Exhibit 10(r)
EMPLOYMENT AGREEMENT
This Agreement is entered into as of May 12, 2005 by and between Albany
International Corp. (the "Company") and Joseph G. Morone ("Executive").
1. Duties and Scope of Employment.
(a) Positions and Duties. Commencing on the Effective Date,
Executive will serve as President of the Company, reporting to the Company's
Chief Executive Officer. Commencing on January 1, 2006, Executive will serve as
President and Chief Executive Officer, reporting to the Company's Board of
Directors (the "Board"). The Effective Date will be such date during the period
from July 1, 2005 through September 1, 2005 as Executive shall designate by at
least ten days' notice to the Chief Executive Officer of the Company. The period
during which Executive is employed by the Company under this Agreement is
referred to herein as the "Employment Term". During the Employment Term,
Executive will render such business and professional services in the performance
of his duties, consistent with Executive's position within the Company, as may
reasonably be assigned to him by the Chief Executive Officer, prior to January
1, 2006, and by the Board after such date.
(b) Obligations. During the Employment Term, Executive will devote
Executive's full business efforts to the Company and will use good faith efforts
to discharge Executive's obligations under this Agreement to the best of
Executive's ability. For the duration of the Employment Term, Executive agrees
not to serve as a director for any for-profit entity or organization or actively
engage in any employment, occupation, or consulting activity for any direct or
indirect remuneration without the prior approval of the Board, in its sole
discretion; provided, however, that Executive may, without the approval of the
Board, (i) serve in any capacity with any civic, educational, or charitable
organization, and (ii) continue to serve on the Board of Directors of Transworld
Entertainment Corporation (and committees of such Board); in each case, provided
such services do not interfere with Executive's obligations to the Company.
2. Term of Agreement; At-Will Employment. Executive and the Company
agree that Executive's employment with the Company constitutes "at-will"
employment. Executive and the Company acknowledge that, subject to the
provisions of Sections 5, 6, 7 and 8 of this Agreement, Executive's employment
relationship with the Company may be terminated at any time, upon written notice
to the other party, with or without good cause, at the option either of the
Company or Executive.
3. Compensation.
(a) Base Salary. Commencing on the Effective Date, the Company will
pay Executive an annual salary of $600,000 as compensation for his services
(such annual salary, as is then effective, to be referred to herein as "Base
Salary"). The Base Salary will be paid periodically in accordance with the
Company's normal payroll practices and be subject to standard and customary
withholdings. Executive's salary will be subject to review by the Compensation
Committee of the Board, or any successor thereto (the "Committee"), at least
annually, and adjustments will be made in the discretion of the Committee.
(b) Annual Bonus. Executive will be eligible for a cash bonus for
2005 under the Company's existing annual cash bonus program for senior
management, to be determined and paid during early 2006. Under this program,
Executive's 2005 target bonus will be equal to 50% of his actual 2005 base
compensation, pro-rated for the portion of the year during which he is actually
employed. (For example, if the Effective Date is September 1, 2005, the target
amount would be $100,000 [50% of $600,000 x 4/12] ). The Compensation Committee
of the Company's Board of
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Directors has determined that 2005 senior management bonuses will be based on
Company performance with respect to operating income, share of market and
management of inventories and accounts receivable. The Committee retains the
right to exercise its discretion, after the end of 2005, as in prior years, to
determine to what extent the cash bonuses of Executive and the other executive
officers are earned, and reserves the right to take individual performance
factors into account, and to employ subjective and objective criteria. Executive
will be eligible thereafter to participate in any annual executive cash bonus
program, as the same may be amended, modified or terminated by the Company, in
accordance with its terms. Target bonuses in future periods will be at the
discretion of the Compensation Committee.
(c) Restricted Stock Units. Executive will receive, as of the
Effective Date, a grant of 30,000 stock units under the Company's Restricted
Stock Unit Plan, pursuant to the form of Restricted Stock Unit Award attached to
this Agreement as Exhibit A.
(d) Initial Payment. On the Effective Date, Executive will receive a
one-time cash payment (the "Initial Payment") in the amount of $425,000 which
amount shall be reduced by any amount paid or payable to Executive with respect
to the "Deferred Compensation Agreement" between Executive and Bentley College.
(e) Relocation. Executive will be entitled to benefits provided
pursuant to the Company's Relocation Policy, a copy of which has been provided
to the Executive.
(f) Perquisites. Executive will be eligible to receive such
perquisites as are from time-to-time made generally available to senior
executives of the Company. Such perquisites currently include financial planning
assistance from AYCO and subsidies for country-club membership, but do not
include Company cars.
4. Employee Benefits and Policies. Executive will be entitled to two
weeks of vacation with pay during the remainder of 2005, and thereafter will be
entitled to four weeks of vacation per calendar year, unless the Company's
then-current vacation policy applicable to executive officers provides for a
greater period. In addition, Executive will be eligible to participate in all of
the Company's employee benefit plans, policies, and arrangements that are
applicable to other executive officers of the Company (including, without
limitation, 401(k), health care, vision, dental, life insurance and disability),
as such plans, policies, and arrangements may exist from time to time.
5. Termination of Employment. In the event Executive's employment with
the Company terminates for any reason, Executive will be entitled to any (a)
unpaid Base Salary accrued to the effective date of termination, (b) unpaid but
earned and accrued annual cash bonus for the portion of the year in which the
termination of employment occurs and for any completed prior year for which the
annual cash bonus has not been paid, (c) pay for accrued but unused vacation to
which the Executive is entitled calculated in accordance with the Company's
vacation policy, (d) benefits or compensation required to be provided after
termination pursuant to, and in accordance with the terms of, any employee
benefit plans, policies or arrangements applicable to Executive, (e)
unreimbursed business expenses incurred prior to termination and required to be
reimbursed to Executive pursuant to the Company's policy, and (f) any rights to
indemnification to which Executive may be entitled under the Company's Articles
of Incorporation, Bylaws, or separate indemnification agreement, as applicable.
In addition, if the termination is by the Company without Cause, Executive will
be entitled to the amounts and benefits specified in Section 6.
6. Severance. If Executive's employment is terminated by the Company
without Cause, Executive will receive an amount equal to twice the Base Salary
of Executive at the time of termination, payable in 24 equal monthly
installments. Executive's right to receive payments under this Section is
contingent upon Executive's continuing compliance with the provisions of
Sections 7 and 8 of this
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Agreement and upon the Executive's having executed and delivered to the Company
a release of any and all claims relating to his termination. Executive will not
be required to mitigate the amount of payments under this Section 6, nor will
any earnings that Executive may receive from any other source reduce any such
payments. For purposes of this Section,
(a) Termination "by the Company" shall not include termination as
the result of death or Disability.
(b) "Cause" shall be deemed to exist if a majority of the members of
the Board determine that the Executive has (i) caused substantial harm to
the Company with intent to do so or as a result of gross negligence in the
performance of his duties; (ii) not made a good faith effort to carry out
his duties; (iii) wrongfully and substantially enriched himself at the
expense of the Company; or (iv) been convicted of a felony.
(c) "Disability" shall be deemed to exist if (i) by reason of mental
or physical illness the Executive has not performed his or her duties for
a period of six consecutive months; and (ii) the Executive does not return
to the performance of his duties within thirty days after written notice
is given by Company that the Executive has been determined by the Board of
Directors to be "Disabled" under the Company's long term disability
policy.
7. Confidential Information. Executive agrees that all aspects of the
Company's business, products, prospects, plans and strategies that have not been
publicly disclosed, including, but not limited to, the identities, needs and
preferences of its customers, internal business operations and pricing
information, manufacturing know-how, technical attributes of products and any
and all other trade secrets (collectively, "Confidential Information"), are
confidential and secret, shall be maintained in confidence and not disclosed to
any third party, and shall remain the exclusive property of the Company. Any
Confidential Information may be used by the Executive solely to discharge his
obligations hereunder, and shall not be used for any other purpose, including,
without limitation, for any purpose whatsoever following termination of
Executive's employment. All Confidential Information in tangible form that is
provided to the Executive shall be returned by the Executive to the Company
within 30 days of any termination of employment, together with a statement
certifying: (1) that Executive has returned all Confidential Information in his
possession, (2) that Executive has at all times maintained the confidential
nature of the Confidential Information, and (3) that Executive confirms his
continuing obligations of confidentiality under this Agreement following such
termination.
8. Non-disparagement. During the Employment Term, and for twenty-four
months thereafter, Executive will not knowingly disparage, criticize or
otherwise make any derogatory statements regarding the Company, its directors or
its officers. The foregoing restriction will not apply to any truthful
statements made in response to a subpoena or other compulsory legal process.
9. Board Membership. Upon the termination of Executive's employment for
any reason, Executive will be deemed to have resigned from any seat on the Board
(and from any seats on the boards, and from any offices of, subsidiaries) held
at such time, voluntarily, without any further required action by the Executive,
as of the end of the Employment Term. Executive, at the Board's request, will
execute any documents necessary to reflect his resignation.
10. Assignment. This Agreement will be binding upon and inure to the
benefit of (a) the heirs, executors, and legal representatives of Executive upon
Executive's death, and (b) any successor of the Company. Any such successor of
the Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes. For this purpose, "successor" means any person,
firm, corporation, or other business entity which at any time, whether by
purchase, merger, or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement may be
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assigned or transferred except by will or the laws of descent and distribution.
Any other attempted assignment, transfer, conveyance, or other disposition of
Executive's right to compensation or other benefits will be null and void.
11. Notices. All notices, requests, demands, and other communications
called for hereunder will be in writing and will be deemed given (a) on the date
of delivery if delivered personally, (b) one (1) day after being sent overnight
by a well established commercial overnight service, or (c) four (4) days after
being mailed by registered or certified mail, return receipt requested, prepaid
and addressed to the parties or their successors at the following addresses, or
at such other addresses as the parties may later designate in writing:
If to the Company:
Attn: Lead Director
Albany International Corp.
1373 Broadway
Menands, NY 12204
If to the Executive:
at the last residential address known by the Company.
12. Severability. If any provision hereof becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable, or void, this
Agreement will continue in full force and effect without said provision.
13. Arbitration. The Parties agree that any and all disputes arising out
of the terms of this Agreement, Executive's employment by the Company,
Executive's service as an officer or director of the Company, or Executive's
compensation and benefits, their interpretation, and any of the matters herein
released, will be subject to binding arbitration in New York, New York under the
American Arbitration Association's National Rules for the Resolution of
Employment Disputes. The Parties agree that the prevailing party in any
arbitration will be entitled to injunctive relief in any court of competent
jurisdiction to enforce the arbitration award. The Parties hereto agree to waive
their right to have any dispute between them resolved in a court of law by a
judge or jury. This paragraph will not prevent either party from seeking
injunctive relief (or any other provisional remedy) from any court having
jurisdiction over the Parties and the subject matter of their dispute relating
to Executive's obligations under this Agreement.
14. Integration. This Agreement, together with the Exhibit, represents
the entire agreement and understanding between the parties as to the subject
matter herein and supersedes all prior or contemporaneous agreements whether
written or oral. No waiver, alteration, or modification of any of the provisions
of this Agreement will be binding unless in a writing that is signed by duly
authorized representatives of the parties hereto, provided that any benefits or
compensation provided to Executive pursuant to the terms of any plan, program,
policy, or arrangement may be amended or terminated by the Company at any time,
in accordance with the terms of such plan, program, policy or arrangement. In
entering into this Agreement, no party has relied on or made any representation,
warranty, inducement, promise or understanding that is not in this Agreement.
Executive acknowledges that Executive is not subject to any contract, obligation
or understanding (whether written or not) that would in any way restrict the
performance of Executive's duties as set forth in this Agreement.
15. Waiver of Breach. The waiver of a breach of any term or provision of
this Agreement, which must be in writing, will not operate as or be construed to
be a waiver of any other previous or subsequent breach of this Agreement.
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16. Survival. The Company's and Executive's obligations under Section 6
and, to the extent provided in Section 6, the Executive's obligations under
Sections 7 and 8, will survive the termination of this Agreement.
17. Headings. All captions and Section headings used in this Agreement
are for convenient reference only and do not form a part of this Agreement.
18. Tax Withholding. All payments made pursuant to this Agreement will
be subject to withholding of applicable taxes.
19. Governing Law. This Agreement will be governed by the laws of the
State of New York.
20. Acknowledgment. Executive acknowledges that he has had the
opportunity to obtain legal advice with respect to this Agreement, has had
sufficient time to read, and has carefully read and fully understands all the
provisions of this Agreement, and is knowingly and voluntarily entering into
this Agreement.
21. Counterparts. This Agreement may be executed in counterparts, and
each counterpart will have the same force and effect as an original and will
constitute an effective, binding agreement on the part of each of the
undersigned.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by a duly authorized officer, as of the day and year
written below.
COMPANY:
ALBANY INTERNATIONAL CORP.
/s/ Frank R. Schmeler Date: May 12, 2005
- ------------------------------------
Frank R. Schmeler
Chief Executive Officer and Chairman
of the Board of Directors
EXECUTIVE:
/s/ Joseph G. Morone Date: May 12, 2005
- ------------------------------------
Joseph G. Morone
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EXHIBIT A
RESTRICTED UNIT AWARD AGREEMENT
pursuant to the
ALBANY INTERNATIONAL CORP.
2003 RESTRICTED STOCK UNIT PLAN
* * * * *
Participant: Executive
Award Date: _________, 2005
Number of Restricted Units Awarded: 30,000
* * * * *
THIS AWARD AGREEMENT, dated as of the Award Date specified above, is
entered into by and between Albany International Corp. (the "Company"), and the
Participant specified above, pursuant to the Albany International Corp. 2003
Restricted Stock Unit Plan, as in effect and as amended from time to time (the
"Plan"); and
WHEREAS, as an incentive to encourage the Participant to remain in the
employ of the Company and its subsidiaries by affording the Participant a
greater interest in the success of the Company and its subsidiaries, the Company
desires to grant the Participant the Restricted Units provided herein;
WHEREAS, the Participant desires to obtain such Restricted Units on the
terms and conditions provided for herein;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein set forth and other good and valuable considerations receipt of which is
hereby acknowledged, the Company and the Participant agree as follows:
1. Incorporation By Reference; Plan Document Receipt. This Award Agreement
is subject in all respects to the terms and provisions of the Plan (including,
without limitation, any amendments thereto adopted at any time and from time to
time and which are expressly intended to apply to the grant of the Restricted
Units provided for herein), all of which terms and provisions are made a part of
and incorporated in this Award Agreement as if they were expressly set forth
herein. Any capitalized term not defined in this Award Agreement shall have the
same meaning as is ascribed thereto in the Plan. The Participant hereby
acknowledges receipt of a true copy of the Plan and that the Participant has
read the Plan carefully and fully understands its content. In the event of a
conflict between the terms of this Award Agreement and the terms of the Plan,
the terms of the Plan shall control.
2. Award of Restricted Units; Credit to Restricted Unit Account. The
Company hereby grants to the Participant, as of the Award Date specified above,
the number of Restricted Units specified above. The Company shall record such
Restricted Units in the Participant's Restricted Unit Account.
3. Amendment and Waiver. Neither this Award Agreement nor any provision
hereof may be amended, modified, changed, discharged, terminated or waived
orally, by any course of dealing or purported course of dealing or by any other
means except (a) in the case of an amendment, modification, change or waiver
that does not impair the rights of the Participant with respect to outstanding
Restricted Units, written notice to the Participant or (b) an agreement in
writing signed by the Company and the Participant. No such written notice of
agreement shall extend to or affect any provision of this Award Agreement not
expressly amended, modified, changed, discharged, terminated or waived or impair
any right consequent on such a provision. The waiver of or failure to enforce
any breach of this Award Agreement shall not be deemed to be a waiver of or
acquiescence in any other breach hereof.
4. Notices. Any notice required or permitted under this Award Agreement
shall be in writing and shall be deemed properly given:
4.1 in the case of notice to the Company, if delivered in person to the
Secretary of the Company, or mailed to the Company to the attention of the
Secretary by registered mail (return receipt requested) at P.O. Box 1907,
Albany, New York 12201, or at such other address as the Company may from time to
time hereafter designate by written notice to the Participant; and
4.2 in the case of notice to the Participant, if delivered to him or her
in person, or mailed to him or her by registered mail (return receipt requested)
at
[insert notice address of Executive]
or at such other address as the Participant may from time to time hereafter
designate by written notice to the Company.
5. Governing Law. This Award Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
6. Binding Agreement; Assignment. This Award Agreement shall inure to the
benefit of, be binding upon, and be enforceable by the Company and its
successors and assigns. The Participant shall not assign any part of this Award
Agreement without the prior express written consent of the Company.
7. Counterparts. This Award Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument.
8. Headings. The titles and headings of the various sections of this Award
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Award Agreement.
9. Further Assurances. Each party hereto shall do and perform (or shall
cause to be done and performed) all such further acts and shall execute and
deliver all such other agreements, certificates, instruments and documents as
any other party hereto reasonably may request in order to carry out the intent
and accomplish the purposes of this Award Agreement and the Plan and the
consummation of the transactions contemplated thereunder.
10. Severability. The invalidity or unenforceability of any provisions of
this Award Agreement in any jurisdiction shall not affect the validity, legality
or enforceability of the remainder of
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this Award Agreement in such jurisdiction or the validity, legality or
enforceability of any provision of this Award Agreement in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder shall be enforceable to the fullest extent permitted by law.
11. Acceptance of Restricted Units. Unless, within 45 days following the
date of this Award Agreement, the Company has received written notice from the
Participant rejecting the Restricted Units, this Award Agreement shall be deemed
to have been accepted by the Participant and shall constitute a legal and
binding agreement between the Participant and the Company.
IN WITNESS WHEREOF, the Company has duly executed this Award Agreement as
of the Award Date specified above.
ALBANY INTERNATIONAL CORP.
By:
--------------------------------------
Name: Frank R. Schmeler
Title: Chairman & Chief Executive Officer
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