saturday, Sunday
or a legal holiday on which banks are authorized to close; and (b) for Plan
Years ending at any time after November 30, 1993, a variable annual interest
rate, adjusted, on a quarterly basis, as of March 1, June 1, September 1 and
December 1 of each calendar year and equaling one hundred twenty percent
(120%) of the Federal long-term interest rate established for such months by
the Secretary of the Treasury pursuant to the provisions of Section 1274 of
the Internal Revenue Code and the regulations thereunder.
1.06 Beneficiary means any person or persons designated, in writing, by
a Participant to share in the benefits of the Plan after his death, or if
none, his spouse, or, if neither, his estate.
1.07 Business Unit means any division of Mark IV, any direct or
indirect wholly owned subsidiary of Mark IV, any division of any direct or
indirect wholly owned subsidiary of Mark IV and any combination of any one or
more of any of the foregoing which has been identified by the Committee as a
group for purposes of establishing the profitability objectives which must be
met in order for an Annual Deferred Compensation Commitment to be made on
behalf of Participants that are employed by any member of such group.
1.08 Board of Directors means the Board of Directors of Mark IV.
1.09 Committee means the administrative committee, referred to in
Section 6.01, designated by the Board of Directors of Mark IV to administer
the Plan.
1.10 Compensation means total base salary or wages to be paid by the
Employer to a Participant at his regular rate for services to be rendered
during the fiscal year of Mark IV including amounts, if any, contributed to
the Mark IV Savings and Retirement Plan (a master 401(k) plan maintained by
Mark IV) pursuant to a salary deferral election of the Participant made
pursuant to the Mark IV Savings & Retirement Plan, any base salary or wages
(but not bonus or other incentive compensation) whose receipt is deferred by
the Participant pursuant to the terms of a Compensation Deferral made by the
Participant pursuant to this Plan and any amounts deferred by the Participant
under the terms of any plan maintained by Mark IV or the Employer under
Internal Revenue Code Section 125, but excluding bonuses, currently paid
incentive compensation, any portion of the Annual Deferred Compensation
Commitment allocated to the Account of a Participant under this Plan or any
other contributions or benefits made to or for the benefit of any Participant
under any other pension, profit sharing, insurance, hospitalization or other
plan or policy maintained by Mark IV or the Employer for the benefit of any
such Participant.
In the event that a Participant's employment with his or her
Employer is terminated for any reason whatsoever, the "Compensation" of such
Participant for the Plan Year ending after the date on which such
Participant's employment with the Employer is terminated shall be equal to the
actual total base salary or wages paid by the Employer to such Participant for
the fiscal year of Mark IV year in which the Participant's employment with the
Employer is terminated.
The decision of the Committee as to what constitutes Compensation
within the meaning of the foregoing definition shall be conclusive.
1.11 Compensation Committee means the Compensation Committee of the
Board of Directors of Mark IV Industries, Inc.
1.12 Compensation Deferral means, for the Plan Year ending February 28,
1994, and for each Plan Year thereafter, (to the extent required by the
context of the applicable provision) either: (a) an election, made by the
Participant in accordance with the provisions of Section 2.03 hereof, to defer
the receipt of payment of any salary, wages, bonus or other incentive
compensation; or (b) the amount, if any, of the salary, wages, bonus or other
incentive compensation payable to a Participant which the Participant has
elected to defer the receipt of payment of pursuant to Section 2.03 hereof and
which Mark IV has agreed and committed to allocate and pay to such Participant
in the future under the terms of this Plan.
1.13 Compensation Deferral Account means a sub-account established and
maintained by the Committee within the Account of each Participant, for each
Plan Year in which the Participant that has made a Compensation Deferral for
the purpose of valuing the amount of the Compensation Deferral made by the
Participant for such Plan Year together with any earnings thereon as provided
for in this Plan. In the event a Trust Fund is established pursuant to
Section 5.01 hereof, the "Compensation Deferral Account" shall mean a sub-
account established and maintained by the Committee for each Participant for
each Plan Year in which the Participant has made a Compensation Deferral and
which reflects the amount of the Compensation Deferral allocated to the
Participant's Account for such Plan Year, increased or decreased to reflect to
proportionate share of the earnings or losses of the Trust Fund attributable
to such portion of the Participant's Account.
1.14 Deferred Bonus Percentage means in the case of each Participant,
the maximum percentage of the Compensation payable to such Participant for a
Plan Year which may be contributed to the Annual Allocation Account
established for such Participant for such Plan Year. In the case of a
Participant who is not an Executive Officer, the Deferred Bonus Percentage
shall be established by the Committee. In the case of a Participant who is an
Executive Officer, the Deferred Bonus Percentage shall be established by the
Compensation Committee.
1.15 Dollar Value means, an amount equal to the sum of: (a) the total
of the dollar amounts credited to the Interest Account portion of each of the
Annual Allocation Accounts contained within a Participant's Account, if any,
under the terms of the Plan, including all interest credited thereon as
provided for in this Plan; and (b) the total of the dollar amounts credited to
the Interest Account portion of the Compensation Deferral Account contained
within a Participant's Account, if any, including all interest credited
thereon as provided for in this Agreement.
1.16 Effective Date means March 1, 1991.
1.17 Employer means, with respect to each Participant (as hereinafter
defined), any division of Mark IV, any direct or indirect wholly owned
subsidiary of Mark IV or any division of any direct or indirect wholly owned
subsidiary for whom such Participant performs personal services for wages as
defined in Section 3121(a) of the Internal Revenue Code.
1.18 ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and corresponding provisions of future laws, as amended.
1.19 Executive Officer means an individual who, by virtue of his
position, duties and responsibilities with respect to Mark IV and any of its
direct or indirect wholly owned subsidiaries is required, pursuant to the
applicable provisions of the Securities and Exchange Act of 1934, as amended,
to report to the U.S. Securities and Exchange Commission, the amount of and
any changes in his ownership of any common stock or other equity securities of
Mark IV.
1.20 Fiduciary means any person with respect to the Plan to the extent:
(a) He exercises any discretionary authority or discretionary
control respecting management of the Plan or exercises any
authority or control respecting management or disposition of
its assets;
(b) He renders investment advice for a fee or other
compensation, direct or indirect, with respect to any moneys
or other property of the Plan or has any authority or
responsibility to do so; or
(c) He has any discretionary authority or discretionary
responsibility in the administration of the Plan.
This term also includes persons designated by the Committee to
carry out fiduciary responsibilities under the Plan. A Fiduciary may serve in
more than one fiduciary capacity (including service as both Trustee and
Committee) with respect to this Plan.
1.21 Interest Account means a sub-account established and maintained by
the Committee within each Participant's Account for the purpose of valuing the
portion of each of the Participant's Annual Allocation Accounts, if any, and
the portion of each of the Participant's Compensation Deferral Accounts, if
any, which is not allocated to the purchase of Phantom Stock.
1.22 Internal Revenue Code, Code and IRC each mean the Internal Revenue
Code of 1986, as amended.
1.23 Investment Manager means that person so designated by the Committee
to manage and invest designated Plan assets, who acknowledges his acceptance
in writing and who is either: (a) registered in good standing as an Investment
Adviser under the Investment Advisers Act of 1940; (b) a bank, as defined in
that Act; or (c) an insurance company qualified to perform investment
management services under the laws of more than one state.
1.24 Participant means any person who has engaged in rendering personal
services for wages (as defined in Section 3121(a) of the Internal Revenue
Code) for any division of Mark IV (other than the Mark IV corporate
headquarters division) or for any direct or indirect wholly owned subsidiary
of Mark IV and who has also been designated as a participant in this Plan by
the Committee, or, in the case of any Executive Officer, who has been
designated as a participant in this Plan by the Compensation Committee and
notified in writing by the Committee that he or she is a Participant in this
Plan.
For purposes of this Plan, an individual's participation in this
Plan shall be terminated and such individual shall no longer be considered a
Participant for purposes of this Plan upon the date that the amount payable to
such individual under this Plan has been paid in full. Accordingly, any
individual whose employment with the Employer has been terminated for any
reason whatsoever (including death) shall continue to be considered a
Participant in this Plan until the amount payable to or on behalf of such
individual under this Plan has been paid in full.
1.25 Phantom Stock means the shares of common stock of Mark IV, if any,
which are hypothetically allocated to a Participant's Account pursuant to the
terms of this Plan, including fractional shares.
1.26 Phantom Stock Account means a sub-account established and
maintained by the Committee within each Participant's Account for the purpose
of valuing the portion of each of the Participant's Annual Allocation
Accounts, if any, and the portion of each of the Participant's Compensation
Deferral Accounts, if any, which is allocated to the purchase of Phantom
Stock.
1.27 Plan means this non-qualified plan of deferred incentive
compensation known as the Non-Qualified Plan of Deferred Incentive
Compensation for Executives of Certain Operating Divisions and Subsidiaries of
Mark IV Industries, Inc.
1.28 Plan Year means the 12 consecutive month period beginning on March
1 of each calendar year.
1.29 Share Value means an amount equal to: (a) the sum of: (i) the
number of shares of Phantom Stock, if any, credited to the Phantom Stock
Account portion of each of the Annual Allocation Accounts contained within a
Participant's Account; and (ii) the number of shares of Phantom Stock, if any,
credited to the Phantom Stock Account portion of each of the Compensation
Deferral Accounts contained within a Participant's Account; multiplied by (b)
the applicable price per share of common stock of Mark IV as determined
pursuant to Section 3.06 hereof.
1.30 Trustee means the person or persons, firm or corporation
designated by the Board of Directors of Mark IV to serve as Trustee of any
Trust Fund which may be created pursuant to the provisions of this Plan, and
who, by joining in the execution of the agreement creating such Trust Fund or
any amendments thereunder, signifies his acceptance of the Trust Fund and any
person or persons, firm or corporation duly appointed as successor Trustee.
1.31 Trust Fund means one or more trust funds which may be established
by Mark IV pursuant to this Plan, and all the assets at any time held by the
Trustee of such trust funds.
1.32 Valuation Date means the last day of February of each calendar
year.
1.33 Vesting Computation Period means each Plan Year.
1.34 Year of Service means each Plan Year in which the Participant
completes at least twelve (12) months of service. For purposes of determining
the number of Years of Service completed by a Participant, a Participant shall
be deemed to complete one month of service for each calendar month in which
the Participant is employed by the Employer and is paid, or entitled to
payment from the Employer for services rendered, including, calendar months in
which the Participant performs no duties for the Employer but is entitled to
payment due to vacation, illness, Employer approved sick or disability leave,
Employer approved leave of absence, military leave or jury duty.
ARTICLE 2.
Annual Deferred Compensation Commitment
and
Compensation Deferrals
2.01 Annual Deferred Compensation Commitment. For each Plan Year
(including the Plan Year ending on February 28, 1992) and not later than the
time prescribed by law for the filing by Mark IV of its federal income tax
return for the fiscal year of Mark IV with or within which such Plan Year ends
(including extensions thereof), the Committee shall, with respect to such
fiscal year, establish, for each Business Unit in which none of the
Participant's is an Executive Officer, the amount, if any, of the Annual
Deferred Compensation Commitment to be allocated among the Participants in
each such Business Unit with respect to the Plan Year ending with or within
such fiscal year.
In addition, for each Plan Year (including the Plan Year ending on
February 28, 1994), and not later than the time prescribed by law for the
filing by Mark IV of its federal income tax return for the fiscal year of Mark
IV with or within which such Plan Year ends (including extensions thereof),
the Compensation Committee shall, with respect to such fiscal year,
established for each Business Unit which includes any Participant who is an
Executive Officer, the amount, if any, of the Annual Deferred Compensation
Commitment to be allocated among the Participant's in each such Business Unit
with respect to the Plan Year ending with or within such fiscal year.
The amount of the Annual Deferred Compensation Commitment for any
Plan Year as established by the Committee and the Compensation Committee shall
represent the amount which Mark IV has agreed to allocate to the Accounts of
Participants in the Plan as of the end of the Plan Year for which such Annual
Deferred Compensation Commitment has been made and, unless a Trust Fund is
established pursuant to Section 5.01 hereof, no segregation of any assets of
Mark IV for the purpose of paying such Annual Deferred Compensation Commitment
shall be required.
2.02 Determination of Annual Deferred Compensation Commitment. For
purposes of determining the portion of the Annual Deferred Compensation
Commitment, if any, to be allocated to the Account of a Participant for a Plan
Year, the Committee, (in the case of each Business Unit which does not include
any Participants who are Executive Officers), and the Compensation Committee
(in the case of each Business Unit which includes any Participant who is an
Executive Officer) shall, on or before the end of each Plan Year, establish
profitability objectives for each Business Unit which the Employer of any
Participant is a member of. In addition, for purposes of determining the
portion of the Annual Deferred Compensation Commitment, if any, to be
allocated to the Account of a Participant for a Plan Year, the Committee (in
the case of a Participant who is not an Executive Officer) and the
Compensation Committee (in the case of a Participant who is an Executive
Officer) shall establish a Deferred Bonus Percentage for such Participant.
The amount of such Deferred Bonus Percentage and the nature and level of the
profitability objectives may vary for each Plan Year.
The Committee, if requested by a Participant, in writing, shall
provide such Participant, with a written statement of the amount of the
Deferred Bonus Percentage and the nature and level of the profitability
objectives which have been established for a Plan Year with respect to the
Participant and the Business Unit which the Participant's Employer is a member
of.
Thereafter, as soon as practicable following the end of each Plan
Year, the Committee (in the case of each Business Unit which does not include
any Participants who are Executive Officers) and the Compensation Committee
(in the case of each Business Unit which includes any Participant who is an
Executive Officer) shall determine whether the profitability objectives for
each Business Unit have been met.
If the Committee or the Compensation Committee (as the case may
be) determines that the profitability objectives established for a Business
Unit have been met, the Committee or the Compensation Committee (as the case
may be) shall establish the amount of the Annual Deferred Compensation
Commitment which is to be allocated among the Participants in each such
Business Unit.
If the Committee or the Compensation Committee (as the case may
be) determines that the profitability objectives established for a Business
Unit have not been met, unless otherwise determined by the Committee (in the
case of a Business Unit which does not include any Participants who are
Executive Officers) or the Compensation Committee (in the case of a Business
Unit which includes any Participant who is an Executive Officer), in its
discretion, the Participants whose Employers are members of any such Business
Unit shall not be entitled to receive any portion of any Annual Deferred
Compensation Commitment for such Plan Year.
Unless otherwise modified or amended by the Committee, if the
Business Unit in which a Participant's Employer is a member meets the
profitability objectives established for such Business Unit for a Plan Year,
the amount of the Annual Deferred Compensation Commitment which is established
for such Business Unit for such Plan Year shall be an amount which provides
for an allocation to each Participant in such Business Unit of a percentage of
the Deferred Bonus Percentage established for such Participant, which is the
same as the percentage (but not in excess of one hundred percent (100%)) of
the base salary which is payable for such Plan Year under the terms of the
Mark IV Industries, Inc. Executive Bonus Plan to executive officers of Mark IV
who are employed at Mark IV's corporate headquarters. Accordingly, unless the
manner for establishing the amount of the Annual Deferred Compensation
Commitment for a Business Unit is amended or modified by the Committee, if the
executive officers of Mark IV who are employed at Mark IV's corporate
headquarters receive bonuses under the terms of the Mark IV Industries, Inc.
Executive Bonus Plan for a fiscal year of Mark IV which are equal to one
hundred percent (100%) or more of the base salary of such executives, the
amount of the Annual Deferred Compensation Commitment which is established for
each Business Unit which has met its profitability objectives shall be an
amount which would provide an allocation for such Plan Year to the Account of
each Participant whose Employer was a member of such Business Unit, in an
amount equal to one hundred percent (100%) of the Deferred Bonus Percentage
established for such Participant for such Plan Year.
2.03 Compensation Deferrals. For each Plan Year beginning with the Plan
Year ending February 28, 1994, each Participant that is provided written
notice of his eligibility to defer his receipt of Compensation for such Plan
Year may elect to defer his receipt of payment of all or any part of the bonus
or other incentive compensation to which he is entitled as provided for in any
bonus or other incentive compensation plans which are maintained by Mark IV or
any of its direct or indirect wholly owned subsidiaries and in which such
Participant is eligible to participate. If a Participant makes a Compensation
Deferral with respect to his bonus or other incentive compensation payable in
connection with the services he has provided to the Employer for any Plan Year
ending on or after February 28, 1994, the amount of the bonus or other
incentive compensation which the Participant has elected to defer the receipt
of shall not be paid to the Participant by his Employer except as provided for
hereunder.
In addition, for the Plan Year beginning March 1, 1994, and for each
Plan Year thereafter, each Participant that is eligible to defer his receipt
of any Compensation may elect to defer the receipt of payment of all or any
part of the salary or wages, to which he is entitled. If a Participant makes
a Compensation Deferral with respect to any portion of the salary or wages to
which he is entitled for the Plan Year beginning March 1, 1994 or for any Plan
Year thereafter, the portion of the salary or wages which the Participant has
elected to defer the receipt of shall not be paid by his Employer except as
provided for hereunder.
The total amount of the Compensation Deferrals made by a Participant
(which shall include the total amount of the salary, wages, bonus or other
incentive compensation which the Participant has elected to defer the receipt
of payment of) together with any earnings thereon as provided for in this
Plan, shall represent the amount which Mark IV has agreed to pay to the
Participant that makes such Compensation Deferral and, unless a Trust Fund is
established pursuant to Section 5.01 hereof, no segregation of any assets of
Mark IV for the purpose of paying such Compensation Deferral shall be
required.
2.04 Compensation Deferral Elections. A Participant that is eligible
to make Compensation Deferrals may make a Compensation Deferral by executing
and delivering to the Committee, a form, supplied by the Committee, which
provides a description of the amount of the Participant's salary or wages
which the Participant elects to defer the receipt of together with a
description of the portion of the bonus or other incentive compensation which
the Participant elects to defer the receipt of (a "Deferred Compensation
Election Form"). The Deferred Compensation Election Form shall also contain a
statement of the period of time over which payment of the Participant's
salary, wages, bonus or other incentive compensation is to be deferred (which
period of time may extend beyond the Participant's Normal Retirement Date and
may be different for separate and distinct portions (identified by the
Participant) of the salary or wages, bonus or incentive compensation which the
Participant has elected to defer) and a statement of the portion of the
Participant's salary, wages, bonus or other incentive compensation which is to
be allocated to the purchase of Phantom Stock (which portion may be different
for separate and distinct portions of the salary, wages, bonus or other
incentive compensation which the Participant has elected to defer). The
Deferred Compensation Election Form shall provide, among other things, that
the Participant's election to defer the receipt of payment of the salary or
wages otherwise payable to the Participant is irrevocable for the Plan Year
for which the election is made, that the Participant's election to defer the
receipt of payment of any bonus or other incentive compensation payable to the
Participant is irrevocable and that the Participant waives his right to make
any claim for payment of the salary, wages, bonus or other incentive
compensation which the Participant has elected to defer except to the extent
such amount is payable pursuant to this Plan.
Notwithstanding the provisions of the preceding paragraph, a
Participant's election to defer the receipt of any portion of his salary or
wages shall be effective only for the Plan Year immediately following the date
the Participant delivers his Deferred Compensation Election Form to the
Committee and a Participant's election to defer the receipt of any portion of
the bonus or other incentive compensation to which he may be entitled shall be
effective only for the bonus or other incentive compensation which is payable
as of the end of the Plan Year immediately following the date the Participant
delivers his Deferred Compensation Election Form to the Committee. Therefore,
in the event that a Participant that is eligible to defer his Compensation
desires to defer the receipt of any portion of the salary or wages which he is
otherwise entitled to for a Plan Year following the Plan Year in which payment
of the Participant's salary or wages has been deferred, the Participant must
execute and deliver a new Deferred Compensation Election Form to the Committee
within the time set forth in the following paragraph. In addition, in the
event that a Participant that is eligible to defer the receipt of his
Compensation desires to defer the receipt of any portion of the bonus or other
incentive compensation he is entitled to for a Plan Year following the Plan
Year in which any portion of his bonus or other incentive compensation was
deferred, the Participant must execute and deliver a new Deferred Compensation
Election Form to the Committee within the time set forth in the following
paragraph.
If a Participant that is eligible to defer the receipt of payment of a
portion of his Compensation desires to defer a portion of his Compensation
effective March 1, 1994, the Participant shall deliver an executed Deferred
Compensation Election Form to the Committee on or before March 1, 1994. If a
Participant desires to defer the receipt of any portion of his salary, wages,
bonus or other incentive compensation for any Plan Year beginning on or after
March 1, 1994, the Participant shall deliver an executed Deferred Compensation
Election Form to the Committee on or before the last day of February of the
Plan Year of the preceding Plan Year in which the Participant desires to have
the receipt of such Compensation deferred.
2.05 Allocation of Forfeitures. Unless a Trust Fund has been
established pursuant to Section 5.01 hereof, Mark IV shall have no obligation
whatsoever to pay any amounts forfeited in accordance with Section 4.06
hereof, and unless a Trust Fund has been established pursuant to Section 5.01
hereof, the amounts, if any, forfeited in accordance with Section 4.06 hereof
shall not be reallocated among the remaining Participants.
2.06 Allocation Does Not Vest Any Interest. The fact that an amount is
credited to the Account of a Participant shall not vest in such Participant or
any Beneficiary any right, title or interest in any assets of Mark IV except
at such time or times and upon the terms and conditions herein provided. In
addition, in the event a Trust Fund is established pursuant to Section 5.01
hereof, the fact that an amount is credited to the Account of a Participant
shall not vest in such Participant or any Beneficiary any right, title or
interest in the assets of the Trust Fund except at such time or times and upon
the terms and conditions provided herein.
2.07 Contributions. In the event a Trust Fund is established pursuant
to Section 5.01 hereof and, following the establishment of such Trust Fund,
Mark IV or its successor elects to continue this Plan: (a) for each Plan Year
in which an Annual Deferred Compensation Commitment is made under this Plan
and not later than the time prescribed by law for filing of the federal income
tax return of Mark IV or its successor for the fiscal year of Mark IV or its
successor with or within which such Plan Year ends, Mark IV or its successor
shall make a contribution to the Trust Fund in an amount equal to the amount
of the Annual Deferred Compensation Commitment to be made with respect to each
Business Unit for such Plan Year; (b) for each Plan Year in which a
Participant makes a Compensation Deferral with respect to any salary or wages
otherwise payable to the Participant, Mark IV or its successor, as the case
may be, shall, within fifteen (15) days following the end of the calendar
month in which any portion of the salary or wages of the Participant is to be
allocated to his Compensation Deferral Account, contribute to the Trust Fund
an amount equal to the amount of the Compensation Deferrals made by such
Participant for such calendar month; and (c) for each Plan Year in which a
Participant makes a Compensation Deferral with respect to any bonus or other
incentive compensation otherwise payable to the Participant, Mark IV or its
successor, as the case may be, shall make a contribution to the Trust Fund in
an amount equal to the amount of the bonus or other incentive compensation
deferred by such Participant for such Plan Year not later than the time
prescribed by law for the filing by Mark IV or its successor of federal income
tax return for the fiscal year of Mark IV or its successor with or within
which such Plan Year ends.
ARTICLE 3.
Accounts, Allocations and Earnings
3.01 Participant's Account. The Committee shall establish and maintain
an Account in the name of each Participant. In addition, for each Plan Year
in which an Annual Deferred Compensation Commitment is made with respect to
any Business Unit pursuant to this Plan, the Committee shall establish and
maintain an Annual Allocation Account (as a sub-account within the Account of
each Participant whose Employer is a member of such Business Unit), to which
the Committee shall credit each such Participant's share of the Annual
Deferred Compensation Commitment made with respect to such Business Unit for
such Plan Year. Finally, beginning with the Plan Year ending February 28,
1994, and for each Plan Year thereafter in which a Participant makes a
Compensation Deferral, the Committee shall establish and maintain a
Compensation Deferral Account (as a sub-account within the Account of each
Participant that has made a Compensation Deferral) which the Committee shall
credit with the amount of the Compensation Deferral made by such Participant
for such Plan Year pursuant to the terms of the Deferred Compensation Election
Form executed by the Participant.
For purposes of determining the value of a Participant's Account,
the Committee shall establish and maintain an Interest Account (as a sub-
account within each Participant's Account) which shall reflect the portion of
each of the Annual Allocation Accounts contained within the Participant's
Account, if any, and the portion of each of the Compensation Deferral Accounts
contained within the Participant's Account, if any, which is not allocated by
the Participant to the purchase of Phantom Stock. In addition, for purposes
of determining the value of a Participant's Account, the Committee shall
establish and maintain a Phantom Stock Account (as a sub-account within each
Participant's Account) which shall reflect the portion of each of the Annual
Allocation Accounts contained within the Participant's Account, if any, and
the portion of each of the Compensation Deferral Accounts contained within the
Participant's Account if any, which is allocated by the Participant to the
purchase of Phantom Stock.
Accordingly, based on the foregoing, each Participant's Account
may contain one or more Compensation Deferral Accounts and one or more Annual
Allocation Accounts. In addition, for purposes of determining the value of a
Participant's Account, each of the Annual Allocation Accounts contained within
a Participant's account and each of the Compensation Deferral Accounts
contained within a Participant's Account may be allocated, in whole or in part
and pursuant to the written instructions of the Participant, to the Interest
Account and the Phantom Stock Account.
The value of each Participant's Account as determined pursuant to
Sections 3.04 or 3.05 hereof, whichever is applicable, shall reflect the
aggregate amount which Mark IV has agreed and committed to pay to the
Participant on whose behalf such Account has been established and, unless a
Trust Fund is established pursuant to Section 5.01 hereof, no trust or other
fund shall be established by Mark IV to pay the amount reflected by such
Account and no segregation of any assets of Mark IV to such Account shall be
required.
In the event a Trust Fund is established pursuant to Section 5.01
hereof, the Committee shall establish and maintain, within the Trust Fund, an
Account in the name of each Participant. At the time the Trust Fund is
established, the Committee shall credit the Account established for the
Participant in the Trust Fund with an amount equal to the value of the
Participant's Account as determined pursuant to Sections 3.04 or 3.05 hereof,
whichever is applicable, as of the date such Trust Fund is established and,
thereafter, the Committee shall credit such Participant's Account with the
Participant's share of the net earnings of the Trust Fund and charge such
Participant's Account with the net losses of the Trust Fund and distributions
from the Trust Fund made on the Participant's behalf. In the event that this
Plan is continued by Mark IV or its successor following the establishment of a
Trust Fund, for each Plan Year following the establishment of the Trust Fund
in which a Participant makes a Compensation Deferral, the Committee shall
establish a Compensation Deferral Account within the Account of such
Participant which Compensation Deferral Account shall be credited with the
amount of the Compensation Deferral made to the Plan by the Participant for
such Plan Year together with earnings or losses thereon. In addition, if the
Plan is continued by Mark IV or its successor following the establishment of a
Trust Fund, for each Plan Year following the establishment of the Trust Fund,
the Committee shall establish within each Participant's Account in the Trust
Fund, an Annual Allocation Account in the name of such Participant which shall
be credited with such Participant's share of the Annual Deferred Compensation
Commitment, if any, made on behalf of Participants in the Business Unit that
the Participant's Employer is a member of for such Plan Year, together with
all earnings or losses thereon.
In the event a Trust Fund is established as required by Section
5.01 hereof, the establishment and maintenance of Accounts within the Trust
Fund shall be for accounting purposes only and not require a segregation of
any assets of the Trust Fund to the Account of any Participant.
3.02 Allocations to Phantom Stock Account and Interest Account.Except
as otherwise provided by Section 3.05 hereof, the Committee shall allocate a
portion of the Annual Deferred Compensation Commitment which is allocated to
each of the Participant's Annual Allocation Accounts and a portion of each
Compensation Deferral made on behalf of a Participant to the purchase of
Phantom Stock in accordance with the written instructions of the Participant
delivered to the Committee in accordance with the following paragraphs of this
Section 3.02.
On or before April 30 of each Plan Year following the first Plan
Year, each Participant may deliver to the Committee, a written statement
setting forth the portion, if any, of the Annual Deferred Compensation
Commitment made on behalf of the Participant for the immediately preceding
Plan Year (if any) which the Participant desires to allocate to the purchase
of Phantom Stock. If the Participant delivers any such written statement to
the Committee, the Committee shall credit the Participant's Phantom Stock
Account and the Annual Allocation Account to be established with respect to
the Annual Deferred Compensation Commitment made on behalf of the Participant
for the immediately preceding Plan Year with the number of shares of Phantom
Stock which could be purchased at a price per share determined pursuant to
Section 3.06 hereof using the portion of the Annual Deferred Compensation
Commitment which is to be allocated to the Participant's Annual Allocation
Account for such Plan Year to the extent that the Participant desires to
allocate to the purchase of common stock of Mark IV as described in the
written statement delivered to the Committee by the Participant.
In the event a Participant fails to deliver any such written
statement to the Committee within the time set forth above, the Participant
shall be deemed to have elected not to have any portion of the amount of the
Annual Deferred Compensation Commitment made on his behalf for the immediately
preceding Plan Year (if any) and which is allocated to his Annual Allocation
Account for the immediately preceding Plan Year, allocated to the purchase of
Phantom Stock and the entire portion of the Annual Deferred Compensation
Commitment which is to be allocated to the Participant's Annual Allocation
Account for the immediately preceding Plan Year shall be deemed to be
allocated to the Interest Account established for the Participant. In
addition, any portion of an Annual Deferred Compensation Commitment made to a
Participant's Annual Allocation Account for a Plan Year which the Participant
has not allocated to the purchase of Phantom Stock pursuant to the preceding
paragraph shall be deemed to be allocated to the Interest Account established
for the Participant.
Effective for the Plan Year ending February 28, 1994 and for each
Plan Year thereafter, each Participant that has elected to have a Compensation
Deferral made to the Plan on his behalf shall specify in the Compensation
Deferral Election Form which the Participant has delivered to the Committee in
connection with such Compensation Deferral, the portion, if any, of the salary
and wages deferred in connection with such Compensation Deferral and the
portion, if any, of the bonus and other incentive compensation deferred in
connection with such Compensation Deferral which the Participant desires to
allocate to the purchase of Phantom Stock.
If the Participant specifies in a Compensation Deferral Election
Form that a portion of the salary or wages deferred by the Participant in
connection with the Compensation Deferral to which such Compensation Deferral
Election Form relates is to be allocated to the purchase of Phantom Stock, the
Committee shall credit such Participant's Phantom Stock Account and the
Compensation Deferral Account established in connection with such Compensation
Deferral with the number of shares of Phantom Stock, if any, which could be
purchased at the time such salary or wages are deemed to be allocated to the
Participant's Account (as determined pursuant to Section 3.03 hereof) at a
price per share determined pursuant to Section 3.06 hereof, using the portion
of the salary or wages deferred by the Participant in connection with such
Compensation Deferral to the extent that such portion is to be allocated to
the purchase of Phantom Stock, as provided for by the Participant's
Compensation Deferral Election Form. If a Participant specifies in a
Compensation Deferral Election Form that a portion of the bonus or other
incentive compensation deferred by the Participant in connection with the
Compensation Deferral to which such Compensation Deferral Election Form
relates is to be allocated to the purchase of Phantom Stock, the Committee
will credit such Participant's Phantom Stock Account and the Compensation
Deferral Account established in connection with such Compensation Deferral
with the number of shares of Phantom Stock, if any, which could be purchased
at the time such bonus or other incentive compensation is deemed to be
allocated to the Participant's Account (as determined pursuant to Section 3.03
hereof) at a price per share determined pursuant to Section 3.06 hereof using
the portion of the bonus or other deferred compensation deferred by the
Participant in connection with such Compensation Deferral to the extent that
such portion is to be allocated to the purchase of Phantom Stock as provided
for by the Participant's Compensation Deferral Election Form.
If a Participant that has elected to have a Compensation Deferral
made to the Plan on his behalf does not specify in the Deferred Compensation
Election Form which the Participant has delivered to the Committee in
connection with such deferral, the portion, if any, of the salary and wages
deferred in connection with such Compensation Deferral and the portion, if
any, of the bonus and other incentive compensation deferred in connection with
such Compensation Deferral which the Participant desires to allocate to the
purchase of Phantom Stock, the entire portion of such Compensation Deferral
shall be deemed to be allocated to the Interest Account established with
respect to such Participant's Account. In addition, any portion of a
Participant's Compensation Deferral which the Participant has not allocated to
the purchase of Phantom Stock pursuant to the provisions of the preceding
paragraph shall be deemed to be allocated to the Interest Account established
with respect to such Participant's Account.
On or before April 30 of each Plan Year, each Participant may
deliver to the Committee a written statement directing the Committee to
increase or decrease the portion of any Annual Allocation Account or the
portion of any Compensation Deferral Account of a Participant which was
allocated to the purchase of Phantom Stock as of the end of the immediately
preceding Plan Year. In the event a Participant fails to deliver such written
statement to the Committee within the time set forth above, the Participant
shall be deemed to have elected to have the entire portion, if any, of each
Annual Allocation Account and the entire portion, if any, of each Compensation
Deferral Account which is allocated to the purchase of Phantom Stock,
reallocated to the Interest Account.
3.03 Time of Allocation. For purposes of determining the Dollar Value
and the Share Value of a Participant's Account: (a) the portion of the Annual
Deferred Compensation Commitment to be allocated to the Account of a
Participant for a Plan Year shall be deemed to be allocated to such
Participant's Account, and to the Annual Allocation Account established for
such Plan Year, as of the end of such Plan Year; (b) the amount of the salary
or wages deferred by a Participant in connection with a Compensation Deferral
shall be deemed to be credited to the Participant's Account and the
Compensation Deferral Account established for the Participant with respect to
such Compensation Deferral, as of the end of the calendar month during which
the services giving rise to such salary or wages were performed; and (c) the
amount of any bonus or other incentive compensation deferred by a Participant
in connection with a Compensation Deferral shall be deemed to be credited to
such Participant's Account, and to the Compensation Deferral Account
established for the Participant with respect to such Compensation Deferral, as
of the end of the Plan Year ending with or within the fiscal year of the
Company with respect to which such bonus or other incentive compensation is
payable.
3.04 Valuation of Accounts. Except as otherwise provided by Section
3.05 hereof, the value of the Account of any Participant at any time shall be
equal to the sum of: (a) the Dollar Value, if any, of each Annual Allocation
Account of the Participant; (b) the Share Value, if any, of each Annual
Allocation Account of the Participant; (c) the Dollar Value, if any, of each
Compensation Deferral Account of the Participant; and (d) the Share Value, if
any, of the Compensation Deferral Account of the Participant.
3.05 Special Rules for Valuing Accounts of Executive Officers. (a) If
a Participant becomes an Executive Officer, the value of such Participant's
Account shall, notwithstanding the provisions of Section 3.04 hereof, be equal
to the greater of the Dollar Value of the Dollar Value Account (as hereinafter
defined) and the Share Value of the Share Value Account (as hereinafter
defined).
(b) For purposes of making the value comparison required by
Section 3.05(a) above, the Committee shall, as of the end of the calendar
month in which a Participant becomes an Executive Officer, establish for such
Participant, two (2) separate hypothetical accounts to which all amounts
theretofore and thereafter credited to the Account of the Participant in
connection with the Annual Deferred Compensation Commitments and Compensation
Deferrals made with respect to such Participant shall be credited. One of
such hypothetical accounts shall not be deemed to be credited with any Phantom
Stock (hereinafter the "Dollar Value Account") and the other hypothetical
account (hereinafter the "Share Value Account") shall be credited exclusively
with Phantom Stock. On the date these accounts are established for the
Participant that is an Executive Officer, each Account shall have the same
value, which value shall be the value of the Participant's Account as of such
date determined in accordance with Sections 3.05(d) and (e) below.
(c) After a Participant has become an Executive Officer and a
Dollar Value Account and a Share Value Account have been established for such
Participant by the Committee, thereafter, the entire amount of any Annual
Deferred Compensation Commitment to be allocated to the Participant's Account
after the Participant becomes an Executive Officer and the entire amount of
any Compensation Deferrals to be allocated to the Participant's Account after
the Participant becomes an Executive Officer shall be allocated both to the
Participant's Dollar Value Account and the Participant's Share Value Account.
The number of shares of Phantom Stock which shall be allocated to the Share
Value Account in connection with any such subsequent allocation shall be equal
to the number of the shares of Phantom Stock which could be purchased at a
price per share which is the same as the price per share established by
Section 3.06 hereof for additional Compensation Deferrals of a similar nature
(salary, wages, bonuses or incentive compensation) and the price per share
established by Section 3.06 hereof for additional Annual Deferred Compensation
Commitments made pursuant to the Plan.
(d) The initial value of the Dollar Value Account shall be
determined by adding to the Interest Account portion of each of the
Participant's Annual Allocation Accounts and to the Interest Account portion
of each of the Participant's Compensation Deferral Account in the case of an
Annual Allocation Accounts, an amount equal to the price per share of common
stock of Mark IV as determined pursuant to Section 3.06 hereof multiplied by
the number of shares of Phantom Stock allocated to the Phantom Stock Account
portion of such Annual Allocation Account and in the case of a Compensation
Deferral Account, an amount equal to the price per share of common stock of
Mark IV as determined pursuant to Section 3.06 hereof multiplied by the number
of shares of Phantom Stock allocated to the Phantom Stock Account portion of
such Compensation Deferral Account. The sum of such amounts shall be deemed
to be the initial value of the Dollar Value Account of such Participant.
Thereafter, any increases in the value of the Dollar Value Account shall be
attributable solely to additional allocations to such Participant's Account of
a portion of any Annual Deferred Compensation Commitment, additional
Compensation Deferrals made by the Participant and any interest attributable
to the amounts credited to such Dollar Value Account, as determined pursuant
to Section 3.09 hereof.
(e) The initial number of shares of Phantom Stock credited to
the Share Value Account of a Participant shall be determined by adding to the
Phantom Stock Account portion, if any, of each of the Participant's Annual
Allocation Accounts and to the Phantom Stock Account portion, if any, of each
of the Participant's Compensation Deferral Accounts in the case of an Annual
Allocation Account, an amount equal to the number of shares of Phantom Stock,
if any, which could be purchased, at a price per share of common stock of Mark
IV determined pursuant to Section 3.06 hereof, using the Interest Account
portion, if any, of such Annual Allocation Account and, in the case of a
Compensation Deferral Account, an amount equal to the number of shares of
Phantom Stock, if any, which could be purchased at a price per share of common
stock of Mark IV determined pursuant to Section 3.06 hereof, using the
Interest Account portion, if any, of such Compensation Deferral Account. The
sum of the total number of shares of Phantom Stock determined above in this
Section 3.05(e) shall be deemed to be the initial number of shares of Phantom
Stock credited to the Phantom Stock Account of the Participant. Thereafter,
any increases in the value of the Share Value Account shall be attributable
solely to additional increases in the price per share of Phantom Stock
allocated to such Account at the time of its establishment and to additional
shares of Phantom Stock allocated to such Share Value Account in connection
with additional allocations of the Annual Deferred Compensation Commitment and
additional Compensation Deferrals.
3.06 Pricing of Mark IV Common Stock. For purposes of determining
the number of shares contained in the portion of the Annual Deferred
Compensation Commitment, if any, which is to be allocated, pursuant to Section
3.02 or Section 3.05 hereof, to the purchase of Phantom Stock, the price per
share of common stock of Mark IV shall be deemed to be the average of the
closing prices per share of common stock of Mark IV during the month of
February for the Plan Year for which the Annual Deferred Compensation
Commitment is to be made, as determined from the closing prices per share of
common stock of Mark IV reported by the New York Stock Exchange Composite
Index for such month.
For purposes of determining the number of shares of Phantom Stock, if
any, to be allocated to the Account of a Participant, as of the end of any
calendar month in connection with the salary or wages deferred by the
Participant as provided for by Section 2.04 hereof, the price per share of
common stock of Mark IV shall be deemed to be the average of the closing
prices per share of common stock of Mark IV during such calendar month as
determined from the closing prices per share of common stock of Mark IV. For
purposes of determining the number of shares of Phantom Stock, if any, to be
allocated to the Account of a Participant as of the end of each Plan Year with
respect to the bonus or other incentive compensation deferred by the
Participant as provided for by Section 2.03 hereof, the price per share of
common stock of Mark IV shall be deemed to be the average of the closing
prices per share of common stock of Mark IV during the month of February for
the Plan Year for which such bonus or other incentive compensation was
deferred. For purposes of determining the average of the closing prices per
share of common stock of Mark IV as required by this paragraph, such closing
prices shall be determined from the closing prices per share of common stock
of Mark IV reported by the New York Stock Exchange Composite Index for such
month.
For purposes of determining the number of additional shares of
Phantom Stock to be allocated to any Annual Allocation Account or any Deferred
Compensation Account of a Participant in connection with any cash dividends
payable with respect to shares of Phantom Stock allocated to any Annual
Allocation Accounts or any Deferred Compensation Accounts of a Participant,
the price per share of common stock of Mark IV which shall be used to
determine the number of additional shares of Phantom Stock to be allocated to
any such Annual Allocation Accounts and any such Deferred Compensation
Accounts shall be the average of the closing prices per share of common stock
of Mark IV as reported by the New York Stock Exchange Composite Index for the
calendar month ending immediately prior to the date on which such cash
dividend is declared.
For purposes of determining the number of additional shares of
common stock of Mark IV to be allocated to any Annual Allocation Account or
any Compensation Deferral Account of a Participant, if, as provided by Section
3.02 hereof, a Participant delivers a written statement to the Committee which
directs the Committee to increase the portion of any of his Annual Allocation
Accounts or the portion of any of his Compensation Deferral Accounts which is
allocated to the purchase of Phantom Stock, the price per share of common
stock of Mark IV shall be the average of the closing prices per share of
common stock of Mark IV during the month of February of the immediately
preceding Plan Year, as determined from the closing prices per share of common
stock of Mark IV reported by the New York Stock Exchange Composite Index for
such month.
For purposes of determining number of shares of common stock of
Mark IV which will be removed from any Annual Allocation Account of a
Participant or any Compensation Deferral Account of a Participant if, as
provided by Section 3.02 hereof, a Participant delivers a written statement to
the Committee which directs the Committee to decrease the portion of any of
his Annual Allocation Accounts or the portion of any of his Deferred
Compensation Accounts which is allocated to the purchase of Phantom Stock the
price per share of common stock of Mark IV shall be the average of the closing
prices per share of common stock of Mark IV during the month of February of
the immediately preceding Plan Year as reported by the New York Stock Exchange
Composite Index or, if such date is a Saturday, a Sunday or a legal holiday on
which banks are authorized to be closed, the closing price per share of common
stock of Mark IV as reported by the New York Stock Exchange Composite Index on
the first day following such date which is not a Saturday, a Sunday or a legal
holiday on which banks are authorized to close.
For purposes of determining the initial value of the Dollar Value
Account of a Participant and the initial number of shares of Phantom Stock to
be credited to the Share Value Account of a Participant as required by Section
3.05(d) above, the price per share of common stock of Mark IV shall be deemed
to be the average of the closing prices per share of common stock of Mark IV
as reported by the New York Stock Exchange Composite Index for the calendar
month in which the Participant becomes an Executive Officer.
For purposes of determining the Share Value of a Participant's
Account if the Participant's employment with the Employer is voluntarily or
involuntarily terminated for any reason other than a "for cause" termination
described in Section 3.09 below including, but not limited to, a termination
as a result of the Participant's retirement, death or suffering of a total and
permanent disability, the price per share of common stock of Mark IV shall be
deemed to be the average of the closing prices per share of common stock of
Mark IV as reported by the New York Stock Exchange Composite Index for the
thirty (30) day period ending on the day the Participant's employment with the
Employer is terminated.
If, pursuant to Section 4.05 hereof, a Participant has elected to
receive payment of all or any portion of the Participant's Account
attributable to Compensation Deferrals while the Participant is still employed
by the Employer, for purposes of determining the Share Value of such portion
of the Participant's Account, if any, at the time or times for payment of such
portion of the Participant's Account, the price per share of the common stock
of Mark IV shall be deemed to be the average of the closing prices per share
of common stock of Mark IV during the calendar month ending immediately prior
to the date for payment of all or any such portion of the Participant's
Account as determined by the closing prices per share of common stock of
Mark IV for such period as reported by the New York Stock Exchange Composite
Index for such month.
For purposes of determining the amount of the funds to be
transferred to any Trust Fund established pursuant to Section 5.01 hereof, the
price per share of common stock of Mark IV shall be the closing price per
share of common stock of Mark IV on the day a Change in Control (as defined in
Section 5.03 hereof) occurs, as reported by the New York Stock Exchange
Composite Index.
Notwithstanding the foregoing, unless the price per share of
common stock of Mark IV is adjusted as a result of the operation of Section
3.07 hereof, in no event shall the price per share of any Phantom Stock
allocated to the Annual Allocation Account or the Compensation Deferral
Account of a Participant be less than the price per share of common stock of
Mark IV used by the Company for purposes of calculating the number of shares
of Phantom Stock to be allocated to the Participant's Annual Allocation
Account or Compensation Deferral Account at the time such shares of Phantom
Stock are allocated to the Participant's Annual Allocation Account or
Compensation Deferral Account. In addition, if a Participant's employment
with his or her Employer is terminated for cause as described in Section 3.09
hereof, subject to the provisions of the preceding sentence, the price per
share of any Phantom Stock allocated to the Annual Allocation Account or the
Compensation Deferral Account of such Participant shall equal the price per
share of common stock of Mark IV as reported by the New York Stock Exchange
Composite Index on the day on which the Participant's employment with the
Employer is terminated for cause.
3.07 Anti-Dilution Provisions. The aggregate number of shares of
common stock of Mark IV allocated to each Annual Allocation Account and to
each Compensation Deferral Account of a Participant shall be adjusted
proportionately in the event of any change, increase or decrease in the total
number of issued and outstanding shares of common stock of Mark IV or any
change in classification of the shares of common stock of Mark IV without the
receipt of consideration by Mark IV as a result of any stock split, reverse
stock split or other consolidation of shares of common stock of Mark IV or as
a result of any payment of a stock dividend, recapitalization,
reclassification or other adjustment in the capital of Mark IV without receipt
of consideration by Mark IV.
3.08 Fractional Shares and Dividends. In the event that any cash
dividends are paid with respect to any common stock of Mark IV, an amount
equal to the amount of the cash dividends which would be payable with respect
to any Phantom Stock allocated to any of the Participant's Annual Allocation
Accounts or the Participant's Compensation Deferral Accounts shall be deemed
to be allocated by the Committee to the portion of the Participant's Annual
Allocation Account and the portion of the Participant's Compensation Deferral
Account, if any, which is allocated to the purchase of Phantom Stock as of the
date for payment of such cash dividends specified by Mark IV in the resolution
authorizing the payment of such cash dividends. Any such cash dividends shall
then be converted to shares of Phantom Stock at a price per share determined
pursuant to Section 3.06 hereof.
In addition, if any fractional shares of common stock of Mark IV
would result from the allocation of any Annual Deferred Compensation
Commitment or any Compensation Deferral to a Participant's Account, in
connection with any change in the portion of any Participant's Annual
Allocation Account or any Compensation Deferral Account allocated to the
purchase of Phantom Stock or in connection with any change in the total number
of issued and outstanding shares of common stock of Mark IV without the
receipt of compensation by Mark IV, an amount equal to such fractional share
of common stock of Mark IV shall be allocated to the portion of such
Participant's Annual Allocation Account and the portion of such Participant's
Compensation Deferral Account which is allocated to the purchase of Phantom
Stock.
3.09 Allocation of Interest. Subject to the provisions of the
following paragraphs, unless a Trust Fund has been established pursuant to
Section 5.01 hereof, as of the end of each Plan Year, the Committee shall
increase the Dollar Value of each Participant's Account and, in the case of a
Participant that is an Executive Officer, the Dollar Value of the
Participant's Dollar Value Account by an amount equal to the Applicable
Interest Rate multiplied by the Dollar Value of such Participant's Account
determined as of the end of the preceding Plan Year. In addition, if a
Participant has elected to defer the receipt of all or any portion of his
salary or wages by making a Compensation Deferral and if a Trust Fund has not
been established pursuant to Section 5.01 hereof, as of the end of each Plan
Year, the Committee shall increase the Dollar Value of each Participant's
Account, and, in the case of a Participant that is an Executive Officer, the
Dollar Value of the Participant's Dollar Value Account by an amount equal to
the amount of interest which would have been earned by applying the Applicable
Interest Rate for the immediately preceding Plan Year (adjusted for periods of
less than one year) to each of the monthly allocations of the salary or wages
deferred by the Participant during the Plan Year but only for the period
between the date a monthly allocation of the Participant's salary or wages is
made to the Participant's Compensation Deferral Account and the end of the
Plan Year. For purposes of this Section 3.09, the amount of the interest to
be allocated to the Participant's Account as of the end of such Plan Year
shall be allocated among the respective sub-accounts established by the
Committee for the Participant in proportion to the Dollar Values of such sub-
accounts, determined as of the end of the preceding Plan Year.
If a Trust Fund has not been established and a Participant's employment
with the Employer is terminated on account of his death, retirement or
suffering of a Total and Permanent Disability, the Committee shall increase
the Dollar Value of such a Participant's Account, and, in the case of a
Participant that is an Executive Officer, the Dollar Value of the
Participant's Dollar Value Account by an amount equal to the amount of
interest which would have been earned by the Dollar Value of the Participants'
Account determined as of the end of the Plan Year ending prior to the
Participant's death, retirement or Total and Permanent Disability and applying
the Applicable Interest Rate for such immediately preceding Plan Year
(adjusted for periods of less than one year) to such Dollar Value for the
period from the end of such Plan Year to the date the Participant's employment
with the Employer is terminated on account of the Participant's retirement,
death or suffering of a Total and Permanent Disability. In addition, if a
Participant has elected to make Compensation Deferrals, a Trust Fund has not
been established and the Participant's employment with the Employer is
terminated on account of his death, retirement or suffering of a Total and
Permanent Disability, the Committee shall increase the Dollar Value of such
Participant's Account, and, in the case of a Participant that is an Executive
Officer, the Dollar Value of the Participant's Dollar Value Account by an
amount equal to the amount of interest which would have been earned by
applying the Applicable Interest Rate (adjusted for periods of less than one
year) to each of the monthly allocations of salary or wages made to the
Participant's Compensation Deferral Account for the period between the date
such monthly allocation is made to the Participant's Compensation Deferral
Account and the date the Participant's employment with the Employer is
terminated on account of his retirement, death or suffering of a Total and
Permanent Disability. Thereafter, if a Trust Fund has not been established,
the Dollar Value of the Account of a Participant whose employment with the
Employer has been terminated on account of his death, retirement or suffering
of a Total and Permanent Disability, shall be credited with interest for the
period beginning on the date the Participant's employment with the Employer is
terminated as a result of his death, retirement or Total and Permanent
Disability and ending on the date the value of the Participant's Account is
distributed. For each Plan Year or portion thereof which elapses during the
period beginning on the date a Participant's employment with the Employer is
terminated on account of his death, retirement or Total and Permanent
Disability and ending on the date the value of the Participant's Account is
distributed, the interest rate which shall be applied to the Dollar Value of
the Account of such Participant shall be the Applicable Interest Rate as in
effect for the immediately preceding Plan Year.
If a Trust Fund has not been established and a Participant's employment
with the Employer is terminated for any reason prior to his death, retirement
or suffering of a Total and Permanent Disability, the Dollar Value of the
Participant's Account determined as of the end of the immediately preceding
calendar month shall be deemed the Dollar Value of such Participant's Account
determined as of the date the Participant's employment with the Employer is
terminated. Thereafter, the Participant's Account shall be credited with
interest during the period beginning on the date the Participant's employment
with the Employer is terminated and ending on the last day of the calendar
month ending immediately before the calendar month in which the Participant's
Account is distributed. The amount of such interest for any such period shall
be equal to the Applicable Interest Rate for the immediately preceding Plan
Year multiplied by the Dollar Value of the Participant's Account determined as
of the end of the immediately preceding Plan Year. For purposes of this
paragraph, the amount of interest to be allocated to the Participant's Account
as of the end of a Plan Year shall be allocated among the respective sub-
accounts established by the Committee for the Participant in proportion to the
Dollar Values of such sub-accounts, determined as of the end of the preceding
Plan Year.
Upon the occurrence of a Change in Control as defined in Section 5.03
hereof, the Committee shall increase the Dollar Value of each Participant's
Account and, in the case of a Participant that is an Executive Officer, the
Dollar Value of the Participant's Dollar Value Account by an amount equal to
the amount of interest which would have been earned by the Dollar Value of
such Participant's Account determined as of the Plan Year ending prior to the
Change in Control and applying the Applicable Interest Rate for such
immediately preceding Plan Year to such Dollar Value for the period from the
end of such Plan Year to the date on which the Change in Control occurs. In
addition, upon the occurrence of a Change in Control, the Committee shall
increase the Dollar Value of the Account of a Participant that has elected to
make Compensation Deferrals by an amount equal to the amount of interest, if
any, which would have been earned by applying the Applicable Interest Rate for
the immediately preceding Plan Year (adjusted for periods of less than one
year) to each of the monthly allocations of salary or wages, if any, made to
the Participant's Compensation Deferral Account for the period between the
date such monthly allocation is made to the Participant's Compensation
Deferral Account and the date the Change in Control occurs.
Notwithstanding anything to the contrary contained in the
preceding paragraphs, no interest shall be credited to any Annual Allocation
Account or any Compensation Deferral Account of a Participant with respect to
any period of time which elapses after the date a Participant's employment
with his or her Employer is terminated if the Participant's employment with
his or her Employer is terminated for cause which shall include, but not be
limited to: (a) willful and continued failure to substantially perform his
duties hereunder other than any such failure resulting from the Participant's
incapacity due to physical or mental illness; (b) illegal or criminal conduct;
(c) intentional falsification of records or reports or any other act or acts
of dishonesty constituting a felony and resulting, or intended to result,
directly or indirectly, in personal gain or enrichment of the Participant at
the expense of the Employer; (d) excessive and/or chronic use of alcohol,
narcotics, or other controlled substances (other than under the supervision of
a licensed physician); or (e) willful engagement in gross misconduct
materially injurious to Mark IV or the Employer.
If a Trust Fund has been established pursuant to Section 5.01
hereof and a Participant's employment with the Employer is terminated (other
than for cause as described above) prior to his death, disability or
retirement at age 60, during the period between the date such Participant's
employment with the Employer is terminated and the date that distribution of
the Participant's Account begins, such Participant's Account shall be credited
or charged with its proportionate share of the earnings or losses of the Trust
Fund.
3.10 Allocations in Year of Retirement. Notwithstanding anything to
the contrary contained in Section 3.02 hereof, in the event that a Participant
delivers written notice to the Committee of his intent to retire from
employment with the Employer, in addition to the change in the portion of the
Participant's Annual Allocation Account and the portion of the Participant's
Compensation Deferral Accounts which is allocated to the purchase of Phantom
Stock as permitted by Section 3.02 hereof, the Participant shall be entitled
to change the portion of his Annual Allocation Accounts and the portion of his
Compensation Deferral Accounts which is allocated to the purchase of Phantom
Stock one additional time during the twelve (12) month period ending on the
date the Participant retires from employment with the Employer. The Committee
shall change the portion of the Participant's Annual Allocation Accounts and
the portion of the Participant's Compensation Deferral Accounts which is
allocated to the purchase of Phantom Stock in accordance with the written
instructions of the Participant; provided that, the Participant gives notice
to the Committee immediately prior to or on the date the Participant intends
that the change in the Phantom Stock Account portion of his Annual Allocation
Accounts and the Phantom Stock Account portion of the Participant's
Compensation Deferral Account will become effective.
For purposes of determining the number of shares of common stock
of Mark IV to be allocated to the Phantom Stock Account portion of the
Participant's Annual Allocation Account and the Phantom Stock Account portion
of the Participant's Compensation Deferral Account following any adjustment
which is made pursuant to this Section 3.10, the price per share of common
stock of Mark IV shall be deemed to be the closing price per share of common
stock of Mark IV as reported by the New York Stock Exchange Composite Index on
the day the change in the Phantom Stock Account portion of the Participant's
Annual Allocation Account is to become effective.
3.11 Valuation of Trust Fund. In the event a Trust Fund is established
pursuant to Section 5.01 hereof, as of each Valuation Date, the Trustee shall
determine the net worth of the assets of the Trust Fund and report such value
to the Committee in writing. In determining such net worth, the Trustee shall
value the assets of the Trust Fund at their fair market value as of such
Valuation Date and shall deduct all fees and expenses chargeable to the Trust
Fund. Such valuation shall not include the portion of any Compensation
Deferral for the Plan Year in which such Valuation Date occurs which is
attributable to the Participant's election to defer the receipt of his bonus
or other incentive compensation nor shall any such valuation include any
contribution to be made by Mark IV or its successor to reflect the Annual
Deferred Compensation Commitment for the Plan Year ending on such Valuation
Date. The Committee shall then adjust the net credit balance in the Accounts
of all Participants upward or downward, pro rata, so that the total of such
net credit balances will equal such net worth of the Trust Fund as of such
Valuation Date. Finally, the Committee shall add to the Account of each
Participant, the portion of the contribution, if any, to be made by Mark IV or
its successor to reflect the Annual Deferred Compensation Commitment if any,
which is to be made on behalf of such Participant for the Plan Year ending on
such Valuation Date and the amount, if any, of the Participant's Compensation
Deferral.
3.12 Statement of Account. As soon as practicable following the written
request of a Participant, the Committee shall deliver to such Participant a
statement of the Dollar Value and, if applicable, the Share Value of his
Account or, in the case of a Participant that is an Executive Officer, the
Dollar Value of such Participant's Dollar Value Account and the Share Value of
such Participant's Share Value Account including a statement of: (a) the
amount of the Annual Deferred Compensation Commitment to be allocated to his
Annual Allocation Account of the Participant for such Plan Year; (b) the
amount of the portion of the Participant's Compensation Deferral which is
attributable to the Participant's deferral of salary or wages and which has
been allocated to the Participant's Compensation Deferral Account for the Plan
Year; (c) the amount of the Participant's Compensation Deferral which is
attributable to the Participant's deferral of his bonus or other incentive
compensation and which is to be allocated to the Participant's Compensation
Deferral Account as soon as practicable following the end of such Plan Year;
(d) the number of shares of Phantom Stock, if any, to be allocated to his
Annual Allocation Account and, if applicable, his Compensation Deferral
Account for such Plan Year; (e) the Dollar Value of the Participant's Account
(including the Dollar Value of the vested and non-vested portions of the
Participant's Account) together with a statement of the interest to be
allocated to such Participant's Account for such Plan Year and the manner in
which such interest is to be allocated among the respective sub-accounts
established by the Committee for the Participant in connection with its
administration of the Plan; and, (f) the Share Value, if any, of the
Participant's Account (including the Share Value of the vested and non-vested
portions of the Participant's Account).
ARTICLE 4.
Distributions
4.01 Retirement. Every Participant shall retire for purposes of this
Plan upon his termination of employment on his normal retirement date or his
deferred retirement date, as such dates are defined below, and shall continue
to participate until his actual retirement. In order to retire for purposes
of this Plan, a Participant shall deliver written notice of his intent to
retire to the Committee at least forty-five (45) days prior to the date his
retirement is to become effective. Upon a Participant's retirement, the value
of his Account shall become fully and nonforfeitably vested.
Following a Participant's retirement, the Committee shall direct Mark IV
to distribute the value of such Participant's Account to such Participant in
one lump sum payment; provided however, that, in no event shall Mark IV be
required to distribute the amounts payable under this Plan to or on behalf of
any Participant until the expiration of the twelve (12) month period beginning
on the date the Participant retires.
If a Trust Fund has been established pursuant to Section 5.01 hereof,
following a Participant's retirement, the Committee shall direct the Trustee
to distribute to the Participant in one lump sum payment in cash or by check
drawn on an account containing sufficient funds, the value of such
Participant's Account within the Trust Fund, determined as of the preceding
Valuation Date. The payments required to be made to a Participant pursuant to
this paragraph shall be delivered to the Participant no later than sixty (60)
days following the date the Participant retires from employment with the
Employer.
For purposes of this Section 4.01, the value of the Participant's
Account shall, in the case of a Participant that is not an Executive Officer,
be determined in accordance with Section 3.04 hereof and, in the case of a
Participant that is an Executive Officer, the value of such Participant's
Account shall be determined in accordance with Section 3.05 hereof.
(a) Normal Retirement Date of any Participant means the date a
Participant attains age 60.
(b) Deferred Retirement Date of any Participant means the first
day of the month after such Participant actually leaves the service of the
Employer, provided it is subsequent to his Normal Retirement Date.
4.02 (a) Death. Upon the death of a Participant before retirement or
other termination of employment, the value of his Account shall become fully
and nonforfeitably vested. Following the Participant's death, the Committee
shall direct Mark IV to distribute and pay the value of the deceased
Participant's Account to any surviving Beneficiary designated by the
Participant, or if none to his surviving spouse, or if neither to his estate
in one lump sum payment; provided however, that in no event shall Mark IV be
required to distribute the amounts payable under this Plan on behalf of a
deceased Participant until the end of the twelve (12) month period beginning
on the date of the Participant's death.
If a Trust Fund has been established pursuant to Section 5.01
hereof, following a Participant's death, the Committee shall direct the
Trustee to distribute to any surviving Beneficiary designated by the
Participant, or, if none, to the Participant's surviving spouse, or, if
neither, to the Participant's estate, in one lump sum payment in cash or by
check drawn on an account containing sufficient funds, the value of such
Participant's Account within the Trust Fund determined as of the preceding
Valuation Date. The payments required to be made pursuant to this paragraph
shall be delivered to the Participant's Beneficiary, or if none to the
Participant's surviving spouse, or if neither to the Participant's estate no
later than 60 days following the Participant's death.
For purposes of this Section 4.02, the value of the Participant's
Account shall, in the case of a Participant that is not an Executive Officer,
be determined in accordance with Section 3.04 hereof and, in the case of a
Participant that is an Executive Officer, the value of such Participant's
Account shall be determined in accordance with Section 3.05 hereof.
(b) Proof of Death. The Committee may require such proper proof
of death and such evidence of the right of any person to receive payment of a
deceased Participant's Account as the Committee may deem desirable. The
Committee's determination shall be conclusive.
(c) Designation of Beneficiary. Each person that becomes a
Participant in this Plan may, upon becoming a Participant, designate a
Beneficiary of his own choosing, and may in addition name a contingent
Beneficiary. Such designation shall be made in a form satisfactory to the
Committee. Any Participant may at any time revoke or change his Beneficiary
designation by filing written notice with the Committee.
4.03 (a) Disability. In the event of a Participant's total and
permanent disability before retirement or other termination of employment, the
value of his Account shall become fully and nonforfeitably vested. Following
the date it is determined that a Participant suffers from a total and
permanent disability, the Committee shall direct Mark IV to distribute and pay
the value of such Participant's Account to such Participant in one lump sum
payment; provided however, that in no event shall Mark IV be required to
distribute the amounts payable under this Plan to or on behalf of a disabled
Participant until the expiration of the twelve (12) month period beginning on
the date it is determined that the Participant suffers from a Total and
Permanent Disability.
If a Trust Fund has been established pursuant to Section 5.01,
after it is determined that the Participant suffers from a Total and Permanent
Disability, the Committee shall direct the Trustee to distribute and pay to
the Participant in one lump sum payment in cash or by check drawn on an
account containing sufficient funds, an amount equal to the value of such
Participant's Account within the Trust Fund determined as of the preceding
Valuation Date. The payments required to be made pursuant to this paragraph
shall be delivered to the Participant no later than 60 days following the date
it is determined that the Participant suffers from a Total and Permanent
Disability.
For purposes of this Section 4.03, the value of the Participant's
Account shall, in the case of a Participant that is not an Executive Officer,
be determined in accordance with Section 3.04 hereof and, in the case of a
Participant that is an Executive Officer, the value of such Participant's
Account shall be determined in accordance with Section 3.05 hereof.
(b) Total and Permanent Disability. For purposes of this Plan,
total and permanent disability shall mean a presumably permanent physical or
mental condition of a Participant resulting from a bodily injury or disease or
mental disorder which renders him incapable of continuing in the employment of
the Employer or any Affiliate.
(c) Determination of Total and Permanent Disability. The total
and permanent disability of any Participant shall be determined by a licensed
physician in accordance with uniform principles consistently applied, upon the
basis of independent medically determined evidence.
4.04 Vesting. Each Participant shall at all times have a 100% vested
interest in the Dollar Value and the Share Value, if any of the portion of his
Account, if any, attributable to amounts credited to each Compensation
Deferral Account, if any, established for his benefit under the terms of this
Plan. Each Participant shall have a vested interest in each of his Annual
Allocation Accounts determined on the basis of the number of his whole Years
of Service occurring after the Plan Year for which an Annual Deferred
Compensation Commitment is allocated to the Participant's Annual Allocation
Account. Such vested interest shall be determined in accordance with the
following schedule:
Completed Years of
Service After Allocation
of Annual Deferred Percent
Compensation Commitment Vested
Less than 1 20%
1 but less than 2 40%
2 but less than 3 60%
3 but less than 4 80%
4 or more 100%
A Participant's vested interest in his Annual Allocation Account for any
Plan Year attributable to the amount of an Annual Deferred Compensation
Commitment allocated to such Annual Allocation Account for any Plan Year can
be determined at any point in time by using the above schedule.
Notwithstanding the above schedule, a Participant shall become fully and
nonforfeitably vested in the entire value of his Account upon the occurrence
of a Change in Control as defined in Section 5.03 hereof or upon sale, to an
unrelated third party, of a majority of the issued and outstanding capital
stock of or substantially all the assets of the Employer or the division of
the Employer for whom the Participant is employed.
For purposes of this Section 4.04, Years of Service shall be determined
on the basis of the Vesting Computation Period.
4.05 Distribution of Compensation Deferrals. A Participant shall be
entitled to receive payment of all or any portion of the amount of his
Compensation Deferral for a Plan Year at the time or times specified in the
Deferred Compensation Election Form executed by the Participant with respect
to such Plan Year notwithstanding the fact that the Participant is actively
employed by the Employer at the time such payment is to be made to the
Participant. As soon as practicable following the date specified by the
Participant in his Deferred Compensation Election Form (and, in no event later
than ten (10) days following such date), the Committee shall distribute and
pay to the Participant in one (1) lump sum payment in cash or by check drawn
on an account containing sufficient funds, the percentage, specified in the
Participant's Deferred Compensation Election Form, of the value, as determined
in accordance with Section 3.04 or 3.05 hereof, whichever is applicable, of
the Participant's Compensation Deferral made in connection with such Deferred
Compensation Election Form. If a Participant's Deferred Compensation Election
Form provides for the partial payment to a Participant of the Participant's
Compensation Deferral, the value, as determined in accordance with Section
3.04 or 3.05 hereof, whichever is applicable, of the Participant's
Compensation Deferral Account shall be reduced in an amount equal to the
percentage of the Compensation Deferral that is to be paid to the Participant.
If a Trust Fund has been established pursuant to Section 5.01 hereof, at
the time a Participant is entitled to payment of all or any portion of his
Compensation Deferral for a Plan Year as provided for the Deferred
Compensation Election Form executed by the Participant for such Plan Year, the
Committee shall direct the Trustee to distribute to the Participant in one (1)
lump sum payment in cash or by check drawn on an account containing sufficient
funds, the portion of the Participant's Account which is attributable to the
portion of the Compensation Deferral which the Participant is entitled to
receive payment of together with any earnings (or less any losses) of the
Trust Fund attributable to such amount.
4.06 Termination of Employment and Distribution of Vested Benefits.
Upon a Participant's voluntary or involuntary termination of employment with
the Employer and any Affiliate with a vested interest in the value of his
Account other than by reason of retirement, death or disability, the value, as
determined in accordance with Section 3.04 or 3.05 hereof, whichever is
applicable, of the vested portion of such Participant's Account, determined as
of the preceding Valuation Date, shall be distributed in one lump sum payment,
to, or in the case of the Participant's death before such vested portion of
his Account is distributed, on behalf of, the Participant; provided however,
that in no event shall Mark IV be required to distribute any amounts payable
under this Plan to or on behalf of the Participant until the end of the twelve
(12) month period beginning on the earlier of the date the Participant attains
age 65, the date of the Participant's death and the date it is determined that
the Participant suffers from a Total and Permanent Disability. During the
period between the date such Participant's employment with the Employer is
terminated and the date the Participant's Account is to be distributed, the
portion of the Participant's Account which is not invested in Phantom Stock
shall be credited with interest to the extent permitted by Sections 3.09 or,
if a Trust Fund has been established pursuant to Section 5.01, the
Participant's Account shall be credited or charged with its proportionate
share of the earnings or losses of the Trust Fund.
If a Trust Fund has been established pursuant to Section 5.01
hereof, following the date a former Participant is entitled to a distribution
as provided in this Section 4.06, the Committee shall direct the Trustee to
distribute to or on behalf of the Participant in one lump sum payment in cash
or by check drawn on an account containing sufficient funds, an amount equal
to the value of the vested portion of the Participant's Account within the
Trust Fund. Payments required to be made from the Trust Fund to or on behalf
of a former Participant as provided in this paragraph shall be made no later
than sixty (60) days following the date the Participant's employment with the
Employer is terminated.
At the time a former Participant is entitled to distribution,
according to its records, the Committee shall send, by registered or certified
mail directed to his address last known to the Committee, a notice informing
him as to his rights with respect to any amounts held for him and requesting
confirmation of his address and age. Each Participant and former Participant
has the obligation to keep the Committee informed of his address. In the
event the Committee is unable to locate such former Participant within four
(4) years, the amount held for his benefit shall be forfeited.
Notwithstanding the foregoing, the Committee may direct Mark IV
or, if a Trust Fund has been established pursuant to Section 5.01 hereof, the
Trustee, to distribute the Participant's vested interest in the value of his
Account at any time prior to the date on which distributions would otherwise
occur under this Section 4.06; provided however, that no such distribution
shall be required to be made to a Participant during the twelve (12)
consecutive month period following the date his employment with the Employer
is terminated.
4.07 Forfeitures. If a Participant terminates his employment with the
Employer before he has acquired a 100% vested interest in any portion of any
of his Annual Allocation Accounts, the portion of such Annual Allocation
Accounts which is not vested shall be forfeited as of the end of the Plan Year
in which the Participant terminates his employment with the Employer.
If a Participant's employment with his Employer is terminated
before he acquires a 100% vested interest in any of his Annual Allocation
Accounts and at the time of such Participant's termination of employment, a
Trust Fund had been established pursuant to Section 5.01 hereof, the portion
of such Participant's Annual Allocation Accounts which is not vested shall be
maintained in a suspense account within the Trust Fund until the end of the
Plan Year in which the Participant terminates his employment with the Employer
at which time, the amount of such suspense account shall be forfeited and
reallocated among the Accounts of the remaining Participants that are actively
employed by the Employer in accordance with Section 2.03 as though such
forfeitures were an additional Annual Deferred Compensation Commitment. Such
suspense account shall be for accounting purposes only, shall not require a
segregation of assets within the Trust Fund to such account and shall not
share in the gains, losses, income or expenses of the Trust Fund. The amount
of the assets necessary to maintain the suspense account shall be deemed an
expense chargeable to the Trust Fund. The Committee shall maintain records so
that each former Participant's share of the suspense account is clearly
identifiable.
4.08 Effects of Vesting. Each Participant, upon (a) acquiring a vested
interest in the value of his Account pursuant to the terms of this Plan; and
(b) otherwise satisfying the requirements for payment and distribution of the
value of his Account pursuant to the terms of this Plan, shall have a valid
and enforceable claim against Mark IV or its successor for payment of an
amount equal to the portion of his Account which is vested, determined as of
the Valuation Date preceding the date on which the Participant is otherwise
entitled to a distribution under this Plan. Notwithstanding the foregoing, no
Participant, spouse or Beneficiary shall have any interest in any particular
assets of Mark IV by reason of the right to receive deferred compensation
under this Plan and any such Participant, spouse or Beneficiary shall have
only the rights of a general unsecured creditor of Mark IV with respect to any
deferred compensation payable under this Plan.
4.09 No Duplication of Benefits. It is the intent of Mark IV that the
deferred incentive compensation to be provided under this Plan shall, with
respect to the employment of a Participant by the Employer during the periods
this Plan is in effect, supersede any other deferred incentive compensation to
which a Participant is entitled under the terms of any written employment
agreement between any Employer and such Participant (excluding benefits
payable under any deferred compensation plans which may, from time to time, be
designated in writing by the Committee to the Participant covered by such
deferred compensation plan and further excluding pension or other retirement
plan benefits payable under the tax qualified retirement plans maintained by
Mark IV), covering periods of such Participant's employment with the Employer
during the periods with respect to which this Plan is in effect.
ARTICLE 5.
Trust Established Upon Change in Control
5.01 Establishment of Trust. Upon the occurrence of a Change in Control
(as hereinafter defined), Mark IV or its successor shall establish a Trust
Fund for the purpose of holding and investing assets of Mark IV to be used for
payment of the deferred compensation to be provided to Participants under this
Plan. The terms and conditions of the agreement containing the terms of the
Trust Fund shall be consistent with the terms and conditions required by
rulings and regulations of the Internal Revenue Service for a trust to be
classified as a "Rabbi Trust" within the scope of Internal Revenue Service
Private Letter Ruling No. 8113017 and Internal Revenue Service Private Letter
Ruling No. 8907034 such that the amounts payable under this Plan will not be
immediately taxable to the Participants to whom such amounts are payable under
the terms of this Plan by virtue of the establishment of such Trust Fund and
contribution of assets thereto or by virtue of the acquisition by any such
Participants of a vested interest in the deferred compensation payable
hereunder.
5.02 Contributions to Trust. Promptly upon the occurrence of a Change
in Control (as hereinafter defined), but in any event not later than thirty
(30) days following the occurrence of the Change in Control, Mark IV or its
successor shall pay to the Trustee to be held pursuant to the Trust Fund, cash
or immediately available funds in an amount equal to the total value of the
Accounts of all Participants in the Plan.
For purposes of this Section 5.02, the value of the Participant's
Account shall, in the event the Participant is not an Executive Officer, be
determined in accordance with Section 3.04 hereof and, in the event the
Participant is an Executive Officer, the value of such Participant's Account
shall be determined in accordance with Section 3.05 hereof.
5.03 Change in Control. For purposes of this Plan, a Change in Control
shall occur if (i) any "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Act")) becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Act) of more than twenty percent (20%) of the then outstanding voting stock of
Mark IV, otherwise than through a transaction arranged by, or consummated with
the prior approval of its Board of Directors; or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors (and any new director whose election to the Board of
Directors or whose nomination for election by Mark IV's shareholders was
approved by a vote of at least two thirds of the directors then still in
office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved) (hereinafter
referred to as the "Continuing Directors") cease for any reason to constitute
a majority thereof; or (iii) the shareholders of Mark IV approve a merger or
consolidation of Mark IV with any other corporation, other than a merger or
consolidation which would result in the voting securities of Mark IV
immediately prior thereto continuing to represent (either by remaining
outstanding or being converted into voting securities of the surviving entity)
at least 80% of the combined voting power of the voting securities of Mark IV
or such surviving entity outstanding immediately after such merger or
consolidation (provided, however, that if prior to the merger or
consolidation, the Board of Directors adopts a resolution that is approved by
a majority of the Continuing Directors providing that such merger or
consolidation shall not constitute a "change in control" for purposes of the
Plan, then such a merger or consolidation shall not constitute a "change in
control"); or (iv) the shareholders of Mark IV approve an agreement for the
sale or disposition by Mark IV or all or substantially all the assets of Mark
IV. Notwithstanding the provisions of Sections 7.01 and 7.02 hereof, the
foregoing provisions of Sections 5.01, 5.02 and 5.03 hereof may not be amended
within three (3) years following a "change in control" without the written
consent of a majority in both number and interest of the Participants who are
actively employed by the Employer, both immediately prior to the "change in
control" and at the date of such amendment.
5.04 Investment Policy. In determining its investments hereunder, the
Trustee or any duly appointed Investment Manager shall consider the short and
long range needs of the Plan communicated to them by the Committee. Benefits
may be provided through any combination of investment media designated to
provide the requisite liquidity, growth and security appropriate to this Plan.
5.05 Trustee Responsibilities. Following the establishment of a Trust
pursuant to Section 5.01 hereof, the Trustee appointed to administer the Trust
Fund shall be deemed a Fiduciary and shall discharge his duties in a manner
designed to protect the interests of Participants in the Plan.
ARTICLE 6.
Administration
6.01 The Committee. The Board of Directors of Mark IV shall appoint an
administrative committee to administer the Plan as the plan administrator.
The Committee shall be the named fiduciary of the Plan with respect to Plan
administration and, if a Trust Fund is established pursuant to Section 5.01
hereof, the appointment of an Investment Manager to manage any assets of the
Plan. The Committee shall consist of officers or other employees of Mark IV,
or any other individuals, who shall serve at the pleasure of the Board of
Directors of Mark IV. Any member may resign by delivering his written
resignation to the Board of Directors. Vacancies arising by resignation,
death, removal or otherwise shall be filled by the Board of Directors of Mark
IV. If at any time no members are currently serving as the Committee, or if
no Committee is appointed, the Executive Officers of Mark IV who are employed
at Mark IV's corporate headquarters shall be deemed to be the Committee.
6.02 General Duties and Responsibilities. The Committee shall
administer the Plan in accordance with its terms and shall have all powers
necessary to carry out the provisions of the Plan. Any interpretation,
construction or determination made by the Committee in good faith in
connection with its administration of the Plan shall be final, conclusive and
binding upon the Participants and their Beneficiaries. The Committee may
correct any defect, supply any omission, or reconcile any inconsistency in
such manner and to such extent as shall be deemed necessary or advisable to
carry out the purpose of this Plan. The Committee as named fiduciary may
employ attorneys, accountants and such other advisors to advise it with
respect to its duties and obligations as it deems appropriate.
6.03 Funding Policy. In the event a Trust Fund is established pursuant
to Section 5.01 hereof, the Committee shall establish a funding policy and
method consistent with the requirements of law and designed to protect the
interests of Plan Participants. The Committee shall thereafter review, and if
necessary, change such funding policy and method.
6.04 Allocation and Delegation of Responsibilities. As the named
fiduciary, the Committee may engage agents to assist it in carrying out its
functions hereunder. The Committee members are expressly authorized to
allocate among themselves and/or delegate to other named persons or parties,
fiduciary responsibilities, other than Trustee responsibilities. In the event
a Trust Fund is established pursuant to Section 5.01 hereof, the Committee may
appoint an Investment Manager and delegate to him the authority to manage,
acquire, invest or dispose of all or any part of the Trust Fund assets. With
regard to the assets entrusted to his care, the Investment Manager shall
provide written instructions and directions to the Trustee, who shall in turn,
be entitled to rely thereon. Appointments and delegations shall be evidenced
by a signed written document, which must be retained with the other Plan
documents.
6.05 Bonding. The Committee shall be responsible for procuring bonding
for any persons dealing with the Plan or its assets as may be required by law
or by this Plan.
6.06 Records, Reporting and Disclosure. The Committee shall maintain
all the records necessary for the administration of the Plan. The Committee
shall also be responsible for preparing and filing such annual reports and tax
forms as may be required by law. The Committee shall furnish and/or make
available for inspection by each Participant covered under the Plan and to
each Beneficiary who is entitled to receive benefits under the Plan, such
information and reports as may be required by law.
6.07 Expenses and Compensation. The expenses necessary to administer
the Plan shall be borne by Mark IV and, if necessary, shall be reimbursed to
the Plan. Notwithstanding the foregoing, in the event a Trust Fund is
established pursuant to Section 5.01 hereof, all expenses for administration
of the Trust Fund other than investment management fees and including, without
limitation, any expenses incurred in connection with any action, suit or
proceeding relating to the amounts payable under this Plan or the Trust Fund,
shall be paid by Mark IV or its successor. Expenses include, but are not
limited to, those involved in retaining necessary professional assistance from
an attorney, an accountant, an actuary, or an investment advisor. The
Employer shall furnish the Committee with such clerical and other assistance
as is necessary in the performance of its duties. The Committee, with the
approval of Mark IV, may receive reasonable compensation for services rendered
in administering this Plan, provided the member performing the services is not
a full-time employee of any Employer whose employees are Participants in this
Plan.
6.08 Information from Employer. To enable the Committee to perform its
functions, the Employer shall supply full and timely information to the
Committee on all matters relating to the Compensation of all Participants,
their employment, their retirement, death, disability or termination of
employment, and such other pertinent facts as the Committee may require. The
Committee shall advise the Trustee of such of the foregoing facts as may be
pertinent to the Trustee's duties under the Plan. The Committee is entitled
to rely on such information as is supplied by the Employer and shall have no
duty or responsibility to verify such information.
6.09 Multiple Signatures. In the event that more than one person has
been duly nominated to serve on the Committee, one signature may be relied
upon by any interested party as conclusive evidence that the Committee has
duly authorized the action therein set forth and as representing the will of
and binding upon the whole Committee. No person receiving such documents or
written instructions and acting in good faith and in reliance thereon shall be
obliged to ascertain the validity of such action under the terms of this Plan
and Trust. The Committee shall act by a majority of its members at the time
in office and such action may be taken either by a vote at a meeting or in
writing without a meeting.
6.10 General Fiduciary Liability. The Employer, Mark IV, the Board of
Directors, the Committee, the Trustee and any Fiduciary with respect to this
Plan and, if applicable, the Trust Fund created pursuant hereto shall not be
liable for any actions taken or omitted by any of them except for such acts
involving gross negligence or willful misconduct of the party to be charged
and except as required by ERISA. Nothing contained in this Section 6.10 shall
be deemed to release, discharge or otherwise limit the liability of Mark IV,
or, if a Trust Fund is established pursuant to Section 5.01 hereof, the
liability of the Trust Fund and any successor in interest to Mark IV for
payment to Participants of the amounts described in this Plan.
6.11 Liability Insurance. The Committee may purchase, as an authorized
expense of the Plan, liability insurance for the Plan and/or for its
Fiduciaries to cover liability or losses occurring by reason of the act or
omission of a Fiduciary, providing such insurance contract permits recourse by
an Insurer against the Fiduciary in the case of breach of fiduciary obligation
by such Fiduciary. Any Fiduciary may purchase on behalf of himself, insurance
to protect himself in the event of a breach of fiduciary duty and the Employer
may also purchase insurance to cover the potential liability of one or more
persons who serve in a fiduciary capacity with regard to this Plan.
6.12 Benefit Claims Procedures. The Committee shall establish a benefit
claims procedure. Such procedure shall provide for the filing of claims for
benefits, adequate notice in writing to any Participant or Beneficiary whose
claim for benefits has been denied, setting forth the specific reasons for
such denial and written in a manner calculated to be understood by the
Participant, and afford a reasonable opportunity to any Participant whose
claim for benefits has been denied for a full and fair review by the Committee
of the decision denying the claim.
ARTICLE 7.
Amendment, Termination and Merger
7.01 Amendment. The Board of Directors of Mark IV shall have the right
at any time and from time to time without the consent of any Participant or
Beneficiary to amend, in whole or in part, any or all of the provisions of
this Plan. No amendment to the Plan shall be effective to the extent that it
has the effect of decreasing the value of a Participant's Account or depriving
any Participant or the Beneficiary of any Participant of any vested portion of
his Account (whether payable to the Participant or his Beneficiary immediately
or in the future) under the terms of this Plan as in effect on the date of
such amendment.
7.02 Termination. Mark IV, by action of its Board of Directors shall
have the right at any time to discontinue its contributions hereunder and to
terminate this Plan. Upon complete termination of the Plan, whether by action
of the Board of Directors or otherwise, all Participants shall become fully
and non-forfeitably vested in the value of their respective Accounts. In the
event the Plan is terminated, the value of a Participant's Account shall not
be required to be distributed to the Participant until such times as are
required by Article 4 hereof. In addition, in the event the Plan is
terminated, the amount of a Participant's Account which is not allocated to
the purchase of Phantom Stock shall continue to earn interest at the
Applicable Interest Rate during the period between the date this Plan is
terminated and the date benefits under this Plan are paid to the Participant
and, during such period, the price per share of common stock of Mark IV
contained in the portion of the Participant's Account which is allocated to
the purchase of Phantom Stock shall, subject to the provisions of Section 4.09
hereof and unless a Trust Fund is established pursuant to Section 5.01 hereof,
continue to be adjusted to reflect increases or decreases in the price of such
common stock as reported by the New York Stock Exchange Composite Index.
7.03 Continuation of Plan by Successor. Mark IV will require any
person, firm, corporation or other entity that becomes a successor to Mark IV,
(whether direct or indirect, by purchase of stock or assets, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of Mark IV to expressly assume and agree to perform the provisions of
this Plan as in effect at the time any such person, firm, corporation or other
entity becomes a successor to Mark IV, in the same manner and to the same
extent that Mark IV would be required to perform it if no such succession had
taken place. Unless this Plan be sooner terminated, a successor to the
business of Mark IV by whatever form or manner resulting, may continue this
Plan after such person, firm, corporation or entity becomes a successor to
Mark IV by executing an appropriate supplemental agreement. In the event any
successor to the business of Mark IV shall not elect to continue this Plan
within the ninety days after such person, firm, corporation or other entity
becomes a successor to Mark IV, this Plan shall be deemed to be terminated and
the obligation to pay to each Participant the amounts described herein at the
times provided for herein shall become fixed and binding obligations of such
successor.
ARTICLE 8.
Miscellaneous
8.01 No Rights Created by Plan and Trust - Terms of Employment Not
Affected. Neither the establishment of the Plan or Trust nor any modification
hereof, nor the creation of any fund or account, nor the payment of any
benefits, shall be construed as giving to any Participant, Beneficiary or
other person any legal or equitable right against Mark IV, the Employer or any
officer or employee thereof, or the Trustee, or the Committee, except as
herein provided. Under no circumstances shall participation in this Plan
constitute a contract of continuing employment or in any manner obligate the
Employer to continue the services of an Employee.
8.02 Participants Rights Unsecured. Unless the establishment of a Trust
Fund is required pursuant to Section 5.01 hereof, the Plan shall at all times
be entirely unfunded and no provision shall at any time be made with respect
to segregating any assets of Mark IV for payment of any distributions
hereunder. The rights of a Participant or his Beneficiary to receive a
distribution hereunder shall be an unsecured claim against the general assets
of Mark IV and neither the Participant nor his Beneficiary shall have any
rights in or against any specific assets of Mark IV including, but not limited
to, any assets contained in any Trust Fund established pursuant to Section
5.01 hereof.
8.03 No Guaranty of Benefits. Nothing contained in this Plan shall be
deemed to constitute a guaranty by Mark IV or any other entity or person that
the assets of Mark IV will be sufficient to pay the benefits hereunder.
8.04 Execution of Receipts and Releases. Any payment to any
Participant, or to his legal representatives or Beneficiary, in accordance
with the provisions of this Plan, shall to the extent thereof be in full
satisfaction of all claims hereunder against the Plan, and the Committee may
require such Participant, legal representative, or Beneficiary, as a condition
precedent to such payment, to execute a receipt and release therefor in such
form as it shall determine.
8.05 Benefits Non-Assignable. No benefit which shall be payable out of
the Trust Fund to any person (including a Participant or his Beneficiary)
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge the same shall be
void and no such benefit shall in any manner be liable for, or subject to, the
debts, contracts, liabilities, engagements or torts or any such person, nor
shall it be subject to attachment or legal process for or against such person,
and the same shall not be recognized by the Committee or the Trustee, except
to such extent as may be required by law.
8.06 Construed Under Applicable Federal Law and New York Law. This Plan
shall be construed according to applicable Federal
Law and the laws of the State of New York and all provisions hereof shall be
administered according to such laws.
8.07 Masculine Gender to Include Feminine; Singular to Include Plural.
Wherever any words are used herein in the masculine gender they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply, and wherever any words are used herein in the
singular form, they shall be construed as though they were also used in the
plural form in all cases where they would so apply.
8.08 Heading No Part of Plan. Heading of sections and subsections of
this instrument are inserted for convenience of reference only. They
constitute no part of this Plan are not to be construed in the construction
hereof.
8.09 Counterparts. This instrument may be executed in several
counterparts, each of which shall be deemed an original, and said counterparts
shall constitute but one and the same instrument and may be sufficiently
evidenced by any one counterpart.
IN WITNESS WHEREOF, Mark IV Industries, Inc. has caused this Plan
to be executed as of the 30th day of November, 1993.
MARK IV INDUSTRIES, INC.
By: /s/ William P. Montague
William P. Montague
Executive Vice President
EXHIBIT 10.20
SHORT TERM INCENTIVE BONUS PLAN
OF
DAYCO PRODUCTS, INC.
Mark IV Industries, Inc., a Delaware corporation, whose corporate
headquarters is located at One Towne Centre, 501 John James Audubon Parkway,
Amherst, New York ("Mark IV") desires to establish a short term incentive
bonus plan for certain key employees of Dayco Products, Inc. ("Dayco"), a
Delaware corporation which is a wholly owned subsidiary of Mark IV and for
certain key employees of the domestic and foreign subsidiaries and affiliates
of Dayco. The purpose of this short term incentive bonus plan is to create an
incentive for these key employees to implement management policies and
procedures which will enable Dayco to achieve certain performance goals
established by the executive officers of Mark IV.
Mark IV desires to set forth in writing the general features of
this short term incentive bonus plan. In consideration of the foregoing, Mark
IV hereby adopts the following as the Short Term Incentive Bonus Plan of Dayco
Products, Inc. (the "Plan") effective March 1, 1994:
1. Eligibility and Participation. For purposes of this Plan,
the executive officers of Mark IV whose principal place of employment is Mark
IV's corporate headquarters (such executive officers, as a group, being
hereinafter referred to as the "Committee") shall determine: (a) which
employees of Dayco shall be eligible to receive short term incentive bonus
awards (hereinafter "STI Awards") under the terms of this Plan; and (b) which
employees of the domestic and foreign subsidiaries and affiliates of Dayco
shall be eligible to receive STI Awards under the terms of this Plan.
Notwithstanding the foregoing, unless otherwise specifically
determined by the Compensation Committee of the Board of Directors of Mark IV,
for each fiscal year of Mark IV that this Plan is in effect, each employee of
Dayco that is an officer of Mark IV who, as a result of his position, duties
and responsibilities, is required, pursuant to the applicable provisions of
the Securities Exchange Act of 1934, as amended, to report to the U.S.
Securities and Exchange Commission, the amount of and any changes in his
ownership of any common stock or equity securities of Mark IV (such employee
being hereinafter referred to as an "Executive Officer") shall be eligible to
receive STI Awards under the terms of this Plan.
As soon as practicable following the date hereof, the Committee
shall determine which employees of Dayco and which employees of Dayco's
domestic and foreign subsidiaries and affiliates shall be eligible to receive
STI Awards under the terms of this Plan. After making such determination, the
Committee shall deliver to the President of Dayco a written statement which
identifies all of the employees of Dayco and all of the employees of Dayco's
domestic and foreign subsidiaries and affiliates, including any Executive
Officers, that are eligible to receive STI Awards under the terms of this
Plan.
For purposes of this Plan, each employee of Dayco which the
Committee has determined is eligible to receive STI Awards under the terms of
this Plan and each employee of any domestic or foreign subsidiary or affiliate
of Dayco which the Committee has determined is eligible to receive STI Awards
under the terms of this Plan is hereinafter referred to as an "Eligible
Employee". All such employees, for purposes of this Plan, are hereinafter
referred to collectively as the "Eligible Employees".
Except as otherwise provided below in this paragraph, once an
employee has been identified by the Committee as being an Eligible Employee,
such employee shall continue to be eligible to receive an STI Award for each
fiscal year of Mark IV thereafter that this Plan is in effect.
Notwithstanding the foregoing, the Committee may, in its discretion, determine
that an Eligible Employee should no longer be eligible to receive STI Awards
under the terms of this Plan. In the event that the Committee determines that
an Eligible Employee should no longer be eligible to receive STI Awards under
the terms of this Plan, the Committee shall notify the President of Dayco and
such employee that the Committee has determined that such employee is no
longer eligible to receive an STI Award and such determination by the
Committee shall be conclusive and binding on such employee. Thereafter, such
employee shall not, unless otherwise determined by the Committee, in its
discretion, and disclosed in writing to the President of Dayco, be eligible to
receive any STI Award hereunder.
2. Establishment of Maximum STI Percentages. At the time that
the Committee determines which employees of Dayco will be Eligible Employees,
the Committee shall, for each Eligible Employee (including employees who are
Executive Officers) establish the maximum percentage of such Eligible
Employee's base salary, (which base salary shall be determined as of the end
of the fiscal year of Mark IV with respect to which any STI Award may be
payable) which may be received by the Eligible Employee (prior to adjustment
to reflect the inventory level Performance Criteria as described in Section 6
hereof). For purposes of this Plan, the maximum percentage of an Eligible
Employee's base salary which is payable to an Eligible Employee for a fiscal
year (without regard to any adjustment relating to the inventory level
Performance Criteria described in Section 6 hereof) shall hereinafter be
referred to as the "Maximum STI Percentage" with respect to any such Eligible
Employee. The Committee shall, in the written statement which is delivered to
the President of Dayco and which contains the list of the Eligible Employees,
set forth the amount of the Maximum STI Percentage which may be paid with
respect to each such Eligible Employee.
3. Establishment of Performance Criteria and Weighting Factors.
As soon as practicable after the beginning of each fiscal year of Mark IV in
which this Plan is in effect, the Committee shall establish performance
criteria (hereinafter "Performance Criteria") which shall be used for purposes
of determining the amount of the STI Award, if any, which is payable to
Eligible Employees for such fiscal year. The Performance Criteria which are
established by the Committee shall pertain, to the global operating results of
Dayco and to the operating results of each business unit of Dayco (hereinafter
a "Business Unit") which any Eligible Employee is either employed by or a
general manager of.
In addition, as soon as practicable after the beginning of each
fiscal year of Mark IV in which this Plan is in effect, the Committee shall
establish factors (hereinafter "Weighting Factors") which may, for purposes of
determining whether an Eligible Employee is entitled to receive an amount
equal to the Maximum STI Percentage payable hereunder, give additional credit
or place additional value on the achievement of certain Performance Criteria
when compared to other Performance Criteria.
Finally, as soon as practicable following the beginning of each
fiscal year of Mark IV during which this Plan is in effect, the Committee
shall deliver to the President of Dayco, a written statement of the
Performance Criteria (both with respect to the global operating results of
Dayco and the operating results of each separate Business Unit of Dayco which
any Eligible Employee is either employed by or the general manager of) and the
Weighting Factors which shall be used by the Committee to determine the
amount, if any, of the STI Award which is payable to Eligible Employees of
Dayco.
4. Adjustments to Reflect Business Unit Management
Responsibilities. If an Eligible Employee is an employee or general manager
of any Business Unit, unless otherwise modified by the Committee, in its
discretion, after the Maximum STI Percentage has been established, fifty
percent (50%) of the Maximum STI Percentage which is payable to such Eligible
Employee shall be allocated by the Committee based on the degree to which the
Performance Criteria and Weighting Factors established by the Committee, for
the Business Unit by whom the Eligible Employee is employed have been met or
exceeded. The remaining fifty percent (50%) of the amount of the Maximum STI
Percentage which is payable to such Eligible Employee shall be based on the
degree to which Dayco's global operations have met or exceeded the Performance
Criteria established by the Committee for Dayco's global operations.
5. General Identification of Performance Criteria and Weighting
Factors. In general, unless otherwise modified by the Committee, in its
discretion, the Performance Criteria used by the Committee shall be based on
operating profit, cash flow and inventory levels established by the Committee
for Dayco and each Dayco Business Unit for each fiscal year of Mark IV in
which the Plan is in effect. The operating profit and cash flow Performance
Criteria shall be adjusted by the Weighting Factors described in the following
paragraph for purposes of determining the amount of the STI Awards prior to
the special adjustment for the inventory level Performance Criteria provided
for by Section 6 hereof.
Unless otherwise modified by the Committee, in its discretion, the
Weighting Factors to be applied to the Maximum STI Percentage shall be such
that seventy percent (70%) of the Maximum STI Percentage of an Eligible
Employee shall be determined based on the degree to which the operating profit
Performance Criteria (whether determined with respect to a Business Unit or
with respect to the global operating results of Dayco) have been met or
exceeded and thirty percent (30%) of the Maximum STI Percentage of an Eligible
Employee shall be determined based on the degree to which the cash flow
Performance Criteria (whether determined with respect to a Business Unit or
with respect to the global operating results of Dayco) have been met or
exceeded.
6. Special Adjustment for Inventory Levels. Unless otherwise
modified by the Committee, in its discretion, the inventory level Performance
Criteria shall be applied as an over-all adjustment to the amount of the STI
Award payable to any Eligible Employee. Accordingly, if the inventory level
Performance Criteria are met or exceeded, the actual dollar amount of the STI
Award which is payable to an Eligible Employee may be greater than the
percentage of the Eligible Employee's base salary which has been identified as
the Maximum STI Percentage. Conversely, if the inventory level performance
criteria are not met, the actual amount of the STI Award which is payable to
an Eligible Employee may be less than the percentage of the Eligible
Employee's base salary which has been identified as the Maximum STI Percentage
even though, based on the degree to which the operating profit and cash flow
Performance Criteria have been met or exceeded, the Eligible Employee would
otherwise be eligible to receive an STI Award equal to the Maximum STI
Percentage.
7. Information Regarding Performance Criteria and Weighting
Factors. As soon as practicable following the written request of any Eligible
Employee, the Committee shall provide such Eligible Employee a written
statement of the Maximum STI Percentage payable to such Eligible Employee, a
statement of the specific Performance Criteria to be achieved with respect to
such Eligible Employee and the Weighting Factors applied to such Performance
Criteria and such other information as may reasonably be necessary to enable
the Eligible Employee to determine the amount of the STI Award which would be
payable to him based on the degree to which the Performance Criteria
established with respect to such Eligible Employee have been met or exceeded.
8. Modification of STI Award Criteria. The Committee may, at
any time, in its discretion, modify, amend or revise the list of Eligible
Employees, the nature or type of the Performance Criteria which are used for
purposes of determining whether STI Awards are payable, the Weighting Factors
applied for purposes of determining the amount of the STI Awards which are
payable and any other factors or criteria used for determining the amount of
the STI Awards which may be payable under the terms of this Plan for any
fiscal year of Mark IV.
Notwithstanding the foregoing or anything to the contrary
contained in this Plan, after the Performance Criteria, Weighting Factors and
the Maximum STI Percentage payable to an Eligible Employee for a fiscal year
have been established by the Committee, such Performance Criteria, Weighting
Factors and Maximum STI Percentage payable to such Eligible Employee shall
continue to be effective for all subsequent fiscal years that this Plan is in
effect until modified, revised or amended by the Committee.
The Committee shall, as soon as practicable following any
amendment, modification or revision made by the Committee for a fiscal year
with respect to the Performance Criteria, Weighting Factors, Maximum STI
Percentage payable or any other criteria or factors relating to the
determination of such STI Award for a fiscal year, deliver written notice of
these changes to the President of Dayco and the affected Eligible Employees.
9. Amount of STI Awards. As soon as practicable following the
end of each fiscal year of Mark IV that this Plan is in effect, the amount of
the STI Award for each Eligible Employee shall be determined by the Committee
based on the degree to which the operating profit, cash flow, inventory level
and any other Performance Criteria established by the Committee for such
fiscal year have been met or exceeded and by the Weighting Factors established
for such Performance Criteria the Committee. As soon as practicable after the
Committee determines the amount of the STI Award which is payable to an
Eligible Employee for a fiscal year, the Committee shall notify the Eligible
Employee, in writing, of the amount of the STI Award payable to the Eligible
Employer for such fiscal year. Notwithstanding the foregoing, or anything to
the contrary contained herein, the amount of any STI Award payable to an
Eligible Employee for a fiscal year, as determined by the Committee, shall be
conclusive and binding on the Eligible Employee.
10. Payment of STI Awards. STI Awards shall be paid to each
Eligible Employee that is entitled to receive such an award as soon as
practicable following the end of the fiscal year of Mark IV with respect to
which such STI Award is payable. However, notwithstanding the foregoing, any
increases in the amount of the STI Award resulting from the attainment of the
inventory Performance Criteria shall be payable in substantially equal
installments over a period of three years. The Committee shall adjust any
deferred amounts which are distributed to an Eligible Employee in subsequent
years to reflect earnings which could have been realized with respect to such
amounts had such amounts been invested in a "prime" based interest bearing
account or in Mark IV common stock, whichever hypothetical investment would
provide a greater investment return. In addition, if the inventory level
Performance Criteria which have been established with respect to an Eligible
Employee have not been met, the amount of an STI Award which has been deferred
for payment in subsequent years due to an adjustment made to reflect the
achievement of inventory Performance Criteria in previous fiscal years may be
reduced or eliminated in order to offset the reduction in the STI Award
attributable to a subsequent failure to meet the inventory level Performance
Criteria.
11. Termination of Employment. In the event that the employment
of an Eligible Employee is terminated during a fiscal year of Mark IV in which
this Plan is in effect, either voluntarily by the Eligible Employee or for
cause, unless such Eligible Employee is otherwise specifically entitled to
payment of all or any portion of the STI Award payable for such fiscal year
pursuant to the terms of a written employment agreement between such Employee
and Dayco, such Eligible Employee shall not be entitled to receive payment of
an STI Award under the terms of this Plan for such fiscal year.
12. Termination. Mark IV by action of the Committee or its
Board of Directors, shall have the right at any time, and without notice to
Eligible Employees, to terminate this Plan provided that, no such termination
shall affect any Eligible Employee's right to payment of any STI Award after
the amount of such incentive bonus award has been determined to be payable for
a fiscal year.
13. No Rights Created by Plan - Terms of Employment Not
Affected. Neither the establishment of the Plan nor any modification hereof,
nor the payment of any STI Award hereunder shall be construed as giving to any
Eligible Employee or any other person, any legal or equitable right against
Dayco or Mark IV or any officer or employee thereof, or the Committee, except
as herein provided. Under no circumstances shall participation in this Plan
constitute a contract of continuing employment or in any manner obligate Dayco
or Mark IV to continue the services of an Eligible Employee.
14. Eligible Employee's Rights Unsecured. This Plan shall at
all times be entirely unfunded and no provision shall at any time be made with
respect to segregating any assets of Dayco or Mark IV for payment of any STI
Awards hereunder. The rights of an Eligible Employee to receive a any STI
Award hereunder shall be an unsecured claim against the general assets of the
Company and Eligible Employees shall not have any rights in or against any
specific assets of the Company.
15. No Guaranty of Benefits. Nothing contained in this Plan
shall be deemed to constitute a guaranty by the Mark IV, Dayco or any other
entity or person that the assets of the Mark IV or Dayco will be sufficient to
pay the benefits hereunder.
16. Headings No Part of Plan. Headings of articles, sections
and subsections herein are inserted for convenience of reference only. They
constitute no part of this Plan and are not to be construed in the
construction hereof.
17. Effective Date and Duration. This Plan shall be effective
March 1, 1994 and for each fiscal year thereafter until terminated in
accordance with Section 12 hereof.
IN WITNESS WHEREOF, Mark IV Industries, Inc. has caused this Plan to be
executed as of the 30th day of March, 1994.
MARK IV INDUSTRIES, INC.
By: /s/ William P. Montague
William P. Montague
Executive Vice President
EXHIBIT 11
MARK IV INDUSTRIES, INC.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(Amounts in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
For the Fiscal Year Ended
the Last Day of February
Primary Earnings Per Share 1995 1994 1993
<S> <C> <C> <C>
Primary Shares Outstanding:
Weighted average number of shares outstanding 48,586 44,605 44,092
Net effect of dilutive stock options (1) 405 332 347
Total 48,991 44,937 44,439
Income from continuing operations $ 67,900 $ 51,100 $39,100
Income per share from continuing operations (2) $ 1.39 $ 1.14 $ .88
Income from discontinued operations $ - $ - $ 3,600
Income per share from discontinued
operations (2) $ - $ - $ .08
Loss from extraordinary items $ (1,100) $(21,700) $(3,700)
Loss per share from extraordinary items (2) $ (.02) $ (.48) $ ( .08)
Loss from cumulative accounting change $ - $(26,000) $ -
Loss per share from cumulative
accounting change (2) $ - $ (.58) $ -
Fully-diluted Earnings Per Share
Fully-diluted Shares Outstanding:
Weighted average number of shares
outstanding 48,586 44,605 44,092
Shares issuable upon conversion of the
Company's 6-1/4% Convertible Subordinated
Debentures 6,002 8,348 8,348
Net effect of dilutive stock options (1) 428 332 400
Total 55,016 53,285 52,840
Income from continuing operations $ 67,900 $ 51,100 $39,100
Interest, net of tax effect, for 6-1/4%
Convertible Subordinated Debentures 3,200 4,400 4,700
Income applicable to fully diluted shares $ 71,100 $ 55,500 $43,800
Income per share from continuing operations $ 1.29 $ 1.04 $ .83
Income from discontinued operations $ - $ - $ 3,600
Income per share from discontinued operations $ - $ - $ (.07)
Loss from extraordinary items $ (1,100) $(21,700) $(3,700)
Loss per share from extraordinary items $ (.02) $ (.41) $ (.07)
Loss from cumulative accounting change $ - $(26,000) $ -
Loss per share from cumulative accounting
change $ - $ (.48) $
_________________
<FN>
(1) The net effects for fiscal 1995, 1994 and 1993 are based upon the treasury
stock method using average market prices during the periods for the primary
amounts, and the higher of the average market prices or the market price at
year-end for the fully-diluted amounts.
(2) Primary earnings per share for fiscal 1995, 1994 and 1993 have been reported
on the Company's financial statements based only upon the shares of common
stock outstanding, since the dilutive effect of the stock options is not
considered to be material.
</FN>
</TABLE>
EXHIBIT 21
SUBSIDIARIES
The following is a list of the subsidiaries of Mark IV Industries, Inc.
at May 15, 1995. Except as otherwise indicated, the names of indirectly-
owned subsidiaries are indented under the names of their immediate parent.
Alston Corporation (Delaware)
Audubon Leasing, Inc. (Delaware)
Automatic Signal/Eagle Signal Corporation (Delaware)
F-P Technologies Holding Corporation (Delaware) (a subsidiary of the Company
owned 100% by the Company and Mark IV Industries Limited)
Gulton-Statham Transducers, Inc. (Delaware)
Pinnacle Audio, Inc. (Delaware)
Gulton Industries, Inc. (Delaware)
F-P Displays, Inc. (Massachusetts)
Electro-Voice, Incorporated (Delaware)
Mark IV Audio Canada Inc. (Canada) (an indirect
subsidiary of the Company 100% owned, in the aggregate,
by Electro-Voice, Incorporated, Gulton Industries, Inc.
and Altec Lansing Corporation)
Altec Lansing International Limited (United Kingdom)
University Sound Inc. (Delaware)
Mark IV Hong Kong Limited (Hong Kong)
Audio Consultants Co., Limited (Hong Kong)
Mark IV Audio (Aust) Pty. Limited (Australia) (an indirect subsidiary
of the Company owned 100% by Gulton Industries, Inc. and
Electro-Voice, Inc.)
Mark IV Holding AG (Switzerland)
Mark IV Audio AG (Switzerland)
F-P Displays AG (Switzerland)
LFE Industrial Systems Corporation (Connecticut)
Luminator Service, Inc. (New York)
Mark IV Audio Japan Ltd. (Japan) (88% owned)
Mark IV France S.A. (France) (an indirect subsidiary of the
Company 100% owned, in the aggregate, by Gulton Industries,
Inc. and Dayco Products, Inc.)
Dayco Europe S.A.R.L. (France)
Mark IV Audio France S.A. (France)
Gulton S.A. (France)
SLE S.A.R.L. (France)
Interstate Highway Sign Corp. (Delaware)
Kirkhof/Goodrich Corp. (Delaware)
Mark IV Transportation Products Corp. (Delaware)
Mark IV Audio, Inc. (Delaware)
Armtek International Holding Company, Inc. (Delaware)
Dayco Pacific Pty. Limited (Australia) (an indirect subsidiary of the
Company 100% owned in the aggregate by Armtek Int'l Holding Company,
Inc. and Dayco Products, Inc.)
Dayco Products Singapore PTE Limited (Singapore)
Dayco TSA Singapore PTE Limited (Singapore) (66% owned)
Dayco Products-International, Inc. (Delaware)
Dayco Products-United Kingdom, Inc. (Delaware)
Eagle Funding Corporation (Delaware)
Mark IV Industries GmbH (Germany)
Mark IV Vertriebs GmbH (Germany)
Dayco Europe GmbH (Germany)
Dynacord Electronic-und Geratebau GmbH (Germany)
Dynacord Electronic-und Geratebau GmbH & Co. KG (Germany)
Dynacord France S.A. (France) (100% owned, in the aggregate, by
Dynacord GmbH and Dynacord KG)
Clarke Container Company, Inc. (New York)
Glar-Ban Incorporated (New York)
Mark IV Holdings Inc. (Delaware)
Mark IV Industries Overseas, Ltd. (Barbados)
Aerospace Sub, Inc. (Delaware)
Mark IV Industries Ireland (Ireland) (100% owned by the Company and
Mark IV Holdings, Inc.)
Mark IV IVHS, Inc. (Delaware)
Madison Industrial Properties, Inc. (Delaware)
NRD, Inc. (New York)
Protective Closures Co., Inc. (New York)
LFE Corporation (Delaware)
Dayco Products, Inc. (Delaware)
Controladora Dayco SA de C.V. (Mexico)
Dayco Products S.A. de C.V. (Mexico)
Bandas Y Mangueras Industriales, S.A. (Mexico)
Industrial de Plasticos Y Elastmeros, S.A. (Mexico)
Dayco Canada Holdings, Inc. (Canada)
Dayco Products Canada Inc. (Ontario, Canada)
Mark IV Industries Limited (Canada)
Vapor Canada Inc. (Canada)
Dayco PTI S.p.A. (Italy)
Dayco SACIC S.A. (Belgium)
Prelasti Joint Venture (Belgium) (50% ownership)
Dayco PTI S.A. (Spain)
Dayco PTI GmbH (Germany)
Dayco Europe S.p.A. (Italy)
Tubi Speciali Auto S.p.A. (Italy)
Lunkoflex Iberica, S.A. (53% owned) (Spain)
Dayco Europe AB (Sweden)
Dayco Hevas AB (Sweden)
Dayco Bjorkmans AB (Sweden)
Dayco Products - Eaglemotive, Inc. (Delaware)
Anchor Swan, Inc. (Delaware)
Dayco PTI, Inc. (Delaware)
U.S. Rubber Acquisition Corp. (Delaware)
Mark IV Holdings, S.A. (Belgium)
Mark IV Audio Magnetic, Inc. (Delaware)
Mark IV PLC (United Kingdom)
Dayco Europe Ltd. (United Kingdom)
Dayco PTI Ltd. (United Kingdom)
Cetec International Limited (United Kingdom)
Klark Teknik Plc (United Kingdom)
Nivenfield (1992) Limited (United Kingdom)
Klark-Teknik (Singapore) Pte. Limited (Singapore)
Dearden-Davies Associates Limited (United Kingdom)
Klark-Teknik Electronics, Inc. (New York)
Mark IV Transportation Products Ltd. (United Kingdom)
Caplugs Ltd. (United Kingdom)
Mark IV Netherlands B.V. (Netherlands)
Vapor Corporation (Illinois)
Pietranera S.r.L. (Italy) (a subsidiary of the Company owned 100% by the
Company and Armtek International Holding Company, Inc.)
Purolator Products Co. (Delaware)
Cal-Facet, Inc. (Delaware)
Facet Advanced Technology Company (Delaware)
Purodenso (Partnership owned 50% by Facet Advanced Tecnology Company)
Facet Enterprises, Inc. (Delaware)
Facet Export Corporation (Delaware)
Facet Fuel Systems, Inc. (Delaware)
Facet Aerospace Products Company (Delaware)
Facet Industrial U.K. (United Kingdom)
Facet Iberica, S.A. (Spain) (Owned 65.5% by Purolator Products Co.;
11.34% by Facet Italiana SpA; 5.91% Facet Industrial U.K.)
Facet France (France) (owned 60.5% by Facet Italiana SpA; 39.5% by
Facet Industrial U.K.)
Facet Industrial B.V. (Netherlands)
Purolator Filter GmbH (Germany)
Facet International, Inc. (Delaware)
Facet Italiana S.p.A (Italy)
Facet FCE S.A.R.L. (France)
George W. Dahl Company, Inc. (Delaware)
Purolator Products Air Filtration Company (Delaware)
Purolator Products Limited (Canada)
Purolator Products NA, Inc. (Delaware)
Purolator India (39.27% Joint Venture-India)
Woods Liquidating Corporation (Delaware)
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Mark IV Industries, Inc. on Form S-8 (File Nos. 33-423007 and 33-55367) of
our report dated March 30, 1995, on our audits of the consolidated financial
statements and financial statement schedule of Mark IV Industries, Inc. as
of February 28, 1995 and 1994, and for each of the three years in the
period ended February 28, 1995, which reports are included in this Annual
Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Rochester, New York
May 23, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Mark IV Industries, Inc. and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-END> FEB-28-1995
<CASH> 800
<SECURITIES> 0
<RECEIVABLES> 402,300
<ALLOWANCES> 18,600
<INVENTORY> 361,900
<CURRENT-ASSETS> 805,000
<PP&E> 638,400
<DEPRECIATION> 150,500
<TOTAL-ASSETS> 1,846,400
<CURRENT-LIABILITIES> 425,300
<BONDS> 610,700
<COMMON> 600
0
0
<OTHER-SE> 634,900
<TOTAL-LIABILITY-AND-EQUITY> 1,846,400
<SALES> 1,603,300
<TOTAL-REVENUES> 1,603,300
<CGS> 1,060,000
<TOTAL-COSTS> 1,439,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,900
<INCOME-PRETAX> 110,400
<INCOME-TAX> 42,500
<INCOME-CONTINUING> 67,900
<DISCONTINUED> 0
<EXTRAORDINARY> 1,100
<CHANGES> 0
<NET-INCOME> 66,800
<EPS-PRIMARY> 1.44
<EPS-DILUTED> 1.33
</TABLE>
