AGREEMENT
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THIS AGREEMENT made this 10th day of March 1995 by and between LYDALL, INC.
and its subsidiaries (the "Company") and Mary Adamowicz (the "Executive").
W I T N E S S E T H :
Recitals.
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Executive is employed by the Company as General Counsel and Secretary. The
Company and Executive have agreed that if Executive should cease to be General
Counsel and Secretary under the circumstances set forth in this Agreement her
employment will be continued in another capacity for a specified period;
NOW, THEREFORE, the Company and Executive, in consideration of the mutual
promises set forth below, agree as follows:
1. Executive to Serve as General Counsel and Secretary. The Executive
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shall continue to act as General Counsel and Secretary, subject to the direction
of its Chairman, President and Chief Executive Officer.
2. Definitions. The phrase "Change of Control," as used in this
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Agreement, shall mean i) an acquisition of the Company by means of a merger or
consolidation or purchase of substantially all of its assets if and when
incident thereto (a) the composition of the Board of Directors of the Company
(the "Board") or its successor changes so that a majority of the Board is not
comprised of individuals who were members of the board immediately prior to such
merger, consolidation or purchase of assets or (b) the stockholders of the
Company acquire a right to
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receive, in exchange for or upon surrender a majority of their stock, cash or
other securities or a combination of the two; and/or ii) the acquisition by a
person (as that term is hereafter defined) of the voting rights with respect to
25 percent or more of the outstanding Common Stock of the Company if such person
was not an officer of director of the Company on the date of this Agreement;
and/or iii) the election or appointment to the Board of any director or
directors whose appointment or election or nomination for election was not
approved by a vote of at least a majority of the directors then still in office
who were either directors on the date hereof or whose election, appointment or
nomination for election was previously so approved.
The word "person," as used in the preceding sentence, shall mean an
individual, corporation, trust, or other legal or commercial entity and include
two or more persons acting as a partnership, limited partnership, syndicate or
other group for the purpose of acquiring, holding or disposing of securities of
the Company.
The word "cause", as used in this Agreement, shall mean (i) conviction of a
crime involving moral turpitude, or (ii) material and unexcused breach by
Executive of her obligations under this Agreement, which results in material
harm to the Company and which is not cured within the period set forth below;
provided, however, that a termination shall not be for "cause" hereunder unless,
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such conviction or breach is detailed in a written notice of intent to terminate
by the Board, providing for
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sixty (60) days from receipt by Executive to cure the breach prior to
termination of Executive; except that such notice would not be required if, in
the Chairman, President and Chief Executive Officer's discretion, the Company
would be immediately harmed.
The phrase "Fringe Benefits," as used in this Agreement, shall mean the
benefits listed on Exhibit A hereto.
3. Termination After Change of Control. If a Change of Control occurs
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after the date of this Agreement and subsequent to such Change of Control (a)
Executive shall resign as a General Counsel and Secretary of the Company within
one year from the time such Change of Control occurs or (b) another shall be
appointed or elected General Counsel and Secretary by the Company in place of
Executive at any time prior to June 1, 2025, Executive's normal retirement date
(such resignation or replacement of Executive being hereinafter referred to as a
"Termination"), Executive shall continue to be an employee of the Company and be
compensated and receive benefits in accordance with this Agreement; provided,
however, that if Executive's resignation shall be requested by the Company for
cause or Executive is replaced for cause, such resignation or replacement shall
not be deemed a Termination for the purpose of this Agreement and shall not
entitle Executive to continue to be an employee of the Company and be
compensated and receive the benefits provided for in this Agreement.
4. Termination Prior to Change of Control. If prior to a Change of
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Control (a) the Executive shall resign as General Counsel and Secretary of the
Company at the request of the
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Company or because the duties and responsibilities of the General Counsel and
Secretary have been significantly modified by the Company without her consent or
(b) another is appointed General Counsel and Secretary in place of the Executive
(such resignation or replacement of the Executive being hereinafter referred to
as a "Termination"), the Executive shall continue to be an employee of the
Company and be compensated and receive benefits in accordance with this
Agreement; provided, however, that if Executive's resignation shall be requested
by the Company for Cause or if Executive is replaced for Cause, such resignation
or replacement shall not be deemed a Termination for the purpose of this
Agreement and shall not entitle Executive to continue to be an employee of the
Company and be compensated and receive the benefits provided for in this
Agreement.
5. Termination for Cause If Executive's employment is terminated for
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cause prior to the beginning of the Employment Period, (subsequent to a Change
of Control),earned but unpaid Base Salary will be paid on a prorated basis for
the year in which the termination occurs, plus accrued vacation benefits, but
all other Company obligations shall cease as of the date of termination for
cause, unless otherwise provided in separate agreements.
6. Employment Period. In the event of a Termination pursuant to paragraph
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3 above, Executive shall continue to be an employee of the Company for a period
of one year from the date of such Termination, and in the event of a Termination
pursuant to either Paragraph 3a or Paragraph 4 above, Executive shall continue
to be an employee of the Company for a period six months
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from the date of such Termination such one year period or six months period, as
the case may be, being hereinafter referred to as the "Employment Period";
provided, however, that (a) Executive may end the Employment Period at any time
in her absolute discretion and the Employment Period may be ended by the Company
at any time for cause, (b) the Employment Period shall not extend beyond June 1,
2025, Executive's normal retirement date, and (c) the Employment Period shall
terminate if and when the Executive becomes employed on substantially a full
time basis by another entity or as a partner or sole proprietor and with
Executive's full recognition of her responsibilities under Paragraph 11 below
(but such termination of the Employment Period under clause (a), (b) or (c)
above shall not preclude the Executive from being paid for her obligation not to
compete as provided in Paragraphs 10 and 11 below).
7. Title and Duties. During the Employment Period, the Executive shall
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perform such duties and undertake such responsibilities as are assigned to her
from time to time by the Chairman, President and Chief Executive Officer;
provided, however, that such duties and responsibilities shall be commensurate
with her status as a senior executive of the Company and bear a reasonable
relationship to the business of the Company.
8. Compensation. The Company shall pay to Executive during the Employment
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Period an annual salary (the "Annual Salary") equal to one-third (1/3rd) of the
aggregate of the base salary and bonuses paid to her during the period
commencing three (3) years prior to the date of Termination and ending on the
date
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of Termination. Payment shall be made twice monthly and be appropriately
prorated during the first and last month of the Employment Period. In addition,
during the Employment Period Executive shall receive (a) the same Fringe
Benefits that she would have been entitled to receive if she had continued to be
General Counsel and Secretary during such period and (b) reimbursement for
reasonable expenses incurred by her in the performance of her duties. If the
Employment Period shall end, pursuant to Paragraph 5 above, prior to the end of
the one year term provided for in Paragraph 3 above or the six month term
provided for in Paragraph 3a or Paragraph 4 above, as the case may be,the Annual
Salary (but, except to the extent provided in Paragraph 9 below, not fringe
benefits and perquisites) shall continue to be payable until the end of the non-
compete period provided for in Paragraph 10 below and shall be deemed payment
for Executive's obligation not to compete as provided in said Paragraph 10, and
such Annual Salary for the remainder of the non-compete period shall be paid to
the Executive in a lump sum cash payment within ten days after the end of the
Employment Period.
9. Tax Gross-up. Anything in this Agreement to the contrary
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notwithstanding, in the event it shall be determined that any payment or
distribution made, or benefit provided, by the Company to or for the benefit of
the Executive (whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise, but determined without regard to
any additional payments required under this Section 8 (a 'Payment') would be
subject to the excise tax imposed by Section
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4999 of the Internal Revenue Code of 1986, as amended and then in effect (the
'Code') (or any similar excise tax) or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
('Excise Tax'), then the Executive shall be entitled to receive an additional
payment (a 'Gross-Up Payment') in an amount such that after payment by the
Executive of all Federal, state, local or other taxes (including any interest or
penalties imposed with respect to any such taxes), including, without
limitation, any such income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments. An Executive may receive Gross-Up Payments under this Section 8
whether or not the Executive actually receives other payments or benefits under
the Agreement.
(i) Subject to the provisions of paragraph (ii) of this Section 8, all
determinations required to be made under this Section 8, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by Coopers & Lybrand (the "Accounting Firm') which shall provide detailed
supporting calculations both to the Company and the Executive within 20 calendar
days of the receipt of written notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or
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auditor for the individual, entity or group effecting the Change of Control, the
Executive shall have the right by written notice to the Company to appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company and shall be paid by the Company upon demand of
the Executive as incurred or billed by the Accounting Firm. Any Gross-Up
Payment, as determined pursuant to this Section 8, shall be paid by the Company
to the Executive within five days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive with an unqualified written
opinion in form and substance satisfactory to the Executive that failure to
report the Excise Tax on the Executive's applicable federal income tax return
would not result in the imposition of a negligence or similar penalty. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ('Underpayment'), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies described in paragraph (ii) of this Section 8 and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be paid by the Company to or for
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the benefit of the Executive within five days of the receipt of the Accounting
Firm's determination. All determinations made by the Accounting Firm in
connection with any Gross-Up Payment or Underpayment shall be final and binding
upon the Company and the Executive.
(ii) The Executive shall notify the Company in writing of any claim
asserted in writing by the Internal Revenue Service to the Executive that, if
successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but not later than 60
days after the Executive is informed in writing of such claim and shall apprise
the Company of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such notice
to the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the Executive
in writing prior to the expiration of such period that it desires to contest
such claim, the Executive shall at the Company's expense:
a. give the Company any information reasonably requested by the Company
relating to such claim.
b. take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company.
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c. cooperate with the Company in good faith in order effectively to
contest such claim, and
d. permit the Company to participate in any proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly as
incurred all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or any Federal,
state, local or other income or other tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs
and expenses. Without limitation on the foregoing provisions of this Section 8,
the Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or Federal,
state, local or other income or other tax (including interest or penalties with
respect thereto)
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imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the status
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(iii) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to paragraph (ii) of this Section 8, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of paragraph (ii) of
this Section 8 promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto) upon
receipt thereof. If, after the receipt by the Executive of an amount advanced
by the Company pursuant to paragraph (ii) of this Section 8, a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment
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required to be paid.
10. Medical Insurance Coverage. Executive and her beneficiaries shall
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continue to participate in all life, health, disability and other welfare plans
or programs existing at the time of a Change of Control in which they were
participating at such time (or substantially similar plans or programs), to the
extent that such continued participation is possible under the general terms and
conditions of such plans and programs throughout the Employment Period.
Company and Executive will continue to pay the same relative portion of the
cost of each such plan or program as each were paying at the time of the Change
of Control. Further, in the event that Executive's or her beneficiaries'
continued participation in any group plan or program is not permitted, then in
lieu thereof, Company shall acquire individual insurance policies providing
substantially similar coverage for Executive and her beneficiaries, and Company
and Executive will pay the same relative portion of the cost of such comparable
coverage plans or programs or in the event that Company cannot acquire
individual insurance policies providing substantially similiar coverage, the
Company will self-insure the Executive, and the Executive in the case of self
insurance will pay the COBRA rate then applicable to the Company's group plan.
For purposes of COBRA, a qualifying event is not deemed to occur until the
Employment Period, as defined in paragraph 6, has expired.
11. Non-Compete. During the Employment Period Executive will not compete
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directly or indirectly with the Company or be directly or indirectly interested
in any business competing with
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the business being conducted by the Company. Ownership of less than 1 percent
of the issued and outstanding capital stock of any corporation the stock of
which is listed upon a national exchange or regularly quoted by the National
Association of Security Dealers Automated Quotation (NASDAQ) shall not be deemed
to create a material conflict of interest as contemplated hereunder. For the
purpose of this Paragraph 10, the Employment Period shall be deemed to extend
one year from Termination if such Termination occurred pursuant to Paragraph 3b
above or six months from Termination if such Termination occurred pursuant to
Paragraph 3a or Paragraph 4 above notwithstanding any prior ending of the
Employment Period pursuant to Paragraph 5 above.
12. Trade Secrets. Executive shall regard and preserve as confidential
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and not use, communicate or disclose to any person, orally, in writing or by a
publication, any secret or confidential information of the Company, regardless
of where or when or how acquired by the Company, or of others which the Company
is obligated to maintain in confidence. This obligation shall exist during the
Employment Period and after the termination of the Employment Period until such
information becomes a matter of public knowledge through no act of Executive.
At the termination of employment by the Company, Executive agrees to return to
employer all documents, writings, drawings and other property of the Company
within her custody and control.
13. Indemnification. The parties agree to execute a separate
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Indemnification Agreement in the form attached as Exhibit B.
14. Arbitration. The Company and Executive undertake to
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execute this Agreement in good faith. Any controversy or claim arising out of
or relating to this Agreement other benefit plans or arrangements with the
Company or breach of this Agreement, shall receive prompt attention by the other
party and both parties agree to make good faith efforts to resolve any
controversy or claim in an amicable way.
If the Company and Executive fail to settle the controversy or claim in an
amicable way, they agree to submit the matter to be settled by arbitration in
accordance with the Arbitration Rules of the American Arbitration Association.
This Agreement, its execution, interpretation and performance shall be governed
by the laws of the state of Connecticut of the United States of America. The
arbitration will be held in Hartford, Connecticut, or such other place as may be
agreed at the time by the parties. The award of this arbitration shall be final
and binding both for the Company and Executive and may be entered in any court
with jurisdiction.
15. Litigation Expenses. In the event of any action, suit, proceeding,
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arbitration or claim between or by or against the Company and/or the Executive
with respect to this Agreement, other benefit plans or arrangements between the
parties, and the assertion or enforcement of her rights hereunder, the Company
shall promptly pay or reimburse the Executive upon such Executive's written
demand therefor, for eighty (80) percent of her costs and expenses (including
costs and fees of witnesses, evidence and attorney fees and expenses) relating
to or arising out of (directly or indirectly) such action, suit, proceeding,
arbitration or claim, on a monthly basis, as such costs and
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expenses are incurred in investigating, prosecuting, defending or preparing to
prosecute or defend, regardless of the outcome thereof. In no event shall the
Executive be required to reimburse the Company for any of the costs and expenses
relating to any such action, suit, proceeding, arbitration or claim. The
obligation of the Company under this Section 14 shall survive the termination
for any reason of this Agreement. This Section 14 cannot be amended or modified
to affect the rights of the Executive without the prior written consent of such
Executive which specifically refers to this Section 14.
16. Rabbi Trust. Within sixty (60) days of the date of this Agreement, the
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Company shall enter into a trust agreement (the "Trust Agreement") with a third
party institutional trustee, substantially in the form set forth in Rev. Proc.
92-64, 1992-2 C.B. 422, to assist it in meeting its obligations to the Executive
under the Company's Supplemental Executive Retirement Plan (the "SERP"). The
trust established pursuant to the Trust Agreement (the "Trust") shall be
irrevocable. The Trust Agreement shall provide that upon a Change of Control
the Company shall, no later than 30 days following the Change of Control, make
an irrevocable contribution of cash or cash equivalents to the Trust in an
amount sufficient to pay each SERP participant or beneficiary the benefits to
which they would be entitled pursuant to the terms of the SERP, and within 30
days following the end of each calendar year ending after the Change of Control
the Company shall irrevocably contribute any additional cash to the Trust
necessary for the Trustee to pay each SERP participant or beneficiary the
benefits payable pursuant to the terms of the
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SERP as of the close of the year. The Trust Agreement shall also provide (i)
that all income received by the Trust shall be accumulated and reinvested, (ii)
that the Company will be responsible for the payment of all fees and expenses
related to the Trust, (iii) that after a Change of Control the Trustee may not
be removed by the Company, and (iv) that, if the Trustee shall resign, any
successor Trustee must be an independent institutional entity, such as a bank
trust department or other party that has been granted corporate trustee powers
under state law. The Trust Agreement shall also provide that the provisions of
the Trust described in this Paragraph 15 may not be amended after a Change of
Control.
17. Entire Agreement. This Agreement embodies the whole understanding
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between the parties hereto with respect to the subject matter hereof and
supersedes all earlier agreements. There are no inducements, promises, terms,
conditions or obligations made or entered into by either party other than as
contained herein.
18. Modification. This Agreement may not be changed orally, but only be
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means of an agreement in writing signed by the parties hereto.
19. Waiver. The waiver by any party of a breach of any provision of this
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Agreement shall not operate as, or be construed as, a waiver of any subsequent
breach.
20. Applicable Law. This Agreement shall be governed and construed in
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accordance with the laws of the State of Connecticut, without reference to
principles of conflict of laws.
21. Successors. This Agreement is personal to the
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Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive's legal representatives. This Agreement shall inure to the
benefit of and be binding upon the Company and its successors and assigns. The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law or otherwise.
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the date
first above written.
LYDALL, INC.
By____________________________ _______________________
Roger M. Widmann, Chairman, Mary Adamowicz
Compensation and Stock Option General Counsel and Secretary
Committee
By___________________________
Leonard R. Jaskol
Chairman, President and CEO
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MA,MGE
EXHIBIT A - FRINGE BENEFITS
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1. Medical Benefits
a. Lydall, Inc. Health Care Payment Plan for Salaried Employees (includes
dental benefits)
b. Lydall, Inc. Health Care Expense Plan
c. Lydall, Inc. Health Care Spending Reimbursement Plan
2. Disability Benefits
a. Lydall, Inc. Short Term Disability Plan
b. Lydall, Inc. Executive Group Long Term Disability Plan
3. Life Insurance
a. Executive Life Insurance Plan
b. Accidental Death and Dismemberment Plan
c. Family Assistance Program
d. Business Travel Accident Plan
4. Retirement Plans
a. Lydall, Inc. Pension Plan No. 1A
b. Lydall, Inc. Profit Sharing Plan No. 1
c. Lydall, Inc. 401(k) Plan
d. Lydall, Inc. Supplemental Executive Retirement Plan
5. Stock Plans
a. Lydall, Inc. Employee Stock Purchase Plan
b. Lydall, Inc. 1992 Stock Incentive Compensation Plan
c. Lydall, Inc. 1982 Stock Incentive Compensation Plan
6. Other
a. Holidays, vacations
b. Lydall, Inc. Dependent Care Assistance Plan
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