[WSI INDUSTRIES
LETTERHEAD]
Severance Letter
Agreement
The purpose of
this Letter Agreement is to set forth our agreement in regard to
your severance arrangement. Although your employment is “at
will” and may be terminated by you or WSI Industries, Inc.
(“WSI”) at any time for any reason, WSI has agreed to
provide you with a particular severance pay benefit in the event
WSI terminates your employment without Cause (as defined below).
Terms not otherwise defined in this letter (the “Letter
Agreement”) shall have the meaning given such terms on
Schedule 1, which is incorporated herein by reference.
WSI’s obligation to you under this Letter Agreement is, among
the other requirements set forth below, subject to the condition
that you execute a Restricted Covenant Agreement in the form
attached as Exhibit A, which is incorporated herein by
reference.
Specifically,
we have agreed as follows:
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(a)
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If
your employment is terminated by WSI without Cause, subject to the
condition stated in Section 1(c), WSI will:
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(i)
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continue to pay your base salary in
accordance with WSI’s regular payroll practices for a period
of twelve (12) months thereafter, or until you have secured
other employment, whichever occurs first, subject to applicable tax
withholding; and
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(ii)
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if
you are eligible for and elect COBRA or state continuation of the
WSI health, dental and group life insurance benefits, WSI shall pay
the portion of such COBRA premium that it pays for active employees
until the earlier of: (A) twelve (12) months from the
date COBRA coverage begins; or (B) the date COBRA coverage
otherwise terminates. You shall pay the remaining portion of the
premiums for such benefits during such period and, if applicable,
the full premium thereafter.
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(b)
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If
you resign for any reason, if WSI terminates your employment for
Cause or if your employment terminates as a result of your death or
disability, you shall be entitled to receive your base salary
accrued but unpaid as of the date of
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termination, but shall not be
entitled to receive any salary continuation benefit
thereafter.
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(c)
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In
case of termination without Cause, you shall be entitled to receive
the amounts due you under Section 1(a) only upon your execution and
delivery to WSI of a general release (and following termination of
all rescission periods) with respect to any and all claims against
WSI and its officers, directors, employees, agents and
shareholders, acceptable in form and substance to WSI in all
respects, and provided you continue to comply with the terms of the
Restricted Covenant Agreement with WSI.
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(d)
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For
purposes of this Agreement, “termination of employment”
shall be interpreted consistent with the term “separation
from service” within the meaning of Treas. Reg.
§1.409A-1(h), and for purposes of Code §409A, each
payment shall be considered a separate payment.
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2.
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Arbitration . All disputes or claims arising out
of or in any way related to this Letter Agreement, including the
making of this Letter Agreement, shall be submitted to and
determined by final and binding arbitration under the American
Arbitration Association Rules for Resolution of Employment
Disputes. Arbitration proceedings may be initiated by either of us
upon notice to the other and to the American Arbitration
Association, and shall be conducted by one arbitrator in
Minneapolis, Minnesota who has experience in employment matters.
Unless we agree to have the person to serve as arbitrator within
thirty (30) days of delivery of the list of propose
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