Employment Offer to Michael O. Fifer

Severance Agreement Dated February 28, 2008 Exhibit 10.1

 

September 5, 2006

Mr. Michael O. Fifer

3254 Pointe Hill Cove

Memphis, TN 38125

     Re:      Employment Offer

Dear Mr. Fifer:

     It is with great pleasure that Sturm, Ruger & Company, Inc. offers you the position of Chief Executive Officer with the following compensation package:

     Base salary of $400,000 per year;

 

     An award of 400,000 Company common stock options subject to the terms of the 1998 Stock Incentive Plan (enclosed);

 

     A restricted stock award in an amount equal to $250,000, subject to the terms of a plan currently under development, and further subject to approval by the Company’s shareholders at the 2007 Annual Shareholders meeting, scheduled for April 24, 2007;

 

     In the event of your termination by the Company for any reason other than cause, an executive severance agreement to include, subject to the terms and conditions of that agreement, a separation benefit of 1.5 times base annual salary;

 

     Eligibility to participate in the Company’s management incentive compensation program, subject to the terms and conditions of the program, at a target level of 75% of base salary. For 2006, you will receive a guaranteed incentive award of $75,000 payable as of December 31, 2006, assuming that you remain in our employ on that date;

 

     Eligibility to participate in the Company’s Salaried Employees Retirement Income Plan, a defined benefit retirement plan, and Profit Sharing Plan, a defined contribution plan, subject to plan terms;

 

     Eligibility for health, dental, life and long-term disability insurance coverage, subject to plan terms;

 

     Reimbursement for any medical premiums incurred by you during the 31-day waiting period required for coverage under the Company’s medical health plan;

 

     Four weeks’ paid vacation;

 

     12 Company-paid holidays per calendar year. 2006 holidays are: April 14, May 29, July 3-4, September 4, November 23-24, and December 25-29;

 

     Reimbursement for the following moving expenses:

 

     Two “house-hunting” trips for you and your family, not to exceed ten days;

 

     Expense of moving your family and your household goods such as furniture, clothing, appliances, etc., from Tennessee to Connecticut;

 

     Temporary living and commuting expenses for a period of time not to exceed one year;

 

     Expense of moving household goods, one time only, from your rental residence to a second residence in the Connecticut area, should you decide to rent initially;

 

     Real estate agency fees, not to exceed 6%, attorney’s fees and other usual closing fees related to the sale of your current home, and attorney and customary closing fees related to the purchase of your new home;

 

     A $30,000 relocation allowance for incidental expenses at the time of your purchase of a Connecticut home;

 

     Reimbursement for the lesser of the tax and insurance payments on your former residence or your new residence, and reimbursement for mortgage interest expense on your new home, for a period not to exceed six months from the date of purchase of your Connecticut home; and

 

     Company “gross-up” for taxes related to any of the above-listed relocation expenses.

 

     The Company strives to provide a competitive compensation and benefits program for its salaried employees as described in the enclosed Summary Plan Descriptions. The Company is in the process of evaluating the adequacy of its equity incentives for senior executives, including further stock options, restricted stock awards, and other forms of long-term, performance-based incentive compensation programs. This evaluation and any program changes are expected to be completed no later than the 2007 Annual Shareholders meeting, currently scheduled for April 24, 2007. In the meantime, if you have any questions concerning the benefits for which you are eligible, please contact Carole Markland, our Corporate Human Resources Manager, or Leslie M. Gasper, our Corporate Secretary, at (203) 259-7843.

     You will report directly to the Board of Directors of the Company. As we are anxious for your employment to begin as soon as possible, please contact Stephen L. Sanetti or me to discuss your actual start date. We greatly look forward to having you join our Company and become the top member of our management team. However, we recognize that you retain the option, as does the Company, of ending your employment with the Company at any time, with or without notice and with or without cause. As such, your employment with the Company is at-will and neither this letter nor any oral or written representations may be considered a contract for any specific period of time.

     This offer of employment is subject to your satisfactory completion of all required employment documentation. If not previously accepted by you, this offer will expire seven days from the date of this letter, although additional time for consideration of the offer can be made available if you find it necessary. If you wish to accept this offer, please sign in the space provided below and return it to me within the specified time. Please contact me at (203) 259-7843 with any questions you may have regarding the Company or this offer.

         

  Sincerely,

 

 

STURM, RUGER & COMPANY, INC.

   

  /s/ James E. Service    

  VADM James E. Service, U.S.N. (ret.)    

  Chairman of the Board Of Directors   

 

 

I agree to the terms of the employment set forth above.

     

/s/ Michael O. Fifer   09/12/06

 

Signature    Date

 

Top of the Document

 

<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>e603666_ex10-1.txt
<TEXT>
 
                                  [LOGO] RUGER
 
                                                                    Exhibit 10.1
 
                                                               February 28, 2008
 
Mr. Michael Fifer
c/o Sturm, Ruger & Company, Inc.
200 Ruger Road
Prescott, AZ 86301
 
Dear Mike:
 
            As you are aware, it is the practice of Sturm, Ruger & Co., Inc.
(the "Company") to provide severance benefits, subject to certain conditions, to
certain officers whose employment is terminated by the Company.
 
            The purpose of this letter is to set forth the terms of the
severance benefits that you would be entitled to receive under the circumstances
outlined below.
 
            1.    (a) Termination Without Cause: Subject to the limitations set
forth in Section 4, if, during the Term (as defined below) the Company
terminates your employment without Cause (as defined below) then the Company
shall pay to you, within 30 days after the date that you execute and deliver a
Release (as defined below) to the Company (the "Release Delivery Date") or, to
the extent required by Section 409A of the Internal Revenue Code of 1986 (the
"Code"), on the first day of the seventh month following the Release Delivery
Date, as a severance payment for services previously rendered to the Company, a
lump sum equal to 18 months of Base Annual Salary. Your Base Annual Salary shall
be the rate in effect immediately prior to the date your employment terminates.
 
                  (b) Change of Control Termination: Subject to the limitations
set forth in Section 4, if (i) a Change in Control (as defined below) occurs
during the Term, (ii) within 24 months after the effective date of such Change
in Control (but in any event within the Term) the Company reduces your annual
salary or makes a material change in the nature and scope of your duties to a
level below that in effect immediately prior to the effective date of the Change
in Control and (iii) thereafter you or the Company terminates your employment
within 90 days, then the Company shall pay to you, within 30 days after the
Release Delivery Date or, to the extent required by Section 409A of the Code, on
the first day of the seventh month following the Release Delivery Date, a lump
sum equal to 18 months of your Annual Compensation in effect immediately prior
to the date your employment terminates (without regard to any decrease in the
rate of your Annual Compensation made after the Change in Control).
 
                  (c) Section 409A of the Code: Notwithstanding the foregoing or
anything to the contrary contained in any Company policy providing for severance
payments and benefits to which you may become eligible pursuant to this Section
1, to the extent required by Section 409A of the Code, no payments shall be made
to you pursuant to any such Company policy during the first six months following
your termination of employment with the Company; you shall instead receive a
lump sum payment on the first day of the seventh month following the date your
employment terminates in an amount equal to the total amount of payments that
you otherwise would have received during the first six months following your
termination of employment. Any remaining payments shall be made to you in
accordance with the terms of the applicable Company policy.
 
 
                                  Page 1 of 4
<PAGE>
 
                  (d) The severance benefits specified in this Section 1 shall
be in lieu of any severance pay or other severance benefit that the Company may
provide to terminated employees pursuant to policies of the Company that may at
that time be in effect.
 
                  (e) The severance benefits specified in this Section 1 shall
not in any way affect your entitlement to the receipt of a pro-rated cash bonus
or other cash incentive that you are otherwise eligible to earn in the ordinary
course, during the partial year prior to date of termination, pursuant to each
plan or program (whether or not such plan or program has been formalized or is
in written form) of the Company in effect for such year that provides for cash
bonuses or other cash incentives (provided that the Company goals are met that
trigger the obligation of the Company to pay the cash bonus or other cash
incentives).
 
            2. Definitions: As used herein:
 
                  (a) "Annual Compensation" shall mean, at any time, an amount
equal to your Base Annual Salary, plus 100% of the target cash bonus or other
cash incentive that you are eligible to earn in such year pursuant to each plan
or program (whether or not such plan or program has been formalized or is in
written form) of the Company in effect for such year that provides for cash
bonuses or other cash incentives, or if no such plan or program has been adopted
with respect to such year, 100% of the target cash bonus or other cash incentive
that you were eligible to earn in the most recent year in which such a plan or
program was in effect;
 
                  (b) "Base Annual Salary" shall mean, at any time, an amount
equal to your annual rate of salary at such time;
 
                  (c) "Cause" shall mean: (i) a breach of your fiduciary duty to
the Company including, but not limited to, your failure to obey any lawful
directive of the Board of Directors of the Company, (ii) your personal
dishonesty or willful misconduct or (iii) your willful violation of any law,
rule or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order;
 
                  (d) "Change in Control" shall be deemed to have the same
meaning as defined in the Sturm, Ruger & Company, Inc. 2007 Stock Incentive
Plan;
 
                  (e) "Release" shall mean a release in made by you in favor of
the Company and its affiliates, in form and content acceptable to the Company,
which shall include, but not be limited to, appropriate non-solicitation and
non-disparagement provisions and that shall last for a period of time equal to
the number of months of severance being received by you; and
 
                  (f) "Term" shall mean the period commencing on the date hereof
and ending on the first anniversary of the date hereof, subject to automatic
extension on each anniversary of the date hereof, unless (a) you give notice of
your intent to terminate your employment, or otherwise terminate your
employment, before such date or (b) the Company gives written notice to you of
the termination of such automatic extensions at least 360 days prior to such
date.
 
 
                                  Page 2 of 4
<PAGE>
 
            3. Benefits: Upon the occurrence of a termination of your employment
under circumstances entitling you to receive the severance payment provided in
Section 1 above, the Company shall also cause to be continued, for a period of
time equal to the number of months of severance pay, such life, medical and
dental insurance coverage as is otherwise maintained by the Company for
full-time employees (based on your Base Annual Salary in effect immediately
prior to the date your employment terminates), subject to the limitations set
forth in such plans, programs or policies, provided that you shall continue to
pay all amounts in respect of such coverage that an employee receiving the same
level of coverage is or would be required to pay (the employee contribution).
 
            4. Parachute Payment: In the event that any amount otherwise payable
hereunder would be deemed to constitute a parachute payment (a "Parachute
Payment") within the meaning of Section 280G of the Code, and if any such
Parachute Payment, when added to any other payments which are deemed to
constitute Parachute Payments, would otherwise result in the imposition of an
excise tax under Section 4999 of the Code, the amounts payable hereunder shall
be reduced by the smallest amount necessary to avoid the imposition of such
excise tax. Any such limitation shall be applied to such compensation and
benefit amounts, and in such order, as the Company shall determine in its sole
discretion.
 
            5. Termination for Cause and Voluntary Termination: You shall have
no right to receive any severance pay or severance benefit or any other
compensation or benefit for any period after the date of the termination by the
Company of your employment for Cause or, except as otherwise provided in Section
1, following the voluntary termination by you of your employment.
 
            6. Nothing in this letter (a) confers upon you the right to continue
in the employment of the Company or the right to hold any particular office or
position with the Company, (b) requires the Company to pay you, or entitles you
to receive, any specified annual salary or interferes with or restricts in any
way the right of the Company to decrease your annual salary at any time or (c)
interferes with or restricts in any way the right of the Company to terminate
your employment at any time, with or without Cause.
 
            7. Any payments due you hereunder shall be reduced by all applicable
withholding and other taxes.
 
            8. The provisions set forth in this letter shall continue in effect
throughout its Term.
 
            9. This letter is intended to be binding upon the Company, its
successors in interest and assigns. On and after the date of this letter, the
terms regarding severance benefits described herein shall supercede and replace
all severance and other benefits provided under, and any other provisions set
forth or described in any prior letters to, or agreements with, you relating to
provisions of benefits upon a termination of your employment, and are contingent
upon your acceptance by signing below.
 
 
                                  Page 3 of 4
<PAGE>
 
            10. This letter shall be governed by, construed and enforced in
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
 
            11. You and the Company intend that this letter complies with the
provisions of Section 409A of the Code and the regulations and other guidance of
general applicability that are issued thereunder. You and the Company agree to
negotiate in good faith regarding amendments to this letter that may be
necessary or desirable to comply with Section 409A.
 
      This letter may be executed in one or more counterparts, each of which
will be deemed to be an original, but all of which will collectively constitute
a single original.
 
                                                       Very truly yours,
 
                                                       STURM, RUGER & CO., INC.
 
 
                                                       /s/ Leslie M. Gasper
                                                       -------------------------
                                                       Leslie M. Gasper
                                                       Corporate Secretary
 
                                                       April 10, 2008
                                                       -------------------------
                                                       Date
 
Agreed and Accepted:
 
 
By:   /s/ Michael O. Fifer
      --------------------
 
Date: February 28, 2008
      --------------------
 
 
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