Exhibit 10.1
EMPLOYMENT
AGREEMENT
THIS AGREEMENT is made and entered
into as of the 26th day of June, 2008, by and between Lydall
Thermal/Acoustical, Inc., a Delaware corporation (the
“Company”), and Joseph K. Wilsted (the
“Executive”).
W I T N E S
S E T H
WHEREAS, the Company and the
Executive (the “Parties”) have agreed to enter into
this agreement (the “Agreement”) relating to the
employment of the Executive by the Company and/or one of its
subsidiaries;
NOW, THEREFORE, in consideration of
the premises and mutual covenants contained herein and for other
good and valuable consideration, the Parties, intending to be
legally bound, agree as follows:
1. Term of Employment;
Termination of Prior Agreement .
1.1 The Company and/or one of its
subsidiaries agrees to continue to employ the Executive, and the
Executive agrees to remain in the employment of the Company and/or
one of its subsidiaries, in accordance with the terms and
provisions of this Agreement.
1.2 The Employment Period under this
Agreement shall be the period commencing as of the date of this
Agreement and, ending on the date of termination of the
Executive’s employment pursuant to Section 5, 6 or 7
below, whichever is applicable.
2. Duties . It is the
intention of the Parties that during the term of the
Executive’s employment under this Agreement, the Executive
will serve as President of its global automotive business of the
Company or in such other senior management position as the Company
shall determine. During the Employment Period, the Executive will
devote his full business time and attention and best efforts to the
affairs of the Company and its subsidiaries and his duties. The
Executive will have such duties as are appropriate to his position,
and will have such authority as required to enable the Executive to
perform these duties. Consistent with the foregoing, the Executive
shall comply with all reasonable instructions of the Board of
Directors of the Company (the “Board”) or a committee
thereof.
3. Compensation and Benefits
.
3.1 Salary . During the
Employment Period, the Company will pay the Executive a base salary
at an initial annual rate of Two Hundred Ninety-Five Thousand
Dollars ($295,000). The Company may, in its sole and absolute
discretion, increase the Executive’s base salary in light of
the Executive’s performance, inflation, changes in the cost
of living and other factors deemed relevant by the Company. The
Executive’s base salary may not be decreased during the term
of this Agreement, other than in connection with an
across-the-board decrease affecting substantially all members of
senior management of the Company on substantially the same
proportional basis. The Chief Executive Officer of the Company
shall meet with the Executive annually to review the
Executive’s performance, objectives and compensation,
including salary and bonus compensation, and the Chief Executive
Officer shall then meet with the Compensation Committee of the
Board to discuss the same. If the Compensation Committee determines
that any adjustments thereto are appropriate, such committee shall
make a recommendation to the full Board and the Board shall make
such adjustments, if any, as the Board deems appropriate and
consistent with this Agreement. The Executive’s base salary
will be paid in accordance with the standard practices for other
members of senior management of the Company.
3.2 Annual Bonus . During the
Employment Period, the Executive will be eligible to receive
annually or otherwise such bonus awards, if any, as shall be
determined by the Board in its sole and absolute discretion after
receiving the recommendation of the Compensation
Committee.
3.3 Benefit Programs . During
the Employment Period, the Executive will be entitled to
participate on substantially the same terms as other members of
senior management of the Company in all employee benefit plans and
programs of the Company (other than any severance plan, program or
policy), subject to any restrictions or eligibility requirements
under such plans and programs, from time to time in effect for the
benefit of senior management of the Company, including, but not
limited to, retirement plans, profit sharing plans, stock incentive
and annual bonus plans, group life insurance, hospitalization and
surgical and major medical coverages (excluding the Lydall
Thermal/Acoustical, Inc. Executive Medical Plan), short-term and
long-term disability.
3.4 Vacations and Holidays .
During the Employment Period, the Executive will be entitled to
vacation leave of two weeks during 2008 and three (3) weeks
per year thereafter, at full pay or such greater vacation benefits
as may be provided for by the Company’s vacation policies
applicable to senior management. The Executive will be entitled to
such holidays as are established by the Company for all
employees.
3.5 Automobile . During the
Employment Period, the Company will provide the Executive with an
automobile allowance in accordance with Company policy.
4. Business Expenses . The
Executive will be entitled to prompt reimbursement for all
reasonable, documented and necessary expenses incurred by the
Executive in performing his services hereunder in accordance with
the policies of the Company, provided that the Executive properly
accounts therefor in accordance with the policies and procedures
established by the Company.
5. Termination of Employment by
the Company .
5.1 Termination by the Company
Other Than For Disability or Cause . The Company may terminate
the Executive’s employment at any time other than (i) by
reason of the Executive’s Disability (as defined in
Section 5.2) or (ii) for Cause (as defined in
Section 5.3), by giving the Executive a written notice of
termination at least 30 days before the date of termination (or
such lesser notice period as the Executive may agree to). In the
event of such a termination of employment pursuant to this
Section 5.1, the Executive shall be entitled to receive
(i) the benefits described in Section 8 if such
termination of employment does not occur within 18 months following
a “Change of Control” (as defined in Section 10),
or (ii) the benefits described in Section 9 if such
termination of employment occurs within 18 months following a
Change of Control.
5.2 Termination Due to
Disability . If the Executive incurs a Disability, as defined
below, the Company may terminate the Executive’s employment
by giving the Executive written notice of termination at least 30
days before the date of such termination (or such lesser notice
period as the Executive may agree to). In the event of such
termination of the Executive’s employment because of
Disability, the Executive shall be entitled to receive (i) his
base salary pursuant to Section 3.1 through the date which is
twelve months following the date of such termination of employment,
reduced by any amounts paid to the Executive under any disability
program maintained by the Company, such base salary, as reduced, to
be paid in accordance with the standard payroll practices of the
Company; (ii) a prorata bonus for the calendar year of
termination, calculated as the product of (x) the annual
performance-based bonus that would have been payable to the
Executive for the calendar year of termination (determined as of
the end of such calendar year) and (y) a fraction, the
numerator of which is the number of days in the current calendar
year through the date of termination and the denominator of which
is 365 (366 if a leap year), to be paid at the normal time for
payment of such bonus in the calendar year following the calendar
year to which the bonus relates; (iii) any other compensation
and benefits to the extent actually earned by the Executive under
any other benefit plan or program of the Company as of the date of
such termination of employment, such compensation and benefits to
be paid at the normal time for payment of such compensation and
benefits to the extent not previously paid, and (iv) any
reimbursement amounts owing under Section 4. In addition, if
the Executive elects to continue coverage under the Company’s
health plan pursuant to the Consolidated Omnibus Budget
Reconciliation Act (“COBRA’), then for the period
beginning on the date of the Executive’s termination of
employment and ending on the earlier of (i) the date which is
12 months after the date of such termination of employment or
(ii) the date the Executive becomes eligible for health
insurance benefits under the group health plan of another employer,
the Company will pay the same percentage of the Executive’s
premium for COBRA coverage for the Executive and, if applicable,
his spouse and dependent children, as the Company paid at the
applicable time for coverage under such plan for actively employed
members of senior management generally. For the period beginning on
the date of the Executive’s termination of employment and
ending on the earlier of (i) the date which is 12 months after
the date of such termination of employment or (ii) the date on
which the Executive becomes eligible for life insurance benefits
from another employer, the Company will continue to
provide
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the life insurance benefits that the Company
would have provided to the Executive if the Executive had continued
in employment with the Company for such period, but only if the
Executive timely pays the portion of the premium for such coverage
that members of senior management of the Company generally are
required to pay for such coverage, if any. The Executive shall
notify the Company promptly if he, while eligible for benefits
under this Section 5.2, becomes eligible to receive health
and/or life insurance benefits from another employer. In the event
that the Executive’s participation in the Company’s
group life insurance plan is barred, the Company shall arrange to
provide the Executive with comparable life insurance coverage to
the extent available at a cost not to exceed 125% of the cost of
the group life insurance coverage offered to the Executive through
the Company’s group life insurance plan; provided that the
Executive shall pay the same proportionate share of the premium for
such coverage that members of senior management of the Company
generally are required to pay for group life insurance coverage
under the Company’s group life insurance plan, if
any.
For purposes of this Agreement, the
Executive shall be considered to have incurred a Disability if and
only if the Executive is by reason of any medically determinable
physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not
less than 12 months (i) unable to engage in any substantial
gainful activity, or (ii) receiving income replacement
benefits for a period of not less than 3 months under an accident
and health plan covering employees of the Company.
5.3 Termination for Cause .
The Company may terminate the Executive’s employment
immediately for Cause for any of the following reasons: (i) an
act or acts of dishonesty or fraud by the Executive relating to the
performance of his services to the Company; (ii) a breach by
the Executive of his duties or responsibilities under this
Agreement resulting in significant demonstrable injury to the
Company or any of its subsidiaries; (iii) the
Executive’s conviction of a felony or any crime involving
moral turpitude; (iv) the Executive’s material failure
(for reasons other than death or Disability) to perform his duties
under this Agreement or insubordination (defined as refusal to
execute or carry out directions from the Board or its duly
appointed designees) where the Executive has been given written
notice of the acts or omissions constituting such failure or
insubordination and the Executive has failed to cure such conduct,
where susceptible to cure, within ten days following such notice;
or (v) a breach by the Executive of any provision of any
material policy of the Company or of his obligations under the
confidentiality, non-competition and invention ownership agreement
executed by the Executive and attached hereto as Exhibit A (the
“Confidentiality Agreement”). The Company shall
exercise its right to terminate the Executive’s employment
for Cause by giving the Executive written notice of termination
specifying in reasonable detail the circumstances constituting such
Cause. In the event of such termination of the Executive’s
employment for Cause, the Executive shall be entitled to receive
only (i) his base salary pursuant to Section 3.1 earned
through the date of such termination of employment plus his base
salary for the period of any vacation time earned but not taken for
the year of termination of employment, such base salary to be paid
in a lump sum no later than the next payroll date following the
Executive’s date of termination to the extent not previously
paid, (ii) any other compensation and benefits to the extent
actually earned by the Executive under any other benefit plan or
program of the Company as of the date of such termination of
employment, such compensation and benefits to be paid at the normal
time for payment of such compensation and benefits to the extent
not previously paid and (iii) any reimbursement amounts owing
under Section 4.
6. Termination of Employment by
the Executive .
(a) Good Reason . The
Executive may terminate his employment for Good Reason by giving
the Company a written notice of termination at least 30 days before
the date of such termination (or such lesser notice period as the
Company may agree to) specifying in reasonable detail the
circumstances constituting such Good Reason. In the event of the
Executive’s termination of his employment for Good Reason,
the Executive shall be entitled to receive (i) the benefits
described in Section 8 if such termination of employment does
not occur within 18 months following a Change of Control, or
(ii) the benefits described in Section 9 if such
termination of employment occurs within 18 months following a
Change of Control. For purposes of this Agreement, Good Reason
shall mean, without the Executive’s written consent,
(i) a significant reduction in the scope of the
Executive’s authority, functions, duties or responsibilities
from that which is contemplated by this Agreement; provided that a
change in scope solely as a result of the Company no longer being
public or becoming a subsidiary of another corporation shall not
constitute Good Reason, (ii) any reduction in the
Executive’s base salary, other than an across-the-board
reduction affecting substantially all members of senior management
of the Company on substantially the same proportional basis, or
(iii) any material breach by the Company of any provision of
this Agreement without the Executive having committed any material
breach of the Executive’s obligations hereunder or under the
Confidentiality Agreement, in each case, which breach is not cured
within thirty days following written notice thereof to the Company
of such breach. In addition, in the case of a termination of
employment within 18
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months following a Change of Control, Good
Reason shall also include the relocation of the Executive’s
office location to a location more than 50 miles away from the
Executive’s then current principal place of employment. If an
event constituting a ground for termination of employment for Good
Reason occurs, and the Executive fails to give notice of
termination within 30 days after the occurrence of such event, the
Executive shall be deemed to have waived his right to terminate
employment for Good Reason in connection with such event (but not
for any other event for which the 30-day period has not
expired).
(b) Other . The Executive may
terminate his employment at any time and for any reason, other than
pursuant to subsection (a) above, by giving the Company a
written notice of termination to that effect at least 30 days
before the date of termination (or such lesser notice period as the
Company may agree to); provided, however, that the Company
following receipt of such notice from the Executive may elect to
have the Executive’s employment terminate immediately
following its receipt of such notice. In the event of the
Executive’s termination of his employment pursuant to this
subsection (b), the Executive shall be entitled to receive
only (i) his base salary pursuant to Section 3.1 earned
through the date of such termination of employment plus his base
salary for the period of vacation time earned but not taken for the
year of termination of employment, such base salary to be paid in a
lump sum no later than the next payroll date following the
Executive’s date of termination to the extent not previously
paid, (ii) any other compensation and benefits to the extent
actually earned by the Executive under any other benefit plan or
program of the Company as of the date of such termination of
employment, such compensation and benefits to be paid at the normal
time for payment of such compensation and benefits to the extent
not previously paid, and (iii) any reimbursement amounts owing
under Section 4.
7. Termination of Employment By
Death . In the event of the death of the Executive during the
course of his employment hereunder, the Executive’s estate
(or other person or entity having such entitlement pursuant to the
terms of the applicable plan or program) shall be entitled to
receive (i) the Executive’s base salary pursuant to
Section 3.1 earned through the date of the Executive’s
death plus the Executive’s base salary for the period of
vacation time earned but not taken for the year of the
Executive’s death, such base salary to be paid in a lump sum
no later than the next payroll date following the Executive’s
date of termination to the extent not previously paid, (ii) a
bonus for the year of the Executive’s death (to be paid
within 90 days after the Executive’s death) in an amount
equal to a pro rata portion of the average of the three highest
annual bonuses earned by the Executive under the Company’s
annual bonus plan for any of the five calendar years preceding the
calendar year of the Executive’s death (or, if the Executive
was not eligible for a bonus for at least three calendar years in
such five-year period, then the average of such bonuses for all of
the calendar years in such five-year period for which the Executive
was eligible), with any deferred bonuses counting for the year
earned rather than the year paid and with the pro rata portion
being determined by dividing the number of days of the
Executive’s employment during such calendar year up to his
death by 365 (366 if a leap year), (iii) any other
compensation and benefits to the extent actually earned by the
Executive under any other benefit plan or program of the Company as
of the date of such termination of employment, such compensation
and benefits to be paid at the normal time for payment of such
compensation and benefits to the extent not previously paid, and
(iv) any reimbursement amounts owing under Section 4. In
addition, in the event of such death, the Executive’s
beneficiaries shall receive any death benefits owed to them under
the Company’s employee benefit plans. If the
Executive’s spouse and/or dependent children elect to
continue coverage under the Company’s health plan following
the Executive’s death pursuant to COBRA, the Company for a
period of 12 months following the Executive’s death will pay
the same percentage of the premium for COBRA coverage for the
Executive’s spouse and/or dependent children, as applicable,
as the Company would have paid in respect of the Executive’s
coverage under such plan if the Executive had continued in
employment with the Company for such period.
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8. Benefits Upon Termination
Without Cause or For Good Reason (No Change of Control ). If
(a) the Executive’s employment hereunder shall terminate
(i) because of termination by the Company pursuant to
Section 5.1, or (ii) because of termination by the
Employee for Good Reason pursuant to Section 6(a), and
(b) such termination of employment does not occur within 18
months following a Change of Control of the Company, the Executive
shall be entitled to the following:
(a) The Company shall pay to the
Executive his base salary pursuant to Section 3.1 earned
through the date of such termination of employment in a lump sum no
later than the next payroll date following the Executive’s
date of termination to the extent not previously paid, and any
other compensation and benefits to the extent actually earned by
the Executive under any benefit plan or program of the Company as
of the date of such termination of employment, any such
compensation and benefits to be paid at the normal time for payment
of such compensation and benefits to the extent not previously
paid.
(b) The Company shall pay the
Executive any reimbursement amounts owing under
Section 4.
(c) The Company shall pay to the
Executive in equal installments spread over the period of 12 months
beginning on the date of the Executive’s termination of
employment an amount equal in the aggregate to the sum of
(i) the Executive’s annual rate of base salary in effect
immediately preceding his termination of employment, and
(ii) the average of his annual bonuses earned under the
Company’s annual bonus plan for the three calendar years
preceding his termination of employment (or, if the Executive was
not eligible for a bonus in each of those three calendar years,
then the average of such bonuses for all of the calendar years in
such three-year period for which he was eligible), with any
deferred bonuses counting for the year earned rather than the year
paid (the “Severance Benefit”). The Severance Benefit
installments shall be paid at the times that salary payments are
normally made by the Company; provided that, if at the time of the
Executive’s termination of employment, the Executive is a
“specified employee” as defined in Section 409A of
the Internal Revenue Code of 1986, as amended (the
“Code”), and the regulations and guidance issued
thereunder (a “Specified Employee”), then fifty percent
(50%) of the Severance Benefit shall be paid in a lump sum on
the first payroll date that occurs six (6) months after the
date of the Executive’s termination of employment, and the
remaining fifty percent (50%) of the Severance Benefit shall
be paid in equal installments spread over six (6) months at
the times that salary payments are normally made by the Company,
beginning on the second payroll date that occurs six
(6) months after the date of the Executive’s termination
of employment.
(d) If the Executive elects to
continue coverage under the Company’s health plan pursuant to
COBRA, then for the period beginning on the date of the
Executive’s termination of employment and ending on the
earlier of (i) the date which is 12 months after the date of
such termination of employment or (ii) the date the Executive
becomes eligible for health insurance benefits under the group
health plan of another employer, the Company will pay the same
percentage of the Executive’s premium for COBRA coverage for
the Executive and, if applicable, his spouse and dependent
children, as the Company paid at the applicable time for coverage
under such plan for actively employed members of senior management
generally. In addition, for the period beginning on the date of the
Executive’s termination of employment and ending on the
earlier of (i) the date which is 12 months after the date of
such termination of employment or (ii) the date on which the
Executive becomes eligible for life insurance benefits from another
employer, the Company will continue to provide the life insurance
benefits that the Company would have provided to the Executive if
the Executive had continued in employment with the Company for such
period, but only if the Executive timely pays the portion of the
premium for such coverage that members of senior management of the
Company generally are required to pay for such coverage, if any.
The Executive shall notify the Company promptly if he, while
eligible for benefits under this subsection (d), becomes
eligible to receive health and/or life insurance benefits from
another employer. In the event that the Executive’s
participation in the Company’s group life insurance plan is
barred, the Company shall arrange to provide the Executive with
comparable life insurance coverage to the extent available at a
cost not to exceed 125% of the cost of the group life insurance
coverage offered through the Company’s group life insurance
plan; provided that the Executive shall pay the same proportionate
share of the premium for such coverage that members of senior
management of the Company generally are required to pay for group
life insurance coverage under the Company’s group life
insurance plan, if any.
(e) The Company will pay to the
outplacement services provider reasonably selected by the Executive
an amount not to exceed $10,000 for outplacement services costs
incurred by Executive within the twelve months following the
Executive’s termination of employment.
(f) The Company’s obligation
to provide the severance benefits set forth in Sections 8(c),
(d) and (e) upon the Executive’s termination of
employment without Cause or for Good Reason, which does not occur
within 18 months following a Change of Control, is subject to the
Executive’s execution without revocation of a valid release
in substantially the form attached to this Agreement as Exhibit B
(the “Release”).
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9. Benefits Upon Termination
Without Cause or For Good Reason (Change of Control ). If
(a) the Executive’s employment hereunder shall terminate
(i) because of termination by the Company pursuant to
Section 5.1, or (ii) because of termination by the
Employee for Good Reason pursuant to Section 6(a), and
(b) such termination of employment occurs within 18 months
following a Change of Control of the Company, the Executive shall
be entitled to the following:
(a) The Company shall pay to the
Executive his base salary pursuant to Section 3.1 earned
through the date of such termination of employment in a lump sum no
later than the next payroll date following the Executive’s
date of termination to the extent not previously paid, and any
other compensation and benefits to the extent actually earned by
the Executive under any benefit plan or program of the Company as
of the date of such termination of employment, any such
compensation and benefits to be paid at the normal time for payment
of such compensation and benefits to the extent not previously
paid.
(b) The Company shall pay the
Executive any reimbursement amounts owing under
Section 4.
(c) The Company shall pay to the
Executive as a severance benefit an amount equal to two
(2) times the sum of (i) his annual rate of base salary
in effect immediately preceding his termination of employment, and
(ii) the average of his three highest annual bonuses earned
under the Company’s annual bonus plan for any of the five
calendar years preceding his termination of employment (or, if the
Executive was not eligible for a bonus for at least three calendar
years in such five-year period, then the average of such bonuses
for all of the calendar years in such five-year period for which
the Executive was eligible), with any deferred bonuses counting for
the year earned rather than the year paid (the “COC Severance
Benefit”). The COC Severance Benefit shall be paid in a lump
sum within 30 days after the date of such termination of
employment; provided that, if at the time of the Executive’s
termination of employment, the Executive is a Specified
Empl
