Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT is made and
entered into as of the 17th day of October 2007, by and between
BLOUNT INTERNATIONAL, INC., a Delaware corporation (the
“Company”), and JAMES S. OSTERMAN
(“Executive”).
W I T N E S S E T H :
WHEREAS, the terms and conditions of
Executive’s employment by the Company are currently provided
for in an Amended and Restated Employment Agreement, which
generally became effective as of January 1, 2006 (such Agreement is
hereinafter referred to as the “Prior Employment
Agreement”); and
WHEREAS, the parties now desire to amend the
Prior Employment Agreement in a number of respects and to restate
such agreement as hereinafter provided, effective January 1, 2008,
to reflect Executive’s new employment arrangements with the
Company; and
WHEREAS, Executive desires to continue his
employment with the Company on the terms and conditions provided
herein;
NOW, THEREFORE, in consideration of the
premises and the mutual covenants and agreements contained herein,
the parties hereby agree as follows:
1.
Purpose and Effective Date .
(a)
The purpose of this Amended and Restated Employment Agreement is to
amend the Prior Employment Agreement, to recognize
Executive’s significant contributions to the overall
financial performance and success of the
Company, and to provide a single, integrated
document which shall provide the basis for Executive’s
continued employment by the Company.
(b)
This Agreement shall be effective on January 1, 2008
(“Effective Date”), at which time the Prior Employment
Agreement shall cease to be in effect. This Agreement shall
terminate as hereinafter provided. Prior to the Effective Date, the
terms and conditions of the Prior Employment Agreement shall govern
Executive’s employment with the Company.
2.
Employment and Term; Consulting Agreement .
(a)
Subject to the terms and conditions of this Agreement, the Company
hereby employs Executive and Executive hereby accepts employment as
Chairman of the Board and Chief Executive Officer of the Company
and shall have such responsibilities, duties and authority that are
consistent with such positions as may be from time to time assigned
to Executive by the Board of Directors. Executive shall continue to
serve as a Director of the Company and the Company agrees to
continue to nominate Executive for election as Chairman of the
Board and as a Director during the Term of this Agreement.
Executive agrees that during the Term of this Agreement he will
devote substantially all his working time, attention and energies
to the diligent performance of his duties and responsibilities for
the Company. With the consent of the Board of Directors, Executive
may serve as a director on the boards of directors or trustees of
additional companies and organizations.
(b)
Unless earlier terminated as provided herein, Executive’s
employment under this Amended and Restated Employment Agreement
shall commence on the Effective Date and shall end on January 3,
2010 (the “Term”), unless
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the
Term is extended in accordance with subsection (c) below (in which
case such extended period shall constitute the Term).
(c)
Not less than ninety (90) days prior to January 3, 2010 (and any
12-month extension of the Term), the Company may offer to extend
the Term for an additional 12-month period on such terms and
conditions as may be specified in the offer (which may be on the
same terms and conditions as provided herein). If Executive desires
to accept such offer, he shall notify the Company in writing within
thirty (30) days of receipt of the offer and the Agreement shall be
extended on the terms and conditions agreed upon. If
Executive’s employment is terminated by the Company or
Executive terminates his employment prior to January 3, 2010, his
rights will be determined in accordance with Section 5 of this
Agreement, as modified by subsection 2(e) below.
(d)
If Executive remains actively employed by the Company until the end
of the Term (whether such date is January 3, 2010, or a later date
at the end of any agreed upon extension pursuant to Section 2(c) of
this Agreement), the Company shall provide Executive with a
consulting agreement (“Consulting Agreement”) with the
following terms:
(i)
The Consulting Agreement shall be for a period commencing January
4, 2010 and ending December 31, 2011 (or beginning on his later
termination date resulting from any mutually agreed upon
extension(s) of the initial Term pursuant to Section 2(c) of this
Agreement and ending two (2) years later). The period of the
Consulting Agreement may only be terminated earlier by the Company
in the event of Executive’s death, Disability, termination
for
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Cause (as defined in Section 6.2 below) or
Executive’s voluntary termination of service during the
two-year period of the Consulting Agreement.
(ii)
Executive’s title during the period of the Consulting
Agreement will be mutually agreed upon between Executive and the
Company. Because of his extensive experience and personal
relationships with major customers and his personal relationships
with persons in China, his duties will be to maintain and assist in
managing relationships with major customers, to attend, and
participate as a Company representative at, trade shows, and to
consult and advise on products, services and manufacturing
facilities, including, without limitation, the responsibility to
arrange and organize customer outings (hunting, fishing, golf,
etc.), making business trips to visit the Company’s largest
customers and the Company’s international operations, and
providing the Board and senior Company executives with consultation
and advice on business matters affecting the Company. Executive
will be an independent contractor with respect to the Company and
not an employee.
(iii)
Executive will be paid an annual retainer of $200,000 for his
consulting services, for which amount he will be available to
perform services up to ten (10) days per month. The Board of
Directors and Executive will agree on the days Executive will be
performing services under the Consulting Agreement. The Company may
request Executive to perform services for additional days per month
at the rate of $1,600 per day.
Executive will be paid his consulting fees
monthly. Executive will also be reimbursed for the reasonable
out-of-pocket expenses (including business travel
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and entertainment)
which he incurs in performing his consulting services. Executive
will be entitled to a bonus of $50,000 per year for each Company
fiscal year which ends coincident with, or prior to, the
termination of the Consulting Agreement, if the Company meets its
financial targets for such fiscal year (such determination will be
made by the Board of Directors).
(iv)
Executive will be provided during the period of the Consulting
Agreement with health and life insurance coverages (including
executive medical) under the Company’s existing benefit
programs, but if such coverages cannot be continued under the
existing benefit programs or if the healthcare coverage cannot be
provided in a manner such that benefit payments will continue to be
tax-free to Executive and his dependents, the Company will arrange
for other, comparable coverages at its expense. Executive will
continue to be responsible for paying the costs of any dependent
coverage in the same manner as if he were an active employee.
(v)
To assist in performing the consulting services, Executive will be
provided during the period of the Consulting Period, at the
Company’s expense, with an equipped office and his current
secretary/administrative assistant (or a substitute acceptable to
Executive). The secretary/administrative assistant shall receive a
level of compensation and benefits comparable to that being
received by such assistant at the end of the Term.
Executive’s office will be at a location acceptable to
Executive, but will not be in the Portland headquarters building.
Executive will also be provided with an automobile (and related
costs) under terms similar to those the Company uses for
senior
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executives, with reimbursement for membership
dues and assessments at a country club, and payment for a
financial/tax consultant for personal financial and tax planning.
At the end of the period of the Consulting Agreement, Executive
will be given the automobile he is then using (which will be a
Cadillac Escalade or equivalent vehicle) without additional
payment.
(vi)
During the period of the Consulting Agreement, it is the intention
of the Company that Executive shall continue to serve as a member
of the Board of Directors, subject to his nomination and election
to such position.
(e)
In accordance with the provisions of the Prior Employment
Agreement, upon any termination of Executive’s employment,
for any reason, whether before, on or after the end of the Term, he
shall be entitled to the contractual rights and benefits provided
below (except to the extent Executive acquires greater rights upon
any such termination of employment) and to the extent necessary or
desirable to reflect the agreements set forth herein, the Company
will amend the agreements affecting such contractual rights or
benefits:
(i)
Executive’s termination will be treated as qualifying as
“Retirement” for purposes of the Stock Option
Agreements listed below (and any future Option grants) and, as a
result, Executive shall have the right to exercise such Options
until the end of the term of the Option (except for such earlier
date as may be provided in the event of death). The following
outstanding Stock Option Agreements are covered by this subsection
(e)(i):
(A)
The Nonqualified Stock Option Agreement (Time Option), dated August
19, 1999, for 60,000 shares and the Nonqualified
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Stock Option Agreement (Performance Option),
dated August 19, 1999, for 60,000 shares.
(B)
The Nonqualified Stock Option Agreements, dated June 29, 2001,
February 14, 2002, March 15, 2002, February 2, 2004, December
21, 2004 and December 21, 2004, for 150,000 shares, 39,400
shares, 150,000 shares, 50,000 shares, 27,500 shares and 22,500
shares, respectively.
(ii)
Executive’s termination will be treated as qualifying as
“Retirement” for purposes of Article IV of the Employee
Stockholder Agreement, dated as of August 19, 1999, and the other
provisions of such agreement.
(f)
The Company shall provide a salary continuation death benefit
(“Salary Continuation Death Benefit”) to
Executive’s beneficiaries in an amount equal to two (2) times
Executive’s Base Salary (as such Base Salary is in effect on
his date of death or, if he terminates employment prior to his date
of death, was in effect on his date of termination of employment)
in accordance with the provisions of the Omark Salary Continuation
Plan (Executive’s termination of employment for purposes of
this Section 2(f) shall occur when he ceases to be an employee, not
when he ceases to perform services as a consultant under the
Consulting Agreement). The Salary Continuation Death Benefit
payable pursuant to this Section 2(f) shall be payable upon
Executive’s death after termination of employment regardless
of the reason for his termination of employment. In the event of a
Change in Control of the Company during the Term of this Agreement
or prior to the end of the period of the Consulting Agreement, the
Company shall fund or otherwise secure the Salary Continuation
Death
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Benefit in a manner acceptable to Executive
within thirty (30) days of the date of the Change in
Control.
3.
Compensation and Benefits . As compensation for his services
during the Term of this Agreement, Executive shall be paid and
receive the amounts and benefits set forth in subsections (a)
through (e) below:
(a)
An annual base salary (“Base Salary”) of Seven Hundred
Fifty Thousand Dollars ($750,000.00), prorated for any partial year
of employment. Executive’s Base Salary shall be reviewed for
increase each year so as to maintain Executive’s Base Salary
at a competitive level with the base salaries of chief executive
officers of companies of comparable size and similar industries at
such time as the Company reviews salaries for its executive
officers generally. Executive’s salary shall be payable in
substantially equal installments on a bi-monthly basis, or in
accordance with the Company’s regular payroll practices in
effect from time to time for executive officers of the
Company.
(b)
Executive shall be eligible to participate in the Executive
Management Annual Incentive Plan (“Incentive Plan”) and
such other annual incentive plans as may be established by the
Company from time to time for its executive officers. The Board or
a committee of the Board will establish performance goals each year
under the Incentive Plan, and Executive’s annual Target Bonus
shall be 65% of Base Salary; the maximum award for exceeding the
performance goals (which will be determined in accordance with the
current plan design) shall be 130% of Base Salary, provided, that
the Board or a committee of the Board may decide to increase such
percentage; provided, further, that, for the Company’s fiscal
years ending December 31,
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2008 and 2009, Executive’s annual bonus
shall be a minimum of $750,000 for each year. The annual incentive
bonus payable under this subsection (b) shall be payable as a lump
sum at the same time bonuses are paid to other senior executives
after certification by the Compensation Committee of the Board,
that the applicable performance objectives have been met, unless
Executive elects to defer all or a portion of such amount pursuant
to any deferral plan established by the Company for such
purpose.
(c)
Except as otherwise provided herein, Executive shall be entitled to
participate in, or receive benefits under, any “employee
benefit plan” (as defined in Section 3(3) of ERISA) or
employee benefit arrangement made generally available by the
Company to its executive officers, including plans providing
retirement, 401(k) benefits, deferred compensation, health care
(including executive medical), life insurance, disability and
similar benefits. Executive shall not be eligible to participate in
(i) the Blount, Inc. and Subsidiaries Supplemental Retirement
Benefit Plan (“SERP”), and (ii) the Executive
Supplemental Retirement Plan of Blount International, Inc.
(“Executive SERP”).
The
Company’s retiree healthcare coverage for Executive and his
dependents shall commence at the date Executive terminates
employment, provided that if Executive is entitled to benefits
pursuant to Section 5.1 or Section 5.2, the retiree healthcare
coverage shall commence at the end of the Severance Period;
provided, further, that if Executive is receiving healthcare
benefits pursuant to Section 2(d)(iv) under the Consulting
Agreement, the retiree healthcare coverage shall commence at the
end of the period of the Consulting Agreement. The level of
coverage and costs
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under such plan for Executive and his
dependents will be the same coverage and costs provided under the
Company’s retiree healthcare program for executives on the
date Executive terminates employment (not at the end of the period
of the Consulting Agreement) and the level of coverage and costs to
Executive for such coverage shall not be changed in the future
(regardless of any changes in such coverages or costs that may be
made that affect other executives). In the event of a Change in
Control of the Company after the Executive has terminated
employment (including a Change in Control occurring during the
period of the Consulting Agreement) and is eligible for coverage
under the retiree healthcare program, the Company shall pay
Executive on the date of such Change in Control a lump sum payment
equal to the present value of the Company’s costs of
continuing such retiree healthcare coverage for a period equal to
the remaining life expectancy of Executive and his spouse, such
costs being calculated in accordance with Financial Accounting
Standard 106 (“FAS 106”), using the same actuarial and
other assumptions used by the Company for financial reporting
purposes with respect to FAS 106 for the fiscal year ending
immediately prior to the date of the Change in Control.
(d)
The Company will reimburse Executive for membership dues and
assessments at recreational and social clubs, consistent with the
policies under the Prior Employment Agreement. Executive will be
provided an automobile in accordance with the Company’s
automobile policy for Executives, and the Company will pay all
insurance, maintenance, fuel, oil and related operational expenses
for such automobile. Executive will receive six weeks vacation
during each year of the Term. Executive will be provided an annual
physical examination and a financial/tax consultant for
personal
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financial and tax planning. Executive will be
promptly reimbursed by the Company for all reasonable business
expenses he incurs in carrying out his duties and responsibilities
under this Agreement.
4.
Confidentiality and Noncompetition .
(a)
Executive acknowledges that, prior to and during the Term of this
Agreement, the Company has furnished and will furnish to Executive
Confidential Information which could be used by Executive on behalf
of a competitor of the Company to the Company’s substantial
detriment. Moreover, the parties recognize that Executive during
the course of his employment with the Company may develop important
relationships with customers and others having valuable business
relationships with the Company. In view of the foregoing, Executive
acknowledges and agrees that the restrictive covenants contained in
this Section are reasonably necessary to protect the
Company’s legitimate business interests and good will.
(b)
Executive agrees that he shall protect the Company’s
Confidential Information and shall not disclose to any Person, or
otherwise use, except in connection with his duties performed in
accordance with this Agreement, any Confidential Information at any
time, including following the termination of his employment with
the Company for any reason; provided, however, that Executive may
make disclosures required by a valid order or subpoena issued by a
court or administrative agency of competent jurisdiction, in which
event Executive will promptly notify the Company of such order or
subpoena to provide the Company an opportunity to protect its
interests. Executive’s obligations under this Section 4(b)
shall survive any expiration or termination of this Agreement for
any reason, provided that Executive may after such
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expiration or termination disclose Confidential
Information with the prior written consent of the
Board.
(c)
Upon the termination or expiration of his employment hereunder, or,
if later, at the end of the period of the Consulting Agreement,
Executive agrees to deliver promptly to the Company all Company
files, customer lists, management reports, memoranda, research,
Company forms, financial data and reports and other documents
supplied to or created by him in connection with his employment
hereunder (including all copies of the foregoing) in his possession
or control, and all of the Company’s equipment and other
materials in his possession or control. Executive’s
obligations under this Section 4(c) shall survive any expiration or
termination of this Agreement.
(d)
Upon the termination or expiration of his employment under this
Agreement, or, if later, at the end of the period of the Consulting
Agreement, Executive agrees that for a period of one (1) year from
his date of termination or until the end of the period for
which he is entitled to receive compensation under Section 5.1(a)
below, whichever is longer, he shall not (i) enter into or engage
in the design, manufacture, marketing or sale of any products
similar to those produced or offered by the Company or its
affiliates in the area of North America, either as an individual,
partner or joint venturer, or as an employee, agent or salesman, or
as an officer, director, or shareholder of a corporation, (ii)
divert or attempt to divert any person, concern or entity which is
furnished products or services by the Company from doing business
with the Company or otherwise change its relationship with the
Company, or (iii) solicit, lure or
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attempt to hire away any of the employees of
the Company with whom the Executive interacted directly or
indirectly while employed with the Company.
(e)
Executive acknowledges that if he breaches or threatens to breach
this Section 4, his actions may cause irreparable harm and damage
to the Company which could not be compensated in damages.
Accordingly, if Executive breaches or threatens to breach this
Section 4, the Company shall be entitled to seek injunctive relief,
in addition to any other rights or remedies of the Company. The
existence of any claim or cause of action by Executive against the
Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of
Executive’s agreement under this Section 4(e).
5.
Termination .
5.1
By Executive . Executive shall have the right to terminate
his employment hereunder at any time by Notice of Termination (as
described in Section 7). If Executive terminates his employment
because (i) the Company has materially breached this Agreement, and
such breach has not been cured within thirty (30) days after
written notice of such breach is given by Executive to the Company;
or (ii) Executive has determined that his termination is for Good
Reason (as defined in Section 6.7), Executive shall be entitled to
receive the compensation and benefits set forth in subsections (a)
through (g) below. If Executive terminates his employment other
than pursuant to clauses (i) or (ii) of this Section 5.1, the
Company’s obligations under this Agreement shall cease as of
the date of such termination. Unless specified otherwise, the time
periods in (a) through (g) below shall be twenty-four (24) months
commencing on the date of Executive’s termination
(“Severance Period”). The
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Company agrees that if Executive terminates
employment and is entitled to compensation and benefits under this
Section 5.1, he shall not be required to mitigate damages by
seeking other employment, nor shall any amount he earns reduce the
amount payable by the Company hereunder.
(a)
Base Salary - Executive will be entitled to receive his Base
Salary as then in effect (subject to withholding of all applicable
taxes) for the Severance Period provided , however ,
that the salary payments provided for hereunder shall be paid in a
single lump sum payment, to be paid not later than 30 days after
his termination of employment; provided , further ,
that the amount of such lump sum payment shall be determined by
treating the salary payments as if they were paid in the same
manner as the payments were being made at the date of
Executive’s termination and discounting them to their Present
Value (as defined in Section 6.9) on the date Executive’s
employment under this Agreement is terminated.
(b)
Bonuses and Incentives - Executive shall receive bonus
payments from the Company for each month of the Severance Period in
an amount for each such month equal to one-twelfth of the average
of the bonuses paid to him for the two fiscal years in which
bonuses were paid immediately preceding the year in which such
termination occurs. Any bonus amounts that Executive had previously
earned from the Company but which may not yet have been paid as of
the date of termination shall be payable on the date such amounts
are payable to other executives and Executive’s termination
shall not affect the payment of such bonus. Executive shall also
receive a prorated bonus for any uncompleted fiscal year at the
date of termination (assuming a bonus at the Target Award level has
been achieved or, if greater, the minimum annual
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bonus amount specified in Section 3(b) is
payable), based upon the number of days that he was employed during
such fiscal year. The bonus amounts determined herein shall be paid
in a single lump sum payment, to be paid not later than 30 days
after termination of employment; provided , that the amount
of such lump sum payment representing the monthly bonus payments
shall be determined by taking the monthly bonus payments to which
he would be entitled and discounting them to their Present Value on
the date Executive’s employment under this Agreement is
terminated.
(c)
Health and Life Insurance Coverage - The health (including
executive medical) and group term life insurance benefits coverage
provided to Executive at his date of termination shall be continued
for the Severance Period at the same level and in the same manner
as then provided to actively employed executive participants as
if
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