EML Eastern Company

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

Form 8-K

 

CURRENT REPORT PURSUANT TO

SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): November 4, 2024

The Eastern Company

(Exact Name of Registrant as Specified in Charter)

 

Connecticut		001-35383		06-0330020
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

3 Enterprise Drive, Suite 408, Shelton, Connecticut 06484

(Address of Principal Executive Offices) (Zip Code)

 

(203) 729-2255

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

Title of Each Class		Trading Symbol		Name of each exchange on which registered
Common Stock, No Par Value		EML		NASDAQ Global Market

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging Growth Company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Departure of Chief Executive Officer

 

On November 4, 2024 (the “Separation Date”), Mark A. Hernandez resigned as Chief Executive Officer of The Eastern Company (the “Company”), and from service on the Board of Directors of the Company (the “Board”) and all other officer, director, trustee, fiduciary and other positions with the Company and its subsidiaries and affiliates, effective as of the Separation Date. Mr. Hernandez’s resignation from service on the Board is not due to any disagreement between Mr. Hernandez and the Company, the Board or management.

 

In connection with Mr. Hernandez’s resignation, the Company and Mr. Hernandez entered into a Separation Agreement and General Release on the Separation Date (the “Separation Agreement”). Pursuant to the Separation Agreement, the Company has agreed to provide the following severance to Mr. Hernandez: (1) the equivalent of his 2024 base salary of $530,500, payable in substantially equal installments over twelve months following the Separation Date in accordance with the Company’s customary payroll practices and procedures, (2) Mr. Hernandez’s estimated 2024 working capital bonus in the amount of $140,787, payable in a lump sum, (3) immediate vesting of outstanding and unvested performance-based restricted stock unit awards under the Company’s 2020 Stock Incentive Plan with respect to 14,800 underlying shares of Company common stock and delivery of such underlying shares, or the cash equivalent thereof, and (4) a lump sum payment of the equivalent of Mr. Hernandez’s unused vacation pay in the amount of $47,206.48. In consideration of these payments, the Separation Agreement provides for a general release of claims by Mr. Hernandez in favor of the Company and agreements by Mr. Hernandez not to disparage the Company, to protect the Company’s confidential information and, for 12 months following the Separation Date, not to engage in a competing business or solicit customers or employees of the Company.

 

The foregoing description of the terms of the Separation Agreement is qualified in its entirety by the full text of the Separation Agreement, a copy of which is filed herewith as Exhibit 10.1, and which is incorporated into this Item 5.02 by reference.

 

Appointment of Chief Executive Officer

 

On November 4, 2024, the Company appointed Ryan Schroeder to serve as the Company’s Chief Executive Officer, effective November 6, 2024.

 

Mr. Schroeder, 48, most recently served as CEO at Plaskolite LLC, a manufacturer of engineering thermoplastics, from 2020 through 2023. Prior to that, Mr. Schroeder spent four years as President, Americas for IMI Norgren, a manufacturer of motion and fluid control products, from 2016 to 2020, and prior to joining IMI Norgren, he served in a variety of roles at Parker Hannifin, a diversified manufacturer of motion and control technologies and systems for a variety of mobile, industrial and aerospace markets, from 2004 to 2016, including general manager of the hydraulic valve division, general manager of the hydraulic pump motor division as well as business unit manager, plant manager and  supply chain manager of the company’s hydraulic cylinder division.

 

There are no arrangements or understanding between Mr. Schroeder and any other persons pursuant to which he was selected as an officer or director. Mr. Schroeder has no family relationships with any of the Company’s directors or executive officers and has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

 

Employment Agreement with Ryan Schroeder

 

In connection with Mr. Schroeder’s appointment as Chief Executive Officer of the Company, the Company has entered into an Employment Agreement with Mr. Schroeder, effective as of November 6, 2024, setting forth certain terms of his employment (the “Employment Agreement”). The Employment Agreement provides for (i) an annual base salary of $475,000, (ii) eligibility to participate in the Company’s Short Term Incentive Plan (“STIP”) with a target equal to 75% of base salary (the “Target Annual Bonus”) based upon the performance of Mr. Schroeder and the performance of the Company and its subsidiaries, as determined by the Compensation Committee of the Board (the “Compensation Committee”), in accordance with the Company’s STIP for senior executives of the Company in place at the time, and (iii) eligibility to receive a grant of long-term incentive compensation under the Company’s Long Term Incentive Plan (“LTIP”) with a target equal to 75% of base salary, payable based on the performance of Mr. Schroeder and the performance of the Company and its subsidiaries, as determined by the Compensation Committee, and in accordance with the Company’s LTIP for senior executives of the Company in place at the time, which may be amended by the Compensation Committee from time to time. Mr. Schroeder will also be eligible to participate in the Company’s benefit plans that are generally available for senior executives of the Company from time to time (other than severance plans), in accordance with the terms of those arrangements, and will be entitled to four weeks of vacation per year.

 

 

Pursuant to the Employment Agreement, in the event Mr. Schroeder’s employment is terminated (other than by Mr. Schroeder with “Good Reason” or by the Company without “Cause” (as each such term is defined in the Employment Agreement)), the Company will (i) pay to Mr. Schroeder an amount equal to the portion of his annual base salary at the time of termination earned through the date of termination, (ii) pay to Mr. Schroeder his accrued but unused vacation time in accordance with Company policy, and (iii) reimburse Mr. Schroeder. for expenses incurred through the date of termination. In the event of a termination of Mr. Schroeder’s employment by the Company without Cause or by Mr. Schroeder for Good Reason, the Employment Agreement provides that the Company will, subject to Mr. Schroeder’s entry into (and not revoking) a separation agreement and general release in the time periods provided by in the Employment Agreement, payment of an amount equal to Mr. Schroeder’s annual base salary at the time of termination, to be paid in substantially equal installments over a period of twelve months in accordance with the Company’s customary payroll practices and procedures.

 

The Employment Agreement also contains, among other things, covenants not to compete with the Company or solicit Company clients or employees for a period of twelve months following separation of employment with the Company, as well as certain customary provisions regarding confidentiality, assignment of work product and other matters.

 

The foregoing description of the terms of the Employment Agreement is qualified in its entirety by the full text of the Employment Agreement, a copy of which is filed herewith as Exhibit 10.2, and which is incorporated into this Item 5.02 by reference.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.		Exhibit Description
10.1		Separation Agreement between The Eastern Company and Mark A. Hernandez, dated November 4, 2024
10.2		Employment Agreement between The Eastern Company and Ryan Schroeder, effective as of November 6, 2024
104		Cover Page Interactive Data File (cover page XBRL tags are embedded within the Inline XBRL document)

 

  

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	The Eastern Company
Date: November 8, 2024	By:	/s/ Nicholas Vlahos
		Nicholas Vlahos
		Chief Financial Officer

 

 

3

 

 

 

Exhibit 10.1

 

SEPARATION AGREEMENT AND GENERAL RELEASE

 

This Separation Agreement and General Release (the “Agreement”), is entered into on November 4, 2024 between The Eastern Company (the “Company”) and Mark Hernandez (the “Executive”). The Company and the Executive shall be referred to collectively as the “Parties”.

 

R E C I T A L S

 

WHEREAS, the Company employed the Executive, as its Chief Executive Offer, subject to the terms and conditions set forth in an Amended and Restated Employment Agreement (the “Amended Employment Agreement”), entered into between the Parties on November 14, 2023, which superseded the original Agreement between the Parties dated January 9, 2023;

 

WHEREAS, under the Amended Employment Agreement, Paragraph 8(e), the Parties “hereto may terminate this Agreement and the Executive’s employment hereunder upon their mutual written consent;”

 

WHEREAS, the Parties seek to terminate the Amended Employment Agreement between the Executive and the Company and end the Executive’s employment upon mutually agreeable terms; and

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, hereby agree as follows:

 

1. Last Day of Employment.

 

(a)       The Executive’s last day of employment with the Company is on November 4, 2024 (the “Separation Date”).

 

(b)       The Executive’s participation in the Company’s group health coverage plan shall cease on the last day of the month in which the Separation Date occurs. The Executive may elect continuation of group health coverage once his participation in the Company’s group health coverage plan shall cease, at his own expense, subject to the terms of the plan and the law.

 

(c)       The Executive’s participation in all other Company benefits will cease on his Separation Date.

 

(d)       After the Separation Date, the Company no longer shall be obligated to pay any wages or bonuses, or any other benefits to the Executive, and the Executive shall no longer be entitled to receive any wages, bonuses, or any other benefits from the Company, except as set forth in this Agreement or as required by federal or state law.

 

 

(e)       The Executive resigned from the Company’s Board of Directors and all other officer, director, trustee, fiduciary and other positions with the Company and its subsidiaries and affiliates, effective November 4, 2024.

 

2. Separation Benefit.

 

(a)       The Executive understands and agrees that under the terms of this Agreement he will receive consideration to enter into the promises he made herein, including but not limited to, the release and covenants not to sue, not to compete, not to solicit, and not to interfere, provided that he timely signs this Agreement and complies with all promises and covenants made by him in this Agreement. In consideration for entering into this Agreement and the covenants contained herein, the Company will provide the Executive:

 

i.

the equivalent of the Executive’s 2024 base salary, which is equal to five hundred, thirty thousand and five hundred dollars ($530,500), subject to applicable taxes and withholdings (the “Separation Amount”). The Separation Amount will be payable to the Executive in substantially equal installments over twelve (12) months following the Separation Date in accordance with the Company’s customary payroll practices and procedures;

 

ii.

the Executive’s working capital bonus of one hundred and forty thousand and seven hundred, eighty-seven dollars ($140,787), within thirty (30) days of the Separation Date, subject to applicable taxes and withholdings;

 

iii.

immediate vesting of fourteen thousand, eight hundred (14,800) of the Executive’s outstanding and unvested stock unit awards under the Company’s 2020 Stock Incentive Plan or the cash equivalent thereof, which shall be delivered within thirty (30) days of the Separation Date, subject to applicable taxes and withholdings; and

 

iv.

the equivalent of the Executive’s unused vacation pay for 2024, which is equal to forty-seven thousand, two hundred and six dollars and forty-eight cents ($47,206.48), (the “Vacation Amount”), payable to the Executive in a lump sum within thirty (30) days of the Separation Date, subject to applicable taxes and withholdings.

 

(b)       The Executive acknowledges and agrees that the consideration to be provided under the terms of this Section 2 of this Agreement are, in significant and substantial part, in addition to those benefits to which he is otherwise entitled. The Executive would not receive the consideration set forth in this Section 2 except for his execution of this Agreement, without revocation, and fulfillment of the promises contained herein. No other promise, inducement, threat, agreement or understanding of any kind or description has been made with or to the Executive by the Company to cause him to agree to the terms of this Agreement.

 

 

3. Tax Consequences.

 

(a)       It is expressly understood and agreed that the Company makes no representations regarding the tax consequences of the monies paid to the Executive, including, without limitation, under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and applicable administrative guidance and regulations (collectively, “Section 409A”), and that neither the Company or the Company’s counsel, has provided the Executive with any tax or any other form of advice. The Company agrees to make lawful withholdings and deductions on the monetary consideration provided herein according to the Executive’s tax elections that he made prior to his Separation Date. The Executive understands that the Company has relied upon his tax elections in making any lawful withholdings and deductions and agrees that he will be solely responsible for evaluating, calculating, reporting and paying the appropriate amount of federal, state, or other taxes or other withholding payments of any kind, if any, due from him on account of his receipt of the monetary consideration provided for herein, and any interest or penalties which may be assessed on any failure to make or withhold any such tax or other payments in a timely manner. The Executive agrees to indemnify and hold the Company harmless from the assessment of any taxes, assessments, interest, and/or penalties that the IRS or any other taxing authority, court, or tribunal determines that he should have paid in connection with the monies paid pursuant to this Agreement (for purposes of clarity, indemnity in this Paragraph shall not apply to taxes, assessments, interest, and/or penalties that the IRS or any other taxing authority, court, or tribunal determines that the Company should have paid on the Executive’s behalf in connection with the consideration paid pursuant to this Agreement).

 

(b)       It is intended that this Agreement shall either comply with, or be exempt from, Section 409A and this Agreement shall be interpreted on a basis consistent with such intent, although no warranty as to compliance or exemption is given here. All payments under this Agreement are intended to be excluded from the requirements of Section 409A or be payable on a fixed date or schedule in accordance with Section 409A(a)(2)(iv). Notwithstanding anything in this Agreement to the contrary, in the event that the Executive is deemed to be a “specified employee” within the meaning of Section 409A(a)(2)(B)(i), no payments hereunder that are “deferred compensation” subject to Section 409A shall, to the extent required to avoid additional taxes under Section 409A, be made to the Executive prior to the date that is six (6) months after the date of the Executive’s “separation from service” (as defined in Section 409A) or, if earlier, the Executive’s date of death. Following any applicable six (6) month delay, all such delayed payments will be paid in a single lump sum on the earliest permissible payment date. For purposes of this Agreement, with respect to payments of any amounts that are considered to be “deferred compensation” subject to Section 409A, references to “termination of employment” (and substantially similar phrases) shall be a “separation from service” within the meaning of Section 409A. For purposes of Section 409A, the Executive’s right to receive installment payments, if any, pursuant to this Agreement will be treated as a right to receive a series of separate and distinct payments. To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Section 409A, (i) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive, (ii) any right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

 

 

(c)       Notwithstanding anything in this Agreement to the contrary, if any payment or benefit that Executive would receive under this Agreement, when combined with any other payment or benefit he receives that is contingent upon a change in control (as determined under Section 280G of the Code) (collectively, the “CIC Payments”) would: (i) constitute a “parachute payment” within the meaning of Section 280G of the Code; and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such CIC Payments shall be either: (x) the full amount of such CIC Payments; or (y) such lesser amount (with CIC Payments being reduced in the order and priority established by the Compensation Committee) as would result in no portion of the CIC Payments being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local employment taxes, income taxes, and the Excise Tax results in the Executive’s receipt, on an after-tax basis, of the greater amount of the CIC Payments notwithstanding that all or some portion of the CIC Payments may be subject to the Excise Tax. Any reduction in the Payments pursuant to the preceding sentence shall be effected first by reducing or eliminating Severance Payments, as applicable, and then by reducing or eliminating any equity vesting or acceleration of payment, and then by reducing other compensation and benefits, in a manner intended to avoid a violation of Section 409A of the Code. Executive shall be solely responsible for the payment of all personal tax liability that is incurred as a result of the payments and benefits received under this Agreement, and the Executive will not be reimbursed by the Company Group for any such payments. The Company shall attempt to cause its accountants to make all of the determinations required to be made under this Section 3(c), or, in the event the Company’s accountants will not perform such service, the Company may select another professional services firm to perform the calculations. The Company shall request that the accountants or firm provide detailed supporting calculations both to the Company and the Executive. For purposes of making the calculations required by this Section 3(c) the accountants or firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith determinations concerning the application of the Code. The Company and the Executive shall furnish to the accountants or firm such information and documents as the accountants or firm may reasonably request in order to make a determination hereunder. The Company shall bear all costs the accountants or firm may reasonably incur in connection with any calculations contemplated by this Section 3(c).

 

4.       Non-Disparagement. The Executive agrees that he will not, make any statements that are disparaging about or adverse to the business interests of the Company or its direct or indirect subsidiaries (including its officers, directors, executives and employees) or which are intended to harm the reputation of the Company including, but not limited to, any statements that disparage any product, service, capability or any other aspect of the business of the Company. For purposes of this Agreement, “disparage” shall mean any statements, actions or insinuations, made either directly or through a third party, that would tend to lessen the standing or stature of an institution or individual in the eyes of an ordinary citizen. Notwithstanding the foregoing, nothing herein shall prevent or prohibit the Executive from testifying truthfully in any legal proceeding or as otherwise may be required by law.

 

 

5.       Confidential Information.

 

(a) The Executive shall not use, publish, divulge, communicate, share, provide access to or otherwise disclose any Confidential Information, unless otherwise permitted under this Agreement.

 

(b) The Executive understands that “Confidential Information” means any Company (including any direct or indirect subsidiary thereof), proprietary or confidential information, technical data, trade secrets or know-how, including, but not limited to: research, product plans and developments, prototypes, products, services, customer lists and customers, prospective customers and contacts, proposals, customer purchasing practices, prices and pricing methodology, cost information, terms and conditions of business relationships with customers, customer research and other needs, markets, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, distribution and sales methods and systems, sales and profit figures, finances, personnel information including, information regarding compensation, skills, training, promotions, and duties, as well as reports and other business information that the Executive learns of, obtains, or that is disclosed to the Executive relating to the Company (including any direct or indirect subsidiary thereof) at any time prior to or during the course of the Executive’s service to the Company (including any direct or indirect subsidiary thereof), either directly or indirectly, in writing, orally or by review or inspection of documents or other tangible property. However, Confidential Information does not include any of the foregoing items which have been made generally available to the public and become publicly known through no wrongful act of the Executive’s or any other person owing a duty of confidentiality to the Company (including any direct or indirect subsidiary thereof). The Executive further agrees that all memoranda, disks, files, notes, records or other documents that contain Confidential Information, whether in electronic form or hard copy, and whether created by the Executive or others, that come into his possession, shall be and shall remain the exclusive property of the Company. The Executive agrees that the foregoing restrictions shall apply whether or not such information is marked “Confidential”.

 

(c) If the Executive becomes legally required (whether by deposition, interrogatories, requests for information or documents, subpoenas, civil investigative demands or similar processes) to disclose any Confidential Information, he will provide the Company with prompt written notice thereof, unless otherwise prohibited by applicable law, so that the Company may seek a protective order or other appropriate remedy and the Executive will, at the Company’s expense, cooperate with and assist the Company in securing such protective order or other remedy. In the event that such protective order is not obtained, or that the Company waives compliance with the provisions of this Section 5 to permit a particular disclosure, the Executive shall furnish only that portion of the Confidential Information which he is advised by counsel in writing is legally required to be disclosed and shall exercise his reasonable efforts to obtain reliable assurances that confidential treatment will be afforded such Confidential Information. Notwithstanding the foregoing, the provisions of this Section 5(c) shall not apply to any communication permitted under Section 11.

 

 

(d)       Section 11 on Confidential Informaiton in this Agreement is in addition to and does not supersede those provisions on Confidential Information in the Amended Employment Agreement, which are incorporated herein and remain in full force and effect

 

6.       Return of Confidential Information and Property. Within seven (7) days of the Separation Date, the Executive (a) shall return to the Company, without copying, all of the Company’s Confidential Information, including any written or printed material, files, papers, designs, records, manuals, schematics, customer lists, notebooks, summaries, reports or analyses involving the Confidential Information; and (b) return any other property that belongs to the members of the Company (including direct and indirect subsidiaries), including, without limitation, access cards, passwords, computers and cellular phones or other devices in the Executive’s possession and control. The Executive further agrees that he shall not retain any copies of any Confidential Information, whether in electronic form or otherwise. In the event that the Executive has sent or stored any Confidential Information on any of his personal computers or other electronic devices, he agrees to provide the Company with access to all such devices so that it can ensure the information is moved onto Company devices and the permanent deletion of all such Confidential Information from the Executive’s devices. However, nothing in this Paragraph 6 will prevent the Executive from retaining any documents in his possession or control concerning his benefits and/or compensation.

 

7.       Non-Competition, Non-Solicitation and Non-Interference. The Executive agrees and acknowledges that, in connection with his employment with the Company, he was provided with access to confidential and proprietary information and trade secrets belonging to the Company, including the Confidential Information. The Executive also acknowledges and agrees that, given the nature of the Confidential Information, it must be maintained as confidential and the Company would suffer irreparable harm if such Confidential Information was disclosed to the general public or to a competitor of the Company. The Executive further acknowledges that as CEO, the Company has provided him with information about and access to its clients for the purpose of developing the Company’s goodwill and ongoing relationship with such clients.

 

(a)       Accordingly, in consideration of the good and valuable consideration provided under this Agreement, the receipt of which is hereby acknowledged, the Executive agrees that, during the “Restricted Period,” defined as the twelve (12) month period following the Separation Date, the Executive shall not, either on the Executive’s own behalf or on behalf of any third party, except on behalf of the Company, directly or indirectly:

 

(i)       own, manage, operate, join, control, finance or participate in the ownership, management, operation, control, or financing of, or be connected as a proprietor, partner, stockholder, employee, officer, director, principal, agent, representative, joint venture, investor, lender, consultant or otherwise with, or use or permit his name to be used in connection with, any company, entity or enterprise engaged in any lines of business in which the Company is actively engaged or actively planning to engage as of the date of the Executive’s separation of employment from the Company, including but not limited to the design, manufacture and sale of security products, metal products and industrial software, and related products and services (referred to hereinafter as a “Competing Business”); or

 

 

(ii)       (x) solicit or accept business from any customer or client who engaged in business with the Company or was engaged in active business negotiations with the Company at any time during the last twelve months of the Executive’s employment with the Company (a “Company Client”); (y) solicit, entice, request or suggest that any Company Client cease to do business, or reduce the amount of business which such Company Client has customarily done with the Company, and/or otherwise interfere with the business relationship between the Company and any Company Client; and/or (z) engage in any activity described in the foregoing clauses (x)-(z) with respect to any potential Company Client made known to the Executive during the Executive’s employment with the Company.

 

The foregoing restrictions shall not be construed to prohibit the ownership by the Executive as a passive investment of not more than 2% percent of any class of securities of any corporation which is engaged in any Competing Business having a class of securities registered pursuant to the Securities Exchange Act of 1934, as amended.

 

(b)       The Executive further agrees that, during the Restricted Period, the Executive shall not, without prior written approval by the Chairman of the Board, either on his own behalf or on behalf of any third party, except on behalf of the Company, directly or indirectly:

 

(i)       hire, solicit, engage or contract for any purpose related to a Competing Business with any employee or consultant known by the Executive to have worked for or with the Company at any time during the last twelve (12) months of the Executive’s employment with the Company; or

 

(ii)       recruit, solicit, or induce, or attempt to induce, any known employee or consultant of the Company to terminate employment or otherwise cease their relationship with the Company.

 

(c)       The Executive agrees that the post-employment restrictive covenants set forth herein are reasonable and necessary to protect the Company’s legitimate interests. The Executive acknowledges that, based upon the Executive’s education, experience, and training, these post-employment restrictive covenants will not prevent him from earning a livelihood and supporting the Executive and the Executive’s family during the Restricted Period. If any restriction set forth in this Section 7 is found by any court of competent jurisdiction to be unenforceable for any reason, including any determination that its scope extends for too long a period of time or over too great a range of activities or geographic area, the parties jointly agree that it shall be modified and interpreted to give effect to such restriction to the maximum degree, and to extend to the maximum period of time, range of activities and geographic area, as to which it may be enforceable. The Company represents that the restrictions contained in this Section 7 are necessary for the protection of the Confidential Information (as defined above) and goodwill of the Company and are considered by the Executive to be reasonable for such purposes. The Executive agrees that any breach or threatened breach of this Section 7 could cause the Company immediate and irreparable damage and therefore, in the event of any such breach or threatened breach, in addition to such other remedies which may be available, the Company shall have the right to seek specific performance and injunctive relief. The existence of a claim, charge, or cause of action by Executive against the Company shall not constitute a defense to the enforcement by the Company of the foregoing restrictive covenants.

 

 

(d)       Except to the extent required for compliance with the provisions of this Section 7, nothing contained in this Agreement shall be construed so as to prevent the Executive from using, in connection with the Executive’s employment for himself or for an employer other than the Company (i) knowledge which is or has become generally known (without any disclosure by the Executive) to persons of his experience in the same industry as the Company, or (ii) information that is or has become available from a third party source where such source is not bound by a confidentiality agreement and did not receive the information directly or indirectly from the Executive.

 

8.       General Release of Claims. The Executive, on behalf of himself and his heirs, successors and assigns (the “Releasing Parties”), knowingly and voluntarily releases and forever discharges, to the full extent permitted by law, the Company, its successors and assigns, current and former parents, affiliated and subsidiary corporations of the Company and of their successors and assigns, and the current and former members, shareholders, directors, officers, insurers, attorneys, employees, including without limitation, agents of the Company (collectively referred to as the “Released Parties”), of and from any and all claims, known and unknown, asserted and unasserted, the Releasing Parties have or may have against the Company or any of the Released Parties, as of the date of execution of this Agreement, related to employment with or termination from the Company; except claims the Releasing Parties may have to enforce this Agreement. Listed below are examples of the statutes and causes of action under which the Releasing Parties will not bring any claim. If the law prohibits a waiver of claims under any such statute or cause of action, the Releasing Parties hereby acknowledge that the Releasing Parties have no valid claim under those statutes or causes of action. The claims released or acknowledged not to exist include, but are not limited to, any alleged violation of:

 

 

·

Title VII of the Civil Rights Act of 1964, as amended;

·

Sections 1981 through 1988 of Title 42 of the United States Code, as amended;

·

The Employee Retirement Income Security Act of 1974, as amended ("ERISA") (except for any vested benefits under any tax qualified benefit plan);

·

The Immigration Reform and Control Act, as amended;

·

The Americans with Disabilities Act of 1990, as amended;

·

The Workers Adjustment and Retraining Notification Act, as amended;

·

The Occupational Safety and Health Act, as amended;

·

The Sarbanes-Oxley Act of 2002;

·

The Fair Credit Reporting Act;

·

The National Labor Relations Act, as amended;

·

The Connecticut Fair Employment Practices Act– Conn. Gen. Stat. § 46a-51 et seq.;

·

The Connecticut Statutory Provision Regarding Retaliation/Discrimination for Filing a Workers Compensation Claim – Conn. Gen. Stat. § 31-290a;

·

The Connecticut Equal Pay Law – Conn. Gen. Stat. §§ 31-58(e) et seq.; §§ 31-75 and 31-76;

·

The Connecticut Family and Medical Leave Law – Conn. Gen. Stat. §§ 31-51kk et seq.;

·

The Connecticut Drug Testing Law – Conn. Gen. Stat. §§ 31-51t et seq.;

·

The Connecticut Whistleblower Law – Conn. Gen. Stat. §§ 31-51m(a) et seq.;

·

The Connecticut Free Speech Law – Conn. Gen. Stat. § 31-51q et seq.;

·

The Connecticut AIDS Testing and Confidentiality Law – Conn. Gen. Stat. §§ 19a-581 et seq.;

 

 

·

The Connecticut Age Discrimination and Employee Benefits Law – Conn. Gen. Stat. § 38a-543;

·

The Connecticut Reproductive Hazards – Conn. Gen. Stat. §§ 31-40g et seq.;

·

The Connecticut Smoking Outside the Workplace Law – Conn. Gen. Stat. § 31-40s;

·

The Connecticut Electronic Monitoring of Employees – Conn. Gen. Stat. § 31-48b;

·

The Connecticut Wage Hour and Wage Payment Laws, as amended;

·

Connecticut OSHA, as amended;

·

Any federal, state or local law, rule, regulation, or ordinance;

·

Any claims of liability of the Company based on the acts or omissions of its current and former employees;

·

Any claims in tort, including but not limited to wrongful or constructive discharge, physical or personal injury, emotional distress, humiliation, pain and suffering, damage to name or reputation, fraud of any kind, defamation, invasion of privacy, negligence of any kind, promissory estoppel, intentional or negligent infliction of emotional distress, violation of public policy, and false imprisonment;

·

Any claims arising under the Amended Employment Agreement;

·

Any contract claims, including but not limited to breach of express or implied contract, and breach of covenants of good faith and fair dealing, and detrimental reliance;

·

Any claims for compensation, including back wages, front pay, overtime pay, bonuses, incentive compensation, fringe benefits, equity awards, additional contributions to any benefit plan, or any other form of economic loss; and

·

Any basis for recovering liquidated damages or punitive damages, costs, interest or attorneys’ fees.

 

The Executive understands that this General Release does not release any claims that the law does not permit him to release. The Executive understands that he is releasing claims that he may not know about. The Executive expressly agrees and understands that the release of claims contained herein is a General Release and that any reference to specific claims arising out of or in connection with the Executive’s employment or its termination is not intended to limit the release of claims. The Releasing Parties expressly agree and understands that this General Release means that the Releasing Parties are releasing and discharging the Released Parties from and with respect to all claims, whether known or unknown, asserted or un-asserted, and whether or not the claims arise out of or in connection with the Executive’s employment or its termination, or otherwise, to the extent permitted by law. This is the Executive’s knowing and voluntary intent, even though the Executive recognizes that someday he might learn that some or all of the facts he currently believes to be true are untrue and even though he might then regret having signed this release of all claims. Nevertheless, the Executive is assuming that risk, and he agrees that this Agreement shall remain effective in all respects in any such case.

 

(b)       Covenant Not to Sue. The Executive represents and warrants that he has not filed or caused to be filed any lawsuit, complaint, arbitration, or charge with respect to any claim this Agreement purports to release. Besides waiving and releasing the claims above, the Releasing Parties promise never to file or prosecute any legal claim of any kind against the Released Parties in any federal, state or municipal court or agency, whether by means of a lawsuit, administrative claim (except as permitted under Section 11 of this Agreement), or arbitration, and whether as a named plaintiff, class member or otherwise, asserting any claims that are released by this Agreement.

 

 

(c)       Claims not released. The Executive is not waiving any rights he may have to: (a) his own vested accrued employee benefits under any health, welfare, or retirement benefit plans or any previously vested equity or previously vested equity-based awards as of the Separation Date; (b) benefits and/or the right to seek benefits under applicable workers’ compensation and/or unemployment compensation statutes; (c) indemnity for any actions he took during his employment with the Company that were consistent with his job duties in the ordinary course of his work, whether under any Company by-law, article of incorporation, insurance policy, or otherwise; (d) claims which by law cannot be waived by signing this Agreement; and/or (e) claims to enforce this Agreement. However, this Agreement is intended to set forth the complete agreement of the parties with respect to the Executive’s employment relationship with the Company, and termination of that relationship, and is intended to release all claims in connection with his employment and the termination of that employment, except those expressly excluded in this subsection.

 

This Agreement does not prohibit or bar the Executive from providing truthful testimony in any legal proceeding or from cooperating with, or making truthful disclosures to, any governmental agency, including under the federal whistleblower laws. Nothing contained in this Agreement is intended to nor shall it limit or prohibit the Executive, or waive any right, to initiate or engage in communication with, respond to any inquiry from, otherwise provide information to or obtain recovery from, any federal or state regulatory, self-regulatory or enforcement agency or authority.

 

9.       Acknowledgments. The Executive acknowledges and represents that he has correctly reported all hours worked, has been paid all salary, bonuses, equity and equity-based awards, sick leave, vacation, and other compensation due to him, if any, for his work at the Company, and received all compensation and funds due to him from the Company for other benefits and reimbursable expenses. The Executive further represents that he has no knowledge of any injuries or conduct which would form the basis of any workers’ compensation claims against the Company or any of the Released Parties, other than any already filed. The Executive further represents that he has not been denied leave under the Family and Medical Leave Act or state equivalent legislation. The Executive also admits that he is not eligible for any post-employment compensation, bonuses, equity or equity-based awards, or benefits under the Amended Employment Agreement. The Executive acknowledges that the Company is relying on the accuracy of these representations as material terms of this Agreement.

 

10.       Cooperation.

 

(a)       The Executive agrees to cooperate with the members of the Board of Directors, the Company and its direct and indirect subsidiaries by being available to testify on behalf of the members of the Company and its direct and indirect subsidiaries in any action, suit or proceeding, whether civil, criminal, administrative or investigative. In addition, except to the extent that the Executive has or intends to assert in good faith an interest or position adverse to or inconsistent with the interest or position of the members of the Company and its direct and indirect subsidiaries, the Executive agrees to cooperate with the members of the Company or its direct or indirect subsidiaries, to assist the members of the Company (and its direct and indirect subsidiaries) in any such action, suit or proceeding by providing information and meeting and consulting with the Board or its representatives or counsel, or representatives of or counsel to the members of the Company (and its direct and indirect subsidiaries), in each case, as reasonably requested by the Company. The Company agrees to pay (or reimburse, if already paid by the Executive) all reasonable and documented out-of-pocket expenses actually incurred in connection with the Executive’s cooperation and assistance.

 

 

(b) The Executive agrees to timely cooperate with members of the Board of Directors, the Company and its direct and indirect subsidiaries or any person(s) designated by them to transfer his responsibilities, including by providing access to documents, systems, networks, electronic communication, passwords and passcodes for necessary contractual, legal, and/or business information maintained by him, and to timely answer reasonable questions posed by the Board of Directors, or any person(s) designated by them in conjunction with his position at the Company. The Company agrees to pay (or reimburse, if already paid by the Executive) all reasonable and documented out-of-pocket expenses actually incurred in connection with the Executive’s cooperation and assistance.

 

11.       Carve out from Agreement. Notwithstanding the provisions set forth in Section “8(a)” (General Release), Section “8(b)” (Covenant Not To Sue), Section “5” (Confidential Information), Section “4” (Non-Disparagement), Section “6” (Return of Confidential Information and Property), and Section “10” (Cooperation), nothing in this Agreement is intended to nor shall it (a) prohibit the Executive from bringing any action to enforce the terms of this Agreement; (b) prohibit the Executive from filing a timely charge with the Equal Employment Opportunity Commission (“EEOC”), the Department of Labor (“DOL”), the Securities and Exchange Commission (“SEC”), the Commodity Futures Trading Commission (“CFTC”) or an equivalent state or local agency (provided that except as set forth below, the Executive has waived any right to personal injunctive relief and to personal recovery, damages and compensation of any kind relating to any such charge); (c) prohibit the Executive from cooperating in any investigation or proceeding conducted by or providing information to the EEOC, DOL, SEC, CFTC or equivalent agency regarding any claim related to Executive employment (although in connection with any charge or complaint, the Executive has waived any right to personal injunctive relief and to personal recovery, damages and compensation of any kind on the claims released in this Agreement as set forth above); (d) prohibit the Executive from initiating or engaging in communication with, responding to any inquiry from, or otherwise providing information to any federal or state regulatory, self-regulatory, or enforcement agency or authority regarding possible violations of federal law or regulation including under the whistleblower provisions of federal law or regulation; or (e) waive or release the Executive’s right to receive a monetary whistleblower award from the SEC or the CFTC.

 

12.       Knowing and voluntary agreement.

 

(a)       The Executive acknowledges he was given a reasonable period of time, which began on November 4, 2024, in which to consider this Agreement. The Executive further acknowledges that: (1) he had the ability to take advantage of each review and consideration period before signing this Agreement; (2) he has carefully read this Agreement, and each of its provisions; (3) he fully understands what this Agreement, and each of its provisions, means; and (4) he is entering into the Agreement, and each of its provisions, knowingly and voluntarily without duress or coercion.

 

 

(b)       The Company encourages the Executive to discuss this Agreement, and each of its provisions, with an attorney (at his own expense) before signing it.

 

(c)       This Agreement will become null and void if it has not been duly executed and the Company provides written or electronic notice to the Executive that this Agreement will be considered null and void if not executed before a set time period.

 

(d)       The Executive understands that the Company would not have given him the consideration as outlined under this Agreement but for the promises and representations he is making by signing and not revoking it.

 

13.       Effective Date. This Agreement becomes effective on the date in which the Executive signs it (the “Effective Date”).

 

14.       Non-Admission. The Executive agrees not to assert that this Agreement is an admission of guilt or wrongdoing by the Company or any Released Party, and he acknowledges that the Company and the Released Parties deny that they have engaged in wrongdoing of any kind or nature. The Company agrees not to assert that this Agreement is an admission of guilt or wrongdoing by the Executive, and the Company acknowledges that the Executive denies that he has engaged in any wrongdoing of any kind or nature.

 

15.       Entire agreement. This Agreement and any sections of the Amended Employment Agreement that survive following the Separation Date constitutes the entire agreement between the Executive and the Company on the subject matter of this Agreement. This Agreement may not be modified or canceled in any manner except by a writing signed by both the Executive and the Chairman of the Board. The Executive acknowledges that the Released Parties have made no representations or promises to him, other than those in this Agreement. If any provision in this Agreement is found to be unenforceable, all other provisions will remain fully enforceable. Should any part or provision of any section of this Agreement be held invalid, void, or unenforceable in any court of competent jurisdiction, such invalidity, voidness, or unenforceability shall not render invalid, void, or unenforceable any other part or provision of this Agreement.

 

16.       Implementation. The Executive agrees to sign any documents and take action at the direction of the Company that is necessary in the future to implement the terms of this Agreement.

 

17.       Successors. This Agreement binds the Executive’s heirs, administrators, representatives, executors, successors, and assigns, and will inure to the benefit of all Released Parties and their respective heirs, administrators, representatives, executors, successors, and assigns.

 

 

18.       Consequences for Violating this Agreement. In the event the Company becomes aware that the Executive has violated the terms of this Agreement, or any of the sections of the Amended Employment Agreement that survive following the Separation Date, including any of the restrictive covenants contained herein or in the Amended Employment Agreement, or disclosed any of the terms of this Agreement, the Executive shall forfeit his rights under this Agreement, and the Company shall be entitled to seek enforcement of the terms of this Agreement and may pursue any claims it has against the Executive. The Executive further acknowledges that a breach of this Agreement, including the restrictive covenants contained herein or in the Amended Employment Agreement, by him will cause irreparable injury to the Company, and that the Company may seek remedies at law, or to the extent that such remedies are inadequate, the Company will be entitled to preliminary injunctive relief and other injunctive relief as necessary.

 

19.       Enforcement. This Agreement shall be construed as a whole according to its fair meaning. It shall not be construed strictly for or against the Executive or any Released Party. This Agreement shall be governed by the statutes and common law of the State of Connecticut. Any dispute over the terms of this Agreement or its enforcement shall be brought according to the dispute resolution procedure in the Amended Employment Agreement. However, nothing in this Agreement forecloses either the Company or the Executive from seeking injunctive or other equitable relief in the federal or state courts in the State of Connecticut by way of a temporary restraining order, stay, preliminary injunction, or other provisional remedy to which the Executive or the Company would be entitled in the absence of the arbitration clause in the Amended Employment Agreement. Nothing in this Paragraph is intended to or shall apply in respect of claims the mandatory arbitration of which is expressly barred by law.

 

20.       Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

 

[The remainder of this page is left blank intentionally; signature page to follow.]

 

 

BY SIGNING THIS AGREEMENT THE PARTIES ACKNOWLEDGE THAT: THEY HAVE READ IT; THEY UNDERSTANDS IT; THEY AGREE WITH EVERYTHING IN IT; AND THEY HAVE SIGNED THIS AGREEMENT RELEASE KNOWINGLY AND VOLUNTARILY.

 

	THE COMPANY:
	By: /s/ James Mitarotonda
	Name: James Mitarotonda
	Title: Chairman of the Board
	Date: 11/8/2024
	THE EXECUTIVE:
	/s/ Mark Hernandez
	Mark Hernandez

Date:

11/8/2024

 

 

-14-

 

 

 

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

 

 

This Employment Agreement (as may be amended from time to time in accordance with its terms, this “Agreement”), is entered into as of November 4, 2024 between The Eastern Company (the “Company”) and Ryan Schroeder (the “Executive”).

 

R E C I T A L S

 

WHEREAS, the Company desires to employ the Executive, and the Executive has agreed to be employed by the Company, on the terms and subject to the conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

 

1.       Employment. The Company hereby agrees to employ the Executive to serve in the capacities described in this Agreement, and the Executive agrees to accept such employment and perform such services, upon the terms and subject to the conditions set forth herein, effective as of November 6, 2024 (the “Effective Date”).

 

2.       Term. The Company shall employ the Executive for a term commencing on the Effective Date and continuing until terminated in accordance with Section 7 below (the “Term”). The Executive acknowledges and agrees that no agreement or arrangement between the Executive and the Company Group (as defined below) (including the execution and delivery of this Agreement) shall entitle the Executive to remain in the employment of the Company Group or affect the right of the Company Group to terminate the Executive’s employment at any time and for any reason.

 

3.       Duties and Responsibilities.

 

(a) Title and Reporting. During the Term, the Executive shall serve as the Chief Executive Officer of the Company and shall have such authority, duties and responsibilities as is consistent with such position and as otherwise determined by the board of directors of the Company (the “Board”), including, without limitation, serving as a director, manager and/or officer of the Company and any direct or indirect subsidiary thereof (collectively, the “Company Group”). The Executive shall report to and take direction from the Board. The Executive’s principal work location will be at the Company’s offices in Shelton, Connecticut, or any such other location as the Company and the Executive may agree in writing.

 

(b) Standard of Care. The Executive shall at all times perform his duties and responsibilities honestly, diligently, in good faith and to the best of his ability and shall observe and comply in all material respects with all of the policies and procedures established by the members of the Company Group and the Board from time to time (including any employee handbook of a member of the Company Group) that are applicable to the Company’s senior executives, and with all applicable laws, rules and regulations imposed by any governmental or regulatory authorities.

 

 

(c) Devotion of Time. The Executive will exercise his best efforts in furtherance of, and devote all of his business time to, the operation of the business and affairs of the members of the Company Group.

 

4.       Compensation.

 

(a) Base Salary. During the Term, as compensation for his services hereunder and in consideration of the covenants set forth in this Agreement, the Company shall pay to the Executive an annual base salary equal to four hundred seventy-five thousand dollars ($475,000) per annum, subject to applicable taxes and withholdings (as may be adjusted from time to time, the “Base Salary”). The Base Salary may be increased, but not decreased, from time to time in the Board’s (or the compensation committee of the Board (the “Compensation Committee”)) discretion. The Base Salary shall be payable in accordance with the Company’s customary payroll practices and procedures and shall be prorated for any partial period during the Term.

 

(b) Short Term Incentive Plan. Commencing in fiscal year 2025, in addition to the Executive’s Base Salary, the Executive shall be eligible to participate in the Company’s Short Term Incentive Plan (“STIP”) with a target equal to 75% of Base Salary. The STIP shall be payable based on the individual performance of the Executive and the performance of the Company Group, as determined by the Compensation Committee, and in accordance with the Company’s STIP for senior executives of the Company in place at the time, which may be amended by the Compensation Committee from time to time. The STIP is payable in the fiscal year following the fiscal year to which such STIP payment relates. The Executive must be continuously employed by the Company from the Effective Date through the payment date to be eligible to receive a STIP payment.

 

(c) Long Term Incentive Plan. During Executive’s employment with the Company, the Executive will be eligible to receive a grant of long-term incentive compensation under the Company’s Long Term Incentive Plan (“LTIP”) with a target equal to 75% of Base Salary. The LTIP shall be payable based on the individual performance of the Executive and the performance of the performance of the Company Group, as determined by the Compensation Committee, and in accordance with the Company’s LTIP for senior executives of the Company in place at the time, which may be amended by the Compensation Committee from time to time. Vesting of these grants are addressed in the LTIP and/or the grant agreement

 

5.       Benefits. During the Term, the Executive shall be entitled to participate in all employee benefit plans and programs (including, without limitation, group health plans and programs) that are established and made generally available by the Company from time to time to its senior executives, subject, however, to the applicable eligibility requirements and other provisions of such plans and programs (including, without limitation, requirements as to contribution requirements, position, tenure, location, salary, age and health), but excluding any such plan or program providing for severance payments or benefits upon termination of employment. The Company reserves the right to amend, modify or terminate such plans and programs from time to time in its sole discretion.

 

 

6.       Vacation. During the Term, the Executive shall be entitled to four (4) weeks of vacation per year in accordance with the Company’s policies for employees of the Company, including but not limited to notice requirements, as modified from time to time; provided, however, that such vacation shall not adversely interfere with the Executive’s operation of the business and affairs of the Company.

 

7.       Termination and Termination Benefits. Subject to the other obligations of this Agreement, the Executive’s employment hereunder shall terminate under the following circumstances:

 

(a)       Termination by the Company for Cause. The Executive’s employment hereunder may be terminated by the Company for Cause, effective immediately, upon written notice to the Executive. Any of the following shall constitute “Cause” for such termination, as determined in good faith by the Board in its sole discretion:

 

(i)       commission by the Executive of any acts involving moral turpitude, deceit, dishonesty or fraud, or the Executive being arrested, charged or indicted for any criminal conduct (excluding a misdemeanor charge which is unrelated to his work for the Company and which will not reasonably be expected to negatively impact the business reputation of the Executive or of the Company);

 

(ii)      commission by the Executive of a material breach of this Agreement, any other organizational document of any member of the Company Group or any other agreement or contract with any member of the Company Group or any affiliate thereof to which he is a party, including the Company’s STIP, LTIP and any award agreements thereunder (it being understood that any breach or violation of a restrictive covenant set forth under any such agreement or contract shall be considered material);

 

(iii)     gross negligence, recklessness or willful misconduct of the Executive in the performance of his duties or otherwise with respect to the Company Group;

 

(iv)     non-performance or substandard performance of the Executive’s duties with respect to the Company Group as determined by the Board, which, if curable, is not cured within ten (10) days after written or electronic notice to the Executive thereof;

 

(v)      failure to comply with any reasonable lawful directives of the Board, which if curable is not cured within ten (10) days after written or electronic notice to the Executive thereof;

 

(vi)     chronic and unexcused absenteeism unrelated to a disability which continues for more than five (5) days after the Company provides written notice to the Executive of such absenteeism;

 

 

(vii)    perpetration by the Executive of a fraud, theft, or embezzlement, or misappropriation of funds against or affecting any member of the Company Group or any affiliate, customer, client, agent, creditor, equity holder or employee of any member of the Company Group;

 

(viii)   any material violation by the Executive of any laws or regulations to which the Company and/or the Executive are subject;

 

(ix)     engagement by the Executive in any activity that is harmful, in a material respect, to any member of the Company Group monetarily or otherwise, as reasonably determined by the Board;

 

(x)      any willful act or omission by the Executive that is reasonably likely to injure the reputation or business of any member of the Company Group or a business relationship of any member of the Company Group; or

 

(xi)     material violation by the Executive of any written policy of the Company Group (including, without limitation, policies relating to harassment, discrimination and/or retaliation).

 

If the Executive’s employment hereunder is terminated for Cause pursuant to this Section 7(a), the Company shall have no further obligation to make any payments or provide any benefits to the Executive hereunder after the date of termination (the “Termination Date”), except for payments of Base Salary through the Termination Date.

 

(b)       Death. This Agreement and the Executive’s employment hereunder shall automatically terminate without notice to either party hereto in the event of the Executive’s death.

 

(c)       Disability. The Company shall have the right to terminate this Agreement and the Executive’s employment hereunder due to disability (“Disability”) if the Executive is determined by the Board to be unable, due to a mental or physical injury, illness or disorder, to perform the essential functions, duties and/or responsibilities of his position hereunder, after reasonable accommodation has been made for him (if required under the Americans with Disabilities Act and/or state law) on a full-time basis for a period of more than ninety (90) days during any consecutive three hundred and sixty-five (365) day period.

 

(d)       Mutual Agreement. The parties hereto may terminate this Agreement and the Executive’s employment hereunder upon their mutual written consent.

 

(e)       Termination by the Company without Cause. The Company may terminate the Executive’s employment without Cause, in the sole discretion of the Board, by providing the Executive with not less than thirty (30) days written notice of such termination (the “Notice Period”). During the Notice Period, the Executive shall continue to have an obligation to perform his job duties in a professional and competent manner. The Company shall have the sole discretion to direct the Executive to provide reduced or no services during the Notice Period and/or to not report to any Company offices or facilities during the Notice Period; provided, however, that the Company shall continue to pay the Executive’s Base Salary for the entirety of the Notice Period.

 

 

(f)       Resignation by the Executive for Good Reason.

 

(i)       The Executive may resign his employment for Good Reason if he provides the Company with written notice of such Good Reason and the Company fails to cure it within thirty (30) days after receiving such written notice. For purposes of this Agreement “Good Reason” shall be defined as any of the following without the Executive’s written consent: (x) a material reduction in the Executive’s Base Salary other than a general reduction in base salary that affects all similarly situated employees in substantially the same proportions; (y) a material, adverse change in the Executive’s authority, duties, or responsibilities (other than temporarily while the Executive is physically or mentally incapacitated or as required by applicable law); or (z) the Company’s material breach of this Agreement or any other material contract between the Executive and the Company.

 

(ii)       Notwithstanding anything to the contrary contained in this Agreement, in order for the Executive to terminate his employment hereunder for Good Reason, the Executive must provide written notice to the Company within thirty (30) days after the date upon which the Executive first became aware of the condition or conditions that are alleged to constitute such Good Reason, such condition or conditions must not have been cured within thirty (30) days following receipt of such notice by the Company demanding that such matters be cured, and the Executive must terminate his employment at the end of such thirty (30) day cure period.

 

(g)       Without Good Reason. The Executive shall have the right to terminate this Agreement and the Executive’s employment hereunder at any time without Good Reason on sixty (60) days’ prior written notice to the Company (which sixty (60) days’ notice may be waived or reduced in the Board’s discretion).

 

(h)       Effect of Termination. Effective as of any date of termination of the Executive’s employment with the Company, without any further action required by any party, the Executive shall be removed from, and shall no longer hold, all positions then held by him with any member of the Company Group, including, but not limited to any position as an officer, Board member, director or fiduciary of any Company Group-related entity or any Company Group employee benefit plan. The Executive agrees that he shall execute any documentation, resignations or similar documents reasonably necessary to give effect to the provisions of this Section 7(h).

 

(i)       Cessation of Professional Activity. Upon delivery of a written notice of termination by either party hereto, or anytime thereafter, the Company may relieve the Executive of his duties and responsibilities and require the Executive to immediately cease all professional activity on behalf of any member of the Company Group. In addition, in the event that the Board determines that there is a reasonable basis for it to investigate whether circumstances exist that would, if true, permit the Board to terminate the Executive’s employment for Cause, the Board may relieve the Executive of his duties and responsibilities during the pendency of such investigation; provided, however, that, during such period, the Company shall remain bound by the terms of this Agreement, including, without limitation, the payment to the Executive of his Base Salary and benefits earned pursuant to the terms hereof.

 

 

8.       Payments Upon Termination.

 

(a)      Payments Upon Termination (other than By the Executive with Good Reason or By the Company Without Cause). If the Executive’s employment with the Company shall be terminated during the Term, in each case, as a result of any of the events set forth in Sections 7(a), (b), (c), or (d), or as a result of the Executive having terminated his employment with the Company other than for Good Reason in Sections 7(g), then the Company shall:

 

(i) pay to the Executive his Base Salary at the time of termination earned through the date of termination;

 

(ii) pay to the Executive his accrued but unused vacation in accordance with Company policy; and

 

(iii) reimburse the Executive for any expenses incurred through the date of termination for which the Executive is entitled to reimbursement under Section 27 (collectively, (i) through (iii), the “Accrued Benefits”);

 

Upon the satisfaction of the obligations in this Section 8(a), the members of the Company Group shall have no further obligation to the Executive under this Agreement.

 

(b)       Payments Upon Termination By the Company Without Cause or By the Executive With Good Reason. If this Agreement and the Executive’s employment with the Company shall be terminated during the Term by the Company without Cause pursuant to Section 7(e) (for a reason other than those covered by Sections 7(a), (b), (c), (d), or (g)) or by the Executive for Good Reason pursuant to Section 7(f), the Company shall subject to Sections 8(c) and Section 26, shall pay the Executive an amount equal to the Base Salary at the time of termination (the “Severance”), which will be payable to the Executive in substantially equal installments over twelve (12) months following the Executive’s termination of employment and in accordance with the Company’s customary payroll practices and procedures, beginning with the next payroll date immediately following the expiration of the sixtieth (60^th) day following the date of termination (which first payment shall include any payments of Base Salary that should have been made during such sixty (60)-day period but for the sixty (60)-day release consideration period); provided, however, that, upon the satisfaction of its obligations in this Section 8(b), the members of the Company Group shall have no further obligation to the Executive under this Agreement.

 

(c)       Release. The Executive agrees, as a condition to receipt of the Severance provided for in Section 8(b), that the Executive will execute a separation agreement and general release, in a form to be provided by the Company, at such time, which is satisfactory to the Company in form and substance (the “Release”), releasing any and all claims the Executive may have (other than enforcement of this Section 8), against the Company Group, its affiliates, and their respective associated persons and entities, but which shall not include a release of any of the Executive’s rights to indemnification as an officer of any member of the Company Group, and such Release must be delivered and no longer subject to revocation prior to the sixtieth (60^th) day following the Executive’s date of termination. The Executive shall not be entitled to receive any Severance unless the Release has become fully enforceable and non-revocable prior to the sixtieth (60th) day after the date of termination.

 

 

9.      Non-Disparagement. The Executive agrees that the Executive will not, during the Executive’s employment with the Company or at any time thereafter, make any statements that are disparaging about or adverse to the business interests of the Company Group (including its officers, directors, executives and employees) or which are intended to harm the reputation of the Company including, but not limited to, any statements that disparage any product, service, capability or any other aspect of the business of the Company. For purposes of this Agreement, “disparage” shall mean any statements, actions or insinuations, made either directly or through a third party, that would tend to lessen the standing or stature of an institution or individual in the eyes of an ordinary citizen. Notwithstanding the foregoing, nothing herein shall prevent or prohibit the Executive from testifying truthfully in any legal proceeding or as otherwise may be required by law.

 

10.    Confidential Information.

 

(a) The Executive agrees to, at all times during the Term and thereafter, except as otherwise permitted under Sections 10(c) and (d), the Executive shall not use, publish, divulge, communicate, share, provide access to or otherwise disclose any Confidential Information.

 

(b) The Executive understands that “Confidential Information” means any Company Group proprietary or confidential information, technical data, trade secrets or know-how, including, but not limited to: research, product plans and developments, prototypes, products, services, customer lists and customers, prospective customers and contacts, proposals, customer purchasing practices, prices and pricing methodology, cost information, terms and conditions of business relationships with customers, customer research and other needs, markets, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, distribution and sales methods and systems, sales and profit figures, finances, personnel information including, information regarding compensation, skills, training, promotions, and duties, as well as reports and other business information that the Executive learns of, obtains, or that is disclosed to the Executive relating to the Company Group at any time prior to or during the course of the Executive’s service to the Company Group, either directly or indirectly, in writing, orally or by review or inspection of documents or other tangible property. However, Confidential Information does not include any of the foregoing items which have been made generally available to the public and become publicly known through no wrongful act of the Executive’s or any other person owing a duty of confidentiality to the Company Group. The Executive further agrees that all memoranda, disks, files, notes, records or other documents that contain Confidential Information, whether in electronic form or hard copy, and whether created by the Executive or others, that come into his possession, shall be and shall remain the exclusive property of the Company to be used by the Executive only in the performance of his obligations hereunder. The Executive agrees that the foregoing restrictions shall apply whether or not such information is marked “Confidential”.

 

 

(c) Notwithstanding any other provision of this Agreement, the Executive is hereby notified in accordance with the Defend Trade Secrets Act of 2016 that the Executive will not be held criminally or civilly liable under any U.S. federal or state trade secret law for the disclosure of a trade secret that is made (i) in confidence to a U.S. federal, state or local government official, either directly or indirectly, or to an attorney, in each case solely for the purpose of reporting or investigating a suspected violation of law; or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. The Executive is further notified that if the Executive files a lawsuit for retaliation by any member of the Company Group for reporting a suspected violation of law, the Executive may disclose the trade secrets of any such member of the Company Group to the Executive’s attorney and use the trade secret information in the court proceeding if the Executive files any document containing the trade secret under seal and does not disclose the trade secret except pursuant to court order.

 

(d) Nothing in this Agreement or in any policy of any member of the Company Group prohibits the Executive from reporting possible violations of U.S. federal, state or local law or regulation to, or discussing any such possible violations with, any governmental agency or entity or self-regulatory organization, including, without limitation, by initiating communications directly with, responding to any inquiry from, or providing testimony before any U.S. federal, state or local regulatory authority or agency or self-regulatory organization, including, without limitation, the Securities and Exchange Commission and the Occupational Safety and Health Administration, or making any other disclosures that are protected by the whistleblower provisions of any U.S. federal, state, or local law or regulation.

 

(e) If the Executive becomes legally required (whether by deposition, interrogatories, requests for information or documents, subpoenas, civil investigative demands or similar processes) to disclose any Confidential Information, he will provide the Company with prompt written notice thereof, unless otherwise prohibited by applicable law, so that the Company may seek a protective order or other appropriate remedy and the Executive will, at the Company’s expense, cooperate with and assist the Company in securing such protective order or other remedy. In the event that such protective order is not obtained, or that the Company waives compliance with the provisions of this Section 10 to permit a particular disclosure, the Executive shall furnish only that portion of the Confidential Information which he is advised by counsel in writing is legally required to be disclosed and shall exercise his reasonable efforts to obtain reliable assurances that confidential treatment will be afforded such Confidential Information. Notwithstanding the foregoing, the provisions of this Section 10(e) shall not apply to any communication permitted under Section 10(c) or (d).

 

11.     Return of Confidential Information and Property. Upon termination of the Executive’s employment with the Company (for any reason) or at any other time upon the written request of the Board, the Executive (or his heirs and/or personal representatives): (a) shall return to the Company all of the Company’s Confidential Information, including any written or printed material, files, papers, designs, records, manuals, schematics, customer lists, notebooks, summaries, reports or analyses involving the Confidential Information; and (b) return any other property that belongs to the members of the Company Group, including, without limitation, access cards, passwords, computers and cellular phones or other devices in the Executive’s possession and control. The Executive further agrees that he shall not retain any copies of any Confidential Information, whether in electronic form or otherwise. In the event that the Executive has sent or stored any Confidential Information on any of his personal computers or other electronic devices, he agrees to provide the Company with access to all such devices so that it can ensure the permanent deletion of all such Confidential Information.

 

 

12.     Non-Competition, Non-Solicitation and Non-Interference.

 

(a)       The Executive agrees and acknowledges that, in connection with his employment with the Company, he will be provided with access to confidential and proprietary information and trade secrets belonging to the Company, including the Confidential Information. The Executive also acknowledges and agrees that, given the nature of the Confidential Information, it must be maintained as confidential and the Company would suffer irreparable harm if such Confidential Information was disclosed to the general public or to a competitor of the Company. The Executive further acknowledges that the Company has provided him with information about and access to its clients for the purpose of developing the Company’s goodwill and ongoing relationship with such clients.

 

(b)       Accordingly, in consideration of his employment with the Company pursuant to this Agreement, and other good and valuable consideration, the receipt of which is hereby acknowledged, the Executive agrees that, during the “Restricted Period,” defined as the twelve (12) month period following the Executive’s separation of employment from the Company, regardless of the cause or reason for such separation, the Executive shall not, either on the Executive’s own behalf or on behalf of any third party, except on behalf of the Company, directly or indirectly:

 

(i)       own, manage, operate, join, control, finance or participate in the ownership, management, operation, control, or financing of, or be connected as a proprietor, partner, stockholder, employee, officer, director, principal, agent, representative, joint venture, investor, lender, consultant or otherwise with, or use or permit his name to be used in connection with, any company, entity or enterprise engaged in any lines of business in which the Company is actively engaged or actively planning to engage as of the date of the Executive’s separation of employment from the Company, including but not limited to the design, manufacture and sale of security products, metal products and industrial software, and related products and services (referred to hereinafter as a “Competing Business”); or

 

(ii)       (x) solicit or accept business from any customer or client who engaged in business with the Company or was engaged in active business negotiations with the Company at any time during the last twelve months of the Executive’s employment with the Company (a “Company Client”); (y) solicit, entice, request or suggest that any Company Client cease to do business, or reduce the amount of business which such Company Client has customarily done with the Company, and/or otherwise interfere with the business relationship between the Company and any Company Client; and/or (z) engage in any activity described in the foregoing clauses (x)-(z) with respect to any potential Company Client made known to the Executive during the Term or otherwise in connection with the Executive’s employment with the Company.

 

The foregoing restrictions shall not be construed to prohibit the ownership by the Executive as a passive investment of not more than 2% percent of any class of securities of any corporation which is engaged in any Competing Business having a class of securities registered pursuant to the Securities Exchange Act of 1934, as amended.

 

 

(c)       The Executive further agrees that, during the Restricted Period, he the Executive shall not, without prior written approval by the Chairman of the Board, either on his own behalf or on behalf of any third party, except on behalf of the Company, directly or indirectly:

 

(i)       hire, solicit, engage or contract for any purpose related to a Competing Business with any employee or consultant known by the Executive to have worked for or with the Company at any time during the last twelve months of the Executive’s employment with the Company; or

 

(ii)       recruit, solicit, or induce, or attempt to induce, any known employee or consultant of the Company to terminate employment or otherwise cease their relationship with the Company.

 

(d)       The Executive agrees that the post-employment restrictive covenants set forth herein are reasonable and necessary to protect the Company’s legitimate interests. The Executive acknowledges that, based upon the Executive’s education, experience, and training, these post-employment restrictive covenants will not prevent him from earning a livelihood and supporting the Executive and the Executive’s family during the Restricted Period. If any restriction set forth in this Section 12 is found by any court of competent jurisdiction to be unenforceable for any reason, including any determination that its scope extends for too long a period of time or over too great a range of activities or geographic area, the parties jointly agree that it shall be modified and interpreted to give effect to such restriction to the maximum degree, and to extend to the maximum period of time, range of activities and geographic area, as to which it may be enforceable. The Company represents that the restrictions contained in this Section 12 are necessary for the protection of the Confidential Information (as defined above) and goodwill of the Company and are considered by the Executive to be reasonable for such purposes. The Executive agrees that any breach or threatened breach of this Section 12 could cause the Company immediate and irreparable damage and therefore, in the event of any such breach or threatened breach, in addition to such other remedies which may be available, the Company shall have the right to seek specific performance and injunctive relief. The existence of a claim, charge, or cause of action by Executive against the Company shall not constitute a defense to the enforcement by the Company of the foregoing restrictive covenants.

 

(e)       Except to the extent required for compliance with the provisions of this Section 12, nothing contained in this Agreement shall be construed so as to prevent the Executive from using, in connection with the Executive’s employment for himself or for an employer other than the Company (i) knowledge which is or has become generally known (without any disclosure by the Executive) to persons of his experience in the same industry as the Company, or (ii) information that is or has become available from a third party source where such source is not bound by a confidentiality agreement and did not receive the information directly or indirectly from the Executive.

 

 

13.     Ownership of Intellectual Property. The Executive hereby agrees that all intellectual property, schematics, software, information, ideas, concepts, reports, studies, charts, plans, diagrams, designs, formulas, algorithms, methods, products, systems and technologies, presentations and any other tangible or intangible information, work product, deliverables and all intellectual property, inventions, discoveries, improvements, specifications, devices, writings, compilations of information, works of authorship and/or materials, or portions thereof, developed, produced, conceived, created or reduced to practice by the Executive in performance of the Executive’s job during his employment with the Company, both prior to and after the Effective Date of this Agreement (collectively the “Intellectual Property”), shall be the sole and exclusive property of the Company and shall be deemed “works made for hire”, of which the Company (or its designee) shall be deemed the author and shall be the exclusive owner. To the extent that any of the foregoing do not constitute works made for hire under applicable law, the Executive hereby assigns all of his rights, title and interest in and to the foregoing, including all patent, copyright or other Intellectual Property rights of whatever kind, to the Company. The Executive agrees to take such further actions or execute such further documents as the Company may reasonably request to confirm the foregoing assignment and to obtain patent and copyright protection in the name of the Company, or its designee, without further compensation, but at the Company’s expense. The Executive shall not have any rights to use, disclose or duplicate the Intellectual Property unless expressly authorized in writing by an authorized agent of the Company.

 

14.     Assignment; Successors and Assigns. The Executive may not make any assignment of this Agreement or his obligations herein, by operation of law or otherwise, without the prior written consent of the Company. The Company may assign its rights under this Agreement to any successors in interest of the Company. This Agreement shall be binding on the Executive, the Company and any successors in interest of the Company.

 

15.     Enforceability of Restrictive Covenants.

 

(a)       The provisions of Sections 9, 10, 11, 12, and 13 shall apply regardless of the reason for the termination of the Executive’s employment with the Company. The Executive further understands and agrees that his obligations under this Section 12 shall continue in full force and effect in the event of any subsequent changes to the Executive’s employment with the Company, including but not limited to, changes in job title, responsibilities, compensation, benefits and reporting structure, without the need to execute a new agreement.

 

(b)       In the event that the Executive is in breach of any of his post-employment restrictive covenants set forth in this Sections 9, 10, 11, 12, and 13: (i) the Executive shall be liable for any attorneys’ fees incurred by the Company in enforcing this Agreement; and (ii) the Restricted Period shall be tolled such that the Executive must be in full compliance with all of his post-employment restrictive covenants for a period of twelve (12) consecutive months before the Restricted Period shall be deemed to expire.

 

(c)       The Executive hereby acknowledges and agrees that (i) the restrictions on his activities contained in Sections 9, 10, 11, 12, and 13 are necessary for the reasonable protection of the members of the Company Group and their goodwill and are a material inducement to the Company entering into this Agreement and (ii) a breach or threatened breach of any such provisions will cause irreparable harm to the members of the Company Group for which there is no adequate remedy at law.

 

 

(d)       The Executive agrees that in the event of any breach or threatened breach of any provision contained in Sections 9, 10, 11, 12, and 13, the members of the Company Group shall be entitled, in addition to any other rights or remedies available to the members of the Company Group at law, in equity or otherwise, to a temporary, preliminary or permanent injunction or injunctions and temporary restraining order or orders to prevent breaches of such provisions and to specifically enforce the terms and provisions thereof without having to prove special damages or the inadequacy of the available remedies at law, in equity or otherwise and without the requirement of posting of a bond.

 

(e)       The parties hereto acknowledge that the time, scope and other provisions contained in Sections 9, 10, 11, 12, and 13 are reasonable and necessary to protect the goodwill and business of the members of the Company Group.

 

(f)        If any covenant contained in Sections 9, 10, 11, 12, and 13 is held to be unenforceable by reason of the time or scope, such covenant shall be interpreted to extend to the maximum time or scope for which it may be enforced as determined by a court making such determination, and such covenant shall only apply in its reduced form to the operation of such covenant in the particular jurisdiction in which such adjudication is made.

 

(g)       The existence of any claim or cause of action by the Executive against any member of the Company Group, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the members of the Company Group of any provision of Sections 9, 10, 11, 12, and 13.

 

(h)       The provisions of Sections 9, 10, 11, 12, and 13 are in addition to and supplement any other agreements, covenants or obligations to which the Executive is or may be bound from time to time. To the extent a covenant set forth in Sections 9, 10, 11, 12, and 13 conflicts with a covenant or obligation set forth in any other such agreement, the provision that is more favorable to the members of the Company Group will control.

 

16.     Representations and Warranties; Indemnity. The Executive represents and warrants to the Company that the execution and delivery of this Agreement by him, and the performance by him of his obligations hereunder, shall not constitute (with or without notice or lapse of time or both) a breach or violation of a provision of any understanding, contract or commitment, written or oral, express or implied, to which the Executive is a party or to which the Executive is or may be bound, including, without limitation, any understanding, contract or commitment with any present or former employer, in each case, that imposes restrictions that would, or would reasonably be expected to, interfere with the Executive’s ability to perform his obligations under this Agreement. The Executive hereby agrees to indemnify and hold the members of the Company Group harmless from and against any and all claims, losses, damages, liabilities, costs and expenses (including, without limitation, attorneys’ fees and expenses) incurred by the members of the Company Group in connection with any such breach or violation by the Executive of any such understanding, contract or commitment.

 

17.   Enforceability, Modification and Severability. The provisions of this Agreement are severable. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the Executive and the Company jointly agree and request that such portion or provision be deemed modified to the least extent necessary to render it valid and enforceable. In the event that such modification is not feasible or is rejected by any court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provisions in circumstances other than those as to which it is illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

 

 

18.    Governing Law; WAIVER OF JURY TRIAL. This Agreement shall be construed in accordance with the laws of the State of Connecticut applicable to contracts executed and to be wholly performed within such State. For any claims not subject to mandatory arbitration as set forth in Section 19 below, each party hereto hereby irrevocably and unconditionally consents and submits to the exclusive jurisdiction of the courts of the State of Connecticut for any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby, and each party hereto agrees not to commence any action, suit or proceeding relating thereto except in such courts; provided, however, that nothing in this Agreement shall prevent either party hereto from enforcing a judgment entered into by any such court in any other jurisdiction. Each party hereto further agrees that any service of process, summons, notice or document by U.S. registered mail to its address set forth herein shall be effective service of process for any action, suit or proceeding brought against it in any such court. Each party hereto irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in such courts, and irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any action, suit or proceeding brought in any such court has been brought in an inconvenient forum. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON STATUTE, CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE) OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREUNDER.

 

19.    Dispute Resolution. The Executive and the Company agree that all disputes arising out of or relating to this Agreement, the parties’ employment relationship, or any termination thereof (“Disputes”) shall be resolved by binding arbitration as the sole and exclusive procedure for the resolution of such Disputes, in the State of Connecticut, to be conducted by JAMS in accordance with its employment dispute resolution rules then in effect. Notwithstanding the foregoing, the parties may seek injunctive or other equitable relief from any court having jurisdiction by way of a temporary restraining order, stay, preliminary injunction, or other provisional remedy to which either party would be entitled in the absence of this arbitration clause. Nothing in this Section is intended to or shall apply in respect of claims the mandatory arbitration of which is expressly barred by law.

 

20.    Waivers. The failure or delay of either party hereto to enforce any provision of this Agreement shall in no way affect the right of such party to enforce the same or any other provision of this Agreement. The waiver by either party hereto of any breach of any provision of this Agreement shall not be construed as a waiver by such party of any succeeding breach of such provision or a waiver by such party of a breach of any other provision. The granting of any consent or approval by either party hereto in any one instance shall not be construed to waive or limit the need for such consent or approval in any other or subsequent instance.

 

 

21.     Notices. Any notice, request or other document required or permitted to be given under this Agreement shall be in writing and shall be deemed given (a) upon delivery if delivered by hand, facsimile or e-mail transmission (unless the sender receives a bounce back or failure to deliver message notification); (b) three (3) days after the date of deposit in the mail, postage prepaid, if mailed by U.S. certified or registered mail; or (c) on the next business day, if sent by prepaid overnight courier service, in each case, addressed as follows:

 

(i) If to the Executive, to the Executive’s address on file with the Company.

 

(ii) If to the Company to:

 

The Eastern Company

3 Enterprise Drive; Suite 408

Shelton, CT 06484

Attn: Chairman of the Board of Directors

 

Either party hereto may change the address to which notice shall be sent by giving notice of such change of address to the other party hereto in the manner provided above.

 

22.     Entire Agreement and Amendment. This Agreement constitutes the entire agreement and understanding of the parties hereto with respect to the matters covered herein and supersedes all prior or contemporaneous negotiations, commitments, agreements and writings with respect to such subject matter. All such other negotiations, commitments, agreements and writings shall have no further force or effect, and the parties to any such other negotiation, commitment, agreement or writing shall have no further rights or obligations thereunder. This Agreement may be amended or modified only by a written instrument signed by the Executive and the Chairman of the Board.

 

23.     Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, personal representatives, successors and permitted assigns, and the Executive consents to the assignment by the Company of its rights and obligations under this Agreement to an affiliate or a purchaser or assignee of all or substantially all of the assets of the members of the Company Group or their respective businesses. The Executive may not assign any of his rights or delegate any of his duties hereunder without the prior written consent of the Board (which consent may be granted or withheld in the Board’s sole discretion).

 

24.     Forwarding of Agreement. The Executive hereby acknowledges and agrees that the Company may, in order to protect its interests, send a copy of this Agreement to any future employer of the Executive, and that the Executive shall have no claim against the Company in the event it does so.

 

 

25.     Advice of Counsel/Construction. The Executive acknowledges that the Executive has been advised by the Company to review the terms of this Agreement with legal counsel of the Executive’s choice (at Executive’s own expense) and that the Executive has been given a reasonable opportunity to seek such legal advice. The Executive also agrees that he has participated in the drafting of this Agreement and that both Parties shall be deemed the drafter of this Agreement for purposes of its construction and interpretation. Therefore, the general rule that ambiguities are to be construed against the drafter is, and shall be, inapplicable. If any language in this Agreement is found or claimed to be ambiguous, each party hereto shall have the same opportunity to present evidence as to the actual intent of the parties hereto with respect to any such ambiguous language without any inference or presumption being drawn against either party hereto.

 

26.     Taxes.

 

(a) Payment of all compensation and benefits to the Executive by the Company shall be subject to all legally required and customary withholdings and deductions.

 

(b) The Company makes no representations regarding the tax implications of the compensation and benefits to be paid to the Executive under this Agreement, including, without limitation, under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and applicable administrative guidance and regulations (collectively, “Section 409A”) and the Executive shall be solely responsible for, and no member of the Company Group, nor any of their affiliates, owners or investors shall be liable for, any additional tax, interest or penalty that may be imposed on the Executive under Section 409A. It is intended that this Agreement shall either comply with, or be exempt from, Section 409A and this Agreement shall be interpreted on a basis consistent with such intent, although no warranty as to compliance or exemption is given here. All payments under this Agreement are intended to be excluded from the requirements of Section 409A or be payable on a fixed date or schedule in accordance with Section 409A(a)(2)(iv). Notwithstanding anything in this Agreement to the contrary, in the event that the Executive is deemed to be a “specified employee” within the meaning of Section 409A(a)(2)(B)(i), no payments hereunder that are “deferred compensation” subject to Section 409A shall, to the extent required to avoid additional taxes under Section 409A, be made to the Executive prior to the date that is six (6) months after the date of the Executive’s “separation from service” (as defined in Section 409A) or, if earlier, the Executive’s date of death. Following any applicable six (6) month delay, all such delayed payments will be paid in a single lump sum on the earliest permissible payment date. For purposes of this Agreement, with respect to payments of any amounts that are considered to be “deferred compensation” subject to Section 409A, references to “termination of employment” (and substantially similar phrases) shall be a “separation from service” within the meaning of Section 409A. For purposes of Section 409A, the Executive’s right to receive any installment payment pursuant to this Agreement will be treated as a right to receive a series of separate and distinct payments. To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Section 409A, (i) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive, (ii) any right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

 

 

(c) Notwithstanding anything in this Agreement to the contrary, if any payment or benefit that Executive would receive under this Agreement, when combined with any other payment or benefit he receives that is contingent upon a change in control (as determined under Section 280G of the Code) (collectively, the “CIC Payments”) would: (i) constitute a “parachute payment” within the meaning of Section 280G of the Code; and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such CIC Payments shall be either: (x) the full amount of such CIC Payments; or (y) such lesser amount (with CIC Payments being reduced in the order and priority established by the Compensation Committee) as would result in no portion of the CIC Payments being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local employment taxes, income taxes, and the Excise Tax results in the Executive’s receipt, on an after-tax basis, of the greater amount of the CIC Payments notwithstanding that all or some portion of the CIC Payments may be subject to the Excise Tax. Any reduction in the Payments pursuant to the preceding sentence shall be effected first by reducing or eliminating Severance Payments, as applicable, and then by reducing or eliminating any equity vesting or acceleration of payment, and then by reducing other compensation and benefits, in a manner intended to avoid a violation of Section 409A of the Code. Executive shall be solely responsible for the payment of all personal tax liability that is incurred as a result of the payments and benefits received under this Agreement, and the Executive will not be reimbursed by the Company Group for any such payments. The Company shall attempt to cause its accountants to make all of the determinations required to be made under this Section 26(c), or, in the event the Company’s accountants will not perform such service, the Company may select another professional services firm to perform the calculations. The Company shall request that the accountants or firm provide detailed supporting calculations both to the Company and the Executive. For purposes of making the calculations required by this Section 26(c) the accountants or firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith determinations concerning the application of the Code. The Company and the Executive shall furnish to the accountants or firm such information and documents as the accountants or firm may reasonably request in order to make a determination hereunder. The Company shall bear all costs the accountants or firm may reasonably incur in connection with any calculations contemplated by this Section 26(c).

 

27.     Reimbursement of Expenses. The Company shall pay or reimburse the Executive for all reasonable and documented business travel, business entertainment, business development, and other out-of-pocket expenses actually incurred by him in furtherance of the performance of his duties during the Term subject to and in accordance with the policies, procedures and limits of the Company as in effect from time to time including, without limitation, the timely submission of reasonable written verification or receipts documenting such expenses.

 

28.     Survival of Obligations. The provisions of this Agreement shall survive the expiration of this Agreement or the earlier termination of the Executive’s employment to the extent necessary to the intended preservation of each party’s respective rights and obligations.

 

29.     Captions and Headings. Captions and section headings used herein are for convenience and reference only and are not a part of this Agreement and shall not be used in the construction or interpretation thereof.

 

 

30.    Counterparts; Electronic Delivery. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. This Agreement, any amendments hereto, to the extent delivered by means of facsimile or electronic mail in “.pdf”, “.tif” or similar format (any such delivery, an “Electronic Delivery”), shall be treated in all manners and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No objection shall be raised as to the authenticity of any signature due solely to the fact that said signature was transmitted via Electronic Delivery.

 

31.    Number of Days. In computing the number of days for purposes of this Agreement, all days shall be counted, including, without limitation, Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday on which federal banks in the United States are or may elect to be closed, then the final day shall be deemed to be the next day which is not Saturday, Sunday or such holiday.

 

32.    Cooperation with Regard to Litigation. The Executive agrees to cooperate with the members of the Company Group, during the Term and thereafter, by being available to testify on behalf of the members of the Company Group in any action, suit or proceeding, whether civil, criminal, administrative or investigative. In addition, except to the extent that the Executive has or intends to assert in good faith an interest or position adverse to or inconsistent with the interest or position of the members of the Company Group, the Executive agrees to cooperate with the members of the Company Group, during the Term and thereafter, to assist the members of the Company Group in any such action, suit or proceeding by providing information and meeting and consulting with the Board or its representatives or counsel, or representatives of or counsel to the members of the Company Group, in each case, as reasonably requested by the Company. The Company agrees to pay (or reimburse, if already paid by the Executive) all reasonable and documented out-of-pocket expenses actually incurred in connection with the Executive’s cooperation and assistance.

 

33.     Cumulative Remedies. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available, whether by contract, at law, in equity or otherwise.

 

34.     Further Assurances. Each party hereto agrees with the other party hereto that it will cooperate with such other party and will execute and deliver, or cause to be executed and delivered, all such other instruments and documents, and will take such other actions, as such other party may reasonably request from time to time to effectuate the provisions and purpose of this Agreement.

 

35.     Third Party Beneficiaries. Each member of the Company Group is an intended third party beneficiary of this Agreement with the right to enforce the Executive’s obligations hereunder as if a party hereto.

 

 

IN WITNESS WHEREOF, this Employment Agreement is entered into as of the Effective Date noted in its first paragraph.

 

 

 

ACCEPTED and AGREED to by:

 

	THE COMPANY:
	By: /s/ James Mitarotonda
	Name: James Mitarotonda
	Title: Chairman of the Board
	Date: 11/4/2024
	THE EXECUTIVE:
	/s/ Ryan Schroeder
	Ryan Schroeder
	Date: 11/4/2024

 

 

-18-

 

 

v3.24.3

Cover	Nov. 04, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 04, 2024
Entity File Number	001-35383
Entity Registrant Name	The Eastern Company
Entity Central Index Key	0000031107
Entity Tax Identification Number	06-0330020
Entity Incorporation, State or Country Code	CT
Entity Address, Address Line One	3 Enterprise Drive
Entity Address, Address Line Two	Suite 408
Entity Address, City or Town	Shelton
Entity Address, State or Province	CT
Entity Address, Postal Zip Code	06484
City Area Code	(203)
Local Phone Number	729-2255
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, No Par Value
Trading Symbol	EML
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Information, Former Legal or Registered Name	Not Applicable

---