1
EXHIBIT 10.5(b)
SECOND AMENDMENT
TO
DONALD N. BOYCE EMPLOYMENT AGREEMENT
HODGSON, RUSS, ANDREWS, WOODS & GOODYEAR
1800 ONE M & T PLAZA
BUFFALO, NY 14203-2391
2
SECOND AMENDMENT
TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT ("Amendment"), made as of the 27th day of September,
1994, between IDEX CORPORATION, a Delaware corporation with its executive
offices at 630 Dundee Road, Suite 400, Northbrook, Illinois 60062 ("IDEX" or
the "Corporation"), and DONALD N. BOYCE, an individual residing at 1251 N.
Sheridan Road, Lake Forest, Illinois 60045 (the "Executive"), is the second
amendment to the Employment Agreement, dated as of January 22, 1988, between
IDEX and the Executive, as amended by the First Amendment to Employment
Agreement, dated January 13, 1993 (the "Employment Agreement").
IDEX and the Executive agree as follows:
1. Introductory Statement. The Executive has served as an Executive
of IDEX since its establishment. IDEX desires to continue the full-time
services of the Executive on the terms and conditions provided in the
Employment Agreement, subject to the amendments set forth in this Amendment.
The Executive is willing to execute this Amendment with respect to his
employment upon the terms and conditions set forth in this Amendment. This
Amendment changes only the provisions of the Employment Agreement set forth in
this Amendment. In all other respects, the Employment Agreement shall remain
in effect as previously written and executed.
3
-2-
2. Period of full-time service. (a) The second sentence of the
third paragraph of Subsection 5(a) of the Employment Agreement is replaced in
its entirety as follows:
"Such bonus shall be calculated in accordance with the provisions
of Section 4(b), but shall not be less than the bonus calculated
in accordance with the management incentive compensation program
of the Corporation in effect from time to time and in no event
less than the full target amount for the Executive for such fiscal year
under such program."
3. Guarantee of pension benefits. (a) The text following
subparagraph (iv) in the first full paragraph of Subsection 5(c)(2) of the
Employment Agreement is replaced in its entirety as follows:
"or (v) for purposes of determining eligibility for a lump sum
distribution, any condition under the Plan considered necessary to
receive a lump sum distribution, such as the submission of medical
evidence of reasonable health of the Participant or the meeting of a
specified age or service requirement (in other words the lump sum
distribution shall be an
4
-3-
election solely in the discretion of the Executive); or (vi) any other
restriction on the Executive's benefits as determined under the Plan
pursuant to the Code, to the Employee Retirement Income Security Act of
1974, as in effect at such point in time ("ERISA") or to any other law
affecting the determination of such benefits. However, except as
specifically described otherwise in the preceding sentence, all
calculations pursuant to this Section 5(c)(2) of benefits shall be made
on the basis of the actual years of service to the Corporation,
including any Affiliated Corporation and Company as defined under the
Plan, and actual compensation of the Executive taken into account under
the applicable Plan provisions. To the extent that the benefits to
which the Executive or his beneficiaries are entitled under this
Section 5(c)(2) are not paid from the Trust under the Plan or from the
IDEX Corporation Supplemental Executive Retirement Plan, the Corporation
shall pay such benefits directly from its general assets."
(b) The text of the last full paragraph of Subsection
5(c)(2) of the Employment Agreement is replaced in its entirety as follows:
5
-4-
"If payments are being made or have been made in full, pursuant
to this Section 5(c)(2), but the Executive or any of his beneficiaries
is required to make a payment to the Trustee under the Plan
(whether in the form of a loss of collateral, interest on such
collateral or otherwise) as the result of the application of the
restrictions in the Plan upon payments to the Executive, as described
in Section 1.401(a)(4)-5(b) of the Treasury Regulations, or by virtue
of the termination of the Plan (including the operation of Section 4045
of ERISA or any successor section) or for any other reason, the
Corporation shall reimburse the Executive or his beneficiaries, as the
case may be, directly from its general assets, for each such payment to
the Trustee, and if the Executive or any of his beneficiaries does not
receive a deduction for federal, state and/or local income tax purposes
for such a payment and/or if such payment would result in the
imposition of any penalty tax because of such repayment, then the
amount of such reimbursement shall be increased by an amount such that
after payment by the Executive or his beneficiaries of all taxes,
including, without limitation, any interest or penalties imposed with
respect to such reimbursement, the Executive or his beneficiaries
retain an amount
6
-5-
from the Corporation approximately equal to the amount repaid
to the Trustee."
(c) A new full paragraph is added to the end of Subsection 5(c)(2) of
the Employment Agreement to read in its entirety as follows:
"In the event (I) the Executive requests a lump sum
distribution from the Trustee or Committee under the Plan and is denied
the request, regardless of the reason for the denial, or (II) (i) if
the Plan is amended to eliminate the lump sum distribution option on
future benefit accruals or (ii) the Executive is not otherwise entitled
to a lump sum distribution under the Plan terms and, in the case of (i)
or (ii), the Executive states in writing to the Corporation at any time
prior to the Executive or his beneficiaries receiving a benefit under
the Plan that he otherwise would have requested the lump sum
distribution option, the Corporation shall pay the Executive, or his
beneficiaries, as the case may be, in cash in a single lump sum
benefit, an amount equal to the benefit hereinbefore determined less
any amount received by the Executive or his beneficiaries from the Plan
directly
7
-6-
or indirectly in a single payment, regardless of the form of
payment in which the benefit is being paid or is to be paid under the
Plan. In the case of a benefit provided under this paragraph, the
Corporation shall pay the Executive or his beneficiaries an additional
amount in cash in a single lump sum payment such that after payment by
the Executive or his beneficiaries of all federal, state, and/or local
income taxes (including, without limitation, any interest or penalties
imposed with respect to such taxes) imposed upon such single lump sum
payment, the Executive or his beneficiaries retain an amount that would
have been retained by him or them (without regard to any limitations as
described in the first paragraph of this Section 5(c)(2)) had he or they
directly rolled the amount from the Plan into an individual retirement
account. If the Executive or his beneficiaries receive the single lump
sum payment from the Corporation under this paragraph, the Executive
and his beneficiaries agree to waive and/or return to the Corporation
all benefits to him or them that he or they subsequently receive from
the Plan. Notwithstanding the preceding sentence, if the Executive or
any of his beneficiaries does not receive a deduction for federal,
state and/or local income tax purposes for such benefits and/or if such
8
-7-
benefits would result in the imposition of any penalty tax
because of such repayment, then the amount of such waiver and/or return
to the Corporation shall be decreased by an amount such that after
payment by the Executive or his beneficiaries of all taxes, including,
without limitation, any interest or penalties imposed with respect to
such waiver and/or return, the Executive or his beneficiaries incur no
net expense from such benefits he or they subsequently receive from the
Plan. For purposes of this Section, beneficiaries means the
beneficiaries as determined under the Plan."
4. Supplemental retirement compensation. Paragraph (v) of
Subsection 5(c)(3) of the Employment Agreement is replaced in its entirety as
follows:
"(v) Notwithstanding any provision in this Section 5(c)(3) to the
contrary, if payments under Section 5(c)(3)(ii) or Section 5(c)(3)(iii)
above commence prior to the Executive commencing his 60th year, the
payments under Section 5(c)(3)(ii) or Section 5(c)(3)(iii) shall be
appropriately adjusted so that the present value of benefit payments at
date of commencement is equivalent to the present value of the benefits
as if benefit payments commenced upon the Executive commencing his
9
-8-
60th year using the interest rate that would be used (as of the
date of payment) by the Pension Benefit Guaranty Corporation for
purposes of valuing a lump sum distribution upon a plan termination on
the January 1 of the calendar year in which payments actually commence
under Section 5(c)(3)(ii) or 5(c)(3)(iii), and the mortality
assumptions of the Unisex Pension 1984 Mortality Table."
5. Medical benefits. Subsection 5(c)(4) of the Employment
Agreement is replaced in its entirety as follows:
"5(c)(4). MEDICAL BENEFITS. The Executive shall be entitled
to prompt reimbursement for all medical, dental, hospitalization,
convalescent, nursing, extended care facilities and similar health and
welfare expenses incurred by the Executive (or by his wife in the event
of the Executive's death) for the Executive or for the benefit of his
wife or other dependents. Such benefits shall continue for the life of
the Executive or the life of his wife (in the event of the Executive's
death), whichever shall be the longer time. The Corporation may, in its
discretion, insure such benefits; provided, however, that such benefits
shall not be affected by the existence or non-existence of
10
-9-
any available insurance from any source, shall not be limited
by the terms of any such insurance or the failure of any insurer to
meet its obligations thereunder, shall not limit the Executive or his
beneficiaries in the choice of any physician, medical care facility or
type of medical expenses in any way, and shall not be affected by the
availability of any medical benefits provided by and available to the
Executive from any subsequent employer. For purposes of this
Agreement, the term "medical expenses" shall include, but not be
limited to, prescription drugs, prosthetics, optical care (including
corrective lenses) and travel and lodging associated with medical
expenses."
6. Termination of this Agreement. The third and fourth sentences of
Section 7 of the Employment Agreement are replaced in their entirety as
follows:
"In the event the Executive, or his beneficiaries, as the case
may be, and the Corporation shall disagree as to their respective
rights and obligations under this Agreement, and the Executive or his
beneficiaries are successful in establishing, privately or otherwise,
that his or their position is substantially correct, or
11
-10-
that the Corporation's position is substantially wrong or
unreasonable, or in the event that the disagreement is resolved by
settlement, the Corporation shall pay all costs and expenses, including
counsel fees, which the Executive or his beneficiaries may incur in
connection therewith. The Corporation shall not delay or reduce the
amount of any payment provided for hereunder or setoff or counterclaim
against any such amount for any reason whatever; it is the intention of
the Corporation and the Executive that the amounts payable to the
Executive or his beneficiaries hereunder shall continue to be paid in
all events in the manner and at the times herein provided."
7. Rights in event of change in management or control. The text
following subparagraph (II) in the first full paragraph of Subsection 8(a) of
the Employment Agreement is replaced in its entirety as follows:
"the Executive or, in the event of his death or inability to
act, his wife or, if not surviving, his eldest surviving child, shall
have the right, in his or her sole option, upon receipt of prior
written notice of the Acquisition from the Corporation, which such
12
-11-
notice the Corporation is hereby required to provide, prior to
the Acquisition to elect to receive on the consummation of the
Acquisition, or for a period of 24 months after the Acquisition to
elect to receive on the date of resignation of the Executive or other
date designated by the Executive, or other beneficiary as the case may
be, in either case within such 24-month period, a lump sum settlement
of any one or more of the economic obligations of the Corporation to
the Executive or other beneficiary under this Agreement or any other
agreement, plan, policy or program of the Corporation. Such election
may be withdrawn by the Executive or other beneficiary with respect to
any one or more of such obligations at any time prior to receipt of
payment by the Executive or other beneficiary from the Corporation.
Any lump sum payment shall be actuarially computed by the Corporation
in good faith on an equitable basis based on the prevailing economic
circumstances at the time of such election and shall include an
assumption regarding future cost of living increases based upon the
average of the monthly CPI for the five (5) calendar years immediately
preceding the date of election. Any lump sum pension guarantee under
Section 5(c)(2) shall be determined using the interest rate that would
be used
13
- 12 -
(as of the date of payment) by the Pension Benefit Guaranty
Corporation for purposes of valuing a lump sum distribution upon a plan
termination on the January 1 of the calendar year in which the single
sum is paid and the mortality assumptions of the Unisex Pension 1984
Mortality Table. For purposes of this paragraph, the term "control"
shall have the meaning ascribed thereto under the Securities Exchange
Act of 1934, as amended, and the regulations thereunder, and the term
"management" shall mean the chief executive officer of the Corporation.
For purposes of clause (I)(ii) above or as appropriate for purposes of
clause (II) above, the Corporation shall be deemed to include on a
consolidated basis all subsidiaries and other affiliated corporations
or other entities with the same effect as if they were divisions."
8. Assurances on liquidation. Subsection 8(b) of the Employment
Agreement is replaced in its entirety as follows:
"8(b). ASSURANCES ON LIQUIDATION. The Corporation agrees that
until the termination of this Agreement as above provided, it will not
voluntarily liquidate or dissolve, or enter into or be a party to any
other transaction the effect of which would be to
14
- 13 -
materially reduce the net assets or operations of the
Corporation, without first making a written agreement with the
Executive or other beneficiary, satisfactory to and approved by him or
such beneficiary in writing within 30 days of receipt of a notice from
the Corporation of such proposed liquidation, dissolution or other
transaction, in fulfillment of or in lieu of its obligations to him or
such beneficiary under this Agreement or any other agreement, plan,
policy or program of the Corporation or, in the absence of such
agreement, paying him or such beneficiary in a lump sum settlement of
all such obligations prior to such proposed liquidation, dissolution or
other transaction. Notwithstanding anything in the preceding sentence
to the contrary, in the event that pursuant to the preceding sentence
the Corporation is obligated to pay to the Executive or such
beneficiary in a lump sum settlement all of the obligations of the
Corporation to the Executive or such beneficiary under this Agreement
or any other agreement, plan, policy or program of the Corporation, the
Executive or, in the event of his death or inability to act, his wife
or, if not surviving, his eldest surviving child, shall have the right,
in his or her sole discretion, to elect not to receive a lump sum
settlement of the obligations of the
15
-14-
Corporation to the Executive or other beneficiary under
Section 5(c)(4) of this Agreement and, in lieu thereof, to receive a
guaranty (including, without limitation, a letter of credit), in form
and substance satisfactory to the Executive or other beneficiary, as
the case may be, in his or her sole discretion, of the payment of such
obligations from any entity satisfactory to the Executive or other
beneficiary, in his or her sole discretion. Any lump sum settlement
shall be actuarially computed by the Corporation in good faith on an
equitable basis based on the prevailing economic circumstances at the
time of such payment and shall include an assumption regarding future
cost of living increases based upon the average of the monthly CPI for
the five (5) calendar years immediately preceding the date of such
proposed liquidation, dissolution or other transaction. In addition to
disclosing to the Executive or other beneficiary the amount of such
lump sum settlement, the Corporation shall disclose to the Executive or
other beneficiary all of the assumptions used to calculate such lump
sum settlement. Any lump sum pension guarantee under Section 5(c)(2)
shall be determined using the interest rate that would be used
(as of the date of payment) by the Pension Benefit Guaranty Corporation
for purposes of valuing a lump sum
16
-15-
distribution upon a plan termination on the January 1 of the
calendar year in which the single sum is paid and the mortality
assumptions of the Unisex Pension 1984 Mortality Table. For purposes
of this Subsection, the Corporation shall be deemed to include on a
consolidated basis all subsidiaries and other affiliated corporations
or other entities with the same effect as if they were divisions."
9. Binding effect. The second sentence of Section 13 is replaced in
its entirety as follows:
"In addition to inuring to the benefit of the Executive, Sections 5(a)
and 5(b)(1) and 5(c)(3)(i) and (ii) are intended to inure to the
benefit of the Executive's beneficiaries, Section 5(c)(2) is intended
to inure to the benefit of the Executive's beneficiaries, to the extent
contemplated in that provision, and Section 5(c)(4) is intended to
inure to the benefit of the Executive's wife and his dependents,
Section 5(c)(3)(ii) and (iii) is intended to inure to the benefit of
the Executive's wife, to the extent of any election under Section
5(c)(3)(iv), and Section 7 and Section 9 are intended to inure to the
benefit of the Executive's beneficiaries."
17
-16-
10. Additional payments by the Corporation. In Subsection 9(a) of
the Employment Agreement the words "any and all equity appreciation rights
plans of the Corporation" are replaced in their entirety by: "the Non-Qualified
Stock Option Plan for Officers of the Corporation."
IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Corporation has caused this Amendment to be executed in its name and on its
behalf as of the date first above written.
/s/ Donald N. Boyce
-------------------
Donald N. Boyce
IDEX CORPORATION
By /s/ Wayne P. Sayatovic
--------------------------
Wayne P. Sayatovic
Senior Vice President of Finances &
Chief Financial Officer
DATE OF EXECUTION: October 25, 1994
The undersigned hereby executes this Amendment to evidence her agreement to
be bound by the terms of Subsection 5(c)(2) of the Employment Agreement.
/s/ Jeris Boyce
-------------------
Jeris Boyce
DATE OF EXECUTION: October 25, 1994
57492 . 1