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Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
BETWEEN
IDEX CORPORATION
AND
DONALD N. BOYCE
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 22nd day of November, 1996, between IDEX
CORPORATION, a Delaware corporation with its executive offices at 630 Dundee
Road, Suite 400, Northbrook, Illinois 60062 (the "Corporation"), and DONALD N.
BOYCE, residing at 1251 N. Sheridan Road, Lake Forest, Illinois 60045 (the
"Executive").
IDEX and the Executive entered into an Employment Agreement dated as of
January 22, 1988 (the "Effective Date") and executed on May 30, 1989 and
subsequently amended as of January 13, 1993 and as of September 27, 1994. The
parties now wish to modify certain provisions of the Employment Agreement and
to restate the Employment Agreement in its entirety as modified. Therefore,
IDEX and the Executive agree as follows:
1. Introductory statement. The Executive has previously served as
President of Houdaille industries, Inc. ("Houdaille") under an employment
agreement dated August 1, 1986 (the "Houdaille Employment Agreement"). The
Corporation purchased from Houdaille all of the shares of stock of all of the
active subsidiaries of Houdaille other than John Crane-Houdaille, Inc. (the
"NonCrane Subsidiaries") on January 22, 1988 and desires to secure the services
of the Executive until at least January 22, 1993 (such date is sometimes
hereinafter referred to as the "Initial Expiration Date"), on the terms and
conditions as
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provided in this Agreement. This Agreement amends and restates
in its entirety all previous employment agreements made between the Executive
and the Corporation. The Executive is willing to execute this Agreement with
respect to his employment upon the terms and conditions set forth in this
Agreement.
2. Agreement of employment. The Corporation agrees to, and hereby does,
employ the Executive, and the Executive agrees to, and hereby does accept,
employment by the Corporation, as Chairman of the Board, President and the
Chief Executive Officer of the Corporation, in full charge of the operation of
its business and affairs, subject to the provisions of the by-laws of the
Corporation in respect of the duties and responsibilities assigned from time to
time by the Board of Directors to the Chairman of the Board, President and
Chief Executive Officer and subject also at all times to the control of the
Board of Directors of the Corporation.
Subject to yearly election by the Board of Directors in the exercise of
its judgment, it is nevertheless contemplated that the Executive will continue
to be elected to the positions of Chairman of the Board and President and Chief
Executive Officer. The Corporation shall not require the Executive to perform
services hereunder away from the Chicago, Illinois area of such frequency or
duration as would necessitate, in the
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reasonable judgment of the Executive, the Executive moving his residence from
the Chicago, Illinois area.
3. Executive's obligations; vacations; automobile: relocation. During the
period of his full-time service under this Agreement, the Executive shall
devote substantially all of his time and energies during business hours to the
supervision and conduct, faithfully and to the best of his ability, of the
business and affairs of the Corporation, and to the furtherance of its
interests, and shall not accept other gainful employment except with the prior
consent of the Board of Directors of the Corporation. With the approval of the
Board of Directors of the Corporation, the Executive may also become a
director, trustee or other fiduciary of other corporations, trusts or entities.
The Executive may take five weeks vacation each year with pay. The
Corporation shall furnish and maintain an automobile for the use of the
Executive consistent with the policy of the Corporation in effect at the time;
provided, however, that at no time shall the policy of the Corporation be
materially less generous than the policy of the Corporation in effect as of
January 1, 1996.
4. Compensation.
4(a). Annual salary. The Corporation shall pay to the Executive for his
services under this Agreement a salary at
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the rate of $445,000 per year commencing as of January 1, 1997, payable in
equal monthly installments, and continuing during the period of his full-time
service hereunder; provided, however, that the Board of Directors of the
Corporation shall in good faith review the salary of the Executive, on an
annual basis, with a view to consideration of appropriate increases in such
salary. If the Executive dies during the period of his full-time service
hereunder, service for any part of the month of his death shall be considered
service for the entire month.
4(b). Bonus. The Executive shall be entitled to receive an annual cash bonus
from the Corporation calculated pursuant to the Corporation's management
incentive compensation program in effect from time to time, but not in an
amount less than would result if such bonus were calculated pursuant to the
Corporation's management incentive compensation program in effect on January 1,
1996. The Board of Directors of the Corporation, in its discretion, may award
bonuses to the Executive in addition to those provided for above, as it may
from time to time determine. The Target Incentive Amount for the Executive
with respect to any calculation of bonus shall be at least 80% of his base
salary as of the end of the fiscal period of the Corporation for which the
bonus is calculated.
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5. Period of Service and Benefits.
5(a) . Period of full-time service. Subject to the provisions of Section
5(b), the period of full-time service of the Executive under this Agreement
shall continue to the Initial Expiration Date, and for successive 12 month
periods thereafter; provided, however, that the Corporation may terminate the
full-time service of the Executive hereunder by delivering written notice of
termination to the Executive at least 3 months prior to the effective date of
such termination, or the Executive may resign and terminate his full-time
service hereunder at any time (i) after the Initial Expiration Date, (ii) if
the Corporation does not appoint (at the time provided in Section 2) and
retain him thereafter in the positions of Chairman of the Board and President
and Chief Executive Officer, or (iii) in the event of an Acquisition (as
defined in Section 8(a)), liquidation or dissolution of the Corporation, by
delivering written notice of his intention to resign to the Corporation at
least 3 months prior to the effective date of such resignation; provided,
however, that with regard to clause (iii) above, any resignation of the
Executive within 24 months following an Acquisition shall be deemed to be a
resignation in connection with such Acquisition.
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In the event of termination of the Executive by the Corporation or upon
his resignation as permitted in the preceding paragraph, as the case may be,
the Executive shall be entitled to receive his full annual salary and fringe
benefits in effect on the date of receipt of the notice of termination or
resignation for a continuing period of at least 24 months beginning with that
month next following the month during which he ceases to be actively employed.
In the event of resignation by the Executive other than as permitted in the
preceding paragraph, the Executive shall be entitled to receive his full annual
salary and fringe benefits in effect on the date of receipt of the notice of
resignation for a continuing period to the effective date of his resignation
but not longer than 3 months. In the event of his death, the balance of the
continuing salary payments (i.e., 3 months or 24 months, as the case may be)
shall be made to his wife, if surviving, or if not, to his estate in addition
to any and all other benefits payable under this Agreement upon his death.
In the event of either termination (including, without limitation, because
of the Executive's death or disability) of employment or resignation, the
Executive shall receive a cash bonus for the entire fiscal year in which the
termination or resignation becomes effective, death occurs, or disability
commences. Such bonus shall be calculated in accordance with the
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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. The
bonus shall be payable in one lump sum in accordance with and at the time
prescribed by the Corporation's policy or if no such policy then exists, the
policy of the Corporation in effect as of January 1, 1996, for payment of
annual bonuses to its executive employees for the year in which the notice is
received, death occurs or disability commences.
In addition, in the event of either termination (including, without
limitation, because of the Executive's death or disability) of employment or
resignation, the Executive shall receive payment for accrued but unused
vacation, which payment shall be equitably prorated based on the period of
active employment for that portion of the fiscal year in which termination or
resignation becomes effective, death occurs, or disability commences, plus
payment for any accrued but unused vacation for the prior fiscal year. Payment
for accrued but unused vacation shall be payable in one lump sum on the
effective date of termination or resignation, the date of death (or as soon
thereafter as practicable) or the date disability commences.
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The benefits provided for under this section shall be in lieu of, and not
in addition to, any and all benefits to which the Executive may be entitled
under any severance program or policy adopted by the Corporation from time to
time unless otherwise expressly stated therein.
5(b) (1). Death benefit. If the Executive dies during the period of
his full-time service hereunder, his wife, if surviving, or if not, his estate
shall be entitled to receive his full annual salary in effect on the date of
his death for a continuing period of 18 months, commencing on the first day of
the month immediately following the date of his death. In addition, his wife,
if surviving, or if not, his estate shall be entitled to receive the cash bonus
and vacation pay calculated under Section 5(a).
5(b)(2). Disability benefits. In the event the Executive ceases to be
actively employed by the Corporation for any reason during any period of his
disability, he shall be entitled to receive, in addition to the bonus and
vacation pay computed under Section 5(a), (i) his full annual salary in effect
on the date he ceased to be employed for a continuing period of 18 months from
the date he ceases to be employed by the Corporation, and (ii) the fringe
benefits provided by the Corporation under its executive disability policy in
effect on
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the date he ceases to be employed or if no such policy is in effect
on that date, under the executive disability policy of Houdaille in effect as
of January 22, 1988.
5(b) (3). Determination of disability. Any question as to the
existence, extent or potentiality of disability of the Executive upon which the
Executive and the Corporation cannot agree shall be determined by a qualified
independent physician selected by the Executive and reasonably acceptable to
the Corporation (or, if the Executive is unable to make such selection, it
shall be made by any adult member of his immediate family). For the purpose of
this Agreement, "disability" shall mean a disability which is, or has the
potential to become, total and permanent and because of which the Executive is
or may become physically or mentally unable to substantially perform his
regular duties as Chairman of the Board, President or Chief Executive Officer
of the Corporation, as the case may be. The determination of such physician
made in writing to the Corporation and to the Executive shall be final and
conclusive for all purposes of this Agreement. In the event of his disability,
the Executive shall cease to be employed on the last day of the month in which
the Executive's disability is determined by written agreement of the Executive
and the Corporation or the written determination of a physician, as the case
may be.
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5(c) (1). Retirement compensation and obligations. Upon the retirement
or resignation of the Executive or upon his termination from full-time service
with the Corporation, in either case pursuant to the provisions of this Section
5 hereof, the full-time service obligations of the Executive and the
Corporation to each other under Sections 2, 3 and 4 hereof shall cease, and the
Executive shall be entitled to receive benefits and compensation as specified
in this Section 5 hereof.
5(c) (2). Guarantee of Pension benefits. In addition to the
compensation otherwise provided herein, the Executive and his beneficiaries
shall be entitled to receive the retirement and death benefits they would
receive at the times and under such optional arrangements as the Executive is
entitled to under the terms of any defined benefit retirement or pension plan
adopted and implemented by the Corporation for its executive office employees
in effect at the date of the Executive's retirement, resignation or termination
(for whatever reason) from full-time service with the Corporation or at any
time during the Executive's service with the Corporation (any such plan is
hereafter referred to as the "Plan") (such Plan shall include a lump sum
option) pursuant to the Plan provisions as in effect at the point in time
during the Executive's employment at which the Plan would provide the greatest
benefits for the Executive and his beneficiaries and, in addition, the greatest
latitude in
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choice of options (including, but not limited to, a lump sum
option), but in any event computed without reference to (i) any restrictions in
the Plan upon payments to the Executive, as described in Section
1.401(a)(4)-5(b) of the Treasury Regulations; (ii) any restrictions in the Plan
upon the maximum contributions to the Plan or upon the maximum benefits payable
under the Plan, as the case may be, pursuant to Section 415 of the Internal
Revenue Code of 1986, as in effect at such point in time (the "Code"); (iii)
any limitations on the amount of the Executive's compensation that may be taken
into account under the Plan pursuant to Section 401(a)(17) of the Code or any
successor section; (iv) the limitations on compensation that would exclude any
income attributable to the exercise of the nonqualified stock options granted
in replacement of Equity Appreciation Rights granted under the First
Restatement of the Amended and Restated 1988 Equity Appreciation Rights Plan or
the 1989 Equity Appreciation Rights Plan (hereafter the "EAR Plans"); (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 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
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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. In calculating the Executive's compensation and years of
service to the Corporation under the Plan for purposes of benefit accrual and
to determine active employment on any date relevant for any purpose under the
Plan, compensation shall be deemed to include amounts termed severance and
service shall be deemed to include the periods for which the Executive receives
payments termed severance (based on the period over which the severance amount
would have been paid if paid over the entire period as to which severance is
calculated) even if such amount is paid as a lump sum settlement. 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.
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If payments are being made, pursuant to this Section 5(c)(2), in the form
of an annuity or other periodic form of distribution, and the portion of the
total amount to be paid from the Trust under the Plan shall thereafter be
reduced after the date such payments have been determined pursuant to the
preceding paragraph, by virtue of the operation of 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 other than the operation of the provisions of the optional form
selected under the Plan, the Corporation shall increase, in an amount equal to
any such reduction, the amount of the benefit under this Section 5(c)(2) which
is to be paid directly from its general assets, and such increase shall be
prorated over the remaining payments or used to recalculate the annuity
payments, as the case may be.
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
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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 from the Corporation
approximately equal to the amount repaid to the Trustee.
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
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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 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
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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 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.
Notwithstanding the preceding provisions of this Section 5(c)(2), in
calculating the benefit provided under this Section 5(c)(2) under the terms of
any Plan, compensation shall include in any year any amount otherwise excluded
from compensation in such year as a result of an election to defer income made
pursuant to the provisions of the IDEX Corporation 1996 Deferred Compensation
Plan for Officers and shall exclude in any year any amount that would otherwise
be included in compensation in a year which relates to an amount deferred in a
prior year under the provisions of the IDEX Corporation 1996 Deferred
Compensation Plan for Officers.
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Notwithstanding the preceding provisions of this Section 5(c)(2), in
calculating the benefit provided under this Section 5(c)(2) under the terms of
the Plan, the following rules shall apply:
(a) in computing average compensation for purposes of any benefit
formula under the Plan, compensation shall not include any income
includable in the Executive's income for income tax purposes attributable
to the exercise of stock options granted in replacement for Equity
Appreciation Rights under the EAR Plans at any time.
(b) An additional benefit under this Section 5(c)(2) shall be
payable in an amount equal to the benefit accrued at the rate provided in
the Plan's career average formula applied to the income includable in the
Executive's income for income tax purposes attributable to the exercise
of stock options granted in replacement of Equity Appreciation Rights
under the EAR Plans at any time.
(5)(c) (3). Supplemental retirement compensation.
(i) If the Executive ceases to be actively employed by the Corporation for
any reason (including, without limitation, upon resignation, termination, death
or disability), the
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Executive shall be entitled to receive, in addition to the other benefits and
compensation specified in this Section 5, $20,000 for each twelve months
or portion thereof that the Executive was employed by the Corporation after the
Effective Date up to a maximum of $240,000. Such supplemental retirement
compensation shall be paid in one lump sum on the date he ceases to be employed
by the Corporation.
(ii) If the Executive ceases to be actively employed by the Corporation
for any reason (including without limitation, upon resignation, termination,
death or disability) on or after attaining age 55 or is receiving continuing
salary payments or disability payments on or after attaining age 55 pursuant to
Section 5(a) or Section 5(b)(2), respectively, the Executive shall be
entitled to receive, in addition to the other benefits and compensation
specified in this Section 5 and commencing upon completion of the continuing
salary payments provided for in Section 5(a) and Section 5(b)(2) of up to 24
or 18 months, respectively, (and excluding any salary payments pursuant to
fringe benefit plans), supplemental retirement compensation at the annual rate
of 40% of his Adjusted Salary (as that term is defined under 5(c)(3)(vi) below)
calculated as of the date he ceases to be employed by the Corporation. Such
supplemental retirement compensation shall be paid in equal monthly
installments and such payments of supplemental retirement compensation shall
continue for a period
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of three years from the date continuing salary payments under Section 5(a) and
Section 5(b)(2) cease. Notwithstanding the preceding, monthly payments made
under this Section 5(c)(3)(ii) shall be reduced by an amount equal to the lump
sum payment made by the Corporation under (i)above divided by 36. Regardless
of the Executive's death prior to or after commencement of benefits under this
paragraph, the benefits provided for in this paragraph shall be paid to him,
his wife, if surviving, or his estate, as the case may be, subject, however, to
his having attained age 55 or his receiving continuing salary payments on or
after attaining age 55 pursuant to Section 5(a) or Section 5(b)(2).
(iii) If the Executive ceases to be actively employed by the Corporation
for any reason (including without limitation, upon resignation, termination or
disability) other than death (unless the election under (iv) below is in effect
on the date of the Executive's death) on or after attaining age 55 or is
receiving continuing salary payments or disability payments on or after
attaining age 55 pursuant to Section 5(a) or Section 5(b)(2), respectively,
the Executive shall also be entitled to receive, in addition to the other
benefits and compensation specified in this Section 5, supplemental retirement
compensation at the annual rate of 20% of his Adjusted Salary. Such
supplemental retirement compensation shall be paid in equal monthly
installments commencing on the first day of the month next following the last
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payment under Section 5(c)(3)(ii) and shall continue for the remainder of his
life.
(iv) If the Executive's spouse is surviving on the date that the benefits
under (ii) commence, the Executive hereby elects in lieu of his benefits under
(ii) or (iii) above, an actuarially equivalent joint and 50% surviving spouse
annuity calculated using the actuarial assumptions under the Plan; provided,
however, that he reserves the right to revoke such election at any time prior
to the commencement of payment of the benefits under (ii); said spouse's
consent shall not be required for such revocation. If such election is
effective on the date of the Executive's death, any benefit payable pursuant to
Section 5(c)(3)(ii) and (iii) shall commence immediately upon the date of his
death notwithstanding any other death benefits payable under this Agreement,
subject, however, to his having attained age 55 or his receiving continuing
salary payments or disability payments on or after attaining age 55 pursuant to
Section 5(a) or Section 5(b)(2), respectively.
(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
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payments at date of commencement is equivalent to the present value of
the benefits as if benefit payments commenced upon the Executive commencing his
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.
(vi) For purposes of this Agreement, the term Adjusted Salary shall mean
the highest base salary paid to the Executive at any time during the term of
this Agreement.
5 (c)(4). Medical benefits. The Executive shall be entitled to
prompt reimbursement for all medical, dental, hospitalization, convalescent,
nursing, extended care facilities (including without limitation, long term care
facilities such as convalescent and nursing homes) 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 (hereinafter collectively referred to as "medical benefits"). Such
medical 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
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time. The Corporation may, in its discretion, insure such medical benefits;
provided, however, that such benefits shall not be affected by the existence
or non-existence of 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 (and/or his wife
or other 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, with the selection of medical providers and
institutions and related travel and lodging to be solely in the discretion of
the Executive (and/or his wife or other dependents).
5(d). Confidentiality agreement. During the course of his employment,
the Executive has had and will have access to confidential information relating
to the lines of business of the Corporation, its trade secrets, marketing
techniques, technical and cost data, information concerning customers and
suppliers, information relating to product lines, and other valuable and
confidential information relating to the business of the
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Corporation not generally available to the public (the "Confidential
Information"). The parties hereby acknowledge that any unauthorized disclosure
or misuse of the Confidential Information could cause irreparable damage to the
Corporation. The parties also agree that covenants by the Executive not to make
unauthorized use or disclosures of the Confidential Information are essential
to the growth and stability of the business of the Corporation. Accordingly,
the Executive agrees to the confidentiality covenants set forth in this
section.
The Executive agrees that, except as required by his duties with the
Corporation or as authorized by the Corporation in writing, he will not use or
disclose to anyone at any time, regardless of whether before or after the
Executive ceases to be employed by the Corporation, any of the Confidential
Information obtained by him in the course of his employment with the
Corporation.
The Executive agrees that since irreparable damage could result from his
breach of the covenants in this Section 5(d) of this Agreement, in addition to
any and all other remedies available to the Corporation, the Corporation shall
have the remedies of a restraining order, injunction or other equitable relief
to enforce the provisions thereof. The Executive consents to jurisdiction in
Lake County, Illinois on the date of the
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commencement of any action for purposes of any claims under this
Section 5(d). In addition, the Executive agrees that the issues in any action
brought under this section will be limited to claims under this section, and
all other claims or counterclaims under other provisions of this Agreement will
be excluded.
5(e). Cost of living adjustments. All payments under Section Section
5(c)(3)(ii) and (iii) hereof shall be appropriately increased at such time as
the Corporation shall first become obligated to make such payments, and at the
beginning of each year thereafter, in proportion to the amount, if any, by
which the Consumer Price Index (the "CPI") for the then most recently reported
month exceeds the CPI as of the month and year of the date he ceased to be
employed. The CPI to be used hereunder shall be the CPI for All Urban
Consumers (CPI-U) (All Cities, All Items, 1982-84 = 100), published by the
Bureau of Labor Statistics of the United States Department of Labor. In the
event of any substantial change in the composition of the CPI to be used
hereunder or in the event of discontinuance or termination of such index, the
most appropriate available price index shall be substituted and utilized
hereunder.
6. Compensation under this Agreement not exclusive. Except as expressly
stated to the contrary in this Agreement, the compensation and benefits payable
by the Corporation to the
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Executive under the provisions of this Agreement shall be in addition to and
separate and apart from such additional compensation or incentives and such
retirement, disability or other benefits as the Executive may be entitled to
under any present or future extra compensation or bonus plan, stock option
plan, share purchase agreement, pension plan, disability insurance plan, life
insurance program, or other plan or arrangement of the Corporation established
for its executives or employees, and the provisions of this Agreement shall not
affect any such compensation, incentives or benefits. The Board of Directors
of the Corporation, in its discretion, may award the Executive such additional
compensation, incentives or benefits, pursuant to such plans or otherwise, as
it may from time to time determine.
7. Termination of this Agreement. This Agreement shall terminate when the
Corporation has made the last payment provided for hereunder; provided,
however, that the obligations set forth under Section 5(d) of this Agreement
shall survive any such termination and shall remain in full force and effect.
Without the written consent of the Executive, the Corporation shall have no
right to terminate this Agreement prior thereto. 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
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beneficiaries are successful in establishing, privately or otherwise, that his
or their position is substantially correct, or 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 directly to the provider of the services or as may
otherwise be directed by the Executive or his beneficiaries. 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. All payments made by
the Corporation hereunder shall be final and the Corporation shall not seek to
recover all or any part of any such payments for any reason whatsoever.
8. Rights in event of change of control or liquidation.
8(a). Rights in event of change in management or control. In the event of
(I) any transaction or series of transactions which within a 12-month period
constitute a change
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of management or control where (i) at least 51 percent of the then outstanding
common shares of the Corporation are (for cash, property (including,
without limitation, stock in any corporation), or indebtedness, or any
combination thereof), redeemed by the Corporation or purchased by any
person(s), firm(s) or entity(ies), or exchanged for shares in any other
corporation whether or not affiliated with the Corporation, or any combination
of such redemption, purchase or exchange, or (ii) at least 51 percent of the
Corporation's assets are purchased by any person(s), firm(s) or entity(ies)
whether or not affiliated with the Corporation for cash, property (including,
without limitation, stock in any corporation) or indebtedness or any
combination thereof, or (iii) the Corporation is merged or consolidated with
another corporation regardless of whether the Corporation is the survivor, or
(II) any substantial equivalent of any such redemption, purchase, exchange,
change, transaction or series of transactions, merger or consolidation
constituting such change of management or control (the "Acquisition"), the
Executive, regardless of whether still employed by the Corporation, or, in the
event of his death or inability to act, his wife or, if not surviving, his
eldest surviving child (or in the event of their inability to act, such person
who has the legal power to act on their behalf), shall have the right, in his
or her sole option, upon receipt of prior written notice of the Acquisition
from the Corporation, which such notice the
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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 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.
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 (or in the event of their
inability to act, such person who has the legal power to act on their behalf),
shall have the right, in his or her sole discretion, to elect not to receive a
lump sum settlement of the obligations of the 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
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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. In addition, if the Executive or other beneficiary elects
to receive a lump sum settlement, 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 mortality assumptions of the "applicable
mortality table" under Section 417(e) of the Code and either (i) 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 the single sum
is paid or (ii) the "applicable interest rate" under Section 417(e) of the
Code, determined as of the first month of the calendar year in which the single
sum is paid, whichever would produce the greater single sum amount. For
purposes of this paragraph, the term
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"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(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 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
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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 (or
in the event of their inability to act, such person who has the legal power to
act on their behalf), shall have the right, in his or her sole discretion, to
elect not to receive a lump sum settlement of the obligations of the
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,
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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 mortality
assumptions of the "applicable mortality table" under Section 417(e) of the
Code and either (i) 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 the single sum is paid or (ii) the "applicable interest rate"
under Section 417(e) of the Code, determined as of the first month of the
calendar year in which the single sum is paid, whichever would produce the
greater single sum amount. 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. Additional Payments by Corporation.
(a) Notwithstanding anything in this Agreement or any other agreement to
the contrary, in the event it shall be determined that any payment or
distribution by the Corporation or
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any affiliate (as defined under the Securities Act of 1933, as amended, and the
regulations thereunder) thereof or any other person to or for the benefit
of the Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement, pursuant to that certain shareholder
purchase and sale agreement between Executive and the Corporation made as of
January 22, 1988, as amended and restated, pursuant to all non-qualified stock
option plans of the Corporation now or hereafter in effect, pursuant to the
IDEX Corporation Supplemental Executive Retirement Plan, pursuant to the IDEX
Corporation 1996 Deferred Compensation Plan for Officers, pursuant to any other
plan of deferred compensation, or pursuant to any other agreement or
arrangement with the Corporation or any affiliate thereof now or hereafter in
effect (a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Code, or any successor statute thereto, 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 Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including, without limitation, any interest or
penalties imposed with respect to such taxes and any Excise Tax) imposed upon
the Gross-Up Payment, the Executive retains an amount of the
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Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) The Executive and/or the Corporation shall notify each other in
writing as soon as practicable of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Corporation of the
Gross-Up Payment. Such notification shall state the nature of such claim and
the date on which such claim is requested to be paid. Neither the Executive
nor the Corporation shall pay such claim for taxes prior to the expiration of
the thirty-day period following the date on which the notice is given (or such
shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Executive or Corporation (hereafter the "Notifying
Party") notifies the other party in writing prior to the expiration of such
period that it desires to contest such claim, such other party shall take such
action, in connection with contesting such claim as the Notifying Party shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
selected by the Notifying Party and approved by the other party, provided,
however, that the Corporation shall bear and pay directly all costs and
expenses (including additional interest and penalties and counsel fees as
submitted) incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on
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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. Furthermore, if the Corporation is the
Notifying Party, the Corporation's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive 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.
10. Definitions. For purposes of this Agreement, the term "year" shall
mean fiscal year, the term "dependents" shall have the same meaning as pursuant
to Section 152 of the Code and "his 60th year" shall mean the twelve months
immediately following the Executive's 59th birthday.
11. Amendments. This Agreement may not be amended or modified orally, and
no provision hereof may be waived, except in a writing signed by the parties
hereto, and specifically the agreement of any beneficiary, wife, dependents, or
other potential or actual third party beneficiary shall not be required except
as specifically provided for in this Agreement.
12. Assignment. This Agreement cannot be assigned by either party hereto
except with the written consent of the other.
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13. Binding effect. This Agreement shall be binding upon and inure to the
benefit of the personal representatives and successors in interest of the
Executive and any successors in interest of the Corporation. In addition to
inuring to the benefit of the Executive, Section Section 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, Section 8 and Section 9 are intended to inure to
the benefit of the Executive's beneficiaries. Such provisions shall be
enforceable by the aforesaid beneficiaries, wife and/or dependents, as the case
may be, who upon the Executive's death shall be deemed successors in interest.
14. Choice of law. This Agreement shall be governed by the law of the
State of Illinois (excluding the law of the State of Illinois with regard to
conflicts of law) as to all matters, including but not limited to matters of
validity, construction, effect and performance.
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15. Notice. Except as otherwise provided in this Agreement, all notices
and other communications given pursuant to this Agreement shall be deemed to
have been properly given if personally delivered or mailed, addressed to the
appropriate party at the address of such party as shown at the beginning of
this Agreement, postage prepaid, by certified mail or by Federal Express or
similar overnight courier service. A copy of any notice sent pursuant to this
section shall also be sent to Michael Tokarz, Kohlberg Kravis Roberts & Co., 9
West 57th Street, New York, New York 10019 and Hodgson, Russ, Andrews, Woods &
Goodyear, 1800 One M & T Plaza, Buffalo, New York, 14203, Attention: Richard
E. Heath, Esq. and Dianne Bennett, Esq. Any party may from time to time
designate by written notice given in accordance with the provisions of this
paragraph any other address or party to which such notice or communication or
copies thereof shall be sent.
16. Severability of provisions. In case any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be effected or impaired thereby and this
Agreement shall be interpreted as if such invalid, illegal or unenforceable
provision was not contained herein.
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17. Titles. Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of this Agreement.
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IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Corporation has caused this Agreement to be executed in its name and on its
behalf as of the date first above written.
/s/ Donald N. Boyce
-----------------------------------
Donald N. Boyce
DATE OF EXECUTION: December 6, 1996
IDEX CORPORATION
By: /s/ Wayne P. Sayatovic
-------------------------------
Wayne P. Sayatovic, Senior Vice
President - Finance and Chief
Financial Officer
DATE OF EXECUTION: December 9, 1996
The undersigned hereby executes this Amendment to evidence her agreement
to be bound by the terms of Subsections 5(c)(2) and 5(c)(3) of the Employment
Agreement.
/s/ Jeris J. Boyce
-----------------------------------
Jeris Boyce
DATE OF EXECUTION: December 6, 1996