Document:

Exhibit 10.2

 

Amended and Restated

 

Bally Technologies, Inc.

 

2008 Employee Stock Purchase Plan

 

(amended and restated as of October 22, 2013)

 

1.              PURPOSE

 

1.1   The purpose of the Plan is to provide a means by which Employees of the Bally Technologies, Inc. and designated Related Corporations (collectively “the Company”) may be given an opportunity to purchase shares of the Common Stock of the Company.

 

1.2   The Company, with the assistance of the Plan, seeks to retain the services of its Employees, to secure and retain the services of new Employees and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Related Corporations.

 

1.3   The Company intends the Plan to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”), and the provisions of the Plan shall be construed in a manner consistent with the requirements of Section 423 of the Code.

 

1.4   The Company intends that the Purchase Rights granted under the Plan be considered options issued under an Employee Stock Purchase Plan.

 

2.    DEFINITIONS

 

2.1   “Account” means the account maintained on behalf of a Participant to which is credited (i) payroll deductions pursuant to Section 8 and (ii) shares of Common Stock acquired upon exercise of an option pursuant to Section 7.

 

2.2   “Authorization Form” means a form established by the Board authorizing payroll deductions as set forth in Section 8 and such other terms and conditions as the Board from time to time may determine.

 

2.3   “Board” means the Board of Directors of the Company.

 

2.4   “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein shall be a reference to any successor or amended section of the Code.

 

2.5   “Committee” means a committee appointed by the Board in accordance with Section 3.3 of the Plan.

 

2.6   “Common Stock” means the common stock of Bally Technologies, Inc. or any securities into which such common stock may be converted.

 

2.7   “Company” means Bally Technologies, Inc., collectively with any Related Corporation.

 

2.8   “Corporate Transaction” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

2.8.1  a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company;

 

2.8.2  a sale or other disposition of at least a majority of the voting power of the outstanding equity securities of the Company;

 

2.8.3  a merger, consolidation or similar transaction following which the Company is not the surviving controlling corporation;

 

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2.8.4 a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise; or

 

2.8.5  a liquidation or dissolution of the Company.

 

2.9   “Director” means a member of the Board.

 

2.10 “Eligible Employee” means an Employee who meets the requirements set forth in the Offering for eligibility to participate in the Offering, provided that such Employee also meets the requirements for eligibility to participate set forth in the Plan.

 

2.11 “Eligible Earnings” means an Eligible Employee’s base salary/base wages, commissions and overtime pay paid during the portion of an Offering during which such Eligible Employee is participating in such Offering. For avoidance of doubt, cash bonuses and other forms of incentive compensation and income generated from stock awards shall not be included in “Eligible Earnings”.

 

2.12 “Employee” means any person, including Officers and Directors, who is employed for purposes of Section 423(b)(4) of the Code by the Company, but excluding (a) leased employees, as described in Section 414(n) of the Code, and (b) any payroll service bureau or employment agency employee, i.e., an individual for whom the direct pay or compensation with respect to the performance of services for the Company is paid by any outside entity, including, but not limited to, a payroll service bureau or employment agency. The determination whether an individual is a payroll service bureau employee or employment agency employee shall be made solely based on the method of paying the individual for his or her services, without regard to whether the individual is considered a common law employee of the Company for any other purpose. Neither service as a Director nor payment of a Director’s fee shall be sufficient to make an individual an Employee of the Company.

 

2.13 “Employee Stock Purchase Plan” means a plan that grants Purchase Rights intended to be options issued under an “employee stock purchase plan,” as that term is defined in Section 423 of the Code.

 

2.14 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

2.15 “Fair Market Value” means the value of a security, as determined in good faith by the Board. If the Common Stock is listed on any established stock exchange or market, the Fair Market Value of the Common Stock, unless otherwise determined by the Board, shall be the closing sales price (rounded up where necessary to the nearest whole cent) for such security (or the closing bid, if no sales were reported for that business day) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the Trading Day prior to the relevant determination date, as reported in The Wall Street Journal or such other source as the Board deems reliable.

 

2.16 “Offering” shall means a period of three (3) months, or such other period of time as determined from time to time by the Committee. In no event shall an Offering exceed twenty-seven (27) months. The first Offering shall commence after shareholder approval of the Plan.

 

2.17 “Offering Date” means a date selected by the Board for an Offering to commence.

 

2.18 “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

 

2.19 “Participant” means an Eligible Employee who holds an outstanding Purchase Right granted pursuant to the Plan.

 

2.20 “Plan” means this Amended and Restated Bally Technologies, Inc. 2008 Employee Stock Purchase Plan.

 

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2.21 “Purchase Date” means the date during an Offering established by the Board on which Purchase Rights granted under the Plan shall be exercised and as of which purchases of shares of Common Stock shall be carried out in accordance with such Offering. A Purchase Date must be a Trading Day.

 

2.22 “Purchase Right” means an option to purchase shares of Common Stock granted pursuant to the Plan.

 

2.23 “Related Corporation” means any parent corporation or subsidiary corporation, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code.

 

2.24 “Securities Act” means the Securities Act of 1933, as amended.

 

2.25 “Trading Day” means any day the exchange(s) or market(s) on which shares of Common Stock are listed is open for trading.

 

3.              ADMINISTRATION

 

3.1   The Board shall administer the Plan unless and until the Board delegates administration to a Committee, as provided in Section 3.3. The Board shall have the final power to determine all questions of policy and expediency that may arise in the administration of the Plan, to promulgate such rules and regulations as it deems necessary for the proper administration of the Plan, to interpret the provisions and supervise the administration of the Plan, and to take all action in connection therewith or in relation thereto as it deems necessary or advisable, regardless of whether the Board has delegated Plan administration to a Committee.

 

3.2   The Board (or a Committee designated by the Board) shall have the power, subject to and within the limitations of the express provisions of the Plan:

 

3.2.1  To determine when and how Purchase Rights to purchase shares of Common Stock shall be granted and the provisions of each Offering of such Purchase Rights (which need not be identical);

 

3.2.2  To designate from time to time which Related Corporations of the Company shall be eligible to participate in the Plan and which Employees of designated Related Corporations shall be eligible to participate in the Plan;

 

3.2.3  To construe and interpret the Plan and Purchase Rights granted under the Plan, and to adopt, amend and rescind any rules and regulations which it deems desirable and appropriate for the administration of the Plan, to construe and interpret the provisions and supervise the administration of the Plan, to make factual determinations relevant to Plan entitlements and to take all action in connection with administration of the Plan as it deems necessary or advisable. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective. Decisions of the Board shall be final and binding upon all Participants;

 

3.2.4  To amend the Plan as provided in Section 15; and

 

3.2.5  Generally, to exercise such powers and to perform such acts as it deems necessary or expedient to promote the best interests of the Company and its Related Corporations and to carry out the intent that the Plan be treated as an Employee Stock Purchase Plan.

 

3.3   The Board may delegate administration of the Plan to a Committee of the Board composed of one (1) or more members of the Board. The Committee will serve for such period of time as the Board may specify. If the Board delegates administration to a Committee, then the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as the Board may adopt from time to time. The Committee shall have full power and authority to adopt, amend and rescind any rules and regulations which it deems desirable and appropriate for the proper administration of the Plan, to

 

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construe and interpret the provisions and supervise the administration of the Plan, to make factual determinations relevant to Plan entitlements and to take all action in connection with administration of the Plan as it deems necessary or advisable, consistent with the delegation from the Board. Decisions of the Board shall be final and binding upon all Participants.

 

3.4   The Board may abolish or change the composition of the Committee at any time and, if abolished, revest in the Board the administration of the Plan. If the Board delegates administration to a Committee, then references to the Board in this Plan and in any Offering document shall thereafter be deemed to be the Committee, as appropriate.

 

3.5   In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of the Company, members of the Board and of the Committee shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted under the Plan, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at his or her own expense to handle and defend the same.

 

4.              SHARES OF COMMON STOCK SUBJECT TO THE PLAN

 

4.1   Subject to the provisions of Section 14, up to 850,000 aggregate shares of Common Stock may be sold pursuant to Purchase Rights granted under the Plan. If the total number of shares which would otherwise be subject to options granted under the Plan on an Offering Date exceeds the number of shares then available under the Plan (after deduction of all shares for which options have been exercised or are then outstanding), the Board shall make a pro rata allocation of the shares remaining available for option grant in as uniform a manner as shall be practicable and as it shall determine to be equitable. In such event, the Board shall give written notice to each Participant of such reduction of the number of option shares affected thereby and shall similarly reduce the rate of payroll deductions, if necessary. If any Purchase Right granted under the Plan shall for any reason terminate without having been exercised, the shares of Common Stock not purchased under such Purchase Right shall again become available for issuance under the Plan.

 

4.2   The shares of Common Stock subject to the Plan may be unissued shares, authorized and issued shares held in the Company’s treasury or Common Stock acquired on the open market at prevailing market prices or otherwise.

 

5.              GRANT OF PURCHASE RIGHTS; OFFERING

 

5.1   The Board may from time to time grant or provide for the grant of Purchase Rights of Common Stock under the Plan to Eligible Employees in an Offering on an Offering Date or Offering Dates selected by the Board. Each Offering shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate, which shall comply with the requirement of Section 423(b)(5) of the Code that all Employees granted Purchase Rights to purchase shares of Common Stock under the Plan shall have the same rights and privileges. The terms and conditions of an Offering shall be incorporated by reference into the Plan and treated as part of the Plan. The provisions of separate Offerings need not be identical, but each Offering shall include (through incorporation of the provisions of this Plan by reference in the document comprising the Offering or otherwise) the period during which the Offering shall be effective, which period shall not exceed twenty-seven (27) months beginning with the Offering Date, and the

 

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substance of the provisions contained in Sections 6 through 9, inclusive. Unless and until altered by the Board, each Offering shall be three (3) months in duration.

 

6.              ELIGIBILITY

 

6.1   Purchase Rights may be granted only to Employees of the Company. Except as provided in Section 6.2, an Employee shall be ineligible to be granted Purchase Rights under the Plan unless, on the Offering Date, such Employee has been in the employ of the Company for such continuous period preceding such Offering Date as the Board may require, but in no event shall the required period of continuous employment be greater than two (2) years. In addition, the Board may provide that no Employee shall be eligible to be granted Purchase Rights under the Plan unless, on the Offering Date, such Employee’s customary employment with the Company is more than twenty (20) hours per week and more than five (5) months per calendar year.

 

6.2   The Board may provide that each person who, during the course of an Offering, first becomes an Eligible Employee shall, on a date or dates specified in the Offering which coincides with the day on which such person becomes an Eligible Employee or which occurs thereafter, receive a Purchase Right under that Offering, which Purchase Right shall thereafter be deemed to be a part of that Offering. Such Purchase Right shall have the same characteristics as any Purchase Rights originally granted under that Offering, as described herein, except that:

 

6.2.1  the date on which such Purchase Right is granted shall be the “Offering Date” of such Purchase Right for all purposes, including determination of the exercise price of such Purchase Right;

 

6.2.2  the period of the Offering with respect to such Purchase Right shall begin on its Offering Date and end coincident with the end of such Offering; and

 

6.2.3  the Board may provide that if such person first becomes an Eligible Employee within a specified period of time before the end of the Offering, he or she shall not receive any Purchase Right under that Offering.

 

6.3   No Employee may participate in the Plan if, immediately after a Purchase Right is granted, the Employee owns, or is considered to own (within the meaning of Code Section 424(d)), Common Stock, including Common Stock which the Employee may purchase by conversion of convertible securities or under outstanding options granted by the Company, representing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company. For purposes of this Section 6.3, the rules of Section 424(d) of the Code shall apply in determining the stock ownership of any Employee, and Common Stock which such Employee may purchase under all outstanding Purchase Rights and options shall be treated as stock owned by such Employee.

 

6.4   As specified by Section 423(b)(8) of the Code, an Eligible Employee may be granted Purchase Rights under the Plan only if such Purchase Rights do not permit such Eligible Employee’s rights to purchase Common Stock of the Company to accrue at a rate which exceeds twenty-five thousand dollars ($25,000) of Fair Market Value of such stock (determined at the time such Purchase Rights are granted, and which, with respect to the Plan, shall be determined as of their respective Offering Dates) for each calendar year in which such Purchase Rights are outstanding at any time; for purposes of this limitation, there shall be counted only options to which Section 423 of the Code applies. For purposes of the Plan, an option is “granted” on a Participant’s Offering Date. An option will expire upon the earlier to occur of (i) the termination of a Participant’s participation in the Plan or such Offering; (ii) the grant of an option to such Participant on a subsequent Offering Date; or (iii) the termination of the Offering. This Section 6.4 shall be interpreted so as to comply with Code Section 423(b)(8).

 

6.5   Officers of the Company, if they are otherwise Eligible Employees, shall be eligible to participate in Offerings under the Plan. Notwithstanding the foregoing, the Board may provide in an Offering that

 

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Employees who are highly-compensated Employees within the meaning of Section 423(b)(4)(D) of the Code shall not be eligible to participate in the Offering.

 

7.              PURCHASE RIGHTS; PURCHASE PRICE

 

7.1   On each Offering Date, each Eligible Employee, pursuant to an Offering made under the Plan, shall be granted a Purchase Right to purchase up to that number of shares of Common Stock purchasable either with a percentage or with a maximum dollar amount, as designated by the Board, but in either case not exceeding ten percent (10%) (or such greater or lesser percentage as determined by the Board prior to the commencement of an Offering) of such Employee’s Eligible Earnings (as defined by the Board in each Offering) during the period that begins on the Offering Date (or such later date as the Board determines for a particular Offering) and ends on the date stated in the Offering, which date shall be no later than the end of the Offering. Unless the Board expressly determines otherwise, an Eligible Employee may designate up to ten percent (10%) of his or her Eligible Earnings for an Offering to be applied to the purchase of shares of Common Stock in such Offering.

 

7.2   The Board shall establish one Purchase Date during an Offering on which Purchase Rights granted under the Plan and pursuant to that Offering shall be exercised and purchases of shares of Common Stock shall be carried out in accordance with such Offering.

 

7.3   In connection with each Offering made under the Plan, the Board may specify a maximum number of shares of Common Stock that may be purchased by any Participant on any Purchase Date during such Offering. In connection with each Offering made under the Plan, the Board may specify a maximum aggregate number of shares of Common Stock that may be purchased by all Participants pursuant to such Offering. If the aggregate purchase of shares of Common Stock issuable upon exercise of Purchase Rights granted under the Offering would exceed any such maximum aggregate number, then, in the absence of any Board action otherwise, a pro-rata allocation of the shares of Common Stock available shall be made in as nearly a uniform manner as shall be practicable and equitable.

 

7.4   Unless and until altered by the Board, the purchase price of shares of Common Stock acquired pursuant to Purchase Rights granted under the Plan shall be equal to eighty-five percent (85%) of the Fair Market Value of the shares of Common Stock on the applicable Purchase Date.

 

8.              PARTICIPATION; WITHDRAWAL; TERMINATION

 

8.1   An Eligible Employee may become a Participant in the Plan pursuant to an Offering by delivering an Authorization Form to the Company within the time specified in the Offering, in such form as the Company may provide. Each such agreement shall authorize payroll deductions of up to the maximum percentage specified by the Board of such Participant’s Eligible Earnings during the Offering. The payroll deductions made for each Participant shall be credited to a Participant’s Account under the Plan and shall be deposited with the general funds of the Company. To the extent provided in the Offering, a Participant may reduce (including to zero), but may not, unless otherwise determined by the Board, increase such payroll deductions. To the extent provided in the Offering, a Participant may begin such payroll deductions after the beginning of the Offering. A Participant may make additional payments into his or her Account only if specifically provided for in the Offering and only if the Participant has not already had the maximum permitted amount withheld during the Offering. Notwithstanding any other provisions of the Plan to the contrary, in locations where local law prohibits payroll deductions, an eligible Employee may elect to participate through contributions to his or her Account under the Plan in a form acceptable to the Board.

 

8.2   Under procedures and at times established by the Board, a Participant may terminate his or her payroll deductions under the Plan and withdraw from the Offering by delivering to the Company a notice of withdrawal in such form as the Company may provide. Upon such withdrawal from the Offering by a Participant, the Company shall distribute to such Participant all of his or her accumulated payroll deductions and/or other contributions (reduced to the extent, if any, such deductions have been used to

 

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acquire shares of Common Stock for the Participant) under the Offering, without interest (unless otherwise specified in the Offering), such Participant’s interest in that Offering shall be automatically terminated and no further payroll deductions and/or other contributions for the purchase of Common Stock will be made during the Offering. A Participant’s withdrawal from an Offering shall have no effect upon such Participant’s eligibility to participate in any other Offerings under the Plan, but such Participant shall be required to deliver a new Authorization Form in order to participate in subsequent Offerings under the Plan. The Company may establish rules pertaining to the timing of withdrawals, limiting the frequency with which Participants may withdraw and re-enroll in the Plan and may impose a waiting period on Participants wishing to re-enroll following withdrawal. Unless and until altered by the Board, a Participant may elect to reduce his or her future payroll deductions at any time during an Offering but may not elect to increase his or her future payroll deductions during an Offering. Any elections shall be implemented by the Company within an administratively reasonable period of time.

 

8.3   Purchase Rights granted pursuant to any Offering under the Plan shall terminate immediately upon a Participant ceasing to be an Employee for any reason or for no reason (subject to any post-employment participation period required by law) or other lack of eligibility. The Company shall distribute to such terminated or otherwise ineligible Employee or, in the case of death, to the Participant’s heirs or estate, all of his or her accumulated payroll deductions and/or other contributions (reduced to the extent, if any, such deductions have been used to acquire shares of Common Stock for the terminated or otherwise ineligible Employee) under the Offering, without interest (unless otherwise specified in the Offering). The Board may also establish rules regarding when leaves of absence or changes of employment status will be considered to be a termination of employment, including rules regarding transfer of employment among any of the Company’s Related Corporations, and the Board may establish termination-of-employment procedures for this Plan that are independent of similar rules established under other benefit plans of the Company; provided that subject to Section 19, such procedures are not in conflict with the requirements of Section 423 of the Code.

 

8.4   Neither payroll deductions or other contributions credited to a Participant’s Account, nor any Purchase Rights granted under the Plan shall be transferable by a Participant otherwise than by will or the laws of descent and distribution, or by a beneficiary designation as provided in Section 13 and, during a Participant’s lifetime, shall be exercisable only by such Participant. Any attempted assignment, transfer, pledge, or other disposition shall be null and void and without effect. If a Participant in any manner attempts to transfer, assign or otherwise encumber his or her Purchase Rights, other than as permitted by the Code, such act shall be treated as an election by the Participant to discontinue participation in the Plan pursuant to Section 8.2.

 

9.              EXERCISE

 

9.1   On each Purchase Date during an Offering, each Participant’s accumulated payroll deductions and/or other contributions specifically provided for in the Offering (without any increase for interest) shall be automatically applied to the purchase of shares of Common Stock up to the maximum number of shares of Common Stock permitted pursuant to the terms of the Plan and the applicable Offering, at the purchase price specified in the Offering. No fractional shares shall be issued upon the exercise of Purchase Rights granted under the Plan unless specifically provided for in the Offering. The Company or its designee may make such provisions and take such action as it deems necessary or appropriate for the withholding of taxes or other amounts which the Company is required to withhold by applicable law. Each Participant, however, shall be responsible for payment of all individual tax liabilities arising under the Plan. The shares of Common Stock purchased upon exercise of an option hereunder shall be considered for tax purposes to be sold to the Participant on the Purchase Date. During his or her lifetime, a Participant’s option to purchase shares of Common Stock hereunder is exercisable only by him or her.

 

9.2   If any amount of accumulated payroll deductions and/or other contributions remains in a Participant’s Account after the purchase of shares of Common Stock and such remaining amount is less

 

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than the amount required to purchase one share of Common Stock on the Purchase Date of an Offering, then such remaining amount shall be held in each such Participant’s Account for the purchase of shares of Common Stock under the next Offering under the Plan, unless such Participant withdraws from such next Offering, as provided in Section 8.2, or is not eligible to participate in such Offering, as provided in Section 6, in which case such amount shall be distributed to the Participant after such Purchase Date, without interest (unless otherwise specified in the Offering).

 

9.3   No Purchase Rights granted under the Plan may be exercised to any extent unless the shares of Common Stock to be issued upon such exercise under the Plan are covered by an effective registration statement pursuant to the Securities Act and the Plan is in material compliance with all applicable federal, state, foreign, and other securities and other laws applicable to the Plan. If, on a Purchase Date during any Offering hereunder the shares of Common Stock are not so registered or the Plan is not in such compliance, no Purchase Rights granted under the Plan or any Offering shall be exercisable on such Purchase Date. If, on the Purchase Date under any Offering hereunder, the shares of Common Stock are not registered and the Plan is not in such compliance, options granted under the Plan which are not in compliance shall not be exercisable and all payroll deductions and/or other contributions accumulated during the Offering shall be returned to the Participants, without interest. The provisions of this Section 9.3 shall comply with the requirements of Section 423(b)(5) of the Code to the extent applicable. As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.

 

9.4   As soon as practicable after the exercise of an option, the Company shall deliver to the Participant a record of the Common Stock purchased and the balance of any amount of payroll deductions and/or other contributions credited to the Participant’s Account not used for the purchase, except as specified below. The Board may permit or require that shares be deposited directly with a broker designated by the Board or to a designated agent of the Company, and the Board may utilize electronic or automated methods of share transfer. The Board may require that shares be retained with such broker or agent for a designated period of time and/or may establish other procedures to permit tracking of disqualifying dispositions of such shares. The Company shall retain the amount of payroll deductions and/or other contributions used to purchase Common Stock as full payment for the Common Stock and the Common Stock shall then be fully paid and non-assessable. No Participant shall have any voting, dividend, or other stockholder rights with respect to shares subject to any option granted under the Plan until the shares subject to the option have been purchased and delivered to the Participant as provided in this Section 9. The Board may in its discretion direct the Company to retain in a Participant’s Account for the subsequent Offering any payroll deductions which are not sufficient to purchase a whole share of Common Stock or return such amount to the Participant. Any other amounts left over in a Participant’s Account after a Purchase Date shall be returned to the Participant.

 

10.       COVENANTS OF THE COMPANY

 

10.1 During the terms of the Purchase Rights granted under the Plan, the Company shall ensure that the amount of shares of Common Stock required to satisfy such Purchase Rights are available.

 

10.2 The Company shall seek to obtain from each federal, state, foreign or other regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell shares of Common Stock upon exercise of the Purchase Rights granted under the Plan. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of shares of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell shares of Common Stock upon exercise of such Purchase Rights unless and until such authority is obtained.

 

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11.       USE OF PROCEEDS FROM SHARES OF COMMON STOCK

 

Proceeds from the sale of shares of Common Stock pursuant to Purchase Rights granted under the Plan shall constitute general funds of the Company.

 

12.       RIGHTS AS A STOCKHOLDER

 

A Participant shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, shares of Common Stock subject to Purchase Rights granted under the Plan unless and until the Participant’s shares of Common Stock acquired upon exercise of Purchase Rights granted under the Plan are recorded in the books of the Company (or its transfer agent).

 

13.       DESIGNATION OF BENEFICIARY

 

13.1 A Participant may file a written designation of a beneficiary who is to receive any shares of Common Stock and/or cash, if any, from the Participant’s Account under the Plan in the event of such Participant’s death subsequent to the end of an Offering but prior to delivery to the Participant of such shares of Common Stock or cash. In addition, a Participant may file a written designation of a beneficiary who is to receive any cash from the Participant’s Account under the Plan in the event of such Participant’s death during an Offering. If a Participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective, to the extent required by local law.

 

13.2 The Participant (and if required under the preceding sentence, his or her spouse) may change such designation of beneficiary at any time by written notice. Subject to local legal requirements, in the event of a Participant’s death and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant’s death, the Company shall deliver such shares of Common Stock and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its sole discretion, may deliver such shares of Common Stock and/or cash to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. The provisions of this Section 13.2 shall in no event require the Company to violate local law, and the Company shall be entitled to take whatever action it reasonably concludes is desirable or appropriate in order to transfer the assets allocated to a deceased Participant’s Account in compliance with local law.

 

14.       ADJUSTMENTS UPON CHANGES IN SECURITIES; CORPORATE TRANSACTIONS

 

14.1 Subject to any required action by the stockholders of the Company, if any change is made in the shares of Common Stock, subject to the Plan, or subject to any Purchase Right, without the receipt of consideration by the Company (through merger, consolidation, spin-off, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, reverse stock split, liquidating dividend, combination or reclassification of shares (including any such change in the number of shares of Common Stock effected in connection with a change in domicile of the Company), exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan shall be equitably adjusted in the type(s), class(es) and maximum number of shares of Common Stock subject to the Plan pursuant to Section 4.1, and the outstanding Purchase Rights granted under the Plan shall be appropriately adjusted in the type(s), class(es), number of shares and purchase limits of such outstanding Purchase Rights. The Board shall make such adjustments, and take any further actions which, in the exercise of its discretion, may be necessary or appropriate under the circumstances, and its determination shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a “transaction not involving the receipt of consideration by the Company.”)

 

14.2 In the event of a Corporate Transaction, then: (i) any surviving or acquiring corporation may continue or assume Purchase Rights outstanding under the Plan or may substitute similar rights (including

 

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a right to acquire the same consideration paid to stockholders in the Corporate Transaction) for those outstanding under the Plan, or (ii) if any surviving or acquiring corporation does not assume such Purchase Rights or does not substitute similar rights for Purchase Rights outstanding under the Plan, then, the Participants’ accumulated payroll deductions and/or other contributions (exclusive of any accumulated interest that cannot be applied toward the purchase of shares of Common Stock under the terms of the Offering) shall be used to purchase shares of Common Stock immediately prior to the Corporate Transaction under the ongoing Offering, and the Participants’ Purchase Rights under the ongoing Offering shall terminate immediately after such purchase.

 

14.3 In the event of the proposed liquidation or dissolution of the Company, the Offering will terminate immediately prior to the consummation of such proposed transaction, unless otherwise provided by the Board in its sole discretion, and all outstanding options shall automatically terminate and the amounts of all payroll deductions and/or other contributions will be refunded without interest to the Participants.

 

15.       AMENDMENT OF THE PLAN

 

15.1 The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 14 relating to adjustments upon changes in securities and except as to amendments solely to benefit the administration of the Plan, to take account of a change in legislation or to obtain or maintain favorable tax, exchange or market control, or regulatory treatment for Participants or the Company, no amendment to the Plan shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary for the Plan to satisfy the requirements of Section 423 of the Code or other applicable laws or regulations, including the rules and regulations of the applicable exchange or market.

 

15.2 It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to employee stock purchase plans and/or to bring the Plan and/or Purchase Rights granted under the Plan into compliance therewith.

 

15.3 The rights and obligations under any Purchase Rights granted before amendment of the Plan shall not be impaired by any amendment of the Plan except (i) with the consent of the person to whom such Purchase Rights were granted, (ii) as necessary to comply with any laws or regulations, or (iii) as necessary to ensure that the Plan and/or Purchase Rights granted under the Plan comply with the requirements of Section 423 of the Code.

 

16.       TERMINATION OR SUSPENSION OF THE PLAN

 

16.1 The Board in its discretion may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate at the time that all of the shares of Common Stock reserved for issuance under the Plan, as increased and/or adjusted from time to time, have been issued under the terms of the Plan. No Purchase Rights may be granted under the Plan while the Plan is suspended or after it is terminated.

 

16.2 Any benefits, privileges, entitlements, and obligations under any Purchase Rights granted under the Plan while the Plan is in effect shall not be impaired by suspension or termination of the Plan prior to the end of the Offering in which such suspension or termination occurs except (i) as expressly provided in the Plan or with the consent of the person to whom such Purchase Rights were granted, (ii) as necessary to comply with any laws, regulations, or listing requirements, or (iii) as necessary to ensure that the Plan and/or Purchase Rights granted under the Plan comply with the requirements of Section 423 of the Code.

 

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17.       EFFECTIVE DATE OF THE PLAN

 

The Plan shall become effective as determined by the Board, but no Purchase Rights granted under the Plan shall be exercised unless and until the Plan has been approved by the stockholders of the Company within twelve (12) months before or after the date the Plan is adopted by the Board.

 

18.       MISCELLANEOUS PROVISIONS

 

18.1 The Plan and Offering do not constitute an employment contract. Nothing in the Plan or in the Offering shall in any way alter the at-will nature of a Participant’s employment or be deemed to create in any way whatsoever any obligation on the part of any Participant to continue in the employ of the Company, or on the part of the Company to continue the employment of a Participant.

 

19.       BOARD RULES FOR FOREIGN JURISDICTIONS

 

The Board may adopt rules or procedures relating to the operation and administration of the Plan to accommodate the specific requirements of local laws and procedures. Without limiting the generality of the foregoing, the Board is specifically authorized to adopt rules and procedures regarding handling of payroll deductions and/or other contributions by Participants, payment of interest, conversion of local currency, payroll tax, withholding procedures and handling of stock certificates, which vary with local requirements; however, if such varying provisions are not in accordance with the provisions of Section 423(b) of the Code, including, but not limited to, the requirement of Section 423(b)(5) of the Code that all options granted under the Plan shall have the same rights and privileges unless otherwise provided under the Code and the regulations promulgated thereunder, then the individuals affected by such varying provisions shall be deemed to be participating under a sub-plan and not the Plan. The Board may also adopt sub-plans applicable to particular Related Corporations or locations, which sub-plans may be designed to be outside the scope of Code section 423. The rules of such sub-plans may take precedence over other provisions of this Plan, with the exception of Section 4, but unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan shall govern the operation of such sub-plan.

 

20.       REPORTS

 

Individual accounts shall be maintained for each Participant in the Plan. Statements of account shall be given to Participants at least annually, which statements shall set forth the amounts of payroll deductions and/or other contributions, the Purchase Price, the number of shares of Common Stock purchased, and the remaining cash balance, if any.

 

21.       NOTICES

 

All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

 

22.       ADDITIONAL RESTRICTIONS OF RULE 16b-3

 

The terms and conditions of options granted hereunder to, and the purchase of shares of Common Stock by, persons subject to Section 16 of the Exchange Act shall comply with the applicable provisions of Rule 16b-3. This Plan shall be deemed to contain, and such options shall contain, and the shares of Common Stock issued upon exercise thereof shall be subject to, such additional conditions and restrictions, if any, as may be required by Rule 16b-3 to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions.

 

23.       GOVERNING LAW

 

This Plan shall be governed by applicable laws of the State of Nevada and applicable federal law.

 

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24.       MISCELLANEOUS

 

(a)   Notwithstanding anything to the contrary contained herein, no interest shall accrue on the payroll deductions and/or other contributions of a Participant in the Plan unless otherwise required under applicable laws, in which case any Employees affected by such applicable laws shall be deemed to be participating in a sub-plan, unless the Board or the Committee otherwise expressly provides that such Employees shall be treated as participating in the Plan.

 

(b)   Notwithstanding anything to the contrary contained herein, all payroll deductions and/or other contributions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll reductions and/or other contributions unless otherwise required under applicable laws.

 

12ex10-1.htm

 

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made as of June 20, 2014, between Ranor, Inc., a Delaware corporation and division of TechPrecision Corporation (the “Company”), and Alexander Shen (the “Employee”).

 

RECITALS

 

WHEREAS, the Company is a wholly-owned subsidiary of TechPrecision Corporation, a Delaware corporation (“TechPrecision”);

 

WHEREAS, the Company desires to employ the Employee in the capacity and on the terms and conditions set forth herein, and the Employee desires to be employed by the Company on the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms, provisions and conditions set forth in this Agreement, the parties hereto hereby agree as follows:

1.           Employment. The Company agrees to employ the Employee during the Term specified in Paragraph 2 hereof, and the Employee agrees to accept such employment, upon the terms and conditions hereinafter set forth.

 

2.           Term. The Company hereby employs the Employee, and the Employee hereby accepts employment with the Company, beginning on June 23, 2014 (the “Start Date”), until termination of this Agreement in accordance with the provisions of Paragraph 6 of this Agreement (the “Term”).

 

3.           Duties and Responsibilities.

 

a.           The Employee shall serve as President of the Company.

 

b.           Subject to the authority of the Chief Executive Officer, or other designee of TechPrecision and the Board of Directors of TechPrecision (the “Board”) to modify the duties and responsibilities of the Employee, the Employee's powers, duties and responsibilities shall initially consist of such powers, duties and responsibilities as are customary to the office of President of a company and division similar in size and stature to the Company.  The Employee shall report to the Chief Executive Officer, or designee, of TechPrecision, the Board and others at the direction of the Board at such time and in such detail as the Chief Executive Officer of TechPrecision or the Board shall reasonably require.  Notwithstanding anything contained herein to the contrary, the Employee shall not be required to perform any act which would constitute or require the violation of any federal, state or local law, rule, regulation, ordinance or the like.

 

 

  

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c.           The Employee shall devote not less than an average of forty (40) hours per week to carrying out his duties hereunder and to the business of the Company and its affiliates, and during the Term the Employee agrees that he will (i) devote his best efforts and all his skill and ability to the performance of his duties hereunder; (ii) carry out his duties in a competent and professional manner; and (iii) generally promote the interests of the Company and its affiliates.  During the Term it shall not be a violation of this Agreement for the Employee to serve on civic or charitable boards or committees, to perform speaking engagements, or to manage his personal passive investments, so long as such activities (individually or collectively) do not interfere with the performance of the Employee's responsibilities as an employee of the Company.

 

4.           Compensation; Bonus; Stock Options.

 

a.           As compensation for services hereunder and in consideration of his agreement not to compete as set forth in Paragraph 8 hereof, the Company shall pay the Employee an initial base salary at the annual rate of Two Hundred Seventy Five Thousand Dollars ($275,000).  Such base salary shall be paid in equal installments in accordance with the normal payroll policies of the Company.

 

b.           The Employee's base salary as set forth in Paragraph 4(a) above may be increased by order of the Compensation Committee of the Board.

 

c.           With respect to the Company’s fiscal year ending March 31, 2015, the Employee shall be eligible for a performance bonus, payable in cash, with a bonus opportunity equal to 50% of the Employee’s base salary, based upon the achievement of such goals and objectives as approved by the Board within 90 days of employee’s start date.  Notwithstanding the foregoing, the Company will pay no less than one half of the target bonus amount for the fiscal year ending March 31, 2015.  With respect to each fiscal year during the Term subsequent to March 31, 2015, the Employee shall be eligible for an annual cash performance bonus of up to 50% of base salary based upon TechPrecision and the Company’s financial performance as set forth in a resolution of the Board within the first three months of each year hereunder and based upon the Company’s business plan.  Any amount payable to the Employee as an annual bonus pursuant to the terms of this Paragraph 4(c) shall be paid as soon as administratively practicable following the date that the Board determines the extent to which the applicable performance metrics have been achieved, provided that the Employee must be employed with the Company on the date of payment in order to receive such amount.

 

d.           As soon as reasonably practicable following the Start Date, the Company shall recommend to the Compensation Committee of the Board that the Employee be awarded stock options (the “Options”) of TechPrecision, par value $.0001 per share (“Common Stock”), pursuant to TechPrecision’s 2006 Long-Term Incentive Plan, as amended from time to time (the “Plan”). The options will have a Black Scholes value of $250,000 at the time of grant. The Options will vest in substantially equal amounts on the date of initial grant and each of the subsequent two anniversaries of the date of grant; provided that in the event of a Change in Control (as defined in the Plan), all outstanding, unvested Options shall become fully vested.  Any additional future option grants will be as the Board shall in its sole discretion institute.

 

 

  

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5.           Expenses; Fringe Benefits.

 

a.           The Company agrees to pay or to reimburse the Employee during the Term for all reasonable, ordinary and necessary business expenses incurred in the performance of his services hereunder in accordance with the policies of the Company as are from time to time in effect.  The Employee, as a condition to obtaining such payment or reimbursement, shall provide to the Company any and all statements, bills or receipts evidencing the travel or out-of-pocket expenses for which the Employee seeks payment or reimbursement, and any other information or materials required by such Company policy or as the Company may otherwise from time to time reasonably require.

 

b.           During the Term the Employee and, to the extent eligible, his dependents, shall be entitled to participate in and receive all benefits under any welfare benefit plans and programs provided by the Company (including without limitation, medical, dental, disability, group life (including accidental death and dismemberment) and business travel insurance plans and programs) applicable generally to the employees of the Company, subject, however, to the generally applicable eligibility and other provisions of the various plans and programs in effect from time to time.

 

c.           During the Term the Employee shall be entitled to participate in all retirement plans and programs (including without limitation any profit sharing/401(k) plan) applicable generally to the employees of the Company, subject, however, to generally applicable eligibility and other provisions of the various plans and programs in effect from time to time.  In addition, during the Term the Employee shall be entitled to receive fringe benefits and perquisites in accordance with the plans, practices, programs and policies of the Company from time to time in effect, available generally to the executive officers of the Company and consistent with the generally applicable guidelines determined by the Board.

 

d.           The Employee shall be entitled to four (4) weeks vacation per year and such holidays, sick days and personal days as are in accordance with the Company's policy then in effect for its employees generally, upon such terms as may be provided of general application to all employees of the Company.

 

e.           The position is located at Westminster, MA. The Board expects that within a reasonable period of time the Employee will relocate his principal residence within a reasonable commuting distance.  In connection with this process the Company will assist with temporary living arrangements and will provide $20,000 at the time of relocation to the Westminster, MA area.

 

 

 

  

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6.           Termination.

 

a.           The Employee’s employment hereunder shall terminate on the earliest of:  (i) on the date set forth in a written notice from the Board that his employment with the Company has been or will be terminated; (ii) on the date not less than thirty days following written notice from the Employee that he is resigning from the Company; (iii)  on the date of his death; or (iv) in accordance with Paragraph 6(c).  Upon cessation of his employment for any reason, unless otherwise consented to in writing by the Board, the Employee shall resign immediately from any and all officer, director and other positions he then holds with the Company and/or its affiliates.  Upon any cessation of his employment with the Company, the Employee will be entitled only to such compensation and benefits as described in this Paragraph 6.

 

b.           If the Employee’s employment with the Company ceases for any reason other than as described in Paragraph 6(c) below, then the Company’s obligation to the Employee will be limited solely to the payment of accrued and unpaid base salary through the date of such cessation of employment, subject to appropriate offsets (as permitted by applicable law) for debts or money due to the Company, including without limitation personal loans to the Employee and travel advances.  All compensation and benefits will cease at the time of such cessation of employment and, except as otherwise provided by COBRA, the Company will have no further liability or obligation by reason of such termination.  The foregoing will not be construed to limit the Executive’s right to payment or reimbursement for claims incurred prior to the date of such termination under any insurance contract funding an employee benefit plan, policy or arrangement of the Company in accordance with the terms of such insurance contract.

 

c.           The Company, or its successor, may terminate the Employee’s employment without Cause and the Employee may terminate his employment for Good Reason at any time during the six (6) month period following a Change in Control, in which case the Employee shall be entitled to receive continuation of his base salary for six months following termination of his employment, payable under the normal payroll practice of the Company (the “Severance Payment”); provided that Employee’s right to any Severance Payment and any amounts paid shall be forfeited and recoverable by the Company in the event the Company determines in good faith that the Employee has violated any provision in Paragraphs 8 or 9 hereof or any other provisions of this Agreement.  The Severance Payment is subject to the Employee’s execution and non-revocation of a general release substantially in the form attached as Exhibit A (the “Release”), which becomes effective within 60 days following the date of termination of his employment.  The Severance Payment will commence as soon as practicable after the Release becomes effective.  Notwithstanding the foregoing, if the 60 day period following the Executive’s termination ends in a calendar year after the year in which the Executive’s employment terminates, the Severance Payment shall commence no earlier than the first day of such later calendar year.  All other rights the Executive may have, other than as set forth in this Paragraph 6, shall terminate upon such termination.  For the avoidance of doubt, the transfer of Employee’s employment to an affiliate or successor of the Company shall not, on its own, constitute termination of the Employee’s employment without Cause or for Good Reason.

 

 

 

  

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7.           Definitions.  For purposes of this Agreement:

 

a.           “Cause” shall mean:

 

i.           the Employee’s failure or refusal to perform his material duties and responsibilities (other than any such failure resulting from Employee’s death) or his repeated failure or refusal to follow lawful and reasonable directives of the Company, the Chief Executive Officer of TechPrecision or the Board;

 

ii.           the willful misappropriation by Employee of the funds or property of the Company or its affiliates;

 

iii.           the commission by the Employee of any willful or intentional act, which he should reasonably have anticipated would reasonably be expected to have the effect of materially injuring the reputation, business or business relationships of the Company or its affiliates;

 

iv.           use of alcohol to excess or illegal drugs, continuing after written warning from the Company, the Chief Executive Officer of TechPrecision or the Board; or

 

v.           any breach by the Employee (not covered by any of clauses (i) through (iv) and other than in connection with the death of Employee) of any material provision of this Agreement.

 

b.           “Good Reason” shall mean, without the prior express written consent of the Employee:

 

i.           the Employee suffers a material adverse change in the duties, responsibilities or effective authority associated with his titles and positions, as set forth and described in Paragraph 3 of this Agreement; or

 

ii.           a material reduction by the Company or its successor of the Employee’s base salary.

 

Notwithstanding the foregoing, Good Reason shall not be deemed to exist unless the Employee gives the Company written notice within thirty (30) days after the occurrence of the event which the Employee believes constitutes the basis for Good Reason, specifying the particular act or failure to act which the Employee believes constitutes the basis for Good Reason.  If the Company or its successor fails to cure such act or failure to act, if curable, within thirty (30) days after receipt of such notice, the Employee may terminate his employment for Good Reason.

 

 

 

  

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8.           Non-Competition and Protection of Confidential Information.

 

a.           The Employee agrees that his services to the Company are of a special, unique, extraordinary and intellectual character and his position with the Company places him in a position of confidence and trust with the employees and customers of the Company and its affiliates.  Consequently, the Employee agrees that it is reasonable and necessary for the protection of the goodwill, intellectual property, trade secrets, designs, proprietary information and business of the Company that the Employee make the covenants contained herein. Accordingly, the Employee agrees that, during the period of the Employee's employment hereunder and for the period of one (1) year immediately following the termination of his employment hereunder, he shall not, directly or indirectly:

 

i.           own, operate, manage or be employed by or affiliated with any person or entity headquartered within or with a management office in the United States that engages in any business then being engaged or planned to be engaged in by the Company or any of its subsidiaries or affiliates; or

 

ii.           attempt in any manner to solicit from any customer or supplier business of the type performed for or by the Company or persuade any customer or supplier of the Company to cease to do business or to reduce the amount of business which any such customer or supplier has customarily done or contemplates doing with the Company, whether or not the relationship between the Company and such customer or supplier was originally established in whole or in part through his efforts; or

 

iii.           employ as an employee or retain as a consultant, or persuade or attempt to persuade any person who is at the date of termination of the Employee’s employment with the Company or at any time during the preceding year was, or in the six (6) months following such termination becomes, an employee of or exclusive consultant to the Company to leave the Company or to become employed as an employee or retained as a consultant by anyone other than the Company.

 

iv.           As used in this Paragraph 8, the term: “customer” and “supplier” shall mean any person or entity that is a customer or supplier of the Company at the date of termination of the Employee’s employment with the Company, or at any time during the preceding year was, or in the six (6) months following such termination becomes, a customer or supplier of the Company, or if the Employee’s employment shall not have terminated, at the time of the alleged prohibited conduct.

 

b.           The Employee agrees that he will not at any time (whether during the Term or after termination of this Agreement for any reason), disclose to anyone, any confidential information or trade secret of the Company or utilize such confidential information or trade secret for his own benefit, or for the benefit of third parties, and all memoranda or other documents compiled by him or made available to him during the Term pertaining to the business of the Company shall be the property of the Company and shall be delivered to the Company on the date of termination of the Employee’s employment with the Company or at any other time, as reasonable, upon request. The term “confidential information or trade secret” does not include any information which (i) becomes generally available to the public other than by breach of this provision, or (ii) is required to be disclosed by law or legal process.

 

 

 

  

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c.           If the Employee commits a breach or threatens to commit a breach of any of the provisions of Paragraphs 8(a) or (b) hereof, the Company shall have the right to have the provisions of this Agreement specifically enforced by any court having jurisdiction without being required to post bond or other security and without having to prove the inadequacy of any other available remedies, it being acknowledged and agreed that any such breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company. In addition, the Company may take all such other actions and seek such other remedies available to it in law or in equity and shall be entitled to such damages as it can show it has sustained by reason of such breach.

 

d.           The parties acknowledge that the type and periods of restriction imposed in the provisions of Paragraphs 8(a) and (b) hereof are fair and reasonable and are reasonably required for the protection of the Company and the goodwill associated with the business of the Company; and that the time, scope, geographic area and other provisions of this Paragraph 8 have been specifically negotiated by sophisticated parties and accordingly it is reasonable that the restrictive covenants set forth herein are not limited by narrow geographic area. If any of the covenants in Paragraphs 8(a) or (b) hereof, or any part thereof, is hereafter construed to be invalid or unenforceable, it is the intention of the parties that the same shall not affect the remainder of the covenant or covenants, which shall be given full effect, without regard to the invalid portions. If any of the covenants contained in Paragraphs 8(a) or (b), or any part thereof, is held to be unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination should reduce the duration and/or areas of such provision such that, in its reduced form, said provision shall then be enforceable. The parties intend to and hereby confer jurisdiction to enforce the covenants contained in Paragraphs 8(a) and (b) upon the courts of any jurisdiction within the geographical scope of such covenants. In the event that the courts of any one or more of such jurisdictions shall hold such covenants wholly unenforceable by reason of the breadth of such time, scope or geographic area, it is the intention of the parties hereto that such determination not bar or in any way affect the Company’s right to the relief provided above in the courts of any other jurisdiction within the geographical scope of such covenants, as to breaches of such covenants in such other respective jurisdictions, the above covenants as they relate to each jurisdiction being, for this purpose, severable into diverse and independent covenants.

 

e.           For purposes of Paragraphs 8 and 9 of this Agreement, the “Company” shall be deemed to include the Company and each of its subsidiaries and affiliates.

 

 

 

  

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9.           Intellectual Property. During the Term, the Employee will disclose to the Company all ideas, inventions, advertising campaigns, designs, logos, slogans, processes, operations, products or improvements which may be patentable or copyrightable or subject to any trade or service mark or name, and business plans developed by him during such period, either individually or in collaboration with others, which relate to the business of the Company (“Intellectual Property”). The Employee agrees that such Intellectual Property will be the sole property of the Company and that he will at the Company’s request and cost do whatever is reasonably necessary to secure the rights thereto by patent, copyright, trademark or otherwise to the Company.

 

10.           Enforceability. The failure of either party at any time to require performance by the other party of any provision hereunder shall in no way affect the right of that party thereafter to enforce the same, nor shall it affect any other party’s right to enforce the same, or to enforce any of the other provisions in this Agreement; nor shall the waiver by either party of the breach of any provision hereof be taken or held to be a waiver of any subsequent breach of such provision or as a waiver of the provision itself.

 

11.           Assignment. This Agreement is binding on and is for the benefit of the parties hereto and their respective successors, heirs, executors, administrators and other legal representatives. Neither this Agreement nor any right or obligation hereunder may be sold, transferred, assigned, pledged or hypothecated by either party hereto without the prior written consent of the other party; provided, the Company may assign its rights and obligations under the Agreement without written consent in connection with the sale or other transfer of all or substantially all of the Company’s business (whether by way of sale of stock, assets, merger or otherwise).

 

12.           Severability. In the event any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall nevertheless be binding upon the parties with the same effect as though the void or unenforceable part had been severed and deleted.

 

13.           Life Insurance. The Employee agrees that the Company shall have the right to obtain life insurance on the Employee’s life, at the Company’s sole expense and with the Company as the sole beneficiary thereof to that end, the Employee shall (a) cooperate fully with the Company in obtaining such life insurance, (b) sign any necessary consents, applications and other related forms or documents and (c) take any reasonably required medical examinations.

 

14.           Notice. Any notice, request, instrument or other document to be given under this Agreement by either party hereto to the other shall be in writing and shall be deemed effective (a) upon personal delivery, if delivered by hand, (b) three (3) days after the date of deposit in the mails, postage prepaid, if mailed by certified or registered mail, or (c) on the next business day, if sent by a prepaid overnight courier service, and in each case addressed as follows:

 

	
If to the Employee:

	
Mr. Alexander Shen

  

 

 

 

  

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If to the Company:

	
Ranor, Inc. c/o TechPrecision, Corp.

3477 Corporate Parkway, Suite 140

Center Valley, PA 18034

Attention: Executive Chairman

 

Any party may change the address to which notices are to be sent by giving notice of such change of address to the other party in the manner herein provided for giving notice.

 

15.           No Conflict. The Employee represents and warrants that he is not subject to any agreement, instrument, order, judgment or decree of any kind, or any other restrictive agreement of any character, which would prevent him from entering into this Agreement or which would be breached by the Employee upon the performance of his duties pursuant to this Agreement.

 

16.           Section 409A Compliance.  The following rules shall apply, to the extent necessary, with respect to distribution of the payments and benefits, if any, to be provided to the Employee under this Agreement. Subject to the provisions in this Paragraph 16, the severance payments pursuant to this Agreement shall begin only upon the date of the Employee’s “separation from service” (determined as set forth below) which occurs on or after the date of the Employee’s termination of employment.

 

a.             This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (to the extent applicable) (“Section 409A”) and the parties hereto agree to interpret, apply and administer this Agreement in the least restrictive manner necessary to comply therewith and without resulting in any increase in the amounts owed hereunder by the Company.

 

b.                      It is intended that each installment of the severance payments and benefits provided under this Agreement shall be treated as a separate “payment” for purposes of Section 409A.  Neither the Employee nor the Company shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A.

 

c.             If, as of the date of the Employee’s “separation from service” from the Company, the Employee is not a “specified employee” (within the meaning of Section 409A), then each installment of the severance payments and benefits shall be made on the dates and terms set forth in this Agreement, without regard to Paragraph 16(d).

 

d.             If, as of the date of the Employee’s “separation from service” from the Company, the Employee is a “specified employee” (within the meaning of Section 409A), then:

 

i.             Each installment of the severance payments and benefits due under this Agreement that, in accordance with the dates and terms set forth herein, will in all circumstances, regardless of when the separation from service occurs, be paid within the short-term deferral period (as defined in Section 409A) shall be treated as a short-term deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) (or any successor provision) to the maximum extent permissible under Section 409A; and

 

 

  

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ii.             Each installment of the severance payments and benefits due under this Agreement that is not described in Paragraph 16(d)(i) above and that would, absent this subsection, be paid within the six-month period following the Employee’s “separation from service” from the Company shall not be paid until the date that is six months and one day after such separation from service (or, if earlier, the Employee’s death), with any such installments that are required to be delayed being accumulated during the six-month period and paid in a lump sum on the date that is six months and one day following the Employee’s separation from service and any subsequent installments, if any, being paid in accordance with the dates and terms set forth herein; provided, however, that the preceding provisions of this sentence shall not apply to any installment of severance payments and benefits if and to the maximum extent that such installment is deemed to be paid under a separation pay plan that does not provide for a deferral of compensation by reason of the application of Treasury Regulation 1.409A-1(b)(9)(iii) (or any successor provision) (relating to separation pay upon an involuntary separation from service).  Any installments that qualify for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) (or any successor provision) must be paid no later than the last day of the second taxable year following the taxable year in which the separation from service occurs.

 

e.             The determination of whether and when the Employee’s separation from service from the Company has occurred shall be made in a manner consistent with, and based on the presumptions set forth in, Treasury Regulation Section 1.409A-1(h) (or any successor provision).  Solely for purposes of this Section, “Company” shall include all persons with whom the Company would be considered a single employer as determined under Treasury Regulation Section 1.409A-1(h)(3) (or any successor provision).

 

f.             All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A to the extent that such reimbursements or in-kind benefits are subject to Section 409A, including, where applicable, the requirements that (i) any reimbursement is for expenses incurred during the Employee’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred and (iv) the right to reimbursement is not subject to set off or liquidation or exchange for any other benefit.

 

g.             Notwithstanding anything herein to the contrary, the Company shall have no liability to the Employee or to any other person if the payments and benefits provided in this Agreement that are intended to be exempt from or compliant with Section 409A are not so exempt or compliant.

 

 

 

  

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17.             Miscellaneous.

 

a.           The headings contained in this Agreement are for reference purposes only, and shall not affect the meaning or interpretation of this Agreement.

 

b.           The Company may withhold from any amount payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to applicable law or regulation.

 

c.           This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction. Any action arising out of the breach or threatened breach of this Agreement shall be commenced in a state court of the State of Delaware and the parties hereto hereby submit to the jurisdiction of such courts for the purpose of enforcing this Agreement.

 

d.           This Agreement represents the entire agreement between the Company and the Employee with respect to the subject matter hereof, and all prior agreements relating to the employment of the Employee, written or oral, are nullified and superseded hereby.

 

e.           This Agreement may not be orally canceled, changed, modified or amended, and no cancellation, change, modification or amendment shall be effective or binding, unless in writing and signed by both parties to this Agreement, and any provision hereof may be waived only by an instrument in writing signed by the party or parties against whom or which enforcement of such waiver is sought.

 

f.           As used in this Agreement, any gender includes a reference to all other genders and the singular includes a reference to the plural and vice versa.

 

 

* * * * *

 

 

 

  

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

	
COMPANY:

 

 

	  	
EMPLOYEE:

	
RANOR, INC.

 

 

	  	/s/ Alexander Shen  
	
Alexander Shen

	
By:

	/s/ Leonard M. Anthony  	  	  
	  	
Leonard M. Anthony

Executive Chairman TechPrecision Corp and Sole Director of Ranor, Inc.

	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  

 

 

 

 

 

  

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Exhibit A

 

FORM OF GENERAL RELEASE OF ALL CLAIMS

 

This General Release of All Claims is made as of _________  __, 20__ (“General Release”), by Alexander Shen (the “Employee”).

 

WHEREAS, Ranor, Inc., a Delaware corporation and division of TechPrecision, Corporation (the “Company”) and the Employee are parties to that certain Employment Agreement dated as of June 20, 2014 (the “Employment Agreement”);

 

WHEREAS, the Employee’s employment with the Company has been terminated pursuant to Paragraph 6(c) of the Employment Agreement;

 

WHEREAS, the execution of this General Release is a condition precedent to the payment of severance as set forth in Paragraph 6(c) of the Employment Agreement;

 

WHEREAS, in consideration for the Employee’s signing of this General Release, the Company will provide the Employee with severance benefits pursuant to Paragraph 6(c) of the Employment Agreement; and

 

WHEREAS, the Employee and the Company intend that this General Release shall be in full satisfaction of the obligations described in this General Release owed to the Employee by the Company, including those under the Employment Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, intending to be legally bound hereby, the Company and the Employee agree as follows:

 

1.           The Employee, for himself, the Employee’s spouse, heirs, administrators, children, representatives, executors, successors, assigns, and all other persons claiming through the Employee, if any (collectively, “Releasors”), does hereby release, waive, and forever discharge the Company and each of its respective agents, subsidiaries, parents, affiliates, related organizations, employees, officers, directors, attorneys, successors, and assigns (collectively, the “Releasees”) from, and does fully waive any obligations of Releasees to Releasors for, any and all liability, actions, charges, causes of action, demands, damages, or claims for relief, remuneration, sums of money, accounts or expenses (including attorneys’ fees and costs) of any kind whatsoever, whether known or unknown or contingent or absolute, which heretofore have been or which hereafter may be suffered or sustained, directly or indirectly, by Releasors in consequence of, arising out of, or in any way relating to:  (a) the Employee’s employment with the Company and any of its subsidiaries and affiliates; (b) the termination of the Employee’s employment with the Company and any of its subsidiaries and affiliates; (c) the Employment Agreement; or (d) any events, acts, agreements or conduct occurring on or prior to the date of this General Release.  The foregoing release and discharge, waiver and covenant not to sue includes, but is not limited to, all claims and any obligations or causes of action arising from such claims, under common law including wrongful or retaliatory discharge, breach of contract (including but not limited to any claims under the Employment Agreement and any claims under any restricted stock or stock option or similar agreements between the Employee, on the one hand, and the Company or any of its subsidiaries, on the other hand) and any action arising in tort including libel, slander, defamation or intentional infliction of emotional distress, and claims under any federal, state or local statute including the Age Discrimination in Employment Act (“ADEA”), Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 and 1871 (42 U.S.C. § 1981), the National Labor Relations Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act of 1990, the Rehabilitation Act of 1973, or the discrimination or employment laws of any state or municipality, and/or any claims under any express or implied contract which Releasors may claim existed with Releasees.  This also includes a release of any claims for wrongful discharge and all claims for alleged physical or personal injury, emotional distress relating to or arising out of the Employee’s employment with the Company or any of its subsidiaries or affiliates or the termination of that employment; and any claims under the WARN Act or any similar law, which requires, among other things, that advance notice be given of certain work force reductions.  This release and waiver does not apply to:  (i) any right to indemnification now existing under the charter or bylaws; (ii) any rights to the receipt of employee benefits which vested on or prior to the date of this General Release; (iii) the right to receive the Severance Payment under Paragraph 6(c) of the Employment Agreement and the right to reimbursement of expenses under Paragraph 5(a) of the Employment Agreement; and (iv) the right to employee-paid continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act, if available.

 

 

  

  

  

 

 

 

 

2.           Excluded from this General Release and waiver are any claims which cannot be waived by law, including but not limited to the right to participate in an investigation conducted by certain government agencies.  The Employee does, however, waive the Employee’s right to any monetary recovery should any agency (such as the Equal Employment Opportunity Commission) pursue any claims on the Employee’s behalf.  The Employee represents and warrants that the Employee has not filed any complaint, charge, or lawsuit against the Releasees with any government agency or any court.  The Employee also represents and warrants that he has been paid for all time worked and has received all the leave of absence and leave benefits and protections for which the Employee was eligible.

 

3.           The Employee agrees never to seek personal recovery from Releasees in any forum for any claim covered by the above waiver and release language.  If the Employee violates this General Release by suing Releasees, other than under the ADEA or as otherwise set forth in Paragraph 1 hereof, the Employee shall be liable to the Company for its reasonable attorneys’ fees and other litigation costs incurred in defending against such a suit to the extent permitted by law.

 

4.           The Employee acknowledges and recites that:

 

a.           the Employee has executed this General Release knowingly and voluntarily and is knowingly and voluntarily waiving any rights he has under the ADEA;

 

b.           the Employee has read and understands this General Release in its entirety;

 

 

 

  

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c.           the Employee has been advised and directed in writing (and this subparagraph (c) constitutes such written direction) to seek legal counsel and any other advice the Employee wishes with respect to the terms of this General Release before executing it;

 

d.           the Employee’s execution of this General Release has not been forced by any employee or agent of the Company, and the Employee has had an opportunity to negotiate about the terms of this General Release;

 

e.           the Employee’s waiver does not apply to any rights or claims that arise after the date the Employee signs this General Release;

 

f.           the Employee has been offered twenty one (21) calendar days after receipt of this General Release to consider its terms before executing it; and

 

g.           the payment of severance pursuant to Paragraph 6(c) of the Employment Agreement is consideration for the Employee’s covenants and agreements set forth in this General Release and is in addition to anything of value to which the Employee is otherwise entitled.

 

5.           This General Release shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction, except for the application of pre-emptive Federal law.

 

6.           The Employee shall have seven (7) days from the date he executes this General Release to revoke his waiver of any ADEA claims by providing written notice of the revocation to the Company, as provided in Paragraph 14 of the Employment Agreement.

 

7.           Defined terms not defined in this General Release have the meanings given in the Employment Agreement.

 

PLEASE READ THIS AGREEMENT CAREFULLY.  IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

	
Date:

	  	  	  
	  	  	  	
 

Alexander Shen

 

 

 -3-

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