This Severance
Agreement (the “Agreement”) is made and entered into
effective as of December 23, 2008 (the “Effective
Date”), by and between Daniel Johnston (the
“Executive”), United Components, Inc. (the
“Company”), and, solely with respect to
Section 3(d), UCI Holdco, Inc. (“Holdco”). Certain
capitalized terms used in this Agreement are defined in
Section 1 below.
In consideration
of the mutual covenants herein contained and the continued
employment of Executive by the Company (or one of its Affiliates),
the parties agree as follows:
1.
Definition of Terms . The following terms referred to in
this Agreement shall have the following meanings:
(a)
Affiliate . “Affiliate” shall mean, with respect
to any Person, any other Person directly or indirectly controlling,
controlled by, or under common control with, such Person where
“control” shall have the meaning given such term under
Rule 405 of the Securities Act. Affiliates of Carlyle Partners
III, L.P., a Delaware limited partnership, shall include all
Persons directly or indirectly controlled by TC Group, LLC, a
Delaware limited liability company.
(b)
Board . “Board” shall mean the Board of
Directors of the Company or its Parent.
(c)
Cause . “Cause” shall mean:
(i) the
Executive’s failure to use his reasonable best efforts to
follow a legal written order of the Board or the CEO, other than
any such failure resulting from the Executive’s Disability,
and such failure is not remedied within 30 days after receipt
of notice;
(ii) Executive’s
gross or willful misconduct with regard to the Company;
(iii) Executive’s
conviction of a felony or crime involving material
dishonesty;
(iv) Executive’s
fraud or personal dishonesty involving the Company’s assets
(but excluding expense reimbursement disputes as to which Executive
had a reasonable good faith belief that his conduct was within the
policies of the Company) or breach of fiduciary responsibility
against the Company or any of its businesses; or
(v) the
Executive’s unlawful use (including being under the
influence) or possession of illegal drugs on the Company’s
premises or while performing the Executive’s duties and
responsibilities under this Agreement.
(d)
Change in Control . “Change in Control” shall
mean a change in ownership or control of the Company or Parent
effected through a transaction or series of transactions (other
than an offering of common stock of the Company or Parent to the
general public through a registration statement filed with the
Securities and Exchange Commission) whereby any
“person” or related “group” of
“persons” (as such terms are used in Sections 13(d) and
14(d)(2) of the Exchange Act) (other than the Company, Parent or
any of their respective subsidiaries, an employee benefit plan
maintained by the Company, Parent or any of their respective
subsidiaries, a Principal Stockholder, any Affiliate of a Principal
Stockholder or a “person” that, prior to such
transaction, directly or indirectly controls, is controlled by, or
is under common control with, the Company, Parent or a Principal
Stockholder) directly or indirectly acquires beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company or Parent possessing more than fifty
percent (50%) of the total combined voting power of the
Company’s or Parent’s securities outstanding
immediately after such acquisition.
(e)
CEO . “CEO” shall mean the Chief Executive
Officer of the Company.
(f)
Disability . “Disability” shall mean the
Executive’s inability to perform, with or without reasonable
accommodation, the essential functions of Executive’s duties
as an employee of the Company for a total of three months during
any six-month period as a result of incapacity due to mental or
physical illness as determined by a physician selected by the
Company or its insurers and acceptable to the Executive or the
Executive’s legal representative, with such agreement as to
acceptability not to be unreasonably withheld or
delayed.
(g)
Exchange Act . “Exchange Act” shall mean the
Securities and Exchange Act of 1934, as amended.
(i) “Good
Reason” shall mean:
(1) a
material diminution in the nature or scope of the Executive’s
responsibilities, duties or authority;
(2) a
material diminution in the Executive’s compensation;
or
(3) a
material breach of this Agreement by the Company.
(ii) Notwithstanding
the foregoing, a Termination of Employment shall not be treated as
a Termination of Employment for Good Reason unless the Executive
shall have delivered to the Company a notice of termination stating
that the Executive intends to terminate employment for Good Reason
within ninety (90) days, and such Termination of Employment
must occur within one year, of the Executive’s having actual
knowledge of the initial occurrence of one or more of such events,
provided, in each such event, the Company fails to cure within
thirty (30) days of receipt of such notice of
termination.
(i)
Parent . “Parent” shall mean UCI Holdco,
Inc.
(j)
Person . “Person” shall mean an individual,
partnership, corporation, limited liability company, business
trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever
nature.
(k)
Principal Stockholder . “Principal
Stockholder(s)” shall mean Carlyle Partners III, L.P., a
Delaware limited partnership, or any of its Affiliates to which
(a) the Carlyle Partners III, L.P. or any other Person
transfers shares of common stock of Parent, or (b) Parent
issues shares of common stock of Parent.
- 2 -
(l)
Securities Act . “Securities Act” shall mean the
Securities Act of 1933, as amended.
(m)
Termination of Employment . “Termination of
Employment” shall mean the time when the engagement of the
Executive as an employee of the Company is terminated by the
Company, but excluding terminations where there is simultaneous
commencement by the Executive of a relationship with the Company or
any of its Affiliates as an employee. In no event shall a
“Termination of Employment” occur under this Agreement
until the Executive incurs a “separation from service”
within the meaning of Treasury
Regulation Section 1.409A-1(h).
(n)
Termination Date . “Termination Date” shall mean
the effective date of the Executive’s Termination of
Employment.
2. Term
of Agreement . This Agreement shall terminate upon the date
that all obligations of the parties under this Agreement have been
satisfied.
3.
Severance; UCI Shares .
(a)
Termination Without Cause . If the Executive experiences a
Termination of Employment following the date hereof as a result of
the Company terminating the Executive without Cause or the
Executive terminating his employment for Good Reason, then, subject
to the Executive signing and not revoking the Release as set forth
below and subject to the continued compliance of the Executive with
Sections 4 and 5 of this Agreement, the Executive shall be
entitled to (i) severance equal to twelve (12) months of
Executive’s annual base salary as in effect on the
Termination Date (provided that such severance shall not be less
than the Executive’s base salary in effect as of the date of
this Agreement), (ii) a prorated amount of the
Executive’s annual bonus for the year in which the
termination occurs (based upon a bonus target percentage no less
than the percentage applicable to Executive as of the date of this
Agreement), paid at the same UCI funding level applicable to other
senior executives of the Company, but subject to a maximum funding
level of 100%, and (iii) reimbursement for, or direct payment
to the carrier for, the premium costs under COBRA for the Executive
and, where applicable, his spouse and dependents, until the earlier
of (x) twelve (12) months following the Termination Date, and
(y) the date Executive is employed by another employer, under
the same or comparable Company group medical and dental plans to
the group medical and dental plans that Executive was participating
in as of the Termination Date; provided that if a same or
comparable Company group plan is, at any time during such twelve
month period, not available generally to senior officers of the
Company, the Executive shall receive reimbursement for, or direct
payment to the carrier for, the premium costs under COBRA under a
group plan that is available to such senior officers of the
Company. For the avoidance of doubt, the Executive shall not be
entitled to severance in the event the Executive experiences a
Termination of Employment for Cause, or before September 30,
2009 due to death, Disability, or the Executive’s resignation
for any reason other than Good Reason.
(b)
Termination on or Following September 30, 2009 . If the
Executive experiences a Termination of Employment for any reason
(other than as a result of the Company terminating the Executive
for Cause) on or after September 30, 2009, including the
Executive’s voluntary resignation for any reason, then,
provided that the Executive continues to perform his job
responsibilities in a manner reasonably comparable to his current
level of performance as of the date hereof (and continues to
commute to the Company’s executive offices in Evansville, IN
consistent with his current practice) through September 30,
2009, and subject to (A) the Executive signing and not
revoking the Release as set forth below and (B) the continued
compliance of the Executive with Sections 4 and 5 of this
Agreement, the Executive shall be entitled to (i) severance
equal to twelve (12) months of Executive’s annual base
salary as in effect on the
- 3 -
Termination
Date (provided that such severance shall not be less than the
Executive’s base salary in effect as of the date of this
Agreement), (ii) a prorated amount of the Executive’s
annual bonus for the year in which the termination occurs (based
upon a bonus target percentage no less than the percentage
applicable to Executive as of the date of this Agreement), paid at
the same UCI funding level applicable to other senior executives of
the Company, but subject to a maximum funding level of 100%, and
(iii) reimbursement for, or direct payment to the carrier for,
the premium costs under COBRA for the Executive and, where
applicable, his spouse and dependents, until the earlier of (x)
twelve (12) months following the Termination Date, and
(y) the date Executive is employed by another employer, under
the same or comparable Company group medical and dental plans to
the group medical and dental plans that Executive was participating
in as of the Termination Date; provided that if a same or
comparable Company group plan is, at any time during such twelve
month period, not available generally to senior officers of the
Company, the Executive shall receive reimbursement for, or direct
payment to the carrier for, the premium costs under COBRA under a
group plan that is available to such senior officers of the
Company. For the avoidance of doubt, if Executive is entitled to
severance payments under this Section 3(b), he shall not be
entitled to any severance or other payments under Sections 3(a) or
3(c).
(c)
Termination on or Following a Change in Control . If the
Executive experiences a Termination of Employment as a result of
the Company terminating the Executive without Cause or the
Executive terminating his employment for Good Reason on or
following the date of a Change in Control, then subject to the
Executive signing and not revoking the Release as set forth below
and subject to the continued compliance of the Executive with
Sections 4 and 5 of this Agreement, the Executive shall be
entitled to (i) severance equal to twenty-four
(24) months of Executive’s annual base salary as in
effect on the Termination Date (provided that such severance shall
not be less than the Executive’s base salary in effect as of
the date of this Agreement), and (ii) reimbursement for, or direct
payment to the carrier for, the premium costs under COBRA for the
Executive and, where applicable, his spouse and dependents, until
the earlier of (x) twenty-four (24) months following the
Termination Date, and (y) the date Executive is employed by
another employer, under the same or comparable Company group
medical and dental plans to the group medical and dental plans that
Executive was participating in as of the Termination Date; provided
that if a same or comparable Company group plan is, at any time
during such twelve month period, not available generally to senior
officers of the Company, the Executive shall receive reimbursement
for, or direct payment to the carrier for, the premium costs under
COBRA under a group plan that is available to such senior officers
of the Company. For the avoidance of doubt, if Executive is
entitled to receive payments under this Section 3(c), he shall
not be entitled to any severance or other payments under Sections
3(a) or 3(b).
(d)
UCI Shares . Subject to the Executive signing and not
revoking the Release as set forth below and subject to the
continued compliance of the Executive with Sections 4 and 5 of
this Agreement, the Company and Holdco each agree that neither the
Company nor Holdco will exercise any right either may have (whether
pursuant to the stockholders agreement of Holdco, any stock option
agreement, award agreement or stock purchase agreement to which the
Executive is a party, or any stock option or equity incentive plan
of the the Company or Holdco, or otherwise) to repurchase any of
the shares of common stock of Holdco (“UCI Shares”)
held by the Executive (or any permitted transferee) as of the
Termination Date or which are issued, or are to be issued, to the
Executive pursuant to the Executive’s exercise of any option
to purchase UCI Shares held by the Executive as of the Termination
Date.
(e)
Release; Payment Timing; Separate Payments . Notwithstanding
any provision to the contrary in this Agreement, no payments shall
be made pursuant to Sections 3(a), (b) or (c) unless
(i) on or following the Termination Date and on or prior to
the 50 th
day following the Termination Date
the Executive executes a waiver and release of claims agreement in
the form attached hereto as Exhibit A (the “
Release ”),
- 4 -
which Release
may be amended by the Company to reflect changes in applicable laws
and regulations, and (ii) such Release shall not have been
revoked by the Executive on or prior to the 8
th day following the date of the Release. The
severance payments shall be payable in the form of salary
continuation and shall be paid at the same time and in the same
manner as the Executive’s annual base salary would have been
paid if Executiv
|
