ASTRONICS CORPORATION EMPLOYMENT TERMINATION BENEFITS AGREEMENT DATED DECEMBER 16, 2003 BETWEEN ASTRONICS CORPORATION AND PETER J. GUNDERMANN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF ASTRONICS CORPORATION
EXHIBIT 10.6
ASTRONICS CORPORATION
EMPLOYMENT TERMINATION BENEFITS AGREEMENT DATED DECEMBER 16, 2003 BETWEEN ASTRONICS
CORPORATION AND XXXXX X. XXXXXXXXXX, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF ASTRONICS
CORPORATION
CORPORATION AND XXXXX X. XXXXXXXXXX, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF ASTRONICS
CORPORATION
AGREEMENT, made this 16th day of December, 2003, between ASTRONICS CORPORATION, a
New York corporation with an office and place of business at 0000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxx
00000 (the “Company”), and Xxxxx X. Xxxxxxxxxx, who resides at 00 Xxxxxx Xxxx, Xxxxxxx, Xxx
Xxxxxxxxx 00000 (“Executive”).
RECITALS:
Executive is presently employed by Company and the Board of Directors of Company (the “Board”)
recognizes that Executive’s contribution to the growth and success of Company has been substantial;
The Board desires to establish appropriate employment arrangements which the Board has
determined will reinforce and encourage Executive’s continued attention and dedication to the
Company’s business and success as a member of the Company’s management, furthering the best
interest of the Company and its shareholders; and
Executive is willing to commit himself to continue to serve Company on the terms and
conditions herein provided.
NOW, THEREFORE, in consideration of the mutual promises and the respective covenants and
agreements of the parties herein contained and intending to be legally bound hereby, the parties
hereto agree as follows:
— DEFINITIONS
Terms Defined. In addition to any words and terms elsewhere defined herein, the following
words and terms shall have the meanings indicated below unless the context or use indicates a
different meaning:
“CAUSE” shall mean any act that is materially inimical to the best interests of the Company
and that constitutes, on the part of the Executive, intentional or grievous wrong, including, but
not limited to, common law fraud, a felony, or other gross malfeasance of duty.
A “CHANGE OF CONTROL” shall mean the transfer in one or more transactions, extending over a
period of not more than 24 months, of Common Stock of the Company possessing 25% or more of the
total combined voting power of all Class A and Class B Shares of Common Stock. A transfer shall be
deemed to occur if shares of Common Stock are either transferred or made the subject of options,
warrants, or similar rights granting a third party the opportunity to acquire ownership or voting
control of such Common Stock.
“COMMON STOCK” shall mean the Class A and Class B $1.00 par value shares of the capital stock
of the Company, as well as all other securities with voting rights or convertible into securities
with voting rights.
“COMPENSATION” shall mean the base salary paid to the Executive for a calendar year plus any
cash bonus or cash incentive payments earned for or attributable to that year, whether or not the
bonus or incentive payments are paid during that year. “AVERAGE ANNUAL COMPENSATION” shall mean
the average of the Compensation paid to Executive for the two years preceding termination.
“COMPENSATION COMMITTEE” shall mean the Executive Compensation Committee of Board, as it is
constituted from time to time.
“COMPANY” shall mean ASTRONICS CORPORATION, as well as any successors or assigns of ASTRONICS
CORPORATION, whether by transfer, merger, consolidation, acquisition of all or substantially all of
the business assets, change in
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identity, or otherwise by operation of law and for purposes of employment of Executive shall
also mean any parent, subsidiary or affiliated entity to whom Executive’s services may be assigned.
“DISABILITY” shall mean the inability of Executive to perform a substantial portion of his
duties hereunder for a continuous period of 6 months or more.
“EFFECTIVE DATE” shall mean the date of this Agreement.
“INVOLUNTARY TERMINATION OF EMPLOYMENT” shall mean a severance of the Executive’s employment
relationship prior to age 65, other than for death, Disability, Retirement, or Cause, by or at the
instigation of Company or by or at the instigation of Executive where Executive’s pay has been
diminished or reduced to a greater extent than any diminution or reduction of Company’s Executives
generally. Where there has been a Change of Control, Involuntary Termination of Employment shall
mean a termination of the employment relationship by or at the instigation of Company or by or at
the instigation of Executive (whether before or after age 65) within two years of the Change of
Control.
“RETIREMENT” shall mean the election of Executive to retire from active employment with
Company at the end of the month in which Executive attains 65 years of age or thereafter.
Retirement shall also mean a similar election by Executive prior to age 65, where Executive elects
to receive early Retirement benefits under the Company’s Profit Sharing Plan or any successor
Company retirement plan.
“TERM OF EMPLOYMENT” means the period commencing on the effective date and expiring on the
earliest to occur of (i) Executive’s death, Disability or Retirement, (ii) the Voluntary
Termination of Employment by Executive, or (iii) Termination for Cause of Executive’s employment.
“TERMINATION FOR CAUSE” shall mean severance of the Employment relationship based upon or
brought about by Cause as defined in paragraph (a) above.
“VOLUNTARY TERMINATION OF EMPLOYMENT” shall mean a severance of the Employment relationship by
or at the instigation of Executive, other than a termination occurring upon a Change of Control as
defined in paragraph (b) above, or upon death, Disability or Retirement.
— EMPLOYMENT, TERM, DUTIES
Employment. Company hereby hires Executive, and Executive agrees to serve Company, for a term
beginning on the Effective Date of this Agreement, and ending on the last day of the Term of this
Agreement.
Term. The term of this Agreement shall begin on the Effective Date, and shall end as provided
in Section 5.01. Unless benefits under this Agreement are being provided at that time, this
Agreement shall also end upon Executive’s attainment of age 70.
Capacity. Executive shall serve in such executive or managerial capacity as the Board of
Directors of the Company shall determine, and shall have all of the duties, responsibilities,
obligations and privileges commensurate with such position.
Duties. Executive agrees to devote his full business time and energy to the business and
affairs of Company and to utilize his best efforts, skill and abilities to promote such interest,
performing such duties as may be assigned on the executive or managerial level. Company agrees
that Executive shall have such powers and authority as shall reasonably be required to enable
Executive to discharge his duties in an efficient manner.
Base of Operations. Company agrees that Executive’s base of operations shall be Executive’s
location as of the Effective Date of this Agreement. Although Executive recognizes that
substantial traveling may be required in connection with employment, Executive shall not be
required to operate from any other area without Executive’s prior consent.
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— COMPENSATION AND BENEFITS
Base Salary and Profit Share. During the Term of Employment, Company shall pay Executive for
all services to be rendered as set forth herein, a base salary as determined from time to time by
the Compensation Committee, plus an annual bonus award based on the performance of the Company and
of the Executive as the Compensation Committee may determine. The base salary shall be payable in
periodic installments not less frequently than on a monthly basis. Any bonus award shall be
payable annually in the month of January and shall be based on performance for the prior fiscal
year.
This Agreement shall not be deemed abrogated or terminated if Company, in its discretion,
shall determine to modify the base compensation of Executive for any period of time, and Executive
accepts the modification, but nothing herein contained shall be deemed to obligate Company to make
any increase in base compensation.
Other Employment Benefits. Executive shall be entitled to all rights and benefits for which
he shall be eligible under any retirement, profit sharing, employee stock purchase plan, savings
and investment plan, business travel, group life, disability, accident or health insurance,
vacation, and other benefit plans which Company provides for its employees generally, as well as
for any stock option, incentive compensation, club memberships, supplemental medical and life
insurance coverages and similar benefit plans which Company provides for executive personnel having
duties and responsibilities similar to those of Executive.
Reimbursement of Expenses. Company shall provide Executive with an automobile or an allowance
for automobile use and shall pay or reimburse Executive for all reasonable traveling or other
expenses incurred or paid by Executive in connection with the performance of his services under
this Agreement upon presentation of expense statements or vouchers, and such other supporting
information as it may from time to time request.
— NON COMPETITION, CONFIDENTIAL DATA
Non-Competition. During the term of this Agreement, and in the event of Involuntary
Termination upon a Change in Control until the last payment of any benefits to Executive under this
Agreement, Executive will not directly or indirectly engage in or compete with the business of the
Company, either as owner, partner or employee. In the event that Executive shall compete with the
business of the Company, payment of benefits under this Agreement will be suspended so long as
Executive engages in activity deemed to be in competition with the business of the Company.
Confidential Information. Executive agrees, during the term of this Agreement and thereafter,
not to use or make use of nor to divulge to anyone other than authorized personnel or
representatives of Company, any information or knowledge relating to the business, business methods
or techniques of Company including, without being limited to, information about accounting
procedures, training methods or techniques, data, processes, research manufacturing formulae,
costing, sales prospects, customers’ or suppliers’ lists, bidding formulae, sales, profits or
costs, except to the extent that Executive can establish the same to be generally known to the
public or recognized as standard practice in the business in which Company is engaged or to the
extent Executive is required to divulge such information or knowledge in connection with any legal
proceeding.
Patents and Inventions. Executive agrees that any patents, inventions, improvements,
discoveries, formulae or processes which he may obtain, make or conceive during the period of
employment hereunder, shall be the sole and exclusive property of Company, and that he will sign
and execute any and all applications, assignments or other instruments necessary or appropriate to
assign, convey or otherwise make available exclusively to Company all such patents, inventions,
improvements, discoveries, formulae or processes.
Enforcement. Executive agrees that in the event of a breach or threatened breach by Executive
of any provision of this Article, Company may institute legal proceedings to compel Employee
compliance hereunder, including injunctive relief and any other remedy provided in law or equity.
If the scope of any restriction contained in this Agreement is too broad to permit enforcement of
such restriction to its full extent, then such restriction shall be enforced to the maximum extent
permitted by law, and Executive hereby consents and agrees that such scope may be judicially
modified accordingly in any proceeding brought to enforce such restriction.
In the event of such judicial modification, Company may, if it determines in its sole judgment
that such action is contrary to the best interests of Company, within ten days after notification
of such modification, terminate all obligations of Company under this Agreement by giving Executive
not less than 15 days notice of such termination.
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— TERMINATION
Termination of Employment. Executive’s employment by Company shall terminate on the earliest
to occur of (a) Executive’s death, Disability or Retirement, (b) Voluntary Termination of
Employment by Executive, or (c) Termination for Cause of Executive’s employment. In any such event
this Agreement shall also terminate other than for the provisions of Articles IV, VI and VII, which
shall survive such Termination.
The existence of Disability, as defined herein, shall be determined in the sole judgment of
the Compensation Committee, and effective upon delivery to Executive of written notice that such
determination has been made, Executive’s employment shall be terminated and Executive shall be
removed from all positions, as an officer, director, or otherwise, with Company.
5.02 Effect of Involuntary Termination. This Agreement shall survive an Involuntary
Termination of Employment.
5.03 Executive Obligations Upon Termination. Executive agrees that upon termination of
services under this Agreement, for any cause whatsoever, he will deliver to Company all documents,
drawings, papers, computer tapes or discs, notes, memoranda, handbooks, manuals, and all other
tangible material on which information is stored or recorded, and all copies thereof which
Executive has in his control or possession in any way related to the business of Company, its
customers, suppliers or affiliates.
— BENEFITS UPON TERMINATION
Death, Disability, Retirement. In the event of termination upon death, or by virtue of
Retirement or Disability, Executive’s surviving spouse or estate shall be entitled to the benefits
provided generally by the Company to its executives.
Termination For Cause. Upon termination of Executive’s employment for Cause, Executive shall
be entitled to his base salary up to the date of such termination, as well as any vested benefits
under any Company retirement plan or supplemental retirement plan in which Executive may
participate. Under such termination, Executive shall not be entitled to participate in any profit
share award or incentive compensation payable after the date of termination, but will be eligible
to receive a payment in cash for any unutilized vacation benefits accrued for Executive. Unless
otherwise provided by law, Executive shall not have the right or privilege of exercising any stock
options held by Executive and issued under any stock option plan or stock purchase plan of the
Company.
Voluntary Termination of Employment. In the event of Executive’s Voluntary Termination of
Employment with Company, Executive shall be entitled to his employment benefits up to the date of
termination, including any vested benefits under any Company profit sharing, retirement plan or
supplemental retirement plan, in which Executive may participate, but unless any profit share award
or incentive compensation is payable prior to such termination, Executive shall not receive any
such payment. Executive shall receive a payment in cash for any unutilized vacation benefits
accrued for Executive. Executive shall have the right to exercise any stock options previously
granted to Executive to the extent permitted by the terms of the applicable stock option plan or
the grant thereunder
Involuntary Termination of Employment. In the event of the Involuntary Termination of
Employment in the circumstance of a Change in Control, Executive shall be entitled to receive his
base salary then in effect or his Average Annual Compensation, whichever is greater, for a period
of two (2) years; any vested benefits under any Company retirement plan, profit sharing or
supplemental retirement plan in which he may participate; the continuation at Company’s expense for
two (2) years of any club memberships held by Executive for which reimbursement was provided by
Company; and, for a period of two (2) years, continue to be provided with an automobile, or
reimbursement of automobile expense. In lieu of the continuation of the foregoing pay and benefits
provided for in the foregoing sentence, Executive may elect to receive some or all of such pay and
benefits in a lump sum, the same to be paid within sixty (60) days of Executive’s written election,
which election must be made within sixty (60) days of the Involuntary Termination of Employment.
Executive shall have the right to exercise any vested or unvested stock options held by Executive
at the date of termination within the one year period after the date of such Involuntary
Termination of Employment but not later than the expiration date(s) of such stock options, or if
such exercise is not permitted or, in any event, if Executive so elects, an amount equal to the
bargain element of such options, vested or unvested, shall be paid. Executive shall also receive
for two (2) years after Termination the same health, life and disability insurance coverages for
which he was eligible during employment. Executive shall also receive a payment in cash for any
unutilized vacation benefits accrued for Executive. Notwithstanding the foregoing, if the
Executive dies within three months from the date of the Involuntary Termination of Employment, his
vested and unvested stock options may be exercised within the one year period after the date of
such Involuntary Termination of Employment but not later than the expiration date(s) of such stock
options, or if such exercise is not permitted or, in any event, if Executive so elects, an amount
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equal to the bargain element of such options, vested or unvested, shall be paid. For purposes
of this Section 6.04, the bargain element of options shall be determined as of the date a Change of
Control occurs.
— MISCELLANEOUS
Notices. All notices, requests, demands and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given when received, if
personally delivered, electronically transmitted, or mailed, first class postage prepaid, addressed
to Company at 000 Xxxxxxxx Xxx, Xxxx Xxxxxx, Xxx Xxxx 00000 (with a copy to Xxxxxxx Xxxx LLP,
attention Xxxx X. Xxxxxxxx, Esq., Xxx X & X Xxxxx, Xxxxx 0000 Xxxxxxx, Xxx Xxxx 00000), or to
Executive at the address on the first page, or such other address as may be designated by notice in
accordance with the provisions of this Section.
Arbitration. All disputes, differences and controversies arising under or in connection with
this Agreement, including but not limited to its interpretation, construction, performance or
application, shall be settled and finally determined by arbitration in the City of Buffalo, New
York, under the then existing rules of the American Arbitration Association.
Entire Agreement. This instrument contains the entire agreement of the parties with respect
to its subject matter, and supersedes and replaces any prior agreement or understanding, and no
amendment, modification or waiver of any provision hereof shall be valid unless it be in writing
and signed by Company and Executive.
Non-Waiver. The waiver of, or failure to take action with regard to, any breach of any term
or condition of this Agreement shall not be deemed to constitute a continuing waiver or a waiver of
any other breach of the same or any other term or condition.
Paragraph and Other Headings. The section and other headings contained in this Agreement are
for reference purposes only and shall not affect in any way, the meaning or interpretation of this
Agreement.
Gender and Number. The masculine gender used herein shall be deemed to include the feminine
and neuter genders, and vice versa, and the singular or plural, shall be deemed to include the
plural or singular, as the case may be, when required by the context, and the word “person” shall
include corporation, firm, partnership or other form of association.
Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any
of which shall be deemed an original, and all of which together shall constitute one and the same
instrument, notwithstanding that all of the parties are not signatory to the original or the same
counterpart.
Persons Bound — Non-Assignment. This Agreement and all of the provisions hereof shall be
binding upon the parties hereto, their legal representatives, heirs, distributees, successors and
assigns. Except as expressly stated herein, nothing in this Agreement is intended to confer upon
any other person any rights or remedies under or by reason of this Agreement. Neither this
Agreement nor any rights hereunder shall be assignable by Executive.
Guarantee of Company. If Executive’s services are assigned to any parent, subsidiary or
affiliate of Company, Company shall remain liable as a guarantor of the obligations hereunder.
Inconsistent Provisions. If any provision of this Agreement is inconsistent with any
provision or any plan or resolution (including a severance pay resolution) providing benefits
substantially similar to those provided by this Agreement or any other document required or
executed pursuant to this Agreement, the provisions of this Agreement shall be controlling.
Severability. If any provision of this Agreement or the application thereof to any person or
circumstances is held invalid, the remainder of this Agreement and the application of such
provision to the other person and circumstances shall not be affected thereby and each term and
condition of the Agreement shall be valid and enforced to the fullest extent permitted by law.
Choice of Law. This Agreement shall be construed as to both validity and performance and
enforced in accordance with and governed by the laws of the State of New York, without giving
effect to the choice of law principles of those laws.
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No Conflicting Agreement. Executive represents and warrants to Company that he is not a party
to, or bound by, any agreement, understanding or plan which would interfere with or prevent
performance under this Agreement. Company similarly represents and warrants to Executive.
Attorney’s Fees. In the event that any dispute or difference arising under or in connection
with this Agreement results in arbitration or litigation, Company shall reimburse Executive for all
reasonable Attorney’s fees and expenses if Executive prevails in such proceeding.
Authorization. Company represents to Executive that this Agreement has been duly approved by
its Board of Directors and execution by an appropriate officer duly authorized.
IN WITNESS WHEREOF, the undersigned parties hereto have duly executed this Agreement as of the
day and year first above written
| WITNESS: | ASTRONICS CORPORATION | |||||||
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WITNESS: |
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