Form of Retention Bonus Agreement
EXHIBIT 10.1
METHODE ELECTRONICS, INC.
FORM OF RETENTION AWARD AGREEMENT – CASH
This Retention Award Agreement (the “Award Agreement”), dated and effective as of September [___], 2023 (the “Effective Date”), is entered into by and between Methode Electronics, Inc., a Delaware corporation (the “Company”), and [________________________] (“Grantee”).
WHEREAS, the Company desires to incentivize Grantee to remain employed by the Company and maintain satisfactory job performance through September 12, 2025, for the benefit of the Company and the Company’s stockholders.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and obligations set forth herein, the Company agrees to provide Grantee the opportunity to earn a cash award on the terms and subject to the conditions set forth herein.
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Without limiting the generality of the foregoing, in the event that Grantee is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code and the Retention Award is considered to be a payment of “deferred compensation” to which Section 409A of the Code is applicable, then to the extent such amount is paid by reason of Grantee’s Separation from Service, such payment shall be delayed, to the extent necessary to avoid a violation of Section 409A(a)(2)(B)(i). In general, the preceding sentence may require that a payment of the Retention Award to Grantee that would otherwise be made within six (6) months following Grantee’s separation from service shall be delayed until the earlier of (i) first day of the seventh (7th) month beginning after Grantee’s separation from service, or (ii) Grantee’s death, if Grantee is determined to be a “specified employee” as that term is defined in Section 409A(a)(2)(B)(i) of the Code.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Award Agreement as of the Effective Date first written above.
METHODE ELECTRONICS, INC.
By:
Bruce K. Crowther
Chair, Compensation Committee
Please indicate your acceptance of the terms and conditions of this Award Agreement by signing in the space provided below and returning a signed copy of this Award Agreement to the Company. IF A COPY OF THIS AWARD AGREEMENT EXECUTED BY GRANTEE HAS NOT BEEN RECEIVED BY THE COMPANY WITHIN THIRTY (30) DAYS OF THE EFFECTIVE DATE, THIS AWARD AGREEMENT SHALL BE CANCELLED.
BY SIGNING BELOW, YOU ACKNOWLEDGE THAT YOU HAVE HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF COUNSEL PRIOR TO EXECUTING THIS AWARD AGREEMENT AND FULLY UNDERSTAND ALL PROVISIONS OF THIS AWARD AGREEMENT. YOU ALSO HEREBY AGREE TO ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL DECISIONS OR INTERPRETATIONS OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF THE COMPANY UPON ANY QUESTIONS ARISING UNDER OR IN CONNECTION WITH THIS AWARD AGREEMENT.
GRANTEE:
____________________________________
[___________________]
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Appendix A
DEFINITIONS
For purposes of this Award Agreement, the following terms shall have the respective meanings specified below:
“Cause” means:
(i) Grantee’s conviction of, or a plea of nolo contendere to, a felony other than a traffic violation;
(ii) Grantee’s commission of any act or acts of personal dishonesty intended to result in personal enrichment to Grantee to the detriment of the Company;
(iii) a failure to perform assigned duties, provided that such failure has continued for more than ten (10) days after the Board of Directors or the Chief Executive Officer of the Company has given written notice of such failure and of the Company’s intention to terminate Grantee’s employment because of such failure;
(iv) any willful misconduct by Grantee which affects the business reputation of the Company;
(v) breach in any material respect by Grantee of any provision of any employment, consulting, advisory, nondisclosure, non-competition or other similar agreement between Grantee and the Company or any of its subsidiaries or affiliates; or
(vi) Grantee’s violation of the Company’s code of conduct or any addendum thereto.
Grantee shall be considered to have been discharged for “Cause” if the Company or the Board of Directors determines, within thirty (30) days after Grantee’s resignation, that discharge for Cause was warranted.
“Change of Control” shall be deemed to have occurred on the first to occur of any of the following:
(i) any one “person” or more than one person acting as a “group” becomes the “beneficial owner” (as such terms are used in the Securities Exchange Act of 1934, as amended) of more than fifty percent (50%) of the total voting power of common stock then outstanding; provided, however, that any acquisition by the Company, any entity controlled by the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company shall not constitute a Change of Control of the Company; or
(ii) a majority of the members of the Company’s Board of Directors is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the Company’s Board of Directors before the date of the appointment or election; or
(iii) the consummation of a merger, consolidation or similar transaction involving the Company where, immediately after the consummation of such transaction, the stockholders of the Company immediately prior thereto do not own, directly or indirectly, either of the following, in each case, in substantially the same proportion as the ownership of the Company’s stockholders prior to such transaction: (A) outstanding voting securities representing more than 50% of the combined outstanding voting power of the surviving entity in such transaction or (B) more than 50% of the combined outstanding voting power of the parent of the surviving entity in such transaction; or
(iv) the consummation of a sale, transfer or liquidation of all or substantially all of the assets of the Company or shareholder approval of complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, however, in any circumstance or transaction in which compensation resulting from or in respect of the Retention Award would result in the imposition of an additional tax under Section 409A of the Code if the foregoing definition of “Change of Control” were to apply, but would not result in the imposition of any additional tax if the term “Change of Control” were defined herein to mean a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5), then “Change of Control” shall mean a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5), but only to the extent necessary to prevent such compensation from becoming subject to an additional tax under Section 409A of the Code.
“Code” means the Internal Revenue Code of 1986, as amended from time to time or any successor thereto.
“Company” means Methode Electronics, Inc., a Delaware corporation, together with its subsidiaries, and any successor thereto.
“Good Reason” shall exist hereunder if, without Grantee’s express written consent any of the following events or actions occurs, provided that no finding of Good Reason shall be effective unless and until the Grantee has provided the Company, within sixty (60) calendar days of becoming aware of the facts and circumstances underlying the finding of Good Reason, with written notice thereof stating with specificity the facts and circumstances underlying the finding of Good Reason and, if the basis for such finding of Good Reason is capable of being cured by the Company, providing the Company with an opportunity to cure the same within thirty (30) calendar days after receipt of such notice: (i) the Company shall materially reduce the nature, scope or level of Grantee’s responsibilities from the nature, scope or level of such responsibilities prior to the Change of Control, or shall fail to provide Grantee with adequate office facilities and support services to perform such responsibilities; (ii) the Company shall require Grantee to move Grantee’s principal business office more than 25 miles from Grantee’s principal business office at the time of this Award Agreement, or assign to Grantee duties that would reasonably require such move; provided, however, that if Grantee’s principal business office is not located at the Company’s then current corporate headquarters, and the Company requires Grantee to move Grantee’s principal business office to such corporate headquarters, or assigns to Grantee duties that would reasonably require such move, such actions shall not constitute “Good Reason” under this Award Agreement; (iii) the Company shall require Grantee, or assign duties to Grantee which would reasonably require Grantee, to increase, by more than twenty-four, the number of normal working days (determined at the time of this Award Agreement) that Grantee spends away from Grantee’s principal business office during any consecutive twelve-month period; (iv) the Company shall reduce Grantee’s annual salary below that in effect as of the date of this Award Agreement (or as of the Change of Control, if greater); (v) the Company shall materially reduce or fail to continue in effect any cash or stock-based incentive or bonus plan, retirement plan, welfare benefit plan, or other benefit plan, program or arrangement, unless the aggregate value (as computed by an independent employee benefits consultant selected by the Company) of all such incentive, bonus, retirement and benefit plans, programs and arrangements provided to Grantee is not materially less than their aggregate value as of the date of this Award Agreement (or as of the Change of Control, if greater); or (vi) if the Board of Directors fails to act in good faith with respect to the Company’s obligations hereunder, or the Company breaches its obligations hereunder.