Exhibit 10.1
SEVERANCE
AGREEMENT
THIS AGREEMENT is made and entered
into as of the 17th day of October, 2005, by and between LYDALL
THERMAL/ACOUSTICAL SALES, LLC., a Delaware limited liability
corporation (the “Company”), and Randall L. Byrd of
Northville, MI (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:
1.0 Termination of Employment by the
Company .
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 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.
2.0 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 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 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.
3.0 Benefits Upon Termination Without Cause
(No Change of Control) .
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 6 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 6 months beginning on the date of
termination. Upon continuous employment through the first
anniversary of the Executive’s hire date, the amount of
severance to be paid shall be increased to 12 months 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 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 applicabl
