SEVERANCE AGREEMENT
AND RELEASE
This Severance
Agreement and Release (this “Agreement”) is made and
entered into on August 19, 2005 (the “Effective
Date”), by and between Stoneridge, Inc., an Ohio corporation,
and its subsidiaries and affiliates and its past and present
directors, shareholders, employees, agents, officers, attorneys and
assigns (the “Company”) and Joseph M. Mallak
(“Executive”).
A. Executive
is a Vice President, Chief Financial Officer and Treasurer of the
Company. He is also an officer, director or both of several of the
Company’s subsidiaries;
B. The
Company and Executive now desire to enter into an agreement
amicably dissolving all employment relations between them and
resolving all matters between them;
C. In
connection therewith, (i) the Company and Executive have
agreed, among other things, that effective at the close of business
on the Effective Date, Executive will voluntarily resign as an
employee and as a Vice President, Chief Financial Officer and
Treasurer of the Company and as an officer, director or both of all
Company subsidiaries on which he serves, (ii) Executive has
agreed to waive, release and settle any claims related to or
arising out of his employment and affiliation with the Company in
exchange for severance benefits to which Executive would not
otherwise have been entitled, and (iii) the Company has agreed
to provide the severance benefits specified herein, to which
Executive would not otherwise have been entitled, in exchange for
this Agreement; and
D. The
Compensation Committee of the Board of Directors of the Company has
approved this Agreement.
NOW, THEREFORE, in
consideration of the terms, conditions, premises and the mutual
covenants set forth herein, the sufficiency of which is hereby
acknowledged, the parties to this Agreement hereby agree as
follows:
1.
Resignations . Simultaneously with the execution and
delivery of this Agreement, Executive will resign, effective as of
the close of business on the Effective Date, as an employee, and
any positions with the Company including but not limited to Vice
President, Chief Financial Officer and Treasurer of the Company by
executing and delivering to the Company a letter of resignation
substantially in the form of Appendix A hereto. In addition,
simultaneously with the execution and delivery of this Agreement,
Executive will resign, effective as of the close of business on the
Effective Date, as a director, officer, employee, member or manager
(as applicable) of each subsidiary of the Company of which
Executive serves in any such capacity, by executing and delivering
to the Company a letter of resignation substantially in the form of
Appendix B hereto.
Executive and the
Company agree and acknowledge that this Agreement sets forth the
parties’ mutual understanding with respect to
Executive’s resignations described above. The parties agree
that (i) for all purposes the resignations described herein by
the Executive are voluntary and (ii) Executive shall remain an
employee of the Company until the close of business on the
Effective Date and that the Company shall pay Executive pursuant to
the Company’s customary payroll practices his base salary and
accrued but unused vacation time earned up to and through the
Effective Date. Except as otherwise provided under Section 2
below, all employee benefits provided to Executive through the
Company will cease at the close of business on the Effective
Date.
2.
Severance Benefits . The Company agrees to pay Executive the
amounts and provide the benefits specified in this Section in
exchange for Executive executing this Agreement. Executive
acknowledges that the payments and benefits provided in this
Section are extra and in addition to all earned wages, accrued
vacation time, unreimbursed expenses to be reimbursed pursuant to
the Company policy, and other payments or benefits ordinarily due
Executive as a separating employee of the Company.
a. The Company
shall provide severance payments to Executive in the aggregate
amount of $180,000, less standard required deductions and
withholdings. The severance payments shall be made monthly for
twelve (12) months on the last business day of the month and
shall commence on September 30, 2005. The monthly severance
payment to Executive shall be $15,000, less standard required
deductions and withholdings.
b. The Company, by
action of the Compensation Committee of its Board of Directors,
shall cause 18,600 shares of Executive’s Restricted Shares to
vest and no longer be subject to forfeiture on the Effective Date,
and shall instruct National City Bank (who holds the
Company’s Restricted Shares as custodian) to deliver to
Executive 18,600 Common Shares promptly after the Effective
Date.
c. Executive and
his qualified beneficiaries shall be entitled to continue health
insurance benefits after the Effective Date, under which Executive
is currently covered, as such health insurance program may be
modified by the Company from time to time, under and through the
terms of the applicable COBRA law and regulations. If Executive
elects COBRA coverage, then during the first twelve
(12) months of the applicable COBRA period following the
Effective Date, the Company shall reimburse Executive or his
qualified beneficiaries, if applicable, for the monthly premiums
for health insurance benefit continuation pursuant to COBRA, which
reimbursement shall cease in the event Executive is employed by a
successor employer through which comparable health insurance
benefit coverage is available.
d.
Executive’s Company sponsored life insurance benefits shall
continue for a period of twelve (12) month following the
Effective Date; provided, however such benefits shall immediately
cease on Executive subsequently becoming employed on a full time
basis during such twelve (12) month period.
a. During his
employment with the Company Executive had access to the
Company’s “confidential information” and
“trade secrets.” For purposes of this Agreement,
“confidential information” shall mean information which
is not publicly available including, without limitation,
information concerning customers, material sources, suppliers,
marketing
plans,
financial projections, financial results and operation methods, and
“trade secrets” shall mean the Company’s
processes, methodologies and techniques known only to those
employees of the Company who need to know such secrets in order to
perform their duties on behalf of the Company. The Company takes
numerous steps, including securing agreements from employees and
former employees to provisions such as these, to protect the
confidentiality of its confidential information and trade secrets,
which it considers unique, valuable and special assets. Executive,
recognizing the Company’s significant investment of time,
efforts and money in developing and preserving its confidential
information and trade secrets, shall not, for a five (5) year
period after the Effective Date, (i) use for his direct or
indirect personal benefit any of the Company’s confidential
information or trade secrets or (ii) disclose to any person or
entity any of the Company’s confidential information or trade
secrets.
b. For a period of
one (1) year after the Effective Date, Executive shall not (i)
directly solicit any employee of the Company or any of its
subsidiaries to leave the employment thereof or in any way
interfere with the relationship of such employee with the Company
or its subsidiaries; and/or (ii) induce or attempt to induce
any customer, supplier, licensee or other individual, corporation
or other business organization having a business relationship with
the Company or its subsidiaries to cease doing business with the
Company or its subsidiaries, or in any way interfere with the
relationship between any such customer, supplier, licensee or other
person and the Company or its subsidiaries. Following the one year
period, for the next two (2) years, Executive shall, with
respect to Company employees, only be allowed to respond to calls
that he receives from Company employees initiating contact with
Executive, or responding to advertisements, including trade
publications, to the general public.
c. Except as
required by law or as requested by any governmental or
self-regulatory authority, Executive agrees that he will not make
any statements, orally, in writing or otherwise, or in any way
disseminate any information, concerning the Company, its
affiliates, employees, shareholders, members, officers, directors,
managers, or agents (past or present), or concerning the business,
business operations or business practices of the Company which, in
form or substance, disparages, or otherwise casts an unfavorable
light upon, the Company, its affiliates, employees, shareholders,
members, officers, directors, managers, or agents, or their
reputation or standing in the business community or the community
as a whole. In the event that Executive is required by law or
requested by any governmental or self-regulatory authority to make
statements or disseminate any information concerning the Company
and its related persons as described above, Executive, to the
extent possible shall notify the Company that he is required by law
(or has been requested by a governmental or self-regulatory
authority) to make such disclosure at least two full business days
prior to making such disclosures. The Company agrees, on behalf of
itself, its directors, its officers and its employees, that it will
not make any statement concerning Executive or his business
practices which in form or substance disparages or otherwise casts
an unfavorable light upon Executive or his reputation or standing
in the business community or the community as a whole; provided,
however, nothing in this Section 3.c. shall in any manner limit or
restrict the Company’s or its officers’,
directors’ or employees’ communications or disclosure
(whether orally or in writing) that are required by law or are
requested by any governmental or self-regulatory
authority.
d. Executive
agrees for a period of one (1) year following the Effective
Date to cooperate with the Company’s officials at reasonable
times with regard to any matters or issues of which he has
historical knowledge or with which he was previously involved while
employed at the Company; provided, however, such cooperation shall
not materially interfere with Executive’s full-time
employment. In the event the Company requires Executive’s
cooperation and that cooperation requires travel to the
Company’s headquarters in Warren, Ohio, the
Company shall
reimburse Executive solely for reasonable out-of-pocket and travel
expenses (including lodging and meals) upon submission of adequate
receipts.
e. Executive
understands and acknowledges that his failure to comply with his
covenants in this Agreement will be deemed a material breach of
this Agreement. In the event of a breach during the period that
severance payments are continuing, Executive shall repay to the
Company all money paid by the Company pursuant to this Agreement.
Notwithstanding, however, the Agreement shall otherwise remain
binding and effective and the Company may pursue any and all
additional remedies that it may have as a result of any such breach
of the Agreement.
4.
Release . In exchange for the payments set forth herein,
Executive, for himself and his heirs, personal representatives,
succe
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