EXHIBIT 10.2
Form of
Change in Control
Agreement
January 16,
2009
[Name]
[Address]
Dear
_____________:
The L.S. Starrett Company (the
“Company”) considers it important and in the best
interests of its stockholders to foster the continuous employment
of key management personnel. In this connection, the
Board of Directors of the Company (the “Board”)
recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Company
may exist and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the
departure or distraction of key management personnel to the
detriment of the Company and its stockholders.
The Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention
and dedication of certain members of the Company's management,
including you, to their assigned duties in the face of potentially
distracting circumstances arising from the possibility of a change
in control of the Company.
In order to motivate you to remain in the employ
of the Company in your current management position, the Company
agrees that you shall receive the benefits set forth in this letter
agreement (the “Agreement”) in the event your
employment in your current management position with the Company is
terminated under the circumstances described below subsequent to a
Change in Control of the Company.
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Term of
this Agreement . The term of this Agreement (the
“Term”) shall commence on the date hereof and shall
continue in effect through June 30, 2010; provided, however, that
on July 1, 2010 and each July 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year
unless, not later than June 15 of such year, the Company shall have
given written notice that it does not wish to extend this Agreement
(provided that no such notice may be given during the pendency of a
potential Change in Control of the Company); and, provided further,
that if a Change in Control of the Company shall have occurred
during the original or extended Term of this Agreement, this
Agreement shall continue in effect for a period of not less than
twenty-four (24) months beyond the month in which such Change in
Control occurred. Notwithstanding the termination of your
employment, any obligations hereunder which by their terms continue
shall survive such termination. This Agreement does not constitute
a contract of employment. Any termination of your employment by the
Company or by you during the Term shall be communicated by a
written notice of termination (“Notice of Termination”)
to the other party hereto in accordance with Section 8. The
“Date of Termination” shall mean the effective date of
such termination as specified in the Notice of Termination;
provided, however, that no such Notice of Termination shall specify
an effective date more than one hundred eighty (180) days after the
date of such Notice of Termination nor, except in the event of a
termination for Cause or Good Reason, less than thirty (30)
days.
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Certain
Definitions . As used
herein, the following terms shall have the following respective
meanings:
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Change in
Control . For
purposes of this Agreement, a “Change in Control” shall
occur or be deemed to have occurred only if any of the following
events occur:
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any
“person”, as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), (other than the Company, any group of
persons which includes you, any employee benefit plan of the
Company, any entity owned directly or indirectly by the
stockholders of the Company in substantially the same proportion as
their ownership of stock of the Company, or any other person owning
thirty (30) percent or more of the combined voting power of the
company as of the date hereof) is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing
in the aggregate thirty percent (30%) or more of the combined
voting power of the Company's then outstanding voting securities or
more than fifty percent (50%) of the total fair market value of the
Company; or
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a majority of
the members of the Board (as of the date hereof, the
“Incumbent Board”) is replaced during any 12 month
period (except as a result of a transaction with any group of
persons which includes you), provided that any person becoming a
director subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was approved
by a vote of at least a majority of the directors then comprising
the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election
of the directors of the Company, as such terms are used in Rule
14a-11 of Regulation 14A under the Exchange Act) shall be, for
purposes of this Agreement, considered as though such person were a
member of the Incumbent Board; or
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the
stockholders of the Company approve a merger or consolidation of
the Company with any other entity, other than (A) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than thirty
percent (30%) of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or (B) a merger or
consolidation effected solely to implement a recapitalization of
the Company (or similar transaction) in which no
“person” (as hereinabove defined) increases the
percentage held of the combined voting power of the Company's then
outstanding securities, or (C) a merger or consolidation with any
affiliate of yours; or
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the
consummation of transactions contemplated by a resolution of the
Board whereby any person or persons (except a related person as
provided in Section 1.409A-3(i)(5)(vii)(B) of the Treasury
Regulations issued under Section 409A) acquire all or substantially
all of the assets of the Company, whether in a single transaction
or series of transactions during the 12 month period ending on the
date of the most recent acquisition by such person or persons;
or
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the
stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale, lease, exchange or
disposition by the Company of all or substantially all of the
Company's assets.
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Cause . The following shall constitute cause for
termination of your employment:
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the material
failure by you to perform your duties (other than any such failure
resulting from your incapacity due to physical or mental illness)
that, if capable of being cured, has not been cured within ten (10)
days after notice to you setting forth in reasonable detail the
manner in which you have not performed your duties; or
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conviction of
or plea of guilty or nolo contendere to a felony or any
other crime involving dishonesty, fraud or moral turpitude;
or
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deliberate
dishonesty with respect to the Company or any of its affiliates;
or
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being found
liable in any SEC or other civil or criminal securities law action,
or the entry of any cease and desist order with respect to such
action (regardless of whether or not you admit or deny liability);
or
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breach of your
fiduciary duties to the Company which may reasonably be expected to
have a material adverse effect on the Company; or
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obstructing or
impeding, or failing to materially cooperate with, any
investigation authorized by the Board or any governmental or
self-regulatory entity; or
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violation of
any nondisclosure, nonsolicitation, non-hire, or noncompete
agreement or policy that is applicable to you which violation may
reasonably be expected to have a material adverse effect on the
Company or its reputation; or
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violation of
any policy of the Company that is generally applicable to all
employees or officers of the Company including, but not limited to,
policies concerning insider trading, workplace violence,
discrimination, or sexual harassment, or the Company’s code
of conduct, that you know or reasonably should know could
reasonably be expected to result in a material adverse effect on
the Company or its reputation; or
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willful action
or gross negligence that results in any restatement of earnings of
the Company; or
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unlawful
conduct pertaining to the Company or any of its affiliates
involving a criminal act; material or conscious falsification or
unauthorized disclosure of important records or reports;
embezzlement or unauthorized conversion of property; violation of
conflict of interest or vendor relations policies, willful
disclosure of significant trade secrets or other information likely
to be used to the detriment of the Company.
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Good
Reason . For purposes of this Agreement,
“Good Reason” shall mean, without your written consent,
the occurrence within ninety (90) days immediately prior to your
giving the Company notice of the following circumstances, except
that no such circumstance shall constitute "Good Reason" in the
event that the Company remedies the condition within 30 days of its
receipt of such notice, and provided that your separation of
service occurs within two years after the occurrence of such
circumstance;
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a material
decrease in the nature and scope of authority, powers, functions,
and duties exercised by you immediately prior to a Change in
Control, including, without limitation, any adverse change in your
status or position as an employee of the Company as a result of a
material diminution in your duties or responsibilities or the
assignment to you of any duties or responsibilities which are
materially inconsistent with such status or position(s) (other than
any isolated and inadvertent failure by the Company that is cured
promptly upon your giving notice), or any removal of you from or
any failure to reappoint or reelect you to such position(s) (except
in connection with the termination of your employment for Cause,
Disability or Retirement or as a result of your death or by you
other than for Good Reason); or
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any reduction
in your annual base salary from that in effect immediately prior to
the Change in Control (other than a fifteen percent (15%) or less
reduction in base salary imposed on all key management personnel
who have an agreement with the Company similar to this Agreement);
or
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the Company
requiring you to be based at an office that is both more than fifty
(50) miles from where your office is located immediately prior to
the Change in Control and further from your then current residence
except for required travel on the Company’s business to an
extent substantially consistent with the business travel
obligations which you undertook on behalf of the Company prior to
the Change in Control; or
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any other
breach or inaction that constitutes a material breach by the
Company of this Agreement, including breach of the covenant in
Section 4(e) below.
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Disability . If, as a result of incapacity due to physical
or mental illness, you shall have been absent from the full-time
performance of the essential functions of your position with the
Company for three (3) consecutive months or for six (6) months in
any twelve (12) consecutive month period and, within thirty (30)
days after written Notice of Termination is given to you, you shall
not have returned to the full-time performance of your duties, your
employment may be terminated for
“Disability.”
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Plan . For purposes of this Section 2,
“Plan” shall mean any compensation plan, program or
policy of the Company intended to benefit employees.
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Change in
Employment Status .
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Any termination
of your employment by the Company or by you following a Change in
Control during the Term shall be communicated by a Notice of
Termination to the other party hereto in accordance with Section 8,
which Notice of Termination shall specify the provisions of this
Agreement, if any, upon which such termination is based.
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You shall be
entitled to the benefits provided in Section 4 if, and only if, the
following event (a “Trigger Event”) occurs: a Change in
Control shall have occurred during the Term and your employment
with the Company is subsequently terminated or terminates for any
reason within twenty-four (24) months after such Change in Control,
unless such termination is:
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because of your
death or Disability, or
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by the Company
for Cause, or
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by you other
than for Good Reason.
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Compensation and Benefits Upon
Termination .
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Subject to the
provisions of Section 6, in the event of the occurrence of a
Trigger Event, the Company will pay to you within thirty (30) days
of the Date of Termination a lump sum amount equal to the aggregate
of:
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one and
one-half times your annual base salary at the rate in effect
immediately prior to the Trigger Event (or such higher rate as may
have been in effect within the ninety (90) days prior to the Notice
of Termination); and
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one and
one-half times the annualized amount equal to the average annual
cash bonus paid to (or accrued for) you by the Company during the
three (3) full years preceding such Trigger Event or such
shorter period of your employment divided by the lesser of three
(3) or the period of your employm
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