Exhibit 10.1

 

MUTUAL SEPARATION AND RELEASE AGREEMENT

 

This Mutual Separation and Release Agreement (the “Agreement”) is entered into
by and between Catherine Powell, her heirs, legal representatives, legatees,
successors and assigns (hereinafter referred to as “Employee”) and MTS Systems
Corporation (hereinafter referred to as “MTS”).

 

WHEREAS, the Employee has provided loyal service to MTS, most recently as its
Chief Legal Officer, and has entered into that certain Employee Agreement dated
as of February 6, 2012, a copy of which is attached as Exhibit A (the “Employee
Agreement”), which provides for certain protections to MTS during and after
employment; and

 

WHEREAS, MTS and the Employee have engaged in discussions regarding the
Employee’s role at MTS and the parties mutually agree that it is in the best
interests of both the Employee and MTS that Employee will separate from MTS; and

 

WHEREAS, in exchange for the release and other obligations of the Employee set
forth in this Agreement, which are in addition to those in the Employee
Agreement, MTS will pay and provide the additional consideration set forth in
the Agreement;

 

THEREFORE, in consideration of the mutual promises contained in this Agreement,
MTS and Employee agree as follows:

 

1.                                      Separation Date  Employee’s employment
with MTS will end May 5, 2017 (the “Separation Date”) and that Employee shall be
on paid leave prior to the Separation Date.  The parties acknowledge that the
separation is neither an involuntary or constructive discharge nor a
resignation.

 

2.                                      MTS Obligations Subject to Paragraph 3
and the other conditions set forth herein, MTS agrees to provide Employee with
the following, which are voluntary and outside of any plan or program of MTS:

 

a.                                      Severance Payment  $325,000.00 (the
“Severance Payment”).  The Severance Payment shall be divided and paid in equal
installments on each payroll pay date during the 12 month period beginning no
later than 60 days after the Employee’s Separation Date. In the event that the
60-day period in this Paragraph 2(a) extends over two calendar years, then the
first installment of the Severance Payment shall be made in the second calendar
year. MTS shall have no obligation to pay the Employee the Severance Payment and
the Employee agrees to repay any portion of such Severance Payment previously
paid in excess of $10,000, if MTS establishes, by a preponderance of the
evidence, that the Employee has violated the provisions of Paragraph 3 below.

 

b.                                      COBRA Coverage and Payment  If the
Employee is eligible and applies for health continuation coverage under Code
Section 4980B or other applicable law (“COBRA Coverage”),MTS will provide life,
accident and health insurance benefits substantially similar to those that the
Employee is receiving or entitled to receive immediately prior to the Separation
Date and MTS shall subsidize the premium cost on a pre-tax basis, equal to MTS’s
share of the premiums. The Employee shall be responsible for the payment of her
portion of the premiums for such benefits at the same relative percentage of
total premiums as the Employee paid prior to the Separation Date. The benefit
provided under this Paragraph 2(b) shall continue for a period ending on the
earlier of: (i) the end of the 12th month after the Separation Date, or (ii) the
date COBRA coverage ends (the “Benefit Continuation Period”).  The MTS cost of
providing such benefits shall be in addition to (and shall not reduce) the
Severance Payment.  Benefits otherwise receivable by the Employee pursuant to
this Paragraph 2(b) shall be reduced to the extent comparable benefits are
actually received by the Employee during the Benefit Continuation Period, and
any such benefits actually received by Employee shall be immediately reported to
MTS.

 

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c.                                       Accrued Benefits.  In addition to the
benefits provided in Paragraph 2(a) and (b), the Employee shall be entitled to
the following benefits and payments upon the Employee’s separation:

 

(i)                                     the payment of the Employee’s base
salary as in effect at the time and any other form or type of compensation
otherwise earned and payable prior to or on the Separation Date under the
applicable plan or program;

 

(ii)                                  the right to receive all benefits accrued,
vested and payable to the Employee in accordance with the terms under MTS
pension and welfare benefit plans or any successor of such plan and any other
plan or agreement relating to retirement benefits as of the Separation Date; and

 

(iii)                               the right to exercise and to receive all
benefits in which the Employee was vested on the Separation Date, in accordance
with the terms of all awards under any Company stock purchase and stock
incentive plans or programs, or any successor to any such plans or programs.

 

3.                                      Employee Obligations In consideration of
the benefits to be provided by MTS as set forth in Paragraph 2(a) and (b) and
subject to the other conditions set forth herein, Employee agrees as follows:

 

a.                                      Waiver and Release of Claims.  Employee,
for herself, her heirs, successors, assigns, and anyone who has or obtains any
legal rights or claims through her, hereby fully waives, releases and discharges
MTS, its past and present subsidiaries, affiliates, directors, officers,
shareholders, agents, employees, successors, attorneys, insurers, indemnitors,
and assigns (the “Releases”) from any and all known and unknown legal and
equitable claims, actions, demands, damages, or liabilities of any nature,
including without limitation, breach of contract, promissory estoppel,
misrepresentation, wrongful or retaliatory discharge, defamation, obstruction of
benefits and discrimination of any kind, under any applicable federal, state or
local law, statute or regulation.  This release specifically includes, but is
not limited to, rights or claims under the Age Discrimination in Employment Act,
Title VII of the Civil Rights Act of 1964, the Employee Retirement Income
Security Act of 1974, the Americans With Disabilities Act, the Family Medical
Leave Act, the National Labor Relations Act, the Minnesota Human Rights Act, the
Michigan Elliott-Larson Civil Rights Act, the North Carolina Equal Employment
Practices Act, the Ohio Civil Rights Act, and all other federal, state and local
laws relating in any way to labor and employment, including, without limitation,
all bias, human or civil rights, discrimination, retaliation, whistleblower,
wage, hour, pay, or labor laws, and including, without limitation, any
equitable, common law, and contract claims, including, but not limited to,
wrongful or constructive termination, retaliation, breach of privacy, breach of
contract, promissory estoppel, negligent infliction of emotional distress,
intentional infliction of emotional distress, negligent or intentional
interference with contract and defamation, severance under any plan or program,
including but not limited to the MTS Executive Severance Plan, arising out of or
in any way connected with her employment or separation from employment with MTS
and existing prior to the date of her signature on this Agreement, except for
claims to the benefits set forth in Section 2 of this Agreement.  Employee
understands that she is not waiving any claims or rights which Employee may have
which arise after Employee signs this Agreement.

 

Employee understands and agrees that this release of her claims is not intended
to, and does not, (a) waive claims that cannot legally be waived, including, but
not limited to, claims for workers’ compensation benefits or unemployment
benefits, or (b) prevent or interfere with her ability/right to (i) provide
truthful testimony if under subpoena or otherwise required by law to do so, or
(ii) file any charge with or participate in any investigation or proceeding
conducted by the Equal Employment Opportunity Commission, Securities and
Exchange Commission, any state or municipal agency enforcing equal employment
opportunity laws, or any other governmental entity (although Employee
understands that this Agreement shall act as a total and complete bar to any
recovery of monetary damages in connection with such a charge other than as
permitted under federal securities laws).

 

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b.                                      Non-disclosure  In addition to her
obligations under the Employee Agreement, Employee agrees not to at any time
following her separation divulge or cause any third party to divulge or
communicate or use for her benefit or the benefit of any person or entity
outside MTS any of MTS’s Confidential Information.  Confidential Information
includes but is not limited to MTS’s trade secrets, records, data,
specifications, developments, secret inventions, research activity, processes,
designs, sketches, drawings, bills of material, supplier lists, manufacturing
processes, methods and equipment; customer, prospective customer and vendor
lists, identities, contacts or information; short term and long range plans, all
financial information, including sales, specific customer account sales, gross
margin information, operating expense and information, competitive strategies
and pricing information, procurement resources, information concerning MTS’s
business or its manner of operation, personnel information, sales and marketing
strategies and information, and any other confidential or technical information
which she had or has obtained during her employment with MTS and which has not
been made public or otherwise disclosed in a non-confidential manner.
Confidential Information also includes any legally privileged information of
MTS, including without limitation attorney work product, attorney-client
communications,  legal strategies, and any information the Employee has acquired
in confidence as an attorney. MTS intends to fully preserve the attorney-client
privilege, work product protection and any other privilege or similar protection
belonging to MTS, and nothing contained in this Agreement shall be construed as
a waiver by MTS of its attorney-client privilege or work product protection or
any other privilege or protection belonging to MTS.  Employee hereby understands
and acknowledges her continuing obligation to maintain such attorney-client
privilege under this Agreement as well as applicable attorney professional
conduct rules. Employee will, within 5 business days after Employee signs this
Agreement, return any and all materials and property in her possession and/or
control (including such materials and property in the possession or control of
any attorney or other agent acting on her behalf) (a) concerning her
representation of MTS to which MTS is entitled under Rule 1.16(e) of the
Minnesota Rules of Professional Conduct; and/or (b) which constitute
Confidential Information of MTS.

 

Notwithstanding anything to the contrary herein or in any MTS compliance policy,
nothing shall require nondisclosure of her wages permitted under Minn. Stat.
§ 181.172 or prohibit communicating or cooperating with any U.S. federal, state
or local enforcement branch, agency or entity with respect to possible
violations of any U.S. federal, state or local law or regulation, or otherwise
making disclosure relating thereto to any such branch, agency or entity,
provided that in each case (i) such communications and disclosures are
consistent with applicable law and made in good faith and (ii) the information
subject to such disclosure was not obtained by her through a communication that
was subject to the attorney-client privilege unless such disclosure of that
information would otherwise be permitted by an attorney pursuant to 17 CFR
205.3(d)(2), applicable attorney professional conduct rules, or otherwise.

 

c.                                       Non-competition. For one year following
her Separation Date, the Employee will not render services, directly or
indirectly, in connection with the design, implementation, development,
manufacture, marketing, sale, merchandising, leasing, servicing or promotion of
any product, process, system or service of any person or entity, in existence or
under development, which is the same as or similar to or competes with, or has a
usage allied to, a product, process, system, or service produced, developed, or
used by the MTS to any person or entity, wherever located.

 

d.                                      Non-solicitation. For one year following
her Separation Date, the Employee will refrain from the solicitation, either
directly or indirectly, of all MTS (a) customers and prospective customers with
whom Employee has had contact during the two years preceding her separation,
(b) vendors and prospective vendors and (c) employees, for any purpose which
would conflict with MTS’s interests.  A prospective customer or vendor is a
person or entity with whom MTS has, as of her Separation Date, a reasonable
opportunity of entering into a business relationship within the six-month period
following her Separation Date.

 

e.                                       Post-employment cooperation.  Employee
agrees that at the request of MTS, Employee will cooperate in connection with
any and all matters (including actual or potential claims that have

 

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been asserted or threatened against MTS) that relate to alleged facts that arose
during her employment at MTS. As part of her commitment to cooperate with MTS,
Employee will promptly respond to all questions and cooperate with all inquiries
from MTS and its agents and attorneys regarding such matters, as deemed
necessary by MTS in its discretion. Her obligations may include, but are not
limited to, answering questions, preparing truthful testimony, and providing
truthful testimony in pending or future litigated matters.

 

f.                                        Non-disparagement  Employee agrees
that, except in the context of an EEOC or other government agency investigation
or proceeding but subject to the conditions as set forth in Paragraph
3(b) above, or unless she is called by subpoena to testify under oath, she will
not make any derogatory, libeling, scandalous, disparaging, or defamatory
comments in any respect regarding MTS or its predecessors, successors, assigns,
parents, affiliates, subsidiaries, divisions and related companies, and their
officers, directors, shareholders, agents, employees, and insurers, and she will
not make any derogatory, libeling, scandalous, disparaging, or defamatory
comments or recharacterization concerning the events which precipitated her
separation from MTS or of this Agreement.  MTS, through its representatives in
its senior management and members of its Board of Directors, will not make any
derogatory, libeling, scandalous, disparaging or defamatory comments in any
respect regarding Employee, the events which precipitated her separation from
MTS or of this Agreement, except in the context of a government agency
investigation or proceeding or under subpoena to testify under oath.  The
parties acknowledge that this Agreement will be disclosed in appropriate filings
required by MTS.  Except as required by applicable securities laws, the Employee
may be permitted to review and comment on any initial internal and external
communication regarding her separation and this Agreement.

 

4.                                      No Mitigation  Employee will not be
required to mitigate the Severance Payment by seeking other employment or
otherwise, nor shall the amount of the Severance Payment be reduced by any
compensation earned by the Participant as the result of employment by another
employer or by any of the benefits provided in Paragraph 2(c) after the
Separation Date or otherwise except as provided in Paragraph 2(a).

 

5.                                      No Admission of Wrongdoing   Employee
acknowledges that MTS denies it is responsible or legally obligated to Employee
for any claims Employee believes she may have. This Agreement is not and shall
not be construed or represented to be an admission of liability or wrongdoing of
any kind on the part of MTS.  This Agreement and the payment required under it
fully resolve any and all differences MTS and Employee may have regarding her
employment and separation from employment with MTS.

 

6.                                      Construction  This Agreement supersedes
all prior written and oral agreements, policies and understandings between MTS
and Employee, except for the applicable provisions of the Employment Agreement
that survive separation of employment, and Employee hereby affirms her
obligations under the Employee Agreement, which continue to be fully effective
and enforceable according to its terms.

 

7.                                      Governing Law  The terms of this
Agreement will be governed by the laws of the State of Minnesota, and shall be
construed and enforced thereunder.  Any dispute relating to or arising out of
this Agreement shall be decided by a court of appropriate jurisdiction in
Minnesota, which shall have exclusive jurisdiction over any such dispute. In
addition to any other remedies available at law, MTS will be entitled to obtain
injunctive or other equitable relief to restrain any breach or threatened breach
or otherwise to specifically enforce the provisions of Section 3.

 

8.                                      Notice  Employee acknowledges that
Employee has been informed pursuant to the Older Workers Benefit Protection Act
that Employee: (a) has the right to consult with an attorney before signing this
Agreement; (b) has forty-five (45) calendar days to consider whether to sign
this Agreement; (c) has fifteen (15) calendar days after the date Employee signs
this Agreement to revoke it and that this Agreement will not be effective until
that revocation period has expired; (d) this Agreement does not waive rights or
claims under the Age Discrimination in Employment Act that may arise after the
date this Agreement is executed; (e) this Agreement does not waive any rights or
claims that Employee may have that this Agreement failed to conform to the legal
requirements under the Age Discrimination in Employment Act;

 

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and (f) Employee has been advised to consult with an attorney, that Employee has
had an opportunity to consult with an attorney of her choice, and that Employee
has fully and carefully read and understand all provisions of this Agreement.

 

9.                                      Opportunity for Review  Her signature
below acknowledges that Employee has read this Agreement carefully and
understands all its terms; that Employee has had a full opportunity to consult
with an attorney before signing it; and that Employee is signing it knowingly
and voluntarily. In signing this Agreement, Employee has not relied upon any
representation by any MTS employee, agent or attorney.

 

10.                               Right to Rescind  Employee understands that
Employee may change her mind and rescind this Agreement within fifteen (15)
calendar days after signing it, by delivering a written notice to the MTS
Systems Corporation, Attn: Bob Ries, MTS HR/Benefits, 14000 Technology Drive,
Eden Prairie, MN, 55344, by hand or certified mail within the 15-day period.  If
Employee delivers the rescission by mail, it must be postmarked within 15
calendar days after the date on which Employee signs this Agreement and sent by
certified mail, return receipt requested. Employee also understands that this
Agreement will become effective and enforceable only after the rescission period
has expired.  If Employee fails to return this Agreement within 45 days of
receipt or signs but later rescinds this Agreement, MTS will not be obligated to
pay any benefits under this Agreement or otherwise following the termination of
her employment.

 

 

/s/ Catherine L. Powell

 

April 18, 2017

Employee Signature

 

Date

 

 

Accepted and approved by:

 

 

/s/ Jeffrey A. Graves

 

April 18, 2017

MTS Authorized Signature

 

Date

 

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