Document:

EXHIBIT 10.2

FORM OF DIRECTOR
NON-COMPETE/NON-DISCLOSURE AGREEMENT

THIS
NON-COMPETE/NON-DISCLOSURE AGREEMENT (this “Agreement”), is made this _____ day
of __________, ______, by and between Torotel, Inc., a Missouri corporation
(the “Company”) and _______________________ (the “Director”), an individual
residing at   
_____________________________.

WHEREAS, the
parties hereto recognize and agree that the services of the Director are
special and unique, that s/he has knowledge of and access to the Company’s trade
secrets, business plans and most sensitive confidential matters, and that s/he
has special fiduciary duties to the Company as an officer and/or director;

WHEREAS, for the
foregoing reasons, covenants on the part of the Director not to compete with the
Company, have any conflicts of interest, or to disclose confidential and
proprietary information of the Company during his/her service as a director and
for a reasonable period after the termination or expiration of his/her service
as a director is essential to protect the business of the Company;

NOW, THEREFORE, it
is hereby agreed by the Company and the Director as follows:

1.    NON-COMPETE. 
During the period of time that the Director serves as a director of the
Company and for a period of two (2) years after the termination or cessation of
such employment and/or service as a director, for any reason (both periods of
time, taken together, being referred to hereinafter as the “Restricted Period”),
the Director shall not, anywhere in the United States, directly or indirectly,
whether individually or as an officer, director, employee, consultant, partner,
stockholder (other than as the holder of not more than one percent (1%) of a
publicly held corporation), individual proprietor, joint venturer, investor, lender,
consultant or in any other capacity whatsoever, develop, design, produce,
market, sell or render (or assist any other person in developing, designing,
producing, marketing, selling or rendering) products or services competitive
with those developed, designed, produced, marketed, sold or rendered by the
Company at any time during the Restricted Period.

2.    NON-SOLICITATION.  During the Restricted Period, the Director
shall not, directly or indirectly, whether individually or as an officer,
director, employee, consultant, partner, stockholder, individual proprietor,
joint venturer, investor, lender, consultant or any other capacity
whatsoever:  (a) solicit, divert or take
away, or attempt to solicit, divert or take away, the business or patronage of
any clients, customers or accounts, or prospective clients, customers or
accounts, of the Company; or (b) hire, retain (including as a consultant) or
encourage to leave the employment of the Company any employee of the Company,
or hire or retain (including as a consultant) any former employee of the
Company who has left the employment of the Company within one (1) year prior to
such hiring or retention.

3.    NON-DISCLOSURE.  The Director agrees, at all times during the
Restricted Period and thereafter to hold in strictest confidence, and not to
use, except for the benefit of the Company, or to disclose to any person, firm,
corporation or other entity, without written authorization from the Company,
any trade secrets, confidential knowledge, data or other proprietary
information of the Company.  By way of
illustration 

 

 

 

and not limitation, such shall include information
relating to products, processes, know-how, designs, formulas, methods,
developmental or experimental work, improvements, discoveries, plans for research,
new products, marketing and selling, business plans, budgets and unpublished
financial statements, licenses, prices and costs, suppliers and customers of
the Company.

4.    ACKNOWLEDGEMENT.   The Director agrees
and acknowledges that his non-competition, non-solicitation and non-disclosure
obligations hereunder are essential to the protection of the Company’s business
as a consequence of the Director’s position with the Company and are reasonable
for such purpose.

5.    EQUITABLE REMEDIES.   The parties hereto
hereby agree that breaches of covenants and obligations undertaken in this
Agreement are likely to cause the Company substantial and irrevocable damage,
which would be difficult, if not impossible, to prove precisely; therefore, it
is agreed that this Agreement shall be enforceable by specific performance or
other injunctive relief.  If any of the
restrictions contained herein are deemed to be unenforceable by reason of the
extent, duration or geographical scope or other provisions hereof, then the
parties hereto contemplate and agree that a court shall reduce such extent,
duration, geographical scope or other provision hereof and enforce the terms
hereof in reduced form for all purposes in the manner contemplated hereby.

6.    MISCELLANEOUS.   The Director acknowledges
that this Agreement does not constitute a contract of employment and does not
imply that the Company will continue his service as a director for any period
of time.  This Agreement may be executed
in multiple counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.  The rights and obligations of the Company
shall inure to the benefit of, and shall be binding upon, its successors and
assigns.  The Director acknowledges that
the services to be rendered by him are unique and personal and cannot and shall
not be assigned.  This Agreement and the
performance hereof shall be construed and governed in accordance with the laws
of the State of Missouri.

IN WITNESS
WHEREOF, and intending to be legally bound hereby, the parties have caused this
Non-Compete/Non-Disclosure Agreement to be duly executed as an instrument under
seal as of the date and year first written above.

	
  

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TOROTEL, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Address:EXHIBIT
10.1

	
  

  	
  Short-Term
  Incentive Plan (STI Plan)

  Terms and Conditions

  	
   

  

 

Compensation
Philosophy

Cubist’s
compensation philosophy is to attract, motivate, retain and reward employees
with base pay, short-term and long-term incentives, and benefits that
competitively target the market.  Cubist’s
compensation programs provide employees with the opportunity to earn increased
compensation – based on Cubist’s and the employee’s achievement of pre-established
performance targets.

Plan Overview

Cubist’s
Short-Term Incentive Plan (“STI Plan”) is a bonus plan for all Cubist employees
(“Participants”) which is designed to reward them  for their roles in the achievement of Cubist’s
annual goals, as established by the Company (“Annual Goals”).  STI Plan awards (“Plan Awards”) are
determined on an annual basis, based on whether and to what extent Cubist
achieves its Annual Goals and each Participant achieves the Participant’s
individual goals for the relevant calendar year (the “Performance Period”).

Plan
Objective

The intent of the
STI Plan is to provide highly competitive total cash compensation through an
annual variable pay program that reflects Cubist’s performance and the Participant’s
performance against goals and objectives. 
The STI Plan is an important variable component of the total
compensation package for all employees.

Eligibility

All employees of
Cubist are eligible to participate in the STI Plan.  Participation in the STI Plan in one year
does not automatically guarantee participation in a future year.  Compliance with all Cubist policies,
guidelines and all applicable laws  is a
prerequisite to receiving an STI award. A determination that an employee is not
eligible to receive an STI award due to his or her failure to demonstrate compliant
behavior may be made by the CEO and Chief Compliance Officer.

Performance
Periods

Each calendar
year, beginning on January 1 of each year, constitutes a separate Performance
Period.

Financial
Measures

Prior to the
beginning of each Performance Period, the Company will establish financial
measures and weightings for each of the Company’s Annual Goals. Cubist needs to
achieve at least 70% of its Annual Goals for any Participant to be eligible for
a Plan Award. For 2007, company achievement will be capped at a 200%
payout.  In addition to achievement of
Annual Goals, Plan Awards are also determined on the basis of individual performance
and achievement of objectives.

Individual Objectives

As part of Cubist’s annual (or in the case of
Participants who join the Company after the commencement of a Performance
Period, ongoing) goal setting process, each Participant should propose
individual objectives for his or her manager’s approval. Each Participant will
be measured by his or her manager against these objectives, and the manager
shall make a recommendation to the CEO as to whether the Participant should
receive a Plan Award, and, if so, the amount of such Plan Award (assuming
Cubist’s Annual Goals have been achieved to the requisite level noted above).

 

Funding

After the end of
each Performance Period, the CEO shall determine the aggregate amount available
for Plan Awards (if any) based on the Company’s performance relative to the
Annual Goals (the “Pool”).  The Pool will
be funded based on the Company’s performance. 
Assuming the Company has achieved the requisite performance level, the
CEO shall then determine the award and amount of any Plan Awards to  Participants in accordance with the STI
Target Percentages noted below; provided that the Compensation Committee of the
Company’s Board of Directors shall make such determinations with respect to the
CEO’s bonus and shall approve the CEO’s recommendations with respect to the
Executive Officers bonuses.

Calculating
the Amount of Any Target Award

Each Participant
is eligible for Plan Awards at a target percentage of base salary (“Target
Percentage”) as listed in Figure 1 below. The “Target Award” is the Participant’s
target percentage, multiplied by his or her base salary for the Performance
Period. The Target Award will be pro-rated based on the portion of the
performance period worked by the Participant if the Participant (a) commenced
employment with Cubist after the commencement of the Performance Period, (b)
worked part-time during the Performance Period, or (c) took a leave of absence
during the Performance Period.  Examples
of calculations are included in Figure 2 below.

Figure 1: Target Percentage by Level

	
  Eligibility Group

  	
   

  	
  2007 Target

  Percentage (as %

  of base salary)

  	
   

  
	
  CEO

  	
   

  	
  80

  	
  %

  
	
  Senior Vice
  President

  	
   

  	
  40

  	
  %

  
	
  Vice President

  	
   

  	
  35

  	
  %

  
	
  Executive
  Director

  	
   

  	
  25

  	
  %

  
	
  Senior Director

  	
   

  	
  25

  	
  %

  
	
  Director

  	
   

  	
  20

  	
  %

  
	
  Senior Manager/
  equivalent individual contributor

  	
   

  	
  15

  	
  %

  
	
  Manager/
  equivalent individual contributor

  	
   

  	
  10

  	
  %

  
	
  Employee

  	
   

  	
  5

  	
  %

  

 

Figure
2: Target Award Calculation Examples

	
  Level

  	
   

  	
  Full-time or

  Part-Time

  	
   

  	
  Base Salary

  	
   

  	
  Target

  Percentage

  	
   

  	
  Pro-Ration

  Factor

  	
   

  	
  Target Award

  	
   

  
	
  Manager

  	
   

  	
  Part
  Time (20 hours/wk)

  	
   

  	
  $

  	
  75,000

  	
   

  	
  10

  	
  %

  	
  50

  	
  %

  	
  ($75,000
  x 10% x 50%)= $3,750

  	
   

  
	
  Senior Manager

  	
   

  	
  Full Time

  	
   

  	
  $

  	
  90,000

  	
   

  	
  15

  	
  %

  	
  100

  	
  %

  	
  ($90,000 x 15% x 100%)= $13,500

  	
   

  

 

Calculating
Actual Awards

A Participant’s Actual Award is calculated in two
portions, which are then added to form the Actual Award.  The first portion is tied to company results,
while the second portion is tied to the Participant’s performance against goals
as assessed by the participant’s Manager. 
As the Participant’s level of responsibility in the organization
increases, the portion tied to company results increases and the portion tied
to individual results decreases, as listed in Figure 3 below.  Actual Awards are subject to approval by the
CEO.  In addition, Actual Awards for
Executive Officers are subject to approval by the Compensation Committee.

 2
 

 

Calculation of portion tied to
company results:

The Participant’s Target Award is multiplied by the
portion (percentage) tied to company results as listed in Figure 3 for the
Participant’s eligibility group.  That
number is then multiplied by Cubist’s achievement against the Annual Goals.

Calculation of portion tied to
individual results:

The Participant’s Target Award is multiplied by the
portion (percentage) tied to individual results as listed in Figure 3 for the
participant’s eligibility group.  That
number is then multiplied by the percentage of individual goals met by the
Participant as assessed by the Participant’s Manager.

Calculation of Actual Plan Award:

The Actual Award is the sum of the portion tied to
company results and the portion tied to individual results.

Figure 3: Portions Tied to Company and
Individual Results

	
  Eligibility Group

  	
   

  	
  2007 Portion Tied

  to Company

  Results

  	
   

  	
  2007 Portion Tied

  to Individual

  Results

  	
   

  
	
  CEO

  	
   

  	
  100

  	
  %

  	
  Board discretion

  	
   

  
	
  Senior Vice
  President

  	
   

  	
  60

  	
  %

  	
  40

  	
  %

  
	
  Vice President

  	
   

  	
  50

  	
  %

  	
  50

  	
  %

  
	
  Executive
  Director

  	
   

  	
  40

  	
  %

  	
  60

  	
  %

  
	
  Senior Director

  	
   

  	
  40

  	
  %

  	
  60

  	
  %

  
	
  Director

  	
   

  	
  30

  	
  %

  	
  70

  	
  %

  
	
  Senior Manager/
  equivalent individual contributor

  	
   

  	
  20

  	
  %

  	
  80

  	
  %

  
	
  Manager/
  equivalent individual contributor

  	
   

  	
  10

  	
  %

  	
  90

  	
  %

  
	
  Employee

  	
   

  	
  10

  	
  %

  	
  90

  	
  %

  

 

Figure 4: Actual STI Plan Award Calculation
Examples

	
  Level

  	
   

  	
  Target

  Award from

  Figure 2

  	
   

  	
  Company

  Results

  	
   

  	
  Individual

  Results

  	
   

  	
  Portion tied to

  Company

  Results

  	
   

  	
  Portion tied to

  Individual

  Results

  	
   

  	
  Actual STI Plan

  Award

  	
   

  
	
  Manager

  	
   

  	
  $

  	
  3,750

  	
   

  	
  100%
  of target

  	
   

  	
  100%
  of goals met

  	
   

  	
  $3,750 x 10% x

  100% = $375

  	
   

  	
  $3,750 x 90% x

  100% of goal =

  $3,375

  	
   

  	
  $375 + $3,375 =

  $3,750

  	
   

  
	
  Senior Manager

  	
   

  	
  $

  	
  13,500

  	
   

  	
  125% of target

  	
   

  	
  100% of goals met

  	
   

  	
  $13,500 x 20% x

  125% = $3,375

  	
   

  	
  $13,500 x 80% x

  100% of goal =

  $10,800

  	
   

  	
  $3,375 = $10,800
  =

  $14,175

  	
   

  

 

Employment Changes

·                  New Hires:

·                  If
a Participant is hired during a Performance Period, his or her award will be
pro-rated to reflect the portion of the year actually worked with Cubist,
subject to the pro-ration guidelines as described below

·                  Changes in Eligibility:

·                  If
a Participant changes from one eligibility group to another, the amount of any
Plan Award will be determined by calculating the amount of time worked in each
eligible position—subject to the pro rata guidelines noted below.

 3
 

 

·                  Part-time:

·                  If a
Participant is not a full-time employee, any Plan Award to the Participant
shall be pro-rated based on the Participant’s regular scheduled work hours or
percentage of time worked. If a Participant has a change in regular scheduled
work hours during a Performance Period, the Participant’s Plan Award shall be
pro-rated in accordance with the pro rata guidelines below.

·                  Pro-rata Guidelines:

·                  All
pro-rata adjustments occur on a whole calendar month basis

·                  Changes
occurring prior to the 16th of the month will be effective on the first
day of the month

·                  Changes
occurring on or after the 16th of the month will be effective on the first
day of the following month

·                  Departure or Termination:

·                  If
a Participant’s employment terminates prior to the end of a Performance Period,
the Participant shall not be entitled to a Plan Award unless such termination
is as a result of Participant’s death or retirement, or a Participant becomes
disabled, in which case the Participant, or the Participant’s estate (as the
case may be) shall be eligible for a pro-rated Plan Award payable on the
standard payment date for the Performance Period (as opposed to an earlier
date).

·                  If
a Participant’s employment terminates after the completion of the Performance
Period but prior to the date that Plan Award payments are made (the “Payment
Date”), a Participant shall be eligible for a Plan Award, unless such
termination is as a result of an involuntary termination for cause or
misconduct.

STI award Payout Process

STI
Plan Awards are paid out following the end of the Performance Period and after
the measurement of Cubist’s achievement of Annual Goals has been
completed.  Plan Awards will generally be
paid out in the first quarter following the end of the relevant Performance
Period. Applicable taxes other withholdings will be deducted from the Plan
Award, as appropriate for each jurisdiction. In the United States, individual contributions
to the 401(k) Plan as well as applicable taxes will be deducted from the award
payment.

Glossary of Key Terms

Actual Award: the Plan Award
based on the sum of the portion of the Plan Award tied to company results and
the portion tied to individual results

Payment Date: the date that
payments, if any, will be made to Participants under the STI Plan

Performance Period: 
the twelve
month period beginning on January 1 of each calendar year

Target Award:  the Participant’s Target
Percentage multiplied by his or her base salary for the Performance Period

Target Percentage: the maximum
amount of a Participant’s Plan Award eligibility expressed as a percentage of
such Participant’s base salary

The
Company reserves the right to amend or discontinue the Plan at any time without
prior notice. In no event does this STI Plan alter the “employment-at-will”
relationship between Cubist and its employees. Cubist and its employees are
free to terminate the employment relationship at any time, without cause or
notice.

 4

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