April 25, 2007

 

 

Mr. James M. Papada, III

421 N. Sydbury Lane

Wynnewood, PA 19096

 

Dear Jim:

This letter will serve as an agreement between you and Technitrol, Inc. ("TNL")
regarding, among other things, what constitutes a termination of your employment
at TNL and setting forth the rights and obligations of each of us upon the
occurrence of such a termination. We intend that this letter constitutes a legal
and binding agreement between us and we acknowledge good and valuable
consideration for our joint promises in this letter. This agreement supersedes
the letter between you and TNL dated July 1, 2004.

Reaffirmation of Past Agreements

We are parties to the letter agreements dated April 16, 1999, October 18, 2000,
April 23, 2001 and this letter (collectively the "Letter Agreement"), as well as
the Technitrol, Inc. Supplemental Retirement Plan dated January 1, 1994, which
was amended on July l, 1999 and April 20, 2001 and which was amended and
restated in its entirety on January 1, 2002 (the "SERP") (the Letter Agreement
and the SERP are collectively the "Related Agreements"). All terms, conditions
and provisions of the Related Agreements shall continue to apply and be in full
force and effect as though set forth in full in their entirety. This letter
supercedes and replaces those dated July 1, 2004, December 16, 2005 and July 25,
2006, which are of no further effect.

Termination of Employment

Your employment with TNL shall terminate on December 31, 2010, or upon the
earlier occurrence of any of the following events to be effective from and after
the date of such event:

your death;

you become totally disabled;

TNL terminates your employment for "cause" (as defined below);

TNL terminates your employment for any reason other than "cause" (as defined
below);

you terminate your employment for "good reason" (as defined below); or

you terminate your employment for any reason other than "good reason", including
your voluntary retirement.

Definitions

"Cash Bonus in the maximum amount then allowed by the Executive Incentive Plan"
as used in Section 8 of the Letter Agreement means 100% of your salary during
the applicable cash bonus period.

"Cause" means any of the following:

i (a) the occurrence of gross negligence or willful misconduct which is
materially injurious to TNL and which, if susceptible of cure, is not cured
within thirty (30) days after notice to you which cites with reasonable
particularity the actions or omissions believed to constitute such gross
negligence or willful misconduct; (b) conviction of or the entry of a pleading
of guilty or nolo contendere to any felony, unless the Board of Directors of TNL
concludes in good faith that such event does not render you unable to
effectively manage TNL or materially and adversely affect TNL's reputation or
ongoing business activities; or (c) misappropriation of TNL's funds or other
dishonesty which in the good faith opinion of the Board of Directors of TNL,
renders you unable to effectively manage TNL or materially and adversely affects
TNL's reputation or ongoing business activities; or

i your continued and willful refusal to carry out in all material respects a
lawful written directive of the Board of Directors of TNL; provided that prior
to termination for cause on this ground the Board will give you written notice
of the acts or omissions alleged to constitute cause, stating them with
reasonable particularity, and will give you twenty (20) days to cure such acts
or omissions such that grounds for termination for cause no longer exist at the
end of such twenty (20) day period.

"Change in Control" shall have the same meaning as is contained in Section
409(A).

 

"Disability" or "complete disability" or "total disability" shall mean that you
are unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period not less than
12 months.

"Good Reason" means:

i a material change in your authority, duties or responsibilities so as to be
inconsistent with the role of the Chief Executive Officer of TNL as they exist
on the date of this letter (unless you otherwise voluntarily agree to such
change); or

i TNL's continued failure to perform its material obligations under the Letter
Agreement which have not been cured within twenty (20) days after written notice
from you setting forth the acts or omissions alleged to constitute such a
failure with reasonable particularity.

F. "Sec. 409A" means Section 409A of the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.

 

 

 

 

Effect of Termination

Death or Retirement

:
Upon termination of the Letter Agreement due to your death, or your voluntary
retirement after the age of 62, then (in addition to the benefits referred to in
Sections 6(b) and (c) of the Letter Agreement relating to vesting of the PBRS
upon death), TNL will pay you or your estate a sum equal to:

The unpaid portion of your base salary through the end of the month in which
termination occurs;

any bonus (commensurate with those paid to other executives) for the six month
bonus period in which termination occurs pro rated to the date of termination;
and

any other ordinary course benefits to which you were entitled as an employee of
TNL and/or pursuant to the Letter Agreement which were then due but unpaid at
the date of your death, such as reimbursement for expenses not yet paid and
incurred in accordance with TNL's policy.

all of the benefits referred to in this Section 4(i) (including those contained
in Sections 6(b) and (c) of the Letter Agreement) will be paid not later than
thirty (30) days after the date of your death or retirement.

Total Disability

:
Upon termination of the Letter Agreement due to your complete disability, then
(in addition to providing to you the benefits referred to in Sections 6(b) and
(c) of the Letter Agreement relating to vesting of the PBRS upon disability)TNL
will pay you a sum equal to:

The unpaid portion of your base salary through the end of the month in which
termination is determined to have occurred;

any bonus (commensurate with those paid to other executives) for the six month
bonus period in which termination is determined to have occurred, pro rated to
the date of termination;

any other ordinary course benefits to which you were entitled as an employee of
TNL and/or pursuant to the Letter Agreement which were then due but unpaid at
the date of your disability, such as reimbursement for expenses not yet paid and
incurred in accordance with TNL's policy; and

the benefits payable under TNL's long-term disability plan.

the benefits set forth in subsections a. thru c. above and the benefits referred
to in Sections 6(b) and (c) of the Letter Agreement will be paid not later than
thirty (30) days after the date on which your complete disability is deemed to
commence.

By TNL for Cause or by You Without Good Reason

:
Upon termination of the Letter Agreement by TNL for Cause or by you without Good
Reason, TNL will pay you, within thirty (30) days after the date of your
termination, a sum equal to:

The unpaid portion of your base salary through the effective date of
termination; and

any other ordinary course benefits to which you were entitled as an employee of
TNL and/or pursuant to the Letter Agreement which were then due but unpaid at
the date of termination, such as reimbursement for expenses not yet paid and
incurred in accordance with TNL's policy.

By TNL Without Cause or by You for Good Reason

:
Upon termination of the Letter Agreement by TNL without Cause or by you for Good
Reason, you will receive all of the benefits set forth in Section 8 of the
Letter Agreement as though a Change in Control had occurred, with respect to any
shares of restricted stock which (1) are held by you on the date of such
termination and which have not yet vested or which are subject to additional
holding period(s) or (2) could have been earned by you under TNL's CEO Equity
Compensation Plan (as adopted by the Compensation Committee of TNL on April 27,
2005, a copy of which is appended to this Letter Agreement, and as thereafter
amended from time to time) for the year in which you are terminated without
Cause or you terminate your employment for Good Reason and for the relevant
three year period in which such termination takes place.
*
. In addition, TNL will pay you a sum equal to (in the case of the payments due
under Section 8 of the Letter Agreement or subsections (a), (c) and (d) below,
such payment shall be made in a lump sum within thirty (30) days from the date
of your termination or, if necessary, in the opinion of counsel, to ensure that
this Letter Agreement is in compliance with Sec. 409A, on the date that is six
months after your termination of employment):

The unpaid portion of your base salary through the date of termination;

any bonus (commensurate with those paid to other executives) for the twelve
month bonus period in which termination occurred, pro rated to the date of
termination (without duplication with payments made pursuant to subsection d.
below) and paid within 2-1/2 months after the end of the year in which your
termination occurs or, if necessary, in the opinion of counsel, to ensure that
this Letter Agreement is in compliance with Sec. 409A, on the date that is six
months after your termination of employment;

any other ordinary course benefits to which you were entitled as an employee of
TNL and/or pursuant to the Letter Agreement which were then due but unpaid at
the date of termination, such as reimbursement for expenses not yet paid and
incurred in accordance with TNL's policy; and

the amount set forth in subsections 8(a) and (b) of the Letter Agreement, except
that (1) such amount shall not be payable if termination occurs at any time
after a Change in Control, and (2) if such termination occurs at any time after
August 21, 2008, you will be entitled to one year's base salary (instead of two)
and six months of bonus (commensurate with those paid to other executives)
(instead of one year); and

health and life insurance benefits on your behalf as you were receiving them on
the date of termination along with your health club membership, in each case for
the applicable time period corresponding to the salary severance period (that
is, one year or two years) provided in subsection d(2) above. TNL will continue
to pay these expenses on your behalf when due for the period indicated in the
preceding sentence. However, if it is necessary, in the opinion of counsel, to
ensure that this Letter Agreement is in compliance with Sec. 409A, you may pay
any or all of these expenses when due until the date that is six months after
the date of your termination of employment and TNL will reimburse you for such
expenses that you have paid on the date which is six months after your
termination date.

General

.

Any indemnification obligations of TNL to which you are entitled as a director,
officer and employee of TNL, whether by contract or pursuant to TNL's charter or
by-laws, relating to the period prior to termination, shall survive such
termination but no payment relating to such obligations shall be paid to you
after termination of your employment until the date which is six months after
the date of your termination and shall thereafter be paid to you as and when due
in accordance with applicable law and the constituent documents of TNL..

The obligations of TNL in this Section 4 (together with TNL's obligations to you
under the SERP, TNL's Restricted Stock Plan (or any substitute therefor) and the
"Technitrol, Inc. Retirement Plan") shall be in lieu of any other damages,
compensation or benefits to which you might be entitled, directly or indirectly,
in connection with the Related Agreements.

The payments due to you under this Section 4 are expressly conditioned upon the
execution and delivery by you and/or your personal representatives of a valid
general release, not revoked, rescinded or withdrawn, in form and content
reasonably acceptable to you and TNL, pursuant to which you shall release TNL
from all claims relating to your employment or otherwise, except TNL's
continuing obligations under subsection 4(v) a. above.

Change in Control

.

In the event of a Change in Control the shares of restricted stock to which the
provisions of Section 8 of the Letter Agreement shall apply shall be determined
as set forth in subsection 4 (iv) above.

Participation in Restricted Stock Plan

From and after December 31, 2004, you will participate in TNL's Restricted Stock
Plan (or any substitute therefor) in accordance with its terms. Your awards will
be determined by the Board of Directors in the same fashion as awards are
determined for other participants.

Capacity and Duties

.

You shall devote your full working time, energy, skill and best efforts to the
performance of your duties set forth in the Letter Agreement, in a manner which
will faithfully and diligently further the business and interests of TNL and its
subsidiaries, and shall not be employed by, or participate or engage in, or be a
part of in any manner, the management or operation of any other business
enterprise without the prior written consent of the Board, which consent may be
granted or withheld in its sole discretion.

Confidentiality

.

You acknowledge a duty of confidentiality owed to TNL and shall not, at any time
during or after your employment by TNL, retain in writing, use, divulge,
furnish, or make accessible to anyone, without the express authorization of the
Board, any trade secret, private or confidential information or knowledge of TNL
or any of its subsidiaries obtained or acquired while so employed. All computer
software, customer lists, price lists, contract forms, catalogs, books, records,
and files and know-how acquired while an employee of TNL, are acknowledged to be
the property of TNL and shall not be duplicated, removed from TNL's possession,
or made use of other than in pursuit of TNL's business; and, upon termination of
employment for any reason, you shall promptly deliver to TNL, without further
demand, all copies thereof which are then in your possession or control.

9. Inventions and Improvements.

During the term of your employment, you shall promptly communicate to TNL all
ideas, discoveries and inventions which are or may be useful to TNL or its
business. You acknowledge that all ideas, discoveries, inventions, and
improvements which are made, conceived, or reduced to practice by you and every
item of knowledge relating to TNL's business interests (including potential
business interests) gained by you during your employment are the property of
TNL, and you irrevocably assign all such ideas, discoveries, inventions,
improvements, and knowledge to TNL for its sole use and benefit, without
additional compensation. The provisions of this Section shall apply whether such
ideas, discoveries, inventions, improvements or knowledge are conceived, made or
gained by you alone or with others, whether during or after usual working hours,
whether on or off the job, whether applicable to matters directly or indirectly
related to TNL's business interests (including potential business interests),
and whether or not within the specific realm of your duties. It shall be
conclusively presumed that ideas, inventions, and improvements relating to TNL's
business interests or potential business interests conceived during the six
month period following termination of employment are, for the purposes of this
Agreement, conceived prior to termination of employment. You shall, upon request
of TNL, at any time during or after your employment with TNL, sign all
instruments and documents requested by TNL and otherwise cooperate with TNL to
protect its right to such ideas, discoveries, inventions, improvements, and
knowledge, including applying for, obtaining, and enforcing patents and
copyrights thereon in any and all countries.

10. Noncompetition.

During the term of your employment and for two (2) years after any termination
of employment, you shall not directly or indirectly:

engage, directly or indirectly, anywhere in the world, in the manufacture,
assembly, design, distribution or marketing of any product or equipment
substantially similar to or in competition with any product or equipment which
at any time during the term of such employment or the immediately preceding
twelve month period has been manufactured, sold or distributed by TNL or any
subsidiary or any product or equipment which TNL or any subsidiary was
developing during such period for future manufacture, sale or distribution;

be or become a stockholder, partner, owner, officer, director or employee or
agent of, or a consultant to or give financial or other assistance to, any
person or entity considering engaging in any such activities or so engaged;

seek in competition with the business of TNL to procure orders from or do
business with any customer of TNL;

solicit, or contact with a view to the engagement or employment by, any person
or entity of any person who is an employee of TNL;

seek to contract with or engage (in such a way as to adversely affect or
interfere with the business of TNL) any person or entity who has been contracted
with or engaged to manufacture, assemble, supply or deliver products, goods,
materials or services to TNL; or

engage in or participate in any effort or act to induce any of the customers,
associates, consultants, or employees of TNL or any of its affiliates to take
any action which might be disadvantageous to TNL or any of its affiliates;
except that nothing in this Agreement shall prohibit you from owning, as a
passive investor, in the aggregate not more than 5% of the outstanding publicly
traded stock of any corporation so engaged. The duration of your covenants set
forth in this Section shall be extended by a period of time equal to the number
of days, if any, during which you are in violation of the provisions contained
in this Agreement.

11. Certain Change in Control Payment Timing Issues

.

If a Change in Control occurs and you are entitled to payment pursuant to
Section 8 of the Letter Agreement for that reason, then (a) if the Change in
Control event is one which is described in Sec. 409A, all benefits due you shall
be paid to you immediately upon the Change in Control and (b) if the Change in
Control event is not one which is described in Sec. 409A, the benefits due to
you shall be paid on the date which is six months after the termination of your
employment.

12. Injunctive and Other Relief

.

A. You acknowledge that the covenants contained in this Agreement are fair and
reasonable in light of the consideration paid under this Agreement, and that
damages alone shall not be an adequate remedy for any breach by you of such
covenants, and accordingly expressly agree that, in addition to any other
remedies which TNL may have, TNL shall be entitled to injunctive relief in any
court of competent jurisdiction for any breach or threatened breach of any such
covenants by you. Nothing contained in this Agreement shall prevent or delay TNL
from seeking, in any court of competent jurisdiction, specific performance or
other equitable remedies in the event of any breach or intended breach by you of
any of your obligations under this Agreement.

Notwithstanding the equitable relief available to TNL, you, in the event of a
breach of your covenants contained in Sections 7, 8 and 9 of this Agreement,
understand that the uncertainties and delays inherent in the legal process would
result in a continuing breach for some period of time, and therefore, continuing
injury to TNL until and unless TNL can obtain such equitable relief. Therefore,
in addition to such equitable relief, TNL shall be entitled to monetary damages
for any such period of breach until the termination of such breach, in an amount
deemed reasonable to cover all actual and consequential losses, plus all monies
received by you as a result of said breach and all costs and attorneys' fees
incurred by TNL in enforcing this Agreement. If you should use or reveal to any
other person or entity any confidential information, this will be considered a
continuing violation on a daily basis for so long a period of time as such
confidential information is made use of by you or any such other person or
entity.

 

13. Miscellaneous Provisions

A. Neither you nor TNL will assign the Letter Agreement without the prior
written consent of the other. The Letter Agreement will bind any successors to
TNL by merger or stock purchase.

B. Notices shall be as set forth in the Related Agreements.

The Related Agreements are the entire agreement between us regarding the subject
matter to which it relates and supersede all prior agreements and
understandings, oral or written. They cannot be amended, changed or modified
except in a writing signed by both parties.

The Letter Agreement will be governed and construed in accordance with
Pennsylvania law.

The invalidity or unenforceability of any particular provision or part of any
provision of the Letter Agreement shall not affect the other provisions or parts
of the Letter Agreement. If any provision of the Letter Agreement is determined
to be invalid or unenforceable by a court of competent jurisdiction, such
provision shall be interpreted to provide protection as nearly equivalent to
that found to be invalid or unenforceable and if any such provision shall be so
determined to be invalid or unenforceable by reason of the duration or
geographical scope of the covenants contained in this Agreement, such duration
or geographical scope, or both, shall be considered to be reduced to a duration
or geographical scope to the extent necessary to cure such invalidity.

 

If the foregoing meets with your approval, please sign where indicated below and
return a signed copy to me.

 

Sincerely,

TECHNITROL, INC.

 

/s/ Drew A. Moyer

Sr. Vice President and CFO

 

 

ACCEPTED AND AGREED

 

/s/ James M. Papada, III

James M. Papada, III