EMPLOYMENT AGREEMENT
This Employment Agreement is effective as of October 1, 1999
by and between SPS Technologies, Inc., a Pennsylvania corporation (the
"Company"), and Xxxx X. Xxxxxxxx, an individual (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Employee and the
Employee desires to be so employed, on the terms and conditions herein set
forth; and
WHEREAS, contemporaneous herewith the Company and the Employee
are entering into an executive severance agreement relating to certain
severance payments in the event of a Change of Control as therein provided
(the "Executive Severance Agreement");
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements hereinafter set forth and intending to be
legally bound hereby, the parties hereto agree as follows:
Section 1. Employment. The Company hereby employs the
Employee, which employment the Employee hereby accepts, to serve, subject to the
direction, supervision and control of the Company's Chairman and Chief Executive
Officer (the "CEO") and the Board of Directors of the Company (the "Board"), as
the Company's President and Chief Operating Officer ("President and Chief
Operating Officer"). In such regard, the Employee agrees to undertake and
discharge such duties, functions and responsibilities as are from time to time
assigned to the Employee by the CEO, consistent with the terms and provisions of
this Employment Agreement.
Section 2. Term and Termination.
(a) Term. The Employee's employment by the Company
shall commence as of October 1, 1999 (the "Effective Date") and shall continue
until such employment is terminated by the Company or by the Employee or when
the Employee reaches the age of 65, retires, dies or becomes disabled, whichever
is sooner. Any such termination shall also automatically constitute the
resignation by the Employee, and the termination of the Employee's status and
capacity, as an officer, employee and/or agent of the Company, and as an
officer, employee, agent and/or as a member of the Board of any of the Company's
subsidiaries or affiliates.
(b) Termination by Employee. The Employee may
terminate this Employment Agreement and the Employee's employment under this
Employment Agreement at any time by giving at least ninety (90) days' prior
written notice of such termination to the Company.
(c) Termination by Company. The Company may
terminate this Employment Agreement and the Employee's employment under this
Employment Agreement at any time for any reason or for no reason and whether or
not constituting "Cause" (as defined in Section 6(e)(i) hereof), immediately or
on such future date (not to exceed ninety (90) days from the date of notice) as
may be specified in the written notice of termination to the Employee from the
Company.
(d) Termination Upon Death, Retirement or
Disability. This Employment Agreement and the Employee's employment under this
Employment Agreement shall terminate automatically and without notice
immediately upon (i) the death of the Employee, or (ii) the retirement of the
Employee in accordance with the Company's retirement income plan, (iii) the
Employee's attaining age 65, or (iv) the disability of the Employee which
qualifies the Employee for benefits under the Company's Long Term Disability
Plan.
Section 3. Compensation.
(a) Base Salary. In consideration for all services
rendered by the Employee, hereunder or otherwise, to or for the benefit of the
Company, its subsidiaries and affiliates, the Company shall pay the Employee a
base salary at the rate per annum during the first year of employment equal to
Four Hundred Thousand Dollars ($400,000), payable in equal monthly installments.
The Employee's base salary shall be reviewed annually by the Board and may be
increased further (but not decreased) in the sole discretion of the Board.
(b) 1999 Bonus. As additional consideration for the
Employee's service hereunder, the Employee shall be eligible to participate in
the Company's Management Incentive Plan (the "MIP") for an incentive bonus
opportunity for 1999 equivalent to 25% of an annual maximum bonus opportunity
based on a maximum payment of 50% of Employee's base salary (i.e. $100,000) in
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accordance with the terms of the MIP. This 1999 incentive bonus opportunity
under the MIP shall have the same MIP payout ranges and objectives established
and approved by the Board for the Company's CEO.
(c) Subsequent Years' Incentive Compensation. In
plan years after 1999, the Employee shall be eligible to participate in the
Company's incentive compensation plans in accordance with the terms thereof,
including, but not limited to, the MIP and the Company's Long Range Incentive
Plan ("LRIP"). For 2000 plan year, the Employee's annual maximum bonus
opportunity for the MIP shall be based on a maximum payment of 50% of Employee's
base salary and the Employee's annual maximum bonus opportunity for the LRIP
shall be based on a maximum payment of 40% of Employee's base salary. The
Employee's objectives for the bonus opportunities for the 2000 plan year under
the MIP shall be established by the Board. The Employee's objectives for the
bonus opportunities for the 2000 plan year under the LRIP shall be based on the
current Company plan for 2000 and shall be the same objectives established by
the Board for the Company's CEO under the LRIP. Bonus opportunities and
objectives for subsequent plan years shall be established by the Board.
(d) Stock Options. The Employee shall be granted
the right and option to purchase seventy-five thousand (75,000) common shares of
the Company at the market value of such shares at the close of trading on the
Effective Date. The Employee shall also be granted the right and option to
purchase an additional twenty-five thousand (25,000) common shares of the
Company after the 2001 Annual Meeting of Shareholders of the Company.
(e) Benefit Plans. The Employee shall be eligible
during the term of his employment under this Employment Agreement to participate
in all employee benefit plans and employee fringe benefits such as health,
disability and life insurance and retirement programs (including the Company's
senior executive severance plan, retirement income plan, executive deferred
compensation plan, supplemental executive retirement plan, and benefit
equalization plan) now or hereafter made available to executive employees of the
Company generally
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(collectively, such plans and programs are herein collectively referred to as
the "Benefit Plans"), to the extent and on the same terms and conditions
(subject, however, to the terms and provisions of any such plans or programs) as
from time to time are accorded other employees serving as executive officers of
the Company, except as such Benefit Plans may be expressly modified by the terms
of this Employment Agreement. The Employee shall be entitled to not less than
four (4) weeks vacation annually.
(f) Limitation on Compensation and Benefits. Except
as specifically set forth in this Employment Agreement and the Benefit Plans and
except for such compensation, if any, which may be paid to the Employee as a
member of the Board, the Employee shall not receive or be entitled to any other
compensation, perquisites or benefits.
Section 4. Relocation. The Company shall reimburse the
Employee the reasonable costs and expenses of moving his principal residence to
the greater Philadelphia, Pennsylvania metropolitan area in accordance with its
employee relocation expense reimbursement policy.
Section 5. Board Membership. The Employee shall be nominated
by the Board for membership on the Company's Board in the year 2000. The
Employee shall not accept any other board memberships or remunerative positions,
other than with the Company and its subsidiaries, whether or not for
compensation, in the future except with the concurrence of the Board in each
instance.
Section 6. Severance Compensation.
(a) Termination Upon Change of Control. In the
event of a "Triggering Termination" of the Employee during a "Change of Control
Period" (as such terms are defined in the Executive Severance Agreement) or a
termination resulting from a breach of Section 16 of such Executive Severance
Agreement, the provisions of such Executive Severance Agreement shall govern and
the Employee shall be entitled to the rights and benefits, if any, set forth in
such Executive Severance Agreement in accordance with its terms in lieu of any
severance payments, rights or benefits under or in respect of this Employment
Agreement.
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(b) Termination by Employee, by the Company for
"Cause" or Upon Death, Disability or Retirement. Upon termination of the
Employee's employment under this Employment Agreement (i) by the Employee (other
than upon a "Constructive Termination" as defined in Section 6(e)(ii) hereof),
(ii) upon the death, disability or retirement of the Employee or the Employee's
attaining age 65, or (iii) by the Company for "Cause" (as defined in Section
6(e)(i) hereof), all rights and benefits of the Employee hereunder or in respect
hereof or in respect of his employment by the Company shall cease and terminate
without further liability or obligation on the part of the Company whatsoever,
except payment of the Employee's base salary through the effective date of
termination of employment and such sums, if any, due or to become due under any
of the Benefit Plans in which the Employee is a participant as of the effective
date of termination of employment in accordance with the terms and provisions of
such Benefit Plans (which sums, if any, shall be payable as provided by the
terms of such Benefit Plans).
(c) Termination by the Company Without Cause. Upon
termination (other than a termination of employment upon the retirement, death
or disability of the Employee or the Employee's attaining age 65) of the
Employee's employment under this Employment Agreement (A) by the Company without
Cause, or (B) by the Employee upon a Constructive Termination, (herein a
"Severance Termination"), the Company shall pay the Employee, within 30 days
after the effective date of the Severance Termination, in full and complete
settlement, satisfaction and release of all claims and rights the Employee may
have against the Company and liabilities or obligations the Company may have to
the Employee (and whether arising under, pursuant to or in respect of this
Employment Agreement, the Employee's employment by the Company or the
termination thereof, or otherwise), such payments, rights and benefits (other
than the rights provided under Section 5.1 and Article VII of the SESP) provided
under the Company's SESP, as such plan is in effect on the Effective Date, as
though the Employee were entitled to fully participate therein except that the
term "Triggering Termination" as used in the SESP shall be deemed to mean a
Constructive Termination as defined herein or a termination by the Company
without Cause.
(d) Release. In consideration of, and as a
condition to, the foregoing payments and benefits, which the Employee
acknowledges to be adequate consideration therefor in excess of the
consideration to which he otherwise would be entitled upon any such termination,
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the Employee shall provide the Company with a fully executed general release of
and from all liabilities, claims, suits, actions and other matters, in form and
substance reasonably satisfactory to the Company.
(e) Certain Definitions. As used herein, the
following terms shall have the following meanings:
(i) "Cause" shall mean misappropriation of
funds, habitual insobriety, substance abuse, conviction of a crime involving
moral turpitude, or gross negligence in the performance of the Employee's
duties, which gross negligence has had an adverse effect on the Company's
business, operations, assets or properties so as to materially adversely affect
the financial condition of the Company and its subsidiaries taken as a whole.
(ii) "Constructive Termination" shall mean a
termination of the Employee's employment under this Employment Agreement
initiated by the Employee following one or more of the following occurrences not
approved in advance by the Employee, provided notice of such occurrence is given
by the Employee to the Company in writing and the Company fails for a period of
more than twenty (20) days to cure the same:
(A) a significant reduction by the Board
of the authority, duties or responsibilities of the Employee as an employee of
the Company including a removal of the Employee as President and Chief Operating
Officer of the Company;
(B) a reduction in, or a wrongful refusal
to pay, the Employee's base salary, by the Company;
(C) a termination or modification of MIP
or LRIP or any action taken pursuant to the terms of such plans, which
materially (x) reduces the Employee's opportunity to receive compensation under
either or both of such plans of equivalent amounts previously received by the
Employee, subject to the right of the Board to establish reasonable objectives
under MIP and LRIP, (y) reduces the compensation payable to the Employee under
either or both of such plans but which does not effect comparable reductions in
the compensation payable to the other participants in such plans, or (z)
increases the compensation payable to other participants in either or both of
such plans but which does not effect corresponding increases in the amount of
compensation payable to the Employee (provided the Employee was, at the time of
such termination or modification, a participant in such plan), unless the
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Company replaces MIP or LRIP (or any successor plan thereto permitted hereby) or
the provision so modified with incentive compensation or incentive compensation
plans at least equal to or better than the MIP or LRIP or the provision thereof
as modified or revoked; or
(D) a termination or modification of the
Company's retirement income plan ("RIP"), benefit equalization plan ("BEP"),
deferred compensation plan (in the event the Employee is a participant therein),
or the supplemental executive retirement plan ("SERP"), which materially reduces
to the detriment of the Employee (x) the benefits provided by such plans, or (y)
the funding thereof provided by the RIP or by any trust established by the
Company to fund benefits provided by the BEP, the deferred compensation plan (if
applicable), or the SERP, unless the Company replaces such plan or provision
thereof as so modified or terminated with a benefit or benefits at least equal
to or better than the plan (or any successor plan thereto permitted hereby) or
provision thereof as modified or terminated.
(f) Arbitration. All claims, controversies and
disputes arising out or in respect of or concerning the breach, interpretation
or application of this Agreement, the Employee's employment hereunder or the
termination hereof or of such employment, including without being limited to any
claims that the application of this Employment Agreement or the termination of
the employment relationship established hereby violates any federal, state or
local law or regulation, shall be submitted to and resolved exclusively by final
and binding arbitration in the City of Philadelphia, Pennsylvania, before a
panel of three arbitrators pursuant to the Rules of the American Arbitration
Association, Rules for Commercial Arbitration. One such arbitrator shall be
appointed by each party and the two so appointed shall select a third, or if
they are unable to agree within fifteen (15) days of their appointment, the
third shall be appointed by the AAA. Arbitration must be demanded within thirty
(30) calendar days of the time when the demanding party knows or should have
known of the event or events giving rise to the claim. The arbitration opinion
and award shall be final and binding on the Company and the Employee and shall
be enforceable by any court. Each party shall bear their own costs and expenses,
including but not limited to attorneys' fees and expenses. The Company and the
Employee shall share equally all costs of arbitration, excepting their own
attorneys' fees and expenses. The Company and the Employee recognize that this
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Section 6(f) means that certain claims will be litigated and reviewed before an
impartial arbitrator or panel of arbitrators instead of before a court of law
and/or a jury, but desire the many benefits of the arbitration process over
court proceedings, including speed of resolution, lower costs and fees, and more
flexible rules of evidence. The arbitrator or arbitrators duly selected pursuant
to the AAA Rules shall have the same power and authority to order any remedy for
violation of a statute, regulation, or ordinance as a court would have; and
shall have the same power to order discovery as a federal district court has
under the Federal Rules of Civil Procedure. This Section is intended by the
Company and the Employee to be enforceable under the Federal Arbitration Act and
any similar state law. Any award shall bear interest at the "prime rate."
Section 7. Non-Competition. During the term of this Employment
Agreement and thereafter for a period of two (2) years, the Employee agrees that
he shall not, directly or indirectly, (i) compete with the Company, (ii) engage
in any line of business in which the Company is engaged on the date of
termination of the Employee's employment in any geographic market in which the
Company then transacts business, (iii) have any interest, whether as an officer,
director, employee, agent, consultant, owner, shareholder (owning more than one
percent (1%) of the outstanding capital stock) or otherwise, in any corporation,
entity or enterprise engaged in competition with the Company or engaged in any
line of business in which the Company is engaged on the date of termination of
the Employee's employment, or (iv) interfere in any manner with the business or
goodwill of the Company. As used in this Section 7, the term Company shall be
deemed to include the Company and all of its subsidiaries and affiliates. The
provisions of this Section 7 shall survive any termination of this Employment
Agreement.
Section 8. Agreement to Provide Services; Right To Terminate.
(a) No Right of Employment. Nothing in this
Employment Agreement shall be construed as giving the Employee any right to be
retained in the employ of the Company. The Company or the Employee may terminate
the Employee's employment at any time, subject to the Company's obligation to
provide the payments and benefits set forth in this Employment Agreement upon
such termination, if any.
(b) No Other Rights. The Employee acknowledges that
from time to time, the Company may establish, maintain and distribute employee
manuals or handbooks or personnel policy manuals, and officers or other
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representatives of the Company may make written or oral statements relating to
personnel policies and procedures. Such manuals, handbooks and statements are
intended only for general guidance. No policies, procedures or statements of any
nature by or on behalf of the Company (whether written or oral, and whether or
not contained in any employee manual or handbook or personnel policy manual),
and no acts or practices of any nature, shall be construed to modify this
Employment Agreement.
Section 9. Exclusivity of Rights. If the Employee becomes
entitled to and receives all of the payments and benefits provided for in this
Employment Agreement in the event of a termination of employment, the Employee
hereby waives the Employee's right to receive payments provided for under any
other severance agreement, plan or program; it being acknowledged, however, that
pursuant to Section 6(a) the provisions of the Executive Severance Agreement
shall govern in the event of a Triggering Termination during a Change of Control
Period or a termination resulting from a breach of Section 16 of such Executive
Severance Agreement.
Section 10. Notice. All notices and other communications
required or permitted hereunder or necessary or convenient in connection
herewith shall be in writing and shall be delivered personally or mailed by
registered or certified mail, return receipt requested, or by overnight express
courier service, as follows:
If to the Company, to:
SPS Technologies, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxxx
Attention: Corporate Secretary
If to the Employee, to:
Xxxx X. Xxxxxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section. Any such notice shall be deemed delivered and
effective when received in the case of personal delivery, five (5) days after
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deposit, postage prepaid, with the U.S. Postal Service in the case of registered
or certified mail, or on the next business day in the case of overnight express
courier service.
Section 11. Governing Law. This Employment Agreement shall be
governed by and interpreted under the laws of the Commonwealth of Pennsylvania
without giving effect to any conflict of laws provisions.
Section 12. Contents of Agreement, Amendment and Assignment.
(a) Entire Agreement. This Employment Agreement
supersedes all prior understandings and agreements and, together with the
Executive Severance Agreement and the confidentiality agreement referred to
therein, sets forth the entire understanding between the parties hereto with
respect to the subject matter hereof and cannot be changed, modified, extended
or amended except upon written amendment executed by the Employee and approved
by the Board and executed on the Company's behalf by a duly authorized officer.
(b) Binding Provisions. All of the terms and
provisions of this Employment Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective heirs, representatives,
successors and assigns of the parties hereto. This Employment Agreement, being
one for the personal services of the Employee, shall not be assignable by the
Employee.
Section 13. Severability. If any provision of this Employment
Agreement or application thereof to anyone or under any circumstances shall be
determined by a court of competent jurisdiction to be invalid or unenforceable,
such invalidity or unenforceability shall not affect any other provisions or
applications of this Employment Agreement which can be given effect without the
invalid or unenforceable provision or application, and it is the desire and
intent of the parties that the court modify any such provision so determined to
be invalid or unenforceable so as to make such provision valid and enforceable
in accordance with applicable law.
Section 14. Remedies Cumulative; No Waiver. No right conferred
by this Employment Agreement is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in addition to any other right or remedy given hereunder or now or hereafter
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existing at law or in equity. No delay or omission by either party in exercising
any right, remedy or power hereunder or existing at law or in equity shall be
construed as a waiver thereof. In addition to any other remedies to which it may
be entitled, in the event of a breach or threatened breach of Section 7 hereof,
the parties agree that the Company would suffer irreparable harm and that money
damages would be inadequate. Accordingly, the Company shall be entitled to
injunctive and other equitable relief.
Section 15. Miscellaneous. All Section headings are for
convenience only. This Employment Agreement may be executed in several
counterparts, each of which is an original. It shall not be necessary in making
proof of this Employment Agreement or any counterpart hereof to produce or
account for any of the other counterparts.
IN WITNESS WHEREOF, the undersigned, intending to be legally
bound, have executed this Employment Agreement as of the date first above
written.
Attest: SPS TECHNOLOGIES, INC.
_________________________ By:_______________________
Secretary
EMPLOYEE:
_________________________ __________________________
Witness Xxxx X. Xxxxxxxx
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