EXHIBIT C - Form I
CRANE CO.
EMPLOYMENT/SEVERANCE AGREEMENT
(Revised 3/95)
AGREEMENT by and between CRANE CO., a Delaware corporation (the
"Company"), and 1~ (the "Employee"), dated as of the day of , 1995.
The Board of Directors of the Company (the "Board"), on the advice of
its Organization and Compensation Committee, has determined that it is in the
best interests of the Company and its shareholders to assure that the Company
will have the continued dedication of the Employee, notwithstanding the
possibility, threat, or occurrence of a Change of Control (as defined below) of
the Company. The Board believes it is imperative to diminish the inevitable
distraction of the Employee by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control, to encourage the
Employee's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide the
Employee with compensation arrangements upon a Change of Control which provide
the Employee with individual financial security and which are competitive with
those of other corporations and, in order to accomplish these objectives, the
Board has caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
l. Certain Definitions.
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(a) The "Effective Date" shall be the first date during the
"Change of Control Period" (as defined in Section l(b)) on which a Change of
Control occurs. Anything in this Agreement to the contrary notwithstanding, if
the Employee's employment with the Company is terminated prior to the date on
which a Change of Control occurs, and it is reasonably demonstrated that such
termination (l) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (2) otherwise arose in
connection with or anticipation of a Change of Control, then for all purposes of
this Agreement the "Effective Date" shall mean the date immediately prior to the
date of such termination.
(b) The "Change of Control Period" is the period commencing on
the date hereof and ending on the earlier to occur of (i) the third anniversary
of such date or (ii) the first day of the month next following the Employee's
normal retirement date ("Normal Retirement Date") under Crane Co.'s Pension Plan
for Non Bargaining Employees effective January 1, 1985 or under that retirement
plan of a subsidiary of the Company in which the Employee is a participant, or
any successor retirement plan (the "Retirement Plan");
provided, however, that commencing on the date one year after the date hereof,
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and on each annual anniversary of such date (such date and each annual
anniversary thereof is hereinafter referred to as the "Renewal Date"), the
Change of Control Period shall be automatically extended so as to terminate on
the earlier of (x) three years from such Renewal Date or (y) the first day of
the month coinciding with or next following the Employee's Normal Retirement
Date, unless at least 60 days prior to the Renewal Date the Company shall give
notice that the Change of Control Period shall not be so extended.
2. Change of Control. For the purpose of this Agreement, a "Change
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of Control" shall mean:
(i) The acquisition, other than from the Company, by any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors, but excluding, for this purpose, any such acquisition by the Company
or any of its subsidiaries, or any employee benefit plan (or related trust) of
the Company or its subsidiaries, or the Crane Fund, a charitable trust under the
laws of the State of Illinois, or any corporation with respect to which,
following such acquisition, more than 50% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by substantially the same individuals and entities who were the
beneficial owners, respectively, of the common stock and voting securities of
the Company immediately prior to such acquisition in substantially the same
proportion as their ownership, immediately prior to such acquisition, of the
then outstanding shares of common stock of the Company or the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors, as the case may be; or
(ii) 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 individual
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 individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office
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is in connection with an actual or threatened election contest relating to the
election of the Directors of the Company (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act); or
(iii) Approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to which
substantially the same individuals and entities who were the respective
beneficial owners of the common stock and voting securities of the Company
immediately prior to such reorganization, merger or consolidation do not,
following such reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 50% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such reorganization, merger
or consolidation, or a complete liquidation or dissolution of the Company or of
the sale or other disposition of all or substantially all of the assets of the
Company.
3. Employment Period. The Company hereby agrees to continue the
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Employee in its employ, and the Employee hereby agrees to remain in the employ
of the Company, for the period commencing on the Effective Date and ending on
the earlier to occur of (a) the third anniversary of such date or (b) the
first day of the month coinciding with or next following the Employee's Normal
Retirement Date (the "Employment Period").
4. Terms of Employment.
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(a) Position and Duties.
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(i) During the Employment Period, (A) the Employee's
position (including status, offices, titles and reporting requirements)
authority duties and responsibilities shall be at least commensurate in all
material respects with those held, exercised and assigned at any time during the
90-day period immediately preceding the Effective Date and (B) the Employee's
services shall be performed at the location where the Employee was employed
immediately preceding the Effective Date or any office or location less than
thirty-five (35) miles from such location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Employee is entitled, the
Employee agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Employee hereunder, to use the
Employee's reasonable best efforts to
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perform faithfully and efficiently such responsibilities. It is expressly
understood and agreed that to the extent that any outside activities have been
conducted by the Employee prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Employee's responsibilities to the
Company.
(b) Compensation.
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(i) Base Salary. During the Employment Period, the
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Employee shall receive an annual base salary ("Base Salary") at a rate at least
equal to twelve times the highest monthly base salary paid or payable to the
Employee by the Company during the twelve-month period immediately preceding the
month in which the Effective Date occurs. During the Employment Period, the Base
Salary shall be reviewed at least annually and shall be increased at any time
and from time to time as shall be substantially consistent with increases in
base salary awarded in the ordinary course of business to other key employees of
the Company and its subsidiaries. Any increase in Base Salary shall not serve to
limit or reduce any other obligation to the Employee under this Agreement. Base
Salary shall not be reduced after any such increase.
(ii) Annual Bonus. In addition to Base Salary, the
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Employee shall be eligible (but not entitled) to receive, for each fiscal year
during the Employment Period, an annual bonus (an "Annual Bonus") (either
pursuant to any incentive compensation plan maintained by the Company or
otherwise) in cash on the same basis as in the fiscal year immediately preceding
the fiscal year in which the Effective Date occurs or, if more favorable to the
Employee, on the same basis as awarded at any time thereafter to other key
employees of the Company and its subsidiaries.
(iii) Incentive, Savings and Retirement
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Plans. In addition to Base Salary and Annual Bonus payable as hereinabove
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provided, the Employee shall be entitled to participate during the Employment
Period in all incentive, savings and retirement plans, practices, policies and
programs applicable to other key employees of the Company and its subsidiaries.
Such plans, practices, policies and programs, in the aggregate, shall
provide the Employee with compensation, benefits and reward opportunities at
least as favorable in the aggregate as the most favorable of such compensation,
benefits and reward opportunities provided by the Company for the Employee under
such plans, practices, policies and programs as in effect at any time during the
90-day period immediately
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preceding the Effective Date or, if more favorable to the Employee, as provided
at any time thereafter with respect to other key employees of the Company and
its subsidiaries.
(iv) Welfare Benefit Plans. During the Employment Period,
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the Employee and/or the Employee's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its subsidiaries
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs), at least as favorable as the most
favorable of such plans, practices, policies and programs in effect at any time
during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Employee and/or the Employee's family, as in effect at any time
thereafter with respect to other key employees of the Company and its
subsidiaries.
(v) Expenses. During the Employment Period, the Employee
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shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Employee in accordance with the most favorable policies,
practices and procedures of the Company and its subsidiaries in effect at any
time during the 90-day period immediately preceding the Effective Date or, if
more favorable to the Employee, as in effect at any time thereafter with respect
to other key employees of the Company and its subsidiaries.
(vi) Fringe Benefits. During the Employment Period, the
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Employee shall be entitled to fringe benefits, including use of an automobile
and payment of related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its subsidiaries in effect
at any time during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Employee, as in effect at any time thereafter with
respect to other key employees of the Company and its subsidiaries.
(vii) Office and Support Staff. During the Employment
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Period, the Employee shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to secretarial and other
assistance, at least equal to the most favorable of the foregoing provided to
the Employee by the Company and its subsidiaries at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Employee, as provided at any time thereafter with respect to other key employees
of the Company and its subsidiaries.
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(viii) Vacation. During the Employment Period, the
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Employee shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of the Company and its
subsidiaries as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee, as in effect
at any time thereafter with respect to other key employees of the Company and
its subsidiaries.
5. Termination.
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(a) Death or Disability. This Agreement shall terminate
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automatically upon the Employee's death. If the Company determines in good
faith that the Disability of the Employee has occurred (pursuant to the
definition of "Disability" set forth below), it may give to the Employee written
notice (given in accordance with Section 12(b) hereof) of its intention to
terminate the Employee's employment. In such event, the Employee's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Employee (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Employee shall not have returned to full-
time performance of the Employee's duties. For purposes of this Agreement,
"Disability" means disability which, at least 26 weeks after its commencement,
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Employee or the Employee's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Employee's employment
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for "Cause." For purposes of this Agreement, "Cause" shall constitute either (i)
personal dishonesty or breach of fiduciary duty involving personal profit at the
expense of the Company (ii) repeated violations by the Employee of the
Employee's obligations under Section 4(a) of this Agreement which are
demonstrably willful and deliberate on the Employee's part and which are not
remedied in a reasonable period of time after receipt of written notice from the
Company or (iii) the commission of a criminal act related to the performance of
duties, or the furnishing of proprietary confidential information about the
Company to a competitor, or potential competitor, or third party whose interests
are adverse to those of the Company; (iv) habitual intoxication by alcohol or
drugs during work hours; or (v) conviction of a felony.
(c) Good Reason. The Employee's employment may be terminated by
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the Employee for Good Reason. For purposes of this Agreement, "Good Reason"
means:
(i) the assignment to the Employee of any duties
inconsistent in any respect with the Employee's position
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(including status, offices, titles and reporting requirements), authority,
duties or responsibilities as contemplated by Section 4(a) of this Agreement, or
any other action by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Employee;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Employee;
(iii) the Company's requiring the Employee to be based at
any office or location other than that described in Section 4(a)(i)(B) hereof,
except for travel reasonably required in the performance of the Employee's
responsibilities;
(iv) any purported termination by the Company of the
Employee's employment otherwise than as expressly permitted by this Agreement;
or
(v) any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Employee shall be conclusive. Anything in this
Agreement to the contrary notwithstanding, a termination by the Employee for any
reason during the 30-day period immediately following the first anniversary of
the Effective Date shall be deemed to be a termination for Good Reason for all
purposes of this Agreement.
(d) Notice of Termination. Any termination by the Company for
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Cause or by the Employee for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than fifteen (15) days after
the giving of such notice). The failure by the Employee to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason shall not waive any right of the Employee hereunder or preclude the
Employee from asserting such fact or
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circumstance in enforcing his rights hereunder.
(e) Date of Termination. "Date of Termination" means the date
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of receipt of the Notice of Termination or any later date specified therein, as
the case may be; provided, however,that (i) if the Employee's employment is
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terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the Employee of such
termination and (ii) if the Employee's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Employee or the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
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(a) Death. If the Employee's employment is terminated by reason
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of the Employee's death, this Agreement shall terminate without further
obligations to the Employee's legal representatives under this Agreement, other
than those obligations accrued or earned and vested (if applicable) by the
Employee as of the Date of Termination, including, for this purpose (i) the
Employee's full Base Salary through the Date of Termination at the rate in
effect on the Date of Termination or, if higher, at the highest rate in effect
at any time from the 90-day period preceding the Effective Date through the Date
of Termination (the "Highest Base Salary"), (ii) the product of the Annual Bonus
paid to the Employee for the last full fiscal year and a fraction, the numerator
of which is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 and (iii) any compensation
previously deferred by the Employee (together with accrued interest thereon, if
any) and not yet paid by the Company and any accrued vacation pay not yet paid
by the Company (such amounts specified in clauses (i), (ii) and (iii) are
hereinafter referred to as "Accrued Obligations"). All such Accrued Obligations
shall be paid to the Employee's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination. Anything in this
Agreement to the contrary notwithstanding, the Employee's family shall be
entitled to receive benefits at least equal to the most favorable benefits
provided by the Company and any of its subsidiaries to surviving families of
employees of the Company and such subsidiaries under such plans, programs,
practices and policies relating to family death benefits, if any, in accordance
with the most favorable plans, programs, practices and policies of the Company
and its subsidiaries in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee and/or the
Employee's family, as in effect on the date of the Employee's death with respect
to other key employees of the Company and its subsidiaries and their families.
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(b) Disability. If the Employee's employment is terminated by
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reason of the Employee's Disability, this Agreement shall terminate without
further obligations to the Employee, other than those obligations accrued or
earned and vested (if applicable) by the Employee as of the Date of Termination,
including for this purpose, all Accrued Obligations. All such Accrued
Obligations shall be paid to the Employee in a lump sum in cash within 30 days
of the Date of Termination. Anything in this Agreement to the contrary
notwithstanding, the Employee shall be entitled after the Disability Effective
Date to receive disability and other benefits at least equal to the most
favorable of those provided by the Company and its subsidiaries to disabled
employees and/or their families in accordance with such plans, programs,
practices and policies of the Company and its subsidiaries in effect at any time
during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Employee and/or the Employee's family, as in effect at any time
thereafter with respect to other key employees of the Company and its
subsidiaries and their families.
(c) Cause; Other than for Good Reason. If the Employee's
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employment shall be terminated for Cause, this Agreement shall terminate without
further obligations to the Employee other than the obligation to pay to the
Employee the Highest Base Salary through the Date of Termination plus the amount
of any compensation previously deferred by the Employee (together with accrued
interest thereon, if any). If the Employee terminates employment other than for
Good Reason, this Agreement shall terminate without further obligations to the
Employee, other than those obligations accrued or earned and vested (if
applicable) by the Employee through the Date of Termination, including for this
purpose, all Accrued Obligations. All such Accrued Obligations shall be paid to
the Employee in a lump sum in cash within 30 days of the Date of Termination.
(d) Good Reason; Other Than for Cause or Disability. If, during
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the Employment Period, the Company shall terminate the Employee's employment
other than for Cause, Disability, or death or if the Employee shall terminate
his employment for Good Reason:
(i) the Company shall pay to the Employee in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the following
amounts:
A. to the extent not theretofore paid, the Employee's Highest
Base Salary through the Date of Termination; and
B. the product of (x) the greater of the Annual
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Bonus paid or payable (annualized for any fiscal year consisting of less than
twelve full months or for which the Executive has been employed for less than
twelve full months) to the Executive for the most recently completed fiscal year
during the Employment Period, if any, or the average bonus (annualized for any
fiscal year consisting of less than twelve full months or with respect to which
the Executive has been employed by the Company for less than twelve full months)
paid or payable to the Executive by the Company and its affiliated companies in
respect of the three fiscal years immediately preceding the fiscal year in which
the Effective Date occurs (the "Average Annual Bonus"), such greater amount
being hereafter referred to as the "Highest Annual Bonus," and (y) a fraction,
the numerator of which is the number of days in the current fiscal year through
the Date of Termination, and the denominator of which is 365;
C. the product of (x) three and (y) the sum of (i) the Highest Base
Salary and (ii) the Average Annual Bonus; and
D. in the case of compensation previously deferred by the Employee,
all amounts previously deferred (together with accrued interest thereon, if any)
and not yet paid by the Company, and any accrued vacation pay not yet paid by
the Company; and
(ii) for the remainder of the Employment Period, or such
longer period as any plan, program, practice or policy may provide, the Company
shall continue benefits to the Employee and/or the Employee's family at least
equal to those which would have been provided to them as if the Employee's
employment had not been terminated, in accordance with the most favorable
employee welfare benefit plans (as such term is defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended) of the Company and
its subsidiaries (including health insurance and life insurance) during the 90-
day period immediately preceding the Effective Date or, if more favorable to the
Employee, as in effect at any time thereafter with respect to other key
employees and their families, and for purposes of eligibility for retiree
benefits pursuant to such employee welfare benefit plans, the Employee shall be
considered to have remained employed until the end of the Employment Period and
to have retired on the last day of such period.
7. Non-exclusivity of Rights. Nothing in this Agreement shall
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prevent or limit the Employee's continuing or future participation in any
benefit, bonus, incentive or other plans, programs, policies or practices,
provided by the Company or any of its subsidiaries and for which the Employee
may qualify, nor shall anything herein limit or otherwise affect such rights as
the Employee may have under any stock option, restricted stock, stock
appreciation right, or other agreements
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with the Company or any of its subsidiaries. Amounts which are vested benefits
or which the Employee is otherwise entitled to receive under any plan, policy,
practice or program of the Company or any of its subsidiaries at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program provided, however, that in the event the terms of
any such plan, policy, practice or program concerning the payment of benefits
thereunder shall conflict with any provision of this Agreement, the terms of
this Agreement shall take precedence but only if and to the extent the payment
would not adversely affect the tax exempt status (if applicable) of any such
plan, policy, practice or program and only if the employee agrees in writing
that such payment shall be in lieu of any corresponding payment from such plan,
policy, practice or program.
8. Full Settlement. The Company's obligation to make the payments
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provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Employee or others. In no event shall the Employee be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Employee under any of the provisions of this Agreement. The Company
agrees to pay, to the full extent permitted by law, all legal fees and expenses
which the Employee may reasonably incur as a result of any contest (regardless
of the outcome thereof) by the Company or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Employee about the amount of any payment pursuant to Section 9 of this
Agreement), plus in each case interest at the applicable Federal rate provided
for in Section 7872(f)(2) of the Internal Revenue Code of 1986, as amended (the
"Code").
9. Certain Additional Payments by the Company.
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(a) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any economic benefit or payment or
distribution by the Company to or for the benefit of the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (including, but not limited to, any economic benefit
received by the Employee by reason of the acceleration of rights under the
various option, restricted stock and stock appreciation right plans of the
Company, but excluding any other economic benefit, which by the terms of the
agreement or other document providing for such economic benefit, is expressly
excluded from inclusion in the economic benefits covered by this Section 9(a))
(a "Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties with respect to such excise tax (such
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excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Employee shall be
entitled to receive an additional payment (a "Gross-Up-Payment") in an amount
such that after payment by the Employee of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax imposed
upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including whether a
Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be
made by the Company's regular outside independent public accounting firm (the
"Accounting Firm") which shall provide detailed supporting calculations both to
the Company and the Employee within 15 business days of the Date of Termination,
if applicable, or such earlier time as is requested by the Company . The initial
Gross-Up Payment, if any, as determined pursuant to this Section 9(b), shall be
paid to the Employee within 5 days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is payable
by the Employee, it shall furnish the Employee with an opinion that he has
substantial authority not to report any Excise Tax on his federal income tax
return. Any determination by the Accounting Firm shall be binding upon the
Company and the Employee. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 9(c) and the Employee
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Employee.
(c) The Employee shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after the later of
either (i) the date the Employee has actual knowledge of such claim, or (ii) ten
days after the Internal Revenue Service issues to the Employee either a written
report proposing imposition of the Excise Tax or a statutory notice of
Deficiency with respect thereto, and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Employee shall not pay such claim prior to the expiration of the thirty-day
period following the
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date on which it gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due). If the
Company notifies the Employee in writing prior to the expiration of such period
that it desires to contest such claim, the Employee shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively
to contest such claim,
(iv) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limitation of the foregoing provisions
of this Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Employee to request or accede to a request for an extension of the
statute of limitations with respect only to the tax claimed, or pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and
the Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Employee to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to the Employee, on an interest-free
basis and shall indemnify and hold the Employee harmless, on an after-tax
basis, from any Excise Tax or income tax, including interest or penalties with
respect thereto, imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations requested or acceded to by the Employee
at the Company's request and relating to payment of taxes for the taxable year
of the Employee with respect to which such
13
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Employee shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Employee of an amount advanced
by the Company pursuant to Section 9(c), the Employee becomes entitled to
receive any refund with respect to such claim, the Employee shall (subject to
the Company's complying with the requirements of Section 9(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Employee of an amount advanced by the Company pursuant to Section 9(c), a
determination is made that the Employee shall not be entitled to any refund with
respect to such claim and the Company does not notify the Employee in writing of
its intent to contest such denial of refund prior to the expiration of thirty
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
(e) In the event that any state or municipality or subdivision
thereof shall subject any Payment to any special tax which shall be in addition
to the generally applicable income tax imposed by such state , municipality, or
subdivision with respect to receipt of such Payment, the foregoing provisions of
this Section 9 shall apply, mutatis mutandis, with respect to such special tax.
------- --------
10. Confidential Information. The Employee shall hold in a
------------------------
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
subsidiaries, and their respective businesses, which shall have been obtained by
the Employee during the Employee's employment by the Company or any of its
subsidiaries and which shall not be or become public knowledge (other than by
acts by the Employee or his representatives in violation of this Agreement).
After termination of the Employee's employment with the Company, the Employee
shall not, without the prior written consent of the Company, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Employee under this Agreement.
14
11. Successors.
----------
(a) This Agreement is personal to the Employee and without the
prior written consent of the Company shall not be assignable by the Employee
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Employee's legal
representatives.
(b) This Agreement 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 Agreement 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. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
12. Miscellaneous.
--------------
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force and effect.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee:
------------------
FIELD (2)
If to the Company:
-----------------
Crane Co.
100 First Stamford Place
Stamford, CT 06902
Attention: Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and
15
communications shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Employee's failure to insist upon strict compliance with
any provision hereof shall not be deemed to be a waiver of such provision or any
other provision thereof.
(f) This Agreement contains the entire understanding of the
Company and the Employee with respect to the subject matter hereof. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives. This Agreement is intended to revise the relationships, rights
and obligations between the Company and the Employee defined by, and to replace,
the Employment/Severance Agreement between the Company and the Employee
dated_______, and amended ________ , ("Former Agreement") in all respects. Upon
the execution of this Agreement by both parties, the Former Agreement to the
extent its provisions are inconsistent with this Agreement shall be of no force
and effect.
(g) The Employee and the Company acknowledge that the employment
of the Employee by the Company is "at will," and, prior to the Effective Date,
may be terminated by either the Employee or the Company at any time. Upon a
termination of the Employee's employment or prior to the Effective Date, there
shall be no further rights under this Agreement.
16
IN WITNESS WHEREOF, the Employee has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
______________________________________
CRANE CO.
By____________________________________
Attest:_____________________________
Secretary
17
EXHIBIT C - Form II
CRANE CO.
EMPLOYMENT/SEVERANCE AGREEMENT
(Revised 3/95)
AGREEMENT by and between CRANE CO., a Delaware corporation (the
"Company"), and 1~ (the "Employee"), dated as of the day of , 1995.
The Board of Directors of the Company (the "Board"), on the advice of
its Organization and Compensation Committee, has determined that it is in the
best interests of the Company and its shareholders to assure that the Company
will have the continued dedication of the Employee, notwithstanding the
possibility, threat, or occurrence of a Change of Control (as defined below) of
the Company. The Board believes it is imperative to diminish the inevitable
distraction of the Employee by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control, to encourage the
Employee's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide the
Employee with compensation arrangements upon a Change of Control which provide
the Employee with individual financial security and which are competitive with
those of other corporations and, in order to accomplish these objectives, the
Board has caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
l. Certain Definitions.
-------------------
(a) The "Effective Date" shall be the first date during the
"Change of Control Period" (as defined in Section l(b)) on which a Change of
Control occurs. Anything in this Agreement to the contrary notwithstanding, if
the Employee's employment with the Company is terminated prior to the date on
which a Change of Control occurs, and it is reasonably demonstrated that such
termination (l) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (2) otherwise arose in
connection with or anticipation of a Change of Control, then for all purposes of
this Agreement the "Effective Date" shall mean the date immediately prior to the
date of such termination.
(b) The "Change of Control Period" is the period commencing on
the date hereof and ending on the earlier to occur of (i) the third anniversary
of such date or (ii) the first day of the month next following the Employee's
normal retirement date ("Normal Retirement Date") under Crane Co.'s Pension Plan
for Non Bargaining Employees effective January 1, 1985 or under that retirement
plan of a subsidiary of the Company in which the Employee is a participant, or
any successor retirement plan (the "Retirement Plan"); provided, however, that
-------- -------
commencing on the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary thereof is
hereinafter referred to as the "Renewal Date"), the Change of Control Period
shall be automatically extended so as to terminate on the earlier of (x) three
years from such Renewal Date or (y) the first day of the month coinciding with
or next following the Employee's Normal Retirement Date, unless at least 60 days
prior to the Renewal Date the Company shall give notice that the Change of
Control Period shall not be so extended.
2. Change of Control. For the purpose of this Agreement, a "Change
-----------------
of Control" shall mean:
(i) The acquisition, other than from the Company, by any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors, but excluding, for this purpose, any such acquisition by the Company
or any of its subsidiaries, or any employee benefit plan (or related trust) of
the Company or its subsidiaries, or the Crane Fund, a charitable trust under the
laws of the State of Illinois, or any corporation with respect to which,
following such acquisition, more than 50% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by substantially the same individuals and entities who were the
beneficial owners, respectively, of the common stock and voting securities of
the Company immediately prior to such acquisition in substantially the same
proportion as their ownership, immediately prior to such acquisition, of the
then outstanding shares of common stock of the Company or the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors, as the case may be; or
(ii) 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 individual
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 individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the Directors of the Company (as such
2
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act); or
(iii) Approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to which
substantially the same individuals and entities who were the respective
beneficial owners of the common stock and voting securities of the Company
immediately prior to such reorganization, merger or consolidation do not,
following such reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 50% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such reorganization, merger
or consolidation, or a complete liquidation or dissolution of the Company or of
the sale or other disposition of all or substantially all of the assets of the
Company.
3. Employment Period. The Company hereby agrees to continue the
-----------------
Employee in its employ, and the Employee hereby agrees to remain in the employ
of the Company, for the period commencing on the Effective Date and ending on
the earlier to occur of (a) the third anniversary of such date or (b) the first
day of the month coinciding with or next following the Employee's Normal
Retirement Date (the "Employment Period").
4. Terms of Employment.
-------------------
(a) Position and Duties.
-------------------
(i) During the Employment Period, (A) the Employee's
position (including status, offices, titles and reporting requirements)
authority duties and responsibilities shall be at least commensurate in all
material respects with those held, exercised and assigned at any time during the
90-day period immediately preceding the Effective Date and (B) the Employee's
services shall be performed at the location where the Employee was employed
immediately preceding the Effective Date or any office or location less than
thirty-five (35) miles from such location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Employee is entitled, the
Employee agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Employee hereunder, to use the
Employee's reasonable best efforts to perform faithfully and efficiently such
responsibilities. It is expressly understood and agreed that to the extent that
any
3
outside activities have been conducted by the Employee prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Employee's
responsibilities to the Company.
(b) Compensation.
------------
(i) Base Salary. During the Employment Period, the
-----------
Employee shall receive an annual base salary ("Base Salary") at a rate at least
equal to twelve times the highest monthly base salary paid or payable to the
Employee by the Company during the twelve-month period immediately preceding the
month in which the Effective Date occurs. During the Employment Period, the Base
Salary shall be reviewed at least annually and shall be increased at any time
and from time to time as shall be substantially consistent with increases in
base salary awarded in the ordinary course of business to other key employees of
the Company and its subsidiaries. Any increase in Base Salary shall not serve to
limit or reduce any other obligation to the Employee under this Agreement. Base
Salary shall not be reduced after any such increase.
(ii) Annual Bonus. In addition to Base Salary, the
------------
Employee shall be eligible (but not entitled) to receive, for each fiscal year
during the Employment Period, an annual bonus (an "Annual Bonus") (either
pursuant to any incentive compensation plan maintained by the Company or
otherwise) in cash on the same basis as in the fiscal year immediately preceding
the fiscal year in which the Effective Date occurs or, if more favorable to the
Employee, on the same basis as awarded at any time thereafter to other key
employees of the Company and its subsidiaries.
(iii) Incentive, Savings and Retirement
---------------------------------
Plans. In addition to Base Salary and Annual Bonus payable as hereinabove
- -----
provided, the Employee shall be entitled to participate during the Employment
Period in all incentive, savings and retirement plans, practices, policies and
programs applicable to other key employees of the Company and its subsidiaries.
Such plans, practices, policies and programs, in the aggregate, shall
provide the Employee with compensation, benefits and reward opportunities at
least as favorable in the aggregate as the most favorable of such compensation,
benefits and reward opportunities provided by the Company for the Employee under
such plans, practices, policies and programs as in effect at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Employee, as provided at any time thereafter with respect to other key
employees of the Company and
4
its subsidiaries.
(iv) Welfare Benefit Plans. During the Employment Period,
---------------------
the Employee and/or the Employee's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its subsidiaries
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs), at least as favorable as the most
favorable of such plans, practices, policies and programs in effect at any time
during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Employee and/or the Employee's family, as in effect at any time
thereafter with respect to other key employees of the Company and its
subsidiaries.
(v) Expenses. During the Employment Period, the Employee
--------
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Employee in accordance with the most favorable policies,
practices and procedures of the Company and its subsidiaries in effect at any
time during the 90-day period immediately preceding the Effective Date or, if
more favorable to the Employee, as in effect at any time thereafter with respect
to other key employees of the Company and its subsidiaries.
(vi) Fringe Benefits. During the Employment Period, the
---------------
Employee shall be entitled to fringe benefits, including use of an automobile
and payment of related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its subsidiaries in effect
at any time during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Employee, as in effect at any time thereafter with
respect to other key employees of the Company and its subsidiaries.
(vii) Office and Support Staff. During the Employment
------------------------
Period, the Employee shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to secretarial and other
assistance, at least equal to the most favorable of the foregoing provided to
the Employee by the Company and its subsidiaries at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Employee, as provided at any time thereafter with respect to other key employees
of the Company and its subsidiaries.
(viii) Vacation. During the Employment Period, the
--------
Employee shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of the Company and its
subsidiaries as in effect at any time during the 90-day period immediately
preceding the Effective
5
Date or, if more favorable to the Employee, as in effect at any time thereafter
with respect to other key employees of the Company and its subsidiaries.
5. Termination.
-----------
(a) Death or Disability. This Agreement shall terminate
-------------------
automatically upon the Employee's death. If the Company determines in good faith
that the Disability of the Employee has occurred (pursuant to the definition of
"Disability" set forth below), it may give to the Employee written notice (given
in accordance with Section 12(b) hereof) of its intention to terminate the
Employee's employment. In such event, the Employee's employment with the Company
shall terminate effective on the 30th day after receipt of such notice by the
Employee (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Employee shall not have returned to full-time
performance of the Employee's duties. For purposes of this Agreement,
"Disability" means disability which, at least 26 weeks after its commencement,
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Employee or the Employee's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Employee's employment
-----
for "Cause." For purposes of this Agreement, "Cause" shall constitute either (i)
personal dishonesty or breach of fiduciary duty involving personal profit at the
expense of the Company (ii) repeated violations by the Employee of the
Employee's obligations under Section 4(a) of this Agreement which are
demonstrably willful and deliberate on the Employee's part and which are not
remedied in a reasonable period of time after receipt of written notice from the
Company or (iii) the commission of a criminal act related to the performance of
duties, or the furnishing of proprietary confidential information about the
Company to a competitor, or potential competitor, or third party whose interests
are adverse to those of the Company; (iv) habitual intoxication by alcohol or
drugs during work hours; or (v) conviction of a felony.
(c) Good Reason. The Employee's employment may be terminated
-----------
by the Employee for Good Reason. For purposes of this Agreement, "Good Reason"
means:
(i) the assignment to the Employee of any duties
inconsistent in any respect with the Employee's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any other
action by the Company which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated,
6
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Employee;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Employee;
(iii) the Company's requiring the Employee to be based at
any office or location other than that described in Section 4(a)(i)(B) hereof,
except for travel reasonably required in the performance of the Employee's
responsibilities;
(iv) any purported termination by the Company of the
Employee's employment otherwise than as expressly permitted by this Agreement;
or
(v) any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Employee shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
---------------------
Cause or by the Employee for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than fifteen (15) days after
the giving of such notice). The failure by the Employee to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason shall not waive any right of the Employee hereunder or preclude the
Employee from asserting such fact or circumstance in enforcing his rights
hereunder.
(e) Date of Termination. "Date of Termination" means the date
-------------------
of receipt of the Notice of Termination or any later date specified therein, as
the case may be; provided, however, that (i) if the Employee's employment is
-------- -------
terminated by the Company other than for Cause or Disability, the Date of
7
Termination shall be the date on which the Company notifies the Employee of such
termination and (ii) if the Employee's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Employee or the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
-------------------------------------------
(a) Death. If the Employee's employment is terminated by
-----
reason of the Employee's death, this Agreement shall terminate without further
obligations to the Employee's legal representatives under this Agreement, other
than those obligations accrued or earned and vested (if applicable) by the
Employee as of the Date of Termination, including, for this purpose (i) the
Employee's full Base Salary through the Date of Termination at the rate in
effect on the Date of Termination or, if higher, at the highest rate in effect
at any time from the 90-day period preceding the Effective Date through the Date
of Termination (the "Highest Base Salary"), (ii) the product of the Annual Bonus
paid to the Employee for the last full fiscal year and a fraction, the numerator
of which is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 and (iii) any compensation
previously deferred by the Employee (together with accrued interest thereon, if
any) and not yet paid by the Company and any accrued vacation pay not yet paid
by the Company (such amounts specified in clauses (i), (ii) and (iii) are
hereinafter referred to as "Accrued Obligations"). All such Accrued Obligations
shall be paid to the Employee's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination. Anything in this
Agreement to the contrary notwithstanding, the Employee's family shall be
entitled to receive benefits at least equal to the most favorable benefits
provided by the Company and any of its subsidiaries to surviving families of
employees of the Company and such subsidiaries under such plans, programs,
practices and policies relating to family death benefits, if any, in accordance
with the most favorable plans, programs, practices and policies of the Company
and its subsidiaries in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee and/or the
Employee's family, as in effect on the date of the Employee's death with respect
to other key employees of the Company and its subsidiaries and their families.
(b) Disability. If the Employee's employment is terminated by
----------
reason of the Employee's Disability, this Agreement shall terminate without
further obligations to the Employee, other than those obligations accrued or
earned and vested (if applicable) by the Employee as of the Date of Termination,
including for this purpose, all Accrued Obligations. All such
8
Accrued Obligations shall be paid to the Employee in a lump sum in cash within
30 days of the Date of Termination. Anything in this Agreement to the contrary
notwithstanding, the Employee shall be entitled after the Disability Effective
Date to receive disability and other
benefits at least equal to the most favorable of those provided by the Company
and its subsidiaries to disabled employees and/or their families in accordance
with such plans, programs, practices and policies of the Company and its
subsidiaries in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee and/or the
Employee's family, as in effect at any time thereafter with respect to other key
employees of the Company and its subsidiaries and their families.
(c) Cause; Other than for Good Reason. If the Employee's
----------------------------------
employment shall be terminated for Cause, this Agreement shall terminate without
further obligations to the Employee other than the obligation to pay to the
Employee the Highest Base Salary through the Date of Termination plus the amount
of any compensation previously deferred by the Employee (together with accrued
interest thereon, if any). If the Employee terminates employment other than for
Good Reason, this Agreement shall terminate without further obligations to the
Employee, other than those obligations accrued or earned and vested (if
applicable) by the Employee through the Date of Termination, including for this
purpose, all Accrued Obligations. All such Accrued Obligations shall be paid to
the Employee in a lump sum in cash within 30 days of the Date of Termination.
(d) Good Reason; Other Than for Cause or Disability. If,
------------------------------------------------
during the Employment Period, the Company shall terminate the Employee's
employment other than for Cause, Disability, or death or if the Employee shall
terminate his employment for Good Reason:
(i) the Company shall pay to the Employee in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the following
amounts:
A. to the extent not theretofore paid, the Employee's Highest
Base Salary through the Date of Termination; and
B. the product of (x) the greater of the Annual Bonus paid or
payable (annualized for any fiscal year consisting of less than twelve full
months or for which the Executive has been employed for less than twelve full
months) to the Executive for the most recently completed fiscal year during the
Employment
9
Period, if any, or the average bonus (annualized for any fiscal year consisting
of less than twelve full months or with respect to which the Executive has been
employed by the Company for less than twelve full months) paid or payable to the
Executive by the Company and its affiliated companies in respect of the three
fiscal years immediately preceding the fiscal year in which the Effective Date
occurs (the "Average Annual Bonus"), such greater amount being hereafter
referred to as the "Highest Annual Bonus," and (y) a fraction, the numerator of
which is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365;
C. the product of (x) two and (y) the sum of (i) the Highest Base
Salary and (ii) the Average Annual Bonus; and
D. in the case of compensation previously deferred by the Employee,
all amounts previously deferred (together with accrued interest thereon, if any)
and not yet paid by the Company, and any accrued vacation pay not yet paid by
the Company; and
(ii) for the remainder of the Employment Period, or such
longer period as any plan, program, practice or policy may provide, the Company
shall continue benefits to the Employee and/or the Employee's family at least
equal to those which would have been provided to them as if the Employee's
employment had not been terminated, in accordance with the most favorable
employee welfare benefit plans (as such term is defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended) of the Company and
its subsidiaries (including health insurance and life insurance) during the 90-
day period immediately preceding the Effective Date or, if more favorable to the
Employee, as in effect at any time thereafter with respect to other key
employees and their families, and for purposes of eligibility for retiree
benefits pursuant to such employee welfare benefit plans, the Employee shall be
considered to have remained employed until the end of the Employment Period and
to have retired on the last day of such period.
7. Non-exclusivity of Rights. Nothing in this Agreement shall
-------------------------
prevent or limit the Employee's continuing or future participation in any
benefit, bonus, incentive or other plans, programs, policies or practices,
provided by the Company or any of its subsidiaries and for which the Employee
may qualify, nor shall anything herein limit or otherwise affect such rights as
the Employee may have under any stock option, restricted stock, stock
appreciation right, or other agreements with the Company or any of its
subsidiaries. Amounts which are vested benefits or which the Employee is
otherwise entitled to receive under any plan, policy, practice or program of the
Company or any of its subsidiaries at or subsequent to the Date of Termination
shall be payable in accordance with such plan,
10
policy, practice or program provided, however, that in the event the terms of
any such plan, policy, practice or program concerning the payment of benefits
thereunder shall conflict with any provision of this Agreement, the terms of
this Agreement shall take precedence but only if and to the extent the payment
would not adversely affect the tax exempt status (if applicable) of any such
plan, policy, practice or program and only if the employee agrees in writing
that such payment shall be in lieu of any corresponding payment from such plan,
policy, practice or program.
8. Full Settlement. The Company's obligation to make the payments
---------------
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Employee or others. In no event shall the Employee be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Employee under any of the provisions of this Agreement. The Company
agrees to pay, to the full extent permitted by law, all legal fees and expenses
which the Employee may reasonably incur as a result of any contest (regardless
of the outcome thereof) by the Company or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Employee about the amount of any payment pursuant to Section 9 of this
Agreement), plus in each case interest at the applicable Federal rate provided
for in Section 7872(f)(2) of the Internal Revenue Code of 1986, as amended (the
"Code").
9. Certain Additional Payments by the Company.
------------------------------------------
(a) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any economic benefit or payment or
distribution by the Company to or for the benefit of the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (including, but not limited to, any economic benefit
received by the Employee by reason of the acceleration of rights under the
various option, restricted stock and stock appreciation right plans of the
Company, but excluding any other economic benefit which by the terms of the
agreement or other document providing for such economic benefit, is expressly
excluded from inclusion in the economic benefits covered by this Section 9(a))
(a "Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Employee shall be entitled to receive
an additional payment (a "Gross-Up-Payment") in an amount such that after
payment by the Employee of all taxes
11
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed upon the Gross-Up Payment, the Employee retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including whether a
Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be
made by the Company's regular outside independent public accounting firm (the
"Accounting Firm") which shall provide detailed supporting calculations both to
the Company and the Employee within 15 business days of the Date of Termination,
if applicable, or such earlier time as is requested by the Company . The initial
Gross-Up Payment, if any, as determined pursuant to this Section 9(b), shall be
paid to the Employee within 5 days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is payable
by the Employee, it shall furnish the Employee with an opinion that he has
substantial authority not to report any Excise Tax on his federal income tax
return. Any determination by the Accounting Firm shall be binding upon the
Company and the Employee. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 9(c) and the Employee
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Employee.
(c) The Employee shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after the later of
either (i) the date the Employee has actual knowledge of such claim, or (ii) ten
days after the Internal Revenue Service issues to the Employee either a written
report proposing imposition of the Excise Tax or a statutory notice of
Deficiency with respect thereto, and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Employee shall not pay such claim prior to the expiration of the thirty-day
period following the date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Employee in writing prior to the
expiration of such period that it desires to contest such claim, the Employee
shall:
12
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively
to contest such claim,
(iv) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limitation of the foregoing provisions
of this Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Employee to request or accede to a request for an extension of the
statute of limitations with respect only to the tax claimed, or pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and
the Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Employee to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to the Employee, on an interest-free
basis and shall indemnify and hold the Employee harmless, on an after-tax
basis, from any Excise Tax or income tax, including interest or penalties with
respect thereto, imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations requested or acceded to by the Employee
at the Company's request and relating to payment of taxes for the taxable year
of the Employee with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect to which a Gross-
Up Payment would be payable hereunder and the Employee shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
13
(d) If, after the receipt by the Employee of an amount advanced
by the Company pursuant to Section 9(c), the Employee becomes entitled to
receive any refund with respect to such claim, the Employee shall (subject to
the Company's complying with the requirements of Section 9(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Employee of an amount advanced by the Company pursuant to Section 9(c), a
determination is made that the Employee shall not be entitled to any refund with
respect to such claim and the Company does not notify the Employee in writing of
its intent to contest such denial of refund prior to the expiration of thirty
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
(e) In the event that any state or municipality or subdivision
thereof shall subject any Payment to any special tax which shall be in addition
to the generally applicable income tax imposed by such state , municipality, or
subdivision with respect to receipt of such Payment, the foregoing provisions of
this Section 9 shall apply, mutatis mutandis, with respect to such special tax.
------- --------
10. Confidential Information. The Employee shall hold in a
------------------------
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
subsidiaries, and their respective businesses, which shall have been obtained by
the Employee during the Employee's employment by the Company or any of its
subsidiaries and which shall not be or become public knowledge (other than by
acts by the Employee or his representatives in violation of this Agreement).
After termination of the Employee's employment with the Company, the Employee
shall not, without the prior written consent of the Company, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Employee under this Agreement.
11. Successors.
----------
(a) This Agreement is personal to the Employee and without the
prior written consent of the Company shall not be assignable by the Employee
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Employee's legal
14
representatives.
(b) This Agreement 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 Agreement 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. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
12. Miscellaneous.
--------------
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force and effect.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee:
------------------
2~
If to the Company:
-----------------
Crane Co.
100 First Stamford Place
Stamford, CT 06902
Attention: Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable
15
law or regulation.
(e) The Employee's failure to insist upon strict compliance with
any provision hereof shall not be deemed to be a waiver of such provision or any
other provision thereof.
(f) This Agreement contains the entire understanding of the
Company and the Employee with respect to the subject matter hereof. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives. This Agreement is intended to revise the relationships, rights
and obligations between the Company and the Employee defined by, and to replace,
the Employment/Severance Agreement between the Company and the Employee
dated_______, and amended ________ , ("Former Agreement") in all respects. Upon
the execution of this Agreement by both parties, the Former Agreement to the
extent its provisions are inconsistent with this Agreement shall be of no force
and effect.
(g) The Employee and the Company acknowledge that the employment
of the Employee by the Company is "at will," and, prior to the Effective Date,
may be terminated by either the Employee or the Company at any time. Upon a
termination of the Employee's employment or prior to the Effective Date, there
shall be no further rights under this Agreement.
16
IN WITNESS WHEREOF, the Employee has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
___________________________________
CRANE CO.
By_________________________________
Attest:___________________________
Secretary
17