Exhibit 10.2
SEVERANCE
AGREEMENT
THIS AGREEMENT is made and entered into as of
the 1st day of August, 2005, by and between LYDALL, INC., a
Delaware corporation (the “Company”), and John F.
Tattersall of 16 Cinnamon Lane, Clifton Park, NY 12065 (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 severance of
the employment of the Executive by the Company;
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:
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1.0
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Termination
of Employment by the Company .
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1.1 Involuntary Termination by
the Company Other Than For Permanent and Total Disability or
Cause . The Company may terminate the Executive’s
employment at any time. If termination is for reasons other than
(i) the Executive’s Permanent and Total Disability (as
defined in Section 1.2) or (ii) for Cause (as defined in Section
1.3), termination shall be effective upon the Company giving the
Executive a written notice of termination at least 30 days before
the date of termination (or such lesser notice period as to which
the Executive may agree). In the event of such a termination of
employment pursuant to this Section, the Executive shall be
entitled to receive (i) the benefits described in Section 3 if such
termination of employment does not occur within 12 months following
a “Change of Control” (as defined in Section 5), or
(ii) the benefits described in Section 4 if such termination of
employment occurs within 12 months following a “Change of
Control” (as defined in Section 5).
1.2 Termination Due to Permanent
and Total Disability . If the Executive incurs a Permanent and
Total 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 Permanent and Total Disability, the Executive shall be
entitled to receive (i) his base salary 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 to be paid at the normal time for the payment of
such base salary, (ii) a bonus for the year of termination of
employment and for the next succeeding year (to be paid at the
normal time for payment of such bonuses) in an amount equal to the
average of the three highest annual bonuses earned by the Executive
under the Company’s annual incentive bonus plan for any of
the five calendar years preceding the calendar year of 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; (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, and (iv) any reimbursement amounts owed for
“Business Expenses” defined herein as: reasonable,
documented and necessary expenses incurred by the Executive in
performing his duties, provided the Executive properly accounts
therefore in accordance with the policies established by the
company. In addition, if the Executive elects to continue coverage
under the Company’s health plan pursuant to COBRA, the
Company for a period of twelve months following termination of the
Executive’s employment by reason of Permanent and Total
Disability 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
senior executives generally. For the period of twelve months
following the termination of the Executive’s employment by
reason of Permanent and Total Disability, 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 senior executives of the Company generally are required to pay
for such coverage, if any. For purposes of this Agreement, the
Executive shall be considered to have incurred a Permanent and
Total Disability if and only if the Executive has incurred a
disability entitling the Executive to disability benefits under the
Company’s long-term disability plan.
1.3 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 on the part of the Executive
resulting or intended to result directly or indirectly in
substantial gain or personal enrichment to which the Executive was
not legally entitled at the expense of the Company or any of its
subsidiaries; (ii) a willful material breach by the Executive of
his duties
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or responsibilities under this Agreement
resulting in demonstrably material injury to the Company or any of
its subsidiaries; (iii) the Executive’s conviction of a
felony or any crime involving moral turpitude, (iv) habitual
neglect 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 neglect or insubordination and the
Executive has failed to cure such conduct, where susceptible to
cure, within thirty days following such notice, or (v) a material
breach by the Executive of any of his obligations under the
Confidentiality and Non-Compete Agreement executed by the Executive
and attached hereto as Exhibit A. 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 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 at the normal time for payment of such base
salary, (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 and at the
normal time for payment of such compensation and benefits and (iii)
any reimbursement of Business Expenses. The Executive will not be
entitled to a bonus payment.
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2.0
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Termination
of Employment By Death .
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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 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 at the normal time for payment
of such base salary, (ii) if earned, 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 incentive 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
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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, and (iv)
any reimbursement of Business Expenses. 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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3.0
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Benefits
Upon Termination Without Cause (No Change of Control)
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If the Executive’s employment
hereunder is terminated by the Company, other than for Cause or
Permanent and Total Disability, and such termination of employment
does not occur within 12 months following a “Change of
Control” of the Company (as defined in Section 5), the
Executive shall be entitled to the following:
(a) Salary . The Company
shall pay to the Executive his base salary earned through the date
of such termination of employment 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, such base salary, compensation and
benefits to be paid at the normal time for payment of such base
salary, compensation and benefits.
(b) Expense Reimbursement.
The Company shall reimburse the Executive for any Business
Expenses.
(c) Severance Payment. The
Company shall pay to the Executive 12 months’ severance, at
the Executive’s annual rate of base salary immediately
preceding his termination of employment, in equal installments
spread over the period of 12 months beginning on the date of
termination.
(d) Bonus. If the date of
termination occurs after the first anniversary of the
Executive’s hire date, the Company
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shall pay to the Executive in
addition, the average of his annual bonuses earned under the
Company’s annual incentive 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. Such installments shall be paid at the times that salary
payments are normally made by the Company.
(e) Health Benefits. 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 on which the
Executive commences substantially full-time employment as an
employee of an employer that offers health benefits, 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 senior executives
generally. The Executive shall notify the
