|
Exhibit
10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated
as of June 3, 2008, is made by and between TransDigm Group
Incorporated, a Delaware corporation (the “ Company
”), and W. Nicholas Howley (the “ Executive
”) and is effective as of April 25, 2008 (the “
Effective Date ”).
RECITALS:
WHEREAS, the Executive is a
party to an employment agreement with TransDigm Holding Company
dated as of June 6, 2003, as amended pursuant to an amendment
dated as of February 24, 2006 (the “ Prior Employment
Agreement ”); and
WHEREAS, the term under the
Prior Employment Agreement expires July 23, 2008;
and
WHEREAS, the Company and the
Executive would like to continue the Executive’s employment
with the Company on the terms set forth herein; and
WHEREAS, TransDigm Holding
Company was merged into TransDigm Inc., a wholly owned subsidiary
of the Company.
NOW, THEREFORE, in
consideration of the foregoing and of the respective covenants and
agreements set forth below, the parties hereto agree as
follows:
1. Certain Definitions
.
(a) “ Annual Base
Salary ” shall have the meaning set forth in
Section 4(a).
(b) “ Board
” shall mean the Board of Directors of the
Company.
(c) “ Cause
” shall mean either of the following: (i) the repeated
failure by the Executive, after written notice from the Board,
substantially to perform his material duties and responsibilities
as an officer or employee or director of the Company or any of its
subsidiaries (other than any such failure resulting from incapacity
due to reasonably documented physical or mental illness),
(ii) any willful misconduct by the Executive that has the
effect of materially injuring the business of the Company or any of
its subsidiaries, including, without limitation, the disclosure of
material secret or confidential information of the Company or any
of its subsidiaries, or (iii) the Executive’s conviction
of, or pleading “guilty” or “ no contest”
to a felony that is or could reasonably be expected to result in
material harm to the Company or any of its subsidiaries.
(d) “ Change in
Control ” shall mean the occurrence of an event described
in (i), (ii), (iii), (iv) or (v) below:
(i) A change in ownership or
control of the Company after the Effective Date effected through a
transaction or series of transactions (other than an offering of
Common Stock to the general public through a registration statement
filed with the Securities and Exchange Commission), including by
way of merger, consolidation or otherwise, whereby any
“person” or related “group” of
“persons” (as such terms are used in Sections 13(d) and
14(d)(2) of the Exchange Act) (other than the Company, any of its
subsidiaries, an employee benefit plan maintained by the Company or
any of its subsidiaries or a “person” that, prior to
such transaction, directly or indirectly controls, is controlled
by, or is under common control with, the Company) directly or
indirectly acquires beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act) of securities of the Company
possessing more than fifty percent (50%) of the total combined
voting power of the Company’s securities outstanding
immediately after such acquisition.
(ii) The individuals who, as
of Effective Date, are members of the Board of Directors of the
Company (the “ Incumbent Board ”), cease for any
reason to constitute at least fifty percent (50%) of the
members of the Board; provided, however, that if the election, or
nomination for election by the Company common stockholders, of any
new director was approved by a vote of at least two-thirds of the
Incumbent Board, such new director shall, for purposes of this
Plan, be considered as a member of the Incumbent Board; provided
further, however, that no individual shall be considered a member
of the Incumbent Board if such individual initially assumed office
as a result of either an actual or threatened “Election
Contest” (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board (a
“ Proxy Contest ”) including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy
Contest.
(iv) The consummation of a
complete liquidation or dissolution of the Company.
(v) The consummation of a
sale or other disposition of all or substantially all of the assets
of the Company to any Person (other than a transfer to a
subsidiary).
(e) “ Code
” shall mean the Internal Revenue Code of 1986, as amended.
Reference to a Section of the Code includes all rulings,
regulations, notices, announcements, decisions, orders and other
pronouncements that are issued by the United States Department of
the Treasury, the Internal Revenue Service, or any court of
competent jurisdiction that are lawful and pertinent to the
interpretation, application or effectiveness of such
Section.
(f) “ Common
Stock ” shall mean the common stock of the Company, $0.01
par value per share.
(g) “ Company
” shall have the meaning set forth in the preamble
hereto.
(h) “ Compensation
Committee ” shall mean the Compensation Committee of the
Board whose members shall be appointed by the Board from time to
time.
(i) “ Date of
Termination ” shall mean (i) if the
Executive’s employment is terminated by reason of his death,
the date of his death, and (ii) if the Executive’s
employment is terminated pursuant to Sections 5(a)(ii) - (vi), the
date specified in the Notice of Termination.
(j) “ Disability
” shall mean the inability of the Executive to perform his
duties and responsibilities as an officer or employee of the
Company or any of its subsidiaries on a full-time basis for more
than six months within any 12-month period because of a physical,
mental or emotional incapacity resulting from injury, sickness or
disease.
(k) “ Effective
Date ” shall have the meaning set forth in the first
paragraph hereof.
(l) “ Exchange
Act ” shall mean the Securities Exchange Act of 1934, as
amended.
(m) “ Executive
” shall have the meaning set forth in the preamble
hereto.
(n) “ Good
Reason ” shall mean the occurrence of any of the
following: (i) a material diminution in the Executive’s
title, position, duties or responsibilities (including reporting
responsibilities), without his prior written consent, (ii) a
reduction of the Executive’s Annual Base Salary or annual
bonus opportunity without his prior written consent,
(iii) Executive is not re-elected to the Board, (iv) the
Company requires the Executive, without his prior written consent,
to be based at any office or location that requires a relocation
greater than 30 miles from Cleveland, Ohio, or (vi) any
material breach of this Agreement by the Company. In addition
to the foregoing, the term “Good Reason” shall also be
deemed to exist if the requirements of clauses (i) and
(ii) below are met:
(i) Any of the following
events occurs:
(A) There is a change in
Executive’s title, position, duties or responsibilities
(including reporting responsibilities) which does not represent a
promotion from the title, position, duties or responsibilities that
are provided for under this Agreement;
- 2 -
(B) The Executive is assigned
any duties or responsibilities which are inconsistent with his
title, position, duties or responsibilities that are provided for
under this Agreement; or
(C) There is a reduction of
the Executive’s aggregate cash compensation (including bonus
opportunities), or a change in Executive’s benefits such that
following such change, Executive’s benefits are not
substantially comparable to those to which he was entitled
immediately prior to such change, in each case without his prior
written consent.
(ii) The event described in
clause (i) above occurs under any of the following
circumstances:
(A) Within the one year
period following a Change in Control,
(B) Prior to the date of a
Change in Control, at the request of a third party who has
indicated an intention or taken steps reasonably calculated to
effect a Change in Control, or
(C) otherwise in connection
with, or in anticipation of, a Change in Control which has been
threatened or proposed.
(o) “ Notice of
Termination ” shall have the meaning set forth in
Section 5(b).
(p) “ Option
Agreements ” shall mean the written agreements between
the Company and the Executive pursuant to which the Executive holds
or is granted options to purchase Common Stock, including, without
limitation, agreements evidencing options granted under the Option
Plan.
(q) “ Option
Plan ” shall mean any option plan adopted or maintained
by the Company for employees generally.
(r) “ Options
” as of any date of determination shall mean options held by
the Executive as of such date to purchase Common Stock of the
Company.
(s) “ Payment
Period ” shall have the meaning set forth in
Section 6(b)(i).
(t) “ Term
” shall have the meaning set forth in
Section 2.
2. Employment . The Company shall
continue to employ the Executive and the Executive shall remain in
the employ of the Company, for the period set forth in this
Section 2, in the positions set forth in Section 3 and
upon the other terms and conditions herein provided. The term
of employment under this Agreement (the “Term”) shall
be for the period beginning on the Effective Date and ending on the
fifth anniversary thereof unless earlier terminated as provided in
Section 5; provided , however , that unless so
earlier terminated or unless the Executive or the Company shall
give written notice to the other of his or its intention not to
renew this Agreement no less than sixty days prior to the scheduled
expiration thereof, upon the fifth anniversary of the Effective
Date, this Agreement shall automatically be renewed for an
additional one year period.
3. Position and Duties . During
the Term, the Executive shall serve as the Chairman and Chief
Executive Officer of the Company with such customary
responsibilities, duties and authority as may from time to time be
assigned to the Executive by the Board. During the Term, the
Executive shall devote substantially all his working time and
efforts to the business and affairs of the Company; provided
, that it shall not be considered a violation of the foregoing for
the Executive to (i) with the prior consent of the Board
(which consent shall not unreasonably be withheld), serve on
corporate, industry, civic or charitable boards or committees
(provided, that without such prior consent of the Board, the
Executive shall, subject to the limitation set forth below, be
permitted to continue to serve as a member of the board of
directors (or board of trustees) or as a committee member, as the
case may be, of Polypore, Inc., Satair A/S, St. Martin de Porres,
Gilmour Academy and the Rock and Roll Hall of Fame), and
(ii) manage his personal investments, so long as none of such
activities significantly interferes with the Executive’s
duties hereunder.
- 3 -
4. Compensation and Related
Matters .
(a) Annual Base Salary
. During the Term, the Executive shall receive a base salary
at a rate that is no less than $550,000 per annum (the
“Annual Base Salary”), payable in accordance with the
Company’s normal payroll practices. The rate of the Annual
Base Salary shall be reviewed by the Compensation Committee on or
prior to each anniversary of the Effective Date during the Term and
may be increased, but not decreased, upon such review.
(b) Bonus . For
each fiscal year during the Term, the Executive shall be eligible
to participate in the Company’s annual cash bonus plan in
accordance with terms and provisions which shall be consistent with
the Company’s executive bonus policy in effect as of the
Effective Date.
(c) Options . Within
60 days following the approval of an amendment to the 2006 Stock
Incentive Plan of the Company as contemplated by this
Section 4(c), the Company shall grant the Executive Options to
purchase 800,000 of the shares in accordance with the incentive
stock option program adopted by the Board of Directors on
April 25, 2008 (with the modifications therefrom set forth on
Exhibit A) under the Company’s 2006 Stock Incentive Plan;
provided , however , that if the stockholders of the
Company do not approve an amendment to the Company’s 2006
Stock Incentive Plan increasing the amount of shares of common
stock available for issuance thereunder as approved by the Board of
Directors on April 25, 2008, then the term “first
anniversary” shall substituted for the term “fifth
anniversary” wherever such term is referenced in
Section 2 of this Agreement.
(d) Long Term Incentive
Compensation . During the Term, the Executive shall be
entitled to participate in the Option Plan or any successor plan
thereto or any other long-term incentive plan implemented by the
Company.
(e) Benefits . During
the Term, the Executive shall be entitled to participate in the
other employee benefit plans, programs and arrangements of the
Company now (or, to the extent determined by the Board or
Compensation Committee, hereafter) in effect which are applicable
to the senior officers of the Company generally, subject to and on
a basis consistent with the terms, conditions and overall
administration thereof (including the right of the Company to
amend, modify or terminate such plans).
(f) Expenses
. Pursuant to the Company’s customary policies in force
at the time of payment, the Executive shall be reimbursed for all
expenses properly incurred by the Executive on the Company’s
behalf in the performance of the Executive’s duties
hereunder.
(g) Vacation Pay
. The Executive shall be entitled to an amount of annual
vacation days per year, and to compensation in respect of earned
but unused vacation days, in accordance with the Company’s
vacation policy as in effect as of the Effective Date. The
Executive shall also be entitled to paid holidays in accordance
with the Company’s practices with respect to same as in
effect as of the Effective Date.
(h) Automobile
. During the Term, the Company shall provide the Executive
with an annual automobile allowance at a rate not less than that in
effect as of the Effective Date.
(i) Club Membership
. During the Term, the Company shall pay on behalf of the
Executive, or reimburse the Executive for, annual membership fees
payable in connection with the Executive’s membership in one
country club of the Executive’s choice.
(j) Tax and Financial
Planning Assistance . During the Term, the Company shall,
upon submission of proper documentation, pay on behalf of the
Executive, or reimburse the Executive for, reasonable expenses
incurred for professional assistance in planning and preparing his
tax returns and managing his financial affairs, provided that such
expenses do not exceed $33,500 per annum.
- 4 -
5. Termination .
(a) The Executive’s
employment hereunder may be terminated by the Company or the
Executive, as applicable, without any breach of this Agreement only
under the following circumstances and in accordance with subsection
(b):
(i) Death . The
Executive’s employment hereunder shall terminate upon his
death.
(ii) Disability
. If the Company determines in good faith that the Executive
has incurred a Disability, the Company may give the Executive
written notice of its intention to terminate the Executive’s
employment. In such event, the Executive’s employment
with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive, provided that within such
30 day period the Executive shall not have returned to full-time
performance of his duties. The Executive shall continue to
receive his Annual Base Salary until the 90th day following the
date of the Notice of Termination.
(iii) Termination for
Cause . The Company may terminate the Executive’s
employment hereunder for Cause.
(iv) Resignation for Good
Reason . The Executive may resign his employment hereunder
for Good Reason.
(v) Termination without
Cause . The Company may terminate the Executive’s
employment hereunder without Cause.
(vi) Resignation without
Good Reason . The Executive may resign his employment
hereunder without Good Reason.
(b) Notice of
Termination . Any termination of the Executive’s
employment by the Company or by the Executive under this
Section 5 (other than termination pursuant to subsection
(a)(i)) shall be communicated by a written notice from the Board or
the Executive to the other, indicating the specific termination
provision in this Agreement relied upon, setting forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the
provision so indicated, and specifying
| 
