Exhibit 10.24
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made and entered into by
and between TECHNITROL, INC. (the "Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Executive")
as of March 22, 2010 (the "Effective Date").
W I T N E S S E T H:
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WHEREAS, the Company desires to employ Executive, and Executive desires to
enter into the employ of the Company, on the terms and conditions contained in
this Agreement.
NOW, THEREFORE, in consideration of the promises and mutual agreements
contained herein and intending to be legally bound hereby, the parties hereto
agree as follows:
1. EMPLOYMENT.
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Subject to the terms and conditions of this Agreement, the Company hereby
employs Executive as its Chief Executive Officer, reporting to the Board of
Directors of the Company (the "Board").
2. DURATION OF AGREEMENT.
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2.1 Term. Executive's employment shall begin as of the Effective
Date, and shall continue until the third anniversary of the Effective
Date, unless earlier terminated pursuant to any of Articles 5, 6, 7,
or 8. The specified period during which this Agreement is in effect is
the "Term." Each one (1) year period commencing on the Effective Date
or on any anniversary of the Effective Date is referred to hereinafter
as an "Employment Year".
3. POSITION AND DUTIES.
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3.1 Position. Executive shall serve as the Company's Chief
Executive Officer, or as the highest designated officer of the Company
or any successor company in the event of any merger or consolidation,
and, in that capacity, shall perform such duties and have such
responsibilities as a Chief Executive Officer of a company in size and
scope similar to the Company would be expected to perform and those
other duties as may be reasonably prescribed from time to time by the
Board; provided, however, that Executive acknowledges that the Company
may appoint or elect a non-executive Chairman of the Board other than
Executive. In this regard, the Executive shall follow all lawful
orders of the Board. At the beginning of the Term, the Board shall
appoint Executive to the Board and, so long as Executive is serving as
Chief Executive Officer, the Board shall nominate Executive for
election as a member of the Board at each meeting of the Company's
shareholders at which the election of Executive is subject to a vote
by the Company's shareholders and shall recommend that the
shareholders of the Company vote to elect Executive as a member of the
Board. Executive acknowledges and agrees that he shall not be entitled
to any additional compensation for his service on the Board. From time
to time, Executive also may be designated to such other offices within
the Company or its subsidiaries and affiliates as may be necessary or
appropriate for the convenience of the businesses of the Company and
its subsidiaries and affiliates.
3.2 Full-Time Efforts. Executive shall perform and discharge
faithfully, diligently and to the best of his ability his duties and
responsibilities to the Company, devote his full-time efforts to the
business and affairs of the Company, and not devote time to activities
or interests that would impair his ability to perform his obligations
to the Company. Except as otherwise provided in this Agreement,
Executive shall not be employed by, or participate or engage in, or be
a part of in any manner, including as an employee, consultant,
director, trustee or similar function, the management of any other
enterprise without the prior written consent of the Board, which
consent may be granted or withheld in its sole discretion. From and
after the first anniversary of the Effective Date, Executive shall be
permitted to serve as a director of not more than one (1) for-profit
organization (in addition to the Company) and not more than three (3)
not-for-profit organizations, in each case upon notice to the Board
and so long as the Board does not object. Executive shall not be
precluded from reasonable charitable and community activities and
industry or professional activities, or managing his personal business
interests and investments, so long as such activities do not interfere
with the performance of Executive's responsibilities under this
Agreement. Executive shall promote the best interests of the Company
and take no action that in any way damages the public image or
reputation of the Company, its subsidiaries or its affiliates.
3.3 Work Standard. Executive shall at all times comply with and
abide by all terms and conditions set forth in this Agreement, all
applicable work policies, the Company's Statement of Principles as in
effect from time to time (a copy of such Statement of Principles as in
effect on the Effective Date is attached hereto as Exhibit A and is
hereby incorporated herein by reference), procedures and rules as may
be issued by Company from time to time, and all federal, state and
local statutes, regulations and public ordinances applicable to the
performance of his duties hereunder.
3.4 No Employment Restriction. Executive represents and covenants
that his employment by the Company hereunder does not violate any
agreement or covenant to which he is subject or by which he is bound
and that there is no such agreement or covenant that could restrict or
impair his ability to perform his duties or discharge his
responsibilities to the Company.
4. COMPENSATION AND BENEFITS.
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4.1 Base Salary. Subject to the terms and conditions set forth in
this Agreement, during the Term, the Company shall pay and Executive
shall accept a base salary ("Base Salary") at the rate of no less than
$650,000 per annum. Executive shall be entitled to increases in
Executive's Base Salary as determined by the Board (excluding
Executive) and, in all events, shall receive increases consistent with
non-performance based increases given to other Senior Executive(s), as
and when such increases are awarded to other Senior Executive(s). The
Base Salary shall be paid in accordance with the Company's normal
payroll practices and pro-rated for partial periods, if any, based on
the actual number of calendar days in the applicable period.
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4.2 Incentive, Savings and Retirement Plans. During the Term,
Executive shall be eligible to participate in all current and future
incentive plans (including, without limitation, short-term and
long-term incentive plans), savings and retirement plans (excluding,
however, the Technitrol, Inc. Retirement Plan), welfare benefit plans,
practices, policies and programs (including, without limitation, as
applicable, medical, life insurance and vacation policies) applicable
generally to senior executive officers of the Company ("Senior
Executives"), and on the same basis as such Senior Executives, except
as to benefits that are specifically applicable to Executive pursuant
to this Agreement. Notwithstanding the foregoing, Executive shall be
entitled to no fewer than four (4) weeks of paid vacation during each
Employment Year during the Term. Without limiting the foregoing, the
following provisions shall apply with respect to Executive during the
Term:
(a) Annual Bonus Plan. Executive shall be entitled to an annual bonus
opportunity under the Company's Short Term Incentive Plan ("STIP") or any
successor plan thereto, the amount and terms of which shall be determined
by the Compensation Committee of the Board (the "Committee"). Executive's
annual target bonus (subject to such performance and other criteria as may
be established by the Committee) shall be 100% of Base Salary.
Notwithstanding the foregoing and for purposes of Executive's bonus for
2010 only, Executive's bonus shall be guaranteed to be at least $350,000
(the "Guaranteed Bonus"). The performance and other criteria in respect of
any bonus in excess of such amount for 2010, and for any bonus for any
future year shall be determined by the Committee in its sole discretion and
communicated to Executive within a reasonable time after the Effective Date
(for 2010) and within a reasonable time after the beginning of any such
future year. Executive's annual bonus shall be paid, if at all, not later
than March 15 of the first calendar year beginning after the end of the
fiscal year (or portion thereof) for which the bonus was earned.
Notwithstanding anything to the contrary, no bonus under this Section
4.2(a) other than the Guaranteed Bonus shall be earned unless Executive
remains an employee of the Company on the last day of the relevant
performance period.
(b) Long-Term Incentive Compensation.
(i) Stock Options. The Company shall grant to Executive
nonqualified stock options under the Technitrol, Inc. 2001 Stock
Option Plan established under the Company's Incentive
Compensation Plan ("SOP") or any successor plan thereto to
purchase 360,000 shares of the Company's common stock ("Common
Stock") on the Effective Date (the "First Tranche") and, subject
to the approval by the Company's shareholders of the amendments
to and restatement of the SOP in a manner consistent with the
terms set forth on Exhibit B, an additional 360,000 shares of
Common Stock on the first anniversary of the Effective Date (the
"Second Tranche" and, collectively with the First Tranche, the
"Option Awards"). Each Option Award shall be granted at an
exercise price as set forth in the SOP or any successor plan
thereto. Except as provided in Section 8.2(b) of this Agreement,
each Option Award shall vest in accordance with Section 8(a) of
the SOP or any successor plan thereto; provided, however, that
the fourth and fifth sentences of Section 8(a) of the SOP shall
not apply to the Option Awards. The Option Awards shall be set
forth in award agreements consistent with the terms and
conditions of the SOP or any successor plan thereto, subject,
however, to the terms of Section 8.5 of this Agreement. For
purposes of Section 6 of the SOP or any successor plan thereto,
the First Tranche shall consist of an issuance of options for
360,000 shares of Common Stock issued in connection with
Executive's recruitment and the Second Tranche shall consist of
issuances of options for 140,000 shares of Common Stock issued in
connection with Executive's recruitment and of options for
220,000 shares of Common Stock issued for the fiscal year
following the fiscal year in which the Effective Date has
occurred. In the event that the shareholders of the Company do
not approve the amendments to and restatement of the SOP at the
Company's 2010 Annual Meeting, then the Executive and the Company
will consult one another in good faith and will use their
reasonable best efforts to arrive at a mutually agreeable
substitution for the Second Tranche which would put the Company
and the Executive in substantially the same positions they would
have been in had the shareholders approved the amendments to and
restatement of the SOP.
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(ii) Performance Plan. In 2010, the Committee shall develop and
approve a performance plan that is accepted and approved by the
Company's Board and shareholders, if applicable, for Executive
with an initial period from the Company's second fiscal quarter
of 2010 through the Company's third fiscal quarter of 2012,
inclusive (the "Initial Period"), and with succeeding rolling
three-year periods during the Term and any extension thereof
beginning on the first day of fiscal year 2011 and ending on the
last day of each three-year fiscal period thereafter; for
example, 2011-2013, 2012-2014 and so on (the Initial Period and
each subsequent three-fiscal-year period is a "Performance
Period"). The target award under the performance plan for each
Performance Period shall equal 160% of Executive's Base Salary as
of the first day of the applicable Performance Period with a
possible range of award from 0% to 250% of such Base Salary;
subject, however, to the terms of Section 8.5. Executive's award
for a Performance Period shall be issued, if at all, no later
than March 15 of the calendar year following the end of the
Performance Period for which the award was earned. Subject to
Section 8.5, such awards shall be payable solely by the issuance
of options pursuant to the SOP or stock pursuant to the
Restricted Stock Plan II of Technitrol, Inc. ("RSP") or any
successor plans thereto. Notwithstanding anything to the
contrary, no award under this Section 4.2(b)(ii) shall be earned
unless Executive remains an employee of the Company on the last
day of the relevant performance period.
(c) Signing Payments. Executive shall be entitled to a signing payment of
$600,000, $300,000 of which shall be paid within three (3) days after the
Effective Date, and the balance of which shall be paid on the six-month
anniversary of the Effective Date, and a second signing payment of $600,000
to be paid on the one-year anniversary of the Effective Date, provided
Executive remains an employee of the Company on the applicable payment
date. Any bonus payable under Section 4.2(a) shall be in addition to the
amount of the signing payments.
(d) Additional Benefits. During the Term, and provided that such benefits are
offered to other Senior Executives, Executive shall be entitled (i) to
participate in the Company's section 401(k) plan and in the Technitrol,
Inc. Supplemental Savings Plan or in any successor plans thereto, (ii) to
the Company's payment of Executive's dues for a health club membership, and
(iii) to the Company's reimbursement for Executive's cost of an annual
medical examination, all in accordance with the Company's policies and
plans as in effect and as approved by the Committee from time to time.
(e) Business Expenses. The Company shall reimburse Executive for all reasonable
business expenses incurred in carrying out his duties hereunder upon
appropriate substantiation and documentation of such expenses and in
accordance with the policies, practices and procedures of the Company as in
effect from time to time.
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(f) No Other Benefits. Executive shall be entitled to all other benefits and
perquisites that are made generally available to all employees of the
Company and not otherwise delineated herein, subject to the eligibility and
other requirements of the applicable plans, if any.
(g) Vesting, Etc. on Change in Control. Executive acknowledges that awards made
to him under any Company compensation, equity-based, or other plan that
provide for full vesting upon a change in control shall specifically
exclude from such full vesting, and for any other purpose, the Company's
sale of any stock or assets of AMI Doduco.
4.3 Recoupment. In addition to any injunctive remedies available
to the Company pursuant to this Agreement, Executive agrees that in
the event of his Termination of Employment (as defined in Section 8.4
below) for a "Covered Cause Event" (as defined below) (each a
"Forfeiture Event"), the Company, at the Board's discretion (Executive
not having the right to participate in any such decision), shall be
entitled to the following additional remedies:
(a) the unexercised portion of any options or other equity awards, and any
other cash-based award, in all cases not otherwise settled or paid (in each
case, both unvested and vested, if any) will immediately be forfeited and
canceled without payment upon the occurrence of the Forfeiture Event; and
(b) Executive will be obligated to repay to the Company, in cash, within sixty
(60) days after written demand is made by the Company (the "Notice Date"),
an amount equal to (i) the total amount of Award Gain (as defined below)
realized by Executive upon each exercise of options and the value Executive
has received with respect to any settlement or payment in connection with
any other equity awards, or any other cash-based award, in each case on or
after the date that the acts giving rise to the Forfeiture Event commenced
or occurred (the "Forfeiture Date"), and (ii) the fair market value of all
other equity awards granted to Executive or which have become vested, in
each case on or after the Forfeiture Date;? provided that the return to the
Company of such other equity awards shall satisfy Executive's repayment
obligations with respect to amounts owed pursuant to this subparagraph.
"Award Gain" shall mean the product of (x) the fair market value per share
of stock at the date of such option exercise or exercise of other equity
award (without regard to any subsequent change in the market price of such
share of stock) minus the exercise price times (y) the number of shares as
to which the options or other equity awards were exercised at that date
Notwithstanding any of the foregoing, the Board (excluding Executive) shall
retain sole discretion regarding whether to seek the remedies set forth in this
Section. For purposes of this Section, a "Covered Cause Event" shall mean any
fraud, gross negligence or intentional misconduct, or wrongful act or omission,
on the part of the Executive that was a material factor contributing to the
Company restating all or a portion of its financial statements, which
restatement is detrimental to the interests of the Company or its shareholders.
Notwithstanding any other provision of this Agreement to the contrary, and to
the extent permitted by applicable law, the Company shall have the right to
offset against any amounts owed to Executive by the Company any repayment
obligations or liabilities that Executive may have under this Section.
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4.4 Other Recoupment. Executive hereby acknowledges and agrees
that Executive is subject to Section 304 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002 ("▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act"). In addition, in connection with any
grant, payment or settlement made on Executive's behalf based in whole
or in part on the financial performance criteria of the Company, or
any division thereof, that are subsequently determined by the Board to
be materially incorrect, Executive hereby agrees that Executive shall
pay back to the Company upon request of the Board (excluding
Executive) within sixty (60) days of written demand, amounts
previously received by Executive as bonuses or other incentive, equity
compensation or cash-based awards, equal to all or any portion of such
awards, as determined by the Board (excluding Executive) in its sole
discretion. Provided, however, that the amount payable by Executive
hereunder shall not exceed the amount that resulted from the
application of the materially incorrect financial performance
criteria, as determined in good faith by the Board. If after the
effective date, the Company adopts a general recoupment policy
applicable to the Chief Executive Officer, the provisions of such
recoupment policy shall supersede the provisions of Sections 4.3 and
4.4 and such recoupment policy shall be deemed incorporated herein.
4.5 Signing Payment. Unless required under the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act, any signing payments received by Executive under Section 4.2(c)
shall not be subject to recoupment pursuant to Sections 4.3 or 4.4.
5. TERMINATION FOR CAUSE.
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5.1 This Agreement may be terminated immediately, or if
applicable after the expiration of the cure period set forth in 5.1(e)
below assuming Executive was unable to cure the applicable event or
occurrence, at any time by the Company without any liability owing to
Executive or Executive's beneficiaries under this Agreement, except
Base Salary through the date of termination, any reimbursable business
expenses or vacation pay to the extent earned but not paid and any
benefits under any plan or agreement covering Executive which provide
for payment of such benefits in accordance with the terms of such plan
or agreement, under the following conditions, each of which shall
constitute "Cause:"
(a) any act by Executive involving fraud, dishonesty, embezzlement, theft or
misappropriation which in the good faith opinion of the Board (excluding
Executive) renders Executive unable to effectively manage the Company or
materially and adversely affects the Company's reputation or ongoing
business activities and any breach by Executive of applicable regulations
of competent authorities in relation to trading or dealing with stocks,
securities, investments, regulation of the Company's business and the like
(including in any administrative proceeding under which Executive has
agreed to a penalty without admitting liability);
(b) attendance at work in a state of intoxication or impairment as a result of
use of alcohol or any prohibited drug or substance;
(c) breach of any common law or statutory fiduciary duty, breach of the duty of
loyalty or breach of the duty of care to the Company;
(d) Executive being convicted of, or pleading guilty or nolo contendere to, any
felony or crime of moral turpitude; or
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(e) improper conduct prejudicial to the business of the Company, the occurrence
of gross negligence or willful misconduct of Executive resulting in his
failure or inability to perform his duties to the Company, or any breach by
Executive of any provision of this Agreement or of any written policy of
the Company (other than any such breach resulting from incapacity due to
Disability as defined in Section 7 below) if not cured within thirty (30)
days after a written notice is delivered to Executive from the Board acting
by majority vote (excluding Executive) that specifically identifies (i) the
manner in which the conduct was improper or in which Executive failed to
perform his duties to the Company or the breach by Executive and (ii) the
actions to be taken and the time period during which such actions shall be
taken to cure such event or occurrence.
5.2 Board Determination of Cause. For purposes of Section 0, the
Board by a majority vote of all directors excluding Executive shall
determine in its sole and absolute discretion whether Cause exists.
6. TERMINATION UPON DEATH OR RETIREMENT.
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Notwithstanding anything herein to the contrary, this Agreement shall
terminate immediately upon Executive's death or voluntary retirement after the
age of sixty-two (62), and the Company shall have no further liability to
Executive or his beneficiaries under this Agreement, other than for payment of
Accrued Obligations (as defined below in Section 8.2(a)) and any other benefits
under such written plans, programs, practices and policies relating to death
benefits or retirement benefits in accordance with such plans, if any, as are
applicable to Executive on the date of his death or retirement. This payment
shall be paid in a lump sum to Executive or Executive's estate within thirty
(30) days after the Company is given notice of Executive's death or retirement.
The rights of Executive or Executive's estate with respect to stock options and
restricted stock, and all other benefit plans, shall be determined in accordance
with the specific terms, conditions and provisions of the applicable agreements
and plans.
7. DISABILITY.
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If the Board (excluding Executive) determines in good faith that the
Disability of Executive has occurred during the Term (pursuant to the definition
of Disability set forth below), the Company may give to Executive written notice
of its intention to terminate Executive's employment. In such event, Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such written notice by Executive (the "Disability Effective Date").
If Executive's employment is terminated by reason of his Disability, this
Agreement shall terminate without further obligations to Executive, other than
for payment of Accrued Obligations (as defined below in Section 8.2(a)) and any
benefits under such plans, programs, practices and policies relating to
disability benefits in accordance with such written plans, if any, as are
applicable to Executive on the Disability Effective Date. The rights of
Executive with respect to stock options and restricted stock, and all other
benefit plans, shall be determined in accordance with the specific terms,
conditions and provisions of the applicable agreements and plans. For purposes
of this Agreement, "Disability" shall mean Executive's inability by reason of
mental or physical incapacity, illness or disability to substantially perform
his duties hereunder for a period of either 90 consecutive days or an aggregate
of 180 days in any 12 month period, as determined by the Board (excluding
Executive) in good faith and its sole discretion.
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8. TERMINATION OF EMPLOYMENT FOR GOOD REASON OR WITHOUT CAUSE.
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8.1 Executive's Termination of Employment for Good Reason.
Executive's employment may be terminated at any time by Executive for
Good Reason or no reason upon thirty (30) days prior written notice.
For purposes of this Agreement, "Good Reason" shall mean:
(a) a reduction by the Company in Executive's Base Salary as in effect on the
Effective Date or as the same may be increased from time to time, except
for any reductions applicable to all Senior Executives (but any failure to
increase Executive's Base Salary shall not be considered a reduction in
Base Salary); or
(b) the material breach by the Company of any provision of this Agreement,
which has not been cured by the Company within thirty (30) days after
written notice from Executive setting forth the acts or omissions alleged
to constitute such breach with reasonable particularity.
Good Reason shall not include Executive's death, retirement or Disability
or, if appointed to such position, removal of the Executive as Chairman of the
Board or expiration of the Term. Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder, if Executive provides the Board with written
notice of any circumstance (describing it with reasonable particularity) he
believes in good faith constitutes Good Reason within thirty (30) days after the
occurrence of such circumstance, or, if later, within thirty (30) days after
Executive in the exercise of ordinary care shall first become aware of any such
circumstances. If Executive does not provide such written notice within such
time period, he shall be foreclosed from raising such circumstance thereafter.
Upon receipt of such written notice, the Board may cause the Company to cure any
claimed event of Good Reason within thirty (30) days of notice from Executive
before Executive may terminate this Agreement for Good Reason.
If Executive terminates his employment for Good Reason, he shall be
entitled to the same benefits he would be entitled to as if he were terminated
without Cause pursuant to Section 8.2 below subject to the execution and
effectiveness of a Release, to the extent required under Section 8.2. If
Executive terminates his employment without Good Reason, this Agreement shall
terminate without further obligations to Executive, other than for payment of
Accrued Obligations (as defined below in Section 8.2(a)).
8.2 Termination of Employment Without Cause. The Company may
terminate Executive's employment without Cause at any time. If
Executive's employment is terminated by the Company without Cause
prior to the expiration of the Term (it being understood by the
parties that termination by death, retirement or Disability or
expiration of the Term will not constitute termination without Cause),
then Executive shall be entitled to the following benefits, subject to
Executive's execution and delivery of a Release as defined below in
Section 8.3(a):
(a) The Company shall pay to Executive in a lump sum in cash within thirty (30)
days following Executive's Termination of Employment as defined below in
Section 8.4, the sum of (i) Executive's Base Salary through the end of the
month in which the date of termination is determined to have occurred to
the extent not paid, (ii) any bonus earned to the extent not paid, and
(iii) any reimbursable business expenses and vacation pay to the extent
earned but not paid. Any compensation previously deferred by Executive
under a plan other than a tax-qualified plan (together with any accrued
interest or earnings thereon) shall be paid to Executive under the terms of
such plan or any agreement entered into by Executive thereunder. (The sum
of the amounts described in this subsection (a) shall be referred to in
this Agreement as the "Accrued Obligations.")
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(b) Notwithstanding the vesting schedule set forth in Section 4.2(b)(i) for the
Option Awards described in the first sentence of that Section, (i) if
Executive's Termination of Employment (as defined in Section 8.4 below)
occurs during the 12-month period succeeding the Effective Date, Executive
shall become vested in 50% of the First Tranche, and (ii) if Executive's
Termination of Employment occurs at any time after the first anniversary of
the Effective Date, Executive shall become vested in 100% of the First
Tranche. The Second Tranche shall vest in accordance with the SOP, except
for the last sentence of Section 8(a) of the SOP which shall not apply.
Moreover, (i) the vesting provision set forth in the last sentence of
Section 8(a) of the SOP or any successor plan thereto shall be superseded
by the foregoing vesting schedule, (ii) the period during which Executive
shall have the right to exercise the First Tranche and the Second Tranche
shall be extended to six months from Executive's Termination of Employment,
and (iii) Executive's award agreements shall contain the vesting and
exercise provisions set forth in this Agreement.
(c) Subject to Executive's execution and delivery of a Release (as defined in
Section 8.3 below), the Company shall pay Executive two (2) times his
monthly base salary in effect at the time of Termination of Employment (as
defined in Section 8.4 below) and it shall be paid to him each month during
the period which is the greater of (i) twenty-four (24) months or (ii) the
number of months remaining between the Termination of Employment and the
Term. The time which is the greater of (i) or (ii) in the preceding
sentence is the "Severance Period." Such payments during the Severance
Period shall be payable in accordance with the Company's normal payroll
practices and procedures in effect from time to time. Any payments
described in the foregoing sentence due to be paid to Executive during the
first six (6) months after his Termination of Employment (as defined below)
shall not be paid to him during such first six (6) months and will instead
be paid to him in accordance with Section 8.3(b). Further, during the
Severance Period the Company shall maintain in full force and effect for
the continued benefit of Executive, his spouse, and his dependents the
group health plan benefits to which Executive, his spouse, and his
dependents would have been entitled if such Termination of Employment had
not occurred In addition, such continued coverage shall run simultaneously
with the Company's obligation to continue group health plan coverage to
Executive, his spouse, and his dependents under Section 4980B of the
Internal Revenue Code of 1986, as amended (the "Code") (such continued
coverage being generally referred to as "COBRA").
8.3 Restrictions on Timing of Distributions. The following
restrictions shall apply to payments under this Article 0:
(a) Release Requirement. No payment shall be made under Section 0(a) unless
Executive delivers to the Company a release in the form reasonably
acceptable to the Company in favor of the Company (a "Release") and the
expiration of any period of revocation provided for in the Release has
expired without revocation by Executive.
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(b) Restriction on Timing of Distributions. Notwithstanding any provision of
this Agreement to the contrary, if Executive is considered a Specified
Employee at Termination of Employment, under such procedures as established
by the Company in accordance with Section 409A of the Code, other than on
account of death, all payments hereunder that are subject to Section 409A
of the Code (including all payments described in Section 8.2(c)), and for
which the payment event is due to a Termination of Employment may not
commence earlier than six (6) months after the date of Termination of
Employment. Therefore, in the event this provision is applicable to
Executive, any such payment which would otherwise be paid to Executive
within the first six (6) months following termination shall be accumulated
and paid to Executive in a lump sum on the first day of the seventh
calendar month that begins following Termination of Employment. All
subsequent distributions shall be paid in the manner specified. "Specified
Employee" means a "specified employee" as defined in Section 409A of the
Code and regulations thereunder.
8.4 Definition of Termination of Employment. With respect to the
payment of all benefits under Section 8.1 and 8.2, "Termination of
Employment" shall mean "separation from service" as defined in Section
409A of the Code and regulations issued thereunder.
8.5 Rights under Equity Plans. The provisions of this Agreement
are subject to the written terms of the Company's equity plans in
effect from time to time. Except as otherwise specifically provided in
this Agreement, any equity awards granted to Executive under the
equity plans shall be forfeited or not, vest or not, and, in the case
of stock options, become exercisable or not, as provided by and
subject to the terms of the applicable equity plans. Notwithstanding
the foregoing, Executive acknowledges that contemporaneously with the
execution of this Agreement, the Board will amend the provisions of
the SOP and RSP in a manner consistent with the terms set forth on
Exhibit B. All awards made to Executive pursuant to Section 4.2(b)(ii)
of this Agreement shall be subject to (i) approval of the amended and
restated SOP and RSP by the Company's shareholders and (ii) the terms
of the SOP and RSP or any successor plans thereto, including without
limitation the limits on the number of options and shares that may be
awarded or issued under such plans. Awards issued under Section
4.2(b)(ii) of this Agreement shall be payable solely by the issuance
of options pursuant to the SOP or stock pursuant to the RSP or any
successor plans thereto. The Committee shall have the sole discretion
to determine the form of payment of such awards in either options
under the SOP or stock under the RSP, or any successor plans thereto,
or in a combination of the two; further, as provided in the RSP, or
any successor plan thereto, any award paid in such stock may be
accompanied by a cash award, and if so such cash award shall be taken
into account for purposes of the Committee's award determination under
Section 4.2(b)(ii) of this Agreement.
8.6 Resignation. Upon Executive's Termination of Employment and
at the request of the Board (excluding Executive), Executive shall
execute resignations as a director of the Company and from all
positions held as a director of the Company and, if applicable, as a
director or an officer of a company affiliated or related to the
Company held at the time of or preceding such termination. Executive
shall cooperate with the Company in executing such resignations or in
the adoption of such other corporate resolutions as may be necessary
to continue the business affairs of the Company or any affiliate until
such resignations are deemed effective under the applicable law
governing such Company or affiliate. Upon Executive's resignation as a
director or officer of any company affiliated or related to the
Company, Executive shall forfeit without consideration any nominal or
qualifying shares he holds in such affiliated or related entities.
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8.7 Non-Renewal. If upon expiration of the Term, this Agreement
is not replaced by a new agreement or otherwise extended by the
parties ("Non-Renewal") and upon such circumstance there is a
Termination of Employment, then the Company shall have no further
liability to Executive, other than the following benefits, subject to
Executive's execution and delivery of a Release as defined in Section
8.3(a):
(a) The Company shall pay the Accrued Obligations as defined in Section 8.2(a)
to Executive in a lump sum in cash within thirty (30) days following the
expiration of the Term.
(b) Notwithstanding the vesting schedule set forth in Section 4.2(b)(i) for the
Option Awards described in the first sentence of that Section, Executive
shall become vested in 100% of the First Tranche only. The Second Tranche
shall vest in accordance with the SOP, except for the last sentence of
Section 8(a) of the SOP which shall not apply. Moreover, (i) the vesting
provision set forth in the last sentence of Section 8(a) of the SOP or any
successor plan thereto shall be superseded by the foregoing vesting
schedule, (ii) the period during which Executive shall have the right to
exercise the First Tranche and the Second Tranche shall be extended to 90
days from the expiration of the Term, and (iii) Executive's award
agreements shall contain the vesting and exercise provisions set forth in
this Agreement.
For purpose of clarity, the parties agree that Non-Renewal means only the
circumstance described in the first sentence of Section 8.7 above and shall not
apply to Termination of Employment for any other reason including death,
Disability, retirement, resignation, termination with or without Cause or
termination for Good Reason.
9. PUBLICITY; NO DISPARAGING STATEMENT.
------------------------------------
Executive and the Company covenant and agree that they shall not engage in
any communications which shall disparage one another or interfere with their
existing or prospective business relationships. For purposes of this provision,
a communication shall be deemed to be a "Disparaging Comment" if it is a verbal,
electronic, or written statement which would affirmatively discredit, belittle,
or ridicule Executive or the Company, as the case may be, either personally or
professionally. In the event that Executive shall at any time be employed by any
competitor of the Company, provided that such employment is not in violation of
the restriction against competition set forth in Section 10.4 of this Agreement,
any communication by or attributed to Executive that discusses Executive's
employer's products or services on a comparative basis to the Company's products
and services and that is not false or misleading shall not be considered to be a
Disparaging Comment.
10. BUSINESS PROTECTION PROVISIONS.
-------------------------------
10.1 Preamble. As a material inducement to the Company to enter
into this Agreement, and its recognition of the valuable experience,
knowledge and proprietary information Executive will gain from his
employment with the Company, Executive warrants and agrees he will
abide by and adhere to the following business protection provisions in
this Article 10 and all sections and subsections thereof.
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10.2 Confidentiality. Executive acknowledges a duty of
confidentiality owed to the Company and shall not, at any time during
his employment by the Company or thereafter, use, divulge, furnish, or
make accessible to anyone, without the express authorization of the
Board, any trade secret, private or confidential information of the
Company or any of its subsidiaries obtained or acquired while so
employed. All computer software, customer lists, price lists,
catalogs, records, and proprietary know-how acquired while an employee
of the Company are acknowledged to be the property of the Company and
shall not be duplicated, removed from the Company's possession, or
made use of other than in pursuit of the Company's business; and, upon
Termination of Employment for any reason, Executive shall promptly
deliver to the Company, without further demand, all copies thereof
which are then in Executive's possession or control. Executive shall
immediately notify the Company of any unauthorized disclosure or use
of any trade secrets or confidential information of which Executive
becomes aware. The obligation hereunder regarding the protection of
confidential information shall not apply to any information which: (i)
is, as of the date hereof, already in Executive's lawful possession;
or (ii) is or becomes publicly known through no fault of Executive; or
(iii) is rightfully received by Executive from a third party without
accompanying secrecy obligations; or (iv) is approved for release by
the Company's prior written consent. If Executive shall at any time be
involved in any litigation, administrative, legal, regulatory or other
proceeding in which Executive may become required to disclose any
confidential information in violation of this Agreement (a "Legal
Proceeding"), whether in discovery or otherwise, Executive may furnish
that portion (and only that portion) of such confidential information
that, in the written opinion of the Company's counsel, Executive is
legally compelled or is otherwise required to disclose or else stand
in contempt or suffer other material censure or material penalty.
Executive shall notify the Company of any Legal Proceeding as soon as
practicable after Executive learns of the same, but no later than
within thirty (30) days thereafter. The Company shall be entitled to
participate in any Legal Proceeding, as a party thereto, to the
greatest extent permitted by applicable law and in any event shall be
allowed to participate with Executive in formulating and implementing
strategies to affect the confidentiality described in this Agreement,
with counsel of its own choosing and at its own cost and expense.
10.3 Inventions and Improvements. During the Term of Executive's
employment, Executive shall promptly communicate to the Company all
ideas, discoveries and inventions which are or may be useful to the
Company or its business. Executive acknowledge that all ideas,
discoveries, inventions, and improvements which are made, conceived,
or reduced to practice by Executive and every item of knowledge
relating to the Company's business interests (including potential
business interests) gained by Executive during his employment are the
property of the Company, and Executive irrevocably assign all such
ideas, discoveries, inventions, improvements, and knowledge to the
Company for its sole use and benefit, without additional compensation.
The provisions of this Section shall apply whether such ideas,
discoveries, inventions, improvements or knowledge are conceived, made
or gained by Executive alone or with others, whether during or after
usual working hours, whether on or off the job, and whether or not
within the specific realm of Executive's duties. Executive shall, upon
the request of the Company, at any time during or after his employment
with the Company, sign all instruments and documents requested by the
Company and otherwise cooperate with the Company to protect its right
to such ideas, discoveries, inventions, improvements, and knowledge,
including applying for, obtaining, and enforcing patents and
copyrights thereon. In the event the Company is unable, after
reasonable effort, to secure Executive's signature on any document
reasonably necessary or appropriate for any of the foregoing purposes,
whether because of physical or mental incapacity or for any other
reason whatsoever, Executive hereby irrevocably designates and
appoints the Company and its duly authorized officers and agents as
Executive's agent and attorney-in-fact, to act on his behalf to
execute and file any such document and to do all other lawfully
permitted acts to further the prosecution and issuance of any such
patent, copyright and other analogous protection with the same legal
force and effect as if executed by Executive.
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10.4 Noncompetition. During the Term of Executive's employment
and after any Termination of Employment for an additional period equal
to the Severance Period Executive shall not directly or indirectly:
(a) engage, directly or indirectly, anywhere in the world, in the manufacture,
assembly, design, distribution or marketing of any product or equipment
substantially similar to or in competition with any product or equipment
which at any time during the Term of such employment or the immediately
preceding twelve (12) month period has been manufactured, sold or
distributed by the Company or any subsidiary or any product or equipment
which the Company or any subsidiary was developing during such period for
future manufacture, sale or distribution;
(b) be or become a stockholder, partner, owner, officer, director or employee
or agent of, or a consultant to or give financial or other assistance to,
any person or entity engaged in or considering engaging in any such
activities described in subparagraph (a) or so engaged;
(c) seek in competition with the business of the Company to procure orders from
or do business with any customer of the Company;
(d) solicit, or contact with a view to the engagement or employment by, or
otherwise directly or indirectly engage or employ any person or entity of
any person who is an employee of the Company or was an employee of the
Company within the previous six (6) months;
(e) seek to contract with or engage (in such a way as to adversely affect or
interfere with the business of the Company) any person or entity who has
been contracted with or engaged to manufacture, assemble, supply or deliver
products, goods, materials or services to the Company; or
(f) engage in or participate in any effort or act to induce any of the
customers, associates, consultants, or employees of the Company or any of
its affiliates to take any action which might be disadvantageous to the
Company or any of its affiliates.
Nothing in this Section 10.4 shall prohibit Executive from owning, as a
passive investor, in the aggregate not more than 2% of the outstanding publicly
traded stock of any corporation engaged in the activities described in
subparagraph (a). The duration of Executive's covenants set forth in this
Section shall be extended by a period of time equal to the number of days, if
any, during which Executive is in violation of the provisions contained in this
Agreement.
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10.5 Remedies.
Executive understands and acknowledges that his violation of this Article 0
or any section or subsection thereof would cause irreparable harm to Company and
Company would be entitled to an injunction by any court of competent
jurisdiction enjoining and restraining Executive from any employment, service,
or other act prohibited by this Agreement. The parties agree that nothing in
this Agreement shall be construed as prohibiting Company from pursuing any
remedies available to it for any breach or threatened breach of this Article 0
or any section or subsection thereof, including, without limitation, the
recovery of damages from Executive or any person or entity acting in concert
with Executive. If any part of this Article 0 or any section or subsection
thereof is found to be unreasonable, then it may be amended by appropriate order
of a court of competent jurisdiction to the extent deemed reasonable.
Furthermore and in recognition that certain severance payments are being agreed
to in reliance upon Executive's compliance with this Article 0 after Executive's
Termination of Employment, in the event Executive breaches any of such business
protection provisions of this Agreement, any unpaid amounts (e.g., those
provided under Article 0) shall be forfeited and Company shall not be obligated
to make any further payments or provide any further benefits to Executive
following any such breach.
11. GENERAL PROVISIONS.
-------------------
11.1 Amendment. This Agreement may be amended or modified only by
a writing signed by both of the parties hereto.
11.2 Binding Agreement. This Agreement shall inure to the benefit
of and be binding upon Executive, his heirs and personal
representatives, and the Company and its successors and assigns.
11.3 Waiver of Breach. The waiver of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any
other breach.
11.4 Indemnification. Upon the Effective Date, the Company and
Executive shall execute an indemnification agreement in substantially
the form attached hereto as Exhibit C which is hereby incorporated
herein by reference.
11.5 Tax Withholding. There shall be deducted from each payment
under this Agreement the amount of any tax required by any
governmental authority to be withheld and paid over by the Company to
such governmental authority for the account of Executive.
11.6 Notices. All notices and all other communications provided
for herein shall be in writing and delivered personally to the other
designated party, or mailed by certified or registered mail, return
receipt requested, or delivered by a recognized national overnight
courier service, or sent by facsimile, as follows:
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If to Company to: Technitrol, Inc.
Attn: Vice President Human Resources
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to Executive to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
All notices sent under this Agreement shall be deemed given twenty-four (24)
hours after sent by facsimile or courier, seventy-two (72) hours after sent by
certified or registered mail and when delivered if personal delivery. Either
party hereto may change the address to which notice is to be sent hereunder by
written notice to the other party in accordance with the provisions of this
Section.
11.7 Waiver of Jury Trial. Each party hereto hereby waives, to
the fullest extent permitted by applicable law, any right it may have
to a trial by jury in respect of any litigation directly or indirectly
arising out of, under or in connection with this Agreement. Each party
hereto (i) certifies that no representative, agent or attorney or the
other party has represented, expressly or otherwise, that the other
party would not, in the event of litigation, seek to enforce the
foregoing waiver, and (i) acknowledges that he or it and the other
parties hereto have been induced to enter this Agreement, by, among
other things, the mutual waivers and certifications of this Section.
11.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania (without giving effect to the conflict of laws provisions
thereof). Any legal action or proceeding by Executive against the
Company with respect to this Agreement will be brought and, except as
set forth below, any and all disputes, controversies, or claims of
Executive (hereinafter "disputes") arising out of or related to this
Agreement, either directly or indirectly, including, but not limited
to, disputes over the interpretation, application or alleged violation
of this Agreement, and any and all disputes arising out of or related
to, either directly or indirectly, the employment relationship between
Executive and the Company, shall be submitted for adjudication
exclusively to arbitration before the Judicial Arbitration and
Mediation Services ("JAMS"), located at Philadelphia , Pennsylvania.
In agreeing to arbitration of any and all disputes, the parties
knowingly and voluntarily waive and relinquish their rights to have
such disputes decided through law suits, in a court of law with a
judge and jury and, instead, shall have them decided by an arbitrator
under the rules and regulations of JAMS. In such arbitration each
party shall pay its own attorney's fees and other costs and half the
costs for the arbitrator. Any decision of the arbitrator resolving
such dispute shall be final and binding upon the parties.
Notwithstanding the foregoing, the foregoing shall not be deemed to
prohibit or restrict either party from initiating legal action in a
court of competent jurisdiction to seek injunctive or other equitable
relief.
11.9 Entire Agreement. This Agreement contains the full and
complete understanding of the parties hereto with respect to the
subject matter contained herein and this Agreement supersedes and
replaces any prior agreement, either oral or written, which Executive
may have with the Company that relates generally to the same subject
matter.
15
11.10 Assignment. This Agreement and any rights, payments or
benefits may not be assigned or encumbered by Executive without the
prior written consent of Company, and any attempted assignment not in
accordance herewith shall be null and void and of no force or effect.
This Agreement may be assigned by the Company to any successor to all
or substantially all of its business.
11.11 Severability. If any one or more of the terms, provisions,
covenants or restrictions of this Agreement shall be determined by a
court of competent jurisdiction to be invalid, void or unenforceable,
then the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect,
and to that end the provisions hereof shall be deemed severable.
11.12 Section and Paragraph Headings. The section and paragraph
headings set forth herein are for convenience of reference only and
shall not affect the meaning or interpretation of this Agreement
whatsoever.
11.13 Interpretation. Should a provision of this Agreement
require judicial interpretation, it is agreed that the judicial body
interpreting or construing the Agreement shall not apply the
assumption that the terms hereof shall be more strictly construed
against one party by reason of the rule of construction that an
instrument is to be construed more strictly against the party which
itself or through its agents prepared the agreement, it being agreed
that all parties and/or their agents have participated in the
preparation hereof.
11.14 Voluntary Agreement. Executive and Company represent and
agree that each has reviewed all aspects of this Agreement, has
carefully read and fully understands all provisions of this Agreement,
and is voluntarily entering into this Agreement. Each party represents
and agrees that such party has had the opportunity to review any and
all aspects of this Agreement with legal, tax or other adviser(s) of
such party's choice before executing this Agreement.
11.15 Compliance With Section 409A of the Code. This Agreement is
intended to comply with the requirements of Section 409A of the Code
and the final regulations issued thereunder and shall be construed and
interpreted in accordance therewith in order to avoid the imposition
of additional tax under such section.
* * * *
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IN WITNESS WHEREOF, the parties hereto have executed, or caused their duly
authorized representative to execute, this Agreement as of this date first
written above.
TECHNITROL, INC.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
--------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Title: Chief Executive Officer
EXECUTIVE
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
