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EXHIBIT 10(v)
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
(as restated)
AGREEMENT by and between AMERICAN PRECISION INDUSTRIES INC. (the
"Company"), a Delaware corporation with its principal office at 0000 Xxxxxx
Xxxxxx, Xxxxxxx, Xxx Xxxx 00000, and XXXX XXXXXXXXXXX ("Employee"), residing at
000 Xxxxxxxxxx Xxxx, Xxxx Xxxxxx, Xxx Xxxx 00000, first dated as of July 1,
1992, as amended and restated as of July 1, 1996.
W I T N E S S E T H :
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WHEREAS, the Employee is currently employed by the Company in the
capacities of President and Chief Executive Officer; and
WHEREAS, the Company desires to continue to provide the Employee with
additional incentive in connection with his employment by the Company; and
WHEREAS, the Employee is a member of a select management group of the
Company;
NOW, THEREFORE, the parties agree as follows:
1. Conditions.
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(a) The payment of benefits to the Employee or designated
beneficiaries under this Agreement is conditioned upon the Employee's compliance
with the terms of this Agreement.
(b) The Company shall withhold Federal, state, and local taxes from
all payments under this Agreement to the extent required by law at the time such
payments are made.
2. Normal Retirement.
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(a) If the Employee's employment with the Company ceases on or after
his sixty-fifth birthday because of normal retirement or if the Employee becomes
totally and permanently disabled while employed by the Company, the Company
shall pay to the Employee the amount specified under paragraph I in Schedule A
to this Agreement (the "Normal Retirement Benefit").
(b) Subject to Sections 6 and 7, such amount shall be paid in 180
equal monthly installments, the first of which shall be paid within thirty days
after the Employee ceases to be employed by the Company, and the balance of
which shall be paid on or about the first business day of each month thereafter
for 179 months.
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(c) In the event that the Employee dies before all of the payments
provided for have been made, the unpaid balance of the payments due shall
continue to be paid by the Company to the designated beneficiaries.
3. Involuntary Termination.
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(a) If the Employee's employment is terminated involuntarily (that is,
by the Company) before age sixty-five, he will receive that percentage of the
Normal Retirement Benefit determined in accordance with the following vesting
schedule:
Full Years of Service Percentage Vested
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Five years or less 50
Six years 60
Seven years 70
Eight years 80
Nine years 90
Ten years or more 100
(b) Subject to Sections 6 and 7, the amount so determined shall be
paid in 180 equal monthly installments, the first of which shall be paid within
thirty days after the Employee ceases to be employed by the Company, and the
balance of which shall be paid on or about the first business day of each month
thereafter for 179 months.
(c) In the event that the Employee dies before all of the payments
provided for have been made, the unpaid balance of the payments due shall
continue to be paid by the Company to the designated beneficiaries.
4. Voluntary Termination.
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(a) If the Employee quits before age sixty-five he will have ten
percent of the Normal Retirement Benefit for each full year of service with the
Company.
(b) Subject to Sections 6 and 7, the amount so determined shall be
paid in 180 equal monthly installments, the first of which shall be paid within
thirty days after the Employee ceases to be employed by the Company, and the
balance of which shall be paid on or about the first business day of each month
thereafter for 179 months.
(c) In the event that the Employee dies before all of the payments
provided for have been made, the unpaid balance of the payments due shall
continue to be paid by the Company to the designated beneficiaries.
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5. Change in Control.
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(a) As used in this Section 5, the terms "Change in Control",
"Protection Period", "Company", "Cause", and "Good Reason" shall have the
meanings given to them in the Change in Control Agreement entered into by and
between the Company and the Employee as of July 1, 1996.
(b) If, during a Protection Period, the Employee's employment is
terminated by the Company other than for Cause or the Employee terminates his
employment for Good Reason, then the Company shall pay to the Employee the
amount of the Normal Retirement Benefit under the provisions of this Section 5,
notwithstanding any conflicting provisions of Section 2, 3, or 4.
(c) Subject to Sections 6 and 7, such amount shall be paid in 180
equal monthly installments, the first of which shall be paid within thirty days
after the Employee ceases to be employed by the Company and the balance of which
shall be paid on or about the first business day of each month thereafter for
179 months.
(d) In the event that the Employee dies before all the payments
provided for have been made, the unpaid balance of the payments due shall
continue to be paid by the Company to the designated beneficiaries.
6. Reduction of Benefits.
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(a) The Company and the Employee have entered into a Life Insurance
Split-Dollar Agreement dated as of August 26, 1992, pursuant to which the
Employee's designated beneficiaries may receive a death benefit in the event of
the Employee's death while employed by the Company and the Employee may own an
interest in the cash surrender value of a life insurance policy (the "Policy")
at the time his employment with the Company terminates by retirement or
otherwise. Therefore, notwithstanding any other provision of this Agreement to
the contrary, the benefits that the Company is obligated to pay to the Employee
pursuant to Sections 2, 3, 4 and 5 shall be reduced in the manner provided in
Paragraph (b) below by the amount of the Employee's interest in the cash
surrender value of the Policy at the date of the Employee's retirement,
termination, or total and permanent disability, whichever first occurs.
(b) The reduction under Paragraph (a) above shall be calculated as
follows as of the date on which the Employee ceases to be employed by the
Company:
(i) Calculate the monthly benefit under Section 2, 3, 4, or 5, as
the case may be.
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(ii) Convert the monthly benefit (from (i) above) into an
after-tax monthly benefit, using the after-tax rate specified under paragraph II
in Schedule A to this Agreement (the "After-Tax Rate").
(iii) Calculate the monthly annuity amount that would be payable
to the Employee monthly for 180 months if an amount equal to the Employee's
interest in the cash surrender value of the Policy were converted into an
annuity with a term certain of 180 months using an interest rate equal to the
applicable annual interest rate specified under paragraph III in Schedule A to
this Agreement (the "Applicable Annual Rate").
(iv) Convert the monthly annuity amount (from (iii) above) into
an after-tax monthly annuity amount, using the After-Tax Rate, but applying the
After-Tax Rate only to that part of the monthly annuity amount that would not
represent the return of the Employee's investment in the policy.
(v) Subtract the after-tax monthly annuity amounts (from (iv)
above) from the after-tax monthly benefit (from (ii) above). Divide the
remainder, if any, by the After-Tax Rate; the quotient is, notwithstanding the
provisions of Sections 2, 3, 4, and 5, the monthly benefit payable for 180
months in accordance with the terms of the relevant section of this Agreement.
7. Acceleration of Payments; Frequency of Payments.
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At the Company's option or, should amounts become payable pursuant to
Section 5 of this Agreement, at the Employee's option, amounts that become
payable under this Agreement may be paid in a lump sum rather than over a period
of years, discounted at the Applicable Annual Rate in effect as of the date the
Employee ceases to be employed by the Company. Should the Employee exercise the
foregoing option, the Company shall make the lump sum payment to Employee within
thirty days after he gives notice of the exercise of said option to the Company.
The Company may, at its option, but subject to the preceding paragraph
of this Section 7, divide any amount due under this Agreement in any month into
two or more installments to be paid during that month at times corresponding to
the Company's regular pay dates for executive employees. The Company's exercise
of the foregoing option shall not be cause for an adjustment of the amount
otherwise payable under this Agreement.
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8. Administrator and Claims Procedure.
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(a) The Administrator for purposes of the claims procedure under this
Agreement is the Vice President of Finance of the Company. The business address
and telephone number of the Administrator is: 0000 Xxxxxx Xxxxxx, Xxxxxxx, Xxx
Xxxx 00000; telephone: (000) 000-0000.
(b) The Company shall have the right to change the Administrator. The
Company shall also have the right to change the address and telephone number of
the Administrator. The Company shall give the Employee written notice of any of
the foregoing changes.
(c) Benefits shall be paid in accordance with the provisions of this
Agreement.
(d) The Administrator shall present any disputed claim for benefits to
the Compensation Committee for review. The Compensation Committee in conjunction
with the Board of Directors shall determine the disposition of the disputed
claim.
(e) If the claim is denied, either wholly or partially, notice of the
decision shall be mailed to the Claimant within ninety days after the receipt of
the claim by the Administrator.
(f) The Administrator shall provide a written notice to any Claimant
who is denied a claim for benefits under this Agreement. The notice shall set
forth the following information:
(i) the specific reasons for the denial;
(ii) the specific reference to pertinent provisions of the
Agreement on which the denial is based;
(iii) a description of any additional material or information
necessary for the Claimant to perfect the claim and an explanation of why such
material or information is necessary; and
(iv) appropriate information and an explanation of the claims
procedure under this Agreement to permit the Claimant to submit his claim for
review.
All of this information shall be set forth in the notice in a
manner calculated to be understood by the Claimant.
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(g) The claims procedure under this Agreement shall allow the Claimant
a reasonable opportunity to appeal a denied claim and to get a full and fair
review of that decision from the Administrator. The Claimant shall exercise his
right of appeal by submitting a written request for a review of the denied claim
to the Administrator.
This written request for review must be submitted to the Administrator
within sixty days after receipt by the Claimant of the written notice of denial.
The Claimant shall have the following rights under this appeal procedure:
(i) to request a review upon written application to the
Administrator;
(ii) to review pertinent documents with regard to this Agreement;
(iii) to submit issues and comments in writing;
(iv) to request an extension of time to make a written submission
of issues and comments; and
(v) to request that a hearing be held to consider Claimant's
appeal.
(h) The Administrator shall notify the Claimant in writing of the
decision on review of the denied claim within 60 days after the receipt of the
request for review if no hearing was held, or within 120 days after the receipt
of the request for review, if an extension of time is necessary in order to hold
a hearing. If an extension of time is necessary in order to hold a hearing, the
Administrator shall give the Claimant written notice of the extension of time
and of the hearing. This notice shall be given prior to any extension. The
written notice of extension shall indicate that an extension of time will occur
in order to hold a hearing on the Claimant's appeal.
The notice shall also specify the place, date, and time of that
hearing and the Claimant's opportunity to participate in the hearing. It may
also include any other information the Administrator believes may be important
or useful to the Claimant in connection with the appeal.
(i) The decision to hold a hearing to consider the Claimant's appeal
of the denied claim shall be within the sole discretion of the Administrator,
whether or not the Claimant requests such a hearing.
(j) The written decision on review required by Paragraph (h) above
shall contain the following information:
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(i) the decisions;
(ii) the reasons for the decisions; and
(iii) specific references to the provisions of the Agreement on
which the decisions are based.
All of this information shall be written in a manner calculated
to be understood by the Claimant.
(k) The Administrator shall be entitled to retain and rely on the
advice of experts (including without limitation attorneys and accountants
retained by the Company) in taking or refraining from taking any action or
making any decision pursuant to this Section 8. All fees and expenses of such
experts shall be paid by the Company.
9. Nature of Company's Obligation.
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The Company's obligation under this Agreement shall be an unfunded and
unsecured promise to pay. Any assets which the Company may acquire to help cover
its financial liabilities are and remain general assets of the Company subject
to the claims of its creditors. The Company does not give, nor does this
Agreement create nor the Employee receive, any beneficial ownership interest in
any asset of the Company. The Employee understands and agrees that his
participation in the acquisition of any general asset which the Company may
acquire or use to help support its financial obligations under this Agreement
shall not constitute a representation to the Employee, his designated
beneficiary, or any person claiming through the Employee that any of them has a
special or beneficial interest in such general asset.
10. No Employment Rights.
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This Agreement shall not be deemed to constitute a contract of
employment between the Company and Employee. Nothing contained in this Agreement
shall be deemed to give to Employee the right to be retained in the employ of
the Company or to interfere with the right of the Company to discharge the
Employee, nor shall it be determined to give to the Company the right to require
the Employee to remain in its employ nor shall it interfere with Employee's
right to terminate his employment.
11. Independence of Benefits.
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The benefits payable under this Agreement shall be independent of, and
in addition to, any other benefits or compensation, whether by salary, or bonus
or otherwise, payable under any other employment agreements that now exist or
may hereafter exist from
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time to time between the Company and the Employee. This Agreement between the
Company and the Employee does not involve a reduction in salary or foregoing of
an increase in future salary by the Employee. Nor does the Agreement in any way
affect or reduce the existing and future compensation and other benefits of the
Employee.
12. Assignability.
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Except insofar as this provision may be contrary to applicable law, no
sale, transfer, alienation, assignment, pledge, collateralization, or attachment
of any benefits under this Agreement shall be valid or recognized by the
Company.
13. Payment Due Incompetents. Minors. Etc.
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If it shall be found that any person to whom a payment is due
hereunder is unable to care for his affairs because of physical or mental
disability, or that such person is a minor, the Company shall have the authority
to cause the payments becoming due to such person to be made to the spouse,
brother, sister, or other individual with whom the person to whom the payment is
due is living, or any other individual deemed by the Company to have incurred
expense for such person otherwise entitled to payment (unless prior claim shall
have been made by a duly qualified guardian or other legal representative),
without responsibility of the Company to see to the application of such
payments. Payments made pursuant to such power shall, to the extent thereof,
operate as a complete discharge of the obligation of the Company hereunder.
14. Employee Waiver.
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The Employee acknowledges and agrees that if the Agreement and the
benefits described in the Agreement constitute an employee benefit plan or part
of an employee benefit plan for purposes of Title I of the Employee Retirement
Income Security Act, as amended ("ERISA"), (i) such plan is an unfunded plan,
(ii) the Employee belongs to a select group of management or highly compensated
employees, and, therefore, (iii) such plan is exempt from the participation,
vesting, benefit accrual, joint and survivor and preretirement survivor annuity,
minimum funding, fiduciary responsibility, and other requirements of Title I of
ERISA. The Employee further agrees that, should the Agreement and the benefits
described in the Agreement be construed as a funded plan or part of a funded
plan for purposes of Title I of ERISA, the Employee irrevocably waives on behalf
of himself and any spouse to whom he may now or in the future be married, any
rights and claims the Employee or his spouse or both of them may have now or in
the future under Title I of ERISA with respect to such plan. The Employee
acknowledges that he has had sufficient opportunity to review this waiver with
counsel.
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15. Amendment.
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During the lifetime of the Employee, this Agreement may be amended or
terminated at any time, in whole or in part, by the mutual written agreement of
the parties; provided, however, that this Agreement may not be amended in a
manner which would materially increase the cost to the Company without the
approval of the Board of Directors.
16. Plan Administrator.
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The plan administrator shall be the Compensation Committee of the
Board of Directors of the Company. The plan administrator shall administer this
Agreement, construe its terms, and make all determinations necessary under this
Agreement and shall have complete discretion in doing so.
17. Notices.
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All notices, requests, demands and other communications which are
required or permitted to be given under this Agreement shall be in writing and
shall be deemed duly given upon the delivery or mailing thereof, as the case may
be, if delivered personally or sent by registered or certified mail, return
receipt requested, postage prepaid:
(a) If to the Company, to:
American Precision Industries Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Chairman, Compensation Committee
(b) If to the Administrator, to:
American Precision Industries Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Vice President of Finance
(c) If to the Employee or Claimant, to:
Xx. Xxxx Xxxxxxxxxxx
000 Xxxxxxxxxx Xxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
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or to such other address as any of the foregoing shall have specified by notice
given in said manner to each of the others.
18. Miscellaneous.
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This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof. This Agreement shall be
governed by the laws of the State of New York, except to the extent that Federal
law supersedes. This Agreement is solely between the Company and the Employee.
However, it shall be binding upon the designated recipients, beneficiaries,
heirs, executors and administrators of the Employee and upon the successors and
assigns of the Company. Headings in this Agreement are for reference purposes
only and shall not be deemed to have any substantive effect.
IN WITNESS WHEREOF, the Executive has executed this Agreement, and the
Company, pursuant to the authorization of its Board of Directors, has caused
this Agreement to be executed, as of the day and year first above written.
AMERICAN PRECISION INDUSTRIES INC.
By /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx, Vice President
- Finance and Treasurer
By /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, Secretary
/s/ Xxxx Xxxxxxxxxxx
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Xxxx Xxxxxxxxxxx
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SCHEDULE A
Effective as of July 1, 1996
I. Normal Retirement Benefit
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The Normal Retirement Benefit as in effect on July 1, 1996, is
$1,676,534. The Normal Retirement Benefit shall be adjusted
automatically as of July 1 of each year after 1996 to reflect changes
in the cost of living, using the following procedure:
The Normal Retirement Benefit in effect as of the immediately preceding
July 1 shall be increased or decreased by a factor derived from the
Consumer Price Index for All Urban Consumers (1982-84 = 100) published
by the United States Bureau of Labor Statistics for the month of June
preceding the date as of which the adjustment is being made. The Normal
Retirement Benefit to be used as the basis for the calculation of any
benefit payable under this Agreement is the Normal Retirement Benefit
in effect as of the July 1 preceding (or, if applicable coincident
with) the date the Employee ceases to be employed by the Company.
II. After-Tax Rate
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The After-Tax Rate is the percentage that is the remainder after the
subtraction from (i) 100 percent of (ii) the effective marginal tax
rate applicable to the Employee on the date as of which a calculation
is being made. The Company shall determine the effective marginal tax
rate applicable to the Employee as of the calculation date, taking into
account federal, state, and local income tax rates; the hospital
insurance tax rate under the Federal Insurance Contribution Act; the
deduction (for income tax purposes) for state and local income taxes;
and no income other than income attributable to the Company. An amount
shall be converted to an after-tax amount by multiplying it by the
After-Tax Rate in effect for the calculation date.
III. Applicable Annual Rate
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The Applicable Annual Rate is the annual rate of interest determined
for a given calendar year as follows: For each calendar year, the
Company shall obtain quotes from the Guardian Life Insurance Company
and two other A+ rated life insurance companies on the single premium
that would be required in January of that year to purchase an immediate
annuity policy paying a fixed monthly benefit for a term certain of 180
months. The premiums quoted shall be translated into discount rates.
The highest of the three discount rates shall be the Applicable Annual
Rate in effect for calculations made as of any date during the given
calendar year.
