Document:

exh10_50.htm

[PAGE NUMBERS REFER TO PAPER DOCUMENT ONLY.]

 

EXHIBIT 10.50

 

EMPLOYMENT SEPARATION AND RELEASE AGREEMENT

THIS EMPLOYMENT SEPARATION AND RELEASE AGREEMENT is made and entered into as of the 13th day of August, 2010, by and between JAMES MILLS, an individual (“Employee”), and CONSUMER PROGRAMS INCORPORATED, a Missouri corporation (alternatively and collectively with its affiliated corporations hereinafter, “CPI”).

 

In consideration of the covenants set forth below and for other valuable consideration, receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

    1.  Employment Termination.  Employee's last day of active employment by CPI shall be August 13, 2010 (the “Termination Date”)

 

    2.  Severance Payment.  CPI hereby agrees to pay to Employee a severance payment as described in Exhibit B, attached hereto and incorporated by this reference (hereinafter the “Severance Payment”).  Employee acknowledges that the Severance Payment is a separate and additional benefit provided by CPI in exchange for signing this Agreement and will be provided only if he signs this Agreement.  Employee further acknowledges that he has been afforded the option of not signing this Agreement in which case Employee would not receive the Severance Payment, but would preserve whatever rights of recourse, if any, Employee may have against CPI.

 

    3.  Other Benefits.  CPI has informed Employee that regardless of whether he signs this Agreement, Employee is entitled to the benefits described on Exhibit A, attached hereto and incorporated herein. 

 

  

  

 

  

    4.  Release of CPI.  In consideration of the payment by CPI to Employee of the Severance Payment, Employee, on his own behalf and on behalf of his heirs and legal representatives, does hereby release CPI, its affiliated corporations, and its respective directors, officers, employees and agents from and waives any and all claims and causes of action for money or other remuneration of any kind whatsoever from CPI, arising directly or indirectly out of, or in any way related to Employee’s employment by CPI or the termination of that employment.  This release includes, but is not limited to, claims and rights based on (i) written or implied contracts, (ii) legal restrictions on CPI’s right to terminate Employee’s employment, if any, or (iii) any federal, state or local law, ordinance or regulation prohibiting employment discrimination, including without limitation, any and all claims arising under or in connection with the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Americans with Disabilities Act, the Family and Medical Leave Act, Title VII of the Civil Rights Act of 1964, the Occupational Safety and Health Act, the Worker Adjustment and Retraining Notification Act, the Employee Retirement Income Security Act, 42 U.S.C. Sections 1981, 1983 and 1985, the Missouri Human Rights Act (all such statutes as amended) and any regulations under such authorities, and any other federal, state or local law, ordinance or regulation applicable to Employee’s employment by CPI or the termination thereof; and any public policy, tort, or common law claim; and any claim for costs, fees, or other expenses including attorneys’ fees incurred in these matters.  Nothing contained herein shall be deemed to waive Employee’s right to file a charge with or participate in an investigation conducted by an administrative agency, or the right to sue for breach of this Agreement.  Employee does, however, waive his right to any monetary recovery if any administrative agency pursues his claims against CPI.

 

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    Employee hereby acknowledges that he has read this release and has been advised to consult an attorney with respect to the terms hereof, and that he fully understands and voluntarily accepts such terms.  The purpose of this release is to make a full, final and complete settlement of all claims between the parties, known or unknown, arising directly or indirectly out of, or in any way related to Employee’s employment by CPI, or the termination thereof.  Employee acknowledges and agrees that the payment described in paragraph 2 above is in total satisfaction and discharge of any and all claims of Employee for or with respect to accrued compensation, bonuses, vacation pay, and other employment benefits of any kind whatsoever, and Employee hereby releases and forfeits any and all rights except as otherwise provided in this Agreement.  Nothing contained herein shall be deemed to waive any of Employee’s rights which arise after the date Employee signs this Agreement or to his continued medical coverage under the Benefit Plan in accordance with COBRA and regulations promulgated thereunder, and in accordance with the terms of the Benefit Plan.

 

    5.  ADEA Waiver.   In addition to the provisions contained herein, and by execution of this Agreement, Employee expressly waives any and all rights to claims arising under the Age Discrimination in Employment Act of 1967, as amended, ("ADEA") and:

 

	
a)  

	
Employee acknowledges that his waiver of rights or claims arising under the ADEA is in writing, written in a manner calculated to be understood, and is understood by him;

 

 

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b)  

	
Employee expressly understands that this waiver refers to rights or claims arising under the ADEA;

	
c)  

	
Employee expressly understands that by execution of this Agreement, he does not waive any ADEA rights or claims that may arise after the date this Agreement is executed;

	
d)  

	
Employee acknowledges that the waiver of his rights on claims arising under the ADEA is in exchange for the consideration outlined in paragraph 2 above, which is above and beyond that to which he is otherwise entitled to receive from CPI;

	
e)  

	
Employee acknowledges that CPI expressly advised him by this Agreement to consult with an attorney of his choosing prior to executing this Agreement.

 

    Employee has been advised by CPI that Employee is given a period of twenty-one (21) calendar days following his receipt of this Agreement within which to consider this Agreement.  Employee may elect to accept or reject this offer within the time period.  If Employee does nothing within the twenty-one (21) day period, CPI shall consider the offer withdrawn.  Employee certifies that if he signs this Agreement prior to the expiration of the twenty-one (21) days following his receipt of the Agreement, he does so knowingly and willingly.

 

    Furthermore, Employee acknowledges and understands that for a period of seven (7) calendar days after he signs and delivers this Agreement to CPI, he may change his mind and revoke the Agreement.   If Employee desires to revoke the Agreement, Employee must deliver notice of such revocation in writing to Jane E. Nelson, CPI Corp., Legal Department, 1706 Washington Avenue, St. Louis, Missouri 63103, on or before the close of business on the seventh day following Employee's execution and delivery of the Agreement.  Consequently, this Agreement will not be in effect until seven (7) days have passed following Employee's signing and delivery of the Agreement.  If the revocation is mailed, it shall be deemed effective at the time it is mailed.  If hand-delivered, a notice of revocation shall be deemed effective on the date delivered.  If Employee gives notice of revocation during the revocation period, this Agreement shall become null and void and all rights and claims of both CPI and Employee, which would have existed but for the execution of this Agreement, shall be restored.

 

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    6.  Withholding Taxes.  CPI shall have the right to withhold from all payments due Employee hereunder to the extent required by law or regulation, all federal, state and local income and other taxes applicable to such payments.

 

    7.  Nondisclosure.  Employee acknowledges that during his employment with CPI, Employee learned information that is confidential and proprietary to CPI, including information concerning CPI’s business and its customers that is not generally known to the public.  Employee agrees that he will not use any such information for personal benefit or disclose such information to any other company or individual, either directly or indirectly, without the prior written consent of CPI.  The obligations of this section shall not apply, however, to information that becomes generally known to and available for use by the public through no act or omission of Employee.

 

    8.  Return of Property.  Employee warrants that he has returned or will return to CPI all property of CPI in Employee's possession or under his control, including but not limited to computers, access cards, keys, credit cards, equipment and lists of any kind, including lists of prices, customers, personnel, addresses, vendors, or suppliers.

 

    9. Confidentiality/Non-Disparagement.  Except as otherwise required by law or legal process, Employee acknowledges and agrees that he will keep the negotiations

 

 

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leading to this Agreement, as well as the terms, amount, and fact of this Agreement strictly and completely confidential, and that he will not communicate or otherwise disclose to any employee of CPI (past, present, or future), or to any member of the general public, the terms, amounts, or fact of this Agreement; provided, however, that Employee may make such disclosures to his attorney, financial and/or tax advisor, his spouse or immediate family members as long as they agree to keep the information confidential.  Employee further agrees that he will not take any action detrimental to CPI, nor make, or assist others in making, any negative, disparaging, detrimental, or derogatory statements and/or communications by any method against CPI, or  (except as required by law or legal process) give testimony against CPI.     Employee understands that any breach of this provision is a material breach of this Agreement and in the event of any such breach, CPI will be relieved of any obligation to make further payment pursuant to the provisions of paragraph 2 and Employee will be required to repay any amount previously paid pursuant to the provisions of paragraph 2.

 

 

    10.  Default by Employee.  In the event that Employee breaches or contests any of the provisions of this Agreement, then CPI shall be relieved and discharged from its obligations to provide Employee the Severance Payment described in paragraph 2 and Employee will promptly return all consideration set forth in paragraph 2 and received by Employee up to the time of the breach or contest.    The provisions of this paragraph shall be in addition to, and not in lieu of, any other rights and remedies CPI may have at law or in equity.

 

 

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    11.  Attorney’s Fees.  In the event that litigation is required to enforce any provision of this Agreement, the prevailing party shall be entitled to recover reasonable attorney fees.

 

    12.  Modification and Waiver/Entire Agreement.  No modification, amendment, or waiver of any of the provisions of this Agreement shall be effective unless made in writing specifically referring to this Agreement, and signed by all parties.   The failure to enforce at any time one or more of the provisions of this Agreement shall in no way be construed to be a waiver of such provisions.  Employee acknowledges that he has not relied on any written or verbal representation not set forth in this Agreement.

 

    13.  Severability.  The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted.

 

    14.  Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Missouri.

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

	
JAMES MILLS

 

 

 

/s/James Mills   

________________________________                                                          

James Mills

	
CONSUMER PROGRAMS INCORPORATED

A Missouri corporation

 

 

By:/s/Renato Cataldo

_______________________________________

Renato Cataldo

President and Chief Executive Officer

 

	
   

 

 

 

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EXHIBIT A

CPI Corp.

Benefits Summary without Release Agreement

Name:                      James Mills

Service Date:          September 22, 2008

Pay

You will receive a full week salary for week ending August 13, 2010.

Vacation

You will receive unused, accrued vacation hours on your last regular paycheck.

Medical and Dental Insurance

Group coverage will end at midnight on August 13, 2010.  Coverage may be continued under the COBRA continuation plan for a maximum of 18 months by paying the full monthly COBRA premium in effect.  A COBRA notice with detailed premium amounts will be mailed to your home.  If you elect COBRA, monthly payment coupons will be sent to you for submitting your payments by check or money order.

Life Insurance and Disability Insurance

Employee Life Insurance ends August 13, 2010.  Conversion to an individual policy is available for this plan. If interested in converting, paperwork will be included with your COBRA notice and must be returned before September 13, 2010.

Coverage for Short Term and Long Term Disability Insurance, Accidental Death and Dependent Term Life Insurance ends on August 13, 2010.

CPI Profit Sharing Plan

Upon termination of employment, you may request a distribution from the Plan.  If your account balance is $1,000 or more, you are not required to take a distribution until age 701⁄2.  Pre-tax (401(k)) contributions, earnings, CPI stock and/or cash from the sale of stock, if any, and dividends are considered taxable income and subject to regular income tax withholding unless rolled into another tax deferred plan.  If a direct rollover is not authorized, 20% of the taxable amount will be withheld for taxes.  In addition to regular withholding, prior to reaching age 591⁄2, a 10% early withdrawal penalty tax may also be payable on amounts not rolled over.  Previously taxed (401(m)) contributions, when withdrawn, are exempt from all taxation.

If you have any questions regarding your 401(k) account, please call Charles Schwab at 800-724-7526.

 

 

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EXHIBIT B

CPI Corp.

Benefits Summary with Release Agreement

In addition to the benefits detailed on Exhibit A, you will be entitled to the following benefits if you sign the Release Agreement.  The Release Agreement incorporates a statutory waiting period of seven days after CPI's receipt of two signed copies of the Release Agreement from you.

Separation Payment

You will receive a lump sum gross severance payment of $275,000.00.   You will receive this payment within ten (10) days after the Company’s receipt of your signed release.

Vacation

You will receive payment for 83 unused, accrued vacation hours.

Medical and Dental Insurance

You have elected to continue your coverage under COBRA.  Your payment for the first 3 months will be at a reduced premium equal to the current active employee rates.  If you wish to continue your coverage thereafter, you will be required to pay COBRA rates.  Monthly payment coupons will be sent to you.  CPI will apply your check in the amount of $1,311.94 to the cost of your coverage.

If you have any questions, please call the following people at (314) 231-1575 or (800) 669-9699, Dan Duggan, extension 3645 or Karen Staten, extension 3233.

 

9execstockplan2010.htm

Exhibit 4a

 

Adopted by the board of directors on February 9, 2010

Approved by the shareholders on April 28, 2010

THE EASTERN COMPANY

2010 EXECUTIVE STOCK INCENTIVE PLAN

1.           Purpose.

The purpose of The Eastern Company 2010 Executive Stock Incentive Plan (the "Plan") is to promote the interests of The Eastern Company and its shareholders by providing a method whereby executives and other key employees of the Company may become owners of the Company's common stock by the exercise of incentive stock options or nonqualified stock options or the grant of shares of restricted stock, and thereby increase their proprietary interest in the Company's business, encourage them to remain in the employ of the Company and increase their personal interest in its continued success and progress.  In addition, another purpose of the Plan is to promote the interests of the Company by providing a method whereby nonemployee directors of the Company may become owners of the Company's common stock by the exercise of nonqualified stock options or the grant of shares of restricted stock, and thereby encourage qualified individuals to become members of the board of directors of the Company.

2.           Definitions.

As used herein, the following terms shall have the following meanings:

(a)           "Award" shall mean the grant of an incentive stock option, a nonqualified stock option, restricted stock, or other stock-based methods of compensation authorized by Section 6 of the Plan.

(b)           "Award Agreement" shall mean an agreement described in Section 7 of the Plan which is entered into between the Company and a Participant and which sets forth the terms, conditions and limitations applicable to an Award granted to the Participant.

(c)           "Board" shall mean the board of directors of The Eastern Company.

(d)           "Code" shall mean the Internal Revenue Code of 1986, as amended.

(e)           "Committee" shall mean the Compensation Committee of the Board or any successor committee with substantially the same responsibilities.

(f)           "Company" shall mean The Eastern Company and each “parent or subsidiary corporation” of The Eastern Company (as those terms are defined in Section 424 of the Code).

  

  

  

(g)           "Company Common Stock" shall mean the common stock, no par value, of The Eastern Company.

(h)           "Disability" shall mean the inability of a Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months, as defined in Section 22(e)(3) of the Code.

(i)           "Employee" shall mean an employee of the Company.

(j)           "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended and in effect from time to time, or any successor statute.

(k)           "Fair Market Value" shall mean the reported price at which Company Common Stock was last traded on the day on which such value is to be determined (or, if there are no reported trades on such day, the last previous day on which there was a reported trade).

(l)           "Incentive Stock Option" shall mean a Stock Option which complies with all of the requirements for incentive stock options set forth in Section 422 of the Code and which may be issued pursuant to Section 6.1.

(m)           "Insider" shall mean any person who is subject to Section 16 of the Exchange Act.

(n)           "Non-Employee Director" shall mean a member of the board of directors of The Eastern Company who is not an Employee.

(o)           "Nonqualified Stock Option" shall mean a Stock Option which does not comply with all of the requirements for Incentive Stock Options set forth in Section 422 of the Code and which may be issued pursuant to Section 6.1.

(p)           "Parent and/or Subsidiary Corporations" shall mean the parent and/or subsidiary corporations of The Eastern Company, as those terms are defined for purposes of Section 424 of the Code.

(q)           "Participant" shall mean an Employee or a Non-Employee Director who has been designated by the Committee as eligible to receive an Award pursuant to the terms of the Plan.  The only Employees that the Committee may designate as Participants are those Employees who are salaried officers or key employees (whether or not directors) of the Company.

(r)           "Restricted Stock" shall mean shares of Company Common Stock which have certain restrictions attached to the ownership thereof and which may be issued pursuant to Section 6.2 of the Plan.

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(s)           "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission, as now in force or as such regulation or successor regulation shall hereafter be amended.

(t)           "Section 16" shall mean Section 16 of the Exchange Act and the rules promulgated thereunder, as they may be amended from time to time.

(u)           "Securities Act" shall mean the Securities Act of 1933, as amended and in effect from time to time, or any successor statute.

(v)           "Stock Option" shall mean a right granted pursuant to Section 6.1 of the Plan to purchase a specified number of shares of Company Common Stock at a specified price during a specified period of time.  Stock Options may be either Incentive Stock Options or Nonqualified Stock Options.

3.           Administration.

(a)           In order to administer the issuance of Awards to Participants pursuant to the Plan, there shall be a Committee which is appointed by the Board and which consists of not less than two Non-Employee Directors of the Company.  Each member of the Committee shall be a non-employee director as such term is defined for purposes of Rule 16b-3.

(b)           Subject to the express provisions of the Plan, the Committee shall periodically determine which Employees and/or Non-Employee Directors shall be Participants in the Plan and the nature, amount, pricing, timing and other terms of the Awards.  However, in no event may an Incentive Stock Option be granted to a Non-Employee Director.  Each Award shall be evidenced by an Award Agreement which shall be signed by an officer of the Company and by the Participant.

(c)           The Committee shall have full power and authority, subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be issued or adopted by the Board, to interpret the provisions of and administer the Plan.  Subject to any applicable provisions of the certificate of incorporation or the bylaws of the Company, all such decisions shall be final and binding on all persons including the Company and its shareholders, Employees, Non-Employee Directors and Participants.  In the event of any conflict between an Award Agreement and the Plan, the terms of the Plan shall govern.

(d)           The Committee may delegate to designated officers or employees of the Company the authority to execute and deliver such instruments and documents, to do all such acts and things, and to take all such other steps deemed necessary or advisable for the effective administration of the Plan in accordance with its terms and purpose.

(e)           It is the intent of the Company that the Plan and the Awards granted hereunder shall satisfy and be interpreted in a manner that, in the case of Participants who are or may be Insiders, satisfies the applicable requirements of Rule 16b-3, so that such persons will be entitled

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to the benefits of Rule 16b-3 or other exemptive rules under Section 16 and will not be subjected to avoidable liability thereunder.  If any provision of the Plan or of any such Award would otherwise frustrate or conflict with the intent expressed in this Section 3(e), that provision (to the extent possible) shall be interpreted and deemed amended so as to avoid such conflict.  To the extent of any remaining irreconcilable conflict with such intent, the provision shall be deemed void as applicable to Insiders.

4.           Eligibility.

Awards may be granted only to those Employees and/or Non-Employee Directors who are designated as Participants from time to time by the Committee.  However, in no event may an Incentive Stock Option be granted to a Non-Employee Director.  Subject to the express conditions of the Plan, the Committee shall determine which Employees and/or Non-Employee Directors shall be Participants, the types of Awards to be made to Participants and the terms, conditions and limitations applicable to the Awards.  More than one Award may be granted to the same Participant.

5.           Shares Subject to the Plan.

The total amount of Company Common Stock with respect to which Awards may be granted under this Plan shall not exceed in the aggregate 500,000 shares of Company Common Stock.  The shares relating to Awards granted under this Plan shall be authorized but unissued shares of Company Common Stock.

Subject to the limitations of the Code and Rule 16b-3 (if applicable), if any Award granted under this Plan lapses, expires, terminates, ceases to be exercisable or is forfeited, in whole or in part, for any reason, then the shares subject to but not issued under such Award shall be available for the grant of other Awards.

6.           Awards.

Awards may include those described in this Section 6.  The Committee may grant Awards singly or in combination with other Awards, as the Committee may in its sole discretion determine.  Subject to the other provisions of this Plan, Awards may also be granted in combination with, in replacement of, or as alternatives to, grants or rights under any other stock incentive plan of the Company.

6.1.           Stock Options.

(a)           The exercise price of each Stock Option shall be determined by the Committee.  However, in the case of Incentive Stock Options, in no event shall the exercise price be less than one hundred percent (100%) of the Fair Market Value of the shares of Company Common Stock at the time of grant of the Stock Option.

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(b)           In no event shall an Incentive Stock Option be granted to a Non-Employee Director.  In addition, an Incentive Stock Option shall not be granted under this Plan to an Employee who, at the time of such grant, owns (actually or constructively) more than ten percent (10%) of the total voting power of all classes of stock of the Company, unless the purchase price of the shares subject to such Incentive Stock Option is at least one hundred ten percent (110%) of the Fair Market Value of the shares of Company Common Stock at the time of the grant of the option and the option is not exercisable after the expiration of five years from the date it is granted.

(c)           No Stock Option intended as an Incentive Stock Option shall be exercisable in whole or in part after ten years from the date it is granted.  The Committee, in its discretion, may impose vesting or other restrictions which provide that a Stock Option may not be exercised in whole or in part for any period or periods of time specified by the Committee, or may provide for the amendment of outstanding unvested Stock Options in order to accelerate the vesting of such Stock Options.  Except as may be so provided and except as provided in Section 6.1(d), any Stock Option may be exercised in whole at any time, or in part from time to time, during its term.

(d)           Any Stock Option, the term of which has not theretofore expired, may be exercised during the optionee's employment with the Company or during the optionee's service as a Non-Employee Director.  In addition, subject to the condition that no Stock Option intended as an Incentive Stock Option may be exercised in whole or in part after ten years from the date it is granted:

(i)           upon the termination of an optionee's employment or service as a Non-Employee Director other than by reason of death, the optionee may, within three months after the date of such termination, exercise such option in whole or in part to the extent it was exercisable (or became exercisable) at the time of his or her termination of employment or service as a Non-Employee Director, and after such three month period the right to exercise the Stock Option shall cease; provided, however, that: (A) if such termination is due to Disability, such three month period shall be extended to twelve (12) months; and (B) if such termination is due to retirement at or after attaining age sixty-five (65), such three month period shall be extended to twelve (12) months; and

(ii)           upon the death of any optionee, either prior to the termination of his or her employment or service as a Non-Employee Director or within the three month or twelve (12) month period referred to in Section 6.1(d)(i) above, such optionee's estate (or the person or persons to whom such optionee's rights under the Stock Option are transferred by will or the laws of descent and distribution) may, within twelve (12) months after the date of such optionee's death, exercise such Stock Option in whole or in part to the extent it was exercisable (or became exercisable) at the time of his or her death, and after such twelve (12) month period the right to exercise the Stock Option shall cease.

(e)           The exercise price of each share subject to a Stock Option shall, at the time of exercise of the Stock Option, be paid in full in cash, or with previously acquired shares of

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Company Common Stock having an aggregate Fair Market Value at such time equal to the exercise price, or in cash and such shares.

(f)           Upon the exercise of a Stock Option, a certificate or certificates representing the shares of Company Common Stock so purchased shall be delivered to the person entitled thereto.

(g)           An optionee shall have no rights as a shareholder with respect to shares subject to his or her Stock Option until such shares are issued to him or her and are fully paid, and no adjustment will be made for dividends or other rights for which the record date is prior thereto.

(h)           The provisions of Section 9 shall apply to any shares of Company Common Stock issued to a Participant upon the exercise of a Stock Option.

(i)           Each Stock Option granted under this Plan shall by its terms be non-transferable by the optionee other than by will or the laws of descent and distribution and, during the lifetime of the optionee, shall be exercisable only by the optionee.

6.2           Restricted Stock.

(a)           Restricted Stock shall be subject to such terms, conditions and restrictions as the Committee deems appropriate.  Such terms, conditions and restrictions may include, but are not limited to, restrictions upon the sale, assignment, transfer or other disposition of the Restricted Stock.  The Committee may provide for the lapse of any such terms, conditions and restrictions, or may waive any such terms, conditions or restrictions, based on such factors or criteria as the Committee may determine.

(b)           If a Participant receives a grant of Restricted Stock, and if the Participant desires to accept such grant, then the Participant shall pay to the Company, in cash, an amount determined by the Committee.  Such amount may be greater than or equal to zero.  Such amount may be paid at any time prior to the sixtieth (60th) day following the date of grant of the shares of Restricted Stock.

(c)           After receipt of any payment required by the Committee in connection with the grant of shares of Restricted Stock, or as of the date of grant of shares of Restricted Stock if no such payment is required, the Company shall issue to the Participant a certificate or certificates representing the shares of Restricted Stock so granted.  The certificates shall have affixed thereto a legend, substantially in the following form, in addition to any other legends required by the Plan or applicable law:

"The shares of Company Common Stock represented by this certificate are subject to the restrictions described in an Award Agreement dated  , a copy of which will be furnished upon request by the issuer, and may not be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of except in accordance with the terms of such Award Agreement."

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Each transfer agent of Company Common Stock shall be informed of such restrictions.

In aid of the restrictions described in this Section 6.2 that are applicable to the Restricted Stock, the Parti­cipant shall, immediately upon receipt of the certificate or certificates for such shares, deposit such certificate or certificates (together with a stock power or instrument of transfer appropriately endorsed in blank) with the Secretary of the Company to be held in escrow.  In the event such restrictions lapse, the certificate or certificates shall be delivered to the Participant free and clear of such restrictions.  In the event the shares of Restricted Stock are forfeited, the certificate or certificates shall be delivered to the Company.

Notwithstanding the above, the provisions of Section 9 shall continue to apply to shares of Restricted Stock even if the restrictions described in this Section 6.2 have lapsed.

(d)           Upon issuance of a certificate or certificates representing shares of Restricted Stock in accordance with the provisions of Section 6.2(c), the Participant shall thereupon be deemed to be a shareholder with respect to all of the shares of Company Common Stock represented by such certificate or certificates.  The Participant shall thereafter have, with respect to such shares of Restricted Stock, all of the rights of a shareholder of the Company (including the right to vote the shares of Restricted Stock and the right to receive any cash or stock dividends on such Restricted Stock).

(e)           In the event that a Participant's employment with the Company terminates for any reason, or in the event that a Participant ceases to be a Non-Employee Director, then any shares of Restricted Stock still subject to the restrictions described in this Section 6.2 on the date of the termination of his or her employment or service as a Non-Employee Director shall automatically be forfeited.

(f)           Each share of Restricted Stock granted under this Plan shall by its terms be non-transferable by the Participant, other than by will or the laws of descent and distribution, while the restrictions described in this Section 6.2 remain in effect.  While shares of Restricted Stock remain subject to such restrictions, all rights with respect to such shares shall be exercisable during a Participant's lifetime only by the Participant.

6.3           Other Awards.

The Committee may from time to time grant shares of Company Common Stock, other stock-based and non-stock-based Awards (including, without limitation, Awards pursuant to which shares of Company Common Stock are or may in the future be acquired), Awards denominated in stock units, securities convertible into shares of Company Common Stock, stock appreciation rights, performance shares, phantom securities and dividend equivalents.  The Committee shall determine the terms and conditions of such Awards; provided, however, that such Awards shall not be inconsistent with the terms and purposes of this Plan.

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7.           Award Agreements.

Each Award granted under this Plan shall be evidenced by an Award Agreement setting forth the number of shares of Company Common Stock subject to the Award, and such other terms and conditions applicable to the Award as are determined by the Committee.  By acceptance of an Award, the Participant thereby agrees to such terms and conditions and to the terms of this Plan pertaining thereto.

8.           Term of Plan.

This Plan shall terminate on February 9, 2020 (ten years after the date of its original adoption by the Board) or upon any earlier termination date established by action of the Board, and no Awards shall be granted thereafter.  Such termination shall not affect the validity of any Awards then outstanding.

9.           Securities Law Considerations.

(a)           The provisions of this Section 9 shall apply to all Awards granted pursuant to the Plan, except to the extent that, in the opinion of counsel for the Company, such provisions are not required by the Securities Act or any other applicable law, regulation or rule of any governmental agency.

(b)           At the time of the grant of an Award and at the time of the acquisition of shares of Company Common Stock pursuant to an Award, a Participant shall represent, warrant and covenant that:

(i)           Any shares of Company Common Stock acquired upon exercise of the Award shall be acquired for the Participant's account for investment only and not with a view to, or for sale in connection with, any distribution of the shares in violation of the Securities Act or any rule or regulation under the Securities Act.

(ii)           The Participant has had such opportunity as he or she has deemed adequate to obtain from representatives of the Company such information as is necessary to permit the Participant to evaluate the merits and risks of his or her investment in shares of Company Common Stock.

(iii)           The Participant is able to bear the economic risk of holding shares acquired pursuant to the Award for an indefinite period.

(iv)           The Participant understands that:  (A) the shares acquired pursuant to the Award will not be registered under the Securities Act and will be "restricted securities" within the meaning of Rule 144 under the Securities Act; (B) such shares cannot be sold, transferred or otherwise disposed of unless an exemption from registration is then available; (C) in any event, an exemption from registration under Rule 144 or otherwise under the Securities Act may not be

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available for at least six months, and even then will not be available for an “affiliate” of the Company (as defined in Rule 144) unless adequate information concerning the Company is available to the public and the other terms and conditions of Rule 144 are complied with; and (D) there is now no registration statement on file with the Securities and Exchange Commission with respect to any stock of the Company subject to the Plan and the Company has no obligation to register under the Securities Act any such stock.

(v)           The Participant agrees that, if the Company offers for the first time any shares of Company Common Stock for sale pursuant to a registration statement under the Securities Act, the Participant will not, without the prior written consent of the Company, publicly offer, sell, contract to sell or otherwise dispose of, directly or indirectly, any shares acquired pursuant to an Award for a period of one hundred eighty (180) days after the effective date of such registration statement.

By making payment pursuant to an Award, the Participant shall be deemed to have reaffirmed, as of the date of such payment, all of the representations set forth in this Section 9 which he or she made at the time of grant of the Award.

(c)           All stock certificates representing shares of Company Common Stock issued to a Participant pursuant to an Award shall have affixed thereto a legend, substantially in the following form, in addition to any other legends required by the Plan or applicable law:

"The shares of stock represented by this certificate have not been registered under the Securities Act of 1933, as amended, and applicable state securities laws, and may not be transferred, sold or otherwise disposed of in the absence of an effective registration statement with respect to the shares evidenced by this certificate, filed and made effective under the Securities Act of 1933, as amended, and applicable state securities laws, or an opinion of counsel satisfactory to the issuer to the effect that registration under such Act or such laws is not required."

	
10.

	
Adjustment Provisions.

(a)           If through, or as a result of, any merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction: (i) the outstanding shares of Company Common Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to shares of Company Common Stock or other securities, then the aggregate number of shares of Company Common Stock subject to this Plan, the number of shares of Company Common Stock subject to each outstanding Award, and the exercise price per share in each such outstanding Award, shall be proportionately adjusted.

(b)           Any adjustments under this Section 10 will be made by the Board, whose determination as to what adjustments, if any, will be made and the extent thereof will be final,

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binding and conclusive.  No fractional shares will be issued pursuant to an Award on account of any such adjustments.

(c)           No adjustments shall be made under this Section 10 which would, within the meaning of any applicable provision of the Code, constitute a modification, extension or renewal of an Incentive Stock Option or a grant of additional benefits to a Participant who has been granted an Incentive Stock Option.

11.           Amendments and Discontinuance.

The Board may amend, suspend or discontinue the Plan, but may not, without the prior approval of the shareholders of the Company, make any amendment which operates: (a) to abolish the Committee, change the qualification of its members or withdraw its authority to interpret or administer the Plan; (b) to make any material change in the class of eligible Employees under the Plan; (c) to increase the total number of shares for which Awards may be granted under the Plan except as permitted by the provisions of Section 10 hereof; (d) to extend the term of the Plan; (e) to permit adjustments or reductions of the price at which shares may be acquired under an Award previously-granted under the Plan except as permitted by the provisions of Section 10 hereof; (f) to extend the maximum Incentive Stock Option period; or (g) to decrease the minimum Incentive Stock Option price.

12.           Continuance of Employment or Service as a Non-Employee Director.

Neither the Plan nor the grant of any Award hereunder shall interfere with or limit in any way the right of the Company to terminate any Employee's employment or to terminate the service of any Non-Employee Director at any time and for any reason, nor shall the Plan or the grant of any Award hereunder impose any obligation on the Company to continue the employment of any Employee or the service of any Non-Employee Director.

13.           Tax Withholding.

The Participant shall be responsible for the payment of all Federal, state and local taxes relating to the grant, vesting or exercise of any Award granted under the Plan.  The Company shall have the power to withhold, or to require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state and local withholding tax requirements on any Award granted under the Plan.  To the extent permissible under applicable tax, securities and other laws, the Company may, in its sole discretion, permit the Participant to satisfy a tax withholding requirement by directing the Company to apply shares of Company Common Stock to which the Participant is entitled as a result of the exercise of a Stock Option or the lapse of restrictions on shares of Restricted Stock.

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14.           Required Notifications by Participant.

(a)           If any Participant shall, in connection with an Award, make an election pursuant to Section 83(b) of the Code (whereby the Participant elects to include in gross income in the year of the transfer the amount specified in Section 83(b) of the Code), then such Participant shall notify  the Company of such election within ten (10) days of the filing of such election with the Internal Revenue Service.

(b)           If any Participant shall dispose of shares of Company Common Stock issued pursuant to the exercise of an Incentive Stock Option under the circumstances described in Section 421(b) of the Code (whereby the Participant makes a disqualifying disposition of the shares before expiration of the applicable holding periods), then such Participant shall notify the Company of such disqualifying disposition within ten (10) days of the disposition.

15.           Limits of Liability.

(a)           Any liability of the Company to any Participant with respect to an Award shall be based solely upon the contractual obligations created by the Plan and the Award Agreement.

(b)           Neither the Company, nor any member of the Board or the Committee, nor any other person participating in the determination of any question under the Plan or the interpretation, administration or application of the Plan, shall have any liability to any party for any action taken or not taken, in good faith, under the Plan.

16.           Requirements of Law.

The grant of Awards and the issuance of shares of Company Common Stock upon the exercise of an Award shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies as may be required.

17.           Governing Law.

The Plan, and all Award Agreements hereunder, shall be construed pursuant to and in accordance with the laws of the State of Connecticut.  The parties to the Plan and each Award Agreement agree that the state and federal courts of Connecticut shall have jurisdiction over any suit, action or proceeding arising out of, or in any way related to, the Plan or any Award Agreement.  The parties waive, to the fullest extent permitted by law, any objection which any of them may have to the venue of any such suit, action or proceeding brought in such courts, and any claim that such suit, action or proceeding brought in such courts has been brought in an inconvenient forum.  In the event that any party shall not have appointed an agent for service of process in Connecticut, the party agrees that it may be served with process by registered or certified mail, return receipt requested, to the party at its respective address as reflected on the records of the Company.  All notices shall be deemed to have been given as of the date so delivered or mailed.

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18.           Effective Date.

The Plan shall be effective as of July 20, 2010 (immediately following the expiration of the term of The Eastern Company 2000 Executive Stock Incentive Plan), and Awards may be granted under the Plan on and after such effective date and prior to the date of expiration of the term of the Plan set forth in Section 8; provided, however, if, within twelve (12) months after the date of adoption of the Plan by the Board, the shareholders of the Company have not approved the Plan, then the provisions of the Plan shall be null and void and any Awards granted under the Plan shall terminate and cease to be of any force or effect.

IN WITNESS WHEREOF, the undersigned has executed this Plan on behalf of the Company as of February 9, 2010 (the date of the Plan’s original adoption by the board of directors of The Eastern Company).

Witness:                                                                           THE EASTERN COMPANY

/s/Theresa P. Dews                                                         By  /s/ Leonard F. Leganza

Its Secretary                                                                          Name: Leonard F. Leganza

                                                                                                Title:  Chairman of the Board, President 

                                                                                                           and Chief Executive Officer

 

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