Document:

exv10w2

 

Exhibit 10.2

March 30, 2007

Deborah F. Ricci

20190 Hidden Creek Court

Ashburn, VA 20147

Dear Debbie:

          On behalf of The Allied Defense Group, Inc. (the “Company”), I am very pleased to offer you
the position of chief financial officer. This letter agreement clarifies and confirms the terms of
your employment with the Company.

1.      POSITION; START DATE

          You shall have the duties and responsibilities as the chief financial officer of the Company.
You will report to the chief executive officer of the Company (the “CEO”). You agree not to
actively engage in any other employment, occupation or consulting activity during your employment
with the Company without the prior written approval of the CEO. Unless we mutually agree
otherwise, you will commence as the Company’s chief financial officer on April 6, 2007 (the “Start
Date”).

2.      SALARY

          Your base salary will be $16,666.66 per month ($200,000 annualized), payable monthly in
accordance with the Company’s standard payroll practice and subject to applicable withholding
taxes. Because your position is exempt from overtime pay, your salary will compensate you for all
hours worked. Your salary will be reviewed annually.

3.      BONUS

          In addition to your salary, you will be eligible to earn an annual bonus of forty percent
(40%) of your base salary (the “Target Bonus”) if you meet certain performance standards which will
be determined by the Company. If you exceed the performance standards, you could earn an annual
bonus of up to two hundred percent (200%) of your base salary; there is no minimum guaranteed
annual bonus so that if you fail to meet your performance standards, you will not be entitled to an
annual bonus. The performance standards generally will be determined during the first quarter of
each calendar year and will be based primarily on Company financial performance against various
targets. Your annual bonus shall be determined based on the assessment of your performance by the
CEO, subject to review and approval by the Compensation Committee of the Board of Directors. You
will be eligible for an annual bonus for any calendar year only if you remain employed with the
Company as of the date of the public release by the Company (via filing of Form 10-K) of its
financial results for the relevant year. The bonus will be payable within ten (10) days of the
public release by the Company of its financial results.

 

 

4.      BENEFITS

          You will be provided 9,000 shares of restricted Company stock on the Start Date. The shares
will vest ratably over a three (3) year period from the State Date. You must still be employed by
the Company on the vesting dates; otherwise the unvested stock will be forfeited. The shares will
also vest upon a Change of Control (as herein defined). The terms of the restricted stock will be
set forth in a Restricted Stock Agreement dated as of the Start Date. You will also be entitled,
during the term of your employment, to such employee benefits as the Company may offer from time to
time, subject to applicable eligibility requirements, including all Company holidays and four (4)
weeks of paid time off. Unused time off or unused holidays will not roll over from one calendar
year to another calendar year unless approved in advance, in writing, by the CEO.

	 	 	For purposes hereof, the term “Change of Control” means
	 
	 	 	(a)     the acquisition (other than by the Company) by any person, entity or “group” within the
meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (the “Exchange
Act”) (excluding, for this purpose, the Company or its subsidiaries or any employee benefit
plan of the Company or its subsidiaries which acquires beneficial ownership of voting
securities of the Company) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act), of 50% or more of either the then outstanding shares of
common stock or the combined voting power of the Company’s then outstanding capital stock
entitled to vote generally in the election of directors; or
	 
	 	 	(b)     individuals who, as of the date hereof, constitute the Board (as of the date hereof the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company’s shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be considered as
though such person were a member of the Incumbent Board; or
	 
	 	 	(c)     approval by the shareholders of the Company of (x) a reorganization, merger,
consolidation or share exchange, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger, consolidation
or share exchange do not, immediately thereafter, own more than 50% of the combined voting
power entitled to vote generally in the election of directors of the reorganized, merged,
consolidated or other surviving company’s then outstanding voting securities, (y) a
liquidation or dissolution of the Company or (iii) the sale of all or substantially all of
the assets of the Company.

5.      TERMINATION OF EMPLOYMENT

          Your employment may be terminated at any time by you or by the Company with or without Cause,
without prior written notice. This at-will employment relationship cannot be

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changed except in a writing signed by the CEO.
The following matters will provide the Company
with justification for termination of your employment with “Cause”:

	 	 	(a)     your conviction of any act by you of fraud or embezzlement;
	 
	 	 	(b)     your conviction of any felony involving an act of dishonesty, moral turpitude, deceit or
fraud;
	 
	 	 	(c)     your conviction of any felony or misdemeanor constituting an act of dishonesty or
misconduct (whether in connection with your responsibilities as an employee of the Company
or otherwise) that either materially impairs the Company’s business, goodwill or reputation
or materially compromises your ability to represent the Company with the public or provide
leadership to its employees; or
	 
	 	 	(d)     your failure to perform your lawful duties to the Company after receiving written notice
from the Company describing such failure in reasonable detail and stating that continued
failure to perform may result in termination of your employment with Cause.

6.      PAYMENTS UPON TERMINATION OF EMPLOYMENT

          The payments you will be entitled to receive from the Company upon termination of your
employment will be as follows:

	 	 	(a)     If you terminate your employment or if the Company terminates your employment with or
without Cause, the Company will pay you any accrued and unpaid compensation (subject to
normal withholding and other deductions) to the effective date of termination of your
employment.
	 
	 	 	(b)     In addition, you may be entitled to additional payments under paragraphs 6(c) or 6(d)
below.
	 
	 	 	(c)     If your employment with the Company is terminated by the Company within twelve (12)
months following a Change in Control or if you terminate your employment with the Company
within twelve (12) months following a Change in Control:

	 
	(A)     you will be entitled to a severance payment equal to the sum of (x) two (2)
times your annual salary immediately prior to the termination and (y) two (2) times
the greater of the Target Bonus or the average annual bonus earned by you for the
three (3) most recent annual periods; and

	 

	(B)     you will be entitled to receive medical, dental, vision, long-term care, life
and long-term disability insurance coverage and your 401(k) entitlement for the
lesser of (i) two (2) years following the termination, (ii) the maximum period for
which such benefits may be provided under Section 409A of the American Jobs Creation
Act of 2004 without triggering any liabilities thereunder, or (iii) when you secure
new employment and are eligible to be covered under the employer’s

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	benefit plans, in any case at levels comparable to that provided immediately prior
to your termination and at the cost of the Company except for any contributions paid
by you prior to the termination.

	 	 	(d)     If your employment with the Company is terminated by the Company without Cause or if you
terminate your employment with the Company following a reduction in your base salary:

	 
	(A)     you will be entitled to a severance payment equal to the sum of (x) one times
(1) your annual base salary immediately prior to the termination and (y) one times
(1) the greater of the Target Bonus or the average annual bonus earned by you for
the three (3) most recent annual periods; and

	 

	(B)     you will be entitled to receive medical, dental, vision, long-term care, life
and long-term disability insurance coverage and your 401(k) entitlement for the
lesser of (i) one (1) year following the termination, (ii) the maximum period for
which such benefits may be provided under Section 409A of the American Jobs Creation
Act of 2004 without triggering any liabilities thereunder, or (iii) when you secure
new employment and are eligible to be covered under the employer’s
benefit plans, in
any case at levels comparable to that provided immediately prior to your termination
and at the cost of the Company except for any contributions paid to you prior to the
termination.

	 	 	(e)     The severance payment set forth in paragraph 6(c)(A) above or in paragraph 6(d) above
payable as a result of a termination of employment initiated by the Company shall be payable
in a lump sum within thirty (30) days of the date of employment termination. The severance
payment set forth in paragraph 6(c)(A) above or in paragraph 6(d) above payable as a result
of a termination of employment initiated by you shall be payable in a lump sum seven (7)
months from the date of employment termination.
	 
	 	 	(f)     If either the Company or you receives confirmation from the Company’s independent
counsel or its certified public accounting firm (the “Tax Advisor”) that any payment by the
Company to you would be considered to be an “excess parachute payment” within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended, or any successor statute then
in effect (the “Code”), then the aggregate payments by the Company shall be reduced to the
highest amount that may be paid to you by the Company without having any portion of any
amount payable treated as such an “excess parachute payment”, and, if permitted by
applicable law and without adverse tax consequence, such reduction shall be made to the last
payment due hereunder.

7.      CONFIDENTIALITY

          With your employment comes the responsibility that you will honor any confidentiality
agreements you have signed with other entities. If you have any confidential information or trade
secrets, written, or otherwise known by you, you agree not to bring them to the Company, and you
agree not to use them in any way. You attest that you have not signed a “non-competition”
agreement or any other agreement that would prohibit you from working here.

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8.     ADDITIONAL PROVISIONS

          The terms described in this letter agreement will be the terms of your employment, and this
letter supersedes any previous discussions or offers and all prior employment and consulting
agreements between you and the Company or any of its subsidiary corporations. Any additions or
modifications of these terms would have to be in writing and signed by you and the CEO.

          The validity, interpretation, construction and performance of this letter agreement shall be
governed by the laws of the State of Delaware (except the provisions governing the choice of law).

          If you agree that this letter agreement evidences our agreement concerning your employment
with the Company, please indicate so by signing both copies of this letter retaining one for your
files.

	 	 	 	 	 
	 	Sincerely,

John J. Marcello, President and Chief Executive Officer

 	 
	 	 	 
	 	 	 
	 	 	 
	 

ACCEPTANCE

I accept employment with The Allied Defense Group, Inc. under the terms set forth in this letter
agreement:

Debbie F. Ricci

5exv10w1

 

EXHIBIT 10.1

AGREEMENT CONCERNING PAYMENT OF BENEFITS

UNDER HOLLY CORPORATION RETIREMENT RESTORATION PLAN

     WHEREAS, Jack P. Reid (“Reid) is entitled to the payment of certain benefits from Holly
Corporation (the “Company”) under the terms of the Holly Corporation Retirement Restoration Plan
(the “Plan”); and

     WHEREAS, due to errors in computation and in the interpretation of the Plan, Mr. Reid has
received from 1999 through April 2007 payments under the Plan and under the Holly Retirement Plan
(the “Qualified Plan”) which in total are estimated to have exceeded by approximately $287,000 the
total of such payments if properly calculated; and

     WHEREAS, the Company and Reid wish to enter into an agreement concerning the payment by the
Company of past and future benefits to Reid under the Plan; and

     WHEREAS, the Holly Corporation Compensation Committee has approved the terms of the agreement
set forth below.

     NOW THEREFORE, Reid and the Company agree as follows:

     1. Except to the extent otherwise required by a lump-sum election if made by Reid pursuant to
the terms of the First Amendment to the Plan, all payments under the Plan to Reid beginning with
the payment to be made in May 2007 shall be in the amount of $8,444.76 per month for Reid’s sole
lifetime and all payments under the Plan with respect to Reid’s participation in the Plan shall
cease at the death of Reid.

     2. For purposes of calculating the payment of a lump-sum benefit if elected by Reid under the
terms of the First Amendment to the Plan adopted in March 2007, the amount of Reid’s monthly
benefit under the Plan shall be an annuity for Reid’s sole life in the amount of $8,444.76.

     3. The Company hereby releases all claims for recovery from Reid with respect to any and all
excess payments made to Reid under the Plan and the Qualified Plan through the date of this
agreement.

     IN WITNESS WHEREOF, the parties have executed this agreement effective as of April 1, 2007.

	 	 	 	 	 
	 	 	 
	 	 	 
	 	Jack P. Reid 	 
	 	 	 
	 
	 	HOLLY CORPORATION

 	 
	 	By  	 	 
	 	 	Matthew P. Clifton 	 
	 	 	Chief Executive Officer

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