Exhibit 10.19


 


EMPLOYMENT
AGREEMENT

WITH

MICHAEL J. HARTNETT


 


This
Employment Agreement (the “Employment Agreement”) is dated as of this first day
of July, 2005 (the “Commencement Date”), and made between RBC Bearings
Incorporated, a Delaware corporation (“Employer” or the “Company”), and Michael
J. Hartnett Ph.D. (“Employee”). Prior to and through the time of their entry
into this Agreement, Employee has served as Employer’s President and Chief
Executive Officer (“Prior Employment”). both parties wish to continue this
employment relationship under the terms reflected in this Agreement.


 


Therefore, Employer hereby employs Employee and Employee hereby accepts
employment, on the terms and conditions hereinafter set forth.


 


1.                                       DEFINITIONS.


 


As used in
this Agreement, and unless the context requires a different meaning, the
following terms shall be defined as follows:


 


“Competing
Business” means any business (including, without limitation, research and
development) that is carried on by Employer in any material respect, and with
which Employee is actively involved, during the Term.


 


“Person” means
any natural person, partnership, corporation, trust, company or other entity.


 


“Territory”
means the geographical area in which the Employer engages in any business (other
than an insignificant amount of business), with which Employee is actively
involved, during the Term.


 


2.                                       TERM.


 


Subject to the
terms and conditions of this Agreement, the Company shall employ Employee as
its President and Chief Executive Officer, for a term commencing on the
Commencement Date hereof and continuing until July 1, 2010 or until
earlier terminated pursuant to the provisions of Section 8 hereof. (the “Term”).


 


3.                                       DUTIES.


 


(a)                                  During the Term, Employee agrees
to serve Employer as its President, Chief Executive Officer and Chairman of its
Board of Directors (the “Board”) reporting to the Board, and in such other
executive capacities as may be agreed from time to time by the Board (or a duly
authorized committee thereof) and Employee; provided that (i) Employee’s
duties shall at all times be limited to those commensurate with the foregoing
offices, and (ii) Employee shall not be obligated, without his consent, to
relocate his principal office location from Oxford, Connecticut (or the
surrounding reasonable commuting area), although the foregoing limitation is
not intended to limit Employee’s requirement, in the normal course


 


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of business, to travel to the Employer’s
other business locations. Employee shall serve, if elected, as a director of,
and if agreed by Employee and the board of directors of the organization in
question, shall serve as an officer and render appropriate services to,
corporations directly or indirectly controlled by Employer or by Roller Bearing
Holding Company, Inc. (“Employer’s Affiliates”) as Employer may from time
to time reasonably request (but only such services as shall be consistent with
the duties Employee is to perform for Employer and with Employee’s stature and
experience). All duties and services contemplated by this Section 3 are
hereinafter referred to as the “Services.”


 


(b)                                 During the Term, Employee will
devote his full business time and attention to, and use his good faith efforts
to advance, the business and welfare of Employer; provided that the foregoing
shall not restrict Employee’s rights to engage in passive investment
activities, to serve on the boards of directors of other entities (so long as
such activities are not violative of Section 4 below), or to engage in
civic, charitable and other similar activities.


 


4.                                       CONFIDENTIAL
INFORMATION AND COVENANT NOT TO COMPETE.


 


(a)                                  Employee hereby agrees that,
during the Term and thereafter, he will not disclose to any Person, or
otherwise use or exploit in competition with Employer or Employer’s Affiliates,
any of the proprietary or confidential information or knowledge treated by the
Employer or Employer’s Affiliates as confidential, including without
limitation, trade secrets, processes, records of research, information included
in proposals, reports, methods, processes, techniques, computer software or
programming, or budgets or other financial information, regarding Employer or
Employer’s Affiliates, its or their business, properties or affairs obtained by
him at any time (i) during the Term or (ii) during any employment of
Employee with the Employer or any of Employer’s Affiliates prior to the
Commencement Date (“Prior Employment”), except to the extent required to
perform the Services; PROVIDED that the foregoing shall not apply to: (A) information
in the public domain other than by reason of a violation of this Agreement by
Employee, or (B) information that Employee is compelled to disclose by
operation of law or legal process (so long as Employee provides Employer with
prior notice of any such compelled disclosure and an opportunity to defend
against such disclosure), or (C) information generally known to Employee
by reason of his particular expertise that is not specific to the Employer.


 


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(b)                                 Employee hereby agrees that
during the Term and for a period of two years thereafter (the “Non-Compete Term”),
he will not (i) engage in or carry on, directly or indirectly, any
Competing Business in any Territory in which such Competing Business is then
engaged in by the Employer, (ii) allow his name to be used by any Person
engaged in any Competing Business, (iii) invest in, directly or
indirectly, any Person engaged in any Competing Business, or (iv) serve as
an officer or director, employee, agent, associate or consultant of any Person
engaged in a Competing Business (other than Employer or any Employer’s
Affiliate). Notwithstanding the foregoing, the Non-Compete Term shall be only
the Term hereof in the event Employee’s employment hereunder is terminated by
the Employer hereunder without cause (as provided in Section 8(c) below)
or by the Employee with good reason (as provided in Section 8(d) below).
Subject to Section 3 (b) hereof, nothing herein shall prohibit the
Employee from (A) investing in any business that is not a Competing
Business or (B) investing in a publicly-held entity if such investment
(individually or as part of a group) is limited to not more than five percent
(5%) of the outstanding equity issue of such entity.


 


(c)                                  All intellectual properties
developed by Employee during the Term or during any Prior Employment and that
is related to the business (or foreseeable business prospects) of the Employer
with which Employee is actively involved shall be for the account of the
Employer. Employee agrees to enter into such agreements (including transfer
documents) as may be reasonably required by Employer to confirm the foregoing.


 


(d)                                 Employee shall not, during the
Non-Compete Term, directly or indirectly, solicit or induce or attempt to
solicit or induce any affiliate, director, agent, or employee of Employer or
contractor then under contract to the Employer, to terminate his, her or its
employment or other relationship with Employer for the purpose of entering into
a similar relationship with any Employer’s competitors or for any other purpose
or no purpose. Employee shall not, during the Non-Compete Term, directly or
indirectly, solicit or induce or attempt to solicit or induce any customer or
supplier of Employer to terminate his, her or its relationship with Employer
for the purpose of entering into a similar relationship with any competitors of
Employer or Employer’s Affiliates or for any other purpose or no purpose.


 


(e)                                  Employee agrees that the remedy
at law for any breach by him of any of any of the covenants and agreements set
forth in this Section 4 will be inadequate and will cause immediate and
irreparable injury to Employer and that in the event of any such


 


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breach, Employer, in addition to the other
remedies which may be available to it at law, shall be entitled to seek
injunctive relief prohibiting him from the breach of such covenants and
agreements.


 


(f)            The parties hereto intend that
the covenants and agreements contained in this Section 4 shall be deemed
to include a series of separate covenants and agreements, one for each and
every county of the states in which the Employer does business. If, in any
judicial proceeding, the duration or scope of any covenant or agreement of
Employee contained in this Section 4 shall be adjudicated to be invalid or
unenforceable, the parties agree that this Agreement shall be deemed amended to
reduce such duration or scope to the extent necessary to permit enforcement of
such covenant or agreement.


 


5.                                       INDEMNIFICATION.


 


Employer
hereby agrees to indemnify Employee to the maximum extent permitted by Delaware
law at the time of the assertion, against any liability against Employee
arising out of or relating to his status as an employee, officer or director
acting within the course and scope of employment, office or director
responsibility of Employer or any Employer’s Affiliate at any time during the
Term, whether such liability is asserted during or after the Term.


 


6.                                       COMPENSATION
AND BENEFITS.


 


(a)                                  During the Term, Employer shall
pay Employee a salary at the rate of forty six thousand, four hundred and eight
dollars ($46408) per month payable at least as frequently as monthly and
subject to payroll deductions as may be necessary or customary in respect of
Employer’s salaried employees (“Base Salary”). The Base Salary will be subject
to an automatic annual increase effective December 1 of each year during
the Term in a percentage amount equal to the greater of (i) five percent
(5%) or (ii) the annual percentage increase in the All-Items Consumer
Price Index for All Urban Consumers for such year as determined for the month
of August. The employee will also receive a special compensation amount(SCA) of
$45000 U.S. dollars per year for fiscal years 2007,2008,2009,2010 payable in
full on or before 15 April of the fiscal years 2007,2008,2009,2010.


 


(b)                                 During the term, Employee shall
also be entitled to receive the benefits set forth in Schedule A hereto
(the “Additional Benefits”) as well as any normal executive benefits of
Employer not enumerated in that Schedule.


 


(c)                                  During the Term, Employee shall
also receive the equity consideration pursuant to the agreement between Whitney
and


 


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Hartnett dated 17 June 2005. Such equity
shall be issued within 30 days of an initial public offering of the companies
stock.


 


(d)                                 During the Term, Employee shall
also be entitled to receive annual-performance bonuses in amounts and at times
as follows:


 


(e)                                  Employee shall be entitled to an
annual performance bonus with respect to each fiscal year of the Employer
during which Employee remains an employee of the Company beginning with the
fiscal year ending March, 2006, in an amount determined as a percentage of
Employee’s Base Salary, based on the following criteria:


 


	
  Percentage of Actual EBITDA to

  Plan

  	
   

  	
  Amount of Bonus

  	
   

  
	
  Less than 90%

  	
   

  	
  Discretion
  of Board of Directors

  	
   

  
	
  90% to 99.9%

  	
   

  	
  100% of Base
  Salary

  	
   

  
	
  100% to 109.9%

  	
   

  	
  150% of Base
  Salary

  	
   

  
	
  110% or higher

  	
   

  	
  200% of Base
  Salary

  	
   

  



 


The amount
payable under this formula, if any, shall be paid to Employee within fifteen
(15) days following the delivery of the Company’s financial statements for each
fiscal year of the Employer during the Term, but in no event later than one
hundred twenty (120) days following the end of such fiscal year.


 


“Plan” shall
mean the operating plan established by the Employee, in his status as CEO of
Employer and as approved by the Board within thirty (30) days following the
beginning of each fiscal year, as applicable to Employer and as applicable to
the determination of bonuses payable to others of Employer’s employees to the
extent such bonuses are calculated by reference to operating results.


 


“EBITDA” shall
mean the income of the Employer increased by interest, taxes, depreciation and
amortization, calculated in a manner consistent with the calculation of the
Plan.


 


7.                                       EXPENSES.


 


Employer will
payor reimburse Employee for such reasonable travel, entertainment, educational
and other expenses as he may incur on behalf of Employer during the Term in
connection with the performance of his duties hereunder. Employee shall furnish
Employer with such evidence that such expenses were incurred as Employer may
from time to time reasonably require or request.


 


8.                                       TERMINATION
OF EMPLOYMENT.


 


Notwithstanding
Section 1 hereof, the Term may be terminated prior to July 1, 2010
under the following circumstances:


 


(a)                                  DEATH OR TOTAL DISABILITY. The
Term shall automatically and immediately terminate upon Employee’s death or “Total


 


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Disability.” For purposes of this Agreement, “Total
Disability” shall mean Employee’s physical or mental incapacitation or
disability that renders Employee unable to perform the Services as performed
prior to such incapacitation or disability for the period of twenty-six (26)
consecutive weeks or during anyone hundred fifty (150) business days (whether
or not consecutive) during any twelve (12) month period during the Term.


 


(b)                                 TERMINATION BY EMPLOYER FOR
CAUSE. Employer, at its election, shall have the right to terminate the Term,
by written notice to Employee to that effect, for “Cause”. The term “Cause”
shall mean:


 


(i)            turpitude;


 


(ii)           any act of fraud, embezzlement, theft or conviction of a
crime involving moral


 


(iii)          any material breach by Employee of any material covenant,
condition, or agreement in this Agreement (“Employee’s Material Breach”); or


 


(iv)          any chemical dependency by Employee (other than in
connection with medicines prescribed for Employee).


 


To terminate
the Term pursuant to this Section 8(b), Employer shall give written notice
(“Cause Notice”) to the Employee specifying the claimed Cause. If Employee
fails to cure the same within thirty (30) days after the receipt of the
applicable Cause Notice (or such longer period as may be reasonably required if
such actions are subject to cure), the Term shall terminate at the end of such
thirty (30) day period or such longer reasonable period, as the case may be.
Notwithstanding anything that may be interpreted t9 the contrary, it is
expressly agreed that no act of the type contemplated by or described in Section 8(b) (i) shall
be capable of being cured by Employee and the Employer may terminate Employee
immediately without the requirement for such cure period.


 


(c)                                  TERMINATION BY EMPLOYER WITHOUT
CAUSE. Employer shall have the right, at its election, to terminate the Term at
any time for any reason other than “Cause” upon not less than sixty (60) days
prior written notice to Employee.


 


(d)                                 TERMINATION BY EMPLOYEE.
Employee shall have the right, at his election, to terminate the Term at any
time by written notice to Employer upon not less than one hundred and twenty
(120) days prior written notice; provided, however, that (i) such notice
period shall be thirty (30) days in the case of a termination for “Good Reason”;
and (ii) if such termination is other than for Good Reason the Non-Compete
Term, for purposes of Section 4(b) and (d), shall continue through July 1,
2010. GOOD REASON. For purposes of this Agreement, Good Reason shall mean any
of the following


 


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which occurs subsequent to the date of this
Agreement’s commencement:


 


(i)            a substantial reduction in the
Employee’s title, position, duties, responsibilities and status with the
Company inconsistent with the Employee’s title, duties, responsibilities and
status immediately prior to a change in the Employee’s titles or offices, or
any removal of the Employee from or any failure to reelect the Employee to any
of such positions, except in connection with the termination of his employment
for disability, retirement or Cause or by the Employee other than for Good
Reason; PROVIDED that such reduction or removal occurs at a time when (A) Employee
does not have a majority of the voting power of the Company or (B) Employee
has a majority of the voting power of the Company, but, notwithstanding
Employee’s objections, the Beard of Directors of the Company has approved the
taking of such actions;


 


(ii)           a relocation of Employee’s principal work location without
his consent to. a location mere than 25 miles from the Company’s headquarters
at Oxford, Connecticut;


 


(iii)          any material breach by the Company of any provision of this
Agreement; or (iv) any failure by the Company to. obtain the assumption of
this Agreement by any successor or assign of the Company.


 


(e)                                  SALARY AND BENEFITS IN EVENT OF
TERMINATION. Upon termination of the Term, the following shall be applicable,
notwithstanding anything to. the contrary elsewhere herein:


 


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(i)            If the Term is terminated by
Employer pursuant to. Section 8 (b) or by Employee pursuant to. Section 8
(d) other than for “Good Reason,” Employee shall thereafter be entitled
to. the Base Salary and all benefits, including the Special Benefits for six
months following the effective date of such termination, unless otherwise
agreed by Employer.


 


(ii)           If the Term is terminated (A) pursuant to. Employee’s
death or Total Disability pursuant to. section 8 (a) hereof, or (B) by
the Employer without Cause pursuant to. Section 8 (c) hereof, or (C) by
Employee with Good Reason pursuant to. Section 8 (d) hereof, (x)
Employer shall pay to. Employee on the date of termination the Base Salary due
to. Employee for the then remainder of the period ending July 1, 2010, net
of any benefits paid to. Employee pursuant to. any policy of disability
insurance maintained by Employer, plus a PRO RATA portion of the Employee’s annual
bonus for the fiscal year of the Employer in which such termination occurs.
(provided that in the case of Employee’s death or Total Disability such payment
and benefits shall extend for no. longer than two. (2) years following
such event), and (y) Employee shall be entitled to. all benefits including the
Special Benefits described in Section 6 (b) hereof for the then
remainder of the period ending July 1, 2010.


 


(f)                                    DELIVERY OF RECORDS UPON
TERMINATION. Upon termination of the Term, Employee will deliver to. Employer
all records of research, proposals, reports, memoranda, computer software and
programming, budgets and ether financial information, and ether materials or
records (including any copies thereof) made, used or obtained by Employee in
connection with his employment by Employer and/or any Employer’s Affiliate.


 


9.                                       MISCELLANEOUS.


 


(a)                                  MODIFICATION AND WAIVER OF
BREACH. No. waiver or modification of this Employment Agreement shall be
binding unless it is in writing signed by the parties hereto. and expressly
stating that it is intended to. modify this Agreement. No. waiver of a
breach hereof shall be deemed to. constitute a waiver of a future breach,
whether of a similar or dissimilar nature.


 


(b)                                 NOTICES. All notices and other
communications required or permitted under this Employment Agreement shall be
in writing, served personally en, or made by certified or registered United
States mail to., the party to. be charged with receipt thereof. Notices and
ether communications served in person shall be deemed delivered when so.
served. Notices and other communications served by mail shall be deemed
delivered hereunder 72 hours after deposit of such notice or communication in
the United States Post Office as certified or registered mail with


 


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postage prepaid and duly addressed to whom
such notice or communications is to be given, in the case of


 


(i)            Employer:


RBC Bearings Incorporated One Tribology
Center

Oxford, CT 06478

A TTN :Chief Financial Officer


 


(ii)           Employee:


Michael J. Hartnett

385 South Street

Middlebury, Connecticut 06762


 


Any party may
change said party’s address for purposes of this Section by giving to the
party intended to be bound thereby, in the manner provided herein, a written
notice of such change.


 


(c)                                  COUNTERPARTS. This instrument
may be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
Employment Agreement.


 


(d)                                 GOVERNING LAW. Except as otherwise
expressly provided herein, this Employment Agreement shall be construed in
accordance with, and governed by, the internal laws of the State of Connecticut
applicable to agreements executed and to be performed in such state without
regard to principles of choice of law or conflicts of laws.


 


(e)                                  COMPLETE EMPLOYMENT AGREEMENT.
This Employment Agreement and its Exhibits and Schedules, together contain the
entire agreement between the parties hereto with respect to the subject matter
of this Employment Agreement and supersedes all prior and contemporaneous oral
and written negotiations, commitments, writings, and understandings with
respect to the subject matter of Employee’s relationship with Employer,
including that certain Employment Agreement, dated December 2000 between
the Company and the Employee.


 


(f)                                    NON-TRANSFERABILITY OF EMPLOYEE’S
INTEREST. None of the rights of Employee to receive any form of compensation
payable pursuant to this Employment Agreement shall be assignable or
transferable. Any attempted assignment, transfer, conveyance, or other
disposition of any interest in the rights of Employee hereunder shall be void.
..


 


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In WITNESS
WHEREOF, the undersigned have executed this Employment Agreement on the day and
year first above written.


 


	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
  /s/ Michael J. Hartnett

  	
   

  
	
   

  	
   

  
	
   

  	
  MICHAEL J. HARTNETT EMPLOYER:

  
	
   

  	
   

  
	
   

  	
  RBC BEARINGS INCORPORATED

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RICHARD CRQWELL Chairman

  Compensation Committee

  
				



 


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SCHEDULE A
TO EMPLOYMENT AGREEMENT BETWEEN MICHAEL J.


HARTNETT AND RBC
BEARINGS INCORPORATED, July 1,2005


 


SPECIAL BENEFITS


 


1. At Employer’s expense, continuation of life insurance coverage in
the amount of $5,000,000, with Employee’s designees as beneficiaries.


 


2.


 


At Employer’s expense,


 


Executive Medical Coverage ($10,000 per year supplemental coverage).


 


Dental insurance.


 


. Prescription drug coverage.


 


The above medical, dental and prescription drug coverage benefits are
subject to change at any time at the discretion of the Board of Directors of
Employer; provided that such coverages provided to Employee shall at all times
be at least as beneficial to Employee as are the coverages provided to other of
Employer’s executive employees and shall always be fully paid by the Employer.


 


The above medical, dental and prescription drug coverage shall be in
addition to Employee’s participation in any medical, hospitalization of related
coverage maintained by Employer for the benefit of all its employees.


 


3. At Employer’s expense, disability insurance at least as beneficial
to Employee as the disability provided for Employee immediately preceding the
Commencement Date of this Agreement, provided that within that limitation, such
insurance may be modified from time to time at the discretion of the Board of
Directors of Employer.


 


4. Contributions by Employer to 401 (K) or other pension or profit
sharing plans pursuant to arrangements applicable to all executive level
employees.


 


5. The Employer shall maintain an appropriate apartment or other
dwelling in Los Angeles for use by the Employee throughout the Term. The
parties acknowledge that “appropriate” shall mean of at least the quality and
convenience of the dwelling maintained for this purpose immediately preceding
the Commencement date of the Agreement. .


 


6. Employee shall be provided six weeks of paid vacation for each
twelve month period during the Term, to accrue PRO RATA during the course of
each such twelve month period; and payable at Employee’s then- effective base
salary rate on termination if not used during the Term.


 


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7. Employee shall have unrestricted use of an appropriate automobile
throughout the Term at the Employer’s expense, including without limitation,
fuel, insurance, maintenance and repair. When the Agreement expires or
otherwise terminates, Employee shall have the option to assume the lease or
purchase the vehicle for its book value as of the Termination date, such option
to be exercised within two months of said Termination date. The parties
acknowledge that “appropriate” shall mean of at least the quality and
convenience of the dwelling maintained for this purpose immediately preceding
the Commencement date of the Agreement.


 


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