EXHIBIT 99.12
This Severance Compensation Agreement ("Agreement") made and entered
into as of the 28 day of Sept , 1989 , by and between Commercial Intertech
Corp. ("Company") and William W. Cushwa ("Executive").
WHEREAS the Company's Compensation Committee of the Board of Directors
("Committee") has determined that, in light of the importance of the Executive's
continued services to the stability and continuity of management of the Company
and its subsidiaries, it is appropriate and in the best interests of the Company
and of its shareholders to reinforce and encourage the Executive's continued
disinterested attention and undistracted dedication to his duties in the
potentially disturbing circumstances of a possible change in control of the
Company by providing some degree of personal financial security; and
WHEREAS in order to induce the Executive to remain in the employ of the
Company or a subsidiary of the Company ("Subsidiary"), the Committee has
determined that it is desirable to pay the Executive the severance compensation
set forth below if the Executive's employment with the Company or a Subsidiary
terminates in one of the circumstances described below following a Change in
Control of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the Company and the Executive agree as
follows:
1. DEFINITIONS.
The following terms shall have the meaning set forth below unless the
context clearly indicates otherwise:
(a) ANNUAL CASH COMPENSATION. Annual Cash Compensation shall mean the
sum of (i) the Executive's annual base salary in effect at the time the Notice
of Termination is given; and (ii) an amount equal to the highest annual
compensation paid in the last three (3) calendar years as compensation under the
Company's Management Incentive Compensation Plan (or any successor plan).
(b) BENEFIT PLAN. Benefit Plan means any benefit plan or arrangement
including, without limitation, the Company's pension or profit sharing plan,
life insurance plan, medical, dental, accident and disability plans and
educational assistance reimbursement plan adopted or maintained by the Company
on the effective date of this Agreement or hereinafter adopted or maintained
during the term of this Agreement.
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(c) CAUSE. The Company or a Subsidiary may terminate the Executive's
employment for Cause only on the basis of: (i) the Executive's wilful and
continued failure substantially to perform his duties with the Company or a
Subsidiary (other than any such failure resulting from his Disability or any
such failure resulting from the Executive's termination for Good Reason), after
a written demand for substantial performance is delivered to the Executive by
the Company's Board of Directors which specifically identifies the manner in
which such Board of Directors believes that the Executive has not substantially
performed his duties; or (ii) the Executive's wilful engagement in conduct
materially and demonstrably injurious to the Company or a Subsidiary. For
purposes of this Section 1(c), no act or failure to act on the Executive's part
shall be considered "wilful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company or a Subsidiary. The Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than two-thirds of the entire membership of
the Company's Board of Directors, at a meeting of the Board of Directors called
and held for the purpose, finding that in the good faith opinion of the Board of
Directors the Executive was guilty of conduct set forth in clause (i) or (ii) of
the first sentence of this Section 1(c) and specifying the particulars thereof
in detail.
(d) CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred if:
(i) there shall be consummated any consolidation or merger of
the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's common stock
would be converted into cash, securities or other property, other than
a merger of the Company in which the holders of the Company's common
stock immediately prior to the merger have substantially the same
proportionate ownership of the common stock of the surviving
corporation immediately after the merger;
(ii) there shall be consummated any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions)
of all or substantially all the assets of the Company;
(iii) the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company;
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(iv) any person (as such term is used in Sections 13(d) and
l4(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a Subsidiary or any
employee benefit plan sponsored by the Company or a Subsidiary, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company representing thirty percent
(30%) or more of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights accruing in
special circumstances) having the right to vote in the election of
directors, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise; or
(v) at any time during a period of two (2) consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors of the Company shall cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for
election by the Company's shareholders of each new director during such
two (2) year period was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning
of such two (2) year period.
(e) COMPANY. Company shall mean Commercial Intertech Corp. and any
successor or assign to all or substantially all of the business and/or assets
which executes and delivers the agreement provided for in Section 7.1(a) or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(f) DATE OF TERMINATION. Date of Termination shall mean (i) if this
Agreement is terminated by the Company or a Subsidiary for Disability, thirty
(30) days after Notice of Termination is given to the Executive (provided that
the Executive shall not have returned to the performance of the Executive's
duties on a full-time basis during such thirty (30) day period); or (ii) if the
Executive's employment is terminated for any reason other than Disability, the
date on which a Notice of Termination is given.
(g) DISABILITY. The Executive shall be deemed to have a Disability if,
as a result of the Executive's incapacity due to physical or mental illness, the
Executive: (1) shall qualify for benefits under the Company's short-term
disability plan or long-term disability plan adopted or maintained by the
Company on the effective date of this Agreement or hereinafter adopted or
maintained during the term of this Agreement; and (2) shall have been absent
from his duties with the Company or a Subsidiary on a full-time basis for a
continuous period of six (6) months commencing with the date of Change in
Control of the Company or the first day of such absence (whichever is later).
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(h) EMPLOYMENT BENEFITS. Employment Benefits shall mean life, health,
disability and accident insurance plans and a package of "executive benefits"
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
(i) GOOD REASON. The Executive may terminate the Executive's employment
for Good Reason, which shall mean in any of the following events unless it
occurs with the Executive's express prior written consent:
(i) the assignment to the Executive by the Company or a
Subsidiary of any duties inconsistent with, or a diminution of, the
Executive's position, duties, titles, offices, responsibilities and
status with the Company or a Subsidiary immediately prior to a Change
in Control of the Company or any removal of the Executive from or any
failure to reelect the Executive to any of such positions, unless the
Executive's employment with the Company or a Subsidiary is terminated
(i) by the Company or a Subsidiary for Cause, Disability or Retirement
or by reason of death or (ii) by the Executive other than for Good
Reason;
(ii) a reduction by the Company or a Subsidiary in the
Executive's base salary as in effect on the date hereof or as the same
may be increased from time to time during the term of this Agreement or
the Company's or a Subsidiary's failure to increase (within fifteen
(15) months of the Executive's last increase in base salary) the
Executive's base salary after a Change in Control of the Company in an
amount which is substantially similar, on a percentage basis, to the
average percentage increase in base salary for all officers of the
Company or a Subsidiary effected during the preceding twelve (12)
months, other than a reduction of the Executive's base salary pursuant
to the terms of the Company's short-term or long-term disability plan
during a period in which the Executive has a Disability and qualifies
for benefits under such plan.
(iii) except with respect to changes required to maintain its
tax-qualified status or changes generally applicable to all employees
of the Company, any failure by the Company or a Subsidiary to continue
in effect any Benefit Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans providing the Executive with substantially similar
benefits), the taking of any action by the Company or a Subsidiary
which would adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such Benefit Plan
or deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of a Change in Control of the Company or the
failure by the Company or a Subsidiary to provide the Executive with
the number of paid vacation days to which the Executive was entitled in
accordance with the vacation policies in effect at the time of a Change
in Control of the Company;
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(iv) any failure by the Company or a Subsidiary to continue in
effect any Incentive Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan in an amount which is not
substantially similar, on a percentage basis, to the average percentage
reduction of benefits under any such Incentive Plan effected during the
preceding twelve (12) months for all officers of the Company or a
Subsidiary participating in any such Incentive Plan;
(v) any failure by the Company or a Subsidiary to continue in
effect any Securities Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under
any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
or the Executive's relocation to any place other than the location at
which the Executive performed the Executive's duties prior to a Change
in Control of the Company;
(vii) a substantial increase in business travel obligations
over such obligations as they existed at the time of a Change in
Control of the Company;
(viii) any material breach by the Company or a Subsidiary of
any provision of this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company in accordance
with Section 7(a); or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 1(k).
(j) INCENTIVE PLAN. Incentive Plan means any incentive plan or
arrangement including, without limitation, the Company's Management Incentive
Compensation Plan, annual bonus and contingent bonus arrangements and credits
and the right to receive performance awards and similar incentive compensation
benefits adopted or maintained by the Company on the effective date of this
Agreement or hereinafter adopted or maintained during the term of this
Agreement.
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(k) NOTICE OF TERMINATION. Notice of Termination shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(l) PENSION BENEFITS. Pension Benefits shall mean all benefits under
the Company's pension plan and any other plan or agreement relating to
retirement benefits adopted or maintained by the Company on the effective date
of this Agreement or hereinafter adopted or maintained during the term of this
Agreement.
(m) RETIREMENT. Retirement shall mean termination by the Company or a
Subsidiary or by the Executive of the Executive's employment based on the
Executive's having reached age sixty-five (65). Termination based on Retirement
shall not include, for purposes of this Agreement, the Executive's taking of
early retirement by reason of a termination by the Executive of his employment
for Good Reason.
(n) SECURITIES PLAN. Securities Plan shall mean any plan or arrangement
to receive securities of the Company including, any Company plan or arrangement
to receive and exercise stock options, stock appreciation rights, restricted
stock or grants thereof or to acquire stock or other securities of the Company
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
2. TERM OF AGREEMENT.
This Agreement shall commence on the date hereof and shall terminate,
except to the extent that any obligation of the Company under this Agreement
remains unpaid as of such time, on the earlier of (i) the date on which the
Executive reaches age sixty-five (65) and (ii) the date five (5) years from the
date of this Agreement; provided that this Agreement shall continue in effect
until the earlier of (i) the date on which the Executive reaches age sixty-five
(65) and (ii) the date two (2) years beyond the date of termination of this
Agreement as provided above if a Change in Control of the Company shall have
occurred prior to such date of termination of this Agreement (and shall continue
for such additional period as any obligation of the Company under this Agreement
shall remain unpaid).
It is further provided, however, that commencing on the date five (5)
years after the date of this Agreement and each anniversary date of the
Agreement thereafter (unless the Executive has attained age sixty-five (65)),
the term of this Agreement shall automatically be extended for one (1)
additional year unless not later than one (1) year prior to the date five (5)
years after the date of this Agreement or subsequent anniversary date the
Company or the Executive shall have given written notice to the other of its or
his intention not to extend this Agreement.
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3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) No compensation shall be payable to the Executive pursuant to
Section 4 of this Agreement unless and until (i) there shall have been a Change
in Control of the Company while the Executive is still employed as an Executive
of the Company or a Subsidiary; and (ii) the Executive's employment with the
Company or a Subsidiary is terminated within two (2) years of the date of the
Change in Control unless the Executive's employment is terminated (i) by the
Company or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive other than for Good Reason.
(b) Any termination of the Executive's employment (i) by the Company or
a Subsidiary for Cause, Disability or Retirement or by reason of the Executive's
death or (ii) by the Executive for Good Reason shall be communicated to the
other party by a Notice of Termination. No such purported termination by the
Company or Subsidiary shall be effective without such Notice of Termination.
(c) The Company shall pay to the Executive all legal fees and expenses
incurred by the Executive as a result of the termination of the Executive's
employment (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of the Executive's death or (ii) by the Executive for
Good Reason, including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement.
4. COMPENSATION UPON TERMINATION.
(a) If the Executive's employment with the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary for Cause, Disability or
Retirement or by reason of death or (ii) by the Executive other than for Good
Reason, the Executive shall not be entitled to any severance compensation under
this Agreement. In the event the Company or a Subsidiary provides a Notice of
Termination to an Executive with a Disability and the Executive shall not have
returned to the full-time performance of his duties within thirty (30) days of
such Notice, the Company or Subsidiary may terminate the Executive's employment
for Disability without the Executive's being entitled to any severance
compensation under this Agreement. The absence of the Executive's entitlement to
any benefits under this Agreement shall not prejudice the Executive's right to
the full realization of any and all other benefits to which the Executive shall
be entitled pursuant to the terms of any employee benefit plans or other
agreements of the Company or a Subsidiary in which the Executive is a
participant or to which the Executive is a party.
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(b) If the Executive's employment by the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of death or (ii) by the Executive for Good Reason,
then the Executive shall be entitled to the severance compensation provided
below:
(i) The Company shall pay as severance compensation to the
Executive, at the time specified in subsection (ii) below, a lump-sum
severance payment equal to two times the Executive's Annual Cash
Compensation reduced by any actual damages paid to the Executive by the
Company as a result of the Company's termination of the Executive's
employment with the Company. If the Executive is age sixty-three (63)
or older on the Date of Termination, such lump-sum severance payment
shall be equal to the Executive's Annual Cash Compensation multiplied
by a fraction of which the numerator shall be the number of months from
such date until the Executive reaches age sixty-five (65) and the
denominator shall be twelve (12).
(ii) The severance compensation provided for in subsection (i)
above shall be made not later than the tenth (10th) day following the
Date of Termination; provided, however, that, if the amount of such
compensation cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as
determined in good faith by the Company but subject to the provisions
of Section 4(c), of the minimum amount of such compensation and shall
pay the remainder of such compensation (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code of
1986, as amended (the "Code")) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after
the Date of Termination. In the event that the amount of the estimated
payment exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive
payable on the fifth (5th) day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
(iii) The Company shall arrange to provide the Executive for a
period of twenty-four (24) months following the Date of Termination
(or, if such date occurs after the Executive reaches age sixty-three
(63), for a period equal to the number of months after such date until
the Executive reaches age sixty-five (65)) or until the Executive's
death, if earlier, with Employment Benefits substantially similar to
those which the Executive was receiving immediately prior to the Notice
of Termination.
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(iv) During the term of this Agreement and through the period
of twenty-four (24) months following the Date of Termination (or, if
such date occurs after the Executive reaches age sixty-three (63), for
a period equal to the number of months after such date until the
Executive reaches age sixty-five (65)), under the Company's pension
plan in which the Executive is participating immediately prior to the
Notice of Termination, all Pension Benefits shall continue to accrue to
the Executive, crediting of service of the Executive with respect to
Pension Benefits shall continue and the Executive shall be entitled to
receive all Pension Benefits. To the extent that the amount of any
Pension Benefits cannot take into account such accrual or crediting by
reason of the Executive's no longer being an employee of the Company
during such period, the Company shall itself pay to the Executive an
amount equal to the additional benefits that would have been provided
had such accrual or crediting been taken into account in calculating
such pension benefits. The obligation of the Company to provide any
pension benefit payment under the preceding sentence constitutes merely
the unsecured promise of the Company to make such payments from its
general assets, and the Executive shall have no interest in, or lien or
prior claim upon, any property of the Company or a Subsidiary with
respect thereto.
(c) If after reduction for any applicable federal excise tax imposed by
Section 4999 of the Code and federal income tax imposed by the Code, the
Executive's net proceeds of the severance compensation payable under this
Section 4 would be less than the amount of the Executive's net proceeds
resulting from payment of severance compensation described below, after
reduction for federal income taxes, then the amount under this Section 4
(without application of the paragraph (c)) shall be reduced as hereinafter
provided. If the severance compensation under this Section 4 (without
application of this Section 4(c)), either alone or together with other payments
to the Executive from the Company or a Subsidiary, would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations), such
severance compensation shall be reduced to the largest amount that will result
in no portion of the severance compensation payments under this Section 4 being
subject to the excise tax imposed by Section 4999 of the Code or being
disallowed as deductions to the Company under Section 280G of the Code. The
determination of whether any reduction in the severance compensation payments
under this Section 4(c) is to apply shall be made by the Executive in good faith
after consultation with the Company, and such determination shall be conclusive
and binding on the Company. The Company shall cooperate in good faith with the
Executive in making such determination and in providing the necessary
information for this purpose.
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5. EMPLOYMENT.
The Executive agrees to be bound by the terms and conditions of this
Agreement and to remain in the employment of the Company or Subsidiary during
any period following any public announcement by any person of any proposed
transaction or transactions which, if effected, would result in a Change in
Control of the Company until a Change in Control of the Company has taken place
or, in the opinion of the Board of Directors, such person has abandoned or
terminated its efforts to effect a Change in Control of the Company. Subject to
the foregoing, nothing contained in this Agreement shall impair or interfere in
any way with the right of the Executive to terminate the Executive's employment
or the right of the Company or any Subsidiary to terminate the employment of the
Executive with or without cause prior to a Change in Control of the Company.
Nothing contained in this Agreement shall be construed as a contract of
employment between the Company or a Subsidiary and the Executive or as a right
of the Executive to continue in the employment of the Company or a Subsidiary,
or as a limitation of the right of the Company or a Subsidiary to discharge the
Executive with or without cause prior to a Change in Control of the Company.
6. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL RIGHTS.
(a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the termination of the
Executive's employment, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, or other plan, arrangement, agreement or contract of the
Company or a Subsidiary.
7. SUCCESSOR TO THE COMPANY; SUCCESSOR OF THE EXECUTIVE.
(a) The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) of all or
substantially all the business and/or assets of the company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume 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 or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason.
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(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to the Executive hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
8. MISCELLANEOUS.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
9. VALIDITY.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
10. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES.
The Company or Subsidiary shall pay all legal fees and expenses which
the Executive may incur as a result of the Company's or a Subsidiary's
contesting the validity, enforceability or the executive's interpretation of, or
determinations under, this Agreement.
12. LAWS GOVERNING.
This Agreement has been entered into in the State of Ohio, and shall be
construed, interpreted and governed in accordance with the laws of the State of
Ohio.
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13. NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
If to the Company or a Subsidiary:
Commercial Intertech Corp.
1775 Logan Avenue
P.O. Box 239
Youngstown, Ohio 44501-0239
Attn: General Counsel
If to the Executive:
William W. Cushwa
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EXECUTIVE CORP. COMMERCIAL INTERTECH
________________________________ By: ________________________________
Name: William W. Cushwa Name: Don E. Tucker
Title: Title: Senior Vice President
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