Document:

exv10w1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

P R E A M B L E

This Employment Agreement defines the essential terms and conditions of our
employment relationship with you. The subjects covered in this Agreement are
vitally important to you and to the Company. Thus, you should read the document
carefully and ask any questions before signing the Agreement. Given the importance
of these matters to you and the Company, all executives shall sign the Agreement as
a condition of employment.

     This EMPLOYMENT AGREEMENT, dated and effective as of June ___, 2005 is entered into by and
between Hillenbrand Industries, Inc. (“Company”) and Rolf A. Classon (“Executive”).

W I T N E S S E T H:

     WHEREAS, the Company is an Indiana corporation engaged through its various subsidiary entities
in the death care, healthcare and funeral services industries throughout the United States and
abroad;

     WHEREAS, the Company is willing to employ Executive on an interim basis and Executive desires
to accept such employment on an interim basis on the terms and conditions set forth in this
Agreement;

     WHEREAS, in the course of the employment contemplated under this Agreement, it will be
necessary for Executive to acquire knowledge of certain trade secrets and other confidential and
proprietary information regarding the Company as well as its parent, subsidiary and/or affiliated
entities (hereinafter jointly referred to as the “Companies”); and

     WHEREAS, the Company and Executive (collectively referred to herein as the “Parties”)
acknowledge and agree that the execution of this Agreement is necessary to memorialize the terms
and conditions of their employment relationship as well as safeguard against the unauthorized
disclosure or use of the Company’s confidential information and to otherwise preserve the goodwill
and ongoing business value of the Company;

     NOW THEREFORE, in consideration of Executive’s employment, the Company’s willingness to
disclose certain confidential and proprietary information to Executive and the mutual covenants
contained herein as well as other good and valuable consideration, the receipt of which is hereby
acknowledged, the Parties agree as follows:

	1.	 	Employment and Term. The Company agrees to employ Executive and Executive agrees to
serve on an interim basis as the Company’s President and Chief Executive Officer. The term of
Executive’s employment began effective May 11, 2005 and shall continue thereafter until the
Board of Directors of the Company has elected a successor President and Chief Executive
Officer and such individual has accepted such position, unless sooner terminated in accordance
with the provisions of Section 9 (“Term”).
	 
	2.	 	Duties. Throughout the Term, Executive agrees to devote his full working time,
attention, talents, skills and best efforts to the performance of his duties as the President
and Chief

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	 	 	Executive Officer of the Company in accordance with the Company’s Amended and Restated Code
of Bylaws, as may be amended from time to time (“Bylaws”), this Agreement and the directions
of the Company’s Board of Directors and shall promote the best interests of the Company.
Executive shall be allowed to serve as a director of any company or entity of which he is
currently a director consistent with the Company’s Corporate Governance Standards for Board
of Directors and applicable laws. Executive shall act at all times in accordance with the
Hillenbrand Industries, Inc. Code of Ethical Business Conduct, the Corporate Compliance
Handbook and all other applicable policies which may exist or be adopted by the Company from
time to time. Executive shall continue to serve as a member of the Company’s Board of
Directors, subject to the requirement that he stand for re-election at the next Annual
Meeting of Shareholders of the Company at which he otherwise would have been required under
the Company’s Articles of Incorporation or Bylaws to stand for re-election. However, during
the period of time that he serves as the Company’s President and Chief Executive Officer,
his membership on all Board committees of Directors of the Company, including the
Nominating/Corporate Governance and Compensation and Management Development Committees,
shall be suspended. However, in his capacity as Chief Executive Officer and Vice Chairman
of the Board of Directors, he shall be allowed to attend any and all non executive portions
of meetings of Board committees ex officio.
	 
	3.	 	Board Compensation. During the Term, Executive shall not be entitled to receive
compensation for his service as a member of the Board of Directors of the Company. The fees
for the Board and committee meetings up to and including May 11, 2005 and pro rata portion of
the fiscal 2005 annual Board retainer, annual restricted stock unit award grant made in
February 2005 need not be repaid.
	 
	4.	 	At-Will Employment. Subject to the terms and conditions set forth below, Executive
specifically acknowledges and accepts such employment on an “at-will” basis and agrees that
both Executive and the Company retain the right to terminate this relationship at any time,
with or without cause, for any reason not prohibited by applicable law upon proper notice.
Executive acknowledges that nothing in this Agreement is intended to create, nor should be
interpreted to create, an employment contract for any specified length of time between the
Company and Executive.
	 
	5.	 	Compensation. For all services rendered by Executive on behalf of, or at the
request of, the Company, in his capacity as President and Chief Executive Officer of the
Company during the Term Executive shall be compensated as follows, subject to withholding for
payment of any and all applicable federal, state and local payroll and withholding taxes.

	 	(a)	 	Base Salary. For the services performed by him under this Agreement,
the Company shall pay Executive a base salary of Eight Hundred and Fifty Thousand
Dollars ($850,000) per year, pro rated for the period which Executive serves (“Base
Salary”). The Base Salary shall be paid in the same increments as the Company’s normal
payroll, but no less frequently than monthly and prorated for any period less than a
full month.
	 
	 	(b)	 	Bonus. In addition to Base Salary, Executive shall be eligible to
receive from the Company an incentive compensation bonus (“Bonus”). The Bonus shall be
payable within thirty days of the last day of the Term (“End of Term Date”), provided
that Executive remains employed by the Company as Chief Executive Officer and President
of the Company through the End of Term Date (except as provided below if the
Executive’s employment is terminated on account of disability or death). The amount of
the Bonus shall equal the sum of (i) Three Hundred and Eighty Two Thousand and Five
Hundred Dollars ($382,500) (“Guaranteed Bonus”) plus (ii) an amount up to Three Hundred
and Eighty Two Thousand and Five Hundred Dollars ($382,500) determined by the
Compensation and Management Development Committees of the Board of Directors of the
Company (“Committee”) based on the achievement by the Company of certain objectives
during Executive’s period of employment as determined by that Committee in consultation
with the Executive on or before

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	 	 	 	the September 2005 Company’s Board of Director’s meeting. Upon the Executive’s
termination of employment on account of disability, as described in Section 9(b)i., or
death before May 10, 2006, the Executive shall receive as soon as reasonably possible
after such termination of employment, a lump sum amount in cash equal to the product of
the Guaranteed Bonus and a fraction, the numerator of which is the number of calendar
months in which the Executive rendered at least one full day of service on behalf of the
Company beginning on May 11, 2005 and the denominator of which is twelve (12); and
	 
	 	(c)	 	Signing Bonus. The Company shall on or before July 11, 2005, pay
Executive a signing bonus of Two Hundred and Fifty Thousand Dollars ($250,000), which
is estimated to be the amount of compensation from other sources foregone by Executive
as a result of his full time dedication to his role as the Company’s President and
Chief Executive Officer.
	 
	 	(d)	 	RSUs. Executive shall receive award of Twenty Thousand (20,000)
restricted stock units (otherwise known as deferred stock awards) (“RSUs”) under the
terms and conditions of a Stock Award Agreement (“Stock Award Agreement”), executed and
delivered of even date herewith and the related Company Stock Incentive Plan; all of
such RSUs shall vest fully on May 10, 2006 or upon the End of Term Date (other than on
account of disability or death), whichever is earlier (“Vesting Date”). Except as
provided below if the Executive’s employment is terminated on account of disability or
death, the RSUs shall be forfeited if Executive’s employment with the Company is
terminated prior to the Vesting Date. One half of the RSUs will be converted to Ten
Thousand (10,000) shares of the Company’s common stock on the first anniversary of the
Vesting Date and the other half of the RSUs will be converted to Ten Thousand (10,000)
            shares of the Company’s common stock on the second anniversary of the Vesting Date. Ten
Thousand (10,000) shares of the Company’s common stock shall be delivered as soon as
administratively possible after such first and second anniversaries of the Vesting
Date. Upon the Executive’s termination of employment prior to the Vesting Date on
account of disability, as determined under the Stock Award Agreement, or death before
May 10, 2006, the Executive shall become vested in a number of RSUs equal to the
product of the RSUs and a fraction, the numerator of which is the number of calendar
months in which the Executive rendered at least one full day of service on behalf of
the Company beginning on May 11, 2005 and the denominator of which is twelve (12).
	 
	 	(e)	 	Savings Plan. During the Term, Executive shall be eligible to
participate in the Company’s 401(k) savings program, subject to satisfaction of any
applicable eligibility requirements.
	 
	 	(f)	 	Waiver of Certain Benefits. In exchange for the consideration
discussed in this agreement, executive, on behalf of himself, his heirs, executors,
assigns and administrators, agrees that, during the term, except as specifically set
forth in this agreement, he shall forgo and waive participation in or entitlement to
any plan or program not identified elsewhere in this section 5, including, without
limitation, plans or programs that provide benefits to employees of the company, or any
related subsidiary, parent, or affiliated corporation, including but not limited to,
any employee benefit plan within the scope of employee retirement income security act
of 1974, as amended; fringe benefit plan; or stock option, bonus, or purchase plan
(collectively, the “plans”). Such plans include, without limitation, the plans
identified on exhibit a attached hereto. Accordingly, executive, on behalf of
himself, his heirs, executors, assigns and administrators, waives any rights he may
have to participate in any group life insurance, accident and health plan,
hospitalization plan, disability plan, vacation or other welfare benefit plan,
cafeteria plan, and pension benefit plan, or any other employee or retirement benefits
that are currently offered or may hereafter be offered by the company, or any related
subsidiary, parent, or affiliated corporation. As a result of this waiver, executive
understands and acknowledges that he will not be entitled to receive any future
employer contributions or accruals under the plans.

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	6.	 	Direct Deposit. Executive agrees to make all necessary arrangements to have all
sums paid pursuant to this Agreement direct deposited into one or more bank accounts as
designated by Executive.
	 
	7.	 	Warranties and Indemnification. Executive warrants that he is not a party to any
contract, restrictive covenant, or other agreement purporting to limit or otherwise adversely
affecting his ability to secure employment with the Company. Alternatively, should any such
agreement exist, Executive warrants that the contemplated services to be performed hereunder
will not violate the terms and conditions of any such agreement. In either event, Executive
agrees to fully indemnify and hold the Company harmless from any and all claims arising from,
or involving the enforcement of, any such restrictive covenants or other agreements.
	 
	8.	 	Restricted Duties. Executive agrees not to disclose, or use for the benefit of the
Company, any confidential or proprietary information belonging to any predecessor employer
that otherwise has not been made public and further acknowledges that the Company has
specifically instructed him not to disclose or use such confidential or proprietary
information. Based on his understanding of the anticipated duties and responsibilities
hereunder, Executive acknowledges that such duties and responsibilities will not compel the
disclosure or use of any such confidential and proprietary information.
	 
	9.	 	Termination of the Term.

	 	(a)	 	The Term shall end without further action by the Company or Executive upon the
Board electing an individual to succeed the Executive as Chief Executive Officer and
President and, upon such election, Executive shall, without further action, be deemed
to have immediately resigned any and all executive or other employment positions with
the Company or any of its subsidiaries.
	 
	 	(b)	 	The Company shall have the right to end the Term under the following
circumstances:

	 	i.	 	Death or Disability. Executive shall die or become
disabled, the latter which shall be deemed to have occurred upon the occurrence
of one or more of the following events: Executive becomes eligible for or
receives any benefits pursuant to any disability insurance policy as a result
of a determination under such policy that Executive is permanently disabled; he
becomes eligible for or receives any disability benefits under the Social
Security Act; or the Company makes a good faith determination that Executive is
and will likely remain unable to perform the essential functions of his duties
or responsibilities hereunder on a full-time basis, with or without reasonable
accommodation, as a result of any mental or physical impairment.
Notwithstanding anything expressed or implied above to the contrary, the
Company agrees to fully comply with its obligations under the Americans with
Disabilities Act as well as any other applicable federal, state, or local law,
regulation, or ordinance governing the protection of individuals with such
disabilities as well as the Company’s obligation to provide reasonable
accommodation thereunder; or
	 
	 	ii.	 	With or without Cause. With or without Cause, effective
upon written notice to Executive by the Company. For purposes of this
Agreement, “cause” shall mean the Company’s good faith determination that
Executive has:

	 	A.	 	acted with gross neglect or willful
misconduct in the discharge of his duties and responsibilities or
refused to follow the lawful direction of the Board of Directors of
the Company;
	 
	 	B.	 	acquiesced or participated in any conduct
that is dishonest, fraudulent, illegal (at the felony level),
unethical, involves moral turpitude or is otherwise illegal and
involves conduct that has the potential, in the Company’s

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	 	 	 	reasonable opinion, to cause the Company, it officers or its directors
embarrassment or ridicule;
	 
	 	C.	 	violated any Company policy or procedures,
specifically including a violation of Hillenbrand Industries, Inc.’s
Handbook of Ethical Business Conduct;
	 
	 	D.	 	disclosed without proper authorization any
trade secrets or other Confidential Information (as defined herein);
or
	 
	 	E.	 	engaged in any act that, in the reasonable
opinion of the Company, is contrary to its best interests and could
reasonably hold the Company, its officers or directors up to probable
civil or criminal liability.

	 	(c)	 	Voluntary Termination. Executive’s voluntary resignation or
termination of his employment with the Company prior to the end of the Term with sixty
(60) days prior written notice to the Company.

	10.	 	Effect of Expiration or Termination of Term. 

	 	a.	 	Promptly following the termination of the Term Executive shall immediately
resign from any and all executive or other employment positions with the Company or any
of its subsidiaries and shall provide the Company with reasonable assistance necessary
to permit the Company to continue its business operations without interruption and in a
manner consistent with reasonable business practices; provided, however, that such
transition period shall not exceed thirty (30) days after termination of the Term nor
require more than twenty (20) hours of Executive’s time per week and Executive shall be
reimbursed for al out of pocket expenses related to the performance of such services.
	 
	 	b.	 	Upon termination of the Term under Section 9.(a) the Company shall be obligated
to pay Executive or his estate all Base Salary accrued but unpaid as of the date of
such termination and the Bonus, and all of Executive’s unvested RSUs previously issued
under the Stock Award Agreement shall immediately vest.
	 
	 	c.	 	Upon termination of Executive under Section 9.(b) i. due to Executive’s death
or disability, the Company shall be obligated to pay Executive or his estate all Base
Salary accrued but unpaid as of the date of such termination and a portion of the Bonus
(determined in accordance with Section 5.(b)), and a portion of Executive’s unvested
RSUs previously issued under the Stock Award Agreement shall immediately vest in
accordance with Section 5.(d).
	 
	 	d.	 	Upon a termination with or without cause pursuant to Section 9.(b) ii. or a
termination pursuant to Section 9.(c), the Company shall only be obligated to pay
Executive or his estate all Base Salary accrued but unpaid as of the date of
termination.

	11.	 	Assignment of Rights.

	 	(a)	 	Copyrights. Executive agrees that all works of authorship fixed in any
tangible medium of expression by him during the term of this Agreement relating to the
Company’s business (“Works”), either solely or jointly with others, shall be and remain
exclusively the property of the Company. Each such Work created by Executive is a
“work made for hire” under the copyright law and the Company may file applications to
register copyright in such Works as author and copyright owner thereof. If, for any
reason, a Work created by Executive is excluded from the definition of a “work made for
hire” under the copyright law, then Executive does hereby assign, sell, and convey to
the Company the entire rights, title, and interests in and to such Work, including the
copyright therein, to the Company. Executive will execute any documents that the
Company deems necessary in connection with the assignment of such Work and copyright
therein. Executive will take whatever steps and do whatever acts the Company requests,
including, but not limited to, placement of the Company’s proper copyright notice on
Works created by Executive to secure or aid in securing copyright protection in such
Works and will assist the Company or its nominees in filing applications to register
claims of copyright in such Works. The Company shall have

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	 	 	 	free and unlimited access at all times to all Works and all copies thereof and shall
have the right to claim and take possession on demand of such Works and copies.

	 	(b)	 	Inventions. Executive agrees that all discoveries, concepts, and
ideas, whether patentable or not, including, but not limited to, apparatus, processes,
methods, compositions of matter, techniques, and formulae, as well as improvements
thereof or know-how related thereto, relating to any present or prospective product,
process, or service of the Company (“Inventions”) that Executive conceives or makes
during the term of this Agreement relating to the Company’s business, shall become and
remain the exclusive property of the Company, whether patentable or not, and Executive
will, without royalty or any other consideration:

	 	(i)	 	Inform the Company promptly and fully of such Inventions by
written reports, setting forth in detail the procedures employed and the
results achieved;
	 
	 	(ii)	 	Assign to the Company or its designee all of his rights, title,
and interests in and to such Inventions, any applications for United States and
foreign Letters Patent, any United States and foreign Letters Patent, and any
renewals thereof granted upon such Inventions;
	 
	 	(iii)	 	Assist the Company or its nominees, at the expense of the
Company, to obtain such United States and foreign Letters Patent for such
Inventions as the Company may elect; and
	 
	 	(iv)	 	Execute, acknowledge, and deliver to the Company or its
designee, at the Company’s expense, such written documents and instruments, and
do such other acts, such as giving testimony in support of his inventorship, as
may be necessary in the opinion of the Company, to obtain and maintain United
States and foreign Letters Patent upon such Inventions and to vest the entire
rights and title thereto in the Company and to confirm the complete ownership
by the Company of such Inventions, patent applications, and patents.

	12.	 	Company Property. All records, files, drawings, documents, data in whatever form,
equipment, and the like relating to, or provided by, the Company shall be and remain the sole
property of the Company. Upon termination of employment, Executive shall immediately return
to the Company all such items without retention of any copies and without additional request
by the Company.
	 
	13.	 	Confidential Information. Executive acknowledges that the Companies possess certain
trade secrets as well as other confidential and proprietary information which they have
acquired or will acquire at great effort and expense. Such information may include, without
limitation, confidential information, whether in tangible or intangible form, regarding the
Companies’ products and services, marketing strategies, business plans, operations, costs,
current or prospective customer information (including customer identities, contacts,
requirements, creditworthiness, preferences, and like matters), product concepts, designs,
prototypes or specifications, research and development efforts, technical data and know-how,
sales information, including pricing and other terms and conditions of sale, financial
information, internal procedures, techniques, forecasts, methods, trade information, trade
secrets, software programs, project requirements, inventions, trademarks, trade names, and
similar information regarding the Companies’ business (collectively referred to herein as
“Confidential Information”). Executive further acknowledges that, as a result of his
employment with the Company, Executive will have access to, will become acquainted with,
and/or may help develop, such Confidential Information.
	 
	14.	 	Restricted Use of Confidential Information. Executive agrees that all Confidential
Information is and shall remain the sole and exclusive property of the Company. Except as may
be expressly authorized by the Company in writing, Executive agrees not to disclose, or cause
any other

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person or entity to disclose, any Confidential Information to any third party while employed
by the Company and for as long thereafter as such information remains confidential (or as
limited by applicable law). Further, Executive agrees to use such Confidential Information
only in the course of Executive’s duties in furtherance of the Company’s business and agrees
not to make use of any such Confidential Information for Executive’s own purposes or for the
benefit of any other entity or person.

	15.	 	Acknowledged Need for Limited Restrictive Covenants. Executive acknowledges that
the Companies have spent and will continue to expend substantial amounts of time, money and
effort to develop their business strategies, Confidential Information, customer identities and
relationships, goodwill and Executive relationships, and that Executive will benefit from
these efforts. Further, Executive acknowledges the inevitable use of, or near-certain
influence by his knowledge of, the Confidential Information disclosed to Executive during the
course of employment if allowed to compete against any of the Companies in an unrestricted
manner and that such use would be unfair and extremely detrimental to the Company.
Accordingly, based on these legitimate business reasons, Executive acknowledges the Company’s
need to protect its legitimate business interests by reasonably restricting Executive’s
ability to compete with any of the Companies on a limited basis.

	16.	 	Non-Solicitation. During Executive’s employment and for a period of twenty-four
(24) months thereafter, Executive agrees not to directly or indirectly engage in the following
prohibited conduct:

	 	(a)	 	Solicit, offer, or accept orders, for any Competitive Products or otherwise
transact any competitive business with, or attempt to entice or otherwise cause any
third party to withdraw, curtail or cease doing business with, any of the Companies,
specifically including customers, vendors, independent contractors and other third
party entities;
	 
	 	(b)	 	Disclose to any person or entity the identities, contacts or preferences of any
customers of any of the Companies, or the identity of any other persons or entities
having business dealings with any of the Companies;
	 
	 	(c)	 	Induce any individual who has been employed by or had provided services to any
of the Companies within the six (6) month period immediately preceding the effective
date of Executive’s separation to terminate such relationship with any of the
Companies;
	 
	 	(d)	 	Offer employment to, accept employment inquiries from, or employ any individual
who is or had been employed by any of the Companies at any time within the six (6)
month period immediately preceding such offer or inquiry; or
	 
	 	(e)	 	Otherwise attempt to directly or indirectly interfere with the business of any
of the Companies or their relationship with any of their employees, consultants,
independent contractors or customers.

	17.	 	Limited Non-Compete. For the above-stated reasons, and as a condition of employment
to the fullest extent permitted by law, Executive agrees during the Relevant Non-Compete
Period not to directly or indirectly engage in the following competitive activities:

	 	(a)	 	Executive shall not have any ownership interest in, work for, advise, consult,
or have any business connection or business or employment relationship in any
competitive capacity with any Competitor unless Executive provides written notice to
the Company of such relationship prior to entering into such relationship and, further,
provides sufficient written assurances to the Company’s satisfaction that such
relationship will not jeopardize the Company’s legitimate interests or otherwise
violate the terms of this Agreement;

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	 	(b)	 	Executive shall not engage in any research, development, production, sale or
distribution of any Competitive Products, specifically including any products or
services relating to those for which Executive had responsibility for the twenty-four
(24) month period preceding Executive’s date of separation;
	 
	 	(c)	 	Executive shall not market, sell, or otherwise offer or provide any Competitive
Products within the Geographic Territory; and
	 
	 	(d)	 	Executive shall not distribute, market, sell or otherwise offer or provide any
Competitive Products to any customer of any of the Companies .

	18.	 	Non-Compete Definitions. For purposes of this Agreement, the Parties agree that the
following terms shall apply:

	 	(a)	 	“Competitive Products” shall include any product or service which directly or
indirectly competes with, is substantially similar to, or serves as a reasonable
substitute for, any product or service in research, development or design, or
manufactured, produced, sold or distributed by any of the Companies;
	 
	 	(b)	 	“Competitor” shall include any person or entity that offers or is actively
planning to offer any Competitive Products;
	 
	 	(c)	 	“Geographic Territory” shall include any and shall include, without limitation,
the United States, Canada, Mexico, Europe and any other geographic location in which
any of the Companies offers or sells any products or services;
	 
	 	(d)	 	Relevant Non-Compete Period” shall include the period of Employee’s employment
with the Company as well as a period of eighteen (18) months after such employment is
terminated, regardless of the reason for such termination provided, however, that this
period shall be reduced to the greater of (i) six (6) months or (ii) the total length
of Employee’s employment with the Company, including employment with a parent,
subsidiary or affiliated entity, if such employment is less than eighteen (18) months;
	 
	 	(e)	 	“Directly or indirectly” shall be construed such that the foregoing
restrictions shall apply equally to Employee whether performed individually or as a
partner, shareholder, officer, director, manager, employee, salesman, independent
contractor, broker, agent, or consultant for any other individual, partnership, firm,
corporation, company, or other entity engaged in such conduct.

	19.	 	Consent to Reasonableness. In light of the above-referenced concerns, including
Executive’s knowledge of and access to the Companies’ Confidential Information, Executive
acknowledges that the terms of the foregoing restrictive covenants are reasonable and
necessary to protect the Company’s legitimate business interests and will not unreasonably
interfere with Executive’s ability to obtain alternate employment. As such, Executive hereby
agrees that such restrictions are valid and enforceable, and affirmatively waives any argument
or defense to the contrary. Executive acknowledges that this limited non-competition
provision is not an attempt to prevent Executive from obtaining other employment in violation
of IC § 22-5-3-1 or any other similar statute. Executive further acknowledges that Company
may need to take action, including litigation, to enforce this limited non-competition
provision, which efforts the parties stipulate shall not be deemed an attempt to prevent
Executive from obtaining other employment.

	20.	 	Survival of Restrictive Covenants. Executive acknowledges that the above
restrictive covenants shall survive the termination of this Agreement and the termination of
Executive’s employment for any reason. Executive further acknowledges that any alleged breach
by the Company of any

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contractual, statutory or other obligation shall not excuse or terminate the obligations
hereunder or otherwise preclude the Company from seeking injunctive or other relief.
Rather, Executive acknowledges that such obligations are independent and separate covenants
undertaken by Executive for the benefit of the Company.

	21.	 	Scope of Restrictions. If the scope of any restriction contained in any preceding
paragraphs of this Agreement is deemed too broad to permit enforcement of such restriction to
its fullest extent, then such restriction shall be enforced to the maximum extent permitted by
law, and Executive hereby consents and agrees that such scope may be judicially modified
accordingly in any proceeding brought to enforce such restriction.

	22.	 	Specific Enforcement/Injunctive Relief. Executive agrees that it would be difficult
to measure any damages to the Company from a breach of the above-referenced restrictive
covenants, but that such damages would be great, incalculable and irremediable, and that
monetary damages alone would be an inadequate remedy. Accordingly, Executive agrees that the
Company shall be entitled to immediate injunctive relief against such breach, or threatened
breach, in any court having jurisdiction. In addition, if Executive violates any such
restrictive covenant, Executive agrees that the period of such violation shall be added to the
term of the restriction. In determining the period of any violation, the Parties stipulate
that in any calendar month in which Executive engages in any activity in violation of such
provisions, Executive shall be deemed to have violated such provision for the entire month,
and that month shall be added to the duration of the non-competition provision. Executive
acknowledges that the remedies described above shall not be the exclusive remedies, and the
Company may seek any other remedy available to it either in law or in equity, including, by
way of example only, statutory remedies for misappropriation of trade secrets, and including
the recovery of compensatory or punitive damages. Executive further agrees that the Company
shall be entitled to an award of all costs and attorneys’ fees incurred by it in any attempt
to enforce the terms of this Agreement.

	23.	 	Publicly Traded Stock. The Parties agree that nothing contained in this Agreement
shall be construed to prohibit Executive from investing his personal assets in any stock or
corporate security traded or quoted on a national securities exchange or national market
system provided, however, such investments do not require any services on the part of
Executive in the operation or the affairs of the business or otherwise violate the Hillenbrand
Industries, Inc. Code of Ethical Business Conduct.

	24.	 	Titles. Titles are used for the purpose of convenience in this Agreement and shall
be ignored in any construction of it.

	25.	 	Severability. The Parties agree that each and every paragraph, sentence, clause,
term and provision of this Agreement is severable and that, in the event any portion of this
Agreement is adjudged to be invalid or unenforceable, the remaining portions thereof shall
remain in effect and be enforced to the fullest extent permitted by law. Further, should any
particular clause, covenant, or provision of this Agreement be held unreasonable or contrary
to public policy for any reason, the Parties acknowledge and agree that such covenant,
provision or clause shall automatically be deemed modified such that the contested covenant,
provision or clause will have the closest effect permitted by applicable law to the original
form and shall be given effect and enforced as so modified to whatever extent would be
reasonable and enforceable under applicable law.

	26.	 	Notice of Claim and Contractual Limitations Period. Executive acknowledges the
Company’s need for prompt notice, investigation, and resolution of claims filed against it due
to the number of relationships it has with Executives and others and due to the turnover among
such individuals with knowledge relevant to any underlying claim. Accordingly, Executive
agrees prior to initiating any litigation of any type (including but not limited to employment
discrimination litigation, wage litigation, defamation, or any other claim) to notify the
Company, within 180

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days after the claim accrued, by sending a certified letter addressed to the Company’s
General Counsel setting forth:(i) claimant’s name, address, and phone;(ii) the nature of the
claim; (iii) the date the claim arose; and (iv) the relief requested. This provision is in
addition to any other notice and exhaustion requirements that might apply. For any dispute
or claim of any type against the Company (including but not limited to employment
discrimination litigation, wage litigation, defamation, or any other claim), Executive must
commence legal action within the shorter of one (1) year of accrual of the cause of action
or such shorter period that may be specified by law.

	27.	 	Non-Jury Trials. Notwithstanding any rights to a jury trial for any claims,
Executive waives any such rights to a jury trial, and agrees that any claim of any type
(including but not limited to employment discrimination litigation, wage litigation,
defamation, or any other claim) lodged in any court will be tried, if at all, without a jury.

	28.	 	Choice of Forum. Executive acknowledges that the Companies are primarily based in
Indiana, and Executive understands and acknowledges the Company’s desire and need to defend
any litigation against it in Indiana. Accordingly, the Parties agree that any claim of any
type brought by Executive against the Company or any of its Executives or agents must be
maintained only in a court sitting in Marion County, Indiana, or Ripley County, Indiana, or,
if a federal court, the Southern District of Indiana, Indianapolis Division. Executive
further understands and acknowledges that in the event the Company initiates litigation
against Executive, the Company may need to prosecute such litigation in such state where the
Executive is subject to personal jurisdiction. Accordingly, for purposes of enforcement of
this Agreement, Executive specifically consents to personal jurisdiction in the State of
Indiana as well as any state in which resides a customer assigned to the Executive.
Furthermore, Executive consents to appear, upon Company’s request and at Executive’s own cost,
for deposition, hearing, trial, or other court proceeding in Indiana or in any state in which
resides a customer assigned to the Executive.

	29.	 	Choice of Law. This Agreement shall be deemed to have been made within the County
of Ripley, State of Indiana and shall be interpreted and construed in accordance with the laws
of the State of Indiana. Any and all matters of dispute of any nature whatsoever arising out
of, or in any way connected with the interpretation of this Agreement, any disputes arising
out of the Agreement or the employment relationship between the Parties hereto, shall be
governed by, construed by and enforced in accordance with the laws of the State of Indiana
without regard to any applicable state’s choice of law provisions.

	30.	 	Assignment-Notices. The rights and obligations of the Company under this Agreement
shall inure to its benefit, as well as the benefit of its parent, subsidiary, successor and
affiliated entities, and shall be binding upon the successors and assigns of the Company.
This Agreement, being personal to Executive, cannot be assigned by Executive, but his personal
representative shall be bound by all its terms and conditions. Any notice required hereunder
shall be sufficient if in writing and mailed to the last known residence of Executive or to
the Company at its principal office with a copy mailed to the Office of General Counsel.

	31.	 	Amendments and Modifications. Except as specifically provided herein, no
modification, amendment, extension or waiver of this Agreement or any provision hereof shall
be binding upon the Company or Executive unless in writing and signed by both Parties. The
waiver by the Company of a breach of any provision of this Agreement by Executive shall not be
construed as a waiver of any subsequent breach. Nothing in this Agreement shall be construed
as a limitation upon the Company’s right to modify or amend any of its manuals or policies in
its sole discretion and any such modification or amendment which pertains to matters addressed
herein shall be deemed to be incorporated herein and made a part of this Agreement.

	32.	 	Outside Representations. Executive represents and acknowledges that in signing this
Agreement he does not rely, and has not relied, upon any representation or statement made by
the Company

10

 

or by any of the Company’s Executives, officers, agents, stockholders, directors or
attorneys with regard to the subject matter, basis or effect of this Agreement other than
those specifically contained herein.

	33.	 	Voluntary and Knowing Execution. Executive acknowledges that he has been offered a
reasonable amount of time within which to consider and review this Agreement; that he has
carefully read and fully understands all of the provisions of this Agreement; and that he has
entered into this Agreement knowingly and voluntarily.

	34.	 	Entire Agreement. This Agreement constitutes the entire employment agreement
between the Parties hereto concerning the subject matter hereof and shall supersede all prior
and contemporaneous agreements between the Parties in connection with the subject matter of
this Agreement. Nothing in this Agreement, however, shall affect any separately-executed
written agreement addressing any other issues (e.g., the Inventions, Improvements, Copyrights
and Trade Secrets Agreement, etc.).

     IN WITNESS WHEREOF, the Parties have signed this Agreement effective as of the day and year
first above written.

	 	 	 	 	 
	 

	 	 	 	 
	EXECUTIVE

	 	[COMPANY]	 	 
	 
	 	 	 	 
	Signed: 

	 	By: 
	 	 
	 
	 	 	 	 
	Rolf A. Classon

	 	Title: 
	 	 
	 
	 	 	 	 
	Dated: 

	 	Dated: 
	 	 

11

 

EXHIBIT A

PLANS

	1.	 	Hillenbrand Industries, Inc. Health Care Plan
	 
	2.	 	Hillenbrand Industries, Inc. Life Insurance Plan
	 
	3.	 	Hillenbrand Industries, Inc. Death & Dismemberment Plan
	 
	4.	 	Hillenbrand Industries Business Travel Accidental Death & Dismemberment Insurance
	 
	5.	 	Hillenbrand Industries Short Term Disability Insurance
	 
	6.	 	Hillenbrand Industries, Inc. Long Term Disability Plan
	 
	7.	 	Hillenbrand Industries, Inc. Employee Assistance Program
	 
	8.	 	Hillenbrand Industries, Inc. Pension Plan
	 
	9.	 	Hillenbrand Industries Flexible Spending Account Program – (a/k/a Hillenbrand
Industries, Inc. Cafeteria Plan)
	 
	10.	 	Hillenbrand Industries, Inc. Health Care Reimbursement Plan
	 
	11.	 	Health Industries, Inc. Dependent Care Reimbursement Plan
	 
	13.	 	Hillenbrand Industries Voluntary Accident Insurance Plan
	 
	14.	 	Hillenbrand Industries Tuition Reimbursement
	 
	15.	 	Hillenbrand Industries, Inc. Severance Pay Plan for Salaried Employees.
	 
	16.	 	Hillenbrand Industries, Inc. Supplemental Executive Retirement Plan
	 
	17.	 	Hillenbrand Industries, Inc. Short-Term Incentive Compensation Program

12exv10w2

 

Exhibit 10.2

HILLENBRAND INDUSTRIES, INC.

STOCK AWARD

(EFFECTIVE May 11, 2005)

                                        1. Purpose. The purpose of the Hillenbrand Industries, Inc. Stock Award (hereinafter
called the “Award”) is to promote profitability and growth of Hillenbrand Industries, Inc. (the
“Company”) by offering an incentive payable in Company common stock to Rolf A. Classon (“Employee”)
who contributes to such profitability and growth.

                                        2. Amount of Award. The Company shall cause an account to be established in the name
of the Employee (“Deferred Stock Account”) which shall be assumed to be invested in 20,000 shares
(“Initial Deferred Stock Award”) of common stock, no par value of the Company (“Common Stock”). No
actual shares of Common Stock shall be held in the Deferred Stock Account, and the number of shares
of Common Stock maintained in the Deferred Stock Account (“Deferred Stock”) shall be a book entry
which states the number of shares of Common Stock the Employee would have a right to receive in
accordance with the terms of this Award. Any cash dividend paid on Common Stock by the Company
while the Deferred Stock Account exists will be assumed to be paid on the Deferred Stock in the
Deferred Stock Account and shall be assumed to be reinvested in Common Stock on the date of such
dividend payment, thereby increasing the number of shares of Deferred Stock maintained in the
Deferred Stock Account. Any stock dividends, stock splits and other similar rights inuring to
Common Stock shall also be assumed to inure to the Deferred Stock, which may increase or decrease
the number of shares of Deferred Stock in the Deferred Stock Account. The Initial Deferred Stock
Award plus any increases or less any decreases due to cash dividends, stock dividends, stock splits
and any other similar rights inuring to Common Stock as set forth in the two immediately preceding
sentences shall herein after be referred to as the “Deferred Stock Award.”

Except for the Employee’s termination of employment on account of disability or death as set forth
below, if Employee’s employment with the Company continues uninterrupted from the effective date of
this Award through (i) the day immediately preceding the date the Board of Directors of the Company
elects an individual to succeed the Employee as Chief Executive Officer and President of the
Company or (ii) May 10, 2006, whichever is earlier (“Vesting Date”), the Deferred Stock which
comprises the Deferred Stock Award shall be non-forfeitable (“Vested Deferred Stock”). Upon a
termination of Employee’s employment with the Company before the Vesting Date by reason of either
disability, as determined by the Compensation and Management Development Committee of the Company’s
Board of Directors (the “Committee”) in its sole discretion, or death, the Deferred Stock which
comprises the Deferred Stock Award shall be non-forfeitable and become Vested Deferred Stock in an
amount equal to the product of the Deferred Stock Award and a fraction, the numerator of which is
the number of calendar months in which the Employee rendered at least one full day of service on
behalf of the Company beginning on May 11, 2005 and the denominator of which is twelve (12). The
Company shall, subject to the Employee’s election to defer receipt, deliver to the Employee shares
of Common Stock equal in number to the number of shares of Deferred Stock which equals a percentage
as set forth below of the Deferred Stock Award on the first or second anniversary of the Vesting
Date as follows:

	 	 	 	 	 	 
	 	The first anniversary of the Vesting Date

	 	 	50% of the Deferred Stock Award	 
	 	The second anniversary of the Vesting Date

	 	 	50% of the Deferred Stock Award	 
	 	The first anniversary of the Employee’s
termination of employment before the Vesting
Date on account of disability or death

	 	 	50% of the Vested Deferred Stock	 
	 	The second anniversary of the Employee’s
termination of employment before the Vesting
Date on account of disability or death

	 	 	50% of the Vested Deferred Stock	 
	 

1

 

Any Deferred Stock maintained in the Deferred Stock Account which is not Vested Deferred Stock
shall, upon the Employee’s termination of employment, be forfeited by Employee without the payment
of any consideration or further consideration by the Company, and neither Employee nor any
successors, heirs, assigns, or legal representatives of Employee shall thereafter have any further
rights or interest in such forfeited Deferred Stock. Any fractional shares of Vested Deferred
Stock shall be rounded up to the next whole share of Vested Deferred Stock.

Notwithstanding the schedule set forth above, Deferred Stock maintained in the Deferred Stock
Account shall become Vested Deferred Stock upon the occurrence of a Change in Control (as defined
in Section 14.2 of the Plan). Temporary absences from employment because of illness, vacation or
leave of absence and transfers among the Company and/or any of its subsidiaries shall not be
considered terminations of employment. For purposes of this Agreement and the Plan (as defined in
Section 15 hereof), the Committee shall have absolute discretion to determine the date and
circumstances of termination of Employee’s employment, and its determination shall be final,
conclusive and binding upon Employee. Except as provided in this paragraph, upon termination of
employment with the Company, the Employee shall be entitled to receive only the number of shares of
Vested Deferred Stock as set forth in the second paragraph of this Section 2.

The shares of Common Stock delivered to the Employee shall be from shares held by the Company as
treasury stock or from shares of Common Stock acquired by the Company in the open market. Subject
to the Employee’s election to defer, all shares of Common Stock to be delivered to the Employee
shall be delivered as soon as administratively possible after the corresponding anniversary date or
as soon as administratively possible after the occurrence of a Change in Control.

                                        3. Administration of the Award. The Committee shall administer the Award. The
Committee shall have complete and full discretion in the administration and interpretation of the
terms of the Award.

                                        4. Right to Defer Payment of Award.

                                        (a) Election to Defer Award. The Employee may elect to defer payment of the Award otherwise
due on the anniversary date set forth in Section 2 by completing a written election and delivering
such election to the Company at least one year prior to the applicable anniversary date; provided
however, that the completion of such written election and the delivery of such election may be at
an earlier date as determined by the Committee or required by law to insure the validity of such
deferral. The deferral period elected cannot end prior to five (5) years before an Award is
otherwise due on an anniversary date set forth in Section 2. At the end of the deferral period
elected by the Employee (or within a certain period of time after the last day of the deferral
period as determined by the Committee or required by law to insure the validity of the deferral),
the Company, consistent with Section 2 and subject to Sections 6, 7 and 8 shall deliver to the
Employee shares of Common Stock equal in number to the number of Vested Deferred Stock held in the
Employee’s Deferred Stock Account.

                                        (b) Financial Hardship. A withdrawal from the Employee’s Deferred Stock Account of Vested
Deferred Stock shall be permitted prior to the termination of the deferral period in the event that
the Employee experiences an “unforeseeable emergency” as such term in defined Section
409A(a)(2)(B)(ii) of the Internal Revenue Code of 1986, as amended (“Code”) and the regulations
issued therewith. The Employee must apply to the Committee for an unforeseeable emergency
withdrawal and demonstrate that the circumstances being experienced were not under the Employee’s
control and constitute a real emergency which is likely to cause great financial hardship. The
Committee shall have the authority to require such medical or other evidence as it may need to
determine the necessity for the Employee’s withdrawal request. If such application for withdrawal
is permitted, the amount of such withdrawal shall be limited to an amount of the Employee’s Vested
Deferred Stock which would have been payable if the Employee’s employment with the Company was
terminated. If the Employee makes a withdrawal, the amount of the Employee’s Deferred Stock
Account under this Award shall be proportionately reduced to reflect the withdrawal. Also, the
withholding requirements described in Section 8 shall also be effected before the withdrawal.
Notwithstanding anything in this Section 4(b) to the contrary, any withdrawal for any unforeseeable
emergency must comply with Section 409A(a)(2)(B) of the Code.

2

 

                                        5. No Rights as Stockholder. Employee shall have no rights as a stockholder with
respect to any shares of Common Stock covered by this Award until shares of Common Stock are
delivered to the Employee pursuant to the last paragraph in Section 2 and Section 4. Until such
time, Employee shall not be entitled to dividends (except where the Employee’s Deferred Stock
Account is adjusted pursuant to the first paragraph of Section 2) or to vote at meetings of the
stockholders of the Company.

                                        6. Compliance With Securities Laws. Prior to the receipt of any certificates for
shares of Common Stock pursuant to this Award, Employee (or Employee’s beneficiary or legal
representative upon Employee’s death or disability) shall enter into such additional written
representations, warranties and Awards as the Company may reasonably request in order to comply
with applicable securities laws or with this Award.

                                        7. Stock Ownership Guidelines. Employee (or Employee’s beneficiary or legal
representative upon the Employee’s death or disability) shall be bound by the “Stock Ownership
Guidelines” of the Company as may be in effect from time to time.

                                        8. Withholding. Any payment of Common Stock under this Award shall be subject to
applicable federal and state withholding requirements. Hence, unless the Employee delivers a check
to the Company equal to the required withholding, the number of shares distributed shall be reduced
to meet the Employee’s applicable withholding requirements.

                                        9. Designation of Beneficiary. The Employee shall be permitted to provide to the
Committee a beneficiary designation for receipt of his or her Award after death. If the Employee
fails to designate a beneficiary, or if the designated beneficiary predeceases the Employee, the
Award shall be paid to the deceased Employee’s spouse, if living, or if such spouse is not living,
to the deceased Employee’s estate.

                                        10. Adjustments. If there is a change in the outstanding shares of the Common Stock
by reason of any stock dividend or split, re-capitalization, merger, consolidation, spin-off,
reorganization, combination or exchange of shares or other similar corporate change occurring after
the effective date of this Award, the Committee shall adjust the number of shares of Common Stock
subject to the Award to reflect the change, and such adjustment shall be conclusive and binding
upon the Employee and the Company.

                                        11. Non-Transferability.

                                            (a) The Deferred Stock, the Deferred Stock Account and the Vested Deferred Stock may not be
sold, assigned, transferred, exchanged, pledged, hypothecated, or otherwise encumbered and no such
sale, assignment, transfer, exchange, pledge, hypothecation, or encumbrance, whether made or
created by a voluntary act of the Employee or any agent of the Employee or by operation of law,
shall be recognized by, or be binding upon, or shall in any manner affect the rights of, the
Company, its successors or any agent thereof.

                                            (b) No amounts payable under the Award shall be transferable by the Employee other than by his
designation of a beneficiary pursuant to Section 9. The amounts payable under the Award shall be
exempt from the claims of creditors of the Employee and from all orders, decrees, levies and
executions and any other legal process to the fullest extent that may be permitted by law.

                                        12. Amendments to Award. The Award may only be modified upon the mutual agreement of
the Company and the Employee.

                                        13. Source of Benefit Payments. The payment of the Award to the Employee shall be
paid solely from the general assets of the Company. Until the actual delivery of the shares of
Common Stock, the Employee shall not have any interest in any specific assets of the Company,
including shares of Common Stock, under the terms of the Award. The Award shall not be considered
to create an escrow account, trust fund or other funding arrangement of any kind, or a fiduciary
relationship between the Employee and the Company. Until such time of payment, no shares of the
Common Stock shall be set aside by the Company for the Award.

3

 

                                        14. Successors and Assigns.

                                            (a) This Award is personal to the Employee and without the prior written consent of the
Company shall not be assignable by the Employee except by will or the laws of descent and
distribution. This Award shall inure to the benefit of and be enforceable by the Employee’s
guardian and legal representatives.

                                            (b) This Award shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

                                            (c) The Company shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Award in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place.

                                        15. Award Subject to Plan. This Award is subject to the terms of the Hillenbrand
Industries, Inc. Stock Incentive Plan (“Plan”). The terms and provisions of the Plan (including
any subsequent amendments thereto) are hereby incorporated herein by reference. In the event of a
conflict between any terms and provisions contained herein and the terms or provisions of the Plan,
the applicable terms or provisions of the Plan will govern and prevail.

                                        16. Governing Law. This Award shall be governed by and construed in accordance with
the internal laws of the State of Indiana without reference to principles of conflict of laws. The
captions of this Award are not part of the provisions hereof and shall have no force or effect.
This Award may not be amended or modified except by a written Award executed by the parties hereto
or their respective successors and legal representatives.

                                        17. Severability. The invalidity or unenforceability of any provision of this Award
shall not affect the validity or enforceability of any other provision of this Award.

                                        18. No Waiver. The failure of the Employee or the Company to insist upon strict
compliance with any provision of this Award or the failure to assert any right the Employee or the
Company may have under this Award shall not be deemed to be a waiver of such provision or right or
any other provision or right of this Award.

                                        19. Entire Award. The Employee and the Company acknowledge that this Award supersedes
any prior agreement between the parties with respect to the subject matter of this Award.

                                        20. Counterparts. This Award may be executed in counterparts, which together shall
constitute one and the same original.

Effective Date: May 11, 2005

	 	 	 	 	 
	 

	 	HILLENBRAND INDUSTRIES, INC.	 	 
	 
	 	 	 	 
	 

	 	By: 
	 	 
	 

	 	Bruce J. Bonnevier

Vice President, Human Resources	 	 
	 

	 	 	 	 
	 	 	 	 	 
	 

	 	Rolf A. Classon	 	 

4

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