Exhibit 10 (a)
MANAGEMENT TRANSITION AGREEMENT
THIS MANAGEMENT TRANSITION AGREEMENT (this "Agreement"), is made as of
the 5th day of August, 2002, between ESCO Technologies Inc., a Missouri
corporation (the "Company" or "ESCO"), and Xxxxxx X. Xxxxx (the
"Executive").
WITNESSETH THAT:
WHEREAS, the Executive, who will reach 65 years of age in 2003, has
informed the Company that he desires to retire from the positions of
Chairman and Chief Executive of the Company prior to the end of the
Company's 2003 fiscal year;
WHEREAS, the Company desires to recognize the Executive's long service
on behalf of the Company and the important contributions that the Executive
has made to the Company, during his employment with the Company;
WHEREAS, the Company desires to retain the goodwill and management
experience of the Executive following Executive's retirement, in order to
ensure the smooth and successful transition of the Company's leadership to
a new Chief Executive Officer;
WHEREAS, the Company has on July 18, 2002 awarded the Executive 60,000
stock options and 40,000 restricted shares; and
WHEREAS, in order to retain Executive's goodwill and recognize the
Executive's contributions to the Company, the Company and the Executive
desire to enter into this Management Transition Agreement, in order to
memorialize the agreement of the Company and the Executive relating to the
Executive's retirement and the transition of the Company's management
authority to a new Chief Executive Officer.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereto agree as follows:
1. Employment Agreement. The terms of that certain Employment
Agreement dated as of November 1, 1999 between the Company and the
Executive (the "Employment Agreement"), shall remain in full force and
effect until September 30, 2002; provided that the Company and the
Executive hereby agree that the Company shall not be in breach of the terms
of the Employment Agreement nor shall the Executive have "Good Reason" to
terminate such Employment Agreement should the Company reduce, change or in
any way modify the duties to be performed by the Executive pursuant to the
terms of the Employment Agreement. The Executive and the Company hereby
agree that the Employment Agreement shall terminate on September 30, 2002,
shall be considered null and void without liability to either party and
that Executive shall not be entitled to any benefits, owed any additional
compensation or severance or have any rights or obligations under the
Employment Agreement upon said termination; provided, that this does not
supersede the Executive's right to receive any benefit earned prior to the
Executive's retirement, or any provision of this Agreement expressly
providing a benefit to the Executive.
2. Transition Period.
2.1 Retirement. The Executive shall retire from the Company as an
employee and resign as a Director on a date to be determined by the
Human Resources and Ethics Committee of the Board of Directors (the
"Committee"), provided that the Committee shall not select a date for
the Exeuctive's retirement before February 5, 2003 or after April 30,
2003 (the date of the Executive's retirement shall be referred to
herein as the "Retirement Date" and the period between October 1, 2002
until the Retirement Date shall be referred to as the "Transition
Period").
2.2 Duties. As of October 1, 2002 Executive shall resign as Chief
Executive Officer and during the Transition Period, the Executive
shall serve as the Company's Chairman, or in such other capacities as
may be determined from time to time in the sole discretion of the
Human Resources and Ethics Committee of the Board of Directors (the
"Committee").
2.3. Compensation. During the Transition Period, the Executive
shall be entitled to receive a pro rata salary at an annual rate of
Four Hundred Eighty Five Thousand Dollars ($485,000.00), payable
pursuant to the terms of the Company's normal payroll practices.
2.4 Bonus. On the Retirement Date, Executive shall receive from
the Company an annual bonus at the Executive's current centerpoint of
$325,000.00 (at the 1.0 level) multiplied by the number of calendar
days comprising the Transition Period divided by 365.
2.5 Long Term Incentive Compensation. All performance shares,
stock options or restricted stock awards previously granted to the
Executive pursuant to the Company's incentive compensation plans shall
fully vest and be distributed in accordance with the terms of such
applicable plans, except that any performance share and restricted
stock awards which have a vesting date following the Retirement Date
shall fully vest and be distributed, and any stock options which have
a vesting date following the Retirement Date shall be eligible for
exercise in accordance with applicable plan terms, as of April 1,
2003. All such performance share, stock option and restricted stock
awards shall be deemed amended by the Committee and the Executive by
this Agreement.
2.6 Directors and Officers Liability Coverage. The Company agrees
to provide the Executive with Directors and Officers liability
coverage during the Transition Period, and for at least five years
thereafter, for covered actions through the date of the end of the
Transition Period, subject to the insurance carrier's approval and the
terms of such coverage.
3. Consulting Agreement. On or before the Retirement Date, the
Executive and the Company will enter into a Consulting Agreement,
providing for the service of the Executive as an independent
contractor to the Company for a one year term following the Retirement
Date for a fee of $300,000 payable bi-weekly pursuant to the Company's
payroll practices (the "Consulting Fee"). The Consulting Agreement
shall contain such reasonable and customary provisions deemed
acceptable by the Company in its discretion, including without
limitation, a non-disclosure and confidentiality covenant, a
non-disparagement covenant, a release of the Company and its
affiliates, including the specified terms contained in Section 4, and
a worldwide covenant restricting the Executive, for a period of three
(3) years following the end of the term of the Consulting Agreement,
from competing with the Company, soliciting the business of the
Company, or soliciting the employees of the Company.
4. Release of Company.
4.1 General Release for Additional Consideration. In
consideration of the mutual promises and covenants contained herein
(which Executive specifically acknowledges include consideration to
which he would not have been entitled in the absence of this
Agreement), the Executive agrees to and does hereby release, acquit,
and forever discharge the Company its subsidiaries and affiliates and
their past, present, and future shareholders, officers, directors,
agents, employees, representatives, attorneys, successors and assigns,
from any and all liabilities, claims, grievances, demands, charges,
actions, causes of action and damages of every nature and description,
known or unknown, accrued or not yet fully in being, which may have
arisen on account of anything occurring, in whole or in part, prior to
the date of this Agreement. This release is specifically understood to
apply to, but is not limited to, any and all claims made, to be made,
or which might have been made as a consequence of Executive's
employment with ESCO or his relationship with any executive officer of
ESCO, or arising out of his retirement, and the termination of his
employment relationship with ESCO. This release also specifically
includes, but is not limited to, any and all claims for salary,
vacation pay, bonuses, commissions, stock options, compensation,
benefits and damages (actual, compensatory, emotional and punitive) of
any kind, sex discrimination, sexual harassment, retaliation,
discriminatory treatment, alleged violations of any employee policy,
employee manual or alleged contract of employment, defamation, fraud,
assault, conspiracy, age discrimination and any and all other claims
arising under any federal, state (Missouri, or any other), or local
law, whether such claims arise at common law (whether sounding in tort
or contract) or by constitution, statute or ordinance, including, by
way of illustration only, Title VII of the Civil Rights Act of 1964,
as amended, 42 U.S.C. 2000e-2000e-17; the Age Discrimination in
Employment Act of 1967, as amended, 29 U.S.C. 621-634; the Americans
with Disabilities Act, as amended 42 U.S.C. 12101 et seq.; the Equal
Pay Act of 1963, as amended, 29 U.S.C. 206 et seq.; the Employee
Retirement Income Security Act of 1974, as amended, 29 U.S.C.
1001-1461; the Missouri Human Rights Act, Mo. Rev. Stat.
213.010-213.137, X.X.Xx. (Supp. 1995) and the Missouri Service
Letter Statute, as amended, 290.140, X.X.Xx. (1986). Executive also
agrees not to institute any claim for damages of any kind, by charge
or otherwise, or to authorize any other party, governmental or
otherwise, to institute any claim through administrative or legal
proceedings against ESCO for any such damages. The liabilities,
claims, grievances, demands, charges, actions, causes of action and
damages released and discharged by this Section include all those,
known or unknown, accrued or not yet fully in being, which exist in
whole or in part as of the date this Agreement is signed.
Nothing in this Section or this Agreement shall release
Executive's right to any benefit he may be or become entitled to by
virtue of his employment by ESCO prior to his retirement as provided
herein or any compensation or benefit expressly provided in this
Agreement; or to obtain any COBRA or retiree health benefits he may
timely elect to receive after his retirement
4.2 Knowing and Voluntary. Executive specifically acknowledges
that the waiver of all of his claims is knowing and voluntary and that
this waiver is a part of this Agreement which has been written in a
manner calculated to be, and which is, understood by him and he
intends to be bound by this entire Agreement. He specifically
acknowledges waiving and releasing any claims under the Age
Discrimination in Employment Act of 1967, as amended, 29 U.S.C.
621-634, in addition to all other claims as provided in this Section
of this Agreement.
4.3 Time to Consider. Executive agrees that in deciding to
execute this Agreement: (a) that he relied entirely on his own
judgment and that of any legal counsel or advisor he may have employed
(and not on ESCO) in assessing the extent and merit of any claims, the
likelihood, if any, of prevailing on those claims, the amount of
damages, if any, which he would receive in the event any such claims
were successfully established and the tax treatment of the amount paid
hereunder; (b) that no facts, evidence, event or transaction currently
unknown to him, but which may hereinafter become known to him, shall
affect in any way or manner the final unconditional nature of this
Agreement; (c) that his execution of this Agreement is a completely
voluntary act on his part; (d) that he understands the terms of this
Agreement; (e) that he has been advised by ESCO to consult with his
legal counsel and has been provided with adequate time to do so, at
his own expense, prior to executing this Agreement; (f) that he has
been advised that this offer remains open for a period of twenty-one
(21) days from the date he receives a copy of this Agreement so that
he may fully consider this Agreement prior to executing it; and (g)
that if he does not execute and return this Agreement to ESCO within
such period, ESCO will consider his non-action a refusal to agree to
the terms of this Agreement, and the offer and terms extended by this
Agreement are revoked effective as of that date and time.
4.4 Revocation and Effective Date. The parties agree that this
Agreement shall not become effective or enforceable until the 8th day
after two (2) copies of this Agreement, signed by Executive, are
delivered to ESCO's Vice President Human Resources at 0000 Xxxxx
Xxxx, Xxxxx 000, Xx. Xxxxx, Xxxxxxxx, 00000 ("Effective Date"). During
any time prior to the delivery of these copies to ESCO's Vice
President Human Resources and during the seven (7) day period prior
to the Effective Date, Executive may revoke, in writing, this
Agreement by delivering a copy of a notice of his intention to revoke
it to ESCO's Vice President Human Resources at the address indicated
above. If Executive does not deliver to ESCO's Vice President--Human
Resources notice of his intention to revoke this Agreement in writing
within such seven (7) day period prior to the Effective Date as set
forth in this Section, the Agreement will become effective, binding,
enforceable and irrevocable.
5. Miscellaneous.
5.1 Death or Disability. The Company shall not be obligated to
pay Executive any salary or bonus after his death or continuous
absence from work due to disability for a period of ninety (90) days.
All long-term compensation will be governed in accordance with the
terms of the applicable plan(s).
5.2 Incidental Benefits. Incidental benefits customarily paid to
or on behalf of senior executives of the Company or appropriate for a
departing Chairman and Chief Executive Officer with many years of
successful service to the Company may be paid during the Transition
Period and on the Retirement Date in the discretion of the Committee
or the new Chief Executive Officer of the Company, such incidental
benefits not to exceed in the aggregate Seventy-Five Thousand Dollars
($75,000.00).
5.3 Successors and Assigns. This Agreement shall inure to the
benefit of the parties hereto and their respective successors,
assigns, heirs, and legal representatives, including any entity with
which the Company may merge or consolidate or to which all or
substantially all of its assets may be transferred. The duties and
covenants of the Executive under this Agreement, being personal, may
not be delegated or assigned.
5.4 Amendment. This Agreement may not be amended except by a
written agreement executed by the Executive and another executive
officer of the Company.
5.5 Entire Agreement. This Agreement is a complete and total
integration of the understanding of the parties and supersedes all
prior or contemporaneous negotiations, commitments, agreements,
writings and discussions with respect to the Executive's transition
from employment with the Company, retirement, or engagement as a
consultant, and Executive expressly acknowledges the termination of
the Employment Agreement pursuant to the terms of this Agreement. This
Agreement does not terminate or supersede any agreement between the
Executive and the Company relating to the Executive's conduct,
behavior, incentive compensation or fringe benefits, except as
expressly modified by the provisions contained herein.
5.6 Governing Law. This Agreement shall be construed and
interpreted in accordance with the internal substantive laws of the
State of Missouri, without regard to conflicts of law provisions, and
except to the extent governed by federal law.
5.7 Arbitration. Any controversy or claim arising out of or
relating to this Agreement or any other agreement contemplated
hereunder, or the interpretation or breach hereof or thereof, shall be
submitted to binding arbitration conducted in the City or County of
St.Louis, Missouri, in accordance with the then current Employment
Dispute Resolution Rules of the American Arbitration Association,
unless otherwise agreed. The parties shall select one arbitrator
familiar with a background in arbitrating employment disputes. If the
parties are unable to agree on the selection of an arbitrator to
resolve the dispute within fifteen (15) days of either party giving
the other party notice of its intent to invoke this Section, then
either party may make a request of the American Arbitration
Association for a list of qualified potential arbitrators from which
the parties shall select an arbitrator in accordance with the
Employment Dispute Resolution Rules of the American Arbitration
Association. If no arbitrator is thus selected within fifteen (15)
days after such list is submitted to the parties, either party may
request the American Arbitration Association to select an arbitrator.
Subject to the following sentence, all expenses and fees of the
arbitrator and any other expenses of the arbitration will be borne
equally by parties unless the arbitrator in the award assesses such
expenses against one of the parties or allocates such expenses other
than equally between the parties. Each party will bear its own
attorneys' fees and expenses, unless the arbitrator finds that the
claim or defense of any party was frivolous or lacked a reasonable
basis in fact or law, in which case the arbitrator may assess against
such party all or any part of the attorneys' fees and expenses of the
other party. The determination of such arbitrator shall be final and
binding upon the parties and judgment may be entered thereupon in any
court having jurisdiction thereof. The provisions of this Section 5.7
shall not apply to the enforcement of any covenants relating to
non-competition, non-solicitation, confidentiality or disparagement
contained in this Agreement or any related agreement. Further, the
provisions of this Section 5.7 shall not limit the rights of the
Company to obtain injunctive relief enjoining the Executive from
taking actions or threatening to take an action in violation of the
terms of this Agreement or any related agreement.
IN WITNESS WHEREOF, the foregoing Agreement has been executed
effective as of August 5, 2002.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
THE PARTIES.
ESCO TECHNOLOGIES, INC.
Xxxxxx X. Xxxxx By: Xxxxxxx X. Xxxxxx
Date: 8/5/02 Title: VP Human Resources
Date: August 5, 2002
