EXHIBIT 10.25
Xxxxx X. Xxxxxx / President
and Chief Executive Officer
(IDEX CORPORATION LOGO) IDEX CORPORATION
000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
(000) 000-0000
April 24, 2000
PERSONAL AND CONFIDENTIAL
Xx. Xxxxx X. Xxxxxx
0000 Xxxxx Xxxxxxxx, Xxx. 0000
Xxxxxxx, Xxxxxxxx 00000
Dear Xxxxx:
Re: Severance Agreement
This is to confirm that in the event of your Termination from Service,
as hereafter defined, with IDEX Corporation or its successors ("IDEX"), within
twenty-four (24) months following, or, directly or indirectly, in connection
with, or in anticipation of, a Change of Control, as hereinafter defined, you
will be entitled to the following benefits as a severance payment (hereinafter
referred to individually as a "Severance Benefit" and collectively as "Severance
Benefits"):
1) Payment of your base salary and vacation pay (for vacation not
taken, including vacation carryover from the prior year plus a
pro rata accrual for the current year) accrued but unpaid
through the date of termination of employment payable in a
single lump sum payment on the last day employed or as soon
thereafter as practicable.
2) Any amount earned under the Management Incentive Compensation
Plan ("MICP") for the calendar year preceding the year in
which the termination of employment occurs which has not been
paid will be paid in a single lump sum payment on the last day
employed or as soon thereafter as practicable.
3) An amount equal to three times the sum of (a) your annual base
salary, at the rate in effect on the Determination Date, as
hereinafter defined, and (b) your full year's bonus under the
MICP at your Target Incentive Amount in effect on the
Determination Date, calculated in accordance with the practice
in effect on the Determination Date. This amount will be paid
in a single lump sum payment on the last day employed or as
soon thereafter as practicable.
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April 24, 2000
Page 2
4) A proportionate bonus, as described in this subparagraph,
under the MICP. The portion of the bonus payable will be the
amount determined by multiplying a full year's MICP bonus, at
your Target Incentive Amount in effect on the Determination
Date, calculated in accordance with the practice in effect on
the Determination Date, by a fraction the numerator of which
is the number of full and partial calendar months in the
calendar year which precede the date of the termination of
employment and the denominator of which is 12. This amount
will be paid in a single lump sum payment on the last day
employed or as soon thereafter as practicable.
5) Fringe benefits for a continuing period of twenty-four (24)
months following the date of termination of employment.
Covered fringe benefits for purposes of this agreement
include: (a) term life insurance in an amount in effect on the
Determination Date, (b) medical benefits at the level in
effect on the Determination Date, (c) to the extent coverage
is available under the insurance policy in effect, the
personal accident plan at the level in effect on the
Determination Date, (d) the use of an IDEX-provided
automobile, plus related expenses, comparable to that provided
to you on the Determination Date, and (e) other miscellaneous
fringe benefits in effect on the Determination Date. Medical
benefits will be reduced to the extent of coverage provided by
subsequent employers. For purposes of COBRA health care
continuation coverage, the "qualifying event" will be deemed
to have occurred at the end of the twenty-four (24) month
period following termination of employment.
6) For a twenty-four (24) month period following the date of your
termination of employment, IDEX will promptly pay or reimburse
you for expenses, in an aggregate amount not to exceed 10% of
your annual base salary, at the rate in effect on the
Determination Date, incurred by you for outplacement services,
which may include consultants, reasonable travel, rental of an
office off IDEX's premises, secretarial support, and
photocopying, telephone, and other miscellaneous office
expenses.
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April 24, 2000
Page 3
7) For a sixty (60) month period following the date of the
Executive's termination of employment, the Corporation will
continue any indemnification agreement with the Executive and
will provide directors' and officers' liability insurance
insuring the Executive. That coverage will have limits and
scope of coverage not less than that in effect immediately
prior to the change in control. At your request, IDEX will
cause a certificate of insurance, in a form satisfactory to
you, verifying this coverage to be provided to you on an
annual basis.
8) You shall be fully vested in your accrued benefit under any
qualified or non-qualified pension or profit sharing plan
maintained by IDEX, provided, however, if the terms of such
plan do not permit acceleration of full vesting, you will
receive a lump sum payment on the last day employed, or as
soon thereafter as practicable, in an amount equal to the
value of your accrued benefit which was not vested.
9) Vesting and the ability to exercise stock options granted to
you will be governed by the terms of the stock option plan
under which the options were granted and the terms of the
option agreement.
Notwithstanding anything in this letter agreement or any other
agreement to the contrary, in the event it is determined that any payments or
distributions by IDEX or 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 you, whether paid or payable pursuant to the terms of this
letter agreement, or pursuant to any other agreement or arrangement with IDEX or
any such affiliate ("Payments"), would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, or any successor
provision, 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 you will be entitled to
receive an additional payment from IDEX (a "Gross-Up Payment") in an amount such
that after payment by you 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, you retain an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. The amount of the Gross-Up
Payment will be calculated by
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the Corporation's independent accounting firm, engaged immediately prior to the
event that triggered the payment, in consultation with the Corporation's outside
legal counsel. For purposes of making the calculations required by this Section,
the accounting firm may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code, provided that the accounting firm's determinations must be made with
substantial authority (within the meaning of Section 6662 of the Code). The
Gross-Up Payment will be paid on your last day employed or on the occurrence of
the event that results in the imposition of the Excise Tax, if later. If the
precise amount of the Gross-Up Payment cannot be determined on the date it is to
be paid, an amount equal to the best estimate of the Gross-Up Payment will be
made on that date and, within ten (10) days after the precise calculation is
obtained, either IDEX will pay any additional amount to you or you will pay any
excess amount to IDEX, as the case may be. If subsequently the Internal Revenue
Service (IRS) claims that any additional Excise Tax is owing, an additional
Gross-Up Payment will he paid to you within thirty (30) days of your providing
substantiation of the claim made by the IRS. After payment to you of the
Gross-Up Payment, you will provide to IDEX any information reasonably requested
by IDEX relating to the Excise Tax, you will take such actions as IDEX
reasonable requests to contest such Excise Tax, cooperate in good faith with
IDEX to effectively contest the Excise Tax and permit IDEX to participate in any
proceedings contesting the Excise Tax. IDEX will bear and pay directly all costs
and expenses (including any interest or penalties on the Excise Tax), and
indemnify and hold you harmless, on an after-tax basis, from all such costs and
expenses related to such contest. Should it ultimately be determined that any
amount of an Excise Tax is not properly owed, you will refund to IDEX the
related amount of the Gross-Up Payment.
For purposes of this letter agreement, "Change of Control" shall have
the same meaning as under the Amended and Restated IDEX Corporation Supplemental
Executive Retirement Plan as in effect on the date of this letter.
For the purposes of this letter agreement, Termination of Service is
defined as (1) a termination of your employment by IDEX for any reason other
than for Cause, as hereinafter defined; (2) your reasonable belief that there
has been a material diminution in responsibilities, duties, title, reporting
responsibilities within the business organization, status, role or authority
(without limiting the generality of the foregoing, such a material diminution in
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April 24, 2000
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responsibilities, duties, title, reporting responsibilities within the business
organization, status, role or authority will be deemed to have taken place if
any of the following occur: (a) you cease to be an officer of a reporting
company under the Securities Exchange Act of 1934, (b) you retain the position
as an officer of the reporting company but your primary responsibilities,
duties, title, status, role or authority are with an entity within the business
organization which is not the reporting company or (c) your degree of
involvement in executive decision making relating to IDEX has been materially
diminished); (3) IDEX moves your primary worksite to a location outside of the
Northbrook, Illinois region which necessitates, in your reasonable judgment,
your required relocation from your current residence which you choose not to
accept; (4) a reduction in your annual base salary, reduction in the aggregate
compensation provided to you (aggregate compensation to be determined by taking
into consideration, without limitation, the target level of MICP Awards (other
than changes in award amounts which are the result of IDEX performance),
retirement or pension plans, nonqualified deferred compensation plans, stock
option awards, severance benefits, or any other fringe benefit plan), or
degradation in working conditions or (5) if following a Change of Control where
IDEX Corporation is no longer the ultimate parent corporation, the failure of
the then ultimate parent corporation (a) to appoint you to a position with the
then ultimate parent corporation having the same responsibilities, duties,
title, reporting responsibilities within the business organization, status, role
and authority as you now hold with IDEX, (b) to acknowledge and assume, in
writing, this letter agreement at the time of the Change of Control, or (c) to
acknowledge and assume, in writing, the indemnification agreement with you which
is in effect at the time the Change of Control. After notification to you or
your obtaining specific and reliable information which gives rise to your
reasonable belief, that one of the preceding events is to occur in the near
future, you may, after providing reasonable notice, voluntarily terminate your
employment (which, if prior to the happening of the event, must be effective no
earlier than, and be contingent on, the occurrence of the event) and the
termination will be deemed a Termination of Service. If a Change of Control
occurs and your responsibilities, duties, title, reporting responsibilities
within the business organization, status, role or authority are reduced or in
any manner adversely affected prior to the date of the Change of Control
(hereafter referred to as a "Modification"), and if you reasonably demonstrate
that the modification was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or otherwise arose, directly
or indirectly, in connection with, or in anticipation of, a Change of Control,
then the level of your responsibilities, duties, title, reporting
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April 24, 2000
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responsibilities within the business organization, status, role or authority for
purposes of this letter agreement shall be those in effect on the date
immediately prior to the Modification. If your termination of employment occurs
prior to a Change of Control and if you reasonably demonstrate that the
termination was at the request of a third party who has taken steps reasonably
calculated to effect a Change of Control or otherwise arose, directly or
indirectly, in connection with, or in anticipation of, a Change of Control, then
your termination will be deemed a Termination of Service. If one of the events
which would be a Termination of Service occurs, and if your termination of
employment at that time would be in a period of time during which you would be
unable to exercise stock options or sell shares of IDEX or its successor, either
by law or contractual agreement (a "Restrictive Period"), then you may continue
in employment until a reasonable period after the Restrictive Period ends and
your subsequent termination of employment will be a Termination of Service.
For purposes of this letter Agreement, "Cause" exists if (1) you
breach, in a substantive and material manner, your fiduciary duty to IDEX, (2)
you commit a felony criminal act, or (3) you fail, after repeated requests of
the Chief Executive Officer of IDEX, which have been documented to you in
writing, to perform the material duties assigned to you (the nature of which
must be consistent with the duties assigned to you prior to the Change of
Control or prior to any modification of your assigned duties made in connection
with, or anticipation of, such Change of Control).
For purposes of this letter agreement, the term "Determination Date"
means the date immediately prior to the date of (1) payment of any Severance
Benefit, (2) the Change of Control, (3) your Termination of Service, or (4) your
last day of employment, on whichever of the four preceding dates a factor (i.e.
the rate, level, amount, practice, quality or other factor, as the context may
indicate) used to calculate a Severance Benefit under this letter agreement is
the factor which will result, with respect to such Severance Benefit, in the
greatest or largest benefit to be provided. For avoidance of doubt, the
Determination Date may be different with respect to different Severance
Benefits.
If IDEX, or any entity which has an obligation to you under this letter
agreement, fails to honor any provision of this letter agreement or if a contest
or dispute as to the terms of this letter agreement arises, all legal fees and
expenses incurred by you to enforce this agreement or to contest or dispute its
terms will
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Page 7
be paid, or at your request, advanced, by IDEX to you or directly to your
attorney, as you may direct.
To the extent that this letter agreement provides a larger or greater
separate Severance Benefit than may be provided to you pursuant to any policy,
program, contract or arrangement previously adopted by IDEX prior to your
Termination of Service, this letter agreement will supersede and be in full
substitution of such other policy, program, contract or arrangement with respect
to the larger or greater separate Severance Benefit to be provided. To the
extent that any policy, program, contract or arrangement adopted by IDEX prior
to your Termination of Service provides a larger or greater separate severance
benefit than provided to you pursuant to this letter agreement, such other
policy, program, contract or arrangement will supersede and be in full
substitution of this letter agreement with respect to the larger or greater
separate Severance Benefit to be provided.
This letter agreement shall apply to a Change of Control that occurs on
or before the date on which IDEX provides written notice to you that the terms
this letter agreement will terminate (the date so specified in the notice will
not be less than two years following the date of such notice), or, if a Change
of Control is pending as of such date, this letter agreement will also apply if
that Change of Control does occur in a reasonable period thereafter. If a Change
of Control has not occurred as of the date specified in the notice, or is
pending as of the date so specified in the notice and is not subsequently
consummated in a reasonable period thereafter, this letter agreement shall be
null and void.
The terms of this letter agreement will be governed by the laws of the
State of Illinois and will be binding on IDEX and its successors (who consent to
jurisdiction in the State of Illinois with respect to the subject matter of this
letter agreement) and will inure to the benefit of your heirs. You will not be
required to mitigate the amount of any payment or benefit provided for in this
letter agreement by obtaining other employment or other sources of income or
benefits nor will the amount of any payment or benefit be reduced by offset
against any amount claimed to be owed by you to IDEX (except to the extent that
medical benefits are provided by a subsequent employer). For any matter in this
letter agreement wherein the determination of the existence of any fact or other
matter is indicated to be in your reasonable belief, your belief will be
respected and upheld provided you have obtained specific and reliable
information giving rise to your reasonable belief and unless IDEX demonstrates,
by a preponderance of
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Page 8
the evidence, that the basis for your belief was arbitrary or capricious. If any
provision of this letter agreement is held invalid or unenforceable for any
reason, all other provisions shall remain in effect.
All notices and other communications given pursuant to this letter
agreement will be deemed to have been properly given if hand delivered or
mailed, addressed to the appropriate party at the address as shown on the first
page of this letter agreement, postage prepaid, by certified or registered mail,
return receipt requested and, in the case of notice to IDEX to the attention of
the President. A copy of any notice sent must also be sent to Xxxxxxx, Xxxx,
Xxxxxxx, Xxxxx & Goodyear, LLP, 0000 Xxx X&X Xxxxx, Xxxxxxx, Xxx Xxxx 00000,
Attention: Xxxxxxx X. Xxxxx, Esq. and Xxxxxxx X. Xxxxxx, Esq. Any party may from
time to time designate, by written notice given in accordance with these
provisions, any other address or party to which such notice or communication or
copies thereof shall be sent.
Very truly yours,
/s/ XXXXX X. XXXXXX
Xxxxx X. Xxxxxx
Agreed to and accepted by:
/s/ XXXXX X. XXXXXX
-------------------
Xxxxx X. Xxxxxx
Date: April 27, 2000
