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EMPLOYMENT AGREEMENT
This Employment Agreement is effective as of
December 1, 1993 by and between SPS Technologies, Inc., a
Pennsylvania corporation (the "Company"), and Charles W. Grigg,
an individual (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Employee and
the Employee desires to be so employed, on the terms and
conditions herein set forth; and
WHEREAS, contemporaneous herewith the Company and the
Employee are entering into an executive severance agreement
relating to certain severance payments in the event of a Change
of Control as therein provided (the "Executive Severance
Agreement");
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements hereinafter set forth and
intending to be legally bound hereby, the parties hereto agree as
follows:
Section 1. Employment. The Company hereby employs the
Employee, which employment the Employee hereby accepts, to serve,
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subject to the direction, supervision and control of the Board of
Directors of the Company (the "Board"), as the Company's Chairman
of the Board of Directors and Chief Executive Officer ("Chairman
and Chief Executive Officer"). In such regard, the Employee
agrees to undertake and discharge such duties, functions and
responsibilities as are from time to time assigned to the
Employee by the Board, consistent with the terms and provisions
of this Employment Agreement.
Section 2. Term and Termination.
(a) Term. The Employee's employment by the
Company shall commence as of December 1, 1993 (the "Effective
Date") and shall continue until such employment is terminated by
the Company or by the Employee or when the Employee reaches the
age of 65, retires, dies or becomes disabled, whichever is
sooner. Any such termination shall also automatically constitute
the resignation by the Employee, and the termination of the
Employee's status and capacity, as a member of the Board,
officer, employee and/or agent of the Company and any of its
subsidiaries or affiliates.
(b) Termination by Employee. The Employee may
terminate this Employment Agreement and the Employee's employment
under this Employment Agreement at any time by giving at least
ninety (90) days' prior written notice of such termination to the
Company.
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(c) Termination by Company. The Company may
terminate this Employment Agreement and the Employee's employment
under this Employment Agreement at any time for any reason or for
no reason and whether or not constituting "Cause" (as defined in
Section 6(e)(i) hereof), immediately or on such future date (not
to exceed ninety (90) days from the date of notice) as may be
specified in the written notice of termination to the Employee
from the Company.
(d) Termination Upon Death, Retirement or
Disability. This Employment Agreement and the Employee's
employment under this Employment Agreement shall terminate
automatically and without notice immediately upon (i) the death
of the Employee, or (ii) the retirement of the Employee in
accordance with the Company's retirement income plan, (iii) the
Employee's attaining age 65, or (iv) the disability of the
Employee which qualifies the Employee for benefits under the
Company's Long Term Disability Plan.
Section 3. Compensation.
(a) Base Salary. In consideration for all
services rendered by the Employee, hereunder or otherwise, to or
for the benefit of the Company, its subsidiaries and affiliates,
the Company shall pay the Employee a base salary at the rate per
annum during the first year of employment equal to Four Hundred
Thousand Dollars ($400,000), payable in equal monthly
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installments. The Employee's base salary shall be increased (but
not decreased) upon each anniversary of the date hereof by the
percentage increase, if any, subsequent to the last such
anniversary in the Consumer Price Index for Urban Workers in the
Philadelphia Region, All Price Index, published by the U. S.
Bureau of Labor Statistics. The Employee's base salary shall be
reviewed annually by the Board and may be increased further (but
not decreased) in the sole discretion of the Board.
(b) First Year Bonus. As additional
consideration for the Employee's first year of service hereunder,
the Employee shall be paid an incentive bonus in the amount of
One Hundred Fifty Thousand Dollars ($150,000) on January 31,
l995, provided the Employee is employed on the first anniversary
of the Effective Date by the Company under this Employment
Agreement.
(c) Subsequent Years' Incentive Compensation.
The Employee shall be eligible, commencing with the first plan
year after the first anniversary of the Effective Date, but not
before, to participate in the Company's incentive compensation
plans in accordance with the terms thereof, including, but not
limited to its management incentive plan ("MIP") and executive
incentive plan ("EIP"), provided the Employee is employed on such
first anniversary by the Company under this Employment Agreement.
(d) Benefit Plans. The Employee shall be
eligible during the term of his employment under this Employment
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Agreement to participate in all employee benefit plans, stock
option programs and employee fringe benefits such as health,
disability and life insurance and retirement programs (and
including the stock option agreement dated the date hereof issued
to the Employee under the Company's 1988 Long-Term Incentive
Stock Plan, retirement income plan, deferred compensation plan,
supplemental executive retirement plan, benefit equalization plan
and, after the first anniversary hereof, the executive incentive
plan and management incentive plan) now or hereafter made
available to executive employees of the Company generally, other
than the Company's Senior Executive Severance Plan ("SESP"),
(collectively, such plans and programs, but excluding SESP, are
herein collectively referred to as the "Benefit Plans"), to the
extent and on the same terms and conditions (subject, however, to
the terms and provisions of any such plans or programs) as from
time to time are accorded other employees serving as executive
officers of the Company, except as such Benefit Plans may be
expressly modified by the terms of this Employment Agreement.
The Employee shall be entitled to not less than four (4) weeks
vacation annually.
(e) Purchase of Automobile. The Company shall
reimburse the Employee for the out-of-pocket cost to the Employee
of purchasing the automobile provided the Employee by his
previous employer in the amount of the "blue book" value thereof,
up to a maximum of $25,000 of such cost, plus such amount as is
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required to reimburse the Employee for the federal and state
income tax liability of the Employee in respect of the sum
reimbursed by the Company under this Section 3(e).
(f) Limitation on Compensation and Benefits.
Except as specifically set forth in this Employment Agreement and
the Benefit Plans and except for such compensation, if any, which
may be paid to the Employee as a member of the Board, the
Employee shall not receive or be entitled to any other
compensation, perquisites or benefits.
Section 4. Relocation. The Employee shall relocate
his principal residence to the greater Philadelphia, Pennsylvania
metropolitan area within twelve (12) months after the Effective
Date. The Company shall reimburse the Employee the reasonable
costs and expenses of so moving his principal residence in
accordance with its employee relocation expense reimbursement
policy.
Section 5. Other Commitments. The Employee shall
devote all of his working time and attention to the discharge of
his duties and performance of services hereunder and to the
affairs of the Company. Accordingly, the Employee will resign
all of his present board memberships and remunerative positions,
other than with the Company and its subsidiaries, as soon as
possible, but, in any event, not later than May 11, 1994 in the
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case of Kollmorgen, Inc. and October 31, 1994 in the case of
Watts Industries, Inc. The Employee will not accept any other
positions, whether or not for compensation, in the future except
with the concurrence of the Board in each instance.
Section 6. Severance Compensation.
(a) Termination Upon Change of Control. In the
event of a "Triggering Termination" of the Employee during a
"Change of Control Period" (as such terms are defined in the
Executive Severance Agreement) or a termination resulting from a
breach of Section 16 of such Executive Severance Agreement, the
provisions of such Executive Severance Agreement shall govern and
the Employee shall be entitled to the rights and benefits, if
any, set forth in such Executive Severance Agreement in
accordance with its terms in lieu of any severance payments,
rights or benefits under or in respect of this Employment
Agreement.
(b) Termination by Employee, by the Company for
"Cause" or Upon Death, Disability or Retirement. Upon
termination of the Employee's employment under this Employment
Agreement (i) by the Employee (other than upon a "Constructive
Termination" as defined in Section 6(e)(ii) hereof), (ii) upon
the death, disability or retirement of the Employee or the
Employee's attaining age 65, or (iii) by the Company for "Cause"
(as defined in Section 6(e)(i) hereof), all rights and benefits
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of the Employee hereunder or in respect hereof or in respect of
his employment by the Company shall cease and terminate without
further liability or obligation on the part of the Company
whatsoever, except payment of the Employee's base salary through
the effective date of termination of employment and such sums, if
any, due or to become due under any of the Benefit Plans in which
the Employee is a participant as of the effective date of
termination of employment in accordance with the terms and
provisions of such Benefit Plans (which sums, if any, shall be
payable as provided by the terms of such Benefit Plans).
(c) Termination by the Company Without Cause.
Upon termination (other than a termination of employment upon the
retirement, death or disability of the Employee or the Employee's
attaining age 65) of the Employee's employment under this
Employment Agreement (A) by the Company without Cause, or (B) by
the Employee upon a Constructive Termination, (herein a
"Severance Termination"), the Company shall pay the Employee,
within 30 days after the effective date of the Severance
Termination, in full and complete settlement, satisfaction and
release of all claims and rights the Employee may have against
the Company and liabilities or obligations the Company may have
to the Employee (and whether arising under, pursuant to or in
respect of this Employment Agreement, the Employee's employment
by the Company or the termination thereof, or otherwise) the
following:
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(i) If the Severance Termination is effective
within the first three (3) years following the Effective Date,
Employee's base salary to the effective date of termination plus
(x) a severance payment in an amount, in cash, equal to two
hundred percent (200%) of the base salary then in effect, and (y)
such benefits as would have been afforded the Employee under the
SESP as if he were a participant therein on the date of
termination of employment, other than payments in respect of base
salary and other than the rights provided under Section 5.1 and
Article VII of the SESP; or
(ii) If the Severance Termination is
effective after the third anniversary of the Effective Date, such
payments, rights and benefits (other than the rights provided
under Section 5.1 and Article VII of the SESP) provided under the
Company's SESP, as such plan is in effect on the Effective Date,
as though the Employee were entitled to fully participate therein
except that the term "Triggering Termination" as used in the SESP
shall be deemed to mean a Constructive Termination as defined
herein or a termination by the Company without Cause.
(d) Release. In consideration of, and as a
condition to, the foregoing payments and benefits, which the
Employee acknowledges to be adequate consideration therefor in
excess of the consideration to which he otherwise would be
entitled upon any such termination, the Employee shall provide
the Company with a fully executed general release of and from all
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liabilities, claims, suits, actions and other matters, in form
and substance reasonably satisfactory to the Company.
(e) Certain Definitions. As used herein, the
following terms shall have the following meanings:
(i) "Cause" shall mean misappropriation of
funds, habitual insobriety, substance abuse, conviction of a
crime involving moral turpitude, or gross negligence in the
performance of the Employee's duties, which gross negligence has
had an adverse effect on the Company's business, operations,
assets or properties so as to materially adversely affect the
financial condition of the Company and its subsidiaries taken as
a whole.
(ii) "Constructive Termination" shall mean
a termination of the Employee's employment under this Employment
Agreement initiated by the Employee following one or more of the
following occurrences not approved in advance by the Employee,
provided notice of such occurrence is given by the Employee to
the Company in writing and the Company fails for a period of more
than twenty (20) days to cure the same:
(A) a significant reduction by the
Board of the authority, duties or responsibilities of the
Employee as an employee of the Company including a removal of the
Employee as Chairman and Chief Executive Officer of the Company;
(B) a reduction in, or a wrongful
refusal to pay, the Employee's base salary, by the Company;
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(C) a termination or modification of
MIP or EIP or any action taken pursuant to the terms of such
plans, which materially (x) reduces the Employee's opportunity to
receive compensation under either or both of such plans of
equivalent amounts previously received by the Employee, subject
to the right of the Board to establish reasonable goals under
MIP and EIP, (y) reduces the compensation payable to the Employee
under either or both of such plans but which does not effect
comparable reductions in the compensation payable to the other
participants in such plans, or (z) increases the compensation
payable to other participants in either or both of such plans but
which does not effect corresponding increases in the amount of
compensation payable to the Employee (provided the Employee was,
at the time of such termination or modification, a participant in
such plan), unless the Company replaces MIP or EIP (or any
successor plan thereto permitted hereby) or the provision so
modified with incentive compensation or incentive compensation
plans at least equal to or better than the MIP or EIP or the
provision thereof as modified or revoked; or
(D) a termination or modification of
the Company's retirement income plan ("RIP"), benefit
equalization plan ("BEP"), deferred compensation plans (in the
event the Employee is a participant therein), or the supplemental
executive retirement plan ("SERP"), which materially reduces to
the detriment of the Employee (x) the benefits provided by such
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plans, or (y) the funding thereof provided by the RIP or by any
trust established by the Company to fund benefits provided by the
BEP, the deferred compensation plans (if applicable), or the
SERP, unless the Company replaces such plan or provision thereof
as so modified or terminated with a benefit or benefits at least
equal to or better than the plan (or any successor plan thereto
permitted hereby) or provision thereof as modified or terminated.
(f) Mitigation. In the event of a Severance
Termination effective within the first three (3) years following
the Effective Date, there shall be no requirement that the
Employee seek other employment or otherwise seek to mitigate
damages in order to be entitled to receive the amounts and
benefits set forth in Section 6(c)(i). In the event of a
Severance Termination effective after the third anniversary of
the Effective Date, the Employee shall comply with the provisions
of the SESP respecting such matters as though he were a
participant therein.
(g) Arbitration. All claims, controversies and
disputes arising out or in respect of or concerning the breach,
interpretation or application of this Agreement, the Employee's
employment hereunder or the termination hereof or of such
employment, including without being limited to any claims that
the application of this Employment Agreement or the termination
of the employment relationship established hereby violates any
federal, state or local law or regulation, shall be submitted to
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and resolved exclusively by final and binding arbitration in the
City of Philadelphia, Pennsylvania, before a panel of three
arbitrators pursuant to the Rules of the American Arbitration
Association, Rules for Commercial Arbitration. One such
arbitrator shall be appointed by each party and the two so
appointed shall select a third, or if they are unable to agree
within fifteen (15) days of their appointment, the third shall be
appointed by the AAA. Arbitration must be demanded within thirty
(30) calendar days of the time when the demanding party knows or
should have known of the event or events giving rise to the
claim. The arbitration opinion and award shall be final and
binding on the Company and the Employee and shall be enforceable
by any court. Each party shall bear their own costs and
expenses, including but not limited to attorneys' fees and
expenses. The Company and the Employee shall share equally all
costs of arbitration, excepting their own attorneys' fees and
expenses. The Company and the Employee recognize that this
Section 6(g) means that certain claims will be litigated and
reviewed before an impartial arbitrator or panel of arbitrators
instead of before a court of law and/or a jury, but desire the
many benefits of the arbitration process over court proceedings,
including speed of resolution, lower costs and fees, and more
flexible rules of evidence. The arbitrator or arbitrators duly
selected pursuant to the AAA Rules shall have the same power and
authority to order any remedy for violation of a statute,
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regulation, or ordinance as a court would have; and shall have
the same power to order discovery as a federal district court has
under the Federal Rules of Civil Procedure. This Section is
intended by the Company and the Employee to be enforceable under
the Federal Arbitration Act and any similar state law. Any award
shall bear interest at the "prime rate."
Section 7. Non-Competition. During the term of this
Employment Agreement and thereafter for a period of two (2)
years, the Employee agrees that he shall not, directly or
indirectly, (i) compete with the Company, (ii) engage in any line
of business in which the Company is engaged on the date of
termination of the Employee's employment in any geographic market
in which the Company then transacts business, (iii) have any
interest, whether as an officer, director, employee, agent,
consultant, owner, shareholder (owning more than one percent (1%)
of the outstanding capital stock) or otherwise, in any
corporation, entity or enterprise engaged in competition with the
Company or engaged in any line of business in which the Company
is engaged on the date of termination of the Employee's
employment, or (iv) interfere in any manner with the business or
goodwill of the Company. As used in this Section 7, the term
Company shall be deemed to include the Company and all of its
subsidiaries and affiliates. The provisions of this Section 7
shall survive any termination of this Employment Agreement.
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Section 8. Agreement to Provide Services; Right To
Terminate.
(a) No Right of Employment. Nothing in this
Employment Agreement shall be construed as giving the Employee
any right to be retained in the employ of the Company. The
Company or the Employee may terminate the Employee's employment
at any time, subject to the Company's obligation to provide the
payments and benefits set forth in this Employment Agreement upon
such termination, if any.
(b) No Other Rights. The Employee acknowledges
that from time to time, the Company may establish, maintain and
distribute employee manuals or handbooks or personnel policy
manuals, and officers or other representatives of the Company may
make written or oral statements relating to personnel policies
and procedures. Such manuals, handbooks and statements are
intended only for general guidance. No policies, procedures or
statements of any nature by or on behalf of the Company (whether
written or oral, and whether or not contained in any employee
manual or handbook or personnel policy manual), and no acts or
practices of any nature, shall be construed to modify this
Employment Agreement.
Section 9. Exclusivity of Rights. If the Employee
becomes entitled to and receives all of the payments and benefits
provided for in this Employment Agreement in the event of a
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termination of employment, the Employee hereby waives the
Employee's right to receive payments provided for under any other
severance agreement, plan or program; it being acknowledged,
however, that pursuant to Section 6(a) the provisions of the
Executive Severance Agreement shall govern in the event of a
Triggering Termination during a Change of Control Period or a
termination resulting from a breach of Section 16 of such
Executive Severance Agreement.
Section 10. Senior Executive Severance Plan. The
parties acknowledge and agree that although the Employee is not
a participant in the Company's SESP (the provisions of this
Agreement being intended by the parties to be in substitution
therefor), certain benefits afforded the Employee hereunder are
to be measured by the provisions of the SESP as though he were a
participant and entitled to fully participate therein.
Section 11. Notice. All notices and other
communications required or permitted hereunder or necessary or
convenient in connection herewith shall be in writing and shall
be delivered personally or mailed by registered or certified
mail, return receipt requested, or by overnight express courier
service, as follows:
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If to the Company, to:
SPS Technologies, Inc.
Route 332
Newtown, PA 18940
Attention: Corporate Secretary
If to the Employee, to:
Charles W. Grigg
87 Spruce Hill Road
Weston, Massachusetts 02193
or to such other names or addresses as the Company or the
Employee, as the case may be, shall designate by notice to the
other party hereto in the manner specified in this Section. Any
such notice shall be deemed delivered and effective when received
in the case of personal delivery, five (5) days after deposit,
postage prepaid, with the U.S. Postal Service in the case of
registered or certified mail, or on the next business day in the
case of overnight express courier service.
Section 12. Governing Law. This Employment Agreement
shall be governed by and interpreted under the laws of the
Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.
Section 13. Contents of Agreement, Amendment and
Assignment.
(a) Entire Agreement. This Employment Agreement
supersedes all prior understandings and agreements and, together
with the Executive Severance Agreement and the confidentiality
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agreement referred to therein and the stock option agreement
dated the date hereof, sets forth the entire understanding
between the parties hereto with respect to the subject matter
hereof and cannot be changed, modified, extended or amended
except upon written amendment executed by the Employee and
approved by the Board and executed on the Company's behalf by a
duly authorized officer.
(b) Binding Provisions. All of the terms and
provisions of this Employment Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties
hereto. This Employment Agreement, being one for the personal
services of the Employee, shall not be assignable by the
Employee.
Section 14. Severability. If any provision of this
Employment Agreement or application thereof to anyone or under
any circumstances shall be determined by a court of competent
jurisdiction to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions or
applications of this Employment Agreement which can be given
effect without the invalid or unenforceable provision or
application, and it is the desire and intent of the parties that
the court modify any such provision so determined to be invalid
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or unenforceable so as to make such provision valid and
enforceable in accordance with applicable law.
Section 15. Remedies Cumulative; No Waiver. No right
conferred by this Employment Agreement is intended to be
exclusive of any other right or remedy, and each and every such
right or remedy shall be cumulative and shall be in addition to
any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by either
party in exercising any right, remedy or power hereunder or
existing at law or in equity shall be construed as a waiver
thereof. In addition to any other remedies to which it may be
entitled, in the event of a breach or threatened breach of
Section 7 hereof, the parties agree that the Company would suffer
irreparable harm and that money damages would be inadequate.
Accordingly, the Company shall be entitled to injunctive and
other equitable relief.
Section 16. Miscellaneous. All Section headings are
for convenience only. This Employment Agreement may be executed
in several counterparts, each of which is an original. It shall
not be necessary in making proof of this Employment Agreement or
any counterpart hereof to produce or account for any of the other
counterparts.
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IN WITNESS WHEREOF, the undersigned, intending to be
legally bound, have executed this Employment Agreement as of the
date first above written.
Attest: SPS TECHNOLOGIES, INC.
____________________________ By:__________________________
Secretary
EMPLOYEE:
____________________________ _____________________________
Witness Charles W. Grigg