CompuDyne Corporation Retention Plan For Selected Employees

 

                                                                    Exhibit 10.1

 

 

                              CompuDyne Corporation

                      Retention Plan For Selected Employees

                      -------------------------------------

 

1.   Purpose. This CompuDyne Corporation Retention Plan for Selected Employees

     (this "Plan," as defined herein) is an incentive plan established to

     provide retention benefits to eligible Employees of CompuDyne Corporation

     (the "Company," as defined herein) and any Subsidiary (as defined herein)

     who remain employed at the time of a Change of Control (as defined herein)

     or who have been subject to an Involuntary Termination (as defined herein)

     within the three month period preceding a Change of Control.

 

2.   Effective Date. This Plan shall be effective June 28, 2005 and shall

     continue thereafter until terminated as provided under Paragraph 9. Any and

     all existing retention or change of control agreements, plans, programs,

     policies or practices for Participants, whether formal or informal, are

     hereby revoked and terminated; provided that, for the avoidance of doubt,

     nothing herein shall be deemed to terminate or amend the CompuDyne

     Corporation 1996 Stock Incentive Compensation Plan for Employees or the

     CompuDyne Corporation 2005 Stock Incentive Compensation Plan for Employees.

 

3.   Definitions. Terms herein with capitalized letters shall mean as follows:

 

          "BOARD" means the Board of Directors of the Company.

 

          "CAUSE" means, without limitation, termination of the Participant's

          employment with the Company or any Subsidiary for (i) a course of

          conduct amounting to incompetence or negligence not related to a

          Disability; (ii) chronic and unexcused absenteeism; (iii) willful

          and persistent failure or refusal to perform the obligations of

          his or her position; (iv) willful and persistent failure or

          refusal to follow an express direction or legal instruction of

          the Chief Executive Officer of the Company or a Subsidiary; (v)

          fraud, embezzlement or comparable dishonest activity; (vi)

          violation of any rule or regulation established by the Company or

          a Subsidiary from time to time; and (vii) conviction of, or a

          guilty or nolo contendere plea to, a felony, or conviction of, or

          a guilty or nolo contendere plea to, a misdemeanor resulting in

          actual imprisonment for thirty days or more.

 

          "CHANGE OF CONTROL" means: (i) for all Participants, a merger of the

          Company with any third party which results in the Company's

          shareholders immediately prior to the merger owning less than 50% of

          the common stock of the surviving company or the acquisition by any

          third party of equity securities representing more than 50% of the

          ownership of the Company or of its combined businesses; (ii) in

          regards to a Participant who is an Employee of a business unit, a

          merger of that business unit with any third party where the Company

          does not own the survivor or the sale to a third party of the

          securities of that business unit or assets representing more than 50%

          of the assets of that individual business unit as of the end of the

 

 

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          last fiscal year; (iii) solely in the case of Schedule A Managers (see

          Paragraph 4(a)(i) and (ii)) who work for the corporate unit and not

          one of the business units, the acquisition by any third party of

          equity securities or assets of businesses which represent more than

          50% of the annual revenues of the Company for the last completed

          fiscal year; and (iv) solely in the case of Schedule B Managers (see

          Paragraph 4(b)(i)) who work for the corporate unit and not one of the

          business units, the acquisition by any third party of equity

          securities or assets of businesses which represent more than one-third

          of the annual revenues of the Company for the last completed fiscal

          year.

 

          "COMPANY" means CompuDyne Corporation, a corporation organized under

          the laws of the State of Nevada, and shall include successors and

          assigns.

 

          "DISABILITY" means any physical or mental illness, impairment or

          incapacity which prevents the Participant from substantially

          performing, with or without accommodation, the essential functions of

          the Participant's position for a period of ninety (90) days or more,

          whether or not consecutive, during any period of twelve (12)

          consecutive months.

 

          "EFFECTIVE DATE" means the date that this Plan is adopted by the Board

          or such other date as determined by the Board.

 

          "EMPLOYEE" means any employee of the Company or a Subsidiary.

 

          "GOOD REASON" means termination by the Participant of his or her

          employment with the Company on account of his or her good faith

          determination that any of the events or conditions described in

          subsections (i) through (iii) below have occurred within forty-five

          (45) days prior to the termination:

 

          (i)  Any material reduction in the Participant's annual base salary;

 

          (ii) The Company's failure to continue the Participant's participation

               in any material incentive compensation or benefit plan or fringe

               benefit program generally applicable to the Company's management

               or the Company's reduction of any material fringe benefit enjoyed

               by the Participant, including a life insurance plan,

               health-and-accident plan or disability plan; the taking of any

               action by the Company which would materially adversely affect the

               Participant's participation in or materially reduce the

               Participant's benefits under any of such plans or deprive the

               Participant of any material fringe benefit enjoyed by the

               Participant; or

 

          (iii) The assignment to the Participant, without his or her express

               written consent, of any duties materially inconsistent with the

               Participant's position (including status, offices, title,

               location or reporting requirements) authority, duties or

               responsibilities, or any other action by the Company which

               results in a diminution of such position, authority, duties or

               responsibilities, the effect of which is a material change in the

               duties and responsibilities of the Participant, except in