EXHIBIT 10.1
EMPLOYMENT
AGREEMENT
THIS AGREEMENT, dated as of
November 18, 2005, and effective as of October 1, 2005
(the “Effective Date”), is made by and between
TransDigm Holding Company, a Delaware corporation (the
“Company”), and Raymond Laubenthal (the
“Executive”).
RECITALS:
WHEREAS, the Executive holds the
position of President and Chief Operating Officer of the Company,
on the terms and subject to the conditions set forth in this
Agreement.
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), or (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.
(d) “ COBRA ”
shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as may be amended from time to time.
(e) “ Common Stock
” shall mean the common stock of the Company, $0.01 par value
per share.
(f) “ Company ”
shall have the meaning set forth in the preamble hereto.
(g) “ Compensation
Committee ” shall mean the Compensation Committee of the
Board whose members shall be appointed by the Board from time to
time.
(h) “ 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.
(i) “ Disability
” shall mean the Executive’s absence from employment
with the Company due to: (i) his inability to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period
of not less than twelve (12) months; or (ii) such
medically determinable physical or mental impairment, which can be
expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months, and for
which the Executive is receiving income replacement benefits for a
period of not less than three (3) months under an accident and
health plan covering the Company’s employees.
(j) “ Effective Date
” shall have the meaning set forth in the first paragraph
hereof.
(k) “ Equity Compensation
Agreements ” shall mean any 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 any option
plan adopted or maintained by the Company for employees generally,
that certain agreement among the Company, the Executive and Warburg
Pincus Private Equity VIII, L.P., governing the treatment of
“Rollover Options” (as described therein), and any
management deferred compensation or similar plans of the
Company.
(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,
duties or responsibilities, without his prior written consent, or
(ii) a reduction of the Executive’s aggregate cash
compensation (including bonus opportunities), benefits or
perquisites, without his prior written consent, (iii) 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 (iv) any
material breach of this Agreement by the Company.
(o) “ Notice of
Termination ” shall have the a meaning set forth in
Section 5(b).
(p) “ Payment Period
” shall have the meaning set forth in
Section 6(b)(i).
(q) “ Principal
Stockholder ” shall mean Warburg Pincus Private Equity
VIII, L.P. and any of its permitted assignees under the
Stockholders’ Agreement.
(r) “ Specified
Employee ” shall mean any individual employed by the
Company who (i) at any time during the twelve (12) month
period ending on the December 31st preceding the calendar year
under consideration, (A) is one of the top 50 compensated
officers of the Company and has annual “W-2”
compensation of at least $130,000; (B) owns more than five
percent (5%) of the Company’s stock; or
(C) owns more than one percent (1%) of the
Company’s stock and has annual “W-2”
compensation
in excess of $150,000; and (ii) the
Company’s stock is publicly-traded on the date such
individual terminates his service with the Company. The foregoing
compensation amounts shall be adjusted from time to time in
accordance with the cost-of-living adjustments provided for under
the Code.
(s) “ Stockholders’
Agreement ” shall mean that certain Stockholders’
Agreement dated July 22, 2003, among TD Holding Corporation,
Warburg Pincus Private Equity VIII, L.P., the Executive and the
other stockholders party thereto, as amended from time to
time.
(t) “ Term ”
shall have the meaning set forth in Section 2.
2. Employment . The Company shall employ
the Executive, for the period set forth in this Section 2, in
the position(s) 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 two year
period.
3. Position and Duties . During the Term,
the Executive shall serve as President and Chief Operating Officer
of each of the Company and its subsidiary, TransDigm, Inc.
(“TransDigm”), with such customary responsibilities,
duties and authority as may from time to time be assigned to the
President and Chief Operating Officer. During the Term, the
Executive shall devote substantially all his working time and
efforts to the business and affairs of the Company and TransDigm;
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,
and (ii) manage his personal investments, so long as none of
such activities significantly interferes with the Executive’s
duties hereunder.
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 $280,000 per annum payable in accordance
with the Company’s normal payroll practices, which 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 (the “Annual
Base Salary”).
(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) Non-Qualified Deferred
Compensation . During the Term, the Executive shall be eligible
to participate in any non-qualified deferred compensation plan or
program (if any) offered by the Company to its
executives.
(d) Long Term Incentive
Compensation . During the Term, the Executive shall be entitled
to participate in the Option Plan or any successor plan
thereto.
(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 . The Executive
shall be entitled to an amount of annual vacation days, 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 determined by the Chief Executive
Officer and generally consistent with allowance currently granted
to the Executive.
(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.
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 terminate his employment
