1
EXHIBIT 3.10 (xvi)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of January 1, 1997, by and
between SPX Corporation (hereinafter called the "Corporation") and Xxxx X.
Xxxxxxxx, (hereinafter called the "Executive").
WITNESSETH THAT:
WHEREAS, the Corporation desires to continue to employ the Executive as
its Chairman, President and Chief Executive Officer, and the Executive desires
to continue in such employment;
NOW, THEREFORE, the Corporation and the Executive, each intending to be
legally bound, hereby mutually covenant and agree as follows:
1. Employment and Term.
(a) Employment. The Corporation shall employ the Executive
as the Chairman, President and Chief Executive Officer of the Corporation, and
the Executive shall so serve, for the term set forth in Paragraph 1(b).
(b) Term. The initial term of the Executive's employment
under this Agreement shall commence as of January 1, 1997 and end on December
31, 2001, subject to the extension of such term as hereinafter provided and
subject to earlier termination as provided in Paragraph 7, below. Beginning on
January 1, 1999, the term of this Agreement shall be extended automatically for
one (1) additional day for each day which has then elapsed since December 31,
1998, unless, at any time after December 31, 1998, either the Board of
Directors of the Corporation (the "Board"), on behalf of the Corporation, or
the Executive gives written notice to the other, in accordance with Paragraph
14, below, that such automatic extension of the term of this Agreement shall
cease. Any such notice shall be effective immediately upon delivery. The
initial term of this Agreement, plus any extension by operation of this Section
1, shall be hereinafter referred to as the "Term".
2. Duties. During the period of employment as provided in
Paragraph 1(b) hereof, the Executive shall serve as Chairman, President and
Chief Executive Officer of the Corporation and have all powers and duties
consistent with such positions, subject to the reasonable direction of the
Board. The Executive shall also continue to serve as a member of the Board if
elected as such. The Executive shall devote substantially his entire time
during reasonable business hours (reasonable sick leave and vacations excepted)
and best efforts to fulfill faithfully, responsibly and to the best of his
ability his duties hereunder. However, the Executive may, with the approval of
the Board, which shall not be withheld unreasonably, serve on corporate, civic
and/or charitable boards and committees.
2
3. Salary.
(a) Base Salary. For services performed by the Executive for the
Corporation pursuant to this Agreement during the period of employment as
provided in Paragraph 1(b) hereof, the Corporation shall pay the Executive a
base salary at the rate of six hundred fifty thousand dollars ($650,000 per
year, payable in substantially equal installments in accordance with the
Corporation's regular payroll practices. The Executive's base salary (with any
increases under paragraph (b), below) shall not be subject to reduction. Any
compensation which may be paid to the Executive under any additional
compensation or incentive plan of the Corporation or which may be otherwise
authorized from time to time by the Board (or an appropriate committee thereof)
shall be in addition to the base salary to which the Executive shall be
entitled under this Agreement.
(b) Salary Increases. During the period of employment as provided
in Paragraph 1(b) hereof, the base salary of the Executive shall be reviewed no
less frequently than annually by the Board to determine whether or not the
same should be increased in light of the duties and responsibilities of the
Executive and the performance thereof, and if it is determined that an
increase is merited, such increase shall promptly put into effect and the base
salary of the Executive as so increased shall constitute the base salary of the
Executive for purposes of Paragraph 3(a).
4. Annual Bonuses. For each calendar year during the term of employment,
the Executive shall be eligible to receive in cash an annual performance bonus
based upon the terms of the Corporation's bonus plan from time to time for
senior executives, as adopted by the Board of Directors and administered by the
Compensation Committee, with a target bonus amount each year equal to at least
80% of the Executive's midpoint, and with such bonuses for calendar years
through 1999 being determined under the EVA Incentive Compensation Plan of the
Corporation which became effective January 1, 1996, the terms of which may not
be changed without the Executive's consent. Throughout the term of this
Agreement, the Executive's minimum midpoint shall be six hundred sixty
thousand dollars ($660,000).
5. Equity Incentive Compensation. During the term of employment hereunder
the Executive shall be eligible to participate, in an appropriate manner
relative to other senior executives of the Corporation, in any equity-based
incentive compensation plan or program approved by the Board from time to time,
including (but not by way of limitation) any plan providing for the granting of
(a) options to purchase stock of the Corporation, (b) restricted stock of the
Corporation or (c) similar equity-based units or interests. In addition, the
following special provisions shall apply to the Executive's participation in
equity-based incentive compensation arrangements:
(a) The Restricted Shares Agreement dated December 18, 1995 between
Executive and the Corporation regarding 125,000 shares of common stock of the
Corporation shall remain in effect but is hereby amended as necessary (i) to
conform to this Agreement and (ii) to permit income tax withholding in the form
of withholding shares of stock from
-2-
3
distributions under that agreement. Such amendment may be further documented
in any appropriate manner.
(b) The Nonqualified Stock Option Agreement dated December
18, 1995 between Executive and the Corporation regarding an option to purchase
125,000 shares of common stock of the Corporation at a price of $15.75 per
share shall remain in effect but is hereby amended as necessary to conform to
this Agreement. Such amendment may be further documented in any appropriate
manner.
(c) As of the effective date of this Agreement, additional
stock option awards for shares of common stock of the Corporation have been
granted to the Executive with the following basic terms:
Exercise Price
Number of Shares per Share Vesting Date
---------------- -------------- ------------
250,000 $45.75 January 1, 2002
250,000 $60.00 January 1, 2002
250,000 $75.00 January 1, 2002
250,000 $90.00 January 1, 2002
Such awards shall be further documented by nonqualified stock option agreements
with terms consistent with this paragraph (c) and all other relevant provisions
of this Agreement, including (but not by way of limitation) Paragraph 8, below.
Except as specifically provided in Paragraph 8, below, no portion of such
awards shall vest prior to January 1, 2002.
(d) In no event will Executive have less than ninety (90)
days following the termination of his employment (regardless of the reason for
the termination) to exercise any stock options which were vested as of the date
of termination.
6. Other Benefits. In addition to the compensation described in
Paragraphs 3, 4 and 5, above, the Executive shall also be entitled to
participate in all of the various retirement, welfare, fringe benefit,
executive perquisite, and expense reimbursement plans, programs and
arrangements of the Corporation to the extent the Executive is eligible for
participation under the terms of such plans, programs and arrangements, with
benefit levels and terms of participation at least as favorable to the
Executive as those in effect on January 1, 1997, including (but not by way of
limitation) under the Supplemental Retirement Plan for Top Management, and with
Executive's overall benefits being no less favorable than those for any other
executive of the Corporation.
7. Termination. Unless earlier terminated in accordance with
the following provisions of this Paragraph 7, the Corporation shall continue to
employ the Executive and the Executive shall remain employed by the Corporation
during the entire term of this Agreement as set forth in Paragraph 1(b).
Paragraph 8 hereof sets forth certain obligations
-3-
4
of the Corporation in the event that the Executive's employment hereunder is
terminated. Certain capitalized terms used in this Paragraph 7 and in
Paragraph 8 hereof are defined in Paragraph 7(d), below.
(a) Death or Disability. Except to the extent otherwise
provided in Paragraph 8 with respect to certain post-Date of Termination
payment obligations of the Corporation, this Agreement shall terminate
immediately as of the Date of Termination in the event of the Executive's death
or in the event that the Executive becomes disabled. The Executive will be
deemed to be disabled upon the earlier of (i) the end of a six (6) consecutive
month period during which, by reason of physical or mental injury or disease,
the Executive has been unable to perform substantially all of his usual and
customary duties under this Agreement or (ii) the date that a reputable
physician selected by the Board, and as to whom the Executive has no reasonable
objection, determines in writing that the Executive will, by reason of physical
or mental injury or disease, be unable to perform substantially all of the
Executive's usual and customary duties under this Agreement for a period of at
least six (6) consecutive months. If any question arises as to whether the
Executive is disabled, upon reasonable request therefor by the Board, the
Executive shall submit to reasonable medical examination for the purpose of
determining the existence, nature and extent of any such disability. In
accordance with Paragraph 14, the Board shall promptly give the Executive
written notice of any such determination of the Executive's disability and of
any decision of the Board to terminate the Executive's employment by reason
thereof. In the event of disability, until the Date of Termination, the base
salary payable to the Executive under Paragraph 3 hereof shall be reduced
dollar-for-dollar by the amount of disability benefits paid to the Executive in
accordance with any disability policy or program of the Corporation.
(b) Discharge for Cause. In accordance with the
procedures hereinafter set forth, the Board may discharge the Executive from
his employment hereunder for Cause. Except to the extent otherwise provided in
Paragraph 8 with respect to certain post-Date of Termination obligations of the
Corporation, this Agreement shall terminate immediately as of the Date of
Termination in the event the Executive is discharged for Cause. Any discharge
of the Executive for Cause shall be communicated by a Notice of Termination to
the Executive given in accordance with Paragraph 14 of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (iii) specifies the termination date, which may be
as early as the date of the giving of such notice. In the case of a discharge
of the Executive for Cause, the Notice of Termination shall include a copy of a
resolution duly adopted by the Board at a meeting called and held for such
purpose (after reasonable notice to the Executive and reasonable opportunity
for the Executive, together with the Executive's counsel, to be heard before
the Board prior to such vote), finding that, in the reasonable and good faith
opinion of the Board, the Executive was guilty of conduct constituting Cause.
No
-4-
5
purported termination of the Executive's employment for Cause shall be
effective without a Notice of Termination.
(c) Termination for Other Reasons. The Corporation may
discharge the Executive without Cause by giving written notice to the Executive
in accordance with Paragraph 14 at least fifteen (15) days prior to the Date of
Termination. The Executive may resign from his employment, without liability
to the Corporation, by giving written notice to the Corporation in accordance
with Paragraph 14 at least fifteen (15) days prior to the Date of Termination.
Except to the extent otherwise provided in Paragraph 8 with respect to certain
post-Date of Termination obligations of the Corporation, this Agreement shall
terminate immediately as of the Date of Termination in the event the Executive
is discharged without Cause or resigns.
(d) Definitions. For Purposes of this Agreement, the
following capitalized terms shall have the meanings set forth below:
(i) "Accrued Obligations" shall mean, as of the
Date of Termination, the sum of (A) the Executive's base salary under Paragraph
3 through the Date of Termination to the extent not theretofore paid, (B) the
amount of any bonus, incentive compensation, deferred compensation and other
cash compensation accrued by the Executive as of the Date of Termination to the
extent not theretofore paid and (C) any vacation pay, expense reimbursements
and other cash entitlements accrued by the Executive as of the Date of
Termination to the extent not theretofore paid. For the purpose of this
Paragraph 7(d)(i), amounts shall be deemed to accrue ratably over the period
during which they are earned, but no discretionary compensation shall be deemed
earned or accrued until it is specifically approved by the Board in accordance
with the applicable plan, program or policy.
(ii) "Cause" shall mean: (A) the Executive's
commission of an act materially and demonstrably detrimental to the goodwill of
the Corporation or any of its subsidiaries, which act constitutes gross
negligence or willful misconduct by the Executive in the performance of his
material duties to the Corporation or any of its subsidiaries, or (B) the
Executive's commission of any material act of dishonesty or breach of trust
resulting or intended to result in material personal gain or enrichment of the
Executive at the expense of the Corporation or any of its subsidiaries, or (C)
the Executive's conviction of a felony involving moral turpitude, but
specifically excluding any conviction based entirely on vicarious liability.
No act or failure to act will be considered "willful" unless it is done, or
omitted to be done, by the Executive in bad faith or without reasonable belief
that his action or omission was in the best interests of the Corporation. In
addition, no act or omission will constitute Cause unless the Corporation has
given detailed written notice thereof to the Executive and, where remedial
action is feasible, he then fails to remedy the act or omission within a
reasonable time after receiving such notice.
(iii) A "Change of Control" shall be deemed to have
occurred if: (A) any "person" (as defined in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934,
-5-
6
as amended (the "Exchange Act")), excluding for this purpose the Company or any
subsidiary of the Company, or any employee benefit plan of the Company or any
subsidiary of the Company, or any person or entity organized, appointed or
established by the Company for or pursuant to the terms of such plan which
acquires beneficial ownership of voting securities of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act) directly or indirectly of securities of the Company representing fifteen
percent (15%) or more of the combined voting power of the Company's then
outstanding securities; provided, however, that no Change of Control shall be
deemed to have occurred as the result of an acquisition of securities of the
Company by the Company which, by reducing the number of voting securities
outstanding, increases the direct or indirect beneficial ownership interest of
any person to fifteen percent (15%) or more of the combined voting power of the
Company's then outstanding securities, but any subsequent increase in the
direct or indirect beneficial ownership interest of such a person in the
Company shall be deemed a Change of Control; and provided further that if the
Board of Directors of the Company determines in good faith that a person who
has become the beneficial owner directly or indirectly of securities of the
Company representing fifteen percent (15%) or more of the combined voting power
of the Company's then outstanding securities has inadvertently reached that
level of ownership interest, and if such person divests as promptly as
practicable a sufficient amount of securities of the Company so that the person
no longer has a direct or indirect beneficial ownership interest in fifteen
percent (15%) or, more of the combined voting power of the Company's then
outstanding securities, then no Change of Control shall be deemed to have
occurred; (B) during any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement), individuals who at the
beginning of such two-year period constitute the Board of Directors of the
Company and any new director (except for a director designated by a person who
has entered into an agreement with the Company to effect a transaction
described elsewhere in this section) whose election by the Board or nomination
for election by the Company's shareholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was
previously approved, cease for any reason to constitute at least a majority
thereof; or (C) the shareholders of the Company approve a plan of complete
liquidation of the Company, an agreement for the sale or disposition of the
Company or all or substantially all of the Company's assets, or a plan of
merger or consolidation of the Company with any other corporation, except for
a merger or consolidation in which the security owners of the Company
immediately prior to the merger or consolidation continue to own at least
eighty-five percent (85%) of the voting securities of the new (or continued)
entity immediately after such merger or consolidation.
(iv) "Date of Termination" shall mean (A) in the event of a
discharge of the Executive by the Board for Cause, the date specified in such
Notice of Termination, (B) in the event of a discharge of the Executive without
Cause or a resignation by the Executive, the date specified in the written
notice to the Executive (in the case of discharge) or the Corporation (in the
case of resignation), which date shall be no less than fifteen (15) days from
the date of such written notice, (C) in the event of the Executive's death, the
date of the Executive's death, and (D) in the event of termination of the
Executive's employment
-6-
7
by reason of disability pursuant to Paragraph 7(a), the date the Executive
receives written notice of such termination (or, if earlier, twelve (12) months
from the date the Executive's disability began).
(v) "Good Reason" shall mean any of the following: (A) the
failure to re-elect the Executive as Chairman, President and Chief Executive
Officer and as a member of the Board of Directors with full voting rights, (B)
assignment of duties inconsistent with the Executive's position, authority,
duties or responsibilities, or any other action by the Corporation which
results in a substantial diminution of such position, authority, duties or
responsibilities, (C) any substantial failure by the Corporation to comply with
any of the provisions of the employment agreement, (D) the Corporation giving
notice to the Executive to stop further operation of the evergreen feature
described in paragraph 1, above, or (E) any change in the current EVA Incentive
Compensation Plan without the Executive's consent. In addition, termination
by the Executive for any reason during the sixty (60)-day period immediately
after a Change of Control shall be deemed to be a termination for Good Reason.
8. Obligations of the Corporation Upon Termination. The following
provisions describe the obligations of the Corporation to the Executive under
this Agreement upon termination of his employment. However, except as
explicitly provided in this Agreement, nothing in this Agreement shall limit or
otherwise adversely affect any rights which the Executive may have under
applicable law, under any other agreement with the Corporation or any of its
subsidiaries, or under any compensation or benefit plan, program, policy or
practice of the Corporation or any of its subsidiaries.
(a) Death, Disability, Discharge for Cause, or Resignation
Without Good Reason. In the event this Agreement terminates by reason of the
death or disability of the Executive, or by reason of the discharge of the
Executive by the Corporation for Cause, or by reason of the resignation of the
Executive other than for Good Reason, the Corporation shall pay to the
Executive, or his heirs or estate, in the event of the Executive's death, all
Accrued Obligations in a lump sum in cash within thirty (30) days after the
Date of Termination; provided, however, that any portion of the Accrued
Obligations which consists of bonus, deferred compensation, or incentive
compensation, shall be determined and paid in accordance with the terms of the
relevant plan as applicable to the Executive. However, if the termination is
for death or disability or by the Corporation other than for Cause or by the
resignation of the Executive for Good Reason, the payment to the Executive
within thirty (30) days after the Date of Termination shall include the full
amount of the Executive's individual Bonus Reserve Balance under the EVA
Incentive Compensation Plan.
(b) Death or Disability. In the event that Executive's
employment is terminated by death or disability, the Executive shall receive,
in addition to the compensation and benefits described in paragraph (a), above,
the following benefits:
-7-
8
(i) Immediate full vesting of all of Executive's
otherwise unvested options to purchase shares of stock of the Corporation,
which options will be exercisable for a period of at least two (2) years after
the date of termination of employment,
(ii) Immediate full vesting in all otherwise
unvested shares of restricted stock of the Corporation previously awarded to
the Executive, with immediate termination of all restrictions on such shares,
and
(iii) Immediate vesting of all other equity or
incentive compensation awards to Executive which are not otherwise vested.
(c) Discharge Without Cause or Resignation with Good
Reason. In the event that this Agreement terminates by reason of the discharge
of the Executive by the Corporation other than for Cause or disability or by
reason of the resignation of the Executive for Good Reason, then the Executive
shall receive, in addition to the compensation and benefits described in
paragraphs (a) and (b), above, the following benefits:
(i) A cash bonus for the year of termination,
calculated as a pro rata portion of the Executive's target annual bonus for the
year of termination,
(ii) Payment in a lump sum of an amount equal to
three (3) times the Executive's base salary as in effect prior to the
termination,
(iii) Payment in a lump sum of an amount equal to
three (3) times the Executive's target annual bonus for the year of
termination,
(iv) Continuation for the period of three (3) years
after the date of termination of welfare benefits and senior executive
perquisites at least equal to those which would have been provided if the
Executive's employment had continued for that time, but such benefits may be
discontinued earlier to the extent that the Executive becomes entitled to
comparable benefits from a subsequent employer,
(v) Immediate vesting of Executive's interest in
the Supplemental Retirement Plan for Top Management, calculated on the basis of
Executive's actual period of service plus three (3) additional years, giving
effect for each of those three (3) additional years to the salary and bonus
continuation described in subparagraphs (ii) and (iii), above,
(vi) Stock price depreciation protection as to any
stock of the Corporation (including any stock to be acquired through the
exercise of stock options) as to which the Executive, within twenty (20) days
after the termination of employment, gives the Corporation written notice of
his intention to sell, which notice shall be binding upon the Executive. Such
protection shall be in the form of a cash payment or payments by the
Corporation equal to the excess of (A) the Protected Price of the stock over
(B) the actual gross selling price; provided, however, that, in the alternative,
the Corporation shall purchase
-8-
9
from the Executive at the Protected Price any of such stock which the
Executive does not sell within ninety (90) days after the termination of
employment. The Protected Price shall be the average closing price of the
stock for the five (5) trading days immediately preceding the date of
termination of employment, and
(vii) Outplacement services, at the expense of the Corporation,
from a provider reasonably selected by the Executive.
(d) If any Change of Control severance agreement between the
Corporation and any other senior executive of the Corporation provides for any
additional type of compensation or benefit, or a higher level of a particular
type of compensation or benefit, compared to the compensation and benefits
otherwise provided for the Executive by paragraph (c), above, the Executive
shall also receive that additional type of, or higher level of, severance
compensation or benefit.
9. Certain Additional Payments by the Corporation. The Corporation agrees
that:
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by the
Corporation to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Paragraph 9) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, (the
"Code") or if any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest
and penalties, being 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 any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payment.
(b) Subject to the provisions of paragraph (c), below, all
determinations required to be made under this Paragraph 9, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by the accounting firm which is then serving as the auditors for the Corporation
(the "Accounting Firm"), which shall provide detailed supporting calculations
both to the Corporation and the Executive within fifteen (15) business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Corporation. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
- 9 -
10
solely by the Corporation. Any Gross-Up Payment, as determined pursuant to
this Paragraph 9, shall be paid by the Corporation to the Executive within five
(5) days of the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with a written opinion that failure to report the
Excise Tax on the Executive's applicable federal income tax return would not
result in the imposition of a negligence or similar penalty. Any good faith
determination by the Accounting Firm shall be binding upon the Corporation and
the Executive. As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments which will not have been
made by the Corporation should have been made ("Underpayment"), consistent with
the calculations required to be made hereunder. In the event that the
Corporation exhausts its remedies pursuant to paragraph (c), below, and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Corporation to
or for the benefit of the Executive.
(c) The Executive shall notify the Corporation in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Corporation of a Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than fifteen (15) business days
after the Executive is informed in writing of such claim and shall apprise the
Corporation of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the thirty (30)-day period following the date on which Executive
gives such notice to the Corporation (or such shorter period ending on the date
on which Executive gives such notice to the Corporation (or such shorter period
ending on the date that any payment of taxes with respect to such claim is
due). If the Corporation notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) Give the Corporation any information
reasonably requested by the Corporation relating to such claim,
(ii) Take such action in connection with contesting
such claim as the Corporation shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Corporation,
(iii) Cooperate with the Corporation in good faith in
order effectively to contest such claim, and
(iv) Permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or
-10-
11
income tax (including interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and expenses. Without
limiting the foregoing provisions of this paragraph (c), the Corporation shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax claimed and
xxx for a refund or contest the claim in any permissible manner; and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Corporation shall determine; provided, however, that
if the Corporation directs the Executive to pay such claim and xxx for a
refund, the Corporation shall advance the amount of such payment to the
Executive on an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to such advance; and
further provided that any extension of the statute of limitations relating to
payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, 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.
(d) If, after the receipt by the Executive of an amount
advanced by the Corporation pursuant to paragraph (c), above, the Executive
becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Corporation's complying with the requirements
of said paragraph (c)) promptly pay to the Corporation the amount of such
refund (together with any interest paid or credited thereon, after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Corporation pursuant to said paragraph (c), a determination is
made that the Executive shall not be entitled to any refund with respect to
such claim and the Corporation does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of thirty (30)
days after such determination, then such advance shall be forgiven and shall
not be required to be repaid; and the amount of such advance shall offset, to
the extent thereof, the amount of the Gross-Up Payment required to be paid.
10. No Set-Off or Mitigation. The Corporation's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Corporation may
have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the provisions
of this Agreement and such amounts shall not be reduced whether or not the
Executive obtains other employment.
-11-
12
11. Payment of Certain Expenses. The Corporation agrees to pay
promptly as incurred, to the fullest extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result of any
contest by the Corporation, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement
(including as a result of any contest initiated by the Executive about the
amount of any payment due pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable federal rate provided for in
Section 7872(f)(2)(A) of the Code; provided, however, that Corporation shall
not be obligated to make such payment with respect to any contest in which the
Corporation prevails over the Executive.
12. Indemnification. To the full extent permitted by law, the
Corporation shall indemnify the Executive (including the advancement of
expenses) for any judgments, fines, amounts paid in settlement and reasonable
expenses, including attorneys' fees, incurred by the Executive in connection
with the defense of any lawsuit or other claim to which he is made a party by
reason of being an officer, director or employee of the Corporation or any of
its subsidiaries.
13. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the heirs and representatives of the Executive and the
successors and assigns of the Corporation. The Corporation shall require any
successor (whether direct or indirect, by purchase, merger, reorganization,
consolidation, acquisition of property or stock, liquidation, or otherwise) to
all or a substantial portion of its assets, by agreement in form and substance
reasonably satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Corporation would be required to perform this Agreement if no such succession
had taken place. Regardless of whether such an agreement is executed, this
Agreement shall be binding upon any successor of the Corporation in accordance
with the operation of law, and such successor shall be deemed the "Corporation"
for purposes of this Agreement.
14. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or by recognized commercial delivery service or
if mailed within the continental United States by first class certified mail,
return receipt requested, postage prepaid, addressed as follows:
-12-
13
(a) If to the Board or the Corporation, to:
SPX Corporation
000 Xxxxxxx Xxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
(b) If to the Executive, to:
Xx. Xxxx X. Xxxxxxxx
000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxxxxxx, Xxxxxxxx 00000
Such addresses may be changed by written notice sent to the other party at the
last recorded address of that party.
15. Tax Withholding. The Corporation shall provide for the
withholding of any taxes required to be withheld by federal, state, or local
law with respect to any payment in cash, shares of stock and/or other property
made by or on behalf of the Corporation to or for the benefit of the Executive
under this Agreement or otherwise. The Corporation may, at its option: (a)
withhold such taxes from any cash payments owing from the Corporation to the
Executive, (b) require the Executive to pay to the Corporation in cash such
amount as my be required to satisfy such withholding obligations and/or (c)
make other satisfactory arrangements with the Executive to satisfy such
withholding obligations.
16. Arbitration. Except as to any controversy or claim which the
Executive elects, by written notice to the Corporation, to have adjudicated by
a court of competent jurisdiction, any controversy or claim arising out of or
relating to this Agreement or the breach hereof shall be settled by arbitration
in Chicago, Illinois in accordance with the laws of the State of Michigan. The
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association. The costs and expenses of the arbitrator(s) shall be
borne by the Corporation. The award of the arbitrator(s) shall be binding upon
the parties. Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction.
17. No Assignment. Except as otherwise expressly provided herein,
this Agreement is not assignable by any party and no payment to be made
hereunder shall be subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or other charge.
18. Execution in Counterparts. This Agreement may be executed by
the parties hereto in two (2) or more counterparts, each of which shall be
deemed to be an original, but all such counterparts shall constitute one and
the same instrument, and all signatures need not appear on any one counterpart.
-13-
14
19. Jurisdiction and Governing Law. This Agreement shall be construed and
interpreted in accordance with and governed by the laws of the State of
Michigan, other than the conflict of laws provisions of such laws.
20. Severability. If any provision of this Agreement shall be adjudged by
any court of competent jurisdiction to be invalid or unenforceable for any
reason, such judgment shall not affect, impair or invalidate the remainder of
this Agreement. Furthermore, if the scope of any restriction or requirement
contained in this Agreement is too broad to permit enforcement of such
restriction of requirement to its full extent, then such restriction or
requirement shall be enforced to the maximum extent permitted by law, and the
Executive consents and agrees that any court of competent jurisdiction may so
modify such scope in any proceeding brought to enforce such restriction or
requirement.
21. Prior Understandings. This Agreement embodies the entire
understanding of the parties hereto and supersedes all other oral or written
agreements or understandings between them regarding the subject matter hereof,
including but not by way of limitation the letter agreement dated November 24,
1995 between the parties. No change, alteration or modification hereof may be
made except in a writing, signed by each of the parties hereto. The headings in
this Agreement are for convenience of reference only and shall not be construed
as part of this Agreement or to limit or otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
Attest: SPX CORPORATION
Xxxxx X. Xxxxxxxx
----------------------- By: Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx ------------------------
Title: Chairman, Governance Committee
XXXX X. XXXXXXXX
/s/ Xxxx X. Xxxxxxxx 2/25/97
----------------------------
-14-
