SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1998
Commission File No. 0-24298
MILLER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Tennessee 62-1566286
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8503 Hilltop Drive
Ooltewah, TN 37363
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (423) 238-4171 x238
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 / /
The number of shares outstanding of the registrant's Common Stock,
$.01 par value, as of November 30, 1998 was 46,647,687.<PAGE>
MILLER INDUSTRIES, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION Number
Item 1. Financial Statements (Unaudited) ------
--------------------------------
Condensed Consolidated Balance Sheets -
October 31, 1998 and April 30, 1998 3
Condensed Consolidated Statements of Income
for the Three Months and Six Months Ended
October 31, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended October 31, 1998 and 1997 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations 9
-----------------------------------
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
-----------------
Item 4. Submission of Matters to a Vote
-------------------------------
of Security Holders 14
-------------------
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2<PAGE>
<TABLE>
<CAPTION>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
ASSETS
October 31, April 30,
1998 1998
-------------- ----------------
<S> <C> <C>
CURRENT ASSETS:
Cash and temporary investments $ 8,329 $ 7,367
Accounts receivable, net 76,256 67,008
Inventories 90,153 71,839
Deferred income taxes 4,077 4,217
Prepaid expenses and other 4,456 5,362
------------ ------------
Total current assets 183,271 155,793
PROPERTY, PLANT AND EQUIPMENT, net 95,957 85,849
GOODWILL, net 91,138 81,605
OTHER ASSETS, net 9,028 6,483
------------ ------------
$ 379,394 $ 329,730
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 2,434 $ 4,900
Accounts payable 32,822 27,883
Accrued liabilities and other 13,604 18,236
------------ ------------
Total current liabilities 48,860 51,019
------------ ------------
LONG-TERM DEBT, less current portion 134,189 95,778
------------ ------------
DEFERRED INCOME TAXES 2,724 2,697
------------ ------------
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000,000 shares authorized; 0 0
none issued or outstanding
Common stock, $.01 par value, 100,000,000 shares
authorized; 46,630,952 and 45,941,814 shares issued
and outstanding at October 31, 1998 and April 30,
1998, respectively 466 459
Additional paid-in capital 145,089 139,480
Retained earnings 48,601 40,862
Accumulated other comprehensive income (535) (565)
------------ ------------
Total shareholders' equity 193,621 180,236
------------ ------------
$ 379,394 $ 329,730
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
October 31, October 31,
-------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 134,055 $ 94,727 $ 251,809 $ 180,080
---------- --------- ---------- ----------
COSTS AND EXPENSES:
Costs of operations 107,153 76,221 199,465 143,450
Selling, general, and administrative expenses 17,820 10,269 34,850 20,469
Restructuring costs -- 4,100 -- 4,100
Interest expense, net 2,228 429 4,268 700
---------- --------- ---------- ----------
Total costs and expenses 127,201 91,019 238,583 168,719
---------- --------- ---------- ----------
INCOME BEFORE INCOME TAXES 6,854 3,708 13,226 11,361
INCOME TAXES 2,812 1,410 5,488 4,265
---------- --------- ---------- ----------
NET INCOME $ 4,042 $ 2,298 $ 7,738 $ 7,096
========== ========= ========== ==========
NET INCOME PER COMMON SHARE
Basic: $ 0.09 $ 0.05 $ 0.17 $ 0.16
========== ========= ========== ==========
Diluted: $ 0.09 $ 0.05 $ 0.16 $ 0.15
========== ========= ========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic: 46,518 44,072 46,291 44,001
========== ========= ========== ==========
Diluted 47,323 45,868 47,283 45,988
========== ========= ========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended October 31,
---------------------------------
1998 1997
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 7,738 $ 7,096
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 6,445 3,724
Deferred income tax provision 212 715
Gain on sales of property, plant, and equipment (589) (662)
Changes in operating assets and liabilities:
Accounts receivable (6,891) 1,190
Inventories (17,433) (459)
Prepaid expenses and other 1,022 (1,477)
Accrued liabilities and other (6,282) (3,133)
Accounts payable 4,652 (14,615)
Other assets (2,160) (2,543)
----------- ------------
Net cash used in operating activities (13,286) (10,164)
----------- ------------
INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (9,587) (9,705)
Proceeds from sales of property, plant, and equipment 1,341 1,058
Acquisition of businesses, net of cash acquired (9,611) (5,320)
Proceeds from sale of finance receivables -- 3,861
Funding of finance receivables -- (1,067)
Other (21) 384
----------- ------------
Net cash used in investing activities (17,878) (10,789)
----------- ------------
FINANCING ACTIVITIES:
Net borrowings under line of credit 37,500 24,722
Payments of long-term obligations (4,699) (10,775)
Proceeds from exercise of stock options 77 785
Repurchase of common stock (857) --
----------- ------------
Net cash provided by financing activities 32,021 14,732
----------- ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
TEMPORARY INVESTMENTS 105 --
----------- ------------
NET INCREASE IN CASH AND TEMPORARY
INVESTMENTS 962 (6,221)
CASH AND TEMPORARY INVESTMENTS, beginning of
period 7,367 8,508
----------- ------------
CASH AND TEMPORARY INVESTMENTS, end of period $ 8,329 $ 2,287
=========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash payments for interest $ 4,584 $ 861
=========== ============
Cash payments for income taxes $ 4,491 $ 5,598
=========== ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5<PAGE>
MILLER INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The condensed consolidated financial statements of Miller
Industries, Inc. and subsidiaries (the "Company") included herein
have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. Nevertheless, the
Company believes that the disclosures are adequate to make the
financial information presented not misleading. In the opinion
of management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments, which are of a
normal recurring nature, to present fairly the Company's
financial position, results of operations and cash flows at the
dates and for the periods presented. Interim results of
operations are not necessarily indicative of results to be
expected for the fiscal year. These condensed consolidated
financial statements should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended April 30,
1998.
2. Net Income Per Share
Basic net income per share is computed by dividing net income by
the weighted average number of common shares outstanding.
Diluted net income per share takes into consideration the assumed
conversion of outstanding stock options resulting in .8 million
and 1.8 million potential dilutive common shares for the three
months ended October 31, 1998 and 1997, and 1.0 million and 2.0
million potential dilutive common shares for the six months ended
October 31, 1998 and 1997, respectively. Diluted net income per
share is calculated by dividing net income by the weighted
average number of common and potential dilutive common shares
outstanding. Per share amounts do not include the assumed
conversion of stock options with exercise prices greater than the
average share price because to do so would have been antidilutive
for the periods presented.
3. Inventories
Inventory costs include materials, labor and factory overhead.
Inventories are stated at the lower of cost or market, determined
on a first-in, first-out basis. Inventories at October 31, 1998
and April 30, 1998 consisted of the following (in thousands):
6<PAGE>
October 31, April 30,
1998 1998
------------ -----------
Chassis $ 22,685 $ 14,211
Raw Materials 22,378 22,027
Work in process 12,094 11,470
Finished goods 32,996 24,131
---------- ----------
$ 90,153 $ 71,839
========== ==========
4. Business Combinations
Throughout the six months ended October 31, 1998, the Company purchased
24 towing service companies for an aggregate purchase price of
$15,361,000, which consisted of $10,088,000 in cash and $5,273,000
(848,253 shares) of common stock. These acquisitions were accounted
for using the purchase method of accounting. The accompanying
consolidated financial statements reflect the preliminary allocation of
purchase price as the purchase price has not been finalized for all
transactions. The excess of the aggregate purchase price over the
estimated fair value of net assets acquired was approximately
$9,180,000.
5. Legal Matters
In January 1998, the Company received a letter from the Antitrust
Division of the Department of Justice (the "Division") stating that it
was conducting a civil investigation covering "competition in the tow
truck industry". The letter asked that the Company preserve its
records related to the tow truck industry, particularly documents
related to sales and prices of products and parts, acquisition of other
companies in the industry, distributor relations, patent matters,
competition in the industry generally, and activities of other
companies in the industry. In March 1998, the Company received a Civil
Investigation Demand ("CID") issued by the Division as part of its
continuing investigation of whether there are, have been or may be
violations of the federal antitrust statutes in the tow truck industry.
Under this CID, the Company is in the process of producing information
and documents to assist the Division in its investigation. It is
unknown at this time what the eventual outcome of this investigation
will be. The Company is continuing to cooperate with the government in
its investigation.
During September, October and November 1997, five lawsuits were filed
by certain persons who seek to represent a class of shareholders who
purchased shares of the Company's common stock during the period from
either October 15 or November 6, 1996 to September 11, 1997. Four of
the suits were filed in the United States District Court for the
Northern District of Georgia. The remaining suit was filed in the
Chancery Court of Hamilton County, Tennessee. In general, the
individual plaintiffs in all of the cases allege that they were induced
to purchase the Company's common stock on the basis of allegedly
actionable misrepresentations or omissions about the Company and its
business and, as a result, were thereby damaged. Four of the
complaints assert claims under Sections 10(b) and 20 of the Securities
7<PAGE>
Act of 1934. The complaints name as the defendants the Company and
various of its present and former directors and officers. The
plaintiffs in the four actions which involved claims in Federal Court
under the Securities Exchange Act of 1934 have consolidated those
actions. The Company filed a motion to dismiss in the consolidated
case which was granted in part and denied in part. The plaintiffs
have filed a motion for class certification which the Company will
oppose. The Company filed a motion to dismiss in the Tennessee case
which was granted in its entirety, however, the plaintiffs in that case
have, with permission from the court, amended and refiled their
complaint. The Company has filed a motion to dismiss the amended
complaint which is pending and will be argued before the Court in
January. In both these actions, the Company denied liability and
continues to vigorously defend itself.
In addition to the shareholder litigation described above, the Company
is, from time to time, a party to litigation arising in the normal
course of its business. Management believes that none of these
actions, individually or in the aggregate, will have a material adverse
effect on the financial position or results of operations of the
Company.
6. Stock Repurchase Plan
The Company's board of directors approved a share repurchase plan
during fiscal 1998 under which the Company may repurchase up to
2,000,000 shares of common stock from time to time until March 31,
1999. It is expected that such repurchased shares would be issued as
consideration in business acquisitions currently being negotiated
pursuant to the Company's ongoing acquisition strategy. All shares
purchased under the plan during fiscal 1999 and 1998 (200,000 shares at
a cost of $.9 million for the six months ended October 31, 1998 and
547,900 shares at a cost of $4.2 million in fiscal 1998) were reissued
as consideration for towing services companies acquired prior to
October 31, 1998.
7. Comprehensive Income
Effective May 1, 1998, the company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income", which
requires additional disclosure of amounts comprising comprehensive
income. The Company has other comprehensive income in the form of
cumulative translation adjustments and tax benefit of stock option
compensation deduction which resulted in total comprehensive income of
approximately $4,206,000 and $2,914,000 for the three months ended
October 31, 1998 and 1997, and $7,814,000 and $8,265,000 for the six
months ended October 31, 1998 and 1997, respectively.
8. Subsequent Events
Subsequent to the end of the quarter, the Company has closed four
additional acquisitions of towing service companies with aggregate
annual historical revenues of approximately $3.7 million. The
consideration for these transactions consists of approximately 16,000
shares of Company common stock and $4.1 million in cash as well as the
assumption of certain indebtedness.
8<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
RECENT DEVELOPMENTS
As more fully discussed in Note 4 to condensed consolidated financial
statements, during the six months ended October 31, 1998, the Company
acquired a total of 24 towing service companies.
Subsequent to the end of the quarter and as more fully discussed in Note 8
to condensed consolidated financial statements, the Company has closed four
additional acquisitions of towing service.
RESULTS OF OPERATIONS--THREE MONTHS ENDED OCTOBER 31, 1998 COMPARED TO THREE
MONTHS ENDED OCTOBER 31, 1997
Net sales for the three months ended October 31, 1998, increased 41.5% to
$134.1 million from $94.7 million for the comparable period in 1997. The
increase in net sales was primarily the result of higher sales from the
towing and recovery equipment segment, including higher sales of chassis and
sales from Chevron, the towing and recovery equipment manufacturer acquired
in December 1997, and the inclusion for the quarter ended October 31, 1998
of sales of towing services companies acquired since October 31, 1997.
Costs of operations for the three months ended October 31, 1998, increased
40.6% to $107.2 million from $76.2 million for the comparable period in
1997. Costs of operations as a percentage of net sales decreased to 79.9%
from 80.5%. This reduction was primarily a result of the Company's towing
services segment, which generally has a lower level of operating costs than
the towing and recovery equipment segment, accounting for a higher
proportion of revenues in the quarter ended October 31, 1998.
Selling, general and administrative expenses for the three months ended
October 31, 1998, increased 73.5% to $17.8 million from $10.3 million for
the comparable period in 1997. As a percentage of sales, selling, general
and administrative expenses increased from 10.8% to 13.3%. The increase was
primarily a result of the Company's towing services segment, which generally
has a higher level of selling, general and administrative costs as a
percentage of sales than the towing and recovery equipment segment.
During the second quarter of fiscal 1998, the Company recorded a one-time
pretax charge of $4.1 million for the Olive Branch, Mississippi facility
closure and consolidation of manufacturing operations.
9<PAGE>
Net interest expense increased $1.8 million to $2.2 million for three
months ended October 31, 1998 from $0.4 million for the comparable period in
1997 primarily due to increased borrowings under the Company's line of
credit to fund working capital needs and additional acquisitions of towing
service companies.
RESULTS OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1998 COMPARED TO SIX
MONTHS ENDED OCTOBER 31, 1997
Net sales for the six months ended October 31, 1998 increased 39.8% to
$251.8 million from $180.1 million for the comparable period in 1997. The
increase in net sales was primarily the result of higher sales from the
towing and recovery equipment segment, including higher sales of truck
chassis and sales from Chevron, the towing and recovery equipment
manufacturer acquired in December 1997, and inclusion for the six months
ended October 31, 1998 of sales from the towing services companies acquired
since October 31, 1997.
Costs of operations increased 39.0% to $199.5 million for the six months
ended October 31, 1998 from $143.5 million for the comparable period in
1997. Costs of operations as a percentage of net sales decreased from 79.7%
to 79.2%. This net decrease is attributed to the Company's towing services
segment, which generally has a lower level of operating costs than the
towing and recovery equipment segment, accounting for a higher portion of
revenues for the six months ended October 31, 1998.
Selling, general and administrative expenses increased 70.3% to $34.9
million for the six months ended October 31, 1998 from $20.5 million for the
comparable period of 1997. As a percentage of net sales, selling, general
and administrative expenses increased from 11.4% to 13.8%. The increase
related primarily to the Company's towing services segment, which generally
has a higher level of selling, general and administrative costs as a
percentage of net sales than the towing and recovery equipment segment .
During the second quarter of fiscal 1998, the Company recorded a one-time
pretax charge of $4.1 million for the Olive Branch, Mississippi facility
closure and consolidation of manufacturing operations.
Net interest expense increased $3.6 million to $4.3 million for the six
months ended October 31, 1998 from $0.7 million for the six months ended
October 31, 1997 primarily due to increased borrowings under the Company's
line of credit to fund working capital needs and additional acquisitions of
distributors and towing service companies.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements are for working capital, debt
service and capital expenditures. The Company has financed its operations
and growth from internally generated funds and debt financing and, since
August 1994, in part from the proceeds from its initial public offering and
its subsequent public offerings completed in January 1996 and November 1996.
10<PAGE>
Cash flows used in operating activities were $13.3 million for the six
months ended October 31, 1998 as compared to $10.2 million used in
operations for the comparable period of 1997. The increase in cash flows
used in operating activities was primarily to fund working capital needed to
support the growth of the businesses.
Cash used in investing activities was $17.9 million for the six months ended
October 31, 1998 compared to $10.8 million for the comparable period in
1997. The cash used in investing activities was primarily for capital
expenditures for equipment, building expansion and acquisitions of
businesses.
Cash provided by financing activities was $32.0 million for the six months
ended October 31, 1998 as compared to $14.7 million provided by financing
activities for the comparable period in the prior year. The cash was
provided primarily by borrowings under the Company's line of credit to fund
working capital and acquisitions.
The Company has an unsecured revolving credit facility of $175,000,000 (the
"Credit Facility") for working capital and other general corporate purposes.
Borrowings under the Credit Facility bear interest at a rate equal to the
London Interbank Offered Rate plus a margin ranging from 0.75% to 2.00%
based on a specified ratio of funded indebtedness to earnings or the prime
rate, as elected by the Company. At October 31, 1998, $122.5 million was
outstanding under the Credit Facility. The Credit Facility imposes
restrictions on the Company with respect to the maintenance of certain
financial ratios, the incurrence of indebtedness, the sale of assets,
capital expenditures and mergers and acquisitions.
On May 1, 1998, the Company entered into an interest rate swap agreement
covering the notional amount of $50 million of variable rate debt to fix the
interest rate at 5.68% plus the applicable margin. The agreement expires at
the end of three years unless cancelled by the bank at the end of two years.
The Company is currently increasing the capacity of its plant in Ooltewah,
Tennessee. Capital expenditures remaining for this expansion and additional
equipment are expected to be approximately $2.6 million. As described in
Note 4 to condensed consolidated financial statements, the Company has
expended approximately $10.1 million for the purchase of companies for the
six months ended October 31, 1998. Excluding the capital commitments set
forth above, the Company has no other pending material commitments. The
Company believes that cash on hand, cash flows from operations and available
credit funding will be sufficient to fund its operating needs, capital
expenditures and debt service requirements for the next fiscal year.
Management continually evaluates potential strategic acquisitions. Although
the Company believes that its financial resources will enable it to consider
potential acquisitions, additional debt or equity financing may be
necessary. No assurance in this regard can be given, however, since future
cash flows and the availability of financing will depend on a number of
factors, including prevailing economic conditions and financial, business
and other factors beyond the Company's control.
11<PAGE>
RECENT ACCOUNTING PRONOUNCEMENTS
The Company has adopted the provisions of Statement of Financial Accounting
(SFAS) No. 131, "Disclosures about Segments of an Enterprise and Related
Information". The adoption will not have a significant impact on the
condensed consolidated financial statements.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", effective
for fiscal years beginning after June 15, 1999. The Statement establishes
accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. The Statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the
hedged item in the income statement, and requires that a company must
formally document, designate, and assess the effectiveness of transactions
that receive hedge accounting.
The Company has not yet quantified the impact of adopting SFAS No. 133 on
its financial statements and has not determined the timing of or method of
adoption of SFAS No. 133. However, the Statement could increase volatility
in earnings and other comprehensive income.
YEAR 2000
The Company utilizes software and related technologies throughout its
businesses that will be affected by the date change in the year 2000. The
Company has been actively planning its systems for year 2000 compliance in
its design, purchase, and installation processes. The impact of non-
compliant systems of a significant number of suppliers, customers and its
own internal applications could be material to the Company's operations.
The Company is in the process of implementing a new financial and
manufacturing software system that has been certified as year 2000
compliant. Completion of this implementation at most of its domestic
manufacturing facilities and towing service locations is expected to be
complete by April 1999. The Company's distribution facilities are in the
process of implementing year 2000 compliant financial software at all
locations, with anticipated completion by the end of fiscal 1999. Neither
implementation has been accelerated due to year 2000 issues, nor has any
information technology project been deferred as a result of personnel or
financial resource allocations to year 2000 issues.
Additionally, a project team has been formed to actively review and evaluate
the Company's systems for year 2000 compliance. Included in this assessment
is the review of both the hardware and software infrastructure that support
the Company's major business functions. To date, the project team has
completed approximately 15% of its review, and anticipates the majority of
the review and remediation to be completed by April 30, 1999. Through
October 31, 1998, remediation costs incurred have not been significant.
12<PAGE>
Besides impacting in-house systems, year 2000 issues could affect the
Company's suppliers and customers. Certain suppliers have been surveyed for
year 2000 compliance and state of readiness, with plans to contact
additional suppliers over the next several months. The Company is not
reliant on a single supplier for its raw material and purchased component
needs. In the event that a significant number of the Company's suppliers or
customers do not successfully and timely achieve their Year 2000 compliance,
the Company's business or operations could be adversely affected.
The Company has and is addressing its year 2000 exposures. However, the
Company has not yet formalized its contingency plans should an unforeseeable
year 2000 issue arise that poses a significant threat to the Company's
business. The Year 2000 project team will address these issues as part of
the overall compliance review and recommend interim solutions until
permanent ones are available. Management will continue to monitor the
progress of the project team and make additional contingency plans as deemed
necessary.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In January 1998, the Company received a letter from the Antitrust Division
of the Department of Justice (the "Division") stating that it was conducting
a civil investigation covering "competition in the tow truck industry." The
letter asked that the Company preserve its records related to the tow truck
industry, particularly documents related to sales and prices of products and
parts, acquisition of other companies in the industry, distributor
relations, patent matters, competition in the industry generally, and
activities of other companies in the industry. In March 1998, the Company
received a Civil Investigative Demand ("CID") issued by the Division as part
of its continuing investigation of whether there are, have been or may be
violations of the federal antitrust statutes in the tow truck industry.
Under this CID, the Company is in the process of producing information and
documents to assist the Division in its investigation. It is unknown at
this time what the eventual outcome of the investigation will be. The
Company is continuing to cooperate with the government in its investigation.
During September, October and November 1997, five lawsuits were filed by
certain persons who seek to represent a class of shareholders who purchased
shares of the Company's common stock during the period from either October
15 or November 6, 1996 to September 11, 1997. Four of the suits were filed
in the United States District Court for the Northern District of Georgia.
The remaining suit was filed in the Chancery Court of Hamilton County,
Tennessee. In general, the individual plaintiffs in all of the cases allege
that they were induced to purchase the Company's common stock on the basis
of allegedly actionable misrepresentations or omissions about the Company
and its business and, as a result were thereby damaged. Four of the
complaints assert claims under Sections 10(b) and 20 of the Securities Act
of 1934. The complaints name as the defendants the Company and various of
its present and former directors and officers. The plaintiffs in the four
actions which involved claims in Federal Court under the Securities Exchange
Act of 1934 have consolidated those actions. The Company filed a motion to
dismiss in the consolidated case which was granted in part and denied in
part. The plaintiffs have filed a motion for class certification which the
Company will oppose. The Company filed a motion to dismiss in the Tennessee
case which was granted in its entirety, however, the plaintiffs in that case
have, with permission from the court, amended and refiled their complaint.
The Company has filed a motion to dismiss the amended complaint which is
pending and will be argued before the Court in January. In both these actions,
the Company denied liability and continues to vigorously defend itself.
13<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders was held on Friday, September 11, 1998 in
Norcross, Georgia, at which the following matters were submitted to a vote
of the shareholders:
(a) Votes cast for or withheld regarding the election of six (6)
Directors for a term of one (1) year were as follows:
FOR WITHHELD
---------- --------
Jeffrey I. Badgley 37,063,712 166,625
A. Russell Chandler III 37,075,784 154,553
Paul E. Drack 37,073,234 157,103
Stephen A. Furbacher 37,071,252 159,085
William G. Miller 37,063,629 166,708
Richard H. Roberts 36,975,134 255,203
(b) Votes cast for or against and the number of abstentions regarding the
other matter voted upon at the meeting were as follows:
DESCRIPTION OF MATTER FOR AGAINST ABSTAINED
- --------------------- --- ------- ---------
Ratification of the appointment
of Arthur Andersen LLP as
independent auditors of the
Company to serve for the 1999
fiscal year 37,032,645 144,741 52,951
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
---------
Exhibit 10.1 - Employment Agreement between Miller Industries, Inc.
and Jeffrey I. Badgley, dated September 11, 1998
Exhibit 10.2 - Employment Agreement between Miller Industries, Inc.
and Adam L. Dunayer, dated September 11, 1998
Exhibit 10.3 - Employment Agreement between Miller Industries, Inc.
and Frank Madonia, dated September 11, 1998
Exhibit 10.4 - Agreement between Miller Industries, Inc. and Jeffrey
I. Badgley, dated September 11, 1998
Exhibit 10.5 - Agreement between Miller Industries, Inc. and Adam L.
Dunayer, dated September 11, 1998
Exhibit 10.6 - Agreement between Miller Industries, Inc. and Frank
Madonia, dated September 11, 1998
Exhibit 27 - Financial Data Schedule (For SEC use only)
(b) Reports on Form 8-K - The Registrant filed a report on Form 8-K on
September 30, 1998 under Item 5.
14<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Miller Industries, Inc. has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
MILLER INDUSTRIES, INC.
By: /s/ Adam L. Dunayer
Adam L. Dunayer
Vice President and
Chief Financial Officer
Date: December 15, 1998
15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered
into effective as of the 11th day of September, 1998 (the "Effective
Date"), by and between Miller Industries, Inc., a corporation
organized under the laws of the State of Tennessee, USA (the
"Company"), and Jeffrey I. Badgley (the "Executive").
For and in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions of this
Agreement, Executive shall be employed by the Company as President and
Chief Executive Officer, and shall perform such duties and functions
for the Company and any company controlling, controlled by or under
common control with the Company (such companies hereinafter
collectively called "Affiliates") as shall be specified from time to
time by the Chairman of the Board; Executive hereby accepts such
employment and agrees to perform such executive duties as may be
assigned to him.
2. DUTIES. Executive shall devote his full business related
time and best efforts to accomplishing such executive duties at such
locations as may be requested by the Chairman of the Board of the
Company. While employed by the Company, Executive shall not serve as
a principal, partner, employee, officer or director of, or consultant
to, any other business or entity conducting business for profit
without the prior written approval of the Chairman of the Board of the
Company. In addition, under no circumstances will Executive have any
financial interest in any competitor of the Company; provided,
however, that Executive may invest in no more than 2% of the
outstanding stock or securities of any competitor whose stock or
securities are traded on a national stock exchange of any country.
3. TERM. The term of this Agreement shall be for a
rolling, three (3) year term commencing on the date hereof, and shall
be deemed automatically (without further action by either the Company
or the Executive) to extend each day for an additional day such that
the remaining term of the Agreement shall continue to be three (3)
years; provided, however, that on Executive's 62nd birthday this
Agreement shall cease to extend automatically and, on such date, the
remaining "term" of this Agreement shall be three (3) years; provided
further, that the Company may, by notice to the Executive, cause this
Agreement to cease to extend automatically and, upon such notice, the
"Term" of this Agreement shall be three (3) years following such
notice; and provided further, that the automatic extension shall not
extend beyond any anniversary of the Effective Date of this Agreement
unless the Company notifies the Executive in writing prior to such
anniversary date that it elects to extend such automatic extension
until the next anniversary date.
4. COMPENSATION AND BENEFITS. As compensation for his
services during the Term of this Agreement, Executive shall be paid
and receive the amounts and benefits set forth in subsections (a),
(b), (c) and (d) below:
<PAGE>
(a) BASE SALARY. An annual base salary ("Base Salary") of $200,000
prorated for any partial year of employment. Executive's Base Salary
shall be subject to annual review, commencing as of the first
anniversary of the Effective Date of this Agreement, for adjustments
at such time as the Company conducts salary reviews for its executive
officers generally. Executive's salary shall be payable in accordance
with the Company's regular payroll practices in effect from time to
time for executive officers of the Company.
(b) BONUS. In addition to the Base Salary, the Executive shall
be entitled to participate in any of the Company's present and future
stock or cash based bonus plans that are generally available to its
executive officers, as such plans may exist or be changed from time to
time at the discretion of the Company
(c) OTHER BENEFITS. Executive shall be entitled to vacation
with pay, life insurance, health insurance, fringe benefits, and such
other employee benefits generally made available by the Company to its
executive officers, in accordance with the established plans and
policies of the Company, as in effect from time to time.
(d) STOCK OPTIONS. As of the Effective Date of this Agreement,
Executive is hereby granted 120,000 options under the Miller
Industries, Inc. Stock Option and Incentive Plan ("Stock Option
Plan"). The exercise price of the options will be the fair market
value of a share of stock on the Effective Date, as determined under
the Stock Option Plan. The terms and conditions of the options will
be set forth in the Stock Option Agreement in accordance with the
Stock Option Plan. This grant of 120,000 stock options is intended to
be the entire grant of stock options to the Executive for the initial
3-year term of this Agreement; provided, however, the Company may, in
its discretion, grant Executive additional options during this initial
3-year period.
5. TERMINATION.
(a) BY EXECUTIVE. Executive may voluntarily terminate his
employment hereunder at any time, to be effective 60 days after
delivery to the Company of his signed, written resignation; Company
may accept said resignation and pay Executive in lieu of waiting for
passage of the notice period.
(b) BY COMPANY. Subject to the terms of this Paragraph and
Paragraph 5(c) below, the Company may terminate Executive's employment
hereunder, in its sole discretion, whether with or without just cause
(as defined in Paragraph 5(b)(ix) below and subject to the notice
periods described therein), at any time upon written notice to
Executive. If, prior to the end of the Term of this Agreement, the
Company terminates Executive's employment without just cause (as
defined in (ix) below), the Executive shall be entitled to receive, as
damages payable as a result of, and arising from, a breach of this
Agreement, the compensation and benefits set forth in (i) through (iv)
below. Except to the extent provided in (viii) below, Executive shall
not be required to mitigate damages by reducing the amounts he is
entitled to receive hereunder by earnings from subsequent employment.
The time periods in (i) through (iii) below shall be the lesser of the
36-month period stated therein or the time period remaining from the
date of Executive's termination to the end of the Term of this
Agreement.
-2-
<PAGE>
(i) BASE SALARY. The Executive will continue to receive
his current salary (subject to withholding of all applicable
taxes and any amounts referred to in paragraph (iii) below) for a
period of thirty-six (36) months from his date of termination in
the same manner as it was being paid as of the date of
termination. For purposes hereof, the Executive's "current
salary" shall be the highest rate in effect during the twelve-
month period prior to the Executive's termination.
(ii) BONUS. The Executive shall receive bonus payments from
the Company for the thirty-six (36) months following the month in
which his employment is terminated in an amount for each such
month equal to one-twelfth of the average ("Average Bonus") of
the bonuses earned by him for the three calendar years
immediately preceding the year in which such termination occurs.
Any bonus amounts that the Executive had previously earned from
the Company but which may not yet have been paid as of the date
of termination shall not be affected by this provision.
Executive shall also receive, within 60 days after the date of
his termination) a prorated bonus for any uncompleted fiscal year
at the date of termination equal to the Average Bonus multiplied
by the number of days he worked in such year divided by 365 days.
(iii) HEALTH AND LIFE INSURANCE COVERAGE. Any health
and life insurance benefits coverage (including any executive
medical plan) provided to the Executive at his date of
termination shall be continued by the Company at its expense at
the same level and in the same manner as if his employment had
not terminated (subject to the customary changes in such
coverages if the Executive retires under a Company retirement
plan, reaches age 65 or similar events and subject to Executive's
right to make any changes in such coverages that an active
employee is permitted to make), beginning on the date of such
termination and ending on the date thirty-six (36) months from
the date of such termination. Any additional coverages the
Executive had at termination, including dependent coverage, will
also be continued for such period on the same terms. Any costs
the Executive was paying for such coverages at the time of
termination shall be paid by the Executive by separate check
payable to the Company each month in advance. If the terms of
any benefit plan referred to in this paragraph do not permit
continued participation by the Executive, then the Company will
arrange for other coverage at its expense providing substantially
similar benefits. The coverages provided for in this paragraph
shall be applied against and reduce the period for which COBRA
will be provided.
(iv) STOCK OPTIONS. As of Executive's date of termination,
all outstanding stock options granted to Executive under the
Stock Option and Incentive Plan and any other Company stock
option plan shall become 100% vested and immediately exercisable.
To the extent necessary, the provisions of this paragraph (iv)
shall constitute an amendment of the Executive's stock option
agreements under the Stock Option Plans.
(v) EFFECT OF DEATH. In the event of the Executive's death
after his termination of employment by the Company under this
Paragraph 5(b), the benefits payable under (i) and (ii) of this
Paragraph 5(b) shall continue for a period of twelve (12) months,
or, if shorter, until the end of the Term of this Agreement;
provided, however, such payments will be paid in a lump sum
-3-
<PAGE>
payment within 60 days following the Executive's death, to the
Executive's surviving spouse, or, if none, to the Executive's
estate. In addition, in the event of Executive's death, any
dependent coverage in effect under (iii) of this Paragraph 5(b)
shall continue at the Company's expense, for a period of 12
months, or, if shorter, until the end of the Term of this Agreement.
(vi) Executive hereby agrees and acknowledges that if he
voluntarily resigns from his employment, or is terminated for
just cause, prior to the end of the Term of this Agreement, then
he shall be entitled to no payment or compensation whatsoever
from the Company under this Agreement, other than as may be due
him through his last day of employment.
(vii) Notwithstanding any provision of this Agreement to
the contrary, if Executive's employment is terminated (whether by
the Company or by Executive) under circumstances that would
entitle him to receive benefits under his agreement with the
Company providing compensation and benefits for terminations
following a "change in control" of the Company (as defined in
such agreement), then any such termination shall be treated under
this Agreement as a termination by the Company without just cause
and the Executive shall be entitled to the compensation and
benefits set forth in (i) through (iv) above for the time periods
provided in this Paragraph 5(b), and such amounts shall be
treated as damages payable as a result of, and arising from, a
breach of this Agreement.
(viii) If Executive becomes entitled to compensation and
benefits under this Paragraph 5(b) and such payments would be
considered to be severance payments contingent upon a change in
control under Internal Revenue Code Section 280G, Executive shall
be required to mitigate damages (but only with respect to amounts
that would be treated as severance payments under Code Section
280G) by reducing the amount of severance payments he is entitled
to receive by any compensation and benefits he earns from
subsequent employment (but shall not be required to seek such
employment).
(ix) For purposes of this Agreement, the phrase "for just
cause" shall mean: (A) Executive's material fraud, malfeasance,
gross negligence, or willful misconduct with respect to business
affairs of the Company which is directly or materially harmful to
the business or reputation of the Company or any subsidiary of
the Company; (B) Executive's conviction of or failure to contest
prosecution for a felony or a crime involving moral turpitude; or
(C) Executive's material breach of this Agreement. A termination
of Executive for just cause based on clause (A) or (C) of the
preceding sentence shall take effect 30 days after the Executive
receives from Company written notice of intent to terminate and
Company's description of the alleged cause, unless Executive
shall, during such 30-day period, remedy the events or
circumstances constituting cause; provided, however, that such
termination shall take effect immediately upon the giving of
written notice of termination of just cause under any clause if
the Company shall have determined in good faith that such events
or circumstances are not remediable (which determination shall be
stated in such notice).
-4-
<PAGE>
(c) BY DEATH OR DISABILITY. If Executive's employment is
terminated due to Executive's death, the Executive's surviving spouse,
or if none, his estate, shall receive the benefits payable under (i)
and (ii) of Paragraph 5(b) above; provided, however, such payments
shall be for a period of 12 months rather than 36 months and such
payments shall be made in a lump sum payment within 60 days of the
Executive's death. In addition, if the Executive's dependents are
eligible to and actually elect to continue under COBRA any coverages
provided under Paragraph 5(b)(iii), the Company shall pay the cost of
such COBRA coverage for a period of 12 months following the date of
Executive's death. If Executive's employment is terminated due to
Executive's disability (as defined in the Company's long-term
disability plan or insurance policy, or if no such plan or policy, as
determined in good faith by the Company), Executive shall be entitled
to the benefits payable or to be provided under (i), (ii), (iii) and
(iv) of Paragraph 5(b); provided, however, the benefits under (i),
(ii) or (iii) of Paragraph 5(b) shall be payable or to be provided for
a period of 24 months. Executive or his estate, as the case may be,
shall not by operation of this paragraph forfeit any rights in which
he is vested at the time of his death or disability.
(d) Upon termination of Executive's employment for any reason
whatsoever (whether voluntary on the part of Executive, for just
cause, or other reasons), the obligations of Executive pursuant to
Paragraphs 6 and 7 hereof shall survive and remain in effect for the
periods described in Paragraph 6.
6. COMPETITION, CONFIDENTIALITY, AND NONSOLICITATION.
Executive agrees to be bound by the terms and conditions of the
Noncompetition Agreement attached hereto as Exhibit "A", which is
hereby made a part of this Agreement.
7. INJUNCTIVE RELIEF. The Executive acknowledges that his
services to be rendered to the Company are of a special and unusual
character which have a unique value to the Company, the loss of which
cannot adequately be compensated by damages in an action at law.
Executive further acknowledges that any breach of the terms of
Paragraph 6, including Exhibit "A", would result in material damage to
the Company, although it might be difficult to establish the monetary
value of the damage. Executive therefore agrees that the Company, in
addition to any other rights and remedies available to it, shall be
entitled to obtain an immediate injunction (whether temporary or
permanent) from any court of appropriate jurisdiction in the event of
any such breach thereof by Executive, or threatened breach which the
Company in good faith believes will or is likely to result in
irreparable harm to the Company. The existence of any claim or cause
of action by Executive against the Company, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of Executive's agreement under this
Paragraph and Paragraph 6 above.
-5-<PAGE>
8. MISCELLANEOUS.
(a) NOTICE. Any notice or other communication required or
permitted under this Agreement shall be effective only if it is in
writing and shall be deemed to have been duly given when delivered
personally or seven days after mailing if mailed first class by
registered or certified mail, postage prepaid, addressed as follows:
If to the Company: Miller Industries, Inc.
P.O. Box 120
8503 Hilltop Drive
Ooltewah, Tennessee 37363
Attention: Chairman of the Board
If to the Executive: Jeffrey I. Badgley
1905 Stoney Creek Drive
Chattanooga, Tennessee 37421
or to such other address as any party may designate by notice to the
others.
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the Executive's
employment by the Company, and supersedes and is in full substitution
for any and all prior understandings or agreements with respect to the
Executive's employment.
(c) AMENDMENT. This Agreement may be amended only by an
instrument in writing signed by the parties hereto, and any provision
hereof may be waived only by an instrument in writing signed by the
party or parties against whom or which enforcement of such waiver is
sought. The failure of either party hereto to comply with any
provision hereof shall in no way affect the full right to require such
performance at any time thereafter, nor shall the waiver by either
party hereto of a breach of any provision hereof be taken or held to
be a waiver of any succeeding breach of such provision, or a waiver of
the provision itself, or a waiver of any other provision of this Agreement.
(d) BINDING EFFECT. This Agreement is binding on and is for the
benefit of the parties hereto and their respective successors, heirs,
executors, administrators and other legal representatives. Neither
this Agreement nor any right or obligation hereunder may be assigned
by the Executive or the Company, except for assignment by the Company
to any wholly owned subsidiary.
(e) SEVERABILITY AND MODIFICATION. If any provision of this
Agreement or portion thereof is so broad, in scope or duration, so as
to be unenforceable, such provision or portion thereof shall be
interpreted to be only so broad as is enforceable. In addition, to
the extent that any provision of this Agreement as applied to either
party or to any circumstances shall be adjudged by a court of
competent jurisdiction to be void or unenforceable, the same shall in
no way affect any other provision of this Agreement or the validity or
enforceability of this Agreement.
-6-<PAGE>
(e) INTERPRETATION. This Agreement shall be interpreted,
construed and governed by and under the laws of the State of
Tennessee. Each party irrevocably (i) consents to the exclusive
jurisdiction and venue of the courts of Hamilton County, State of
Tennessee and federal courts in the Eastern District of Tennessee, in
any action arising under or relating to this Agreement (including
Exhibit "A" hereto), and (ii) waives any jurisdictional defenses
(including personal jurisdiction and venue) to any such action. If
any provision of this Agreement is deemed or held to be illegal,
invalid, or unenforceable under present or future laws effective
during the term hereof, this Agreement shall be considered divisible
and inoperative as to such provision to the extent it is deemed to be
illegal, invalid or unenforceable, and in all other respects this
Agreement shall remain in full force and effect; provided, however,
that if any provision of this Agreement is deemed or held to be
illegal, invalid or unenforceable there shall be added hereto
automatically a provision as similar as possible to such illegal,
invalid or unenforceable provision as shall be legal, valid or
enforceable. Further, should any provision contained in this
Agreement ever be reformed or rewritten by any judicial body of
competent jurisdiction, such provision as so reformed or rewritten
shall be binding upon the Executive and the Company.
(g) FAILURE TO ENFORCE. The failure of either party hereto at
any time, or for any period of time, to enforce any of the provisions
of this Agreement shall not be construed as a waiver of such
provision(s) or of the right of such party hereafter to enforce each
and every such provision.
(h) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
(i) NO CONFLICTING AGREEMENT. The Executive represents and
warrants that he is not party to any agreement, contract or
understanding which would prohibit him from entering into this
Agreement or performing fully his obligations hereunder.
IN WITNESS WHEREOF, the Company and the Executive have executed
this Agreement as of the date first written above.
EXECUTIVE
/s/ Jeffrey I. Badgley
Jeffrey I. Badgley
MILLER INDUSTRIES, INC.
By: /s/ Adam Dunayer
Its Vice President
<PAGE>
EXHIBIT "A"
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is entered into this _____ day of September,
1998, between Miller Industries, Inc. (the "Company") and Jeffrey I. Badgley
(the "Executive") contemporaneously with and as part of the Employment Agreement
between the parties to which this Noncompetition Agreement is attached.
REASONS FOR THIS NONCOMPETITION AGREEMENT: During Executive's relationship
with the Company Executive has learned, will learn, or has or will have
access to, important proprietary information related to the manufacturing
and distribution of towing and recovery equipment, and towing services
(collectively, the "Company's Business"). Executive acknowledges that the
proprietary customer, operations, financial, and business information that
has been or will be learned or accessible has been and will be developed
through the Company's expenditure of substantial effort, time and money; and
together with relationships developed with customers and employees, could be
used to compete unfairly with the Company. The Company's ability to sell
its products on a competitive basis depends, in part, on its proprietary
information and customer relationships, and the Company would not share this
information, provide training or promote Executive's relationship with
customers if the Company believed that it would be used in competition with
the Company, which non-disclosure would cause Executive's performance and
opportunities to suffer.
In consideration of employment or continued employment and other valuable
consideration, the receipt and sufficiency of which are acknowledged, the
Company and Executive agree:
1. Definitions: - For this Agreement, the following terms shall have the
meaning specified below:
(a) Person: - any individual, corporation, limited liability company,
partnership, joint venture, association, unincorporated organization or
other entity.
(b) Termination Date: - the date of Executive's termination of
employment from the Company, whether such termination is voluntary or
involuntary, whether with or without cause, and whether before or after the
expiration of the Term of the Executive's Employment Agreement.
(c) Customers: - all Persons (i) that Executive solicited or contacted
on behalf of the Company; (ii) whose dealings with the Company were
coordinated or supervised, in whole or in part, by Executive; or (iii) about
whom Executive possessed Confidential Information, in each case during the
one-year period immediately prior to the Executive's Termination Date.
(d) Confidential Information: - information, without regard to form,
relating to the Company's customers, operation, finances, and business that
derives value, actual or potential, from not being generally known to other
Persons, including, but not limited to, technical or nontechnical data,
formulas, patterns, compilations (including compilations of customer
information), programs (including fulfillment and marketing programs),
devices, methods (including fulfillment methods), techniques, processes,
financial data (including sales forecasts), or lists of actual or potential
customers or suppliers (including identifying information about those
customers), whether or not reduced to writing. Confidential Information
includes information disclosed to the Company by third parties that the
Company is obligated to maintain as confidential. Confidential Information
<PAGE>
subject to this Agreement may include information that is not a trade secret
under applicable law, but information not constituting a trade secret only
shall be treated as Confidential Information under this Agreement for a two
year period after the Termination Date.
(e) Territory: - the term "Territory" as used in this Agreement means
the continental United States. Executive acknowledges that Executive will
provide services to Company and will have a substantial impact on the
Company's Business throughout the Territory.
(f) Competing Business: - any Person (other than the Company)
providing or offering goods or services identical to or reasonably
substitutable for the Company's Business.
2. Confidential Information: - Executive shall use best efforts to protect
Confidential Information. During or after association with the Company,
Executive will not use or disclose any of the Company's Confidential
Information except in connection with his duties performed in accordance
with his Employment Agreement or except with the prior written consent of
the Chairman of the Board of the Company; provided, however, Executive may
make disclosures required by a valid order or subpoena issued by a court or
administrative agency of competent jurisdiction, in which event Executive
will promptly notify the Company of such order or subpoena to provide the
Company an opportunity to protect its interests.
3. Return of Materials: - On the Termination Date or for any reason or at
any time at the Company's request, Executive will deliver promptly to the
Company all materials, documents, plans, records, notes, or other papers and
any copies in Executive's possession or control relating in any way to the
Company's Business, which at all times shall be the property of the Company.
4. Solicitation of Employees: - During employment and for a period of 24
months following his Termination Date, Executive will not solicit or induce
or in any manner attempt to solicit or induce, any person employed by the
Company to leave such employment, whether or not such employment is pursuant
to a written contract with the Company or at will.
5. Solicitation of Customers: - During employment and for a period of 24
months following his Termination Date, Executive will not solicit Customers
for the purpose of providing or offering products or services identical to
or reasonably substitutable for the Company's Business.
6. Limitations on Post-Termination Competition: - During employment and for
a period of 24 months following his Termination Date, Executive will not,
within the Territory, be employed or engaged by a Competing Business as a
director, executive, officer, manager, consultant or equivalent position.
2<PAGE>
7. Notwithstanding any provision of this Agreement to the contrary, if
Executive's employment is terminated (whether by the Company or by
Executive) under circumstances that would entitle him to receive benefits
under his agreement with the Company providing compensation and benefits for
terminations following a "change in control" of the Company (as defined in
such agreement), then the time periods in Paragraphs 5 and 6 above shall be
reduced to 12 months.
8. Disparagement: - Executive shall not at any time make false, misleading
or disparaging statements about the Company, including its products,
management, employees, and customers.
9. Ownership of Confidential Information. The Executive hereby agrees that
2
<PAGE>
any and all improvements, inventions, discoveries, formulas, processes,
methods, know-how, confidential data, trade secrets and other proprietary
information (collectively "Work Product") within the scope of any business
of the Company or any affiliate which the Executive may conceive or make or
has conceived or made during his employment with the Company shall be and
are the sole and exclusive property of the Company, and that the Executive
shall, whenever requested to do so by the Company, at its expense, execute
and sign any and all applications, assignments or other instruments and do
all other things which the Company may deem necessary or appropriate (i) in
order to apply for, obtain, maintain, enforce or defend letters patent of
the United States or any foreign country for any Work Product, or (ii) in
order to assign, transfer, convey or otherwise make available to the Company
the sole and exclusive right, title and interest in and to any Work Product.
10. Interpretation; Severability: - Rights and restrictions in this
Agreement may be exercised and are applicable only to the extent they do not
violate any applicable laws, and are intended to be limited to the extent
necessary so they will not render this Agreement illegal, invalid, or
unenforceable. If any term shall be held illegal, invalid, or unenforceable
by a court of competent jurisdiction, the remaining terms shall remain in
full force and effect. This Agreement does not in any way limit the
Company's rights under the laws of unfair competition, trade secret,
copyright, patent, trademark or any other applicable laws(s), which are in
addition to rights under this Agreement. The existence of a claim by
Executive, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the Company's enforcement of this Agreement.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered
into effective as of the 11th day of September, 1998 (the "Effective
Date"), by and between Miller Industries, Inc., a corporation
organized under the laws of the State of Tennessee, USA (the
"Company"), and Adam L. Dunayer (the "Executive").
For and in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions of this
Agreement, Executive shall be employed by the Company as Executive
Vice President, Chief Financial Officer and Treasurer, and shall
perform such duties and functions for the Company and any company
controlling, controlled by or under common control with the Company
(such companies hereinafter collectively called "Affiliates") as shall
be specified from time to time by the Chief Executive Officer ("CEO");
Executive hereby accepts such employment and agrees to perform such
executive duties as may be assigned to him.
2. DUTIES. Executive shall devote his full business related
time and best efforts to accomplishing such executive duties at such
locations as may be requested by the CEO of the Company. While
employed by the Company, Executive shall not serve as a principal,
partner, employee, officer or director of, or consultant to, any other
business or entity conducting business for profit without the prior
written approval of the CEO of the Company. In addition, under no
circumstances will Executive have any financial interest in any
competitor of the Company; provided, however, that Executive may
invest in no more than 2% of the outstanding stock or securities of
any competitor whose stock or securities are traded on a national
stock exchange of any country.
3. TERM. The term of this Agreement shall be for a
rolling, three (3) year term commencing on the date hereof, and shall
be deemed automatically (without further action by either the Company
or the Executive) to extend each day for an additional day such that
the remaining term of the Agreement shall continue to be three (3)
years; provided, however, that on Executive's 62nd birthday this
Agreement shall cease to extend automatically and, on such date, the
remaining "term" of this Agreement shall be three (3) years; provided
further, that the Company may, by notice to the Executive, cause this
Agreement to cease to extend automatically and, upon such notice, the
"Term" of this Agreement shall be three (3) years following such
notice; and provided further, that the automatic extension shall not
extend beyond any anniversary of the Effective Date of this Agreement
unless the Company notifies the Executive in writing prior to such
anniversary date that it elects to extend such automatic extension
until the next anniversary date.
4. COMPENSATION AND BENEFITS. As compensation for his
services during the Term of this Agreement, Executive shall be paid
and receive the amounts and benefits set forth in subsections (a),
(b), (c) and (d) below:
<PAGE>
(a) BASE SALARY. An annual base salary ("Base Salary") of $165,000
prorated for any partial year of employment. Executive's Base Salary
shall be subject to annual review, commencing as of the first
anniversary of the Effective Date of this Agreement, for adjustments
at such time as the Company conducts salary reviews for its executive
officers generally. Executive's salary shall be payable in accordance
with the Company's regular payroll practices in effect from time to
time for executive officers of the Company.
(b) BONUS. In addition to the Base Salary, the Executive shall
be entitled to participate in any of the Company's present and future
stock or cash based bonus plans that are generally available to its
executive officers, as such plans may exist or be changed from time to
time at the discretion of the Company
(c) OTHER BENEFITS. Executive shall be entitled to vacation
with pay, life insurance, health insurance, fringe benefits, and such
other employee benefits generally made available by the Company to its
executive officers, in accordance with the established plans and
policies of the Company, as in effect from time to time.
(d) STOCK OPTIONS. As of the Effective Date of this Agreement,
Executive is hereby granted 90,000 options under the Miller
Industries, Inc. Stock Option and Incentive Plan ("Stock Option
Plan"). The exercise price of the options will be the fair market
value of a share of stock on the Effective Date, as determined under
the Stock Option Plan. The terms and conditions of the options will
be set forth in the Stock Option Agreement in accordance with the
Stock Option Plan. This grant of 90,000 stock options is intended to
be the entire grant of stock options to the Executive for the initial
3-year term of this Agreement; provided, however, the Company may, in
its discretion, grant Executive additional options during this initial
3-year period.
5. TERMINATION.
(a) BY EXECUTIVE. Executive may voluntarily terminate his
employment hereunder at any time, to be effective 60 days after
delivery to the Company of his signed, written resignation; Company
may accept said resignation and pay Executive in lieu of waiting for
passage of the notice period.
(b) BY COMPANY. Subject to the terms of this Paragraph and
Paragraph 5(c) below, the Company may terminate Executive's employment
hereunder, in its sole discretion, whether with or without just cause
(as defined in Paragraph 5(b)(ix) below and subject to the notice
periods described therein), at any time upon written notice to
Executive. If, prior to the end of the Term of this Agreement, the
Company terminates Executive's employment without just cause (as
defined in (ix) below), the Executive shall be entitled to receive, as
damages payable as a result of, and arising from, a breach of this
Agreement, the compensation and benefits set forth in (i) through (iv)
below. Except to the extent provided in (viii) below, Executive shall
not be required to mitigate damages by reducing the amounts he is
entitled to receive hereunder by earnings from subsequent employment.
The time periods in (i) through (iii) below shall be the lesser of the
36-month period stated therein or the time period remaining from the
date of Executive's termination to the end of the Term of this
Agreement.
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(i) BASE SALARY. The Executive will continue to receive
his current salary (subject to withholding of all applicable
taxes and any amounts referred to in paragraph (iii) below) for a
period of thirty-six (36) months from his date of termination in
the same manner as it was being paid as of the date of
termination. For purposes hereof, the Executive's "current
salary" shall be the highest rate in effect during the twelve-
month period prior to the Executive's termination.
(ii) BONUS. The Executive shall receive bonus payments from
the Company for the thirty-six (36) months following the month in
which his employment is terminated in an amount for each such
month equal to one-twelfth of the average ("Average Bonus") of
the bonuses earned by him for the three calendar years
immediately preceding the year in which such termination occurs.
Any bonus amounts that the Executive had previously earned from
the Company but which may not yet have been paid as of the date
of termination shall not be affected by this provision.
Executive shall also receive, within 60 days after the date of
his termination) a prorated bonus for any uncompleted fiscal year
at the date of termination equal to the Average Bonus multiplied
by the number of days he worked in such year divided by 365 days.
(iii) HEALTH AND LIFE INSURANCE COVERAGE. Any health
and life insurance benefits coverage (including any executive
medical plan) provided to the Executive at his date of
termination shall be continued by the Company at its expense at
the same level and in the same manner as if his employment had
not terminated (subject to the customary changes in such
coverages if the Executive retires under a Company retirement
plan, reaches age 65 or similar events and subject to Executive's
right to make any changes in such coverages that an active
employee is permitted to make), beginning on the date of such
termination and ending on the date thirty-six (36) months from
the date of such termination. Any additional coverages the
Executive had at termination, including dependent coverage, will
also be continued for such period on the same terms. Any costs
the Executive was paying for such coverages at the time of
termination shall be paid by the Executive by separate check
payable to the Company each month in advance. If the terms of
any benefit plan referred to in this paragraph do not permit
continued participation by the Executive, then the Company will
arrange for other coverage at its expense providing substantially
similar benefits. The coverages provided for in this paragraph
shall be applied against and reduce the period for which COBRA
will be provided.
(iv) STOCK OPTIONS. As of Executive's date of termination,
all outstanding stock options granted to Executive under the
Stock Option and Incentive Plan and any other Company stock
option plan shall become 100% vested and immediately exercisable.
To the extent necessary, the provisions of this paragraph (iv)
shall constitute an amendment of the Executive's stock option
agreements under the Stock Option Plans.
(v) EFFECT OF DEATH. In the event of the Executive's death
after his termination of employment by the Company under this
Paragraph 5(b), the benefits payable under (i) and (ii) of this
Paragraph 5(b) shall continue for a period of twelve (12) months,
or, if shorter, until the end of the Term of this Agreement;
provided, however, such payments will be paid in a lump sum
-3-<PAGE>
payment within 60 days following the Executive's death, to the
Executive's surviving spouse, or, if none, to the Executive's
estate. In addition, in the event of Executive's death, any
dependent coverage in effect under (iii) of this Paragraph 5(b)
shall continue at the Company's expense, for a period of 12
months, or, if shorter, until the end of the Term of this
Agreement.
(vi) Executive hereby agrees and acknowledges that if he
voluntarily resigns from his employment, or is terminated for
just cause, prior to the end of the Term of this Agreement, then
he shall be entitled to no payment or compensation whatsoever
from the Company under this Agreement, other than as may be due
him through his last day of employment.
(vii) Notwithstanding any provision of this Agreement to
the contrary, if Executive's employment is terminated (whether by
the Company or by Executive) under circumstances that would
entitle him to receive benefits under his agreement with the
Company providing compensation and benefits for terminations
following a "change in control" of the Company (as defined in
such agreement), then any such termination shall be treated under
this Agreement as a termination by the Company without just cause
and the Executive shall be entitled to the compensation and
benefits set forth in (i) through (iv) above for the time periods
provided in this Paragraph 5(b), and such amounts shall be
treated as damages payable as a result of, and arising from, a
breach of this Agreement.
(viii) If Executive becomes entitled to compensation and
benefits under this Paragraph 5(b) and such payments would be
considered to be severance payments contingent upon a change in
control under Internal Revenue Code Section 280G, Executive shall
be required to mitigate damages (but only with respect to amounts
that would be treated as severance payments under Code Section
280G) by reducing the amount of severance payments he is entitled
to receive by any compensation and benefits he earns from
subsequent employment (but shall not be required to seek such
employment).
(ix) For purposes of this Agreement, the phrase "for just
cause" shall mean: (A) Executive's material fraud, malfeasance,
gross negligence, or willful misconduct with respect to business
affairs of the Company which is directly or materially harmful to
the business or reputation of the Company or any subsidiary of
the Company; (B) Executive's conviction of or failure to contest
prosecution for a felony or a crime involving moral turpitude; or
(C) Executive's material breach of this Agreement. A termination
of Executive for just cause based on clause (A) or (C) of the
preceding sentence shall take effect 30 days after the Executive
receives from Company written notice of intent to terminate and
Company's description of the alleged cause, unless Executive
shall, during such 30-day period, remedy the events or
circumstances constituting cause; provided, however, that such
termination shall take effect immediately upon the giving of
written notice of termination of just cause under any clause if
the Company shall have determined in good faith that such events
or circumstances are not remediable (which determination shall be
stated in such notice).
-4-<PAGE>
(c) BY DEATH OR DISABILITY. If Executive's employment is
terminated due to Executive's death, the Executive's surviving spouse,
or if none, his estate, shall receive the benefits payable under (i)
and (ii) of Paragraph 5(b) above; provided, however, such payments
shall be for a period of 12 months rather than 36 months and such
payments shall be made in a lump sum payment within 60 days of the
Executive's death. In addition, if the Executive's dependents are
eligible to and actually elect to continue under COBRA any coverages
provided under Paragraph 5(b)(iii), the Company shall pay the cost of
such COBRA coverage for a period of 12 months following the date of
Executive's death. If Executive's employment is terminated due to
Executive's disability (as defined in the Company's long-term
disability plan or insurance policy, or if no such plan or policy, as
determined in good faith by the Company), Executive shall be entitled
to the benefits payable or to be provided under (i), (ii), (iii) and
(iv) of Paragraph 5(b); provided, however, the benefits under (i),
(ii) or (iii) of Paragraph 5(b) shall be payable or to be provided for
a period of 24 months. Executive or his estate, as the case may be,
shall not by operation of this paragraph forfeit any rights in which
he is vested at the time of his death or disability.
(d) Upon termination of Executive's employment for any reason
whatsoever (whether voluntary on the part of Executive, for just
cause, or other reasons), the obligations of Executive pursuant to
Paragraphs 6 and 7 hereof shall survive and remain in effect for the
periods described in Paragraph 6.
6. COMPETITION, CONFIDENTIALITY, AND NONSOLICITATION.
Executive agrees to be bound by the terms and conditions of the
Noncompetition Agreement attached hereto as Exhibit "A", which is
hereby made a part of this Agreement.
7. INJUNCTIVE RELIEF. The Executive acknowledges that his
services to be rendered to the Company are of a special and unusual
character which have a unique value to the Company, the loss of which
cannot adequately be compensated by damages in an action at law.
Executive further acknowledges that any breach of the terms of
Paragraph 6, including Exhibit "A", would result in material damage to
the Company, although it might be difficult to establish the monetary
value of the damage. Executive therefore agrees that the Company, in
addition to any other rights and remedies available to it, shall be
entitled to obtain an immediate injunction (whether temporary or
permanent) from any court of appropriate jurisdiction in the event of
any such breach thereof by Executive, or threatened breach which the
Company in good faith believes will or is likely to result in
irreparable harm to the Company. The existence of any claim or cause
of action by Executive against the Company, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of Executive's agreement under this
Paragraph and Paragraph 6 above.
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8. MISCELLANEOUS.
(a) NOTICE. Any notice or other communication required or
permitted under this Agreement shall be effective only if it is in
writing and shall be deemed to have been duly given when delivered
personally or seven days after mailing if mailed first class by
registered or certified mail, postage prepaid, addressed as follows:
If to the Company: Miller Industries, Inc.
P.O. Box 120
8503 Hilltop Drive
Ooltewah, Tennessee 37363
Attention: President
If to the Executive: Adam L. Dunayer
9123 Stoney Mountain Drive
Chattanooga, Tennessee 37421
or to such other address as any party may designate by notice to the
others.
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the Executive's
employment by the Company, and supersedes and is in full substitution
for any and all prior understandings or agreements with respect to the
Executive's employment.
(c) AMENDMENT. This Agreement may be amended only by an
instrument in writing signed by the parties hereto, and any provision
hereof may be waived only by an instrument in writing signed by the
party or parties against whom or which enforcement of such waiver is
sought. The failure of either party hereto to comply with any
provision hereof shall in no way affect the full right to require such
performance at any time thereafter, nor shall the waiver by either
party hereto of a breach of any provision hereof be taken or held to
be a waiver of any succeeding breach of such provision, or a waiver of
the provision itself, or a waiver of any other provision of this
Agreement.
(d) BINDING EFFECT. This Agreement is binding on and is for the
benefit of the parties hereto and their respective successors, heirs,
executors, administrators and other legal representatives. Neither
this Agreement nor any right or obligation hereunder may be assigned
by the Executive or the Company, except for assignment by the Company
to any wholly owned subsidiary.
(e) SEVERABILITY AND MODIFICATION. If any provision of this
Agreement or portion thereof is so broad, in scope or duration, so as
to be unenforceable, such provision or portion thereof shall be
interpreted to be only so broad as is enforceable. In addition, to
the extent that any provision of this Agreement as applied to either
party or to any circumstances shall be adjudged by a court of
competent jurisdiction to be void or unenforceable, the same shall in
no way affect any other provision of this Agreement or the validity or
enforceability of this Agreement.
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(e) INTERPRETATION. This Agreement shall be interpreted,
construed and governed by and under the laws of the State of
Tennessee. Each party irrevocably (i) consents to the exclusive
jurisdiction and venue of the courts of Hamilton County, State of
Tennessee and federal courts in the Eastern District of Tennessee, in
any action arising under or relating to this Agreement (including
Exhibit "A" hereto), and (ii) waives any jurisdictional defenses
(including personal jurisdiction and venue) to any such action. If
any provision of this Agreement is deemed or held to be illegal,
invalid, or unenforceable under present or future laws effective
during the term hereof, this Agreement shall be considered divisible
and inoperative as to such provision to the extent it is deemed to be
illegal, invalid or unenforceable, and in all other respects this
Agreement shall remain in full force and effect; provided, however,
that if any provision of this Agreement is deemed or held to be
illegal, invalid or unenforceable there shall be added hereto
automatically a provision as similar as possible to such illegal,
invalid or unenforceable provision as shall be legal, valid or
enforceable. Further, should any provision contained in this
Agreement ever be reformed or rewritten by any judicial body of
competent jurisdiction, such provision as so reformed or rewritten
shall be binding upon the Executive and the Company.
(g) FAILURE TO ENFORCE. The failure of either party hereto at
any time, or for any period of time, to enforce any of the provisions
of this Agreement shall not be construed as a waiver of such
provision(s) or of the right of such party hereafter to enforce each
and every such provision.
(h) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
(i) NO CONFLICTING AGREEMENT. The Executive represents and
warrants that he is not party to any agreement, contract or
understanding which would prohibit him from entering into this
Agreement or performing fully his obligations hereunder.
IN WITNESS WHEREOF, the Company and the Executive have executed
this Agreement as of the date first written above.
EXECUTIVE
/s/ Adam Dunayer
Adam L. Dunayer
MILLER INDUSTRIES, INC.
By: /s/ Jeffrey I. Badley
Its President
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EXHIBIT "A"
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is entered into this _____ day of September,
1998, between Miller Industries, Inc. (the "Company") and Adam L. Dunayer
(the "Executive") contemporaneously with and as part of the Employment
Agreement between the parties to which this Noncompetition Agreement is
attached.
Reasons for this Noncompetition Agreement: During Executive's relationship
with the Company Executive has learned, will learn, or has or will have
access to, important proprietary information related to the manufacturing
and distribution of towing and recovery equipment, and towing services
(collectively, the "Company's Business"). Executive acknowledges that the
proprietary customer, operations, financial, and business information that
has been or will be learned or accessible has been and will be developed
through the Company's expenditure of substantial effort, time and money; and
together with relationships developed with customers and employees, could be
used to compete unfairly with the Company. The Company's ability to sell
its products on a competitive basis depends, in part, on its proprietary
information and customer relationships, and the Company would not share this
information, provide training or promote Executive's relationship with
customers if the Company believed that it would be used in competition with
the Company, which non-disclosure would cause Executive's performance and
opportunities to suffer.
In consideration of employment or continued employment and other valuable
consideration, the receipt and sufficiency of which are acknowledged, the
Company and Executive agree:
1. Definitions: - For this Agreement, the following terms shall have the
meaning specified below:
(a) Person: - any individual, corporation, limited liability company,
partnership, joint venture, association, unincorporated organization or
other entity.
(b) Termination Date: - the date of Executive's termination of
employment from the Company, whether such termination is voluntary or
involuntary, whether with or without cause, and whether before or after the
expiration of the Term of the Executive's Employment Agreement.
(c) Customers: - all Persons (i) that Executive solicited or contacted
on behalf of the Company; (ii) whose dealings with the Company were
coordinated or supervised, in whole or in part, by Executive; or (iii) about
whom Executive possessed Confidential Information, in each case during the
one-year period immediately prior to the Executive's Termination Date.
(d) Confidential Information: - information, without regard to form,
relating to the Company's customers, operation, finances, and business that
derives value, actual or potential, from not being generally known to other
Persons, including, but not limited to, technical or nontechnical data,
formulas, patterns, compilations (including compilations of customer
information), programs (including fulfillment and marketing programs),
devices, methods (including fulfillment methods), techniques, processes,
financial data (including sales forecasts), or lists of actual or potential
customers or suppliers (including identifying information about those
customers), whether or not reduced to writing. Confidential Information
includes information disclosed to the Company by third parties that the
Company is obligated to maintain as confidential. Confidential Information
<PAGE>
subject to this Agreement may include information that is not a trade secret
under applicable law, but information not constituting a trade secret only
shall be treated as Confidential Information under this Agreement for a two
year period after the Termination Date.
(e) Territory: - the term "Territory" as used in this Agreement means
the continental United States. Executive acknowledges that Executive will
provide services to Company and will have a substantial impact on the
Company's Business throughout the Territory.
(f) Competing Business: - any Person (other than the Company)
providing or offering goods or services identical to or reasonably
substitutable for the Company's Business.
2. Confidential Information: - Executive shall use best efforts to protect
Confidential Information. During or after association with the Company,
Executive will not use or disclose any of the Company's Confidential
Information except in connection with his duties performed in accordance
with his Employment Agreement or except with the prior written consent of
the Chairman of the Board of the Company; provided, however, Executive may
make disclosures required by a valid order or subpoena issued by a court or
administrative agency of competent jurisdiction, in which event Executive
will promptly notify the Company of such order or subpoena to provide the
Company an opportunity to protect its interests.
3. Return of Materials: - On the Termination Date or for any reason or at
any time at the Company's request, Executive will deliver promptly to the
Company all materials, documents, plans, records, notes, or other papers and
any copies in Executive's possession or control relating in any way to the
Company's Business, which at all times shall be the property of the Company.
4. Solicitation of Employees: - During employment and for a period of 24
months following his Termination Date, Executive will not solicit or induce
or in any manner attempt to solicit or induce, any person employed by the
Company to leave such employment, whether or not such employment is pursuant
to a written contract with the Company or at will.
5. Solicitation of Customers: - During employment and for a period of 24
months following his Termination Date, Executive will not solicit Customers
for the purpose of providing or offering products or services identical to
or reasonably substitutable for the Company's Business.
6. Limitations on Post-Termination Competition: - During employment and for
a period of 24 months following his Termination Date, Executive will not,
within the Territory, be employed or engaged by a Competing Business as a
director, executive, officer, manager, consultant or equivalent position.
2
<PAGE>
7. Notwithstanding any provision of this Agreement to the contrary, if
Executive's employment is terminated (whether by the Company or by
Executive) under circumstances that would entitle him to receive benefits
under his agreement with the Company providing compensation and benefits for
terminations following a "change in control" of the Company (as defined in
such agreement), then the time periods in Paragraphs 5 and 6 above shall be
reduced to 12 months.
8. Disparagement: - Executive shall not at any time make false, misleading
or disparaging statements about the Company, including its products,
management, employees, and customers.
9. Ownership of Confidential Information. The Executive hereby agrees that
any and all improvements, inventions, discoveries, formulas, processes,
methods, know-how, confidential data, trade secrets and other proprietary
information (collectively "Work Product") within the scope of any business
of the Company or any affiliate which the Executive may conceive or make or
has conceived or made during his employment with the Company shall be and
are the sole and exclusive property of the Company, and that the Executive
shall, whenever requested to do so by the Company, at its expense, execute
and sign any and all applications, assignments or other instruments and do
all other things which the Company may deem necessary or appropriate (i) in
order to apply for, obtain, maintain, enforce or defend letters patent of
the United States or any foreign country for any Work Product, or (ii) in
order to assign, transfer, convey or otherwise make available to the Company
the sole and exclusive right, title and interest in and to any Work Product.
10. Interpretation; Severability: - Rights and restrictions in this
Agreement may be exercised and are applicable only to the extent they do not
violate any applicable laws, and are intended to be limited to the extent
necessary so they will not render this Agreement illegal, invalid, or
unenforceable. If any term shall be held illegal, invalid, or unenforceable
by a court of competent jurisdiction, the remaining terms shall remain in
full force and effect. This Agreement does not in any way limit the
Company's rights under the laws of unfair competition, trade secret,
copyright, patent, trademark or any other applicable laws(s), which are in
addition to rights under this Agreement. The existence of a claim by
Executive, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the Company's enforcement of this Agreement.
3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered
into effective as of the 11th day of September, 1998 (the "Effective
Date"), by and between Miller Industries, Inc., a corporation
organized under the laws of the State of Tennessee, USA (the
"Company"), and Frank Madonia (the "Executive").
For and in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions of this
Agreement, Executive shall be employed by the Company as Executive
Vice President, General Counsel and Secretary of the Company, and
shall perform such duties and functions for the Company and any
company controlling, controlled by or under common control with the
Company (such companies hereinafter collectively called "Affiliates")
as shall be specified from time to time by the Chief Executive Officer
("CEO") or the Board of Directors of the Company; Executive hereby
accepts such employment and agrees to perform such executive duties as
may be assigned to him.
2. DUTIES. Executive shall devote his full business related
time and best efforts to accomplishing such executive duties at such
locations as may be requested by the CEO or Board of Directors of the
Company. While employed by the Company, Executive shall not serve as
a principal, partner, employee, officer or director of, or consultant
to, any other business or entity conducting business for profit
without the prior written approval of the CEO of the Company. In
addition, under no circumstances will Executive have any financial
interest in any competitor of the Company; provided, however, that
Executive may invest in no more than 2% of the outstanding stock or
securities of any competitor whose stock or securities are traded on a
national stock exchange of any country.
3. TERM. The term of this Agreement shall be for a
rolling, three (3) year term commencing on the date hereof, and shall
be deemed automatically (without further action by either the Company
or the Executive) to extend each day for an additional day such that
the remaining term of the Agreement shall continue to be three (3)
years; provided, however, that on Executive's 62nd birthday this
Agreement shall cease to extend automatically and, on such date, the
remaining "term" of this Agreement shall be three (3) years; provided
further, that the Company may, by notice to the Executive, cause this
Agreement to cease to extend automatically and, upon such notice, the
"Term" of this Agreement shall be three (3) years following such
notice; and provided further, that the automatic extension shall not
extend beyond any anniversary of the Effective Date of this Agreement
unless the Company notifies the Executive in writing prior to such
anniversary date that it elects to extend such automatic extension
until the next anniversary date.
4. COMPENSATION AND BENEFITS. As compensation for his
services during the Term of this Agreement, Executive shall be paid
and receive the amounts and benefits set forth in subsections (a),
(b), (c) and (d) below:
<PAGE>
(a) BASE SALARY. An annual base salary ("Base Salary") of $165,000
prorated for any partial year of employment. Executive's Base Salary
shall be subject to annual review, commencing as of the first
anniversary of the Effective Date of this Agreement, for adjustments
at such time as the Company conducts salary reviews for its executive
officers generally. Executive's salary shall be payable in accordance
with the Company's regular payroll practices in effect from time to
time for executive officers of the Company.
(b) BONUS. In addition to the Base Salary, the Executive shall
be entitled to participate in any of the Company's present and future
stock or cash based bonus plans that are generally available to its
executive officers, as such plans may exist or be changed from time to
time at the discretion of the Company
(c) OTHER BENEFITS. Executive shall be entitled to vacation
with pay, life insurance, health insurance, fringe benefits, and such
other employee benefits generally made available by the Company to its
executive officers, in accordance with the established plans and
policies of the Company, as in effect from time to time.
(d) STOCK OPTIONS. As of the Effective Date of this Agreement,
Executive is hereby granted 90,000 options under the Miller
Industries, Inc. Stock Option and Incentive Plan ("Stock Option
Plan"). The exercise price of the options will be the fair market
value of a share of stock on the Effective Date, as determined under
the Stock Option Plan. The terms and conditions of the options will
be set forth in the Stock Option Agreement in accordance with the
Stock Option Plan. This grant of 90,000 stock options is intended to
be the entire grant of stock options to the Executive for the initial
3-year term of this Agreement; provided, however, the Company may, in
its discretion, grant Executive additional options during this initial
3-year period.
5. TERMINATION.
(a) BY EXECUTIVE. Executive may voluntarily terminate his
employment hereunder at any time, to be effective 60 days after
delivery to the Company of his signed, written resignation; Company
may accept said resignation and pay Executive in lieu of waiting for
passage of the notice period.
(b) BY COMPANY. Subject to the terms of this Paragraph and
Paragraph 5(c) below, the Company may terminate Executive's employment
hereunder, in its sole discretion, whether with or without just cause
(as defined in Paragraph 5(b)(ix) below and subject to the notice
periods described therein), at any time upon written notice to
Executive. If, prior to the end of the Term of this Agreement, the
Company terminates Executive's employment without just cause (as
defined in (ix) below), the Executive shall be entitled to receive, as
damages payable as a result of, and arising from, a breach of this
Agreement, the compensation and benefits set forth in (i) through (iv)
below. Except to the extent provided in (viii) below, Executive shall
not be required to mitigate damages by reducing the amounts he is
entitled to receive hereunder by earnings from subsequent employment.
The time periods in (i) through (iii) below shall be the lesser of the
36-month period stated therein or the time period remaining from the
date of Executive's termination to the end of the Term of this
Agreement.
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(i) BASE SALARY. The Executive will continue to receive
his current salary (subject to withholding of all applicable
taxes and any amounts referred to in paragraph (iii) below) for a
period of thirty-six (36) months from his date of termination in
the same manner as it was being paid as of the date of
termination. For purposes hereof, the Executive's "current
salary" shall be the highest rate in effect during the twelve-
month period prior to the Executive's termination.
(ii) BONUS. The Executive shall receive bonus payments from
the Company for the thirty-six (36) months following the month in
which his employment is terminated in an amount for each such
month equal to one-twelfth of the average ("Average Bonus") of
the bonuses earned by him for the three calendar years
immediately preceding the year in which such termination occurs.
Any bonus amounts that the Executive had previously earned from
the Company but which may not yet have been paid as of the date
of termination shall not be affected by this provision.
Executive shall also receive, within 60 days after the date of
his termination) a prorated bonus for any uncompleted fiscal year
at the date of termination equal to the Average Bonus multiplied
by the number of days he worked in such year divided by 365 days.
(iii) HEALTH AND LIFE INSURANCE COVERAGE. Any health
and life insurance benefits coverage (including any executive
medical plan) provided to the Executive at his date of
termination shall be continued by the Company at its expense at
the same level and in the same manner as if his employment had
not terminated (subject to the customary changes in such
coverages if the Executive retires under a Company retirement
plan, reaches age 65 or similar events and subject to Executive's
right to make any changes in such coverages that an active
employee is permitted to make), beginning on the date of such
termination and ending on the date thirty-six (36) months from
the date of such termination. Any additional coverages the
Executive had at termination, including dependent coverage, will
also be continued for such period on the same terms. Any costs
the Executive was paying for such coverages at the time of
termination shall be paid by the Executive by separate check
payable to the Company each month in advance. If the terms of
any benefit plan referred to in this paragraph do not permit
continued participation by the Executive, then the Company will
arrange for other coverage at its expense providing substantially
similar benefits. The coverages provided for in this paragraph
shall be applied against and reduce the period for which COBRA
will be provided.
(iv) STOCK OPTIONS. As of Executive's date of termination,
all outstanding stock options granted to Executive under the
Stock Option and Incentive Plan and any other Company stock
option plan shall become 100% vested and immediately exercisable.
To the extent necessary, the provisions of this paragraph (iv)
shall constitute an amendment of the Executive's stock option
agreements under the Stock Option Plans.
(v) EFFECT OF DEATH. In the event of the Executive's death
after his termination of employment by the Company under this
Paragraph 5(b), the benefits payable under (i) and (ii) of this
Paragraph 5(b) shall continue for a period of twelve (12) months,
or, if shorter, until the end of the Term of this Agreement;
provided, however, such payments will be paid in a lump sum
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payment within 60 days following the Executive's death, to the
Executive's surviving spouse, or, if none, to the Executive's
estate. In addition, in the event of Executive's death, any
dependent coverage in effect under (iii) of this Paragraph 5(b)
shall continue at the Company's expense, for a period of 12
months, or, if shorter, until the end of the Term of this
Agreement.
(vi) Executive hereby agrees and acknowledges that if he
voluntarily resigns from his employment, or is terminated for
just cause, prior to the end of the Term of this Agreement, then
he shall be entitled to no payment or compensation whatsoever
from the Company under this Agreement, other than as may be due
him through his last day of employment.
(vii) Notwithstanding any provision of this Agreement to
the contrary, if Executive's employment is terminated (whether by
the Company or by Executive) under circumstances that would
entitle him to receive benefits under his agreement with the
Company providing compensation and benefits for terminations
following a "change in control" of the Company (as defined in
such agreement), then any such termination shall be treated under
this Agreement as a termination by the Company without just cause
and the Executive shall be entitled to the compensation and
benefits set forth in (i) through (iv) above for the time periods
provided in this Paragraph 5(b), and such amounts shall be
treated as damages payable as a result of, and arising from, a
breach of this Agreement.
(viii) If Executive becomes entitled to compensation and
benefits under this Paragraph 5(b) and such payments would be
considered to be severance payments contingent upon a change in
control under Internal Revenue Code Section 280G, Executive shall
be required to mitigate damages (but only with respect to amounts
that would be treated as severance payments under Code Section
280G) by reducing the amount of severance payments he is entitled
to receive by any compensation and benefits he earns from
subsequent employment (but shall not be required to seek such
employment).
(ix) For purposes of this Agreement, the phrase "for just
cause" shall mean: (A) Executive's material fraud, malfeasance,
gross negligence, or willful misconduct with respect to business
affairs of the Company which is directly or materially harmful to
the business or reputation of the Company or any subsidiary of
the Company; (B) Executive's conviction of or failure to contest
prosecution for a felony or a crime involving moral turpitude; or
(C) Executive's material breach of this Agreement. A termination
of Executive for just cause based on clause (A) or (C) of the
preceding sentence shall take effect 30 days after the Executive
receives from Company written notice of intent to terminate and
Company's description of the alleged cause, unless Executive
shall, during such 30-day period, remedy the events or
circumstances constituting cause; provided, however, that such
termination shall take effect immediately upon the giving of
written notice of termination of just cause under any clause if
the Company shall have determined in good faith that such events
or circumstances are not remediable (which determination shall be
stated in such notice).
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(c) BY DEATH OR DISABILITY. If Executive's employment is
terminated due to Executive's death, the Executive's surviving spouse,
or if none, his estate, shall receive the benefits payable under (i)
and (ii) of Paragraph 5(b) above; provided, however, such payments
shall be for a period of 12 months rather than 36 months and such
payments shall be made in a lump sum payment within 60 days of the
Executive's death. In addition, if the Executive's dependents are
eligible to and actually elect to continue under COBRA any coverages
provided under Paragraph 5(b)(iii), the Company shall pay the cost of
such COBRA coverage for a period of 12 months following the date of
Executive's death. If Executive's employment is terminated due to
Executive's disability (as defined in the Company's long-term
disability plan or insurance policy, or if no such plan or policy, as
determined in good faith by the Company), Executive shall be entitled
to the benefits payable or to be provided under (i), (ii), (iii) and
(iv) of Paragraph 5(b); provided, however, the benefits under (i),
(ii) or (iii) of Paragraph 5(b) shall be payable or to be provided for
a period of 24 months. Executive or his estate, as the case may be,
shall not by operation of this paragraph forfeit any rights in which
he is vested at the time of his death or disability.
(d) Upon termination of Executive's employment for any reason
whatsoever (whether voluntary on the part of Executive, for just
cause, or other reasons), the obligations of Executive pursuant to
Paragraphs 6 and 7 hereof shall survive and remain in effect for the
periods described in Paragraph 6.
6. COMPETITION, CONFIDENTIALITY, AND NONSOLICITATION.
Executive agrees to be bound by the terms and conditions of the
Noncompetition Agreement attached hereto as Exhibit "A", which is
hereby made a part of this Agreement.
7. INJUNCTIVE RELIEF. The Executive acknowledges that his
services to be rendered to the Company are of a special and unusual
character which have a unique value to the Company, the loss of which
cannot adequately be compensated by damages in an action at law.
Executive further acknowledges that any breach of the terms of
Paragraph 6, including Exhibit "A", would result in material damage to
the Company, although it might be difficult to establish the monetary
value of the damage. Executive therefore agrees that the Company, in
addition to any other rights and remedies available to it, shall be
entitled to obtain an immediate injunction (whether temporary or
permanent) from any court of appropriate jurisdiction in the event of
any such breach thereof by Executive, or threatened breach which the
Company in good faith believes will or is likely to result in
irreparable harm to the Company. The existence of any claim or cause
of action by Executive against the Company, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of Executive's agreement under this
Paragraph and Paragraph 6 above.
8. MISCELLANEOUS.
(a) Notice. Any notice or other communication required or
permitted under this Agreement shall be effective only if it is in
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writing and shall be deemed to have been duly given when delivered
personally or seven days after mailing if mailed first class by
registered or certified mail, postage prepaid, addressed as follows:
If to the Company: Miller Industries, Inc.
P.O. Box 120
8503 Hilltop Drive
Ooltewah, Tennessee 37363
Attention: President
If to the Executive: Frank Madonia
932 St. Lyonn Courts
Marietta, Georgia 30068
or to such other address as any party may designate by notice to the
others.
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the Executive's
employment by the Company, and supersedes and is in full substitution
for any and all prior understandings or agreements with respect to the
Executive's employment.
(c) AMENDMENT. This Agreement may be amended only by an
instrument in writing signed by the parties hereto, and any provision
hereof may be waived only by an instrument in writing signed by the
party or parties against whom or which enforcement of such waiver is
sought. The failure of either party hereto to comply with any
provision hereof shall in no way affect the full right to require such
performance at any time thereafter, nor shall the waiver by either
party hereto of a breach of any provision hereof be taken or held to
be a waiver of any succeeding breach of such provision, or a waiver of
the provision itself, or a waiver of any other provision of this
Agreement.
(d) BINDING EFFECT. This Agreement is binding on and is for the
benefit of the parties hereto and their respective successors, heirs,
executors, administrators and other legal representatives. Neither
this Agreement nor any right or obligation hereunder may be assigned
by the Executive or the Company, except for assignment by the Company
to any wholly owned subsidiary.
(e) SEVERABILITY AND MODIFICATION. If any provision of this
Agreement or portion thereof is so broad, in scope or duration, so as
to be unenforceable, such provision or portion thereof shall be
interpreted to be only so broad as is enforceable. In addition, to
the extent that any provision of this Agreement as applied to either
party or to any circumstances shall be adjudged by a court of
competent jurisdiction to be void or unenforceable, the same shall in
no way affect any other provision of this Agreement or the validity or
enforceability of this Agreement.
(f) INTERPRETATION. This Agreement shall be interpreted,
construed and governed by and under the laws of the State of
Tennessee. Each party irrevocably (i) consents to the exclusive
jurisdiction and venue of the courts of Hamilton County, State of
Tennessee and federal courts in the Eastern District of Tennessee, in
any action arising under or relating to this Agreement (including
Exhibit "A" hereto), and (ii) waives any jurisdictional defenses
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(including personal jurisdiction and venue) to any such action. If
any provision of this Agreement is deemed or held to be illegal,
invalid, or unenforceable under present or future laws effective
during the term hereof, this Agreement shall be considered divisible
and inoperative as to such provision to the extent it is deemed to be
illegal, invalid or unenforceable, and in all other respects this
Agreement shall remain in full force and effect; provided, however,
that if any provision of this Agreement is deemed or held to be
illegal, invalid or unenforceable there shall be added hereto
automatically a provision as similar as possible to such illegal,
invalid or unenforceable provision as shall be legal, valid or
enforceable. Further, should any provision contained in this
Agreement ever be reformed or rewritten by any judicial body of
competent jurisdiction, such provision as so reformed or rewritten
shall be binding upon the Executive and the Company.
(g) FAILURE TO ENFORCE. The failure of either party hereto at
any time, or for any period of time, to enforce any of the provisions
of this Agreement shall not be construed as a waiver of such
provision(s) or of the right of such party hereafter to enforce each
and every such provision.
(h) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
(i) NO CONFLICTING AGREEMENT. The Executive represents and
warrants that he is not party to any agreement, contract or
understanding which would prohibit him from entering into this
Agreement or performing fully his obligations hereunder.
IN WITNESS WHEREOF, the Company and the Executive have executed
this Agreement as of the date first written above.
EXECUTIVE
/s/ Frank Madonia
Frank Madonia
MILLER INDUSTRIES, INC.
By: /s/ Jeffrey I. Badgley
Its President
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EXHIBIT "A"
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is entered into this _____ day of September,
1998, between Miller Industries, Inc. (the "Company") and Frank Madonia
(the "Executive") contemporaneously with and as part of the Employment
Agreement between the parties to which this Noncompetition Agreement is
attached.
Reasons for this Noncompetition Agreement: During Executive's relationship
with the Company Executive has learned, will learn, or has or will have
access to, important proprietary information related to the manufacturing
and distribution of towing and recovery equipment, and towing services
(collectively, the "Company's Business"). Executive acknowledges that the
proprietary customer, operations, financial, and business information that
has been or will be learned or accessible has been and will be developed
through the Company's expenditure of substantial effort, time and money; and
together with relationships developed with customers and employees, could be
used to compete unfairly with the Company. The Company's ability to sell
its products on a competitive basis depends, in part, on its proprietary
information and customer relationships, and the Company would not share this
information, provide training or promote Executive's relationship with
customers if the Company believed that it would be used in competition with
the Company, which non-disclosure would cause Executive's performance and
opportunities to suffer.
In consideration of employment or continued employment and other valuable
consideration, the receipt and sufficiency of which are acknowledged, the
Company and Executive agree:
1. Definitions: - For this Agreement, the following terms shall have the
meaning specified below:
(a) Person: - any individual, corporation, limited liability company,
partnership, joint venture, association, unincorporated organization or
other entity.
(b) Termination Date: - the date of Executive's termination of
employment from the Company, whether such termination is voluntary or
involuntary, whether with or without cause, and whether before or after the
expiration of the Term of the Executive's Employment Agreement.
(c) Customers: - all Persons (i) that Executive solicited or contacted
on behalf of the Company; (ii) whose dealings with the Company were
coordinated or supervised, in whole or in part, by Executive; or (iii) about
whom Executive possessed Confidential Information, in each case during the
one-year period immediately prior to the Executive's Termination Date.
(d) Confidential Information: - information, without regard to form,
relating to the Company's customers, operation, finances, and business that
derives value, actual or potential, from not being generally known to other
Persons, including, but not limited to, technical or nontechnical data,
formulas, patterns, compilations (including compilations of customer
information), programs (including fulfillment and marketing programs),
devices, methods (including fulfillment methods), techniques, processes,
financial data (including sales forecasts), or lists of actual or potential
customers or suppliers (including identifying information about those
customers), whether or not reduced to writing. Confidential Information
includes information disclosed to the Company by third parties that the
Company is obligated to maintain as confidential. Confidential Information
<PAGE>
subject to this Agreement may include information that is not a trade secret
under applicable law, but information not constituting a trade secret only
shall be treated as Confidential Information under this Agreement for a two
year period after the Termination Date.
(e) Territory: - the term "Territory" as used in this Agreement means
the continental United States. Executive acknowledges that Executive will
provide services to Company and will have a substantial impact on the
Company's Business throughout the Territory.
(f) Competing Business: - any Person (other than the Company)
providing or offering goods or services identical to or reasonably
substitutable for the Company's Business.
2. Confidential Information: - Executive shall use best efforts to protect
Confidential Information. During or after association with the Company,
Executive will not use or disclose any of the Company's Confidential
Information except in connection with his duties performed in accordance
with his Employment Agreement or except with the prior written consent of
the Chairman of the Board of the Company; provided, however, Executive may
make disclosures required by a valid order or subpoena issued by a court or
administrative agency of competent jurisdiction, in which event Executive
will promptly notify the Company of such order or subpoena to provide the
Company an opportunity to protect its interests.
3. Return of Materials: - On the Termination Date or for any reason or at
any time at the Company's request, Executive will deliver promptly to the
Company all materials, documents, plans, records, notes, or other papers and
any copies in Executive's possession or control relating in any way to the
Company's Business, which at all times shall be the property of the Company.
4. Solicitation of Employees: - During employment and for a period of 24
months following his Termination Date, Executive will not solicit or induce
or in any manner attempt to solicit or induce, any person employed by the
Company to leave such employment, whether or not such employment is pursuant
to a written contract with the Company or at will.
5. Solicitation of Customers: - During employment and for a period of 24
months following his Termination Date, Executive will not solicit Customers
for the purpose of providing or offering products or services identical to
or reasonably substitutable for the Company's Business.
6. Limitations on Post-Termination Competition: - During employment and for
a period of 24 months following his Termination Date, Executive will not,
within the Territory, be employed or engaged by a Competing Business as a
director, executive, officer, manager, consultant or equivalent position.
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7. Notwithstanding any provision of this Agreement to the contrary, if
Executive's employment is terminated (whether by the Company or by
Executive) under circumstances that would entitle him to receive benefits
under his agreement with the Company providing compensation and benefits for
terminations following a "change in control" of the Company (as defined in
such agreement), then the time periods in Paragraphs 5 and 6 above shall be
reduced to 12 months.
8. Disparagement: - Executive shall not at any time make false, misleading
or disparaging statements about the Company, including its products,
management, employees, and customers.
9. Ownership of Confidential Information. The Executive hereby agrees that
any and all improvements, inventions, discoveries, formulas, processes,
methods, know-how, confidential data, trade secrets and other proprietary
information (collectively "Work Product") within the scope of any business
of the Company or any affiliate which the Executive may conceive or make or
has conceived or made during his employment with the Company shall be and
are the sole and exclusive property of the Company, and that the Executive
shall, whenever requested to do so by the Company, at its expense, execute
and sign any and all applications, assignments or other instruments and do
all other things which the Company may deem necessary or appropriate (i) in
order to apply for, obtain, maintain, enforce or defend letters patent of
the United States or any foreign country for any Work Product, or (ii) in
order to assign, transfer, convey or otherwise make available to the Company
the sole and exclusive right, title and interest in and to any Work Product.
10. Interpretation; Severability: - Rights and restrictions in this
Agreement may be exercised and are applicable only to the extent they do not
violate any applicable laws, and are intended to be limited to the extent
necessary so they will not render this Agreement illegal, invalid, or
unenforceable. If any term shall be held illegal, invalid, or unenforceable
by a court of competent jurisdiction, the remaining terms shall remain in
full force and effect. This Agreement does not in any way limit the
Company's rights under the laws of unfair competition, trade secret,
copyright, patent, trademark or any other applicable laws(s), which are in
addition to rights under this Agreement. The existence of a claim by
Executive, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the Company's enforcement of this Agreement.
3
AGREEMENT
THIS AGREEMENT (the "Agreement"), effective this 11th day of
September, 1998 (the "Effective Date"), by and between MILLER
INDUSTRIES, INC., a Tennessee corporation (the "Company"), and Jeffrey
I. Badgley (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the
event of any Change in Control of the Company, and to induce its key
employees to remain employed by the Company, and the Executive is a
key employee of the Company and an integral part of its management;
and
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive reasonably could expect
to receive in the absence of a Change in Control of the Company, and
this Agreement accordingly will be operative only upon circumstances
relating to a Change in Control of the Company, as set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants herein contained, the parties hereby agree as
follows:
I. OPERATION OF AGREEMENT.
This Agreement shall be effective immediately upon its execution
by the parties hereto, but anything in this Agreement to the contrary
notwithstanding, neither this Agreement nor any provision hereof shall
be operative unless, during the term of this Agreement, there has been
a Change in Control of the Company, as defined in Article III below.
Immediately upon such an occurrence, all of the provisions hereof
shall become operative.
II. TERM OF AGREEMENT.
The term of this Agreement shall be for a rolling, three (3) year
term commencing on the date hereof, and shall be deemed automatically
(without further action by either the Company or the Executive) to
extend each day for an additional day such that the remaining term of
the Agreement shall continue to be three (3) years; provided, however,
that on Executive's 62nd birthday this Agreement shall cease to extend
automatically and, on such date, the remaining "term" of this
Agreement shall be three (3) years; provided further, that the Company
may, by notice to the Executive, cause this Agreement to cease to
extend automatically and, upon such notice, the "Term" of this
Agreement shall be three (3) years following such notice; and provided
further, that the automatic extension shall not extend beyond any
anniversary of the Effective Date of this Agreement unless the Company
notifies the Executive in writing prior to such anniversary date that
it elects to extend such automatic extension until the next
anniversary date.
<PAGE>
DEFINITIONS.
1. Base Amount - The term "Base Amount" shall have the same
meaning as ascribed to it under Section 280G(b)(3) of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Board or Board of Directors - The Board of Directors of
Miller Industries, Inc., or its successor.
3. Cause - The Term "Cause" as used herein shall mean: (i)
Executive's material fraud, malfeasance, gross negligence, or willful
misconduct with respect to business affairs of the Company which is
directly or materially harmful to the business or reputation of the
Company or any subsidiary of the Company, or (ii) Executive's
conviction of or failure to contest prosecution for a felony or a
crime involving moral turpitude. A termination of Executive for
"Cause" based on clause (i) of the preceding sentence shall take
effect thirty (30) days after the Company gives written notice of such
termination to Executive specifying the conduct deemed to qualify as
Cause, unless Executive shall, during such 30-day period, remedy the
events or circumstances constituting cause to the reasonable
satisfaction of the Company. A termination for Cause based on clause
(ii) above shall take effect immediately upon giving of the
termination notice.
4. Change in Control - The term "Change in Control" as used
herein shall mean:
(a) the acquisition, directly or indirectly, by any "person" (as
such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) of securities of the Company
representing an aggregate of forty percent (40%) or more of the
combined voting power of the Company's then outstanding securities
(excluding the acquisition by persons who own such amount of
securities on the date hereof, or acquisitions by persons who acquire
such amount through inheritance or gift); or
(b) the date of any transfer or sale of securities by
William G. Miller if, immediately after such sale or transfer, William
G. Miller ceases to own at least 5% of the combined voting power of
the Company's then outstanding securities; or
(c) when, during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board
of Directors of the Company, cease for any reason to constitute at
least a majority thereof, provided, however, that a director who was
not a director at the beginning of such period shall be deemed to have
satisfied the two-year requirement if such director was elected by, or
on the recommendation of or with the approval of, at least three-
quarters of the directors who were directors at the beginning of such
period (either actually or by prior operation of this Section 4(c));
or
(d) consummation of (i) a merger, consolidation or other
business combination of the Company with any other "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) or affiliate thereof, other than a merger,
consolidation or business combination which would result in the
outstanding common stock of the Company immediately prior thereto
continuing to represent (either by remaining outstanding or by being
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converted into common stock of the surviving entity or a parent or
affiliate thereof) at least fifty percent (50%) of the outstanding
common stock of the Company (or such surviving entity or parent or
affiliate thereof) that is outstanding immediately after such merger,
consolidation or business combination, or (ii) a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(e) when, through a sale, transfer or other disposition, the
Company significantly reduces or ceases its operations in either the
towing and recovery equipment manufacturing and distribution industry
segment or the towing services industry segment, where a significant
reduction means a disposition of at least eighty percent (80%) of the
identifiable assets used in such industry segment; or
(f) the occurrence of any other event or circumstance which is
not covered by (a) through (e) above which the Board of the Company
determines affects control of the Company and adopts a resolution that
such event or circumstance constitutes a Change in Control for the
purposes of this Agreement."
5. Disability - The term "Disability" shall mean the
Executive's inability as a result of physical or mental incapacity to
substantially perform his duties for the Company on a full-time basis
for a period of six (6) months.
6. Excess Severance Payment - The term "Excess Severance
Payment" shall have the same meaning as the term "excess parachute
payment" defined in Section 280G(b)(1) of the Code.
7. Severance Payment - The term "Severance Payment" shall have
the same meaning as the term "parachute payment" defined in Section
280G(b)(2) of the Code.
8. Present Value - The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
9. Reasonable Compensation - The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the
Code.
IV. BENEFITS UPON TERMINATION FOLLOWING A CHANGE IN CONTROL.
1. Termination - If a Change in Control occurs during the term
of this Agreement and the Executive's employment is terminated (i)
within twenty-four (24) months following the date of the Change in
Control, or (ii) within six (6) months prior to the date of the Change
in Control and is related to such Change in Control, and in either
case (i) or (ii) such termination is a result of Involuntary
Termination or Voluntary Termination, as defined below, then the
benefits described in Section 2 below shall be paid or provided to the
Executive:
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1. Involuntary Termination - For purposes hereof, "Involuntary
Termination" shall mean termination of employment that is involuntary
on the part of the Executive and that occurs for reasons other than
for Cause, Disability or death.
(b) Voluntary Termination - For purposes hereof, "Voluntary
Termination" shall mean termination of employment that is voluntary on
the part of the Executive, and, in the judgment of the Executive, is
due to (i) a reduction of the Executive's responsibilities, title or
status resulting from a formal change in such title or status, or from
the assignment to the Executive of any duties inconsistent with his
title, duties or responsibilities in effect within the year prior to
the Change in Control; (ii) a reduction in the Executive's
compensation or benefits, or (iii) a Company-required involuntary
relocation of Executive's place of residence or a significant increase
in the Executive's travel requirements. A termination shall not be
considered voluntary within the meaning of this Agreement if such
termination is the result of Cause, Disability or death of the
Executive.
2. Benefits to be Provided - If the Executive becomes eligible
for benefits under Section 1 above, the Company shall pay or provide
to Executive the compensation and benefits set forth in this Section
2; provided, however, that the compensation and benefits to be paid or
provided pursuant to paragraphs (a), (b), (c) and (d) of this Section
2 shall be reduced to the extent that the Executive receives or is
entitled to receive upon his termination the compensation and benefits
(but only to the extent he actually receives such compensation and
benefits) described in paragraphs (a), (b), (c) and (d) of this
Section 2 pursuant to the terms of an employment agreement with the
Company or as a result of a breach by the Company of the employment
agreement; and provided, however, that notwithstanding contrary
provisions in the employment agreement, to the extent benefits are
actually paid or provided under this Agreement, the benefits shall be
provided in lump sum payments where specified in paragraphs (a) and
(b) below.
(a) Salary - The Executive will continue to receive his current
salary (subject to withholding of all applicable taxes and any amounts
referred to in Section 2(c) below) for a period of thirty-six (36)
months from his date of termination in the same manner as it was being
paid as of the date of termination; provided, however, that the salary
payments provided for hereunder shall be paid in a single lump sum
payment, to be paid not later than 30 days after his termination of
employment; provided, further, that the amount of such lump sum
payment shall be determined by taking the salary payments to be made
and discounting them to their Present Value (as defined in Section
III.8) on the date Executive's employment is terminated. For purposes
hereof, the Executive's "current salary" shall be the highest rate in
effect during the twelve-month period prior to the Executive's
termination.
(b) Bonuses and Incentives - The Executive shall receive bonus
payments from the Company for the thirty-six (36) months following the
month in which his employment is terminated in an amount for each
month equal to one-twelfth of the average ("Average Bonus") of the
bonuses paid to him for the three calendar years immediately preceding
the year in which such termination occurs. Any bonus amounts that the
Executive had previously earned from the Company but which may not yet
have been paid as of the date of termination shall not be affected by
this provision. Executive shall also receive a prorated bonus for any
-4-<PAGE>
uncompleted fiscal year at the date of termination equal to the
Average Bonus multiplied by the number of days he worked in such year
divided by 365 days. The bonus amounts determined herein shall be
paid in a single lump sum payment, to be paid not later than 30 days
after termination of employment; provided, further, that the amount of
such lump sum payment shall be determined by taking the bonus payments
(as of the payment date) to be made and discounting them to their
Present Value (as defined in Section III.8) on the date Executive's
employment is terminated.
(c) Health and Life Insurance Coverage - The health and life
insurance benefits coverage (including any executive medical plan)
provided to the Executive at his date of termination shall be
continued by the Company at its expense at the same level and in the
same manner as if his employment had not terminated (subject to the
customary changes in such coverages if the Executive retires under a
Company retirement plan, reaches age 65 or similar events and subject
to Executive's right to make any changes in such coverages that an
active employee is permitted to make), beginning on the date of such
termination and ending on the date thirty-six (36) months from the
date of such termination. Any additional coverages the Executive had
at termination, including dependent coverage, will also be continued
for such period on the same terms, to the extent permitted by the
applicable policies or contracts. Any costs the Executive was paying
for such coverages at the time of termination shall be paid by the
Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this Section
do not permit continued participation by the Executive, the Company
will arrange for other coverage at its expense providing substantially
similar benefits. The coverages provided for in this Section shall be
applied against and reduce the period for which COBRA will be
provided. If the Executive is covered by a split-dollar or similar
life insurance program at the date of termination, he shall have the
option in his sole discretion to have such policy transferred to him
upon termination, provided that the Company is paid for its interest
in the policy upon such transfer.
(d) Stock Options - As of Executive's date of termination, all
outstanding stock options granted to Executive under the Miller
Industries, Inc. Stock Option and Incentive Plan and any such similar
stock option plan (the "Stock Option Plans") shall become 100% vested
and immediately exercisable. To the extent necessary, the provisions
of this subsection (d) shall constitute an amendment of the
Executive's stock option agreements under the Stock Option Plans.
(e) Effect of Lump Sum Payment - The lump sum payment under (a)
or (b) above shall not alter the amounts Executive is entitled to
receive under the benefit plans described in (c) above. Benefits
under such plans shall be determined as if Executive had remained
employed and received such payments without reduction for their
Present Value over a period of thirty-six (36) months.
V. LIMITATION OF BENEFITS.
1. Tax Equalization Payment. If all or any portion of the
compensation or benefits provided to Executive under this Agreement
are treated as Excess Severance Payments (whether by action of the
Internal Revenue Service or otherwise), the Company shall protect
Executive from depletion of the amount of such compensation and
benefits by payment of a tax equalization payment in accordance with
this subsection. In connection with any Internal Revenue Service
-5-
<PAGE>
examination, audit or other inquiry, the Company and Executive agree
to take actions to provide and to cooperate in providing evidence to
the Internal Revenue Service (and, if applicable, the State of the
Executive's residence) that the compensation and benefits provided
under this Agreement do not result in the payment of Excess Severance
Payments. The tax equalization payment shall be an amount which when
added to the other amounts payable, or to be provided, to Executive
under this Agreement will place Executive in the same position as if
the excise tax penalty of Code Section 4999 (and any state tax
statute), or any successor statute of similar import, did not apply to
any of the compensation or benefits provided under this Agreement.
The amount of this tax equalization payment shall be determined by the
Company's independent accountants and shall be paid to Executive not
later than ten (10) days prior to the date any excise tax under Code
Section 4999 is due to be paid by Executive.
2. Additional Limitation. In addition to the limits otherwise
provided in this Section V, to the extent permitted by law, Executive
may in his sole discretion elect to reduce (or change the timing of)
any payments or benefits he may be eligible to receive under this
Agreement to prevent the imposition of excise taxes on Executive under
Section 4999 of the Code or otherwise reduce or delay liability for
taxes owed under the Code.
VI. MISCELLANEOUS.
1. Notices Any notice or other communication required or
permitted under this Agreement shall be effective only if it is in
writing and shall be deemed to have been duly given when delivered
personally or seven days after mailing if mailed first class by
registered or certified mail, postage prepaid, addressed as follows:
If to the Company: Miller Industries, Inc.
P.O. Box 120
8503 Hilltop Drive
Ooltewah, Tennessee 37363
Attention: Chairman of the Board
If to the Executive: Jeffrey I. Badgley
1905 Stoney Creek Drive
Chattanooga, Tennessee 37421
or to such other address as any party may designate by notice to the
others.
2. Assignment - This Agreement shall inure to the benefit of
and shall be binding upon the parties hereto and their respective
executors, administrators, heirs, personal representatives and
successors, but, except as hereinafter provided, neither this
Agreement nor any right hereunder may be assigned or transferred by
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<PAGE>
either party thereto, or by any beneficiary or any other person, nor
be subject to alienation, anticipation, sale, pledge, encumbrance,
execution, levy or other legal process of any kind against the
Executive, his beneficiary or any other person. Notwithstanding the
foregoing, any person or business entity succeeding to substantially
all of the business of the Company by purchase, merger, consolidation,
sale of assets or otherwise, shall be bound by and shall adopt and
assume this Agreement and the Company shall obtain the assumption of
this Agreement by such successor. If Executive shall die while any
amount would still be payable to Executive hereunder (other than
amounts which, by their terms, terminate upon the death of Executive)
if Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators
of Executive's estate.
3. No Obligation to Fund - The agreement of the Company (or its
successor) to make payments to the Executive hereunder shall represent
solely the unsecured obligation of the Company (and its successor),
except to the extent the Company (or its successors) in its sole
discretion elects in whole or in part to fund its obligations under
this Agreement pursuant to a trust arrangement or otherwise.
4. Applicable Law - This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Tennessee.
5. Claims; Expenses - All claims by Executive for compensation
and benefits under this Agreement shall be directed to and determined
by the Board and shall be in writing. Any denial by the Board of a
claim for benefits under this Agreement shall be delivered to
Executive in writing and shall set forth the specific reasons for the
denial and the specific provisions of this Agreement relied upon. The
Board shall afford a reasonable opportunity to Executive for a review
of a decision denying a claim and shall further allow Executive to
appeal to the Board a decision of the Board within sixty (60) days
after notification by the Board that Executive's claim has been
denied. In the event the Executive incurs legal fees and other
expenses in seeking to obtain or to enforce any rights or benefits
provided by this Agreement and is successful, in whole or in part, in
obtaining or enforcing any such rights or benefits through settlement
or otherwise, the Company shall promptly pay Executive's reasonable
legal fees and expenses incurred in enforcing this Agreement. Except
to the extent provided in the preceding sentence, each party shall pay
its own legal fees and other expenses associated with any dispute.
6. Conversion To Employment Agreement - The Company reserves
the right at any time in its sole discretion to convert all or any
part of its obligations under this Agreement and restate them in an
employment agreement with the Executive, provided that such employment
agreement provides compensation and benefits to the Executive upon the
basis and for the reasons stated in this Agreement that are
substantially identical to the compensation and benefits provided
under this Agreement.
7. Amendment - This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific
reference to this Agreement.
-7-<PAGE>
8. Severability - If any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other
provisions hereof.
9. Other Benefits - Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or
otherwise adversely affect Executive's rights, under any other benefit
plan, program or agreement to which Executive is a party.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers and the
Executive has hereunder set his hand, as of the date first above
written.
MILLER INDUSTRIES, INC.
By: /s/ Adam Dunayer
Title: VP
(Corporate Seal)
Attest: /s/ Frank Madonia
Secretary
EXECUTIVE
/s/ Jeffrey I. Badgley
Jeffrey I. Badgley
-8-
AGREEMENT
THIS AGREEMENT (the "Agreement"), effective this _____ day of
September, 1998 (the "Effective Date"), by and between MILLER
INDUSTRIES, INC., a Tennessee corporation (the "Company"), and
Adam L.Dunayer (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the
event of any Change in Control of the Company, and to induce its key
employees to remain employed by the Company, and the Executive is a
key employee of the Company and an integral part of its management;
and
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive reasonably could expect
to receive in the absence of a Change in Control of the Company, and
this Agreement accordingly will be operative only upon circumstances
relating to a Change in Control of the Company, as set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants herein contained, the parties hereby agree as
follows:
I. OPERATION OF AGREEMENT.
This Agreement shall be effective immediately upon its execution
by the parties hereto, but anything in this Agreement to the contrary
notwithstanding, neither this Agreement nor any provision hereof shall
be operative unless, during the term of this Agreement, there has been
a Change in Control of the Company, as defined in Article III below.
Immediately upon such an occurrence, all of the provisions hereof
shall become operative.
II. TERM OF AGREEMENT.
The term of this Agreement shall be for a rolling, three (3) year
term commencing on the date hereof, and shall be deemed automatically
(without further action by either the Company or the Executive) to
extend each day for an additional day such that the remaining term of
the Agreement shall continue to be three (3) years; provided, however,
that on Executive's 62nd birthday this Agreement shall cease to extend
automatically and, on such date, the remaining "term" of this
Agreement shall be three (3) years; provided further, that the Company
may, by notice to the Executive, cause this Agreement to cease to
extend automatically and, upon such notice, the "Term" of this
Agreement shall be three (3) years following such notice; and provided
further, that the automatic extension shall not extend beyond any
anniversary of the Effective Date of this Agreement unless the Company
notifies the Executive in writing prior to such anniversary date that
it elects to extend such automatic extension until the next
anniversary date.
<PAGE>
DEFINITIONS.
1. Base Amount - The term "Base Amount" shall have the same
meaning as ascribed to it under Section 280G(b)(3) of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Board or Board of Directors - The Board of Directors of
Miller Industries, Inc., or its successor.
3. Cause - The Term "Cause" as used herein shall mean: (i)
Executive's material fraud, malfeasance, gross negligence, or willful
misconduct with respect to business affairs of the Company which is
directly or materially harmful to the business or reputation of the
Company or any subsidiary of the Company, or (ii) Executive's
conviction of or failure to contest prosecution for a felony or a
crime involving moral turpitude. A termination of Executive for
"Cause" based on clause (i) of the preceding sentence shall take
effect thirty (30) days after the Company gives written notice of such
termination to Executive specifying the conduct deemed to qualify as
Cause, unless Executive shall, during such 30-day period, remedy the
events or circumstances constituting cause to the reasonable
satisfaction of the Company. A termination for Cause based on clause
(ii) above shall take effect immediately upon giving of the
termination notice.
4. Change in Control - The term "Change in Control" as used
herein shall mean:
(a) the acquisition, directly or indirectly, by any "person" (as
such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) of securities of the Company
representing an aggregate of forty percent (40%) or more of the
combined voting power of the Company's then outstanding securities
(excluding the acquisition by persons who own such amount of
securities on the date hereof, or acquisitions by persons who acquire
such amount through inheritance or gift); or
(b) the date of any transfer or sale of securities by
William G. Miller if, immediately after such sale or transfer, William
G. Miller ceases to own at least 5% of the combined voting power of
the Company's then outstanding securities; or
(c) when, during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board
of Directors of the Company, cease for any reason to constitute at
least a majority thereof, provided, however, that a director who was
not a director at the beginning of such period shall be deemed to have
satisfied the two-year requirement if such director was elected by, or
on the recommendation of or with the approval of, at least three-
quarters of the directors who were directors at the beginning of such
period (either actually or by prior operation of this Section 4(c));
or
(d) consummation of (i) a merger, consolidation or other
business combination of the Company with any other "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) or affiliate thereof, other than a merger,
consolidation or business combination which would result in the
outstanding common stock of the Company immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into common stock of the surviving entity or a parent or
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<PAGE>
affiliate thereof) at least fifty percent (50%) of the outstanding
common stock of the Company (or such surviving entity or parent or
affiliate thereof) that is outstanding immediately after such merger,
consolidation or business combination, or (ii) a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(e) when, through a sale, transfer or other disposition, the
Company significantly reduces or ceases its operations in either the
towing and recovery equipment manufacturing and distribution industry
segment or the towing services industry segment, where a significant
reduction means a disposition of at least eighty percent (80%) of the
identifiable assets used in such industry segment; or
(f) the occurrence of any other event or circumstance which is
not covered by (a) through (e) above which the Board of the Company
determines affects control of the Company and adopts a resolution that
such event or circumstance constitutes a Change in Control for the
purposes of this Agreement."
5. Disability - The term "Disability" shall mean the
Executive's inability as a result of physical or mental incapacity to
substantially perform his duties for the Company on a full-time basis
for a period of six (6) months.
6. Excess Severance Payment - The term "Excess Severance
Payment" shall have the same meaning as the term "excess parachute
payment" defined in Section 280G(b)(1) of the Code.
7. Severance Payment - The term "Severance Payment" shall have
the same meaning as the term "parachute payment" defined in Section
280G(b)(2) of the Code.
8. Present Value - The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
9. Reasonable Compensation - The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the
Code.
IV. BENEFITS UPON TERMINATION FOLLOWING A CHANGE IN CONTROL.
1. Termination - If a Change in Control occurs during the term
of this Agreement and the Executive's employment is terminated (i)
within twenty-four (24) months following the date of the Change in
Control, or (ii) within six (6) months prior to the date of the Change
in Control and is related to such Change in Control, and in either
case (i) or (ii) such termination is a result of Involuntary
Termination or Voluntary Termination, as defined below, then the
benefits described in Section 2 below shall be paid or provided to the
Executive:
-3-<PAGE>
1. Involuntary Termination - For purposes hereof, "Involuntary
Termination" shall mean termination of employment that is involuntary
on the part of the Executive and that occurs for reasons other than
for Cause, Disability or death.
(b) Voluntary Termination - For purposes hereof, "Voluntary
Termination" shall mean termination of employment that is voluntary on
the part of the Executive, and, in the judgment of the Executive, is
due to (i) a reduction of the Executive's responsibilities, title or
status resulting from a formal change in such title or status, or from
the assignment to the Executive of any duties inconsistent with his
title, duties or responsibilities in effect within the year prior to
the Change in Control; (ii) a reduction in the Executive's
compensation or benefits, or (iii) a Company-required involuntary
relocation of Executive's place of residence or a significant increase
in the Executive's travel requirements. A termination shall not be
considered voluntary within the meaning of this Agreement if such
termination is the result of Cause, Disability or death of the
Executive.
2. Benefits to be Provided - If the Executive becomes eligible
for benefits under Section 1 above, the Company shall pay or provide
to Executive the compensation and benefits set forth in this Section
2; provided, however, that the compensation and benefits to be paid or
provided pursuant to paragraphs (a), (b), (c) and (d) of this Section
2 shall be reduced to the extent that the Executive receives or is
entitled to receive upon his termination the compensation and benefits
(but only to the extent he actually receives such compensation and
benefits) described in paragraphs (a), (b), (c) and (d) of this
Section 2 pursuant to the terms of an employment agreement with the
Company or as a result of a breach by the Company of the employment
agreement; and provided, however, that notwithstanding contrary
provisions in the employment agreement, to the extent benefits are
actually paid or provided under this Agreement, the benefits shall be
provided in lump sum payments where specified in paragraphs (a) and
(b) below.
(a) Salary - The Executive will continue to receive his current
salary (subject to withholding of all applicable taxes and any amounts
referred to in Section 2(c) below) for a period of thirty-six (36)
months from his date of termination in the same manner as it was being
paid as of the date of termination; provided, however, that the salary
payments provided for hereunder shall be paid in a single lump sum
payment, to be paid not later than 30 days after his termination of
employment; provided, further, that the amount of such lump sum
payment shall be determined by taking the salary payments to be made
and discounting them to their Present Value (as defined in Section
III.8) on the date Executive's employment is terminated. For purposes
hereof, the Executive's "current salary" shall be the highest rate in
effect during the twelve-month period prior to the Executive's
termination.
(b) Bonuses and Incentives - The Executive shall receive bonus
payments from the Company for the thirty-six (36) months following the
month in which his employment is terminated in an amount for each
month equal to one-twelfth of the average ("Average Bonus") of the
bonuses paid to him for the three calendar years immediately preceding
the year in which such termination occurs. Any bonus amounts that the
Executive had previously earned from the Company but which may not yet
-4-<PAGE>
have been paid as of the date of termination shall not be affected by
this provision. Executive shall also receive a prorated bonus for any
uncompleted fiscal year at the date of termination equal to the
Average Bonus multiplied by the number of days he worked in such year
divided by 365 days. The bonus amounts determined herein shall be
paid in a single lump sum payment, to be paid not later than 30 days
after termination of employment; provided, further, that the amount of
such lump sum payment shall be determined by taking the bonus payments
(as of the payment date) to be made and discounting them to their
Present Value (as defined in Section III.8) on the date Executive's
employment is terminated.
(c) Health and Life Insurance Coverage - The health and life
insurance benefits coverage (including any executive medical plan)
provided to the Executive at his date of termination shall be
continued by the Company at its expense at the same level and in the
same manner as if his employment had not terminated (subject to the
customary changes in such coverages if the Executive retires under a
Company retirement plan, reaches age 65 or similar events and subject
to Executive's right to make any changes in such coverages that an
active employee is permitted to make), beginning on the date of such
termination and ending on the date thirty-six (36) months from the
date of such termination. Any additional coverages the Executive had
at termination, including dependent coverage, will also be continued
for such period on the same terms, to the extent permitted by the
applicable policies or contracts. Any costs the Executive was paying
for such coverages at the time of termination shall be paid by the
Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this Section
do not permit continued participation by the Executive, the Company
will arrange for other coverage at its expense providing substantially
similar benefits. The coverages provided for in this Section shall be
applied against and reduce the period for which COBRA will be
provided. If the Executive is covered by a split-dollar or similar
life insurance program at the date of termination, he shall have the
option in his sole discretion to have such policy transferred to him
upon termination, provided that the Company is paid for its interest
in the policy upon such transfer.
(d) Stock Options - As of Executive's date of termination, all
outstanding stock options granted to Executive under the Miller
Industries, Inc. Stock Option and Incentive Plan and any such similar
stock option plan (the "Stock Option Plans") shall become 100% vested
and immediately exercisable. To the extent necessary, the provisions
of this subsection (d) shall constitute an amendment of the
Executive's stock option agreements under the Stock Option Plans.
(e) Effect of Lump Sum Payment - The lump sum payment under (a)
or (b) above shall not alter the amounts Executive is entitled to
receive under the benefit plans described in (c) above. Benefits
under such plans shall be determined as if Executive had remained
employed and received such payments without reduction for their
Present Value over a period of thirty-six (36) months.
V. LIMITATION OF BENEFITS.
1. Tax Equalization Payment. If all or any portion of the
compensation or benefits provided to Executive under this Agreement
are treated as Excess Severance Payments (whether by action of the
Internal Revenue Service or otherwise), the Company shall protect
Executive from depletion of the amount of such compensation and
benefits by payment of a tax equalization payment in accordance with
5<PAGE>
this subsection. In connection with any Internal Revenue Service
examination, audit or other inquiry, the Company and Executive agree
to take actions to provide and to cooperate in providing evidence to
the Internal Revenue Service (and, if applicable, the State of the
Executive's residence) that the compensation and benefits provided
under this Agreement do not result in the payment of Excess Severance
Payments. The tax equalization payment shall be an amount which when
added to the other amounts payable, or to be provided, to Executive
under this Agreement will place Executive in the same position as if
the excise tax penalty of Code Section 4999 (and any state tax
statute), or any successor statute of similar import, did not apply to
any of the compensation or benefits provided under this Agreement.
The amount of this tax equalization payment shall be determined by the
Company's independent accountants and shall be paid to Executive not
later than ten (10) days prior to the date any excise tax under Code
Section 4999 is due to be paid by Executive.
2. Additional Limitation. In addition to the limits otherwise
provided in this Section V, to the extent permitted by law, Executive
may in his sole discretion elect to reduce (or change the timing of)
any payments or benefits he may be eligible to receive under this
Agreement to prevent the imposition of excise taxes on Executive under
Section 4999 of the Code or otherwise reduce or delay liability for
taxes owed under the Code.
VI. MISCELLANEOUS.
1. Notices Any notice or other communication required or
permitted under this Agreement shall be effective only if it is in
writing and shall be deemed to have been duly given when delivered
personally or seven days after mailing if mailed first class by
registered or certified mail, postage prepaid, addressed as follows:
If to the Company: Miller Industries, Inc.
P.O. Box 120
8503 Hilltop Drive
Ooltewah, Tennessee 37363
Attention: President
If to the Executive: Adam L. Dunayer
9123 Soney Mountain Drive
Chattanooga, Tennessee 37421
or to such other address as any party may designate by notice to the
others.
2. Assignment - This Agreement shall inure to the benefit of
and shall be binding upon the parties hereto and their respective
executors, administrators, heirs, personal representatives and
successors, but, except as hereinafter provided, neither this
Agreement nor any right hereunder may be assigned or transferred by
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<PAGE>
either party thereto, or by any beneficiary or any other person, nor
be subject to alienation, anticipation, sale, pledge, encumbrance,
execution, levy or other legal process of any kind against the
Executive, his beneficiary or any other person. Notwithstanding the
foregoing, any person or business entity succeeding to substantially
all of the business of the Company by purchase, merger, consolidation,
sale of assets or otherwise, shall be bound by and shall adopt and
assume this Agreement and the Company shall obtain the assumption of
this Agreement by such successor. If Executive shall die while any
amount would still be payable to Executive hereunder (other than
amounts which, by their terms, terminate upon the death of Executive)
if Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators
of Executive's estate.
3. No Obligation to Fund - The agreement of the Company (or its
successor) to make payments to the Executive hereunder shall represent
solely the unsecured obligation of the Company (and its successor),
except to the extent the Company (or its successors) in its sole
discretion elects in whole or in part to fund its obligations under
this Agreement pursuant to a trust arrangement or otherwise.
4. Applicable Law - This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Tennessee.
5. Claims; Expenses - All claims by Executive for compensation
and benefits under this Agreement shall be directed to and determined
by the Board and shall be in writing. Any denial by the Board of a
claim for benefits under this Agreement shall be delivered to
Executive in writing and shall set forth the specific reasons for the
denial and the specific provisions of this Agreement relied upon. The
Board shall afford a reasonable opportunity to Executive for a review
of a decision denying a claim and shall further allow Executive to
appeal to the Board a decision of the Board within sixty (60) days
after notification by the Board that Executive's claim has been
denied. In the event the Executive incurs legal fees and other
expenses in seeking to obtain or to enforce any rights or benefits
provided by this Agreement and is successful, in whole or in part, in
obtaining or enforcing any such rights or benefits through settlement
or otherwise, the Company shall promptly pay Executive's reasonable
legal fees and expenses incurred in enforcing this Agreement. Except
to the extent provided in the preceding sentence, each party shall pay
its own legal fees and other expenses associated with any dispute.
6. Conversion To Employment Agreement - The Company reserves
the right at any time in its sole discretion to convert all or any
part of its obligations under this Agreement and restate them in an
employment agreement with the Executive, provided that such employment
agreement provides compensation and benefits to the Executive upon the
basis and for the reasons stated in this Agreement that are
substantially identical to the compensation and benefits provided
under this Agreement.
7. Amendment - This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific
reference to this Agreement.
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<PAGE>
7. Severability - If any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other
provisions hereof.
9. Other Benefits Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or
otherwise adversely affect Executive's rights, under any other benefit
plan, program or agreement to which Executive is a party.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers and the
Executive has hereunder set his hand, as of the date first above
written.
MILLER INDUSTRIES, INC.
By: /s/ Jeffrey I. Badgley
Title: President
(Corporate Seal)
Attest: /s/ Frank Madonia
Secretary
EXECUTIVE
/s/ Adam L. Dunayer
Adam L. Dunayer
-8-
AGREEMENT
THIS AGREEMENT (the "Agreement"), effective this 11th day of
September, 1998 (the "Effective Date"), by and between MILLER
INDUSTRIES, INC., a Tennessee corporation (the "Company"), and Frank
Madonia (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the
event of any Change in Control of the Company, and to induce its key
employees to remain employed by the Company, and the Executive is a
key employee of the Company and an integral part of its management;
and
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive reasonably could expect
to receive in the absence of a Change in Control of the Company, and
this Agreement accordingly will be operative only upon circumstances
relating to a Change in Control of the Company, as set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants herein contained, the parties hereby agree as
follows:
I. OPERATION OF AGREEMENT.
This Agreement shall be effective immediately upon its execution
by the parties hereto, but anything in this Agreement to the contrary
notwithstanding, neither this Agreement nor any provision hereof shall
be operative unless, during the term of this Agreement, there has been
a Change in Control of the Company, as defined in Article III below.
Immediately upon such an occurrence, all of the provisions hereof
shall become operative.
II. TERM OF AGREEMENT.
The term of this Agreement shall be for a rolling, three (3) year
term commencing on the date hereof, and shall be deemed automatically
(without further action by either the Company or the Executive) to
extend each day for an additional day such that the remaining term of
the Agreement shall continue to be three (3) years; provided, however,
that on Executive's 62nd birthday this Agreement shall cease to extend
automatically and, on such date, the remaining "term" of this
Agreement shall be three (3) years; provided further, that the Company
may, by notice to the Executive, cause this Agreement to cease to
extend automatically and, upon such notice, the "Term" of this
Agreement shall be three (3) years following such notice; and provided
further, that the automatic extension shall not extend beyond any
anniversary of the Effective Date of this Agreement unless the Company
notifies the Executive in writing prior to such anniversary date that
it elects to extend such automatic extension until the next
anniversary date.
<PAGE>
DEFINITIONS.
1. Base Amount - The term "Base Amount" shall have the same
meaning as ascribed to it under Section 280G(b)(3) of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Board or Board of Directors - The Board of Directors of
Miller Industries, Inc., or its successor.
3. Cause - The Term "Cause" as used herein shall mean: (i)
Executive's material fraud, malfeasance, gross negligence, or willful
misconduct with respect to business affairs of the Company which is
directly or materially harmful to the business or reputation of the
Company or any subsidiary of the Company, or (ii) Executive's
conviction of or failure to contest prosecution for a felony or a
crime involving moral turpitude. A termination of Executive for
"Cause" based on clause (i) of the preceding sentence shall take
effect thirty (30) days after the Company gives written notice of such
termination to Executive specifying the conduct deemed to qualify as
Cause, unless Executive shall, during such 30-day period, remedy the
events or circumstances constituting cause to the reasonable
satisfaction of the Company. A termination for Cause based on clause
(ii) above shall take effect immediately upon giving of the
termination notice.
4. Change in Control - The term "Change in Control" as used
herein shall mean:
(a) the acquisition, directly or indirectly, by any "person" (as
such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) of securities of the Company
representing an aggregate of forty percent (40%) or more of the
combined voting power of the Company's then outstanding securities
(excluding the acquisition by persons who own such amount of
securities on the date hereof, or acquisitions by persons who acquire
such amount through inheritance or gift); or
(b) the date of any transfer or sale of securities by William G.
Miller if, immediately after such sale or transfer, William G. Miller
ceases to own at least 5% of the combined voting power of the
Company's then outstanding securities; or
(c) when, during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board
of Directors of the Company, cease for any reason to constitute at
least a majority thereof, provided, however, that a director who was
not a director at the beginning of such period shall be deemed to have
satisfied the two-year requirement if such director was elected by, or
on the recommendation of or with the approval of, at least three-
quarters of the directors who were directors at the beginning of such
period (either actually or by prior operation of this Section 4(c));
or
(d) consummation of (i) a merger, consolidation or other
business combination of the Company with any other "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) or affiliate thereof, other than a merger,
consolidation or business combination which would result in the
outstanding common stock of the Company immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into common stock of the surviving entity or a parent or
-2-<PAGE>
affiliate thereof) at least fifty percent (50%) of the outstanding
common stock of the Company (or such surviving entity or parent or
affiliate thereof) that is outstanding immediately after such merger,
consolidation or business combination, or (ii) a plan of complete
-2-
<PAGE>
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(e) when, through a sale, transfer or other disposition, the
Company significantly reduces or ceases its operations in either the
towing and recovery equipment manufacturing and distribution industry
segment or the towing services industry segment, where a significant
reduction means a disposition of at least eighty percent (80%) of the
identifiable assets used in such industry segment; or
(f) the occurrence of any other event or circumstance which is
not covered by (a) through (e) above which the Board of the Company
determines affects control of the Company and adopts a resolution that
such event or circumstance constitutes a Change in Control for the
purposes of this Agreement."
5. Disability - The term "Disability" shall mean the
Executive's inability as a result of physical or mental incapacity to
substantially perform his duties for the Company on a full-time basis
for a period of six (6) months.
6. Excess Severance Payment - The term "Excess Severance
Payment" shall have the same meaning as the term "excess parachute
payment" defined in Section 280G(b)(1) of the Code.
7. Severance Payment - The term "Severance Payment" shall have
the same meaning as the term "parachute payment" defined in Section
280G(b)(2) of the Code.
8. Present Value - The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
9. Reasonable Compensation - The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the
Code.
IV. BENEFITS UPON TERMINATION FOLLOWING A CHANGE IN CONTROL.
1. Termination - If a Change in Control occurs during the term
of this Agreement and the Executive's employment is terminated (i)
within twenty-four (24) months following the date of the Change in
Control, or (ii) within six (6) months prior to the date of the Change
in Control and is related to such Change in Control, and in either
case (i) or (ii) such termination is a result of Involuntary
Termination or Voluntary Termination, as defined below, then the
benefits described in Section 2 below shall be paid or provided to the
Executive:
-3-<PAGE>
1. Involuntary Termination - For purposes hereof, "Involuntary
Termination" shall mean termination of employment that is involuntary
on the part of the Executive and that occurs for reasons other than
for Cause, Disability or death.
(b) Voluntary Termination - For purposes hereof, "Voluntary
Termination" shall mean termination of employment that is voluntary on
the part of the Executive, and, in the judgment of the Executive, is
due to (i) a reduction of the Executive's responsibilities, title or
status resulting from a formal change in such title or status, or from
the assignment to the Executive of any duties inconsistent with his
title, duties or responsibilities in effect within the year prior to
the Change in Control; (ii) a reduction in the Executive's
compensation or benefits, or (iii) a Company-required involuntary
relocation of Executive's place of residence or a significant increase
in the Executive's travel requirements. A termination shall not be
considered voluntary within the meaning of this Agreement if such
termination is the result of Cause, Disability or death of the
Executive.
2. Benefits to be Provided - If the Executive becomes eligible
for benefits under Section 1 above, the Company shall pay or provide
to Executive the compensation and benefits set forth in this Section
2; provided, however, that the compensation and benefits to be paid or
provided pursuant to paragraphs (a), (b), (c) and (d) of this Section
2 shall be reduced to the extent that the Executive receives or is
entitled to receive upon his termination the compensation and benefits
(but only to the extent he actually receives such compensation and
benefits) described in paragraphs (a), (b), (c) and (d) of this
Section 2 pursuant to the terms of an employment agreement with the
Company or as a result of a breach by the Company of the employment
agreement; and provided, however, that notwithstanding contrary
provisions in the employment agreement, to the extent benefits are
actually paid or provided under this Agreement, the benefits shall be
provided in lump sum payments where specified in paragraphs (a) and
(b) below.
(a) Salary - The Executive will continue to receive his current
salary (subject to withholding of all applicable taxes and any amounts
referred to in Section 2(c) below) for a period of thirty-six (36)
months from his date of termination in the same manner as it was being
paid as of the date of termination; provided, however, that the salary
payments provided for hereunder shall be paid in a single lump sum
payment, to be paid not later than 30 days after his termination of
employment; provided, further, that the amount of such lump sum
payment shall be determined by taking the salary payments to be made
and discounting them to their Present Value (as defined in Section
III.8) on the date Executive's employment is terminated. For purposes
hereof, the Executive's "current salary" shall be the highest rate in
effect during the twelve-month period prior to the Executive's
termination.
(b) Bonuses and Incentives - The Executive shall receive bonus
payments from the Company for the thirty-six (36) months following the
month in which his employment is terminated in an amount for each
month equal to one-twelfth of the average ("Average Bonus") of the
bonuses paid to him for the three calendar years immediately preceding
the year in which such termination occurs. Any bonus amounts that the
Executive had previously earned from the Company but which may not yet
have been paid as of the date of termination shall not be affected by
this provision. Executive shall also receive a prorated bonus for any
-4-<PAGE>
uncompleted fiscal year at the date of termination equal to the
Average Bonus multiplied by the number of days he worked in such year
divided by 365 days. The bonus amounts determined herein shall be
paid in a single lump sum payment, to be paid not later than 30 days
after termination of employment; provided, further, that the amount of
such lump sum payment shall be determined by taking the bonus payments
(as of the payment date) to be made and discounting them to their
Present Value (as defined in Section III.8) on the date Executive's
employment is terminated.
(c) Health and Life Insurance Coverage - The health and life
insurance benefits coverage (including any executive medical plan)
provided to the Executive at his date of termination shall be
continued by the Company at its expense at the same level and in the
same manner as if his employment had not terminated (subject to the
customary changes in such coverages if the Executive retires under a
Company retirement plan, reaches age 65 or similar events and subject
to Executive's right to make any changes in such coverages that an
active employee is permitted to make), beginning on the date of such
termination and ending on the date thirty-six (36) months from the
date of such termination. Any additional coverages the Executive had
at termination, including dependent coverage, will also be continued
for such period on the same terms, to the extent permitted by the
applicable policies or contracts. Any costs the Executive was paying
for such coverages at the time of termination shall be paid by the
Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this Section
do not permit continued participation by the Executive, the Company
will arrange for other coverage at its expense providing substantially
similar benefits. The coverages provided for in this Section shall be
applied against and reduce the period for which COBRA will be
provided. If the Executive is covered by a split-dollar or similar
life insurance program at the date of termination, he shall have the
option in his sole discretion to have such policy transferred to him
upon termination, provided that the Company is paid for its interest
in the policy upon such transfer.
(d) Stock Options - As of Executive's date of termination, all
outstanding stock options granted to Executive under the Miller
Industries, Inc. Stock Option and Incentive Plan and any such similar
stock option plan (the "Stock Option Plans") shall become 100% vested
and immediately exercisable. To the extent necessary, the provisions
of this subsection (d) shall constitute an amendment of the
Executive's stock option agreements under the Stock Option Plans.
(e) Effect of Lump Sum Payment - The lump sum payment under (a)
or (b) above shall not alter the amounts Executive is entitled to
receive under the benefit plans described in (c) above. Benefits
under such plans shall be determined as if Executive had remained
employed and received such payments without reduction for their
Present Value over a period of thirty-six (36) months.
V. LIMITATION OF BENEFITS.
1. Tax Equalization Payment. If all or any portion of the
compensation or benefits provided to Executive under this Agreement
are treated as Excess Severance Payments (whether by action of the
Internal Revenue Service or otherwise), the Company shall protect
Executive from depletion of the amount of such compensation and
benefits by payment of a tax equalization payment in accordance with
this subsection. In connection with any Internal Revenue Service
examination, audit or other inquiry, the Company and Executive agree
-5-<PAGE>
to take actions to provide and to cooperate in providing evidence to
the Internal Revenue Service (and, if applicable, the State of the
Executive's residence) that the compensation and benefits provided
under this Agreement do not result in the payment of Excess Severance
Payments. The tax equalization payment shall be an amount which when
added to the other amounts payable, or to be provided, to Executive
under this Agreement will place Executive in the same position as if
the excise tax penalty of Code Section 4999 (and any state tax
statute), or any successor statute of similar import, did not apply to
any of the compensation or benefits provided under this Agreement.
The amount of this tax equalization payment shall be determined by the
Company's independent accountants and shall be paid to Executive not
later than ten (10) days prior to the date any excise tax under Code
Section 4999 is due to be paid by Executive.
2. Additional Limitation. In addition to the limits otherwise
provided in this Section V, to the extent permitted by law, Executive
may in his sole discretion elect to reduce (or change the timing of)
any payments or benefits he may be eligible to receive under this
Agreement to prevent the imposition of excise taxes on Executive under
Section 4999 of the Code or otherwise reduce or delay liability for
taxes owed under the Code.
VI. MISCELLANEOUS.
1. Notices - Any notice or other communication required or
permitted under this Agreement shall be effective only if it is in
writing and shall be deemed to have been duly given when delivered
personally or seven days after mailing if mailed first class by
registered or certified mail, postage prepaid, addressed as follows:
If to the Company: Miller Industries, Inc.
P.O. Box 120
8503 Hilltop Drive
Ooltewah, Tennessee 37363
Attention: President
If to the Executive: Frank Madonia
932 St. Lyonns Courts
Marietta, Georgia 30068
or to such other address as any party may designate by notice to the
others.
2. Assignment - This Agreement shall inure to the benefit of
and shall be binding upon the parties hereto and their respective
executors, administrators, heirs, personal representatives and
successors, but, except as hereinafter provided, neither this
Agreement nor any right hereunder may be assigned or transferred by
-6-
<PAGE>
either party thereto, or by any beneficiary or any other person, nor
be subject to alienation, anticipation, sale, pledge, encumbrance,
execution, levy or other legal process of any kind against the
Executive, his beneficiary or any other person. Notwithstanding the
foregoing, any person or business entity succeeding to substantially
all of the business of the Company by purchase, merger, consolidation,
sale of assets or otherwise, shall be bound by and shall adopt and
assume this Agreement and the Company shall obtain the assumption of
this Agreement by such successor. If Executive shall die while any
amount would still be payable to Executive hereunder (other than
amounts which, by their terms, terminate upon the death of Executive)
if Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators
of Executive's estate.
3. No Obligation to Fund - The agreement of the Company (or its
successor) to make payments to the Executive hereunder shall represent
solely the unsecured obligation of the Company (and its successor),
except to the extent the Company (or its successors) in its sole
discretion elects in whole or in part to fund its obligations under
this Agreement pursuant to a trust arrangement or otherwise.
4. Applicable Law - This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Tennessee.
5. Claims; Expenses - All claims by Executive for compensation
and benefits under this Agreement shall be directed to and determined
by the Board and shall be in writing. Any denial by the Board of a
claim for benefits under this Agreement shall be delivered to
Executive in writing and shall set forth the specific reasons for the
denial and the specific provisions of this Agreement relied upon. The
Board shall afford a reasonable opportunity to Executive for a review
of a decision denying a claim and shall further allow Executive to
appeal to the Board a decision of the Board within sixty (60) days
after notification by the Board that Executive's claim has been
denied. In the event the Executive incurs legal fees and other
expenses in seeking to obtain or to enforce any rights or benefits
provided by this Agreement and is successful, in whole or in part, in
obtaining or enforcing any such rights or benefits through settlement
or otherwise, the Company shall promptly pay Executive's reasonable
legal fees and expenses incurred in enforcing this Agreement. Except
to the extent provided in the preceding sentence, each party shall pay
its own legal fees and other expenses associated with any dispute.
6. Conversion To Employment Agreement - The Company reserves
the right at any time in its sole discretion to convert all or any
part of its obligations under this Agreement and restate them in an
employment agreement with the Executive, provided that such employment
agreement provides compensation and benefits to the Executive upon the
basis and for the reasons stated in this Agreement that are
substantially identical to the compensation and benefits provided
under this Agreement.
7. Amendment - This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific
reference to this Agreement.
-7-
<PAGE>
7. Severability - If any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other
provisions hereof.
9. Other Benefits - Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or
otherwise adversely affect Executive's rights, under any other benefit
plan, program or agreement to which Executive is a party.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers and the
Executive has hereunder set his hand, as of the date first above
written.
MILLER INDUSTRIES, INC.
By: /s/ Jeffrey I. Badgley
Title: President
(Corporate Seal)
Attest: /s/ Adam Dunayer
Title: __________________
EXECUTIVE
/s/ Frank Madonia
Frank Madonia
-8-
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