Exhibit 10.2
EXECUTIVE TRANSITION
AGREEMENT
THIS EXECUTIVE TRANSITION AGREEMENT (this
“ Agreement ”) by and between KĀDANT INC.,
a Delaware corporation (the “ Company ”), and
Edward J. Sindoni (the “ Executive ”) is made as
of August 17, 2009.
WHEREAS, the Company and the Executive desire to
provide for an orderly transition to the Executive’s
successor as Chief Operating Officer (“ COO ”)
of the Company beginning on September 1, 2009 and continuing
through September 1, 2010 (the “ Retirement Date
”), when (unless sooner terminated as provided for herein)
the Executive will retire and cease to be an employee of the
Company;
WHEREAS, in connection with the foregoing, the
Company and the Executive wish to set forth the terms of such
transition in this Agreement;
WHEREAS, the Company and the Executive are
parties to that certain Amended and Restated Executive Retention
Agreement, dated as of December 9, 2008 (the “ Executive
Retention Agreement ”), which provides certain benefits
to the Executive in his position as COO in the event of a
termination of his employment following a Change in Control (as
defined below) of the Company; and
WHEREAS, the Company and the Executive wish to
replace the Executive Retention Agreement with the benefits and
obligations set forth in this Agreement, to be effective upon the
Executive’s transition to a non-officer employee of the
Company, as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual
covenants herein contained and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Executive agree as
follows:
1.1
Except as hereinafter otherwise provided, the Company shall employ
the Executive as the Executive Vice President and COO of the
Company through August 31, 2009 and as a non-officer employee of
the Company, with a title, if any, to be determined by the Chief
Executive Officer (“ CEO ”) of the Company, from
September 1, 2009 through the Retirement Date. The
Executive agrees to remain in the employment of the Company in such
capacities through the Retirement Date, at which point the
Executive shall retire and cease to be an employee of the
Company.
1.2
The Executive shall work for the Company on a full-time basis
through August 31, 2009 and on a part-time basis (on average at
least 20 hours per week) from September 1, 2009 through the
Retirement Date.
1.3
From September 1, 2009 through the Retirement Date, the Executive
shall work under the direction of and on such matters as may be
reasonably assigned to him by the CEO or COO. Such
duties may include, but shall not be limited to, the advancement of
the business and interests of the Company, consulting with the CEO
or COO as requested on strategic and operational matters related to
the Company, meeting with industry groups and the Company’s
customers as requested by the CEO or COO, evaluating potential
acquisition targets and undertaking special assignments agreed to
between the Executive and the CEO or COO.
1.4
The Executive agrees that, during the specified period of
employment, he shall, to the best of his ability, perform his
duties, and shall not engage in any business, profession or
occupation which would conflict with the rendering of the agreed
upon services, either directly or indirectly, without the prior
approval of the Board of Directors.
2.
Compensation . During the period of his
employment by the Company under this Agreement, the Executive shall
be compensated for his services as follows:
2.1
Except as provided in Section 2.6, (a) during the period commencing
on the date of this Agreement and ending on August 31, 2009, the
Executive shall continue to be paid a base salary at his current
annual rate of $288,000 and (b) during the period commencing on
September 1, 2009 and ending on the Retirement Date, the Executive
shall be paid a base salary at an annual rate of
$144,000.
2.2
The Executive shall be eligible to participate in the
Company’s Cash Incentive Plan (a) based on his current target
or reference bonus of $175,000 for the fiscal year ending January
2, 2010 and (b) based on a target or reference bonus of $60,000 for
the fiscal year ending January 1, 2011 (based on the portion of
such fiscal year elapsed through the Retirement Date), in each case
subject to the terms of the Cash Incentive
Plan. Provided that the Executive remains an employee of
the Company through the Retirement Date, the Executive shall be
eligible to participate in the Cash Incentive Plan for the fiscal
year ending January 1, 2011 regardless of whether the Executive is
an employee of the Company through the end of such fiscal
year. Any bonus payable to the Executive under the Cash
Incentive Plan shall be paid in accordance with the terms of the
Cash Incentive Plan, but in no event later than March 15 of the
fiscal year following the fiscal year for which the bonus is
payable.
2.3
The Executive’s existing restricted stock unit awards shall
continue to be governed by the terms of the applicable plans and
agreements; provided , however , that if the
Executive remains an employee of the Company through the Retirement
Date, the restricted stock unit award granted to the Executive on
March 3, 2008 shall vest in full as of the Retirement
Date. For the avoidance of doubt, the Executive
acknowledges that he shall forfeit all unvested restricted stock
unit awards on the Retirement Date or such earlier date as his
employment terminates in accordance with this Agreement.
2.4
The Executive shall be reimbursed for any and all monies expended
by him in connection with his employment for reasonable and
necessary expenses on behalf of the Company in accordance with the
policies of the Company then in effect.
2.5 Until the
Retirement Date or the earlier termination of this Agreement, the
Executive shall (a) be eligible to participate in the
Company’s executive and employee benefit plans and
arrangements that are offered to executive officers and employees
of the Company (including, without limitation, retirement, medical
insurance, dental insurance, life insurance, disability benefits
and vacation (which shall accrue in accordance with the
Company’s
vacation policy and shall be adjusted appropriately when the
Executive changes from a full-time employee to a part-time
employee)), to the extent he remains eligible to do so under the
terms of such plans and to the extent that the Company continues
such plans for its executive officers and employees, and (b)
continue to receive the same perquisites that are generally
provided to other executive officers of the Company.
2.6
If, because of adverse business conditions or for other reasons,
the Company at any time puts into effect salary reductions
applicable to all executive officers of the Company generally, the
salary payments required to be made under this Agreement to the
Executive during any period in which such general reduction is in
effect may be reduced by the same percentage as is applicable to
all executive officers of the Company generally. Any
benefits made available to the Executive which are related to base
salary shall also be reduced in accordance with any salary
reduction.
3.
Restrictive Covenants .
3.1
During the period of the Executive’s employment with the
Company and for a period of two years following the termination of
such employment, the Executive shall not, directly or indirectly,
own, manage, control, operate, be employed by, participate in or be
connected with the ownership, management, operation or control of
any business which competes with the Company or any of its
affiliated companies; provided , however , that the
foregoing shall not apply to ownership of less than 5% of the
outstanding stock of a publicly held corporation, which ownership
is disclosed to the Board of Directors, nor shall it apply to any
other relationship which is disclosed to and approved by the Board
of Directors.
3.2
During the period of the Executive’s employment with the
Company and for a period of two years following the termination of
such employment, the Executive shall not, either alone or in
association with others, solicit, divert or take away, or attempt
to divert or take away, the business or patronage of any of the
clients, customers or business partners of the Company that were
contacted, solicited or served by the Company during the 12-month
period prior to the termination of the Executive’s employment
with the Company.
3.3
During the period of the Executive’s employment with the
Company and for a period of two years following the termination of
such employment, the Executive shall not, either alone or in
association with others, (a) solicit, induce or attempt to induce
any employee of the Company to terminate his or her employment with
the Company or (b) hire, recruit or attempt to hire any person who
was employed by the Company at any time during the term of the
Executive’s employment with the Company, provided that
this clause (b) shall not apply to the recruitment or hiring of any
individual whose employment with the Company has been terminated
for a period of six months or longer.
3.4
During the period of the Executive’s employment with the
Company and thereafter, the Executive shall not, without the
written consent of the Company, utilize or disclose to others any
proprietary or confidential information of any type or description,
which terminology shall be construed to mean any information
developed or identified by the Company that is intended to give it
an advantage over its competitors or that could give a competitor
an advantage if obtained by it, unless and until such confidential
information has become public knowledge through no fault
of the Executive. Such information includes, but is not
limited to,
product or
process design, specifications, manufacturing methods, financial or
statistical information about the Company, marketing or sales
information about the Company, sources of supply, lists of
customers and the Company’s plans, strategies and
contemplated actions. The Executive shall not disclose
any proprietary or confidential information to others outside the
Company or use the same for any unauthorized purposes without
written approval by an executive officer of the Company, either
during or at any time after employment, unless and until such
proprietary or confidential information has become public knowledge
without fault by the Executive.
3.5
During the period of the Executive’s employment by the
Company and for a period of two years following the termination of
such employment, the Executive shall not in any way whatsoever aid
or assist any party seeking to cause, initiate or effect a Change
in Control of the Company without the prior approval of the Board
of Directors.
4.1
Except for the covenants set forth in Section 3, which covenants
shall remain in effect for the periods stated therein, and subject
to the satisfaction of the provisions of this Agreement that
require payments or the provision of benefits after the termination
of this Agreement, this Agreement shall terminate on the earlier of
the Retirement Date and the occurrence of any of the following
events:
(a) on the
effective date set forth in any resignation submitted by the
Executive and accepted by the Company, or if no effective date is
agreed upon, the date of receipt of such letter;
(b) upon
the death of the Executive;
(c) at the
election of the Company, upon the Disability of the
Executive. For purposes of this Agreement, “
Disability ” shall mean the Executive’s absence
from the performance of the Executive’s duties with the
Company for 180 consecutive calendar days as a result of incapacity
due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive’s
legal representative;
(d) upon
the termination of the Executive by the Company for
Cause. For purposes of this Agreement, “
Cause ” shall mean the Executive’s willful
engagement in illegal conduct or gross misconduct that is
materially and demonstrably injurious to the Company,
provided that no act or failure to act by the Executive
shall be considered “willful” unless it is done, or
omitted to be done, in bad faith and without reasonable belief that
the Executive’s action or omission was in the best interests
of the Company; or
(e) upon
termination of the Executive by the Company without
Cause.
4.2
Except as otherwise expressly provided herein, upon the termination
of this Agreement, all of the Company’s obligations under
this Agreement, including, without limitation, making payments to
the Executive, shall immediately cease and terminate.
4.3
Notwithstanding the foregoing, in the event of the termination of
this Agreement pursuant to Section 4.1(a) or (d), the Company shall
pay to the Executive, in a lump sum in cash within 30 days after
the date of termination of this Agreement, an amount equal to the
sum of (a) the Executive’s base salary through the date of
termination of this Agreement, (b) the annual bonus payable
(including any bonus or portion thereof which has been earned but
deferred) to the Executive for the most recently completed fiscal
year (if such bonus has not yet been paid), provided that,
notwithstanding the foregoing, such annual bonus need not be paid
within the 30-day period as long as such annual bonus is paid not
later than March 15 of the fiscal year following the fiscal year
for which the bonus is payable, and (c) the amount of any
compensation previously deferred by the Executive (together with
any accrued interest or earnings thereon) and any accrued vacation
pay, in each case to the extent not previously paid (the sum of the
amounts described in clauses (a), (b) and (c) shall be hereinafter
referred to as the “ Accrued Obligations
”).
4.4
Notwithstanding the foregoing, in the event of the termination of
this Agreement pursuant to Section 4.1(b) or (c), the Company shall
(a) pay to the Executive (or the Executive’s estate, if
applicable), in a lump sum in cash within 30 days after the date of
termination of this Agreement, the Accrued Obligations and (b) pay
to the Executive (or the Executive’s estate, if applicable),
in a lump sum in cash within 30 days after the date of termination
of this Agreement, an amount equal to the product of (i) the
Executive’s target or reference bonus for the fiscal year in
which this Agreement is terminated and (ii) a fraction, the
numerator of which is the number of days in the current fiscal year
through the date of termination of this Agreement, and the
denominator of which is either 365 (for the fiscal year ending
January 2, 2010) or 242 (for the fiscal year ending January 1,
2011) (the “ Pro-Rated Bonus ”).
4.5
Notwithstanding the foregoing, in the event of the termination of
this Agreement pursuant to Section 4.1(e), the Company
shall:
(a) pay to
the Executive, in a lump sum in cash within 30 days after the date
of termination of this Agreement, the Accrued
Obligations;
(b)
continue to pay to the Executive through the Retirement Date the
compensation (including, without limitation, base salary, bonus and
vacation pay) that the Executive would have received pursuant to
this Agreement had the Executive remained an employee of the
Company through the Retirement Date; and
(c)
continue to provide benefits (including, without limitation,
retirement, medical insurance, dental insurance, life insurance and
disability benefits) to the Executive and the Executive’s
family through the Retirement Date at least equal to those which
would have been provided to them if the Executive’s
employment had not been terminated, in accordance with the
applicable benefit plans in effect on the
on the
date of termination of this Agreement or, if more favorable to the
Executive and the Executive’s family, in effect generally at
any time thereafter with respect to other executive officers of the
Company and its affiliated companies; provided ,
however , that if the Executive becomes reemployed with
another employer and is eligible to receive a particular type of
benefits (e.g., medical benefits) from such employer on terms at
least as favorable to the Executive and the Executive’s
family as those being provided by the Company, then the Company
shall no longer be required to provide those particular benefits to
the Executive and the Executive’s family; and provided
further , however , that (i) if any particular
benefits cannot be provided because of plan or regulatory
restrictions, then the Company will pay to the Executive an amount
equal to the cost the Executive will incur in acquiring such
benefits directly as a result of the Company not providing such
benefits and (ii) to the extent the Company determines that the
Executive’s qualifying event for purposes of continuation of
medical benefits under COBRA occurs on the date of termination of
this Agreement, such period of continuation of benefits shall not
be counted against or otherwise reduce the period for which the
Company must provide continuation of medical benefits under this
Section 4.5(c) unless the Executive otherwise agrees.
In addition,
upon termination of this Agreement pursuant to Section 5.1(e), each
of the Executive’s restricted stock unit awards shall become
immediately vested to the same extent that such restricted stock
unit awards would have vested had the Executive remained an
employee of the Company through the Retirement Date. The
provision to the Executive of the benefits provided by this Section
4.5 shall be contingent upon the execution by the Executive of a
release in a form reasonably acceptable to the Company.
4.6
Notwithstanding the foregoing, in the event of the termination of
this Agreement on the Retirement Date, the Company shall pay to the
Executive, in a lump sum in cash within 30 days after the date of
termination of this Agreement, an amount equal to the sum of (a)
the Executive’s base salary through the Retirement Date, (b)
the annual bonus payable to the Executive for the fiscal year
ending January 1, 2011, which shall be paid in accordance with
Section 2.2, and (c) the amount of any compensation previously
deferred by the Executive (together with any accrued interest or
earnings thereon) and any accrued vacation pay, in each case to the
extent not previously paid.
4.7
For the avoidance of doubt, if the Executive shall become entitled
to any payments or other benefits pursuant to the Executive
Retention Agreement or Section 5.3(b) of this Agreement, the
payments and other benefits provided for by Sections 4.3 through
4.6 of this Agreement shall not be payable or provided to the
Executive.
4.8
For the avoidance of doubt, the termination of the
Executive’s employment as a result of the expiration of this
Agreement on the Retirement Date shall not be considered a
termination of this Agreement pursuant to Section 4.1(a) or
(e).
5.
Change in Control . The Company and the Executive
hereby agree that (a) the Executive Retention Agreement shall
remain in full force and effect from the date of this Agreement
through August 31, 2009 and shall thereafter be terminated in its
entirety and (b) as of September 1, 2009, but not prior to such
date, the terms and conditions of this Section 5 shall become
effective and shall be binding on the Company and the
Executive. For the avoidance of doubt, (i) if a Change
in Control occurs on or before August 31, 2009 and the
Executive’s employment with the Company is subsequently
terminated on or before August 31, 2009, then the Executive shall
be
entitled to the
benefits, if any, and subject to the obligations set forth in the
Executive Retention Agreement and (ii) if a Change in Control
occurs at any time while this Agreement is in effect and the
Executive’s employment with the Company is subsequently
terminated on or after September 1, 2009, but not later than the
Retirement Date, then the Executive shall be entitled to the
benefits, if any, and subject to the obligations set forth in this
Section 5.
5.1
Key Definitions . As used herein, the following
terms shall have the following respective meanings:
(a) “
Change in Control ” means an event or occurrence set
forth in any one or more of clauses (i) through (iv) below
(including an event or occurrence that constitutes a Change in
Control under one of such clauses but is specifically exempted from
another such clause):
(i) the
acquisition by an individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “ Exchange Act ”)) (a
“ Person ”) of beneficial ownership of any
capital stock of the Company if, after such acquisition, such
Person beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act) 20% or more of either (A) the
then-outstanding shares of common stock of the Company
(t
